It is true generally, sir.
Evidence of meeting #16 for Natural Resources in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was neb.
A recording is available from Parliament.
Evidence of meeting #16 for Natural Resources in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was neb.
A recording is available from Parliament.
9:25 a.m.
Chair and Chief Executive Officer, National Energy Board
It is true generally, sir.
9:25 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Yes. So we're entering into some new territory. What happened in the gulf was the use of equipment at depths that had not been tried before, and the preventers and all of the “schemes” that they've been using since have also never been tried at these depths before.
In a sense, then, we're testing in the field. We're operating a laboratory as to what may or may not work when it comes to blowouts of oil in deep water. Is that true?
9:25 a.m.
Chair and Chief Executive Officer, National Energy Board
The depths that are currently being drilled are very deep. I cannot speak for the two offshore boards, but I can speak for our board. In Canada we haven't had this situation. The earliest we could face that, at about half the depth that is now currently drilled in the gulf, would be 2014.
9:25 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
When Canadians read about this and watch the news, one question that comes to mind is can this happen here? Can what happened in the Gulf of Mexico and the blowout with British Petroleum also happen in Canadian waters?
9:25 a.m.
Chair and Chief Executive Officer, National Energy Board
No safety regulator can possibly say that an accident will never happen. It is our job to prevent that to the best of our abilities, and at the same time, as a last resort, if the worst-case scenario emerges, to not have to think about it: to be absolutely ready, at T equals zero, to move in.
So that's the philosophy of safety regulations throughout the world. Nobody can promise that nothing will ever happen again.
9:25 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Right. So then the importance of having strong rules and regulations becomes increasingly urgent. Is that true?
9:25 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
So a question, then, with regard to the mandate of the National Energy Board. Part of your vision was read out into the record earlier. Do you see yourselves as a promoter of the oil and gas industry?
9:25 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
It's interesting, because I have a quote from you in 2005, where you believe that the NEB's number one priority is to “contribute to innovation and economic growth and to reduce the administrative burden on business”..
Did you say that?
9:25 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
That sounds like a promoter of the oil and gas industry.
9:25 a.m.
Chair and Chief Executive Officer, National Energy Board
--in the context of resources that our staff must invest in processes that are administrative in nature, and the necessity to be accountable to the people of Canada for processes that only take the time necessary to do a superb job.
9:25 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
The concern has been raised that we have been moving from rules and regulations to guidelines, goal-oriented guidelines. You referred to them earlier.
In the U.S. it's a regulation, where companies must prove the best available and safest technology. That's a rule. It's not a guideline, and it's not goal-oriented.
Switch over to Canada in 2009, where you moved from a regulation to a guideline that says that the equipment must be adequate and “reliably operating”. This seems a lot less secure to me.
Can you tell me why not?
9:25 a.m.
Chair and Chief Executive Officer, National Energy Board
I will start by citing the very purpose of the Canada Oil and Gas Operations Act. Section 2.1 of the act says that the purpose of the act—which we administer—is to promote safety, the protection of the environment, and conservation of oil and gas resources. By law, our focus can only be that. Our regulations then require us to evaluate thoroughly any proposal by any corporation to drill any well, anywhere in our jurisdiction.
9:25 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Yes, but in that evaluation—and this is my point—the move from regulations and hard rules to goal-oriented guidelines that ask for adequate and reliably operating equipment is a little like setting a speed limit on the highway and saying, “Our goal-oriented rule here is that you drive safely. You determine the speed, you determine what kind of car you drive and how your drive, but just hit the goal of driving safely.”
We would never do that.
9:30 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
We would never set a fire code that way.
Why, for heaven's sake, would we have a goal-oriented, non-regulatory, non-rule-based system for something as dangerous as deep offshore drilling?
9:30 a.m.
Chair and Chief Executive Officer, National Energy Board
Our thinking has been guided by best practices in regulation. The first example I will mention is Norway. The U.K. has followed, and Brazil just converted to goal-oriented regulation.
The basic tenet of goal-oriented regulation is that you regulate for the outcome—as you say, for the safety. Even if you drive at the speed limit, it doesn't mean you are driving safely. So our regime combines some prescriptive elements with, more and more, an accountability on the part of the operator to prove to us that their specific solution for a specific environment, for a specific well, is safe.
9:30 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Let's talk about that proof, because in the U.S. a company must demonstrate financially their ability to drill a relief well. That is not true in Canada.
9:30 a.m.
Chair and Chief Executive Officer, National Energy Board
As I read in my opening statement, and maybe I did not express this properly—
9:30 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
They must prove a financial capacity to do it in the U.S., but not so in Canada. The way the rules are in Canada right now, they must say they have the ability to drill a same-season relief well, but not necessarily the financial ability to do so. That's not a requirement in Canada.
9:30 a.m.
Chair and Chief Executive Officer, National Energy Board
No, it is a requirement, sir. As I said in my opening statement, if there is a spill and the operator is at fault, they are 100% responsible to pay for all costs and damages.
9:30 a.m.
Chair and Chief Executive Officer, National Energy Board
In addition, before drilling, the operator must provide us with financial security. This security is available to us to cover the costs of a potential cleanup. The National Energy Board determines the amount of that security, and there is no set maximum amount.