The Fraser Institute: BC Stands to Gain Billions of Dollars

The Fraser Institute: BC Stands to Gain Billions of Dollars If
Moratorium on Offshore Oil and Gas Exploration Is Lifted 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 10/22/12 -- British
Columbia and Canada could see billions of dollars in economic
benefits if the federal government lifted the moratorium on offshore
oil exploration off the province's coast, concludes a new study
released today by the Fraser Institute, Canada's leading public
policy think-tank.  
Using conservative estimates of the size of oil deposits from a
single offshore development in the Queen Charlotte Basin, a baseline
oil price of $90 per barrel, and including environmental costs while
excluding indirect benefits, the study estimates the net benefits
could exceed $9.6 billion. 
"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 Joel Wood, Fraser Institute senior research economist
and author of Lifting the Moratorium: The Costs and Benefits of
Offshore Oil Drilling in British Columbia. 
The report combines information from academic studies,
government-commissioned reports, and government data bases to
estimate the expected net benefits to Canadians from removing the
federally imposed moratorium on offshore oil operations on BC's
coast. It not only considers the economic benefits and costs, but
also calculates estimates for the potential environmental damages and
monetary costs from oil spills, such as lost profits to fisheries and
tourism, and the cost of cleaning up and containing a spill. 
"We should not rule out offshore exploration simply because of a
'what if' scenario," Wood said. 
"The vast array of existing data clearly indicates that the
environmental risks of offshore oil exploration in BC can be safely
managed and that British Columbians would benefit enormously from
this new industry." 
The federal government imposed the moratorium on offshore oil and gas
exploration in 1972. Although multiple scientific panels have since
then concluded that with appropriate safeguards and assessments the
ban on offshore activity could be lifted, it remains in place. As a
result, accurate estimates of the size of BC's offshore oil and gas
resources have been difficult to quantify. A 2004 study from the
Royal Society of Canada concluded that without lifting the moratorium
to allow preliminary exploration work, it is virtually impossible to
fully determine if BC should proceed with developing its offshore
Since the establishment of the moratorium on BC offshore oil
exploration and development, other jurisdictions such as Norway, the
United Kingdom, and Newfoundland and Labrador have developed offshore
oil resources and enjoyed tremendous economic benefits through
increased energy-related investment, massive positive economic impact
on the economy, and significant government revenue all without
causing significant environmental damage. 
For example, 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 over
that period. 
Wood's study compares the regulatory regimes and history of oil
spills in Newfoundland and Labrador, Norway, the United Kingdom, and
the U.S. Gulf of Mexico. He concludes that the Newfoundland
experience, combined with Canada's strong safety record and more
stringent regulations and liability rules, make a strong case for
lifting the moratorium on offshore oil exploration and development in
"Regardless of where offshore drilling takes place, there are always
some environmental risks. But the experience of Newfoundland and
Labrador shows those risks can be contained. Consequently, there's no
reason why BC could not also safely develop its offshore oil
resources," Wood said. 
Wood notes that any discussion of offshore oil exploration must also
include consideration of the BP Deepwater Horizon oil spill in the
U.S. Gulf of Mexico, which was deemed by a U.S. presidential
commission to have resulted from human error. And while offshore
drilling in BC would take place at a much shallower depth than in the
US Gulf of Mexico, Wood suggests that any offshore exploration
activity in BC must occur within a well-funded, world-class
regulatory system to ensure environmental risks are managed and
mitigated to the greatest extent feasible. This would include
ensuring companies operating in BC waters have the financial ability
to cover all costs stemming from a potential oil spill. 
"With the right regulatory regime in place, the environmental risks
posed by offshore oil exploration and development could be managed,
allowing British Columbia to benefit from a new industry that would
contribute to increased prosperity and create a large stream of
revenue for the provincial government," Wood said. 
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The Fraser Institute is an independent Canadian public policy
research and educational organization with offices in Vancouver,
Calgary, Toronto, and Montreal and ties to a global network of 85
think-tanks. Its mission is to measure, study, and communicate the
impact of competitive markets and government intervention on the
welfare of individuals. To protect the Institute's independence, it
does not accept grants from governments or contracts for research.
The Fraser Institute - Media Contact
Joel Wood
Senior Research Economist
(604) 688-0221 ext. 513
Twitter: @JoelWWood 
The Fraser Institute
Dean Pelkey
Director of Communications
(604) 714-4582
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