Maritime Law and the Offshore Industry

AuthorEdgar Gold; Aldo Chircop; Hugh M. Kindred; William Moreira
While traditionally maritime law had as its area of concern commercial
shipping matters and to a lesser extent f‌ishing vessel activities, the tra-
ditional areas of application have since been expanded so as to include
other activities, including certain activities in the offshore industry. In
a maritime context, when mention is made of offshore activities, gener-
ally it is offshore oil and gas exploration and production activities that
come to mind. While it is certainly the case that such activities form the
largest segment of the offshore sector, they are by no means the only ac-
tivities conducted. Interest in alternative forms of energy generation is
increasing. Offshore wind farms, particularly in places such as England
and Europe, are currently producing renewable energy, with many more
projects under development and construction globally.1 Hydrokinetic
energy projects, namely those that derive energy from waves, tides or
ocean currents, are operating at a lesser scale, however research and
1 At the time of drafting, there are several Canadian onshore wind farms in opera-
tion, however there are no offshore wind farms. One explanation for this is that,
although there are a number of high quality offshore sites with signif‌icant potential,
the areas are remote and therefore far away from the existing electrical grid. See the
website of Natural Resources Canada (NRCan) regarding renewable energy, “About
Renewable Energy,” online: NRCan
Maritime L aw and the Offshore Industr y 10 89
development initiatives are increasing.2 Other than alternative energy
generation, seabed mining is another activity in the offshore sector that
is forecasted to increase signif‌icantly, both in national and international
waters.3 Effectively, the offshore industry is formed of a multitude of
diverse activities in various sectors. Indeed, each sector of the offshore
industry is the subject of extensive literature in their own right.
For the purposes of this chapter, the focus shall be on the sector of
the offshore industry encompassing oil and gas exploration and pro-
duction. Canada is an important offshore energy producer with proven
resources off the East, West, and Arctic coasts. Although exploration
for oil and natural gas began off Canadian coasts over half a century
ago,4 technological advances, market conditions, and the general econ-
omy have f‌inally reached a point that encourages the industry to further
develop these resources.5 Newfoundland and Labrador currently have
three offshore oil producing projects, with a fourth project, Hebron,
currently in development.6 Nova Scotia currently has two gas producing
2 By way of example, in the summer of 2014 the United States Bureau of Ocean
Energy Management approved and issued leases for hydrokinetic technology test
facilities offshore Florida and Oregon. See the website of the Bureau of Ocean
Energy Management (BOEM), and in particular the renewable energy section,
“Renewable Energy,” online: BOEM In Canada,
there is currently a tidal power plant in operation in Nova Scotia, with further
wave and current research projects under way in both British Columbia and Nova
Scotia. See the website of Natural Resources Canada regarding renewable energy,
above note 1.
3 Currently, the International Seabed Authority (ISA), an intergovernmental body
with control over mineral-related activities in the international seabed area, has
issued several exploration licences. For further information, see the website of
the International Seabed Authority, online: ISA
4 Although Canada’s f‌irst offshore well was drilled off of Prince Edward Island in
the 1940s, exploration began in earnest in the 1960s offshore of Nova Scotia
(see Canada-Nova Scotia Offshore Petroleum Board (CNSOPB), “Exploration
History,” online: CNSOPB
exploration-history), Newfoundland, and British Columbia (although for British
Columbia a federal moratorium on offshore oil and gas exploration was imposed
in 1972). Exploration drilling in Canada’s Arctic offshore began in 1972, with
the height of activity taking place in the 1970s and 1980s. See Jennifer Dagg
et al, Comparing the Offshore Drilling Regulatory Regimes of the Canadian Arc-
tic, the U.S., the U.K., Greenland and Norway (Drayton Valley, AB: The Pembina
Institute, 2011), online: Pembina Institute
5 See the websites of two of the East Coast offshore regulators, Canada-Newfound-
land and Labrador Offshore Petroleum Board (CNLOPB) and the CNSOPB, online:
CNLOPB and CNSOPB, respectively. See also the
website of the National Energy Board (NEB), online: NEB
6 Namely, the Hibernia Project, the Terra Nova Project, and the White Rose Project.
projects.7 Furthermore, it is also likely that West Coast and Arctic re-
gion resources will be developed in the foreseeable future.8 At this junc-
ture, however, the concentration of offshore activity in Canada remains
off the East Coast, with East Coast ports, and in particular St. John’s,
Newfoundland, being the key supply bases.
One third of the estimated global reserves of oil and gas, being ap-
proximately 1.3 trillion barrels of oil and 6.2 quadrillion cubic feet of
gas, occur in the offshore and of those offshore reserves, a signif‌icant
amount are located in the continental margin sediments.9 The explo-
ration for and production of oil and natural gas in offshore regions,
especially in the North Atlantic, the North Sea, the Arctic Ocean,10 is
generally far more challenging than onshore production. Offshore in-
stallations, structures and equipment have been designed and developed
to deal with adverse weather conditions and the marine environment.
As technology has advanced, exploration and production operations
have moved into ever deeper waters. This trend is set to continue, as
the greatest growth predictions for the offshore and the largest capital
expenditure increases are in relation to deep water reserves.11 Moreover,
exploration in ultra-deep waters in excess of 2,000 metres is increas-
ing,12 and companies are exploring ways to move many of the structures
and equipment f‌loating on the surface to the sea f‌loor.13
With regard to exploration and production operations, it is worthy
of mention that oil and gas companies normally drill three types of
wells. The f‌irst will be an exploration well. Prior to this, there will have
been seismic surveys conducted in order to identify geological forma-
tions of interest, and the drilling of the exploration well will then seek
to conf‌irm the presence of resources.14 Provided the results of the explo-
7 Namely, the Sable Offshore Energy Project and the Deep Panuke Offshore Gas
8 See, for example, the National Energy Board’s website, above note 5, for updates.
9 Dronnadula V Reddy & Arisi SJ Swamidas, Essentials of Offshore Structures (Boca
Raton, FL: CRC Press, 2013) at 47.
10 Which includes the Barents Sea and the Beaufort Sea.
11 Balwinder Rangi, “Deepwater Spend Forecast to Surge from 2016,” online: Oil and
Gas Financial Journal
12 Currently, the world’s deepest platform installation is the BW Pioneer FPSO in
the Gulf of Mexico, with a working depth of 2,600 metres. Ibid.
13 Jared Anderson, “Going Ultra-Deep: GE Opens $500M Subsea Oil and Gas R&D
Center in Brazil,” online: Breaking Energy
14 Canadian Association of Petroleum Producers (CAPP), “Offshore Drilling,” on-
line: CAPP

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