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Shale-Gas Development, Hydraulic Fracturing, and Water in Alberta: AER's Regulatory Program

Dr. Kevin Parks, P.Geol, VP Geology, Environment and Reserves

October 29, 2013

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Alberta’s Regulatory History

Government of Alberta created first regulator 75 years ago

Mandate has expanded over the decades

Alberta Energy Regulator: new organization, new mandate

Presenter

Presentation Notes

Historical Context Alberta has been blessed with abundant energy resources; we’ve also been fortunate to enjoy decades of strong regulatory oversight that’s ensured public safety, protected the environment, and safeguarded the resource. After all, it was 75 years ago that the Alberta Government rejected wasteful flaring practices at Turner Valley by creating the province’s first oil and gas regulator to “snuff out” the towering flames. Over the decades, a variety of drivers have prompted Alberta’s regulator to change its mandate, its way of doing business, and sometimes its name. This continued in June 2013 when the Government of Alberta created the Alberta Energy Regulator. This was done in response to: changing social, environmental and economic conditions; progressive resource extraction technology and innovation; and Outcomes-focused government policies�

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AER Mandate

The Alberta Energy Regulator ensures the safe, efficient, orderly, and environmentally responsible development of hydrocarbon resources over their entire life cycle. This includes allocating and conserving water resources, managing public lands, and protecting the environment while providing economic benefits for all Albertans.

Presenter

Presentation Notes

The Government of Alberta has given the Alberta Energy Regulator a clear mandate: to provide the efficient, safe, orderly, and environmentally responsible development of energy resources. This includes managing public lands, protecting the environment, and conserving and managing water. As the Alberta Energy Regulator turns this mandate into action, it will strive to balance social, environmental, and economic issues related to upstream oil, oil sands, natural gas, and coal.

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What We Regulate

Over 185 000 wells and 405 000 km of pipelines

775 gas processing plants

Nine oil sands mines, more than 50 thermal in situ and 200 primary/enhanced schemes

Five bitumen upgraders

Ten coal mines and four processing plants

Presenter

Presentation Notes

As you can see, our responsibilities are considerable.

55

A Phased Approach

Phased implementation ensures operational certainty during transition

Phase 1 – Launch, new governance model, new public informationPhase 2 – Geophysical, Public Lands Act, Landowner Registry, enhanced participationPhase 3 – Water Act, EPEA functions, full integration into AER

Presenter

Presentation Notes

Phased Approach Creating the AER is a complex undertaking that requires careful implementation. For this reason, the Government of Alberta is taking the time to ensure a well-managed transition through a three-phased approach. Phase 1, which occurred in June 2013, involved the government proclaiming certain sections of the Responsible Energy Development Act, resulting in the launch of the AER and its new governance model. Phase 2 will see the AER assume additional responsibilities from Alberta Environment and Sustainable Resource Development, beginning with public land and geophysical jurisdiction. In addition, the AER will create a landowner registry for private surface agreements. New rules and processes for public engagement and participation will also come in to effect during this phase. Phase 3 will occur when all environmental and water jurisdictions under the Responsible Energy Development Act will come into force and are transferred to the AER. This phase represents the final step in creating a single regulator for upstream oil, oil sands, natural gas, and coal development in Alberta. All the phases will be completed by Spring 2014.

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Alberta is a Petroleum Province

Enormous natural endowment of hydrocarbons

Over 72 000 producing pools and deposits.

Favourable geological history of petroleum generation, migration, and entrapment.

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Over 100 years exploration, production, transportation.

>171 000 wells have been fractured to date in Alberta.

6300 horizontal wells with multi-stage hydraulic fracturing since 2008.

A Long Legacy of Petroleum Production.

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The New “Prize”: 8+ Alberta Shale-Gas Formations

Shale Gas In Place: 3406 Tcf2005 Ultimate Conventional Gas Potential 223 Tcf

Shale NGL In Place: 58.5 Bbbls

Shale Oil in Place: 423.5 BbblsBitumen in Place 1844 Bbbls

Majority of resource owned by all Albertans.

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Public Concerns with Shale-Gas Extraction and Water

Water qualityNatural gas release, chemicals, storage

Water quantitySource protection, interferenceConsumptive use and value

Formation and well integrityWater well, aquifer damageSeismicity

10

Current State

Water QualityConcerns focused around groundwater, spills. Thermogenic gas has been identified in water wells. Sometimes hard to identify source.

Water QuantityNo technical issues noted to date associated

with shale gas use, either with saline or non- saline water. Concerns for social reasons.

11

Current State

Formation and Water Well Integrity Water well complaints usually non- conclusive on performance issues.Farmers’ Advocate program for well rehabilitation in effect when damages found and repaired.Associated micro-seismicity has been detected with oilfield injection for over 40 years. No damages.

12

Responding to Risks and Concerns

Balancing outcomes and risksPublic safetyLandowner rightsEnvironmental protectionResource conservationProvincial competivenessCumulative effectsPublic interest and legacy

13

AER Regulatory FrameworkActs

Responsible Energy Development ActOil and Gas Conservation ActEnviromental Protection and Enhancement ActPublic Lands ActWater Act

Regulations under the ActsNecessary, fair, transparentProportional to risk

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Regulatory Instruments

AER has many regulations and directives already in place that protect water.

Policy assurance and regulatory delivery mechanisms:

AuthorizationsInspectionsAuditsReporting requirementsInvestigations and enforcement

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AER Hydraulic Fracturing Directive 083 – new in 2013

Notification prior to hydraulic fracturing (HF)

Increased AER field presence

Wellbore integrityWells undergoing HF require dual- barrier systems or equal level of protection

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AER Hydraulic Fracturing Directive 083

Interwellbore CommunicationOperators need a risk-management plan to ensure offset wells are not intersected by HF.

Non-saline Aquifer Protection Aquifers will be protected by vertical setbacks, risk-management and monitoring plans.

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AER Hydraulic Fracturing Directive 083

Hydraulic Fracturing Near Water Wells Water wells protected with prescribed setbacks

Hydraulic Fracturing Near Top of Bedrock

Fracturing must honour prescribed setbacks

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Disclosure of HF Completion Fluids – Directive 059 Update

Reporting of all chemicals used in fracturing operations mandated in AER Directive 059 since Jan. 2013

Publically available on FracFocus.ca>2200 wells reported (Jan. 1-Oct. 20, 2013)

Limited “trade secret” protectionAER can obtain ALL chemicals if required

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HF Water Quantity Reporting – Directive 059 Update

HF water-use reporting under D 059AER requires reported use by 14 “water types”

Non-saline – surface (3), groundwater (2), municipal, central facilities;“Alternatives” – saline groundwater, recycled flowback (2), wastes (3), produced water.

Source location, date, volume, rate, TDS must be reported.

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Seismicity and HF

Earthquakes occur naturally in Alberta. Most are not felt, mag. 3.0>

Microquakes sometimes associated with oilfield injection, studied for 40+ years; no damage

Regional monitoring since 2005 in A.B. has detected microquakes in only one HF instance. No damage / not felt at surface

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HF Research and Investigations

Natural contaminants and background

Shale hydrogeology

Natural pathways and connectedness

Place-based risk analysis

Subsurface forensics for complaint investigations

Science communication & literacy

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HF Information and Education

AGS Seismic Monitoring Program

Shale Gas Resource Studies (e.g., AGS OFR 2012-06)

ST55- Alberta’s Base of Groundwater Protection updates.

Risk Mapping (e.g., AGS OFR 2009-16 – Connectivity of natural hydraulic pathways, Scollard-Paskapoo system)

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Going Forward

Regulatory development based on development of shale-gas plays, place-based risks, and new technologies.

Cumulative effects management.

Water-use collaboration.

Monitoring, reporting, performance evaluation against outcomes.

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Thank You

www.aer.ca

www.ags.gov.ab.ca

Inquiries: 1-855-297-8311

http://www.aer.ca/

http://www.ags.gov.ab.ca/

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