This article is based on a lecture, nationally televised in Canada, organized by the Fraser Institute and delivered by Henry Lyatsky at the Calgary Chamber of Commerce in January 2009.
The silent majority of British Columbians is the most potent force to unlock the province's rich offshore basins to oil exploration.
Public demand for oil jobs and revenues, coupled with clear evidence of the operators' environmental responsibility, will create the political will to lift the moratorium that blocks exploration today. On a sustained basis, exploration proponents need to provide the public with honest, factual information about the enormous benefits of oil development.
Faced with overcautious provincial and federal governments and noisy environmental and anticapitalist lobbies whose stridency conceals a limited weight of numbers, proponents of offshore exploration have a natural ally in the working British Columbians. With the employment uncertainties of the current recession, investment and job-creation potential offshore makes obvious partners of business and workers.
Geological studies conducted so far indicate that the best oil prospects off BC exist in Mesozoic rocks in western Queen Charlotte Sound,1-3 perhaps with additional oil and gas targets in other areas and rock formations.4 Though potential oil and gas traps exist in various offshore BC basins, a major limiting factor is the presence of petroleum source rocks at required levels of organic maturation.
Favorably, the prospective western Queen Charlotte Sound area lies in relatively shallow water on the continental shelf, in a sea free of pack ice or icebergs (Fig. 1).
Oil seeps have been known in the Queen Charlotte Islands for decades. Two dozen exploration wells were drilled on land and offshore without success in the Queen Charlotte and Tofino basins, mostly in the 1950s and 1960s.
The Queen Charlotte Islands and Vancouver Island have so far proved nonprospective, largely due to lack of impermeable cap rock.
The government moratorium imposed in the early 1970s ended exploration offshore, except for a marine seismic reflection survey in Hecate Strait and Queen Charlotte Sound in 1988. Other impediments to exploration arise from environmental concerns and unresolved First Nations claims. A Canada-US maritime-boundary dispute persists in Dixon Entrance between the Queen Charlotte Islands and the Alaska Panhandle.
Earthquake risk will affect oil-infrastructure development. The BC coastal region is part of the circum-Pacific "Ring of Fire" characterized by greatly elevated earthquake activity.
Tremors are frequently felt along the BC coast. Yet, some geological studies indicate the BC coast region is tectonically anomalous in the circum-Pacific ring, and its earthquake risk may be lower than sometimes estimated:3 5 while earthquakes large and small are many, a city-flattening "Big One" seems less likely than is commonly supposed.
An estimate by Hannigan et al.4 is that the offshore BC basins contain some 9.8 billion bbl of oil and 43.4 tcf of natural gas.
Such reserve estimates in underexplored frontier basins are fashionable but also usually unreliable and dependent on many loose assumptions. With their somewhat different geologic model, Lyatsky and Haggart1 abstained from numerical predictions. Regardless, BC boasts a rich and ill-explored oil and gas province off its Pacific coast.
The moratorium
Two separate offshore moratoria stand in the way of oil exploration.
The BC legislature passed a 1971 resolution opposing tanker traffic along the BC coast, aimed to push farther out to sea the Alaska-to-California tankers. In 1972, Pierre Trudeau's federal government made a "policy decision" to approve no new exploration programs and permits off BC and to suspend all obligations under existing ones.6 7
Subsequent complications were many. Federal-provincial disputes about offshore jurisdiction wound their way to the Supreme Court of Canada.
After 1984, provincial efforts to lift the moratorium, with public hearings and federal-provincial discussions, continued until the Exxon Valdez oil spill in Alaska in 1989. Then, in the face of real concerns and much hysteria, BC reaffirmed its moratorium. The federal government said it would lift its own moratorium only at BC's request.
After a decade or so of leftish NDP provincial governments that succeeded the business-minded Social Credit, a new BC Liberal government announced early in this decade that it would like to see offshore oil exploration by 2010. There followed a flurry of report writing and task-force discussions, but BC did ask Ottawa to remove the moratorium.
Then came federal reports and reviews, including one by no less than the Royal Society of Canada. Worded cautiously, these reports generally found no compelling reasons to prevent offshore exploration.
But the BC Liberals' offshore enthusiasm waned as they faced reelection against left-wing opposition. Climate-change concerns have also developed an antioil tinge.
Meanwhile, Ottawa acquired a minority Conservative government in 2006, which survives in office at the pleasure of leftist opposition. Split three ways between the Tories, Liberals, and NDP, many federal ridings in BC are sensitive to even small vote swings, leaving the Tories reluctant to rock the boat by raising sensitive local issues.
Federal ministers grow visibly annoyed when questioned about the BC offshore moratorium, and the current federal priority in Canada's offshore oil supply seems to be ensuring national sovereignty in the Arctic. All the federal talk of making Canada into an "energy superpower" stops short at the BC water's edge.
In their heart of hearts, both levels of government probably want the moratorium lifted, but neither wants the hot potato. Neither side wishes to get "blamed" for taking a definitive step, and each would like to shift the public blame to the other. The safest option is to do nothing.
The political scene is now becoming cloudy. The oil-skeptical Obama administration and Democrat-controlled Congress have arisen in Washington, DC, although continuing US thirst for oil is imposing its own sobering inevitability.
The BC Liberal government is in its third consecutive term, with an eventual prospect of return to office of the left-wing NDP. The federal Tories are in their second term of precarious minority, and the thinking of the federal Liberals on offshore oil exploration is a question mark.
Special interests
Despite the extremely noisy antidrilling lobbies and the lack of sustained pro-exploration public and media efforts, polling indicates British Columbians by a small majority to be in favor of lifting the offshore moratorium.7
Wider dissemination of factual information about offshore oil operations can only improve the numbers. The winning strategy for exploration proponents is to go over the heads of governments and special-interest lobbies and address themselves directly to ordinary British Columbians.
Opponents of oil exploration off BC are disparate interests and groups, competing for some of the same supporters and fundraising pools, operating sometimes at cross-purposes, but often united by ideology on the principle of no enemies on the left. While often extremely shrill in their public statements and pressure tactics, they appear to be a concentrated minority at odds with many ordinary British Columbians.
Very notable are groups and individuals variously concerned about environmental degradation, ideologically opposed to resource extraction, hostile to capitalism, suspicious of oil companies or of any large-scale corporate activities, or even nihilists who regard the modern industrial civilization as an unnatural parasite load on the planet. Such groups and persons tend to congregate around the Lower Mainland and southern Vancouver Island, but are found also in the BC interior and up the coast.
Loathing of offshore drilling among such groups can be talismanic. Private statements are often unprintable.
Public and media statements tend to be exaggerated, even fantastic, claims about environmental damage supposedly caused by marine oil development and geophysical surveys, ignoring the ever-diminishing environmental footprint of exploration and drilling and the many decades of environmentally sound offshore exploration and production elsewhere.
Absence of clear federal or provincial environmental regulations for offshore work in BC will also deter investment even if the moratorium is lifted.6 8 For example, how the federal Species at Risk Act would be applied is unclear; its broad application could be very disruptive to oil activities.
Suspicions abound of anti-industry bias among government bureaucrats who interpret and apply any existing rules. Privately, oil operators often distrust the motives and practices of provincial and federal bureaucrats; some fear excessive use of the precautionary principle in environmental approvals.
A historical anomaly in BC, compared with other western provinces, is the absence of a general system of Indian treaties. This leads to enormous and sometimes overlapping First Nations claims, even in major urban areas.
Negotiations are under way, but to resolve these claims and introduce a treaty system or its equivalent will probably take decades. On the bright side, like many other British Columbians and aboriginal communities elsewhere in Canada, First Nations may conceivably grow to favor oil development if provided with sufficient revenue shares and employment opportunities.
For now, coastal First Nations in BC mostly oppose offshore oil exploration, citing environmental concerns, unresolved land claims, and lack of clarity about aboriginal rights if exploration went ahead.
The Haida Nation of the Queen Charlotte Islands in its constitution claims for itself "the entire Dixon Entrance, half of the Hecate Straits, halfway to Vancouver Island and Westward into the abyssal ocean depths."6 The rigidity of this ambitious claim in the face of serious negotiations remains to be tested.
The way forward
Latent public sympathy among ordinary British Columbians is the offshore oilmen's strongest weapon.
It persists despite shrill opposition and in the absence of sustained pro-exploration publicity. This sympathy will become broader and deeper if antioil propaganda is countered by honest, balanced, and factual information aimed at the general public.
Investors and operators are well placed to provide the public with honest information about environmentally responsible offshore oil development, as well as about the job opportunities and revenues that would benefit local workers, families, and communities.
Oil industry associations and corporations have a strong track record of winning public support in other Canadian jurisdictions. Lobbying the governments has its place, but in a democracy the general public calls the shots.
References
1. Lyatsky, H.V., and Haggart, J.W., "New petroleum prospects on the west coast of Canada," OGJ, Vol. 90, No. 34, 1994, pp. 53-56.
2. Lyatsky, H.V., "British Columbia's geology holds promise of significant reserves," Offshore, Vol. 63, No. 3, 2003, pp. 34-35.
3. Lyatsky, H.V., "Frontier next door: geology and hydrocarbon assessment of sedimentary basins offshore western Canada," Canadian Society of Exploration Geophysicists Recorder, Vol. 31, No. 4, 2006, pp. 66-75.
4. Hannigan, P.K., Dietrich, J.R., Lee, P.J., and Osadetz, K.G., "Petroleum Resource Potential of Sedimentary Basins on the Pacific Margin of Canada," Geological Survey of Canada, Bull. 564, 2001, 72 pp.
5. Lyatsky, H.V., "Continental-Crust Structures on the Continental Margin of Western North America," Springer-Verlag, Lecture Notes in Earth Sciences 62, 1996, 352 pp.
6. Fogarassy, T., "Legal shoals," Oilweek, December 2003, pp. 19-21.
7. Cook, D., "Stalled offshore," Oilweek, October 2005, pp. 42-46.
8. Cook, D., "Greening B.C.'s deep blue," Oilweek, October 2005, pp. 49-50
Ecuador
International Sovereign Energy Corp., Calgary, plans to sell its interest in Charapa marginal oil field in Ecuador's Oriente 15 km northwest of the producing Lago Agrio field to state Petroecuador.
Consideration is $3 million and replacement of International Sovereign's $2.34 million performance guarantee to Petroecuador. International Sovereign operates Charapa, which had produced 1.7 million bbl of oil from Cretaceous Hollin and Napo Caliza B at about 10,000 ft before watering out.
The Charapa concession contains three untested and prospective structures. They are Conejo, a seismically defined-drill ready structure 16 km west of the former producing field; Charapa Southwest, a seismically defined structure 5 km southwest of the former producing field; and Halcon, a seismically defined structure in the southwest part of the concession.
Seychelles
Two companies launched a second seismic survey on acreage in the Seychelles in the Indian Ocean off East Africa.
East African Exploration Ltd., a unit of Black Marlin Energy Ltd., Dubai, and Avana Petroleum began shooting 1,100 line-km of 2D seismic to better image potential reservoirs in numerous tilted fault blocks and better delineate leads mapped earlier.
A 3,650 line-km 2D survey in 2007 identified an extensive and deep sedimentary section between and around the granitic islands. The granitic features are linked to those that underpin giant Bombay High field and flank the Cambay basin on India's west coast.
The survey area includes large structures in shallow and deep water and is near wells drilled by Amoco in 1980-81. The wells had oil shows that correlate well with the tar balls occasionally found on Seychelles beaches, suggesting an active hydrocarbon system.
Louisiana
Future Corp. Australia Ltd., Melbourne, took a farmout from Pryme Oil & Gas Ltd., Brisbane, covering 6,400 contiguous acres in Louisiana's updip Tuscaloosa Trend.
Future Corp. will begin to earn a 50% interest in the acreage, known as the Atocha project in East Baton Rouge and East Feliciana parishes, by reentering the Shell Oil Brian-1 well drilled in 1980 updip from Port Hudson field to test 125 ft of bypassed gas pay at 17,700 ft. After that, the two companies will develop other prospects for exploration.
Pryme has a 100% working interest in Atocha and has spent more than $1.4 million building the land position, carrying out technical reviews, and planning a test program.
More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
