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N.L. judge says extension of offshore drilling licence unreasonable

A Newfoundland and Labrador Supreme Court judge has ruled the province's regulatory oil and gas board acted unreasonably by extending an exploration drilling licence beyond its set term limit.
A Newfoundland and Labrador Supreme Court judge has ruled the province's regulatory oil and gas board acted unreasonably by extending an exploration drilling licence beyond its set term limit. File Photo

ST. JOHN’S, N.L. – The Newfoundland and Labrador Supreme Court has ruled the province’s regulatory oil and gas board acted unreasonably by extending an exploration drilling licence beyond the defined term limit.

Justice Rosalie McGrath wrote in a July 3 decision the Canada-Newfoundland and Labrador Offshore Petroleum Board did not have authority to grant a company another licence covering the same area in the Gulf of St. Lawrence in 2017.

The licence extended Corridor Resources Inc.’s drilling rights in the Old Harry site, located about 80 kilometres off the southwest tip of Newfoundland, beyond the set nine-year limit.

The licence extended Corridor Resources Inc.’s drilling rights in the Old Harry site, located about 80 kilometres off the southwest tip of Newfoundland, beyond the set nine-year limit.

Environmental groups including the David Suzuki Foundation and Sierra Club Canada Foundation had argued the decision was unlawful and lacked proper environmental oversight.

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Law firm Ecojustice, which represented the groups, said today the ruling sets a precedent for regulatory boards in Canada and it prevents companies from exploring for assets for an indefinite length of time.

Ecojustice lawyer Ian Miron said oil and gas drilling poses a significant threat to the environment, especially sensitive ecosystems like the Old Harry site, home to thousands of species that support the local tourism and fishing industries.

He said companies are expected to complete environmental assessments within the set time frame. “Exploration drilling is inherently risky,” Miron said from Toronto. “It is important to limit it.”

The regulatory board welcomed the ruling, saying it brought “greater certainty” on the statutory regime. In a statement provided Tuesday, the board said it did not plan to appeal.

Gretchen Fitzgerald of the Sierra Club Canada Foundation said her organization would continue calling for a full moratorium on oil and gas activity in the area, which hosts diverse marine life, including critically endangered North Atlantic right whales who visit the gulf to feed.

“Right whales make their way here every summer and a major oil spill and seismic blasting would be devastating to them and other marine life, as well as coastal communities that rely on a healthy ecosystem,” Fitzgerald said in a written statement.

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The board had argued the licence extension was legal and reasonable because the environmental assessment process – which included consultations between the Crown and Indigenous groups – had been delayed due to circumstances outside the company’s control.

McGrath wrote the board’s justification did not fall under any of the three exceptions to the prohibition on extending exploration licences defined in the law. “I accept that the Board was motivated by valid objectives, including that of providing a stable and fair offshore management regime for industry,” McGrath wrote.

“However, the Board was not given the authority to carry out a discretionary balancing of objectives. The Board cannot rely on general policy objectives to override the clear statutory directive … that limits its authority, notwithstanding that it may be acting in good faith.”

Corridor Resources, now known as Headwater Exploration Inc., announced in June 2018 that it was suspending work on its proposed project at the Old Harry site. At the time the company said there was no “viable path” to drilling a well before its licence expired in 2021.

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This report by The Canadian Press was first published July 7, 2020.