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National Energy Board Update [PDF 922 KB]

National Energy Board Update

Roland George
Board Member
National Energy Board

 

Inuvik Petroleum Show
Inuvik, Northwest Territories

 

11 June 2013

 

 

Slide 1 speaking notes (click to view)

Good morning and thank you for the opportunity to talk about how I see the National Energy Board (NEB) continuing to work with the people of the North and Northern institutions in the years and decades to come. This presentation will address:

  • Why I believe we have, at the NEB, an effective toolkit to promote safety, environmental protection, and protection of communities when companies propose to us to explore for oil or gas, to develop it, to produce it, and to transport it; and
  • The NEB’s commitment to continual improvement and to working with Northern institutions towards “made-in-the-North” solutions.

 

NEB Role in Canada’s North

Post Devolution Northwest Territories COGOA Map

 

Slide 2 speaking notes (click to view)
  • The NEB is an independent federal quasi-judicial board. Within the mandate set by Parliament for the regulation of pipelines, energy development and trade, we are responsible for promoting safety and security, environmental protection, and economic efficiency in the Canadian public interest.
  • In the North, the Board has regulatory responsibilities for oil and gas exploration and production activities. These regulatory responsibilities are set out in the Canada Oil and Gas Operations Act - referred to as COGOA - and the Canada Petroleum Resources Act - referred to as CPRA.
  • The map shown here illustrates the NEB’s role following devolution in the Northwest Territories. We will continue to regulate the offshore, the Norman Wells Proven Area and pipeline, and the onshore land part of the Inuvialuit Settlement Region. I will discuss devolution, and what we are doing to prepare for it, in greater detail in the coming slides.
  • The NEB focuses on safety, protecting the environment, and conservation of oil and gas resources, through COGOA, while land tenure or rights issues, benefits plans, and royalty management is administered by federal departments (Aboriginal Affairs and Northern Development and Natural Resources Canada). This ensures a clear separation between the safety, environmental, conservation and technical issues related to Northern oil and gas development and the financial side.
  • Currently, there is some activity taking place in the Sahtu Region, however, there is no drilling taking place in Canada’s offshore Arctic. In January of this year, the NEB approved applications made by both ConocoPhillips and Husky, under COGOA, to drill and alter wells in the Sahtu Region.
  • It is important to understand that no work or activity proposed for the exploration of oil or gas under the NEB’s responsibility will occur unless we are satisfied that the company’s plans are safe for all people and will protect the environment. Processes for environmental screening or assessment under the various land claim agreements must also be respected.

 

Robust Northern Regulatory Framework

  1. Clear and effective processes
  2. Meaningful engagement
  3. Clear expectations of companies
  4. Enforcement and compliance verification mechanisms to promote safety

 

Slide 3 speaking notes (click to view)
  • In the North, we are working to develop a robust regulatory framework which will result in future decisions on applications being made in a manner that addresses the safety of the public and workers and the protection of the environment. To achieve this, we are:
    • First, working diligently to establish clear and effective processes;
    • Second, committed to continuing to have meaningful engagement with Northerners and Northern Institutions;
    • Third, setting out clear expectations for companies; and,
    • Finally, striving to ensure we have appropriate enforcement and compliance verification mechanisms to promote safety.

 

Clear and Effective Processes

Willard Hagen, Chair, Mackenzie Valley Land and Water Board and Gaétan Caron, Chair/CEO of the National Energy Board, sign a Memorandum of Understanding.

 

Slide 4 speaking notes (click to view)
  • Regulatory efficiency, coordination and predictability are all key elements of an effective regulatory framework.
  • To promote effective communication and regulatory efficiency, the NEB has federal, provincial and territorial partnerships in place to deal with overlapping jurisdictions and common regulatory objectives. We are committed to enhancing and developing cooperative agreements with regulators and land claim organizations.
    • We have, for example, established Memoranda of Understanding with the Bureau of Safety and Environmental Enforcement of the Department of the Interior of the United States of America, the Mackenzie Valley Land and Water Board (shown in the photo here), the Mackenzie Valley Environmental Impact Review Board, the Inuvialuit Environmental Impact Screening Committee, the Inuvialuit Environmental Impact Review Board, the Nunavut Water Board and the Nunavut Impact Review Board.
  • As there is an increase in industry interest and activity in the North, there will be an unprecedented demand on our services. To ensure that we are able to respond to this increase in demand, we are working to build our capacity through additional staff and ensuring we have the right people with the right skills.
  • As I am sure you are all aware, the consensus on the terms of a final devolution agreement was announced on March 11, 2013. This agreement, targeted to take effect in April 2014, will transfer administrative control over public lands and inland waters, as well as law making powers from the Government of Canada to the Government of the Northwest Territories.
  • In order to ensure continuity where the NEB will no longer be the regulator, we are committed to providing support and any skills and expertise that is required to Northern Boards, the Government of Canada and the Government of the Northwest Territories as they work to devolve responsibilities for oil and gas from Canada to the Government of the Northwest Territories.
    • We are, for example, working to develop Memoranda of Understandings and Service Agreements with Northern regulators, working to ensure knowledge and skill transfer, and helping to develop required Acts and Regulations.
  • In an effort to cooperate and provide mutual support, the Board is pursuing a Project Specific agreement with the Environmental Impact Review Board - known as the EIRB - for coordinated review of the Imperial Beaufort Exploratory Joint venture.
  • We are also part of a joint industry/government working group to explore options for coordinated environmental reviews of exploratory drilling projects in the Sahtu Region.

 

Meaningful Engagement

Northwest Territories Engagement Map

 

Slide 5 speaking notes (click to view)
  • In developing a robust regulatory framework in the North, there are a number of key elements that are needed to ensure success. One of which is meaningful engagement with Northerners and Northern institutions that could be affected by potential activities, in support of our shared objectives for safety and environmental protection. This is of particular importance to the Board and, thus, is one of our strategic priorities.
  • During the Review of Offshore Drilling in the Canadian Arctic, we committed to continuing the dialogue. In this vein, we continue to proactively engage with all of you. The map shown here reflects the communities that we have held meetings in over the past two years.
  • This year alone, our staff and Board Members held over 50 meetings across the North to continue to listen to those who will be most affected by oil and gas activities.
    • These meetings have included, for example, numerous discussions about what your key concerns might be around oil and gas exploration and development, explaining our role, and getting your feedback on how we can best design our future engagement activities to better facilitate participation of Northerners.
    • In addition, we have an expectation that companies seeking to explore and develop northern oil and gas will work collaboratively with Northerners and Northern institutions. By listening to one another, respecting one another and sharing knowledge and expertise, improved safety and environmental protection outcomes can be achieved.
  • As we prepare for the future, it is our goal that Northerners will continue to see in the NEB a trusted and credible organization that holds companies it regulates accountable for addressing the environmental and safety concerns of communities.

 

Clear Expectations of Companies

Filing Requirements for Arctic Offshore Drilling in the Canadian Arctic

 

Slide 6 speaking notes (click to view)
  • Filing requirements and guidance documents are intended to provide clarity to industry and the public regarding what the Board’s expectations are from industry, specifically around what information a proponent must submit in support of an application. The applicant must demonstrate that it has complied with applicable legislation and regulatory requirements.
  • In the past, our regulations were prescriptive, specifying design and operational details. We have come to realize that there are challenges with this style of regulation, as it is a “one-size-fits-all approach”. We have moved towards goal-oriented regulations, with prescriptive elements where appropriate, such as management processes and reporting requirements, that provide flexibility but ensure a consistent level of performance.
  • Based on the input we received during the Arctic Review, we have developed the Filing Requirements for Arctic Offshore Drilling in the Canadian Arctic. Given that every application will be different, these Filing Requirements provide relatively high level guidance to industry on what information is required when they submit an application. This provides the Board with the flexibility to be able to determine, on a case by case basis, what specific information is required in order to assess that particular project on its merits.
  • In other words, the information set out in the Filing Requirements does not prevent the Board from requesting any additional information for a particular application, if we believe the information is relevant to the project. To complement these Filing Requirements, we are developing more specific guidance products which will set out clear expectations for companies. Draft Financial Viability and Financial Responsibility Guidelines were released in May 2013 for comment. Additional guidance documents, expected to be released in the Summer of 2013, include:
    • Filing Requirements for Geophysical Operations; and,
    • Filing Requirements for Drilling Operations involving Hydraulic Fracturing.
  • The Board has announced that we are formally seeking comments on the guidelines for financial responsibility, entitled Draft Financial Viability and Financial Responsibility, from all interested parties until October 31, 2013. The guidelines are intended to clarify expectations around what an applicant must do to demonstrate they have the financial resources to conduct the proposed activity safely - the financial viability - and the financial resources to address a ‘Worst Case Scenario’, referring to a severe event with extreme and significant effects and consequences - the financial responsibility. In other words, the applicant must provide an estimate of all costs associated with the applied-for project and with a worst case scenario, including containing the event, environmental clean-up and compensation to affected parties, and provide demonstration of their ability to pay for these. The Board will have immediate access to unfettered funds, if necessary, to address costs resulting from an incident where the Operator does not pay for these costs itself.
  • While we are not formally seeking comments on the other guidance documents that we are preparing, the option is always available to interested parties to contact the Board to discuss or express any concerns related to our guidance documents.

 

Enforcement to Promote Safety and Protect the Environment

Kakiska Falls

 

Slide 7 speaking notes (click to view)
  • The Board puts safety and environmental protection at the forefront of its responsibilities in protecting Canadians and requires the oil and gas industry we regulate to continually improve their safety and environmental performance. We achieve this through strong compliance verification and enforcement processes, our 40 plus years of environmental assessment expertise, and by taking leadership to drive fundamental change when and where it is needed.
  • We will continue to take all available actions to protect the environment and the public.
  • The NEB believes that carefully designed and well-implemented management systems are the best way for industry to keep people safe and protect the environment. We have seen in recent reports on the causes of major incidents such as the Michigan oil pipeline rupture and the Gulf of Mexico blowout that effective management systems were not what they should have been, exponentially increasing the negative effects of the incident.
  • Another key finding of these reports, reiterated by our own Arctic Offshore Drilling Review in 2011, is a disturbing pattern of organizational cultures that did not put safety first. We have been clear with the companies that we regulate. We expect them to develop a safety culture where everyone, regardless of position, is serious about and actively works to achieve a culture where safety is always top of mind.
  • Robust management systems are the tools through which this outcome is achieved. The NEB must be satisfied that the management system provides a strong foundation for a pervasive culture of safety, forcefully affirmed by the organization’s leadership, rigorously documented in writing, known to all employees, and consistently implemented from the corporate office to the drilling platform or the pump station.

 

Questions?

Polar Bears

 

Slide 8 speaking notes (click to view)
  • Going forward, we will continue to work with all of you in support of our shared objectives of safety and environmental protection when it comes to oil and gas exploration and development in the North. This dialogue remains open, and I look forward to hearing your questions and comments.
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