FRONTIER AND OFFSHORE REGULATORY RENEWAL INITIATIVE (FORRI)

PROPOSED POLICY INTENTIONS FOR PHASE 1 OF THE FRAMEWORK REGULATIONS

Government of Canada
Government of Newfoundland and Labrador
Government of Nova Scotia

March 17, 2016

Table of Contents

Introduction

The Frontier and Offshore Regulatory Renewal Initiative (FORRI) aims to modernize the regulatory framework governing Canada's frontier and offshore oil and gas sector. FORRI is a partnership of the government departments responsible for frontier and offshore petroleum under legislation as well as the independent regulators that ensure compliance with the legislation and regulations.

This regulatory framework applies to companies and/or individuals that propose to, or have been authorized to, carry out activities related to the exploration and drilling for, and the production, conservation, processing and transportation of, oil and gas in the frontier and offshore areas of Canada. These activities include geophysical operations (such as seismic), drilling, and the construction, certification, and operation of production facilities.

Modernizing the regulations for frontier and offshore oil and gas will contribute to maintaining Canada’s high standards for safety, environmental protection and management of these resources.

Regulations affected by the Framework Regulations Initiative

The following regulations will be modernized and amalgamated into one Framework regulation:

  • Drilling and Production Regulations
  • Geophysical Regulations
  • Certificate of Fitness Regulations
  • Installations Regulations
  • Operations Regulations

For more information, please visit the FORRI website: www.nrcan.gc.ca/energy/crude-petroleum/17729

Consultation Process

The stakeholder consultation process for the Framework Regulations policy intent will occur in three phases:

  • Phase 1 - Board Powers, Applications, Management Systems and Operator Duties
  • Phase 2 - Reporting and Resource Management
  • Phase 3 - Safety and Environmental Protection

Further information on each phase will be provided during the Stakeholder Consultation session on March 31, 2016.

PROPOSED POLICY INTENTIONS FOR PHASE I OF THE FRAMEWORK REGULATIONS

PART 1 - BOARD POWERS

1.1 SPACING

The Board is authorized to make orders respecting the allocation of areas, including the determination of the size of spacing units and the well production rates for the purpose of drilling for or producing oil and gas and to exercise any powers and perform any duties that may be necessary for the management and control of oil or gas production.

1.2 NAMES AND DESIGNATIONS

The Board may give a name, classification or status to any well and may change that name, classification or status.

The Board may also

  1. designate a zone for the purposes of these Regulations;
  2. give a name to a zone, pool or field; and
  3. define the boundaries of a pool, zone or field for the purpose of identifying it.

PART 2 - MANAGEMENT SYSTEM

2.1 GENERAL

An operator shall develop, implement and maintain a management system that reduces and manages risks to safety, security and the environment, prevents waste and ensures conservation of the resource.

The management system shall correspond to the scope, nature, and complexity of the proposed work or activity, and to the hazards and risks associated with the work or activity, and shall:

  1. ensure compliance with the Act, these Regulations and any legal requirements of the Board;
  2. integrate operational activities and technical systems with the management of financial and human resources;
  3. cover all work or activity associated with the application for authorization;
  4. foster a strong safety culture (see definitions below);
  5. be explicit, comprehensive and proactive and be set out in a logical fashion to allow for ease of understanding and efficient implementation;
  6. provide for coordinating the execution and management of the work or activity among the operator, employers, suppliers and provider of services involved in executing the work or activity;
  7. establish and maintain measurable targets, goals and performance indicators for the improvement of safety and security, protection of the environment and prevention of waste and conservation of the resource;
  8. include a continual improvement process for preventing and taking corrective actions respecting any deficiencies, non-conformances or areas for improvement;
  9. provide for annual management reviews and periodic internal audits of the management system;
  10. ensure that all documented policies and procedures are made accessible to those that require access;
  11. provide a mechanism for ensuring that all documents are approved by the appropriate level of authority, reviewed on a periodic basis and updated as required to ensure they remain current and valid;
  12. include a data management system for monitoring and analyzing trends in hazards, incidents and near-misses;
  13. include a records management system to identify, generate, control and retain records necessary to support operational and regulatory requirements, and all other records associated with the management system and ensure that they are made accessible to those that require access; and
  14. ensure that all personnel are trained, competent and appropriately supervised to perform their duties in a manner that is safe.

Note on Safety Culture:
It is proposed that safety culture will be defined as the attitudes, values, norms, and beliefs, which a particular group of people shares with respect to risk and safety.

A strong safety culture will be defined as one in which:

  1. leaders demonstrate that safety is their overriding value and priority;
  2. every individual/person is aware of known hazards while remaining vigilant to new threats;
  3. every individual/person feels empowered and recognized for making safe decisions;
  4. every individual/person feels encouraged to report safety hazards, including instances where they have committed an error and introduced a threat themselves;
  5. every individual/person, including the most junior employee would not hesitate to take action in response to a safety concern without fear of disciplinary action or reprisal;
  6. every individual works safely regardless of whether or not someone is watching; and
  7. the organization is continually learning from its own and others’ experiences with the goal of advancing safety.

The management system documentation shall include

  1. the policies and standards on which the management system is based together with the operator’s commitment to compliance with the policies and standards;
  2. the roles, responsibilities and authorities of all individuals with responsibilities under the management system and the processes and procedures for making those individuals aware of their roles and responsibilities;
  3. the processes and procedures for the internal and external communication of information relating to safety and security and protection of the environment;
  4. a system for shift handover to effectively communicate any conditions, mechanical or procedural deficiencies or other problems that might have an impact on safety or the protection of the environment;
  5. processes and procedures for identifying hazards, evaluating risks associated with those hazards and for developing and implementing controls to manage those risks during routine and non-routine operations;
  6. an inventory of identified hazards and associated controls and the means of maintaining the inventory so that it is current and valid;
  7. processes and procedures to communicate to those who may be exposed to hazards the necessary controls to mitigate any risks associated with those hazards;
  8. an inventory of the codes and standards being applied to the project;
  9. competency requirements and training programs, including verification processes to achieve the objectives 2.1(n);
  10. processes and procedures for identifying, evaluating and managing safety critical elements and any tasks that are critical to safety and security, the protection of the environment, and prevention of waste and conservation of resources;
  11. processes and procedures for identifying, evaluating and managing any changes that could affect safety and security or the protection of the environment, as well as the prevention of waste and conservation of the resource;
  12. processes and procedures for inspecting, monitoring and maintaining the integrity of all installations, facilities, vessels, pipelines, and all other equipment or systems associated with the application for authorization and that also includes evaluating the effectiveness of these processes and for taking corrective actions if deficiencies are identified;
  13. processes and procedures for tracking and monitoring compliance with all legal requirements established by the Act (Part III), regulations or the Board; and
  14. processes and procedures for:
    1. the internal reporting, investigating and analysis of hazards, incidents and near-misses and for taking corrective action to prevent their recurrence; and
    2. establishing the conditions under which a person who makes a report will be protected from any reprisal actions.

2.2 ORGANIZATIONAL STRUCTURE AND RESOURCES

The operator shall ensure an organizational structure with sufficient qualified human resources is in place for establishing, implementing, maintaining and continually improving the management system.

2.3 ACCOUNTABLE PERSON

The name and position of the person accountable for the establishment, maintenance and continual improvement of the management system shall be provided to the Board at the time of the application for authorization and any time there is a change in the accountable person.

The operator shall ensure that the person accountable has authority over the human and financial resources required to establish, implement and maintain the management system.

The accountable person must sign a statement accepting their responsibilities for the establishment, maintenance and continual improvement of the management system.

2.4 ANNUAL REPORT

The operator shall ensure that, not later than March 31 of each year, a report on the adequacy and effectiveness of the management system relating to the preceding calendar year, signed by the accountable officer, is submitted to the Board and includes:

  1. an assessment of the performance of the management system in meeting the targets and goals referred in section 2.1; and
  2. the actions taken during that year to correct any deficiencies, areas of non-conformance or any opportunities for improvement.

2.5 COMPLIANCE

The operator shall ensure compliance with the requirements of the management system, including by employees, subcontractors, service providers, and other individuals that are subject to the management system.

PART 3 - APPLICATIONS FOR AUTHORIZATIONS AND APPROVALS

3.1 APPLICATION FOR AUTHORIZATION

The application for an authorization for any work or activity shall be accompanied by

  1. a description of the scope of the proposed work or activity;
  2. an execution plan and schedule for undertaking the work or activity;
  3. a safety plan that meets the requirements of item 3.4;
  4. an environmental protection plan that meets the requirements of item 3.5;
  5. a contingency plan, including emergency response procedures, that meet the requirements of item 3.6;
  6. a description of all installations, facilities, vessels, vehicles [onshore COGOA regs only], pipelines, and all other equipment or systems proposed to be used;
  7. for a production program, a field data acquisition program that allows sufficient pool pressure measurements, fluid samples, cores, cuttings, well logs, formation flow tests, analyses and surveys for a comprehensive assessment of the performance of development wells, pool depletion and injection schemes and the field;
  8. for a drilling program or a production program:
    1. information on any proposed flaring or venting of gas, including the rationale and the estimated rate, quantity and period of the flaring or venting;
    2. information on any proposed burning of oil, including the rationale and the estimated quantity of oil proposed to be burned;
  9. in the case of a geoscientific, geotechnical or environmental programs (these terms will be defined):
    1. maps illustrating the location of the program and proximities to man-made and vulnerable natural structures and any territorial or other boundaries;
    2. details of the proposed data acquisition plan; and
    3. a detailed description of the methods and equipment to be used; and
  10. a description of the decommissioning and abandonment plan of the site in relation to the activity to be authorized, including methods for restoration of the site after its decommissioning and abandonment.

3.2 MANAGEMENT SYSTEM IN PLACE

An applicant for an authorization for any work or activity must have a management system in place that meets the requirements of Part 2 prior to an authorization being issued.

3.3 FLOW ALLOCATION APPROVAL

If the application for authorization covers a production installation, the applicant shall also submit to the Board for its approval the flow system, the flow calculation procedure and the flow allocation procedure that will be used to conduct the required measurements.

The Board shall approve the flow system, the flow calculation procedure and the flow allocation procedure if the applicant demonstrates that the system and procedures facilitate accurate measurements and allocate, on a pool or zone basis, the production from and injection into individual wells.

3.4 SAFETY PLAN

The safety plan shall set out the procedures, practices, resources, sequence of key safety-related activities and monitoring measures necessary to manage hazards and to ensure the safety of the proposed work or activity and shall include:

  1. a summary of and references to the management system, including the Occupational Health and Safety management system [Accord Act versions of the regulations only], that demonstrate how it will be applied to the proposed, work or activity and how the duties set out in these Regulations with regard to safety (and those under Part III.1 and any regulations made thereunder - Accord Acts only) will be fulfilled;
  2. a document that includes
    1. a summary of all the studies undertaken to identify hazards and to evaluate safety risks related to the proposed work or activity, including any hazards by adjacent or simultaneous activities taking place near the work or activity;
    2. the processes used for identifying those hazards, assessing consequences and probabilities, and evaluating prevention and mitigation measures;
    3. a description of the hazards that were identified and the results of the risk evaluation;
    4. a summary of the measures to anticipate, avoid, prevent, reduce or manage safety risks; and
    5. measures for communicating the hazards and risk mitigation measures with all directly affected individuals;
  3. a description of all structures, facilities, equipment and systems critical to safety and a summary of the system in place for their inspection, testing and maintenance;
  4. a description of the organizational structure and the command structure for the proposed, work or, which
    1. clearly explains their relationships to each other; and
    2. provides the contact information and position of the person accountable for the safety plan and of the person responsible for implementing it;
  5. if the possibility of ice hazards exists, the measures to address the safety of the operations and the protection of installations, facilities, vessels, pipelines, equipment or systems, including systems for ice detection, surveillance, data collection, reporting, forecasting and, if appropriate, ice avoidance or deflection;
  6. a description of the arrangements for monitoring compliance with the plan and for measuring performance in relation to its objectives, including audits, inspections, data collection and analysis;
  7. For a diving operation:
    1. a detailed description of the diving activities outlined in the scope of the diving operation outlined in 3.1,
    2. a description of the practices and procedures to be followed in the diving operation, including
      1. The minimum continuous period at normal atmospheric pressure required for a diver after completing a saturation dive;
      2. The maximum duration of a saturation dive to which a diver will be subjected; and
      3. safe and controlled operation of lift bags;
    3. a description of any additional training that is required to meet the unique or particular needs of the diving operation and that will be provided to a person taking part in the diving operation;
    4. an explanation of how the Operator ensures that the personnel, procedures and diving installation to be employed in the diving operation meet the requirements of the Act and the regulations and good industry practice; and
    5. any specific operational requirements that require the use of pure helium or nitrogen.

3.5 ENVIRONMENTAL PLAN

The environmental protection plan shall set out the procedures, practices, resources and monitoring necessary to manage hazards to and protect the environment from the proposed, work or activity and shall include

  1. a summary of and references to the management system that demonstrate how it will be applied to the proposed, work or activity and how the duties set out in these Regulations with regard to environmental protection will be fulfilled;
  2. a document that includes
    1. a summary of the studies undertaken to identify hazards and to evaluate environmental risks related to the proposed operation, work or activity;
    2. the processes used for identifying hazards, assessing consequences and probabilities, and evaluating prevention and mitigation measures;
    3. a description of the hazards that were identified and the results of the risk evaluation;
    4. a summary of the measures to anticipate, avoid, prevent, reduce or manage environmental risks; and
    5. measures for communicating the hazards and risk mitigation measures with all directly affected individuals;;
  3. a list of all structures, facilities, equipment and systems critical to environmental protection and a summary of the system in place for their inspection, testing and maintenance;
  4. a description of the organizational structure and the command structure for the proposed work or activity, which
    1. clearly explains their relationships to each other, and
    2. provides the contact information and position of the person accountable for the environmental protection plan and the person responsible for implementing it;
  5. the procedures for the selection, evaluation and use of chemical substances including process chemicals and drilling fluid ingredients;
  6. a description of equipment and procedures for the treatment, handling and disposal of waste material;
  7. a description of all discharge streams and limits for any discharge into the environment including any waste material;
  8. a description of the system for monitoring compliance with the discharge limits identified in paragraph (g), including the sampling and analytical programs to determine if those discharges are within the specified limits;
  9. a description of the arrangements for monitoring compliance with the plan and for measuring performance in relation to its objectives such as audits, inspections, data collection and analysis and other related activities; and
  10. [for onshore COGOA regs only] a description of the procedure to be followed when an archaeological site or a burial ground is discovered during an operation .

3.6 CONTINGENCY PLAN

The contingency plans shall set out the procedures, including emergency response procedures, practices and resources and monitoring necessary to mitigate the effects of any foreseeable event that might compromise safety or environmental protection and at a minimum shall include, where applicable:

  1. a method of classifying incidents and a description of the response actions (measures) for specific incidents;
  2. internal and external notification, communication and reporting procedures;
  3. procedures for accessing essential safety and environmental information;
  4. a description of the organizational design and resources to manage the emergency, including trained personnel, equipment and facilities;
  5. a description of the duties, responsibilities and authorities of all key emergency response positions;
  6. communication protocols with relevant municipal, provincial, territorial or federal agencies;
  7. mutual aid arrangements with other operators;
  8. coordination and liaison measures with relevant municipal, provincial, territorial or federal emergency response organizations, and notification to any other work or activity in area that may be impacted by the incident;
  9. a description of the process for periodic review and updates of contingency plans, including emergency response procedures;
  10. personnel evacuation plans, including, if applicable, an evacuation plan for divers engaged in a dive (include references to requirements under OHS Accord Acts only);
  11. a description and locations of available lifesaving equipment, survival craft and launching facilities, as required, [As this pertains in part with OHS, include reference to requirements under III.1 - Accord Acts versions only], as well as the limitations on their use and mitigation when they become unavailable;
  12. a description and locations of any primary and secondary Emergency Operation Centers;
  13. a description and locations of available support craft;
  14. a description of the location and content of temporary safe refuge (survival shelters) and medical equipment, as required, [include a reference to OHS requirement under III.1 - Accord Acts only];
  15. the location of any equipment or other resources identified in the plan;
  16. a description and operation procedures for communication systems designed and protected to enable operation in an emergency;
  17. a description of all reasonably practicable steps to ensure the safety of the installation, pipeline or operation;
  18. frequency and scope of emergency response drills and exercises;
  19. description of any services or resources for each response action to be obtained on a contractual basis; and
  20. for diving operations, a hyperbaric evacuation plan and a dive bell recovery plan, as applicable.

3.7 WELL APPROVAL

An operator who intends to conduct a well operation shall obtain a well approval.

A well approval is not necessary to conduct a wire line, slick line, or coiled tubing or similar operation through a tree if

  1. the work does not alter the completion interval or is not expected to adversely affect recovery; and
  2. the equipment, operating procedures and qualified persons exist to conduct the operations as set out in and approved under the authorization as a routine operation.

If the well approval sought is to drill a well, the application shall contain

  1. a comprehensive description of the drilling program, a detailed geoscientific description of the prospect(s) and a description of any geohazard;
  2. all digital data required to allow for an independent geohazard assessment; and
  3. a well data acquisition program that allows for the collection of sufficient cutting and fluid samples, logs, conventional cores, sidewall cores, pressure measurements and formation flow tests, analyses and surveys to enable a comprehensive geophysical, geological and reservoir evaluation to be made.

The application shall contain

  1. if the well approval sought is to re-enter, work over, complete or recomplete a well or suspend or abandon a well or part of it, a detailed description of that well, the proposed operation, work or activity and the rationale for conducting it, including barrier envelope diagrams to demonstrate two barrier envelopes throughout the operation;
  2. if the well approval sought is to complete a well, in addition to the information required under paragraph (a), information that demonstrates that well completion requirements will be complied with [Note: well completion requirements will be presented as part of Phase III]; and
  3. if the well approval sought is to suspend a well or part of it, in addition to the information required under paragraph (a), an indication of the period within which the suspended well or part of it will be abandoned or completed.

The Board shall grant the well approval if the operator demonstrates that the work or activity will be conducted safely, without waste and without pollution, in compliance with these Regulations (and any other applicable regulations under the Act)

3.8 SUSPENSION OR REVOCATION OF A WELL APPROVAL

The Board shall suspend the [well approval] if the safety of the work or activity becomes uncertain because the physical environmental conditions encountered in the area of the activity for which the well approval was granted are more severe than the equipment’s operating limits as specified by the manufacturer or the operator fails to comply with the approvals issued by the Board respecting the flow system, formation flow testing, or commingled production.

In the event a well approval is suspended or revoked, the operator shall ensure the situation that caused the suspension or revocation is remedied as soon as the circumstances permit.

In the event a well approval is suspended or revoked, the operator shall ensure the well is suspended or abandoned in accordance with any regulatory requirements spelled out in Part 13 of the Framework Regulations (included in Phase II).

The Board shall revoke the well approval if the operator fails to remedy the situation that caused the suspension within 60 days after the date of that suspension unless the operator establishes that:

  1. due to circumstances beyond their control it is impossible to remedy the situation within 60 days; and
  2. the situation will be remedied in a timely fashion.

3.9 DEVELOPMENT PLANS

For the purpose of subsection 5.1(1) of the Canada Oil and Gas Operations Act, subsection 139(1) of the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act, subsection 143(1) of the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act, and the respective mirror provincial legislation, the well approval relating to a production project is prescribed.

For the purposes of paragraph 5.1(3)(b) of the Canada Oil and Gas Operations Act, paragraph 139(3)(b) of the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act and subsection 143(3)(b) of the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act of the Act, Part II of the development plan relating to a proposed development of a pool or field shall include a resource management plan.

The resource management plan shall include a detailed description, and an analysis, of the following:

  1. the geological setting and features of the field and of each pool or hydrocarbon-bearing reservoir;
  2. petrophysical data and analytical procedures for each pool;
  3. the reservoir engineering data and analysis for each pool;
  4. estimates of in place resources and recoverable reserves for each pool and for each individual fault block and reservoir subdivision;
  5. the proposed reservoir exploitation scheme;
  6. deferred developments and the reasons why they are not included in the proposed development;
  7. past drilling activities in the area related to the development as well as the proposed drilling program and typical completion designs for the development wells;
  8. the production and export systems;
  9. the expected overall operating efficiency and reliability of the proposed development; and
  10. past expenditures and predicted capital and operating cost data in sufficient detail to permit an economic analysis of the scope of work proposed in the development plan.

The resource management plan shall also contain an organizational chart that shows the reporting relationships of the personnel involved in implementing the plan.

PART 4 - OPERATOR DUTIES

4.1 AVAILABILITY OF DOCUMENTS

The operator shall keep a copy of the authorization and other related approvals and plans required under these Regulations, the Act and the regulations made under the Act in a conspicuous location at each installation, pipeline control centre (COGOA onshore only) or operations site and shall make them available for examination at the request of any person at that location.

The operator shall ensure that a copy of all operating information and procedures, maintenance and inspection records and other procedures and documentations necessary to execute the work or activity and to operate and maintain the installation or pipeline safely, and without pollution and without waste are

  1. readily and reliably accessible at each installation, pipeline control station centre or operating site and emergency response operations centre;
  2. revised and updated as required to ensure they always remain current; and
  3. usable under all expected circumstances at each such location.

4.2 EMERGENCY RESPONSE PROCEDURES

The operator shall ensure emergency response procedures are readily and reliably available at all emergency response operations centres or operating sites, and are usable under all foreseeable events at each such site.

4.3 SAFETY AND ENVIRONMENTAL PROTECTION

The operator shall take all reasonable precautions required to ensure safety and environmental protection including ensuring that:

  1. any operation necessary for the safety of persons at an installation or operations site or on a support craft has priority, at all times, over any other work or activity at an installation or operations site or on that support craft;
  2. safe work methods are followed during all work or activities;
  3. there is a shift handover system to effectively communicate any conditions, mechanical or procedural deficiencies or other problems that might have an impact on safety or environmental protection;
  4. differences in language or other obstacles to effective communication do not jeopardize safety or environmental protection;
  5. all persons at, or in transit to or from, an installation or an operations site receive instruction in and are familiar with safety and evacuation procedures and with their roles and responsibilities in the contingency plans, including emergency response procedures;
  6. any drilling or well operation is conducted in a manner that maintains full control of the well at all times;
  7. if there is loss of control of a well at an installation, all other wells at that installation are shut in until the well that is out of control is secured;
  8. plans are in place to deal with potential hazards;
  9. all equipment required for safety and environmental protection is available and in an operable condition;
  10. the list of structures, facilities, equipment and systems included in the safety plan and environmental protection plan is updated after the modification, replacement or addition of any major component;
  11. the administrative and logistical support that is provided for drilling, well or production operations includes accommodation, transportation, first aid and storage, repair facilities and communication systems that are fit for the purposes for which they will be used in the area of operations;
  12. a number of trained and competent individuals sufficient to complete the authorized work or activities and to carry out any work or activity safely and without pollution is available; and
  13. any operational procedure that is a hazard to safety or the environment is corrected and all affected persons are informed of the alteration.

4.4 STORING AND HANDLING OF CONSUMABLES

The operator shall ensure that explosives, fuel, potable water, spill treating agents and containment products, safety-related chemicals, drilling, completion and well stimulation fluids, cement and other consumables are

  1. readily available and stored in quantities that are sufficient for normal conditions and any foreseeable emergency condition; and
  2. stored and handled in a manner that minimizes their deterioration, ensures safety and prevents pollution.

4.5 HANDLING OF CHEMICAL SUBSTANCES AND WASTE MATERIAL

The operator shall ensure that all chemical substances, including, process fluids, diesel fuel, lubricants, waste material, drilling fluid and drill cuttings are stored or handled in a way that does not create a hazard to safety or the environment.

4.6 TAMPERING WITH EQUIPMENT

No person shall tamper with, activate without cause, or misuse any safety or environmental protection equipment.

4.7 CESSATION OF A WORK OR ACTIVITY

The operator shall ensure that any work or activity ceases without delay if that work or activity

  1. endangers or is likely to endanger the safety or integrity of any operation, the well, the installation or the vessel; or
  2. causes or is likely to cause pollution.

If the work or activity ceases, the operator shall ensure that it does not resume until it can do so safely and without pollution.

4.8 NOTIFICATION TO THE BOARD

When a geoscientific, geotechnical or environmental operation is commenced, terminated or cancelled by an operator, the operator shall forthwith notify the Chief Conservation Officer in writing of the date of commencement, termination or cancellation.

COMMENTS

Please provide written comments by April 30, 2016 to: Cheryl.mcneil@canada.ca