1. Canadian Energy Emergency Response ›› APEC Energy Working Group Vancouver, Canada 9–13 May 2011

2. 2 Purpose  To describe Canadian government responses to domestic and international oil supply disruptions  To indicate the authorities available to the Minister of Natural Resources Canada (NRCan)  Outline of current activities

3. 3 Under Canada’s Constitution Act  Federal government  Policies of national interest (economic development; security; and S&T)  Frontier lands resource management  Corporate taxation policies  Management of uranium and nuclear power  International and inter-provincial trade, commerce and environmental impacts  National Energy Board (NEB) as Federal Regulator  Duty to consult First Nations  Provincial governments  Resource ownership within provincial land borders  Manage pace and extent of resource development  Manage and regulate intra- provincial energy infrastructure  Intra-provincial electricity and natural gas utility regulation  Manage intra-provincial trade, commerce, and environmental impacts  Taxation and royalty powers

4. 4 Shared powers …  Federal and Provincial governments  Work together to get overall policy and fiscal framework consistent and stable  Share responsibility for environmental assessments of major projects where federal ‘triggers’ are impacted  However, provinces can, amongst other things,  Regulate commodity prices within their borders  Control the rate of resource extraction - surge production - and regulate use

5. 5 On-Going Security Activities  NRCan works with:  The private sector, provincial and territorial governments, energy regulators, and industry to take the steps necessary to assure the integrity of critical energy facilities  The U.S. and Mexico on international initiatives for North American critical energy infrastructure protection and emergency management  Public Safety Canada to implement the National Strategy and Action Plan for Critical Infrastructure

6. 6 Emergency Management in Canada  The Emergency Management Act requires each Minister to identify risks to their responsibilities and develop plans to mitigate those risks  Public Safety Canada’s Federal Emergency Response Plan (FERP) coordinates a whole-of-government response during an emergency for all-hazards  A FERP annex; Emergency Support Function 4 - Energy Production and Distribution (ESF 4):  Identifies NRCan as the lead federal department on energy emergencies  Highlights roles and responsibilities of key stakeholders during an energy emergency

7. 7 Emergency Management at NRCan  Emergency Management Planning Directive (EMPD)  Provides the governance structure and roles within NRCan during an emergency  Emergency Management Plan 8: Energy Supply Disruption (EMP 8)  Identifies stakeholders, jurisdictions, responsibilities, activation and response capabilities specific to an energy emergency  Standard Operating Procedures  Contact lists  Support specific situations e.g. International Energy Agency Strategic NRCan EMPD (Department-level)

8. 8 Canada is a Dual Market …  Canada is a major net oil exporter – not required by International Energy Agency (IEA) to hold a Strategic Petroleum Reserve  But… 43% of domestic refinery receipts are imported - these are declining as east coast production ramps up, and Ontario refineries process more oil sands derived crude  52% of oil imports come from OPEC countries (such as Algeria, Saudi Arabia, Iraq); and,  21% of oil imports come from the North Sea  Adequate commercial stocks available (next slide)

9. 9 Domestic Supply Disruption …  At local or regional level …  Industry has primary responsibility and works market mechanisms and transactions to meet needs  Price response  Product swaps  Imports  Industry has commercial stocks to draw on:  About 10 days of crude oil stocks for refineries  About 40 days of finished petroleum product stocks

10. 10 If Industry Cannot Manage Domestic Outage…  Provinces are required to take all reasonable steps to minimize energy consumption and secure alternative energy supplies  To do this, the province would likely have needed to declare a state of emergency, and exercise its own emergency powers  If necessary, Federal emergency powers can be used but require broad provincial consultation to ensure situation is a “market failure”  This situation has never occurred

11. 11 International Oil Supply Disruption  IEA would choose the level of response  Canada would:  At a minimum maintain export flows at pre-crisis levels as part of our supply contribution  To do this:  For global shortages up to 2 MM bpd, Canada will decrease domestic use through policy driven demand restraint and other measures  For global shortages in excess of 2 MM bpd, Canada will contribute additional supplies to the extent possible – via a surge or increased production and other measures

12. 12 In Cases Of Severe Shortage, A State Of Emergency Could Be Declared…  If international (or domestic) shortage is severe and poses national economic concerns, Canada can declare:  A National Emergency under the Energy Supplies Emergency Act and use the Energy Supplies Allocation Board (ESAB)  ESAB has broad-ranging powers to control all aspects of crude oil and petroleum product movements, including:  Redirecting crude oil to ensure that all refiners experience similar shortages  Directing companies to draw down inventories to meet a short-term shortage  A Public Welfare Emergency under the Emergencies Act and use Emergency Orders and Regulations (EMORS)  The government could order the requisition, use or disposal of property including energy commodities

13. 13 EMORs vs. ESAB EMORS  The preferred response tool for an oil disruption in a declared state of emergency  Only response option for natural gas  Offers the flexibility of tailoring the response to the circumstances  Can be implemented quickly in response to a higher probability short-term disruption. ESAB  Commonly referred to as the federal government’s emergency response mechanism  Designed to respond to the kind of major long-term disruption of world oil markets of the 1970s  Regulations are quite elaborate, and cumbersome Depending on the circumstances and the required action, the Minister of NRCan would suggest the most appropriate instrument to use – the Energy Supplies Emergency Act or the Emergencies Act

14. 14 Decision Process Minister of NRCan would  Provide advice to Cabinet and Prime Minister on the need to declare an energy-related national emergency  Given circumstances, decide which instrument should be used –The Energy Supplies Emergency Act or The Emergencies Act  Recommend appropriate regulation(s)

15. 15 Summary  Canada has a diverse mixture of energy products to rely upon (uranium, coal, hydro, natural gas, oil)  Canada is a significant supplier and consumer of energy  Canada’s federal government holds significant emergency powers to address energy supply disruptions  But first, we work with and encourage voluntary solutions by Industry and the Provinces to address energy supply disruptions