Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 16 - Evidence - October 2, 2014
OTTAWA, Thursday, October 2, 2014
The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill S- 6, An Act to amend the Yukon Environmental and Socio-economic Assessment Act and the Nunavut Waters and Surface Rights Tribunal Act, met this day at 8 a.m. to give consideration to the bill.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I represent the province of British Columbia in the Senate and I'm chair of this committee. I would like to welcome honourable senators, any members of the public with us in the room and viewers across the country who are watching on television. As a reminder to those watching, these committee hearings are open to the public and available via webcast on the sen.parl.gc.ca website. You may also find more information on the schedule of witnesses on the website under ''Senate committees.''
I would like to introduce the deputy chair of the committee, Senator Paul Massicotte, from Quebec, and I will turn it over to Senator Mitchell.
Senator Mitchell: Grant Mitchell from Alberta.
[Translation]
Senator Boisvenu: Pierre-Hugues Boisvenu of Quebec.
[English]
Senator Patterson: Dennis Patterson, Nunavut.
Senator Black: Doug Black, Alberta.
Senator Wallace: John Wallace from New Brunswick.
Senator Seidman: Judith Seidman from Montreal, Quebec.
The Chair: I would also like to introduce our staff, beginning with our clerk, Lynn Gordon, and Library of Parliament analysts, Sam Banks and Marc LeBlanc.
Today we are continuing our examination of Bill S-6, An Act to amend the Yukon Environmental and Socio- economic Assessment Act and the Nunavut Waters and Nunavut Surface Rights Tribunal Act, which was introduced in the Senate and received first reading on June 3, 2014.
It gives me great pleasure today to welcome the first segment of our meeting, from the Northwest Territories and Nunavut Chamber of Mines, Elizabeth Kingston, General Manager, and Adam Chamberlain, Director.
We have one hour for this part of the meeting. We'll listen to your presentation and senators will have some questions. I look forward to your presentation. I understand Ms. Kingston will do the presentation.
Elizabeth Kingston, General Manager, Northwest Territories and Nunavut Chamber of Mines: Thank you very much, Mr. Chairman. On behalf of the Chamber of Mines, we thank you for this invitation to speak to you this morning regarding Bill S-6.
The Northwest Territories and Nunavut Chamber of Mines is the industry association and leading advocate for responsible and sustainable mineral development in the Northwest Territories and Nunavut. As mentioned, my name is Elizabeth Kingston, I'm the general manager for Nunavut and my office is based in Iqaluit. I will ask my colleague to introduce himself.
Adam Chamberlain, Director, Northwest Territories and Nunavut Chamber of Mines: My name is Adam Chamberlain. I'm a lawyer with the law firm of Borden Ladner Gervais in Toronto. I am called to the bar in Nunavut as well and work across the North. One of my activities is that I serve as a volunteer director on the Chamber of Mines board.
Ms. Kingston: Along with our written presentation, we have prepared this deck presentation to provide a quick overview of the mining industry in Nunavut, and then we will move on to our specific comments about Part 2 of the bill.
Mining is playing a significant role in the growth of Nunavut's GDP. Next to government, it is the largest contributor to the northern economy, and becomes even larger when you factor in associated mining industry costs towards transportation and construction. It is the largest private sector contributor to the economy in the North.
We have included a map in our package, which shows our active projects. Our industry has been busy over the past number of years advancing a number of projects that we are hopeful could become mines in the next few years.
Exploration is the lifeblood of our industry and to maintain mining at the healthy and high levels we need for our economy, we need exploration to increase the odds of finding mines.
The value of production is a significant indicator of the health of our industry.
In Nunavut, there was record gold production at Meadowbank mine in 2013 with a 16 per cent increase in production over the previous year.
Mining's impact on employment has already provided a huge benefit to Nunavut. This is a jurisdiction that is experiencing a baby boom and yet there are few job opportunities in the communities. This is a huge problem facing Nunavut right now, but our industry holds great hope to assuage it.
Canada's mining industry is the biggest employer of Aboriginal peoples. But even better, what we're seeing in Nunavut is the upswing of Inuit-owned companies that employ local people to provide services and supplies to our industry.
Nunavut's mining companies are striving to develop new mines in very remote areas that lack many basic components of public infrastructure.
Our projects need to build and maintain our own bridges and roads. Because our mines are remote and not located in towns, we must fly in our workers on work rotations. This requires major airstrips to be built to house a variety of aircraft and while on site, staff has to be housed and fed.
These are very costly initiatives, plus these companies have to work and manage their assets often at temperatures as low as minus 45 degrees.
Other jurisdictions, such as those in Southern Canada, do not have to deal with these cost pressures. That is why the work that you do to create new legislation that can provide process and investment certainty in Nunavut is so important. That brings us to this morning's meeting. We support a number of the legislative changes proposed by Bill S-6. However, we do have a number of comments, which will focus on proposed amendments to Part 2, respecting Nunavut waters.
Our first concern is a new interpretation of water ''use,'' specifically a recent decision by staff from Aboriginal Affairs and Northern Development to now include circulated water, utilized for no other purpose than to prevent pipes from freezing, as a ''use'' under the act. This change in policy was made with no consultation with industry, and no transition period for its application has been applied to our advanced projects.
The current standards by which type A and type B water licences are defined needs to be reviewed. In particular, the threshold of 300 cubic metres per day for a project moving from a type B to a type A requirement needs to more accurately coincide with the transition of a project from exploration to development. The act and regulations should demarcate between exploration and mining, by requiring type A licences for mining activity and type B licences for exploration projects.
Industry is encouraged by the proposal to allow low-level use of water in Nunavut without a licence, though we remain concerned that the maximum permissible limit of 50 cubic metres per day for unlicensed use is unduly restrictive and should be made consistent with the limits in effect in the Yukon and Northwest Territories, which is 100 cubic metres per day.
Cost recovery for the consideration, renewal, amendment or cancellation of a licence is proposed for Nunavut to align with the Canadian Environmental Assessment Act.
Industry strongly opposes new cost recovery measures as they are a clear disincentive to investment in the North. Cost recovery represents an added impediment to an already costly operating regime. Introducing these measures now will only serve to further dampen investor interest in our territory. We recommend that cost recovery either be removed from the legislation, or that it not be invoked at this time.
The concept of administrative monetary penalties is new to the North and is creating unease with our industry, as there are a number of aspects with this section of the proposed legislation that require clarification.
Monetary fines, in and of themselves, do not present a problem to good operators. However, extending the period of uncertainty from two to five years after a non-compliance incident could discourage investment in Nunavut without offering additional environmental protection.
As well, the proposed amendments to the offences and punishment under the current scheme differ from the current version of the Mackenzie Valley Resource Management Act. We recommend that this clause be changed to be more closely aligned and consistent with the MVRMA.
Double-bonding occurring within a licencee must provide financial security to more than one payee to address the same or related reclamation requirements. Industry is pleased to note the addition of proposed section 76.1 as a positive step toward addressing the issue of double-bonding. However, we note that security-management agreements would be formulated only on a proponent-driven, case-by-case basis.
Successfully resolving the double-bonding issue entirely will help to support Nunavut's growing reputation as an attractive destination for investment into the many mineral development projects that are situated on both Crown and Inuit-owned lands. Our recommendation is to broaden proposed section 76 to clarify what elements security management agreements should contain.
Establishing time limits for the evaluation and approval of water licence applications will allow for more predictable and timely reviews. The inclusion of an express power for the Nunavut Water Board to issue 60-day extensions to water licences is entirely consistent with the Nunavut Land Claim Agreement.
However, it seems that the option currently under review is to permit extensions only on the recommendation of the minister. In our view, this decision should be made by the Nunavut Water Board, as the considerations that would need to be weighed in determining whether an extension would be granted are well within the expertise of the Nunavut Water Board's technical staff.
It is important that water licences address environmental risks associated with mining processes, as well as respond to community and socio-economic issues.
We agree that water licences should be issued for the life of the mining operation, with scheduled periodic reviews to ensure water-related requirements are addressed, as opposed to the current costly process of a full reapplication and review process every few years.
To conclude, mining provides the North a major economic advantage, and it's already creating significant community benefits. Nunavut hosts a very high mineral potential and can support world-class mines and opportunities.
We support Bill S-6, but with recommendations to ensure it can be an incentive for increased mineral investment in Nunavut. We look forward to future dialogue with the federal government as accompanying regulations are created.
That concludes my presentation. Thank you.
The Chair: Thank you very much. I don't usually do this, but I'll just quickly ask a couple of questions. When you spoke about the 50 to 100 cubic metres and that it should be the same as it is in — I believe you said — either the Yukon or the Northwest Territories, did you have an opportunity to have input into the making of this legislation? If so, was that something that you brought forward? Can you tell me why the difference exists? Maybe you know and maybe you do not. It seems strange to me.
Ms. Kingston: We had actually raised this issue with Aboriginal Affairs during the initial review of the regulations in 2011. We felt that what seemed an arbitrary decision to put the level at 50 cubic metres was too low, and industry questioned why it was not simply made consistent with both the Yukon and Northwest Territories, which have 100 cubic metres per day.
The history is a bit vague, and we understand there were discussions between NTI, the Inuit organizations and the federal government to come up with this figure. But industry has always maintained that it should be higher. However, when the draft regulations came out, it was placed at 50 cubic metres per day, and we have been raising this issue ever since we saw those proposed amendments.
The Chair: How large of an impact will that have on mining — going from 50 cubic metres to 100 cubic metres?
Ms. Kingston: You can probably run two to three drills at that level. So any flexibility that we can add to allow more activity on land before requiring a licence is going to only open up the door to allow more people to do more exploration work.
So it can be significant.
The Chair: That would be two to three drills if you had the 100 cubic metres as compared to the 50 cubic metres in this legislation. You can't have one and a half, so you would be down to one; would that be correct?
Ms. Kingston: It would be a minimal activity that would be under 50 cubic metres.
The Chair: Second is the cost recovery, and I'm sure that you had lots of input into that. I don't know whether this would be easy for you to answer, so if you do not have an answer, I'm fine with that: What would one of these mines cost on cost recovery compared to the capital investment to open a mine? Take Mary River, for instance. Do you have some idea? Is it $1,000 or is it $100 million?
Mr. Chamberlain: It depends on the mine, the particular location and the particular process that it has to go through, but we're talking millions; it can be millions of dollars.
When thinking of cost recovery, it's important to understand that cost recovery is something that is brought up in many jurisdictions in Canada, and it can be argued to make a lot of sense. In the North, in the Northwest Territories, Yukon and in particular Nunavut, because of the lack of roads and lack of infrastructure, the costs related to permitting and all the soft costs related to the development of a mine are significantly higher already than they are elsewhere in Canada. Just by virtue of the fact of the remoteness of these communities or these facilities, you already have a premium built into the cost of development. To add in cost recovery on top of that, the concern we have is that it ''super-adds,'' if you will, a cost that would place projects in Nunavut at a disadvantage compared to projects elsewhere in the country.
The Chair: There are some really remote areas in the province I come from, where mining takes place in the mountains. It's cold and they have no access. They do the same things you do in Nunavut. I understand that Nunavut is farther from a large centre, but they do generate their own electricity and those kinds of things and have cost recovery.
Mr. Chamberlain: Certainly there are similarly remote communities in different parts of the country. We would suggest that Nunavut has a lower baseline. It depends on how you look at it, I suppose, but every community in Nunavut is remote and every community has no infrastructure. In northern Ontario or northern B.C., you might have hearings or regulators in a relatively nearby community that will require flying in but is nonetheless relatively close from a remote point of view, whereas you have that added distance just to get to the territory in Nunavut. If you are having, for instance, hearings with interested communities within Nunavut — there's 25 communities, and they're all fly-in. I'm sure you've all travelled there, travel is a real challenge. All that has to happen is the weather changes and things get thrown off.
We would suggest the cost is higher in Nunavut than it would be elsewhere. That is not to say we're suggesting that other parts of the country don't have remote concerns or challenges, as well.
The Chair: I appreciate that. I can understand where you're coming from. Thank you very much. I go to the deputy chair, Senator Massicotte, please.
Senator Patterson: I do have a supplementary on your first question, chair.
The Chair: Okay, a quick one.
Senator Patterson: Yes. I would like the witnesses to clarify, while I understand the water threshold issue is important, the drilling threshold, the 50 and 100 cubic metres a day, would you agree that that issue is not a matter in this bill? And the fix for that is a regulatory fix you're pursuing with the department? There's nothing in this bill that you're worried about with regard to that issue; is that correct?
Ms. Kingston: Thank you, senator. The issue around the change in how water is measured is not something, no, that has come as a result of the change in this bill. It was a policy decision that was made. So because it's directly related to use of water, we felt this was an appropriate avenue to bring that issue forward so that our concerns would be known.
The Chair: Thank you, senator, for your clarification. It's great to have you here from Nunavut.
Senator Massicotte: Thank you very much for being with us this morning. My questions are basically on the same line. When I read your earlier presentation, you point out quite a number of proposed difficulties with Bill S-6, and I came to the same questions.
To what degree were you consulted? To what degree did you get to voice your concerns? The testimony we've heard so far, including from the First Nations, is that they were heavily consulted and they were very pleased with the process of consultation. Nothing is ever perfect, but they were quite satisfied with the conclusions.
When you read this stuff, one might say, ''Boy, you have a lot of issues.'' I have the same interpretation. I think a lot of it is regulatory and can be decided at the local level. I appreciate it causes uncertainty because they're obviously new terms and new definitions, using recycled water in your definition of volume, but could you just highlight whether you are on side with Bill S-6? Were you really heard, or do you have serious objections? How much of that is basically uncertainty that can eventually be resolved and which is probably good news, being decided at the local level?
Ms. Kingston: Thank you for your question. I think, in general, we are in support; we are happy to see these amendments come forward and to see some consistency and clarification, but we felt it was a good opportunity to certainly bring forward as many issues as possible. I guess the good news is that there is a lot of activity going on; there are a lot of companies that are interested in Nunavut; there is a lot of investor interest in Nunavut. So we have a lot of input and interest when legislative changes come about. We have had the opportunity to provide a good review of the legislation.
Certainly, in fairness to the staff, we have had the benefit of a couple of presentations, certainly at the Nunavut Mining Symposium and formally a presentation that we have had with a number of our members and with staff to go through the details and, essentially, the issues as I've outlined them here, one by one, and to talk about the proposed changes that were coming through. So yes, we would say that we have been consulted, but we felt that it would be prudent to bring forward our concerns and address them here.
Again, the other message is that we would like to have continued consultation on the regulations as they come forward. We would be appreciative to have that opportunity.
In terms of the first issue, the water use issue, which was really that change in policy, it was just that; it had nothing to do with the fact that these regulatory changes were coming through. It's having a major and immediate impact on our industry right now, so we felt it was important to bring this forward and to help educate as to the potentially dire consequence that decision could make in our industry in Nunavut.
Mr. Chamberlain: If I might add, I think what you're seeing are comments, which I characterize as constructive, that are coming from a body of people with expertise and experience on the ground in real-time right now. So, for instance, with the issue of water and recycling, the people that Liz and I are dealing with and working with at the board level of the chamber are people on the ground in Nunavut operating facilities that are actually using water, and they're actually able to say, ''We're having to restrict use or we know we're going to have to restrict use because of this limit, and we know that's going to have an impact on our ability in a very short exploration season to do the exploration we need.''
What you are hearing is support generally for Bill S-6 but also some hopefully constructive comments that can be used, either in this process or in the regulatory process. The concern we have is that sometimes an issue like the water, the 50 versus 100 cubic meter issue, we're not getting reassured by some of the responses that we've been hearing, so we think it's important that we bring them up now. It is an important issue, and it will have direct implications for the amount of exploration that's done.
In this current economic environment as it relates to mining and commodities related to mining, in particular in the North, believe me, every mining executive is watching the cost of this work as it relates to the cost for similar work in other parts of Canada or other parts of the world. It's very much a global marketplace.
What you're hearing are very specific comments of people on the ground who are actually seeing the impact or seeing what the impact will be of these changes or are concerned about what it might be if certain things aren't changed through the regulatory process or otherwise.
Senator Patterson: I know that cost recovery is a very serious concern of the chamber, and with no infrastructure in Nunavut, roads or ports, it's a scary prospect for developers. You recommend that those provisions be removed or not imposed, and I guess you've been told that this is consistent with the CEAA amendments and with the N.W.T. and Yukon legislative provisions.
I'm wondering whether you would agree that the day may come — we now have two mines in Nunavut, and there's significant investor interest in the rich mineral deposits in Nunavut — when commodity prices change dramatically, infrastructure may be built, and the day may come when cost recovery might be affordable. I wonder if you'd comment on that.
Mr. Chamberlain: I think that's quite possible. In time, as infrastructure is developed, the regulatory environment will be substantially different or can be substantially different. I think what we're facing now, though, as you point out, is a reality where there is no infrastructure on the ground.
To the chair's point, like other communities in Canada, Nunavut is composed of remote communities with a lack of infrastructure that is not something we see in the rest of the country, certainly not on a territorial basis.
So will we see change? We think we will hopefully, but it's a long time coming. There are two operating mines, and there are others under development, but they're not moving quickly. With added additional costs and regulatory burdens, the concern is that some of the companies that are looking at these projects might think they would be better to spend their money elsewhere. There is a significant difference now in the cost. That's our concern.
Senator Patterson: Thank you for that. You made a comment about the double-bonding issue, which I know the chamber has worked on for probably three years, and section 76(1) is a positive step. I'm glad to hear that, because it has been a significant issue for developers to have to put up two bonds, one for Crown land and one for Inuit land.
You've recommended that it would be helpful to have a clarification on what elements security arrangements should comprise, that certainty should be a little bit more there now.
I'm just wondering, have you given any thought to the wisdom of putting this in legislation or, rather, having a more flexible approach, which would be by defining the elements for security arrangements through regulation?
Ms. Kingston: I think that makes sense to have it apply through regulation. We wanted to bring the issue forward. It is technically a rather complicated issue that seems to be exclusive to Nunavut and that is because we have essentially two land owners we often deal with. So the issue comes forward about posting a bond for security reclamation, but who holds the bond, how much that bond is going to be, these are questions that come up and there are extensive conversations around how they're going to be managed. We were very pleased to see there was recognition of this issue coming forward in the bill and to allow the minister some authority to go ahead and sign agreements once the agreements can be reached, and that the Nunavut Water Board must take these agreements into consideration when they're setting the amount of bond.
There is still an extensive amount of discussion that has to take place in order to get to that agreement. I think some parameters around what those agreements should contain would include such things as which measurements are we going to take, or do we use a reclaim model to determine what the costs will be or what the percentages will be. There are various tools available and if there was some clarification in regulations or more detail, it would help people to get established and get these agreements set in place in a timely fashion.
Senator Patterson: I have finished my questions, but Senator Massicotte referred to the position of First Nations on the bill. As a member of the steering committee, he and I and you are aware of a communication we received from Nunavut Tunngavik, but I would like to share that with the committee, with your permission.
The Chair: Yes.
Senator Patterson: It's a short email we received from Malaya Mikijuk, the executive assistant to the President of Nunavut Tunngavik Incorporated, September 16, 2014. She was responding to an invitation to Nunavut Tunngavik to appear before this committee. The email to Jody Turner, on behalf of the committee, said:
We see no advantage to NTI appearing before the Committee on this bill. In the recent draft letter from President Cathy Towtongie to Minister Bernard Valcourt, we've stated NTI has no objections to the modest changes proposed to the NWSRTA (giving the Minister the authority to enter into security management agreements — DIAND's proposed solution to double bonding).
I would like to have that on the record, please.
The Chair: That's great. I'm glad, Senator Patterson, that you did that.
Senator Black: Thank you very much for that tremendous presentation, it was very helpful. I have one question for clarity. Do I understand, arising from the responses to the questions from my colleagues here, that you believe most of the changes you think should be implemented should be implemented through regulation rather than an amendment to the act?
Ms. Kingston: I would agree, yes.
Senator Black: Thank you very much.
[Translation]
Senator Boisvenu: Welcome and thank you for your presentations. Like Senator Black, I found your presentations very helpful. I would like to pick up on what Senator Patterson was saying.
Water is a resource, or raw material, that is heavily used in mining. First off, what percentage of input costs does water account for, both before and after? And second, how much will the bill increase that cost if it does go up, provided it does not stabilize?
[English]
Mr. Chamberlain: I'll provide a short answer and if Ms. Kingston wants to add anything, she can. The short answer is I don't know the threshold cost, but what we're trying to articulate here is that it is more of a critical threshold issue than cost related. Mining exploration and mining activities by their very nature require a significant amount of water as a tool for use in the process. With the proposed limits, it will create a significant reduction in the amount of drilling that can be done or the amount of process that can be undertaken, which will slow down the ability of mining companies to be able to do the work and increase the costs. It will mean that less work will be able to be done to explore the resource, and the resource will be exploited in a slower manner because of that additional up-front threshold issue.
[Translation]
Senator Boisvenu: So it would have a greater impact on exploration than on exploitation?
[English]
Mr. Chamberlain: Yes. To be clear, with mining in Nunavut in particular, where there are only two operating mines, a significant amount of the economic activity is related to exploration. Exploration is a critical path that must be undertaken in order to get to a productive mine where you see significant activity and employment. Without the ability to undertake exploration in an efficient, cost-effective and fairly timely manner in a very challenging environment, there will be significantly less mining activity in the future because of that. It will have a very real impact.
While some people will say it's just exploration and it's not such a big deal, the chamber would like to make it very clear we think anything that limits the ability to explore mining in the North under the harsh and very short season will have a significant implication, leaving aside cost.
Ms. Kingston: It also depends on who is actually doing the work. If you have a major mining company, such as Agnico Eagle or Baffinland, they earn their revenues internally through the revenues of their operating mines, so they have internal resources they can apply to these kinds of costs. In some ways it is not attractive to have more cost added to your operation, but they have the resources available to them or are more likely to have resources available to them than the junior exploration companies that have to rely on outside investors to help them move their projects forward.
By adding additional costs and making it more challenging for those companies to operate and get their projects moving forward, it's an additional pressure and sales pitch they have to make to their investors to add to their comfort level that their investment will actually pay off with an operating mine sometime, hopefully in the near future. It puts a lot of pressure on the exploration industry and those junior mining companies that do not have their own internal sources of revenue. They must go outside and seek investor applications to these projects.
[Translation]
Senator Boisvenu: If the mining companies do not absorb the costs, who will?
[English]
Mr. Chamberlain: The exploration just won't happen. As Ms. Kingston indicated, junior mining companies will do quite a bit of the exploration, because mining is unlike many industries where there are different levels of activities. Often, exploration is done by one junior company and later down the road, if an exploration leads to a find of a resource that seems valuable and worth exploiting, it will eventually be mined by a larger company with more resources. Where a company is having trouble raising money to do exploration under challenging circumstances and high cost, or with a threshold issue like we've described, they just won't do it, certainly not to the same degree.
And that's what we're seeing. One of the charts in Ms. Kingston's presentation showed the exploration levels, and you can see a fairly precipitous drop-off in the last couple of years and that is in part due to global commodity conditions, but the anecdotal evidence we can convey is that it is also in part due to uncertainty of regulatory changes in Nunavut, as well as costs related to those. It's a complex issue, of course, but it's an important one.
Senator Mitchell: Thank you both for your presentations. I'm interested in the difference. Why the choice of a threshold of 50 instead of 100? Where did that come from? Is it dated and technology has gotten past that and needs more water, or was it some assessment that there isn't enough water?
Ms. Kingston: There is a lot of water, so that's not exactly the issue. This no-licence use of water actually is a step in the right direction, as well. Previously, to do any activity on land at all required a licence; there was absolutely no threshold which allowed even minimal activity. So this is a step in the right direction.
But when the time came where the threshold was set in regulation, it seemed an arbitrary decision on the part of the water board, essentially. Despite our efforts to have that raised, it was felt that it was just the number and that it would remain.
From a consistency point of view, which seems to be part of the goal with this bill, we wondered why it wouldn't be consistent with what's happening in the Northwest Territories and the Yukon. It just made sense to allow that threshold to be raised to 100 cubic metres a day.
Senator Mitchell: With respect to security and remediation, have there been cases where sites have been left improperly remediated? Could you comment on that and how this will help?
Ms. Kingston: Yes, unfortunately, it does happen from time to time. Again, for good operators, it's not an issue. Reclamation is part of that mine cycle, so you do your exploration work, mine the deposit, and at the end, you are required to close that project and essentially put the land back the way it was found. If you do not put forward a bond or set aside enough money to do that, then, unfortunately, the landowner — or, generally, Aboriginal Affairs — will be responsible to go in and ensure that land is put back the way it was found.
Because of some experiences in the past and around the world, these things tend to happen. There is a lot more pressure now to ensure that, even before you start your project, there is enough money set aside in the form of a bond that you are able to go in and clean up that site at the end. Mines are finite — they will close eventually — and there is an obligation on the part of the company to ensure that the site is cleaned up. This will ensure that will happen.
How the bonds are set and determined is very important, but it's a natural part of the cycle. It's required and an acceptable part of the mining process.
Senator Wallace: Ms. Kingston, just to come back to the issue of cost recovery and your suggestion that the cost recovery provisions should be removed from the bill, could you describe for us what your understanding is of the types of costs that are sought to be recovered by that provision?
Ms. Kingston: One of the things that hasn't come up in our discussion yet this morning that is a little different in Nunavut is the concept of the institutions of public governance. They are a group of boards operating under the Nunavut Land Claims Agreement. They are there to ensure a robust regulatory process.
The bill right now does refer to cost recovery for the board, and our preliminary understanding was that it would involve cost recovery for the federal government officials and their costs around running hearings for licence renewals, application processes or what have you.
In a way, our concern is that we could be hit twice. There are costs that need to be recovered on the part of the federal government employees who have to spend time reviewing licences or further travel to attend hearings and what not, but because we have this extra group of agencies, or an extra regulatory arm available in Nunavut, the concern now is: Do we have to recover costs, or pay back costs, for both of those groups? It's a question we have, and we would like to see clarification on that.
It's essentially for any application, renewal or process around a water licence application — or the management of a water licence — that for all of the players participating, those costs would have to be recovered for their involvement.
Senator Wallace: That was my understanding.
Mr. Chamberlain, you made a comment about the costs and the lack of infrastructure, and I didn't want there to be a perception that we were perhaps talking about the recovery of capital recovery costs, which was obviously not the intent. But the lack of infrastructure is also bringing greater costs to attend hearings and so on.
Business wants to minimize its cost. That's understandable. But if those costs are not going to be borne by industry, which is going to receive the benefit of the undertaking — the community does as well, but the direct benefit is to the industry — those costs have to be borne somewhere, and they're going to be borne by the taxpayer or, in the case in Nunavut, by the citizens of Nunavut.
Does it not seem reasonable that industry should take the lead on bearing the costs of those expenses that it's actually incurring? Its applications and developments are creating those costs. Isn't it reasonable that industry would bear all of it, or at least the lion's share of it?
Ms. Kingston: It would be reasonable. Our question, however, is first: What are the parameters around those costs, and how are those costs going to be managed? Are they going to be a reasonable amount of costs?
Our question right now is the timing of it, as well. The first recommendation said that it be removed, but the other part of it is that it be put off to another time.
Right now, our industry is struggling. The markets are down and the costs for commodities are low. That puts a lot of pressure on the exploration industry right now.
We're trying to get this fledgling industry up and running in Nunavut. We talk about the citizens of Nunavut, but we have a very high unemployment rate in Nunavut. It's a fledgling economy, and we believe our industry can provide a remedy for that. So why are measures being put in place now that would seemingly work against that?
We're trying to address that and work our way through it to get the industry up and running so that there are revenues and taxes flowing into that economy. Then we would probably be in a better position to be able to recover those kinds of costs.
It's an extra pressure on our industry right now at a really poor time. We're asking for that consideration.
Senator Wallace: I would think for legislators, though, it becomes difficult to deal with an issue like that and try and adjust it on a cyclical basis as the nature of the industry changes. It has its up and downs, and its peaks and valleys. It would be difficult to have something like ''in down-times, costs would not be passed along, and in up-times, they would.'' That's very difficult to do.
I would think the idea would be to have something that's reasonable and understandable such that if you decide to do business in the North, you understand that basis going in and you, industry, make your decisions. Government's not going to make the decision if you're going to invest or not.
Mr. Chamberlain: I have a couple of comments. One is to your point about cyclical changes to regulatory systems in cost recovery. That's a good point. It's really worthwhile reinforcing Ms. Kingston's point that this is a fledgling industry. Nunavut is 15 years old, roughly, and the economy on the mining side is really new. By far, the mining economy is really the only private economy driver in Nunavut. I think Senator Patterson's question about where this could go in the future gets to your point.
I think we're talking less about the cyclical nature of the business and more about the fledgling nature of the business, the fact that mining in Nunavut needs support until a critical mass is reached. When that happens is hard to say, but as growth goes and as infrastructure, regulatory and capital is developed, one would think that less support would be needed.
The other thing I would say is I worry that your question might leave one with the impression that private sector mining companies are somehow benefiting at the expense of the private purse. Mining companies who do work in Nunavut now are spending a premium; they are spending extra to do work there, and they are making a decision because they're a business and they see a resource and they know it can be exploited. Yes, of course it's for the bottom line, but the citizens of Nunavut will be the ones who benefit from the additional jobs and economic activity that will be brought along. I think it's important to balance those things. I'm not suggesting you're not, but I wanted to make that point.
Senator Wallace: The cost of business does vary from jurisdiction to jurisdiction. We know that across industries. That's my point. Thank you very much.
Senator Ringuette: As a supplementary question, I understand that in regard to costs, there is federal involvement and territorial involvement, which should not be different from an interprovincial project that would require the province and the federal government to do a cost assessment for the project developer.
Have you looked into comparing the current legislation and what is happening elsewhere in Canada, as a follow-up to Senator Wallace's question?
Mr. Chamberlain: Costs of permitting and things like that?
Senator Ringuette: Yes.
Mr. Chamberlain: I can speak to it a bit and let Ms. Kingston chip in if she has something to add.
I am an environmental lawyer; I practise environmental assessment law across the country. Most of my practice is either in Ontario or Nunavut, but I am active in the Northwest Territories and have been on projects in Quebec, Saskatchewan, Alberta and other places. Those are principally the areas of my activities.
I guess when you ask a question about the soft costs of project development and how they compare, I don't have numbers to give you, but I can tell you that the soft costs related to projects in remote communities, no matter where they are, will always be higher and that the soft costs related to projects in Nunavut will be among the highest in the country. I'm reluctant to say they are by far the highest because there are remote communities, as has already been mentioned in other places, but the baseline of the costs related to these things in Nunavut is much higher than it is anywhere else because of the geographic realities there.
On top of that, the Nunavut Land Claims Agreement created the IPGs that Ms. Kingston referred to, and the processes. Not to say that other provinces and territories don't have their own processes — they do — but I would suggest that in Nunavut, when you take the complexities of the federal involvement, the Institutions of Public Government, under the land claims agreement, as well as the input required from the Aboriginal communities — that is, the Inuit — that it is a more complex and costly regime from a regulatory point of view and from a geographic point of view than you would find elsewhere in the country.
I would add to that one caveat, and that is I think it's a highly effective system. As an environmental assessment practitioner, I often provide speeches across the country and write about environmental assessment across the country and have seen the process in action, and I think it's one of the more effective environmental assessment processes in the country. That said, it's more expensive.
The Chair: Thank you. That brings us to the end of questions for this segment.
Ms. Kingston, Mr. Chamberlain, thank you very much for your presentation and for your answers to our questions. We appreciate it very much.
It gives me great pleasure to welcome during the second portion of the meeting by video conference from Calgary, from the Canadian Association of Petroleum Producers, Alex Ferguson, Vice-President, Policy and Environment; and Aaron Miller, Manager of Northern Canada.
Thank you for being with us today. We look forward to your presentation. We have one hour and we have to be out of here in the hour, and then we'll have some questions from senators and we look forward to your answers. The floor is yours, sir.
Alex Ferguson, Vice-President, Policy and Environment, Canadian Association of Petroleum Producers: Thank you, Mr. Chair, members of the committee. I am Alex Ferguson and I'm with CAPP. I'm here with Aaron Miller, Manager, Northern Canada, who will go through the details.
I remind you that CAPP represents a pretty significant portion of Canada's upstream oil and gas industry. Approximately 90 per cent of our Canadian resources in this sector come through our membership, which is a pretty significant investor base across Canada, and we are hoping to increase that investment in some of the northern territories that we see some good opportunities in.
We certainly support the spirit and what we see in the bill in front of us. We view any bill that has the word ''improvement'' in it as a pretty positive step for us as Canadians, and the petroleum industry specifically. To get into the detail, I will quickly turn it over to Mr. Miller who will run through specific comments and we will be able to answer any questions that you have of our sector.
Aaron Miller, Manager, Northern Canada, Canadian Association of Petroleum Producers: Thank you, Mr. Chair and committee members for this opportunity to speak to you today as we certainly appreciate the chance to contribute our perspectives on Bill S-6. To that end, we have focused primarily on Part 1 of the bill, namely the amendments to the Yukon Environmental and Socio-economic Assessment Act, otherwise known as the YESAA, and more importantly what this means as the petroleum sector in the Yukon is in such an early, critical stage where quite frankly it can either be hatched or halted.
I would like to speak for a few minutes to the frontier nature of the Yukon landscape. Junior exploration companies that are currently leading the way in Yukon in the early stages of exploration are not only crucial to the future of petroleum in that region, but are key catalysts for the oil and gas industry across Canada.
Such companies have been catalysts in the early stages in mature jurisdictions, such as Alberta when it went through its very own early exploration phase many decades ago.
The nimble, entrepreneurial character of these companies was instrumental in not only unlocking the resource, but helping to hatch the industry at large.
Such companies are crucial to frontier jurisdictions, like the Yukon, as their early exploration work will not only be the precursor to potential future commercial development, but the work they do now will lay the foundation for subsequent companies both big and small that may come after, hence providing that early baseline information on the resource potential, thereby helping focus future efforts by reducing the uncertainty of outcome.
That critical foundation of geological and basin knowledge is key as the more data and intelligence an exploration company can gather, the better it is for all parties involved, whether it be regulatory bodies, governing bodies, First Nations and various other stakeholders.
A very robust and thorough exploration program that is allowed to proceed without unnecessary obstacles and delays will be best positioned to assess the resource potential and also mitigate business risk.
It is at this point, after a thorough and timely exploration phase — and at this point only — that explorers will have a more accurate picture of the size and scope of the potential resource, its commercial viability, and ultimately the size and scope of potential environmental and socio-economic impacts if it is indeed a viable play.
Exploration by its nature is high risk and when I say risk, it is in terms of probability of commercial success as often exploration activities do not translate into hydrocarbons being able to flow at an economic rate. That is the nature of exploration work.
Now let's talk a little bit more about the Yukon in specifics. Eagle Plain, an area of interest in the Yukon, is largely an under and unexplored area as exploration started in the 1950s and continued to the early 1970s when it slowed down significantly.
Since 1972, only four wells were drilled prior to the increased activity in the area a couple of years ago. A total of 38 wells have been drilled in this basin, with the majority of course being drilled in the initial stages of work 50 plus years ago.
Things have changed in the last 50 years or so. The technology and innovation available to the oil and gas industry today compared to the relatively rudimentary tools available in that first round of activity many decades ago opens up a whole new paradigm of exploration potential.
To name a few of the many technological innovations, we have the advent of horizontal drilling. And the big one in the early exploration stage is the ability to process seismic data. In decades past, rudimentary 2-D surveys were the norm. Now, exploration endeavours are often undertaken using more sophisticated 3-D seismic programs.
In short, more data can be extracted in a faster, more efficient manner. In the last two years at Eagle Plain, four wells have been drilled along with a large 3-D seismic survey, which was the first 3-D ever done in the Yukon. Having said that, further drilling is necessary to continue exploration and appraise the viability of the variety of play types prior to be able to consider any type of development plan.
Explorers need clarity, consistency and a level of predictability in this process, and to operate in an environment where the regulatory and assessment triggers are proportionate with the risk profile and exploration character of the activities. Accordingly, CAPP is supportive of the government's objectives to improve the efficiency and effectiveness of the northern regimes while retaining robust environmental standards. Extending these reforms into the Yukon will be important for attracting and enabling investment that creates jobs, economic growth and prosperity for the Yukon and all Canadians.
Of course, the YESAA is a core piece of legislation and the proposed changes are very important to the fledgling industry in that region. Investment and operational decisions benefit by having a level of predictability in the review process, particularly as to review scope and timing. This predictability is essential for being able to manage work activities to fit within limited seasonal operating windows.
Our industry is global in scale, as you know, and northern oil and gas exploration and development projects have to aggressively compete for limited investment dollars against opportunities elsewhere in Canada and around the globe.
Reducing risks and uncertainties in project review timelines, as proposed in this legislation, will serve to improve Yukon competitiveness.
In that vein, CAPP commends the proposed reforms to the YESAA, namely the adequacy review stage that has now been included in the time limits being proposed for evaluations, screenings and reviews. Further, the reforms in section 49 will also lead to more streamlined and efficient timelines as the new assessment will not be required when an authorization is renewed or amended unless, in the opinion of the board, there is a significant modification to the original project.
Now, although there is resource potential in the Yukon, most of these resources await confirmation as to whether they are economically viable, and timely and thorough assessment through exploration will be key to their realization.
I should note that the Yukon and the North at large is not alone in its challenges as Canada's oil and gas industry faces many.
Whether in mature producing jurisdictions or potential new development areas, common challenges facing Canadian oil and gas development include access to domestic, North American, and other international markets; competitiveness in the areas of fiscal and regulatory policies; workforce availability; access to investment capital; and having the social licence to operate with respect to public confidence and trust.
CAPP commends the federal government on the northern regulatory reforms of the last few years and the priority of northern development. However, numerous barriers continue to exist that still make the North a challenging regime in which to explore for petroleum.
The permanent and lasting transition from a regime of perennial exploration potential to commercial development jurisdiction remains elusive in the North.
We look forward to continuing to consult with all stakeholders and work together to help make this vision a reality.
Thank you for this opportunity to present to you today. We look forward to your questions.
The Chair: Thank you, gentlemen, for that presentation. Very well done. We will now go to questioners.
Senator Massicotte: Thank you very much to both of you for being with us this morning.
Obviously you agree with Bill S-6 and you recommend its adoption. That's good. At the beginning of your presentation, you said this is a critical time for you, and at the end you said the potential is very elusive to you. Why is this critical and why is it so important at this time? What's going on?
Mr. Miller: Again, Yukon is, of course, as we know, a frontier jurisdiction. The exploration activity that's going on, for example, in Eagle Plain, again, they're in that early phase of exploration where they're trying to assess the viability of the resource, and of course, ultimately to assess the viability of it to flow economically.
What I mean by that is, the more clarity, consistency and efficiency in the timeline and review process we have in these early phases, the better the process can get. It's just going to increase the probability of success of these exploration endeavours. Again, it's in that critical early stage.
Senator Massicotte: But that early stage, the way you describe it, sounds pretty normal to me. Isn't that the case for most of your exploration?
Mr. Miller: Yes, but I'm glad you brought that up. In the North it's a little difficult.
You're right; early-stage development has parallel characteristics and jurisdictions, but you have to remember, as we all know, north of 60, you have, again, a frontier jurisdiction. That's going to be different from south of 60 where you have mature jurisdictions. Obviously, the timelines are much longer; it's going to take much longer to see any return on the investment. In a nutshell, you're spending tens of millions of dollars for several years before you see any potential return or any return at all.
Again, the more we can do to kick-start that process in such a jurisdiction, the better.
Senator Massicotte: The bad news is it's not going to change; the weather is not going to get any warmer quickly, but I understand your point.
Senator Mitchell: Thank you very much, gentlemen. I'm interested in focusing on the clarity, consistency and certainty features of your concerns in your presentation.
One of the features of this bill will be to change the definition of cumulative effects. In the environmental review process, cumulative effects applies only to projects that are actually under way or projects that are actually in the process of being built. It will now include projects likely to be carried out. There is some concern as to how that will be defined.
Have you given that any thought? Have you had experience elsewhere? What's your thinking generally on this?
Mr. Miller: In the Yukon, we're in the very early stages of development, and that has been a challenge in the review process so far, in terms of the project scoping, what that's going to look like down the road.
Unfortunately, by virtue of early exploration activities, it's hard to tell what that project is going to look like until you've actually had a chance to assess the viability of the resource.
So, yes, that is an issue we have been cognizant of long before this actually came into the conversation about this legislation.
Mr. Ferguson: I can add, senator, that we have a lot of experience in other jurisdictions, not just in Canada but elsewhere, around the concepts of cumulative effects. Our industry is a growth industry in terms of over a land base over a period of time. It's not just a single project in one specific area.
One of the challenges we have with being able to forecast other activities that may relate to ours, first of all, we're not that certain about how rapidly or to what extent our sector will grow in a particular area of land. At the same time, you can think about some of the other scenarios or some of the sectors that may impact that land base; there could be an infinite number of possibilities of what could happen.
One of the things we have a lot of experience with, given the uncertainty at the exploration stage for oil and gas development, if you start telegraphing too quickly the opportunities and the wealth and values that are going to be generated and created in an area, people in that local area start making probably less appropriate decisions about their future, individually and collectively, and we then get accused of leading them down a pathway that they're not prepared for.
You don't have to go very much further than look at the liquefied natural gas scenario in Canada; a lot of expectations and there are going to be a lot of projects built. At the end of the day, we can forecast anywhere from one plant to 14 or more plants in Canada alone. We're not really aware yet how many plants are going to be built.
We're pretty concerned about layering a process that could lead people astray, but at the same time, there's a lot of uncertainty around it. Not to say that you can't start expressing those things and making some decisions around cumulative effects, but at the same time, you want to be cautious when we don't really know what's going on with any great deal of certainty.
Senator Mitchell: Thank you. Clearly, at the base of what you're doing for the impact on the good of the community, of the region, is economic development and jobs, and also, clearly, there's an Aboriginal population that needs them.
Does your industry, in approaching these projects, have a concerted, coordinated effort to create jobs in the Aboriginal communities?
Mr. Ferguson: I can certainly speak to that. Again, in the Yukon in particular, as well as the Northwest Territories, we're in pretty early days, so we're not going out there promising a lot of things. But across our sector, company- specific and also through our association representing a lot of the members, we have very focused, specific programs to address and prioritize Aboriginal employment opportunities, training opportunities and broader engagement opportunities, not to mention benefits to local, non-Aboriginal populations as well.
Like any business, it's good business for us to have a local work force that's capable, trained and available to us to help grow that community that we need to be in for a period of time.
Mr. Miller: If I could add very quickly, with respect to one of our members who is doing early exploration work up in the Yukon, in the last two or three years, approximately $22 million has been paid out locally in direct wages, benefits and services. Again, that's just from very early exploration work.
If we want to look to the neighbouring territory, the Northwest Territories, very similar work that's going on. One of our members there, for roughly every one well that's drilled, about $3 million in wages is paid out and roughly half of that goes to local populations. Again, those economic impacts to the North are quite significant.
Senator Ringuette: Thank you, gentlemen, for your presentation.
Since you operate in other jurisdictions within Canada and outside of the country, in other countries, how does this modification to the act compare to what your members are dealing with in other jurisdictions?
Mr. Ferguson: I'll give a broader answer, and then Aaron can provide something more specific.
Certainly we look at any opportunity to not just streamline but make the regulatory model more effective. It supports our sector because we intend to grow in those areas with those communities, so we're looking for a pathway to certainty and predictability in the regulatory model.
I would say the opportunity you have in front of you here is to start down that path probably slightly ahead of the curve in terms of other jurisdictions that have already been down a certain road.
We do see regulatory certainty and being able to predict that if we do the following steps in a process, not that we will be able to predict what the answer is, but that we will know with some degree of certainty what that process is going to look like. We can see it through that pathway. It really adds confidence to our ability to invest in an area.
We have certain areas of the province that probably aren't as certain in terms of their regulatory processes. We see opportunities here to create that certainty, streamline it not just to our benefit but to the oversight or the regulator's benefit, and to be able to apply resources where they're most needed in terms of that oversight role.
This is a pretty positive, advanced step relative to what we see in many parts of the country.
Mr. Miller: I would echo Alex's comments. Again, these improvements in YESAA will make it more competitive with jurisdictions across Canada, whether that's the neighbouring territory, Alberta, British Columbia, Saskatchewan, et cetera. As I alluded to earlier, it's especially important in the context of north of 60, which is the frontier jurisdiction where the systemic challenges of lacking infrastructure, increased costs and limited operating windows again make it that more challenging vis-à-vis its southern neighbouring jurisdictions. Such reforms are that much more important at this stage.
Senator Ringuette: Gentlemen, I'm kind of surprised at your answers, because a few weeks ago, when the minister was in front of this committee, I asked how this current process would compare to other jurisdictions, specifically the current assessment process federally. He said that it was comparable — just about the same. Yet you are saying that it provides lower times of assessment and so forth. I'm surprised at your answer, really. It begs the question: Considering the very ''soft'' environment that you will be working with in those regions, is it the time to move toward a more streamlined, quicker assessment process?
Mr. Ferguson: Maybe I could add a bit of clarity. We appreciate any opportunity to improve the process and the systems, and streamline and increase the transparency so we see what the process is going to be. If it changes the time frame only marginally, that's still a pretty significant improvement for us to be able to see with some confidence the process we're going to have to go through.
We believe that, over time, the regulators will become more efficient and effective within the model that's outlined here. We certainly don't expect people to adjust to a new regulatory model within the regulatory system overnight, but we see the opportunities here that have been framed for that regulator to start adopting and changing processes, given the new direction that's in here, to become more efficient.
Again, that's not an overnight process for any organization, whether it's within industry or government, but we do see the opportunity here that you've created — a pathway — for that to be developed.
There's still a lot of work to do from the regulation agencies and the people who are involved in that side of the process to make sure that they use the improvements to this regulatory model within their current processes. There will be an adjustment in terms of what people do, and we see that in many other jurisdictions. The opportunity here is to start pushing down that pathway of improvement so that the regulator can apply his or her resources in the most appropriate manner, given the concerns, the risks and the objectives they're trying to conserve and protect.
So it is not an overnight solution, but it starts everyone down the path of understanding the opportunities that are here.
Senator Seidman: Mr. Ferguson, you spoke about ''permanent and lasting transition from a regime of perennial exploration potential to commercial development — jurisdiction remains elusive in the North.'' I appreciate the very special circumstances in the North. I would also suggest, though, that the exploration phase to commercial development phase is a challenging one in every industry and in every field.
Do you have any partnerships with other stakeholders or academia in this push from innovation through to the commercial development phase?
Mr. Ferguson: Certainly. With the oil and gas sector in Canada being this large, you can appreciate there are many partnerships and alliances among individual companies, for example, but also groups of companies. I can give you a few notable examples: The oil sands operators in Alberta have joined together. It is a unique collaboration called the Canada's Oil Sands Innovation Alliance, which allows them to overcome typical competitive barriers or impediments with regard to intellectual property in order to resource a pretty significant technology development and deployment vehicle that's unique in the world and to specifically target it at environmental remediation, mitigation effects and technologies in particular. That's a significant thing.
Associated with that, although separate, is a partnership that is a collaborative effort between the Alberta government and the federal government on joint oil sands monitoring. That is a commitment by the industry for approximately $50 million per year on environmental monitoring in the oil sands region of Alberta. That's a pretty broad-based one.
We do have very specific smaller-scale — down to very small scale — individual companies through Sustainable Development Technology Canada. It's a federal government agency around technology, innovation and deployment. There are a great number of smaller-scale ones — and significant collective investment on partnerships with individual entrepreneurs, as well as the federal government on those kinds of things. And there is everything in between.
I could certainly make available pages and pages of the kind of partnerships and alliances that we promote and have.
Senator Seidman: I'm not so much looking for pages. The issue is one that you have just spoken to, and it is an important one. There is no question one would not begin to underplay the challenges of the North and these issues, but we can also say that it offers unique opportunities to test innovative ways of dealing with these issues, as well. That's important.
Mr. Ferguson: Yes, I agree completely. Even though the sector for us is very small right now in the North, it's a very important aspect of the Canadian landscape to look at in terms of our sector, the environment and what we can look at: unique aspects in terms of the populations, expectations and values. It is done collectively for government as well as for our sector. It's part of the rich fabric of the learning opportunities we do have.
Senator Seidman: Thank you. I appreciate that.
Senator Black: Mr. Ferguson and Mr. Miller, good morning. It's a very early morning in Calgary, so thank you for being with us.
Thank you for your intervention. As always, CAPP's intervention is extremely relevant and considered, so thank you very much for that.
Based on what you have shared with us, can you give us any suggestions as to how Bill S-6 might be improved?
Mr. Miller: Let me start by saying I believe some of the improvements in the YESAA process don't necessarily require statutory change. Of course nothing is perfect, but certainly these amendments before us today are a step in the right direction. I believe some changes can be implemented with existing rules.
One thing I'm hearing from the ground from members — and the rules are already in place for this — is that there are inconsistencies with district offices on the ground depending on what office you go through.
For example, an application may be treated one way in one district office, whereas a similar parallel project application in another office would be treated completely differently. That's what I'm hearing from the ground.
To my knowledge, those rules can be enforced by virtue of the board's bylaws. That's one area of improvement, but again that doesn't really require any statutory change.
Senator Black: Thanks, Mr. Miller, we heard that from other people as well.
The Chair: I do not have any other questioners on our list. Senator Wallace, are you nodding to me?
Senator Wallace: I can't pass up the opportunity.
Gentlemen, we understand that there was an extensive consultation process that led up to the final form of this bill, and that a number of interested groups and parties were involved in that process as the bill was drafted. There were various versions of it and those versions were circulated to different parties and levels of government in Nunavut and the Yukon. I'm just wondering if your organization was part of that process and had an opportunity to provide any input.
Mr. Miller: Yes, we were part of that process and provided a formal submission to Aboriginal Affairs on Bill S-6.
Senator Wallace: Did you find that the department responded at all to the suggestions you made?
Mr. Miller: Yes, the suggestions we made were sentiments echoed by other sectors operating in the North. Specifically, the one that was very near and dear to our members in the North in those early exploration stages was the adequacy review. Again, we weren't the only sector that echoed that issue in the process.
The Chair: I have a couple of questions or observations. In your presentation, you talked about directional drilling. When it comes to cumulative effects, I think it's something that may need to be emphasized a little more. I would like your response to that.
I know directional drilling; I don't know how many wells you can drill off one pad, directionally. If that is something you're doing in Eagle Plains, that has a lot less impact on the surface — tremendously less impact — and maybe you could explain that to me a little bit. Then I have one more question.
Mr. Ferguson: Certainly, senator. It's part of the opportunity to improve the regulatory model so you can foresee and start planning for more optimal patterns on the land base. We have, in certain parts of Alberta and B.C., in particular, well pads that have 18 to 24 or even more wells on a pad. It's a slightly larger well pad, but if you think of that compared to 18 individual well pads with roads that go to each of them and the pipelines associated with that, in terms of that kind of resource development, you certainly have a huge opportunity to gain the benefit from the resource development with a much greater or limited impact on the land base.
At the same time, when you get to that scale, you're able to come up with better alignment with whatever planning model there is for land-based planning in an area or land use planning. Again, I think the important thing is you need to allow the industry to get up to that scale and understand that we're now in a production mode, and you can start deploying that kind of development pattern. It's certainly the industry's aspiration that the resource is proven and we get to that ability to be able to demonstrate a very optimal pattern on a land base and minimizing the disturbance associated with that.
The Chair: I appreciate your answer, it's very clear. I think it's something that the industry has to talk more about to get people to understand. As you clearly say, up to 24 wells off of one lease or one well pad, and obviously it's going to be a bigger well pad, but that certainly reduces the impact on the ground, the footprint left. At some point in time, depending on what you find in Eagle Plains, it may be an option to use.
The second question is something where I go back to my days as minister and maybe for you around the table, we lost a very good oil and gas commissioner in British Columbia, a fellow by the name of Alex Ferguson, but we were also happy to see him go to Alberta and start training the Albertans on how to go about doing things.
You will understand I have some Albertans at the table and every once in a while I have to remind them that British Columbia is a force in the oil and gas industry.
Play-based permitting is another process and I see lots of advertisement in Alberta about it starting today. I've been here six years and about eight years ago we started that process in the Horn River basin. I'm glad Alberta is starting to look at that. I'm serious about it because it is something that also has much less impact on the land base when talking about cumulative impacts — this is in relation to Senator Mitchell's questions— and cumulative impacts will play a big part, if enough activity happens, let's say in Eagle Plains or wherever else in the Yukon you could be drilling. Maybe you could explain to the committee a bit about that process and how it helps with cumulative impacts.
Mr. Ferguson: Certainly, I can speak a little bit to that. First of all, it wasn't a really good commissioner that the province lost; it was probably a better minister who was lost at that time.
You're right, the play-based regulatory framework or thinking that Alberta is doing was certainly done with the thinking that had been done previously at the Oil and Gas Commission in B.C. The opportunity with the new legislation in Alberta, where they now have the opportunity to set that tone and define that process more specifically, very much aligned with what we see here, an improvement in a regulatory model that allows the regulator to start doing that kind of thinking and prepare proactively for that kind of opportunity to reduce those cumulative effects, the land footprint.
It is very much in line with what we see in YESAA, moving down that road of regulatory improvement, allowing the regulator to be not just reactive, but proactive on some of those things, which is what the play-based opportunity is. It is recognizing the nature of unconventional resource development now; it is not just a single well pad by well pad opportunity. Once we prove the resource and the extent of that resource, we can start planning a longer term planning horizon for optimizing the configuration on the land to address other values there more proactively, whether it is caribou, wildlife, water use, any other kinds of emissions or effects or even local residents, First Nations values. You now have allowed the industry to, with that kind of resource development pattern, plan at a scale, temporal land spatially that can align better with some of those other values.
It's a great opportunity. It's certainly a feature of the unconventional resource plays that we have and that we're looking at and looking for in the Yukon, but at the same time, it has enabled us, with a good, strong regulatory model and a good regulator that walks through that model, to look for those opportunities.
I agree, it's a significant opportunity in front of the Yukon that should not be ignored.
The Chair: Thank you very much, gentlemen, for your presentation and answers.
I will just date myself a bit; as a young person, I moved dregs into Eagle Plains 45 to 50 years ago. So when they talk about that long ago, I was out there on the land base doing that.
Senator Ringuette: Out of curiosity, with the horizontal drilling that you do, what is the maximum distance you're able to drill from the starting point?
Mr. Ferguson: Currently, anywhere from two to two and a half kilometres. Technology is always being added, and we're looking for opportunities to extend that. It's always a balance point between the kind of resource you're drilling in and the kind of opportunity you have, but at the same time, it's the technology available to us. It's a mix of that.
Typically, right now, you will see anywhere from two kilometres, which would probably be fairly standard for horizontal drilling, from the initial point of the vertical section of the well. It could be shorter, it could be longer, depending on the resource play and the technology being used.
The Chair: Thank you very much, gentlemen. We appreciate it. You have a good day in Calgary. The meeting is adjourned.
(The committee adjourned.)