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Oil companies' plans for Arctic drilling face a crucial test this week at a high-stakes meeting in Inuvik, NWT, as they seek to reassure the National Energy Board of their ability to prevent blowouts and respond effectively to spills.

Many northern residents and southern environmental groups remain deeply skeptical, and their doubts were fuelled last week with two reports that challenge industry claims that it is prepared to meet the environmental risks associated with operating in such a hostile environment.

Starting Monday, the NEB will convene a roundtable, featuring company representatives, environmental experts and scores of residents from Inuit communities that depend on Arctic waters for their livelihoods. While many Inuit are eager for the economic spinoffs that drilling would bring, others worry that development will come with unacceptably high risk.

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Major producers, including Imperial Oil Ltd. and Chevron Corp., hold leases in the Beaufort Sea and are eager for the NEB to clear the way for activity to begin, though there are no current applications for drilling licences.

In filings to the board, companies have indicated how they would respond to blowouts or spills, and suggested they will be able to avoid a catastrophic accident like BP PLC's blowout in the Gulf of Mexico that gushed crude for three months.

In Inuvik this week, the NEB will hear from industry, environmentalists and Inuit leaders about the tradeoffs between risk and benefit, and the challenges of operating in the deep, ice-prone waters of the Beaufort.

The regulator – which has said it will listen closely to local concerns – plans by the end of the year to issue a report that would set minimum requirements for future offshore Arctic drilling applications.

"What we would hope to see out of the review is some clarity regarding expectations," said Mike Peters, manager for Arctic affairs for the Canadian Association of Petroleum Producers.

He said the National Energy Board has been very clear that it won't make sweeping policy decisions about whether the industry should be drilling in the Arctic, but will focus instead on specific requirements of individual applications.

One key issue is whether the regulator will continue to require companies to have the capacity to drill a relief well prior to ice-up in the event of a blowout.

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It would be virtually impossible for companies to meet that requirement in the deep waters of the Beaufort Sea because it can take two or three years to complete a single deep well due to the short drilling season. Chevron argues that technological advances in blowout preventers provide equivalent protection and therefore makes the same-season drilling requirement unnecessary.

In a report released Friday, the Oceans North Canada urged the board to maintain its relief well requirement, saying it should not rely on the enhanced blowout preventers that companies are touting.

Oceans North – which is funding by the U.S.-based Pew Environmental Group – is also urging the Harper government to suspend all leasing and licensing in the Arctic until a full environmental analysis can be conducted.

"We're laying out some of the minimum requirements that government and industry should do before they proceed down the road of drilling in the Arctic," Trevor Taylor, Oceans North's policy director, said in an interview.

Environmentalists are also warning that the oil industry would have very little operating time – even during the summer drilling season – to respond to spills and blowouts. Pack ice, high winds, high waves and fog are all common factors that would limit the ability of crews to respond.

In a report filed with the NEB last week, WWF Canada concluded that no response would be possible on two-thirds of the days in summer months on average, and on more than 80 per cent of days in June and October.

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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