Offshore Report

British Columbia prepares to open previously banned offshore areas

Fresh ideas from a new administration give the provincial industry hope Interview with Richard Neufeld, Minister of Energy, British Columbia, Canada

British Columbia’s (BC’s) provincial government is in the early stages of implementing a major policy reversal that pertains to offshore E&P activity. During a recent visit to Houston, British Columbian Energy Minister Richard Neufeld sat down with World Oil Managing/International Editor Kurt Abraham to explain why and how the province’s offshore areas will be opened to oil and gas exploration.

Q: Minister Neufeld, BC’s offshore activity ban has been in effect for a long time. What prompted this major policy shift?

A: The administration of BC Premier Gordon Campbell, which I am part of, took office in June 2001. One of the premier’s priorities has been to create a more business-friendly, competitive investment climate in our province. Given our abundant resources, energy development needs to be a key ingredient in that plan.

While examining our oil and gas resource base, we decided to re-visit the offshore basins’ potential. We believe that these areas are highly prospective and merit new exploration. We also believe that given advances in technology, the concerns about oil spills, unsightly infrastructure and environmental despoiling that led to the offshore ban years ago can now be overcome.

Q: What was BC’s offshore history before the ban took effect?

A: The history is really very brief. In the Queen Charlotte region, there were exploration wells drilled during the late 1950s. I believe that 14 wells, in all, were drilled. Not long after that, the moratorium went into effect. In the mid-1980s, the federal and provincial governments discussed the possibility of a limited offshore opening. But then the Exxon Valdez spill occurred in Alaska’s Prince William Sound (1989), and that effectively ended any thoughts of an opening. 

Q: How did you rethink an opening?

A: As I mentioned earlier, we, the Liberals, were elected two years ago, and I was appointed energy minister. Once the premier made his priorities known, I looked into what our body of knowledge was on the affected areas, and I realized that we needed to thoroughly update our scientific information. So, I appointed three independent scientists to a task force and asked them to make recommendations about potential E&P activity offshore. We wanted to make sure that we have the right information and knowledge to refute potential critics. In my mind, there is no reason that we can’t explore for oil and gas offshore with today’s new technologies.

Q: What other initiatives did you launch?

A: We did a survey of folks along the coast to find out their concerns. One major item that they worried about was potential effects on fisheries. That’s where the findings of our scientists come into play. Meanwhile, we set up a Division of Oil & Gas, with an initial budget of up to C$12 million, to work with the federal government on settling the issue of who owns the BC seabed. This division is also working with the aboriginal commissions, whose big concern is maintaining some semblance of the native people’s way of life. Of course, they also worry about economic activity, because there has been a big downturn in logging. They see offshore oil and gas as a way to create jobs. We still have some issues to be fleshed out with the Assembly of First Nations, a coalition of about 30 “bands” of Indians living along the coast and inland. 

Q: What are your initial findings on potential offshore resource amounts?

A: We estimate that up to 42 Tcf of gas and 10 billion bbl of oil are in place. What the recovery rate might be remains to be seen. I know that some fishermen in the Tofino basin about two years ago came up with a block of methane hydrate equal in size to a Volkswagen. Hydrocarbons are seeping out of the seafloor near there. Additional seeps are at the north end of the Queen Charlotte Islands. 

Q: What is your timetable for beginning new activity? 

A: Premier Campbell has said that he wants to see significant activity by 2010. This means seismic work and at least one or two wells. I don’t think that offshore seismic activity is that far off. I believe that we can do that without lifting the moratorium. Nevertheless, we’re going to have to move fairly quickly. In addition to us lifting BC’s ban, the federal government will work to lift its own moratorium by within a year from now. We also want to make sure that in forming our regulatory structure, we don’t recreate the wheel.

Q: Have you been able to gauge industry’s interest?

A: Yes, we detect quite a bit of interest. ChevronTexaco and Shell still own tracts offshore. In fact, we have met several times with Shell’s people. Larger Canadian companies and US independents are also interested. El Paso obviously has some ideas from the gas end, and we’ve heard from ConocoPhillips and Anadarko. EnCana also is a prime candidate, particularly because they already have a large presence in BC – they are spending C$700 million this year in northeastern BC for gas-related work.