04 15 AER Response PeaceRiverProceeding

Report of Recommendations on Odours and Emissions in the Peace River Area AER Response

April 15, 2014

Alberta Energy Regulator

Report of Recommendations on Odours and Emissions in the Peace River Area—AER Response

April 15, 2014

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Report of Recommendations on Odours and Emissions in the Peace River Area—AER Response (April 15, 2014) i

Contents

About the AER .............................................................................................................................................. 1

Independent Adjudication .............................................................................................................................. 1

Peace River Odours and Emissions Proceeding .......................................................................................... 1

AER Response to Report Recommendations ............................................................................................... 2

Conclusion .................................................................................................................................................. 11


ii Report of Recommendations on Odours and Emissions in the Peace River Area—AER Response (April 15, 2014)


Report of Recommendations on Odours and Emissions in the Peace River Area—AER Response (April 15, 2014) 1

About the AER

The Alberta Energy Regulator (AER) 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.

Independent Adjudication

The AER’s governance model ensures strong corporate oversight and independent adjudication; the

corporate, operational, and governance responsibilities are separate from adjudicative functions to ensure

the independence of decisions and recommendations made by hearing commissioners during the course of

the hearings and proceedings they conduct.

The AER’s CEO is accountable for day-to-day operations, which include receiving and making decisions

on applications, monitoring and investigating energy resource activities for compliance, and closure of

energy developments. Hearing commissioners are responsible for conducting all hearings into energy

applications and regulatory appeals, and all AER inquiries and proceedings.

Peace River Odours and Emissions Proceeding

In July 2013, AER President and CEO Jim Ellis requested that the AER chief hearing commissioner call

an inquiry to address odours and emissions generated by heavy oil operations in the Peace River area of

Alberta.

The AER chief hearing commissioner assigned a panel of independent AER hearing commissioners to

conduct the inquiry and write a report with findings and recommendations.

The proceeding consisted of four phases:

Phase 1: Organizational meeting

Phase 2: Expert selection and information gathering (written)

Phase 3: Solutions and recommendations (written)

Phase 4: Oral proceeding

The oral proceeding started on January 21 and ended on January 31, 2014, in Peace River, Alberta. On

March 31, 2014, the panel released its report titled Report of Recommendations on Odours and Emissions

in the Peace River Area. The recommendations in the report include calls for regulatory change, regional

air monitoring, and ongoing stakeholder engagement in the Peace River area. The report can be accessed

via www.aer.ca.


2 Report of Recommendations on Odours and Emissions in the Peace River Area—AER Response (April 15, 2014)

AER Response to Report Recommendations

Recommendation

No. & Paragraph Panel Recommendation AER Response to Report Recommendations Timelines

Geology

1

paragraph 36

That the AER conduct or require operators in the

Peace River area1 to submit a geochemical

analysis of the volatile compounds from the

heavy oil from the Gordondale-sourced bitumen

a) at surface prior to processing, and

b) from the tank prior to transport.

The AER accepts this recommendation. The

results of 1(a) will define the boundary of the

play for regulatory recommendation 1. The

results of 1(a) and 1(b) will characterize the

produced hydrocarbons over the production cycle.

The recommendation will require the AER to

specify the sampling program and laboratory

protocols for consistency; and the samples need

to be collected by the operators, although

supportive core sampling may be done by the

AER. The AER will immediately initiate a review

of AER regulatory approaches2 to enable the

collection of the geochemical analysis.

Regulatory approach

analysis to be initiated

immediately with

implementation to be

determined upon

completion of analysis.

Health

1

paragraph 90(1)

That the Government of Alberta encourage the

research community to conduct studies that

The AER supports both these recommendations;

however, the AER does not have jurisdiction over

To be determined by

Alberta Health.

1 The Peace River area is defined in figure 1 of the report and includes the Three Creeks, Reno, Seal Lake, and Walrus areas.

2 The AER’s regulatory analysis is based on decision analysis when determining regulatory approaches. Decision analysis is a sound, practical, iterative, and

adaptable analytical framework that provides a consistent approach to evaluating problems and risks, and supports making choices and decisions about

alternative regulatory interventions. It forms the basis and the justification for all regulatory interventions considered by the AER.



Recommendation


would assist policy makers and regulators to

better understand potential linkages between

odours and emissions from heavy oil operations,

including long-term exposures to individual

chemicals and chemical mixtures, and health

effects.

health-related matters. The AER will collaborate

with Alberta Health on these recommendations to

deliver a response.

2

paragraph 90(2)

That Alberta Health ensure that appropriate

avenues exist to link local physicians with

specialists in environmental health to assist in

diagnosing symptoms associated with odours and

emissions from heavy oil operations and to

enable physicians to provide appropriate

treatment to residents.

Operations

1

paragraph 144(1)

That the AER require that all produced gas be

captured. Tank top gas will be captured using a

VRU

a) within four months from the issuance of this

report in the Reno and Three Creeks areas, and

b) immediately with respect to all new operations

in the Peace River area.

The captured gas may be sent to a flare or

incinerator until such time that the feasibility

study (discussed in recommendation 5 of the

The AER accepts recommendation (a) and will

immediately initiate a project to examine the

appropriate regulatory approach to fulfill the

recommendation that all produced gas be

captured and venting eliminated in the Reno and

Three Creeks areas. The AER will mandate

existing operations that are currently venting

produced gas from tanks to capture this solution

gas by August 15, 2014.

The AER accepts recommendation (b). Effective

May 15, 2014, the AER will require all new

Recommendation 1(a):

Implementation of

requirements to capture all

produced gas from the

Reno and Three Creeks

areas effective August 15,

2014.

Recommendation 1(b):

Implementation effective



Recommendation


Operations section) is implemented. heavy oil and bitumen operations in the Peace

River area to capture all produced gas during

steady-state operations.

May 15, 2014.

2

paragraph 144(2)

That each operator in the Seal Lake and Walrus

areas provide a report to the AER within two

months of the issuance of this report outlining its

plan to install VRUs to eliminate venting from

existing facilities. The Panel expects the AER,

after considering the information in such reports,

to work with operators to implement an

appropriate and timely plan to eliminate venting.

The AER accepts this recommendation and will

require operators from the Seal Lake and Walrus

areas that are venting produced gas to submit a

plan by June 15, 2014, demonstrating targeted

actions to reduce and eventually eliminate

venting. The AER will then work with operators

and stakeholders to design an appropriate

regulatory approach that will be implemented as

soon as reasonably practical with the outcome of

reducing and eventually eliminating the venting

of produced gas from existing heavy oil and

bitumen operations in the Seal Lake and Walrus

areas.

Operator reports to be

submitted to the AER by

June 15, 2014; regulatory

approach and subsequent

implementation will be

determined once the AER

has reviewed the reports.

3

paragraph 144(3)

That, following implementation of gas capture

measures contemplated in these

recommendations, the AER prohibit venting from

all facilities. In the event of an emergency or

upset situation and where flaring infrastructure is

not available (which results in venting), the well

must be immediately shut in.

The AER accepts this recommendation. The AER

recognizes that the implementation of operations

recommendations 1 and 2 will reduce and

eventually eliminate venting in the Peace River

area. Additionally, the AER will examine

regulatory approaches to address venting in

emergency or upset situations where flaring

infrastructure is not available in the Peace River

area.

Immediate initiation of

regulatory approach

analysis; implementation

of requirements is

estimated to be completed

by December 31, 2014.



Recommendation


4

paragraph 144(4)

That where gas conservation measures have been

implemented, and where upsets and/or

emergencies occur, the AER require that flaring

be limited to a maximum of three percent of the

annual operational time, with the duration of the

flaring reported to the AER monthly.


examine the appropriate regulatory approach to

ensure that flaring be limited to a maximum of

three per cent of the annual operational time in

the event of an upset and/or emergency where gas

conservation measures have been implemented.

Implementation to be

determined upon

completion of regulatory

approach analysis.

5

paragraph 144(5)

That toward the objective of conserving all

captured gas, the AER require that by October 31,

2014, operators, either collectively or

independently, provide a feasibility study to the

AER into options and timelines to conserve all

gas at sites in the Peace River area. The Panel

expects that the AER, after considering the

information in the feasibility study, will require

operators to implement an appropriate

conservation plan.

The AER accepts the recommendation. Once the

review and analysis of the feasibility study is

complete, the AER will require operators in the

Peace River area to implement an appropriate gas

conservation plan. With the revised Directive

060, the AER will have the regulatory tools in

place to require conservation.

Feasibility studies to be

submitted to the AER by

October 31, 2014;

appropriate gas

conservation plans will be

implemented once the

AER completes its review

and analysis of the studies.

6

paragraph 144(6)

That the AER require that operators conduct

monthly fugitive emission inspections using

appropriate equipment (e.g., FLIR camera). The

results of monthly fugitive emission inspections

must be submitted to the AER for review and

made available to area stakeholders.


develop an appropriate regulatory approach that

will require Peace River area heavy oil and

bitumen operations, as soon as reasonably

practical, to conduct monthly fugitive emission

inspections and to report the results to the AER.

The AER will make the results of the monthly

inspection reports available to the public.


determined upon


approach analysis.



7

paragraph 144(7)

That the AER require that where sources of

fugitive emissions are identified, these be

repaired within 12 hours of being detected or the

facility be shut down until such repairs are

completed. Repair responses would be submitted

to the AER for review and made available to area

stakeholders.

The AER accepts this recommendation’s

outcome. For the purposes of this

recommendation, fugitive emissions are defined

as follows: “Fugitive emissions at oil and gas

facilities are unintentional leaks to the atmosphere

and arise due to normal wear and tear on seals,

threaded or mechanical connections, covers, or

other equipment components.” The AER will

develop the appropriate regulatory approach to

ensure that operators repair identified sources of

fugitive emissions, as defined, as soon as

reasonably practical and report to the AER on the

repair response. The AER will make this

information available to the public.


determined upon


approach analysis.

8

paragraph 144(8)

That the AER require that operators implement

measures (such as scrubbing or recovering

displaced truck tank emissions) to minimize

odours from truck loading and unloading

activities.

The AER accepts this recommendation’s outcome

and recognizes that the AER jurisdiction applies

only to AER-licensed wells and facilities. The

AER will evaluate and implement appropriate

regulatory approaches to minimize emissions and

odours associated with truck loading and

unloading activities. For non-AER-licensed

offloading sites, the AER will engage with the

appropriate parties to discuss strategies to

minimize odours from these activities.


determined upon


approach analysis.

9

paragraph 144(9)

That the AER should review the results of the

Stantec and Clearstone studies and

a) require operational changes in the Three

Creeks area, if necessary, to reduce odours and

emissions from sources identified in those


review the studies. The AER will evaluate

recommendations from these reports and, if

necessary and appropriate, require Three Creeks

area operators to implement additional

Implementation of

additional operational

changes will be

determined once the AER

completes its review and



studies;

b) determine the applicability of the results and

operational changes to the other Peace River

areas.

operational changes to reduce odours and

emissions being emitted from sources identified

in these reports. Knowledge from these reports

will be applied to the other Peace River areas if

appropriate.

analysis of the studies.

Monitoring and Modelling

1

paragraph 178(1)

That the AER engage industry, residents, and

stakeholders to establish a scientific and

technically credible regional air quality

monitoring program for the Peace River area that,

to the extent possible,

a) builds on the efforts of the existing continuous

monitoring program;

b) includes the Reno area;

c) considers the studies and monitoring surveys

conducted to date by ESRD, industry, Stantec,

RWDI, Clearstone, Chemistry Matters,

Odotech, and Dr. Zelt;

d) provides greater geographic and spatial

coverage by monitoring in areas of anticipated

highest concentrations and where people might

be exposed to emissions and odours;

e) is operated collaboratively by industry,

residents, the AER, and other government

agencies (using a Clean Air Strategic Alliance

[CASA] type model);

f) provides transparent and real-time data to


immediately engage with industry, residents, and

stakeholders to establish a regional air quality

monitoring program for the Peace River Area.

The AER will also expand its engagement to

Alberta Environment and Sustainable Resource

Development (ESRD) and Alberta Health.

Development plans for

engagement with

stakeholders will be

initiated immediately.



residents and stakeholders; and

g) assesses innovative monitoring technologies to

better understand odours and emissions

sources, and use the technology where

appropriate.

2

paragraph 178(2)

That the AER require that holders of new

approvals issued in the Peace River area join the

regional monitoring program.

The AER accepts the recommendation. The AER

will require all new heavy oil and bitumen

operations in the Peace River area to join the

appropriate regional monitoring program as soon

as reasonably practical.

Implementation of this

recommendation will be

determined once the

regulatory review is

complete.

3

paragraph 178(3)

That the AER work with stakeholders engaged in

the air quality monitoring program to provide a

progress report to the Peace River area

community within six months of the issuance of

this report. The report should describe

a) progress that has been made in establishing the

governance framework for the monitoring

program,

b) progress that has been made in modelling or in

characterizing emissions and odours, and

c) other efforts made to address the monitoring

recommendations above.

The AER accepts the recommendation and will

collaborate with ESRD and Alberta Health to

provide a progress report on air quality

monitoring in the Peace River area.

Progress report to be

coordinated by the AER

for public release by

October 15, 2014.

Regulatory

1

paragraph 202(1)

That the AER establish localized, “play-based”

regulatory requirements for all heavy oil

operations in the Peace River area that are


examine opportunities to develop a play-based

regulatory (PBR) approach in the Peace River


determined upon




producing or will produce Gordondale-sourced

bitumen.

area. The AER is currently considering applying a

PBR approach to other areas of the province. This

would involve designing unique regulatory

frameworks for areas that have unique risk

profiles with the intention of achieving assurance

of broad economic, environmental, and social

policy goals. Play-based regulation would include

regulatory approaches to address risks to

outcomes specific to the Peace River area.

approach analysis.

2

paragraph 202(2)

That the AER release the current draft edition of

Directive 060 as soon as possible, with any

additional changes arising in response to the

recommendations of this report to be developed

in a timely manner.

The AER accepts this recommendation and has

released the revised Directive 060 in conjunction

with this response letter. The revised Directive

060 requirements become effective June 16th,

2014. These revisions include a protocol to help

the AER inspection staff identify and issue

enforcement actions relating to offensive off-

lease hydrocarbon odours. The revisions also

authorize the AER to exercise its discretion to

require gas conservation.

Release of revised

Directive 060 on April 15,

2014.

The effective date of

revised Directive 060 is

June 16, 2014.

3

paragraph 202(3)

That ESRD assess the feasibility of defining an

ambient odour objective for Alberta based on a

perception threshold.

The AER recognizes that this recommendation is

a matter of government policy that would not be

confined to the upstream oil and gas sector alone.

For that reason, this recommendation will be

referred to ESRD. If requested, the AER will

assist and participate.

Implementation of this

recommendation is to be

determined by ESRD.



Stakeholder Engagement

1

paragraph 214 (1)

That the AER provide support to allow

stakeholders to work together and determine what

stakeholder engagement processes would meet

their needs on a go-forward basis.


continue to facilitate stakeholder engagement.

Ongoing.

2

paragraph 214 (2)

That the AER enhance its operational and

enforcement presence in the Peace River area.

The AER accepts this recommendation. AER

intends to develop a strategic and focused

surveillance program for the Peace River area.

Surveillance will focus on compliance, education,

and prevention.

A focused surveillance

program in the Peace River

area will be implemented

in conjunction with the

AER Directive 060 odour

management protocol

effective June 16, 2014.



Conclusion

By accepting the panel’s recommendations, the AER intends to provide assurance that the outcomes that

are expressed in the report, and that are within the AER’s jurisdiction, are met. The AER commits to

informing stakeholders as each recommendation is successfully implemented, and to provide progress

updates on recommendations that are more complex and will take longer to implement. Ultimately, the

objective of all of these actions will be to

reduce and virtually eliminate all hydrocarbon emissions that contribute to odour events, nuisance,

and environmental and potential health impacts for residents of the Peace River area; and

increase the conservation of gas resources in the Peace River area.

Documents

04 15 AER Response PeaceRiverProceeding