The energy industry is embracing measures by the federal government to simplify environmental reviews for major projects, but waiting to hear more details on how exactly the new rules will be applied.
CALGARY: The energy industry is embracing measures by the federal government to simplify environmental reviews for major projects, but waiting to hear more details on how exactly the new rules will be applied.
Capping environmental reviews at two years and having one project undergo only one review “makes great sense,” said a spokesman for Enbridge Inc., the Calgary company looking to build a crude pipeline from Alberta to the West Coast.
But how the changes – included in last month’s federal budget and fleshed out by Natural Resources Minister Joe Oliver on April 17 – would affect the schedule of the $5.5-billion Northern Gateway pipeline remains to be seen, said Todd Nogier.
“We’ll have to see what the legislation is when it’s tabled to see how it affects the project. So at this point it would be a little premature to speak to specifics as it relates to our project,” he said.
Enbridge filed its application for Northern Gateway almost two years ago. Hearings began in January of this year, and a final decision on the pipeline is not expected until late next year. Oliver has said the review for that project would have been done within the two-year time frame anyway.
David Collyer, president of the Canadian Association of Petroleum Producers, said it’s clear Ottawa is committed to making the regulatory system more efficient and competitive. The move gives oil and gas companies more certainty on how long the regulatory process is going to take, which in turn makes it easier to plan and make informed investment decisions, he said.
“The issue that I think is in front of us now is how does all this play out in terms of the specific changes the government proposes to make? And those will be forthcoming,” said Collyer.
“We haven’t seen the details of those yet, and we look forward to seeing how the government plans to move forward with implementation.”
Calgary energy consultant Doug Matthews said he’s been waiting a long time to see Ottawa step up and take control of the country’s resource development.
“Decisions on resource development have always been made elsewhere, whether it was beaver pelts in London or lumber in Europe or the Keystone XL pipeline,” he said – the latter being a delayed proposal to ship oil sands crude form Alberta to the US Gulf Coast that has been the subject of much political wrangling south of the border.
“So the feds are finally saying, ‘These are our resources. We are going to aggressively push to develop them.’ That’s a good thing.”
But there are some rather thorny issues left to sort out, he said.
“The policy makes sense. I’m not sure these guys are capable of implementing it,” said Matthews, who spent much of his career handling the Mackenzie Gas Project file for the Northwest Territories government.
That proposal, first conceived in the 1970s and then resurrected in 2004, encountered delay after delay until it was finally approved by the National Energy Board in late 2010. The natural gas market in North America changed so radically in the years it took to review the Mackenzie pipeline that the project is viewed by many to be all but defunct.
Matthews said he’s perplexed as to why the federal government didn’t impose a time limit on the Northern Gateway review in the first place, in light of what it went through with the Mackenzie “fiasco.”
Matthews said he’s also concerned that with Ottawa’s increased focus on natural resources, some regions will be pitted against others.
The higher oil prices that would come from being able to export crude to new markets would raise the value of the Canadian dollar, which makes it more difficult for manufacturers to export their goods, he said. Alberta Premier Alison Redford and her Ontario counterpart Dalton McGuinty had a testy exchange over that very issue earlier this year.
“The problem I have with this is, as we become more aggressive pushing our own resource development, we’re essentially telling Central Canada and the manufacturing sector ‘You guys are toast.’”
Canadian Manufacturers & Exporters (CME) supports the plan, saying it will ensure environmentally responsible growth in Canada’s resource sector and create the certainty required to boost investment, generate business and create job opportunities throughout the manufacturing, technology and service industries.
“And we need to keep in mind the tax revenues and royalties that will be raised by resource development which will, in turn, help finance the public services that all Canadians expect from their governments across the country,” said CME president and CEO Jayson Myers.
He said responsible resource development will give Canada a competitive economic edge over the next decade, providing jobs for globally competitive businesses throughout the supply chains linked to resource development.
The Harper government’s “responsible resource development” plan involves the following:
• “One project, one review” system for reviews of major projects by recognizing provincial processes as substitutes or equivalents to federal ones as long as they meet the requirements under the Canadian Environmental Assessment Act;
Ensuring decisions by the Canadian Environmental Assessment Agency on whether a federal environmental assessment is required are made earlier in the process (within 45 days);
• Setting timelines for hearings and assessments (24 months for panel reviews, 18 months for National Energy Board hearings and 12 months for standard environmental assessments);
• Setting legally binding timelines for key regulatory permitting processes, including the Fisheries Act, the Species at Risk Act, the Navigable Waters Protection Act, the Canadian Environmental Protection Act and the Nuclear Safety and Control Act;
• Consolidating the number of organizations responsible for reviews from more than 40 to three: The Canadian Environmental Assessment Agency, the National Energy Board and the Canadian Nuclear Safety Commission;
• Focusing federal assessment efforts on major projects that can have significant environmental effects;
• Introducing enforceable environmental assessment decision statements under the Canadian Environmental Assessment Act. This means proponents of major projects will have to comply with conditions set out in the decision statements or face tough financial penalties. The proposed penalties could range from $100,000 to $400,000;
• Requiring follow-up programs after all environmental assessments to verify the accuracy of the predictions regarding potential environmental effects and to determine if mitigation measures are working as intended;
• Providing federal inspectors with the authority to examine whether or not conditions of a decision statement are met;
• Authorizing the use of administrative monetary penalties for violations of the Canadian Environmental Assessment Act, the Nuclear Safety and Control Act and the National Energy Board Act. These penalties will be designed to address small contraventions quickly so that larger issues do not arise in the future;
• Providing more than $35 million over two years for marine safety and $13.5 million over two years to strengthen pipeline safety, including regulations to strengthen the tanker safety regime and increasing the number of oil and gas pipeline inspections each year by 50%, from 100 to 150 inspections.
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