Natural Resources Committee on June 15th, 2010

[Mark Corey]

I think you could say there's a fairly profound review going on right now so that we can understand what happened in the gulf, to make sure that we learn from it and that we basically make our system even stronger.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Regan.

We'll go now to Madame Brunelle for up to seven minutes.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Good morning, ladies and gentlemen. I would like to thank you for being here.

Mr. Brown, you talked lot about research and development. It seems you are stepping up your activities in trying to find solutions following the ongoing disaster in the Gulf of Mexico.

Furthermore, I would like to briefly touch upon the regulatory side of things. According to information that I have read, it would seem that there has been a change to the drilling regulations. In-depth studies are no longer required. You can tell me whether that is true or not.

Previous witnesses have compared the offshore drilling regulatory requirements in Canada, the United States, Greenland and Norway. Canada is the only country that does not regulate the opening of new oil drilling areas. There is no documented environmental assessment or analysis.

Do you find that normal? Do you think those standards and regulations should be reviewed in light of what is going on in the Gulf of Mexico?

[Dr. Carl Brown]

Thank you for your question.

As a research manager, the regulations related to offshore drilling are outside my area of expertise, so that's not something I can comment on.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Why can you not comment on that? Is the National Energy Board the sole agency responsible for the environmental assessment of drill sites?

[The Chair, Conservative, Leon Benoit]

Actually, Mr. Corey was indicating that he would like to answer that question.

[Mark Corey]

Mr. Landry can talk about responsibilities and environmental assessments.

[Eric Landry]

I will give you a brief description of how things are done in areas where there are agreements with the provinces. I would ask my colleague from Indian Affairs to describe the process in the north.

In his presentation, Mr. Corey indicated that the offshore boards will conduct strategic environmental assessments before rights are issued. Therefore, environmental assessments are done prior to the issuing of exploration licences. The process is somewhat different in the north. I would ask my colleague to respond.

[Mimi Fortier]

A lot of research and experiments are conducted in the Beaufort Sea.

I will answer in English, I apologize.

We synthesize all of that information for our consultations and assessments with Environment Canada, with the Department of Fisheries and Oceans, with renewable resource departments of the territorial governments, and by and large there are a lot of institutions with Inuvialuit that look at joint fisheries and joint responses to oil and gas activities. These are synthesized on our web-based tool, the petroleum environmental management tool that describes the sensitivities of the ecosystem, and we're adding into that the socio-economic indicators as well.

The Inuvialuit have been extremely involved and very engaged in informing themselves on oil and gas activity for decades. They themselves provide us with a lot of the basis for the terms and conditions in which we issue oil and gas rights.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

I am surprised that no one can talk to me about the fact that today's environmental standards are weaker than those in 2005. I will have to do some more research.

Ms. Fortier, during a previous hearing with a BP company official, I asked the question... The company had asked the government to change the standards so that it not be required to drill relief wells. It had submitted that request to the National Energy Board. I asked the BP officials whether they were maintaining their request, given the current disaster. Needless to say, I did not get an answer to my question.

However, there is one thing that troubled me. BP insisted on saying that it was difficult for the company to drill relief wells in the north.

As a northern representative, what do you think of the company's statement? Is it mandatory in Canada for companies to drill relief wells as part of offshore projects? What do you think about BPs excuses? Despite the disaster, the committee seems to want to weaken regulations.

[Mimi Fortier]

The National Energy Board requires that plans be submitted.

These contingency plans are supposed to address all of the response measures in case of an oil spill. Traditionally, in the Beaufort we have had a requirement for a relief well. This is a policy of the Government of Canada. The National Energy Board has assured recently in a letter to the media that they will look for plans for a relief well in those contingency plans.

We see a variety of situations in the Beaufort Sea. There is a variety of drilling situations. In the landfast ice, for instance, where we see most of the drilling, it's a shallow sea, and there is a long period of landfast ice, where drilling takes place on ice. It is quite easy to build up an ice pad and put a second relief well rig on that ice pad adjoining the original drilling platform.

What BP and some of the current interest holders are looking at now is drilling in deeper waters. We've seen drilling in up to 200 metres of water in the Beaufort Sea, historically. We may be seeing some of these licences in deeper water depths. What they're thinking of is purpose-built ships that are ice-class ships designed specifically for the Canadian Beaufort Sea.

What we're also looking at is having technology that is a more rapid response to contain a spill in the worst-case scenario than having to drill a second well into the lower horizons to contain the pressures that would mount from a blowout.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Thank you.

Mr. Corey, current regulations limit compensation as a result of corporate liability in the event of an oil spill to $40 million. In what year did the government set that amount, which seems very low?

My colleague asked a question about costs—we shall see. A maximum of $40 million in our view seems too little. Are you considering a review of that regulation in order to better adapt it to reality?

[The Chair, Conservative, Leon Benoit]

Mr. Landry.

[Eric Landry]

The amounts were set in the 1980s.

I will talk about the offshore boards and then ask my colleague from the Department of Indian Affairs and Northern Development to describe the process in the north.

Financial responsibility is set out in the guidelines established by the offshore boards. Those are joint guidelines that were set in the 1990s. The amount of financial responsibility or liability is set at approximately $350 million, in the case of the offshore boards. That would apply to both Newfoundland and Labrador and Nova Scotia.

In the case of the National Energy Board, I will ask my colleague to talk about the amount.

[Mimi Fortier]

There are three statutes that affect the north, particularly the Beaufort Sea. There is the Canada Oil and Gas Operations Act, which sets liability at $40 million. There is also the Arctic Waters Pollution Prevention Act , which imposes an additional $40 million in compensation. The department manages those two regimes through the National Energy Board. In addition to that,

the National Energy Board requires the operator to show financial capability for assuming the severe liability. And on a third regime, the Inuvialuit Final Agreement also provides for an absolute and limitless liability. They turn to the National Energy Board to evaluate the worst-case scenario, along with the oil company's projections of the oil and gas reservoirs that they may encounter in the drilling. Again, they have to show financial capability to meet that liability of the worst-case scenario. Recently, in the Beaufort Sea, the last well had to show its financial capability to meet a liability up to $1 billion.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Madame Brunelle.

I will be giving your party a little less time in the second round. We went well over time, but those are questions that have been asked an awful lot, and I think the committee wanted to hear the answers.

We'll go now to Mr. Cullen, for up to seven minutes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Thank you, everyone, for being here.

Monsieur Grenier, how many kilometres of boom does Canada currently have in stock?

[D/Commr René Grenier]

I'm just going to check my notes.

The Canadian Coast Guard has over 80 equipment depots across the country—

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I know that--just kilometres of boom.

[D/Commr René Grenier]

—and we have 6,385 metres of offshore boom, of which we lent 3,000 metres. That's only the offshore boom. We also have all kinds of coastal booms, up to 85,645 metres of boom.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

So about 10 kilometres, give or take, maybe 11 kilometres' worth of boom, all said. So the U.S. has—

[D/Commr René Grenier]

No, more than that, 90-some kilometres.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Oh, excuse me, 90. So 90-some kilometres. The U.S. has deployed more than 2,000 kilometres of boom so far, with another 700 kilometres of boom on hand.

Our coast is ten times the length of the U.S. coast. Why do we have so little boom capacity?

[D/Commr René Grenier]

Well, we identify risks, and we have national, regional, and area plans, and those outline the need for response in the country.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I understand that you have risk plans, but what concerns me... We've given away a certain portion, but the amount of stock that we have is significantly less than that in the U.S., even though our coastline is significantly longer.

Mr. Brown, has anyone developed a way to either stop or clean up an oil spill in arctic conditions?