Thank you very much.
Mr. Chairman and members of the committee, it's a pleasure to be here again today and to have this opportunity to talk to you about offshore emergency response in the Newfoundland and Labrador offshore area.
When we talk about emergency response, we really need to take a broad view of what ian emergency is. An emergency response plan will typically list ten or more types of occurrences that will be classified as emergencies, all of which will require response. Many of them will present far greater hazards to human safety than will an oil spill.
Emergency response plans are designed around a requirement for operators to respond to all types of emergencies that occur on or immediately adjacent to their facilities.
When I say “operator”, I mean an offshore oil and gas company that's licensed to operate in a particular area. Throughout this presentation, when I refer to operators, I'm referring to oil and gas companies.
Operators would activate the same emergency response plan for a blowout as the operators involved did for the Cougar helicopter crash in 2009. At that crash, you should know that the first responders to the crash scene were a fixed-wing aircraft and two helicopters, all under contract to the operators, not Department of National Defence search and rescue helicopters, which arrived a considerable time later. This certainly demonstrated that we have a very robust emergency response capability in our offshore area
There has been a lot of media attention about the environmental and economic consequences resulting from the Macondo blowout in the Gulf of Mexico, and rightly so. However, it is very important for everyone to remember that the first thing that happened when this tragedy occurred is that 11 people died and 17 more were injured. This fact may have been lost in much of the ongoing media coverage about the Macondo incident, but it has not been lost on regulators. Safety is, and always will be, paramount in all decisions taken by this board and by my colleagues on the other boards.
When assessing a drilling application, we are essentially looking for three things: whether the operator has the appropriate equipment to do the job safely, whether personnel are adequately trained to do the job, and whether the necessary procedures are in place for safe operations. Prior to issuance of the operations authorization, a number of statutory obligations must have been met, including those of the Canadian Environmental Assessment Act and the Canada-Newfoundland Atlantic Accord Implementation Act, as well as regulations and obligations arising form Transport Canada and from the independent third party certifying authority. Operators must file a safety plan, an environmental protection plan, and a contingency plan that includes an oil spill response plan. In addition, they must submit documentation respecting financial responsibility.
Finally, they must provide a declaration of fitness, attesting that the equipment and facilities to be used during their programs are fit for the purpose, that the operating procedures relating to them are appropriate, that the personnel employed are qualified and competent, and that the installation meets all necessary Canadian standards. Only after all of this documentation is presented to and approved by the board may an operator proceed with the activity.
Drilling and well control are critical aspects of offshore operations and are addressed extensively in the regulatory framework. This involves a review of the operator's well planning and the technical capabilities in respect of well encasing design, well control matters, kick prevention and detection, and establishment of severe weather operating limits, as well as a review of emergency disconnect requirements and an assessment of the relief well drilling arrangements. Emphasis is also placed on ensuring that personnel have the requisite training in well control and blowout prevention. A review is conducted to ensure suitable redundancy of the blowout preventor activation and control systems in the event of any situation that could result in a disconnect from the well.
Oversight of these matters is achieved in a systematic manner through the board's safety assessment system, which includes a review of the operator's safety management system and confirmation that the operator has identified the hazards and the measures to be put in place to reduce the risks of those hazards to a level that is as low as reasonably practicable.
Although we have a robust regulatory regime and exercise substantial oversight of offshore activity, accidents can and unfortunately will happen. Therefore, it is important to have plans in place to address the impacts of incidents when they occur. Operators provide our offshore petroleum board with a contingency plan that includes an oil spill response plan. The board's safety and environmental professionals review these plans for each project.
Response plans include details on how relief wells could be drilled if necessary. However, what the response plans have not included to date is any detail on the subsea containment of a blowout. As we saw from the Macondo activity, it was containment that ended the blowout before the relief well was completed.
We are currently watching keenly the development of new containment capability by the Marine Well Containment Company formed in July by Exxon Mobil, Chevron, Shell, and ConocoPhillips, and joined recently by BP. Collectively, they have committed over $1 billion U.S. to develop advanced containment capability, equipment, and specially trained personnel to combat any future subsea blowouts or other loss of containment in the Gulf of Mexico. We--and I suspect other regulators in other offshore regimes--are examining ways to ensure that a similar or the same capability would be made available to deal with any blowouts in our offshore area.
Oil spill response plans describe a three-tier system. Tier one spill response involves activation of on-board spill response equipment sufficient to address small-scale spills of less than 100 barrels. If the equipment on site is insufficient, the operator will move to a tier two response, which involves mobilizing equipment located in St. John's, available to the operators through the Eastern Canada Response Corporation and typically capable of dealing with spills of up to 100,000 barrels. If the equipment available on board and through the ECRC is insufficient, the response moves to tier three, which means that operators have to acquire response equipment elsewhere in Canada or internationally, much of which is in specialized depots, such as in Southampton, U.K., and can be mobilized to Newfoundland and Labrador within 24 hours. Each operator exercises their emergency response plan quarterly, and collectively the operators conduct a field exercise each year, which involves the deployment of spill response equipment.
The question that has been on everybody's mind, particularly since the Macondo incident, is whether we are ready for a large-scale release of hydrocarbons into the environment as a result of offshore oil and gas activity in the event such an unfortunate incident should occur. For some people the concept of readiness implies that companies be able to recover most or all of the oil released into the environment. This is simply not currently achievable. We do expect that the Macondo tragedy will result in considerable additional research and development into improved spill response capability.
The reality is that oil spills in the marine environment are addressed through several processes, both natural and mechanical. The North Atlantic Ocean is a harsh environment, and recovery of oil from that ocean is very difficult even in the best of weather conditions. However, the biggest threat to marine mammals and birds is oil slicks. Therefore, emergency response measures also consider the value of oil dispersal as a means of minimizing impacts. At this time, we do not sanction the use of chemical dispersants as an oil spill response measure, but we are reviewing this in light of the Macondo experience, in consultation with experts at Environment Canada and Fisheries and Oceans.
If there were a major spill on the Grand Banks, environmental assessments done for the projects to date include detailed modelling of the potential fate of a spill at locations in the Newfoundland and Labrador offshore area. Using 40 years of weather data, these models indicate that even if a large spill were to occur, it is unlikely that oil would approach the Newfoundland and Labrador shoreline. The impacts of a spill occurring this far from the Canadian coastline nevertheless would be serious and would require immediate response, but it would be a situation substantially different from what we saw in the Gulf of Mexico.
I have just a couple of quick points before closing.
Production of oil from our offshore area started in 1997. As of the end of March, 2010, nearly 1.2 billion barrels of oil had been produced, and of that 1,100 barrels of crude had been spilled, less than one barrel spilled per million barrels produced. In the Gulf of Mexico, prior to the Macondo tragedy, for every one million barrels produced, 13 barrels had been spilled, and that figure is only for spills of greater than 50 barrels. There have been no blowouts in our offshore area. Obviously, we would prefer to have no injuries and no spills, but we believe that the record for our offshore area is quite reasonable.
In the wake of the Macondo incident, the CNLOPB, like all regulators, is keeping a sharp eye on lessons learned. It will help us to improve our performance as regulators and to improve the performance of those we regulate. We are confident in our robust safety and environmental protection regime, but we are always open to ways in which it can be improved.
Thank you, and I look forward to your questions when you have them.
