The Energy Safety and Security Act (ESSA), passed in
2014 by the Harper government, introduced changes to the liability
regimes governing Canada’s offshore oil and gas industries.
These changes are slated to be effective on February 26, 2016, and
include increasing the amount of security required to be provided
to $100 million, raising the cap on absolute, or no-fault,
liability from $30 million ($40 million in the Arctic) to $1
billion and empowering offshore regulators to issue administrative
monetary penalties. We have discussed these changes in greater
length in a previous
Since the legislation was passed, the offshore regulators (the
National Energy Board, the Canada-Newfoundland and Labrador
Offshore Petroleum Board and the Canada-Nova Scotia Offshore
Petroleum Board) have issued draft regulationsandguidelines in
respect of the changes implemented by ESSA.
In their current form, the guidelines and regulations indicate
that participants in Canada’s offshore oil and gas industries
will be required to post $100 million security in respect of
each operations authorization for the drilling for or
development or production of petroleum. While not perhaps initially
appreciated, this change in regulatory practice may be one of the
most significant changes implemented by ESSA. However, ESSA
provides relief from this financial responsibility requirement
where participants demonstrate their participation in a pooled fund
that is maintained at a minimum of $250 million.
Participation in a pooled fund that is acceptable to the
applicable regulator will satisfy the financial security
requirements for any number of authorizations. Moreover, where the
same pooled fund is acceptable to more than one regulator, it may
satisfy financial responsibility requirements in more than one
While the establishment of a pooled fund presents a number of
challenging commercial issues, its benefits to participants would
We will discuss these changes in greater detail after they come
into effect in upcoming issues of the Alberta Oil
Magazine,Alberta Venture and the Daily Oil
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guide to the subject matter. Specialist advice should be sought
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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