Natural Resources Committee on May 25th, 2010

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Cullen.

Mr. Harris, go ahead, please.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Mr. Ruelokke, you were talking about what you thought may have happened in the gulf and why you thought it could not happen in the case of Canadian offshore drilling. If you could finish that story I would appreciate it, because I think it will be helpful to our committee.

[Max Ruelokke]

Certainly.

Again, this is not hard and fast evidence. We don't have solid evidence to...but the information we do have is that a decision was made as they were in the process of getting ready to terminate or abandon the well. Ordinarily what would happen is that before you would do that you would set a cement plug and seal the interior of the well bore and then you would circulate out the drilling mud with enhanced sea water or brine.

What we believe happened at the Macondo well is that they circulated the mud out prior to setting or establishing this cement plug. So that barrier was removed. The second barrier then should have been, and would have been, the blowout preventer, but for some reason the blowout preventer failed. We don't know why that failed or what the mechanism of failure was. There was some speculation that it may have been a control system, but the remotely operated vehicle should have been able to activate it once they got to it. They turned all the right handles but it still didn't activate.

So we know there was some sort of failure within the BOP but we don't what that was, and we won't know until such time as that BOP is eventually recovered.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

It sounds as if they missed a step that you would have--

[Max Ruelokke]

We believe that is the case, yes. But as I say, those are just things we've heard. We don't have any real evidence.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Okay.

Someone said earlier that we are assuming that this safety method will work--I can't remember which one we were talking about. Is there actual testing, critical testing, of all these different methods under conditions that could be expected in real life?

[Max Ruelokke]

I'll defer to Jeff. I know he's been in communication with our current well operations engineer, who has witnessed some of the testing.

[Jeff Bugden]

Thank you, Mr. Chairman.

One of the key premises is that there be at least two well barriers against flow at all times. One of the concepts of a well barrier is that a barrier is not a barrier until it's been tested and confirmed to be so.

So in the case of all well operations, the drilling regulations specify clearly the requirement for two well barriers. The guidelines expand on and clarify exactly what is needed by way of testing of those barriers for them to be effective.

In the case of well barriers in particular, we have decided to draw upon a standard issued by the Norwegian industry, the NORSOK standard D-010, which outlines very clearly exactly what the expectations are for well barriers during all phases of an operation. Provided you have two independently verified, tested barriers, then that is the standard we expect of operators. We intend to ensure that during all phases of the operation, from drilling through to the final termination of the well, there are procedures, mechanisms, and policies in place to verify those barriers.

One of the key elements is the BOP stack. The BOP stack is equipped with a number of mechanisms and barriers itself. It typically consists of three pipe rams, a shear ram, and what's known in the industry as a super-shear ram, which is capable of cutting through large-diameter, high-strength tubular goods. A systematic method of pressure testing the BOPs is the mechanism to verify the well barrier and the same concept applies to all well barriers. They have to be tested and verified to be functioning to qualify as a well barrier and two of them must be in place at all times. There is no compromise on that whatsoever.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Harris.

Thank you to all the witnesses on the first panel for your presentations and for the short time you had to answer questions. I think in the future the committee will have to be more realistic and either have fewer witnesses or more time. But we will deal with that.

Thank you all very much for coming.

We will suspend the meeting for about two minutes before the second panel.

[The Chair, Conservative, Leon Benoit]

We'll resume the meeting.

On our second panel we have four individuals or groups. I'll just introduce the individuals or groups as they make their presentation in the order that they appear on the agenda.

We will start with Dr. William Adams, a research scientist who is appearing as an individual.

Go ahead, please, Mr. Adams.

[Dr. William Adams, Research Scientist, As an Individual]

Thank you, Mr. Chairman.

Mr. Chairman, members of the committee, as a research scientist with Environment Canada, I was involved in the 1970s series of studies called the “Beaufort Sea project”, which included extensive research on the potential impacts of oil pollution in the Arctic and on the climate. It appears that, as oil exploration and production are again being planned, there is a growing probability of a major oil spill or even a blowout occurring, which would release oil into the Arctic ice and water regime.

I would also like to make the point that recently Bill C-3 extended Canadian jurisdiction to 200 nautical miles offshore, thus greatly increasing the area requiring monitoring, and has increased the cost and difficulty of remedial activities in the case of oil spills that are now a Canadian responsibility.

I am the immediate past chair of the Defence Science Advisory Board, which is working on studies sponsored by DND on infrastructure requirements for increased activities by the Canadian Forces in the Canadian arctic. We are also looking at an all-of-government approach in trying to assess the potential for collaborative infrastructure initiatives with northern communities. I mention that just for some background on myself.

The results of my early studies, part of the 1970s Beaufort Sea project, were on the physical and biological impacts of the largest--to date--controlled experimental crude oil spill on sea ice. I want to help the committee to gain an appreciation of the risks and to see what regulations and timing may be appropriate with regard to granting permission for offshore drilling to be undertaken safely in ice-covered waters. There is some background on the Beaufort Sea project provided in the text of my brief, which unfortunately didn't get translated in time. This is the sort of thing that you should gain access to. These are the summary reports. There are five of them and they are available from Fisheries and Oceans. There are 42 technical reports, which this summarizes, and I'm talking about the summaries now.

We studied the impact of oil on the melting of sea ice in the spring, as well as the impacts on the organisms living in, under, and on the ice. Another major area of study was the impact of oil on the reflectivity of ice, in other words the albedo of the oil-contaminated sea ice. This measures how much the sun's radiation is absorbed compared to how much is reflected back from the surface. The concern was whether oil-polluted sea ice from a major blowout could impact the climate by influencing the degree of ice cover in the Arctic Ocean from year to year.

The field experiments were conducted by releasing eight individual spills of hot crude oil in the winter, 36 barrels each, under two-metre-thick landfast ice. We then followed the fate of the crude into the spring breakup period and on into the following year when landfast ice melts, of course, each year. The spills were into 800-foot diameter containment booms frozen into the ice such that the average depth of the crude was one centimetre in the contaminated areas.

I have a few images here that will give you an idea of what we did. The first shows where the experiments took place on the Beaufort Sea at a place called Balaena Bay near Cape Parry, which is to the east of Inuvik and Tuk. You can see here that the bay was an enclosed bay with a very small mouth into the open Beaufort Sea. This was chosen for safety: if we had to seal it off, we could. The actual spills took place in this little corner of the bay and consisted of these eight boomed areas under which the crude was pumped.

This is what it looked like in the spring. You can see the eight boomed areas and you can see crude oil beginning to emerge.

This was in June, so the melt had begun. Partial disposal of oil by burning is possible, and in June we did begin to try burning. Oil can be burned when it first arises in the spring, but soon after being exposed to the air and the sun, the lighter fractions disperse and you can't burn it. Large areas of the surface can also be contaminated by black soot from the burning.

Oil rises up through brine channels. Sea ice is a very complex material and it has channels through which the oil rises.

This is what it looks like on a burned area where you can see soot. There's a lot of soot and that extends over hundreds and hundreds of metres from the site, even when it's not very windy.

This shows one of the organisms that's at the heart of the food chain in the marine environment; this is a marine diatom. We studied these, and there were various changes. We found them to be more numerous and more diverse in the presence of oil. We also found much algal growth in the melt ponds in the oil area compared with the control area. Here is an image that gives you an idea what it looks like from a human perspective out on the ice.

And here is an indication of where the landfast ice is. You can see that there's an active shear zone between the landfast ice, which is the ice that melts every year and remains stable throughout the winter, and a transition zone, which is multi-year ice and some first-year ice, and then the main polar pack, which has a sort of gyre that goes in the direction I am pointing, past Banks Island and the Canadian shores.

Just to give you, from a cartoon perspective, a sense of what the ice looks like, you can see in this next image that you have the first-year ice, you have an active zone that contains multi-year ice, often with ridges and the possibility of scoring the seabed, and then you are out into the polar, multi-year ice. Multi-year ice can grow up to ten feet thick, and every ten years it's basically regenerated by refreezing from the bottom and melting from the surface. It's a very dynamic system.

That gives you a short course on the ice in the Arctic.

The tests we conducted, the largest so far ever conducted with real crude oil, were conducted without natural gas. There would normally be gas accompanying the crude in a blowout, and the large gas bubble that would form under the ice therefore couldn't have been observed in this. It would have major effects on what would actually happen.

The major conclusion we came to was that oil-contaminated landfast sea ice melts faster in the spring and stimulates biological processes that differ from those in normal sea ice. Secondly, any physical modelling, without including the surprising biological responses to the oil itself and to the burn products that have seen from these experiments, would not predict the impact of an oil blowout on the dynamics of the sea ice regime in the Arctic. That is, biological systems may be a determining process in looking at the impacts of oil on the environment and climate.

[The Chair, Conservative, Leon Benoit]

Dr. Adams, you're at seven and a half minutes. We just have to keep the presentations to seven,or seven and a half maximum. You're going to have to—

[Dr. William Adams]

I'll summarize, then.

[The Chair, Conservative, Leon Benoit]

The rest of your information will have to come from questioning, unfortunately.

[Dr. William Adams]

There's one final thing I'd like to say.

[The Chair, Conservative, Leon Benoit]

Okay, you may say one final thing, very quickly, please.

[Dr. William Adams]

My recommendation is that, first, more research is needed to assess the degree of risk.

Secondly, I recommend a moratorium on drilling that is not either on landfast ice or in shallow water areas until the required technological capability and scientific knowledge is in place. Our present knowledge base is not adequate for the open-water situation in deep drilling, and is certainly not adequate to risk drilling in deeper ice-covered Arctic waters.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Adams. I do appreciate that.

We go now to the second witness, from the Canadian Association of Oilwell Drilling Contractors: Don Herring, president.

Go ahead, please, and if you could, make sure your presentation is seven minutes. Thank you.

[Don Herring, President, Canadian Association of Oilwell Drilling Contractors]

Certainly.

The CAODC represents 45 drilling contractors and 72 service rig contractors operating just over 800 drilling rigs and more than 1,000 service rigs across Canada. Of these totals, currently there are five offshore drilling facilities in Atlantic Canada, run by three companies. Right now there are no drilling operations pending in Canada's northern waters or on the west coast that our members have been aware of.

The CAODC welcomes the opportunity to provide some comments to the committee following the tragic loss of life in the Gulf of Mexico and the attendant blowout. As you heard from CAPP, the Canadian Association of Petroleum Producers, in their brief on May 13, oil and gas production sourced from offshore Canadian reserves will play a significant role in meeting this country's hydrocarbon requirements in the coming decades. Currently about 12% of Canada's crude comes from Atlantic Canada.

To speak of the role of the drilling contractor, the oil and gas company—the operator, in our parlance—is the entity with overall responsibility for offshore operations. They lease the parcel of land from governments, and prepare and submit detailed plans to the regulatory authorities, including where and how the well is to be drilled, cased, cemented, and completed, based on their interpretation of proprietary data. Once the plans are approved and all the permits are in place, the operators—

[The Chair, Conservative, Leon Benoit]

Excuse me, Mr. Herring. We have a point of order.

Madame Brunelle.

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

The interpreter said the text is being read too quickly. They do not have the text. They are not able to interpret it.

[The Chair, Conservative, Leon Benoit]

The comment was, as you heard, Mr. Herring, that you're going a little too fast. I know you're under time constraints, but the interpreter can't keep up. Could you just slow it down a bit?

[Don Herring]

Certainly, Mr. Chairman.

Again, the operator—the oil and gas company—is the general manager for the activity. Among their tasks, they select the drilling contractor, and we provide a drilling rig and a crew. The operator also arranges for all the other subcontractors who provide specialized services, including cementing, casing, that sort of thing. Generally speaking, the role of the drilling contractor is to just drill, to circulate the drill string or pipe into the ocean floor, based on what the oil company tells us to do. We use a sophisticated rig and a trained crew.

[The Chair, Conservative, Leon Benoit]

We were just having some troubles with interpretation, but I think we have them straightened out. Continue, please.

[Don Herring]

In terms of training the drilling crew, drilling contractors in Canada emphasize training and competency assurance programs that have been developed and put in place effectively to mitigate against risk. The crew is trained in well-controlled procedures, using certified well-controlled facilities in Atlantic Canada or the equivalent in Norway, the United Kingdom, or the U.S.

In particular for Canada, our facilities are certified by Enform, which is the safety association for the upstream oil and gas industry. The exacting standards from Enform were established and continue to be maintained at the world-class facility located in Nisku, Alberta. What's unique about that facility is that it's one of the few live well simulators located anywhere in the world. Canadian contractors in Atlantic Canada have had 40 years of operating jointly with the oil company and the regulator. As contractors, we work diligently to identify and understand risk.

In terms of spill response, rig crews are trained in accordance with shipboard oil pollution response procedures and an environmental management system. The program focuses on spills that are onboard the drilling rig itself. They include drills that are undertaken every 90 days for familiarization with the equipment, including high-risk containment and shut-off valves, and system specification.

Drilling crews are included in the oil company's contingency plan along with other subcontractors, and they have to have a contract in place with an approved spill response organization, such as the Eastern Canada Response Corporation. There are three levels of spill response, and I'm sure my colleagues from the Eastern Canada Response Corporation will get into those kinds of detail. Basically, level one is monitored offshore; level two is shore-based, and that includes the Canada Response Corporation, operating to the Norwegian standard, I'm told; level three is an international program like the oil response program from Southampton, England. The detail on these can be made available to you from CAPP, from the operators, or from the contractors who are involved in this.

In terms of a conclusion, the Canadian drilling contractors are part of an offshore team. We work with all operators and regulators to mitigate the risk of a spill or an accident. The record in Canada over the last 50 years reveals very few drilling incidents. These results stem from an effective regulation combined with advances in technology and the implementation of good management and operating practices.

Thank you, Chairman.