ARCHIVED – Review of offshore drilling in the Canadian Arctic

People at the community meetings reminded us of the unique environment where they live. There are changing ice conditions, strong currents, stretches of 24-hour darkness, extreme cold, and high winds. They have lived with this all their life but they are not sure the harshness is truly understood and being taken into account by companies that want to drill in the Canadian Arctic. They told us that the safety of the workers in this environment would be very important.

While they were very concerned about the potential hazards of Arctic offshore drilling, many people recognized that energy is something we all need. They use gas and oil to fuel their snowmobiles and boats to go hunting and fishing and to run their trucks. In Inuvik, Northwest Territories, one man told us that he knows energy is needed but he has to be able to look at his children and his grandchildren. If development does go ahead, it has to be done right. What would he say to his children and grandchildren if he allowed offshore drilling to happen and their way of life was destroyed?

People attending community meetings talked about their land and environment and told us personal stories about past offshore drilling projects that occurred in the Beaufort Sea hunting ground. In the 1970s and 1980s, operators drilled 93 wells in the Beaufort Sea and another 40 wells in offshore areas near the Arctic Islands. Some of the attendees had worked in offshore drilling or had family members who worked in the industry. We heard concerns about waste that was left behind and spills and discharges that were not cleaned up properly. Some were afraid to speak up when they saw unsafe practices because they were afraid of losing their jobs. A resident of Pond Inlet, Nunavut told us that, in the past, “when inspectors are coming things get cleaned up and then when they leave things go back to the old ways”. They told us that some of the practices that were common when offshore drilling first got underway are no longer acceptable today.

John Amagoalik from Nunavut currently works with the Qikiqtani Inuit Association. He is a past president of Inuit Tapiriit Kanatami and the past chair of the Nunavut Implementation Committee. Dr. Amagoalik spoke of his experiences with previous offshore drilling in the Canadian Arctic:

As you know, most of this exploration in the Canadian Arctic mostly occurred in the Beaufort Sea and in the High Arctic Islands. Some oil and a lot of natural gas were found. This did not lead to development extraction of the resources because it was not economically feasible at the time ... Because the Inuit organizations were not in place, very little information was passed on to Inuit, and monitoring of the exploration was almost non-existent. It was only years later that Inuit began to see the damage the oil companies had done in the High Arctic.

We heard that there is a need for accountability by all, including industry and regulators.

We listened carefully to the voices telling us that we were not only accountable to Northern residents and to all Canadians, but we also had a great responsibility to the North itself. At the Roundtable in Inuvik, Amie Charlie, a Grade 12 student at Samuel Hearne Secondary School, said "I realize that the National Energy Board has the authority to approve or deny deep-sea explorations in Canada and with this authority comes great responsibility ...". Another meeting attendee reminded us that we had a big decision to make; if we allowed Arctic offshore drilling to proceed, we would be held responsible if anything were to go wrong. A resident from Tuktoyaktuk, Northwest Territories told us that their way of life is in our hands. One Elder told us that she was scared.

While there are currently no applications for offshore drilling before us, we expect to see such applications in the future. We began this review with the intention of finding the best available information on offshore drilling. Chapter 2 lays out how we conducted the Arctic Review. How we regulate offshore drilling in the Canadian Arctic is described in Chapter 3. We discuss what we have learned from past offshore drilling incidents in Chapter 4 and then look at how to drill safely while protecting the environment in Chapter 5. In Chapter 6, we examine how to respond when things go wrong. Finally, in Chapter 7, we describe how our journey will continue.

Throughout this report, we identify key filing requirements that we expect to be met if and when applications are filed in the future. The complete set of filing requirements is contained in the companion document to this report, Filing Requirements for Offshore Drilling in the Canadian Arctic (Filing Requirements). Our Filing Requirements integrate the requirements identified in the report, supplemented by additional, detailed technical requirements, many of which were taken from the Calls for Information we issued during Phase 1 of the Arctic Review. During the Roundtable discussions, industry participants told us that they are willing to answer the kinds of questions found in our Calls for Information.

Months before the Deepwater Horizon even arrived in the Gulf of Mexico to begin drilling the Macondo well, we had been examining some of the technical issues associated with Arctic offshore drilling. In late 2009, Imperial Oil Resources Ventures Limited applied to the NEB for an advance ruling on its plan for managing an offshore well, should it go out of control.

Instead of ruling on Imperial Oil Resources Ventures Limited’s plans, we decided to conduct a review of the policy for same season relief well capability calling it “an issue of significant public concern”. As part of the hearing to look into this issue, we had planned a technical conference for June 2010 in Inuvik, Northwest Territories.

However, on 11 May 2010, just days after the incident in the Gulf of Mexico, we cancelled the technical conference and the associated hearing and initiated a review of safety and environmental requirements for Arctic offshore drilling. We called it the Arctic Offshore Drilling Review.

In June 2010, we released a draft scope of topics for the Arctic Review so the public could provide their feedback. We heard from more than 60 groups and individuals, including Northern residents, scientists, governments, other regulators, environmental non-government organizations, labour, and industry. We carefully considered these comments and used them to adjust the scope of the Arctic Review.

In their comments, people told us they were concerned about what would happen if there was an oil spill in the Arctic Ocean. Could an incident like the Deepwater Horizon happen in the Canadian Arctic? How would Canada respond if it did? Many people also told us about the unique Arctic environment and said there needed to be more equipment and infrastructure in the North for responding to an oil spill.

Some of the comments related to offshore drilling in Canada’s Atlantic Ocean and in neighboring countries. Others said that we should ban offshore drilling altogether. We did not include these comments in the scope of the Arctic Offshore Drilling Review because they are outside the National Energy Board’s mandate. However, we posted all these comments on our public website so they may be used by others as they see fit.

People asked who would pay for cleaning up an oil spill. To help the public understand this issue, we prepared a backgrounder on financial responsibility and liability and posted it on our website.

Once we had decided which topics to examine, we began to gather the best available information on these topics. We gathered this information in a number of different ways. First, we asked everyone who had registered to participate in the Arctic Review to send us any information they thought the Board should consider.

We also sent out two sets of questions for Arctic Review participants. The first set of questions was released on 30 September 2010 and the second on 23 November 2010. These questions, or Calls for Information, asked participants to provide information and expertise about the topics included in the Arctic Review scope. In response to these requests, we received thousands of pages of information which are posted on our website.

The United States government’s Report to the President: National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling was very important to the Arctic Offshore Drilling Review. We studied this report along with a number of other reports on the BP Macondo incident and other incidents like it, to see what we could learn. You can find links to these reports on our website.

We also asked participants to suggest topics they thought we should study and to recommend experts to carry out these studies. Based on input from participants in the Arctic Review, we asked experts to prepare a number of reports. These reports are posted on our website.

What did we hear at the community meetings?

In addition to examining studies and reports, we wanted to meet face-toface with people and groups interested in Arctic offshore drilling. We felt it was important to listen to the people who would be most affected by Arctic offshore drilling.

Beginning in November 2010, we held more than 40 meetings in 11 communities across Yukon, the Northwest Territories, and Nunavut. We met with Elders, hunters and trappers, community corporation representatives, students, local governments, Northern land claim organizations, territorial governments, and community residents.

The purpose of these meetings was to talk about the role of the National Energy Board and the work we do in the North and to listen to what people had to say about Arctic offshore drilling. It was also an opportunity for people in the North to examine and comment on the facts and information that we had gathered so far.

The people who live in Canada’s Arctic had many questions about offshore drilling, the role of the National Energy Board, and what would happen if Arctic offshore drilling projects went ahead. At many of these meetings, we heard that people understand that energy is important and there is a need for energy development but we cannot let this development occur anywhere at any cost. It must be done the right way.

The unique Arctic environment, including marine and other animals, is an important subject that was raised at every meeting. People in many of these Northern communities told us that they are isolated and depend on the ocean. They said that all species, such as beluga, narwhal, char, Arctic cod, polar bear, seal, and walrus, are connected and important to people in the North.

Attendees at the community meetings were concerned that a blowout could completely change their way of life. They asked about the Same Season Relief Well Policy. We discuss this policy in Chapter 5.

There were also many comments about the use of dispersants, including how they could be used if there was a spill, questions about the impacts of dispersants, and the need for more research.

Spill response capability and infrastructure was another topic that was raised. There were concerns that the North lacks the infrastructure, resources, and capacity to deal with an offshore spill.

And if there was a spill, would Northern residents be compensated? Who would be responsible for clean-up costs? Attendees at the community meetings said that companies need to be able to pay for all the costs and Canadian taxpayers should not have to pay.

People asked, “How would the animals be impacted if there was a spill?” and “How would oil be recovered and cleaned up if there was an accident?” People said that the prevention of an accident is key, as well as preparedness, including strategically locating spill response and clean-up equipment close to where it would be needed.

The subject of Wildlife and Environmental Monitors was discussed. Would they be hired for the drilling projects? Others remembered that Wildlife and Environmental Monitors who were hired for past offshore drilling projects in the Canadian Arctic sometimes felt they could not raise their concerns with the operator because they were afraid of losing their jobs.

We heard questions about how workers would be properly trained to work in the Arctic environment and deal with safety issues. People asked about hiring local residents, including how they could be trained as first responders if there was an accident.

We heard that inspections and monitoring conducted by the National Energy Board would be very important in ensuring that the companies are doing what they said they would.

Finally, many people asked us to clarify the roles of the different government agencies involved in Arctic offshore drilling activities, including:

• the role of local governments and resource management boards;
• how to ensure that all land claims agreements will be respected;
• how environmental processes will be included in project review; and
• how emergency response activities will be coordinated.

All of the questions, comments, and information we gathered at each meeting are summarized and posted on our website.

What did we hear at the Arctic Review Roundtable?

We held a week-long Roundtable meeting in Inuvik so that participants could have face-to-face dialogue to understand information that had been submitted and comment on the issues being considered in the Arctic Review.

Nearly 200 people attended the NEB’s Arctic Review Roundtable from 12 September through 16 September 2011. Another 300 people logged on to their computers to listen to the live web broadcast, which was simultaneously interpreted into Inuinnaqtun, Gwich’in, Inuvialuktun, Inuktitut, and French. Others listened to the broadcast over their telephone.

Roundtable participants included Elders, community members and leaders, local high school students, industry, environmental non-government organizations, labour, experts, other regulatory agencies, federal, provincial, and territorial governments, and land claim organizations.

Five of our Board Members were in Inuvik to participate in the Roundtable and hear first-hand from the Roundtable participants. The Members were: Chair Gaétan Caron, Kenneth Bateman, Georgette Habib, Lyne Mercier, and David Hamilton.

The Roundtable was divided into two parts. Part I was called Understanding Participants’ Interests and Part II was called How to Do Things Right. During Part I, participants had the opportunity to share their interests and concerns related to Arctic offshore drilling and ask questions of other participants attending the meeting.

During Part II, participants commented on the issues being considered, asked questions, and made recommendations on what they thought we should include in filing requirements for future Arctic offshore drilling applications. Part II had five themes:

• the unique Arctic environment;
• regulatory overview;
• learnings;
• drilling safely; and
• responding effectively when things go wrong.

At the beginning of each new theme, the Board had arranged for experts to introduce the topic and share their knowledge. Afterwards, there was an open discussion for participants to comment and provide their input. Everyone was welcome to contribute to the discussion, even those who were not able to attend the meeting in person. Their questions were submitted by telephone and relayed to the Roundtable.

Throughout the five days, we heard that many people in the North are passionate about their land, their culture, and their way of life. They said that they depend on the animals and, in particular, the marine life to feed their families.

Frank Pokiak, from Tuktoyaktuk, Northwest Territories, is the Chair of the Inuvialuit Game Council. He pointed out that communities in the Inuvialuit Settlement Region depend on marine, rather than land-based, animals for their food. He stressed the importance of the ocean to the Inuvialuit people by saying: “... if it wasn’t for the Beaufort Sea I don’t think the Inuvialuit would exist today”.

Duane Smith, from Inuvik, Northwest Territories, referred to many of the concerns that were raised as issues of “food security”.

Mr. Smith also spoke about the Inuit circumpolar perspective, which includes Inuit from the United States, Canada, Greenland, and Russia.

Mr. Smith, who also serves as Vice-Chair of the Inuvialuit Regional Corporation and President of the Inuvik Community Corporation, said that any offshore activity in the Canadian Arctic could affect the entire circumpolar Arctic region. Negative effects on marine species in Canada would affect people in other regions who depend on those same resources. Animals and fish don’t recognize international boundaries.

Some participants were worried that if there was a spill or an accident in the Arctic offshore, the environment and the animals would not be able to recover. They told us that the shoreline is sensitive and ecologically important as a habitat for migratory waterfowl, which many coastal communities rely on. They said that an oil spill could be devastating to their traditional way of life.

Participants talked about the harsh conditions in the Arctic Ocean, including how strong currents and changing ice conditions could impact drilling. Not only is the region very cold, with extreme temperatures and periods of 24 hours of darkness, but the Arctic Ocean is also prone to very high winds and is covered in ice for much of the year. Others spoke of their traditional knowledge, which says that many species, such as whales, polar bears, and sea birds, rely heavily on the leads, or open stretches of water, in the sea ice.

We heard that offshore drilling in the Canadian Arctic might be acceptable to some. However, they told us that if there is to be drilling in the unique Arctic environment, it must be done right. The environment, the people, and the animals that live in Canada’s North must be protected.

We heard that it is important for us to understand the relationship between oil and gas development and maintaining values and a quality of life.

Transcripts of the Arctic Review Roundtable are posted on our website.

Our role includes a number of specific responsibilities such as overseeing:

• geophysical surveys (for example, seismic surveys);
• exploration wells to see if oil or gas is present;
• delineation wells to confirm the size of a potential oil or gas field;
• development wells for producing oil and gas;
• building and operating production facilities and facilities for transporting oil and gas; and
• abandoning wells and facilities.

Abandoning a well or related facilities means that the operator must prepare the well so that it can be left indefinitely. The operator must make sure that the well will not leak and damage water supplies or other potential oil and gas reservoirs. The operator is still responsible for the well even after it has been abandoned.

We do not regulate offshore activities off the coasts of either Nova Scotia or Newfoundland and Labrador. The Canada-Nova Scotia Offshore Petroleum Board and the Canada-Newfoundland and Labrador Offshore Petroleum Board, respectively, regulate these areas.

How are oil and gas resources managed in the North?

While any company wishing to drill in the Canadian Arctic offshore must apply to the National Energy Board for a drilling authorization, the first step is to obtain an Exploration Licence. An Exploration Licence gives a company the right to explore for, and the exclusive right to drill and test for, oil and gas. This licence, issued by the Minister of Aboriginal Affairs and Northern Development, is granted for up to nine years.

The process for getting oil and gas rights to land owned by the Government of Canada, including land under the ocean, is called the rights issuance process. The Department of Aboriginal Affairs and Northern Development manages this process, which is similar to an auction. This process falls under the Canada Petroleum Resources Act. This means that the financial side of Arctic offshore oil and gas development is clearly separated from the safety, environmental, conservation, and technical issues. One federal department looks after the financial side and we focus solely on the rest. There is a clear separation between issuing oil and gas rights and issuing a regulatory authorization to drill.

More information on the rights issuance process is available on the Department of Aboriginal Affairs and Northern Development website under “Northern Oil and Gas”.

The Minister of Aboriginal Affairs and Northern Development is also responsible for reviewing benefits plans for a proposed project. A benefits plan is a plan for the employment of Canadians and for providing Canadian companies with a fair opportunity to participate in the supply of goods and services.

The company is expected to develop these plans in consultation with the affected communities and land claim organizations where the proposed oil and gas activity may take place. A company is also required to submit an annual report to the Department of Aboriginal Affairs and Northern Development which describes the employment, training, and business benefits that occurred from the oil or gas activity.

The Minister must either approve, or waive the requirement for the approval of, a benefits plan before we can consider issuing an authorization.

During the Arctic Review Roundtable, we heard many comments about opportunities for training and education. We also heard that offshore drilling in the Canadian Arctic could provide potential jobs for local residents.

Benefits such as employment and training are included in a benefits plan. We do not examine these plans. The Minister may require that a benefits plan include provisions to ensure that disadvantaged individuals or groups have access to training and employment opportunities.

What is the National Energy Board’s role in reviewing applications for offshore drilling?

Once a company has acquired an Exploration Licence, they must apply to the National Energy Board for an Operating Licence, an Operations Authorization, and a Well Approval before before they can carry out any drilling-related activities. These requirements are laid out in the Canada Oil and Gas Operations Act. The purpose of this act, among other things, is to promote the:

• safety of the public and workers;
• protection of the environment; and
• conservation of oil and gas resources.

There are a number of mandatory regulations which fall under the Canada Oil and Gas Operations Act. The principal regulations relating to drilling are the Canada Oil and Gas Drilling and Production Regulations. These detail what an applicant must do to obtain an authorization for offshore oil and gas drilling or production activities. Operators are required, under the Canada Oil and Gas Drilling and Production Regulations, to take all reasonable precautions to ensure safety and environmental protection.

In the past, our regulations were prescriptive, specifying design and operational details. The challenge with this style of regulation is the “one-size-fits-all” approach. For example, the older Canada Oil and Gas Drilling Regulations specified well casing details such as minimum design factors for burst, collapse, and tension. In the current Canada Oil and Gas Drilling and Production Regulations, the operator needs to ensure that, among other things, the well and the casing are designed so that the well can be drilled safely and withstand anticipated conditions and forces that may be placed on it.

The new Canada Oil and Gas Drilling and Production Regulations came into effect in late 2009. These regulations define the safety and environmental protection outcomes to be achieved. Companies must persuade us that they have selected the appropriate means to achieve those outcomes. Where appropriate, the regulations also contain prescriptive elements including necessary management processes and reporting requirements. We will only authorize a project if we are satisfied that it may proceed safely while protecting the environment.

One of the expert reports that we commissioned for the Arctic Review compared offshore drilling regulatory regimes in Canada with those in Greenland, Norway, the United Kingdom, and the United States. The report focused on management systems, drilling, well control, independent verification, and oil spill response requirements. Canada’s framework is similar to Norway’s, which is recognized as the leader in these areas. This report was prepared by the Pembina Institute and is available on our website.

Before we can approve an application for offshore drilling activities, we must make sure that an environmental assessment is completed. The timing for an environmental assessment typically starts well in advance of a drilling application being submitted or early in the application process. The environmental assessment is based on a project description provided by the company, combined with the additional information we may require when we review the project.

The project description includes information about potential impacts on the environment, including potential impacts from accidents and malfunctions, socio-economic impacts caused by environmental effects, and mitigation measures to protect the environment. We also require information about the public consultation that the applicant conducted for the project. The proposed location of a project determines which environmental assessment process is used when conducting the assessment.

The Canadian Environmental Assessment Act applies to offshore drilling projects in the Beaufort Sea, which are within the Inuvialuit Settlement Region. This act also applies to projects outside of the Nunavut Land Claims Agreement area (beyond the Land Fast Ice Zone). We keep the Nunavut Impact Review Board updated and we seek their comments during the process.

Projects that are proposed for the Inuvialuit Settlement Region also require an environmental screening or review under the Inuvialuit Final Agreement. The Environmental Impact Screening Committee conducts the environmental screening. If necessary, the Environmental Impact Screening Committee may refer a project to the Environmental Impact Review Board for an environmental impact assessment and public review. When the Environmental Impact Screening Committee or Environmental Impact Review Board carry out an environmental assessment, there is often a public consultation period that identifies local issues and perspectives. We must see the decision and recommendations from the Environmental Impact Review Board before we make our regulatory decision.

The Nunavut Impact Review Board screens proposed projects in the Nunavut Land Claims Agreement area to determine whether a review is required.

As part of the scope of the Arctic Review, we committed to examining lessons learned from accidents, incidents, and emergency response exercises. Throughout the Review, we asked participants to tell us what they have learned from their previous experiences with offshore drilling.

We recognize that offshore drilling comes with risks. However, as was noted in the report to the President of the United States by the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, “... even the most inherently risky industry can be made much safer, given the right incentives and disciplined systems, sustained by committed leadership and effective training.”

We commissioned Det Norske Veritas to write a comparative analysis of major incidents in order to identify trends related to root causes and contributing factors. This report, called Major Hazard Incidents, is available on our website. Claudine Campbell, our technical leader of safety, discussed the findings from this report at the Roundtable in Inuvik. She said:

The report authors also acknowledged how crucial it is for an operator to capture their contractors’ activities and learnings within their safety management system. In addition, it was noted that previous accidents and near-misses contained vital information about both active and latent threats to safety.

In the rest of this chapter, we take a closer look at what we have learned from previous offshore incidents. The list is by no means exhaustive, nor does it take into account what we have learned from near-misses. We also examine some of the lessons we have learned from other regulators, and discuss how a strong safety culture and a commitment to management systems contribute to offshore drilling projects that are safe and do not damage the environment.

What have we learned from the Ocean Ranger?

It began with a winter storm and a broken window.

It was a porthole window in the ballast control room of the Ocean Ranger. And shortly after 3 a.m. on 15 February 1982, this broken window led to the sinking of the largest self-propelled semi-submersible offshore drilling rig of its time and the l-oss of its 84 crew.

The broken porthole window and the ballast control room were located within range of the large waves splashing up from the Atlantic Ocean. A Royal Commission into the incident later determined that the glass in the window was not strong enough. There was a deadlight (steel cover) intended to cover the window. However, someone was required to check draft marks on the rig’s outer legs, which meant opening the deadlight. “This led to the habit of leaving the deadlight open at all times.”

On the afternoon of 14 February 1982, the Ocean Ranger’s crew started to disconnect from the wellhead off the coast of Newfoundland because a major storm was coming. That evening, the porthole window broke and seawater sprayed into the ballast control room.

Radio conversations from the Ocean Ranger overheard by other vessels in the area reported that “the control panel was wet and discharging shocks”, the valves used to control the stability of the rig were opening and closing on their own, and they needed an electrical technician.

The ballast valves could be controlled manually by inserting or removing control rods. The crew appeared to believe that inserting the control rods would close the ballast valves. Instead, the crew was actually opening the valves to the ballast tanks, making their situation worse.

In 1982, “ballast operators were not formally trained nor did they have to pass tests to determine whether they understood the systems and their operation”.

In their report, Det Norske Veritas noted that the rig owner’s “career management policy focused on growth through experience without formal training ... This industry approach was not supported by sufficient training measures which showed a lack of commitment to formally improve employees and overall company performance in the area of safety”.

Just before 1:30 a.m. on 15 February, the Ocean Ranger issued a Mayday and the crew headed to lifeboat stations.

There is evidence that only one lifeboat was launched. It was damaged by the winter storm and capsized with at least 30 men on-board. The stand-by vessel took an hour to get to the scene and did not have the equipment to rescue the men who were in the water. Some of the crew died “while trying to climb onto the supply boat during a rescue attempt using improvised life ring lines”.

The Royal Commission found that there was inadequate lifesaving equipment on the rig. While there were four lifeboats, not all of them were installed. The Det Norske Veritas report also noted “emergency training was not mandatory and did not ensure evacuation procedures were well understood by the crew”.

What have we learned from the Piper Alpha?

It took less than 30 minutes. When it was over, three explosions and the resulting fire would make the Piper Alpha a tragic memory.

The Piper Alpha was located 193 kilometres northeast of Aberdeen, Scotland in the North Sea. The platform piped natural gas to shore and was linked via gas pipelines to two other offshore platforms in the area, the Claymore and the Tartan.

On the morning of 6 July 1988, the crew was carrying out routine maintenance to Condensate Pump A. As part of the maintenance, the pump’s pressure safety valve “was removed to be recertified”. In the meantime, the condensate line was temporarily sealed with a blind flange, “which was not fully tightened”. Because the work could not be completed by the end of their shift, the crew filled out paperwork stating that Pump A was not ready for service and must not be switched on.

Later that evening Condensate Pump B failed. Staff couldn’t find any paperwork about the status of Pump A and “assumed it would be safe to restart Pump A”. Pump A was re-started and highly pressurized gas condensate began to leak through “the less than leak-tight blind flange”.

The Det Norske Veritas report said “the crew did not follow procedures when they completed the fitting of the blind flange. The flange was not properly adjusted ...

In addition, the work situation and the status of the job was poorly communicated at the shift handover”.

Minutes after Pump A was switched on, a “gas cloud found an ignition point and the first explosion occurred”. A projectile ruptured a condensate line, starting a fire. The blast also destroyed the control room and, with it, the communications system, meaning there was no way to provide evacuation instructions to the Piper Alpha’s crew.

With a fire raging, approximately 100 men gathered in the fireproof accommodation block and waited for instructions. Those who tried to get to the lifeboat stations, which were all in the same location, found their path blocked by smoke and flames. The fire also prevented any rescue helicopters from landing. The Det Norske Veritas report cites a lack of emergency preparedness, including “no proper planning of alternative evacuation routes”, as one of the issues which contributed to the disaster.

Shortly after the first explosion, the fire ruptured the gas pipeline riser connecting the Tartan platform to the Piper Alpha. The Tartan was still pumping gas to the Piper Alpha, in effect, fuelling the fire. An inquiry later found that the “Tartan continued pumping because managers either had no authority or had not received communication” to shut in production.

Minutes later there was a third explosion, this time from the Claymore gas pipeline riser. The intense heat was destroying the Piper Alpha, including the fireproof accommodation block where many of the crew were located. Finally, the platform, including the accommodation block, “slipped into the sea”.

The accident took the lives of 165 of 226 men on-board, plus two rescuers, making it the world’s worst offshore oil and gas disaster.

What have we learned from the crash of Cougar Helicopter Flight 491?

The morning of 12 March 2009 started off well in St. John’s, Newfoundland and Labrador. The sun was bright, the sky was clear, and it was shaping up to be a good day for flying.

Shortly before 9 a.m., 17 men and one woman climbed aboard a Sikorsky S-92A, operated by local Cougar Helicopters, and headed to work. The plan was to stop first at the Hibernia platform, 315 kilometres from St.  John’s, and then the SeaRose Floating Production Storage and Offloading vessel, located 350 kilometres from St. John’s.

Helicopter travel is a routine part of life in the offshore industry. However, it is not without risk.

The helicopter was 28 minutes into its 90-minute flight when a warning light flashed on. The two pilots issued a Mayday and headed for home. What they did not know was that two of three titanium studs connecting the oil filter to the helicopter’s main gearbox had broken off mid-flight and the aircraft was rapidly losing oil pressure. The gearbox is part of the system that turns the main and tail rotors and is essential to the helicopter’s operation.

Just 11 minutes later, Cougar Flight 491 slammed into the North Atlantic, 55 kilometres southeast of St. John’s, taking all 18 on-board with it. Only Robert Decker survived the crash. Mr. Decker was in the water amidst the wreckage for more than an hour before he was plucked from the sea by Cougar’s own rescue aircraft.

Following the crash, the Honourable Robert Wells led a Commission of Inquiry. The purpose was to examine offshore helicopter safety. His mandate did not extend to examining what caused the Cougar crash, which is the role of the Transportation Safety Board. Commissioner Wells’ final report contained 29 recommendations, including a call for the creation of a new regulatory body which should be “independent from all other components of offshore regulation and should stand alone, with safety being its only regulatory task”. He went on to say:

I believe the major safety development of the past 20 years has been the realization that safety regulation should be separate from the production aspects of the oil industry in order to avoid the conflicts which could arise when both activities are presided over by a single regulator.

The report also pointed out that in the unique offshore environment, first response capability is critical.

At the time of the crash, the offshore oil companies operating in Newfoundland and Labrador had a contract with Cougar Helicopters to provide first response services. This contract called for the aircraft to be “wheels-up” in under an hour. As Cougar did not have a helicopter dedicated to emergency response, it took the company 50 minutes to remove the passenger seats from the stand-by helicopter, install the necessary search and rescue equipment, and take off. In his report, Commissioner Wells recommended that operators should be required to have a dedicated aircraft with a 15-20 minute wheels-up response available at all times.

Throughout his report, Commissioner Wells was clear that changes are necessary, particularly the need to “improve and maximize worker participation in developing and advancing safety”. Workers have a significant responsibility for ensuring their own safety, he said. There needs to be wider worker, public, and stakeholder engagement. This includes the sharing of regulatory assessments with the public.

Commissioner Wells’ report can be found on our website.

What have we learned from the Montara blowout?

It was called a failure of sensible oilfield practices.

More specifically, an inquiry commissioned by the Australian government found that “the way that PTTEPAA [PTT Exploration and Production Australasia] operated the Montara Oilfield did not come within a ‘bulls roar’ of sensible oilfield practice”. The blowout at the Montara H1 Well was the worst of its kind in the Australian offshore petroleum industry’s history.

On 21 August 2009, contractors for PTT Exploration and Production Australasia were drilling in the Montara field. The field is located 250 kilometres northwest of Western Australia and included the Montara H1 Well.

At the time of the incident, the well had been temporarily suspended while the contractor was using a jack-up drilling rig called the West Atlas to work on another nearby well. The well had the following well barriers in place before the well was initially suspended:

• a cemented 9 5/8” (244 mm) casing shoe;
• a cemented 9 5/8” (244 mm) casing annulus;
• inhibited seawater; and
• a 9 5/8” (244 mm) pressure containing corrosion cap.

At this point, there was no wellhead or blowout preventer installed on the well.

The Montara Commission Inquiry later “found that at the time the H1 Well was suspended in March 2009, not one well barrier complied with the operator’s own Well Construction Standards ... Relevantly, the 9 5/8” (244 mm) cemented casing shoe had not been pressure-tested in accordance with the company’s Well Construction Standards, despite major problems having been experienced with the cementing job”. Then, on the morning of 21 August 2009, Montara H1 Well experienced a “kick”.

In the drilling industry, a kick is an indication that unintended formation fluids have entered the wellbore. When fluids with a higher pressure than the pressure exerted by the drilling mud enter the wellbore, the well may need to be shut in quickly or a kick can escalate to a full-scale blowout.

The West Atlas rig was headed back to the Montara H1 Well to install additional well barriers when the well suffered a second kick. This time a stream of oil and gas shot to the surface and control of the well was lost that same day.

While all 69 workers made it to safety, an estimated 29,600 barrels (approximately 4,700 cubic metres) of oil was released into the Timor Sea over 74 days until a relief well was completed in early November and brought the well under control.

Among the findings and recommendations included in their report, the Commission of Inquiry identified two broad categories of likely causes for the incident.

The direct cause of the blowout was the failure of the primary well barrier, the 9 5/8” (244 mm) cemented casing shoe. The casing shoe was intended to act as a primary line of defense against a potential blowout.

The report also identified systemic failures in how the operator implemented the regulatory regime, rather than inadequacy of the regulations themselves.

The Montara Commission of Inquiry report is posted on our website.

What have we learned from the Deepwater Horizon?

Following the Deepwater Horizon incident in the Gulf of Mexico, several countries, including Canada, announced their intention to examine the accident and learn from it. United States President Barack Obama announced the creation of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling on 22 May 2010.

In their Report to the President, the Commission found that the Deepwater Horizon incident could have been prevented and that the “immediate causes of the Macondo well blowout can be traced to a series of identifiable mistakes ...”.

The Commission went on to note “there are recurring themes of missed warning signals, failure to share information, and a general lack of appreciation for the risks involved. In the view of the Commission, these findings highlight the importance of organizational culture and a consistent commitment to safety by industry, from the highest management levels on down”.

In their report, the Commission documented the weaknesses and the inadequacies of the federal regulation and oversight, and made important recommendations for changes in legal authority, regulations, investments in expertise, and management. Recommendations to government follow eight themes:

• Improving the Safety of Offshore Operations;
• Safeguarding the Environment;
• Strengthening Oil Spill Response, Planning, and Capacity;
• Advancing Well-Containment Capabilities;
• Overcoming the Impacts of the Deepwater Horizon Spill and Restoring the Gulf:
• Ensuring Financial Responsibility;
• Promoting Congressional Engagement to Ensure Responsible Offshore Drilling; and
• Moving to Frontier Regions.

The Canada-Newfoundland and Labrador Offshore Petroleum Board took additional measures to make sure the well would be drilled safely. These measures included:

• establishing an oversight team to coordinate oversight of the project and to make sure that the regulator received daily reports from the field;
• monitoring the lessons learned from the Deepwater Horizon incident and increasing the frequency of audits and inspections from once every three or four months to once every three or four weeks;
• calling an operations timeout before critical phases during the drilling program – the purpose was to make sure that everybody understood what was required to get safely through the next phase of the well and to make sure that it was done in a way that protected the environment;
• observing key operations from on-board the rig – the Canada- Newfoundland and Labrador Offshore Petroleum Board sent a senior drilling engineer to the rig during specific times in the drilling program to make sure that “things were being done as they should have been”;
• ensuring that spill response equipment was ready for rapid deployment in case things should go wrong; and
• reviewing the well termination program because it was during this activity that the Deepwater Horizon crew lost control of the Macondo well.

We consider many of these steps to be best practice in terms of regulating offshore drilling. In particular, the concept of calling an “operations timeout” or safety “stand down” at critical phases during the drilling program would give us the opportunity to make sure that everyone understands the next steps in the process and that the equipment and procedures in place are acceptable. We would only allow the drilling process to continue when we were convinced that drilling will be safe and will not harm the environment.

How do management systems contribute to a safety culture?

When we look at the root causes of these incidents, we find a common thread: a neglect of, or even an absence of, processes and procedures to identify, mitigate, or eliminate potential risks. Beneath that deficiency lies an even deeper and more disturbing pattern of organizational cultures that did not put safety first.

What is safety culture?

An organization’s safety culture is made up of both individual employee and group beliefs, values, attitudes, and behaviours about safety. A positive safety culture is characterized by “... communications founded on mutual trust, by shared perceptions of the importance of safety and by confidence in the efficacy of preventative measures”.

In other words, a strong safety culture always puts safety, and the practices of continually making things safer, first.

We invited Dr. Mark Fleming of Saint Mary’s University to the Inuvik Roundtable so participants could learn more about the importance of safety culture in preventing things from going wrong in offshore drilling.

In his report, Safety Culture Review Implications for Regulators, Dr. Fleming cites four common cultural factors identified in inquiry reports from 17 major disasters, including the offshore disasters Piper Alpha, Ocean Ranger, and Deepwater Horizon. These are:

• tolerance of inadequate systems and resources – front-line employees are willing to tolerate poor systems, maintenance, or inadequate resources;
• deviation from safety policy becomes normal and accepted – employees accept that not everyone will follow the rules laid out in organizational policy, or that the rules do not necessarily need to be followed in order to operate safely;
• complacency – major disasters are rare, though catastrophic. Because they do not happen frequently, employees and management begin to feel that they simply will not happen, no matter how highhazard daily operations may be; and
• work pressure – the pressure to meet deadlines or cut costs can overwhelm the desire or directive to follow procedures, take precautions, or even stop work if something does not appear to be right.

These findings point to deficiencies in organizational safety culture: deficiencies that lead to the worst possible outcomes. Dr. Fleming’s work asks the question, “given the demonstrated link between an organization’s safety culture and their ability to drill safely, what can the regulator do to make certain that an operator has a strong safety culture?”. Dr. Fleming recommends that regulators hold industry accountable for growing a healthy safety culture and audit companies to observe and validate that safety culture. We agree.

Applicants must demonstrate to us that they have a strong safety culture. It is the primary foundation of all other requirements that address the health and safety of workers and the public, as well as the protection of the environment. This is especially significant for any proposed operations in the Arctic, where the transient nature of offshore drilling and the Arctic environment pose unique challenges to a sustainable safety culture.

How can a regulator drive development of a safety culture?

If the desired outcome is a safety culture where every individual, from the Chief Executive Officer to the rig worker, cares about and acts to promote safety, management systems are the tool through which this outcome is achieved. Unfortunately, in addition to safety culture, another common thread links the root causes of industrial disasters: the lack of robust safety management systems.

In each of the cases assessed in the Det Norske Veritas report that we commissioned, it was clearly demonstrated that, while the operating organization may have had safety policies and management commitment statements to them in place, hazard identification, risk assessment, and the necessary related controls were deficient.

In the context of an application to drill a well, a management system is a framework of plans, processes, and procedures used to ensure that an applicant can meet the regulatory requirements and objectives concerning health, safety, and the environment, identify hazards, and mitigate or eliminate risks. Companies must demonstrate to us their ongoing adherence to a management system. We must be satisfied that someone in the company is effectively and rigorously accountable for the maintenance and implementation of such a system. The applicant needs to persuade us that it has processes in place for conducting reviews or audits of the system and for taking corrective actions if reviews or audits identify areas of non-conformance or opportunities for improvement.

Management systems include processes for:

• hazard identification;
• risk management;
• personnel competence and training;
• emergency preparedness;
• internal reporting; and
• performance monitoring and compliance.

Management systems inherently focus on continual improvement using information captured from front-line workers, industry intelligence, incidents, and even “near-misses” to review and improve the existing system.

We currently require that all regulated companies and applicants demonstrate, to our satisfaction, comprehensive and well-executed management systems. Our regulatory framework provides clear and unambiguous direction for the implementation of management systems. As stated in Chapter 3, in Canada, management systems are required by the Canada Oil and Gas Drilling and Production Regulations for offshore drilling authorizations and approvals. We also require that the management system be maintained and updated during drilling operations.

We evaluate the implementation and effectiveness of management systems using a risk-based program that includes audits, inspections, and other compliance and enforcement tools.

Throughout the Arctic Review, we heard that, if companies are going to be permitted to drill in the Canadian Arctic offshore, it must be done right. Our goal is to see that energy facilities are safe and are built and operated in a manner that protects the environment.

We have the primary responsibility under the Canada Oil and Gas Operations Act, which governs offshore drilling in the Canadian Arctic. The purpose of this act, among other things, is to promote safety and the protection of the environment. This act gives us the authority to attach requirements to the authorizations that we issue in order to achieve these goals. If these requirements or the applicable regulations are not met, the Board can suspend or revoke the authorization. Accordingly, any company planning to drill in the Canadian Arctic offshore must demonstrate to us that they can drill safely while protecting the environment. If the company can’t do this, they can’t drill.

We are a full life cycle regulator for oil and gas drilling and production. This means that we are responsible for regulating a project from start to finish, from the application, through the production phase, and even after a well is eventually abandoned. We make sure that an operator does what they promised they would do. We verify compliance with the legislation and conditions of authorizations and approvals by meeting with the company and conducting inspections and audits. We focus on safety, environmental, and technical issues. We do not decide whether an area will be open for bids nor do we regulate or collect royalties from oil and gas leases. These are the responsibilities of the Department of Aboriginal Affairs and Northern Development or, in some areas, the Department of Natural Resources.

There are a number of regulations under the Canada Oil and Gas Operations Act which explain the requirements for a company operating an offshore drilling project in the Canadian Arctic. The Canada Oil and Gas Drilling and Production Regulations say that, when a company applies for an authorization to drill in the Arctic offshore, they must provide us with:

• a Safety Plan, that sets out the procedures, practices, resources, sequence of key safety-related activities, and monitoring measures necessary to ensure the safety of the proposed work or activity;
• an Environmental Protection Plan, that describes the procedures, practices, resources, and monitoring necessary to manage hazards and protect the environment from the proposed work or activity; and
• Contingency Plans, including emergency response procedures, that describe how the effects of any reasonably foreseeable event that might compromise safety or environmental protection will be mitigated.

In addition to the regulations, we can impose conditions on a company’s authorization to drill in order to promote safety and environmental protection. Furthermore, the filing requirements noted in this report, and further detailed in the companion document to this report, Filing Requirements for Offshore Drilling in the Canadian Arctic, include our filing expectations for future applications for offshore drilling projects.

How will the National Energy Board be ready for applications to drill in the Canadian Arctic offshore?

Throughout the Arctic Review, we heard that, as the regulator of offshore drilling in the Canadian Arctic, we have a responsibility to be ready for future applications.

We have staff with the offshore expertise and experience necessary to assess, inspect, and conduct audits of offshore drilling projects. This includes geophysicists, geologists, drilling engineers, safety engineers, offshore structures engineers, safety inspectors, environmental specialists, and marine emergency response experts. We benefit from a significant expert resource in the certifying authorities who examine and certify every drilling rig and drillship. We have an agreement with the Canada-Nova Scotia Offshore Petroleum Board to share experienced personnel through a staff exchange, as needed.

In addition, we work with a major engineering firm to provide technical services when we run into very specialized technical issues where we may benefit from additional expertise. We will be ready to apply the highest scrutiny necessary to any future applications for offshore drilling in the Canadian Arctic. As the offshore drilling workload of the Board grows, we will add the necessary capacity.

How do we know that drilling equipment will be safe?

The Canada Oil and Gas Certificate of Fitness Regulations say that every production installation, accommodation installation, and diving installation at an offshore production or drilling site is required to have a valid Certificate of Fitness. The Certificate of Fitness is issued by an independent expert organization called a certifying authority. A list of recognized certifying authorities is provided in the Canada Oil and Gas Certificate of Fitness Regulations.

The certifying authority independently conducts the work that is necessary to determine that the drilling rig and drillship, and the associated equipment such as blowout preventers and well control equipment, have been designed, constructed, transported, installed, operated, and maintained in accordance with the regulations.

By issuing a Certificate of Fitness, the certifying authority states that it has verified that the installation can be operated safely, without polluting the environment, and that it is fit for the purpose for which it is intended, such as drilling in offshore Arctic waters. The operator must ensure that the Certificate remains in force for as long as the equipment or installation is used.

In addition, once a Certificate of Fitness has been issued, the operator cannot modify any of the drilling equipment without authorization. The equipment must be certified and used according to the design.

How will the National Energy Board make sure offshore drilling projects are safe?

We learned that accidents can happen not only because the regulatory regime was deficient, but because the operator did not effectively implement safety processes and systems required by the regulations. We hold operators accountable for meeting our regulations and the conditions of their authorization, and for honouring their commitments.

If we authorize an offshore drilling project, we will monitor the facilities and activities to verify that the operator is complying with our requirements throughout the life cycle of the project. Monitoring compliance is an essential tool that helps enable enforcement, promote continual improvement, and facilitate a deeper understanding of an operator’s systems and practices. We will respond to concerns and complaints that we receive on any matter under our mandate. If a concern does not fall under our mandate, we will inform the relevant authorities of the complaint.

We may use a variety of tools to verify compliance.

Audits are a systematic evaluation of an operator’s organization-wide management system, including programs, practices, procedures, plans, processes, manuals, records, systems, and activities. The objective is to verify that the operator is complying with regulatory obligations. Operators can be required to submit and implement corrective action plans, within specific time limits, to resolve any findings of non-compliance.

Inspections are an on-site methodical examination and assessment of an operator’s activities compared to their regulatory obligations and commitments. Our staff may conduct inspections at any time during the life cycle of the project.

Compliance meetings are used to:

• exchange information about an operator’s programs or our requirements;
• verify the operator’s implementation of their regulatory obligations and commitments; and
• assess the operator’s performance, provide feedback, and seek an operator’s commitment to improve as necessary.

Emergency response exercise evaluation are on-site evaluations of an operator’s capability to respond to an emergency in accordance with emergency response procedures and industry best practices.

Compliance verification tools and the prospect of regulatory enforcement have important roles to play in educating operators and encouraging future compliance. Our enforcement activities range from notifying the operator and providing opportunities for voluntary compliance, up to revoking and suspending their Authorizations or Operating Licences. Offences can also be prosecuted.

We can use a variety of tools to compel compliance, including:

• a letter or notice, most commonly in the form of a Safety Advisory;
• an Assurance of Voluntary Compliance, which is a formal written undertaking given by an operator to correct a non-compliance;
• Board Orders to enforce regulatory obligations under the Canada Oil and Gas Operations Act, regulations, or authorizations;
• revoking an authorization that enables the company’s operation, if we lose confidence in their ability to operate safely or in a manner that protects the environment; and
• prosecution (through the Office of the Attorney General of Canada).

It is an offence to contravene provisions of the Canada Oil and Gas Operations Act and the Canada Labour Code, Part II. If we discover a serious offence, we will refer the details to the Office of the Attorney General of Canada for prosecution. Under the Canada Oil and Gas Operations Act, a person can be held liable to a fine of up to one million dollars if found guilty of an offence. In addition, offences under the Canada Oil and Gas Operations Act are continuing offences. This means that for each day that an offence continues, the offence is deemed a separate offence.

What tools are used to control a well?

Well control refers to techniques used to maintain pressure in the wellbore, to control or prevent flow of formation fluids into the wellbore. We require wells drilled in the Canadian Arctic offshore to have at least two independent and tested well barriers in place during all well operations to ensure well control and well integrity.

As the regulator, we examine an application for offshore drilling to see that there are built-in redundancies for well control systems and equipment, and the system is reliable. This is essential. Furthermore, the operator is required to immediately cease any activity that endangers, or is likely to endanger, the safety or integrity of the well.

Examples of well barriers are:

• drilling fluids;
• cemented casing and casing shoetrack;
• downhole packers and other plugs; and
• blowout preventers.

When drilling, the primary tool for controlling the well and avoiding a blowout is having sufficient weight of drilling fluid, known as “mud”, so that the pressure of the mud is enough to overcome the pressure from the underground formation surrounding the hole. A blowout preventer is a second line of defense and is essentially a large set of valves at the top of a well that may be activated if the primary well control fails. If the blowout preventer fails once control of the well is lost, the well could continue to flow at an uncontrolled rate, as was seen during the blowout in the Gulf of Mexico. This creates serious hazards to people, the environment, and property.

When wells are drilled in shallow water with an offshore rig that sits on the seafloor or on an artificial island, the blowout preventers are installed above the waterline. In offshore drilling operations which take place in deeper water with floating drilling rigs, such as a drillship, the blowout preventer is located underwater near the seabed. This is called a subsea blowout preventer.

Since blowout preventers are critical equipment for safe operations, we expect that they will be inspected, tested, and refurbished at regular intervals, according to industry best practices. The timing for these activities will be determined by a combination of risk assessment and the type of well being drilled.

We know from past incidents, such as the blowout and oil spill in the Gulf of Mexico, that while blowout preventers are an important tool in well control, they are not fail-safe. It’s important that we learn from these incidents.

According to the Canada Oil and Gas Drilling and Production Regulations, “the operator shall ensure that pressure control equipment associated with drilling, coil tubing, slick line, and wireline operations is pressure-tested on installation and as often as necessary to ensure its continued safe operation”.

As part of normal drilling operations, blowout preventers are expected to be regularly tested. Drilling crews will typically run certain tests before the start of a particular operation, such as running casing. In addition, the crew will typically run a pressure test approximately every week.

If the operator loses control of their well, they must have a Contingency Plan to regain well control. This plan could use various measures including:

• cap and containment methods;
• same-well intervention methods; and
• drilling a relief well.

Blowout Preventer

Learnings from the Macondo Well

What have we learned about blowout preventers?

• The blind shear rams must be capable of shearing the off-center drill pipe.
• All back-up control systems must have built-in redundancy.
• A robust change management process is required to manage changes and modifications to well control equipment.

What is the National Energy Board‘s policy regarding same season relief wells?

Under the Canada Oil and Gas Drilling and Production Regulations, we require the applicant to develop Contingency Plans appropriate for their project. These Contingency Plans must be submitted to us as part of their application. The regulations also say that the plans must take into account anticipated hazards and risks, and identify the appropriate equipment, procedures, and personnel for mitigating these hazards and risks.

A relief well is one contingency measure used to respond to an out-of-control well. In the Canadian Arctic offshore, we have a policy that says the applicant must demonstrate, in its Contingency Plan, the capability to drill a relief well to kill an out-of-control well during the same drilling season. This is referred to as same season relief well capability.

When Contingency Plans for a proposed project are submitted to us as part of an application, we thoroughly review and consider their adequacy. The plans can also be considered during any environmental assessment process for the proposed project.

During the Roundtable in Inuvik, we heard that, while relief wells are one option for killing a well that has gone out-of-control, there may be other methods which would achieve the same goal. As Mike Peacock from Imperial Oil told attendees, “... the Arctic environment requires all the tools in our toolbox to be available to the operators ...”.

We heard from other participants that, while they agree with the goal of regaining control of a well as soon as possible and not relying solely on a relief well, they had concerns about not including same season relief well capability as a tool in an operator’s toolbox.

The intended outcome of the Same Season Relief Well Policy is to kill an outof- control well in the same season in order to minimize harmful impacts on the environment. We will continue to require that any company applying for an offshore drilling authorization provides us with specific details as to how they will meet this policy. An applicant wishing to depart from our policy would have to demonstrate how they would meet or exceed the intended outcome of our policy. It would be up to us to determine, on a case-by-case basis, which tools are appropriate for meeting or exceeding the intended outcome of the Same Season Relief Well Policy.

In addition, we will continue to require an operator to use all intervention techniques available, in addition to a relief well, so that the flow from an out-ofcontrol well can be stopped as quickly as possible.

We acknowledge that there is a continual evolution of technology worldwide, including the technology needed to kill an out-of-control well. We are open to changing and evolving technology.

Offshore Relief Well

What level of risk is acceptable?

Throughout the Arctic Review, many people told us that when one is faced with great risk, there is great responsibility. While there is much that can be done to prevent an accident from happening, no one can guarantee that there will never be an offshore drilling accident. We heard that offshore drilling, particularly in the Arctic, always comes with risks.

During the Roundtable in Inuvik, we heard participants discuss a concept of tolerable risk.

In the normal course of an application review, we would examine a company’s proposed risk assessment and risk management processes. We would look at the consequences of the risks occurring, notably a worst-case scenario. For instance, we would require an operator to tell us how long it would take to regain well control given the operating environment, such as ice conditions, lack of daylight, and possible weather conditions. The operator would also have to describe the volume of oil that could be released, the volume of oil that would be recovered until well control is regained, and the likely short-term impact and residual longterm impact on the environment and Northern communities. We would weigh all the case-specific information in front of us and make a risk-informed decision to approve or deny the application.

As stated in the Canada Oil and Gas Operations Act, we are the lead agency for emergencies related to oil and gas drilling and production in the Canadian Arctic offshore. Our role, in the case of an incident or emergency, is to lead a coordinated agency response, monitor the operator’s response activity, and verify that legal requirements, conditions of authorization, and other commitments are followed and met. We investigate and report on the incident to help prevent a similar occurrence in the future.