george eynon
DESCRIPTION
Developing a Regulatory Framework for Unconventional Oil and Gas DevelopmentTRANSCRIPT
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…
Strong Foundation…
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
Strong Foundation…
Strong Foundation…
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…
Strong Foundation…
Compliance assurance…Surveillanceinspections, audits, response to complaintsEnforcementcommensurate with risk levelIndustry-Community local organizations: air-shed/watershed monitoring and protectionReportingpublically on ERCB web-site
Strong Foundation…
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]