Canadian Manufacturing

Offshore oil regulators defy enviro commissioner’s advice for NL

by Heather Scoffield, THE CANADIAN PRESS    

Canadian Manufacturing
Environment Energy Oil & Gas environment exploration Newfoundland offshore oil

Issued call for bids prior to completion of key environmental assessment

OTTAWA—Oil and gas regulators in Newfoundland have done exactly what the federal environment commissioner told them not to do: issued a call for bids to explore parts of the Gulf of St. Lawrence several months before a key environmental assessment has concluded.

The commissioner, who audits government operations for their environmental performance, warned the Canada-Newfoundland Offshore Petroleum Board earlier this year to make sure strategic environmental assessments were finished before offering up parcels of the land beneath the sea.

That way, companies would know what kind of measures they would need to undertake in order to properly protect the environment while exploring and drilling in marine habitat.

“To maximize opportunities for protecting the environment and to ensure that potential project proponents have the environmental information to make appropriate decisions, the boards should ensure that the results of up-to-date strategic environmental assessments are available prior to issuing a call for bids,” the environment auditor said in his report last fall.


The commissioner—Scott Vaughan, who has since left the post—rapped the Newfoundland board and its Nova Scotia counterpart for jumping the gun in the past, issuing premature calls for bids in all four cases examined. In one case, licences were awarded before the environmental assessment was done.

“Potential bidders did not always have complete information about the environmental constraints and required protection measures until near the end of, or after, the bid preparation process,” his report noted.

But on May 16, the board issued a call for bids to explore more than a million hectares of the land beneath the Gulf of St. Lawrence off the west coast of Newfoundland. Environmentalists say the area is crucial for the lobster industry, as well as redfish and cod.

The call for bids was authorized by federal Natural Resources Minister Joe Oliver and provincial Natural Resources Minister Tom Marshall.

That’s despite an ongoing strategic environmental assessment of the area.

The assessment is meant to update previous studies to see how fragile that part of the Gulf is to oil and gas development and recommend ways to avoid damaging the ecosystem.

It was ordered in 2011, in the wake of the massive oil spill in the Gulf of Mexico. A draft report is expected to be made public in the next few weeks, followed by six weeks of public feedback and a final report in the fall.

Environmental activists who want a moratorium on drilling in the Gulf say the board has its priorities backwards.

“In our mind, this is a very bad message to send to the public,” said Sylvain Archambault, spokesman for the St. Lawrence Coalition. “On the one hand, they are looking at (whether) there are places in the Gulf that are too sensitive for oil exploration. And on the other hand, they are going ahead with a call for bids.

“…It’s the other way around that it should be happening.”

The environmental assessment could very well conclude that the areas opened up for bidding should be off limits because of sensitive habitat, Archambault said. In the meantime, regulators are signalling the Gulf is open for more business.

“There’s no rush to go ahead with this call for bids. Were there political pressures? Were there industrial pressures on the board to go ahead? We don’t know.”

But a spokesman for the board says the deadline for bids is four months after the environmental assessment is published this fall, so it makes no difference whether the call for bids takes place now or later.

In an interview, Sean Kelly said there will be plenty of time for bidders to incorporate proper plans to protect marine life. The draft environmental assessment will be published by the end of June, already giving prospective bidders an idea of what will be expected, he said.

“There is no rush,” he added. “But by putting it out now, the board feels it gives potential bidders the opportunity to consider the environmental information that exists now and the new environmental information that comes up in the SEA (the strategic environment assessment).”

“At the end of the day, there won’t be any decisions made until 120 days after the SEAs are completed.”

He and a spokesman for federal minister Oliver both noted that in responding to the environment commissioner’s report, the boards only agreed with his recommendation “in principle”.

The boards committed to publishing environmental assessments before irrevocable business decisions are made, but they stopped short of agreeing to complete the assessments before soliciting bids.

“No licences will be issued until the strategic environment assessments work is completed,” Oliver’s spokesman, David Provencher, wrote in an email.

Neither Kelly nor Provencher would fully explain why the board would not wait six months until the assessment was done. But the CEO of one of the key companies involved in exploration in the area believes he has some insight.

Phillip Knoll of Corridor Resources Inc. says governments and regulators are anxious to see exploration and development in the region because they need the eventual revenues and because the region needs the economic benefits of oil and gas.

“We in Eastern Canada need to develop the reserves, because we need an economy here, last time I checked,” Knoll said in an interview.

While he would not say whether his company was readying a bid for the newly opened parcels of land, he said he was happy to see regulators take action.

“They want, of course, the industry to grow. And there’s not that much going on right now.”


Stories continue below