Lull gives energy watchdog chance to sharpen teeth
After 71 years of experience with boom-and-bust cycles, Alberta’s Energy Resources Conservation Board knows that no fat or lean times last forever
“Our job is to think about the long term,” ERCB chairman Dan McFadyen says.
In an Alberta Oil interview, he laid out 2009 ERCB priorities rooted in trends with more staying power
than market highs or lows. The agenda includes strengthening oil sands policing, preparing for unconventional natural gas development on a large scale and reducing friction between industry and private landowners.
Across the 142,200-square-kilometer bitumen belt, spanning Alberta from Cold Lake in the east through Fort McMurray in the north to Peace River in the west, development has slowed. McFadyen acknowledges that the mid-2008 drop in oil prices by 70 per cent was the culprit. But in the ERCB view, the industry kept operating and concern raised by the former rapid growth pace did not go away.
“We’ve started a lot of work on oil sands. We’re going to continue to work on oil sands,” McFadyen says. “We’re going to send a message that we have a sound and solid regulatory framework,” he vows.
“It’s not like activity is going to zero. And nor is planning by those companies going to zero.”
Annual industry spending in the bitumen belt is still measured in the billions of dollars. Projects begun before the oil price drop are being finished. While most new construction has been suspended, preparations continue for plant expansions and the next generation of developments.
The legacy of the last growth spurt is a vastly expanded oil sands industry, especially in the open-
pit bitumen mining district north of Fort McMurray. Suncor Energy Inc. and the Syncrude consortium doubled the scale of their 1960s and ’70s plants. Shell Canada’s Athabasca group and Canadian Natural Resources Ltd. opened two new mega-mines. Total oil sands production jumped by 130 per cent to about 1.3 million barrels a day last year from 568,000 barrels daily in 1999.
Job one for the ERCB is to implement tailings pond rules and policing that were announced in mid-2008 after an accident killed 500 migrating ducks and aroused an environmental outcry. The regulations set a mid-2009 deadline for plants to submit plans and schedules for cleanups of the deep liquid waste storage sites that cover 130 square kilometers of the bitumen belt.
An expanded ERCB station in Fort McMurray is hiring inspectors to make sure oil sands operations adhere to tailings ponds management programs after the board approves them. The new requirements include performance benchmarks.
Establishing clear standards will enable the inspectors to take action if companies falter, using a range of penalties that could include orders to shut down operations until environmental commitments are kept. As in conventional oil and gas fields, bitumen belt inspections can include surprise visits at any time during around-the-clock plant operations 365 days a year.
Like the oil sands, unconventional natural gas operations involve increasingly intense industry activity and ERCB scrutiny. The difference is that the new approach to gas was still in its infancy when the economic slump and energy price decline arrested development.
After initial drilling flurries, coalbed methane development has slowed down. Northern British Columbia is attracting the first uses of new technology for production from shale partly thanks to a B.C. gas counterpart to Alberta’s light oil sands royalties.
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