Backgrounder - National Energy Board Report on the Arctic Offshore Drilling Review

This backgrounder is also available in Gwich'in, Innuinnaqtun, Inuvialuktun and Inuktitut. [Filing A37753]

On 20 April 2010, an explosion on a drilling platform in the Gulf of Mexico caused the rig to sink and killed 11 workers. The Deepwater Horizon incident also caused one of the largest oil spills in history.

Around the world, people watched in disbelief as millions of barrels of oil spilled into the Gulf of Mexico. How could this happen? Is it possible to safely drill offshore while protecting the environment? What do we do when things go wrong? What can we learn from incidents like the Deepwater Horizon?

Within days of the incident, the National Energy Board (NEB or the Board) announced that we would review safety and environmental requirements for offshore drilling in Canada’s Arctic. We called it the Arctic Review. The objective was to gather information and knowledge through meaningful engagement and dialogue.

What were the key findings from the Arctic Review?

We felt it was important to listen to those who would be most affected by Arctic offshore drilling. Beginning in November 2010, we held more than 40 meetings in 11 communities across Yukon, the Northwest Territories and Nunavut.

We listened carefully to the people who told us that we were not only accountable to Northern residents and to all Canadians, but we also had a great responsibility to the North itself. We take this responsibility seriously. It’s our job to make sure that any company wishing to drill in the Canadian Arctic offshore has plans that are safe for workers, the public, and the environment. If the company can’t provide these, they can’t drill.

Throughout the Arctic Review, people in the North told us that they understood the importance of energy and were not opposed to development, but not necessarily anywhere or at any cost. They also said that, if companies are going to drill in the Canadian Arctic offshore, it must be done right.

The people we met at the community meetings reminded us that they are deeply connected to the land and the ocean. They have been taught by their Elders that if you take care of the land, the land will take care of you. We also heard that if there was a drilling accident in the Arctic offshore, life in the North could change irrevocably.

We learned that the root cause of most industrial accidents, including offshore drilling blowouts, is the lack of a broadly shared safety culture. This is caused by inadequate, or inadequately implemented, management systems. In other words, people don’t do what they are supposed to.

We re-affirmed our Same Season Relief Well Policy: the applicant must demonstrate, in its Contingency Plan, the capability to drill a relief well to kill an out of control well during the same drilling season. The intended outcome of this policy is to minimize harmful impacts on the environment. We will continue to require that any company applying for an offshore drilling authorization provides us with specific details as to how they will meet this policy. An applicant wishing to depart from our policy would have to demonstrate how they would meet or exceed the intended outcome of our policy. It would be up to us to determine, on a case-by-case basis, which tools are appropriate for meeting or exceeding the intended outcome of the Same Season Relief Well Policy.

It was through this extensive, open, and public information and knowledge gathering that the Board developed the Arctic Review Report and our Filing Requirements for Offshore Drilling in the Canadian Arctic. While there are currently no applications for offshore drilling before us, we expect to see such applications in the future.

Our regulatory regime has the tools we need to protect the safety of Northern residents, workers, and the Arctic environment. We recognize that if we approve Arctic offshore drilling in the future, we need to do all we can to reduce the risk of an incident. This includes making sure that we have staff with the experience, skill, and know-how to see that the facilities we regulate are safe, secure, and operated in a way that protects the environment. Finally, we all need to be ready to respond effectively if an incident does happen.

Northern residents have been clear that they want to be involved in preparing for potential drilling in the future. Industry told us they agree that Northern residents have a key role to play. This starts with training opportunities before an application is filed. We agree too.

How did the National Energy Board Gather Information for the Arctic Review?

In June 2010, we released the scope of topics for the Arctic Review after carefully considering comments from more than 60 groups and individuals. Once we had decided which topics to examine, we began to gather the best available information on offshore drilling. We asked participants in the Arctic Review to send us any information they thought we should consider.

We sent out two sets of questions for participants. These questions, or Calls for Information, asked participants to provide information about the topics included in the Arctic Review scope. In response, we received thousands of pages of information. We asked experts to prepare a number of studies. We also examined reports on the incident, and others like it, to see what we could learn.

Finally, we held a week-long Roundtable meeting in Inuvik, Northwest Territories so participants could have face-to-face dialogue to understand the information that had been submitted and comment on the issues being considered in the Arctic Review. Five of our Board Members participated in the Roundtable to hear first-hand from participants.

Nearly 200 people attended our Arctic Review Roundtable in September 2011. Another 300 people logged on to their computers to listen to the live web broadcast, which was interpreted into Inuvialuktun, Inuinnaqtun, Inuktitut, Gwich’in, and French. Others listened to the broadcast over their telephones.

Transcripts of the Arctic Review Roundtable are posted on our website.

How to drill safely while protecting the environment

We will expect applicants to make public their:

  • Safety Plans;
  • Contingency Plans;
  • Emergency Response Plans (if such plans exist separately from other Contingency Plans);
  • and Environmental Protection Plans.

In their application, we require an applicant to submit a Contingency Plan that outlines what measures they will use to respond to an out of control well. A relief well is one contingency measure.

During the Roundtable meeting in Inuvik we heard that, while relief wells are one option for killing a well that has gone out of control, there may be other methods which would achieve the same goal. Other participants said that, while they agree with the goal of regaining control of a well as soon as possible and not relying solely on a relief well, they had concerns about not including same season relief well capability as a tool in an operator’s toolbox.

We will continue to require an operator to use all intervention techniques available, in addition to a relief well, so that the flow from an out of control well can be stopped as quickly as possible.

How should we respond when things go wrong?

We are the lead agency for emergencies related to drilling and production in the Canadian Arctic.

During the Roundtable, we heard speakers from all backgrounds and interests say that the prevention of an oil spill in the Canadian Arctic offshore is the primary goal and desire of all parties. The experience of the past tells us to prepare for the worst case.

Spill response is not a one-size-fits-all proposition. We heard information on the universal principle of a “tiered spill response”, where the strategy selected to respond to a spill depends, in part, on the size of the spill.

How will companies be held financially accountable in the event of a spill?

If an oil spill was to occur in the Arctic offshore, the effects on the environment and animals could be immediate. When determining the appropriate form and amount of financial responsibility for offshore Arctic drilling, we find it desirable that sufficient financial resources will be available to address loss or damage, and that a portion of these funds be available to quickly compensate people of the Arctic. There is no upper limit on the amount that we may require as proof of financial responsibility from a company.

What Have we Learned?

As part of the Arctic Review, we committed to examining the lessons learned from accidents, incidents, and emergency response exercises.

When we look at the root causes of many incidents, we find a common thread: a neglect of, or even an absence of, processes and procedures to identify, mitigate, or eliminate potential risks. Beneath that deficiency lies an even deeper pattern of organizational cultures that did not put safety first. An organization’s safety culture is made up of individual employee and group beliefs, values, attitudes, and behaviours about safety.

Any company wishing to drill in the Canadian Arctic must demonstrate to us that they have a strong safety culture. We will hold the companies that we regulate accountable for developing a robust safety culture and we will audit their operations to observe and validate that safety culture.

Many of the learnings that we gathered through the Arctic Review have been incorporated into the filing requirements for future applications for offshore drilling in the Canadian Arctic.

What are the Filing Requirements?

The National Energy Board Filing Requirements for Offshore Drilling in the Canadian Arctic is the companion document to the Arctic Review Report. The filing requirements specify the information that the Board will need to see in order to assess future applications for drilling in the Canadian Arctic offshore.

The filing requirements, which are available on our website, include detailed technical requirements, many of which were taken from Calls for Information issued during the Arctic Review.

What are the next steps?

As we prepare for the future, we will work collaboratively with land claim organizations throughout the North and continue to listen to those who will be most affected by offshore drilling in the Canadian Arctic. We will pursue opportunities to strengthen our regulatory framework, including the filing requirements, in support of future NEB decisions on Arctic offshore drilling. This journey will continue.

We recognize that the values and the interests of the public evolve over time and so do our expectations of project applicants. We are committed to continually improving our regulatory processes and to ensuring that decisions on drilling applications will be made in a manner that addresses safety of workers and the public and protects the environment.

Thanks to the insight, rigor, and generosity of all who contributed, the Arctic Review yielded a rich foundation of information that has informed the contents of the report and the Filing Requirements.

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