0 Minister of Public Works and Government Services Canada 1997 ISBN : o Cat. No.: En /l 997E

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2 0 Minister of Public Works and Government Services Canada 1997 ISBN : o Cat. No.: En /l 997E To obtain a copy of this report please contact: Canadian Environmental Assessment Agency Canada-Newfoundland Offshore Petroleum Board 200 Sac&Coeur Boulevard Fifth Floor, TD Place Hull, Quebec KlA OH3 140 Water Street tel: (819) St. John s, Newfoundland AlC 6H6 fax: (819) tel: (709) Internet: fax: (709) Internet:

3 TERRA NOVA DEVELOPMENT PROJECT ENVIRONMENTAL ASSESSMENT PANEL The Honourable Christine Stewart Minister of the Environment House of Commons Ottawa, Ontario Kl A OA6 The Honourable Ralph Goodale Minister of Natural Resources House of Commons Ottawa, Ontario KIA OA6 The Honourable Oliver Langdon Minister of Environment and Labour House of Assembly St. John s, Newfoundland Al B 4J6 The Honourable Charles Furey Minister of Mines and Energy House of Assembly St. John s, Newfoundland Al B 4J6 Mr. John Fitzgerald Chairman (Acting) Canada-Newfoundland Offshore Petroleum Board St. John s, Newfoundland Al C 6H6 Dear Ministers and Mr. Chairman: In accordance with the memorandum of understanding concerning environmental assessment of the Terra Nova Development issued on June 17,1996, the environmental assessment panel has completed its review of the Terra Nova Development project proposed by Petro-Canada and its partners. On behalf of the panel, I am pleased to submit this report for your consideration. Very sincerely yours, Leslie Harris Chairperson

4 TABLE OF CONTENTS EXECUTIVE SUMMARY INTRODUCTION l PROJECT DESCRIPTION THE PROCESS FUNDAMENTAL FINDINGS PRECAUTIONARY APPROACH ROLE OF THE BOARD SOCIO-ECONOMIC IMPACTS OF THE PROJECT... 1'3 3.1 OVERVIEW THE ATLANTIC ACCORD EMPLOYMENT OPPORTUNITIES GLOBAL COMPETITION INDUSTRIAL RELATIONS ALLIANCING AND PARTNERING OTHER EMPLOYMENT ISSUES BENEFITS TO THE ECONOMY SOCIAL IMPACTS WORKER SAFETV THE IMPACT OF THE ENVIRONMENT ON THE PROJECT OVERVIEW WIND AND WEATHER WAVES CURRENTS ICE COINCIDENT EXTREMES COMMAND STRUCTURES ENVIRONMENTAL EFFECTS OF THE PROJECT OVERVIEW COMPARATIVE EXPERIENCE FROM OTHER AREAS REGULATION OF OFFSHORE DISCHARGES CUMULATIVE IMPACTS SIGNIFICANT EFFECTS UNCERTAINTY TRANSPARENCY AND PEER REVIEW DRILLING WASTES PRODUCED WATER OIL SPILLS GREENHOUSE GASES LIGHT... 58

5 5.13 NOISE DECOMMISSIONING AND ABANDONMENT MONITORING OVERVIEW DESIGN SEABIRDS FISH FOLLOW-UP RECOMMENDATIONS FUNDAMENTAL FINDINGS SOCIO-ECONOMIC IMPACTS OF THE PROJECT IMPACT OF THE ENVIRONMENT ON THE PROJECT ENVIRONMENTAL EFFECTS OF THE PROJECT MONITORING APPENDIX A APPENDIX B,...,...,.*,...* APPENDIX C APPENDIX D APPENDIX E * APPENDIX F......*...* APPENDIX G *.* APPENDIX H * APPENDIX I LIST OF FIGURES FIGURE 1 LOCATION OF THE TERRA NOVA DEVELOPMENT FIGURE 2 TERRA NOVA OIL FIELD AND POTENTIAL DRILL CENTRE LAYOUT

6 Executive Summary 1 EXECUTIVE SUMMARY The Terra Nova Development is a proposal to develop the petroleum resources of the Terra Nova oil field. The field, with approximately one billion barrels of oil in place, is located on the northeast section of the Grand Banks. The Proponents are Petro-Canada, Mobil Oil Canada Properties, Husky Oil Operations Limited, Murphy Oil Company Limited, Norsk Hydro AS and Mosbacher Operating Limited. Petro- Canada will operate the development on behalf of the Proponents. The Proponents will use a floating steel monohull production, storage and offloading vessel; semi-submersible drilling rigs; and, shuttle tankers to transfer produced oil from the site to storage facilities onshore or directly to markets. Drilling centres will be located in open glory holes, 10 m deep and 15 m wide, from which flowlines trenched in the ocean floor will carry oil to flexible risers leading to the production platform. Production is scheduled to commence in The Proponents submitted their development application and environmental impact statement to the Canada- Newfoundland Offshore Petroleum Board on August 5, On December 2, the Board referred the application documents to the Environmental Assessment Panel, which had been jointly appointed by the federal and provincial governments. The Panel, having reviewed the documents and, having sought and received additional information from the Proponents, commenced public hearings on April 22, The Panel heard 20 oral presentations and received over 70 written submissions. Taking into account all the information provided by the Proponents, submissions by government departments and agencies, and representations by non-governmental groups and individual members of the public, the Panel has concluded that the Project can proceed subject to the recommendations which, for convenience, are grouped in the concluding chapter of this report. Two fundamental recommendations that provide a context for all the others are: that a precautionary approach should inform all aspects of the development; and, that the Board must be provided with adequate resources for the exercise of its mandate to monitor and enforce the conditions of development. A precautionary approach implies prudent foresight, the recognition of uncertainty, and error on the side of caution when decisions must be taken in a domain where knowledge is incomplete. The Panel is convinced that it is vitally important to the interests of the Province that the Proponents should observe the spirit and intent of the Atlantic Accord. Notwithstanding the provincial endorsement of the principle of global competitiveness, and realizing that the monohull and the shuttle tankers will, perforce, be built in foreign yards, the Panel acknowledges the Proponents assurances that Newfoundland yards and businesses will be given all reasonable assistance in making competitive bids on remaining work. This implies employment opportunities for Newfoundland workers in the preproduction phase, which will involve, in total, some 2,300 person years of work. In the operations phase of some 18 years duration, the Panel is pleased to record the Proponents expectations that the vast majority of the permanent workers will be Newfoundlanders and Labradorians. The recommendations of the Panel tend to require full recognition of the Atlantic Accord and legislation thereunder, and the adoption of management strategies, including training opportunities and a labour relations regime, that will maximize

7 2 Executive Summarv opportunities for Newfoundland workers and Newfoundland businesses. In consideration of the fact that the Proponents have indicated in very positive terms that Terra Nova should be regarded as the foundation of a strong offshore petroleum industry for Newfoundland, the Panel s recommendations also tend to the development of a highly trained workforce and of business expertise, calculated to be able to optimize both local and export opportunities. The Panel also believes that the Project should provide occasions for technology transfer and recommends that foreign suppliers of mechanical or electronic components of sub-sea systems, for example, should be required to establish appropriate manufacturing and assembly facilities in Newfoundland. In respect of all those matters relating to the benefits plan, the Panel believes that the Proponents, the Board and the Government of Newfoundland and Labrador should be equally assiduous in keeping citizens of the Province fully informed as to what is happening to their resources and what benefits the Province is deriving from their depletion. The relatively small size of the Project, in comparison with Hibernia, for example, informs the public perception that it will not entail negative social impacts. The Panel concurs and believes that the communities in or near which developments are likely to occur, have sufficient infrastructural capacity to absorb the entailed economic expansion without undue social disruption or inflationary pressures. The Panel does not believe that mitigative measures, as in the Hibernia case, are warranted. The Panel believes that extreme weather and ice regimes at the production site pose the most serious difficulties for the developers. The weather, sea-state and ice data used by the Proponents are, the Panel believes, the best available; and design criteria for the production system should ensure a safe operation. This is particularly so since the floating system will permit employment of avoidance strategies in extreme conditions. Nevertheless, the Panel recommends continued efforts to improve operational forecasting abilities in respect of both weather and iceberg trajectories. The menace of ice floes and hard-to-detect growlers and bergy bits are of particular concern. Overall, the Panel recommends adherence to a precautionary approach, a clearly defined command structure, a zero tolerance for oil spills, and safety systems and evacuation procedures that conform to the highest possible standards of design and operation. The Panel believes that the management of environmental impacts in areas of larger scale developments over a longer time offers a useful means of testing the appropriateness of planned regulatory and management regimes. In this context, the Panel is concerned that the available literature indicates uncertainties in respect of cumulative impacts on the general ecosystem. Noting that, in the North Sea, for example, regulations have become more stringent over time, the Panel proposes that the near pristine conditions of the Grand Banks should not be a justification for less stringent standards, and, in any case, recommends the conscious adoption of a precautionary approach. The Panel realizes that the treatment and waste materials guidelines have been recently reviewed. Since, however, the application of currently available technology achieves results that clearly exceed present standards for discharges of oil-based muds and cuttings, the Panel believes that the reviewers did not follow a precautionary approach and that a new review should be undertaken at the earliest possible time. The Panel notes with approval that the

8 Executive Summary 3 Proponents have undertaken to use stateof-the-art technology that will exceed existing standards. The Panel is aware that the Proponents cannot be held responsible for future developments which occur on the Grand Banks, and, that the identification and measurement of cumulative impact is difficult and uncertain, especially in the context of natural variation over time. It is for this reason that the Panel s recommendations urge a careful and systematic peer-reviewed monitoring program to provide a sound basis for adaptive management decisions and an invaluable data legacy for the more adequate evaluation of future development. In devising such a program, the Panel is persuaded that the Proponents should identify all monitoring and research programs in the Grand Banks area, including those undertaken at Hibernia, or by Memorial University of Newfoundland or the Department of Fisheries and Oceans, for example, with a view to exploiting all possibilities for effective synergistic integration. The Panel also believes that the monitoring program should be subject to third-party auditing and compliance monitoring, and that the results of reviews by the Board, or by government departments or agencies, should be placed in the public domain. Apart from the possibility of a major oil spill, discharges into the sea of oil-based drilling muds, a variety of chemicals, and produced water represent the greatest environmental hazards of the Project. Ecological concerns in other jurisdictions have led to the adoption of reinjection technology as the superior method for disposal of both drill cuttings and produced water. The Proponents indicate that reinjection of cuttings from the planned floating production system is virtually impossible. The Panel believes that design features to allow retrofitting to accommodate such a process would be a prudent decision in anticipation that regulatory standards in the future will be adjusted upwards. In the meantime, non-toxic oils and the treatment of cuttings by the best available technology to minimize oil and chemical contents must constitute a minimum requirement. In respect of produced water, the Proponents assert that the mitigative measures they propose, together with the dilution factor, will render such discharges harmless. Nevertheless, while recognizing the difficulties associated with the process, the Panel is aware that reinjection is a proven technology in other jurisdictions, and recommends that a precautionary approach would require its adoption for the Terra Nova Development. In respect of major oil spills, the Panel is convinced that given the nature of the environment, mitigative measures will likely be ineffective. It is, therefore, absolutely essential that prevention must be the first priority and that all systems and processes must be designed with that priority clearly in mind. Thus, a very important recommendation by the Panel is that the Proponents must adopt a zero-tolerance policy for oil spills of any kind and must take all necessary preventative measures to ensure the successful implementation of such a policy. This implies that all offshore workers must be thoroughly trained, educated and sensitized to their environmental responsibilities. The effect of light on seabirds in the Project area was brought to the Panel s attention. The Panel believes that a co-operative effort with Hibernia management would permit monitoring of such effects and permit the development of appropriate mitigative measures, should such be required, before production at Terra Nova begins. The transport of oil from the site to shore is clearly a matter of concern. In particular, the

9 4 Executive Summary large seabird colonies of the Avalon Peninsula and of the potentially disastrous consequences for those colonies in the event of a large oil spill must be recognized. The Panel is also aware that no coastal zone management regime is in place along the shores of Avalon and recommends that one should be created. While the Panel is satisfied that the proposed double-hulled, ice-strengthened shuttle tankers represent the best available technology, it nevertheless concurs with a recommendation of Environment Canada that a comprehensive review of the transport of oil from offshore sites is necessary. In conclusion, the Panel believes that if construction and operation conform to the detailed information provided by the Proponents, and if the Proponents meet their commitment to best available technologies and minimal discharges, and if the recommendations included in this report are implemented, the Project will meet all regulated standards and be environmentally acceptable. Nevertheless, it is difficult to muster enough wisdom at the beginning of an 18-year period to predict that an optimum development will occur and that minimal environmental impact will result. The chances of success will be enhanced, however, if both the Board and the Proponents are fully committed to adaptive changes in standards, in technologies, and in management practices. These in turn will be facilitated by a first-rate monitoring program, by proper reviews of its results, and by proper compliance monitoring by the Board.

10 Introduction 5 1.O INTRODUCTION 1.l PROJECT DESCRIPTION The Terra Nova Development (the Project) is a proposal to develop the petroleum resources of the Terra Nova oil field on the northeast Grand Banks of Newfoundland, and is likely to be the second oil production project on the Grand Banks. The Terra Nova Development proponents (hereafter called the Proponents) are Petro-Canada, Mobil Oil Canada Properties, Husky Oil Operations Limited, Murphy Oil Company Limited, Norsk Hydro AS and Mosbacher Operating Limited. Petro-Canada will operate the development on behalf of the Proponents. The Terra Nova oil field lies 350 km eastsoutheast of St. John s on the continental shelf in the northeast section of the Grand Banks on the southeastern margin of the Jeanne D Arc Basin (Figure 1). It is approximately 35 km southeast of the Hibernia project and covers an area of 67 km2. The field is located in water approximately 95 m deep. The Terra Nova oil field is estimated to contain over one billion barrels of oil in place, and is composed of three major geological structural fault blocks: the Graben, the East Flank and the Far East (Figure 2). The Graben and East Flank blocks are estimated to contain 200 to 400 million barrels of recoverable reserves, given current prices and technology. The Far East block may, in addition, contain up to 100 million barrels of recoverable reserves, though this estimate has yet to be proven by drilling. The development plan forecasts a producing life for the Graben and East Flank of 13 to 15 years, with development beginning in the East Flank and continuing to the Graben. The first well in the Far East Block will be drilled early in the Project life. If the results are positive, the Far East block will be incorporated into the later stages of the Project. The Proponents preferred mode of development, a floating production facility, includes a steel monohull vessel, known as a floating production storage and offloading (FPSO) vessel, sub-sea equipment, and an oil transfer system. Shuttle tankers, one or more semi-submersible drilling rigs, and marine and air support vessels will also be associated with the Project. Oil will be processed on the FPSO and transferred to shuttle tankers for transport to shore. Detailed engineering work, drilling, fabrication, construction, and assembly are scheduled to begin in 1998, with production expected to commence in During the course of the hearings, however, Petro- Canada informed the Environmental Assessment Panel (the Panel) that the Proponents are working to advance this schedule so that production can begin earlier. The Proponents considered several options for the Project. A gravity base structure (GBS), like the one used at Hibernia, was evaluated but was found to be uneconomical owing to the greater water depth and smaller reserves of recoverable oil at the Terra Nova oil field. A semisubmersible floating production facility was also evaluated, but the steel monohull vessel was found to offer the same benefits while having lower capital and operating costs. The use of a vessel with a concrete hull was also considered. Studies carried out on behalf of the Proponents suggested the cost would be significantly higher than for a steel vessel and that, in any case, the technology was unproven. In December, 1996, the Proponents announced that the steel monohull option had been selected. The proposed FPSO for the Project will be a newly built steel vessel 265 m in length.

11 6 Introduction I Figure 1 - Location of the Terra Nova Development i (after: Canada-Newfoundland Offshore Petroleum Board)

12 Introduction 7

13 8 Introduction The vessel will be ice-strengthened and double-hulled with a storage capacity of 850,000 barrels of crude oil. The topsides will include a processing facility that is capable of producing 125,000 barrels of oil per day. Accommodation for 75 people will be located at the forward of the ship. The FPSO will be positioned at the centre of the field (Figure 2) and will be moored to the seabed during operations through a series of strategically placed anchors, the chains from which are gathered in the turret and allow the vessel to swing freely. The crude oil will be offloaded by pumping it from the stern of the vessel to a shuttle tanker located about 80 m away. The wells will be drilled in clusters of about six. The Proponents plan approximately 32 production, water injection and gas injection wells to be drilled in the Graben and East Flank blocks with a potential for an additional 12 in the Far East block. At each drill centre, manifolds will collect the flow of the wells, and will be connected by flowlines, trenched in the ocean floor, to flexible risers leading to the FPSO. The drill centres will be located in open pits, called glory holes, 10 m deep by 15 m in diameter to protect the equipment from scouring icebergs. The flowlines from the drill centres will be gathered in the turret of the FPSO, and can be disconnected along with the mooring lines. The number and size of tankers that will be used for the Terra Nova Development have yet to be determined. The Proponents estimate that between one and three tankers of 80,000 to 120,000 tonnes deadweight will be required. Shuttle tankers will be ice-strengthened and doubled-hulled and designed for segregated ballasting. The oil-loading equipment will be located at the bow. The crude oil will be shipped directly to market or transshipped through an onshore storage and offloading terminal. Potential markets for Terra Nova oil are Eastern Canada, the U.S. East Coast and the U.S. Gulf Coast. One or more semi-submersible offshore drilling rigs will be used to drill and complete about 10 wells before the FPSO moves on site. The remainder of the wells will be drilled after First Oil. Support vessels will be required for iceberg towing and deflection, for assistance with anchors and drilling rigs, for transportation of supplies, and for safety duties. Helicopters will be used primarily for the transport of personnel and smaller supplies. A base will be established in St. John s to manage the logistics of drilling and production operations. 1.2 THE PROCESS On June 17, 1996, the Government of Newfoundland and Labrador, the Government of Canada and the Canada- Newfoundland Offshore Petroleum Board (the Board) signed a Memorandum of Understanding (MOU) concerning the environmental assessment of the Terra Nova Development. The purpose of the MOU was to establish a single process for assessing the environmental effects of the Project and for ensuring that the process satisfied the environmental assessment requirements of the parties under the Canada-Newfoundland Atlantic Accord implementation Acts (the Accord Acts) and the Canadian Environmental Assessment Act (CEAA). The MOU stipulated that the Panel must complete its work within 270 days of receiving the development application from the Board. The federal and provincial governments jointly announced the appointment of the Panel on November 22, The

14 Introduction 9 members of the Panel are: Dr. Leslie Harris (chair), Ms. Irene M. Baird and Dr. Jon Lien. Biographies of the Panel members are provided in Appendix A. The Panel was asked to conduct a review of the environmental effects of the Project; considerations of human safety incorporated into the proposed design and operation of the Project; the general approach to the development and exploitation of the petroleum reserves of the Terra Nova field; and, the employment and industrial benefits that are expected to accrue to Canada and in particular to the Province of Newfoundland. The Panel s complete terms of reference and the matters to be considered in the public review are part of the MOU and are provided in Appendix B. The Board is responsible for the management of hydrocarbon resources in the Newfoundland offshore area on behalf of the Government of Canada and the Government of Newfoundland and Labrador. The Board s authority is derived from the Accord Acts of 1986 and The Proponents prepared their development application in cognizance of the provisions of the MOU and submitted it to the Board on August 5, In October, the Board requested additional information from the Proponents which was supplied in November. On December 2, 1996, the Board, satisfied that the development application was suitable for public review, referred it to the Panel. On December 16, 1996, the Panel invited the public to comment on the development application and specifically on whether any further information on the Project was required prior to the public hearings. On February 5, 1997, the Panel met with representatives of the provincial Department of Mines and Energy, and on February 6, 1997 with Petro-Canada for public information sessions. Having considered all the information before it, the Panel requested additional information from the Proponents on February 13, The Proponents submitted their response to the Panel s request on March 14, The Government of Canada made available $75,000 to assist the public to participate in the review process. Funds were allocated by an independent committee prior to the appointment of the Panel. Two funding applications were received, and a total of $26,410 was awarded. According to some participants in the review process, more applications for funding would have been made had the program been more widely advertised. A summary of the participant funding allocations is found in Appendix C. The Panel held public hearings in four Newfoundland communities: in St. John s on April 22, 23, 24 and May 6; in Grand Falls-Windsor on April 30; in Clarenville on May 1; and, in Marystown on May 2. The public hearings gave participants an opportunity to present their views, opinions and technical information on the acceptability of the proposed Project. The Panel heard over 20 presentations and received in excess of 70 written submissions during the public review phase. A list of presenters at the public hearings can be found in Appendix D and the key review documents are listed in Appendix E. This report is the final step in the review process. It provides the Panel s findings, conclusions and recommendations to the federal Ministers of Natural Resources and of the Environment, to the provincial Ministers of Mines and Energy and of Environment and Labour, and to the Board. Concurrent with the Panel s work, the Board has conducted its own internal review of the development application. The Board s decision with respect to the Project will explicitly take into account this report and

15 10 Introduction the Panel s recommendations, as well as the positions of the Government of Canada and the Government of Newfoundland and Labrador regarding the report of the Panel.

16 Fundamental Findings FUNDAMENTAL FINDINGS The Panel has carefully examined all the information provided to it throughout the review process. It has considered the anticipated environmental effects of the Project, the efficacy of the mitigation measures proposed by the Proponents and the comments received from the public. The Panel concludes that the Project should be permitted to proceed subject to the recommendations in this report. Recommendation 1: Government of Canada, the Government of Newfoundland and Labrador arid the Board give approval for the Terra Nova Development to proceed subject to the recommendations in this report. Two fundamental recommendations that provide a context for all the others are: that the precautionary approach should inform all aspects of the development; and, that the Board must be provided with adequate resources for the exercise of its mandate to monitor and enforce the conditions of development. 2.1 PRECAUTIONARY APPROACH In the Rio Declaration on Environment and Development, made at the United Nations Conference on Environment and Development (UNCED), the precautionary approach was recommended as the best approach to environmental management. Essentially it involves the application of prudent foresight, the recognition of uncertainty and error on the side of caution when decisions must be taken in a domain where knowledge is incomplete. Further, the approach recognizes that the burden and standard of proof should be commensurate with the potential risks to sustainable use of resources and to the environment. Participants emphasized that a precautionary approach should consider subtle, sub-lethal effects and not rely only on population impacts. Precautionary approaches have been applied in other contexts to specific resources, such as fisheries, and to general environmental integrity issues. A precautionary approach should include the use of environmental assessments, pilot projects, careful impact monitoring, cautious interpretation of data, and adaptive management when indicated. The Panel believes a precautionary approach having those characteristics is a cautious yet practical way to minimize the impacts of offshore petroleum development and to reduce the risk that ignorance will lead to inappropriate action and avoidable environmental effects. The Panel feels strongly that the Proponents and the Board s decisions throughout the life of the Project should be informed by this precautionary approach. Recommendation 2: The Panel recommends that a precautionary approach govern all aspects of the Terra Nova Development. 2.2 ROLE OF THE BOARD The Panel is aware of the critical role of the Board in making the Project a safe and environmentally acceptable one. For this reason, the Panel has directed all but a few of its recommendations to the Board. In doing so, the Panel assumes that the Board will have the resources to respond effectively to those recommendations; and, to play its appropriate role in the monitoring of environmental effects and benefits of the Terra Nova Development; and, in the enforcement of standards, guidelines and

17 12 Introduction regulations for the protection of the environment; and, to optimize Canadian, and in particular Newfoundland content; and, to ensure human safety. Further, the Panel recognizes that the Board s work will increase with the commencement of production at Hibernia, and with the start-up of Terra Nova, and with the intensification of interest in exploration off the coast of Newfoundland. However, just as the overall workload of the Board is growing, its resources are shrinking. Since 1994, the Board s budget has been reduced by 26%, and its staff cut by approximately one-third. The Panel has made a number of recommendations that are contingent upon the Board s ability to play an active role in the monitoring of environmental effects of the Terra Nova Development; and, in the enforcement of existing or recommended standards, guidelines and regulations for the protection of the environment and for human safety. If the Board s resources are not sufficient to meet the growing demands placed on it by the expanding activity in the Newfoundland offshore, the Panel questions whether the Board can ensure that the Terra Nova Development, and future projects, can be carried out in a safe and environmentally acceptable manner. The Panel notes that there has been acting chairman of the Board si December 3, A temporary chair such a long period undermines credibility of the Board and calls question the value placed on it by t: governments. The Panel believes that in the best interest of the environment of human safety, and indeed of Province as a whole, to ensure that most senior position in the organizatioi filled on a permanent basis as soon possible. This will ensure the continuity stability of the organization and will indic the governments support for the won the Board. Recommendation 3: The Panel recommends to Government of Canada and Government of Newfoundland ; Labrador that adequate resources allocated to the Board for implementation and follow-up of recommendations of this report. Recommendation 4: an nce for the into it is and the the n is as and the the and be the the Bcbard take a more active role in the exercise e of its full mandate.

18 Socio-Economic Impacts of the Project SOCIO-ECONOMIC IMPACTS OF THEPROJECT 3.1 OVERVIEW The Terra Nova field will be developed at a capital cost of $2.4 billion, of which $1.6 billion will be expended in the preproduction phase. A development of that magnitude should provide a major economic stimulus in a small province. Whether it does so in fact will depend, in part, upon net revenues. realized by the Province of Newfoundland from royalties and taxes; in part, upon policies and strategies developed and implemented by the Proponents and their contractors; and, in part, upon the success of Newfoundland business in a globally competitive bidding environment. The Panel heard repeated expressions of concern in respect of royalties, taxes and concessions that may have been made to the Proponents, but those matters fall outside the scope of the Panel s terms of reference. Among the issues that do come within its purview, those of greatest apparent interest to the public-at-large were job creation and employment opportunities. Those were brought into sharp focus and kept constantly before the Panel by two individuals who had clearly worked long and assiduously to analyze the benefits section of the application documents. The fears they expressed, and which were echoed by a number of other participants in the hearings process, were that the concept of global competitiveness would be used as an excuse to limit local employment and benefits and thus circumvent the spirit and intent of the Atlantic Accord. The absence from the development plan of a provision for training was seen as a partial justification for such fears. In respect of the community s capacity to absorb the industrial activity to be generated by the Project, neither the Proponents nor the public anticipated any negative impacts. 3.2 THE ATLANTIC ACCORD The Atlantic Accord is a memorandum of agreement between the Government of Canada and the Government of Newfoundland and Labrador on offshore oil and gas resource management and revenue sharing. It was signed by the Prime Minister of Canada, the Premier of Newfoundland and Labrador, and appropriate ministers of both governments on February 11,1985. The Atlantic Accord was and is a matter of paramount importance to the Province of Newfoundland. It offered an amicable political solution to a contentious jurisdictional problem by recognizing the right of the Province to be the principle beneficiary of oil and gas resources off its shores, within a strong and united Canada. It recognized the equality of both governments in the management of the resources and sought to ensure that the pace and manner of development would optimize the social and economic benefits to Canada as a whole, and to the Province in particular. The Accord Acts translated the provisions of the Atlantic Accord into legislation, enacted by the Parliament of Canada and the Legislature of Newfoundland and Labrador. Both governments established the Board to administer the Accord Acts and other relevant legislation. The Accord Acts give the Board a mandate to approve development plans and to authorize work pertaining to offshore development, subject, in most cases, to its prior approval of a Canada-Newfoundland benefits plan. The Accord Acts also provide that residents of Newfoundland be given first consideration for training and employment in respect of such development. A clause in the Canadian Charter of Rights and Freedoms permits this local preference policy as long as the employment rate in a province is below the

19 14 Socio-Economic Impacts of the Proiect national employment rate. Also, the Accord Acts require that first consideration be given to services provided from within the Province and to goods manufactured in the Province, where those goods and services are competitive in terms of fair market price, quality and delivery. Furthermore, the Accord Acts provide that the development plan should include provision for expenditures on research and development, and education and training. The Board s Development Application Guidelines explain how the Accord Acts are to be applied in both the preproduction and operations phases of any developmental activity. The document provides guidance to proponents in preparing their benefits plan, noting the statutory requirements of full and fair opportunity and just consideration in procurement and employment. The guidelines advise proponents to reflect their commitment to these principles through the policies and procedures governing project management; supplier development, procurement and contracting; employment and training; and, research and development. There are, as well, general requirements for consultation with the Board during the preparation of the benefits plan and for monitoring and reporting during the life of a project. 3.3 EMPLOYMENT~OPPORTUNITIES The Terra Nova Development preproduction phase is planned to commence in 1998 and will last approximately two to three years. The operations phase will commence in the year 2001 and last approximately 15 to 18 years. Originally the labour forecast for the preproduction phase was 8.5 million work hours exclusive of drilling. Subsequently, the estimate was reduced to a range of 4.7 million to 6.2 million hours exclusive of drilling. Converted to 40-hour work weeks, this amounts to 2,300 to 3,100 person years for the construction of the FPSO and topsides, hook-up and assembly, engineering, management and other miscellaneous activities. The Proponents attribute the reductions from their earlier estimates to a combination of increased experience with floating production systems, cost reduction initiatives, and new management strategies. Clearly, Terra Nova is not another Hibernia, which, according to the Proponents, provided over 30 million hours, that is 15,000 person years of employment in its preproduction phase. Nevertheless, 3,000 or more person years of employment in the preproduction phase of the Terra Nova Development is by no means insignificant. How much of it will accrue to Canadians in general, and to Newfoundlanders and Labradorians in particular, remains to be seen. The Proponents have informed the Panel that the FPSO, or at least its basic steel hull, and in all probability the shuttle tankers as well, will be built outside Canada owing to the incapacity of Canadian yards to accommodate vessels of the size required. Nevertheless, the basic hulls may be brought to Canadian yards for completion and, in the case of the FPSO, for topsides construction and assembly. The components of the sub-sea system are of specialized design and manufacture, and will be provided by foreign manufacturers. The semi-submersible drill rigs will be leased or purchased, also from external sources. It is clear that opportunities for employment in Newfoundland in respect of many of the 3,000 person years in the preproduction phase are already foreclosed. While the potential consequence of the Proponents development plan and the realities of the globally competitive bidding process may result in virtually all the remaining preproduction work being done elsewhere, with the consequent loss of several hundred jobs, the Panel was greatly encouraged by the Proponents repeated assurances that every reasonable

20 Socio-Economic Impacts of the Proiect 15 effort would be made to obviate such a deplorable eventuality. However, the many submissions made to it based on experiences from the Hibernia project, leaves the Panel concerned that the spirit and intent of the Atlantic Accord are sometimes overlooked. The operations phase of the Project will produce 400 to 500 long-term jobs in Newfoundland over the life of the field. Most of these jobs will be associated with the FPSO, tanker operations, marine and air support and onshore activities. The production platform jobs will include deck hands, seamen, control room and crane operators, technicians, supervisors, radio operators, nurses, cooks, cleaning staff, and others. A number of people will be employed in shore support as office workers or as direct employees of warehouse and shore-based facilities. Some jobs will also be created to provide vessel and helicopter support to the Project. Drilling will take place over a 12-year period overlapping the preproduction and operations phases. The labour requirements for drilling is estimated at 4.5 million hours, that is, approximately 2,200 person years. 3.4 GLOBAL COMPETITION The very concept of global competition engenders a sense of unease in some unions and workers as was apparent in certain submissions made to the Panel. Some see competitive bidding as a potential obstacle to their obtaining work on the Project and expressed the belief that a newly emergent industry requires special protection, but there are others who fully accept the proposition that Newfoundland must be globally competitive as a necessary precondition for its development. The Newfoundland and Labrador Oil Development Allied Trades Council (ODC), for example, expressed the view that Newfoundland workers need not fear any competitor provided that wages alone were not the determinant consideration. If the Proponents restricted the competition to countries paying decent wages; if productivity, quality of work and safety were considered; and if technology transfer and skills development were accepted as a legitimate incremental cost of doing business under provisions of the Atlantic Accord, then they believe Newfoundland workers could compete successfully with workers anywhere in the world, and the Province would maximize the benefits to be derived from offshore development. They cited the case of Norway as an example of what sound government policies could achieve. This theme was also addressed by other participants at the hearings who cited the example of work performed for the Hibernia project in Korea. Not only did that work require costly corrective measures, but, they maintained, safety standards were compromised.. In this case, it was false economy to have the work done in a jurisdiction where the exacting standards for quality assurance and quality control demanded in Canada were not enforced. The Newfoundland Ocean Industries Association (NOIA) viewed global competition as an opportunity rather than as an obstacle. In their view, the Hibernia project had already set new standards and enabled local industry to strengthen its ability to compete in national and international oil and gas markets. They saw the Terra Nova Development as the beginning of a new era, where experiences with new technologies and new systems would increase Newfoundland business potential to compete in petroleum projects anywhere in the world. NOIA expressed no negative sentiments regarding global

21 16 Socio-Economic Impacts of the Project competition, and their presentation exuded optimism that the work would be done in Newfoundland. From the Proponents perspective, international competitive bidding is necessary to ensure the viability of the Project. Oil that is produced from the Project will have to compete for markets with similar crudes from other producing regions of the world. As well, the Proponents maintained that international competitive bidding will help to ensure the development of a world-class industry in Newfoundland. The Panel understands the nature of public concern. Simply put, if local businesses are not successful in bidding for Terra Nova Development work, the provisions of the Accord Acts with regard to Newfoundland benefits are meaningless. The Panel notes, however, that international competitive bidding for goods and services for Newfoundland offshore developments did not originate with the Terra Nova Development. Indeed, it has long been a cornerstone of provincial government petroleum policy, first made public in a White Paper in May 1977, then included in the Newfoundland and Labrador Petroleum Regulations promulgated in October of the same year. Language similar to that contained in those regulations is found in the Atlantic Accord, in the Accord Acts and in Premier Tobin s letter of August 5, 1996, confirming that agreement in principle had been reached regarding the development of the Terra Nova field. While such a policy may appear unfair to some, and particularly to those who are currently unemployed or struggling to maintain a business, the Panel must concede that, looking at the long-term, it is a policy that makes economic sense. The present economy of Newfoundland and Labrador is heavily dependent on the successful marketing of the products of its natural resources sector. At the same time, the small domestic market, the distance from large population centres and high transportation costs, inhibit large-scale manufacturing. In this context, one strategy for economic diversification is to take every possible opportunity to develop a highly trained labour force whose skills are transferable to other industrial activities, and a business community with the expertise and the determination to market those skills in resource development service in other parts of Canada and throughout the world. But if this is to be successful, the skills developed in Newfoundland, the quality of work and the price at which the products can be delivered must be at least equal to, but preferably better than, that offered by competitors. High quality, international standards, and prices are the keys to external contracts. The Panel does not underrate the fears of many workers who have spent most of their working lives + traversing Canada and the world looking for employment. Nevertheless, the Panel believes that a degree of optimism is now justified, predicated upon the technical skills and the high productivity of Newfoundland workers who brought the Hibernia project to completion on time; and upon the fact that the Proponents themselves, as well as NOIA, the ODC and others, recognize that the new technologies and the new businesses that were developed in response to the Hibernia project can be further enhanced and made fully capable of meeting the challenge of the Terra Nova Development, Further, the Panel believes that in honouring the spirit of the Atlantic Accord, the Proponents can make the Project a signif icant step towards implementation of the above-mentioned development strategy. Even before Hibernia, the foundations of a strong ocean industry sector had been laid. Federal and provincial governments and Memorial University of Newfoundland had

22 - Socio-Economic Impacts of the Project 17 recognized cold ocean engineering and associated sciences and technologies as important areas for development. Institutions such as the Newfoundland Ocean Research and Development Corporation (NORDCO); the Centre for Cold Oceans Resources Engineering (C- CORE); the Marine Institute; programs in naval architecture and engineering technologies; the Institute of Marine Dynamics; and, the Cow Head rig-repair facility were created. Through these and spin-off enterprises in the private sector, particularly in oceans and communications technology, Newfoundland and Labrador is recognized internationally for its cold oceans research, communications innovations, and ship and oil rig inspection, repair and maintenance. The same commitment to purpose can be brought to bear in the fabrication and construction sector, and in the development of support industries for the oil and gas sector. In this regard, the Panel is very pleased to note the commitments of the Proponents to assist local businesses to upgrade their project management, procurement and quality control systems to international standards. If Newfoundland businesses are prepared to act upon this commitment fully and to take full advantage of falling trade barriers and advances in communications, and to build upon the solid foundations already laid, they will be able to build a vibrant industry that will bring the promise of the Atlantic Accord to full realization. Recommendation 5:.- Proponents use their best efforts to ensure that local fabrication yards have the information and support necessary to take advantage of opportunities to upgrade project management, procurement and quality control systems to the highest recognized international standards. The Panel nevertheless believes that a line must be drawn between good prices that will permit the Proponents to be competitive in the international oil market, on the one hand, and on the other, the acceptance of bids simply because they are the lowest. Issues of quality assurance and of quality control must be most carefully considered. The Proponents must be fully satisfied that every successful bidder is totally cognizant of the extremely hazardous environment in which their structures must function and of the stringent requirements for personnel and environmental safety that Canadian law demands. Post facto inspections of work after it has arrived in this country are not sufficient to give the assurance of its longterm integrity. Given the experience of the Hibernia project, the Panel believes that the Board should seriously consider whether any construction in Korean yards, for example, should be approved in the future. In the interests of safety, global competition clearly should be restricted to those countries where quality assurance and quality control are of the same high standards that apply in Canada. The Panel has confidence that the Proponents share its concern for the long-term integrity of structures, and will make safety a preponderant consideration that outweighs price in its decisions on infrastructure sourcing. Recommendation 6: Board approve construction of project facilities in foreign countries only if the quality assurance and quality control of that country are equal to or better than in Canada, and also where the means for monitoring and control of quality are in place. The Panel believes that Newfoundland yards must be involved in the Terra Nova

23 18 Socio-Economic Impacts of the Project Development, and not merely for the sake of immediate employment, but as a step towards building an industry that will secure larger local benefits from future offshore projects. The Terra Nova Development must encourage technology transfer, business capability and worker skills. The latter may be achievable through well designed training programs and through the encouragement of the maximum number of apprentices that union constitutions permit. A practical application of the Proponents commitment to the concept may well emerge in the area of sub-sea systems, which will be a significant part of the Project and, in all probability, of all future offshore oil and gas projects. The Panel expects the Proponents to use their best efforts to encourage, or require, as an aspect of the bidding process, that the successful international suppliers of sub-sea systems set up assembly and fabrication facilities in the Province, using local labour trained to produce quality products. This implies that the Proponents ensure that residents of the Province are not excluded by unreasonable or unnecessary qualification requirements or other artificial barriers. Global competition would obviously be more palatable to the people of the Province if the companies receiving the contracts carried out their work in Newfoundland. Recommendation 7: Proponents be required to use their best efforts and bidding processes to cause the successful international supplier of sub-sea systems to set up assembly and fabrication facilities in Newfoundland, using local labour trained to produce quality products. Recommendation 8: Board monitor and review the qualifications required for all jobs to ensure that residents of the Province are not excluded by unreasonable or unnecessary qualification requirements or other artificial barriers, and that the maximum number of apprenticeships permitted by union constitutions are filled by local people. The International Union of Operating Engineers drew the Panel s attention to the seemingly anomalous case of a project with a substantial sub-sea component, and yet very little requirement for divers. The Proponents indicate that sub-sea facilities will be designed to accept remote operating vehicles (ROVs), use of which will make diver intervention unnecessary. Neither the Union nor the Panel finds it easy to contemplate a situation in which ROVs can be used to install and service major sub-sea installations over a period of almost 20 years without diver support. While ROVs can certainly be used alone for some types of observation, inspection, maintenance and repair, they are often used in combination with divers. In short, the Panel is not convinced that robotics technology has yet totally replaced human resources in subsea work as evidenced by the Hibernia project. In any case, if ROVs are used with or without divers, they must be operated by qualified personnel. Steps should be taken to develop an adequately trained ROV workforce within the Province. Recommendation 9: Proponents be required to identify to the Board the level and type of qualifications required for positions on their remote operating vehicle crews and indicate

24 Socio-Economic Impacts of the Proiect 19 where such training can be obtained and that the Board initiate arrangements for establishing appropriate training in the Province. By the same token, the Panel believes that a deep-sea diving capacity should also be developed here. At the very least, the Panel believes the Proponents should reassess the need for deep-sea divers and confirm the result of their reassessment to the Board. Clearly, steps should be taken to obviate a situation in which divers, previously claimed to be unnecessary, have to be recruited, at some later date, from outside Canada. There is, indeed, an onus on the developers, by reason of the Atlantic Accord legislation, to work with government and appropriate worker representatives, to identify the human resource requirements of a project in a timely manner, so that the first preference clause with respect to Newfoundland residents is not made impotent. The educational requirements of the Accord Acts look to the development of new skills with or without additional government funding, as an aspect of the development plan application approval. Recommendation 10: Proponents be required to reassess their need for deep-sea diving throughout the life of the Project and report the findings to the Board and that, if a need for divers is demonstrated, the Board initiate arrangements for appropriate training in the Province. In respect of training for the Project, the ODC, the International Brotherhood of Electrical Workers (IBEW), and several individual participants in the hearings process made a strong case for a wellconceived training program. They argued persuasively that in any area where technology is rapidly advancing, a concomitant and continuing upgrading of skills is absolutely necessary both to increase productivity and to enhance quality of work. In their view, which the Panel shares, both pre-employment and on the job training programs that would encourage workers to adopt and effectively utilize leading edge technologies as they emerge throughout the life of the Project, should be devised in consultation with labour. The Proponents position on training for the preproduction phase, as identified both in the development application and at the public hearings, is based upon their study of the availability of fabrication and construction skills in Newfoundland to meet the needs of the Project. From that study they conclude, that with some small exceptions, the required skills can be met from the existing labour pool. They believe that preproduction phase training will be generally limited to issues of safety and to appropriate skills upgrading. They intend to work with the relevant labour organizations and governments to identify particular requirements. The construction of the nickel smelter in Argentia and the mine in Voisey s Bay are expected to be coincident in time with Terra Nova construction and will demand many of the same skills. The Proponents have not attempted to assess the combined effects of these projects on the labour supply, but they remain confident that there will not be a shortfall in most trades. If there should be a problem, they believe that deficiencies could be made good by recruitments from the Maritime provinces or from the rest of Canada. For the operations phase, the Proponents intend to hire individuals with appropriate education and experience. These employees will be provided with mandatory offshore survival and safety training, and with any other specialized on-the-job

25 20 Socio-Economic Impacts of the Project training required. An operations training manual has been prepared, and career development models are in the process of development, which are intended that in due course, all, or virtually all offshore crews will be residents of the Province. The scant attention given to training in the preproduction phase of the Terra Nova Development is not only a concern of the unions but of the Panel as well. Even if the Project is a comparatively small one, the Proponents, like most progressive employers, should provide for their employees opportunities to improve their job skills, and workers should be able to expect experiential values from their work in addition to the monetary compensation they receive. The Hibernia experience should have given us the wisdom to avoid situations where local workers were, without prior warning, declared unqualified for certain phases of the job. Thus, before construction starts, the Proponents should supply the Board with a list of the skills to be required by the various trades throughout the life of the preproduction phase; an analysis of any shortfall in skills among the local labour force; and, a plan for upgrading qualified tradespeople to the level required by the Project as it proceeds. The Board should have power to enforce compliance. Newfoundland tradespeople to attain the level of skill required for the Project. Such training programs should provide for periodic updating as the Project proceeds. The human resource plan envisaged above should be made available in the immediate future, not only to the Board, but to government and to post-secondary educational institutions, so that appropriate actions can be taken to prepare residents of the Province for job opportunities as they emerge. If the petroleum industry is to be important to the Province, and if young people are to be encouraged to make appropriate career choices, then educational institutions, governments and the oil industry must co-operate in ensuring them access in the Province to the education and training required to effect such a consummation. Recommendation 12: Board and the Proponents work with school boards to promote an interest in careers in the oil industry, through participation in career days, guest lecturing in science courses, providing scholarships, and the like. Recommendation 11: The Panel recommends that as part of the benefits plan approval process, the Proponents supply: a list of skiils required for the various trades throughout the life of the Project; an explanation of where shortfalls of skills are anticipated when compared with the local labour force; and, a plan for cooperation with government agencies, training institutions and unions to develop and fund training programs for Recommendation 13: Proponents provide to the Board, to government and to educational institutions information on jobs in the operations phase, including specific qualifications required, to allow planning to take place regarding the development of any new training required.

26 Socio-Economic lmoacts of the Proiect INDUSTRIAL RELATIONS The development application is virtually silent on the subject of how industrial relations will be conducted during the life of the Project. The Panel notes, however, that immediately prior to the commencement of public hearings an agreement (known as the PCL Agreement) was concluded with various construction unions with the intention of creating a suitable labour relations climate at the Bull Arm site in anticipation of Terra Nova-related construction work being done there. From this it might appear that the Proponents are, at least, not inimical to the idea, expressed by many participants in the public hearings process, that high productivity, safety, and other valued outcomes, will derive from a sound, co-operative labour management regime. To this end the Panel conceives that a good project agreement between the parties, negotiated in good faith, is the best possible assurance of satisfaction for workers and proponents alike. Recommendation 14: Proponents require contractors and subcontractors to work towards developing a true partnership with workers and their representatives. The ODC, representing building and construction workers at Hibernia, indicated their view that the project agreement negotiated in that case had worked without any relative degree of incident, and produced a tremendous sense of accomplishment and pride of work... Such flaws as they perceived to exist in that agreement could, they believe, be eliminated by bringing any comparable agreement for Terra Nova under the aegis of the Province s Labour Relations Act; by acknowledging the full intent of the Atlantic Accord and the Accord Acts; and, by providing for coverage of all trades and technical personnel both onshore and offshore and during the commissioning phase. Other participants in the hearings process reiterated those views and added criticisms of the manner in which dispute resolution procedures in the Hibernia Agreement were implemented. The consensus among those who addressed the issue appeared to be that any agreement should be concluded under provision of the Labour Relations Ad and that collective bargaining should extend to the offshore operational phase of the Project. The Proponents indicated no definitive plan nor clear intention in respect of unionization other than to express a commitment to amicable and fully cooperative labour relations. It is the perception of the Panel that unionization, in and of itself, need not be an impediment to efficiency, productivity or competitiveness. On the contrary, a responsible union and a good collective agreement may be the best possible assurance of all three. It is true that an atmosphere of jurisdictional wrangling among unions, or of confrontational politics between union and management leadership, are enemies, not only of peace, but of productivity. On the other hand, an atmosphere of mutual respect between employer and employee, and a joint contractual commitment to specific declared objectives can best assure the attainment of those objectives. In particular, the Panel believes that the issues of safety, both personal and environmental, will be better served when workers are full parties to the development of policies and procedures reflecting such matters and co-operatively involved in their implementation. Again, an agreement that guarantees no disruption of work during a construction process where time is an important consideration, must be regarded as eminently desirable from the

27 22 Socio-Economic Impacts of the Project employer s perspective. Further, it is the Panel s view that a union agreement will most readily and most effectively ensure access to the most highly skilled tradespersons in the Province. Given the nature of the Project, the Panel does not conceive that industrial agreements with several separate unions is a practical possibility; nor that, particularly in the offshore environment, the exclusionary rights of individual unions to specific jobs can be sustained. Recommendation 15: The Panel recommends that, if a union agreement is negotiated for offshore workers, it should be between single entities and should clearly provide for a flexible workforce that is not hidebound by the existence of rigidly narrow trade classifications. 3.6 ALLIANCING AND PARTNERING Management for the Project will be based on the alliance philosophy. In this type of arrangement, long-term relationships between the operator (Petro-Canada), contractors and possibly key suppliers are established to achieve collective objectives in a more effective and efficient way than through traditional contracting. Under the traditional system, the operator took a large role in direct project management and generally assumed most or all of the associated costs and schedule risks. In an alliance, each member company participates in a risk-reward commercial arrangement with established targets that include completion of the Project on schedule and within budget, while maintaining quality, safety, environmental protection and functional efficiency. NOIA offered enthusiastic support for the alliance concept and indicated that Newfoundland companies have already reaped significant benefits from this approach. Unions too supported the concept but indicated their belief that alliancing would be more effective if workers, through their union representatives, were recognized a s significant partners so as to eliminate the distrust between workers and management that had, to some degree, at least, soured the Hibernia experience. Such a partnership, in the opinion of the unions, would be advantageous to both the Proponents and the Province. For example, in meeting the demand for highly skilled and productive workers, the unions would draw upon local resources, giving first priority to qualified residents of the Province of Newfoundland, thus honouring the intent of the Atlantic Accord. When and if the need arose, the union could bring qualified union members from any part of Canada. Although not denying the possible usefulness of the alliance concept, the Town of Marystown expressed some reservations. Their fears centered upon the proposition that alliance partners would tend to look after themselves and those firms with whom they were accustomed to doing business. In such circumstances a small operation like the Marystown Shipyard might well be overlooked. Only if they were included in the alliance group, they felt, would their concerns be relieved. In seeking to assuage such concerns, the Proponents indicated that while the alliance was chosen for its ability to deliver project management services for a large project, they were committed to ensuring that procurement personnel were familiar with domestic capabilities, and would include all qualified domestic suppliers on the appropriate bid lists. The actual provision of goods and services would follow the conventional industry practice of open bidding. Marystown Shipyard would be given every opportunity to bid for any work for which they were capable.

28 Socio-Economic Impacts of the Proiect 23 From the Panel s perspective, the alliance approach is introducing a new management strategy to Newfoundland businesses. Communications with contractors will be improved and the operator will be more closely attuned to the contractor s operations than under the conventional system. This approach should prevent some of the difficulties that arose with Hibernia when certain contractors did not, perhaps, fully appreciate the importance of the first consideration provision for Newfoundlanders and Newfoundland businesses as outlined by the Hibernia proponents in the benefits plan. Under an alliance arrangement, such failures of communication should be more readily avoided. The Panel urges the Proponents to use the strengths of the alliance arrangement to enforce the requirements of the first principle clauses of the benefits plan, and to ensure that contractors and subcontractors and their management employees are fully aware of and, just as importantly, understand the reasons for these statutory requirements, Recommendation 16: Proponents.require their contractors and subcontractors to educate their management staff, down through the supervisor level, about the rationale for and the requirements of the Atlantic Accord, so that all decisions can be made in the context of that Accord. Some participants demanded a more active role by the provincial government in protecting the interests both of the Government of Newfoundland and Labrador and of workers employed on offshore oil projects. These participants interpret the lack of specificity concerning Newfoundland benefits in the benefits plan as an indication that the Province will not receive from the Project the employment and economic benefits it deserves. In this context, they were most critical of what they described as a blanket of silence in regard to the Province s position on international competitive bidding, and based on their experience with Hibernia, in respect of the Province s failure to respond to union concerns about a regime that denies local workers opportunities for employment. For some unions, government inaction derived either from misinformation or from reposing altogether too much trust in the good faith of large international contractors to put the interests of Newfoundlanders in first place. These views give the sense of a strongly held perception that there has indeed been slippage in respect of the spirit and intent of the Atlantic Accord. The Panel itself is inclined to this view, and further believes that governments must take ultimate responsibility for assuring compliance with the Accord Acts even though they have delegated this function to the Board. With the Terra Nova Development, we are now beginning what is essentially a new game; and the recently negotiated PCL Agreement may, indeed, have eliminated the perceived sources of earlier friction. Nevertheless, the Board must be vigilant in monitoring for compliance and in taking strong measures in the event of non-compliance. In particular, the Panel believes that the establishment of quotas for Canadian, and in particular Newfoundland workers, as in the case of Hibernia, is now inappropriate taking into account the expanded capabilities of Newfoundland businesses and workers developed during the Hibernia project. Any deviation from the principle of first consideration for Newfoundland workers, if necessary, should require written authorization from the Board and the prior knowledge of the appropriate worker representatives. Such occasions should be rare, for the Proponents have ample lead time to define their personnel requirements and to specify special qualifications and

29 24 Socio-Economic Impacts of the Proiect experiences needed during the life of the Project. With sufficient advance notice, the Proponents, governments and unions can develop a plan to train or upgrade qualified workers. So that there can hardly be an excuse for the Proponents or the Board to allow a situation requiring that skilled personnel must be brought from outside the Province, any such requirement should be identified well before the start of the Project so that appropriate agreement among the parties can be concluded in a timely fashion. Recommendation 17: Board discontinue the practice of establishing employment targets for Canadian, and in particular, Newfoundland workers. Recommendation 18: Board insist upon compliance with the spirit and intent of the Atlantic Accord so as to avoid the necessity for bringing personnel from outside the Province solely because the need was not identified early enough to permit the training of local residents. Recommendation 19: Government of Canada and the Government of Newfoundland and Labrador require the Board to prepare an assessment of the effectiveness of the Accord Acts in securing first consideration for employment of Newfoundland residents, together with recommendations, if necessary, for strengthening the provisions of the Accord Acts or its regulations so that benefits accrue to Newfoundlanders according to the original spirit and intent of the Accord. Furthermore, the Board should carry out regular periodic reviews of the effectiveness of the Accord Acts in the future. Recommendation 20: The Panel recommends that, should deviations from the principle of first consideration for Newfoundland workers be deemed necessary, the Proponents, with the full knowledge of the concerned worker representatives, be required to seek written authorization from the Board. Special consideration for workers in Newfoundland and Labrador is predicated on an employment rate in the Province lower than the national average. In fact, this Province s unemployment rate is approximately 20%, more than double the national average, and would be much higher were it not for the large scale outmigration of young people and families who cannot find work at home. At the same time, the per capita earned income for Newfoundlanders remains significantly below the Canadian average. In 1984, this figure was 56.9% of that for Canada as a whole. It was against this backdrop that the Atlantic Accord was negotiated. The discrepancy has not changed significantly since then and it is, therefore, clearly incumbent upon governments and the Board to enforce strictly all legal measures to ensure that Newfoundland workers are employed in projects that exploit Newfoundland resources. 3.7 OTHER EMPLOYMENT ISSUES In the case of Hibernia, extensive overtime was part of a management strategy to complete the project in the shortest time

30 Socio-Economic Impacts of the Project 25 possible. The ODC told the Panel that many workers were required to work seven days a week, 10 hours a day for upwards of eight months without a break and requested the Panel to recommend a legislated restriction on such excessive overtime. The Panel is pleased to note that the Proponents plan to implement a standard 40-hour work week and do not have a planned overtime schedule for the Project. The Panel believes this to be a wise decision in as much as excessive overtime generally disrupts the lives of workers and their families, increases the risk of accidents causing injury and loss of life, possibly limits productivity and quality of work, and exacerbates the problem of unemployment. In any case, given the large numbers of unemployed workers here and scattered throughout Canada who are eager for work, there should be no need to resort to such practice. A larger workforce benefits everyone -- the employer, who profits from increased productivity and safety; the worker, who gains a greater chance of employment and increased opportunity to advance in his/her trade; and, the Province, which benefits when people earning an income pay taxes and generate multiplier effect employment. The Panel does not believe, in light of assurances given by the Proponents, that legislation is necessary at this time. It does, however, in view of the practical need for some occasional overtime, recommend that such be limited to a normal maximum of 10 hours per week. Recommendation 21: The Panel recommends that a work week of 40 hours and maximum levels for overtime of IO hours per week be established by the Board as the norm for the Terra Nova Development. Workers who appeared before the Panel drew upon their Hibernia experience and consistently complained about communications. The ODC, in particular, considered the Proponents communications to date to be wanting, especially with regard to the partnering concept and its implications for local businesses and workers. The Panel is strongly inclined to support the ODC view that inadequate communications account for a substantial percentage of all labour relations problems. It also agrees that in as much as the Proponents submission was lacking in specific information, particularly in the benefits plan, the germ of future problems arising from misinformation and - misunderstanding already may have been planted. The Panel, therefore, urges the Proponents to ensure that more open lines of communication are established now, and maintained for the life of the Project, and that new and innovative ways be devised to monitor and update information supplied to the public. The Panel notes that the provincial government and the Board may also be found lacking in respect of their clear responsibility to keep the people of the Province informed with regard to the exploitation of their resources. In justice, the Panel also notes that the Proponents failure to supply full information on local employment prospects is owing in part to the unknowns associated with a government-approved process, i.e., competitive global bidding. As a final note, the Panel is aware that the Proponents should not be blamed for everything that, from the workers perspective, went wrong with Hibernia, and is also aware that worker representatives themselves have some responsibility for the dissemination of information to their peers. Notwithstanding, the Proponents should be advised that the public expects to be kept informed of what is happening with the Project, and particularly with respect to

31 26 Socio-Economic Impacts of the Project benefits issues. Straightforward reporting indicating not only compliance with, but any deviations from enunciated policies, procedures and principles, should be done at regular intervals. Recommendation 22: Proponents be required to institute an appropriate system for providing regular information to the public, not only regarding job and business opportunities, but also regarding the extent to which it is adhering to all commitments made in the context of its benefits plan. As to the Board, the Panel is aware that it has heretofore maintained a low profile and has not made a priority of keeping the public informed of its activities. The Panel believes, however, that it should initiate a consumer-oriented public information effort, recognizing that the people have a stake in natural resources and a right to know what is happening to them. This argument applies pari passu to the Government of Newfoundland and Labrador which has a clear obligation to keep the public fully informed of policies in place that affect the exploitation of natural resources and that determine the benefits that the Provincial government expects to derive from the depletion of such resources. The availability of correct information may prevent some of the misunderstandings and anxieties about offshore development that were expressed at the hearings. Recommendation 23: Board commence a regular public information program to update the people of the Province on the results of its compliance monitoring efforts and other matters of interest to the public concerning activities of the offshore oil industry. Recommendation 24: Government of Newfoundland and Labrador improve its public information efforts concerning the offshore oil industry, in particular by releasing full information concerning any changes in existing petroleum policies or the adoption of new ones, together with clear explanations of policies in place. Throughout Canada, certain professions, whose activities have implications for the safety and welfare of the public, are selfregulated under authority of relevant provincial legislation. One such group, the Association of Professional Engineers and Geoscientists of Newfoundland, made representation to the Panel on their experience with the Hibernia project. Their principle concern was that engineering and geoscience work for the offshore should be performed only by qualified professionals, registered to practice in the Province and the management and supervisory professionals to whom such workers report should also be registered in this Province. While the onus is on the individual to register with the appropriate professional organization, companies have a responsibility to see that this is done. It is clearly for companies to decide how they will discharge their statutory responsibility to have engineering work in the Province performed by Newfoundland registered professional engineers. The Panel would, however, urge full co-operation by the Proponents with the professional body in supplying information on individuals being hired from outside Newfoundland. The Proponents should ensure that their

32 Socio-Economic Impacts of the Project 27 professional employees are registered in the Province. Recommendation 25: Proponents, their contractors and subcontractors be required to honour any statutory obligations respecting the licensing of professionals who work in the Province of Newfoundland. 3.8 BENEFITS TO THE ECONOMY Supplier distribution and development were the principle economic benefits issues brought before the Panel. In particular, the Town of Grand Falls-Windsor drew the Panel s attention to the potential for companies, other than those located in the four construction areas named by the Proponents, to participate in any economic activity generated by the Project. They suggested that the Proponents look to the whole Province for their prospective suppliers, hold public information sessions, and use existing organizations such as the regional economic zone boards, chambers of commerce and municipal economic development offices to disseminate printed information to the business community. The desirability of spreading economic benefits to smaller towns was also stressed by the Town of Marystown and the Marystown-Burin Area Chamber of Commerce. Both promoted the use of Marystown Shipyard and the Cow Head facility, as well as other industrial providers in the area. They noted, in particular, that the Marystown-Burin area already had community infrastructure in place to support industrial activity at the level that might be anticipated. NOIA indicated that its members, having already benefited from the offshore oil industry, were ready and fully able to contribute significantly to the success of the Project. Their presentation exuded optimism that Newfoundland can build on the momentum of its Hibernia experience and through full participation in the Terra Nova Development assist in laying firm foundations for an industry with long-term potential for local development and, indeed, for export of technical expertise and services. The Panel notes that the Proponents have committed to a course of action to ensure that offshore fabrication and construction yards in Newfoundland have an opportunity to enter the bidding process. Furthermore, the Proponents are committed to using their best efforts to bring to Newfoundland the fabrication, assembly and outfitting services associated with new construction or modifications on the topsides facilities of the production platform, the sub-sea facilities, the mooring systems and the production risers. Further, the Panel is pleased to note.that the Proponents have adopted policies designed to enhance the competitiveness of Newfoundland businesses. Bids will be packaged into smaller modules so that local yards can compete for the work. An assessment of the capability of local yards has been completed. If requested to do so, the Proponents will provide assistance to help yards focus on the aspects of supply for which they are best suited and, if necessary, will assign individuals to these enterprises at an early stage to assist with project management. Recommendation 26: Proponents use their best efforts to promote supplier development throughout the Province.

33 28 Socio-Economic Impacts of the Proiect Further still, the Proponents are committed to the concept of local content in goods, services and labour as an important factor in awarding bids. Companies bidding on the use of a location outside Canada will be required to supply a bid for carrying out the same work in Newfoundland. If bids are equal in price, quality and delivery, the contract will be awarded to the company providing the goods and services from Newfoundland. When all technical and commercial considerations are satisfied, but bids are essentially equal, the Proponents will award the contract to the bid offering the greater benefits to Newfoundland. If a contract cannot be awarded in Newfoundland s favour, the Maritimes and the rest of Canada will get consideration, and in that order. With those commitments in mind, the Panel finds it inconceivable that Newfoundland and other Canadian businesses should not share in the economic benefits from this development. Newfoundland has several ideal sites for fabrication by virtue of their location close to the Grand Banks, a plentiful supply of skilled labour fresh from Hibernia experience, and a business community ready to respond to the challenge of servicing this new industry. The Panel confidently anticipates the expansion of existing businesses and the development of new services and supply companies. The preproduction phase will be the most visible to local residents, though because of the relatively short construction period, greater benefits will probably flow from the sustained economic activities of the drilling and production phases. Those will offer stable employment and opportunities for the Newfoundland business community to supply a wide variety of goods and services over the life of the field, possibly up to the year Despite this relatively optimistic forecast, the Panel is concerned that the Board might set targets for Newfoundland content in services and labour and that these might be achieved through existing capability. The Panel believes that it would be a great disservice to the development of a local industry if such targets were set; and if the Project was allowed to proceed without a substantial transfer of technology and without the development of new supporting industries, such as sub-sea systems, deepsea diving, ROV operations; and without development in technical areas such as instrumentation, remote sensing, environmental monitoring and the like; and without development in the general fields of supply, maintenance and repair. In the Panel s opinion, it should be possible that all labour and all services might be provided from Newfoundland or other Canadian sources. Prior to the approval of the Project, the Board must satisfy itself that transfer of new technology and the development of new industrial supports will occur. These two requirements can be accomplished within competitive bidding and must not be stifled by it. Technology transfer and new industrial development should come about with each succeeding project and must be a prime requisite for any project approval. Recommendation 27: Board ensure that Newfoundland content in the Project is maximized and that such content includes technology transfer and support for existing and new industries in the service sector. Recommendation 28: Board develop a plan to ensure that technology transfer and new industrial development become a prime requisite for the

34 Socio-Economic Impacts of the Project 29 approval of future oil development projects. 3.9 SOCIAL IMPACTS One of the objectives of an environmental assessment review is to identify how a project will have an impact on the social fabric of the community in which it is located. Population change associated with increased industrial activity and employment is normally the stimulus for other social changes, some of which can be negative. The number of jobs created by the Project during the preproduction phase is expected to peak at 500 to 600 and last for approximately two years. During the drilling and operations phases, 400 to 500 people will be employed in offshore operations. Neither of those job forecasts are sufficient to produce population changes that cannot be absorbed within existing infrastructure and social supports. No negative impacts are expected from the Project. Social impacts that may, in the longer term derive from a growing oil and gas based industry are beyond the scope of this review, as are the impacts of increased government revenues in the form of royalties and taxes. If the number of participants concerned with social issues is an indicator, the social impact of the Terra Nova Development is not a priority for most residents of the Province. The towns of Grand Falls- Windsor and Marystown promoted their areas in an effort to attract the socioeconomic impacts of the Project, rather than raising concerns. The Bull Arm Area Co-ordinating Committee, representing communities within a 50 km radius of the Hibernia construction site, also sought increased community participation. They, too, accept the general view that the anticipated negative social impacts of the Hibernia project had not materialized, even in the communities adjacent to the site. There was a feeling, however, that while the self-sufficiency of the campsite prevented adverse social impacts, it also limited economic growth in surrounding communities and diminished employment opportunities for residents of those communities. Thus, to the Bull Arm Area Co-ordinating Committee, an increased involvement in their area would have entirely positive connotations. In short, Hibernia has been a test case for social impacts from oil development. There was virtually unanimous agreement that the predictions of severe negative impacts, prevalent during the planning stage of that development, did not occur. As with previous developments in other sectors, Hibernia has demonstrated the absorptive capacity of the Province to withstand economic expansion without undue social disruption or inflationary pressures. While some of the mitigative measures undertaken by Hibernia Management and Development Company (HMDC) prevented social disruption from occurring, the Panel believes that it will take more than the Terra Nova Development before any negative socio-economic impacts occur within the underutilized capacity of the Newfoundland economy. The Proponents have indicated, and the Panel agrees, that the modest size of the Terra Nova workforce, people at peak, does not require the kinds of mitigative measures introduced for Hibernia. In other respects, the Proponents have already acted to alleviate some of the concerns expressed by the Bull Arm Area Co-ordinating Committee. The PCL Agreement provides for residents of the area, who have the required skills, to join the various unions and enter the workforce without the normal waiting period. The Panel acknowledges this effort by the Proponents to settle in an amicable manner

35 30 Socio-Economic Impacts of the Project the contentious issue of employment preference for residents of adjacent areas, particularly in view of a provincial policy defining local as covering the whole Province. Further, it has been decided that whatever construction site is chosen, no onsite accommodation will be provided. This should result in some demand for rental units, boarding homes and other revenueproducing services in the surrounding communities. A fisheries compensation package will also be available if necessary or appropriate. The Proponents have rejected a 5% preference policy for local businesses, as proposed by some participants. The Panel is generally supportive of this position, accepting as it does the Proponents declared intention to work with the business community across the Province to promote supplier development. The Panel supports equal opportunity for all businesses in the Province on a fair and equitable competitive basis. Two other matters raised by the Bull Arm Area Co-ordinating Committee require comment. The first concerns special funding for a liaison group and the other concerns the possibility of bringing the Bull Arm site under the control of an adjacent municipality. The Bull Arm Area Co-ordinating Committee was funded through the Offshore Development Fund to provide a link between the local communities, government, and the Hibernia operator to facilitate dissemination of information about the project, particularly with regard to employment and to provide feedback regarding undesirable impacts. Although this was a useful measure at the time of its implementation, and although the committee has served well, the Panel cannot see, in the altered circumstances of the Terra Nova Development, any justification for the continuation of special funding. Recommendation 29: The Panel recommends that, while the Government of Newfoundland and Labrador may decide to renew the funding for the Bull Arm Area Coordinating Committee, the Terra Nova Development should not be considered as a reason for such renewal. Nor is the Panel disposed to support the proposal that the Bull Arm Industrial Site be placed under the jurisdiction of a municipality or other form of regional government that would administer the properties and collect taxes from companies operating on the site. The Panel s rationale is that none of the municipalities in the area have the highly skilled technical and operational staff required to establish and enforce the various building, safety and environmental codes that would be necessary. The Panel is therefore recommending that the area remain under the jurisdiction of the Department of Industry, Trade and Technology. Recommendation 30: The Panel recommends that administration of the Bull Arm site remain under the jurisdiction of the Department of Industry, Trade and Technology. It can be assumed, however, that developments associated with the Terra Nova Project would provide to adjacent communities revenue-generating possibilities through the sale of services, such as water, sewer and waste disposal, and other rental and property tax revenues.

36 Socio-Economic Impacts of the Project 31 The Panel notes, however, during the Hibernia construction phase, many workers set up trailers in unregulated areas by roadsides outside municipal boundaries. These, in time, became a source of pollution of the land and of streams that flowed through adjacent communities. Had those trailer dwellers been required to establish themselves within communities where services were available, the pollution problem would have been averted and municipalities would have been in a position to increase their tax revenues without incurring significant new costs. The Proponents of the Terra Nova Development will not be providing housing for workers. The Panel therefore urges municipalities and responsible provincial authorities to take appropriate and early action to prevent a replication of the experience noted above. Environment Canada, in its submission to the Panel, although concluding that the relevant socio-economic issues associated with the Project had been identified, was critical of the Proponents approach to their quantification and to the assessment of their potential impacts. Environment Canada would have preferred a more theoretical approach to impact identification, including working definitions, a comparative analysis with and without the Project that would include quantitative and qualitative assessments, a protocol for mitigating negative impacts, and a monitoring program for both the effects and the results of mitigative measures. Environment Canada also suggested that the Proponents should revise their assumption that no socioeconomic impacts will result from offshore operations. The suggestion here was that socio-economic impacts could indirectly derive from environmental impacts that might result if ocean dispersal of oil-based muds (OBMs) and produced waters are the selected technological alternatives. The Proponents defended their methodology for socio-economic impact assessment and stated that even if Environment Canada s recommendations had been followed, they would have lead to the same conclusion but would have required significant additional time and money. The Panel concurs, and is satisfied that the Proponents have supplied sufficient information for the Panel to determine that the development will not have significant negative social impacts and that a monitoring program is considered unnecessary at this time WORKER SAFETY The Panel has a mandate to consider issues of life safety. However, the Board did not require the Proponents to include a safety plan with the documents comprising the environmental impact statement (EIS). They will be required to submit such a plan for Board approval prior to the commencement of operations at the Terra Nova site. The Panel believes that the life safety plan is a matter of such great significance that it ought to have been made available for public review. The Panel believes that the Board, when they have received the plan, should make it generally available for the information of the public, and allow a sufficient period for the receipt and consideration of public comments before proceeding to the approval stage. For the future, the Panel believes that the Board should require that a safety plan be an essential element of any EIS submitted for review. In respect of the safety plan for the current project, the Board must ensure that it is predicated upon the principle that life safety is the paramount consideration at all times. It must, of course, satisfy all regulatory requirements established under occupational health and safety legislation and other relevant acts. It must provide for comprehensive safety training; it must provide for emergency and contingency

37 32 Socio-Economic Impacts of the Project planning; it must provide for drilling and production operations that are fail-safe insofar as it is possible for them to be so; it must take into full account the extreme weather, sea and ice conditions likely to be encountered on the Grand Banks; and, it must contain clear protocols for avoidance of hazards when other forms of management may increase risks. It must be founded on a clear and thorough risk assessment and must set high performance standards for hazard management. It must contain provisions for evolution as engineering studies, together with operational and safety audits, suggest better ways of minimizing risk. In particular, the Board must be convinced that the FPSO design incorporates temporary safe refuge areas and more than one protected escape route. Most particularly, the Board must be sure that the evacuation systems are chosen only after careful assessment of studies of all such systems undertaken subsequent to the Ocean Ranger disaster, and that the ones selected are the very best available. Although the Panel received few submissions directly related to worker safety, it is clear to the Panel that the safety of workers associated with the Terra Nova Development is nonetheless a matter that all participants viewed as a fundamental consideration. The Panel has already referred to the importance of worker involvement in implementation and management of any safety program. The significance of such arrangements cannot be overstated. Indeed, every individual involved with the Project must be fully informed, fully sensitized, and fully committed to the proposition that safety both of personnel and of the environment are first priorities. Recommendation 31: safety plans for the Project be released to the public for information and that the Board allow sufficient time for receipt and consideration of public comment before proceeding to approval. For future projects, the Panel recommends that the safety plan be a required element of the environmental impact statement. Recommendation 32: Board ensure that the safety plan for the Project is built upon the highest standards for materials, design and operational procedures to ensure life safety; that safe refuge areas and escape routes be designed with worst-case scenarios clearly in mind; that evacuation systems represent the best available technology; and, that workers be made partners in developing and monitoring safety procedures.

38 The Impact of the Environment on the Project THE IMPACT OF THE ENVIRONMENT ON THE PROJECT 4.1 OVERVIEW The physical environment, and most particularly the oceanic, atmospheric and ice regimes that dominate the Grand Banks represent formidable challenges to the Proponents. Design engineers will underestimate at their peril the forces of wind, ocean currents, waves, pack ice and icebergs that will be brought to bear upon both the floating and sub-sea elements of an oil production system. It is imperative that designers be concerned that their environmental data are as comprehensive as is reasonably possible; that their risk analyses are thorough; and that, if error is made, it must be error on the side of caution. The consequence of failure would be to place lives at risk and to court environmental disaster. 4.2 WIND AND WEATHER The EIS derives its basic information concerning the nature of the Grand Banks weather from the comparable Hibernia EIS of 1985 which, in turn, drew upon studies that had been conducted in the early 1980s. Some more recent information has been included and, particularly, that deriving from the Canadian Atlantic Storms Program (CASP), Phases I and II, as well as the Genesis of Atlantic-Lows Experiment (GALE), and the Experiment on Rapidly Intensifying Cyclones over the Atlantic (ERICA). In general, climatological data are drawn from archival resources of the Atmospheric Environment Service of Environment Canada (AES), located at the Atlantic Weather Centre, Bedford, Nova Scotia, and the Canadian Climate Centre at Downsview, Ontario. Those data sets, some going back to the early 18OOs, and some continuing through 1995, include hourly observations of weather conditions from certain local stations, some detailing wave, wind, ice cover, air and water temperatures, air pressure, and storm tracks obtained through marine or coastal station meteorological reports as summarized by the Marine Statistics System (MAST). One data set, located in the AES archive at Downsview and also at the U.S. Pacific Marine Environmental Laboratory (PMEL) at Seattle, although identified as the Comprehensive Ocean-Atmosphere Data Set (COADS), does not include certain Canadian marine observations since Furthermore, the range of outputs for data collected since the late 1980s are limited to monthly means. Of considerable importance is the Proponents Terra Nova environmental data base, which consists of data on temperature, wind speed and direction, atmospheric pressure and variability, collected by oil industry and government vessels operating in or passing through the Terra Nova and Hibernia regions of the Grand Banks. In short, it may be said that the best available data have been used by the Proponents in preparing their EIS. This is not to say, however, that current knowledge is definitive or that, in respect of forecasting abilities, the science is any way exact. The data bases contain materials of varying provenance whose real value is also variable, ranging from relatively crude observations by untrained observers using unsophisticated measuring devices to carefully controlled measurements by qualified scientists or technologists using state-of-the-art equipment. Prior to the commencement of exploration activities on the Grand Banks, most climatological information from the area was provided by ships of opportunity and was in consequence somewhat random in terms of both time and quality. The usefulness of

39 34 The Impact of the Environment on the Project these data is further compromised because transocean shipping, though generally following standard shipping lanes, will avoid bad weather and ice where possible. The international fishing fleets that habitually frequented the Grand Banks did not maintain weather records in any systematic way. Over the next few years it will be possible to collect systematically additional data from the Hibernia platform and from drilling rigs operating in the area. Nevertheless, it is clear, as the Proponents have recognized, that the ocean area to the south and east of Newfoundland is the most active area of cyclonic activity in North America and the adjoining oceans. Data produced in the EIS indicate clearly that wind speeds over the Terra Nova area are consistently higher than the values reported from the nearest land stations. On average, one significant tropical storm per year passes within 300 km of the Newfoundland coast, tracking across the Terra Nova area, while less common but even more violent storms follow the same track. Indeed, it is recognized by the Proponents that the Project will be located in one of the harshest weather and sea-state environments on earth. The calculations for expected extreme wind speeds at the Terra Nova location appear reasonable in the context of available data. The Det Novake Ventas calculations for gust factors as applied in the Seaconsult analysis appear to be consistent with recent studies of wind speed and gusting conducted off Canada s east coast, albeit not at the Terra Nova site. The CASP-I and II, GALE and ERICA research programs have added considerably to the knowledge of the physical processes that produce the major storms that skirt the coast of Newfoundland. These and other recent studies also have increased the knowledge and understanding of area scale variability in winds over the northern Grand Banks as influenced, for example, by the presence of pack ice. Despite this growing knowledge, observational techniques and operational forecasting skills still can be improved. Early identification of impending storms, and particularly of those intense winter storms that result from explosively deepening low pressure systems, can be improved through careful surface observations, remote sensing, and from numerical weather models. Happily, the Proponents are fully aware of the need for improved operational forecasting, especially of severe weather. They look for such improvements to the AES, which promises, at the very least, higher resolution wind field forecasts in the near future. It was apparent from the hearings conducted by the Panel that the Proponents EIS was deemed by the public to be generally satisfactory in respect of the impact of wind on the Project. Very few questions were raised in this domain and those that were raised, by Environment Canada, for example, were satisfactorily answered. Nevertheless, the Proponents must not leave everything to the AES. Continuous monitoring of weather conditions at the production site in full collaboration with AES will add an important dimension to that agency s data gathering activities. Additionally, since accurate forecasting of weather must be a major concern in respect of both life safety and security of facilities and production, the Panel believes that a dedicated forecasting program with a research component should be an integral part of the Project. Recommendation 33: Terra Nova Development should become, in

40 The Impact of the Environment on the Proiect 35 collaboration with the Atmospheric Environmental Service of Environment Canada and the Hibernia platform, an important centre for the collection of weather data both to enlarge and improve current data sets and to aid in the early identification of intense winter storms; and, that a collaborative weather program with a research component be designed and implemented to improve observational techniques and operational forecasting. Other atmospheric weather phenomena that might impact upon the Project are thunderstorms, although those are comparatively rare in this area; fog, which will present a hazard in all seasons; and, freezing rain and spray icing that will, during winter and spring, be a regularly occurring danger to ships and aircraft. Because the Terra Nova Development will involve ships, both stationary and in motion, as well as helicopters, and because the field is located near a major transatlantic shipping lane, the Great Circle Route, and in an area frequently traversed by fishing vessels, the prevalence of dense fogs must be the occasion for particular care. The price of safety in such an environment must be eternal vigilance in the context of a welldesigned program, in collaboration with the Canadian Coast Guard and other appropriate authorities, for the monitoring and controlling of sea and airborne traffic. Recommendation 34: development plan should include a program devised in consultation with the Canadian Coast Guard and other appropriate authorities for monitoring and controlling marine traffic and for the development of a set of protocols to obviate the danger of collision. The data available in respect of ice accumulation on hulls and superstructural elements of ships and production facilities are relatively sparse, and the application of the best available models to the Newfoundland offshore has not been properly tested. It is known that spray icing, in conjunction with high winds, has historically represented an extreme hazard to shipping. Thus, in the context of the Project, the Panel believes that the Proponents measures to ameliorate this hazard should be coupled with a monitoring and research program which would refine existing models, and would establish reliable design load estimates for the extreme conditions anticipated throughout the life of the Project. Recommendation 35: The Panel recommends that measures proposed by the Proponents to ameliorate spray icing or icing from freezing rain should be coupled with a research program designed to expand current knowledge and to refine existing models with the objective of establishing completely reliable design load estimates for the extreme conditions that may be encountered in the Terra Nova Development area. 4.3 WAVES The Proponents acknowledge that a sound understanding of the mean and extreme wave climate at the Terra Nova site is required to support systems designs and operational planning. The Panel is satisfied that the EIS contains a reasonably comprehensive analysis of available data bases. In particular, the expanded wave hindcast data set, now including 80 specific storm events, indicate little change from earlier estimates. However, very large

41 36 The Impact of the Environment on the Project waves are often episodic in their occurrence, exhibiting a large degree of variability extending over time scales of decades or longer. In this context, a value for extreme wave height derived from a study period of less than a single decade may well be invalid. However, sea and wave conditions did not appear to be a concern to members of the public appearing before the Panel. Only the Natural History Society raised the issue and their comments did not directly address the Proponents EIS, but rather provided a retrospective of comments by Environment Canada and the Department of Fisheries and Oceans raised in response to the Hibernia EIS. Notwithstanding what appears to be general public satisfaction with the Proponents preparedness to deal with high wave conditions, the Panel believes that design criteria for vessels that will be on site for two decades or more must clearly recognize the possibility of extreme wave values higher than those predicted by the current model. There is also a necessity for continuing accurate observation and the regular updating of the wave hindcast data bases. Recommendation 36: Proponents, in collaboration with Environment Canada and other relevant institutions, collect data and regularly update wave hindcast data bases. Recommendation 37: Board ensure that design criteria for vessels that will be on site for two decades or more must clearly recognize the possibility of extreme wave values higher than those predicted by the current model. 4.4 CURRENTS In the event of oil spills at or near the production site, the pattern of drift that will determine the rate and spatial extent of dispersal is clearly a matter of importance. The Natural History Society, while acknowledging that the EIS contains an excellent and thorough summary of the oceanography of the area around the Terra Nova field, concludes that this knowledge is not transferred into the assessment of environmental impact. Their principal criticism was that in the drift modeling done for the EIS, the Labrador current was apparently absent, even though the addition of the ocean flow of that current has an important impact on model results. If the studies reported by the Natural History Society correctly predict that an oil spill at the Terra Nova site will drift southwards along the eastern flanks of the Grand Banks, the environmental impact will clearly be different from that arising in the case of a different pattern of dispersion. Additionally, the Panel is concerned that because of the extreme variability of surface currents in the area, it will be difficult to forecast the manner in which an oil spill would be dispersed. For this reason, the Panel recommends that a surface current monitoring program be established with the objective of adding to the knowledge base; improving assessment of the full impact of a spill at the Terra Nova site; and, to the development of contingency plans for amelioration. Recommendation 38: Proponents be required to maintain a continuous surface current monitoring program at the Terra Nova site to enhance the predictability of oil dispersal patterns. The Panel further recommends that serious consideration be given to the incorporation of the data

42 The Impact of the Environment on the Project 37 from the monitoring exercise with drift modeling. 4.5 ICE Anchored FPSO technology has been proven in the harsh offshore environment of the North Sea. However, drifting ice, and most particularly icebergs, add a unique dimension of danger to both floating and sub-sea systems at the Terra Nova field that is difficult to overstate. The EIS employs data compiled from approximately 40 years of airborne reconnaissance by both Canadian and American government agencies. This has been augmented, and in some cases replaced, by images from polar-orbiting satellites in daily and weekly ice charts produced at the AES Ice Centre. The Proponents have relied also upon observations of the offshore oil exploration industry during the 1970s and 198Os, and as well upon the results of the Department of Fisheries and Oceans and AES research supported by the Panel on Energy Research and Development (PERD). Data on icebergs has also been available from the International Ice Patrol (IIP), which was created subsequent to the Titanic disaster. Since 1989, Provincial Airlines Ltd. (PAL) has conducted airborne surveys on an approximate five-day schedule, which has allowed for a simpler process for counting icebergs within a given one-degree grid area than the more complex modeling of the IIP. Significant differences between the figures derived from IIP estimates and the PAL counts indicate continuing uncertainties associated with both the survey and estimation procedures employed. In using a judicious interpretation of both sets of data, the Proponents are satisfied with the counting criterion for the particular onedegree grid in which the Terra Nova Development lies. Nevertheless, they must recognize that their conclusions are not absolute. Rate of drift and rate of deterioration are confounding elements of modeling equations. A single large iceberg, in an instant, might split in two or into a number of growlers and bergy bits, and thus confuse the counting process. Of course, mere counting says nothing of physical dimensions and velocities nor, indeed, of propensity to scour. Data in respect of these phenomena are reliant upon monitoring and study programs carried out by the oil industry during exploration and preparation for production. Additionally, research supported by PERD and the Environmental Studies Revolving Fund have contributed to available knowledge. Iceberg trajectories are notoriously difficult to forecast. They are subject to the influences of major ocean currents, tidal currents and by winds and wind-generated currents. The dimensions and shape of icebergs, the pack ice regimes in which they move, and the air, water and bottom drag coefficients also affect the ability to forecast. In consequence, the predictive values based on forecast wind and current values alone are somewhat suspect. Best estimates are derived only from near realtime wind and current data from the immediate area in which the iceberg is moving. This is to say, that the capacity to assemble such real-time data for instantaneous application will add an important empirical dimension to forecasting abilities. The Panel believes that the problem of iceberg scouring has been adequately addressed in the EIS, although some uncertainties remain in respect of the available data and analysis based on them, and that glory holes and trenching to the

43 38 The Impact of the Environment on the Proiect indicated depths make sufficient allowance to ensure the safety of the wellheads and flow lines. In the public mind, the icebergs, growlers, bergy bits and pack ice represent the greatest hazard associated with development of the oil field. One participant, in his presentation to the Panel, concentrated on the possibilities of collisions of ice with floating elements of the production system. He felt that the EIS was too optimistic in respect of the ability to detect, monitor, and manage ice, and provide for an orderly and controlled move off location, in the event an unmanageable iceberg that presents a hazard approaches too close to the facilities. His argument was predicated on the assumptions that ice is uncontrollable; that predicting iceberg drift is extremely difficult, if not impossible; that sometimes as many as 200 icebergs may be found in the Terra Nova area, and, on such occasions, it would be extremely difficult, if not impossible, to determine which individual icebergs should be selected for management; that the calculation of a median southerly ice edge is of little value; that growlers and bergy bits are virtually undetectable in wave heights commonly experienced at Terra Nova, but are nonetheless dangerous to ships; that the EIS makes no provision for the management of such growlers and bergy bits; and, that indeed such pieces of ice are not only hard to detect at long range, but practically impossible to deflect from their course. In support of his argument, the participant listed 52 significant incidents occurring offshore Eastern Canada since 1980 in respect of oil exploration and development activities. Of the 52 incidents, 10 involved ice management or.avoidance. In no case was ice responsible for losses other than of time. The Natural History Society of Newfoundland and Labrador in its submission echoed those concerns and systematically challenged the statistical methodologies applied in the EIS, asserting that the data used were collected for logistical rather than for scientific uses so that certain results were not scientifically reviewable. They complained about means reported without standard deviations, and other data sets in which considerable spatial and temporal averaging were masked. Environment Canada, too, concluded that the ice management plan assumes skill in the forecasting of iceberg motion that has yet to be demonstrated to their satisfaction. Environment Canada also expressed caution about the possibility of climate change causing a greater number of icebergs in the Project area. The Panel is impressed with the degree of confidence expressed by the Proponents in respect of their capacity to deal with icebergs at the production site. However, there is strong public perception that difficulties and potential hazards may have been understated. In view of the acknowledged hazard and the difficulties presented by analysis of available data bases, the continuing study of ice conditions and iceberg trajectories in the Terra Nova area, and a better means of identifying and tracking growlers and large bergy bits, must be implemented. This implies that a continuous program of observation and research, that leads to the improvement of radar and other remotesensing devices making possible the early detection of even low-lying masses of floating ice, must be a significant component of the operational plan. Further, a carefully-designed third-party audit of the effectiveness of the Proponents ice management plan would serve to validate the Proponents optimism and satisfy public concerns. While the EIS discussion of sea ice data drew similar public criticisms none of the participants deemed it to be as large a

44 The Impact of the Environment on the Project 39 potential problem as icebergs, growlers and large bergy bits. Nevertheless, large pieces of hard multi-year ice will pose a threat to the integrity of the hulls of the FPSO, tankers and supply vessels. Ship designs for the Project should clearly recognize this hazard and the protocols proposed in respect of double-hull design, icestrengthening, Canadian flagging and crewing should be mandatory. Furthermore, all marine crews should be properly trained and certified in safety and marine emergency procedures and, to this end, appropriate arrangements should be made with relevant training establishments in the Province. Dangerous pack ice will be encountered at the Terra Nova site and avoidance would seem to be the only appropriate form of management. The Panel should note the argument advanced by the Natural History Society that pack ice in the Flemish Pass area, just east of the Grand Banks, could quickly infest the Terra Nova site in the event of a strong easterly wind. The Panel believes that the ice management plan should clearly delineate the circumstances in which it will be appropriate to disconnect and remove all surface vessels to a safer environment. Recommendation 39: ice management plan should: a) allow for the difficulties in forecasting iceberg trajectories and provide for the acquisition of adequate real-time data that can add a substantial pragmatic element to model-driven projections; W clearly indicate a process for selecting the icebergs to be managed by towing, for example, when multiple icebergs are in the immediate area; cl d) e) f 1 9) h) recognize that collisions with small growlers and bergy bits are definite hazards to shipping; include a process for timely identification and management of threatening growlers; recognize the potential for a substantial increase in the number of icebergs crossing the 48th parallel as a concomitant of global warming; include provision for a third-party audit of its effectiveness; clearly establish a set of protocols that will determine the conditions which will dictate disconnection and removal of all surface vessels to a safe area; and, include a continuous program of observation and research that leads to the improvement of radar and other remote sensing devices that will make possible the early detection of even low-lying masses of floating ice. Recommendation 40: The Panel recommends that ship designs for the Project clearly recognize the hazard to hull integrity posed by growlers and bergy bits and meet the highest standards for navigation in ice as presented by the appropriate authorities. Recommendation 41: The Panel recommends that all marine crews be properly trained and certified in safety and marine emergency procedures and that the Proponents make appropriate arrangements with relevant establishments in the Province for such training.

45 40 The Impact of the Environment on the Proiect 4.6 COINCIDENT EXTREMES A matter of public concern raised on several occasions was the possibility of the coincidence of extreme wind force, extreme wave heights and extreme iceberg menace or rig icing. In the context of risk analysis, it is clear that there is a low probability of such a scenario. Nevertheless, the possibility must b e recognized as a ponderable one. In extreme wind and sea conditions the management of icebergs would be, given the current state of the art, an impossibility. it, therefore, follows that the ice management plan must adopt a policy of avoidance that eliminates any possibility of such a crisis arising. This implies not only an effective monitoring program and a completely reliable forecast capacity for wind and sea conditions, but also a welldesigned and clearly understood decisionmaking process that will ensure the timely removal of the FPSO and support vessels from the area. Recommendation 42: The Panel recommends that operational planning should allow for the simultaneous occurrence of two or more loo-year events, involving combinations of wind, sea, and ice. This should include a well-designed and clearly understood decision-making process for the timely removal of the production vessel and all other vessels from the area. 4.7 COMMAND STRUCTURES This in turn implies a carefully conceived structure of command that permits no ambiguity nor any possibility of misunderstanding at times of emergency. It is accepted under marine law and the Canada Shipping Act that vessels at sea are under the absolute authority of their masters. It is also accepted, throughout the oil industry, that a production platform is under the command of the offshore installations manager (OIM). The FPSO that will be used in developing the Terra Nova field will be a production platform when it is moored at the site and connected to the sub-sea production facilities. It will be a ship when it has been disconnected from those facilities and from its moorings. There is, within the paradox of a vessel that becomes a ship, then ceases to be a ship, and then becomes a ship again, a clear and present possibility for conflict. For there are two authorities, each of whom has, from time to time, supreme and uncontradictable control over the vessel. It will be argued, of course, that there would be no conflict when the vessel was under way, for then the captain would be in command; nor any conflict when the vessel was in production mode, for then the OIM would be in command. From this, it might appear to follow that there would be no time at all when there was not a single person in command. However, a potential difficulty does exist when a decision must be taken to remove the FPSO from its moorings and change it into a ship under way. One might assume that the marine captain would be the person best qualified to make such a determination. However, until that decision to disconnect is actually taken, the person in command is the OIM. The Proponents assured the Panel that there will be in place formal and wellstructured provisions for appropriate consultation between senior oil production and ship handling specialists whenever wind, sea state or ice conditions warrant special concern. In eventualities such as those, when conditions of extreme hazard exist, the prime consideration must be the safety of the vessel and, more particularly,

46 The Impact of the Environment on the Project 41 the safety of its crew. Since, in the Panel s view, the marine captain must be the person with the best appreciation of the impending dangers, and best able to interpret weather and sea-state data and how the vessel should be best prepared to meet severe storm conditions, the Panel believes that if a difference of opinion should arise as to whether to disconnect or not, the captain s decision should be final. The Panel recognizes, of course, the possibility that the OIM could be a qualified marine captain with appropriate sea experience and that the offices of ship s captain and OIM could be combined in one person. Recommendation 43: marine captain should be ultimately responsible for the safety of the vessel and her crew in respect of all weather or sea-state hazards. A mechanism for the formal and continuous consultation between the captain and the offshore installations manager should be clearly in place. The marine captain should be the one to implement, when it is necessary, the protocols to disconnect the vessel and remove it to a safe area. The Panel does not, however, believe this to be an appropriate course to follow. The stresses of either job would be considerable. The additional stress of having to resolve the potentially severe conflict of competing interests might well be intolerable.

47 42 Environmental Effects of the Project 5.0 ENVIRONMENTAL EFFECTS OF THE PROJECT 5.1 OVERVIEW The principal goal of environmental assessment is to obtain assurances that the repercussions upon the environment of proposed developments are identified and appraised in advance, and that requisite measures are adopted to limit them to acceptable levels. In this instance, the Proponents prepared a comprehensive and well-documented EIS, and in the course of public hearings clearly explained their plans to minimize environmental impacts of their Project. The EIS documents were made accessible to the public, and to government departments and agencies, as well as to various institutions and individuals who took the opportunity of commenting upon them in submissions to the Panel. Additionally, the public hearings offered opportunity for participants to discuss with the Proponents such issues as attracted their interest or their criticism. The Panel believes that fair and reasonable consideration was given to the environmental impacts that may be contemplated in consequence of the Terra Nova Development. Public fears of negative social impacts arising from industrial development of petroleum resources have been allayed by the positive Hibernia experience. But since the Hibernia platform has but recently reached the Grand Banks, there has not been equivalent experience to alleviate concerns for environmental impacts. Those concerns, emphasized by several participants in written submissions and oral presentations throughout the hearings, were best illustrated by the submission of the Natural History Society, as they were by the Wilderness Society during the Hibernia environmental assessment. They include, particularly, the effects of oil spills during both production and transport, and the effects of operational discharges upon marine organisms and upon seabirds. A report on sustainable coastal communities prepared by the Provincial Round Table on the Environment and Economy, but issued by the National Round Table, identified the continuing health and productivity of the ocean as the key to the survival of rural Newfoundland. Recent experiences with the collapse of groundfish stocks have heightened awareness of the possibility that any offshore development may produce unintended and unfortunate environmental impacts that will seriously affect work and life in coastal communities. 5.2 COMPARATIVE EXPERIENCE FROM OTHER AREAS The North Sea, owing to similarity of physical and biological conditions, was chosen by the Proponents and others as the main source of comparative data through examination of potential impacts of the Terra Nova Development which might be anticipated and evaluated. Even though offshore development activities are responsible for a relatively small percentage of oil released into the North Sea, as point sources of pollution, they have been well monitored and studied. Some references have also been made to offshore petroleum activities in the Gulf of Mexico, but with over 3,000 production platforms and nearly 200 mobile drilling rigs operating in near-shore waters and on a totally different marine environment, comparisons with the Grand Banks may not be very useful. Activity in the North Sea is also much greater than is presently anticipated on the Grand Banks, where, up to 1991, there had been 22 significant discoveries as compared with 232 in the U.K. sector of the North Sea alone; -

48 Environmental Effects of the Project 43 and where identified reserves of oil in 1991 were less than 4% of those identified in the North Sea. Nevertheless, in consideration of accumulated evidence, biological community structure, and water and substrate conditions, the Panel believes that data from the North Sea are appropriate for comparative purposes, and that conditions in the two areas are sufficiently similar as to provide a helpful means of estimating and evaluating potential environmental impacts on the Grand Banks. Exploration and development activities have been conducted more intensely and over a longer period in the North Sea area, but comparisons of significant discoveries on the Grand Banks and in the North Sea show roughly similar patterns. This may indicate that as an offshore petroleum industry on the Grand Banks expands and develops over time, the level of activity may approach levels closer to those in the North Sea. Indeed, during hearings the Proponents repeatedly indicated that the Terra Nova Development is just the beginning of an offshore petroleum industry on the Grand Banks. The Panel believes that scrutiny of the environmental impacts of offshore petroleum development in areas with a greater scale of activities over a longer time, provides, in fact, a useful means of testing the appropriateness of planned regulations and management strategies for the Project. The Panel is, of course, pleased to note that the numbers of major incidents involving released material in the North Sea have been remarkably few. It is also encouraging to note that when drilling and production activities ceased, there was a rapid degradation of oil in areas of local contamination and the benthic communities showed signs of early recovery. A note of caution is, however, appropriate; from literature cited by the Proponents and other participants it is clear that cumulative impacts on specific species and on the general ecosystem in the North Sea are still inadequately studied and imperfectly understood. 5.3 REGULATION OF OFFSHORE DISCHARGES Participants noted during the hearings that, in the North Sea and other jurisdictions, regulations governing discharges from offshore petroleum activities have become more stringent over time. In fact, regulations evolved to control identified local environmental impacts and to prevent other cumulative, insidious changes which were suspected,. or deemed possible. That is to say, in those jurisdictions regulatory agencies and operators accepted more stringent regulations as the appropriate adaptive management response to identified threats. The Panel is encouraged that the Proponents themselves have noted this trend to increasingly strict control; but this is not surprising, for as offshore petroleum producers who operate world-wide, they are of course, familiar with such strict regulations, and with the practicalities of meeting them. Noting the steadily increasing standards required in developed areas like the North Sea, several participants, including Environment Canada, urged the Proponents to adopt more stringent controls on released materials into the Grand Banks environment than those presently required by regulations, arguing that present regulations specify standards lower than those achievable by best available technology. Others suggested that the relatively pristine condition of the Grand Banks was alone a sufficient reason for extra effort to ensure its protection. The Panel is itself inclined to this view and certainly believes that near pristine conditions should not be used as justification for less stringent standards. During the public hearings, it was indicated that the Board had recently undertaken, in

49 44 Environmental Effects of the Project conjunction with the Canada-Nova Scotia Offshore Petroleum Board and the National Energy Board, a review of regulations currently in place for drilling and operational discharges. The purpose of this review was to produce, with input from appropriate government departments and agencies, new Offshore Waste Treatment Guidelines following a comprehensive scientific and technical examination of the most recent data and of existing and new treatment technologies. The revised guidelines were published in September, Even though these guidelines had been in place only about seven months and even though Environment Canada had participated in the exercise of revision, representatives of that department nevertheless recommended that the Project meet higher standards than those specified in the guidelines. They cited instances where regulated standards for the Grand Banks were lower than those required in other jurisdictions, and, moreover, lower than those that could be achieved by best available technology or through implementation of alternative disposal recommendations. The Panel cannot second guess the wisdom of those who, in the context of such a recent review, set the current discharge guidelines. Yet, it fails to understand how such standards could have been adopted as late as 1996 in the face of the many legitimate concerns identified by participants, including government departments and agencies themselves; of the steady strengthening of regulated standards in other jurisdictions; and, of ever accumulating monitoring information tending to suggest the need for greater stringency. The clear implication is that in respect of the Canadian offshore, the reviewing agencies did not follow a precautionary approach in preparation of the current guidelines. Nor is the discrepancy between the standards in the guidelines and those in other jurisdictions a small one. The guidelines allow up to 15% oil by weight to be discharged in drill cuttings. It should be noted that 15% is the level that some jurisdictions adopted a number of years ago but have since abandoned. Many jurisdictions have instituted greatly, reduced case-by-case levels or complete bans on discharge of OBM cuttings. What is even more incomprehensible to the Panel is that such an outdated standard has been retained even though the Proponents have indicated that the technology they intend to employ can achieve results that are about 50% better. Thus, although the guidelines in question are normally reviewed once in five years, the Panel believes that a new, thorough, immediate review of the adequacy of present regulations on discharges is required. The review should take full account of monitoring and management experiences in other offshore petroleum areas, and should proceed on the basis of a precautionary approach that considers the impact of specific projects and cumulative effects as well. Recommendation 44: Board undertake a new, thorough, immediate review of the adequacy of present regulations on discharges. The review should take full account of monitoring and management experiences in other offshore petroleum areas, and should proceed on the basis of a precautionary approach that considers the impact of specific projects and cumulative effects as well. In making this recommendation, the Panel realizes that the guidelines are a joint effort

50 Environmental Effects of the Proiect 45 with the Canada-Nova Scotia Offshore Petroleum Board and the National Energy Board, and that a degree of compromise may be deemed expedient to effect a tripartite agreement. Nevertheless, the Atlantic Accord stipulates that consistency with the management regimes established for other offshore areas in Canada is required insofar as is appropriate. Also, the Accord Acts do not require consistency with other Canadian jurisdictions, but only coordination and the avoidance of duplication. The Panel therefore urges the Board to insist upon a new review and also upon the most stringent standards for the treatment of wastes, taking into account the experience of jurisdictions that have imposed increasingly stringent standards as their offshore petroleum industry has matured. As several participants noted, the Terra Nova Development will be operating for up to 20 years on the Grand Banks and during that period regulations governing offshore activities may well change several times. In any event, the Proponents assured the Panel that they will continue to evaluate emerging technologies and will retrofit their production facilities and systems as it becomes necessary or appropriate, provided it is economically feasible to do so. Recommendation 45: The Panel recommends that, if regulations, standards and/or guidelines are updated over the life of the Terra Nova Development, the new requirements should be applied to the Project. Flexibility in the Project s design is required to allow for retrofitting during the life of the Project in order to comply with updated requirements. Use of facilities that do not incorporate retrofitting provisions in the initial design should not be permitted on the Grand Banks. 5.4 CUMULATIVE IMPACTS Cumulative impacts from developments occur when anthropogenically induced changes happen frequently in time and space so that the effects of an individual project cannot be assimilated, or when single projects interact synergistically to produce effects. Incremental changes, such as threshold events that establish new activities, industries or practices are also typically considered as cumulative impacts. Analyses contained in submissions from the public emphasized synergistic effects including fishery depletions, oceanographic changes, seabird hunting, climate change, and transportation. Future petroleum developments on the Grand Banks, including other specific developments in the Jeanne d Arc Basin and general plans to establish an offshore industry were also identified as matters that should be considered in evaluating cumulative impacts. One participant suggested that an additional comprehensive environmental assessment of all the proposed and potential offshore developments was necessary. One particular effect of offshore petroleum developments that should be noted is the pre-emption of ocean areas from other uses. The Oceans Act charges the Department of Fisheries and Oceans with the lead agency role in the establishment of a system of marine protected areas. At present it is developing policies for such sanctuaries and is devising guidelines for their establishment both inshore and offshore. At an early date the Department should inform the Board regarding its intentions for the establishment of a system of marine protected areas on the Grand Banks. The Board should remain aware of progress and plans for reserves and consider the impact of petroleum project developments on these plans. Clearly, a precautionary approach to the assessment of the Terra Nova Development

51 46 Environmental Effects of the Project demands an examination of cumulative effects. However, given large uncertainties in regard to the nature, speed and scale of future petroleum developments by the Proponents, and by other offshore petroleum operators, and considering additional anthropogenic changes on the Grand Banks deriving from other sources, the Panel must admit that it is difficult to be clear about how these activities and changes might be monitored. Evaluation of cumulative impact considerations in environmental assessments is an area of emerging law, policy and practice. Development projects usually occur in an environment where changes from natural and anthropogenic sources have occurred or are taking place. Some of these changes are obvious, others are not. In any case, a fair, even-handed evaluation of the potential impact of a specific project must be balanced with a reasonable assessment of the Project s impact given significant, induced changes over a broader geographic area and longer time scales than may be envisaged for the Project itself. In literature cited in the EIS and by participants, the evidence for and significance of such longer-term, cumulative change associated with offshore petroleum development are often challenged and the contribution of any specific project to detected or suspected changes may be difficult to assess. The Panel is, of course, aware that it is not possible to hold the Proponents responsible for future developments beyond their control that may interact with the Terra Nova Development to produce cumulative environmental effects. Nevertheless, the gradual accumulated degradation of ecological integrity of areas of the Grand Banks owing to collective anthropogenic impacts is a major environmental concern which must be avoided. Such cumulative effects will often involve more than one administrative area. This would imply a necessity for co-operation in monitoring and mitigation. During hearings there was a lack of agreement about what factors should be considered in evaluating potential cumulative impacts. The Proponents argued that cumulative impact should be considered only in terms of specific, planned petroleum projects on the Grand Banks; other participants looked at rapidly changing fishery conditions as an additional factor which should be considered. Still other participants identified generalized global events as factors which would interact cumulatively with the impact of the Terra Nova Development. Cumulative anthropogenic change is clearly a significant area of concern. This is attested by recent recognition by the Government of Canada in legislation, such as the Oceans Act, in international agreements such as the Convention on Biological Diversity, the Agreement for the Implementation of the Provisions of the United Nations Convention on Law of the Sea of IO December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, and the United Nations Framework Convention on Climate Change and by the United Nations Conference on Environment and Development. Environmental assessment panels have also recognized and identified cumulative impacts in their evaluations and recommendations. About half of the panels reporting to the federal government since the 1980s have mentioned cumulative impacts in combination with other environmental factors. In most of these reports, the information about future projects was insufficient to allow the panels to make definitive recommendations. It is important to note that these panel reports were from reviews conducted under

52 Environmental Effects of the Proiect 47 the Environmental Assessment and Review Process Guidelines Order (EARP), which did not include any requirement for assessment of cumulative environmental effects. Nevertheless their identification and management has become such a critical issue in Canadian environmental policy that the CEAA of 1992 specifically requires that cumulative environmental effects be considered. In spite of uncertainty, concerns about cumulative effects have led panels to recommend that a variety of studies and research be undertaken. The Lancaster Sound Regional Study was undertaken as a result of a recommendation of the 1979 Lancaster Sound Drilling Panel Review. During the Hibernia project hearings in 1985, participants expressed the view that the panel s mandate was too restrictive in examining strategic issues for area-wide planning of offshore development. That panel recommended that review of future developments should take into account cumulative effects and that research should be conducted under the Environmental Studies Revolving Fund to assist governments in wider planning issues. This research was not undertaken. The Fraser-Thompson Corridor panel report of 1986 indicated that existing management systems were unable to identify properly and hence to prevent or to mitigate future cumulative environmental effects. They found that monitoring programs were required to determine the cumulative impact of future developments. They further indicated that simulation models should be developed to identify possible changes and to focus data collection and monitoring. The 1990 Arctic Pilot Project panel report noted that other proposals would likely follow that pioneering venture, particularly if it were successful. Recognizing that an individual proponent could not be held responsible for future developments beyond its control, the panel suggested that the government, in consultation with stakeholders and industry, should be responsible for long-range planning and determination of priorities. Such research and monitoring over the life of the projects was viewed as an opportunity to determine trends, problems and solutions to projected larger scale activities in the Northwest Passage. The panel evaluating the Northumberland Straight Crossing Project in 1990 indicated a concern for cumulative effects, noting particularly the possible synergistic effect of global warming on the project. Despite the realization that global changes might be unpredictable locally, they did recommend that the bridge design should incorporate a safety factor to accommodate conditions that could occur as a result of climate change. In the 1991 panel report of the Rafferty- Alameda Project, it was acknowledged that concern about cumulative impacts was relatively new and that reliable methodologies to assess such effects had not yet been fully developed and tested. The panel observed that neither the proponents, nor participants dealt with aspects relating to cumulative impact of the project, but concluded that a detailed assessment was necessary. They emphasized the importance of a comprehensive, well-designed monitoring program to accomplish this. The recommendation in the 1993 report on Uranium Mining Proposals in Northern Saskatchewan (Dominique Janine Extension, McLean Lake Project and Midwest Joint Venture) led to the establishment of cumulative effects monitoring programs to assess regional environmental effects resulting from multiple mining operations. The importance of cumulative impacts on the environment, and the difficulty in identifying and measuring them, causes the Panel to

53 48 Environmental Effects of the Project believe that experts with experience in environmental monitoring, sampling and measurement are in the best position to advise the Board on potentials for cumulative impacts on the Grand Banks and their monitoring. The Board should therefore convene, in the near future, a workshop of recognized experts to examine the potential for cumulative impacts in the Newfoundland offshore due to petroleum development and other activities, and to develop best-science approaches to monitoring them. Adequate assessment of cumulative impacts will require identification of, and integration with, other research and monitoring efforts. Once factors necessary for a cumulative monitoring program in the Newfoundland offshore have been identified, an implementation plan for their monitoring must be designed. Individual development projects in the offshore must be required to incorporate into their monitoring plan standards and measures consistent with this cumulative effects monitoring program. Recommendation 46: Board convene, in the near future, a workshop of recognized experts to examine the potential for cumulative impacts in the Newfoundland offshore due to petroleum development and other activities, and to develop best-science approaches to monitoring them. Recommendation 47: Board identify the factors necessary for a cumulative effects monitoring program on the Grand Banks and design an implementation plan for such a program; and that future projects be required to incorporate measures consistent with this program efforts. Recommendation 46: into their monitoring The Panel recommends that reviews of regulations, standards and guidelines by the Board and relevant government departments explicitly take into account cumulative impacts of all petroleum projects and other probable developments on the Grand Banks, and potential synergistic effects of other activities in the area; and that the Board advise all future proponents that it will not accept environmental impact statements that do not include a thorough and broad analysis of possible cumulative impacts. 5.5 SIGNIFICANT EFFECTS During hearings the Proponents repeatedly noted that the design of the Terra Nova Development was intended to avoid significant effects on the environment. Significant effects were typically defined as those that affect 1% of the population or of the carrying capacity of the environment, or that impact on valued or endangered species. Lethal doses were the measure used to indicate toxicity to organisms. At face value these definitions provide a clear measure for judging the significance of environmental changes. However, they are, in fact, blunt instruments, lacking sensitivity and practicality, and failing to properly acknowledge the important issue of cumulative impacts. Determining such impacts by the standard monitoring techniques is difficult, but those responsible for stewardship of the marine environment must insist on the inclusion of sub-lethal impacts in monitoring programs and must conduct thorough examinations of their

54 Environmental Effects of the Project 49 long-term significance. Further, the use of a 1% criterion in judging impacts on population or carrying capacity impact is often impractical statistically because of difficulties in determining the actual size of the relevant affected population or capacity. Use of this criterion for judging the possible impact of industrial activity on the environment appears to the Panel as inadequate. Marine sciences cannot measure any population to 1% precision. It is the Panel s view that effects which cannot be detected by presently-used criteria may be biologically important. Judging the significance of cumulative effects may require the flexible use of a variety of significance measures and more realistic evaluations of scientific capabilities. The Board, during its consideration of cumulative impacts, should discuss with experts the adequacy of present criteria for significance and additional criteria which would be helpful in a precautionary approach to prevention of environmental harm. of basic processes and conditions are also a major limitation in the ability to identify and understand impacts, or to foresee future conditions and events. In the case of the Terra Nova Development participants identified major gaps in basic knowledge of oceanographic and biological changes which have recently occurred on the Grand Banks and whose persistence is also unknown. The Panel concurs with these views. Recommendation 50: The Panel recommends that Environment Canada and the Department of Fisheries and Oceans identify specific relevant gaps in existing information pertaining to the Grand Banks which limit their ability to identify and predict typical impacts of offshore petroleum activity. This information should be made available to proponents, the Board and others. The Board must consider such information deficits when reviewing regulated standards. Recommendation 49: The Panel recommends that in the context of the workshop on cumulative effects, the Board should discuss with experts the adequacy of present criteria for significant impact and additional criteria which would be helpful in a precautionary approach to prevent environmental harm. 5.6 UNCERTAINTY There are many sources of uncertainty in assessing the effects of any development in the ocean environment. These uncertainties may derive from lack of standardized data, or incomplete data, from the inability to quantify risks, or from natural variation. Several participants noted that incomplete knowledge When Northern Cod and groundfish stocks collapsed on the Grand Banks it became clear that research beyond the standard monitoring of stock status was necessary to, deal with uncertainty about the factors responsible and to predict future developments. Hence, the Northern Cod Science Program was developed to identify and meet these needs. From all accounts, it was a success in providing the basic knowledge by which annual stock assessment information became better understood. This sort of basic research will also be necessary to lessen the uncertainties of operating petroleum facilities in the Grand Banks environment. Funding basic research from revenues generated from offshore petroleum resources is a requirement of the Atlantic Accord.

55 50 Environmental Effects of the Proiect While excellent monitoring of the Terra Nova Development is expected to be the basis for evaluating management of environmental impact, the Panel believes it can only be effective by integrating these efforts with others to understand the Grand Banks environment. Integration of the Terra Nova monitoring program with Hibernia, and with all major research programs on the Grand Banks will provide a better context for the interpretation of data. The Panel believes that design of the monitoring program should identify such synergies and integrate them as much as possible with the Terra Nova monitoring effort. Further work to identify the larger information needs, and develop a long-term plan for meeting them, is clearly necessary if adequate support is to be given the developing offshore petroleum industry. Recommendation 51: Board require operators of offshore oil projects to fund basic research. This initiative should include support of the Department of Fisheries and Oceans to conduct basic research on the mechanisms and processes by which chemicals in produced water may have impacts on the biological community. Also, support for research on cumulative and sub-lethal effects should be included. 5.7 TRANSPARENCY AND PEER REVIEW Environment Canada identified third-party auditing or compliance monitoring, and transparent review of monitoring results as requirements of a successful environmental monitoring program. The Panel agrees. The Proponents have indicated their intention to establish an auditing procedure to monitor compliance with environmental targets. The data thus assembled would then be provided to and reviewed by the Board and by relevant government departments and agencies. Neither the nature of these reviews nor their transparency has been made clear. It is important in the Panel s view that such reviews be conducted by an independent third-party and that the reviews, together with the basic data, should be made available to the public. The rationale for such a position is clear. The data in question are not proprietary but relate immediately to the health and sustainability of the Grand Banks and its resources, which is a matter of the utmost importance to all Newfoundlanders. In this context alone the Panel believes it to be important that interested scientists and other experts should have access to the monitoring data to conduct independent analysis. Recently, the Department of Fisheries and Oceans has made some of its fish survey data available through the Internet where it can be accessed by interested scientists shortly after assessment surveys have been completed. Such access to environmental resource monitoring data has proven successful and the Panel would urge the Board to emulate this program. Recommendation 52: Board ensure that monitoring data from the Terra Nova Development be subjected to full scientific peer review at regular intervals. Notification and invitation to participate in these reviews should be extended to qualified experts and the public. The reviews conducted by the Board should examine relevance of information that becomes available from basic research studies. The Board should make the data and the results of these reviews available in the public domain. The Board should also regularly present information from on-going monitoring programs and reviews to the public through effective information programs.

56 Environmental Effects of the Project DRILLING WASTES The drilling of the approximately 30 wells associated with the Terra Nova Development will result in substantial discharges of drilling wastes. Drilling wastes consist primarily of the spent muds, rock and a variety of additives which are generated during drilling. The elements of greatest concern in these wastes are primarily oil, heavy metals and a variety of other chemicals, although the cuttings themselves are also a concern because of their smothering effect on the benthic community. The EIS indicates that drilling wastes will be discharged over the approximately 67 km2 of the Project area. Even after the treatment of drilling wastes proposed by the Proponents, over 1,400 m3 of oil will be released to the marine environment over the life of the Project. The Proponents suggest that the impact will be mitigated by dilution and estimate that most effects will be measurable only within 250 m of the wells and will not persist in the longterm once drilling ceases. The Department of Fisheries and Oceans in their presentation, however, suggested that such predictions were optimistic and that the effects were underestimated, particularly those associated with toxicity and interference with benthic organisms. The distance that these impacts extend from the well into the environment was the major concern; Although most literature cited by the Proponents and other participants indicate fairly local impacts, recent studies extend these zones of impact. Environment Canada concluded that disposal of OBMs and cuttings in the North Sea had produced widespread environmental effects and noted that it was wiser for the Project to proceed using a precautionary approach rather than following the North Sea example of delaying mitigative actions until damage had already occurred. Indeed, some participants, including the Department of Fisheries and Oceans and Environment Canada, suggested that consideration should be given to a policy that no cuttings should be discharged at sea. The Panel notes, however, that while this may be desirable it would raise additional concerns regarding hazards associated with transportation to shore, treatment and disposal on land. Recommendation 53: The Panel recommends that, because of accumulating data summarized in recent studies which extend the zones of local impacts, the Board ensure that the monitoring program for the Terra Nova Project extend sampling gradients beyond the limits where effects have been previously demonstrated. In the instances where these gradients overlap with potential influences from the Hibernia project, careful standardization of methodologies is necessary. Until fairly recently, OBMs were the standard lubricants used in drilling oil wells. In recent years, however, the technology has evolved to the point that more benign water-based muds are often viable alternatives. The Proponents.have selected water-based muds for drilling the first 1,500 m in a well; deeper drilling will be done using OBMs. Since the technology is still evolving, the Proponents are optimistic that a more benign OBM consisting of a food-grade oil may be available for use during the life of the Project. Ecological concerns about drilling discharges has lead to the development of reinjection technology as a more acceptable means for disposing of cuttings. According to Environment Canada, reinjection could become standard technology in the North Sea. It is not inconceivable, indeed, that during the life of the Project such a regulation might apply to the Grand Banks. Although the Proponents indicated that if

57 52 Environmental Effects of the Proiect evaluations of impacts during the life of the Terra Nova Project warrant, refitting for altered disposal operations will be considered, they also indicated that injection of cuttings was virtually impossible from a floating production facility. Whether this restriction applies to any floating system, or merely to the FPSO that has been chosen is a moot point. If the latter is the case, it is clear that such a choice may pose considerable difficulties at some point in the life of the Project when guidelines and standards regulating discharges may be adjusted upwards. At that time, and unless a requirement for reinjection could be accommodated through retrofitting, it would appear that the only reasonable alternative might be to transport the cuttings to shore for safe disposal. The Proponents indicated that they are committed to a minimum-release policy and to developing and using state-of-the-art technology to control potentially harmful discharges. For example, they have proposed use of technology that reduces the oil discharged in cuttings to a 7-8% target as against the currently regulated 15% maximum. While the Panel believes that a precautionary approach would suggest reinjection as the appropriate procedure, the Panel must also recognize the existence of current standards, inadequate as they appear to be. Nevertheless, the Panel recommends that the Board should require a re-evaluation of reinjection of cuttings as the primary means of disposal. If reinjection is not possible, then the most stringent possible standards should be applied to the discharge of oil and chemicals. At the very least, the Proponents should be required to meet the 8% discharge levels that current technology allows, and to improve that performance as better technology emerges. Recommendation 54: Proponents re-evaluate the potential for reinjection of drill cuttings as a viable disposal option for the Terra Nova Development. If reinjection is not possible, the Panel recommends that the discharge levels obtainable with best available technology for floating systems be applied to the Terra Nova Development, and that if during the life of the Project standards are developed that cannot be met at sea, the cuttings be transported to shore for safe disposal. 5.9 PRODUCED WATER Produced water consists of water present in the oil-bearing formations and seawater injected into the well to maintain reservoir pressure during production. Produced water also contains scale, trace metals, dissolved salts, hydrocarbons, organic compounds, and additives such as injected biocides, bisulphite compounds, and corrosion inhibitors. Produced water will be warmed by a reservoir temperature of 96 C and therefore will be much warmer than ambient seawater when it is discharged. Over 67,000,OOO m3 of produced water will be introduced into the Grand Banks environment by the Project. Amounts of produced water will vary with the nature of the reservoir and the life of a field but typically amount to many times the volume of recovered oil. The EIS indicates that the amount of produced water is slight during the initial period of oil recovery but increases as reserves of oil are removed. At some time in the life of a field, the amount of produced water in the recovered oil increases to the point that separation will not be economic. Hence produced water, and possible impacts from the compounds it contains, are not spread evenly over the life of a field, but are concentrated during the later stages of production. To assess the potential impacts of produced water, the Proponents have relied

58 Environmental Effects of the Proiect 53 upon North Sea data. However, dilution is dependent on flushing rates, water depth and stratification, and, as well, on the amount of energy present in the environment. In respect of those, North Sea conditions may be less than a precise analogy with Grand Banks conditions. There is little water in the producing formations at the Terra Nova field; thus produced water will consist largely of seawater that is initially injected during oil recovery. Current guidelines specify that in a 30-day period, an average of 40 mg of oil per litre of water must not be exceeded. The guidelines also specify that release of an average of 80 mg/l over any 48-hour period exceeds allowances. If these standards are met an estimated total amount of over 2,600 m3 of oil in the produced water will be released into the environment over the life of the Project. By way of comparison, the Panel notes the United States Environmental Protection Service specifies a monthly maximum of hydrocarbon in produced water of less than 29 mg/l and recommends a maximum of 25 mg/l. Environment Canada added that the maximum monthly average permitted by Tunisia is 10 mg/l. The Department of Fisheries and Oceans indicated that up to 5,000,OOO kg of various chemicals added in the drilling process and present in the produced water would be released into the Grand Banks environment over the life of the Project. Further, they state that while the technology to separate oil from produced water can remove particulate or dispersed oil, it cannot remove oil or other compounds dissolved in water. They also noted that the chronic toxicity of such compounds to marine organisms is unknown. This lack of information makes it difficult in the extreme to establish intelligent discharge standards. Therefore, they suggested a precautionary approach and a careful monitoring of the impacts of produced water released into the marine environment. Most importantly, they suggested the necessity for basic research to understand the mechanisms and processes through which environmental effects were realized. Several participants indicated that reinjection of produced water is a tested and established procedure. Indeed, Environment Canada stated that over 90% of produced water in offshore operations is now reinjected. Further, they noted that the Environmental Code of Practice for Treatment and Disposal of Waste Discharges from Offshore Oil and Gas Operations issued by Environment Canada has recommended that produced water reinjection be considered in all instances. In any event, they believe that because of the high proportion of injected seawater in the produced water of the Project, that problems with reinjection at Terra Nova would be minimal. Environment Canada estimated that the cost of reinjecting produced water would be approximately 2% of the total cost of the Terra Nova Development and suggested that such a cost might not be excessive in comparison with potential environmental damage arising from cumulative effects. The Proponents stated that an inevitable effect of mixing produced water with seawater for reinjection is significant problems with scaling which will require additional use of chemicals, and will pose additional safety hazards. Moreover, they maintain that the efficiency of reinjection depends on reservoir characteristics that, for the Terra Nova Development, are not fully known at this time. Thus, they state, the reinjection of produced water could reduce the efficiency of oil extraction by approximately 50%, and would in any case require the drilling of more injection wells with associated additional risk and cost. The method selected for disposal of produced water will have a major influence

59 54 Environmental Effects of the Proiect on the extent to which uncertain cumulative impacts on the environment are controlled. The Panel notes that there were significant disagreements among experts about the feasibility of reinjecting produced water in the case of the Terra Nova Development. There also appears to be contradictions in respect of the economic feasibility of employing best available technology that is capable of exceeding the standards set out in current regulations. Furthermore, it is clear that those current regulations do not cover all compounds of possible concern contained in produced water. A precautionary approach would suggest that reinjection of produced water would be the disposal option with the potential for the fewest adverse environmental effects. It is, therefore, the option preferred by the Panel. Recommendation 55: Proponents be required to re-examine the option of reinjection of produced water. Only if they can demonstrate to the clear satisfaction of the Board that reinjection into the Terra Nova formation is not a practical or economically feasible proposition should they be permitted to proceed with discharge after treatment. In that eventuality, the Proponents should be required to meet standards that are the most stringent achievable with best available technology for floating production facilities. Additional to the problem of produced water, the Panel is concerned with the 10,000 m3 of chlorinated cooling water that will be released each day by the Project. This is a toxic substances pursuant to the Canadian Environmental Protection Act. The Proponents have not addressed this matter, The Panel believes that the Board should require them to submit a plan for mitigation that includes the use of alternatives to chlorination or employment of dechlorination facilities. Recommendation 56: Board require the Proponents to submit a plan for mitigation of discharged chlorinated water that includes the use of alternatives to chlorination or of dechlorination facilities OIL SPILLS The possibility of a major oil spill is clearly the prospect most feared by the public. Not only are such events dramatic, but the impacts are immediately visible. Further, given the nature of the environment, the possibility of effective mitigation is quite remote. Therefore, a concern for long-term repercussions must remain. Major spills can occur because of a blow-out, a major accident resulting in equipment failure, a rupture in the storage holds of the FPSO or of a shuttle tanker on site, or because of the wreck of tankers transporting the oil to storage or to markets. However, lesser spills, which may have disproportionately large consequences, as demonstrated by last year s Placentia Bay incident, may result from failure in normal production activities, from accidents during transfers from FPSO to tankers, or from failure to observe regulations respecting the flushing and pumping of bilges. The Panel notes, however, that the Proponents have indicated that the crude oil from the Project is a waxy oil that forms emulsions in cold water that remain at the surface and do not spread like conventional oils. These properties, it is claimed, minimize the impacts that spills might have. Nevertheless, the possibility of a spill, however minimal, occurring at some point in

60 Environmental Effects of the Project 55 the life of the Project is real. The Proponents state that they are committed to a zero-tolerance for release predicated upon the best design and the highest standards of safety for all vessels and equipment and upon prevention as a first priority. The Panel, as do all participants in the hearings, endorses this approach and believes that the Proponents should invest in prevention such effort and resources as are commensurate with savings to be achieved through avoidance of spills that, under the polluter pays principle, could be extremely costly. Recommendation 57: Board require the Proponents to adopt a zerotolerance policy for oil spills. In respect of navigation in near-shore waters, where the greatest possible threat to coastal populations of birds and other marine animals will exist, the Panel concurs that existing protocols to prevent spills are adequate if properly followed. indeed, in the vast majority of reported past disasters, the principal cause has been human failure. Thus, it is of the utmost importance, not only that crews be properly trained and qualified, but that they be required to participate in a planned education program to keep them continuously alert to the responsibilities they bear and to the potentially disastrous environmental consequences of failure through carelessness or incompetence. Recommendation 58: Proponents implement a program of continuing education for marine crews to keep them sensitive to the ocean environment within which they are working and fully alive to the potentially disastrous consequences of even momentary failures through carelessness, complacency or incompetence. Winds, waves and ice will obviously be matters of major concern in respect of spills that might occur during the regular transfer of oil from the storage tanks of the FPSO to shuttle tankers. The potential causes of such spills are numerous, ranging from human error to weather to equipment failure. The Panel is satisfied that the expressed intentions to employ state-of-theat-t hoses, valves and couplings will obviate concerns for spillage under normal conditions. Nevertheless, it will be necessary to maintain a program of rigorous inspection and preventive maintenance and to ensure that components subject to stress or timerelated deterioration are replaced in a timely fashion. Occasions will undoubtedly arise when wind, sea state or ice conditions make transfers particularly hazardous. On such occasions, since the over-riding principle will be a zero-tolerance for spills of any kind, there must be in place a set of protocols defining conditions in which no transfers will be attempted. Recommendation 59: Board require the Proponents, in accordance with a zero-tolerance policy for oil spills, to establish a set of protocols to determine when oil transfers are unsafe. The Canadian Wildlife Service and others expressed concern about oil transport and anticipated that the Newfoundland Transshipment Terminal at Whiffen Head in Placentia Bay would likely be used for the

61 56 Environmental Effects of the Proiect Project. This terminal was conceived to hold and transfer oil from Hibernia to tankers bound for market. The Proponents have stated that the oil from the Terra Nova Development could be shipped directly to markets along the eastern seaboard of North America, but they allowed that the use of the Whiffen Head facility was also a possibility. Some of the world s largest seabird colonies are located adjacent to the route tankers would follow from Hibernia or Terra Nova to the Whiffen Head facility. Any oil releases associated with this transportation must be deemed to have potentially important impacts on these colonies. Presently there is no coastal zone management plan for this area. Environment Canada and other participants urged that a comprehensive review of the transport of oil from offshore petroleum activities was needed. The Panel concurs with this evaluation and recommends that these should be required. Recommendation 60: appropriate authorities undertake a comprehensive review of the transport of oil produced on the Grand Banks. Recommendation 61: Government of Newfoundland and Labrador establish a coastal zone management plan for the Avalon Peninsula and the west side of Placentia Bay. Although the EIS discusses in detail the clean-up of oil spills as a mitigative procedure, the effectiveness of such efforts to date is dismal. In most instances, the capacity for oil spill clean-up in a high energy environment like the Grand Banks is little more than a public relations exercise; the technology simply cannot cope with the challenging conditions. The same is essentially true for spills that may occur along the generally rugged shorelines of the Avalon Peninsula. Further complicating discussions of the impact of spills is the contention of several participants, supported by recent experiences in Placentia Bay, that the extent and significance of impacts may not be directly related to the size of the spill. The impact of spills will be largely determined by their proximity to shore and by the distribution of seabirds and seals present in the area of a spill at a given time. These concentrations could range from a few animals to entire local populations. The Proponents zero-tolerable release policy and the use of all necessary preventative measures will go a long way to ensure that impacts are minimized. But, in reality, the most important activity following a spill will be to monitor its impact. The Canadian Coast Guard noted some concern with the procedures used for reporting oil spills into the marine environment. Further, they suggested that clarification of the working relations between government departments and agencies during emergency situations was necessary. The Panel is itself concerned that lines of reporting and of communication between concerned agencies must be absolutely clear. Recommendation 62: Proponents ensure that all staff associated with the Terra Nova Development be fully informed about the procedures required for reporting all spills, whatever their size.

62 Environmental Effects of the Project 57 Recommendation 63: relationships between relevant government departments during an oil spill response situation be reviewed and clarified so that each co-operating agency has a role that is clearly defined and clearly understood GREENHOUSE GASES Greenhouse gases represent one of the most significant environmental problems facing the world today. Excessive emissions of such gases contribute to significant changes in both atmospheric and oceanic climates, threaten coastal flooding, and raise serious concerns for world agriculture and fisheries. No part of the planet is immune from such potentially disastrous effects. With this in mind, the international community has been striving, with limited success, to achieve reductions of emissions that will mitigate already existing pollution. Canada is a signatory to the United Nations Framework Convention on Climate Change and has developed goals to stabilize by the year 2000 emissions of greenhouse gases, not subject to the Montreal Protocol on Substances that Deplete the Ozone Layer, at 1990 levels. Canada has also agreed to cooperate with the United States on reductions of those greenhouse gases identified as priorities. Nevertheless, it has already admitted that in respect of carbon dioxide (CO*) emissions it will fall short of its commitment under the Framework Convention by some 49,000,OOO tonnes and has recently suggested to the international community that targets should be reduced.. The 300,000 tonnes of CO, that, the Proponents estimate, will be released annually at the Project site will contribute about 0.5% to the Canadian shortfall. In respect of end use of Terra Nova petroleum, the Proponents noted that it is a sweet crude, which produces little COa or sulphur dioxide (SO*) during combustion, so that its eventual introduction to the market will have the effect of actually reducing greenhouse emissions. The assumption, it may be supposed, is that Terra Nova crude will supplant an equivalent amount of more sulphurous fuel. One of the Proponents, Petro-Canada, also indicated that it participates in the Climate Change Voluntary Challenge and Registry Program, a joint initiative of Environment Canada and Natural Resources Canada, and is fully committed as an organization to meeting its emission targets under the program. In its calculations respecting those targets, Terra Nova petroleum has been given full consideration. The Panel agrees that the greenhouse effect and climate change are cumulative impacts to which the Terra Nova Project will contribute and that they are matters of serious concern. However, that contribution, compared to those of other petroleum alternatives, is relatively low. Further, technology which may be developed and become practical during the life of the Project may make possible significant reductions in the discharge of undesirable emissions from this Project. The Panel believes that the FPSO should incorporate such new technologies as they emerge. Indeed, current developments suggest that reinjection of such gases may become a real possibility in the near future. It is difficult for the Panel to direct specific recommendations to the Proponents in this domain, even though participants repeatedly raised the issue in submissions and in the hearings. The difficulty arises from the Panel s awareness. that the Government of Canada itself has failed to meet its international commitments and has recently indicated a wish to adjust standards downward.

63 58 Environmental Effects of the Project Recommendation 64: Proponents be required to modify the production vessel as new technology emerges to reduce the emission of greenhouse gases at the Project site. Recommendation 65: Government of Canada assume a leadership role in the international community in seeking substantial reductions in greenhouse gas emissions and take immediate action to meet, at the very least, those targets set under the United Nations Framework Convention on Climate Change LIGHT The Canadian Wildlife Service expressed concern for the effects on seabirds of light from the FPSO and drill rigs. There is, in fact, surprisingly little information available on the subject. The Panel is aware, however, that petrels, for example, are sometimes attracted to light and that the largest colony in the world of Leach s Storm Petrels, numbering some 3,000,OOO pairs, breeds on Baccalieu Island at the northeast corner of the Avalon Peninsula, and are known to forage at distances greater than 350 km from their nesting sites. Because the Project is within their foraging range, systematic information is clearly needed to quantify any deleterious effects; to determine their significance; to monitor mitigation measures, should such be found necessary; and, to document the effectiveness of mitigation. A unique opportunity exists to carry out this research using the Hibernia platform, since it is also within the foraging range of petrels. A reasonable and practical suggestion made by one participant was that the Proponents should seek the co-operation of Hibernia management to place full-time bird and mammal observers on the Hibernia platform in order to determine through monitoring whether suspicions of light impacts on seabirds are justified or not. The Panel believes this to be an excellent idea. If the suspicion concerning light impact should be confirmed, mitigation procedures can be developed and evaluated prior to major activity at the Terra Nova Development site. Recommendation 66: Board require the Proponents to undertake a study of seabird attraction to, and collisions with, offshore petroleum facilities, and in this effort should seek co-operation with the Hibernia project so that early evaluation of light effects might be possible, and so that there might be opportunity to test any mitigation procedures which might be required. Recommendation 67: Board routinely require observers on the production vessel and on shuttle tankers that use transshipment facilities in Newfoundland until comfort is achieved that there will be minimal impact on seabirds on the Grand Banks or in breeding colonies along the Newfoundland coast NOISE The Department of Fisheries and Oceans indicated that the area around the Terra Nova Development is known to contain a variety of marine mammal species. Whales and seals are especially sensitive to sounds and are known to be affected by the noise generated by oil and gas exploration and

64 Environmental Effects of the Project 59 production activities, although individuals may adjust to elevated levels. There are no estimates presented in the EIS of the characteristics of sound emitted by the Project. However, the Department of Fisheries and Oceans suggests that the EIS underestimates potential effects of emitted noise. The Panel believes that monitoring of the abundance and activities of marine mammals, and especially of identified individuals, should be conducted by observers and related to specific activities and noise associated with the Project. Recommendation 68: Board ensure that monitoring of the abundance and activities of marine mammals, and especially of identified individuals, be conducted and be related to specific activities and attendant emitted noise of the Terra Nova Development DECOMMISSIONING AND ABANDONMENT When extraction of the oil reserves of the Terra Nova field is no longer economically feasible, estimated to be after 18 years, the facilities will be decommissioned and the site abandoned. The Proponents have indicated that all but the facilities embedded in the sea floor will be removed from the site. Oil will be flushed from the flow lines and other equipment remaining under the sea floor before abandonment. Participants at the hearings expressed no concerns about the decommissioning plans. The Panel is also convinced that the decommissioning and abandonment plans outlined in the EIS are adequate. However, the Panel is cognizant of the possibility that over a 20-year period circumstances may change and believes that those plans, therefore, should be reviewed and evaluated in light of new technology, and of regulations and standards that are current when decommissioning and abandonment approaches. After decommissioning, if a problem with pollution emerges, the Proponents should remain responsible for any appropriate mitigative measure or for any compensation that may be required. The polluter pays principle should apply even after the Project ends, provided that harmful effects can be linked unequivocally to the Project. Recommendation 69: Board require the Proponents, when the end of the Project approaches, to review and evaluate their plans for decommissioning and abandonment in light of new technologies and standards that are then current. Recommendation 70: Board apply the polluter pays principle even after the Project ends provided that harmful effects can be linked unequivocally to the Project.

65 60 Monitoring 6.0 MONITORING 6.1 OVERVIEW Monitoring of the environmental effects of the Project was repeatedly raised as an important issue during the public review. The role of monitoring in respect of the Panel s recommendation that the Project be allowed to proceed is fundamental. A good monitoring program will identify potential sources of environmental effects; will determine to the satisfaction of the Proponents and of relevant departments and agencies if mitigative actions are effective; and, will provide a foundation for sound adaptive management decisions. Offshore petroleum developments provide jobs and wealth but inevitably involve some risk to the environment from identified and unidentified impacts, and from cumulative impacts. Examining for such possible effects is done through an environmental assessment process. Potential impacts are identified, assessed and mitigated as necessary. Regulated standards are implemented and steps are taken to ensure compliance. Monitoring measures the impact and is the mechanism that protects all concerned from surprises and unintended consequences. The Proponents, government departments and agencies and participants have expressed a range of opinions about the threat to the environment from the Project and the measures proposed to ensure environmental protection. These opinions range across a spectrum from satisfaction with existing regulations to nearly complete dissatisfaction. The preponderance of opinion, however, seems to be that standards for drilling and production discharges must be strengthened, and, that provision for monitoring must be enhanced. Further, there appears to be general agreement that prevention is the best approach to dealing with potential environmental impacts; that prevention demands a precautionary approach that identifies harmful impacts, mitigates them and then monitors to ensure their absence; that the monitoring program must be one of sufficient precision and sensitivity to measure impacts; and, that when undesirable or unwarranted effects are detected, adaptive management action is taken. The Panel is in complete agreement with this assessment of the critical role of monitoring and adaptive management. 6.2 DESIGN In the literature cited by the Proponents and participants, case after case indicated that monitoring programs had often been ineffective in preventing surprises. This appears to have resulted from a variety of causes including inadequate monitoring design; failure to identify and incorporate key environmental components; lack of standardization of measurement or problems with data quality; lack of statistical power; and, an inability to isolate anthropomorphic impacts from natural events or variation. The Panel is reluctant to specify the individual elements that ought to be incorporated in a monitoring program. Rather, the Panel believes, such a program should be developed by the Proponents in collaboration with the Board, relevant government departments and agencies as well as interested, qualified experts. To this end, a workshop should be convened by the Board to identify critical monitoring program details, including baseline studies, and to review the final proposed program before it is approved by the Board. The process used to design the monitoring program, as well as the program itself, should be available for a full scientific peer review.

66 Monitoring 61 Environmental monitoring at the Hibernia site has been planned and will begin prior to much of the Terra Nova offshore activity. The Panel believes that synergistic integration with monitoring at the Hibernia site is desirable. This would require standardization of measurement protocols including baseline studies that establish parameters and variation of key ecosystem components, including chemical attributes of the substrate, water column, and biological communities. The Panel recognizes that the Hibernia operators are under no obligation to accommodate on their facilities monitoring for the Terra Nova Development. However, the Board has a responsibility to ensure that the best monitoring is carried out and should urge a co-operative, synergistic approach to monitoring where benefits would accrue to all parties. Recommendation 71: Board convene a workshop to identify critical monitoring program details, including baseline studies, and to review the final proposed program before it is approved by the Board. Recommendation 72: Board urge the Proponents to seek a synergistic relationship with the Hibernia project to the end of devising the best possible monitoring programs. 6.3 SEABIRDS The Grand Banks is an area that attracts very large numbers of seabirds of a variety of species. In summer it attracts millions of shearwaters, for example, from the south Atlantic and the Antarctic Ocean, as well as foragers from colonies on the Newfoundland coast; in winter it draws equal numbers of murrs and dovekies, for example, from far northern colonies. The Banks have been described as a crossroads and there is no season in which birds are not present in great abundance. Thus, as several participants noted, there is no season in which an oil spill would not represent potentially disastrous consequences. Seabirds are, in fact, the fauna that are often most immediately and most visibly affected by oil released or spilled into the marine environment. During the hearings it was noted that previous studies of the sensitivity of marine birds to oil spills and releases have shown that there are major gaps in the understanding of their potential impacts on colonies of breeding marine birds; and it is unlikely that significant, long-term biological impacts of most major spills can be identified. There were, for example, dramatic, well-documented short-term effects of the 1989 Exxon Valcfez oil spill in Alaska where an estimated 250,000 birds were killed. However, scientists have since concluded that the available data are inadequate to distinguish between long-term impacts of the spill and natural variation in the marine environment. Paradoxically, that spill may have had one positive result in that it encouraged scientists to gather more and better data on seabirds and to establish a knowledge base that may make it possible to better assess the effects of future spills. Baseline information ought to provide a means of assessing the impacts of a project, but as was noted by the Natural History Society, the complexity and interactive nature of the marine ecosystem, natural variation, insensitivity of population-based measures and inadequate data bases make this extremely difficult. Complicating this further is the lack of correlation between the size of the spill and its short-term impacts and the difficulty of obtaining measurements

67 62 Monitoring in winter conditions when impacts might be more severe. While short-term impacts, readily detectable in the form of dead and dying birds, are distressing and of concern, it is the long-term impacts on populations that may be more serious. But given the weakness of our basic knowledge, the typically deficient baseline information and the usual monitoring in place for petroleum projects, these are much less detectable. Literature cited in the EIS, and by other participants, suggests that the information required to evaluate oil release impacts includes foraging costs, population sizes, reproductive successes, survivor rates and specific responses of the birds to released oil. Such basic information is typically not part of monitoring programs nor is it expected to be required in this case. Nevertheless, assessing longer-term impacts of spills will require information on population dynamics and behavioural ecology of the birds, which goes well beyond the distribution and abundance surveys from platforms of opportunity that are typical and affordable but which almost inevitably are unable to demonstrate significant biological impacts. But even if the kind of research that is required falls outside the reasonable scope of a Terra Nova monitoring program, the Panel believes that the design of a sound program offers very exciting opportunities for collaboration with university and government researchers who should be eager to avail of synergistic co-operation. The Atlantic Accord provides for funding to support such arrangements and the Panel believes that the Board should be active in expediting them. Recommendation 73: Board use every reasonable opportunity, including the provision of funding as appropriate, to promote collaborative research among the Proponents, other petroleum projects, and university and government researchers. A contingency plan specifically designed to measure the impact of an oil spill on seabirds is necessary. Oiled birds recovered at sea and onshore must be counted. The release of a known number of drifters at the time of any spill, and their subsequent recovery along with affected birds, will provide a measure of recovery effectiveness in the conditions prevalent at the time and by extrapolation will provide an estimation of the spill s total impact. Recommendation 74: Board ensure that preparations to evaluate the effects of oil spills be done in advance of actual events. Planning should, include preparedness to release drifters in the area of the spill and to provide for their collection at sea and on beaches. In the event of a spill, evaluation of the impact must begin with dispersal of drifters and the careful collection of all oiled seabirds and drifters in the area of the spill and on beaches. 6.4 FISH Participants did not appear much concerned with fish largely because there is at present little commercial fishing in the Terra Nova area. However, many examples of natural variability have come recently to notice, and it is recognized that environmental conditions on the Grand Banks may change during the life of the Project. During that time, the area may well become attractive to any one of several possible marine species; or, species not now considered commercially viable may become so.

68 Monitoring 63 Fisheries are such a critical element of the culture and economy of Newfoundland and Labrador that the possibility of any negative effects arising from the Project must be considered. Offshore oil development in other areas has not generally shown impacts on fish populations. However, the Department of Fisheries and Oceans noted recent reports detecting sub-lethal effects as far as 20 km from oil platforms. They also indicated their concern that a variety of chemicals released into the marine environment from oil production facilities may have impacts on fish larvae and that even short-term, local effects at specific times of year could have important consequences for some fish populations. Such consequences would only be likely if a large oil spill occurred, and, in such an event, the possibility of fish tainting would also be high. The consequence of even one fish tasting of oil might be a serious problem in a sensitive and highly competitive market. It would, therefore, seem appropriate that monitoring for tainting could be included in the well conceived monitoring that is proposed for the Terra Nova Development site. In any event, monitoring for tainting should be a low cost, low technology enterprise. Recommendation 75: Department of Fisheries and Oceans, in collaboration with the Proponents and the Board, design a program to measure possible larval effects and fish tainting, which result from released oil, and that such measures be incorporated in the Project s monitoring program. 6.5 FOLLOW-UP It is difficult to muster sufficient wisdom at the beginning of an I&year project to ensure that an optimum development will occur and that minimum environmental impact will result. Adaptive changes in management incorporating new technologies, standards, and practices will undoubtedly be required to ensure the on-going acceptability of the Project. A first-rate monitoring program is absolutely essential, and this program, too, the Panel believes, should be the subject of periodic reviews over the life of the Project.

69 64 Recommendations 7.0 RECOMMENDATIONS 7.1 FUNDAMENTAL FINDINGS Recommendation 1: Government of Canada, the Government of Newfoundland and Labrador and the Board give approval for the Terra Nova Development to proceed subject to the recommendations in this report. Recommendation 2: The Panel recommends that a precautionary approach govern all aspects of the Terra Nova Development. Recommendation 3: The Panel recommends to the Government of Canada and the Government of Newfoundland and Labrador that adequate resources be allocated to the Board for the implementation and follow-up of the recommendations of this report. Recommendation 4: Board take a more active role in the exercise of its full mandate. 7.2 SOCIO-ECONOMIC IMPACTS OF THE PROJECT Recommendation 5: Proponents use their best efforts to ensure that local fabrication yards have the information and support necessary to take advantage of opportunities to upgrade project management, procurement and quality control systems to the highest recognized international standards. Recommendation 6: Board approve construction of project facilities in foreign countries only if the quality assurance and quality control of that country are equal to or better than in Canada, and also where the means for monitoring and control of quality are in place. Recommendation 7: Proponents be required to use their,best efforts and bidding processes to cause the successful international supplier of sub-sea systems to set up assembly and fabrication facilities in Newfoundland, using local labour trained to produce quality products.

70 Recommendations 65 Recommendation 8: Board monitor and review the qualifications required for all jobs to ensure that residents of the Province are not excluded by unreasonable or unnecessary qualification requirements or other artificial barriers, and that the maximum number of apprenticeships permitted by union constitutions are filled by local people. Recommendation 9: Proponents be required to identify to the Board the level and type of qualifications required for positions on their remote operating vehicle crews and indicate where such training can be obtained and that the Board initiate arrangements for establishing appropriate training in the Province. Recommendation 10: Proponents be required to reassess their need for deep-sea diving throughout the life of the Project and report the findings to the Board and that, if a need for divers is demonstrated, the Board initiate arrangements for appropriate training in the Province. Recommendation 11: The Panel recommends that as part of the benefits plan approval process, the Proponents supply: a list of skills required for the various trades throughout the life of the Project; an explanation of where shortfalls of skills are anticipated when compared with the local labour force; and, a plan for cooperation with government agencies, training institutions and unions to develop and fund training programs for Newfoundland tradespeople to attain the level of skill required for the Project. Such training programs should provide for periodic updating as the Project proceeds. Recommendation 12: Board and the Proponents work with school boards to promote an interest in careers in the oil industry, through participation in career days, guest lecturing in science courses, providing scholarships, and the like. Recommendation 13: Proponents provide to the Board, to government and to educational institutions information on jobs in the operations phase, including specific qualifications required, to allow planning to take place regarding the development of any new training required. Recommendation 14: Proponents require contractors and subcontractors to work towards developing a true partnership with workers and their representatives. Recommendation 15: The Panel recommends that, if a union agreement is negotiated for offshore workers, it should be between single entities and should clearly provide for.a flexible workforce that is not hidebound

71 66 Recommendations by the existence of rigidly narrow trade classifications. Recommendation 16: Proponents require their contractors and subcontractors to educate their management staff, down through the supervisor level, about the rationale for and the requirements of the Atlantic Accord, so that all decisions can be made in the context of that Accord. Recommendation 17: Board discontinue the practice of establishing employment targets for Canadian, and in particular, Newfoundland workers. Recommendation 18: Board insist upon compliance with the spirit and intent of the Atlantic Accord so as to avoid the necessity for bringing personnel from outside the Province solely because the need was not identified early enough to permit the training of local residents. Recommendation 19: Government of Canada and the Government of Newfoundland and Labrador require the Board to prepare an assessment of the effectiveness of the Accord Acts in securing first consideration for employment of Newfoundland residents, together with recommendations, if necessary, for strengthening the provisions of the Accord Acts or its regulations so that benefits accrue to Newfoundlanders according to the original spirit and intent of the Accord. Furthermore, the Board should carry out regular periodic reviews of the effectiveness of the Accord Acts in the future. Recommendation 20: The Panel recommends that, should deviations from the principle of first consideration for Newfoundland workers be deemed necessary, the Proponents, with the full knowledge of the concerned worker representatives, be required to seek written authorization from the Board. Recommendation 21: The Panel recommends that a work week of 40 hours and maximum levels for overtime of 10 hours per week be established by the Board as the norm for the Terra Nova Development. Recommendation 22: Proponents be required to institute an appropriate system for providing regular information to the public, not only regarding job and business opportunities, but also regarding the extent to which it is adhering to all commitments made in the context of its benefits plan.

72 Recommendations 67 Recommendation 23: Board commence a regular public information program to update the people of the Province on the results of its compliance monitoring efforts and other matters of interest to the public concerning activities of the offshore oil industry. Recommendation 24: Government of Newfoundland and Labrador improve its public information efforts concerning the offshore oil industry, in particular by releasing full information concerning any changes in existing petroleum policies or the adoption of new ones, together with clear explanations of policies in place. Recommendation 25: Proponents, their contractors and subcontractors be required to honour any statutory obligations respecting the licensing of professionals who work in the Province of Newfoundland. and support for existing and new industries in the service sector. Recommendation 28: Board develop a plan to ensure that technology transfer and new industrial development become a prime requisite for the approval of future oil development projects. Recommendation 29: The Panel recommends that, while the Government of Newfoundland and Labrador may decide to renew the funding for the Bull Arm Area Coordinating Committee, the Terra Nova Development should not be considered as a reason for such renewal. Recommendation 30: The Panel recommends that administration of the Bull Arm site remain under the jurisdiction of the Department of Industry, Trade and Technology. Recommendation 26: Proponents use their best efforts to promote supplier development throughout the Province. Recommendation 27: Board ensure that Newfoundland content in the Project is maximized and that such content includes technology transfer Recommendation 31: safety plans for the Project be released to the public for information and that the Board allow sufficient time for receipt and consideration of public comment before proceeding to approval. For future projects, the Panel recommends that the safety plan be a required element of the environmental impact statement.

73 68 Recommendations Recommendation 32: Board ensure that the safety plan for the Project is built upon the highest standards for materials, design and operational procedures to ensure life safety; that safe refuge areas and escape routes be designed with worst-case scenarios clearly in mind; that evacuation systems represent the best available technology; and, that workers be made partners in developing and monitoring safety procedures. 7.3 IMPACT OF THE ENVIRONMENT ON THE PROJECT Recommendation 33: Terra Nova Development should become, in collaboration with the Atmospheric Environmental Service of Environment Canada and the Hibernia platform, an important centre for the collection of weather data both to enlarge and improve current data sets and to aid in the early identification of intense winter storms; and, that a collaborative weather program with a research component be designed and implemented to improve observational techniques and operational forecasting. Recommendation 34: development plan should include a program devised in consultation with the Canadian Coast Guard and other appropriate authorities for monitoring and controlling marine traffic and for the development of a set of protocols to obviate the danger of collision. Recommendation 35: The Panel recommends that measures proposed by the Proponents to ameliorate spray icing or icing from freezing rain should be coupled with a research program designed to expand current knowledge and to refine existing models with the objective of establishing completely reliable design load estimates for the extreme conditions that may be encountered in the Terra Nova Development area. Recommendation 36: Proponents, in collaboration with Environment Canada and other relevant institutions, collect data and regularly update wave hindcast data bases. Recommendation 37: Board ensure that design criteria for vessels that will be on site for two decades or more must clearly recognize the possibility of extreme wave values higher than those predicted by the current model. Recommendation 38: Proponents be required to maintain a continuous surface current monitoring program at the Terra Nova site to enhance the predictability of oil dispersal patterns. The Panel further recommends that serious consideration be given to the incorporation of the data from the monitoring exercise with drift modeling.

74 Recommendations 69 Recommendation 39: ice management plan should: a) W cl d) h) allow for the difficulties in forecasting iceberg trajectories and provide for the acquisition of adequate real-time data that can add a substantial pragmatic element to model-driven projections; clearly indicate a process for selecting the icebergs to be managed by towing, for example, when multiple icebergs are in the immediate area; recognize that collisions with small growlers and bergy bits are definite hazards to shipping; include a process for timely identification and management of threatening growlers; recognize the potential for a substantial increase in the number of icebergs crossing the 48th parallel as a concomitant of global warming; include provision for a third-party audit of its effectiveness; clearly establish a set of protocols that will determine the conditions which will dictate disconnection and removal of all surface vessels to a safe area; and, include a continuous program of observation and research that leads to the improvement of radar and other remote sensing devices that will make possible the early detection of even low-lying masses of floating ice. Recommendation 40: The Panel recommends that ship designs for the Project clearly recognize the hazard to hull integrity posed by growlers and bergy bits and meet the highest standards for navigation in ice as presented by the appropriate authorities. Recommendation 41: The Panel recommends that all marine crews be properly trained and certified in safety and marine emergency procedures and that the Proponents make appropriate arrangements with relevant establishments in the Province for such training. Recommendation 42: The Panel recommends that operational planning should allow for the simultaneous occurrence of two or more loo-year events, involving combinations of wind, sea, and ice. This should include a well-designed and clearly understood decision-making process for the timely removal of the production vessel and all other vessels from the area. Recommendation 43: marine captain should be ultimately responsible for the safety of the vessel and her crew in respect of all weather or sea-state hazards. A mechanism for the formal and continuous consultation between the captain and the offshore installations manager should be clearly in place. The marine captain should be the one to implement, when it is necessary, the protocols to disconnect the vessel and remove it to a safe area.

75 70 Recommendations 7.4 ENVIRONMENTAL EFFECTS OF THE PROJECT Recommendation 44: Board undertake a new, thorough, immediate review of the adequacy of present regulations on discharges. The review should take full account of monitoring and management experiences in other offshore petroleum areas, and should proceed on the basis of a precautionary approach that considers the impact of specific projects and cumulative effects as well. Recommendation 45: The Panel recommends that, if regulations, standards and/or guidelines are updated over the life of the Terra Nova Development, the new requirements should be applied to the Project. Flexibility in the Project s design is required to allow for retrofitting during the life of the Project in order to comply with updated requirements. Use of facilities that do not incorporate retrofitting provisions in the initial design should not be permitted on the Grand Banks. Recommendation 46: Board convene in the near future, a workshop of recognized experts to examine the potential for cumulative impacts in the Newfoundland offshore due to petroleum development and other activities, and to develop best-science approaches to monitoring them. Recommendation 47: Board identify the factors necessary for a cumulative effects monitoring program on the Grand Banks and design an implementation plan for such a program; and that future projects be required to incorporate measures consistent with this program into their monitoring efforts. Recommendation 48: The Panel recommends that reviews of regulations, standards and guidelines by the Board and relevant government departments explicitly take into account cumulative impacts of all petroleum projects and other probable developments on the Grand Banks, and potential synergistic effects of other activities in the area; and that the Board advise all future proponents that it will not accept environmental impact statements that do not include a thorough and broad analysis of possible cumulative impacts. Recommendation 49: The Panel recommends that in the context of the workshop on cumulative effects, the Board should discuss with experts the adequacy of present criteria for significant impact and additional criteria which would be helpful in a precautionary approach to prevent environmental harm.

76 Recommendations 71 Recommendation 50: The Panel recommends that Environment Canada and the Department of Fisheries and Oceans identify specific relevant gaps in existing information pertaining to the Grand Banks which limit their ability to identify and predict typical impacts of offshore petroleum activity. This information should be made available to proponents, the Board and others. The Board must consider such information deficits when reviewing regulated standards. Recommendation 51: Board require operators of offshore oil projects to fund basic research. This initiative should include support of the Department of Fisheries and Oceans to conduct basic research on the mechanisms and processes by which chemicals in produced water may have impacts on the biological community. Also, support for research on cumulative and sub-lethal effects should be included. Recommendation 52: Board ensure that monitoring data from the Terra Nova Development be subjected to full scientific peer review at regular intervals. Notification and invitation to participate in these reviews should be extended to qualified experts and the public. The reviews conducted by the Board should examine relevance of information that becomes available from basic research studies. The Board should make the data and the results of these reviews available in the public domain. The Board should also regularly present information from on-going monitoring programs and reviews to the public through effective information programs. Recommendation 53: The Panel recommends that, because of accumulating data summarized in recent studies which extend the zones of local impacts, the Board ensure that the monitoring program for the Terra Nova Project extend sampling gradients beyond the limits where effects have been previously demonstrated. In the instances where these gradients overlap with potential influences from the Hibernia project, careful standardization of methodologies is necessary. Recommendation 54: Proponents re-evaluate the potential for reinjection of drill cuttings as a viable disposal option for the Terra Nova Development. If reinjection is not possible, the Panel recommends that the discharge levels obtainable with best available technology for floating systems be applied to the Terra Nova Development, and that if during the life of the Project standards are developed that cannot be met at sea, the cuttings be transported to shore for safe disposal. Recommendation 55: Proponents be required to re-examine the option of reinjection of produced water. Only if they can demonstrate to the clear satisfaction of the Board that reinjection into the Terra Nova formation is not a practical or economically feasible proposition should they be

77 72 Recommendations permitted to proceed with discharge after treatment. In that eventuality, the Proponents should be required to meet standards that are the most stringent achievable with best available technology for floating production facilities. Recommendation 56: Board require the Proponents to submit a plan for mitigation of discharged chlorinated water that includes the use of alternatives to chlorination or of dechlorination facilities. Recommendation 57: Board require the Proponents to adopt a zerotolerance policy for oil spills. Recommendation 58: Proponents implement a program of continuing education for marine crews to keep them sensitive to the ocean environment within which they are working and fully alive to the potentially disastrous consequences of even momentary failures through carelessness, complacency or incompetence. Recommendation 59: Board require the Proponents, in accordance with a zero-tolerance policy for oil spills, to establish a set of protocols to determine when oil transfers are unsafe. Recommendation 60: appropriate authorities undertake a comprehensive review of the transport of oil produced on the Grand Banks. Recommendation 61: Government of Newfoundland and Labrador establish a coastal zone management plan for the Avalon Peninsula and the west side of Placentia Bay. Recommendation 62: Proponents ensure that all staff associated with the Terra Nova Development be fully informed about the procedures required for reporting all spills, whatever their size. Recommendation 63: relationships between relevant government departments during an oil spill response situation be reviewed and clarified so that each co-operating agency has a role that is clearly defined and clearly understood. Recommendation 64: Proponents be required to modify the production vessel as new technology emerges to reduce the emission of greenhouse gases at the Project site.

78 Recommendations 73 Recommendation 65: Government of Canada assume a leadership role in the international community in seeking substantial reductions in greenhouse gas emissions and take immediate action to meet, at the very least, those targets set under the United Nations Framework Convention on Climate Change. Recommendation 66: Board require the Proponents to undertake a study of seabird attraction to, and collisions with, offshore petroleum facilities, and in this effort should seek co-operation with the Hibernia project so that early evaluation of light effects might be possible, and so that there might be opportunity to test any mitigation procedures which might be required. Recommendation 67: Board routinely require observers on the production vessel and on shuttle tankers that use transshipment facilities in Newfoundland until comfort is achieved that there will be minimal impact on seabirds on the Grand Banks or in breeding colonies along the Newfoundland coast. Recommendation 68: Board ensure that monitoring of the abundance and activities of marine mammals, and especially of identified individuals, be conducted and be related to specific activities and attendant emitted noise of the Terra Nova Development. Recommendation 69: Board require the Proponents, when the end of the Project approaches, to review and evaluate their plans for decommissioning and abandonment in light of new technologies and standards that are then current. Recommendation 70: Board apply the polluter pays principle even after the Project ends provided that harmful effects can be linked unequivocally to the Project. 7.5 MONITORING Recommendation 71: Board convene a workshop to identify critical monitoring program details, including baseline studies, and to review the final proposed program before it is approved by the Board. Recommendation 72: Board urge the Proponents to seek a synergistic relationship with the Hibernia project to the end of devising the best possible monitoring programs.

79 74 Recommendations Recommendation 73: Board use every reasonable opportunity, including the provision of funding as appropriate, to promote collaborative research among the Proponents, other petroleum projects, and university and government researchers. Planning should include preparedness to release drifters in the area of the spill and to provide for their collection at sea and on beaches. In the event of a spill, evaluation of the impact must begin with dispersal of drifters and the careful collection of all oiled seabirds and drifters in the area of the spill and on beaches. Recommendation 74: Recommendation 75: Board ensure that preparations to evaluate the effects of oil spills be done in advance of actual events. Department of Fisheries and Oceans, in collaboration with the Proponents and the Board, design a program to measure possible larval effects and fish tainting which result from released oil, and that such measures be incorporated in the Project s monitoring program.

80 TERRA NOVA DEVELOPMENT PROJECT ENVIRONMENTAL ASSESSMENT PANEL Leslie Harris Chair Jon Lien Irene Baird

81 76 Appendix A APPENDIX A BIOGRAPHIES OF PANEL MEMBERS Dr. Leslie Harris, Chairman Dr. Harris was born in St. Joseph s, P.B., Newfoundland. He received a B.A. (Education) and a M.A. (History) from Memorial University of Newfoundland and a Ph.D. (History) from the University of London. Dr. Harris joined Memorial as Assistant Professor of History in 1963, and subsequently held a number of academic positions, culminating in a IO-year period as President and Vice-Chancellor, prior to his retirement in Dr. Harris has held a wide variety of appointments during his career, including chairmanship of the 1989 Review Panel on Northern Cod Stocks. He has been a member of the Provincial Panel of Arbitration Chairmen since He is Commissioner of the Royal Newfoundland Constabulary Public Complaints Commission, and is chairman of the Battle Harbour Historic Trust. Dr. Harris has received a number of honors and awards, including an appointment in 1987 as an Officer of the Order of Canada. Ms. Irene M. Baird Ms. Baird was born in St. John s, Newfoundland and received a B.A. (Sociology) from Memorial University of Newfoundland and a Master of Public Health from the University of North Carolina in Chapel Hill. She had a lengthy career in the Newfoundland public service in a number of administrative, managerial and advisory positions in the field of health care and social policy. During the 198Os, she served as Assistant Secretary to Cabinet and as Assistant Deputy Minister in the Newfoundland Petroleum Directorate, and, later, in the Department of Energy. In these positions she was responsible for policy and planning relating to the socio-economic impacts associated with offshore petroleum exploration and development. She served as member of the federal Lower Churchill Hydroelectric Environmental Assessment Panel from 1977 to 1980, and was the official spokesperson for the Government of Newfoundland and Labrador during the Hibernia Environmental Assessment Panel hearings in Dr. Jon Lien Dr. Lien received a B.A. from St. Olaf College in Northfield, Minnesota, a MSc. and a Ph.D. from Washington State University. He came to Newfoundland in 1968 as Assistant Professor in Memorial University of Newfoundland s Department of Psychology, and was appointed as full professor in In 1988, he was crossappointed to Memorial s Ocean Sciences Centre. Dr. Lien s principal research interest is the application of principles of animal behavior to marine resource conservation and management, with particular emphasis upon whales. He also is involved in studies of resource education and of traditional ecological knowledge of resource users.

82 Appendix A 77 Dr. Lien has published extensively in both Scientific Advisory Board of the Canadian academic and popular journals, and has Environmental Network, the Expert Advisory been a member of numerous academic, Committee of the Protected Areas advisory, and community committees. His Association, and the Commission on current memberships include the ICES National Parks and Protected Areas of the Marine Mammal Advisory Committee, the World Conservation Union.

83 78 Appendix B APPENDIX B TERMS OF REFERENCE Definitions In these Terms of Reference, Environmental effect, follow-up program, and mitigation have the same meaning as I Section 2 of the Canadian Environmental Assessment Act; and Board, Canada-Newfoundland Benefits Plan, Development Application, Development Plan, Minister of the Environment, Minister of Environment and Labour, Minister of Natural Resources, Minister of Mines and Energy, Panel, Project, Proponent, and Secretariat, have the same meaning as in Paragraph 1 of the Memorandum of Understanding Concerning Environmental Assessment of the Terra Nova Development. General 1. The Panel will conduct a review of the environmental effects of the Project, considerations of human safety incorporated into the proposed design and operation of the Project, the general approach to the development and exploitation of the petroleum resources respecting the Project, and the employment and industrial benefits that are expected to accrue to the Province, and to Canada, from the Project. Scope of the Review 2. The Panel will include in its review consideration of the factors listed in Schedule 1 to this Annex. Limitation 3. The Panel s mandate shall not include an examination of questions of energy policy, jurisdiction, the fiscal and royalty regime, or the division of revenues between the Government of Canada and the Government of Newfoundland and Labrador. Public Participation 4. The Panel shall conduct its review in a manner which shall promote and facilitate public participation. Conduct of the Review 5. The review procedures to be set by the Panel will be generally consistent with Section 2.5 of the Board s 1988 Development Application Guidelines, which are set out in Schedule 2, and will be published by the Panel prior to the commencement of hearings, Panel to Monitor Preliminary Review of Application 6. During the Board s preliminary review of the Development Application, the Panel, its Secretariat, or both, will monitor the review process and, on invitation from the Board, will provide advice concerning the adequacy of the information contained in the Development Application for the purposes of public review.

84 Appendix B 79 Referral of Documentation to Panel 7. Following the board s determination that the documentation contained in the Development Application is complete and suitable for public review, the Board shall refer the documentation to the Panel for public review. The documentation will include, but not be limited to, an environmental impact statement, a socioeconomic impact statement, a Development Plan and a Canada-Newfoundland Benefits Plan. Additional Information 8. The Panel will gather any information it requires for the conduct of its review, including but not limited to: a) information on the Project; b) existing technical, environmental or other information relevant to the review; c) insofar as is appropriate, the conclusions and recommendations of the Hibernia Environmental Assessment Panel and information in response to those recommendations; d) supplementary information including a description of any Proponent-initiated public consultation program, its nature and scope, issues identified, commitments made and outstanding issues; and e) any proposed work plans, terms of reference or guidelines relating to the Proponent s preparation of its development application. Distribution of Information 9. The Panel shall ensure that the information referred to in Paragraphs 7 and 8 is made available for public examination. Comments on Information 10. Prior to announcing the schedule for public hearings, the Panel will request public comment to determine whether additional information should be provided before convening the public hearings. The time period for receipt of comments shall not be less than thirty (30) days and shall not exceed sixty (60) days. Panel May Request Additional Information 11. Should the Panel identify deficiencies after reviewing the information referred to in Paragraphs 7 and 8, and in consideration of any comments which are received pursuant to Paragraph 10, it may request additional information from the Proponent. Any request for additional information shall be issued within fifteen (15) days following the expiry of the period for comment described in Paragraph 10. Location of Hearings 12. The Panel will hold its hearings in St. John s and in such other locations that may be determined to be appropriate by the Panel. Announcement of Hearings 13. The Panel will schedule and announce the start of its public hearings respecting the Project once the Panel is satisfied with the information provided. A minimum of thirty (30) days and a maximum of sixty (60) days notice will be provided prior to the start of the hearings. Reporting 14. The Panel will prepare and submit to the Board, to the Minister of Natural Resources, to the Minister of Mines and Energy, to the Minister of the Environment,

85 80 Appendix B and to the Minister of Environment and Labour a report on its review of the Project, including: a) the anticipated environmental effects of the Project; b) the efficacy of any mitigation measures which are proposed by the Proponent; c) comments which are received from the public; and 4 the terms and conditions under which the Project may proceed in a safe and environmentally acceptable manner. The report shall be submitted at the earliest possible date but in no event later than two hundred and seventy (270) days following receipt of the information referred to in Paragraph 7 of this Annex. The report of the Panel will be published. Specialist Advisors to Panel 15. The Panel may secure the services of independent specialists to provide information on and help interpret technical and scientific issues. The names of any specialists retained and their advice to the Panel will be made public. Specialists hired by the Panel may be requested to appear before the Panel.

86 Appendix B 81 FACTORS TO BE CONSIDERED DURING PUBLIC REVIEW The public review of the Development Application respecting the Terra Nova Project shall include a consideration of the factors described below, the temporal scope of which consideration shall include all phases (i.e., construction, installation, commissioning, operation, decommissioning and abandonment) of the Project: 1. The purpose of the Project; 2. The need for the Project; 3. Alternative means of carrying out the Project which are technically and economically feasible; 4. The temporal and spatial boundaries, for environmental assessment purposes, of the Project area; 5. A description of the existing environment, or components thereof, including the socioeconomic environment, which may reasonably be affected by the Project; 6. The effects of the environment upon the Project; 7. The environmental effects of the Project, including those due to malfunctions or accidents that may be reasonably expected to occur in connection with the Project; 8. Cumulative environmental effects of the Project that are likely, to result from the Project in combination with other projects or activities that have been or will be carried out; 10. Measures, including contingency and compensation measures as appropriate, that are technically and economically feasible and that would mitigate any significant adverse environmental effects of the Project which are identified pursuant to item 9; 11. The significance of adverse environmental effects following the employment of mitigative measures referred to in item 10; 12. The capacity of renewable resources that are likely to be significantly affected by the Project to meet the needs of the present and those of the future; 13. The need for, and the contents of, follow-up programs respecting the results of the environmental assessment; 14. Measures which have been taken by the Proponent of the Project to identify, evaluate, and minimize risks to human safety which may be associated with the operation of the Project; 15. The general approach to the development and exploitation of the petroleum resources respecting the Terra Nova oil field; 16. The employment and industrial benefits that are expected to result from the Project and the general measures that are proposed or could be undertaken to optimize those benefits, particularly in the local and regional economies; and 17. Comments from the public respecting any of the matters described above. 9. The significance of the effects described in items 6 through 8;

87 82 Appendix C APPENDIX C PARTICIPANT FUNDING PROGRAM ORGANIZATION DESCRIPTION OF WORK FUNDED AMOUNT RECEIVED 1. Bull Arm Area Co-ordinating Committee Hire researcher to do research on the potential socio-economic effects of the project, negative and positive, to the area surrounding the Bull Arm construction site. $4, Natural History Society of To research and prepare a scientific review of Newfoundland and Terra Nova EIS, in particular with respect to Labrador marine ecology, marine mammal ecology and physical oceanography. $22,410.00

88 Appendix D 83 APPENDIX D PRESENTERS AT PUBLIC HEARINGS * April 22, 1997 General Session/Development Plan St. John s, Newfoundland Association of Professional Engineers and Geoscientists of Newfoundland: Mr. Geoff Emberley, president Environment Canada: Mr. Brian Power Mr. Roy Parker Dr. John Chardine Mr. Stuart Porter Ms. Kim Coady Mr. Glen Worthman Mr. Glen Brown Newfoundland and Labrador Oil Development Allied Trades Council (ODC): Mr. Dermot Cain International Union of Operating Engineers, Local 904: Mr. Bill Katay Environment Canada: Mr. Brian Power Dr. John Chardine Mr. Roy Parker Ms. Kim Coady, Mr. Glen Wotthman Mr. Andre Gauthier Mr. Kevin Power Mr. Charles MacLean Natural,History Society of Newfoundland and Labrador: Dr. Len Zedel April 24, 1997 Socio-Economic Effects/Benefits St. John s, Newfoundland Environment Canada: Mr. Dave Sawyer Mr. John MacLellan International Brotherhood of Electrical Workers (IBEW), Local 2330: Mr. Art dake April 23, 1997 Environmental Effects St. John s, Newfoundland Dr. Michael Wallack Department of Fisheries and Oceans: Mr. Urban Williams Mr. Mr. Glen Brown Dan Corbett * Petro-Canada made a presentation at each session.

89 84 Appendix D April 30, 1997 Community Session Grand Falls-Windsor, Newfoundland Town of Grand Falls-Windsor: Mr. Rod French May 1,1997 Community Session Clarenville, Newfoundland Bull Arm Area Coordinating Committee: Mr. Dave Stacey Mr. Glen Brown May 2,1997 Community Session Marystown, Newfoundland Town of Marystown: Mr. Jerome Walsh Marystown-Burin Area Chamber of Commerce: Ms. Evelyn Richardson Mr. Glen Brown May 6,1997 General Session St. John s, Newfoundland Department of Fisheries and Oceans: Mr. Larry Coady Mr. Ray Brown Dr. Jerry Payne Mr. Peter Cranford Dr. John Gray Mr. Cordell Green Mr. Graham Moores Canada-Newfoundland Offshore Petroleum Board: Mr. John Fitzgerald Natural History Society of Newfoundland and Labrador: Mr. Owen Myers Dr. William A. Montevecchi Newfoundland Ocean Industries Association (NOIA): Mr. Gerry Bishop Ms. Joanne Ellis Natural History Society of Newfoundland and Labrador: Ms. Janet Russell

90 Aooendix E 85 APPENDIX E KEY REVIEW DOCUMENTS Development Application documents submitted by Petro-Canada for the Terra Nova Development Development Application Summary, August 1996 Development Plan - Part I, August 1996 Canada-Newfoundland Benefits Plan, August 1996 Environmental Impact Statement, August 1996 Socio-Economic Impact Statement, August 1996 Development Plan - Parf II, August 1996 Supplement A to the Application, November 1996 Supplement B to the Application, February 1997 Department of Environment and Labour Canada-Newfoundland Offshore Petroleum Board Department of Fisheries and Oceans Natural History Society of Newfoundland and Labrador Dr. Michael Wallack Atlantic Cooperative Wildlife Ecology Action in Newfoundland Mr. Merrill Francis Ms. Janet Russell Centre for Longterm Environmental Action in Newfoundland. Additional Information Request, issued by the Panel, February 1997 \ Hibernia Development Project Environmental Impact Statement, May to September, 1985 (seven volumes) Response to the Additional Information Request from the Terra Nova Environmental Assessment Panel, submitted by Petro-Canada, March 1997 Comments received on the Development Application documents, January 1997: Mr. Glen Brown Department of Fisheries and Aquaculture 9 Environmental Protection Branch, Environment Canada Department of Mines and Energy

91 86 Appendix E Written submissions to the Terra Nova Project Environmental Assessment Panel during public hearings, April to May, 1997: Environment Canada. Joint Public Review: Terra Nova Project, April Newfoundland and Labrador Oil Development Allied Trades Council (ODC). Enhancing the Value of Workers, April International Union of Operating Engineers, Local 904. Divers: A Special Case, April Dr. Michael Wallack. Regarding the Emissions of Greenhouse Gasses by the Proposed Development, April International Brotherhood of Electrical Workers (IBEW), Local Building Upon the Disappointment of Hibernia, April Natural History Society of Newfoundland and Labrador. Review of the Terra Nova Project Development Environmental Impact Statement, April Natural History Society of Newfoundland and Labrador: A Preliminary Analysis of the Petro- Canada Development Application (Mr. Owen Myers). January Mr. Merrill Francis. Public Review of Petro-Canada s Terra Nova Development Application, April Ms. Janet Russell. Comment on Petro-Canada s Terra Nova Development Application, April Town of Grand Falls-Windsor. April Bull Arm Area Co-ordinating Committee. May Department of Fisheries and Oceans, Environmental Assessments. Position Statement: Terra Nova Offshore Oil Development, April Mr. Glen Brown and Mr. Dan Corbett. A Base to Build On, April (Two volumes) Association of Professional Engineers and Geoscientists of Newfoundland and Labrador. April Mr. Ed Byrne, M.H.A. Kilbride. Clearly Defining Benefits for the Newfoundland and Labrador Workforce from the Terra Nova Offshore Oil and Gas Development Project, April Mr. David Campbell. Canadian Content in the Terra Nova Development Project, May Marystown Burin Area Chamber of Commerce. May Town of Marystown. May Mr. Graham Moores: Speaking Notes. May Dr. William A. Montevecchi. May Canada-Newfoundland Offshore Petroleum Board. May Mr. Jim Pike. May Ms. Joanne Ellis: Slides accompanying verbal presentation, May Newfoundland Ocean Industries Association. May 1997.

92 Appendix E 87 Transcripts of the Terra Nova Project. Mount Peyton Hotel, Grand Falls- Environmental Assessment Public Windsor, NF. April 30, Hearings, April to May, 1997: Clarenville Inn, Clarenville, NF. May 1,1997. Airport Plaza Hotel, St. John s, NF. April 22, 1997 Hotel Marystown, Marystown, NF. May 2, Airport Plaza Hotel, St. John s, NF. April 23, Airport Plaza Hotel, St. John s, NF May 6, 1997 Airport Plaza Hotel, St. John s, NF. April 24, 1997.

93 88 Appendix F APPENDIX F ACTS, REGULATIONS AND GUIDELINES CITED IN THE REPORT International Agreements The Agreement for the Implementation of the Provisions of the United Nations Convention on Law of the Sea of IO December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks U.N.Doc./A/CONF.164/37 (1995) Convention on Biological Diversity U.N.Doc.UNEP/Bio.Div./N7lNC.5/4 (1992) The Montreal Protocol on Substances that Deplete the Ozone Layer (1987) Int. Leg. Mat. 26:1541 Nov 87 The Rio Declaration on Environment and Development (7992) Int. Leg. Mat. 31:876 Jul92 United Nations Framework Convention on Climate Change UN.Doc. A./AC.236/18 (1992) Federal Acts Canadian Environmental Assessment Act S.C., 1992, c.37 Canadian Environmental Protection Act R.S.C.,l985,c.16 Canada-Newfoundland Atlantic Accord Implementation Act S.C.,1987, c.3 Canada Shipping Act R.S.C., 1985, c.s-9 Environmental Assessment and Review Process Guidelines Order P.C June 1984 Oceans Act S.C., 1996,c.31 Provincial Acts Canada-Newfoundland Atlantic Accord implementation (Newfoundland) Act R.S.N., 1986, c.37 Labour Relations Act R.S.N., 1977, c.64 Regulations Newfoundland and Labrador Petroleum Regulations, /78 Guidelines Environmental Code of Practice for Treatment and Disposal of Waste Discharges from Offshore Oil and Gas Operations, Department of Environment. Environmental Protection Directorate. Industrial Programs Branch, Offshore Waste Treatment Guidelines, published by National Energy Board, Canada-Newfoundland Offshore Petroleum Board, and Canada-Nova-Scotia Offshore Petroleum Board, September 1996

94 Appendix G 89 APPENDIX G ABBREVIATIONS The Accord Acts AES The Board CASP C-CORE COADS EARP EIS ERICA FPSO GALE GBS IBEW IIP MAST MOU NOIA NORDCO OBM ODC OIM PAL PERD ROV UNCED Canada-Newfoundland Atlantic Accord Implementation Acts Atmospheric Environment Service Canada-Newfoundland Offshore Petroleum Board Canadian Atlantic Storms Program The Centre for Cold Oceans Resources Engineering Comprehensive Ocean Atmosphere Data Set Environmental Assessment and Review Process Environmental Impact Statement Experiment on Rapidly Intensifying Cyclones over the Atlantic Floating Production Storage and Offloading vessel Genesis of Atlantic-Lows Experiment Gravity Base Structure International Brotherhood of Electrical Workers International Ice Patrol Marine Statistics System Memorandum of Understanding Newfoundland Ocean Industries Association Newfoundland Ocean Research and Development Corporation Oil-based muds Newfoundland and Labrador Oil Development Allied Trades Council Offshore Installations Manager Provincial Airlines Ltd. Panel on Energy Research and Development Remote operated vehicles United Nations Conference on Environment and Development

95 90 Appendix H APPENDIX H GLOSSARY* anthropogenic adaptive management barrel biocide benefits plan benthic organisms bergy bit carrying capacity cuttings demersal delineation well drift blocks Derived or resulting from human activity. Management that changes in anticipation of, or in response to, new or altered circumstances during the life 0f.a project. A unit of measure for crude oil and oil products equal to 42 U.S. gallons; litres. A chemical agent that destroys living organisms. A plan that gives full and fair opportunity for Canadian individuals and companies to supply the requirements of the project, to give first consideration to services and goods provided from within the province, and to provide, in particular, employment opportunities for the labour force of the province. Organisms including animals and plants living on, in, or attached to the sea bottom. A piece of floating glacier having a sail (the portion of the iceberg above the water line, exposed to the wind) greater than 1.5 m but less than 5 m and a water plane area greater than 20 m2 but less than 30 m. Size approximates that of a small house and mass is between 120 and 5,400 tonnes. The total number of plants and animals that can be supported by a particular ecosystem, without reducing the environment s long-term ability to sustain life. Chips and small fragments of rock that are brought to the surface by the flow of drilling mud as it is circulated in the drilling process. Referring to animals (usually fish) associated with, but not living on, the sea bottom. A well drilled in the vicinity of a discovery well to evaluate the extent and importance of a hydrocarbon find. Floating objects released at sea to indicate surface water movements. Also called drifters. * ltalized words used in definitions are also defined in this glossary.