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Canada’s northern regulatory cost burden
Gary Park For Petroleum News
The Canadian government is pondering ways to improve its northern regulatory processes, a federal official told a northern gas symposium in Calgary earlier in March where participants got a detailed insight into the costs and challenges faced by E&P companies.
Stephen Traynor, director of resource policy and programs for Indian and Northern Affairs Canada, said an action plan announced last May by then-Indian and Northern Affairs Minister Chuck Strahl has been allocated C$11 million over two years to achieve a more efficient and effective regime through legislative and regulatory change.
He said environmental monitoring programs will also be enhanced in the Northwest Territories and Nunavut, where C$8 million will be spent over two years.
Whatever change occurs can’t come too soon based on a presentation to the symposium by John Hogg, vice president of exploration and operations at MGM Energy.
Based on his 30 years’ experience in Canada’s North, he said the last three decades have spawned a “significant amount of regulatory overlap and confusion.”
Opportunity for a fix But the current exploration hiatus, pending a decision on the Mackenzie Gas Project, provides an opportunity to fix those problems, otherwise “neither the regulators nor the industry will have time to do it,” Hogg said.
Topping his action list would be the introduction of a single set of seismic acquisition guidelines in the Northwest Territories, ending the current multilayered approval process involving the NWT government, NWT Water Board and National Energy Board.
He also called for a “made in NWT” method of handling liquid and solid waste.
Hogg estimated the cost of exploring in the Mackenzie Delta is about five times the cost in British Columbia and Alberta, given the shortage of oilfield services in the north and the confined drilling season of about three months.
Obtaining a permit for any drilling or seismic program is more than C$250,000, Hogg said, adding: “Both the regulatory cost and the timelines are, we think, a deterrent to industry and there are many regulators (federal, territorial and local) compared to other Canadian regimes.”
He said approval for an exploratory well in the NWT can take six to 15 months, compared with six to eight weeks in Alberta, while permitting a seismic program can take four to 12 months in the north, compared with two months in Western Canada.
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