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Home > Speeches and Presentations > Speeches and Presentations 2010 > National Energy Board's Appearance before the Standing Committee on Natural Resources - Emergency Response to Offshore Oil and Gas Drilling - Opening Statement

National Energy Board’s Appearance before the Standing Committee on Natural Resources - Emergency Response to Offshore Oil and Gas Drilling - Opening Statement

Presented by
Gaétan Caron
Chair and Chief Executive Officer
National Energy Board

National Energy Board's Appearance
before the Standing Committee on Natural Resources
Emergency Response to Offshore Oil and Gas Drilling
Opening Statement

13 May 2010

  • The NEB is the federal regulator for offshore oil and gas drilling and production in Canada.
  • The areas offshore Nova Scotia and Newfoundland and Labrador are administered by joint federal - provincial offshore petroleum boards (CNSOPB and C-NLOPB respectively)
  • The NEB has a close working relationship with both the two offshore boards and other regulators in Canada and around the world. When an accident happens anywhere, we all learn from each other. This is considered standard operating procedure for all safety regulators.
  • We have also been working with land claim agencies such as the Inuvialuit Game Council and communities potentially affected by Mackenzie Delta and Beaufort Sea drilling for the past 20 years.
  • The most recent authorization for offshore drilling issued by the Board was for Devon Paktoa C-60. This exploratory oil well was drilled in about 11 metres of water between December 2005 and March 2006.
  • The previous offshore exploratory well drilled in this area was the Imperial Isserk I-15 well in 1989. This was also a shallow oil well, drilled in only about 10 metres of water.
  • The earliest possible date future drilling may occur in the Beaufort Sea, if the NEB approves it, is 2014, for activity in about 700 metres of water.
  • This contrasts with the BP Macondo MC252 in the Gulf of Mexico at 1,500 metres, which is the subject of the current emergency reponse.
  • There are currently no active authorizations or approvals for offshore exploration or production activities under the NEB's jurisdiction.

Current Situation in the Beaufort Sea

  • What brings us here today is an accident of major proportion in the Gulf of Mexico. The NEB is actively monitoring this situation.
  • The focus now is to stop the leak and protect the environment. Once this is done, people will be able to focus on explaining what happened, why, and what has been learned.
  • On Tuesday, 11 May, the Board announced that it is starting a review of Arctic safety and environmental offshore drilling requirements in light of the oil spill in the Gulf of Mexico. Full details of this review will be announced and this process will be public and consultative.

Adequacy of NEB Regulatory Regime

  • The National Energy Board administers the current Canada Oil and Gas Operations Act (COGOA), parts of the Canada Petroleum Resources Act (CPRA) along with the Canada Oil and Gas Drilling and Production Regulations.
  • These regulations have very strong wording. These acts call on the National Energy Board to ensure that oil and gas activities are safe, protect the environment and conserve oil and gas resources when considering whether to grant an authorization.
  • Before any project is approved, the NEB must satisfy itself that the operator's drilling plans include robust safety, emergency response and environmental protection plans which meet the Board's high standards.
  • To make sure we meet the strict requirements of the acts, the NEB relies on a team of skilled and experienced experts. The NEB has 85 people focused on safety, engineering, environment, geo-science, socio-economic and lands.
  • NEB staff review every single application to make sure that workers and the public will be safe and the environment will be protected.
  • In addition to making sure that applications meet the requirements of COGOA and its regulations, NEB staff conduct stringent environmental assessments to make sure that projects under our jurisdiction comply with the Canadian Environmental Assessment Act. An authorization for drilling and production activities will not be granted unless a comprehensive environmental assessment has been completed.
  • Any project that is approved by the NEB is subjected to a number of conditions in areas such as safety, the environment and emergency response. To make sure operators comply with these conditions, NEB staff are out in the field conducting inspections and auditing the company's management plans.
  • For offshore projects, the operator needs to obtain a Certificate of Fitness from an independent certifying authority to ensure that the vessel and drilling equipment are appropriate, in good condition, and capable of undertaking the proposed activity.
  • When drilling has been approved, if the Board is not satisfied that an operator is living up to its commitments, the Acts administered by the Board allow the NEB to take over the management and control of any work or activity. The Acts provide for a fine of up to one million dollars, imprisonment for up to five years or both. The Board can also suspend or revoke an authorization for failure to comply with provisions of the Act, regulations or an authorization.

Emergency Response Assets

  • In the case of spills or incidents under the NEB's jurisdiction, the NEB is the lead federal agency.
  • The operator is fully accountable and responsible for spills and damage.
  • A critical requirement under the Board's legislation is the need for companies to provide a proposed emergency response and contingency plans. The Board's staff assess these plans before any authorization to drill can be issued.
  • Not only do NEB staff thoroughly review a company's emergency response plans in order to prevent an emergency situation, the NEB has a dedicated emergency response management program and our staff have participated in 22 spill response exercises over the past five years. Examples include:
    • 2010 May Orientation and Communication exercise for a Beaufort Sea oil spill;
    • 2010 and 2009 CANUSNorth table top exercise in Anchorage, AK and Edmonton, AB respectively lead by the Canadian and U.S. Coast Guard;
    • 2007 Exercise Narwhal with Department of National Defense and numerous other agencies in Norman Wells;
    • 2007 Enbridge Pipelines (NW) exercise in Norman Wells;
    • 2006 Paramount Cameron Hills table top exercise;
    • 2005 Offshore table top exercise;
    • 2004 Lutselk'e Great Slave Lake fuel spill; and,
    • 2002 Tuktoyaktuk Harbour fuel oil spill table top exercise.

Liability

  • NEB-regulated companies are fully responsible for anticipating, preventing, mitigating and managing incidents and oil spills of any size or duration.
  • If there is a hydrocarbon spill and the operator at fault, they are 100% responsible for paying for all the costs and damages. There is no limit to how much they would have to pay.
  • If there is a hydrocarbon spill and the operator is not at fault, they are responsible for paying for the costs and damages, up to a limit of $40 million.
  • Before drilling, the operator must provide the NEB with financial security. This security is available to the NEB to cover the costs of a potential clean-up. The National Energy Board determines the amount of this security deposit and there is no set maximum amount.
  • In addition, under the terms of the Inuvialuit Final Agreement, an operator is responsible for restoring damage to wildlife and compensating Inuvialuit hunters, trappers and fishermen for their loss of subsistence or commercial harvesting opportunities. The NEB may require the operator to provide financial security for this amount up front.

Closing

  • The purpose of my testimony here today is to tell you why we at the National Energy Board believe we have in place both an adequate regulatory framework and the necessary emergency response assets.
  • At the same time, we have a fundamental responsibility to review the lessons learned from the Deepwater Horizon accident in the Gulf of Mexico.

 

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Date Modified:
2011-10-28