Ontario appoints John Godfrey as special advisor for climate change, creates climate action group

P. Jason Kroft and Tamir Birk -

On March 9, 2015, former Liberal MP John Godfrey was appointed special advisor to the Ontario government on climate change and chair of the government’s new climate action group. Godfrey’s role will include providing strategic advice and recommendations to Glen Murray, Minister of the Environment and Climate Change, to help Ontario meet its greenhouse gas emission targets and transition to a prosperous, low-carbon economy. 

As discussed here, Ontario is currently in the midst of a 45-day public review and comment period on climate change, following the government’s release of its climate change discussion paper. The paper, which identifies the risks and challenges associated with climate change in Ontario, and the public comment period will help inform the government’s decision on its climate change strategy, as it weighs which carbon pricing mechanism to adopt in the province. Currently, Quebec utilizes a cap-and-trade system while British Columbia has a carbon tax.

Quebec has conventional oil, now what?

Erik Richer La Fleche -

Quebec runs a chronic trade deficit (2013: C$30 billion).  Lower oil prices coupled with higher exports to a resurgent US should narrow the deficit but it will remain high until certain structural issues are addressed. Oil is Quebec’s number one import. Quebec’s oil consumption is rising and it is expected to do so for some time to come.

Quebec’s two refineries meet nearly all of Quebec’s needs for refined products. They even export some products.  Quebec’s refineries represent approximately 20% of Canada’s refining capacity.

Junex Inc. and Petrolia Inc., two Quebec-based juniors listed on the Toronto Venture Exchange (TSV), recently issued separate press releases indicating that their test wells located on the Gaspé peninsula had daily oil flows of 316 and 340 barrels, respectively.

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Bill C-52 - Changes to the liability and compensation regime for shipping crude oil by rail

Brandon Mewhort and Cameron Anderson

On February 20, 2015, Parliament introduced Bill C-52, an Act to amend the Canada Transportation Act and the Railway Safety Act. Bill C-52 is meant to strengthen the liability and compensation regime for federally regulated railway companies. Particularly, the Bill will, among other things:

  • establish minimum insurance levels for freight railway operations;
     
  • establish that a railway company is liable, without proof of fault or negligence, subject to certain defences, for damages resulting from an accident involving crude oil, up to the level of the company’s minimum liability insurance coverage; and
     
  • establish a fund that is financed by levies on shippers to cover the damages resulting from a railway accident involving crude oil that exceed the minimum liability insurance coverage.
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Federal Government Proposes Accelerated Capital Cost Allowance for LNG Industry

Douglas Richardson  and Cameron Anderson-

On February 19, 2015, the Department of Finance released a proposal to allow accelerated CCA treatment for certain property acquired for use in facilities that liquefy natural gas to supply international markets, domestic markets or to store in periods of low demand and then regasify it in periods of high demand.

Equipment and structures used for natural gas liquefaction are generally included in Class 47 (8 per cent declining balance).  The accelerated CCA will increase the rate to 30 per cent (on a declining balance basis) where the property is used in Canada in connection with natural gas liquefaction. Although the additional allowance represents a significant increase, it is not as generous as the original allowance provided to oil sands producers.   

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Ontario releases climate change discussion paper

P. Jason Kroft and Tamir Birk -

On February 12, 2015, the Ministry of the Environment and Climate Change released Ontario’s Climate Change Discussion Paper (the Paper), which identifies the risks and challenges associated with climate change and the threat it poses to Ontario. The Paper also outlines Ontario’s long-term visions for reducing greenhouse gas emissions, most notably by establishing a carbon pricing policy in Ontario. “A well-designed carbon pricing system is the most cost-effective approach to reducing greenhouse gas emissions,” the Paper states. “Carbon pricing reduces greenhouse gas emissions as businesses and households incorporate the cost of emitting carbon into their decisions, encouraging companies and consumers to move away from fossil fuels and towards cleaner and more efficient ways of going about their business.” The Paper outlines four approaches to carbon pricing:

  1. A Cap-and-Trade System, which places a cap, divided into permits, on the amount of greenhouse gases that can be emitted in a given period. Emitters must acquire enough permits to match their emissions, and those that have reduced emissions can sell extra permits to those that require more. The auctioning and trading of permits establishes a carbon price, which fluctuates over time.
     
  2. A Baseline and Credit System,where a baseline intensity is determined for each emitter, which is then required to improve its efficiency by a set amount (i.e. reducing greenhouse gas emissions by 10% per barrel of oil produced). Emitters that overachieve can obtain credits that can be sold to other businesses that exceed their limits.
     
  3. A Carbon Tax, where a charge is applied to each unit of greenhouse gas emitted.
     
  4. Regulations and Performance Standards, requiring businesses to meet standards or targets or to use specific technologies to reduce greenhouse gas emissions.
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BC LNG: Environmental Assessment Process

Jonathan Drance and Cameron Anderson -

In a previous post, we discussed the federal and provincial environmental assessment (EA) process and the status of the various proposed BC LNG Export Terminals in obtaining the necessary EA approvals. The following provides an update as to the status of obtaining EA approvals for those BC LNG Export Terminals that have initiated the EA process.

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Key developments in Canadian private M&A law for the oil and gas industry - Q4 2014

The last quarter of 2014 saw a number of legal developments that may specifically affect private companies in the oil and gas industry. Below, we’ve compiled a list of key developments in Canadian law and regulatory practice since October 27, 2014 that may be of particular interest.

Oil & Gas and Regulatory

  • The Extractive Sector Transparency Measures Act, expected to come into force in June, will require Canadian oil and gas companies to disclose public payments made in connection with commercial developments. This payment history will be made available to the public – buyers should conduct diligence of these payments and later filings.
     
  • The Alberta Energy Regulator held that an aboriginal group objecting to an oil sands exploration program must prove that it would directly affect cultural and traditional land use activities – oil sands developers will now be able to obtain the AER’s approval for these programs unless an aboriginal group can prove exceptional circumstances exist.
     
  • The Alberta Court of Queen’s Bench decided that in the context of drilling wells, a finding of gross negligence requires conscious indifference (i.e., a marked departure from ordinary standards) or very great negligence. This decision marks the first time the Court has considered the degree of caution required of operators in the field.
     
  • The B.C. Environmental Assessment Office approved the Petronas-led Pacific Northwest LNG Export Terminal, TransCanada’s Prince Rupert Gas Transmission and Spectra Energy’s Westcoast Connector Gas Transmission pipelines. Federal approval is pending.
     
  • Alberta issued the Water Conservation Action Plan outlining 20 short-term and five long-term actions to protect groundwater from risks associated with oil and gas development. Current water conservation and allocation policies will be expanded in early 2015 to include water conservation measures for hydraulic fracturing.
     
  • Ontario and Quebec have adopted joint principles for TransCanada to meet in connection with its Energy East Pipeline. The NEB controls its approval but incidental provincial authorizations will be required before TransCanada can begin development.
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BC LNG pipeline projects: Status update on the environmental assessment process

Cameron Anderson and Jonathan Drance

In a previous post (see August 27, 2014: BC LNG: Environmental Assessment Process for Pipeline Projects), we discussed the Environmental Assessment (EA) process applicable to various pipelines designed to serve the proposed LNG Export Terminals in British Columbia. The following summary provides an update as to the EA status of these projects:

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Key developments in Canadian public markets law for the oil and gas industry - fourth quarter 2014

The last quarter of 2014 saw a number of regulatory developments in Canadian capital markets that may specifically affect companies in the oil and gas industry. Below, we’ve compiled a list of key legal developments since October 21, 2014 that may be of particular interest, along with corresponding links to our securities blog.

Capital Markets

  • The OSC approves rules (expected to be effective in February) allowing TSX and TSXV companies to raise capital from existing holders without a prospectus in certain circumstances.
     
  • Canadian securities regulators propose sweeping amendments to the rights offering rules – including eliminating the requirement for prior regulatory clearance of the circular and increasing permitted dilution from 25% to 100%.
     
  • IIROC releases a comprehensive overview of best practices and recommendations regarding the underwriter diligence processes.
     
  • The ASC exempts certain foreign issuers conducting private placements in Alberta from becoming reporting issuers under Alberta law.
     
  • TSX Private Markets begins operation.
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BC LNG Export Licenses: An Update

Jonathan Drance and Cameron Anderson -

In a previous post , we discussed the National Energy Board (NEB) process for obtaining LNG Export Licenses and the status of the various proposed BC LNG Export Terminals in obtaining their Licences. The following provides an update as to the status of these LNG Export Licences:

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