Fact Sheet: Management of Oil and Gas Resources in the Canadian Arctic Offshore
A company wishing to drill in the Canadian Arctic offshore must apply to the National Energy Board (NEB) for a drilling authorization. However, the Company first obtains 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 Indigenous and Northern Affairs Canada, 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. Indigenous and Northern Affairs Canada (INAC) manages this process, which is similar to an auction. This process falls under the Canada Petroleum Resources Act. Further, INAC manages royalties, and must either approve or waive the requirement for a benefits plan, before the NEB can consider issuing an authorization.
The NEB, as an independent regulator, grants authorizations and approvals for oil and gas exploration and production activities under the Canada Oil and Gas Operations Act (COGOA). Under COGOA the NEB assesses, amongst other things, safety, protection of the environment, and conservation of oil and gas resources.
This means that the economic side of Arctic offshore oil and gas exploration and development is clearly separated from the safety, environmental, conservation, and technical issues. There is a clear separation between issuing oil and gas rights and issuing a regulatory authorization to drill.
| Activity | Responsible Organization |
|---|---|
| Issue Exploration Licences | Indigenous and Northern Affairs Canada |
| Issue Authorizations and Approvals for wells | National Energy Board |
| Operations regulatory oversight - Compliance verification |
National Energy Board |
| Issue Significant Discovery Declarations | National Energy Board |
| Issue Significant Discovery Licences | Indigenous and Northern Affairs Canada |
| Issue Commercial Discovery Declarations | National Energy Board |
| Issue Development Plan Approval | National Energy Board with the consent of the Governor in Council |
| Issue Production Licences | Indigenous and Northern Affairs Canada |
| Operations regulatory oversight - Compliance verification |
National Energy Board |
| Manage royalties from oil and gas production | Indigenous and Northern Affairs Canada |
The Minister of Indigenous and Northern Affairs Canada 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 INAC which describes the employment, training, and business benefits that occurred from the oil or gas activity.
More information can be found online:
National Energy Board – North/Offshore
Indigenous and Northern Affairs Canada – Northern Oil and Gas
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