Regulator overview on arctic energy development

September 26, 2013

The National Energy Board (NEB) oversees energy development in the Canadian arctic. NEB Board member Roland George provided some insights at a recent conference in Anchorage, Alaska.

In Canada’s North, the NEB has regulatory responsibilities for oil and gas exploration and production activities through the entire lifecycle of the well, from the application stage, through exploration and production activities, and even after the well is eventually abandoned. The Board focuses on safety, protecting the environment and conservation of oil and gas resources, 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). 

• There is currently some conventional and unconventional activity taking place in the Central Mackenzie Valley region of NWT near Norman Wells. There are 13 exploration licenses, totaling over half a billion dollars in work bid commitments. It is worth noting that in May 2013, Aboriginal Affairs and Northern Development Canada launched a call for bids for exploratory licenses for six more parcels located in the Central Mackenzie Valley (Sahtu traditional territory), this process will close in September 2013.
• Although there are16 exploratory licenses totaling roughly $2 billion dollars in work bid commitments, there yet no applications for operations have yet been submitted to the NEB for Arctic offshore drilling. There has been no offshore drilling in the Canadian arctic for 30 years.  In the Beaufort Sea, two offshore seismic programs were conducted in 2012, with the potential for further seismic and drilling activity. Imperial and its joint venture partners, who have been issued Exploration Licenses (ELs) by Aboriginal Affairs and Northern Development Canada (AANDC), but have yet to file a Project Description. Recent timelines provided by Imperial suggest that they may file an application with the NEB towards the end of 2014.
• The filing requirements for Arctic Offshore Drilling in the Canadian Arctic were developed based on the input the NEB received during the Arctic Review. They 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.
• Interestingly the NEB is planning to release this Fall the Filing Requirements for Drilling Operations involving Hydraulic Fracturing to inform future applications to explore and produce from the shale oil plays in Canada’s Central Mackenzie Valley. The NEB has well established and cooperative relationships with the territorial environmental review authorities.

Commentary

The regulatory requirements for arctic offshore oil and gas exploration have been modernized in light of the tragic Deepwater Horizon incident in the Gulf of Mexico. It will be interesting to see if Imperial Oil decides to explore in the Canadian Arctic, the first company to do so in a generation.

Sources

• a)Roland George,"A regulator's perspective on arctic energy development" presentation to 32nd USAEE/IAEE conference, Anchorage, Alaska, 23-Jul-2013 see http://www.neb-one.gc.ca/clf-nsi/rpblctn/spchsndprsnttn/2103/rgltrprspctvrctcnrgy/rgltrprspctvrctcnrgy-eng.pdf



• b)http://www.neb-one.gc.ca/clf-nsi/rpblctn/spchsndprsnttn/2103/prspctsnrth/prspctsnrth-eng.html