Thank you for the opportunity to appear before you today to provide comments related to Bill C-49.
As the chair mentioned, my name is Paul Barnes, and I am director of Atlantic Canada and Arctic with the Canadian Association of Petroleum Producers or CAPP. I am based in St. John's, Newfoundland and Labrador. I have over 30 years' experience in the offshore oil and gas industry and have worked extensively during that time with the Atlantic accord legislation, which is being amended with this bill.
CAPP is a non-partisan, research-based industry association that advocates on behalf of our member companies that explore for, develop and produce oil and natural gas throughout Canada. CAPP's members include several that are active in the Atlantic Canada offshore area and that will therefore be directly impacted by any accord act amendments.
One main driver behind Bill C-49 is to provide authority to the offshore petroleum boards in both Nova Scotia and Newfoundland and Labrador to regulate offshore renewable energy. My remarks are not specifically focused on this aspect of the bill, as it falls outside of CAPP's oil and gas industry mandate.
My remarks will instead focus on the aspects of Bill C-49 that directly impact offshore exploration, development and production activities.
Before moving into my specific remarks, I want to note that there are several positive changes included in the bill that our industry supports, including providing clarity in the role of the offshore petroleum boards in the regional impact assessment process. Natural Resources Canada staff have also been extremely helpful in providing clarity to CAPP and our members on aspects of the bill that we highlighted in a letter to Minister Wilkinson in August 2023, which we provided a copy of to the committee on February 2, 2024.
To begin, clause 36 of the bill introduces a significant change for the oil and gas industry, which is the move to a 25-year, fixed term, significant discovery licence on future licences. CAPP recognizes the desire of the governments to find new ways to encourage the development of discoveries in a timely manner, but cautions that moving to a fixed term without adequate flexibility to extend the term could have unintended consequences.
The Atlantic Canada offshore is one of the most challenging operating environments in the world. Current projects have taken up to 30 years to develop. There may be unique cases in the future where more than 25 years are necessary to move from exploration to production. Flexibility in the fixed-term licence is critical in a jurisdiction with such challenges. Specifically, legal language on the ability to extend the term if an operator can demonstrate that they are diligently pursuing development should be included in the bill.
Should governments move towards a fixed-term licence, CAPP suggests they direct the offshore boards to remove escalating rentals in the terms and conditions of the licence.
Clause 28 of the bill, which proposes to amend section 56 of the accord act, leads to the prohibition of oil and gas activities in a marine protection, environmental or wildlife conservation area. CAPP and its members had concern with this section when we wrote our original submission to the NRCan minister in August 2023, as we viewed it as expanding the prohibition of oil and gas activities to other conservation or protection areas outside of the Oceans Act marine protected areas or national conservation areas. However, following discussions with NRCan staff and provincial Government of Newfoundland staff, we now better interpret the intent of the section and the role of both the federal and provincial natural resource ministers if there is to be any prohibition of oil and gas activities in any area.
Clause 71 of the bill allows government to make regulations to regulate access to offshore infrastructure, including to enforce tolls and tariffs. It is CAPP's view that in such a small operating basin in Newfoundland and Labrador, where all current offshore oil and gas activities are focused, access to infrastructure is not an issue that requires additional regulation, nor should it be included in this bill.
Offshore facility owners are open to considering adding production from others that wish to access their facilities. If a facility has extra capacity, allowing others to have access to it can reduce costs and extend the commercial life of a project provided, however, that those others share the responsibility of all related costs and liabilities, plus provide a fair return on risk investment.
Access to infrastructure is a commercial issue and is best left to facility owners and those wanting to access the facility to manage and negotiate. Moving towards a system whereby governments can regulate access and enforce tolls and tariffs adds uncertainty in an environment where there are a limited number of projects and where facility owners are open to negotiating directly with others.
As I see that I'm coming rather close to the end of my time, we will provide specific written remarks to elaborate on a couple of other issues that I wanted to bring to the committee's attention.
Thank you.