SAHTU
An unexpected delay has arisen with Imperial Oil's application to renew its Norman Wells water-use licence with the Sahtu Land and Water Board (SLWB).

An Imperial Oil well flares near Norman Wells. The company is seeking clarification over who will be responsible when the sun sets on this project. - NNSL file photo

"The (SLWB) has suggested that Imperial Oil provide the board with reclamation estimates, so that the board can propose a financial security," said Paul Dixon, the board's executive director.

The idea of attaching a reclamation and remediation security requirement to Imperial's water licence has met with resistance from Imperial, not on economic grounds but on a question of jurisdiction.

"Imperial is seeking clarification on which regulator has jurisdiction over the areas of final remediation and reclamation once (operations) cease, whether its the SLWB or the National Energy Board," said Pius Rolheiser, Imperial Oil spokesperson.

Imperial has been paying royalties to the federal government under an arrangement predating both the GNWT and the SLWB. The federal government, through Aboriginal Affairs and Northern Development Canada (AANDC) owns a one-third interest in the Norman Wells proven area.

The Norman Wells proven area remained under federal jurisdiction following territorial devolution earlier this month.

Imperial has been setting aside a portion of the company's annual federal royalty payments into a trust fund to account for the federal portion of financial responsibility for eventual area reclamation and remediation.

According to an April 9 letter to the SLWB from AANDC legal counsel, $181.4 million is held in trust to secure the federal one-third portion liability for reclamation and remediation once the Norman Wells field stops producing.

Without a context for that number, it is impossible for the SLWB to know whether it is appropriate for ultimate reclamation costs.

Based on the requested estimates, the SLWB could attach an ask for a security deposit with their final recommendation regarding Imperial's water licence renewal.

"That financial security alleviates the burden on the tax payer should the company walk away from its obligations," Dixon said.

"We're not saying Imperial will walk away, but current practice is to - at the least - do an accounting of potential liabilities."

In a written submission to the SLWB, Imperial Oil stated that responsibility and oversight of land reclamation in the Norman Wells proven area remains the jurisdiction of the federal government - specifically, the National Energy Board (NEB) - and not the SLWB.

For this reason, Imperial is not convinced the SLWB has either the regulatory authority to demand or assess area reclamation and remediation bonding.

Imperial is also concerned that the question of land reclamation is not a within the purview of a water use application.

The company is currently not required to post a reclamation bond on oil production against eventual shutdown activity.

Imperial has already started reclamation work at their Norman Wells refinery, which has been shut down for 10 years now.

"Imperial's position is that the long term financial strength of the company - the fact that we take our obligations seriously, and live up to those obligations - provides sufficient security," Rolheiser said.

"But that is certainly one of the issues on which we are seeking regulatory clarity."

With all parties involved - except the NEB - having filed responses with the SLWB, it now falls to the SLWB itself to decide on the jurisdictional question.

"Next week the board will sit down and go through all the evidence and look at the arguments provided ... and make a ruling (on jurisdiction)," Dixon said.

The SLWB will engage their legal counsel to assess the position statements submitted to date by Imperial, the GNWT, and AANDC.

The apparent incongruity of the SLWB deciding on its own jurisdiction is mitigated by looking at it as a formal requirement.

"The board has to propose its own position before any other party can review it or question it," Dixon said.

"It's a matter of process."

Imperial will have limited options once the board makes the decision.

"If Imperial Oil questions the board's jurisdiction ruling, there is the option for a formal court proceeding where the courts would make a ruling," Dixon said.

Imperial Oil takes water from the Mackenzie River for use in cooling plant equipment and for pressurizing well reservoirs to maintain oil production.

Dixon anticipates the SLWB will make a decision before the end of this month.

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