Monday, November 29, 1999

Newfoundland: no need to halt offshore drilling

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There is no reason to stop Chevron from drilling Canada's deepest offshore well until there is solid evidence on the cause of BP's catastrophic Gulf of Mexico oil spill, Newfoundland's natural resources minister said on Thursday.Kathy Dunderdale, responsible for energy development in Canada's third-largest oil producing province, defended the provincial government's decision to allow further drilling and said a moratorium would have hurt the local economy."Everybody's hopping around all over the place, in terms of what we ought to be doing or should be doing or could be doing without ever understanding what went wrong in the Gulf, so what are we fixing?" she told Reuters in an interview."Slowing down the offshore, we could be putting dozens if not hundreds of people out of work, having quite an economic impact here in the province, affecting people's lives and what's the rationale on doing that?"On Wednesday Dunderdale told the Newfoundland and Labrador Oil and Gas Industries Association annual meeting: "We are wide open for business with plenty of opportunities to grow and develop here."An April 20 explosion on an offshore rig leased by BP Plc killed 11 workers and ruptured a deep-sea well, creating what U.S. President Barack Obama has called the worst environmental disaster America has ever faced.There are several oil projects off the Newfoundland coast, but Chevron, which last month started work on a new exploration well, has the only deepwater drilling currently underway.Chevron is drilling the Lona 0-55 exploration well in the Orphan Basin, some 430 kilometers (270 miles) northeast of the capital St. John's.The federal-provincial agency that regulates offshore drilling tightened rules for Chevron after the Gulf disaster, but insisted it was safe to go ahead with exploration and suggested BP may have used questionable practices.Chevron will have to provide test results for the blowout preventer and activation systems at the well, after BP's blowout system failed inexplicably."There are assumptions being made about what caused the incident in the Gulf of Mexico that as far as I know don't have any basis in fact at this point in time. There's discussion about the BOP (blowout preventer) valve not functioning in deep water. We have no evidence of that," said Dunderdale.INCREASED SCRUTINYChevron's drill ship will also face more frequent audits and inspections, and regulators will aim to ensure safety systems are functioning before the well reaches the oil.Last month, outspoken Premier Danny Williams said forcing Chevron to drill a relief well would spike costs dramatically, threatening billions of dollars in lost provincial revenue.Soon after the BP accident, the Obama administration imposed a six-month moratorium on drilling in waters more than 500 feet (152 meters) deep for time to determine the exact cause of the failure.That made Canada's East Coast the only region in North America where deep-water drilling can go on.Chevron is drilling its well in more than 2,600 meters (8,530 feet) of water, a record for Canada, and nearly twice as deep the BP well that has been gushing tens of thousands of barrels of oil per day into the Gulf.BP and Exxon Mobil have longer term plans to look for oil in the Beaufort Sea, north of the Arctic Circle."This about understanding risk and how do we mitigate that risk and what's sensible ... and there will be risk at the end of the day, there's no question," Dunderdale said."I hope at the end of the day ... we'll have good learnings over and above what we're doing now to protect human safety and to protect the environment further. That's the best we could hope for." (Editing by Jeffrey Hodgson and Janet Guttsman)
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