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Offshore Oil and Gas Around the World

The Last Frontiers
Three-quarters of the earth’s surface is covered by ocean. It is no surprise that as land-based oil and gas reserves are depleted because of our dependence on fossil fuels, exploration and production has extended into offshore basins around every continent. The oceans around the world have become the last frontier for fossil fuels. Offshore oil and gas development and production are risky industries not only for the people who work far out at sea, and for marine plants and animals, but for all of us given the ocean plays a critical role in regulating the Earth’s climate.

The east coast of Canada
Proponents of offshore oil and gas in B.C. often point to the east coast of Canada as an example of a “successful” story. However, a closer look at the industry, its practices, errors and location, shows clear economic and ecological reasons for keeping the moratorium to protect the coast of B.C.

In December 2004, 1069 barrels spilled into the Atlantic Ocean covering an estimated 57 square kilometres. This major spill occurred within the first two years of the Terra Nova rig production phase. While this spill was almost 250 kilometres from Newfoundland’s shore, an equivalent spill in coastal B.C. would cover our entire coastline in oil.

In the six years, between 1997 and 2003, a total of 163 reported spills occurred in Newfoundland, totalling 453 barrels and resulting in an average of 23 spills per year.

In 2004 two large oil spills occurred in the waters near Sable Island off Nova Scotia; one spill released 4000 litres of diesel and the second spill released 354,000 litres of drilling mud at an exploratory well.

Similar spills in the coastal waters off British Columbia would impact highly sensitive ecosystems, which are the nursery grounds for hundreds of species of fish and home to millions of seabirds.

Two production operations exist in Newfoundland: Hibernia and Terra Nova. White Rose is expected to produce oil by the end of 2005. While Hibernia was primarily built within Newfoundland and created local construction jobs, its “success” required billions of dollars of taxpayer’s money.

  Read more about the subsidizing of Hibernia

The other rigs, Terra Nova and White Rose, were built offshore in Korea and the U.K., and subsequently did not create as many employment opportunities for Newfoundlanders. Unless there is another significant discovery in Newfoundland soon, the peak of oil production will come to an end by 2010. The industry that was deemed to save Newfoundland from its economic woes will be in decline in less than five years.

Based on statistics from the provincial government's website, almost 123 million barrels of light crude were sucked out of offshore Newfoundland and Labrador in 2003 -- none was refined in that province. In fact, the Atlantic Accord virtually guarantees no oil will be processed in Newfoundland.

In Nova Scotia, the industry is already in decline. All seven deep-water wells that have been drilled in recent years have failed to produce a commercial discovery. In September, 2003 Imperial Oil Ltd. announced another dry hole off Nova Scotia. As a result, CAPP, the Canadian Association of Petroleum Producers, closed its office in Halifax last year and moved back to Calgary.

Executives in several major oil companies have privately started to re-evaluate their future investment in a region beset with more than a dozen dry holes and abandoned wells in recent years and that hasn't yielded a commercial discovery since 1986.

Offshore oil and gas on the east coast has been a long, slow process. The first well was drilled on the Grand Banks of Newfoundland in 1966 and in the Scotia Shelf off Nova Scotia in 1967. Since then, over 400 wells have been drilled on the east coast and over one million kilometres of seismic lines have been shot in Newfoundland alone. The footprint from one well averages one kilometre, while the footprint from seismic testing is unknown.

For more information about the impacts of seismic testing click here.

Baseline data was not collected prior to industrial exploration on the east coast. Some data sets were collected prior to production drilling but, by then, seismic testing and exploratory drilling had already occurred.

The first commercial discovery of natural gas took place in Nova Scotia in the Venture field in 1979. The first major oil discovery was made later that same year at Hibernia in Newfoundland, however it would be almost 20 years before oil would be produced from Hibernia. Jurisdictional, regulatory and technological issues delayed the process significantly. The drill rig Ocean Ranger used in the Hibernia field sank in February 1982, resulting in the death of all 84 crew.

If there are lessons to be learned from the east coast experience, they could be summarized as follows:

  • The offshore oil and gas industry cannot occur without accidents – accidents that cost lives and harm ecosystems.
  • The offshore industry requires government subsidies in order to create local employment.
  • Offshore oil and gas is a short-term, unsustainable industry with economic contributions to local economies that are questionable at best.

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Cook Inlet, Alaska
Comparisons are often made between Alaska’s Cook Inlet and the Hecate Strait, Queen Charlotte Sound area. Promoters of the offshore oil and gas industry point to Cook Inlet as a model to follow. Operations in Cook Inlet are worthy of a closer look.

Cook Inlet in Alaska is the only location in the United States where oil platforms may lawfully discharge produced water and other toxic drilling wastes directly into coastal waters. Based on industry information supplied to the Environmental Protection Agency, industry dumps at least 2 billion gallons of produced water into Cook Inlet each year, and at 30 to 40 parts per million, the total equals roughly 70,000 gallons of pure oil dumped into Cook Inlet every year. This does not include millions of tons of drilling muds and cuttings.

  For more information about the oil and gas industry in Cook Inlet click here.

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Elsewhere in the USA
In the United States, Republican Governor Jeb Bush of Florida and Republican Governor Arnold Schwarzenegger of California support a congressional moratorium on offshore oil development that was initiated in 1982. The U.S. moratorium was put in place because of the same risks and uncertainties regarding offshore oil development in British Columbia.

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Despite an offshore oil and gas industry in Newfoundland, the rural communities are still struggling economically. While Hibernia was primarily built within Newfoundland and created local construction jobs, its “success” required billions of dollars of taxpayer’s money. Newfoundland continues to have the highest unemployment rate in Canada.