Canada: North Of 60: Report Recommends Two Key Changes To Arctic Oil & Gas Exploration Regime

On September 7, 2016, the federal Minister of Indigenous and Northern Affairs released its report on the Canada Petroleum Resources Act and its recommendations for changes. While concluding that industry generally supports the regime under the Act, it did recommend two key changes.

The Act governs the issuance of petroleum rights in the offshore areas north of 60. On November 26, 2015 Indigenous and Northern Affairs Minister Carolyn Bennett confirmed Rowland Harrison QC as the Minister's Special Representative to conduct a comprehensive review of the Canada Petroleum Resources Act and to engage with stakeholders to determine how the Act can best ensure the responsible development of Canada's Arctic oil and gas resource opportunities. The Special Representative filed the Review with the Minister on May 30, 2016. The Review concluded that industry generally supports the regime under the Act, but recommended two key changes:

Longer term for offshore exploration licenses. The Act currently restricts exploration licenses held in the Beaufort Sea offshore region to a non-renewable nine year term. As of August 2016, there are 15 such licenses held. Based on stakeholder input and having regard to encouraging offshore exploration in the challenging frontier areas of the north, the review recommended an increase in the term of exploration licenses to 16 years, with a limited authority to extend. The review concludes that failing to do so will discourage future exploration. This extended term should be applied retroactively to the existing exploration licenses to encourage development of existing properties.

Strategic environmental assessment. The review also recommends that the Minister complete and consider a strategic environmental assessment covering the area in which bids for licenses are contemplated before the federal government issues a call to industry for bids to lease the relevant lands.

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