Natural Resources Committee on May 13th, 2010

[David Pryce]

Thank you.

I guess what we're saying is that when these events occur, it's important to understand what happened and to learn from them. This industry has been active for many decades. I think we've grown a great deal of expertise, but I don't think it would be wise for us to assume that we would have all the answers at this point in time. A continuous improvement in the regulatory regime and the operating practices are really important to make sure that we are state-of-the-art, that we are current.

[The Chair, Conservative, Leon Benoit]

You have roughly a minute and a half, Madame Brunelle.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Good day, Mr. Amos.

Correct me if I'm wrong, but you stated that you were not against the drilling of oil wells in the Beaufort Sea. However, you support the requirement for relief well capability.

From an economic standpoint, is this type of development important to your community? Is your support for relief well capability based on studies that you have done, or on other research? Has your opinion changed at all in light of the oil spill in the United States?

[Lawrence Amos]

Maybe I'll ask Norm Snow to answer that, if you don't mind.

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. Snow.

[Dr. Norman Snow, Executive Director, Inuvialuit Game Council]

Thank you very much.

As Lawrence was saying, we have been involved with the same-season relief well capability policy in a lot of detail in the past five years, since the Paktoa well. Prior to that, as Lawrence said, there has been a lot of experience with Inuvialuit themselves, because they've worked on the rigs in the earlier era of offshore exploration, they haven't done any work themselves, but they have always kept themselves apprised of what the difficulties are in having to drill a relief well in the same season. As you're probably aware, it's not really a very straightforward matter.

The policy was designed for shallow-water wells, such as the landfast ice wells that have been talked about earlier in these hearings. In deepwater, the season is intended to be longer than one year and it's rather difficult to apply holus-bolus the initial requirement for a relief well, for shallow-water wells, to deepwater drilling. I think that is why the NEB was calling for that complete overhaul. The Inuvialuit Game Council, like others, I think, is awaiting the outcome and the lessons learned from the tragedy in the Gulf of Mexico to see how this system can be improved.

[The Chair, Conservative, Leon Benoit]

Thank you.

Merci, Madame Brunelle.

We'll go now to Mr. Cullen for about five minutes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

What happened to six minutes? Nice try, Chair.

[The Chair, Conservative, Leon Benoit]

Four and three-quarter minutes now.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I'll take my six, with pleasure.

The question here today is that, while it's not pleasant, I think it's responsible for us to consider what it would look like to have the disaster that's happening in the gulf right now happen in Canadian waters. That is what is before us. That is the question before us. Is it possible, and if it were possible, what would it look like to have a massive oil spill such as what's going on in the gulf? The only difference, I suggest, is that it would be worse, particularly in the Arctic.

In terms of the cleanup, we're hearing from the senior person at British Petroleum that we don't know if we can get oil out of ice, yet the oil companies are asking to drill in areas that are predominantly ice-filled waters.

It seems to me that what happened in the Gulf of Mexico was something that the oil companies said couldn't happen, and in fact, in British Petroleum's submission, said it had a one in 300,000 chance of happening. Well, it's not one in 300,000 any more.

Would you agree, Ms. Drinkwater, that the relief well regulation is, in a sense, a safety rule, something put in place to mitigate a blowout, something put in place to allow the company to stop a blowout from doing what it's doing in the gulf right now?

[Anne Drinkwater]

A relief well is a response effort to an incident that has already happened. The focus that we have, and that the industry has, is on the prevention of incidents in the first place, obviously. That is why it's very important, as an industry and as a company, to take the results of the investigations that are going on and look at how we can properly apply those preventative measures. That has to be our first priority.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Two weeks before your rig caught fire, blew up, and sank in the gulf, spilling a minimum of 5,000 barrels of oil a day—and one of your executives is claiming to Congress that it may be as many as 50,000—your company was in front of Canadian regulators asking for the relief well requirement to be lifted. You stood in support of British Petroleum's request to no longer require relief wells. I have your submission here with me.

Do you think that was a bad thing to ask for? And do you still support British Petroleum and other oil companies' request to remove that safety regulation?

[Anne Drinkwater]

Our submission was in support of reviewing the policy and, as I've already iterated, we don't reject the option of a relief well, but we do believe, with the particular circumstances in the Arctic and the difficulty that Mr. Snow has already outlined of achieving a relief well in the same season, that a review is--

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

You said it's too expensive.

[Anne Drinkwater]

It's not a question of cost.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Your submission does say it's a question of cost. You say that the proposed operations on the Beaufort could require commitments in excess of $1.5 billion before the regulatory processes are complete. You cite money because you're concerned about money, which is understandable because that's your mandate. Your job is to maximize profit for shareholders. That is clear.

Let's get into British Petroleum for a second. Last year you were fined $66 million under regulations that you already knew about. In 2005 you were fined $50 million in the accident in Texas that killed 15 workers and injured another 170. You're now facing an additional $85 million in fines. The Health and Safety Executive of the United Kingdom has cited British Petroleum for failing to ensure the safety of their employees and others not in their employ by not providing and maintaining a system of work for the control of that operation that was, so far, reasonable and practically safe.

British Petroleum, on its website, claims to be a company that is rebranded. It's beyond petroleum. I suppose that's not necessarily so much true. In the United States the President has proposed a $10 billion fund to assist in the cleanup. He has also delayed any more issuing of leases for offshore drilling until we know what happened in the gulf.

Do you think that would be prudent for Canada as well, Mrs. Drinkwater?

[Anne Drinkwater]

To answer your first question about our submission on the same-season relief well, in our submission, you will note, we have not rejected the option of drilling a same-season relief well. We do cite the technical challenges with regard to drilling a well in that same season.

Moving on to our efforts in the Gulf of Mexico, we are on record as saying that we will continue to aggressively attack the cleanup, and we will pay all legitimate claims against us.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

If a relief well can't be drilled--

[The Chair, Conservative, Leon Benoit]

Mr. Cullen, excuse me, your time is up.

We'll go now to Mr. Anderson, for five minutes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, Mr. Chair.

First I want to point out that Mr. Cullen can afford to--

[The Chair, Conservative, Leon Benoit]

Mr. Cullen, on a point of order.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Very quickly--I don't want to take Mr. Anderson's time--I'm just confused as to why it went six minutes, six minutes, and then dropped to five minutes.

[The Chair, Conservative, Leon Benoit]

The clock got away a little bit. The answers were a little longer than you had anticipated. Have a look at the clock, Mr. Cullen. We have less than five minutes.

Now let's allow Mr. Anderson his five minutes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Now I get four minutes.

Anyway, Mr. Cullen can afford to imagine the worst, but the reality is that we are protecting the environment in this situation. There is no drilling. There is no authorization for drilling. There is no early approval. We heard this morning it's going to be at least four years. We have a current review of the regulations and a focus on lessons learned, so he can imagine whatever he wants, but we actually have to deal with reality, and I think we're doing that.

I would like to ask--this is just a technical question--what are the present requirements for blowout prevention? Does anybody know?

Mr. Pryce.

[David Pryce]

I would have to say I don't think this group has the technical expertise to respond to that.