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Report of the Terra Nova Development Project Environmental Assessment Panel

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 duringboth 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 l99l, there had been 22 significant discoveries as compared with 232 in the U.K. sector of the North Sea alone;

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 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, 1996.

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:

The Panel recommends that the 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 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 co-ordination 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 appliedto 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 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 l0 December l982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, and the United Nations Framework Convention on Climate Changeand 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 l980s 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 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 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:

The Panel recommends that the 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:

The Panel recommends that the 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.

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 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.

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 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.

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.

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:

The Panel recommends that the 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:

The Panel recommends that the 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.

5.8 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 km 2 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 long-term 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 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:

The Panel recommends that the 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 o C and therefore will be much warmer than ambient seawater when it is discharged.

Over 67,000,000 m 3 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 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 m 3 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 5,000,000 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 theEnvironmental 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 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:

The Panel recommends that the 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 m 3 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:

The Panel recommends that the 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.

5.10 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 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:

The Panel recommends that the Board require the Proponents to adopt a zero-tolerance 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:

The Panel recommends that the 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-the-art 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 time-related 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:

The Panel recommends that the 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 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:

The Panel recommends that the appropriate authorities undertake a comprehensive review of the transport of oil produced on the Grand Banks.

Recommendation 61:

The Panel recommends that the 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:

The Panel recommends that the 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:

The Panel recommends that the 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.

5.11 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 l990 levels. Canada has also agreed to co-operate 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 2) emissions it will fall short of its commitment under the Framework Convention by some 49,000,000 tonnes and has recently suggested to the international community that targets should be reduced.

The 300,000 tonnes of CO 2 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 CO 2 or sulphur dioxide (SO 2) 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.

Recommendation 64:

The Panel recommends that the 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:

The Panel recommends that the 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.

5.12 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 3,000,000 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:

The Panel recommends that the 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:

The Panel recommends that the 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.

5.13 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

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:

The Panel recommends that the 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.

5.14 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:

The Panel recommends that the 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:

The Panel recommends that the Board apply the polluter pays principle even after the Project ends provided that harmful effects can be linked unequivocally to the Project.