Our Northern Focus

Slide 1 speaking notes (click to view)

Good morning and thank you for the opportunity to talk about how I see the National Energy Board (NEB) continuing to work with the people of the North and Northern institutions in years and decades to come. Today’s comments will address:

• Our keen desire to be part of the pursuit of a sustainable energy future in the North, and how we can contribute to that journey;
• Why I believe we have, at the National Energy Board, an effective toolkit to promote safety, environmental protection, and protection of communities when companies propose to us to explore for oil or gas, to develop it, to produce it, and to ship it by pipeline; and
• The NEB’s commitment to continual improvement and to working with Northern institutions towards “made-in-the-North” solutions.

Slide 2 speaking notes (click to view)

We are very well known for our role as the watchdog with respect to pipelines. As people could tell when they followed the Mackenzie Gas Project hearing, the NEB is the authority that decides whether or not a proposed international or interprovincial pipeline is and will be required by the present and future public convenience and necessity. We are an independent quasi-judicial board, with a team of nearly 400 people representing a broad range of skills and knowledge, including engineers, geologists, geophysicists, environment specialists, socio-economic specialists, accountants, financial analysts, lawyers, economists, and many more. The breadth of expertise we feel we need to have to do our work is a good representation of what we have found in the past to be relevant to our decisions under the NEB Act about pipelines. We must integrate a broad range of factors, including social, economic and environmental factors in each decision. Many of you will recognize in this language the definition of sustainability that has been promoted since at least the Brundtland Commission Report in 1987, and more recently discussed in more detail in the work of authorities such as Dr. Robert B. Gibson, in his seminal book titled "Sustainability Assessment" published in 2005. It still amazes me that an Act of Parliament drafted in 1959 under the Diefenbaker government, the NEB Act, anticipated the modern debate we're still having today about sustainability, several decades before the word was even created!

And it gets better. Not only does our NEB Act require us to integrate social, economic and environmental considerations in each decision we make, it also asks us to assume full jurisdiction of pipelines throughout their life-cycle. This includes pre-filing requirements such as the form and content of public consultations; public hearings to allow us to decide the "go/no go" question; and if it is a "go", the inspection and compliance with our orders during construction and operation; the powers to conduct audits during operations; and the responsibility, in the end, to authorize abandonment of facilities we regulate when we are satisfied it can be done properly. All of the above in the public interest. What all of Canada has in their National Energy Board Act is a very powerful contributor to our collective sustainability journey.

The other big ticket item in our mandate is our responsibilities with oil and gas exploration, development and production on Canada lands not covered by offshore boards, such as in Nova Scotia and Newfoundland and Labrador. This means we have jurisdiction for these activities in the Beaufort Sea, the Arctic islands, the Baffin Area, Hudson's Bay, and the West Coast - and this list is not exhaustive.

Until recently, this part of our mandate was not a focus of public attention. This changed suddenly with the tragedy of the Gulf of Mexico blowout in April 2010. Today, our responsibilities with respect to oil and gas drilling, especially in the offshore, are very well known and very high profile.

Like our responsibilities for pipelines under the NEB Act, the Canada Oil and Gas Operations Act (COGOA), which is the legislation we operate under for oil and gas exploration and production, requires us to consider, together and at the same time, for their full lifecycle, a broad range of factors:

• are the proposed activities safe;
• are they environmentally sound;
• what is the impact on communities; and
• Readiness for emergency response, to name a few.

Unlike the NEB Act, though, under COGOA the focus is placed on safety and the environment, and not economic issues. Under the regime that is in place, the economics is the role of government, for instance, through Aboriginal Affairs and Northern Development's (formally INAC) policy decisions to award specific sections of land to bidding. At the same time, we may not proceed with approvals under our legislation unless we are notified that there is an approved benefit plan in place for the project. As you can tell, under COGOA, we play an important role towards sustainability of Northern development.

Slide 3 speaking notes (click to view)

Let me turn now to safety and environmental protection.

As some of you may know, there was a recent pipeline spill in the Northwest Territories, outside the town of Wrigley.

The company initially informed us that approximately four barrels of crude oil had leaked from the pipe. It was not until earlier this month that we learned that the amount of oil released from the pipeline could range from 700 barrels to 1500 barrels.

We know that a lot of people have concerns about incidents like this one, so I'd like to tell you how the National Energy Board is responding to this incident.

We have sent a team of staff to the site to oversee the incident response. I can assure you that our staff will continue to be actively involved until we are satisfied that the site has been cleaned up.

The Board has ordered the company to reduce the pressure on their pipeline and you can see this order on our website. The company will also have to seek the Board's approval before they can lift that pressure reduction.

Furthermore, immediately following a release such as this one, the company is required to file a clean-up plan with the NEB. They must also provide daily reports to the Board outlining their immediate and long-term remediation plan.

There is a requirement for the company to actively engage the local community and provide them with information on the status of the clean-up.

We're also concerned that it took a while for the company to determine the extent of the spill. This is an area where we are looking at what additional steps we can take as the regulator to improve the amount of transparency around incidents like this one.

Let me say this: information should flow naturally to people rather than them having to look for it.

We are focusing our efforts on informing Canadians about safety and environmental issues that we are working on; working with other regulators to promote best practices; and, ultimately, holding a broader discussion forum on safety. You will be seeing more information on this topic in the near future as we roll out our detailed plans.

One of the ways the Board is looking to improve our results is through what we are calling a safety discussion represented by the four pillars of:

• worker safety - keeping all workers safe;
• integrity of pipelines and installations such as drilling platforms - in other words preventing the release of a product;
• damage prevention - preventing third parties from damaging pipelines; and
• emergency response - dealing effectively with releases when things go wrong.

The NEB is holding those we regulate accountable for results in the public interest. In doing so, the Board is clarifying its expectations for the industry it regulates through the development of appropriate regulations, approval conditions, guidance, orders and education. We will also remain diligent in monitoring our regulated industry to verify compliance, and apply appropriate enforcement measures as and when necessary.

Slide 4 speaking notes (click to view)

The NEB issued its decision on the Mackenzie Gas Project on 16 December 2010, and the Governor-in-Council approval was given on 23 March 2011.

The next step is up to the companies. They need to determine whether they will proceed with the project. The certificate requires that the Proponents must provide updated cost estimates and report on their decision to construct by 31 December 2013 and unless the NEB otherwise directs they must begin construction in respect of the Mackenzie Gas Project before 31 December 2015.

The NEB will remain ready to fulfill its regulatory role when the companies decide to proceed with drilling of the wells, construction of the production and processing facilities, and the construction of the pipelines. We will do this by having trained and qualified personnel to oversee that the construction complies with the terms and conditions of the approval, and all applicable laws and regulations. We are ready, and we will remain ready to do that work.

In being ready, we have been working with northern boards, departments, and agencies to prepare for the future regulatory oversight of the project. We will continue to work with them.

Slide 5 speaking notes (click to view)

The NEB launched its Arctic Review on 10 May 2010, 20 days after the BP Macondo Deepwater Horizon disaster in the Gulf of Mexico.

The scope of the Arctic Review is:

• Learning from recent offshore drilling investigations and reviews;
• Drilling safely while protecting the environment;
• Responding effectively when things go wrong; and
• Filing requirements for future drilling applications.

Board Members and staff have been to all three Territories in late 2010 and in 2011.

Staff completed Information Sessions in Inuvik, Whitehorse, Iqaluit, and Yellowknife in May and June 2011.

The Inuvik Roundtable is scheduled for 10 to 16 September 2011 where registered parties will have an opportunity to ask questions about the responses to the 100 or so Call For Information questions posed by the NEB in late 2010, and to express their views on what the Board should require of future applicants for offshore oil and gas drilling in the Arctic.

I invite all of you to attend and to contribute to information that the NEB would use in the preparation of the Final Report and the Filing Requirements.

The Report and Filing Requirements are scheduled to be released in December 2011.

Slide 6 speaking notes (click to view)

The public interest is best served when people know what standard of excellence we will uphold in the work we do, and the time it will take to do our work well. Here are a number of initiatives underway to achieve that goal:

The Major Projects Management Office (MPMO)

• The MPMO was established in 2007 to improve coordination of the regulatory review of major resource projects.
• Its goal is to allow the federal government to work on major projects as one team. As a means to that end, the system has been devised so that industry is provided with a single point of entry into federal processes, accompanied with explicit service standards. A basic tool in the toolkit of the MPMO is the execution of project agreements, signed by all deputy ministers and heads of regulatory agencies involved in major projects. As a result, issues are escalated to deputy ministers and agency heads before they become a problem. Project agreements and the service standards embodied in them are a good demonstration of the doctrine of "what gets measured gets done".

The Northern Projects Management Office (NPMO)

• The NPMO was established in May 2010 to coordinate federal regulatory work in the territories.
• It is different from the MPMO, given the different context, but it is based on the same fundamental principles of doing our work well and doing it on a timely basis. The NEB has pledged its full support towards the goals and the planned outcomes of the NPMO.

At the Northwest Territories Board Forum, all the Chairs and executive directors of NWT regulatory and environmental assessment institutions meet twice a year to compare notes on best practices, learn from each other, and implement whatever changes to our joint processes are possible within existing legislation. Our focus is continual improvement and collaboration. The NEB is highly committed, through its attendance and level of participation, to the work and planned outcomes of the NWT Board forum. I believe we are only starting to see the concrete benefits of the work of the NWT Board Forum

Slide 7 speaking notes (click to view)

We do not know what the future holds for the NWT, the Mackenzie Delta and the Beaufort Sea. We all have a responsibility, however, to stand ready. The NEB is ready. The NEB will remain ready.

Many of you have been boy scouts or girl guides in the past, and may still be involved in the movement, so I will borrow the unifying motto of the movement: be prepared. The NEB is, and will remain, prepared.

Until important business decisions are made in respect of future activities under our legislation we will assume that further development may be proposed at any time. We will work with Northern institutions to respond and remain prepared. We will continue to share best practices. We will assume that the pace of proposed development may accelerate at any time. Our preparedness will be a prudent investment. The alternative of rolling our thumbs and waiting for future events to react is simply unacceptable.

In closing, I want to say how honoured the people of the NEB are to be given the opportunity every day to earn the trust of Northerners. We are acutely aware of how much we need to learn, and we always see Northerners keen to share with us the knowledge they have of the land, of communities, and their vision of a sustainable future. On the land, everything is connected. We feel very connected with Northerners. At the same time, we feel accountable to the people of the North for an approach to safety, and protection of the environment and communities, which is made in the North. I thank you for giving me the chance to offer these remarks and I look forward to your questions and comments.