This is page numbers 4981 - 5018 of the Hansard for the 18th Assembly, 3rd Session. The original version can be accessed on the Legislative Assembly's website or by contacting the Legislative Assembly Library. The word of the day was community. View the webstream of the day's session.

Topics

Question 603-18(3): Resident Nurse in Tsiigehtchic
Oral Questions

February 23rd

Page 4997

The Speaker Jackson Lafferty

Masi. Time for oral questions has expired. Item 8, written questions. Item 9, returns to written questions. Item 10, replies to the Commissioner's opening address. Item 11, petitions. Item 12, reports of standing and special committees. Item 13, reports of committees on the review of bills. Member for Kam Lake.

Bill 31: Northwest Territories 9-1-1 Act
Reports Of Committees On The Review Of Bills

February 23rd

Page 4997

Kieron Testart Kam Lake

Thank you, Mr. Speaker. Mr. Speaker, I wish to report to the Assembly that the Standing Committee on Government Operations has reviewed Bill 31, Northwest Territories 9-1-1 Act, and that Bill 31 is now ready for consideration in Committee of the Whole. Thank you, Mr. Speaker.

Bill 31: Northwest Territories 9-1-1 Act
Reports Of Committees On The Review Of Bills

February 23rd

Page 4997

The Speaker Jackson Lafferty

Masi. Reports of committees on the review of bills. Item 14, tabling of documents. Minister of Infrastructure.

Tabled Document 353-18(3): Follow-up Letter for Oral Question 526-18(3): Dempster Highway Windbreak at Km 4
Tabling Of Documents

February 23rd

Page 4997

Wally Schumann Hay River South

Mr. Speaker, I wish to table the following document entitled "Follow-up Letter for Oral Question 526-18(3): Dempster Highway Windbreak at KM 4." Thank you, Mr. Speaker.

Tabled Document 353-18(3): Follow-up Letter for Oral Question 526-18(3): Dempster Highway Windbreak at Km 4
Tabling Of Documents

February 23rd

Page 4997

The Speaker Jackson Lafferty

Masi. Tabling of documents. Item 15, notices of motion. Item 16, notices of motion for first reading of bills. Item 17, motions. Item 18, first reading of bills. Item 19, second reading of bills. Minister of Industry, Tourism and Investment.

Bill 36: An Act to Amend the Petroleum Resources Act
Second Reading Of Bills

February 23rd

Page 4997

Wally Schumann Hay River South

Mr. Speaker, I move, seconded by the honourable Member for Thebacha, that Bill 36, An Act to Amend the Petroleum Resources Act, be read for the second time.

This bill amends the Petroleum Resources Act to:

  • clarify the authority of the Minister to delegate to a person the powers, duties, and functions assigned to the Minister;
  • require the publication of additional notices respecting activities under the act;
  • require that specified licences be made publicly available;
  • amend the criteria for an interest-holder to be eligible for Significant Discovery Licence and restrict the term of the Significant Discovery Licence;
  • add consideration of Indigenous traditional knowledge and input from Indigenous organizations when appointing board members;
  • increase public representation on Environmental Studies Management Board;
  • clarify the requirements respecting conflicts of interest and remuneration of board members;
  • require the disclosure of greater amounts of information with respect to activities in Environmental Studies Research Fund;
  • require the disclosure of greater amounts of information and clarify the obligations of the Minister and regulator with respect to the confidentiality of information received by either of them; and
  • correct inconsistencies and errors identified in the act.

Thank you, Mr. Speaker.

Bill 36: An Act to Amend the Petroleum Resources Act
Second Reading Of Bills

February 23rd

Page 4998

The Speaker Jackson Lafferty

Masi. The motion is in order. To the principle of the bill. Member for Frame Lake.

Bill 36: An Act to Amend the Petroleum Resources Act
Second Reading Of Bills

February 23rd

Page 4998

Kevin O'Reilly Frame Lake

Merci, Monsieur le President. Members may speak to the object, expediency, principles, and merits of a bill at second reading, and I will exercise that right with the proposed changes to the Petroleum Resources Act.

I will speak to the process that got us here. I will also provide some comments on the bill and concerns with what is there and what is missing.

The Petroleum Resources Act set the rules on the rights to explore and produce oil and gas in those lands where the GNWT owns the resources. It sets out how the GNWT will act as the owner of onshore oil and gas resources and those subsurface lands owned by Indigenous governments.

The Process

This bill will amend the Petroleum Resources Act, which mirrors the Canada Petroleum Resources Act that the federal government had used to administer oil and gas rights in the Northwest Territories prior to devolution. The federal legislation still applies in the offshore areas of the NWT. Oil and gas rights are administered much differently than mineral rights, where free entry has prevailed for hundreds of years. Oil and gas rights are only acquired through an initial expression of interest, which is decided by a bidding system. This is not a first-come, first-served approach. Benefits plans may also be required, followed by Exploration Licences, Significant Discovery Licences, and Production Licences. This is a far more rational approach to resource management than exists for mining.

With devolution effective April 1, 2014, our government has had the opportunity to develop our own legislation on oil and gas rights disposition regime. The public part of that process began in March 2018 with the release of a discussion paper, "Updates to the NWT's Petroleum Legislation." Community drop-in sessions were held March to May 2018. The scope of the discussion paper and proposed changes to the Petroleum Resources Act was limited to the following general areas:

  • delegation authority of the Minister;
  • confidentiality;
  • Environmental Studies Management Board composition;
  • Environmental Studies Research Fund accountability and reporting;
  • transparency of licences;
  • modernizing public notices; and
  • Significant Discovery Licence options.

The department made it clear that this was the first phase of two-step process of changing this legislation. Broader changes are still to come in some key areas, including royalties. I think that a two-step process makes sense, but I would have preferred that the royalty regime be included to make sure that our government gets a fair share of our petroleum resources that are extracted.

In contrast to the approach taken by the Minister and his department in terms of developing the mining legislation, changes to the oil and gas legislation have been better managed, and more public information was made available, including cross-jurisdictional research and analysis and best practices. The Minister also provided clearer information and responses to committee requests, and I commend them for that work.

The "what we heard" report from the consultation was released on July 25, 2018. It was a thorough review of the comments submitted and rationale for preferred direction moving forward. All of the written submissions made to ITI are still available on its website, which is an improvement over the approach to the mining legislation, where such submissions are not public.

As I understand it, there was some Indigenous government involvement in the development of the bill, as is legally required. As I said last week, we are still trying to figure out how to mesh this new way of developing legislation with the public government approach of the Executive holding the pen and the Legislature conducting a review.

Clearly, a lessons-learned review is required for the development process on post-devolution legislation, as the processes across departments and even within departments has varied wildly, with different outcomes and satisfaction levels. Mr. Speaker, I want to move on to the principles and merit of the bill.

Principles and Merit of the Bill

This bill is about petroleum resource rights management. It is not about promoting oil and gas development. The department certainly does a very good job at promoting oil and gas development, even if there is virtually no production from lands that we own and little to no interest from the hydrocarbon industry, despite Cabinet's heavy promotion.

In my view, it is an inherent conflict of interest for a department to promote something and attempt to impartially regulate it at the same time. This is not good governance. Unlike mining in the NWT, there is an impartial oil and gas regulator for many aspects of exploration and development, and in my opinion, they are doing a good job. That being said, I am still of the view that oil and gas rights should not be regulated by the Department of Industry, Tourism and Investment but by the Department of Lands that already has systems and expertise in place for surface lands management. This would remove the apprehension of bias.

There are definitely some improvements in this bill to how this government attempts to manage oil and gas. The Minister will have the ability to delegate authority to departmental staff to carry out duties under the Petroleum Resources Act, including to the Office of the Regulator of Oil and Gas Operations. There is no requirement for a notice to be issued of such delegation, which is contained in the other oil and gas bill for delegations by the regulator. A public notice of delegations under the Petroleum Resources Act by the Minister would be a good idea and should be included as we move forward.

There is the potential for improved public notice of licences issued for oil and gas exploration and production, including changes to the terms and conditions. While the discussion paper had suggested online publication, the bill, unfortunately, leaves the Minister with total discretion as to how public notice might be given. This seems to be part of a very troubling trend that we are beginning to see with this post-devolution legislation, where Ministers are increasingly being given discretion and authority, rather than setting standards of performance in the statutes themselves.

The other issue with the notice requirements in the bill is that notice is not required to be given to relevant Indigenous governments, as is the case with the proposed new mining legislation. Notice alone is also not sufficient for this government to comply with the concept of free, prior, and informed consent as found in the United Nations Declaration on the Rights of Indigenous Peoples. I understand that oil and gas rights are managed differently and that the agreement of communities is usually sought before expressions of interest are sought, but notice requirements will still need to be reviewed carefully in this bill, Mr. Speaker.

We have a very antiquated system of registration of oil and gas rights, where fees are required for examination and reproduction of records. The Oil and Gas Rights Management section of the ITI website is a model of non-disclosure, where almost no specific information can be found. There appears to be errors in the dates for the very few postings that have been made. This definitely needs a lot of work and improvement if it is to be relied upon as the major source of public notification. The bill could help with that, but reporting and notice should become mandatory and online, with provision for interested parties to register to receive notices as they are filed.

The bill will require the Minister to make all of the licences public, which is an important first step and a definite improvement over current practice. Further steps towards more responsible resource development would see opportunities for the public to review and comment on licence applications, something that the discussion paper briefly mentioned but is not reflected in the bill. There should also be a requirement for the Minister to table an annual report on oil and gas rights administration and management.

One of the most contentious issues over the years with oil and gas management has been around confidentiality of information. The current legislation is a model of government secrecy. There is a mandatory requirement to keep almost everything secret. That is not how public governments should manage public resources, and I was pleased to see that the department even mentioned the Extractive Industries Transparency Initiative that I highlighted in the House yesterday in attempting to get the Minister of Finance to provide minimal details on resource royalties. The bill may allow for the disclosure of more information. The problem is that there are some very broad categories of information that can be held back, including financial, commercial, scientific, and technical data. This definitely needs to be clarified, with the onus placed on the parties submitting the information to prove that it should be kept secret.

There is finally a definition for hydraulic fracturing in this bill, and it will require the disclosure of chemicals that are to be used, at least to the regulators. Hopefully we can find a way to ensure that the public is informed of these operations, if they ever happen here, and despite Cabinet's efforts to avoid dealing with the issue of fracking, even though it is part of our mandate.

Changes are proposed to the Environmental Studies Research Fund in this bill. This fund is an interesting and innovative way to improve our understanding of the impacts of oil and gas exploration and production on the environment. It is also a good example of polluter pays. The holders of oil and gas rights pay relatively small levies to enable research on impacts to be funded and published. I think that this approach should also be applied to the mining sector.

The fund is managed by a board appointed by the Minister and made up of individuals nominated by industry and government. There is currently a space for someone from the public. Under this bill, Indigenous governments will be able to nominate individuals to serve on the board, which is good step and one that I urged the Minister to ensure is in the legislation. This is certainly in keeping with the co-management approach in the land rights agreements.

This part of the bill would be even stronger if half of the board membership came from Indigenous government nominees. I believe there is a strong case for improving the credibility of the board by removing the requirement for industry and government employee representatives. All of the board members can and should be there for the public interest.

The accountability and reporting of the board will also be improved under the bill, and I support and, indeed, have suggested that this needs to happen. The Conflict of Interest Act will apply to the board members under this bill, which is an interesting move, one that I will be looking to better understand. Annual reporting by the board will become more prescriptive, with information required on projects funded. I note for the record that the board does such reporting now.

I have saved the best for last, Mr. Speaker: Significant Discovery Licences. This concept arose in the federal legislation that we inherited. It allows companies to have exclusive ownership of oil and gas rights without having to do any work or pay any fees, forever. Companies can get these licences without doing anything except being near another Significant Discovery Licence. A Minister could require drilling to take place, but this has never been done. Such licences amount to a resource giveaway that does nothing for our economy or for future generations.

Unfortunately, this has happened under our watch already, where the Minister has issued ten Significant Discovery Licences since 2016. The area covered by these licences is almost 2,200 square kilometres, an area about 39 percent of the size of Prince Edward Island. This government will get no revenues, generate no taxes, and ensure no employment and no benefits from these areas that are now tied up virtually forever. The Minister had and still has options to change this bad move. This should have been fixed right after devolution rather than waiting for five years. There was no reason to wait this long, and other options may have been open to the Minister.

The bill does try to fix this problem in some small ways. Drilling requirements will have to be completed on Exploration Licences before they can be converted to Significant Discovery Licences. This is helpful, but drilling on Exploration Licences appears to be at the complete discretion of the Minister. If the objective is to generate activity and benefits, exploration should be a mandatory requirement to maintain the rights, as is the case with mining.

Personally, I would prefer to see a cash bid system rather than the current work bid system with benefits plans. That is what the Inuvialuit did with their subsurface rights. The biggest change with regard to Significant Discovery Licences under the bill would be a term of 15 years. I am not sure why that length of term was picked, and I look forward to exploring it, but extensions to these licences may be possible, with the Minister, again, having total discretion.

In summary, I commend the department and Minister for a more open and transparent approach to amending the Petroleum Resources Act. I wish that we were also dealing with the royalty regime, but there is not as much urgency, given the lack of production and interest, so this can wait.

There are improvements in the bill, and the Significant Discovery Licence issues problem may get resolved soon. I hope for reduced confidentiality requirements, better public notice, and actual opportunities for the public to comment on and review licence applications, as is the case with our co-management regime for virtually all our other resources. There are also changes to the Environmental Studies Research Fund, and I will push for further improvements.

This bill is a good start, and I look forward to working with my colleagues on the Standing Committee on Economic Development and Environment to hear what Indigenous governments, non-governmental organizations, industry, and the public have to say. Mahsi, Mr. Speaker.

Bill 36: An Act to Amend the Petroleum Resources Act
Second Reading Of Bills

February 23rd

Page 5001

The Speaker Jackson Lafferty

Masi. To the principle of the bill.

Bill 36: An Act to Amend the Petroleum Resources Act
Second Reading Of Bills

February 23rd

Page 5001

Some Hon. Members

Question.

Bill 36: An Act to Amend the Petroleum Resources Act
Second Reading Of Bills

February 23rd

Page 5001

The Speaker Jackson Lafferty

Question has been called. All those in favour? All those opposed?

---Carried

Bill 36 has had its second reading and is now referred to standing committee. Second reading of bills. Minister of Industry, Tourism and Investment.

Bill 37: An Act to Amend the Oil and Gas Operations Act
Second Reading Of Bills

February 23rd, 2019

Page 5001

Wally Schumann Hay River South

Mr. Speaker, I move, seconded by the honourable Member for Thebacha, that Bill 37, An Act to Amend the Oil and Gas Operations Act, be read for the second time.

This bill amends the Oil and Gas Operations Act to:

  • clarify the authority of the Minister and the regulator to delegate to a person the powers, duties, and functions assigned to them;
  • expand the authority of the regulator to issue guidelines and interpretation notes;
  • allows the regulator to conduct public hearings and specify the powers that the regulator may exercise in the conduct of the hearings;
  • require the Minister to table an annual report on the activities of the regulator;
  • require the disclosure of greater amounts of information and clarify the obligations of the Minister and the regulator with respect to the confidentiality of information received by either of them; and
  • clarify the requirements surrounding proof of financial responsibilities for holders of authorizations.

Thank you, Mr. Speaker.

Bill 37: An Act to Amend the Oil and Gas Operations Act
Second Reading Of Bills

February 23rd

Page 5001

The Speaker Jackson Lafferty

Masi. The motion is in order. To the principle of the bill. Member for Frame Lake.

Bill 37: An Act to Amend the Oil and Gas Operations Act
Second Reading Of Bills

February 23rd

Page 5001

Kevin O'Reilly Frame Lake

Merci, Monsieur le President. Members may be relieved to know that I will not repeat my comments on the process for this bill, as this was covered in my remarks on Bill 36.

The Oil and Gas Operations Act regulates activities that take place when companies explore for and produce onshore oil and gas, even on Indigenous subsurface lands. It deals with safety, environmental protection, and resident benefits from exploration and production activities.

The Minister's main role under the act is to approve benefits plans related to exploration. A regulator approves plans for safely and sustainably drilling wells and building production facilities; monitors operations to make sure that everything is going according to filed plans; and oversees the process of decommissioning and abandoning oil and gas facilities. OROGO, or the Office of the Regulator of Oil and Gas Operations, is the regulator for most onshore areas, and in an odd twist, the National Energy Board is the regulator for the Settlement Region and the offshore.

This Bill will amend the Oil and Gas Operations Act which mirrors the federal Canada Oil and Gas Operations Act.

The scope of the proposed changes to the Oil and Gas Operations Act are limited to the following general areas:

  • Delegation authority of the Minister and the regulator;
  • Guidelines and interpretation notes will be allowed by the regulator for all of its areas of responsibilities;
  • The regulator will have the ability to hold public hearings and set its own rules for hearings;
  • The regulator will be required to prepare an annual report;
  • Confidentiality of information may be reduced; and
  • Proof of financial responsibility will be required for the duration of an operation and after decommissioning.

It is not clear whether there will be any further changes to the act as part of the overall second phase of reviewing how GNWT manages oil and gas resources.

The Minister and regulator will have the ability to delegate authority to carry out duties under the act, but only the regulator is required to provide public notice of such delegations. In my view, the Minister should also be required to give public notice of delegations.

The powers and authorities of the regulator are being clarified in the bill, and that is a good thing. The regulator will be able to provide greater guidance with regard to all of its duties and responsibilities. This will help create greater certainty for industry, Indigenous governments, other regulators, and the public. The regulator will also have the ability to hold public hearings and set its own rules for such proceedings. While I support this move, I believe the bill should also set out when such hearings should be mandatory. Annual reports will also be required of regulators. OROGO already does this and I commend them for doing that voluntarily.

The same provisions around confidentiality of information as found in Bill 36 appear to be repeated here in this bill. The current legislation is not as restrictive as the other oil and gas legislation. That is a better place to start from. The problem is that there are some very broad categories of information that can be held back including financial, commercial, scientific, and technical data. This definitely needs to be clarified with the onus placed on the parties submitting the information to prove that it should be kept secret, rather than use the assumption that things are secret unless an active decision is made to make them public.

There is also a definition for hydraulic fracturing in this bill that could improve the amount of information that may be made public about such operations.

There is a significant change to the requirements for proof of financial responsibility under this bill. The current legislation only requires proof of financial responsibility for the duration of the operation, which may not include abandonment or decommissioning. We want to make sure that an operator remains responsible for closure until the regulator signs off that it is acceptable. There may be some lessons that we can learn from the Redwater Supreme Court of Canada case that I spoke of earlier in this sitting. The changes in the bill will require that such proof of financial responsibility will need to remain in place for a period of one year after the regulator agrees that closure has been completed. This should held avoid unforeseen events or failures, but we may need to look at whether just one year is an appropriate end point.

There is a very disappointing omission in the bill when it comes to proof of financial responsibility, and I have raised this issue previously in this House. There is an arbitrarily low cap of a maximum of $40 million of absolute liability for spills set out in the Oil and Gas Spills and Debris Liability Regulations under the current act. The federal government has amended its mirror Oil and Gas Legislation to put in a $1-billion cap to help prevent public liabilities. I have noted, for example, that the Deep Water Horizon blow out in the Gulf of Mexico resulted in clean up and compensation costs of over $80 billion. The $40-million amount in the regulations now is insignificant in face of the potential harm and cost of a major spill in the Northwest Territories. This is a very serious threat to our government's financial safety. We need to fix this in our bill.

I note for the record that OROGO is conducting a public review of the principles it should use in developing a methodology for calculating and managing proof of financial responsibility and I support their efforts.

I look forward to working with my colleagues on the Standing Committee on Economic Development and Environment to improve this bill. Mahsi, Mr. Speaker.

Bill 37: An Act to Amend the Oil and Gas Operations Act
Second Reading Of Bills

February 23rd

Page 5002

The Speaker Jackson Lafferty

Masi. To the principle of the bill.