Canada Seeks Tightened Marine Oil Spill Plan

Canada moved on Tuesday to strengthen its response plan for oil spills at sea ahead of the development of new pipelines that would sharply increase tanker traffic in Canadian waters if they are built.

Among the new measures, the federal government said it would remove a per-incident liability cap on a domestic clean-up fund, which means that all the money in the fund could be made available to clean up a single spill. It also pledged to cover spill costs if clean-up funds were exhausted.

It also said it will lift its ban on the use of dispersants in cases when using them offers a net environmental benefit. Dispersants are chemicals that break down oil slicks but can also harm marine life.

"With these changes, Canada will have the most robust and comprehensive liability and compensation system in the world," Transport Minister Lisa Raitt said in announcing the Conservative government's plan at an event in Saint John, New Brunswick.

The changes to the ship-source oil spill regime come as the government readies to rule on Enbridge Inc's proposed Northern Gateway pipeline, which would carry oil from Alberta to the British Columbia Coast.

Regulators are also reviewing Kinder Morgan (KMI)'s plan to twin its Trans Mountain pipeline from Alberta to the West Coast. Those two projects could bring an additional 600 tankers to Canada's Pacific Coast each year.

Also, TransCanada Corp has proposed a pipeline to ship Alberta crude east to refineries in Quebec and New Brunswick, increasing tanker traffic off the East Coast and in the Gulf of St. Lawrence.

The pipelines are opposed by many environmentalists and aboriginal groups, which fear spills and the possibility that pipelines will hasten development of the Alberta oil sands and exacerbate climate change.

The government has pushed hard to reassure Canadians that it has policies in place to manage increased tanker traffic and respond if there is a major spill.

Under the revised plan, Canada will lift the C$161 million ($147.65 million) cap on its Ship-Source Oil Pollution Fund, making available the full amount if needed for a single incident. There is about C$400 million in the fund currently.

Raitt said that in a worst-case spill, once all domestic and international pollution funds have been tapped, the government will pay out any remaining compensation, and then recover that cost through an industry levy.

The government said it will also invest in new navigation technologies to help vessels move safely through congested waterways and support scientific research looking at how different types of heavy oils behave in marine environments.

The new plan comes five months after a government panel cautioned that Canada must be better prepared to respond to major oil spills if more crude starts to flow in pipelines to its Pacific Coast.

($1=$1.09 Canadian)

(Reporting by Julie Gordon; Editing by Jeffrey Hodgson; and Peter Galloway)