Mr. Speaker, I appreciate the work the hon. member and I do together on the standing committee.
To respond to the question of the hon. member for the Western Arctic on this matter, he should know that the Government of Canada continues to deliver on initiatives under the northern strategy, including the issuance of exploration licences in the north, which encourage investment in northern communities.
The process to acquire the rights to explore for oil and gas on Crown lands in the north is called the rights issuance process. It is the result of an open and transparent process set out in the Canadian Petroleum Resources Act.
The process has four phases, which include: community engagement; call for nominations; call for bids; and the issuance of exploration licences. It is a public process through and through.
Rights issuances in Canada's offshore areas are market driven and awarded based on competitive calls for bids. Industry identifies parcels of interest which may be included in a subsequent call for bids. We have one bidding criterion, which is the highest bidder wins. The minimum bid is set at $1 million and before a licence is awarded, a financial deposit is required, which represents 25% of the bid. Companies are required to come up with this financial deposit within 15 days of being announced as the highest bidder before any licence is issued.
Let me be clear. Lands are not sold in the process. Rights issuance does not provide permission to conduct exploratory activities. In fact, a licence is awarded for a specific period of time that affords the holder the exclusive right to apply for authorizations to undertake work. When companies get to the stage of seeking permission to conduct exploratory activities, they require authorization from the National Energy Board. Only after a rigorous review process and environmental assessments does the National Energy Board authorize exploration. By law, the company needs to demonstrate that it has the financial capacity to afford potential liabilities in the event of a major incident.
What is more, this exploration of Canada's offshore regions generates economic opportunities for communities and direct and indirect benefits to northern and Canadian economies.
We are getting things done in the north. Whether it is setting high standards for regulatory frameworks, increasing opportunities or making food more readily available, our government takes its responsibility to the north and to all northerners seriously. We are committed to working with our partners to ensure any future development takes place in a manner that protects the northern environment and is respectful of community interests.