1. McCarthy Tétrault LLP / mccarthy.ca Gordon Nettleton Regulatory Issues Facing Canada’s Oil and Gas Industry

2. McCarthy Tétrault LLP / mccarthy.ca The Background Changing Market Dynamics ¬Gas ¬Cdn gas supply abundant from technology (shale gas exploitation) ¬Prolific trend in US ¬Geographic proximity to US markets causes Cdn exports to decline and US supply to serve Cdn markets 2

3. McCarthy Tétrault LLP / mccarthy.ca The Background Changing Market Dynamics ¬Crude ¬Cdn crude supply increasing ¬US crude markets remain most attractive ¬Constrained access adversely affects net backs to industry and Cdn governments ¬US domestic supply on the rise but unlikely to back out Cdn crude types 3

4. McCarthy Tétrault LLP / mccarthy.ca The Background ¬Response to Market Changes: ¬New infrastructure required to access alternative tidewater markets ¬Need for Canada to position itself as being able to serve new markets. ¬Market Access & Diversification ¬Largest issue facing Canada’s O&G Industry ¬Is Canada up this challenge? 4

5. McCarthy Tétrault LLP / mccarthy.ca Solving The Market Diversity Challenge The Requirements ¬Asian marketplace demands ¬Export supply certainty & security ¬Commercial development & operational certainty ¬Fiscal regime certainty ¬ Regulatory certainty ¬Opportunity to serve Asian markets is limited ¬Canada is competing with worldwide market participants. 5

6. McCarthy Tétrault LLP / mccarthy.ca Solving The Market Diversity Challenge Policy/Regulatory Initiatives ¬Legislation ¬Process Changes: ¬export authorizations ¬Redefinition of public involvement role ¬Changes in role/scope of regulator decisions ¬Imposing time limitations on processes ¬Effectiveness of changes still unclear 6

7. McCarthy Tétrault LLP / mccarthy.ca Solving The Market Diversity Challenge Policy/Regulatory Initiatives ¬Policy ¬Government buy-in essential & unprecedented ¬Discussions are beginning (finally!) around national energy strategy ¬Will not work without involvement and role for First Nations affected by new development ¬Learn from Canada’s success stories (e.g. Kitimat LNG, BxM 500 kV) ¬Commercial structures exist that promote win-win-win opportunities 7

8. McCarthy Tétrault LLP / mccarthy.ca Regulatory Proceedings ¬Involves impartial public interest decisions ¬Decisions are based on presented evidence ¬Concurrent Processes (with settlement) ¬Litigated outcome provides some certainty ¬Common Objective: avoid negative outcomes: ¬ Project denial, delay/appeal, cost increase 8

9. McCarthy Tétrault LLP / mccarthy.ca Strategies to Manage Risks During Regulatory Proceedings Regulatory Objectives: ¬Proponents: ¬demonstrate evidence supports the relief sought ¬Opponents: ¬Test/present evidence to ¬Raise doubt regarding the merits of the project ¬Raise doubt about the credibility of the Proponent and the Crown ¬Improve settlement bargaining position ¬Establish an evidentiary for appeal purposes 9

10. McCarthy Tétrault LLP / mccarthy.ca Top 10 Strategies For Proponents 1.Build a Strong Evidentiary Record ¬Focus on Consultation Record 2.Credibility of Witnesses ¬Familiarity with case, issues and comfort with litigation process 3.Regulators and “Tough” Decisions ¬Avoidance strategy ¬Has the proponent taken all reasonable steps to avoid opposition? 10

11. McCarthy Tétrault LLP / mccarthy.ca Top 10 Strategies For Proponents 4.Know the Case(s) Against You ¬How do you intend to position your case vis a vis theirs? ¬What additional evidence do you need? 5.Develop a Litigation Resource Plan ¬Who is doing what & when? ¬Advanced Planning is a key for success 6.Witness Training ¬Comfort in the hearing room is key for success 11

12. McCarthy Tétrault LLP / mccarthy.ca Top 10 Strategies For Proponents 7.Co-ordination with the Crown ¬Aboriginal risks lie with the proponent AND the Crown. ¬Ensure open lines of communication exist with Crown ¬Roles and expectations must be known in advance. ¬Who is doing what, when? ¬What role will the Crown take in the hearing process? 12

13. McCarthy Tétrault LLP / mccarthy.ca Top 10 Strategies For Proponents 8.Have a Public Relations Plan ¬Do not leave this to the lawyers! 9.Assess Need/Impact of Cross Examination ¬On what basis will you credibly attack: ¬Elder stated oral evidence ¬Positions taken regarding strength of claim ¬Cross examination has risks! 10. “Backwards First” Strategy ¬Know your final argument and work from there! 13

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