1. Environmental Studies Research Funds ESRF Program Overview January 2011

2. Table of Contents Legislation………………………………………………….…3 Purpose of Funds……………………………………….….4 Frontier Lands…………………………………………….…5 Funding: Regional Levies…………………………….….6 Administration of Funds……………………………….…8 ESRF Management Board.…………………………..….9 Study Management………………………………………10 ESRF Levy and Invoice Process……………………..13 ESRF Contract Issuance Process……………….…..14 Publications…………………………………………………15 2011 Research Priority Areas...........................16 2011 Research Projects..……………………...........17 2

3. Legislation Originated in 1981, Section 49 of the Canada Oil and Gas Act (C0GA) Currently described in Part VII of the Canada Petroleum Resources Act (CPRA) assented to 18th November, 1986 Ministers of Natural Resources Canada (NRCan) and Indian and Northern Affairs Canada (INAC) responsible for accounts Newfoundland and Labrador (NL) and Nova Scotia (NS) Accord legislation provides for application to Accord areas Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) and Canada-Nova Scotia Offshore Petroleum Board (C-NSOPB) approve levies for their respective areas of jurisdiction 3

4. Purpose of Funds “ To finance environmental and social studies pertaining to the manner in which, and the terms and conditions under which, exploration, development and production activities on frontier lands authorized under this Act or any other Act of Parliament should be conducted.” Canada Petroleum Resources Act, s. 76 (2) 4

5. Frontier Lands

6. Funding: Regional Levies 31 ESRF regions Unique annual levy in each region on petroleum land interests (per hectare) Overall budget set each calendar year Levy in each region depends on: Applicability of each proposed study to a region Industry activity/interest within a region Existence of moratorium/prohibition 6

7. ESRF Regions 7

8. Administration of Funds 12-member Management Board  Jointly, Ministers appoint 8 members:  Federal Government (4) o National Energy Board (NEB), Environment Canada (EC), Fisheries and Oceans Canada (DFO) and Indian and Northern Affairs Canada (INAC)  Industry (4) o Industry representatives of the Canadian Association of Petroleum Producers (CAPP)  Offshore Petroleum Boards (2)  C-NSOPB  C-NLOPB  Public Members (2)  INAC and NRCan Ministers may appoint one member each to the Board Chair – Jointly appointed by Ministers from within the Management Board Administrator – Jointly appointed by Ministers Secretariat – Administrative support from within NRCan 8

9. ESRF Board Membership Paul Barnes (Industry) – Chair Robert Steedman (NEB)Lynne Patenaude (EC) Patrice Simon (DFO)Vacant* (INAC) Greg Janes (Industry)Alan Kennedy (Industry) Francine Wight (Industry) Dave Burley (C-NLOPB) Eric Theriault (C-NSOPB) Gerard ChidleyNorman Snow (Public Member South) (Public Member North) * Member to be appointed by both Ministers 9

10. Study Management Spring: ESRF Management Board establishes priority areas for research one year in advance Summer: Advisory Groups recommend proposals to support priority areas Fall: ESRF Management Board selects the final research proposals and determines the method of study - contract or Memorandum of Understanding (MOU) Regional Research Manager (RRM), ESRF Secretariat, and Public Works and Government Services Canada (PWGSC) develop the Statement of Work (SOW) to be incorporated in the Request for Proposal (RFP) which is either issued in a contract (posted on federal contracting site -MERX) by PWGSC or in a MOU by the ESRF Administrator Technical Advisory Group (TAG) provides input in developing the study RFP and reviewing of the final report ESRF Secretariat and Regional Research Managers administer contracts/MOUs and ensure overall technical consistency ESRF Management Board approves final report for public release ESRF Secretariat releases report on ESRF web site 10

11. ESRF Annual Cycle 11 Step 1:Annual review of Priority Areas for research in February Step 2:Proposals brought forward via Management Board members and/or Regional Advisory Committees Step 3:First look at proposals by Management Board in Spring Step 4:Management Board makes final funding decisions in early Fall Step 5:Ministerial budget approval in early Fall Step 6:Offshore Boards budget approvals by new year Step 7:Invoices to interest owners in 1st quarter of year for approved projects Step 8:RFPs posted on MERX or Memorandum of Understanding (MOU) co-signed with required Government Department Step 9:Technical Advisory Groups established Step 10:Project proceeds, administered by Secretariat and Regional Research Manager with technical support from Technical Advisory Group

12. January February March April May JuneJuly August September October November December Management Board Research Priorities setting meeting for funding in following year Management Board Draft Proposals review meeting Regional Advisory Committees Research Priorities Recommendations Meeting Regional Advisory Committees Research Proposals and Discussions Regional Advisory Committees Draft Research Proposals Review & Recommendations Meeting Management Board final review of and funding decisions for final projects 12 ESRF Annual Cycle

13. *Fall - Secretariat confirms land holdings with regulators *Draft administrative budget prepared for annual meeting *Winter - Secretariat receives approvals from Offshore Boards and then confirms land holdings with all regulators *Secretariat prepares and issues levy notices to all interest owners *Levies collected and adjustments made to budgets *Secretariat prepares levy package for approval by Ministers of NRCan and INAC *Upon approval, levy notices sent to Offshore Boards for approval ESRF Levy and Invoice Process 13 *ESRF Management Board approves draft admin budget *Secretariat prepares final study and admin budgets and distributes for Chair, CAPP and Offshore Boards’ approval

14. *ESRF MB approves study and recommends RFP process (MOU or Contract) *PWGSC reviews contract with Secretariat and posts on MERX for minimum 15 days *Secretariat updates RFP notification on web site *NRCan reviews contract with Secretariat and posts on MERX for minimum 40 days *Secretariat updates RFP notification on web site *Secretariat drafts MOU and forwards to Participant *Participant reviews, signs and returns MOU to Secretariat *Secretariat establishes Evaluation Team *PWGSC forwards all responses for review by Evaluation Team *Secretariat establishes Evaluation Team *NRCan forwards all responses for review by Evaluation Team *RRM and TAG prepare draft Statement of Work (SOW) *RRM forwards SOW to Secretariat *Secretariat drafts SOW and Evaluation Grid for either: -PWGSC R&D contract -NRCan Service contract -MOU *MOU reviewed by NRCan Legal Services *MOU initiated PWGSC R&D Contract NRCan Service Contract Memorandum of Understanding *Evaluation Team selects potential winning bid *Secretariat convenes consensus meeting with PWGSC and Evaluation Team *PWGSC reviews Evaluation team decision and if in agreement, notifies successful bidder *Contract issued *Evaluation Team selects potential winning bid *Secretariat convenes consensus meeting with NRCan and Evaluation Team *NRCan reviews Evaluation Team decision and if in agreement, notifies successful bidder *Contract issued ESRF Contract Issuance Process 14

15. Publication of ESRF Studies All research studies are published in the continuing ESRF reports series Approximately 179 published to date Reports, at no cost, are only available on the ESRF web site (www.esrfunds.org)www.esrfunds.org All publications are listed in both the ESRF Annual Report and Study Publications section on ESRF web site 15

16. 2012 Research Priorities Northern Oil Spill Preparedness, Fate and Effects Regional Effects Management East Coast Oil Spill Preparedness, Fate and Effects Seismic 16

17. 2011 Projects: North Arctic Coastal Ecosystems – Beaufort Sea/Mackenzie Delta Mapping Improving the accuracy of short-term ice and ocean forecasts in the Beaufort Sea Strategic Plan for Beaufort Spill Prevention and Management 17

18. 2011 Projects: East Coast Assessment of the Potential for Impacts on Early Life Stages of Fish and Zooplankton around Petroleum Development Sites on the Grand Banks Data Display and Source Apportionment of Volatile Organic Compounds and Particulate Matter on Sable Island Seismic Sound and Fish Behaviour Workshop 18