Order Prohibiting Certain Activities in Arctic Offshore Waters, 2022: SOR/2022-274
Canada Gazette, Part II, Volume 157, Number 1
Registration
SOR/2022-274 December 15, 2022
CANADA PETROLEUM RESOURCES ACT
P.C. 2022-1317 December 15, 2022
Whereas His Majesty in right of Canada as represented by the Minister of Northern Affairs (the Minister) has, relating to frontier lands in respect of which the Minister has administrative responsibility for natural resources, the right to dispose of or to exploit those natural resources;
Whereas Canada, as part of the United States-Canada Joint Arctic Leaders’ Statement announced December 20, 2016, has designated all Canadian Arctic waters as indefinitely off limits to future offshore Arctic oil and gas licensing (the moratorium), and that the designation is to be reviewed every five years through a climate and marine science-based life-cycle assessment of Canadian Arctic waters, Indigenous knowledge and the socio-economic effects of developing or further prohibiting the development of Arctic offshore resources;
Whereas Canada, the Inuvialuit Regional Corporation, Nunavut Tunngavik Incorporated and the governments of Yukon, the Northwest Territories and Nunavut have jointly developed the assessments to be considered under the review and are engaging with rights holders, affected Northerners and other affected stakeholders with respect to the assessments;
And whereas the Governor in Council considers that it is in the national interest of Canada to prohibit any person, including an interest owner of a licence set out in the schedule to this Order, from commencing or continuing any work or activity authorized under the Canada Oil and Gas Operations Act footnote a on the frontier lands that are situated in Canadian Arctic offshore waters and in respect of which the Minister has administrative responsibility for natural resources, until such time as the moratorium is rescinded;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Northern Affairs, makes the annexed Order Prohibiting Certain Activities in Arctic Offshore Waters, 2022 under subsection 12(1)footnote b of the Canada Petroleum Resources Act footnote c.
Order Prohibiting Certain Activities in Arctic Offshore Waters, 2022
Prohibition
Prohibition
1 It is prohibited for any person, including an interest owner of a licence set out in the schedule, to commence or continue any work or activity authorized under the Canada Oil and Gas Operations Act on the frontier lands that are situated in Canadian Arctic offshore waters and in respect of which the Minister of Northern Affairs has administrative responsibility for natural resources.
Repeal of this Order
2 This Order is repealed on December 31, 2023.
Repeal
3 The Order Prohibiting Certain Activities in Arctic Offshore Watersfootnote 1 is repealed.
Coming into force
Registration
4 This Order comes into force on the day on which it is registered.
SCHEDULE
| Item | Column 1 Licence Number |
|---|---|
| 1 | EL476 |
| 2 | EL477 |
| 3 | EL478 |
| 4 | EL479 |
| 5 | EL481 |
| 6 | EL483 |
| 7 | EL485 |
| 8 | EL488 |
| 9 | EL489 |
| 10 | EL491 |
| 11 | EL496 |
| 12 | SDL005 |
| 13 | SDL014-CAN |
| 14 | SDL025-CAN |
| 15 | SDL026-CAN |
| 16 | SDL028 |
| 17 | SDL037 |
| 18 | SDL038 |
| 19 | SDL039 |
| 20 | SDL040 |
| 21 | SDL041 |
| 22 | SDL043 |
| 23 | SDL044 |
| 24 | SDL045 |
| 25 | SDL046 |
| 26 | SDL047 |
| 27 | SDL048 |
| 28 | SDL049 |
| 29 | SDL050-CAN |
| 30 | SDL051 |
| 31 | SDL053 |
| 32 | SDL054 |
| 33 | SDL055 |
| 34 | SDL058 |
| 35 | SDL061 |
| 36 | SDL065 |
| 37 | SDL066 |
| 38 | SDL067 |
| 39 | SDL068 |
| 40 | SDL069 |
| 41 | SDL070 |
| 42 | SDL071 |
| 43 | SDL072 |
| 44 | SDL073 |
| 45 | SDL074 |
| 46 | SDL075 |
| 47 | SDL076 |
| 48 | SDL077 |
| 49 | SDL078 |
| 50 | SDL079-CAN |
| 51 | SDL080 |
| 52 | SDL081 |
| 53 | SDL083 |
| 54 | SDL084 |
| 55 | SDL085 |
| 56 | SDL086 |
| 57 | SDL087 |
| 58 | SDL088 |
| 59 | SDL089 |
| 60 | SDL091 |
| 61 | SDL092-CAN |
| 62 | SDL095 |
| 63 | SDL096 |
| 64 | SDL097 |
| 65 | SDL110 |
| 66 | SDL111 |
| 67 | SDL112 |
| 68 | SDL113 |
| 69 | SDL114 |
| 70 | SDL115 |
| 71 | SDL116 |
| 72 | SDL117 |
| 73 | SDL126 |
| 74 | SDL130 |
| 75 | SDL132-CAN |
| 76 | SDL133-CAN |
| 77 | SDL134-CAN |
| 78 | SDL135 |
| 79 | SDL136-CAN |
| 80 | SDL146-CAN |
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Issues
The Order Prohibiting Certain Activities in Arctic Offshore Waters was brought into force on July 30, 2019, and was originally set to expire on December 31, 2021, at which time a one-year renewal was granted until December 31, 2022. The renewal of this Order until December 31, 2023, is required to assure the ongoing prohibition of existing oil and gas activities in the Arctic offshore and to preserve the terms of the 11 active exploration licences in the Beaufort Sea. It will allow the Government of Canada to share the findings of the climate and marine science-based Arctic Review that was co-developed with the governments of Yukon, Northwest Territories and Nunavut, the Inuvialuit Regional Corporation and Nunavut Tunngavik Incorporated. It will also enable the Government of Canada to keep its commitment to protect the rights of oil and gas licence holders in Canada’s Arctic waters for the duration of the moratorium.
Background
As part of the December 20, 2016, Canada – U.S. Joint Arctic Leaders Statement, Canada announced an indefinite moratorium on the issuance of new oil and gas licences in Canada’s Arctic waters. The Arctic offshore moratorium acknowledges the important balance between the traditional value of the Arctic waters for Indigenous peoples and establishing a strong, sustainable Arctic economy and ecosystem supported by science-based management. While the moratorium suspends the issuance of new oil and gas licences in the Arctic offshore — marking a shift in oil and gas policy in the North — it does not affect the rights of licence holders to explore for or develop oil and gas resources in relation to the 80 existing oil and gas licences in the western and eastern Arctic offshore.
The moratorium was to be reviewed every five years through a climate and marine science-based review. The findings of the review would help to inform the Government of Canada’s decision on whether the moratorium should be lifted or maintained.
In 2017, Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) engaged with the Yukon Government, the Government of the Northwest Territories, the Government of Nunavut, the Inuvialuit Regional Corporation, Nunavut Tunngavik Incorporated (Northern partners), environmental groups and industry on their future interests in the Arctic offshore.
As a result of the engagements, in October 2018 the Government of Canada announced “Next Steps on Future Arctic Oil and Gas Development.” Canada agreed to co-develop a science-based review in Canada’s Arctic waters every five years to assess the moratorium, to negotiate an offshore oil and gas Accord in the Beaufort Sea, and to freeze the terms of the 11 active exploration licences in the Beaufort Sea to prevent them from expiring for the duration of the moratorium.
Freezing the terms of the 11 active exploration licences was necessary as exploration licences have fixed, nine-year terms during which the licence holder is required to complete the drilling of an exploration well. An exploration licence cannot be renewed. If an exploration well has not been started within the nine-year term, the licence is forfeit and the lands revert to the Crown. The nine-year term for the licence was meant to compel licence holders to actively explore for oil and gas in the Arctic, or remit the licence and the lands held under the licence to be released to another potential developer.
On July 30, 2019, the Governor in Council made the Order Prohibiting Certain Activities in Arctic Offshore Waters, under section 12(1) of the Canada Petroleum Resources Act, R.S.C. 1985. The Order was set to expire on December 31, 2021. The Order suspended all existing oil and gas activities in the Arctic offshore and prevented the 11 active exploration licences in the Beaufort Sea from expiring. In effect, the Order freezes the number of remaining days associated with the licence, so it cannot expire.
The expiry of the Order on December 31, 2021, was to align with the five-year science-based review. However, due to unanticipated delays, the review could not be completed within this timeframe and the Order was renewed in December 2021 for one year (to December 31, 2022). CIRNAC and Natural Resources Canada worked with the governments of the Yukon, the Northwest Territories and Nunavut, and the Inuvialuit Regional Corporation and Nunavut Tunngavik Incorporated to co-develop the five-year science-based review. This renewal allowed the Government of Canada to conclude the review with Northern partners in June 2022.
An additional one-year renewal of the Order (until December 31, 2023) is necessary to allow CIRNAC with its Northern partners (Government of Yukon, Government of the Northwest Territories, Government of Nunavut, the Inuvialuit Regional Corporation and the Nunavut Tunngavik Inc) to engage Northern communities on next steps for a science-based approach to oil and gas in Canada’s Arctic waters. The Order would continue to suspend active oil and gas licences until it expires on December 31, 2023. Following the engagement process, there may be a need for a second five-year science-based review of the moratorium.
Objective
- To continue to suspend all oil and gas activities in Canada’s Arctic waters for the duration of the review process;
- To ensure active exploration licences are protected for the duration of the moratorium;
- To respond to the future oil and gas interests in the Arctic offshore of territorial government and Northern Indigenous leaders and industry; and
- To address the economic development goals of the Arctic Northern Policy Framework.
Description
This initiative repeals the current Order (SOR 2021-272), which expires on December 31, 2022, and replaces it with a new Order that expires on December 31, 2023.
The Order applies to Canada’s Arctic waters for which the Minister of Northern Affairs is the responsible Minister. The Order continues to suspend all oil and gas activities in these waters and freezes the terms, i.e. the number of days remaining on the 11 active exploration licences in the Beaufort Sea, to prevent them from expiring.
Regulatory development
Consultation
Following the announcement of the moratorium, CIRNAC engaged territorial governments, Northern Inuit organizations, environmental organizations and industry on their future interests in the Arctic offshore, leading to the 2018 commitment by the Government of Canada to protect the 11 active exploration licences in the Beaufort Sea to prevent them from expiring for the duration of the moratorium. The licence holders include Imperial Oil, BP Canada, Chevron Canada, ConocoPhillips Canada, and Franklin Petroleum. Since 2018, CIRNAC has worked closely with Northern partners to co-develop the five-year science-based review and engage with them on the Order renewal process.
Territorial governments, Northern Inuit organizations, industry and licence holders conveyed to CIRNAC officials their interest in keeping the door open to future Arctic offshore oil and gas development, and that the 11 active exploration licences in the Beaufort Sea are crucial to restarting any future development.
The issuance and term of a federal Order in Council prohibiting Arctic offshore oil and gas activities was intended to synchronize with the term of the five-year science-based review and decision by the Government of Canada regarding the moratorium.
CIRNAC and Northern partners finalized the reports of the review process in May 2022: the “Science-based Assessment of the Risks and Benefits of Arctic Offshore Oil & Gas Exploration and Development,” and the “Committee on the Science-Based Assessment of Offshore Oil and Gas Exploration and Development in the Eastern and Central Arctic.” Northern partners are aware and support the renewal of the Order and the ongoing protection of the licences that the Order authorizes while the moratorium remains in place.
A further one-year renewal of the Order (until December 31, 2023) is necessary to allow CIRNAC with its Northern partners to engage Northern communities on next steps for a science-based approach to oil and gas in Canada’s Arctic waters while continuing to suspend all oil and gas activities and to freeze existing oil and gas licences throughout the engagement process.
The licence holders of the 11 active exploration licences in the Beaufort Sea continue to be consulted on their future interests in the Arctic offshore. They shared their support for these measures.
Modern treaty obligations and Indigenous engagement and consultation
As required by the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an assessment of modern treaty implications was conducted on the Order. The assessment did not identify any modern treaty implications or obligations related to the 2019 Order or its renewal.
In 2017, Canada engaged extensively with territorial governments, the Inuvialuit Regional Corporation and Nunavut Tunngavik Incorporated on their future interests in the Arctic offshore. Based on this engagement, in 2018, Canada announced next steps on future Arctic Oil and Gas development, addressing the request by territorial government and Inuit leaders to protect the 11 active exploration licences in the Beaufort Sea and to preserve the terms of these licences for potential future development, should the Government of Canada decide to lift the moratorium. The benefits inherent in the development of the licences are deferred to the future.
The Order suspends the terms of the active licences issued in the Arctic offshore that were issued by the Minister of Northern Affairs. The Order does not impact the rights of Modern Treaty rights holders, nor infringe their traditional rights, traditional wildlife harvesting, nor traditional migratory or transiting routes.
In further recognition of Indigenous Treaty rights in the North, section 3 of the Canada Petroleum Resources Act explicitly provides that nothing in the Act shall be construed as to abrogate or derogate from any existing Indigenous or treaty rights of Indigenous peoples of Canada under section 35 of the Constitution Act, 1982.
Instrument choice
Renewing the Order Prohibiting Certain Activities in Arctic Offshore Waters is the only way to ensure that the terms of the existing exploration licenses are suspended before their expiry dates. This approach also aligns with the intent of the moratorium and allows Canada to work with territorial and Northern Indigenous governments on future decisions in relation to Arctic offshore oil and gas development.
Regulatory analysis
Benefits and costs
The Order is not anticipated to result in any impacts in the form of deferred benefits (i.e. foregone profits from production in the license area) to the licence holders as well as Northern and Indigenous economies. There are no other anticipated quantitative costs of the Order to the licence holders.
The licence holders of the 11 active exploration licences have invested over $100 million to explore for oil and gas resources within the licence areas. The licence holders shared their intent to continue to explore the area prior to the announcement of the moratorium. Local Inuit communities and other Northern communities participated in these exploration activities and benefited from them.
Since the 1970s, 69 significant discoveries of oil and gas deposits in Canada’s Arctic offshore were declared. The significant discovery licence holders have an option to develop these discoveries at such time as the licence holders decide. The development of these discoveries would result in significant economic development opportunities for Inuit communities and businesses. Based on an assessment of current economic conditions, as well as feedback received from oil and gas stakeholders, development is not anticipated in the near- or mid-term. The terms of significant discovery licences are in perpetuity; they have no expiry date.
The Order results in two important benefits. First, the suspension of all oil and gas activities in Canada’s Arctic waters ensures the waters and marine environment is protected from the potential adverse impacts from oil and gas activities while the Government of Canada works with Northern partners to assure a science-based approach to oil and gas. Second, it freezes the terms of the 11 active exploration licences in the Beaufort Sea, which prevents their expiration and loss of rights to licence holders. The Northern partners and licence holders fully support the objective of the Order and ongoing science-based review of Canada’s Arctic waters as these would lead to informed climate and environmental outcomes.
Small business lens
There are no associated impacts on small businesses as a result of this Order.
One-for-one rule
The one-for-one rule does not apply as there is no incremental change in administrative burden on business.
Regulatory cooperation and alignment
The Order complies with the December 2016 Joint Arctic Leaders’ Statement to work with Northerners to preserve the Arctic offshore from the potential adverse impacts from oil and gas activities and to build Canada’s marine and climate-based knowledge base to assure that future oil and gas development in the region is evidence-based and meets Canada’s domestic and international climate goals.
The Order directly advances United Nations Declaration on the Rights of Indigenous Peoples Article 3: Indigenous Peoples have the right to self-determination. It supports the Arctic and Northern Policy Framework Goal 3: Strong sustainable, diversified and inclusive local and regional economies, and Goal 8: Reconciliation supports self-determination and nurtures mutually respectful relationships between Indigenous and non-Indigenous peoples.
Arctic oil producing nations bordering Canada’s maritime boundary have issued oil and gas moratoriums in their respective jurisdictions: the United States is a partner to the 2016 Joint Arctic Leaders’ Statement and banned oil and gas activities in the United States Beaufort and Chukchi seas, and Greenland banned the issuance of new oil and gas rights in its territorial waters. In October 2021, the European Union issued an Arctic Strategy, which called for an Arctic-wide ban on new oil and gas development to protect the vulnerable Arctic environment.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required as the Order only supports the important impacts on the environment caused by the Arctic offshore moratorium. The ongoing 5-year science-based review associated with the Arctic offshore moratorium will include a strategic environmental assessment in the western and eastern Arctic offshore areas.
Gender-based analysis plus
A preliminary gender-based analysis plus (GBA+) assessment was undertaken to assess the impacts of this Order on diverse groups in society, with a focus on Northern and Indigenous residents. Specific measures were considered to neutralize potential gender-specific impacts from the implementation of this Order.
The assessment draws on consultations with territorial and Northern Indigenous governments, and industry on their future interests in the Arctic offshore, and is informed through subsequent assessments related to the “Sustainable Arctic Economy” element of the Arctic and Northern Policy Framework.
The Order indirectly supports demographic and gender diversity through the mandatory affirmative action training programs and diversity hiring policies employed by the oil sector’s human resources guidelines, consistent with federal policy to assure that disadvantaged individuals and businesses are able to participate in oil and gas development opportunities, as provided by the Canada Oil and Gas Operations Act, as well as by federal and territorial affirmative action programming for Indigenous peoples and women.
The long-term benefits of the Order seeks to promote demographic and gender equality in those areas of the workforce that have traditionally been dominated by a male, non-Indigenous workforce. Sustainable oil and gas development in the North would offer ongoing opportunities to train and to employ a local Indigenous workforce, and close the sector-based gender gap of the workforce in the North and more broadly across Canada.
Federal and territorial census data will be the primary approach to measure the performance and track the implementation of this Order. These data will provide Canada to benchmark the progress for the Order and to develop additional workforce and gender diversity programs to address any gaps in expected outcomes.
CIRNAC will continue to work in partnership with the territorial governments and Northern Indigenous organizations to implement a science-based approach to oil and gas in Canada’s Arctic waters.
Affirmative action programs will be fully implemented across each of the sectors in Northern communities, and participation of territorial and Northern Indigenous organizations in the planning and implementation of the environmental and science-based assessments in Canada’s Arctic waters will help to assure diversity in the workforce.
Traditionally, the oil and gas sector has had a lower labour force participation rate for women compared to men; while women have higher rates of participation in jobs that may require a higher degree of post-secondary education. The long-term benefit of the Order leads to improve benefits for Northerners traditionally employed in the oil and gas sector and improve Northern Indigenous female participation in the training for and employment required of higher income job-related opportunities, supported through the implementation of federal and territorial as well as project-specific affirmative action programming.
The Order focuses on planning for and co-developing with territorial and Northern Indigenous governments climate and marine-based assessment process to develop new scientific information and traditional knowledge and to report the findings to Canada to inform next steps for the moratorium. The Order fulfills the Prime Minister’s announcement for a climate and marine-based assessment of the moratorium every five years to assess the risks and challenges of developing oil and gas resources in Canada’s remote North. The Order builds on the co-developed climate and marine-based research begun in 2019.
The membership of the committee established with territorial and Northern Indigenous governments to co-manage the assessment process is gender-neutral and reflects the unique demographics of the North. The Order supports new research and support for Indigenous participation to collect new information and research to build Canada’s knowledge base in the North. If the Order should lead to oil and gas development in the future, the Gender-Based Analysis Plus would be updated accordingly.
Implementation, compliance and enforcement, services standards
The Order came into force on the date on which it was registered.
Contact
Mireille Lajoie
Director
Petroleum and Mineral Resources Management Directorate
Northern Affairs
Crown-Indigenous Relations and Northern Affairs Canada
25 Eddy Street, 10th Floor
Gatineau, Quebec
K1A 0H4
Telephone: 613‑889‑9493
Email: mireille.lajoie@rcaanc-cirnac.gc.ca