A new report says it’s time for the federal government to look at the billions of dollars lost under the moratorium on offshore oil and gas exploration in British Columbia (B.C.).
An October 2012 Fraser Institute report by Senior Research Economist Joel Wood, “Lifting the Moratorium: The costs and benefits of offshore oil drilling in British Columbia”, suggests the immediate net benefits of lifting the ban could exceed $9.6 billion.
The report’s estimate uses a baseline oil price of $90 per barrel. It not only considers the economic benefits and costs, but also calculates estimates for the potential environmental damages and costs from oil spills.
“These are not solely profits to private companies, but are also large contributions to government revenues that can be used to fund health care, education, environmental projects, and other government services,” said Wood in an October 22, 2012 announcement about the report.
The federal government imposed the moratorium on offshore oil and gas exploration in 1972.
Since the establishment of the moratorium on B.C. offshore oil exploration and development, other jurisdictions such as Norway, the UK, and Newfoundland and Labrador have developed offshore oil resources and enjoyed economic benefits.
Newfoundland and Labrador averaged $1.2 billion in annual industrial benefits from the offshore oil sector between 1990 and 2009. The offshore oil sector in Newfoundland and Labrador has also generated $43 billion in gross domestic product (GDP) between 1997 and 2007 — around 25 per cent of the province’s total GDP.
Wood’s study compares the regulatory regimes and history of oil spills in a number of regions, concluding that Newfoundland’s experience, combined with Canada’s strong safety record and more stringent regulations and liability rules, makes for a strong case for lifting the moratorium on offshore oil exploration and development in B.C.
While offshore drilling in B.C. would take place at a much shallower depth than in the U.S. Gulf of Mexico, Wood suggests that any offshore exploration activity in B.C. must occur within a well-funded, world-class regulatory system to ensure environmental risks are managed accordingly.