Pivoting away from its failed Arctic drilling campaign, Royal Dutch Shell just received the go-ahead to drill in another offshore frontier.
Regulators from the Canadian province of Nova Scotia approved of Shell's drilling plan to drill in the Atlantic Ocean off the Canadian coast. The blocks that Shell is looking to drill could hold up to 120 trillion cubic feet of natural gas and 8 billion barrels of oil.
The drilling program could take 10 months, and wells will be drilled in 2,000 meters of water depth. The so-called Shelburne Basin off the coast of Nova Scotia is an "unexplored geological region" according to the Anglo-Dutch oil major. Related: Future Of Iraq's Oil Industry Under Threat
For Nova Scotia, which is eager to see a boost to its economy, Shell's exploration program holds out hope. But it has not been met with unanimous support in the province. Related: Present Pain Leading To Future Risks In Oil Markets
One controversial aspect of the plan is the lack of oil spill response equipment on site. Shell's plans consist of bringing in a capping stack from Norway in the event of a well blowout, with a backup located in Brazil. The company requested 21 days to contain a hypothetical well blowout, but Nova Scotia regulators trimmed that down to 13 days after public criticism. That compares to the 24-hour window that Shell had in the U.S. Arctic, which required a capping stack on site.
Environmental groups criticize the 13 days that Shell has, arguing that not having the equipment on site means that there is no guarantee that Shell will be able to contain a spill within the agreed timeframe. But with a limited number of capping stacks available around the world, a top official at the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB) said having one on hand is not feasible. Related: Statoil's North Sea Success Provides Hope For World's Depleted Fields
But that has not swayed the fishing industry in Canada. "The capping stack is still in Norway. The mandate of the CNSOPB is to protect the environment on the Scotian Shelf while exploration drilling takes place. They are simply not doing their job," said John Davis of the Clean Ocean Action Committee, which represents fisheries.
Shell plans on drilling two exploratory wells, named the Cheshire and Monterey Jack. The company received approval for the Cheshire this week.
By Charles Kennedy of Oilprice.com
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