Shell Canada Ltd. courted favor in environmentally sensitive British Columbia (BC) on Thursday by surrendering about 50,000 square kilometers (19,300 square miles) of offshore drilling rights to the federal government.
The Royal Dutch Shell plc affiliate announced an agreement to return the natural gas and oil prospects beneath the Pacific Ocean floor along the BC coast to the federal government, which owns Canadian offshore resources.
“Releasing these exploration permits can help protect spectacular and environmentally-rich areas off Canada's west coast where we have no plans to explore for oil and gas,” said Shell Canada President Michael Crothers.
“Canadians know that the environment and the economy must go hand in hand,” said Canada Natural Resources Minister Amarjeet Sohi. The announcement “is an example of this and demonstrates how businesses can develop resources in a responsible manner, while also taking important steps to protect the environment, including our coasts, oceans and wildlife.”
Shell Canada said surrendering the rights would contribute to marine conservation. The returned drilling leases overlap with the Scott Islands National Wildlife Area, a newly created offshore nature preserve.
Drilling in the Pacific offshore of BC dates back to 1913, but a federal moratorium adopted in 1972 declared the region off-limits. An unsuccessful attempt to revive west coast offshore industry activity nearly 20 years ago began with forecasts that development would generate C$100 billion ($80 billion) in production revenue, chiefly from natural gas.
A 2003 national inquiry into ending the ban concluded in failure, foreshadowing the Aug. 30 court verdict to stop expansion of the Trans Mountain Pipeline and budding opposition to liquefied natural gas (LNG) exports in BC. The drilling inquiry aroused a storm of environmental protest all along the provincial coast.
Shell Canada announced the return of the dormant drilling targets ahead of a forthcoming construction decision for the proposed LNG Canada export terminal, which would receive inland shale gas via TransCanada Corp.’s Coastal GasLink project. Shell Canada is senior operating partner in the terminal sponsor consortium that includes Petronas, Mitsubishi Corp., PetroChina and Korea Gas Corp.
Federal Fisheries and Oceans Minister Jonathan Wilkinson portrayed the drilling rights surrender as an environmental victory.
“Our government is pleased to be working with First Nations partners, the Government of British Columbia and Shell to ensure the Scott Islands remain a thriving hub of biodiversity and marine life for generations to come,” he said.