Offshore Oil and Gas Moratorium

What are the processes involved in lifting the current oil and gas moratoria on the west coast? Where do we currently stand? If the moratoria are lifted, what then?

This section attempts to address many of the questions surrounding the processes of the current government and First Nations debates in regards to the moratoria, and the production timeline should the moratoria be lifted.

1. Overview

2. Timeline

3. Reviews

4. Decision

 

1. OVERVIEW

What has to happen before the moratoria can be lifted? What are the processes that are currently taking place? Who is involved? Are our governments doing enough?

There are three parties involved in the lifting of the moratoria: the BC provincial government, the federal government and the First Nations groups.

The BC provincial government has already reached its decision. It commissioned a report (Strong et al.) for January of 2002 to examine the issue. This scientific report found no reason for exploration not to commence off the BC coast. (It should be noted that just because exploration is allowed to begin doesn't necessarily mean that it will lead to drilling and oil and hydrocarbon extraction.)

The federal government is still in the process of reviewing the moratorium. It too has commissioned a scientific report, this one from the Royal Society. Again, this report found no scientific reason to prohibit exploration to continue. However, it has been admitted that there are still scientific gaps in knowledge. The second step that the federal government undertook was a public consultation. The review panel, chaired by Roland Priddle, submitted its report to the Minister of Natural Resources at the end of October, 2004 (report). This report showed strongly divided, bipolar views amongst British Columbians in regards to the question as to whether or not to lift the moratorium on oil and gas exploration. The third step in the federal government’s review process is ongoing talks with the First Nations in regards to issues such as their role in the decision-making process and their share in the benefits.

The third party who has to approve the lifting of the ban on offshore oil and gas exploration are the First Nations. They are currently in the process of examining options to better assess the situation so that they can respond in an informed manner.

The Private Sector (Industry)

The private sector has shown a considerable interest in exploring offshore. However, first a strong social, political and economic framework needs to be established. This includes issues such as ownership and revenue sharing, processes of environmental assessment and the creation of a regulatory framework. All environmental concerns need to be addressed and a situation of environmental certainty needs to be established before they can entertain moving into the area.

Summary

Challenges

Environmental/Biological

Social/Political/Economic

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2. TIMELINE

If the moratoria are lifted, what then? How quickly will things progress?

Shown below is an image illustrating an estimated industry timeline for the various steps involved leading towards the production of offshore oil and gas on the west coast. As it can be seen, if the moratoria are lifted there are quite a few stages that still need to be completed before production can commence. While the prospects of finding viable amounts of oil and gas offshore are good, the actual quantities and locations are still unknown and thus there is still a great deal of exploration and left to be done.

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3. REVIEWS

As mentioned above, both the federal and provincial governments have convened major studies examining various aspects involved with lifting the current oil and gas moratoria. Their findings and mandate of each study were summarized by Simon Fraser University in a review published in 2004 and are included below. Reviews of other studies are courtesy of EnergyBC.ca.

a. Provincial Moratorium Review Process

The provincial moratorium review consists of two processes, both of which have been completed. The first process was a government review undertaken by a committee, comprised of six members from the provincial liberal caucus and referred to as the Offshore Oil and Gas Task Force (OOGTF). The committee, mandated to seek public opinion on offshore development, held public hearings in nine coastal communities: Port Hardy, Masset, Skidegate, Bella Bella, Bella Coola, Terrace, Kitimat, Kitkatla, and Prince Rupert. OOGTF received more than 150 oral presentations and almost 130 written submissions. The committee concluded in its report of 15 January 2002 that “before the government decides upon a final course of action, the public would like to see the following issues addressed” (B.C. OOGTF 2002:): • Resolution of ownership of offshore resources; • Estimates of the quantity of offshore resources; • Processes for involvement of First Nations; • Assessment of environmental impacts; and • Assessment of economic and social impacts.

The second provincial process in 2002 created a three person scientific panel, referred to as the British Columbia Scientific Review Panel chaired by Dr. David Strong from the University of Victoria and included Dr. Patricia Gallagher, from Simon Fraser University, and Dr. Derek Muggeridge, Dean of Science at Okanagan University College. The panel was mandated to identify: • The scientific and technological considerations relevant to offshore development; • Further research that should be undertaken to advance the state of knowledge on scientific and technological considerations relevant to offshore development; • Any government actions required prior to a decision on whether to remove the moratorium; and • Specific conditions or parameters that should be established as part of a government decision to remove the moratorium.

Strong et al. (2002) identified four issues requiring resolution before any development should be allowed to proceed: 1. Development of an integrated federal-provincial regulatory framework. 2. Negotiation of an accord providing for revenue sharing between the Canadian, B.C. and First Nations governments. 3. Identification of sensitive areas requiring special protection from development. 4. Development of capacity to build baseline data, analysis of ecosystems, and risk assessment, and evaluation of development options.

The report concluded: There is no inherent or fundamental inadequacy of the science or technology applied in an appropriate regulatory framework, to justify retention of the B.C. moratorium. . The panel acknowledged that there may still be good reasons for maintaining the moratorium including: • Important factors not related to science and technology such as economic and social impacts, risk assessment, institutional weaknesses, and public values that were not assessed; and • An inappropriate regulatory framework.

b. Federal Moratorium Review Process

On 28 March 2003, the Canadian government announced a process to review issues regarding offshore development. The objectives were to: 1. Identify science gaps related to possible offshore development off the B.C. coast. 2. Hear the views of the public regarding whether or not the moratorium should be lifted. 3. Consult with First Nations to ensure that their interests are fully explored. Reflecting the competing jurisdiction, the Canadian government initiated two processes that largely duplicated ones recently completed by the B.C. government. These federal approaches consisted of a panel of scientific experts and a consultation process.

The first process was creation of a federal expert panel (FEP). FEP was managed under the independent auspices of the Royal Society of Canada (RSC) and completed its report in February 2004. The mandate of FEP was: • Identify gaps in scientific knowledge that need to be filled before a decision is made with respect to the moratorium; • Provide a work plan to fill any scientific gaps; and • Identify sensitive zones requiring protection from any OOGD and other zones requiring special management measures.

FEP recommended: 1. Create a body of key stakeholders to advise government 2. Fill the scientific gaps by completing a number of baseline and monitoring studies 3. Identify protected areas and exclusion zones. The FEP did not recommend lifting the moratorium. Instead, the panel reached the conclusion that . . . provided an adequate regulatory regime is put in place, there are no scientific gaps that need to be filled before lifting the moratoria on oil and gas development (RSC 2004:). The panel emphasized that a number of conditions need to be met prior to offshore development proceeding.

Federal Consultation Process (Roland Priddle - Chair): The second process initiated by the federal government after the completion of the scientific report is a public hearing process to assess public views on offshore development. A separate, special component of this process will be conducted specifically with First Nations. This process is expected to run from January to June 2004.

In addition to the official federal and provincial processes, there are a number of other studies examining various issues related to potential offshore development in BC. These include: 1. A Western Diversification Office grant to Royal Roads University to analyze socioeconomic impacts of offshore activities through a illustrative development scenario. These studies were released in May 2004. 2. A study by Simon Fraser University School of Resource and Environmental Management offshore oil and gas team for the Coastal First Nations examining socioeconomic, environmental, and jurisdictional issues involved in potential development. 3. A research program financed by the B.C. government being undertaken at the University of Northern British Columbia.

c. Royal Roads Study

The report was prepared by the Science, Technology and Environment Division of Royal Roads University, in association with G.E. Bridges and Associates through a grant from the Western Economic Diversification Office. The goal is to advance public knowledge of the potential social and economic benefits from the development of BC's offshore oil and gas resources. The study used the "Scenario Approach" describing an 'illustrative development scenario' of an offshore gas project in Hecate Strait and an offshore oil project in the Queen Charlotte Sound. Preliminary forecast of potential resource revenues was then generated for the two scenarios. Direct and indirect employment income, identification of local suppliers, diversification opportunities, etc, for the two projects were estimated using Statistics Canada's Input-Output Model. The results present a viable scenario, though the study admits to be highly speculative based on several assumptions as to the quantity of potential resources discovered and the methods used to recover them.

d. Simon Fraser Study

This report was in response to a request from Turning Point Initiative, a cooperative organization representing Coastal First Nations (CFN) including indigenous communities located along the shores of the Queen Charlotte Basin. The content of this study relative to the federal and provincial studies is focused more on non-scientific topics such as social, economic, regulatory, jurisdictional, legal, and environmental issues. The federal and provincial studies assess primarily geological, technological and environmental issues. International best practices for offshore development were identified and used to evaluate the current BC management and moratorium review process. Among the studies conclusions were:

1. Jurisdiction over offshore development is unclear, with overlapping responsibilities and claims between the Canadian, B.C. and First Nations governments.

2. The current regulatory regime is deficient. The regulatory regime does not meet any of the 12 international best practices criteria for good resource management.

3. The key deficiencies of the moratorium review process include: inadequate engagement of stakeholders, no government to-government partnership with First Nations, inadequate information, and inadequate delineation of decision-making criteria.

4. Although technological improvements and better management practices can mitigate and reduce the risk of some impacts, offshore development would have negative impacts on the environment. These negative effects could be severe to catastrophic depending on the occurrence of events such as major oil spills. Further, the Queen Charlotte basin is particularly vulnerable to impacts because of the nature of currents and regional ecological conditions. There is a consensus that there are significant gaps in knowledge regarding impacts of offshore development and understanding of regional ecological conditions where more information is required to properly assess potential impacts.

5. The economic and social impacts of offshore development have not been adequately assessed. Economic impacts on growth would be small and would be constrained by several factors. Offshore development is higher cost and riskier than conventional oil and gas operations. Offshore development would be more cyclical and would generate less rent and royalty revenue to government than more conventional oil and gas development. The low rent generation would further reduce potential economic benefits.

6. The role of oil and gas development in B.C.’s energy policy needs to be assessed in light of Canada’s Kyoto commitments. Alternative energy strategies based on renewable and green technologies may produce greater economic benefits with fewer environmental costs.

7. Five conditions or tests necessary to justify removal of the B.C. moratorium have not been met. The five gaps include: • Inadequate understanding of the environmental, social, and economic impacts; • Opposition from some key stakeholder groups and First Nations; • Reluctant project proponents (proponents have preconditions that have not been met); • A deficient regulatory regime; and • Failure to demonstrate with reasonable probability that the benefits exceed the costs.

8. The decision on whether to undertake offshore development is based on public values and attitudes towards risk. Scientists can help identify risks and tradeoff, but they can not determine whether to lift the moratorium. The decision on whether to proceed or not can only be made by stakeholders and governments through a comprehensive process of shared decision making based on best practice guidelines. The principal finding of this report is that the moratorium should be maintained and the review process is deficient and the information necessary for making an informed decision has not been collected or analyzed.

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4. DECISION

The final decisions on the moratoria and offshore drilling are as of yet unknown. This section will continue to evolve as the various groups arrive at their respective conclusions.

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Some credit from above text to Review of Offshore Oil and Gas Development by Simon Fraser University, 2004.

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