The official Opposition critic for Northern development Dennis Bevington is fuming after nearly a million hectares of Arctic offshore oil and gas leases in the Beaufort Sea were sold to a British company with just $220 in the bank and a corporate worth of minus $32,000.
Aboriginal Affairs and Northern Development (AANDC) Minister John Duncan issued leases for six parcels totaling 900,000 hectares off the north coast to privately owned British company Franklin Petroleum Ltd. on Sept. 11, based on its promise to spend at least $7.5 million developing them over the next five years.
With only CEO Paul Barrett and his wife listed as its sole two employees, the company’s most recent corporate filing was for £139 GBP ($220 CAD), with a corporate value of £-20,760GBP (-$32,961 CAD).
The same company was awarded another two parcels for $2 million in last year’s auction, giving it a total holding of 1.1 million hectares in the Beaufort – one of the largest in the Canadian Arctic among several multinationals, including ExxonMobil, ConocoPhillips and Chevron.
Bids in previous auctions have been in the half-billion dollar range.
MP for the Western Arctic Dennis Bevington demanded answers from Duncan last week in the House of Commons, accusing AANDC of failing to protect Canada’s interests in a sensitive area in which drilling was just recently approved.
“It’s just a shell company. There’s no money in it,” Bevington said of Franklin Petroleum. “It has other backers somewhere, but they’re not identifiable.”
Bevington told Northern Journal that much of his concern lies with Canada’s Petroleum Lands and Gas Act, which simply requires that companies provide a letter of credit for a deposit to bid on a project.
Though Duncan could have refused the bid under the act, he is not able to control to whom those leases may now be transferred. AANDC spokesperson Geneviève Guibert wrote in an email that the minister approved the sale based on the “sole criterion” in the act that is used to assess bids: the highest bid wins.
Bevington said that criteria is not enough. He said Canada needs to have more decision-making power over offshore oil drilling in the Beaufort Sea, considering the recent report from the National Energy Board advising cautious development.
“To me it speaks to the fact that we were doing this a long time ago with certain rules and those rules are now not appropriate,” he said. “I would like to see that there be some process in place to make the minister responsible to examine and to approve transfers or leases. I think that’s clearly something that should happen now…The world’s changing and we have great environmental concerns over the development of Arctic leases.”
While attempts to reach Franklin Petroleum were unsuccessful, the CEO indicated to other media, including The Financial Post, that Russia or South Korea may be interested in a joint venture by 2015.
Bevington said he would not be surprised to see state-owned companies from controversial nations become part of the equation.
“I think any country would be interested in obtaining it, and right now we see China’s working very hard – they’ve got icebreakers, they have deep sea drilling platforms… and it’s got a huge interest in the Arctic. So it could be China, as well.”
The Beaufort Sea region, including the Mackenzie Basin, has an estimated potential of 5.4 billion barrels of oil and 53 trillion cubic feet of natural gas. So far, wells in 52 petroleum fields have discovered over a billion barrels of oil and nine trillion cubic feet of gas in the area.