Review of the Canada Petroleum Resources Act
Learn more about the Canada Petroleum Resources Act and its review.
September 7, 2016: The Indigenous and Northern Affairs Minister's Special Representative's report, Review of the Canada Petroleum Resources Act, is now available online.
About the Canada Petroleum Resources Act
The Canada Petroleum Resources Act (CPRA) was established in 1985. It is one of the main pieces of federal legislation that governs oil and gas exploration in the North and offshore.
The Act authorizes the issuance by the Crown of title rights to explore for, develop and produce petroleum in areas under federal jurisdiction that are not covered by other legislation.
It also governs the allocation of rights to explore and develop petroleum resources on frontier lands, the administration of these rights and the setting of royalties on production.
The CPRA's principles are:
- rights can be awarded only as the result of a transparent, competitive bidding process
- generally, rights once issued should be secure
- to support the recirculation of potential exploration areas
- this means that at the end of the term of an exploration licence, all areas that are not carried forward into either a significant discovery licence or production licence revert to crown reserve land and are potentially available, through the call for bids process, for exploration by others
- to help implement the concept of unitary development
- this means that petroleum reservoirs are best developed as a single unit from the perspectives of resource conservation, engineering efficiency and protection of the environment
Ministerial responsibility for the CPRA is divided:
- The Minister of Indigenous and Northern Affairs is responsible for the administration of the Act where it applies in the North.
- The Minister of Natural Resources is responsible for the administration of the Act in other areas and is also the Minister responsible for the administration of legislation implementing the Atlantic Accord and the Canada-Nova Scotia Petroleum Resources Accord.
As of August 2016, there are 15 exploration licenses held in the Beaufort Sea offshore region. Oil and gas rights have not been issued in the Eastern Arctic offshore since the mid-1980s.
The application of the CPRA onshore was withdrawn by the implementation of devolution agreements with the Yukon in 1993 and the Northwest Territories in 2013. The Act continues to apply in Nunavut, in most offshore areas north of latitude 60, and in the Hudson Bay area.
To learn more about the creation of the CPRA visit: Origins of the CPRA.
Highlights of the Review of the Canada Petroleum Resources Act
The Government of Canada is committed to promoting a modern, effective and safe oil and gas regulatory regime that upholds world-class environmental standards in the North. To maintain responsible resource development and competitiveness, regular reviews of the regulatory regime are carried out.
The Review of the Canada Petroleum Resources Act by the Minister's Special Representative, Rowland J. Harrison, Q.C. was released on August 8, 2016. The report was presented to the Minister of Indigenous and Northern Affairs, Carolyn Bennett on May 30, 2016.
Visit: Review of the Canada Petroleum Resources Act to read the full report
The report reviews the CPRA and whether or not it can promote a sustainable Arctic economy while serving the public interest.
Specifically in his review, Mr. Harrison:
- examined key legislation, regulation, policy and contractual arrangements that make up the management of northern oil and gas
- compared Canada's northern petroleum management structure with equivalent management structures in international jurisdictions with similar petroleum activities in comparable environments
- assessed the CPRA's contribution to achieving the original policy intent of the Government of Canada and specifically, as the legislation relates to the Arctic;
- took into account the interests of rights holders under relevant self-government and comprehensive land claim agreements
- considered changes and recommendations to the management of oil and gas resources, including potential legislative amendments, in support of Canada's interests in oil and gas matters in the Arctic
- reviewed frontier lands under the responsibility of the Minister of Indigenous and Northern Affairs with a focus on the Beaufort Sea
In his review, Mr. Harrison concluded that the CPRA has been successful in instituting a rights issuance system that is market-driven, is responsible to industry interest and provides security of tenure. The Act also provides the Crown with full control in managing an effective oil and gas regime.
Mr. Harrison found that the Act, in its current form, meets the needs of Canadians and industry, but he also made ten recommendations to the Minister on how the Act can be clarified and improved.
These ten recommendations are:
- Recommendation 1: That the CPRA be amended to include a statement of purpose that would be broad and enduring, to accommodate national priorities as they evolve
- Recommendation 2: That the CPRA be amended to require that a strategic environmental assessment, encompassing the area in which it is proposed to initiate bids, has been completed and considered by the Minister before the call for bids is issued
- Recommendation 3: If it is decided not to proceed with proposed legislative amendments to the CPRA, it is recommended that appropriate formal statement of policy and guidance be adopted, to be applied within the framework of the current act
- Recommendation 4: That the CPRA be amended to increase the permissible maximum term of exploration licences from nine to 16 years
- Recommendation 5: That the CPRA be amended to allow the Minister to extend the term of exploration licence where the Minister is satisfied that intervening and unanticipated regulatory developments, or a force majeur event, would restrict the ability of the licence owner to meet the requirements of the licence in the remaining term of the licence
- Recommendation 6: If it is proposed to amend the CPRA to increase the maximum allowable term of exploration licences, the Minister consider whether the revised term should be applied to existing licences in the Beaufort Sea, having regard to changed circumstances, the potential benefits of having the Beaufort Sea Exploration Joint Venture work program continue and the implications for future exploration in the Beaufort Sea
- Recommendation 7: Provisions of the CPRA relating to the rights granted by significant discovery licences not be changed
- Recommendation 8: Technical discussions continue between industry and the responsible regulators to determine if the definition of "significant discovery" in section 2 and the requirement for "further drilling" in subsection 28(4) of the Act are consistent with current technology and, if not, that the Act be amended accordingly
- Recommendation 9: The Act be amended to require the Minister's approval of transfers of interest, or any share therein, provided the Minister is satisfied that the transfer would not jeopardize the relevant interest owner's ability to continue to satisfy the qualifications required of the original interest owner
- Recommendation 10: Part VII: Environmental Studies Research Fund of the CPRA be amended to:
- increase the limit on the maximum amount of the ESRF to account for inflation from 1986 to date and to provide for indexing for the future
- require appointment of the Environmental Studies Management Board of a nominee of the Inuvialuit Regional Corporation and representation for the territories
- require the incorporation of Indigenous knowledge into environmental and social studies financed by the fund
The appointment of the Minister's Special Representative, Rowland Harrison, Q.C.
On November 26, 2015, Indigenous and Northern Affairs Minister Carolyn Bennett confirmed Rowland Harrison, Q.C., as the Minister's Special Representative to conduct a comprehensive review of the operations of the CPRA and to lead an ongoing engagement process with Indigenous governments, organizations, stakeholders and other interested parties to determine how the Act can best contribute to the responsible development of Canada's Arctic oil and gas resource opportunities.
In addition to his extensive experience advising provincial, territorial, federal and foreign governments on energy regulation, Mr. Harrison has extensive experience as an adviser on all regulatory and constitutional aspects of oil and gas exploration in the Canadian offshore and northern frontier lands. He played a leading role in the development and enactment of the Canada Petroleum Resources Act and the Canada Oil and Gas Operations Act. From 1997 to 2011, Mr. Harrison completed two full terms as a full-time board member of the National Energy Board. During that time, he was appointed by the federal Minister of Environment as a member of the Joint Review Panel for both the GSX Canada Pipeline and the Mackenzie Gas Projects. Before joining the National Energy Board, Mr. Harrison was a partner in the Calgary office of Stikeman Elliott, a national and international Canadian law firm, where he specialized in all regulatory aspects of the oil and gas industry from 1987 to 1997.
Mr. Harrison has been Professor of Law at the University of Ottawa, Dalhousie University, the University of Calgary and the University of Alberta. He holds a Bachelor of Law degree from the University of Tasmania, Australia, and a Master of Law degree from the University of Alberta, where he served for the last three years as the TransCanada Chair in Administrative and Regulatory Law. Mr. Harrison has been a member of the bars of Nova Scotia, Ontario and Alberta and is Co-Editor of the Energy Regulation Quarterly. He was appointed Queen's Counsel by the Government of Alberta in 2006.
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