Archived - Update on the Modernization of the Act, Regulations and Systems (MARS)

Reporting Period October 1, 2016 to December 31, 2016

I. IOGC and MARS Project Update:

First Nations’ feedback on IOGC’s draft Phase I regulations – gathered from two symposiums (March 2016 in Edmonton and April 2016 in Saskatoon) – was categorized under three themes. Those categorized under "oil and gas technical comments" will be considered when the draft Phase I regulations are updated to become the final Phase I regulations (i.e., in conjunction with all other comments received during the 30-day pre-publication in Canada Gazette, Part I). For the remaining two themes, "First Nations’ governance" and "Consultation", the Government of Canada has re-established a negotiation table that is committed to explore, in partnership with oil and gas First Nations, potential options for greater First Nation’s jurisdiction and control over oil and gas management on reserve and is actively engaging First Nations to determine how this may be accommodated with a view to bringing recommendations forward for consideration by the Government.

IOGC’s draft Phase I regulations are now undergoing the appropriate government review and approvals processes. Once approved, they would be published in the Canada Gazette, Part I for a 30-day public review and comment period. This could occur as early as the next quarterly reporting period (January 2017 to March 2017). IOGC will also be publishing the draft Phase I regulations in the First Nations Gazette. All feedback received will be considered and accommodated, where appropriate. In the next step, the draft Phase I regulations will be updated to become the final Phase I regulations. The final Phase I regulations would once again undergo government review and approvals processes. Once approved, the final Phase I regulations would be published in the Canada Gazette, Part II and shortly thereafter, the Indian Oil and Gas Act, 2009 and the Phase I regulations would both become law.

IOGC’s staff continues to prepare for the administration and enforcement of the Indian Oil and Gas Act, 2009 and the Phase I regulations. There are two parallel tracks governing this important process: 1) MARS Implementation, that will ensure processes, policies, procedures, and tools are prepared; and, 2) Organizational Change Management (OCM), that will ensure IOGC's staff are well-equipped. To assist staff through this period of considerable change, a contract is being prepared for an OCM service provider over the long-term. This will enable IOGC to be better-positioned to respond to both internally-driven change (i.e., changes resulting from the new Act and regulations) and externally-driven change (i.e., those changes that affect whole-of-government such as new e-mail and document management systems). Due to competing priorities, the development of the long-term contract for OCM services has been delayed and will likely be postponed until Q1 FY2017-18.

Even as IOGC is shepherding the Phase I regulations through government approvals processes, its partnership with the Indian Resource Council and the Joint Technical Committee One has already begun work on the Phase II regulations. Regulatory drafting instructions were shared for:

• Surface;
• Exploration (Seismic);
• Moneys; and,
• Environment.

IOGC is looking forward to feedback once oil and gas First Nation advocates have completed their review.

II. Announcement – Petrinex IOGC Inclusion Project Begins

In the last issue, IOGC announced that the Resource Information Management Systems 2 (RIMS2) project received Treasury Board approvals for its project and expenditure implementation. The RIMS2 project includes:

1. the Petrinex IOGC Inclusion Project;
2. a new royalty management system for IOGC; and,
3. introduction of elements of a case management system at IOGC.

The partnership with Petrinex (formerly PETRINEX – PETRoleum INformation EXcellence) marks an important milestone for IOGC’s modernization project. Petrinex is a unique Crown-industry partnership that is recognized as the authoritative source in Western Canada for hydrocarbon volume and pricing data.

The new on-reserve oil and gas legislative and regulatory regime will be implemented via modernized business practices supported by new information systems. Once the RIMS2 project is completed, IOGC will be able to align business processes and systems with those already in use by the provinces and industry. By tapping into Petrinex, First Nations and oil and gas companies will benefit via:

• reduced royalty under-payments and over-payments due to up-front validation and use of a factor concept to ensure 100% allocations;
• fewer amendments and reconciliations for royalty data submitted by industry; and,
• more effective and reliable data.

In Q3, IOGC and Public Services and Procurement Canada completed the procurement process and issued a contract to Fujitsu Consulting Canada for the Petrinex IOGC Inclusion Project. The project kick-off meeting has been scheduled for early Q4 and project workshops are scheduled to begin shortly thereafter.

III. An Important Update from Environment and Climate Change Canada (ECCC) (re-print from previous issue of newsletter)

Environment and Climate Change Canada (ECCC) is developing regulations to reduce methane emissions from the oil and gas sector. These regulations are being designed to fulfill a joint commitment with the United States to reduce methane emissions by 40-45 percent, below 2012 levels, by 2025 from the oil and gas sector. In late June 2016, Mexico announced their intent to implement this methane commitment. These federal regulations will cover both new and existing sources, and will affect both upstream and downstream sources. Methane is a potent, short-lived, greenhouse gas. It is 25 times more potent than carbon dioxide, so limiting these emissions is a key part of addressing climate change. Controlling methane from oil and gas operations also improves air quality by reducing the release of volatile organic compounds (VOCs). These regulations will address fugitive emissions (those that escape unintentionally) and venting of emissions (intentional release of emissions, instead of flaring those emissions). Fugitive emissions will be addressed through measures such as requiring the implementation of a leak detection and repair system (known as LDAR), so that unintentional emission releases can be identified and fixed. Limits will be placed on the venting of emissions, to minimize their release.

ECCC is working on the draft regulations, which are expected to be pre-published in Canada Gazette Part I in early 2017. Final regulations are targeted for the end of 2017 and will be published on the CEPA Environmental Registry:
ECCC is actively engaging Indigenous organizations, companies, non-governmental organizations as well as provinces and territories on this subject and welcomes comments and questions on the development of these regulations. ECCC would be pleased to provide interested groups with additional background information and/or briefings, if desired. For further information on this important initiative and the proposed regulations, please contact ec.methane-methane.ec@canada.ca by Email or visit Environment and Climate Change Canada.

For further information on IOGC or the MARS Project, please contact IOGC at:

Indian Oil and Gas Canada
100 – 9911 Chiila Blvd.
Tsuu T'ina AB T2W 6H6
Phone: (403) 292-5625
Fax: (403) 292-5618
Email: aadnc.contactiogc.aandc@canada.ca