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Global Processing e-News / Oil & Gas / Oil & Gas / North America

Canada not ready to deal with offshore leaks, report finds

February 08, 2013
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Canadian authorities are not ready to deal with the consequences of a potential offshore oil leak, according to a new report released by the federal commissioner of the environment and sustainable development.

The report revealed that oil companies can be charged a maximum of C$40 million in the north of the country and C$30 million in the rest of the territory for cleanup and this cap has not been raised in more than 20 years. In comparison, the limit is C$75 million in the United States and C$250 million in the United Kingdom. An actual cleanup of an oil leak can cost much more, suggesting that Canadian taxpayers would have to make up the rest, commissioner Scott Vaughan explained. The bill that a country has to pay for cleaning up a leak can reach billions in certain extremes cases. The Gulf of Mexico leak in 2010, for instance, cost $40 billion, the Herald News said.

It has been reported that the Canadian government is considering introducing legislative reforms that would increase the liability limit for oil companies. Speaking to the press, environment minister Peter Kent said that the government is looking into possible ways to make sure that both taxpayers and the environment are fully protected in the event of a leak.

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According to the report from the commissioner of the environment and sustainable development, the problem is more serious in Atlantic Canada, where the Canada-Nova Scotia Offshore Petroleum Board and the Canada-Newfoundland and Labrador Offshore Petroleum Board need to work harder in their efforts to prevent a major spill. The report revealed that the boards were effectively managing offshore operations on a daily basis but emergency action plans by the boards and by the government are inconsistent and did not necessarily complement each other. These discrepancies suggest that, in the event of a leak, it would be unclear who performs certain roles and in what ways.

Furthermore, agreements between the government and the boards were found to be inadequate: some of them were out of date, while others were totally non-existent. In some of them, key activities were not covered and jurisdiction was not clearly defined, potentially leading to delayed reactions, the report noted. One example of such inadequacy is that the coast guard has the necessary equipment that could be used in case of spills but it has no mandate to respond to such an event.

Currently there are about 200,000 fracking wells across Canada but over the next two decades this number is expected to double, the report stated. However, oil and gas exploration and drilling activities are not included in reporting releases of pollutants to Environment Canada. This suggests that the government cannot have the full picture of whether and how the country is being protected. Vaughan said that while Canada is seeing a surge in natural resources, the effect the industry has on natural habitats should be taken into account.
 

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