Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 8 - Evidence - June 10, 2010
OTTAWA, Thursday, June 10, 2010
The Standing Senate Committee on Energy, the Environment and Natural
Resources met this day at 8:07 a.m. to study the current state and future of
Canada's energy sector (including alternative energy); (topic: Canadian offshore
oil/gas exploration and drilling: the current status of operations/applicable
regulatory rules and regulations).
Senator W. David Angus (Chair) in the chair.
The Chair: Good morning, colleagues, members of the media, guests,
special witnesses and our viewers watching on CPAC and the World Wide Web. We
are continuing this emergency hearing of the Standing Senate Committee on
Energy, the Environment and Natural Resources, which we convened following the
tragic accident in the Gulf of Mexico involving the rig Deepwater Horizon. The
purpose of these hearings is not to do an exhaustive study as to the whys and
wherefore of that particular accident or, indeed, offshore drilling at large.
Rather, we hope to allay the fears of Canadians over the alleged accident
waiting to happen off our shores.
Polling data suggested that 51 per cent of Canadians were of a mind that all
offshore drilling, which is an important aspect of our Canadian industry, should
suddenly be stopped. Most of these people wanted it to be stopped forever, and a
good portion of them want it to at least be stopped pending exhaustive studies
We have heard from the regulatory agencies, the federal Minister of Natural
Resources and officials from Natural Resources Canada, NRCan. We have heard from
the World Wildlife Federation and from many knowledgeable folks regarding the
situation here in Canada. I am happy to say that we have been advised and we
understand there is actually no drilling happening on the West Coast of Canada
or in the Arctic. What drilling we do have is happening in both gas and oil,
offshore Nova Scotia and Newfoundland and Labrador.
Today, we are fortunate to have with us the actual people who do the
operating. They are people from the industry, from Chevron Canada Limited. We
are pleased you could be with us, Mr. MacInnis and Mr. MacLeod. Today we will
hear a perspective of what is really happening and what is involved.
Mr. Mark MacLeod is the Vice-President for Atlantic Canada; and Mr. David
MacInnis is the Vice-President, Policy, Government and Public Affairs. I will
say a couple of words, if I may, about you both.
Mr. MacLeod's career with Chevron began in 1980 when he worked as a
geophysicist in San Francisco, working in exploration. In 2000, he transferred
to Calgary to work on the Hebron project, and in 2002, he became the Hebron
project manager. In 2007, Mr. MacLeod moved to Oslo, where he was country
manager for Chevron's Norway operations. In 2009, he transferred back to St.
John's to take on the new role of VP Atlantic Canada with Chevron.
Mr. MacInnis, I believe that prior to joining Chevron Canada Resources, you
were President of Canadian Energy Pipeline Association, CEPA, which represents
Canada's oil and pipeline companies. He has served as Vice President Public
Affairs with the Canadian Association of Petroleum Producers, CAPP, representing
Canada's offshore industry. I might say parenthetically that we will hear from
CAPP and their government representatives next week or the week after.
It would be helpful for you to know who we are. My name is David Angus, from
Montreal, and I am chair of this committee. To my right is Senator Grant
Mitchell, from Alberta, deputy chair of the committee. To his immediate right is
Mr. Mark Le Blanc, from the Library of Parliament, who assists us in data
gathering and research. To his right are Senator Tommy Banks, from Alberta;
Senator Robert Peterson, from Saskatchewan; Senator Daniel Lang, from Yukon; and
visiting today from Nunavut, Northwest Territories, Senator Dennis Patterson. I
hope you will find this interesting, Senator Patterson, given that you follow
the deliberations of the committee closely. To my left is our very able clerk,
Ms. Lynn Gordon. To her left are Senator Richard Neufeld, from British Columbia;
Senator Linda Frum, from Toronto; Senator Fred Dickson, from Halifax; Senator
Judith Seidman, Montreal; and Senator Bert Brown, from Alberta.
You have heard us say that you have been following our proceedings. We have
been advised that there is considerable fear that a potential or a possible
overreaction to the terrible events in the Gulf of Mexico could set the offshore
drilling industry back as much as 20 years. Our purpose is to determine the
facts. Maybe there should be a big reaction; we do not know. We are here to
learn the facts so that we can share them with Canadians. Much media attention
has been paid to this event. To date, there has been some contradictory
reporting of the regulations and whether they have been strengthened or reduced
in recent months. We know that you are cognizant of the reality.
Mr. MacInnis, please proceed with your opening statement.
David MacInnis, Vice-President, Policy, Government and Public Affairs,
Chevron Canada Limited: I have a couple of remarks before Mr. MacLeod
presents our opening statement.
Thank you for the opportunity this morning to have this discussion. It is
great to be here. Mr. Chair, I note your comment that the people in the know are
here. I do not mean to begin this proceeding by correcting you, but the people
who know are currently offshore Newfoundland. You have the second-best options
before the committee today, for which I apologize.
The Chair: Like many of us, I listen to the CBC morning reports, and
you would think that President Obama was out on the rig and that Mr. Hayward did
the drilling and caused the explosion. We understand how the corporate model
works. You are very good representatives of Chevron, and we will not kick any
butt. We are most interested to hear your take on these events.
Mr. MacInnis: We appreciate that. In all seriousness, I want to give
you an undertaking that if there are technical issues that our drilling and
completions people need to respond to, we will undertake to get those responses
in writing to the committee within the next week.
We are happy to be here. I gave the clerk of the committee a brochure that
illustrates some of the quick facts on our Orphan Basin well offshore
I also provided our general safety handbook. All members that work on the rig
have a copy of this, and they are required to go through a multi-day training
session. I draw your attention to a couple of pages in the booklet. You will see
a page called "Operational Excellence Tenets of Operation." These are the key
safety principles that we observe at Chevron throughout the company, which
operates in over 160 countries. Those key principles simply are do it safely or
not at all. There is always time to do it right, and if you see it, you own it.
There are 10 tenets that accompany that. Before every meeting worldwide with
Chevron begins, we have an operational excellence safety moment. Within these
tenets, two are applicable today: First, meet or exceed customers' requirements.
If I may refer to the committee as our customers today, we intend to meet or
exceed your requirements. Second, comply with applicable rules and regulations.
Again, for any questions that we cannot answer, we fully undertake to respond in
writing within seven days.
The Chair: We appreciate that.
Mark MacLeod, Vice-President, Atlantic Canada, Chevron Canada Limited:
I thank you for the opportunity to appear before this committee and to answer
any questions you may have about our Orphan Basin exploration well being drilled
offshore Newfoundland and Labrador. The hearings your committee is undertaking
are certainly timely and relevant to Canadians, given what is going on in the
Gulf of Mexico. We very much appreciate the invitation to participate.
Chevron employees around the world are truly saddened by the tragic incident
in the Gulf of Mexico that resulted in the loss of 11 lives and the ongoing
environmental disaster in that region. Along with our peers in the U.S. energy
industry, we are providing both direct and indirect support to BP and the U.S.
government as we try to stop the leak, assist with the spill response and assess
opportunities to enhance offshore safety and environmental performance.
We recognize the significance of the Gulf of Mexico incident, and, like you,
we await the outcome of the investigation so that we can gain detailed insight
into the cause of the accident and can apply lessons learned from it. While the
Gulf of Mexico incident precipitated us speaking with you today, Chevron is not
in a position either to comment or to answer questions on the incident itself
because we do not have the knowledge or the facts at hand. However, Chevron is
applying additional due diligence, which we will talk about today.
The Chair: To reassure you, unlike some committees, we do not pretend
to be a court of law or an administrative tribunal investigating the cause of
this terrible accident. We are here simply to learn the facts as they apply in
Mr. MacLeod: We are applying additional due diligence to our
operations to enhance safety, environmental protection and reliability in our
operations. I will begin by telling you a little bit about Chevron Canada
Limited and what we stand for in safety and environmental protection.
Chevron Canada Limited is a wholly owned subsidiary of Chevron Corporation,
one of the world's leading energy companies. We have been working in Canada
since 1938. We are headquartered in Calgary, Alberta, and we have an office in
St. John's, Newfoundland, where I work. Chevron Canada Limited's upstream arm is
focused on exploration and production activities in Atlantic Canada, the
Canadian Arctic and the Athabasca Oil Sands.
Offshore Newfoundland and Labrador, Chevron discovered the Hibernia field in
1979 and continues to hold significant interest in that field today. We also own
a stake in the Hebron and Terra Nova projects, and we have exploration
activities and licences in the Orphan Basin and offshore Labrador.
The Chair: I hate to interrupt you, but since you were telling us a
bit about Chevron and your entire shareholder, is it a public company? Is there
a significant dominant shareholder? Would you call yourselves a Canadian
company, an American company or an international company?
Mr. MacLeod: The company is a publicly traded company based in the
Chevron's corporate vision is to be the global energy company most admired
for its people, partnership and performance. We are committed to uncompromising
standards of operational excellence. Our priority is to ensure safe and
incident-free operation and protection of the environment and the public. That
is fundamental in everything we do, including the drilling of our exploration
well in the Orphan Basin.
The Lona O-55 well is approximately 430 kilometres northeast of St. John's,
in a water depth of 2,600 metres. Chevron is the operator, and our co-venturers
are ExxonMobil Canada Limited, Imperial Oil Resources Ventures Limited and Shell
I will now talk about our deepwater drilling experience. We have extensive
experience around the world, and we have drilled over 300 deepwater wells in the
Gulf of Mexico, West Africa, the U.K., Norway, Brazil and Australia. Chevron is
a proven leader and a safe and environmentally responsible operator in both
exploration and production, with over 60 years of experience operating in the
Gulf of Mexico.
At the end of 2009, Chevron was the largest leaseholder in the Gulf of Mexico
and one of the largest producers in the Gulf of Mexico. I am pleased to be able
to tell you that in 2009 we had a record year for safety.
Chevron is also an industry leader in drilling safety performance. Our safety
statistics back that up.
Our company has a number of unique characteristics, and I would like to point
to some of those now. First, we have an in-house well-control training program
that drives our philosophy of well-control equipment and procedures, and we
ensure that those procedures are applied to every well we drill around the
world. Second, we have an in-house subsea blowout preventer specialist team. In
fact, one of the team members is assisting BP with its incident now. That team
ensures that blowout preventers used by contractors are suited to each
individual project and that there is consistency in the application of those
procedures. Third, we have a very disciplined management-of-change procedure.
Therefore, any change, no matter how big or small, that is applied must be done
with a high degree of rigour. Every change is applied to all wells. Fourth, a
demanding risk and uncertainty management standard is applied to all of our
complex wells. This Lona well is indeed a complex well. Finally, we have
well-suspension procedures that exceed regulatory requirements.
I will talk about the Lona well now.
The Chair: Again, to get the picture correctly, I mentioned the
misinformation or simply the lack of understanding. There is the drilling and
exploration stage, I take it, where you identify where the hydrocarbons may be,
the deposits, and then there is a drilling phase, such as I gather was happening
in the Gulf of Mexico. You locate the well and start to drill it. Once it is
identified, the well is drilled and you go into production; you have equipment,
and a rig — I think it is called — stays there on the scene like in Hibernia
today. I am told there is no drilling, but there are operations.
For our audience, the people of Canada, in the drilling industry there are
obviously certain types of risks you are describing and how you manage those
risks in the exploration and drilling phase. Then, when you are finished the
drilling, you are still there on site, and the people who work there I take it
are still at some kind of risk. I supposed there could be leakages or blowouts,
but I do not know.
We need that distinction at some point, and I wanted to mention that. Do not
assume we know. We are liberal arts people, most of us here.
Mr. MacLeod: I will explain that now, if I may. There are three
phases. The first phase is exploration, which is what we are undertaking now in
the Orphan Basin. This is high risk from a geologic perspective. Our chance of
success is not particularly high. We have not found hydrocarbons in the Orphan
Basin yet. We have drilled one well, and it was dry. We are drilling a second
The next phase we call the development phase, where we construct a facility
such as Hibernia. That is the phase for the Hebron project right now.
The final phase is the producing phase. As you said, the Hibernia field is
producing oil today, but it is also drilling. In fact, two rigs on the Hibernia
platform are drilling wells today. Other facilities offshore Newfoundland and
Labrador, such as the Terra Nova field and the White Rose field, are producing
oil, but they are also drilling at the same time.
The Chair: The drilling goes on. Even though you found the deposits,
got the well in place, and production is starting to happen, you carry on
exploration drilling in that particular field.
Mr. MacLeod: Right. I would also like to clarify with respect to the
well we are drilling today that if we find hydrocarbons, we will abandon the
well and come back at a later date. We have no intention of testing this well,
of flowing oil, should we find oil in this well. Should we have a discovery, we
would abandon the well and come back at a later date to drill further wells to
appraise the discovery. That is the process.
The Chair: That is very helpful. We are into something, because some
of the other information we have had has perhaps led us to some slightly
different conclusions about how much drilling is going on. The public sees the
big black tide and all the birds and everything covered in oil. Some drilling
has to have taken place, and there is the risk of oil escaping. When you abandon
a well, at what point is there the biggest opportunity for oil to get loose into
Mr. MacLeod: First, obviously you have to find oil, and we have not
found oil yet. We are hopeful. There are no instances where we can reduce risk
to absolutely zero. There is risk in everything we do, in all manners of life. I
would not say any one phase is any more or less risky than another phase.
However, to spill oil you have to find oil, and we have not found oil yet.
I would like to talk about our team on the Lona O-55 operation. We have a
dedicated team that has been working for the past two years designing and
planning this well. On May 10, 30 days ago, we began drilling the well. We are
one month into a four-month program. I am very pleased to be able to tell you
today that we have drilled this well safely and without incident. We have not
had one injury on board the drill ship. We have not had a cut finger. We have
had no lost time incidents. We have been safe, and we continue to be safe; we
intend to be safe for the rest of the program. We are confident that we have
plans and measures in place that will enable us to drill this well
I will speak about the regulatory procedures we have undertaken. As you know,
the Canada-Newfoundland and Labrador Offshore Petroleum Board is the regulator
responsible for approval and oversight of the Lona O-55 well. That well has
undergone two levels of environmental assessments, and we have received
regulatory approval for all aspects of the program, including approval of a
myriad of plans, such as our safety plan, blowout contingency plan, emergency
response plan, oil spill response plan and declaration of fitness.
Chevron is committed to uncompromising standards in the protection of people
and the environment. We are applying these demanding standards for safety and
reliability offshore Newfoundland. Our rigorous approach to the Lona O-55 well
has encompassed environmental assessments; well design and equipment selection;
contractor selection, certification, training and competency; assurance reviews;
established management processes and standards; and verification systems.
The typical Chevron employee in our operating team that is conducting the
Orphan Basin exploratory well program has decades of experience worldwide.
Indeed, we require well-trained, experienced, competent people in our drilling
operations, and I am pleased to say we have that on the Orphan Basin operation.
It is also worth noting that many of the people we have in this operation were
involved in the first deepwater well we drilled in the Orphan Basin in 2006-07.
Chevron employs a process that we call Stop Work Authority. That process
authorizes, and in fact obligates, every employee and contractor working for
Chevron to immediately stop work at a site when they see an unsafe condition.
Additionally, after the April 20 incident, Chevron immediately held safety
stand-downs with our drilling personnel to review our operations around the
world, including the Lona operation. Drilling personnel used the session to
discuss the ability of any employee or contractor to stop work if they see a
safety concern, as well as the regular practice of making safety observations by
all employees. We reviewed the drilling processes and examined blowout
contingency plans across our global operations.
Let me turn to the Stena Carron drill ship, which is the ship that is
drilling our well today.
The Chair: This is another point where I feel it would be helpful to
clarify. With regard to the Gulf of Mexico incident, people have come in a
layperson's way to know the names Transocean and Halliburton when they are
trying to point fingers.
We see in your brochure that the Stena Carron is the drill ship at
this operation and that it is owned by Stena Drilling Ltd. of Aberdeen,
Scotland. Would that be the equivalent of Transocean? As you go through this,
could you mention the contractors that are not directly with Chevron?
Mr. MacLeod: Sure. Stena Drilling is the drilling contractor. They are
in the same league as the Transocean. The
Stena Carron drill ship is specially designed for use in harsh
environments, such as those found offshore Newfoundland and Labrador. The ship
can operate in water depths of up to 3,050 metres. It has been used in the West
of Shetlands region in the U.K., where it drilled a number of wells for Chevron.
The Stena Carron was also used off the south coast of Newfoundland,
drilling for another operator, last year and into this year.
The Stena Carron is a state-of-the-art drill ship, and we believe
there is no better drill ship in the world for this type of drilling operation.
The Stena Carron is a dynamically positioned sixth-generation drill ship.
Of course, it has a subsea blowout preventer system. I would like to talk about
that blowout preventer today. I know there is a lot of attention on those.
The blowout preventer we are using has seven components — two annular blowout
preventers and five rams — that can secure the well, depending on the nature of
the situation. There are several means of activating the blowout preventer, but
the primary means is from the drill floor, through a combined hydraulic and
There are other means. If the blowout preventer ever became disconnected from
the drill ship, the blowout preventer would automatically activate and shut in
and secure the well. That is called the automode function. There is another
auxiliary function, called the acoustic system, where an acoustic transponder
can send a signal to the blowout preventer and activate the blowout preventer.
There is a third system with remotely operated vehicles, and in fact we added
an extra remotely operated vehicle, or ROV, on board the Stena Carron for
this operation. An ROV can go down to the blowout preventer, activate it and
close the rams.
There is a fourth and final system, called an emergency disconnect system. In
the event we did not have the time to safely secure the well, with a single push
of a button, the Stena Carron could activate a series of measures that
would disconnect the ship and the riser from the blowout preventer and
automatically close the rams, and we could get out of harm's way. All of that
can happen in 42 seconds.
The Chair: Assuming everything is working properly.
Mr. MacLeod: Absolutely. We will talk about the testing of our blowout
preventer in a minute.
In Appendix II of our submission, you will see a detailed list of additional
steps we have taken on the Lona O-55 well to ensure safe and incident-free
operations. In some cases, these additional steps had been built into our well
plan from day one, while others were implemented directly as a result of the
April 20 Gulf of Mexico incident.
Let me start by saying that from day one, more than two years ago, our
president said that we would drill this well incident-free and that we would be
over the top on safety. He said, "Pull out all the stops in everything you do.
We will drill this well incident-free." Leadership from the top is very
The Chair: You are saying that was a year or more ago, nothing to do
with the April 20 incident?
Mr. MacLeod: Absolutely. In early in 2008, we were talking about an
over-the-top plan for safety for this particular well.
On May 1, with the Stena Carron offshore Newfoundland, prior to
arriving on site, we had what we called a Stand Up for Safety day. Senior
leadership and senior drillers went offshore. We stopped all the operations for
24 hours, met with the crew and employees, gave them our commitment to safely
drill this well, and got their commitment to safely drill the well. We also
emphasized the Stop Work Authority that each and every employee and contractor
on board that rig has and is expected to use.
To your earlier comment about the blowout preventer, we have added an
additional function test on the BOP to ensure it is working reliably. We have
paid particular attention to the secondary well-control systems that I mentioned
earlier. The blowout preventer was fully pressure tested on board the Stena
Carron. We lowered it to the seabed and tested it again.
We have put additional equipment on board the Stena Carron. I
mentioned the second ROV that has been added on board as additional backup and
Prior to drilling into the potentially hydrocarbon-bearing zone, Chevron will
conduct yet another emergency response exercise to ensure that all our emergency
protocols are in place and functioning, and the Canada-Newfoundland and Labrador
Offshore Petroleum Board, the regulator, will witness this exercise.
In addition to our over-the-top preparedness for drilling this well
incident-free, Chevron fully supports and is compliant with the additional
special oversight measures that have been introduced by the Canada-Newfoundland
and Labrador Offshore Petroleum Board. We have been asked to monitor the
developments at the Gulf of Mexico incident, and we will provide periodic
assessments of the impact of any lessons learned from that situation to our
operation at Lona O-55.
Personnel from the board will visit the rig approximately every three to four
weeks. A traditional schedule of audits is every three to four months. Again,
prior to penetrating any potentially hydrocarbon-bearing zone, Chevron will hold
an operations time out to review and verify that all appropriate equipment,
systems and procedures are in place to allow operations to proceed safely and
without polluting the environment.
The Chair: Mr. MacLeod, I cannot resist; this is where the drill hits
the water. We had here the regulator, Mr. Max Ruelokke, and he told us basically
what you are saying. He said he was going out to the Stena Carron and
that he would actually sleep on board and stay there for a week. We all heard
that and went back to our rooms. On TV, we saw the criticisms that sometimes
these regulators get too close to the operators. There is an opportunity here
for you to make clear what the reality is. I suspect it is just the opposite.
Mr. MacLeod: The reality is that the oversight is extremely thorough.
Mr. Ruelokke and a team of his staff went offshore and conducted very stringent
reviews of our safety systems and our safety culture on board the rig. I am
pleased to say he came back and said he was very impressed with the safety
systems and culture on board that ship.
I will say the regulatory environment is quite thorough on this particular
operation and on operations in Newfoundland and Labrador. In fact, a colleague
of mine closely associated with this particular drilling operation — and who has
decades of experience worldwide — said to me the other day that this is one of
the toughest regimes he has ever worked in. It is a very thorough regime, and we
are under stringent and strict oversight. We welcome that. It gives our
stakeholders more confidence that we are operating safely.
Another point Mr. Ruelokke might have mentioned is that we meet with the
board every two weeks. In fact, we met with the board yesterday to thoroughly
review the progress of the well plan; the safety record to date, which, as I
alluded to, is excellent; and the plans forward. Every two weeks we have a
thorough operational review with the board.
Our plan sees us continuing with this over-and-above approach and additional
safety and spill response drills, equipment tests and inspections, and safety
audits. Senior leadership rig visits will take place over the course of the next
few months until the end of the program.
In summary, as Mr. MacInnis said, we will not commence any operation unless
we feel it can be conducted safely and without environmental incident. We
believe in the principles of "Do it safely or not at all," and "There is always
time to do it right." We live by those. This includes our drilling operation at
the Lona O-55 well.
We are confident in our well design and in our procedures for well control
and deepwater drilling. We are fully committed to ensuring safe and
I would like to reiterate again the high-level measures that Chevron has
taken to ensure safe operations at the Lona O-55 well. We have adhered to
Chevron's industry-leading safety standards in designing all aspects of the well
program; we have implemented additional measures in light of BP's Gulf of Mexico
incident; we have a very experienced team in place both on shore and offshore to
manage the drilling program; and we are compliant with and have met all the
regulatory approvals and work fully cooperatively with the additional oversight
from the Canada-Newfoundland board.
We are committed to ensuring that all of our employees and contractors
working on the Stena Carron return to their families safe and healthy;
that we preserve the environment in which we are working; and that we execute
the drilling program reliably and efficiently. Chevron will continue to work
with the responsible regulatory authorities, departments and agencies in Canada
to find ways to improve the safety and reliability of offshore oil and gas
operations in Canada.
I look forward to your questions.
The Chair: Thank you, Mr. MacLeod and Mr. MacInnis. I have to
congratulate you for having gotten through nearly three quarters of an hour
without mentioning the buzz words "relief well." I can assure you that you will
hear them when my colleagues ask their questions.
Senator Mitchell: Thank you, gentlemen. That was a very good
presentation, and it has clarified many questions for me and for other members,
I am sure. It does raise some other questions I would like to ask.
You outlined very well and clearly the tremendous effort that Chevron puts
into safety, both in a leadership way and also with technology. It is
impressive; your description of the Stena Carron was quite compelling.
It does beg the question, however, of how your technology compares to BP's
technology. I know you do not want to get into too detailed a declaration of
what BP was doing. Could you reassure us in some ways that your technology is
different than BP's or is applied in a different way, such that we could assume
reliably that the likelihood of the same thing happening is less?
I think the Stena Carron is for drilling rather than production. The
problem with BP was that they were at a production stage, is that not right?
Therefore, the issues would be different there.
Mr. MacLeod: First, I cannot compare and contrast our equipment to
BP's equipment because I do not know the facts of their operation. I can say
that safety and their safety record is of utmost importance when we select
equipment and our contractors. We are very confident about the equipment we have
selected, the people we have trained up to run this operation and the safety
culture we have embedded on board the Stena Carron. We have the utmost
confidence in the equipment, the contractors and the people running this
Senator Mitchell: What about the other side of it? You have described
the Stena Carron. What about the production side?
Mr. MacLeod: As I said earlier, this is an exploratory well. We do not
know whether there are hydrocarbons there. If there are, we will abandon the
well safely, and I can describe that procedure if you would like. We have no
plans to produce that oil from the well. It is a well to gather information.
Senator Mitchell: When you abandon that, what procedures do you use to
secure it in a way that inspires confidence?
Mr. MacLeod: The best way to talk about it is to refer to the previous
exploration well we drilled in the Orphan Basin in 2006-07, the Great Barasway.
We abandoned that well with four mechanical barriers, which are cement plugs and
bridge plugs. Four barriers were cemented in that well. Additionally, the
drilling mud, a heavy-weight special fluid, was left in the well. That well is
safe, secure, and abandoned. By the way, no oil was found in that well.
Senator Mitchell: A recent newspaper article suggested that
regulations had been changed in December 2009. I am not judging it or agreeing
with it, but the suggestion was that somehow regulations had been weakened to
some extent, particularly with respect to relief wells.
The distinction here is a move from direct regulation to guidelines. I do not
know whether that is significant or not. Regardless, was that the case in your
experience, and would it constitute some kind of weakening? If so, what does it
mean for being ready to drill relief wells and for access to the ships in the
state of an emergency and the time it would take to get one from somewhere else
in the world to drill a relief well?
Mr. MacLeod: I am pleased to answer that question. The Lona well was
in a rather unique situation. When we made the application to drill the well, it
was made under the old regime, the so-called prescriptive regime. The approval
we received was after the goal-based regulatory environment was in place. They
were not guidelines.
I am unaware of any relaxation in the need for a relief well. The
Canada-Newfoundland Offshore Petroleum Board asked us to identify which
equipment we could bring in to drill a relief well if required, which we fully
believe will not be required. We have complied with that. We have identified two
advanced drill ships in the Gulf of Mexico available to come in the event of a
need for a relief well.
Senator Mitchell: How long would it take to get them?
Mr. MacLeod: The transit time from the Gulf of Mexico is approximately
Senator Lang: I was heartened to hear your comments about your
relationship with the regulatory body and about observations noted to you by a
third party that this is the most stringent regime he has come across in the
world. Perhaps that gives our viewers some comfort, because that is obviously
important in overseeing your operations.
My question pertains to deepwater drilling and the well incident we have
witnessed in the Gulf of Mexico. I believe the depth of the Lona well in the
North Atlantic is 2,600 metres, if not deeper. How does that relate to deepwater
drilling around the world? Is that a normal deepwater drilling depth, or is it
deeper than most wells? Perhaps you could elaborate on that.
Mr. MacLeod: I am pleased to do that. Chevron will not conduct any
operation unless we feel we can do it safely. That is a key principle for us. We
are confident in our ability to drill in these water depths. The water depth at
the Lona location is 2,600 metres. Chevron has drilled in depths greater than
that. In standard units, we are in 8,500 feet, and we have drilled in the Gulf
of Mexico in excess of 10,000 feet. This is a complex deepwater well. There is
no doubt about that, but we are very confident of our equipment, our people, our
experience and our track record and that we can and will drill this well safely.
Senator Lang: You referred to the Gulf of Mexico, which is in part why
we are here. We are comparing ourselves to that. You talked about the equipment
and highlighted both the contractor and the number of mechanical and
technological procedures in place in case of emergency or discrepancy. Are your
process and safety procedures offshore Newfoundland comparable to those in the
Gulf of Mexico? Are you doing exactly the same thing there as is done in the
Gulf of Mexico?
Mr. MacLeod: I cannot speak to any particular Gulf of Mexico
operation, but as I said earlier, if we are not comfortable that we can do it
safely, we will not do it. In the Gulf of Mexico, we would apply our same
internal blowout preventer team. They would review our plans for the well and
the BOP systems in place to ensure consistency across the globe in all of our
operations. It is rather unique with Chevron that we have that team, and we
apply those standards across the globe. Of course, the operation with the drill
ship Stena Carron meets those standards.
Senator Lang: For clarification, you indicated that you have exceeded
the minimums required by a regulatory body. Therefore, am I to understand that
if I were another company in the Gulf of Mexico, I could use a lesser standard
if I wished to do so and still comply with the regulatory requirements for that
Mr. MacLeod: I cannot speculate about what another company could do or
would do, but I can speak for Chevron. We will fully comply with the
regulations; and in many areas, such as well abandonment, which I described
earlier, we will exceed the regulatory requirements.
Senator Lang: You have procedures in place and experience in other
parts of the world, and you know the offshore drilling business very well.
Whether in the North Sea, Australia or the Arctic, have those procedures been
followed so well to the point that there has never been an emergency blowout?
Mr. MacLeod: Again, I cannot speak to other people's operations. I can
speak to Chevron and our track record, in particular in Atlantic Canada. We have
not had a blowout in Atlantic Canada. In fact, Mr. Ruelokke told the committee a
couple of weeks ago that there has never been a blowout in Newfoundland and
Labrador. Chevron has not had a blowout in Newfoundland. As to other operations,
I cannot speak to any of those areas. As you know, no wells today are being
drilled in the Arctic.
We will not drill a well anywhere in the world unless we believe we can do it
The Chair: I welcome Senator Massicotte, from Montreal, Quebec.
Senator Frum: Gentlemen, you speak about uncompromising standards. I
am one of the liberal arts people the chair referred to. As a non-engineer, I
get the sense that beyond 5,000 feet, you are into highly compromised depths, by
definition. I ask about that because I read an article that appeared in The
Wall Street Journal last month that quoted Robin West, former President
Reagan's adviser on offshore drilling, who likened that depth to being in outer
space because of the comparable level of complexity of the operating
environment. Another engineer quoted in the same article said that beyond 5,000
feet, if something happens to the wellhead, it is beyond reach. You cannot touch
it because it is too far away to access.
I want to read you another paragraph from that same article, because you
talked about how we rely on blowout preventers in the event of an accident:
Drilling companies have pushed the limits of technology in blowout
preventers, also known as BOPs. Multiple technical papers have called into
question whether the shears are powerful enough to cut through the tough steel
used in modern drilling pipe at the deepest wells. A 2004 study commissioned
by federal regulators found that only three of 14 newly built rigs had shears
powerful enough to cut through pipe at the equipment's maximum water depth.
In other words, at those depths, the wellhead required is so thick that you
cannot cut through it.
Mr. MacLeod: You have a number of questions that I will try to answer.
Clearly, the offshore oil and gas industry has been moving into deeper and
deeper water. Nothing magic happens at 5,000 feet beyond which things change.
Certainly, the challenges increase with deeper water depth, but nothing magical
occurs at 5,000 feet. It is not a break-over point. Industry has overcome these
challenges and has a good track record, of which it was quite proud, until April
Today, Chevron is producing oil safely and without incident in water depths
of approximately 7,000 feet. Allow me to bridge to our safety record in the Gulf
of Mexico. Remember that Chevron is one of the largest producers in the Gulf of
Mexico. Between 2004 and 2008 our spill volume rate was half a barrel per
million barrels produced, which is far lower than the industry average, and much
of that production is in deepwater. We have demonstrated that we can produce and
operate safely in deepwater.
There were other question; I am sorry.
Senator Frum: If everything goes well, it works beautifully. However,
we have heard a lot in the last few weeks about the use of blowout preventers
for emergency response. A lot of information seems to say that the effectiveness
of these BOPs is overrated.
Mr. MacLeod: Again, if Chevron was not comfortable or confident it
could be done safely, we would not do it. We are very confident in the blowout
preventer we have at the Lona well.
In regard to your point about cutting casing, there are pieces of the casing,
whether in shallow water or deepwater, that the rams cannot cut through. They
are called drill collars. They are very thick pieces of pipe, and they are
fairly short. An experienced driller would know when a drill collar was passing
through the ram. If he had to close the ram, he would simply raise or lower the
drill pipe and then cut it. The thickness of pipe does not change dramatically
with deeper water drilling.
The blowout preventer on this particular operation has a closing force of
15,000-pounds per square inch, which is far greater than a typical blowout
preventer. It is a rather massive device. Again, we are very confident in the
ability of the BOP we are using at the Lona O-55 operation. We have tested the
blowout preventer at the surface. We have tested it at the seabed. Every time we
do a test, which is now approximately every three weeks, we provide all of the
test results to the regulator, the Canada-Newfoundland and Labrador Offshore
Petroleum Board. The blowout preventer is operating well. There are redundant
systems on it, and we are confident.
Senator Frum: One of the charges is that these things have not been
tested in real-world circumstances or in real disaster circumstances. I guess
the good news is that you have not had the opportunity to test them in a real
Mr. MacLeod: I will tell you about an incident we had while drilling a
well in the Orphan Basin in January 2007. A storm was rapidly approaching. There
were quite significant storm surges, and some tensioning wires on the drill ship
broke as a result of this rapidly encroaching storm. We were in an emergency
situation. We had to cut the pipe using the blowout preventer and move off
location. Everything worked. The well was sealed; the pipe was cut; we moved off
location and out of harm's way. It worked, as designed, in very deep water.
Senator Frum: That is good to hear. Thank you.
Senator Neufeld: Having experienced drilling all around the world and
in deepwater, has Chevron ever had a blowout?
Mr. MacLeod: No, we have not, senator.
Senator Neufeld: You have never experienced a blowout in any place,
other than I read in your documents where some drilling fluids were released
because of what you just described. Is that correct?
Mr. MacLeod: That is right.
Senator Neufeld: That is good news. That should help with the fears a
Can you tell me how many wells you have drilled around the world offshore?
You do not need to be exact, but give me a sense. Is it 1,000 or 100?
Mr. MacLeod: We have drilled in excess of 300 deepwater wells. If I
added up all the shallow-water wells, it would be in the thousands.
Senator Neufeld: That is important for Canadians to hear.
We have discussed the blowout preventers. You have been very thorough on
that. There are downhole procedures, because it is not just the BOPs that you
use. There are drilling fluids, cement and all those kinds of things. Can you
explain that a bit? I know what drilling mud is and I know how that is used, but
many people do not. Could you explain the concepts of drilling mud and the
Second, would you confirm for us that your downhole procedures offshore
Newfoundland would be similar to those in other parts of the world, or are they
different from other parts of the world? I am not talking just about the Gulf of
Mexico. I am talking about the North Sea and some of those areas. Can you
explain that a bit? I know that will take a long time, but I would ask you to
Mr. MacLeod: I will try first to explain the conventional drilling
operation. I will be brief and hopefully fairly straightforward.
We start with a fairly big hole, in fact 36 inches in diameter. We drill a
little bit and then put wide-diameter cement casing in that hole. We continue to
drill the well, with smaller and smaller drill bits and smaller and smaller
casing, and as we go down we cement the casing in place, and we fully
pressure-test that casing to ensure the seal has been made.
We mentioned mud. It is not the mud you scrape off the ocean bottom or
anything. It is specially designed chemicals and fluids that are a very specific
weight. The weight of that mud keeps fluids from flowing into the wellbore. If
the mud is too heavy, the mud will flow into the rocks. If it is too light the
water or oil in the rocks will flow out of the well, and that is a problem. The
drilling technology is achieving the appropriate balance of the drilling mud to
the pressure in the formation.
I will make a point about the well we are drilling now and pressure. In many
areas of the Gulf of Mexico you encounter abnormally high pressure. I cannot
speak to the BP site, but Chevron has encountered high pressure. That makes
drilling a bit tricky, and we have to carefully balance the mud weight with the
pressures in the formation.
At our Lona operation, primarily based on the first well we drilled, the
Great Barasway well, and other scientific information, we are very confident we
will encounter normal pressures, which I will say is less tricky in balancing
mud weight and formation pressures.
Again, the mud and the casing that we cement in the well and barriers we
place in the well are the primary means of keeping control of the well. The
blowout preventer is there more or less as a last resort. We do not expect to
have to use a blowout preventer. It is not there to control the well; the mud
and the casing are there to control the pressures and the fluid in the well.
Senator Neufeld: That helps. It makes it clear that it is not just the
blowout preventer you depend on. That is one part of the safety procedure, but
there are other procedures you use to actually control wells.
The next question I have is about relief wells. Senator Mitchell talked a bit
about it. Are the two ships you identified in the Gulf of Mexico that would
drill a relief well if something went wrong, heaven forbid, on contract to you
for that? If Chevron had an incident, could you pick up the phone and tell them
to get that ship here and it would disconnect from whatever it is doing? You
must pay a standby for that service. Will it come and do whatever is needed at
your site? Is that how that works?
Mr. MacLeod: Yes. We have identified those ships. The two ships are
Discoverer Clear Leader and Discoverer Inspiration, and actually
there is a third ship, Discoverer Deep Seas. They are all under long-term
contract to Chevron and all capable of drilling in the water depths in the
Orphan Basin. Because of the moratorium, they are all available immediately to
move to Newfoundland and Labrador, should we need them.
Senator Neufeld: We also talked to the boards from Atlantic Canada. If
a spill happened, Chevron's commitment through permits and such is that
immediately, without any questions asked, you would deploy whatever it takes to
contain the oil as much as you could, clean it up and restore everything that
was damaged by any leaking oil. Would that be correct? Would I be correct in
saying that there would be no questions asked, that you just go ahead and do
Mr. MacLeod: That is exactly right. There are no questions asked.
Chevron would do it, yes.
Senator Neufeld: I like to hear that.
My last question is about abandonment of wells. Some people might be alarmed
when you talk about abandoning a well. That is normal in the oil and gas
industry. If you abandon a well and are not intending to come back, who is
responsible for that abandoned well? That could happen; I do not know and I am
not asking that. That might be proprietary information. If you abandon a well —
you know you are finished — who becomes responsible for that well should
something happen at that well site a decade in the future? Does the government
say, "Yes, Chevron, you have met all the regulations; you have met all the
qualifications of abandoning that well, and now it is someone else's problem,"
or does it still rest on Chevron's shoulders?
Mr. MacLeod: My understanding is that Chevron is responsible for that
Senator Neufeld: You are responsible, for the lifetime of that well?
Mr. MacLeod: Yes, that is my understanding.
Senator Lang: I want to follow up on Senator Neufeld's question about
the ability to contact these drill ships if we have a blowout and your statement
that they could come to you immediately. You were very specific. You said that
with the moratorium, the drill ships are available. If there were no moratorium,
would the ships still be available on a day's notice?
Mr. MacLeod: Let me be clear. If those three ships I mentioned were
busy drilling wells, and if we had an incident — which we do not expect to have,
because we are confident in drilling this well incident-free, as I said — the
well would have to stop what it is doing. My point was that those ships are not
doing anything right now because of the moratorium. If they were drilling, they
would have to suspend operations and transit to Newfoundland. The understanding
is that they would be there.
Senator Brown: Thank you for your presentation.
The Louisiana oil rig was apparently 5,000 feet down and drilled 18,000 feet
before it blew up. Are you suggesting that in Newfoundland you will drill 10,000
feet of water before you drill the actual seabed?
Mr. MacLeod: No. The water depth at the Lona O-55 location is 2,600
metres, or 8,500 feet.
Senator Brown: How deep can you actually drill in the seabed after you
are down there?
Mr. MacLeod: The rig itself is capable of drilling upwards of 30,000
feet in total — 30,000 feet of drill string. The depth we are drilling our well
is proprietary information.
Senator Brown: Have you ever stacked blowout preventers, since that is
the last line of defence? Have you ever had more than one blowout preventer on
the same drill site?
Mr. MacLeod: I am not aware that we have, but if you would like, I can
follow up and find out whether we have ever stacked two BOPs, if that is the
Senator Brown: I would like to know, and I think the committee would
like to know. Considering what has happened in Louisiana and the ensuing costs
for everyone, not just the well but damage to the coast, it seems that you could
afford to string about 10 blowout preventers, one on top of the other, and it
would still be a minor amount of money compared to what is happening in
Mr. MacLeod: Let me reiterate that Chevron is very confident in the
equipment, processes and training we have in place to drill this well
incident-free. If we thought adding a BOP would significantly change the risk
profile, I imagine we would do it. I remind you of the redundancies built into
the BOP systems. I remind you that we have a tremendous safety track record in
drilling in deepwater around the world.
I live in Newfoundland and Labrador. I was raised in Maine. I do not want to
see oil on the coast. I am confident that we will not see oil on the coast, that
we will not have a spill and that we will not have an incident on this
Senator Brown: I certainly hope you are absolutely right. My only
concern is that we hear about regulation upon regulation for safety and
everything else, but to ensure that another Louisiana situation does not happen,
the equipment must be strong enough to meet the pressures that you are going
Mr. MacLeod: Absolutely.
Senator Brown: You are going for tremendous pressures when you drill
that deep. Every foot you go down, more pressure is added to the drill stem. For
every bit of deepwater you go down, you are facing pressures already. The
pressure at Louisiana was supposedly 2,200 pounds per square inch at the bottom,
before they started drilling the well.
The pressures are phenomenal. That is why I say everyone should focus on the
equipment and on making it two or three times what is necessary to handle that
kind of pressure. I know there must be a limit, but looking at the Louisiana
situation, at what point do you say the equipment must be two or three times
better than what it is now?
Mr. MacLeod: I believe equipment is important. We have reviewed the
equipment that we have selected for this operation. We have tested and retested
the equipment. However, it is also about people, behaviours and the safety
culture we have on the rig. It is also about knowing who is in charge and about
a regulatory regime and requirements. We are very confident in all of that. It
is not just about equipment. Equipment is critical and it must work, but these
other elements are also vitally important.
I will tell you a story about our Stop Work Authority. I have read what you
have read about the BP incident. I cannot comment on it. However, I can tell you
a story about a crane operator aboard our rig who was preparing to lift
equipment off a supply boat. The manifest said that piece of equipment weighed
12 tonnes. The operator looked at the equipment, and in his judgment, that was
He exercised his Stop Work Authority. He shut down the entire operation.
People got around, talked about the situation, looked at the equipment in
question and determined it weighed 20 tonnes. Because he exercised his Stop Work
Authority, that employee was given a significant reward by Chevron and
congratulated publicly. That is an example of how powerful behaviours can be,
such as rewarding exercise of the Stop Work Authority. Even if it slowed down
our operation, that is not an issue.
Senator Brown: I can appreciate good operators. There is no question
that there must have been many good operators. They have about 3,000 wells in
the Gulf of Mexico. However, there is also the bad operator who will make a
mistake. No charges have been brought forward yet, but there are all kinds of
hints that this incident involved some kind of human failure.
That is why I go back to stacking blowout preventers, because if someone
makes a mistake and does not shut down the rig fast enough, you need to have two
or three more blowout preventers, maybe at the top or maybe at the bottom; I do
not know. I am just suggesting that you need more duplication of protection.
Mr. MacInnis: I will touch on a point that Senator Brown and Senator
Frum raised in their questions. I take your point that the equipment must
constantly be improved, because of new circumstances and new lessons learned.
To your point about blowout preventers, back in 2007, about three years ago,
Chevron began development of our Alternative Well Kill System. The Alternative
Well Kill System is a next-generation blowout preventer. It is in the testing
phase right now. There is a year and a half to go before we know that the design
will be commercially viable. There is a lot of work to be done.
I do not intend to raise expectations that there is a game changer afoot.
What I am suggesting, however, at least with respect to Chevron, is that your
point is well understood. The technology must constantly be updated. Currently
we are testing our program. It has gone through two phases, both successful. We
have a number of other phases to go through, including one that would ultimately
require us, working with the National Energy Board, to ensure the tests we are
doing conform to their requirements.
I cite the National Energy Board because this project came out of our plans
hopefully to start to do some work in the Canadian Arctic at some point down the
road. We will need a different type of tool by way of blowout preventer there,
and we are looking to develop that unique application.
Senator Brown: Thank you. I think the public needs to hear that new
and better equipment is being developed all the time.
Senator Dickson: As a supplementary on the blowout preventers that
Senator Brown and others were asking about, an article referred to the question
of whether in the U.S. new redundancies for blowout preventers will be mandated
What are the laws now in the Gulf of Mexico regarding redundancies for
second-tier systems? Also, would you like to comment on radio-operated valves,
whatever those might be?
Mr. MacLeod: I cannot speculate as to what the new changes, if any,
will be. We look to understand the facts and take on board the lessons learned.
We look forward to improving the safety and the environmental performance of our
industry. I cannot speculate whether additional redundancies will be called into
question or added to the requirements.
However, I can talk about that remotely operated valve you asked about. We
have an acoustic transponder system. I think that is the question. Using a
signal from above the waterline, perhaps onboard a ship, a standby vessel can
send a signal to the blowout preventer and actuate the blowout preventer
remotely. That is one method of actuating the blowout preventer; it is a backup
method, if you will.
The other remote method is using ROVs, which are unmanned submarines. They
can go down and turn valves for the blowout preventer. We have both of those
systems, as well as the automode function and the emergency disconnect system
onboard the Stena Carron. We tested that. We are confident the equipment
works as designed for those pressures in our location.
The Chair: We will be come back to the Atlantic Canada senator. I do
not know whether the next senator is a liberal arts graduate or not; he is a
Liberal. Regardless, the point is he is a renaissance man: Senator Banks.
Senator Banks: I am only a graduate of the school of hard knocks, Mr.
Chair. Thank you for being here, gentlemen. Mr. MacInnis, I think you are an
Albertan, if I am not mistaken.
Mr. MacInnis: I am originally from Nova Scotia, but I moved to
Edmonton in 1980. I have enjoyed many of your performances while in Edmonton.
Thank you for that, as well.
Senator Banks: I hope you enjoy this one. You have said twice, Mr.
MacLeod, that this is a complex well. Is it the depth that makes it complex?
Mr. MacLeod: It would be the depth, yes.
Senator Banks: There are five rams in the blowout preventer in place
in the well you are talking about off Newfoundland. We understand what the rams
are. However, you said that, in addition to that, there are two annular aspects
of the blowout preventer. Can you explain to us what that means — what they are
and how they work?
Mr. MacLeod: I will need to defer to my drilling experts to get exact
answers. There are sheer rams that cut pipe. There are blind rams that seal.
There are pipe rams that bind around the pipe. Regarding your specific question
about annular rams, I would have to get back to you.
Senator Banks: I would be grateful if you would.
Mr. MacLeod: Will do.
Senator Banks: It is a term we have not heard before. We understand
the rams and the sheers, but if you could get back to the clerk about what an
annular function is, that would be great.
My hands-on information about drilling is from 1949. My uncle owned a
pipe-pulling company. In those days, there was always a casing from the point
where the ground began — though I do not know about the water — inside which the
drill stem worked. Is there a casing between the top of the water and the seabed
through which the drill stem proceeds, or is that just a drill stem?
Mr. MacLeod: That is a good question. There is a riser, which is, in
effect, a casing that the drill string goes through.
Senator Banks: I presume casing is put in once you hit the seabed and
you are going into rock. The drill stem works from inside that; is that right?
Mr. MacLeod: Yes. From the seabed to the last casing section, yes,
there is casing.
Senator Banks: It is not intermittent, but continuous, correct?
Mr. MacLeod: As I said earlier, we start with large diameter casing
and we go to successively smaller diameter casings as we get deeper down the
Senator Banks: But there are no blanks?
Mr. MacLeod: No.
Senator Banks: Therefore, those collars you referred to were not
intermediate pieces of casing, were they?
Mr. MacLeod: No. We set plugs in the well as we leave the well.
Senator Banks: You said the blowout preventer is pressure-tested on
board and again once you hit the seabed. Is it tested again?
Mr. MacLeod: Yes.
Senator Banks: Continuously or intermittently?
Mr. MacLeod: Intermittently. I believe we test the BOPs every three
Senator Banks: Mr. MacInnis, you talked about leases in the Arctic, in
the Beaufort Sea, I think.
Mr. MacInnis: Yes.
Senator Banks: We have heard evidence from the National Energy Board
that it was so. In those leases, is there an obligation on the company to drill
within a specific time?
Mr. MacInnis: In the Beaufort Sea, there is an obligation to spend a
certain amount of money during that period of time. If you do not spend that
money in that period, you are obligated to pay a percentage fee. That is the way
the system up North works.
Senator Banks: It just talks about spending money, but it does not say
what you must spend it on. Does it not say you must drill?
Mr. MacInnis: No. It just says you have to spend a certain amount of
your commitment. The commitment has a certain dollar value you are required to
spend within a certain period of time. That obligation is what allows the
regulator to compare one company's commitment to another and decide whom to
award the lease to. If you do not fulfill that commitment, then a penalty is
Senator Banks: Yet you could spend that money without drilling a well,
Mr. MacInnis: You could, but yes, it would be highly unlikely.
The Chair: I am not cutting you off, Senator Banks. On the contrary, I
am thinking of putting you up for law school. I am not sure where you were going
with this, but this might be a good point to make something clear. We have been
told there is no drilling in the Beaufort or the Arctic at the moment.
Therefore, Canadians ought to relax. At this point in time, there will not
suddenly be an oil disaster in the Arctic or the Beaufort.
However, it has been suggested by some that there are commitments on paper
and in binding agreements that force people like your company and your
competitors to drill within a certain period of time and that this is sort of
like an irrevocable commitment. I find that hard to believe, because the reality
is there is no drilling right now.
Senator Banks, you are wondering whether there will be drilling pursuant to
those leases, are you not?
Senator Banks: Not today, but we have heard there is an obligation in
those leases that requires that drilling must commence by a drop-dead date. This
is what we have heard, and we are now hearing differently.
Mr. MacInnis: I would suggest that the issue is moot, because the
National Energy Board has said that there will be no activity and that it will
conduct a review of Arctic drilling issues. I understand the NEB is currently
developing the scope of the review. You can rest assured that no one will do
anything in the Arctic anytime soon.
The Chair: For our viewers, and Senator Banks you would agree with
this, Mr. Gaétan Caron, Chair of the National Energy Board, who will appear
before the committee this month, said there is effectively a moratorium on any
kind of drilling, although the word "moratorium" might not have been used.
Mr. MacInnis: That word certainly has not been used, but the NEB has
announced its review. Mr. Caron will be able to go into more depth on that
Senator Banks: The other day, we raised the matter of the relationship
between the operator and the drilling contractor. Do you pass on some of your
undertaken liability by virtue of the lease? Do you have recourse to that
driller? To what extent is the driller exposed? Do your agreements include words
such as "indemnify and save harmless"?
Mr. MacLeod: The board has granted Chevron the permit to drill the
well. Chevron is ultimately responsible. Our contract with our drilling
contractor is confidential. It includes terms and conditions with respect to
liability, gross negligence and what have you, but I would rather not get into
those details. As a senator said earlier, the board, the public and the
government would look to Chevron primarily to manage in the event of an
incident, when we would be the responsible party.
Senator Banks: Period.
Mr. MacLeod: Yes.
The Chair: It follows that they would have their own recursory actions
in terms of the contractual relationship.
Mr. MacLeod: Indeed.
Senator Seidman: We have heard and are confident that regulations and
oversight minimize risk and that corporate standards, best practices and safety
protocols further reduce risk. What you have presented this morning is truly
impressive with respect to your safety protocols, which are clear, well-designed
and well-written. We know that all we can do is minimize risk.
We also know that more released contracts mean more drilling and more rigs
and, given the law of probabilities, a greater likelihood of an accident. You
have spoken a lot about drilling technology. Clearly, there has been and
continues to be a significant amount of research and development in this area.
We know that the technology has been developed to drill in water to depths of
2,500 metres, but we have not heard much or know much about the science and
technology to remedy the kind of catastrophic event that can occur at such
I am sure that all Canadians, Americans and probably everyone around the
world have watched this oil gusher in the Gulf of Mexico via the media and the
efforts to stop the flow with mud, tires, golf balls, cement and cutters that do
not work. We are all asking how this is possible.
Does your company have ongoing R & D? You talked about a commitment to spend
a certain amount of money on a contract in the future, but do you have a
commitment to spend a certain amount of money on R & D in order to develop the
science and technology to deal with a potential catastrophic event, as we are
seeing in the Gulf of Mexico? Should you have an enormous spill or blowout in
the Arctic or offshore Newfoundland, do you have or are you in the process of
developing the science and technology that could deal with that? Does your
company have a relevant fund? Could you tell us a bit about that?
Mr. MacLeod: There are several questions in there that I look forward
to answering. If I miss one, remind me.
You made a statement about the increasing risk and probability. I point to
Chevron's safety performance over time, which has improved quite significantly.
In 2009, we had a record safety year, yet our drilling activity and production
did not decrease. In fact, it was the highest ever. With increasing activity, we
are seeing better safety performance.
The industry is showing better safety performance over time. The industry and
Chevron, of course, were very proud of our safety performance and our drilling
performance in particular. Our low lost-time injury rate is industry-leading,
even with the increasing amounts of activity over time. Until six months ago,
you could not find a rig in the world because they were all busy drilling wells,
many of which are complex deepwater wells. I do not expect to see dramatic
increases in accidents. The data do not support that, and our results do not
As to your question about R & D, Chevron is a very large corporation with a
large technology company. We invest R & D funds in oil spill technologies,
drilling technologies and improving safety. I can speak to one in particular. We
are looking at oil spills in ice-infested waters. We co-founded an industry
project in the Barents Sea. Oil was spilled in the ice, and recovery methods
were investigated. We indeed spend significant sums of money on research and
In Newfoundland and Labrador, as Mr. Ruelokke mentioned at a previous meeting
of your committee, there is a requirement to spend a certain proportion of our
earnings on research and development. We are obligated to spend that money, and
we will spend it in Newfoundland and Labrador, which is also part of the
requirement. Some investment opportunities we are looking at go directly to
making the offshore safer. I am proud of that effort, and there are more things
to come on those investment decisions.
Senator Seidman: What proportion of your earnings is spent on R & D
under the contractual responsibility? Is the R & D specifically on cleanup
Mr. MacLeod: The board in Newfoundland has not mandated what the R & D
must be spent on. It can be spent on true R & D or on education and training.
The industry in Newfoundland and Labrador is considering a range of
opportunities for research investments. To date, we have not made any firm
commitments on those expenditures. The R & D expenditures are in the hundreds of
millions of dollars over the next 10 to 20 years to be spent in Newfoundland and
Senator Seidman: I appreciate that and find it hopeful. However, we
are a little cynical in our thinking. Private industries spend a lot of money on
developing their drilling technologies so they can do it better and better, but
very little of their money is spent on the hypothetical environmental disaster.
That kind of cynical thinking is reinforced by an event such as the one
unfolding in the Gulf of Mexico. Clearly, the oil would not gush all these days
into the gulf if there were R & D that could produce an immediate solution.
Could you please say something to increase our confidence in this area?
Mr. MacLeod: Here I am speculating. As we understand it, as we learn
more about what happened we will look at containment opportunities or methods to
improve our ability to contain.
Our focus is on preventing incidents like this from happening, and we believe
that it is very possible, through equipment, through procedures, through people
and a culture, and we have done so.
How to contain an incident like this is quite challenging. That is very
clear, and I do not deny it. I read, perhaps as you did, that BP has committed
to spend I believe $500 million in research and development in offshore safety,
so there is one company stepping up.
The Chair: You were able to bring out and into the record the DWC, the
Danny Williams clause, the licence — anyway, hundreds of millions.
Senator Peterson: Your safety culture is very reassuring, and you
certainly have done everything you can on the human element. We hear a lot about
relief wells and that after all else fails this is the final solution.
Could you explain exactly what that is? Do you have to drill into the
original formation or intercept the existing well? How does this go and what is
Mr. MacLeod: My understanding of drilling a relief well is not
thorough, and if my answer does not provide you comfort then let me know and we
will find out more information.
The basic idea of a relief well is to intercept the original wellbore and to
cement off the formation to stop the flow of oil out of that wellbore. The
timing to drill that relief well depends on where the issue is located. It could
be shallow up the hole or could be deeper, and shallower generally takes less
time to drill.
We will be approximately three months getting to our total depth at the Lona
well, so if we had to drill to that depth to drill a relief well it would take
approximately that amount of time. However, I am speculating here.
Our focus, of course, is on preventing these incidents from happening, to
have the equipment, the people, the procedures, the training, and the
regulations so that we will never, ever need to drill a relief well.
Senator Peterson: You indicated that you are monitoring the pressure
continuously all the way down.
Mr. MacLeod: Absolutely.
Senator Peterson: Can you ascertain the reservoir pressure before you
get into the hydrocarbon, or is that an issue?
Mr. MacLeod: First, you mentioned hydrocarbon. In the exploratory well
we are drilling, we hope to find hydrocarbons. Some technologies can give an
estimate of pressure ahead of the drill bit. The best technology is to have
drilled a nearby well, and in the Orphan Basin we have drilled a nearby well and
have sampled the pressures. Therefore we are pretty confident in what the
pressure regime will be in the location we are drilling now. However, we are
prepared for all circumstances.
If we encounter high pressures we would know that; we would be prepared, and
we have procedures in place to manage any pressure regime we encounter in the
well we are drilling now.
Senator Peterson: I believe we were told earlier that if there was an
oil spill, and we hope there will not be one, it would travel only 100
kilometres. Why would that be? Is there something special about the area you are
Mr. MacLeod: I do not know the particular number you are talking
about. I have not heard that. As part of the approval process for drilling this
well, we conducted an environmental assessment. As part of that environmental
assessment, we contracted a third-party company to evaluate what would happen in
the event of an oil spill. We evaluated many scenarios. Part of that evaluation
included weather, current and sea states in the North Atlantic.
In one of the cases we modelled, we modelled a 30,000-barrel a day blowout,
which of course we do not ever expect to have happen. Some 14,000 trajectories
and simulations were run of that particular envisioned disaster, and none of the
oil spilled in any of those trajectories reached any shore. It dispersed; it
evaporated because of the high sea states. The sea states are challenging, but
in that instance they would work for us.
Senator Peterson: Is the liability with your partners joint and
Mr. MacLeod: We have shared liability in that. I do not want to
comment on the legal term. We are the operator; we would take the lead role on
any spill response, but we have partners in the well, co-venturers, as I
Senator Dickson: I want to come back to page 2 of your remarks and the
second-last paragraph, which deals with the levels of environmental assessment,
your health, environment and safety policies, your environmental protection
plan, and so on. On the one side you have the technical, regulatory piece, and
on the other side you have the corporate culture and how important the corporate
culture of a large company is, right down through to the drill floor. Would you
elaborate further on that? I think it is necessary for our audience, as well as
for those around the table here, to get a firm understanding of the importance
of that corporate culture. I have had a minimum amount of experience myself.
Over and above what the stringent regulatory requirements may or may not be, it
really fits into the new philosophy of regulation in the oil and gas industry
being goal-oriented versus prescriptive. May I have your comments on that,
Mr. MacLeod: As you may recall at the beginning, I have been with
Chevron for 30 years. We live by "the Chevron way." It really does guide
everything we do, and it speaks to our corporate culture — our belief in safety.
As Mr. MacInnis said, we start every meeting with a safety moment.
I have here cards that we observe individuals' behaviour, such as their
posture at their desk. Here is one right here. We are expected to make an
observation every month. Every individual in our company fills out one of these
cards because we care about each other. It is a very powerful behavioural
system. It could be just the way you are sitting at your desk.
It goes throughout our company. Our corporate culture focuses first and
foremost on safety. I have felt it for 30 years, and I am very proud of our
company corporate philosophy and approach to safety.
It pervades everything we do. We have policies such as "Do it safely or not
at all," and "If you see it, you own it." If I see a trip hazard as I walk out
the door, I own that hazard. I will not walk by it. That is part of the way we
live and work at Chevron. I do not know whether that answers your question,
senator, but it is engrained in all of us.
Senator Dickson: Yes, it does. It really touches the surface, but I
have a great appreciation that multinational companies have tremendous health,
safety and environment policies.
Mr. MacLeod: I will offer another anecdote. On the Stena Carron
we believe in operating safely. If we see someone not operating safely, we call
that person to task. A contractor was working on board the Stena Carron.
He was observed practising some unsafe behaviour and was coached to operate
safely. A day went by, and that individual was seen by the senior person on the
rig, the offshore installation manager, walking down a stairwell not holding the
handrail. He was put on the helicopter in the morning and told never to come
back on the rig. That goes around the rig. Everyone knows that person is not
invited simply because he did not hold the handrail.
Senator Dickson: My second line of questioning relates to something
Senator Banks introduced, the liability provisions that affect the well you are
drilling now. We had a presentation from Natural Resources Canada. They
mentioned that the general practice is $30 million to $40 million for absolute
liability; $70 million in a form that ensures the regulator will have access to
funds via bonds or whatever support for the balance sheet; and $250 million to
demonstrate financial capacity to cover liability by insurance, letter of
What are the amounts and the conditions insofar as covering liability on the
particular well that you are drilling in the Orphan Basin?
Mr. MacLeod: There are regulations for these financial instruments.
They total $350 million. There is insurance, letters of credits and promissory
notes. I believe it is $30 million in letters of credit, $70 million in
promissory notes, and $250 million in insurance.
However, that does not imply that there is a cap in liability. If there were
an incident, Chevron would be responsible for managing that incident and
cleaning up the mess, which we certainly do not expect in our plan.
Senator Dickson: That is absolute liability. There does not have to be
proof of negligence?
Mr. MacLeod: If oil is coming out of our operation, it is our
The Chair: You have heard of a presumption, which is rebuttable, but
there would be a strong res ipsa loquitur if the oil was coming out of
Senator Massicotte: Thank you for being with us. Your argument is
comforting and convincing that the Chevron way is such that there is minimal
risk, that you operate differently from others and that we should not be
On a scientific basis, when you do your risk assessments, what is your
probability rate? You say an oil spill will never occur in your case, but what
is the probability of a spillage? Is it one in a million or one in 100 million?
Mr. MacLeod: I do not have the exact numbers at hand. We provided the
board with the probability of a blowout, and I will provide that number to you.
Senator Massicotte: You also mentioned that in your scenario there was
a lot of spillage, but nothing went offshore. Does that suggest there was no
consequence environmentally from that spill?
Mr. MacLeod: What I said is that none of the oil, in all the
scenarios, would reach land. A spill would be a disaster, no matter where it
happened, whether it reached shore or not. I did not say there would be no
environmental cost. I believe there would environmental consequences.
There are seabirds, obviously, in the region. We are in a deepwater area, so
there are relatively few fish, but there surely would be environmental
consequences. We would not take the situation lightly, and we would deal with
Senator Massicotte: Premier Danny Williams gave a description that if
there were a spillage, given the temperature of the water, it would not be as
serious. Can you describe what the consequences would be environmentally, and do
you agree with Premier Williams' description of the consequences?
Mr. MacLeod: I cannot speak to Premier Williams' comments, although I
have read his comments.
In the North Atlantic, the sea states are quite severe, typically,
particularly in the winter. The high sea states would serve to disperse a lot of
the oil, and a lot of the oil would evaporate.
I remind you that we have not yet found oil, so we do not know the type of
oil we might find. In fact, we do not know whether we could find gas; we are not
There are differences between gas and oil, as I think Stuart Pinks shared
with you a couple of weeks ago. There is heavy oil and light oil. Light oil and
gas evaporate into the atmosphere, whereas heavy oil is different.
We have not yet discovered oil there, and it is difficult to speculate on
what would happen to the oil in that environment. We have modelled a range of
scenarios, oil types, and sea states. I repeat that in all of those scenarios,
the oil did not reach shore.
I want to reiterate that we are focused on prevention. With our equipment,
our procedures, our people and our training, we do not believe we will ever
encounter such an event.
Senator Massicotte: You make a solid argument that Chevron sets an
example. However, when you start believing that, you also start believing that
the other companies are not as sensitive or as careful as you are. Acknowledging
that, what would you recommend that the government or the National Energy Board
change to ensure the other companies' cultures and procedures are as cautious as
Mr. MacLeod: With respect, I did not imply that others treat the issue
of safety as less important than Chevron does. I believe the industry as a whole
treats safety as their number one priority. However, I cannot speak for others.
I can only speak for Chevron. Frankly, I cannot speak to regulatory policies or
changes in regulations. I can say that if changes are made, Chevron will comply
with those changes, anywhere we go, anywhere in the world.
The Chair: Senator Massicotte, for the committee, maybe we should each
have one of those cards that says it is risky to put words in the witness's
mouth that he did not say.
To be sure we have the facts, since you mentioned that you have operations in
Hebron and Hibernia, from your general knowledge, are you able to tell us what
drilling is going on today, on June 10, 2010, off the Atlantic shores?
Mr. MacLeod: Sure. First let me say that Hibernia is operated by
Hibernia Management & Development Company Ltd., HMDC, not by Chevron, but I do
know that today there is a well drilling at the Hibernia platform. Two other
rigs, in addition to the Stena Carron, are currently in the general
region of Newfoundland offshore. One is the Glomar Grand Banks and the
other is the Henry Goodrich. I believe one of those is in the shipyard
for repair and perhaps the other one is drilling. However, we are not operating
that well. Another operator is. Then there is the Stena Carron, our
operated well in the Orphan Basin.
I understand from Stuart Pinks' testimony of a couple of weeks ago that there
are no wells currently being drilled in Nova Scotia or at the Sable project. The
Hibernia; perhaps another well, the Glomar Grand Banks, I believe; and
Stena Carron are the three operating drilling units. These units are all
different. Hibernia is a platform. The Glomar Grand Banks is a
semi-submersible drill ship in moderate water depths of roughly 100 metres, and
the Stena Carron is in 2,600 metres.
The Chair: That refers to drilling and exploration?
Mr. MacLeod: Yes.
The Chair: In addition to that, there are operations. Could you
enumerate them? I gather from your earlier answer that there is always risk when
you are dealing with oil, so those operations are relevant to our study as well.
Mr. MacLeod: There are currently three producing fields in
Newfoundland: the Hibernia field, the Terra Nova field and the White Rose field.
White Rose is operated by Husky; Terra Nova is operated by Suncor; and Hibernia
is operated by HMDC. Hebron, which has been mentioned, is still on the drawing
board. Oil was discovered decades ago at Hebron, but it is not under
development; there are no drilling and no activities in the waters by Hebron.
The Chair: Thank you. That is helpful.
Senator Mitchell: That was my question. It was well asked.
Senator Lang: I want to go back to the blowout preventers and Senator
Frum's line of questioning. First, I would like to get something clear in my
mind: Under regulation by the regulatory body, the Newfoundland regulatory body
in this case, is there a minimum requirement of the type of blowout preventer
that you must use, or is it up to you as a company to determine what that
blowout preventer will be and how you use it?
Mr. MacLeod: We are right in the middle of a shift from a prescriptive
regulatory regime to a goal-based regime. I am unaware of whether there are a
required number of redundancies, rams or what have you in the new regime.
I can tell you that Chevron will meet and in many cases exceed the regulatory
requirements. It is my understanding that the blowout preventer we are using at
the Stena Carron, has an additional redundancy built in that is not
required by regulations. I enumerated four backup systems or methods to actuate
the BOP. It is my understanding that two are required. We have four in total.
Senator Lang: I am thinking more globally, because whether the
catastrophe Senator Seidman spoke about is off our shores or off Greenland, it
seems to me there should be general standards across the industry where those
types of requirements are dictated by regulations. That would ensure they are
committed to not just by your company but also by other companies. Perhaps you
might want to comment on that.
Mr. MacLeod: I can once again reiterate that Chevron will meet or
exceed regulations wherever we work. I do know, and Mr. Ruelokke spoke to it,
that regulatory agencies meet and compare notes, methods and standards by which
the industry is regulated. I know that regulatory bodies, including the
Canada-Newfoundland and Labrador Offshore Petroleum Board, meet with the U.S.
Minerals Management Service, the Norwegian Petroleum Directorate and other
regulatory bodies to talk about best practices. I believe a lot of best-practice
sharing is already going on.
Senator Lang: In conclusion, I want to say that we all appreciate your
very concise and informative presentation. We know there is risk, but it is very
valuable to know what we are experiencing off the coast, in view of your safety
culture and the fact you have successfully drilled a well fairly close by and
are now aware of the pressures. That is probably very valuable information for
yourselves and your contractors. It gives us some comfort that, as it is
proceeding, you are doing the best you can with what you have.
Mr. MacLeod: Thank you.
The Chair: I have made a note of your disclosure that Senator Lang
owns no shares of Chevron whatsoever. Senator Neufeld has a supplementary.
Senator Neufeld: It is about the blowout preventers. You have a lot of
experience in deepwater drilling around the world. Would the blowout preventers
be the same for the North Sea, in the same depth of water, as for the Gulf of
Mexico or off the coast of South America? Would you use the same type of
equipment, or would you change your equipment? I know this is hypothetical, but
I want you to think about the same conditions, same depth of water and the same
things that you find drilling off the East Coast now.
Mr. MacLeod: I am not a BOP expert, but it is my understanding the
blowout preventers have to be rated for certain pressures in water depths. With
knowledge of that, the appropriate BOP would be selected. We would refer to our
in-house BOP specialist team in selecting the equipment that is right for the
job. As I said in my opening remarks, they apply their standards around the
world regarding which type of BOP we should be using.
Senator Neufeld: I think that is a good answer. It says that not every
country has to have the same regulations, but you internally have a minimum
standard depending on the pressures you drill in and those kinds of things, and
you often go with a standard that is a bit better.
Mr. MacLeod: Right.
Senator Mitchell: The discussion has generally focused on the
exploration risks. You have explained very clearly and well what Chevron has
done to reduce, diminish and almost nullify that risk. For example, the Stena
Carron has at least four levels of redundancies, and you have described the
confidence Canadians and others can have in that.
However, there are the three stages: There is exploration; there is
development, which as you said might be minimal risk because they are not trying
to get anything out of the field at that point; but then there is production.
Production would be different from what we have been discussing.
Are the risks different? Do you have the same levels of redundancy if there
is a blowout during the production phase? This is relevant, because BP was at
the production stage when the event occurred, was it not? Are there differences?
You do not have the Stena Carron at that point.
Mr. MacLeod: It is very complex to give you a short answer on risk on
a producing facility. Producing facilities are all different. Hibernia is a
concrete platform resting on the seabed with topsides. The Terra Nova and White
Rose fields have ships. We have very different operations around the world.
We are a partner; we do not operate the Hibernia platform. Hibernia has an
excellent safety record, I must say. We monitor it and talk about it at
management committees all the time. Looking at the safety and spill performance
of that particular facility is always the first order of business. I would ask,
though, that the question of that facility be directed to the operator, HMDC.
As a partner in that facility, we are very proud of the operator's
performance from a safety and spill perspective. It is excellent.
I am sorry, what was the follow-up question to that?
Senator Mitchell: I think that is it. Can you give us some general
ideas about what technology in a production facility would prevent or cap a
blowout? Is it similar to what you have on the Stena Carron?
Mr. MacLeod: It is similar in concept. However, on a production
facility like the Hibernia platform, the blowout preventers are on the platform.
You can touch them. You can feel them. You can intervene more easily than you
could in deepwater.
Again, I am speaking more generally about platforms like Hibernia. I cannot
speak to Hibernia, specifically. We have asked the operator to speak to that.
The blowout preventer is on the seabed, like they are in these shallow water
Senator Mitchell: Thank you.
Senator Banks: This was Senator Mitchell's question: Were the four
levels of redundancy in the means of activating the blowout preventer?
Mr. MacLeod: Correct.
Senator Banks: It is not that there are four levels of blowout
preventer redundancies; there are not four blowout preventers.
Mr. MacLeod: No. There are a number of rams, as I mentioned.
Senator Banks: With four means of turning it on.
Mr. MacLeod: Five means — the primary way and the four alternates.
Senator Banks: I will ask you the question that Senator Seidman sort
of referred to pertaining to mitigation. You are likely noticing a bit of doubt
in our questions. I will paint the scenario: Some of us are sitting around a
room like this in Louisiana on April 19 and BP is telling us that they have
never had a major blowout, that their safety record is perfect and that they do
not anticipate any problems because they have everything covered. I suspect that
could be true, because there had not been anything like it before, which leads
to many of these questions.
I ask you to comment on the mitigation and how to deal with it if, God
forbid, it should happen. I put the question in the context of Louisiana and
Florida. The people who live there and have been affected by this disaster had
nothing to do with it and do not care that BP has a lot of resources, is
standing behind this and is legally responsible. That simply does not make any
difference to them. Would you tell us a little more about the mitigation
aspects? You said the models showed that no oil from a potential accident in the
well you are drilling today would ever hit a shore, but I am sure that is not
true of every deepwater well that is drilled.
We do not seem to have the means to contain, suck up and stop a leak of the
magnitude of the one in the Gulf of Mexico. I hope that someone is looking at
what to do in that unhappy event? Humanity could reasonably contain the
Exxon Valdez spill and sop it up with chemicals and dispersants, but those
techniques have not worked in the current event. Could you comment on that?
Mr. MacLeod: Yes. Certainly the event in the Gulf of Mexico is tragic
and unprecedented. BP is faced with a huge challenge. We are assisting in that.
We are proud of our assistance, both direct and indirect. We lead one of the
U.S. government panels on blowout preventers and recommendations for possible
changes to blowout preventers. We are very proud of that.
In terms of mitigation, our spill response plan is a tiered approach. The
first of three tiers is that in the event of a small spill, we would activate
resources on board the Stena Carron and the supply vessel standing by. A
certain amount of boom and equipment and absorbent equipment would be brought to
bear. The next tier is to activate equipment in St. John's at the Eastern Canada
Response Corporation, ECRC, with whom we have a contract to help respond. In the
event of an incident in the magnitude of the current one in the Gulf of Mexico,
we would go to the third tier, which our corporation has only gone to once. That
was during Hurricane Katrina, when there were a number of small spills. In the
third tier, we have a worldwide emergency response team. We could immediately
mobilize 200 or more people to help us to manage that spill, and we would call
in resources from around the world. That is our mitigation plan.
Senator Banks: Thank you.
The Chair: The Eastern Canada Response Corporation will appear before
the committee next Tuesday evening with the its president, Mr. James Carson. We
will be able to look into that aspect further.
We are grateful to you, Mr. MacInnis and Mr. MacLeod. You have given us a
very clear picture. It is palpable how proud you are of your company and your
culture, which is refreshing to see. We hope it has reassured our viewers and
Canadians about your operation.
Are there last comments?
Mr. MacInnis: I have taken away several undertakings, and I want to
reassure Ms. Gordon that we will respond to them within the next week.
The Chair: Thank you. I declare the meeting adjourned.