Capping oil well blowouts within 24 hours too expensive, says Ottawa

​The federal government says it is agreeing to an offshore drilling plan that would allow up to 21 days to bring in capping technology for a subsea well blowout, because requiring a shorter response time would be too expensive for Shell Canada Ltd.

Meanwhile, the most recent U.S. ruling in Alaska — where Shell wants to conduct an exploratory drilling project — requires a capping stack to be on hand for a blowout within 24 hours.

Nova Scotia environmentalists are questioning why the Canadian Environmental Assessment Agency has signed off on a plan that allows between 12 and 21 days for the multinational company to bring a vessel and a capping system to the Shelburne Basin offshore site, about 250 kilometres off the southwestern coast of Nova Scotia.

Approval of Shell's plan for exploratory drilling in the Shelburne Basin is up to the Canada-Nova Scotia Offshore Petroleum Board. The board says it is taking the environmental assessment into account, but won't make a decision on whether to give the company the green light until later this year.

Conditions much different in Arctic

However, the board's chief executive, Stuart Pinks, says the type conditions off the coast Alaska that require a capping system close at hand simply don't exist in Nova Scotia.

"The drilling season is very short in Alaska, is very short because of ice," Pinks told CBC Radio's Information Morning. "If there was an event to occur in Alaska, there's a very short time period to get a capping stack on location and deployed before the ice moves in."

Alberta-based oil and gas analyst Doug Matthews says the regulatory regime is much tighter in Canadian and American Arctic waters than off the coast of Nova Scotia and Newfoundland.

If an Arctic well blowout is not controlled before the ice moves in, Matthews says it could mean oil flowing uncontrollably for up to seven months and would "very much be a disaster."

Whether less stringent rules in Eastern Canada are appropriate is a discussion people in Nova Scotia and Newfoundland should have with their offshore petroleum boards, he said. But he adds that provincial revenues may play a role.

"Both Nova Scotia and Newfoundland get significant resource revenue from the offshore," Matthews says. "So maybe economics has to be taken more into account by the regulator."

Capping stack would be brought from Norway

Shell Canada says capping stack equipment would be brought in from Stavanger, Norway, in the case of a subsea blowout, according to the environmental assessment. It would also deploy a backup stack from either Scotland, South Africa, Singapore or Brazil.

A blowout is a "very low probability event," Pinks says, but "it is recognized that it is a high consequence." The offshore board is "knee-deep" reviewing Shell's application and wants to make sure equipment and systems are in place to deal with spills, if the project is given the go ahead.

In the federal environmental assessment report of June 15, the agency states a blowout in the seven planned wells is unlikely and the project is unlikely to cause significant adverse environmental effects.

"I set out 40 legally enforceable conditions for Shell Canada to follow if the project proceeds. These legally binding conditions are based on the assessment of the project by the Canadian Environmental Assessment Agency," federal Environment Minister Leona Aglukkaq said in a statement released Thursday.

"My decision statement requires the proponent to take all reasonable measures to prevent accidents and malfunctions that may result in adverse environmental effects."

In the case of the Shelburne Basin Project, the Canadian Environmental Assessment Agency "accepted the proponent's view that it would be prohibitively expensive to develop this infrastructure in Atlantic Canada for exploratory work."

In an email sent late Wednesday night, a spokesman for Environment Canada said the Alaska plan to have a vessel and capping system on call was based on the harsh environment in the area and the long distances a vessel would have to travel to get there.