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Vol. 17, No. 18 Week of April 29, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

Canada sets limits

Federal cabinet to make final decisions on major energy projects

Gary Park

For Petroleum News

The Canadian government has drawn a clear line between the industry and its foes when it comes to handling regulatory applications for energy projects that are deemed to be in the “national interest.”

Following through on a promise in the 2012-13 federal budget introduced in March, the administration of Prime Minister Stephen Harper has issued the broad strokes of a policy to streamline environmental reviews of major energy and mining projects that it estimates could attract C$500 billion in new investment over the next decade.

“We have to compete with other resource-rich countries for fast-growing markets and scarce capital,” said Natural Resources Minister Joe Oliver.

“With scarce resources, it is counter-productive to have the federal and provincial governments completing separate reviews of the same projects,” he said. “We need to tap into the tremendous appetite for resources in the world’s dynamic emerging economies — resources we have in abundance.”

In unveiling the centerpiece of the government’s “Responsible Resource Development” plan, Oliver listed some of the constraints that will restrict the activities of the “limited number who have a radical agenda.”

He said there will be legally binding timetables on reviews to put an end to “duplicative, cumbersome and uncertain” environmental reviews that the government believes are putting at risk projects such as exports of oil sands crude and LNG.

Restricted participation

Oliver and Harper have previously identified environmentalists and First Nations as interest groups that have hamstrung regulatory hearings, notably for Enbridge’s Northern Gateway project that faces 4,500 registered interveners.

The government now intends to restrict participation in those hearings to individuals and groups that are directly affected by projects.

As part of the “wide-ranging” legislative changes, Oliver said the government will also shift the final authority to approve or reject large pipeline proposals from the National Energy Board to the federal cabinet.

The board will continue to review pipelines that cross provincial boundaries, but the regulator will only be able to make recommendations, although the cabinet will not be allowed to alter conditions attached to the NEB’s recommendation.

Because of a pipeline’s potential impact on the environment and its importance to the economy, the ultimate authority should rest with elected politicians and not appointed officials, Oliver said.

Oliver said that once legislation passes the House of Commons, reviews will be confined to three federal departments and agencies, down from 40, and smaller projects will become the exclusive jurisdiction of provincial governments.

He said the “one project, one review” of major projects will cover pipelines longer than 25 miles, leaving others to the provinces.

Oliver said legislation will impose deadlines of 24 months for environmental reviews, 18 months for projects that come under the NEB, which issues export permits, and 12 months for “standard” assessments.

Northern Gateway included

The new rules will be backdated to include Enbridge’s Northern Gateway proposal to export 525,000 barrels per day of oil sands crude to Asia and California and import 193,000 bpd of condensate.

Brenda Kenney, president of the Canadian Energy Pipeline Association, said the federal government is bringing the NEB’s authority in line with other independent federal agencies.

She said that “to a large extent, this is cleaning up an historical artifact (dating back to 1959) that is, in itself, a bit quirky.”

Joseph Doucet, interim dean of the University of Alberta business school, said the government is unlikely to override the NEB because of the public backlash it could face.

David Collyer, president of the Canadian Association of Petroleum Producers, said Oliver has addressed the “key areas of interest and concern that we’ve talked about” by offering “more clarity and predictability and process timelines (by) dealing with redundancy and overlap between jurisdictions.”

He said there is no reason to believe that opponents of projects will be more inclined to use the courts rather than the regulatory regime to make their case.

“Decisions will still be made by independent regulators. There will be no particular impact on whether people choose to use the courts,” Collyer said.

Enbridge spokesman Todd Nogier said that until more details are available his company does not know how the announcement will affect “processes that are already under way” with Northern Gateway, but Oliver’s goal of focusing the regulatory phase “makes great sense.”

Oliver said adapting the legislation to existing regulatory applications such as Northern Gateway “will take into account how long the review has lasted so far, how much of the scientific evidence has been completed and how many people have been heard.”

Double-hulled tankers required

Ottawa will protect the environment by requiring that crude tankers operating in British Columbia waters are double-hulled, carry pilots and are subject to aerial surveillance, while the new rules will apply only to pipelines longer than 40 kilometers, leaving provincial governments to handle the rest, he said.

He said Ottawa will make “environmental protection more robust” by increasing annual audits of pipelines to six from three.

“A gamut of smaller projects that do not have any environmental impact that will not be subjected to a comprehensive environmental review will still be subjected to provincial and federal laws,” Oliver said. “They’re not getting a free pass.”

Premier Brad Wall of Saskatchewan, Canada’s second largest oil and gas producing province after Alberta, told a news conference that he and other premiers have been pressing Harper to streamline reviews to ensure prospective investors do not face unnecessary regulatory delays.

“We want to make sure we have a rigorous environmental assessment process,” he said. “But we don’t think that means we need two.”

British Columbia Environment Minister Terry Lake embraced the government plan, saying his province will continue to play its role as a trustworthy steward of the environment.

Environmentalists object

But Matt Horne, of the Pembina Institute, an environmental think-tank, questioned the British Columbia government’s ability to “offer the level of environmental protection we need through the assessment process.”

“When you add up B.C’s big push for mining, shale gas and liquefied natural gas development and no increase in the provincial budget for environmental assessment those concerns become even bigger,” he said.

Barry Robinson, an attorney with Ecojustice, an environmental law group, said the regulatory decision on major pipelines is moving from science-based to political.

He expressed concern about the move to limit participants in hearings to those directly affected, adding “that’s going to shut out way more people and environmental groups that have been traditionally involved.”

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