As Richard Neufeld spearheads British Columbia’s drive to open its offshore to oil and gas exploration he is not inclined to undervalue the challenges on the government’s table.
“They’re all tough … I don’t think there is any one that is tougher than the others,” the province’s energy minister told Petroleum News in an interview Feb. 28.
But, backed by a dozen-strong team of full-time employees in the B.C. Offshore Oil and Gas Team and a C$5.8 million annual budget, he brushes off the naysayers and fixes his sights on achieving the government’s goal of having an industry “up and running” by 2010.
The chief prize at stake is the Queen Charlotte Basin, which the Royal Society of Canada estimates could yield 9.8 trillion cubic feet of gas from nine fields and 1.3 billion barrels of oil from six fields, worth a total of C$110 billion at current commodity prices.
While still saddled with the rash promise that offshore gas would be used to light the flame at the 2010 Winter Olympics in Vancouver, Neufeld is unapologetic and unwavering.
“Up and running means something is happening on the coast as it relates to offshore oil and gas,” he said. “It means anything, from what we are doing now to moving forward with some seismic activity.”
Once seismic work gets under way and the industry shows an interest “that will spur on a whole bunch of other things,” Neufeld said.
He told a British Columbia Oil & Gas Summit in Victoria, British Columbia, on March 1 that the offshore is an opportunity the province should seize.
“We ought not to be shy about exploiting those resources,” he said.
To that end, Neufeld’s instruction to his offshore team is to “eat, breathe and sleep oil and gas, day after day.”
Canadian government’s freeze on the offshore
In many minds, the largest single roadblock today is a 33-year-old Canadian government freeze on the offshore.
In Neufeld’s mind, simply ending that moratorium is not the “be all and end all.”
“I don’t put a timeframe on the moratorium. If we lifted it tomorrow, what would we do then?” he said.
More important is the work under way to develop the regulatory systems and negotiate agreements with First Nations.
Without a clear system of rules in place, there is no way for the industry to move ahead and “that would feed into the hands of our opponents” who see an offshore industry as a threat to the marine environment.
For the offshore team to complete its seven-stage strategy to allow exploratory drilling to start by about 2012 its immediate goal is to:
- Develop a management and regulatory regime covering royalties and taxes, decisions to open areas for exploration, granting exploration rights and tenures, and environmental assessments of all offshore activities.
- Reach agreements with First Nations to give them a role in the decision-making process involving offshore resources.
- Negotiate a deal with Canadian governments to establish a single, independent agency, based on goal-oriented models used in the United Kingdom, Norway and Australia.
Governments must work together
Eventually, though, the two governments must figure out a way to end the moratorium, if seismic is to proceed, Neufeld conceded.
“That’s time-consuming and difficult when you deal with the feds,” he said, referring to the minority government of Prime Minister Paul Martin, which does not hold enough votes to force legislation through Parliament and could be toppled by a united vote of the three opposition parties.
But Neufeld has found a more responsive attitude to his government’s offshore ambition since Martin took the helm in late 2003.
Unlike the previous administration under Jean Chrétien, which Neufeld said “wanted to go it alone” on the offshore, British Columbia has entered talks over the last three months with a full array of federal cabinet ministers — John Efford (natural resources), Stéphane Dion (environment), Andy Scott (Indian and northern affairs), David Emerson (industry) and Geoff Regan (fisheries and oceans).
Emerson said in late February that the federal cabinet will decide the fate of the moratorium some time in 2006.
“I’m hopeful they will see their way clear to work with us,” Neufeld said.
For now, he said it is “not acceptable” that the Canadian government has blocked progress on the offshore, while reducing taxes on its East Coast offshore and approving drilling in the Great Lakes.
Offshore not seen as threat to Campbell
British Columbia goes to the voters on May 17, with no sign that the future of the offshore will be a threat to Premier Gordon Campbell’s re-election prospects, but every indication that an economic resurgence has Campbell strongly placed for a second term in office.
In the last four years the province has created 200,000 jobs, pushed unemployment to its lowest level since 1981, slashed 382,000 government regulations by 37 percent, produced back-to-back balanced budgets and taken a C$1.7 billion bite out of a C$34 billion debt in the current fiscal year, Neufeld said.
“We have changed how investors view British Columbia,” he said.
The provincial government’s determination to press ahead with its offshore agenda got a lift Feb. 28 when the British Columbia Chamber of Commerce released poll results showing that 81 percent of the 229 business people surveyed backed exploration so long as federal safety standards “are properly met.”
A similar percentage believed there would be economic benefits for both coastal and inland communities from pipeline development.
Only 10 percent opposed opening up the offshore; 7 percent were undecided; and 2 percent did not respond.
