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Regulation of Shale and Tight Resources

A product of the Energy and Mines Ministers’ Conference

Under Canada’s Constitution, provinces own onshore energy resources within their borders and are the primary regulator of their development.

Provincial regulatory bodies are constantly updating their regulatory frameworks to reflect the changing nature of oil and natural gas extraction technologies, including shale and tight resource development. These frameworks help to ensure safe operation, protection of the environment and resource conservation.

International Energy Agency’s Golden Rules for a Golden Age of Gas, 2012

“The technology and the know-how already exist for unconventional gas to be produced in an environmentally acceptable way... The industry must win public confidence by demonstrating exemplary performance; governments must ensure that appropriate policies and regulatory regimes are in place.”

Source: International Energy Agency (2012)

Regulation of Development

In Canada, exploration and production rights for oil and natural gas are generally obtained through a bidding process, with the exception of Quebec, where the system operates on a first-come, first-served basis (claims).

In Canada’s North and offshore, the rights issuance process is based on a single quantifiable bidding subject with rights going to the best bid.

Currently, to encourage remote exploration, the bidding criterion is the total amount of money that the bidder proposes to spend doing exploratory work on the parcel within a specified time period (work bid commitment).

In most of Canada, exploration licences include the right to search for hydrocarbons but do not give ownership of surface rights. Landowner consultation is required to conduct exploration activities. Aboriginal consultation is also required on decisions that may impact Aboriginal rights or title on their lands.

Provincial regulations for oil and gas development differ. Regulators may require licenses for wells or specific permits to conduct geophysical work, drill, complete, hydraulically fracture, modify or abandon a well.

Lease agreements are often needed for surface land access. Regulators may also require that regular drilling reports, geophysical log data, and well testing data be made public, depending on the well category.

Federal Role

Federal responsibilities include interprovincial and international energy trade, cross-jurisdiction pipelines, pollution prevention, habitat protection, regulatory oversight of chemicals, as well as natural resource regulation in parts of the Canadian North, offshore marine areas and Aboriginal lands.

Natural Resources Canada

As the federal energy department, Natural Resources Canada (NRCan) provides expertise and policy leadership on shale and tight resources by analyzing energy markets; funding and performing scientific research; and consulting with industry, regulators, academia and other government departments to inform policy and address concerns.

The Geological Survey of Canada (GSC), within NRCan, provides geoscience information used in making exploration, resource management and environmental protection decisions.

Environment and Climate Change Canada and Health Canada

Environment and Climate Change Canada’s (ECCC) role and authorities in relation to pollution prevention and habitat protection is provided for in a number of statutes, in particular under the Canadian Environmental Protection Act, 1999 (CEPA 1999) and the Fisheries Act. ECCC also has responsibility for the Species at Risk Act and the Migratory Birds Convention Act.

Under CEPA 1999, Health Canada (HC) and ECCC share the responsibility for assessing potential risks associated with environmental pollutants and chemical substances and for developing control measures if a substance is proven to be a risk to the environment or the health of Canadians. This includes the authority to regulate listed air pollutants and greenhouse gases.

ECCC is also responsible for the administration and enforcement of the pollution prevention provisions of the Fisheries Act, which prohibit the deposit of deleterious substances in water frequented by fish or in a place where that substance may enter such water, unless the deposit is authorized by regulation under a federal act. 

Canada Energy Regulator

The Canada Energy Regulator (CER, formerly the National Energy Board) is an independent federal agency that regulates several aspects of Canada's shale and tight resource industry. It regulates the construction and operation of interprovincial and international pipelines and energy trade.

The CER also has regulatory responsibilities for oil and gas exploration and production activities in specific areas that are not regulated under joint federal/provincial accords. Regulatory responsibilities are under the Canada Oil and Gas Operations Act, and certain provisions of the Canada Petroleum Resources Act are administered to particular regions.

Lands where the CER has jurisdiction over oil and gas activities

Figure 1 - Map of Lands Having CER Jurisdiction Over Oil and Gas Activities

Source: Canada Energy Regulator (2019)

Text Version - Figure 1

Figure 1: Map of Canada showing areas where the CER has primary regulatory authority over oil and gas development. These areas include Nunavut, parts of the Northwest Territories and offshore areas of British Columbia, the Arctic and the East Coast that fall outside the jurisdiction of the Canada-Newfoundland and Labrador Offshore Petroleum Board and the Canada-Nova Scotia Offshore Petroleum Board.

Indigenous Services Canada

Shale and tight resources on First Nation reserve lands are regulated by Indian Oil and Gas Canada (IOGC), a special operating agency within Indigenous Services Canada (ISC). IOGC operates pursuant to the Indian Oil and Gas Act and Indian Oil and Gas Regulations, 1995, as well as other relevant legislation and guidelines.

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