Canada raises offshore spill liability to C$1bn

TORONTO – Canadian regulators plan to raise the liability for offshore oil spills to C$1 billion (US$983 million) as part of an effort to increase accountability for operators and enable the government to more quickly respond to incidents.

The liability would increase from C$30 million for spill in the Atlantic and C$40 million for Arctic spills, the Natural Resources Ministry said in a statement.

Natural Resources Minister Joe Oliver said the updated level of accountability would bring Canada “in line with international standards”.

The changes are part of the government’s effort to enshrine into law a “polluter pays” policy, currently only implicit in legislation but aimed at incentivising spill prevention for companies operating offshore.

Canada raises offshore spill liability to C$1bnThe changes will also require operators to offer proof of financial capacity to cover absolute liability of C$1 billion, and ready access to at least C$100 million.

With such a high buy-in, the new rules could make it difficult for smaller operators, said Paul Barnes, manager for Atlantic Canada for the Canadian Association of Petroleum Producers.

However, Barnes said the industry has long been anticipating the changes “in light of disasters that have occurred in recent times”.

“There is nothing in it that really concerns us,” Barnes told Biztellers.

In cases of “demonstrably lower risk”, regulators can recommend that the absolute liability limit be reduced to reflect that lower risk, the Ministry said.

The liability changes cover oil and gas exploration and operations, including exploratory drilling, production operations and loading of tankers for transport.

The updated rules would also make it easier for regulators to tap into a pool of funds set aside for clean-up operations by eliminating the immediate need to prove liability.

To implement the rules, the governments of Canada, Nova Scotia and Newfoundland & Labrador must amend existing legislation to improve transparency and clarity of operations.

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