ARCHIVED – Meeting Summary – 2 June 2011

Arctic Offshore Drilling Review

Information Meeting Summary

Date and Location

Date	Location
Thursday 2 June 2011 1:30 p.m. and 4:30 p.m. and 7:00 p.m. and 9:00 p.m.	Tree of Peace Boardroom Yellowknife, NT

Purpose: Phase 2 Information Meeting

Participants

Participants
Brian Chambers	Northern Advisor, NEB
Bharat Dixit	Technical Leader, Exploration and Production, NEB
Pamela Romanchuk	Environmental Specialist, NEB
Susan Gudgeon	Northern Coordinator, NEB
Céline Sirois	Technical Specialist, Environment, NEB
Sarah Kiley	Communication Officer

Presentation (NEB):

National Energy Board staff gave a presentation providing an overview of:

• the Board's role in the North
• the scope of the Arctic Offshore Drilling Review
• what has occurred to date including stakeholder meetings and information filed
• where the Review is now at
• what is coming up
• funding

Questions and Comments:

The following questions and comments were posed:

• Does the National Energy Board conduct technical reviews or is it done through a third party?
• It was mentioned that there are no applications at this time. How many have there been in the past?
• Why do this Review now?
• What is the format for the Roundtable – will the Board Members be up front like in a hearing?
• Has the National Energy Board considered breaking into smaller sessions? Northerners may feel more comfortable in smaller sessions. These smaller groups could be on specific themes. Could have the larger circle to start off with and then break into the smaller sessions.
• Will people who submitted information be making presentations at the Roundtable?
• How will the Roundtable be managed? If the Roundtable is for a week, how will the National Energy Board control people coming and going and making presentations?
• Will the speakers be known prior to the start of the Roundtable or can people walk in and make a presentation?
• Is pre-registration required to make a presentation?
• Glad to hear of the open concept for the Roundtable. In other situations where there have been consultations with governments or companies this hasn't been the case. There is great value in everyone hearing the same information. There will be no misinformation in one person hearing something that others haven't.
• What would be the role of industry at the Roundtable? Do they have to register like other participants?
• Are any other government departments going to be there? Imagine the National Energy Board is getting questions about other jurisdictions and other departments. Will they be there to answer the questions?
• Who is the Chief Conservation Officer? Does he have any northern experience?
• Are there written criteria or guidance for when the Chief Conservation Officer takes a matter to the Board?
• Are the results of the inspections that are carried out posted on a public registry?
• Although the mandate of the National Energy Board is understood, when it comes to environmental protection, can't find any environmental regulations.
• If a company says they aren't going to do a contingency plan, there is no regulation that says they have to. Is the only thing the National Energy Board can do is not to give an approval?
• Find it odd that multi-national companies are going ahead and discharging chemicals into the water. There are no regulations for this, just conditions. This is an industry that operates different than any other industry.
• Has any oil and gas company ever been charged under by the National Energy Board for environmental damages?
• With the benefit of 35 years of experience, there have been problems. Many times pipes get stuck and the remedy is to dump large volumes of diesel oil to get the pipe unstuck. This was no big deal for COGLA for companies to mix the diesel oil with the mud. There has been a disagreement on this with Environment Canada for years. Industry was against using mineral oil fluids as there was no room on the rig. They had plenty of diesel oil though. Companies said the stuck pipe was a safety matter so made it into a safety issue and used the diesel oil.
• Companies had old barite on the rig and needed new. They asked COGLA if they could dump the old stuff overboard and COGLA said yes. Environment Canada charged the company.
• The National Energy Board says it regulates safety and the environment but looking at the guidelines and regulations, nothing has changed in 10, 20, 30 years. The only stick the National Energy Board has is to withdraw an authorization. How can the National Energy Board regulate without regulations?
• Every regulation comes with a penalty. In fact for this there is no penalty, just a fear factor to lose an approval. Failure to comply with conditions results in a complaint and not a penalty. Companies will make an economic decision about dumping diesel oil into the Beaufort.
• The National Energy Board has a good electronic registry for hearings but once it ends and something is approved there is nothing further. The other boards (Land and Water Boards) track projects all the way through (various terms of licences, plans that have to be filed) and maintain distribution lists. Why can't the National Energy Board scan inspection results, etc. so people can see this ongoing information online? This is transparent so people can see what is happening. Things are done differently in the North and if the National Energy Board is going to continue to work here it needs to get a good electronic registry.
• There are some extremely good examples of information on the internet for projects that have been funded by the World Bank (ie: Esso in Chad). It is a requirement of the World Bank that all environmental documents be posted on the internet, including compliance records on a month by month basis. World Bank funded projects all over the world seem to have higher standards. The main players in the Mackenzie Gas Project (MGP) contributed to these international standards but when asked in the MGP process, they said absolutely no – they would just do the bare minimum. Higher level of standards that are applied in third world countries are not applied in this country, in this jurisdiction because of money. These include Arctic and sub-Arctic standards.
• During the Review, if issues are raised for matters that DIAND is responsible for, is it recorded or just said that is it not part of this Review? Will there be a section in the Report of what the National Energy Board has heard that is outside its mandate and make recommendations? These could be matters that are in the public interest even though outside the mandate of the National Energy Board.
• It is not a matter of how to regulate, but if it should happen in the first place (rights issuance matter).
• If the National Energy Board throws things out the window it heard that is outside its mandate that is no way to run a Review.
• It is one thing for INAC to come to a meeting to hear what is said, but making recommendations on things they have heard should be done.
• INAC has been in communities doing consultation.
• Heard a lot in the news lately about the small area around Quebec. Will there be something coming out of that soon?
• How do the Inuvialuit Final Agreement and Nunavut Land Claims Agreement fit into the process?
• How many years has it been since the National Energy Board has regulated any offshore drilling?
• What sort of capacity does the National Energy Board (and its staff) have to deal with this stuff? How many staff have even worked or been offshore? Has there been any assessment done regarding capacity in case a bunch of applications come in?
• The National Energy Board mostly deals with pipelines and the odd COGOA application. Without meaning any disrespect, has any assessment been done as to what capacity the staff at the National Energy Board have? On the east coast, that is what they do but not at the National Energy Board. Is there a public report on what should be in place, what is in place and what the gaps are? That is something that should be done.
• Have any extensions been granted to BP, ExxonMobil or Imperial for the timeframe of when they have to drill by? Since the blowout in the Gulf and this Review, companies requested an extension. Has this happened?
• ConocoPhillips has definite plans to develop the Amauligak for production. Once the well was capped they knew what was there. How long do they have? Is it in perpetuity?
• Having an eye on what can be learned from other incidents is good. There is much information on the internet. There is a three page report from the inventor of the Macondo BOP. It did all but predict the BOP would fail when going deeper and deeper and the pipe getting smaller and smaller. It said can't go indefinitely without a failure.
• Can achieve the highest degree of safety by studying risk assessments.
• In the February update from the National Energy Board there was mention of four contracts for studies. Who is doing the comparative assessment of regulatory regimes and when will it be available?
• There is a three page backgrounder the National Energy Board did. Has any thought been given to having a comparative study done on how financial responsibility is handled in different regimes?
• At the beginning when the National Energy Board was looking at the scope, Alternatives North registered to be involved. Why not fund such organizations to do studies? Who has the funds to participate, the experience and the background – government, if they choose to participate? They did not do so in MGP.
• How did the National Energy Board decide not to provide participant funding but only fund travel costs? Providing participant funding would result in more balanced information, debate and discussions.
• There are organizations that have no paid staff and operate on a volunteer basis. Without participant funding these organizations can't meaningfully participate. There won't be anyone going to the Roundtable. Like tonight, attendance is on a volunteer basis. Having participant funding for project facility hearings is one thing but not for something as important as this it is not right. Years ago there was lots of work and suggestions for participant funding and the National Energy Board is interpreting it in a narrow way and applying it to facilities only. Without participant funding, the National Energy Board will get a lopsided result for this Review.
• How much was the security for financial responsibility and in what form was it for the DevonPaktoa?
• How much security was required for the 1989 drilling?
• Worried that the National Energy Board will license something in the Beaufort and if there is a blowout the company won't be able to cover the cost. The company could go bankrupt. The provisions under the Inuvialuit Final Agreement will end up with the taxpayers being on the hook.
• Unless the National Energy Board deals with financial responsibility properly, the taxpayer will end up on the hook. The track record of DIAND on mining reclamations is appalling. Any junior company would not be able to afford to put up adequate security.
• Using audited financial statements as proof of financial responsibility is crazy. Want a Letter of Credit as a requirement based on worst case scenario under the Inuvialuit Final Agreement.
• Audited financial statements are not adequate especially after what happened in the Gulf. The cost would be even higher here and probably a spill would never be able to be cleaned up.
• Unless more than $75 million is put up, there shouldn't be any drilling.
• Unless the cap can be raised and security held drilling shouldn't happen. Putting up security shouldn't be discretionary, it should be mandatory.
• There are contaminated sites across the three northern territories. It is costing billions and is all on the taxpayer and on the public accounts as liabilities.
• $75 million would be a small clean up. Clean up costs of a spill in the Beaufort stagger the mind.
• Considering using audited financial statements is just not acceptable in today's world.
• There was a summary of learnings given in Portland last week – need to rethink on the basis of worst case scenarios and not probable case scenarios.
• One month before the Gulf blowout, heard from companies meeting in Tuktoyaktuk that blowouts are no longer a problem, they have it all figured out.
• Hearing the same issues today that was heard 30 years ago.
• May be time to rethink worst case scenario. On the other hand this would mean that junior companies wouldn't be able to participate. Only the biggest companies would.
• The National Energy Board should produce a document that shows how the National Energy Board manages financial responsibility under COGOA in comparison with other jurisdictions for offshore drilling. Consider this a formal recommendation to the National Energy Board in this Review.
• Norway leads the world for standards and regulations. They obtained enormous wealth through high royalties and have been prudent with investments. They are by far the leaders for environmental regulations.

Concluding remarks:

• NEB staff are available to assist in completing registration forms for the Roundtable as well as funding applications.
• Copies of DVDs containing the information on the NEB Arctic Offshore Drilling Review website are available.