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Legal Guide

In contrast to the situation prevailing on Canada’s west coast, the areas offshore of the provinces of Newfoundland and Nova Scotia have seen significant exploration and production activities. In 1992, Nova Scotia’s first offshore project, Cohasset-Panuke, commenced oil production which continued until the reservoir was depleted in 1999. The facilities have been de-commissioned with environmental follow-up ongoing. Natural gas was found in deeper reservoirs offshore Nova Scotia and production from the Deep Panuke Offshore Gas Development Project began in November 2011. The Deep Panuke project started producing gas in 2013 and is estimated to be capable of producing 25.1 billion m3 of natural gas over a lifesspan of 13 years.[]. The nearby Sable Offshore Energy Project continues to provide natural gas to Nova Scotia and the northeastern United States through the Maritimes & Northeast Pipeline. In 2014, BP began a 3D Wide Azimuth seismic survey in exploration blocks off the coast of NOva Scotia []. In 2014, Shell is also conducting a seabed survey over prospective areas, which will include the taking of core samples [].
Newfoundland has also seen increased production activity in its offshore region. The Hibernia Project began operating in 1997 and currently reaches production volumes of 220,000 barrels per day of oil from its large gravity based concrete production facility.[] The Terra Nova Project, which began in 2002, and the White Rose Project, which began in 2005, each utilize large floating production storage and offloading facilities. The satellite expansions to the White Rose Project, including the North Amethyst, West White Rose and the South White Rose extension, have also contributed to growth in offshore oil production in the east coast. Future development includes the Hebron Field. Discovered in 1981, the oil field located north of the Terra Nova Field is estimated to have 660 - 1055 million barrels of recoverable resources and is scheduled to begin production in 2017.[ and]
Discovered in 1981, the oil field located north of the Terra Nova Field is estimated to have 660 - 1055 million barrels of recoverable resources and is scheduled to begin production in 2017.[ and]. Statoil announced a significant discovery in 2013 with its Bay du Nord exploration well, which has the potential to produce between 300 and 600 million barrels of oil11. Bay du Nord represents Statoil’s third major discovery in the Flemish Pass Basin, along with Mizzen, which has an estimated 100 to 200 million barrels of oil recoverable, and Harpoon, which is still under evaluation. []

The regulatory regime applicable to the offshore east coast differs from that applicable anywhere else in Canada. After a number of jurisdictional disputes in the 1970s and 1980s, a series of Supreme Court of Canada and lower court decisions established that jurisdiction and ownership of the offshore resources rested with the federal government. However, the governments of Newfoundland and Nova Scotia were unwilling to accept this result, and eventually agreed to a compromise solution with the federal government to share jurisdiction and powers. The federal government thereby entered into two separate accord agreements (one each with Newfoundland and Nova Scotia), which provide for the bulk of the regulatory authority for offshore petroleum matters to be delegated to joint offshore management boards. For each province, this was enshrined in mirror legislation, which may not be amended without the concurrence of both governments. The resulting entities, the Canada-Newfoundland and Labrador Offshore Petroleum Board and the Canada-Nova Scotia Offshore Petroleum Board, continue exercising these powers to the present. The regulatory regime for each Board is modeled upon the federal legislation applicable in northern Canada. While the Offshore Petroleum Boards were given broad regulatory powers, a number of federal statutes have continued application, including most notably the Canadian Environmental Assessment Act, 2012, the Fisheries Act, and the Canadian Environmental Protection Act.

In June 2014, the federal government enacted changes to various legislations governing the development of Canada’s east coast offshore oil and gas areas. Included in these changes was an increase in the amount that an operator can be liable for, on a no-fault basis, for causing environmental damage or pollution, to CA$1 billion. There is still no maximum amount of liability where an operator’s fault or  negligence can be proven. The legislation also clarifies the provincial and federal governments’ status as plaintiffs in the event of environmental damage or pollution. Operators will also have to demonstrate increased financial capacity prior to the award of licenses. Further, the changes stipulate that corporate directors and officers of operators can be found personally liable for offenses committed contrary to certain of the offshore acts. Sanctions can include fines of up to CA$1 million, imprisonment for a term of up to five years, or both.

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