Canada Benefit Plan

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1.0 INTRODUCTION.............................................................................................................................................11.1 Development Application..............................................................................................................................11.2 Overview .......................................................................................................................................................11.3 Basic Document.............................................................................................................................................31.4 Auxiliary Document Socio-Economic Impact Statement: Sustainable Development ................................41.5 Benefits Plan Amendments............................................................................................................................41.6 Review Process..............................................................................................................................................5

2.0 BENEFITS PLAN SUMMARY........................................................................................................................62.1 Introduction ...................................................................................................................................................6

3.0 STATUTORY REQUIREMENTS....................................................................................................................63.1 Office in the Province....................................................................................................................................63.2 Full and Fair Opportunity and Competitive Basis .........................................................................................63.3 First Consideration: Employment..................................................................................................................73.4 Research and Development and Education and Training ..............................................................................83.6 Disadvantaged Individuals or Groups............................................................................................................93.7 Collective Agreements...................................................................................................................................9

4.0 POLICIES AND PROCEDURES ...................................................................................................................104.1 Project Management ....................................................................................................................................104.2 Supplier Development .................................................................................................................................104.3 Procurement and Contracting ......................................................................................................................114.4 Employment and Training ...........................................................................................................................114.5 Research and Development .........................................................................................................................124.6 Disadvantaged Individuals or Groups..........................................................................................................12

5.0 ASSESSMENT OF THE CAPACITY OF THE NEWFOUNDLAND AND LABRADOR ANDCANADIAN ECONOMIES TO MEET THE REQUIREMENTS OF THE PROJECT.................................14

5.1 Construction.................................................................................................................................................145.1.1 Goods and Services..............................................................................................................................145.1.2 Employment.........................................................................................................................................15

5.2 Production Operations .................................................................................................................................15

5.2.1 Goods and Services..............................................................................................................................155.2.2 Employment.........................................................................................................................................166.0 CONSULTATION, MONITORING AND REPORTING..............................................................................17

6.1 Consultation.................................................................................................................................................176.2 Monitoring and Reporting ...........................................................................................................................17

6.2.1 Pre-development Monitoring and Reporting .......................................................................................176.2.2 Project Monitoring and Reporting .......................................................................................................18

Appendix I: Exploration Benefits Plan Guidance

Appendix II: Guidelines for Research and Development Expenditures

Appendix III: Transboundary Crewing GuidanceAppendix IV: Monitoring and Reporting Guidance

ISBN 1-897101-14-7


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Canada-Newfoundland and Labrador Benefits Plan Guidelines

1.0 INTRODUCTION

1.1 Development Application

The Canada-Newfoundland and Labrador Offshore Petroleum Board (the Board or

C-NLOPB) is responsible for management of the petroleum1

resources in theNewfoundland and Labrador Offshore Area, pursuant to the Canada-

Newfoundland Atlantic Accord Implementation Act, and the Canada-

Newfoundland and Labrador Atlantic Accord Implementation Newfoundland and

Labrador Act (the Acts)2.

The Acts establish the requirements that proponents of offshore petroleum

development projects must fulfill in order to obtain approval for a Development

Application. The Development Application shall be comprised of a Canada-

Newfoundland and Labrador Benefits Plan (Benefits Plan) and a Development

Plan with ancillary documents.

A Benefits Plan Approval is a prerequisite to approving the Development Plan.

The Benefits Plan contains information to satisfy the Board that the provisions of

section 45 of the Acts are respected. The Benefits Plan is the focus of these

guidelines.

The Development Plan describes the general approach of developing a pool or

field and includes information and supporting documentation relating to the scope,

purpose, location, timing and nature of the proposed development as well as

production rates, costs and environmental factors. Proponents should refer to the

Development Plan Guidelines for guidance in the preparation of the Development

Plan and ancillary documents.

1.2 Overview

Section 45 of the Acts makes provision for a Canada-Newfoundland and

Labrador Benefits Plan for any work or activity in the Newfoundland and

Labrador Offshore Area. These Guidelines are presented to assist operators in the

preparation of a Benefits Plan.

The intent of the benefits provisions of the legislation is that the exploration for,

and the development and production of the petroleum resources in the

Newfoundland and Labrador Offshore area make a lasting contribution to the

sustainable development of the Provinces economy. This was the vision or intent

1C-NAAIA, Section 2.

2References are made to the federal version. The Acts can be accessed through the Boards website

(www.cnlopb.nl.ca).

Canada-Newfoundland and Labrador Offshore Petroleum Board 1


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of the legislators at the time of writing the legislation. The petroleum resource is

finite and exhaustible, and it is the intent of the benefits provisions of the

legislation, that exploitation of these resources creates a lasting economic legacy

for the people of the Province.

The legislation defines a process that is intended to provide an opportunity forbusinesses and persons in Newfoundland and Labrador and Canada to participate

on a competitive basis in the economic opportunities generated by any offshore oil

and gas activity in the offshore area. Therefore, benefits achievements associated

with any activity is an important public policy concern in Newfoundland and

Labrador, and in Canada. As a result,benefits achievements will be monitored and

measured by the C-NLOPB. It is expected these measurements will show an

increasingly positive trend of continuous improvement as the industry and the

local supply community continues to evolve and mature; and, any slippage or

deterioration in these measurements from benchmarks and achievements

established by previous projects of similar scope, or similar concepts andtechnologies will require significant explanatory documentation.

The Acts establish the requirements that proponents of offshore hydrocarbon

development projects must fulfill in order to obtain approval of a Development

Plan Application. Subsection 151.1(1) of the Acts authorizes the Board to issue

and publish in such manner as it deems appropriate guidelines and interpretation

notes with respect to the application and administration of section 45. To assist

proponents in complying with requirements for a Canada-Newfoundland and

Labrador Benefits Plan (Benefits Plan) for a development, the Board has prepared

these Guidelines.

Guidance with respect to Benefits Plans for exploration programs, including

seismic activity,is provided in Appendix I.

The Board stresses the importance of early consultation with operators in the

preparation of a Benefits Plan. This early consultation is intended to assist the

operator in understanding the Boards guidance in preparing a Benefits Plan. The

Boards participation in early consultations with the operator will not prejudice

any decisions the Board may make with respect to a Benefits Plan. However, it is

intended such consultations, if diligently pursued, should facilitate the preparation

of a Benefits Plan, and expedite its consideration by the Board upon its completion

and submission.

Approval of a Benefits Plan is a pre-condition of the approval of a Development

Plan. Approval of a Development Plan is a fundamental decision by the Board. It

therefore must be approved by Ministers subsequent to the Boards approval.

Approval of a Benefits Plan is not a fundamental decision, and therefore not



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subject to subsequent approval by Ministers. However, operators should be aware

that the responsible ministers in the Provincial and Federal governments may issue

to the Board joint directives in relation to Canada-Newfoundland and Labrador

Benefits Plans and any of the provisions thereof. Operators are therefore

encouraged to consult with governments3in the preparation of a Benefits Plan.

Where the word project is used in these guidelines it shall be understood to refer

to all activity associated with the project, which includes both the development

(construction)phase and operations phase. Accordingly, the Benefits Plan should

address both the development and operations phase of a project.

1.3 Basic Document

A Benefits Plan for a project should describe the proponents commitment to, and

plans concerning, the following:

establishment of an office in the Province where appropriate levels of decision-making are to take place;

consistent with the Canadian Charter of Rights and Freedoms, employment ofCanadians and residents of the Province, giving first consideration to residents

of the Province of Newfoundland and Labrador for employment and training

during the project;

participation of Canadian manufacturers, consultants, contractors and servicecompanies and, in particular, giving first consideration to services provided

from within the Province and to goods manufactured in the Province, where

those services and goods are competitive in terms of fair market price, qualityand delivery;

expenditures for Research and Development to be carried out in the Provinceand for Education and Training to be provided in the Province;

provisions to ensure that disadvantaged individuals or groups have access toemployment and business opportunities generated by the project; and,

provisions to ensure manufacturers, consultants, contractors and servicecompanies in the Province and other parts of Canada are given a full and fair

opportunity to participate on a competitive basis in the supply of goods and

services used in any proposed work or activity.

The Plan should also describe the consultative, monitoring and reporting

procedures the proponent intends to establish to achieve these objectives. A

Benefits Plan should be as detailed and specific as possible, and should set out

3The Board normally consults with the following government departments in the administration of benefits matters:

Natural Resources (NR), Human Resources Labour and Employment (HRLE), Education (E), Natural ResourcesCanada (NRCAN), Industry Canada (IC), Atlantic Canada Opportunities Agency (ACOA), and Human Resources

and Skills Development Canada (HRSDC).



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clearly the manner in which the proponent intends to address each of the elements

described above. When preparing a Benefits Plan, the outline of the final

document should correspond to sections 3.0 to 6.0 of the Table of Contents of this

Guideline.

1.4 Auxiliary Document Socio-Economic Impact Statement: SustainableDevelopment

Depending on the nature of a project, the Board may require the proponent to

submit, as part of its Development Application, a document describing how the

development and operational phases of the project will contribute to the

sustainable development of the Province. The concept of a Socio-Economic

Impact Statement (SEIS) is raised in paragraph 44(2)(c) of the Acts in the context

of a public review for a development. Its purpose has been to set out a proponents

analysis of the effects the proposed project is anticipated to have on a variety of

social, demographic and labour market factors, as well as on public infrastructureand other land and resource uses.

The concept of a SEIS is closely related to the concept of sustainable

development. In a modern context, one would expect any SEIS analysis to include

a thorough assessment of sustainable development. Sustainable development has

been defined as development that meets the needs of the present without

compromising the ability of future generations to meet their own needs4. These

concepts are clearly intertwined, particularly in the context of large developments

for the exploitation of a non-renewable resource in a relatively small society and

economy like Newfoundland and Labrador. It is an intent of the legislation, insection 45 and elsewhere, that oil and gas developments be implemented and

managed in a manner that creates a lasting economic legacy for the people of the

Province. Guidance with respect to the contents of this document is provided in

section 1.3.3 of the Boards Development Plan Guidelines.

1.5 Benefits Plan Amendments

At any time during a projects life, where an operator presents a Development Plan

Amendment for consideration by the Board, it should be accompanied by a

complete assessment of the impact such an amendment will have on the approved

Benefits Plan for the project and describe any appropriate mitigating measures and

required amendments to the Benefits Plan. Where, in the operators opinion, an

amendment to the Benefits Plan is not required, a rationale should be provided as

to why this is the case and a determination will be made by the Board. In the case

4United Nations



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where the Board determines a Benefits Plan Amendment is required, it must be

approved prior to approval of the Development Plan Amendment.

1.6 Review Process

The submission and approval of a Benefits Plan is subject to the requirementsestablished by the Acts. One of those requirements is that a Benefits Plan may be

subject to a public review process, unless the Board determines that, in the public

interest, a public hearing is not required.

In the event of a Public Review, a complete description of the Review Process is

contained in Chapter Six of the Development Plan Guidelines.



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2.0 BENEFITS PLAN SUMMARY

2.1 Introduction

The Benefits Plan Summary is a requirement of each Benefits Plan and is intended

for widespread public distribution. This summary should be produced as a separatedocument that provides a sufficiently comprehensive overview of the Benefits

Plan to enable the non-specialist reader to reach an informed opinion concerning

the proposal.

Particular care should be taken in preparing the summary to recognize that most of

the readers will not be specialists. The proponent is encouraged to explain those

technical terms that cannot be avoided. The Summary should be organized to

parallel the more comprehensive Benefits Plan document. When preparing a

Benefits Plan Summary, it should be organized to correspond appropriately to the

Table of Contents of this Guideline.

3.0 STATUTORY REQUIREMENTS

The content requirements of a Benefits Plan are described in section 45 of the

legislation. Each of these requirements is addressed below.

3.1 Office in the Province

The legislation requires that a proponent:

. establish in the Province an office where appropriate levels ofdecision-making are to take place;

This provision requires that an operator establish an office in the Province with

appropriate decision-making authority. The Board would not consider any

application for exploration drilling, development or production activity from an

operator who does not have an office with appropriate levels of decision-making

in the Province.

3.2 Full and Fair Opportunity and Competitive Basis

The legislation requires that the proponent provide:

.manufacturers, consultants, contractors and service companies in the

Province and other parts of Canada with a full and fair opportunity to

participate on a competitive basis in the supply of goods and services used

in any proposed work or activity; and that, first consideration shall be



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given to services provided from within the Province and to goods

manufactured in the Province, where those services and goods are

competitive in terms of fair market price, quality & delivery.

For goods and services, the legislation requires that procurement activities be

conducted ona competitive basis; and, that businesses in the Province and otherparts of Canada must have a full and fair opportunity to participate on a

competitive basis. The competitive basis is further described by the legislation as

one where goods and services are competitive in terms of fair market price,

quality and delivery. The competitive basis therefore has two elements: (i) it must

provide a full and fair opportunity for businesses in the Province and other parts of

Canada to participate, and (ii) its outcome must be determined on the basis of fair

market price, quality and delivery, subject to first consideration to services

provided from within the Province and to goods manufactured in the Province.

This means that not only must contracting procedures not unfairly disadvantage

local suppliers, but the proponent must demonstrate all reasonable efforts havebeen taken to ensure that local suppliers have been afforded an opportunity to

participate in the contracting process on a competitive basis. Also, the contracting

outcome cannot be determined solely on the basis of lowest price.

3.3 First Consideration: Employment

The legislation requires that the proponent provide for:

.the employment of Canadians and, in particular, members of the

labour force of the Province.

Within this context, the legislation requires that:

consistent with the Canadian Charter of Rights and Freedoms,

individuals resident in the Province shall be given first consideration for

training and employment

For the purpose of these guidelines, a Newfoundland and Labrador resident is a

Canadian (or landed immigrant) who meets the residency requirements of the

Province as defined by The Election Act, SNL 1992, CE-3.1, i.e., has resided in the

Province for the immediately preceding six month period.

These requirements are intended to ensure that first consideration for employment

opportunities in the work program for which the Plan was submitted is provided to

residents of the Province.



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The first consideration provision of the legislation clearly requires that the

proponent and its contractors look first to the Newfoundland and Labrador labour

market to meet their human resource requirements. Employers have the right to

establish, in advance of the recruitment process, the qualifications, experience and

competencies required of candidates for employment. However, the first

consideration requirement means that once the requirements for a position havebeen established, a Newfoundland and Labrador resident who meets these

requirements must be given employment preference over non-residents. Further,

the proponent should describe in its Human Resource Plan an approach for the

succession of qualified residents of the Province and other Canadians to any

positions not initially held by such persons (see section 4.4 of these guidelines).

3.4 Research and Development and Education and Training

The legislation requires the proponent to address Research and Development and

Education and Training in the following manner:

. expenditures shall be made for research and development to be

carried out in the Province and for education and training to be provided

in the Province;

Since the legislation simply requires that expenditures be made for these purposes

in the Province, latitude is left to the Board to establish parameters and criteria for

such expenditures. Appendix II provides these criteria.

3.5

First Consideration: Procurement

The legislation requires that:

. first consideration shall be given to services provided from within the

Province and to goods manufactured in the Province, where those services

and goods are competitive in terms of fair market price, quality and

delivery.

The intent of the legislation is to ensure full and fair participation within a

competitive context for manufacturers, consultants, contractors and service

companies in the Province and other parts of Canada. It would therefore be

acceptable for proponents to limit bidding to Canadian providers; or, in the

event there is a single provider in Canada, to sole source that provider. The

first consideration provision of the Acts applies to services provided from

within the Province and to goods manufactured in the Province, where these

are competitive in terms of fair market price, quality and delivery. Further to



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the guidance provided in section 3.2 above, the Board interprets that it is

consistent with the first consideration intent of the legislation if an operator

chooses to limit bids to providers from the Province, if there is competitive

capacity in the Province. Also, a proponent would be meeting this intent of the

legislation if it chooses to sole source in the Province if there is only one

provider in the Province.

3.6 Disadvantaged Individuals or Groups

The legislation requires a proponent to describe its plans for establishing:

. provisions to ensure that disadvantaged individuals or groups have

access to training and employment opportunities and . to participate in

the supply of goods and services .

Proponents are expected to be proactive in their plan. In the context of the plandisadvantaged groups and individuals are considered to include: women,

aboriginal groups, persons with disabilities and members of visible minorities. The

proponent is expected to review, assess and apply models such as the federal

Employment Equity Act, the Federal Contractors Program, and other models as

appropriate in preparing its action plans in this regard. Such plans will normally

encompass employment equitymeasures with an explicit objective to facilitate the

participation of disadvantaged groups and individuals.

3.7 Collective AgreementsParagraph 45(3)(b) of the Acts stipulates that a collective agreement may not

frustrate access to training and employment opportunities for residents of the

Province; this applies particularly to disadvantaged individuals or groups.



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4.0 POLICIES AND PROCEDURES

The proponents commitment to the statutory requirements as described in the

preceding sectionsshould be reflected in its proposed policies and procedures for

planning and executing the project. The acceptability of the proponents policies

and procedures will be determined by its commitment to the six categoriesdiscussed in this section. Also, the proponent should prepare for the Boards

review a management systems and procedures manual to ensure the coordination

of,and adherence to, Canada-Newfoundland and Labrador benefits commitments

among all clients and contractor groups involved in the project. The systems and

procedures manual should specify clearly that contractors have the same level of

obligation to the proponents benefits commitments as does the proponent. This

document should be submitted at the same time as the Benefits Plan.

4.1 Project Management

Project management and engineering services can represent significant benefits to

Canada and Newfoundland and Labrador in every project. The proponent should

describe its approach to the management and engineering of the project, including

its plans concerning:

establishment of an office in the Province in accordance with paragraph45(3)(a) of the Acts;

extent and type of participation by Canadian and, in particular, Newfoundlandand Labrador engineering firms and individual contractors, in project

management and engineering activities; and, establishment of management systems and procedures to ensure that its

contractors comply with the proponents commitments in the benefits area.

4.2 Supplier Development

The objective of supplier development is to develop reliable domestic sources of

goods and services including management, technical and engineering support. The

proponent is expected to describe its plans for:

provision of timely information concerning project requirements andspecifications to Newfoundland and Labrador and other Canadian suppliers

and contractors;

assessment of Newfoundland and Labrador and other Canadian supplycapabilities, including the identification of constraints and new supply

opportunities;

initiatives to promote supply opportunities for Newfoundland and Labradorand other Canadian firms;



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transfer of technology and know-how to Newfoundland and Labrador andother Canadian suppliers and contractors;

visits to plant facilities to review procedures, equipment and personnelqualifications to ascertain and develop the competitive capabilities of

Newfoundland and Labrador and other Canadian suppliers; and,

programs, policies or procedures to enable Newfoundland and Labrador andother Canadian suppliers to participate in the proponents national and

international activities.

4.3 Procurement and Contracting

Domestic supplier development could be positively affected by the proponents

procurement and contracting policies. The proponent should describe its plans

concerning:

preparation of bid specifications and packages in such a manner, and on atimely basis, to ensure that they provide full and fair opportunity for qualifiedNewfoundland and Labrador and other Canadian suppliers and contractors to

participate in the bid process;

communication of its bid procedures to qualified Newfoundland and Labradorand other Canadian suppliers and manufacturers on a timely basis;

location(s) of procurement offices, and the names of key procurementpersonnel in Newfoundland and Labrador and other parts of Canada;

requests for Canada and Newfoundland and Labrador benefits information as apart of the bid solicitation process along with a description as to how such

information will be used in the bid selection process; initiatives to ensure that contractors and subcontractors comply with the

provisions of the approved Benefits Plan and provide a definitive statement in

the plan to that effect;

provision of competent and thorough debriefings to unsuccessful bidders whenso requested, which is consistent with CAPPs Industry Recommended

Practice document entitled Atlantic Canada Offshore Petroleum Industry

Supply Chain Management; and,

inclusion of provisions to enable disadvantaged individuals or groups orcorporations owned or cooperatives operated by them to participate in the

supply of goods and services used in the proposed work.

4.4 Employment and Training

The employment of Canadians, and in particular members of the labour force of

the Province, is an essential feature of governments policy concerning offshore

resource development. In recognition of the importance of this matter, the

proponent should be as explicit and detailed as possible on these matters in the



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Benefits Plan, and in any event should, not later than one year preceding first

production, provide an operations phase Human Resource Plan for approval by the

Board. The proponent is expected to address the following in its Benefits Plan:

project organization and staffing for the design, construction and operationsphases;

succession of qualified residents of the Province, and other Canadians, to anypositions held initially by non-Canadians;

education and training programs to be provided in the Province forNewfoundland and Labrador residents and other Canadians to participate in the

project;

specific education and training programs, including associated expenditures, tobe provided in the Province, pursuant to paragraph 45(3)(c) of the Acts (see

Appendix II);

establishment of specific measures and initiatives including reportingrequirements which address the needs of disadvantaged individuals and groupsincluding: women, aboriginal groups, persons with disabilities and members of

visible minorities;

assistance to government departments and agencies and to private and publictraining institutions in identifying and developing suitable employment-related

training programs; and

any planned transboundary crewing requirements between the Newfoundlandand Labrador Offshore Area and any other Canadian offshore jurisdiction. See

Appendix III Transboundary Crewing Guidance.

4.5 Research and Development

Appendix II contains Guidelines for Research and Development Expenditures in

the Province. That document is intended to provide an operator engaged in

petroleum exploration, development and production activities in the

Newfoundland and Labrador Offshore Area with guidance parameters and criteria

for these expenditures in the Province which are required under section 45 of the

Acts.

4.6 Disadvantaged Individuals or Groups

The proponent is expected to be proactive in this regard in its plan. In the context

of the Benefits Plan, disadvantaged individuals and groups are considered to

include: women, aboriginal groups, persons with disabilities and members of

visible minorities. The proponent is expected to review, assess and apply models

such as the federalEmployment Equity Act, the Federal Contractors Program, and

other models as appropriate in preparing its action plans in this regard. Measures

to address the participation of these individuals and groups for employment, and



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for corporations or cooperatives owned by them to supply goods and services for

the project should be covered by the Plan.



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5.0 ASSESSMENT OF THE CAPACITY OF THE NEWFOUNDLAND AND

LABRADOR AND CANADIAN ECONOMIES TO MEET THE

REQUIREMENTS OF THE PROJECT

The Development Plan requires a mode of development decision, which is a

Fundamental Decision, concerning the production system and any alternatives.Guidance for this decision is provided in section 3.9 of the Development Plan

Guidelines. It describes the criteria and analyses which should be provided by the

proponent for that decision. While the Board recognizes the proponent will

construct its Benefits Plan on the basis of the preferred production system, the

information required by section 3.9 of the Development Plan Guidelines should be

appended to the Benefits Plan submitted by the proponent.

The Benefits Plan should provide an analysis of the potential for Canadian

companies, and in particular Newfoundland and Labrador companies to participate

in the engineering, supply, fabrication, construction, operation and supportactivities of the project. A similar analysis of the labour force should be provided

to meet the employment needs of the project. These analyses should be conducted

for the preferred production system, and should incorporate an assessment of the

supplier development, procurement and contracting and employment and

training initiatives, described in sections 4.2, 4.3 and 4.4, to enhance the

participation by persons and businesses in the Province. These analyses should

conclude with an estimate by the proponent of the proportion of work and

employment associated with the project which can be performed by businesses

and workers in Canada, and in particular in Newfoundland and Labrador. Subject

to the outcome of the competitive process described in these guidelines, the Boardencourages proponents to provide, where feasible, estimates of benefits

achievements anticipated from this process.

5.1 Construction

The project construction phase offers significant procurement and employment

opportunities for businesses and persons in the Province. This section offers

guidance for the preparation of a Benefits Plan to facilitate the attainment of these

opportunities.

5.1.1 Goods and Services

The demand for goods and services for the preferred production system should be

estimated, by major component, in terms of quantities, values, timing and probable

sources for each of the following procurement categories:

fabrication, construction and installation of the facilities;Canada-Newfoundland and Labrador Offshore Petroleum Board 14


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materials required in bulk such as steel plate, pipe, tubular goods, fuel,chemicals, etc.;

equipment such as pumps, compressors, motors, wellheads, instrumentation,pressure vessels and tanks; and,

services including engineering and drafting, project management,transportation, diving, drilling and maintenance.

For each of the major components identified, the proponent is expected to provide

a thorough assessment of the ability of the Canadian and, in particular, the

Newfoundland and Labrador economies to participate in the project and to identify

constraints to their participation. The proponent should also provide a description

of those aspects of its contracting strategy designed to facilitate such participation

and a list of major contracts and sub-contracts, in as much detail as is available.

5.1.2 Employment

The annual demand for labour, in person-hours and persons, for each major

component of the preferred production system, should be projected by skill

classification in accordance with Canadas National Occupation Codes (NOC).

These demand estimates should be identified in terms of Newfoundland and

Labrador based and other Canadian based requirements.

The proponent is expected to:

provide an assessment for the availability of Canadian and Newfoundland andLabrador labour to meet this demand and how they might be increased orenhanced;

identify any special training requirements which might be needed to facilitateparticipation by the Canadian and Newfoundland and Labrador labour force;

assess the impact of project demands on the educational infrastructure in theProvince; and,

assess impact of other major projects in the region which may draw on thesame pool of workers as the project being considered.

5.2 Production Operations

5.2.1 Goods and Services

The annual demand for goods and services required to support production

operations, for each major cost category associated with the preferred production

system, should be projected in terms of quantities, values, timing, and probable

sources.



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For each of the major cost categories identified, the proponent is expected to

provide a thorough assessment of the ability of Canadian and, in particular,

Newfoundland and Labrador industry to participate, and to identify any constraints

to its participation. The proponent should also provide a description of the aspects

of its contracting strategy designed to facilitate such participation and a list of

major contracts and subcontracts, in as much detail as possible.

5.2.2 Employment

The annual operating labour requirements, in person-hours and persons, for the

preferred production system should be projected by skill classification in

accordance with the NOC.

The proponent is expected to provide an assessment of the availability of Canadian

and Newfoundland and Labrador labour to meet this demand and to identify any

special training requirements which might be needed to maximize the Canadianand Newfoundland and Labrador labour force participation.



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6.0 CONSULTATION, MONITORING AND REPORTING

This section of the guidelines outlines the general requirements for consultation

with the Board during the preparation of the Benefits Plan and for monitoring and

reporting during the life of the project.

6.1 Consultation

The proponent should initiate and maintain timely consultation with the Board

during the preparation of the Benefits Plan. The Board will consult with the

appropriate government departments and agencies concerning their objectives

related to matters to be dealt with in the Benefits Plan and will inform the

proponent of those objectives. This consultation is not intended to limit in any way

direct contact between the proponent and a department or agency of government

with respect to their objectives (see section 1.2).

6.2 Monitoring and Reporting

6.2.1 Pre-development Monitoring and Reporting

The Exploration Benefits Plan Guidance (see Appendix I) makes provision for the

monitoring and reporting of post-discovery activities, i.e., pre-development

activities conducted prior to the approval of a Benefits Plan for a field

development. Any pre-development procurement and contracting activity, which

is in support of preparing a development application, will be monitored in

accordance with the provisions of the approved Exploration Benefits Plan.

An operators activity with respect to any long lead procurement or contracting for

the project under consideration, prior to the approval of the project Benefits Plan,

will be at the operators own risk, if it does not conform to the Benefits Plan which

is subsequently approved. However, this risk may be mitigated to the extent such

activity is conducted in accordance with these guidelines, and to the extent there

have been diligent consultations. The Board will monitor all pre-approval

contracting activity, which is in support of the construction phase of a

development, in accordance with the monitoring framework described in

Appendix IV. In monitoring this process, the Board is in no way prejudicing any

decisions it may take in approving the Benefits Plan or the Development Plan.



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6.2.2 Project Monitoring and Reporting

Effective monitoring and reporting of procurement decisions, employment levels

and expenditures are necessary to ensure that the principles of the Benefits Plan

are being followed and its commitments are being met.

The proponent is expected to describe its plans for monitoring, and reporting on

the efforts of both itself and its contractors in achieving benefits to Canada in

general, and to Newfoundland and Labrador in particular.

It is the Boards intention to review all procurement and contracting decisions,

which have significant national or provincial implications, and to require

submission, by the proponent, of project expenditure and employment reports on a

regular basis. Suggested formats for the Boards monitoring and reporting

requirements for development phase procurement are described in Appendix IV of

this document. The Board will also consider alternative monitoring and reportingsystems proposed by a Proponent.

For each major work or activity, which is to be executed in the Province, in the

offshore area or in another part of Canada, upon award of contract, the proponent

shall provide the Board with a complete and detailed description of the work

commitments for the Province and Canada. The proponents performance will be

measured against these commitments.

The proponent shall submit Canada-Newfoundland and Labrador Benefits Reports

on a quarterly and annual basis, in a format satisfactory to the Board. Such reportsshall be shared with the public. Quarterly reports should include an assessment by

the proponent with respect to identified goals and objectives stated in the plan.

Six months before the expiry of an operators Production Operations

Authorization (POA), the operator shall provide an assessment of the results of the

application of the approved Benefits Plan during the term of the authorization and

the potential for realizing further improvements.



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AAPPPPEENNDDIIXXII

CCAANNAADDAA--NNEEWWFFOOUUNNDDLLAANNDD AANNDD LLAABBRRAADDOORR EEXXPPLLOORRAATTIIOONN BBEENNEEFFIITTSSPPLLAANNGGUUIIDDAANNCCEE


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Table Of Contents

1.0 INTRODUCTION ............................................................................................................. 12.0 STATUTORY REQUIREMENTS.................................................................................... 23.0 POLICIES AND PROCEDURES ..................................................................................... 34.0 FORMAT OF A BENEFITS PLAN.................................................................................. 5

4.1 Description of Work Program ..............................................................................................................54.2 Statutory Requirements and Policies and Procedures...........................................................................5

5.0 MONITORING AND REPORTING ................................................................................ 65.1 Contract Notification............................................................................................................................65.2 Annual Report ......................................................................................................................................6

Appendix I-A: Well Expenditure ReportAppendix I-B: Annual Expenditure SummaryAppendix I-C: Annual Employment Summary


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Canada-Newfoundland and Labrador Exploration Benefits Plan Guidance

1.0 INTRODUCTION

This document is designed to provide an operator engaged in petroleumexploration activities, including geophysical, geotechnical, drilling, etc., in the

Newfoundland and Labrador Offshore Area with guidance for the preparation ofa Canada-Newfoundland and Labrador Benefits Plan (Benefits Plan) which isrequired under section 45 of the Atlantic Accord Implementation Acts (the Acts).The guidance also addresses related contracting, expenditure and employmentreporting requirements.

The document is divided into four principal parts: Statutory Requirements,Policies and Procedures, Format of a Benefits Plan and Monitoring andReporting. Within the context of the monitoring and reporting requirements anoperator is expected to report on post-discovery' activities, i.e. pre-developmentactivities conducted prior to the approval of a Benefits Plan for a fielddevelopment, and the provisions of the approved Exploration Benefits Plan shallapply.

This guidance will be administered by the Canada-Newfoundland and LabradorOffshore Petroleum Board (the Board), and may be revised from time to timefollowing consultation with industry.

An operator which plans offshore exploration activity in the Labrador offshorearea is further directed to consult the Labrador Inuit Association (LIA) LandClaims Agreement for provisions affecting any planned activity.



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2.0 STATUTORY REQUIREMENTS

An Exploration Benefits Plan must address key statutory provisions from section45 of the Acts. The Boards requirements with respect to these provisions is fully

described in section 3.0 of the Guideline.



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3.0 POLICIES AND PROCEDURES

When reviewing an operators commitment to the statutory requirementsreferenced in section 3.0, the Board will review the policies and procedures that

an operator proposes to follow in the planning and execution of its program. TheBoard will consider the size and scope of a program, as well as the prevailingsocio-economic circumstances, in determining the acceptability of the operatorsproposed policies and procedures. When preparing a Benefits Plan, an operatorshould state its intentions, if applicable, concerning:

the establishment of an office in the Province in accordance with paragraph45(3)(a) of the Acts;

the provision of information concerning its exploration program to concernedindividuals, groups and communities in the Province;

the assessment of Newfoundland and Labrador and other Canadian supplycapabilities and the identification, in documentation prepared for the Board,of new supply opportunities;

its plans for communicating to Newfoundland and Labrador and otherCanadian suppliers and manufacturers, on a timely basis, its requirements forgoods and services, its bid procedures and the names of its key procurementpersonnel;

its plans for visiting, when requested, plant facilities to review procedures,equipment and personnel qualifications to ascertain and develop thecompetitive capabilities of Newfoundland and Labrador and other Canadiansuppliers;

the requesting of Newfoundland and Labrador and Canada benefitsinformation as a part of the bid solicitation process;

the preparation of bid specifications and packages to ensure that they do notunfairly prevent Newfoundland and Labrador and other Canadian suppliers

from participating in the bid process;

the establishment of mechanisms to ensure that its contractors comply withthe company's commitments in respect of Canada-Newfoundland andLabrador benefits;



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the provision of debriefings to unsuccessful bidders when requested, which isconsistent with CAPPs Industry Recommended Practice document titledAtlantic Canada Offshore Petroleum Industry Supply Chain Management.

the transfer of technology and know-how to Canada and in particularNewfoundland and Labrador; specific initiatives or action plans proposed to significantly contribute to

work in Canada or Newfoundland and Labrador from the program;

the utilization of Newfoundland and Labrador and other Canadian firms andinstitutions to undertake research and development, as provided for inAppendix II to the Guideline;

assistance to government agencies and to private and public traininginstitutions in identifying and developing suitable pre-employment trainingprograms;

transboundary crewing (see Appendix III to the Guideline); the succession of qualified Canadians to positions held by non-Canadians

(The Board considers that qualifications should include academicqualifications, qualifying work experience and competent performance); and,

the establishment of measures to achieve the employment equity provisionsof subsection 45(4) of the Acts.



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4.0 FORMAT OF A BENEFITS PLAN

A Benefits Plan, submitted under subsection 45(1) of the Acts, should beprepared according to the following format:

4.1 Description of Work Program

The description of the exploration program should provide an overview of thework proposed and, if applicable, include:

the length, number and duration of geophysical, or other, surveys; the number of wells, with anticipated spud and completion dates; a description of drilling unit(s), seismic vessel(s), and number and type of

support vessels to be used;

a forecast of total program expenditure; a forecast of direct employment associated with the program supported by a

detailed crew roster for marine and technical personnel who will be employedduring the program. The listing should include their residency at time of hireand a rationale to support the use of any foreign workers;

a listing of contracts or procurements greater than $100,000; and A description of the operators plan with respect to seismic processing.4.2 Statutory Requirements and Policies and Procedures

The operator is expected to confirm its commitment to the statutory requirementsof the legislation and to describe the policies and procedures it proposes tofollow in executing the program.



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5.0 MONITORING AND REPORTING

This section outlines the Board's contract notification and expenditure andemployment reporting requirements.

5.1 Contract Notification

To ensure that full and fair opportunity is afforded Newfoundland and Labradorand other Canadian suppliers, the Board encourages early discussion of anoperators procurement and contracting plans. If practical, these discussionscould take place at a pre-program or pre-well meeting.

Specifically, the Board requires notification of an operators or contractorsproposed bidders lists for contracts valued in excess of $100,000 pertaining tothe following items:

drilling units/seismic vessels; service/support vessels; diving services; tubulars and tubular services; environmental services; and, engineering and other pre-development activities.The Board may also require notification of bidders lists for other contracts fromtime to time. When reviewing the proposed bidders lists for these items, the

Board will identify any pre-award notification requirements.

5.2 Annual Report

The Board requires that an operator engaged in exploration activities in theNewfoundland and Labrador Offshore Area submit an annual benefits report.This report should provide a summary of the previous year's activities andinclude the following:

a description of the work activities including time periods during which theactivities occurred;

a well expenditure report, if applicable, by product/service,contractor/supplier and dollar amount for each well location. Appendix I-Aoutlines the Board's suggested reporting format;



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a total annual expenditure summary categorized by major activities.Appendix 1-B outlines the Board's suggested reporting format;

an employment summary, reported in work-months, for the operator and allcontractors dedicated to the program. Appendix I-C outlines the Board'ssuggested reporting format;

a description of Research and Development activities, including associatedexpenditures, undertaken by the company in the province;

a description of Education and Training activities, including associatedexpenditures, undertaken by the company in the province; and,

a discussion of the results from any specific initiatives or "action plans"undertaken by the company.

Annual reports should be prepared on a calendar year basis and should besubmitted to the Board by January 31 of the subsequent calendar year.



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APPENDIX I-A

Well Expenditure Report

Well Name:

Product/Service Contractor/Supplier Expenditure ($)

EquipmentRig(s)Aviation SupportService/Support VesselsOther*

Sub-total

Drilling SuppliesCasing/TubularsCementFuel & LubesDrill Bits/ReamersMud & ChemicalsWellheadOther*

Sub-total

ServicesCoringLoggingTestingDivingCommunicationsCasingEnvironmentalRig PositioningOther*

Sub-total

Logistics/SupportSupport FacilitiesAdmin. & ManagementOther*

Sub-total

TOTAL:

* Since these "other" categories can represent rather large expenditures, pleaseprovide additional information, on separate sheets, showing a breakout of theitems and costs included in these categories.



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APPENDIX I-B

Annual Expenditure Summary

Activity Expenditure ($)

Pre-DrillingGeophysical:

- Acquisition-Processing-Interpretation

OtherSub-total

DrillingEquipmentConsumablesServicesLogistics/SupportOther

Sub-total

Pre-DevelopmentEnvironmentalSocio-economicEngineeringOther

Sub-total

TOTAL



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APPENDIX I-C

Annual Employment Summary

(Work-Months)

Company Total Newfoundland &Labrador Resident

OtherCanadian

Non-Canadian

TOTAL

Notes:

Company includes the operator, drilling contractor(s), service/support vesselcontractor(s) and any other contractors dedicated to the program.

Definitions:

Newfoundland and Labrador ResidentA Canadian (or landed immigrant) who meets the residency requirementsof the province under theElection Act, SNL 1992, CE-3.1, i.e. has residedin the province for the immediately preceding six month period.

CanadianA person who was born in Canada and who has not relinquished his/herCanadian citizenship; or, a person who has been granted Canadiancitizenship; or, a person who has been granted permanent resident status(landed immigrant status).



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APPENDIX II

GUIDELINES FOR

RESEARCH AND DEVELOPMENT EXPENDITURES

October 2004


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Tableof Contents

1.0 The Legislation ................................................................................................................... 1

2.0 Required Expenditure Commitments.................................................................................. 1

2.1 Exploration Phase ........................................................................................................... 1

2.2 Development Phase and Production Phase ..................................................................... 1

2.2.1 Development Phase................................................................................................. 2

2.2.2 Production Phase..................................................................................................... 2

3.0 Eligibility Criteria ............................................................................................................... 2

3.1 Location .......................................................................................................................... 2

3.2 Sources............................................................................................................................ 2

3.3 Research and Development............................................................................................. 3

3.4 Education and Training................................................................................................... 3

4.0 Administrative Criteria and Expenditure Management ...................................................... 3

4.1 Administrative Criteria ................................................................................................... 3

4.2 Expenditure Management ............................................................................................... 4


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R&D Expenditure Guidelines 1

1.0 The Legislation

The legislative requirement for expenditures related to R&D in the Province is contained in Section 45 ofthe Act, and reads as follows:

45(3)(c) expenditures shall be made for research and development to be carried out in the

Province and for education and training to be provided in the Province;

Section 151.1(1) of the Act authorizes the Board to issue and publish in such manner as it deemsappropriate guidelines and interpretation notes with respect to the application and administration of Section45.

This document is intended to provide an operator engaged in petroleum exploration development andproduction activities in the Newfoundland Offshore Area with guidance parameters and criteria for R&Dexpenditures in the Province, which are required under Section 45 of the Legislation. Throughout thisguideline the term Research & Development (R&D) includes Education & Training.

Research & Development represent one avenue whereby the exploration for, and the development andproduction of the petroleum resources in the Newfoundland Offshore area can make a contribution to thesustainable development of the Province. This was the vision or intent of the legislators at the time whenthey inserted the requirement for Research & Development and Education & Training in the Provinceinto the Atlantic Accord legislation. The petroleum resource is finite and exhaustible, and it is the intent ofthis provision of the legislation that its exploitation create a lasting economic legacy for the people of theProvince. This is best achieved by building on the intellectual capital and human resources of the Province.Achievement of this legislative intent is a key reason why some parameters or guidance are required inrespect of the requirement in the Act that there be expenditures in the Province for R&D. These guidelinesseek to establish such parameters.

The level of R&D expenditure by operators is expected to be consistent with the norms for suchexpenditures by the upstream petroleum industry in Canada. While the expenditures must be in the

Province, Canadian tax criteria will be used as a general guide to determine other eligibility criteria.

R&D expenditures are viewed by the Board to be strategically important contributions to growth andsustainable development associated with the offshore petroleum sector in the Province.

2.0 Required Expenditure Commitments

R&D expenditures in the development phase of projects tend to focus primarily on education & trainingactivities, whereas it is expected that in the production phase there will tend to be more focus on research &development activities. Both will be legitimate and eligible expenditures in either phase of a project.Further an operator, or group of operators, may propose an R&D program in lieu of the requirement of theguidelines. The acceptability of such a proposal will be assessed by the Board.

2.1 Exploration Phase

From 2003 on, during the exploration phase, R&D expenditures up to a maximum of 5 percent of theexpenditure bid will be allowed.

2.2 Development Phase and Production PhaseIn the absence of experience on which to base a benchmark for such expenditures, the C-NOPB examinedthe levels of such expenditures by petroleum companies in Canada. These data (Statistics Canada,

Canada-Newfoundland Offshore Petroleum Board


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Catalogue No. 88-202-X1B) reveal that R&D expenditure by oil and gas extracting companies in Canadaaveraged about 0.6 percent of revenue between 1995 and 2000.Establishing a benchmark (B) based on industry practice in Canada seems to be a reasonable approach andthe Board will apply the most recent five-year data reported by Statistics Canada. The Total R&Dexpenditure (TRr&d) during the development and production phase will be determined by the Statistics

Canada benchmark for oil and gas extraction companies, total recoverable oil (RO) as defined by theapproved Development Plan and the long term oil price (LTOP) as follows:

TRr&d= B x (RO x LTOP)

A similar calculation will apply to the production of Natural Gas Liquids and Natural Gas.

2.2.1 Development Phase

Experience to date has been that R&D expenditures during the development phase of a project haveamounted to approximately 0.5 percent of total project capital cost (C). The C-NOPB accepts this as areasonable R&D expenditure level for the development phase of a project. The development phase R&Dexpenditure (DPr&d) will be calculated as follows:

DPr&d= 0.005 x C

2.2.2 Production Phase

The production phase R&D expenditure requirement will be calculated for each project for the periodcovered by each Productions Operations Authorization (POA) issued by the Board.

The production phase R&D expenditure requirement (PP r&d) will be calculated as the difference betweenthe Total Requirement (TRr&d) and the development phase requirement (DP r&d), as follows:

PPr&d= TRr&d DPr&d

The production phase expenditure requirement will be distributed over each POA period during theproduction life of the project in proportion to production. In other words the requirement for each POAperiod will be the same proportion of the production phase R&D expenditure requirement as production inthat POA period is of total anticipated project production.

At the end of each POA period, there will be a re-calculation based on actual production levels and prices.

3.0 Eligibility Criteria

The Board seeks a definition of R&D that is reasonable and consistent with that contemplated by theLegislation. The definitions suggested below are not considered exhaustive, and the Board will considerother reasonable areas of expenditure proposed by an operator as appropriate, on a case-by-case basis.

3.1 Location

In order to be eligible, any R&D expenditure must occur in the Province of Newfoundland & Labrador.

3.2 SourcesExpenditures by operators and their contractors and sub-contractors may be considered.



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3.3 Research and Development

For the purposes of these guidelines R&D may include:

- R& D activity in the Province- Increased R&D capacity in the Province- Education & Training activity/capacity in the Province as discussed in 3.4 belowThe definition of research and development, as referenced in Section 45 of the Legislation, includes, but isnot limited to Section 248(1) of the Income Tax Act, which defines Scientific Research and ExperimentalDevelopment as follows:

The systematic investigation or search that is carried out in a field of science or technology by means ofexperiment or analysis and that is:

(a) basic research,(b) applied research, or(c) experimental development,and, in applying this definition, includes(d) work undertaken with respect to engineering, design, operations research, mathematical

analysis, computer programming, data collection, testing or psychological research,where the work is commensurate with needs, and directly in support, of work describedin (a), (b), or (c) that is undertaken in the Province.

In addition to the elements included in the above definition, eligible R&D expenditures may extend beyondscience and technology to include research in such areas as fiscal regimes, business models and socio-eocnomic and environmental matters.

3.4 Education and Training

For the purposes of these guidelines the definition of education and training in the Province, as

contemplated in Section 45 of the Legislation, shall include expenditures for any or all of the following:

Support for the establishment and/or maintenance of education and training infrastructure; Support for technology transfer or including the advancement of trades training; Support for Chairs and Fellowships Scholarships and work terms including provincial residents who may study or work outside the

Province

Expenditure associated with wages and salaries of employees engaged in specific job training andregulatory training requirements are not considered to be an eligible category of expenditure.

4.0 Administrative Criteria and Expenditure Management

4.1 Administrative CriteriaThe operator shall file an R&D and E&T Expenditure Application Form (see attached form) for each R&Dand E&T activity it plans to undertake. The form shall be submitted to and reviewed by the Board forapproval, prior to commencement of the activity. The Board will undertake to review an Application withinfive working days from receipt. The operator will be notified in writing of the results of this review.



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1. A separate abstract of the activity, where applicable, shall be submitted with the ApplicationForm.

2. A copy of the research report, where applicable, shall be submitted to the Board uponcompletion.

3. Written verification that an approved activity has been completed.An Operator is required to submit a report in the 1st quarter of each calendar year describing its R&Dexpenditures in the previous year and its R&D expenditure plans for the current year. The Board will reviwthis report in respect of the operators plan for the period.

4.2 Expenditure Management

A successful R&D program should not fluctuate widely. Therefore, for any POA period in which there arenot sufficient projects to absorb the required level of expenditure, the balance may be placed in a R&Dfund. The fund will be managed by the Board in conjunction with the operator consistent with theseguidelines. In a POA period where an operator overspends its R&D requirement, the excess may be appliedagainst its requirement in the subsequent POA period.



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R&D Work Expenditure Application Form

Project: ____________________________________________

Phase: Exploration Development Production

Activity:

Research and Development Education and Training

Amount Expensed $___________________________________

Source of Funding Operator Contractor Subcontractor

Location of Activity ____________________________________

Receiving Institution ____________________________________

Begin Date _______________ End Date _________________

Classification of R&D

Engineering Testing or Psychological Research

Design Fiscal Research

Operation Research Business Models

Mathematical Analysis Environmental Research

Computer Programming Socio-Economic Research

Other ____________________________________________________________________

Description of R&D Activity:

Classification of E&T

Support of E&T Infrastructure Scholarships

Technology Transfer in Trades Work Terms for Students

Chairs and Fellowships

Other _____________________________________________________________________

Description of E&T Activity:

Signature: __________________________________ Date: __________________________________

For C-NOPB Use Only CNOPB File No.

_______________________

A roved: Yes No


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Transboundary Crewing Guidance

Offshore oil and gas activities from time to time involve the use of transboundary

vessels - vessels that move between Newfoundland and Labrador and any other

Canadian offshore jurisdiction for multi-well programs or similar offshore

activity. It is recognized that there is a need for policy change to not only ensure

that the safety of offshore workers is not compromised but also to provide for the

efficient and effective operation of such rigs and vessels. The C-NLOPB andCNSOPB acknowledged these challenges and in 2002 reached an accommodation

on the crewing of the drilling rig Eirik Raude and associated support vessels.

In recognition of the need to move toward a longer-term crewing approach/policy

for drilling rigs and support vessels which are planning to work in more than one

provincial jurisdiction, the following policy applies:

operators/companies responsible for drilling rigs and support vessels

that operate transboundary vessels respect the spirit and intent of the

Accords over the planned period by crewing such vessels with aproportionate mix of other Canadian and Newfoundland and

Labrador residents based on the expected time spent working in the

respective jurisdictions.

This action shall be taken only to the degree that it is achievable recognizing the

need for competent and qualified crews as required for the safe operation of these

vessels. Any distribution of crewing by residency shall respect an equitable

occupational split.

For the short term deployment of support vessels, less than 90 days,vessel owners/operators will be given full flexibility with respect to

crewing. Any contract(s) extending beyond 90 days will follow the

policy as outlined above for longer-term crewing.

Notwithstanding this policy change, it is clearly understood that operators will

continue to manage their operations from the offshore area for which an

authorization was issued. This guidance will be reviewed for effectiveness on a

regular basis.



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Table of Contents

1.0 INTRODUCTION ........................................................................................................................... 12.0 QUARTERLY PROCUREMENT FORECAST ............................................................................. 2

3.0 REVIEW PROCEDURES............................................................................................................... 33.1 Prequalification Stage.................................................................................................................. 33.2 Bidders List Stage........................................................................................................................ 33.3 Award Stage ................................................................................................................................ 43.4 Timing ......................................................................................................................................... 4

4.0 QUARTERLY PROCUREMENT REPORT .................................................................................. 5

Appendix IV-A: Quarterly Procurement ForecastAppendix IV-B: Prequalification NotificationAppendix IV-C: Bidders List NotificationAppendix IV-D: Award Notification Form

Appendix IV-E: Quarterly Procurement ReportAppendix IV-F: Canadian General Standards Board Definition of Canadian Content


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Monitoring and Reporting Guidance

1.0 INTRODUCTION

This guidance is intended to provide a framework for the Canada-Newfoundlandand Labrador Offshore Petroleum Boards review of designated contracts,subcontracts and purchase orders associated with development phase procurement

for a project in the Newfoundland and Labrador Offshore Area, includingcontracting and procurement by all contractors and subcontractors. The frameworkcomprises three main elements:

Quarterly Procurement Forecast; Review Procedures; and, Quarterly Procurement Report.It is the Boards expectation that the number of contracts, subcontracts andpurchase orders designated for review by the Board will not exceed 20% of all

contracts, subcontracts and purchase orders $250,000 Cdn.

Any contracts, subcontracts or purchase orders < $250,000 Cdn. which in theBoards opinion may be sensitive, will also be subject to this guidance.



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2.0 QUARTERLY PROCUREMENT FORECAST

The Board requires, thirty days prior to the first day of each quarter, a listing of all

contracts, subcontracts and purchase orders, $250,000 Cdn., which willcommence the contracting process in the upcoming quarter. For each contract,

subcontract and purchase order this listing should provide:

a description of the service(s)/item(s) to be contracted/purchased (material andequipment specifications shall be provided upon request);

estimated value of contract, subcontract or purchase order:- (10%) for direct contracts and purchase order,- (20%) for subcontracts and sub-orders; and,

anticipated RFP issuance date, RFP closure date and award date.Appendix IV-A provides a suggested format for the Quarterly ProcurementForecast.

The Board will advise the operator, by the first day of each quarter, whichcontracts, subcontracts and purchase orders have been designated by the Board forreview.

The Board shall be informed of all additions and changes to the forecast and shalladvise the operator of its contract review requirements accordingly.



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3.0 REVIEW PROCEDURES

This section outlines the procedures for reviewing those contracts, subcontractsand purchase orders designated by the Board under section 2.0 of this guidance.

3.1 Prequalification Stage

At the prequalification stage, prior to issuing a prequalification questionnaire toprospective bidders, the Board requires the following:

a description of the scope of work; a copy of the prequalification questionnaire, if these documents differ from the

standard prequalification questionnaires previously reviewed by the Board;

a list of companies, indicating locations of head offices, to whomquestionnaires will be issued; and, anticipated dates for closure of prequalification and issuance of a Request for

Proposals (RFP) or a Request for Quotations (RFQ).

Appendix IV-B provides a suggested notification format.

3.2 Bidders List Stage

At the bidders list stage, prior to issuing a RFP or RFQ, the Board requires thefollowing:

list of bidders; a copy of the RFP/RFQ; (the Board will advise the operator of its requirements

in this regard on a case by case basis);

a description of corporate ownership (main shareholders by percentage) ofbidders;

location(s) of any Canadian based offices/plants/facilities; anticipated dates for closure of bids and award of contract/purchase order.Appendix IV-C provides a suggested notification format.



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3.3 Award Stage

At the award stage, prior to the award of contract/purchase order to the selectedbidder, the Board requires the following:

the name of the selected contractor/vendor; a listing of designated sub-contractors/sub-vendors; where applicable, a listing of proposed sub-contractors, sub-vendors and sub-

suppliers;

for construction/service contracts; the estimated Canadian and Newfoundlandand Labrador employment (in person-hours);

contract/purchase order commencement and completion dates; award rationale (evaluation of bids):

- % difference in price between selected bidder and each bid,- primary location(s) of work associated with each bidder,- estimates of Canadian and Newfoundland content associated with each

bidder calculated in accordance with the Canadian General Standards Boarddefinition of Canadian Content (CAN2-147.3-82) (Refer to AppendixIV-F). The definition of Newfoundland Content shall be the samedefinition as Canadian Content except that imported costs refer to costs

incurred in all areas outside the Province of Newfoundland and Labrador,- other information relevant to the evaluation of bidders including whereapplicable, a summary of the technical, commercial and Canada-Newfoundland benefits aspects of the bid evaluations; and

- provisions with respect to participation of disadvantaged individuals andgroups, where applicable.

C-NLOPB Award Notification Form signed by an appropriate official of theoperator (Refer to Appendix IV-D).

3.4 Timing

The Board will conduct its reviews within the following timeframes:

Prequalification review - 5 Board working daysBidders list review - 3 Board working daysAward review - 2 Board working days



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4.0 QUARTERLY PROCUREMENT REPORT

The Board requires that the operator submit, within thirty (30) days of the end of

each quarter, a listing of all contracts, subcontracts and purchase orders, $250,000 Cdn., awarded in the previous quarter. This listing should provide:

item/service; estimated value of contract/purchase order: name of successful contractor/vendor; primary location of work; estimates of Newfoundland and Labrador and Canadian content; and, commencement and completion date.Appendix IV-E provides a suggested format for the Quarterly ProcurementReport.



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APPENDIX IV-A

DEVELOPMENT PROJECTQUARTERLY PROCUREMENT FORECAST

(Suggested Reporting Format)



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Development ProjectQuarterly Procurement Forecast

(For all Contracts/POs $250,000)

Ref. # Item/Service Description Estimated ValueRFP IssueDate

RFP CDate

Note: This forecast should be organized by product/service category or by project component to fC-NLOPB.

Canada-Newfoundland and Labrador Offshore Petroleum Board


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DEVELOPMENT PROJECTPREQUALIFICATION NOTIFICATION

(For all Contracts/POs Designated by C-NLOPB)

Reference #: ________________ Item/Service: ______________________________ Estimated Valu

Prequalificaton Closure Date: ____________ RFP Issuance Date: _______________

Description of Scope of Work: _____________________________________________________________________________________________________________________________________________________________

Prequalification Questionnaire to be issued to:

Company Name Location/Address of Head Office Remarks



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APPENDIX IV-C

DEVELOPMENT PROJECT

BIDDERS LIST NOTIFICATION

(Suggested Reporting Format)



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DEVELOPMENT PROJECTBIDDERS LIST NOTIFICATION

(For all Contracts/POs Designated by C-NLOPB)

Reference #: ___________ Item/Service: ____________________________ Estima

Bid Closure Date: ____________ Award Date: ____________________________

Bidder Corporate Ownership(List Main Shareholders by %)

Canadian BOffice/Plan

For each Canadian company not selected to the bidders list, please provide a complete explanation:



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APPENDIX IV-D

DEVELOPMENT PROJECT

AWARD NOTIFICATION FORM



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DEVELOPMENT PROJECT

AWARD NOTIFICATION FORM

Reference #: _________________ Item/Service: _________________________________

Selected Contractor/Vendor: ____________________________________________________________

Commencement Date: _________ Completion Date: ____________ Est. Value:______________

Estimated Employment (Person-hours) for Construction/Service Contracts:

Newfoundland: _________ Other Canada: _______ Foreign: ________ Total: _____________

Designated Sub-contractors/Sub-vendors:

1. _____________________ 2. _____________________ 3. _______________________

EVALUATION OF BIDS% Content

Bidder % of PriceDifference

Primary Location(s)of Work

Cdn. Nfld.

Other rationale (where

Canada Benefit Plan

Documents

Transcript of Canada Benefit Plan