June 2, 2010 / 6:34 PM / in 7 years

Regulator says no repeat of BP disaster in Canada

CALGARY, Alberta (Reuters) - There will be no repeat of BP Plc’s disastrous blowout in the Gulf of Mexico at a deepwater well now being drilled off the Atlantic Coast of the province of Newfoundland, Canadian regulators said on Wednesday.

Chevron Corp’s Lona 0-55 well in the Orphan Basin offshore Newfoundland, being drilled in waters nearly twice as deep as BP’s well, already faces heightened scrutiny following the April 20 blowout, they said.

That increase in regulatory attention and adherence to existing rules will ensure that a problem at Lona won’t result in the same sort of environmental disaster that now threatens the Gulf of Mexico, Max Ruelokke, chief executive of the Canada-Newfoundland and Labrador Offshore Petroleum Board, told reporters.

“We believe that things that were done in the Gulf of Mexico were not in compliance with the existing regulations in the Gulf and probably not even in compliance with good oil field practice,” he said. “We would never allow such a thing to happen. Our policy, procedures, training, equipment are such that it will not happen.”

Chevron is drilling the Lona well in water 2,600 meters deep in the Orphan Basin, about 430 kilometers (267 miles) northeast of St. John‘s, Newfoundland. It’s the only deepwater exploration well currently being drilled in Canadian waters.

Canadian governments and regulators are reassessing the country’s preparedness for an offshore disaster following the April 20 explosion of Transocean Ltd’s Deepwater Horizon drilling rig.

The explosion killed 11 workers and triggered the worst oil spill in U.S. history as crude spews unchecked into the Gulf and repeated attempts to stop the flow come up short.

Ruelokke said that the blowout preventer for the Lona well was tested repeatedly before being deployed and that safety procedures in place would prevent failure of the device, which is designed to sever and seal the well in the event of a blowout.

The blowout preventer at the BP well failed, leading to the spill.

The regulator, which oversees all three of Canada’s existing offshore oil production platforms, is also mulling taking further steps.

One measure under consideration is to increase the financial guarantees that must be posted by would-be drillers, which currently total C$350 million ($336 million). BP’s spending so far, estimated to be close to $1 billion, dwarfs value of the guarantees now demanded by Canadian regulators.

Ruelokke also expects new regulations to come for blowout preventers that would make a repeat of the Gulf disaster unlikely.

“There will be improvements and changes made to (blowout preventer) systems and I‘m pretty certain there will be changes made to control systems,” he said. “We don’t believe there’s any need to change what we are doing now immediately, but I expect the world is going to shift underneath our feet when it comes to control of a subsea well.”

($1=$1.04 Canadian)

Editing by Peter Galloway

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