george eynon

The Mission of Canada to the EUShale Gas: Sharing Canada’s Regulatory and Industrial ExperiencesJanuary 22, 2013 – Brussels

Developing a Regulatory Framework for Unconventional Oil & Gas Development

George Eynon PGeoBoard Member

• Regulating Unconventional Oil & Gas in Alberta Discussion Paper Nov 2012

• Hydraulic Frac’ing Directive Draft for comment Dec 2012

• Directive 059 update• www.fracfocus.ca

frac fluid content reporting• Hydraulic frac’ing animation

on website• Proof of Concept project

to be undertaken 2013• Implementation also

via hearing Decisions

URF – Unconventional Oil & Gas Regulatory Framework

Applications Field Surveillance & Operations Oil Sands & Coal Geology, Environment & Economics Alberta Geological Survey Law Regulatory Development SEO: Stakeholder Engagement Office Information & Systems Services Corporate Services

ERCB operational organization

Responsible Energy Development Act

Cradle-to-Grave oversight

All current ERCB functions + Front-end public lands

approvals

+ Water use approvals and groundwater protection

+ Back-end reclamation and remediation

= the Alberta Energy regulatorto be proclaimed mid-2013

A new single regulator…

Regulations already in-place

• Groundwater protection– Directives 027 wellbore construction– Directives 008 & 009 casing & cementing

• Fluid handling & disclosure– Directives 055 & 056

storage, management, handling & disposal– www.FracFocus.ca frac fluid reporting

• Water use & management– Directive 059 reporting requirements

• Flaring & Venting– Directive 060 limitations, gas conservation

Strong Foundation…

Dir 008: Surface Casing Depth Requirements Dir 009: Casing Cementing Requirements Dir 020: Well Abandonment… Dir 027: Shallow Fracturing Restricted OperationsDir 029: Applications and Hearing ProcessDir 031: Guidelines for… Cost Claims Dir 035: Baseline Water Well Testing…Dir 038: Noise Control…Dir 044: Surveillance - Water Production in Wells Dir 050: Drilling Waste Management… Dir 051: Injection and Disposal Wells…Dir 055: Storage Requirements Dir 056: Energy Development Applications…Dir 058: Oilfield Waste Management…Dir 059: Drilling & Completion Data Filing…etc…


Comprehensivesafety, environmental, and technical requirements…

Well design

Casing and cementing

blowout controls

Well completions

shallow frac’ing

Pipeline specs & operations

leak detection and controls

Surface casing & conductor pipebase of ground water protection; wellbore isolationminimum depth requirementsminimum casing standardsconductor pipe cemented full lengthsurface casing centralized & cemented full length

Production, intermediate & liner design requirements dependant on fluids, temperaturesSpecial cements may be required [foam, thermal…]cement volumes based on hole size + 20%all strings centralized cement flow returns visually monitoredcement tops verified by logsliners cemented full length



Facilities design and operations

flaring, venting, and emissions

Waste managementdrilling wastesproduction and flow-back wateroilfield wastes from operations

Produced fluids & waste disposalsafe disposal if not reused

disposal via injection wellsdeep saline aquifers CCS & EORsequestration at depthresource conservation

in situ oilsands…CHOPS, CSS, & SAGD THAI & solventsrequirements re: injection pressures andvolumes, caprock integrity…


Compliance assurance…Surveillanceinspections, audits, response to complaintsEnforcementcommensurate with risk levelIndustry-Community local organizations: air-shed/watershed monitoring and protectionReportingpublically on ERCB web-site


Development process for new regulations

Identify key operational hazards Assess associated risks Evaluate alternatives Create draft directive Internal staff/executive review Board review External consultation

Narrowing the scope

Identify key operational hazards

Discussion of risk

EventPressure/fluid event with offset energy well

CausesHigh-density subsurface development Lack of systematic prevention planning;

ConsequencesUncontrolled release of fluids: surface/subsurfaceFluids migration into non-target formationsProduction delays Varying level of impacts to statutory objectives

Assessment High-risk: based on number of occurrences and severity of potential consequences

Inter-wellbore communication

EventCement or casing damage – not fit for purpose

CausesFrac’ing down well using single barrier system Cyclical high pressure/volumes: mechanical stresses

ConsequencesLoss of containment and zonal isolation Migration of fluids into non-target formationsProduction delays Varying level of impacts to statutory objectives

Assessment Moderate-risk: based on serious concerns with current operational practices – no confirmed events

Loss of well integrity

EventEstablish a communication pathway Migration of fluids into a non-saline aquifer

CausesLack of systematic planning; emphasizing preventionOperating proximal to the BGWP & non saline aquifers

ConsequencesImpact on quality and/or quantity of water resources

Assessment Low operation risk: no confirmed eventsHigh-risk to public confidence in regulatory system

Frac’ into non-saline reservoir

Too many inter-wellbore events 21 since 2009 - low to moderate impacts

Widespread use of single barrier1000% increase in HZ wells since 2009 70% of all frac’s HZ wells in 2011

Frac’ing above/proximal to BGWPIntroduces elevated risk element200m vertical depth cf BGWP exposed Significant ‘risk perception’ issueLow ‘real operational risk’

Limited assurance risks being appropriately managed

Problem statements

Reduce risks of causing interwell communication event

Reduce frequency of eventsAlleviate consequences by effectively managing response

Maintain well integrity during frac’ing

Reduce possibility of communication pathway to non-saline aquifer

Augment ERCB monitoring/assuranceAbility to assess beyond ‘simple compliance’

Regulatory outcomes

Prescriptivehigh level of certainty; clear minimum standard; minimizes discretion

inflexible; rules tend to multiply; slow to change;

Performance-basedprovides flexibility; promotes innovation; cost effective

can be difficult to enforce; smaller companies struggle; KPI’s can be problematic

OthersEconomic regulation; Self-regulation; Information disclosure

Regulatory alternatives

• Even the most improbable events can occur…– Caltex/Crew well n. Alberta– series of errors and omissions– perf’d & frac’d at wrong depth– guns went off @ 137m; did not

notice– cont’d to 1487m and conducted ‘frac’– Fluid into shallow zone above

BGWP– Missed all the signals

• Almost always operator error!

“the best laid plans of mice and men…”

Alternatives: Interwell communication

Prescribe planning approach – tightly defined IRP-24

Prescribe Planning Approach – Loosely Defined

Specify regulatory outcomes: allow licensee to choose process

Satisfy Outcomes Likely effective at reducing risk

Probably effective at reducing risk

Probably effective at reducing risk

Industry Impacts Incremental cost, more effort

Incremental cost, more effort

Incremental cost, more effort

Alignment with URF yes yes yes

Compliance Assurance

Complex Very complex Very complex

ERCB Impacts Significant Very significant Very significant

Public Response Receptive Less receptive Less receptive

Prescribe standard: dual barrier system

Prescribe standard with exemption to select technically equivalent option

Specify regulatory outcomes: allow licensee to choose standard

Satisfy Outcomes Likely effective maintaining WBI

likely effective maintaining WBI

Likely effective maintaining WBI

Industry Impacts Incremental cost; may not be commensurate to risk

Incremental cost; commensurate to risk

Incremental cost; commensurate to risk

Alignment with URF No Yes yes

Compliance Assurance Less complex More complex Very complex

ERCB Impacts Insignificant Significant Very significant

Public Response Receptive Receptive Less receptive

Alternatives: Wellbore integrity

Alternatives: Non-saline communication

Prescribe planning + revised shallow BGWP with 100m buffer

Prescribe Planning + revised shallow zone fixed at 600m

Specify regulatory outcome: licensee to choose process

Satisfy Outcomes Likely prevent communication

Likely prevent communication

Likely prevent communication

Industry Impacts Commensurate to risk; incremental cost

Not commensurate to risk, incremental cost

Commensurate to Risk; incremental cost

Alignment with URF yes yes Yes

Compliance Assurance

More Complex Complex More complex

ERCB Impacts Very significant Significant Very Significant

Public Response Receptive Receptive Less Receptive

ERCB approach

WELL INTEGRITYOptions for well designdual barrier system or technically equivalent single-barrier with well integrity testing

INTERWELL COMMUNICATIONRisk assessment/planning process continual improvement clause parts of Directive 027 at shallow depths

NON-SALINE AQUIFERSRedefine ‘shallow depths’

above BGWP plus a 100m vertical buffer

COMPLIANCE ASSURANCE

Related ERCB regulatory development

URFUnconventional Oil & Gas Regulatory Framework

• Project/play area full development plans;• Consultation with municipal/rural authorities• and local residents• Collaboration with other producers locally• Coordinated road use, water use, etc

Flaring & Venting

• Flaring or Incineration• Combustion/destruction efficiencies

What now?

Consult with CAPP…

Revise draft directive…

Assess economic impact…

Finalize analysis…

Complete compliance assurance strategy…

Conduct broader external consultation…

Identify resource needs…

Questions?

Developing an ERCB Hydraulic Fracturing Regulatory FrameworkGeorge Eynon PGeoBoard [email protected]

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george eynon