Canada to Grant New Offshore Oil Exploration Leases in Beaufort Sea

The federal government is moving ahead with plans to grant new offshore oil-exploration licences in Canada’s Arctic, despite the U.S. government’s expanding freeze on offshore drilling in the wake of the Gulf Coast spill.

Moreover, any company granted an exploration licence in Canada’s portion of the Beaufort Sea will be subjected to less environmental scrutiny than companies wishing to explore on the U.S. side, critics say.

On Friday, U.S. President Barack Obama toured areas along the Louisiana coast affected by the massive oil spill triggered by last month’s blowout at BP’s Deepwater Horizon rig. The spill is now the biggest in U.S. history, eclipsing the Exxon Valdez disaster off the coast of Alaska in 1989.

Obama announced this week that his administration has extended its moratorium on new offshore drilling, as well as suspended plans by Shell to explore this summer for oil in the Beaufort and Chukchi seas, off the coast of Alaska. The U.S. will also cancel a pending sale of offshore leases in the Gulf of Mexico and off the coast of Virginia, freeze plans at 33 deepwater exploratory wells in the Gulf and stop giving out new deepwater-drilling permits for six months.

By contrast, Canada is still soliciting bids for exploration licences in the Beaufort Sea and the Mackenzie River delta in the Northwest Territories. The locations up for grabs include a parcel of land roughly 200 kilometres offshore, to the west of existing leases owned by BP and Imperial Oil.

No exploratory drilling is currently taking place in the Canadian Beaufort, although BP has commenced seismic testing of the sea floor. The last company to drill an exploratory well in the Beaufort was Devon Energy in 2005. But that well was only about 10 metres deep, whereas the BP and Imperial leases are at depths of several hundred metres.

In testimony this month, officials with the National Energy Board, which regulates drilling in the Beaufort, admitted they don’t know whether it would be possible at such depths for companies to drill a relief well in the same season as the main well. Drilling a relief well is one of the primary ways of stopping a leak.

Offshore drilling in the U.S. is regulated by an agency called the Minerals Management Service (MMS), which has come under fire for its cosy relationship with the oil industry. But in comparison with Canada, the U.S. conducts more thorough and transparent environmental assessments before deciding whether to grant exploration leases.

Before granting leases to Shell in the Beaufort, for example, the MMS did a general environmental assessment of drilling in the Beaufort that considered the risks of an oil spill and solicited public comment.

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Source: Winnipegfreepress, May 31, 2010;