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Offshore drilling liability hike alleviates community concerns
Tuk mayor says it's important companies prove they can afford to invest in potential cleanup

Kassina Ryder
Northern News Services
Published Monday, July 15, 2013

Merven Gruben, mayor of Tuktoyaktuk, said an increase in liability costs for companies drilling in the Beaufort Sea is welcome news, although it still mostly likely would not be sufficient to clean up a major spill.

Companies drilling in the Beaufort Sea must prove they have the funds to pay $1 billion in liability costs before projects begin, the federal government announced last month.

"Well, if there is ever something wrong, that's probably not enough, but it's better than the $40 million that was there before," he said.

The $1 billion covers "no fault" incidents, where company error or negligence aren't factors. Companies deemed to be at fault or negligent would face unlimited liability costs. The $1 billion can be adjusted depending on project risks, a federal news release stated.

Gruben said he believes the $1-billion requirement might deter smaller companies from drilling in the Beaufort Sea.

But, he added, it's important companies prove they can afford to help clean up an accident, even if they aren't at fault.

Gruben said a common concern during meetings about offshore oil drilling was what would happen if an accident happened with a smaller company that couldn't afford the clean-up costs.

"It's a deterrent, but that's a good thing. That's kind of what we were worried about," he said. "We've had many meetings and people were talking about what if a junior company gets into trouble or something, are they gonna bail on us, they have no cap, they have no deposits.' That will weed out the problems."

Merven said Tuktoyaktuk is still in the planning phase of developing an oil spill response team for the region.

"Hopefully it will be a little more ammunition for us as well," he said. "We want to make sure this is in place before activity starts in the Beaufort."

Trevor Taylor, policy director for Oceans North Canada, said he agreed the increase is a positive step.

However, he said one of the biggest challenges to responding to an oil spill in the Arctic is a lack of access to equipment.

"Aside from the fact that the vast majority of the year you'll have to deal with adverse ice conditions and a substantial amount of darkness, it's the availability of equipment," he said.

Right now, communities in the Beaufort region have little equipment in place to deal with spills, according to a report from the Beaufort Regional Environmental Assessment's (BREA) oil spill preparedness and response working group.

Taylor said even if responders were provided with the most up-to-date technology and tools, cleaning up a major spill in the Beaufort Sea would still be an enormous challenge.

"I think it's fair to say that it's highly unlikely in the near future that you'll have enough equipment, regardless, in the Arctic area to be able to respond to the type of catastrophic failure that we saw in the Gulf of Mexico," he said. "That has to be recognized."

Taylor said because of currents, wind conditions and other factors, an oil spill off of Canada's East Coast would likely be carried further out to sea and wouldn't necessarily impact coastal communities. Along with the federal government increasing its offshore oil liability to $1 billion from $40 million in the Arctic, it also increased liability to $1 billion from $30 million on Canada's East Coast.

However, conditions in the Beaufort Sea, such as ice, wind and currents, means oil spilled there would probably stay in the area.

"It's almost a certainty the impact would be seen and felt very locally," he said. "It's almost impossible to foresee an event in the Beaufort that wouldn't have a very adverse impact on the marine life in the immediate area."

That area includes communities such as Tuktoyaktuk.

"Our concern is that the industry and governments are not very well equipped to be able to deal with problems associated with drilling, especially when you get into deep water," Taylor said. "There is no doubt there is a ways to go before the resources are there to be able to adequately respond to a drilling mishap."

He said while problems remain, the increase is a stepping stone toward protecting the environment.

"The $40-million figure that was there was unrealistic and at least this demonstrates that people are taking this issue much more seriously," he said. "You can only say that that is a positive step."

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