'Rough waters': Spill raises new questions about fast-growing N.L. oil industry

Newfoundland and Labrador's ambitious plans to dramatically expand the province's lucrative offshore oil and gas industry got a nasty jolt on Nov. 16.

Amid a fierce winter storm, an estimated 250,000 litres of oil spilled into the ocean from Husky Energy's SeaRose platform, about 350 kilometres from St. John's.

It was the largest spill in the history of the province's offshore industry, and has prompted calls for regulatory change.

Critics are calling for tighter control of the industry, just as the province moves to expand the size and range of offshore drilling, and fast.

"This incident, we hope it will shine a light on the laws and how we undertake offshore oil and gas in Canada and how we regulate it if and when it proceeds," said Gretchen Fitzgerald of Sierra Club Canada Foundation.

"If they are going to undertake this large industrial activity in the rough waters of the North Atlantic there has to be a better regulatory scheme."

There are currently four platforms producing oil off Newfoundland: Hibernia, Hebron, Terra Nova and SeaRose.

Expansion plans include a proposed 100 new exploration wells and over 650,000 barrels of oil per day by the year 2030. This long-term vision also includes "shortened time from prospectivity to production."

The expansion will also take the industry into uncharted territory with its first deepwater drilling site at Bay du Nord in the Flemish Pass, after announcing an agreement with Norway's Equinor earlier this summer.

The remote Bay du Nord parcel, about 500 kilometres east of St. John's, lies in more than 1,100 metres of water -- 10 times deeper than the SeaRose, the current deepest site.

Premier Dwight Ball called the announcement a "new frontier" for the province's offshore industry, but deepwater expansion also raises fresh concerns about worker safety and the possibility of a swift cleanup if another spill were to occur.

Oil royalties promise a much-needed economic boost for the financially strapped province.

A report this month from the Conference Board of Canada predicts Newfoundland and Labrador will lead all provinces in economic growth in 2019, just a year after having the weakest economic outlook in 2018, with oil revenue getting all the credit.

In an interview, Ball said the November spill was "unfortunate" and reiterated his government's prioritization of worker and environmental safety.

The premier said his government would consider regulatory changes, including more transparent, public and accessible summaries of operators' safety plans, based on the findings of the SeaRose investigation.

"Once this investigation is done and completed, if there's changes that will need to be made, we're more than willing to implement those changes," Ball said.

The premier said his government is looking to other jurisdictions around the world as it plans to expand its industry and prepare for potential incidents in the future.

The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) regulates the industry's development in the province, as well as its safety and environmental responsibilities.

The spill occurred as Husky began to restart production on Nov. 16 as the storm began to wane — a decision that was up to the company, not the offshore board.

Operators like Husky are responsible for following their own internal safety and environmental plans that are approved by the board, which monitors and investigates if things go wrong.

Production on the SeaRose remains halted as the offshore board investigates whether the company followed its own internal procedures.

Husky provides its procedures to the board, but a Husky spokesperson told The Canadian Press in an email that the company "does not disclose its specific operating procedures publicly for security and commercial reasons."

Critics say operator transparency is a key area of possible reform, especially as the industry braces for expansion into even riskier conditions.

Ball said his government is giving Equinor time to properly assess the deepwater drilling site before construction is tentatively slated to begin in 2020.

He said his government will look to other jurisdictions as it prepares for new deepwater ventures, adding that he considers the industry's track record to be fairly clean over the long term.

"Our track record when you look at it is pretty solid," said Ball.

The province's offshore industry doesn't have a history of multiple major oil spills, but it has been marked by devastating tragedies.

The memory of the 1982 Ocean Ranger disaster still haunts the province. An offshore rig sank during an intense storm, claiming the lives of all 84 people on board.

In March 2009, Cougar Flight 491 crashed into the ocean while carrying workers and staff to the oil fields, killing 17 of the 18 people on board.

After an inquiry into helicopter safety, commissioner Robert Wells in 2010 called Newfoundland's offshore conditions "probably the harshest in the offshore world," citing bitterly cold water, high winds, sea ice, fog, severe sea states and long helicopter flights.

Wells recommended establishing a stand-alone, independent safety regulator for the province's offshore industry.

The recommendation was echoed by the provincial NDP after the recent SeaRose spill, asking the premier to establish a separate safety and environmental board similar to those in Norway and the United Kingdom.

Lana Payne, Atlantic regional director for Unifor, which represents about 700 offshore oil workers on the Hibernia and Terra Nova rigs, said the industry has seen some safety improvements since the helicopter safety inquiry.

But she said the union still sees room for more — including establishing a separate safety and environmental board, especially in light of the recent close call.

"You should never use this word around safety, but we just felt that we got lucky," Payne said.

There were 81 people on board the SeaRose at the time of the spill, and while there were no injuries, the incident called to mind another safety incident on the same rig not long ago.

An investigation by the offshore board found the company failed to follow its ice management plan during a 2017 near-miss with a large iceberg. The rig was not disconnected as the iceberg approached, with 84 people and upwards of 340,000 barrels of crude oil onboard.

Fitzgerald thinks Environment Canada and the Department of Fisheries and Oceans should have regulatory power, to ensure people with more environmental expertise oversee the industry.

More federal involvement in the industry would also help keep national environmental priorities like climate change and protecting endangered species in view, Fitzgerald said.

Payne said at a minimum, the regulator needs more expertise and staffing for the rapidly expanding sector.

"There's going to be a lot of pressure on the system to get things done quickly, and when you do that in an environment like the offshore things can go amiss," Payne said.

"We've got to do everything possible here to make sure it doesn't happen."