Worthwhile Canadian drilling safety initiative

Could the U.S. Congress look north for cues on offshore drilling regulatory reform?

Since the 1970s, oil companies working in Canada have been required to demonstrate the capacity to drill a relief well rapidly — "to re-gain control if something goes wrong," says Scott Gedak, an official with Canada’s National Energy Board (NEB). Now, the Canadians are thinking of going further — not just requiring that companies have the capability to drill such a well, but that they actually do it, reports Shawn McCarthy in the Toronto Globe and Mail.

The issue is pertinent, not only because BP has placed most of its hopes on just such a well to  cap its oil spill in the Gulf of Mexico once and for all, but because Congress and U.S. regulators are just now debating what laws the United States ought to enact in the wake of the catastrophe. The extent of the BP spill prompted the Calgary-based NEB, an independent regulator, to announce a review of existing Arctic policy. Although Canada is still issuing exploration licenses for the Beaufort Sea, the NEB wants to complete the review before it green lights any actual drilling there.

Authorities in current offshore drilling regions south of the Arctic Circle, particularly in Newfoundland (where Chevron has a project in the deepwater Orphan Basin), oppose any change in policy, and the oil majors aren’t fans, either. As of last year, ExxonMobil subsidiary Imperial Oil, BP and others were pressing the NEB to scrap the current requirement for just the relief well drilling capacity requirement, so they are bound to oppose any actual drilling mandate. The companies say relief wells are expensive — an extra $100 million to $200 million — and risky; "I would say you just doubled your risk," Exxon CEO Rex Tillerson said. But the Gulf spill, of course, has undermined that argument; BP is on the defensive in Canada now, too.

South of the border, U.S. Sen. Frank Lautenberg last month introduced the Emergency Relief Well Act, which would require at least one relief well at all future U.S. offshore exploratory sites. He calls his relief well bill "a common-sense step" aimed at containing potential damages from the "inherently dangerous drilling business."

Interestingly, Paul Rioux at the New Orleans Times-Picayune writes that some environmental groups actually agree with Tillerson’s original complaint, and worry about whether the risk incurred in drilling relief wells outweighs the benefit of having them as a backup in the event of a Macondo-grade disaster. One idea, say some environmental and industry representatives, is simply to improve blowout preventers, the device that’s supposed to provide fail-safe protection from disastrous blowouts (and failed to do so in the case of the BP spill). Chevron’s Canadian unit is already working on an improved blowout preventer to cope with demanding Arctic conditions, according to Canada’s CBC News.