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September 1994

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Environmental Issues

The Environmental Issues Task Force was formed in the fall of 1992, in general to evaluate how environmental matters might affect Joint Venture arrangements. The mandate of the Task Force was to provide a contractual means to minimize and equitably share in the environmental liabilities existing in oil and gas facilities in order that they may be restored to an acceptable condition by:

  1. Acquiring an understanding of the effect of legislation and regulations on joint venture facilities

  2. Acquiring an understanding of the recommendations of companies and other associations on facilities related environmental issues

  3. Develop and table with the PJVA Board specific recommendations for Joint Venture Agreements to address these issues.
In March of 1993, the Task Force formed two subcommittees to examine the most pertinent issues. The Restoration Funds Subcommittee was established with the mandate to make recommendations to the Task Force on the methodology for establishing and managing "financial assurance mechanisms" that will provide for rehabilitation and reclamation of pipelines or facilities that are governed by a Joint Operating Agreement.

The Environmental Audits (Assessment) Subcommittee mandate was to recommend options to ensure that environmental conditions of jointly owned facilities are being reviewed at reasonable intervals and that deficiencies are being addressed in such a manner that reclamation costs and all environmental liabilities are managed in a proactive, responsible manner.

A third group was formed to contact government, regulatory bodies and industry associations from a joint venture perspective and present their findings to the two subcommittees.

Notwithstanding the terminology used in the various mandates, throughout this report "facilities" is used to refer to both facilities and pipelines insofar as reclamation and restoration are concerned. Likewise, "reclamation" will be used to refer to site restoration and reclamation. In addition, the various agreements under which operations of facilities can be performed will be referred to as "facility agreements".

The findings of both Subcommittees are presented in the Discussion Paper. Overall, the Task Force felt that the mandates had been achieved although specific recommendations regarding financial vehicles to fund reclamation were impossible to develop. Wording is presented for facility agreements which can be used when the owners have agreed to set up a restoration fund. A recommendation for working is also presented for use where the owners have agreed to provide for environmental audits and/or assessments.