Part 5: Paying to pump

Ashley Fitzpatrick
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CNLOPB department of industrial benefits prods companies

Jeff Bugden, manager of the industrial benefits dep-artment at the Canada-Newfoundland and Labrador Offshore Petroleum Board, says his department is responsible for making sure oil companies meet their commitments to local benefits from offshore oil and gas projects. — Photo by Joe Gibbons/The Telegram

Fifth in a six-part series

The value of oil production off Newfoundland and Labrador was approximately $8.2 billion in 2010, with three active projects producing more than 100 million barrels of light crude.

The production sent millions of dollars to the provincial coffers through taxes and royalty cheques. However, there are other benefits from offshore oil and gas work. They are often lumped under the general tag of “spinoff.”

Those benefits are the focus of the Canada-Newfoundland and Labrador Offshore Petroleum Board’s (CNLOPB) industrial benefits department.

According to Jeff Bugden, manager of the department, they can include capital investments, funding for research and development, funding for education and training, direct employment and indirect employment — through growth in the local offshore supply and service community.

The department’s mandate is to maximize benefits to the province and the country under the provisions provided within the Atlantic Accord Acts.

This includes obtaining and reviewing a benefits plan from the operator, before they begin an offshore project.

The plan is required to outline how the operator intends to fulfil requirements under the legislation, including giving first consideration to the employment of Newfoundland and Labrador residents and assuring both provincial and Canadian companies are given “full and fair opportunity” to participate in the project.

It is also standard to include a statement on the company’s intentions around employment opportunities. Pledging fair employment opportunity for “designated groups” — women, people with disabilities, members of visible minorities and aboriginal people — has become a key aspect of pre-project planning on the part of the companies.

Promises made and kept

Having such a plan is not optional.

“All development projects must first have a Canada-Newfoundland and Labrador benefits plan approved before they can proceed with development,” Bugden said.

The plans require a great deal of detail, and about operations where many basic facts remain undetermined.

Though expectations are clearly laid out at the start of a project, Bugden said, the plans “cannot necessarily foresee all the potential opportunities.”

Therefore, the industrial benefits department conducts followup with operators as their projects progress.

“There’s a significant amount of reporting. Perhaps sometimes the companies, the operators, will tell you it’s extremely onerous in terms of the level of reporting, but it’s a key mechanism that we have to monitor compliance,” he said.

Even when companies are at the stage of pumping oil, they have to renew their authorization for production every three years. This provides an opportunity for the board to take enforcement action if promises are not kept.

“We have an option not to renew an authorization, or to renew it with additional conditions,” Bugden said.

Keeping the ducks in a row

Outside of benefits, the CNLOPB’s industrial benefits department co-ordinates the key regulatory responses to operators.

That’s handled by two staff members and completed with participation from every department at the board. Checklists are developed for the documentation to be reviewed by each department and a master checklist is made for what must ultimately be presented to the chairman and board members when considering final approvals.

Friday: owning the resource, logging the samples

Organizations: Canada-Newfoundland and Labrador Offshore Petroleum Board

Geographic location: Newfoundland and Labrador, Canada

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