Question re: Oil and gas development - Decemeber 3, 2014

Mr. Silver:   In August 2013, a set of interim guides were issued by the Yukon Water Board for oil and gas. These new guidelines increase the jurisdiction the Water Board has over the oil and gas industry. These new guidelines treat all methods of oil and gas extraction the same — as being water intensive. Conventional oil drilling uses far less water than hydraulic fracturing but the water permits under the new guidelines do not differentiate.

According to the Water Board’s internal directive, signed on August 8, 2014, the Department of Energy, Mines and Resources and the Department of Environment signed a memorandum of agreement on these interim guides. My question is to the Minister of Energy, Mines and Resources: Why have these changes been made?

Hon. Mr. Pasloski:     The Yukon government recognizes that a modern, timely and predictable regulatory regime is required for the resource sector to realize its potential. We are working to improve the regulatory system and the licensing processes in order to reduce uncertainty and maintain environmental and socially sustainable industries.

As I just spoke about, the Yukon Party, by record, is a party that has supported industry and has supported growth and economic diversification through growth in our primary extraction industries. Sadly, the NDP and the Liberals continue to vote against all of those initiatives.

Mr. Silver:   The thing I’m voting against is the leadership style that I cannot, in good conscience, back up.

These changes do not just impact active wells, but also the effective exploration phase as well. Previously, the Water Board was not heavily regulated for companies doing test drilling. Now, in hardrock mining, we only see this level of oversight when a company actually moves into the active production phase. Creating barriers for oil and gas exploration could very well prevent the oil and gas industry from taking root in the Yukon.

Is the Minister of Energy, Mines and Resources concerned that these changes will actually impede development of oil and gas industry in the Yukon?

Hon. Mr. Kent:    On a number of occasions, I have met with the proponent that the member opposite is referring to with respect to this particular initiative. Certainly we were concerned as a government that the changes came in part way through the assessment phase that the company was undertaking. We felt that there were some issues with procedural fairness. I met, along with the Deputy Minister of Executive Council Office, with the chair of the Water Board and was able to convey our concerns to the Water Board. We have not heard back officially from the Water Board following up on a letter that was sent to the chair of the Water Board. As members know of course, the Yukon Water Board is a quasi-judicial board and of course we respect their rights to make determinations on what requires water licencing activities, but I can assure members opposite that they were certainly concerned about the oil and gas industry and the ability for it to proceed and become a major contributor to the Yukon economy, building on what’s already taken place in the Yukon over the past 50 to 60 years.

Mr. Silver:   I appreciate the minister’s response.

Setting up a regulatory framework is absolutely a balancing act. We do need to protect our environmental interests while also ensuring that the process does not prevent resource development and the high-quality paying jobs that come with this.

With the Carmacks Copper project, we saw a situation where YESAB approved the project and then the Water Board denied it. These new regulations from the Water Board threaten to do the same in our oil and gas projects. In setting up these new guidelines, is the minister taking proactive steps toward getting Yukon ready for an oil and gas industry or trying to replicate the red tape that is plaguing the mining industry?

Hon. Mr. Kent:    Of course providing regulatory certainty is something that our government is very committed to. One only has to look at the changes that were introduced last year with respect to introducing timelines at the adequacy phase for type A water licences for quartz mining projects. When it comes to the oil and gas industry — and I know the member knows that it has had a long history here in the Yukon going back to the 1950s. That’s when the first well was drilled in the territory. There are between 70 and 80 wells that have been drilled in the territory over the years and two producing wells and two very strong producing wells in the Southeast Yukon that I know we have spoken about on a number of occasions, which have contributed over $45 million in royalties to the Yukon government coffers that all governments have used over the years to support spending initiatives, such as hiring teachers or doctors or nurses, important things for Yukoners that I know that Yukoners appreciate.

We certainly value the oil and gas industry. We would like to see a strong oil and gas industry established here in the Yukon. We’ll continue to work on regulatory initiatives and improvements to ensure that we eliminate duplication when it comes to licencing and so that people can be treated in a fair and consistent manner.