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Oil and Gas Activity

When an operator decides that it is appropriate to develop a hydrocarbon discovery, it must convert the rights into a Production Licence and get approval to develop from the regulator by submitting a Development Plan.

The main purpose of submitting a Development Plan is to satisfy the regulator that production of the hydrocarbons will be done in a professional manner that provides for safety of the workers and protection of the environment. The secondary purposes are to indicate how local benefits will occur, and to ensure that good oil field practices are carried out which will maximise the recovery of the resources. The process in Canada's offshore is a rigorous one requiring much information from the operator that undergoes detailed examination by the regulator and various federal departments.

Typically, the operator will also be required to submit a Safety Plan and an Environmental Protection Plan. In addition, depending on the complexity of the project, a Socio-Economic Statement and an Environmental Impact Statement may be required.

Finally, a Certificate of Fitness is required for every drilling, production, diving, and accommodation installation used for offshore exploration or development activities. The certifying authority will carry out a scope of work that has to be approved by the Chief Safety Officer prior to the issuance of a certificate. The scope of work statement describes the activities which will be carried out by the certifying authority in determining whether the installation is designed, constructed and transported, as specified by the Concept Safety Analysis (CSA) section of the Canada Oil and Gas Installations Regulations. The certifying authority will also ensure that the installation is fit for the purpose for which it is to be used.

All of the information supplied by the operator, with the exception of proprietary information in part 2 of the Development Plan, is made available for public review. In addition, the regulator may determine that a formal public review process is required, and appoint a public review panel to public hearings and submit a report of its findings to the regulator and responsible ministers.

The approval of the Development Plan does not give the operator authority to actually start production; additional authorizations are also required:

  • Production Operations Authorization: To obtain this approval, all operating methods and procedures must meet with the appropriate standards. Safety and environmental protection plans are also reviewed and approved at this stage.
  • Petroleum Transportation Approvals: Separate approvals are required for construction, testing and operation of offshore pipelines. Other transportation systems are subject to approvals from other regulatory agencies, such as the National Energy Board or Transport Canada.
  • Production Reporting/Authorizations: A concentrated effort is needed to ensure that the safety of operations, environmental protection, and resource conservation are maintained throughout the life of a project. Therefore, once a field is in production, the operator is required to provide supplementary reports and obtain approvals for additional work or activities related to the project. The approved certifying authority conducts ongoing inspection and verification work to ensure the validity of the certificate of fitness.

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