Report of the Western Arctic Review Committee

2.1 Five-Year Review and committee overview

The purpose of the Five-Year Review has been to gather information, including traditional and local knowledge and information generated through science methods, and to identify factors relating to petroleum exploration and development in the Western Arctic offshore, that will form a basis for advice to decision-makers responsible for the management of oil and gas resources in the Western Arctic offshore.

With the help of the information gathered here, a central question to be answered by decision-makers will be whether the moratorium on oil and gas activities in Canada's Western Arctic offshore should be maintained for a defined or an indefinite period, be lifted with certain provisions in place or be removed.

The formation of the committee and its terms of reference ensured that the Government of Canada, the Government of the Northwest Territories, the Yukon Government and the Inuvialuit Regional Corporation were able to provide input into the structure of the Review. The terms of reference for the Review, including membership, responsibilities and guiding principles for the committee can be found in Appendix 1.

The terms of reference state that the committee would be comprised of 6 members, with 3 Members from the Government of Canada represented by Crown-Indigenous Relations and Northern Affairs Canada, Natural Resources Canada, the Department of Fisheries and Oceans, and 1 member each from the Inuvialuit Regional Corporation, the Government of the Northwest Territories and the Yukon Government. Delegates from each of the Members of the Committee participated in the Five-Year Review and the development of this science-based report for presentation to ministers responsible for petroleum management and regulation in the 2 territories, the Minister of Crown-Indigenous Relations & Northern Affairs Canada and the Chair and CEO of the Inuvialuit Regional Corporation.

The Canada Energy Regulator, which is responsible for regulating offshore drilling in Canada's Arctic and relevant federal departments were consulted on those matters germane to their respective mandates. The Canada Energy Regulator and departmental representatives provided helpful technical support and expert advice to the Committee and contributed in a significant way to this Report.

2.2 Information sources

3.1 Governance framework in the Western Arctic offshore and Inuvialuit Settlement Region^{Footnote 18}

Canada's Western Arctic offshore is subject to multiple jurisdictions established under the Inuvialuit Final Agreement^{Footnote 19}, as well as federal and territorial legislation.

The Inuvialuit Settlement Region comprises a large part of the offshore area of Canada's Western Arctic and is subject to the Inuvialuit Final Agreement. The Inuvialuit Final Agreement was signed and subsequently given effect through the Western Arctic (Inuvialuit) Claims Settlement Act in 1984. The Inuvialuit Final Agreement sets out the treaty rights of Inuvialuit within the meaning of section 35(3) of the Constitution Act, 1982, including those relating to land, resources, culture, governance, environment and the economy.

The governance structure established by the Inuvialuit Final Agreement is rooted in the 6 Inuvialuit communities:

• Aklavik
• Inuvik
• Paulatuk
• Sachs Harbour
• Tuktoyaktuk
• Ulukhaktok

Each of these communities has a Community Corporation composed of 6 elected directors and one elected chair. Each Community Corporation chair sits on the Inuvialuit Regional Corporation Board of Directors. In this way, the Board reflects the collection of Inuvialuit Community interests and priorities, which are then integrated into the strategic planning and ongoing work of the Inuvialuit Regional Corporation of generally representing the rights and interests of Inuvialuit.

Relevant to the conduct of development activities within the Inuvialuit Settlement Region, the Inuvialuit Final Agreement established a robust and effective system for the co-management of fish, wildlife and environmental impacts of activities proposed for the region. This co-management system is also rooted in the communities and operates in tandem with federal and territorial legislation. Each community has a Hunters and Trapper Committee, Elder Committee and Youth Committee. The Hunters and Trapper Committees in each community appoint members to the Inuvialuit Game Council, which serves to represent the Inuvialuit interests in wildlife. In turn, the Inuvialuit Game Council appoints Inuvialuit members to the different co-management bodies.

Representatives appointed by Inuvialuit and the federal and territorial governments carry out co-management functions through the co-management bodies. These Inuvialuit co-management organizations^{Footnote 20} include the Inuvialuit Environmental Impact Screening Committee, Inuvialuit Environmental Impact Review Board, Fisheries Joint Management Committee, Wildlife Management Advisory Council (Northwest Territories), and Wildlife Management Advisory Council-North Slope.

Recognizing the need to support these important management functions, a Joint Secretariat was established to provide administrative, technical, and logistical support to the Inuvialuit Game Council and Inuvialuit co-management organizations.^{Footnote 21}

3.2 Regulation and management of offshore oil and gas activities

Since the moratorium was put in place in 2016, the federal regulatory system that applies to the Western Arctic offshore has been extensively reviewed and modernized. Changes include:

• replacement of the National Energy Board Act by the Canadian Energy Regulator Act in 2019
• replacement of the Canadian Environmental Assessment Act, 2012 by the Impact Assessment Act in 2019
• release of the Government of Canada's Strategic Assessment of Climate Change in 2020 to enable consideration of climate change throughout federal impact assessments
• modernization of both the Canada Petroleum Resources Act in 2019 and the Canada Oil and Gas Operations Act in 2020
• assent of the Canadian Net Zero Emissions Accountability Act in 2021

The Canada Energy Regulator^{Footnote 22} regulates oil and gas exploration and development in Canada's Arctic offshore area (except for part of the Eastern Arctic) under the Canada Oil and Gas Operations Act. The purpose of the Canada Oil and Gas Operations Act, among other things, is to promote safety, protection of the environment, and the conservation of oil and gas resources.

Under the Canada Petroleum Resources Act, Crown title rights are issued to allow for the exploration, development and production of petroleum in areas under federal jurisdiction that are not covered by co-management Accord legislation (for example Newfoundland and Labrador, Nova Scotia). The federal Minister of Northern Affairs is responsible for the administration of the Canada Petroleum Resources Act where it applies in the North.

Within the Inuvialuit Settlement Region, offshore oil and gas activities are subject to regulatory review processes, including environmental screenings, established under the Inuvialuit Final Agreement. Specific offshore oil and gas activities are also designated under the Physical Activities Regulations (SOR/2019-285) for the purpose of the definition "designated project" in section 2 of the federal Impact Assessment Act. Public interest is at the centre of the federal impact assessments. The resulting assessment report and report on the outcomes of Crown Consultations inform the federal Minister or Governor in Council decision on whether a project's impacts are in the public interest. If the effects are determined to be in the public interest, the minister must issue a Decision Statement, which includes conditions that must be complied with by the proponent. Decision Statements also set out the rationale for the decision, providing transparency and accountability.

Two co-management bodies were established under the Inuvialuit Final Agreement to manage screening and reviews of proposed developments, the Inuvialuit Environmental Impact Screening Committee and the Inuvialuit Environmental Impact Review Board. The Environmental Impact Screening Committee undertakes a preliminary assessment (screening) of a proposed activity based on a project description prepared and submitted by a proponent. The Environmental Impact Screening Committee determines whether the proposed activities are likely to cause significant negative environmental impacts.

If the Environmental Impact Screening Committee determines that significant negative environmental impacts could occur, the application is referred to the Inuvialuit Environmental Impact Review Board for a detailed public environmental impact review. For these projects, the Inuvialuit Environmental Impact Review Board requires the project proponent to submit its Project Description along with an Environmental Impact Statement, which includes information on the current state of the biophysical and human environment prior to the development, assessment of project effects and cumulative effects on the biophysical and human environment, and proposed mitigation to reduce potential negative effects on the environment. A review panel, appointed by the Inuvialuit Environmental Impact Review Board, reviews the project.

3.3 Environmental setting^{Footnote 23}

The Western Arctic offshore is recognized as an environmentally significant zone due to the interaction between the ocean and onshore habitats. Marine and terrestrial mammals, fish, birds, and other wildlife depend on these diverse habitats for feeding and rearing. These, in turn, constitute an important portion of the traditional diet of Inuvialuit.

Recognizing the importance of this unique habitat for many species, 2 conservation and protection areas have been established. Figure 2 shows the location of formally recognized marine/terrestrial protected areas in the marine and adjacent terrestrial portions of the Beaufort Regional Strategic Environmental Assessment study area:

Marine Protected Areas

• Tarium Niryutait Marine Protected Area: beluga whales and other marine species
• Anguniaqvia niqiqyuam Marine Protected Area: beluga whales, Arctic char, ringed/bearded seals

Migratory Bird Sanctuaries

• Kendall Island Migratory Bird Sanctuary: shorebirds, songbirds, and waterfowl including, lesser snow geese, shorebirds, songbirds
• Banks Island Migratory Bird Sanctuary: waterfowl
• Anderson River Delta Migratory Bird Sanctuary: waterfowl, songbirds
• Cape Parry Migratory Bird Sanctuary: waterbirds, shorebirds

National and Territorial Parks

• Ivvavik National Park: porcupine caribou herd calving grounds and Northern Yukon and Mackenzie Delta
• Anderson River Delta Migratory Bird Sanctuary: waterfowl, songbirds
• Tuktut Nogait National Park: bluenose West caribou, terrestrial mammals
• Aulavik National Park: muskoxen, terrestrial mammals
• Herschel Island Territorial Park

Local knowledge experts from the Inuvialuit Settlement Region emphasize the coastline is important for staging, whaling, fishing, bird harvesting and other important activities. Western research also has emphasized how important coastal habitats are for fish, migratory birds, marine mammals and polar bears.

Nearshore and coastal water provide important habitat for many species of fish. The estuaries, bays and rivers host resident and migratory species, and contain a variety of rearing and breeding habitats. Estuaries are also important habitats for overwintering species.

Significant numbers of Canada's migratory birds seasonally occupy nearshore and coastal waters, including geese, ducks, swans, loons and shorebirds. These species rely on these waters for breeding, feeding, moulting and raising of young. Migratory birds make up an important portion of the traditional diet of the Inuvialuit.

Marine mammals migrate nearshore, feed in shallow coastal waters, and are hunted along coastal breaks in nearshore areas. Seals are widely distributed, but also occupy the nearshore environment, providing important opportunities for traditional harvesting during winter. Polar bears are particularly reliant on coastal habitats. As seasonal ice melts, many species move offshore to feed on plankton blooms, while others, like belugas, prefer coastal shallow waters or estuaries throughout the summer.

Barren-ground caribou are also attracted to the coastal environment. They seek coastal winds for heat relief and as an escape from summer mosquitos and flies. Humans also rely heavily on the coasts and adjacent coastal habitats for a wide range of uses. As part of the evidence gathered during the Beaufort Regional Strategic Environmental Assessment, traditional and local knowledge holders have provided detailed information on the distribution and ecology of important coastal and terrestrial habitat. The entire environmental setting of the Western Arctic offshore could never be captured in a few short paragraphs. Those interested in understanding more about this are encouraged to refer to the Beaufort Regional Strategic Environmental Assessment Report and the literature reference therein.

Text alternative for Figure 2. Protected Areas and Private Lands in the Inuvialuit Settlement Region.

Figure 2 depicts protected areas, both marine and terrestrial, 7(1)a and 7(1)b private lands, and bathymetric information, within the boundaries of the Inuvialuit Settlement Region. The terrestrial protected areas shown on the map are the following: Aulavik National Park, located on Banks Island, northeast of Sachs Harbour; Banks Island Migratory Bird Sanctuary, south of Aulavik National Park and north of Sachs Harbour; Ivvavik National Park, located in the southwestern part of the Inuvialuit Settlement Region, east of the Yukon-Alaska border; Tuktut Nogait National Park, located in the southeastern part of the Inuvialuit Settlement Region; Anderson River Delta Migratory Bird Sanctuary, located between Paulatuk and Tuktoyaktuk. There is also 2 national parks depicted on the map that are in the Yukon Territory, namely Vuntut National Park located at the junction of the Yukon, Northwest Territories and the Yukon-Alaska border, and Ni'iinlii Njik Territorial Park, located south of Vuntut National Park. The marine protected areas depicted on the map are the following: Tarium Niryutait Marine Protected Area, located off the coast of Tuktoyaktuk, between Herschel Island and Cape Bathurst, and Anguniaqvia niqiqyuam Marine Protected Area, located between Cape Bathurst and the Amundsen Golf, north of Paulatuk. The 7(1)a lands are located in 7 different locations in the Inuvialuit Settlement Region. The westernmost portion of the 7(1)a lands is located northwest of Aklavik. Heading east, another portion of the 7(1)a lands is located northwest of Inuvik and west of Reindeer Station. Continuing east, the next portion is located in and around Tuktoyaktuk. Heading east, the next portion encompasses the entirety of Cape Bathurst, north of the 70°N parallel. The following 7(1)a portion is located in and around Sachs Harbour. Heading southeast, the following 7(1)a lands are located in and around Paulatuk. Lastly, the easternmost portion of the 7(1)a lands is located in and around Ulukhaktok. The 7(1)b lands are adjacent to the 7(1)a lands and extend inland, around the following communities: Tuktoyaktuk, Paulatuk, Sachs Harbour and Ulukhaktok. Finally, the map illustrates bathymetric information, depicting bathymetry depth ranging from less than 200 metres in watercourses to more than 3000 metres in the Beaufort Sea.

3.4 Socio-economic overview^{Footnote 24}

Ernst & Young LLP describes the Inuvialuit Settlement Region as "home to a unique economic structure, including a mix of a modern wage economy, and an economy inherent to the region". The top 5 industries in the Inuvialuit Settlement Region are construction, real estate rental and leasing, transport and warehousing, health care and social services, as well as professional, scientific and technical services. Other key sectors include mining exploration and quarrying. Fishing, hunting, and trapping are an integral part of the lives of Inuvialuit and have been so for millennia. In 2014, approximately 54 percent of people hunted and fished in the Inuvialuit Settlement Region, and almost 8 percent of people in the region took part in trapping activities.

All Inuvialuit communities, Aklavik, Inuvik, Paulatuk, Sachs Harbour, Tuktoyaktuk and Ulukhaktok, are likely to experience the impacts of the offshore oil and gas development. Inuvik serves as the administrative centre for the Inuvialuit Settlement Region with 59 percent of the population identifying as Inuvialuit, 13 percent as Dene, 2 percent as Métis, and 24 percent as non-Indigenous.

3.5 Traditional and local knowledge and cultural activities overview^{Footnote 25}

A traditional and local knowledge inventory was compiled for the Beaufort Regional Strategic Environmental Assessment by facilitators with experience in the use of this knowledge in environmental assessments and regulatory reviews.^{Footnote 26} Information was reviewed and summarized from traditional and local knowledge sources, with a focus on the Beaufort Regional Strategic Environmental Assessment Study Area. The traditional and local knowledge Inventory contains information on specific activities and resources related to this knowledge, as well as baseline and development-specific information including traditional habitation sites, traditional trails and travel routes, culturally important areas and traditional activities or practices.

Hunting, trapping, and fishing have been identified as the traditional activities of significant importance to Inuvialuit communities in the Inuvialuit Settlement Region. Reliance on country foods in providing dietary staples is high, with hunted and fished foods generally preferred over store bought foods both for reasons of health and cultural vitality.

Inuvialuit from Inuvik have identified East Whitefish Station, Kendall Island, and Kittigazuit as important fishing areas. Other fishing areas of significant importance to the Inuvialuit are the Firth and Babbage rivers, Philips Bay, Tununuk Point, and the middle channel of the Mackenzie River. Argo Bay has both cultural and ecological importance for Inuvialuit from Paulatuk, as it is used for fishing, whaling, hunting and trapping.

3.6 Petroleum resource assessments of the Northern offshore Canadian sedimentary basins^{Footnote 27}

The current understanding of the regional geological setting of the Western Arctic offshore is derived from a variety of studies carried out by the Geological Survey of Canada (for example regional geological mapping and geophysical studies) and public domain industry data, including more than 200,000 kilometres of seismic surveys and 247 exploration wells.

The 2020 Geological Survey of Canada Resource Assessments of Northern Offshore Canadian Sedimentary Basins Report evaluated 49 resource assessments for Canada's Arctic offshore, undertaken for 1973 to 2020. Twenty-four of these assessments contain quantitative resource values and an additional 6 provide prospectivity maps. Assessments are grouped into 9 areas (Figure 3) and include:

• near-shore Beaufort-Mackenzie Delta
• deep water Canada Basin that occupies the floor of the Arctic Ocean
• Arctic Margin from Banks Island to northern Ellesmere Island
• Sverdrup Basin underlying the northern Canadian Arctic Islands
• Lincoln Sea and Makarov basins north of Ellesmere Island and Greenland
• Baffin Margin between Baffin-Devon-Ellesmere islands and Greenland
• Franklinian Margin underlying the southern Arctic Islands
• Foxe Basin southwest of Baffin Island

Mean estimates of recoverable barrels of oil equivalent for each assessment area are shown in Figure 4.

Text alternative for Figure 3. Location of resource assessment areas presented in the Resource Assessments of Northern Offshore Canadian Sedimentary Basins Report - Geological Survey of Canada, 2021.

Figure 3 depicts the location of areas presented in the Resource Assessments of Northern Offshore Canadian Sedimentary Basins Report by the Geological Survey of Canada. The areas depicted on the map are the following: the Beaufort-Mackenzie Delta, located near-shore of the Northwest Territories and extends to the toe of the slope in the Beaufort Sea; the Canada Basin, north of the Beaufort-Mackenzie Delta, in the Arctic Ocean; the Arctic Margin, east of the Canada Basin, extending from Banks Island to Ellesmere Island; the Sverdrup Basin, east of the Arctic Margin and underlying the northern Canadian Arctic Islands; the Alpha Ridge, located north of the Canada Basin; the Makarov Basin, located in the Arctic Ocean, north of the Alpha Ridge; the Lincoln Sea Basin, located north of Greenland and the Arctic Islands; the Lomonosov Ridge located in between of the Makarov Basin and the Lincoln Sea Basin, north of the eastern portion of the Alpha Ridge; the Baffin Margin, located in between Baffin Island, Ellesmere Island, Devon Island and Greenland; Banks and Eglinton Basins, located south of the Sverdrup Basin and east of the Arctic Margin; the Franklinian Margin, underlying the southern Arctic Islands and Foxe Basin, located between Baffin Island and Melville Peninsula.

Text alternative for Figure 4. Range of mean estimates of recoverable barrels of oil equivalent for the nine assessment areas used in the Resource Assessments of Northern Offshore Canadian Sedimentary Basins Report (Geological Survey of Canada, 2021). Canada 2020 hydrocarbon production from BP's 2021 Statistical Review of World Energy.

Figure 4 is a bar graph illustrating the range of mean estimates of recoverable barrels of oil equivalent for the 9 assessment areas used in the Resource Assessments of Northern Offshore Canadian Sedimentary Basins Report. The graph shows that hydrocarbon production in Canada in 2020 was around 3,000 to 4,000 of mean estimates of recoverable barrels of oil equivalent. The Beaufort-Mackenzie Delta as approximately a range of mean estimates of recoverable barrels of oil equivalent of 15,000 to 29,000 million barrels of oil equivalent. The Canada Basin as approximately a range of mean estimates of recoverable barrels of oil equivalent of 10,000 to 15,000 million barrels of oil equivalent. The Arctic Margin as approximately a range of mean estimates of recoverable barrels of oil equivalent of 4,000 to 8,000 million barrels of oil equivalent. The Sverdrup Basin as approximately a range of mean estimates of recoverable barrels of oil equivalent of 9,000 to 16,000 million barrels of oil equivalent. The Lincoln Sea Basin as approximately a range of mean estimates of recoverable barrels of oil equivalent to 43,000 to 44,000 million barrels of oil equivalent. The Makarov Basin and Lomonosov Ridge have approximately a range of mean estimates of recoverable barrels of oil equivalent of 0 to 3,000 million barrels of oil equivalent. The Baffin Margin as approximately a range of mean estimates of recoverable barrels of oil equivalent of 3,000 to 13,000 million barrels of oil equivalent. The Foxe Basin as approximately a range of mean estimates of recoverable barrels of oil equivalent of 0 to 1,000 million barrels of oil equivalent. The Franklinian Margin as approximately a range of mean estimates of recoverable barrels of oil equivalent of 3,000 to 4,000 million barrels of oil equivalent.

The range of mean estimates of recoverable barrels of oil equivalent for each assessment area are shown as green bars. The beige bar reports mean estimated recoverable barrels of oil equivalent for Mesozoic structural plays only in Sverdrup Basin. Black circles denote mean estimate of recoverable barrels of oil equivalent for an individual assessment.

Unlike other resource assessments of the Arctic, Drummond^{Footnote 30} provides separate estimates for the ultimate recoverable onshore and offshore crude oil and natural gas resources. In Canada's Arctic offshore, the crude oil estimates are 7,501 million barrels and the natural gas estimates 44.5 Trillion cubic feet.

4.1 Large-scale crude oil development within significant discovery licenses on the continental shelf (Beaufort Regional Strategic Environmental Assessment scenario 3)

This scenario describes the hypothetical development and production of oil reserves from existing significant discovery licences in moderate water depth (less than 40 metres) on the continental shelf, approximately 40 to 50 km offshore. A 3D seismic survey would be conducted over a 60,000-hectare area to delineate the field. An offshore gravity based structure would provide a base for drilling, oil production and storage, and loading of tankers.

The oil reservoirs are expected to be multiple Tertiary-aged, semi-consolidated sandstones with 700 plus million barrels (bbl) (approximately 111,291,000 plus m³) of recoverable high-quality oil over an area of ~4,500 to 5,500  area of ~4,500 to 5,500 ha at a depth of 2,800 to 3,300 m below the seabed.

Three production rates for this scenario were selected by considering the quantities of recoverable oil and the equipment available to recover and produce the oil and include:

• 60,000 bbl/d (~ 9,540 m³/d)
• 75,000 bbl/d (~ 11,920 m³/d
• 90,000 bbl/d (~ 14,300 m³/d)

For comparison purposes the Hebron field, the second largest field in the Jeanne d'Arc Basin offshore Newfoundland, produces an average of ~150,000 barrels/d (~23,850 m³/d) of crude oil. The offshore equipment would include:

• 1 gravity based structure with topsides equipment suitable for Arctic crude oil processing, storage and unloading
• 1 supply vessel
• 1 standby vessel (present at all times)
• 1 icebreaker (potential for 2, used when ice present)

Logistical support would be provided from a supply ship, with additional support from Tuktoyaktuk and Summers Harbour. Inuvik would serve as the administrative and business centre. Class 3 ice breaking oil tankers would take oil out of the Beaufort Sea via an Alaska route year-round with 1 inbound and 1 outbound transit each week.

The operational life of the reservoirs would be 30 years or more (post 2050). However, the scenario is described up to the year 2050. While there could be potential for additional nearby fields to be developed once the anchor field is operational, these additional developments are not considered in this scenario or the assessment. Decommissioning would involve plugging the wells and removal of the gravity based structure production platform.

4.2 Large-scale crude oil development within exploration licences on the continental slope (Beaufort Regional Strategic Environmental Assessment scenario 4)

This scenario describes the hypothetical development and production of oil reserves from exploration licences located in deeper water (100 m to 1200 m water depth) on the slope of the continental shelf approximately 100 km offshore. A 3D seismic program would be conducted over an area of up to 120,000 hectares to delineate the field. Two exploration wells would be completed by a drillship over a period of 4 years, followed by the completion of 5 delineation wells over the next 4 years. Up to 50 production and injection wells would be drilled 7 to 12 years after discovery. During production, a single floating production storage and offloading vessel would be used year-round for processing and loading of oil onto ice-strengthened double-acting tankers. The tankers would exit the Beaufort Sea westward via an Alaska route year-round with 1 inbound and 1 outbound transit every 5 to 6 days, and eastward through the Northwest Passage during the open water seasons with 1 inbound and 1 outbound transit each month.

Development under this scenario would include the production of oil with gas being reinjected for conservation and to maintain reservoir pressure. A small portion of the gas could be cleaned for use as fuel. For this hypothetical scenario, the field is assumed to be 40,000 to 60,000 ha, with 2 billion bbl (approximately 317,975,000 m³) of recoverable oil potential (currently undiscovered).

Three production rates for this scenario were selected by considering the quantities of recoverable oil in the oil field and the equipment available to recover and produce the oil and include:

• 120,000 bbl/d (approximately 19,100 m³/d)
• 180,000 bbl/d (approximately 28,600 m³/d)
• 240,000 bbl/d (approximately 38,200 m³/d)

Again, for comparison purposes the Hebron field, the second largest field in the Jeanne d'Arc Basin offshore Newfoundland, produces an average of about 150,000 barrels/d (~23,850 m³/d) of crude oil.

The offshore equipment would include:

• 1 floating production storage and offloading with topsides equipment suitable for Arctic crude oil processing, storage, and unloading
• subsea manifolds, well heads, and risers for connection to the floating production storage and offloading
• 1 warehouse vessel (potential for 2, if needed)
• 1 to 2 standby vessels, as needed for floating production storage and offloading and drillship
• 1 drillship (present for the early part of production)
• 1 icebreaker ship (potential for 2, used when ice is present)
• 1 supply vessel (with potential for 2, if needed)

The operational life of the reservoirs would be 30 years or more (post 2050). However, the scenario is described up to and beyond the year 2050. Decommissioning would occur after 2050 and involve sealing the wells and capping them below the seabed, and removal of the subsea manifolds, riser systems, and gathering flowlines.

5.1 Environmental effects: fish

The 2 proposed offshore crude oil development scenarios would likely result in effects on fish and fish habitat from vessel traffic, seismic surveys, installation and operation of offshore structures and related activities. Impact on fish can be behavioural, physical and potentially fatal. Impact on habitat can include harmful alteration, disruption and destruction. In addition, seismic activities may cause death, injury and behavioural impacts on fish. The mitigation of the impact on fish and other marine valued components (for example the Coastal Habitat, Sea Ice, Marine Lower Trophic Levels and Oceanography) would be regulated in an eco-systemic approach to protect fish and their habitat.

5.2 Mitigation and management measures: fish

Standard measures are included in the terms of work authorizations, and would be used to mitigate and help manage the potential impact on fish and fish habitat from the two proposed offshore crude oil development scenarios. In addition, impact assessments would be designed to identify site specific measures. The standard measures include:

• avoid sensitive fish habitat
• develop fish habitat compensation including replacement or reclamation of habitat resulting in zero net loss as per the Policy for Applying Measures to Offset Adverse Effects on Fish and Fish Habitat Under the Fisheries Act (2019)
• conduct site preparation activities, where possible, under relatively calm conditions to reduce sediment dispersal
• use measures to reduce sediment resuspension and contain sediment dispersion (for example modeling of potential sediment dispersion to inform mitigation, silt curtain, choice of dredging equipment)
• confirm and mark anchorages to reduce effects on marine fish habitat
• design and implement an Environmental Effects Monitoring program to establish baseline health information for fish and fish habitat for future effects to be measured against
• use ramp-up procedures when starting airguns during seismic surveys
• develop and implement environmental management plans for site preparation, installation and operation
• use of least-risk work windows for in-water construction (e.g., dredging) to avoid sensitive life history stages of fish

5.3 Environmental effects: marine mammals

For both offshore crude oil development scenarios, the effects causing the greatest impact on marine mammals and their habitat are expected to result from increased vessel traffic from tankers, supply vessels and ice-breakers as well as activities related to marine seismic surveying, drilling and production. Impact on marine mammals can be behavioural, physical and potentially fatal. Impact on habitat can include harmful alteration, disruption and destruction. In conjunction, impact on other valued components namely the Coastal Habitat, Sea Ice, Marine Lower Trophic Levels and Oceanography should be considered in an eco-systemic approach to protect marine mammals and their habitat.

5.4 Mitigation and management measures: marine mammals

The following measures would mitigate and manage the potential effects on marine mammals from the two proposed offshore crude oil development scenarios:

• create habitat protection setbacks and timing windows to protect sensitive foraging, migration, pupping, rearing or birthing habitat
• use existing and common travel routes by vessels and icebreakers where possible and practical. Canada has embarked on a project under the Oceans Protection Plan to develop a network of low-impact marine transportation corridors in the Arctic that encourages marine transportation traffic to use routes that pose less risk and minimize the impact on communities and the environment
• maintain vessels on a steady course and safe speed (for example less than 10 knots) whenever possible
• use wildlife monitoring programs on vessels, icebreakers, and platforms to identify marine mammals in the area, and maintain safe operating distance
• create additional long term monitoring programs to collect additional data on population status, habitat use, body condition, response of marine mammals to humans and development activities
• develop and implement co-management strategies that define management goals and objectives and align standard marine mammal management policies across multiple marine users in the region (Beaufort Sea Beluga Management Plan)
• monitor sound sources within safety zones for the duration of a seismic survey to protect marine mammals from injury due to underwater noise
• Use temporal restrictions or alternate monitoring technology (for example passive acoustic monitoring) when required if operating within specific habitat zones (for example bowhead feeding aggregations)

5.5 Environmental effects: polar bears^{Footnote 32} and barren-ground caribou

Both offshore crude oil development scenarios could produce effects to wildlife such as polar bears and barren-ground caribou. Habitat disturbance, change in behaviour and increased mortality risk due to conflicts resulting from the competition for space could occur from icebreaking and year-round project operations.

5.6 Mitigation and management measures: polar bears and barren-ground caribou

The following measures would mitigate and manage the potential effects on polar bears and barren-ground caribou from the 2 proposed offshore crude oil development scenarios:

• establish habitat protection setbacks and timing windows to protect sensitive foraging, rearing, or denning habitat from icebreakers, snowmobiles and low flying aircraft
• use timing windows and specific marine routes to avoid important habitat areas, as well as operational procedures like requiring consistent course with reduced vessel speeds, and the use of wildlife monitors
• use existing and common travel routes by vessels and icebreakers where possible and practical
• require polar bear safety programs to educate workers and reduce potential human-bear conflict
• use wildlife monitoring programs to identify bears in the area and maintain safe operating distances. This could include remote observations using drones (for example around wind turbines)
• use long-term monitoring programs to collect data on population status, habitat use, body condition and response of polar bear to human and development activities
• identify and monitor maternal denning habitat and development of requirements to avoid key sensitive areas during shipping and other activities (for example maintain safe operating distance)
• develop and implement co-management strategies that define management goals and objectives and align standard polar bear management policy across multiple marine users in the region

6.1 Economic effects: large scale crude oil development within significant discovery licenses on the continental shelf (Beaufort Regional Strategic Environmental Assessment scenario 3)

In the Beaufort Regional Strategic Environmental Assessment continental shelf significant discovery licenses development scenario, operations are anticipated to create annual economic contributions of:

• $146.8 million in gross spending for the Inuvialuit Settlement Region economy
• $95.0 million in GDP
• $50.3 million in labour income
• sustain 502 full time equivalent jobs over a 23-year period

The average annual royalty contributions are estimated at $547.8 million per year.

In the Northwest Territories, the development is expected to contribute an estimated annual total of:

• $160.8 million in gross spending in the economy
• $104.2 million in GDP
• $54.6 million in labour income
• sustain 540 full time equivalent jobs

Yukon is estimated to benefit from an annual total of:

• $3.1 million in gross spending
• $2.8 million in GDP
• $1 million in wages
• 10 full time equivalent jobs

At the national level, project operations on an annual basis are estimated to contribute:

• $228.7 million in gross spending
• $148.1 million in GDP
• $79.4 million in wages and salaries
• 894 full time equivalent jobs to the national economy

The Government of the Northwest Territories, the Yukon Government and Government of Canada are estimated to benefit $30.6 million in government revenue annually resulting from operational activities in this scenario. Through devolution, the Government of the Northwest Territories has committed to sharing offshore resource revenues with the Northwest Territories Indigenous Governments, including the Inuvialuit Regional Corporation.

6.2 Economic effects: large scale crude oil development within exploration licenses on the continental slope (Beaufort Regional Strategic Environmental Assessment scenario 4)

In the Beaufort Regional Strategic Environmental Assessment continental slope exploration licences development scenario, operations are assumed to be 31 years in length and are expected to generate annual contributions estimated at:

• $167.2 million in gross spending
• $108.2 million in GDP
• $57.3 million in labour income
• sustain 572 full time equivalent jobs

The average annual royalty contributions for this scenario are estimated at $1.2 billion per year.

Contributions to the Northwest Territories economy are estimated at:

• $183.1 million in gross spending
• $118.7 million in GDP
• $62.2 million in labour income
• 614 full time equivalent jobs

Yukon is estimated to benefit an annual total of:

• $3.5 million in gross spending
• $3.2 million in GDP
• $1.2 million in wages
• 12 full time equivalent jobs

At the national level, oil development operations may contribute:

• an estimated total annual gross spending in the economy of $260.5 million
• $168.6 million in GDP
• $90.5 million in labour income
• facilitate 1,018 full time equivalent jobs

The Inuvialuit Regional Corporation, the Government of the Northwest Territories, the Yukon Government and the Government of Canada are estimated to benefit $46.7 million in government revenue annually as a result of operational activities in this scenario. Through devolution the Government of the Northwest Territories has committed to sharing offshore resource revenues with Northwest Territories Indigenous Governments, including the Inuvialuit Regional Corporation.

7.1. Large oil release event effects^{Footnote 34}

In the event of a large oil release, traditional harvesting activities are expected to be impacted significantly. In addition, there would be significant negative impacts to cultural and traditional uses of coastal areas. The spread of oil is likely to result in closure of the impacted area for an indefinite period of time to allow for cleanup. Fish and marine animals could be contaminated, making them unsafe for consumption. This may also affect other types of wildlife that rely on fish and marine animals for food. As a result, this scenario has the potential to intensify the reduction in harvesting activities.

For fish larvae and to a lesser extent juvenile and adult fish, the mortality rate and the potential effects on coastal and nearshore over-wintering and migrating fish would be high, causing major alterations to marine and fish habitat.

The greatest effects causing severe alterations to marine mammals, including belugas, may be the exposure to vapours or the ingestion of contaminated prey. In addition, potentially severe effects could occur from a spill within the Mackenzie estuary if it is at a time when belugas use the area to congregate.

A near shore spill could affect seals, leading to health and mortality effects on polar bear. Oil could be ingested through contaminated prey or self-grooming. High mortality of the seal population could also result in reduced polar bear resiliency and slow population recovery over the longer term. Oil in broken ice/open water could also lead to long term, multi-year effects on polar bear habitat, behaviour, and/or mortality.

Clean-up could be difficult resulting in long exposure times. If oil clean-up and recovery efforts are incomplete, lingering oil could also affect barren-ground caribou. Barren-ground caribou using coastlines could be affected by oil contact and ingestion. However, barren-ground caribou are generally considered to be at lower potential for exposure to oil than most other wildlife species that use the area.

Fishing and polar bear hunting would also be adversely affected due to the thinning of ice, in turn rendering harvesting unsafe. Additionally, disruptions to harvesting caused by an oil release would reduce traditional food consumption which is an integral part of cultural preservation and social cohesion. Restricted ability to engage in harvesting activities reduces the opportunity for members in the community to bond through harvesting and food sharing networks, and can negatively impact inter-generational transmission of traditional and cultural knowledge.

Oil releases are also likely to affect other marine activities, such as cruise ships, if the spill occurs in proximity to shipping routes. Economic activity would be disrupted in this scenario resulting in losses in income, higher unemployment, and losses in sales and profits to businesses.

In the event of an oil release, costs to governments are anticipated to increase, however the extent of the impact is uncertain. Government services, such as the Canadian Coast Guard would be required to facilitate the clean-up process, and other efforts may be required from municipal governments to limit environmental impacts to the region.

7.2. Large oil release event effects mitigation and management^{Footnote 35}

8.1 GHG assessment scenarios

The GHG assessment scenarios were designed to mirror the Beaufort Regional Strategic Environmental Assessment development scenarios 3 and 4 located on the Beaufort Sea continental shelf and continental slope, respectively and described in detail in Chapter 4. For this study, GHG emissions were calculated for a total of 24 different combinations of location (continental shelf vs. slope) and quantity of produced oil (range 60,000 to 240,000 bbl/d), and electricity generation technology and transportation method of oil (see details in next sections). The assessment timeline was for the period 2022 to 2050. Specific attention is given to the amounts of GHG emissions that occur in years 2030 and 2050, as these represent GHG reduction target years announced by the Government of Canada.

The study evaluated total GHG emissions for two geographical areas:

1. globally - referred to as the 'global boundary'
2. within Canada - referred to as the 'Canadian boundary'

The global boundary considers emissions that occur from the assessment scenarios anywhere on the globe, whereas the Canadian boundary considers only GHG emissions that occur within Canada's borders. Methods used to estimate the GHG emissions include the OPGEE^{Footnote 45} (Oil Production Greenhouse gas Emissions Estimator ) and PRELIM^{Footnote 46} (Petroleum Refinery Life Cycle Inventory Model) models. Refinery GHG emission intensities were estimated using methods described in Jing et al., (2020).

The life cycle assessment was conducted in accordance with ISO Standards 14040 and 14044. The life cycle assessment considered two life cycle system boundaries:

1. from well to refinery gate
2. from well to end-use combustion of refined petroleum products (for example gasoline, diesel, kerosene, jet fuel and heavy fuel oil).

The GHGs considered in the assessment are carbon dioxide (CO₂), methane (CH₄), and nitrous oxide (N₂O). After applying their respective global warming potentials (GWPs) of 1 carbon dioxide, 25 (methane), and 298 (nitrous oxide), the total GHGs are expressed as carbon dioxide equivalent (CO₂e).

For this study, development activities that generate GHGs in each scenario are grouped into four main categories:

• upstream: this includes construction of the gravity based structure and floating production storage and offloading (for this study all upstream activities are assumed to occur outside of Canada)
• exploration and construction - exploration, construction support (such as tugboats), drilling and development
• operations: production/extraction of crude oil, surface processing of crude oil and associated natural gas, maintenance, transportation of crude oil, operations support (such as supply vessels), and indirect emissions from production of fuel
• downstream: refining of petroleum products, fuel distribution, and end-use combustion

8.2 Electricity generating technologies

As part of identifying mitigation measures, best available technologies, and best environmental practices, the GHG assessment included 2 electricity generation technologies for the gravity based structure and floating production storage and offloading:

• gas turbines: this technology is technically feasible, commercially available, and has been used in both offshore and onshore industrial settings for many years. The gas used to fuel the turbines will be sourced from the associated gas produced with the oil
• renewable electrification: for the gravity based structure, it is assumed that either an offshore or onshore renewable energy source, such as wind power with battery storage, will be used to provide power to the gravity based structure operations.^{Footnote 47} For the floating production storage and offloading, it is assumed that a small modular nuclear reactor is used to provide both vessel and operations power

The use of gas turbines results in GHG emissions directly from the gravity based structure and floating production storage and offloading, whereas the use of renewable and nuclear power does not. Stantec's assessment of GHG emissions from the 2 scenarios did not include the emissions associated with the development of the renewable or nuclear power.

8.3 Crude oil transportation

Two transportation options were identified:

• tanker transport: loaded tankers travel from the gravity based structure or floating production storage and offloading to a second tanker located offshore of Alaska. The crude oil is transferred to the second tanker (referred to as transshipment). The second tanker carries the crude oil to a refinery in South Korea
• tanker and pipeline transport: loaded tankers travel from the gravity based structure or floating production storage and offloading to Prudhoe Bay, Alaska for connection to the Trans Alaska Pipeline System and eventual delivery at Valdez Marine Terminal in Alaska. From Valdez, a tanker carries the crude oil to a refinery in South Korea

The tankers are anticipated to be powered with marine diesel. The pipeline operations combust natural gas to power the pumps. Emissions from the Valdez Marine Terminal due to the storage and loading of the tankers were not included in the quantified emissions as these values would be minor.

8.4 Refining, distribution, and end-use combustion

Crude oil would be transported from the Beaufort Sea for refining, distribution and combustion in southern Asia, and it is assumed that no crude oil would be refined in Canada. Produced crude oil is assumed to be refined to gasoline, kerosene, diesel, jet fuel and heavy fuel oil. This product slate is based on the refined petroleum products produced at the GS Caltex Yeosu Oil Refinery in South Korea.

Fifty percent of end-use combustion of refined petroleum products is assumed to occur in South Korea (100 km distribution radius) and 50 percent in other parts of Asia, within approximately 500 km from the refinery. End-users are assumed to fully combust the fuels.

8.5 GHG emission summary

8.6 GHG mitigation and management

Examples of GHG mitigation and management practices for offshore oil activities that could be used in conjunction with GHG reduction technologies include:

• minimizing flaring of associated gas in favour of recovering the gas for use or for re-injection to maintain well pressure
• monitoring fuel use of equipment and performing maintenance to maintain fuel efficiency
• collaborating between offshore oil and gas operators (for example sharing of helicopters or transportation)

Electricity is being supplied to 2 fields in the Atlantic Ocean's North Sea where mostly renewable power is transmitted using subsea cables to offshore production facilities. This would not be possible at present in the case of Beaufort Sea oil and gas development due to a lack of onshore infrastructure and alternative fuel sources.

The global nature of GHG emissions creates challenges for climate policy, which covers only a small subset of the sources contributing to the problem. This creates the potential for "carbon leakage", a situation that can result in a global increase in GHG emissions due to the transfer of production from countries with strong climate policies and emission standards to other countries that have laxer policies and emission constraints.

Consideration of the effects of "leakage" must factor into any decisions made on the future of the moratorium.

10.1 Observations

Arctic offshore development has occurred since the 1970s in Canada and other Arctic nations. In total, 142 exploration wells have been drilled in Canada's Arctic offshore, with 92 of these drilled in the Beaufort Sea.^{Footnote 49} In addition, 48 significant discovery licenses have been granted based on their potential for sustained production. The last well drilled in the Beaufort Sea was in 2005. There are currently 11 exploration licenses in the Beaufort Sea, all of which are inactive due to the moratorium.

A petroleum resource assessment of the Western Arctic offshore illustrates that there is significant potential for petroleum, with an estimated 7.5 billion barrels of recoverable oil and 44.5 trillion cubic feet of recoverable natural gas.

Inuvialuit and the governments of the Yukon and the Northwest Territories have historically relied on oil and gas development as a source of significant regional economic opportunity. For example, Inuvialuit developed a viable oil field services industry to successfully take advantage of these opportunities.

On May 30, 2016, the Ministerial Representative, Mr. Rowland Harrison, Q.C., finalized the Review of the Canada Petroleum Resources Act. The purpose of the review was:

"to conduct a comprehensive review of the operations of the Canada Petroleum Resources Act, to engage with aboriginal groups, stakeholders and other interested parties as appropriate, and to provide recommendations as to whether potential amendments should be made to the Act as it applies to the Arctic offshore."

The review concluded that the scheme of the Canada Petroleum Resources Act is robust and should be maintained, though the role of the act should be clarified. Mr. Harrison proposed 10 recommendations to the act to better reflect today's understanding of the technical and regulatory challenges in Canada's Arctic waters.

All offshore oil and gas activities in Canada's offshore are subject to a rigorous environmental and regulatory regime. The Inuvialuit Final Agreement requires the evaluation of any project through a robust and holistic screening and review process that has been active since 1984.

Further, the Government of Canada has a modern, robust and recently-modernized environmental and regulatory regime, which includes the Impact Assessment Act (modernized 2019), the Strategic Assessment of Climate Change (modernized in 2020), the Canadian Energy Regulator Act (modernized 2019), the Energy Safety and Security Act ( modernized in 2016), the Canada Oil and Gas Operations Act (modernized in 2020), the Canada Petroleum Resources Act (modernized in 2019), as well as the proposed Canadian Net-Zero Emissions Accountability Act. In addition, projects in the North are often subject to overlapping federal, territorial, and Inuvialuit Settlement Region approvals.

The Canada Energy Regulator regulates oil and gas exploration and production activities, including the drilling of offshore wells in Canada's Arctic, under the Canada Oil and Gas Operations Act and its regulations. The purpose of the Canada Oil and Gas Operations Act, among other things, is to promote safety, protection of the environment, and the conservation of oil and gas resources. The Canada Energy Regulator requires a declaration of fitness confirming that equipment and installations are fit for their intended purpose throughout the proposed activity. The Canada Energy Regulator also requires the integration of operations and technical systems with financial and human resource management for the purposes of achieving safety, security, environmental protection and the conservation of resources.

Within the Inuvialuit Settlement Region, offshore oil and gas activities are subject to the environmental screening and review processes established under the Inuvialuit Final Agreement. Upon a determination from the Environmental Impact Screening Committee, the application to conduct activities would be referred to the Inuvialuit Environmental Impact Review Board for a detailed public environmental impact review. For these projects, the Inuvialuit Environmental Impact Review Board requires the project proponent to submit its Project Description along with an Environmental Impact Statement, which includes information on the current state of the biophysical and human environment prior to the development, assessment of project effects and cumulative effects on the biophysical and human environment, and proposed mitigation to reduce potential negative effects on the environment. The review process includes extensive consultation that ensures local perspectives and issues are identified. The Inuvialuit Final Agreement addresses the prevention of loss or damage to wildlife and habitat and subsequent compensation if there is loss in terms of harvesting opportunities.

An assessment of the impacts of offshore oil and gas activities may also be required under the federal Impact Assessment Act. The objectives of the Impact Assessment Act are to foster sustainability, ensure respect of Government's commitments with respect to the rights of Indigenous peoples, and includes the consideration of both positive and adverse effects related to environmental, social, health and economic factors. Early, inclusive and meaningful public engagement is conducted and nation-to-nation, Inuit-Crown, and government-to-government partnerships with Indigenous peoples ensure decisions are based on science, Indigenous knowledge and other sources of evidence to assess cumulative effects within a region.

Companies conducting offshore oil and gas activities in Canada's Western Arctic must also comply with numerous other acts and regulations applicable to the Canadian Arctic offshore. Such acts include, but are not limited to, the Arctic Waters Pollution Prevention Act, Canada Shipping Act, Fisheries Act, Western Arctic (Inuvialuit) Claims Settlement Act and the Inuvialuit Final Agreement, and any act of general application. In addition, the Government of Canada continues to work with its northern partners to develop policy guidance and guidelines such as the Ocean Noise Strategy for Canada and the Arctic Corridors Research Project, which will serve to further mitigate potential negative impacts of exploration and development in Arctic waters.

Regulators and operators have directed a tremendous effort toward spill prevention and response, and no significant oil spills have occurred in Canadian Arctic waters. Using current best prevention practices and technologies summarized in this report, it has been determined that the future likelihood of a large-scale oil release event is very low.

The Same Season Relief Well Policy has been consistently upheld by the government authorities as an important regulatory component for the protection of the Arctic marine environment. Over time, the efficacy of the Government of Canada's longstanding Same Season Relief Well Policy has come under scrutiny, due to the emergence of several factors, including:

• the retreat of ice coverage
• developments in spill isolation and prevention technology
• competing interests of various stakeholders
• public perception of geopolitics

This evolving thinking was explored during the 2010-2011 Arctic Offshore Drilling Review conducted by the National Energy Board.^{Footnote 50} While understandably Same Season Relief Well Equivalency is an open concept within the goal-setting framework, it has reached a point where stakeholders are unable to agree on what proven technologies would adequately support further Arctic oil and gas exploration. Further consideration should be given to clarifying Same Season Relief Well Policy.

Although well control and containment technology has improved significantly in the last 10 years, regulators should encourage, and industry should continue to develop and adapt, well control and containment devices suitable for use in the Arctic, including subsurface isolation device to make oil and gas development safer. Further, subject matter experts agree that regulators and any applicant wishing to drill in Canada's Arctic waters should consider performing a probabilistic risk assessment to understand how these and other possible solutions could be deployed to enhance the well system reliability against a loss of well control.

From an economic and socio-cultural perspective, the socio-economic assessment illustrated how the 2 offshore development scenarios could contribute significant improvements to the local and regional economy due to increased employment for residents of the Inuvialuit Settlement Region and other Northerners, the purchase of goods and services from Inuvialuit and other businesses, and the benefits that would accrue from oil and gas royalties and corporate taxes. Other benefits may include increased government and industry support of cultural programs and traditional activities, and possible development of new infrastructure. On the other hand, there are challenges, particularly at the local level, associated with increased industrial and related economic activity. Some of the challenges that require the particular attention of regulators, government and the extractive and development industry are outlined in Section 13 of the Calls for Justice from the National Inquiry into Missing and Murdered Indigenous Women and Girls.

While the socio-economic outcomes may see an improvement overall with exploration and development in the Western Arctic, the 2 offshore oil development scenarios analyzed as part of the GHG Assessment demonstrate that offshore oil and gas projects generate GHG emissions which contribute to climate change, which could result in a range of beneficial and adverse impacts for local residents. Science and traditional and local knowledge have documented substantial changes in climate and associated changes in the physical and biological environment over the past several decades concluding that land-based and marine ecosystem changes will be driven by climate change. The subject matter experts providing input to the committee highlighted a number of wildlife and ocean health considerations that would need to be addressed through a project-specific review under the existing regulatory frameworks. Industry proponents seeking to explore and develop in the Western Arctic Ocean would be required to meet the significant challenge of ensuring management plans are robust and adaptive in order to meet the challenges posed by climate change.

Looking specifically at the GHG Assessment prepared for the committee, it was concluded that oil produced from the Western Arctic offshore would result in much lower GHG emissions than many other fossil fuels sources and that its development would represent a relatively small contribution to global GHG emissions. If Arctic offshore development is used to replace more GHG-intense sources of energy, it could serve to reduce Canada's GHG emissions and help Canada to achieve targets in the Paris Agreement. The GHG Assessment estimates that if light sweet crude oil from a single production platform in the Western Arctic offshore displaced a higher emitting GHG oil development, that development alone would reduce the current gap in the Government of Canada achieving its 2030 target by 29 percent.

Despite international commitment to reduce GHG emissions, there remains a strong global demand for fossil fuels. An overall global increase in GHG emissions could occur if fossil fuels with a higher intensity of GHG emissions are produced while lower intensity sources are reduced or eliminated from the global supply. This is often referred to as "carbon leakage".

The challenges related to GHG emissions and climate change are not unique to Canada. Other Arctic nations with established offshore oil and gas development have committed to pursuing domestic emissions reduction strategies in order to comply with the emissions reduction targets in the Paris Agreement.

Appendix 1. Terms of reference for the Western Arctic co-management committee on the science-based assessment of the risks and benefits of Arctic offshore oil & gas exploration and development

Objective:

The co-management committee to manage the Western Arctic five-year science-based assessment of Western Arctic offshore oil and gas is to be collaborative by design.

Membership:

The Western Arctic offshore^{Footnote 51} committee (the Committee) will be comprised of six members: three members from the Government of Canada (Crown-Indigenous Relations & Northern Affairs, Natural Resources Canada and Department of Fisheries and Oceans Canada, and membership from the Government of the Northwest Territories, the Yukon Government and the Inuvialuit Regional Corporation.

The Canada Energy Regulator is responsible for regulating offshore drilling in the Canadian Arctic. The Canada Energy Regulator will provide technical support to the committee and will be consulted on those matters addressed within the assessment that relate directly to its mandate.

Responsibilities:

The committee's existence and terms of reference seek to ensure that the Government of the Northwest Territories, the Yukon Government and the Inuvialuit Regional Corporation are able to provide advice and input into the management of Western Arctic offshore oil and gas resources.

As a tool of co-management, the committee's primary responsibility is to support the process for the generation of information, knowledge and evidence that will serve as the basis for advice to decision-makers responsible for the management of oil and gas resources in the Western Arctic offshore, including the issuance of licenses for Western Arctic offshore oil and gas exploration and development.

The co-management committee will:

• support development and ratification of its governance framework
• develop and finalize the scope of the assessment framework for the Western Arctic offshore region
• ensure the coordination and engagement of stakeholders, as required
• report on progress and outcomes
• develop joint workplans/timelines to guide the process (to be adjusted as required)
• oversee the gathering and development of science-based information as well as other sources of knowledge that will be compiled in a report to be shared with the federal Minister responsible for the issuance of licences for Western Arctic offshore oil and gas exploration and development, other federal and territorial Ministers with resource management responsibility in the Western Arctic offshore, and the Chair and CEO of the Inuvialuit Regional Corporation

Guiding principles:

The committee will strive to make decisions or establish agreement on positions on a consensus basis. Its advice and written report to the federal and territorial Ministers and the Inuvialuit Regional Corporation, will represent broadly-based agreement, but not necessarily unanimity, among the committee members.

The committee's guiding principles are to:

• strive for a consensus in decision-making
• seize opportunities to work in collaboration to advance respective priorities
• be consistent with, complement or enhance existing federal, territorial and Indigenous programs and policy initiatives that can be leveraged to support and inform the work of the Assessments
• take a coordinated, whole-of-government approach to decision-making that affects the management of resources in the Western Arctic offshore
• function as an interim mechanism for the participation of the Government of the Northwest Territories, the Yukon Government and the Inuvialuit Regional Corporation in offshore resource management decisions prior to the conclusion of an offshore oil and gas management agreement with the Government of Canada similar to those that exist in other areas of Canada
• ensure that the scope of the assessment is consistent with the objectives of the Prime Minister's December 20, 2016, commitment to a science-based review that is sufficiently comprehensive, achievable and measurable
• consider and reflect the views, input, knowledge and priorities of Canadians and Indigenous peoples living in the North and Arctic regions
• ensure that co-development of the assessment by the Committee is based on recognition of rights, respect, cooperation and partnership
• in circumstances in which members of the Committee believe decisions on the science-based assessment need to be taken on a Canadian pan-Arctic basis, the Committee may collaborate with any committee established for a similar purpose in the Eastern Arctic

Appendix 2. Harrison Report

The Review of the Canada Petroleum Resources Act by the Minister's Special Representative, Rowland J. Harrison, Q.C. was released on August 8, 2016. The report was presented to the Minister of Indigenous and Northern Affairs, Carolyn Bennett on May 30, 2016.

The report reviews the Canada Petroleum Resources Act and whether or not it can promote a sustainable Arctic economy while serving the public interest.

Specifically in his review, Mr. Harrison:

• examined key legislation, regulation, policy and contractual arrangements that make up the management of northern oil and gas
• compared Canada's northern petroleum management structure with equivalent management structures in international jurisdictions with similar petroleum activities in comparable environments
• assessed the Canada Petroleum Resources Act's contribution to achieving the original policy intent of the Government of Canada and specifically, as the legislation relates to the Arctic
• took into account the interests of rights holders under relevant self-government and comprehensive land claim agreements
• considered changes and recommendations to the management of oil and gas resources, including potential legislative amendments, in support of Canada's interests in oil and gas matters in the Arctic
• reviewed frontier lands under the responsibility of the Minister of Indigenous and Northern Affairs with a focus on the Beaufort Sea
• In his review, Mr. Harrison concluded that the Canada Petroleum Resources Act has been successful in instituting a rights issuance system that is market-driven, is responsible to industry interest and provides security of tenure. The act also provides the Crown with full control in managing an effective oil and gas regime

Mr. Harrison found that the act, in its current form, meets the needs of Canadians and industry, but he also made ten recommendations to the Minister on how the act can be clarified and improved.

These 10 recommendations are:

Recommendation 1: That the Canada Petroleum Resources Act be amended to include a statement of purpose that would be broad and enduring, to accommodate national priorities as they evolve.

Recommendation 2: That the Canada Petroleum Resources Act be amended to require that a strategic environmental assessment, encompassing the area in which it is proposed to initiate bids, has been completed and considered by the Minister before the call for bids is issued.

Recommendation 3: If it is decided not to proceed with proposed legislative amendments to the Canada Petroleum Resources Act, it is recommended that appropriate formal statement of policy and guidance be adopted, to be applied within the framework of the current act.

Recommendation 4: That the Canada Petroleum Resources Act be amended to increase the permissible maximum term of exploration licences from nine to 16 years.

Recommendation 5: That the Canada Petroleum Resources Act be amended to allow the Minister to extend the term of exploration licence where the Minister is satisfied that intervening and unanticipated regulatory developments, or a force majeur event, would restrict the ability of the licence owner to meet the requirements of the licence in the remaining term of the licence.

Recommendation 6: If it is proposed to amend the Canada Petroleum Resources Act to increase the maximum allowable term of exploration licences, the Minister consider whether the revised term should be applied to existing licences in the Beaufort Sea, having regard to changed circumstances, the potential benefits of having the Beaufort Sea Exploration Joint Venture work program continue and the implications for future exploration in the Beaufort Sea.

Recommendation 7: Provisions of the Canada Petroleum Resources Act relating to the rights granted by significant discovery licences not be changed.

Recommendation 8: Technical discussions continue between industry and the responsible regulators to determine if the definition of "significant discovery" in section 2 and the requirement for "further drilling" in subsection 28(4) of the Act are consistent with current technology and, if not, that the Act be amended accordingly.

Recommendation 9: The act be amended to require the Minister's approval of transfers of interest, or any share therein, provided the Minister is satisfied that the transfer would not jeopardize the relevant interest owner's ability to continue to satisfy the qualifications required of the original interest owner.

Recommendation 10: Part VII: Environmental Studies Research Fund of the Canada Petroleum Resources Act be amended to:

• increase the limit on the maximum amount of the Environmental Studies Research Fund to account for inflation from 1986 to date and to provide for indexing for the future
• require appointment of the Environmental Studies Management Board of a nominee of the Inuvialuit Regional Corporation and representation for the territories
• require the incorporation of Indigenous knowledge into environmental and social studies financed by the fund

Appendix 3. Canada Energy Regulator filing requirements for offshore drilling in the Canadian Arctic