Daily Oil Bulletin: May 9, 2011
Water Use Rules Under Development
Faced with increasing pressures from the oil and gas industry and the outside world, regulators in Alberta and British Columbia are establishing new rules to ease pressures from increasing demand for water, a symposium on water technologies heard recently.
For example, new regulations are being developed for the use of groundwater in B.C., driven partly by expectations of increased water demand from shale gas development, attendees heard at the Environmental Services Association of Alberta's WaterTech 2011 in Banff.
Similar to what happened in Alberta in the last decade with coalbed methane development, regulators are being required to quickly develop water use rules for shale gas development in B.C. and some of those rules are "hot off the press," said Jamie Wills, the president and principle hydrogeologist at Calgary-based consulting firm Waterline Resources Inc.
Starting March 2, 2011 the BC Oil and Gas Commission is implementing changes in the way oil and gas industry water use is approved and reported in the province.
"The commission is looking ahead at the reality of increased water use in the Montney and Horn River Basin as those shale gas plays are fully developed," said Commissioner Alex Ferguson in a press release.
B.C.'s Water Act, currently in the policy development stage, is being updated. It has four main goals to achieve by 2012: to protect stream health and aquatic environments; improve water governance arrangements; introduce more flexibility and efficiency in the water allocation system; and regulate groundwater use in priority areas and for large withdrawals.
The Oil and Gas Activities Act (OGAA) will replace the Oil and Gas Act of October 2010 and is being modified to consolidate the Oil and Gas Commission Act, the Pipeline Act and the Petroleum and Natural Gas Act.
B.C. regulators initially looked to Alberta's rules in drafting their own (DOB, April 21, 2011) but the OGAA has a new suite of physical regulations including a drilling and production regulation, specifically meant to apply to both conventional and unconventional gas and oil.
The OGAA is a good start but regulations relating to cumulative effects and water source wells still need to be tweaked to reflect industry use, said Wills.
There is no reference in the OGAA to potential interference by other industrial/commercial users, there is an absence of monitoring of water levels and ongoing assessment of cumulative impacts to aquifers and there are no procedures to help determine sustainable practices to avoid "injurious effects," said Wills.
Shale gas development has been developed so quickly that regulators are now "grasping," said Wills. "Policies are being developed on the fly. They need to be and they are. They'll come."
Meanwhile, manage your surface water and groundwater as if you had an approval in Alberta, he told his audience. "You're not going to be submitting those [groundwater level] reports but it gives you good information to show that you're good stewards of the resource and that you're interested in water management and sustainability. Because if something goes wrong there'll be an investigation and then you'll have to defend yourself so get your ducks in a row now."
Key areas for the evolution of shale gas in B.C. are the Cordova Embayment, Montney and especially the Horn River Basin where there are 16 companies currently operating on 1.3 million hectares in northeast B.C., he said.
In 2012, 200 gas wells are expected to be drilled in the Horn River Basin and a total of up to 50,000 gas wells may ultimately be drilled, he said, adding that number will go up and down depending on the price of natural gas.
Drilling and fracking require huge volumes of up to 40,000 cubic metres of water per well, used over several days, relying for the most part on surface water, while camps of 200 to 400 people require 1,200 litres of water per person, per day.
There are a lot of regulations in B.C. for surface water but very few for groundwater, said Wills. Groundwater extraction does not require a licence but its use is increasing and not just by industry, he said, noting more than one million people in the province drink groundwater.
Water management systems for both surface and groundwater are needed to ensure sustainable development "so you don't get into fights with each other, fights with First Nations, and fights with other beneficial users of all those resources," said Wills.
Diversion and use of all surface water in B.C. must be authorized under the Water Act which has policies of "first in time first in right." Therefore priority is based on licence date not on water use, and "use it or lose it," said Wills.
A well permit is required to explore for a groundwater source well if the water is used for frac operations or other methods of oil and gas development and production. A permit is not required for potable water.
Emerging Alberta Environment changes for the industry include new land-use frameworks (DOB, April 7, 2011) and potential for a single regulator for the upstream oil and gas industry (DOB, Jan. 31, 2011), said Wills.
Drivers for the changes include the evolving needs of regulators including increasing involvement by the Department of Fisheries and Oceans (DFO), and the province's Water for Life Strategy. In addition there are increasing groundwater and surface water interactions, the concerns of local and regional stakeholders and a global audience that is receiving negative images about the industry, said Wills, pointing to a National Geographic photograph of an oilsands mine.
A draft of regulations regarding non-saline water in direct contact with bitumen is getting close to being released, said Wills.
This tends to be an issue in northeastern Alberta, for companies such as Cenovus Energy Inc. whose proposed SAGD projects in the McMurray formation could come in direct contact with shallow surface, non-saline water.
The guidelines include quantity and quality indicators, thresholds and limits.
The oil and gas industry's water is managed very effectively and efficiently in Alberta, said Wills, adding those who have worked internationally know that practices used elsewhere are not tolerated here. "Highly regulated, good job," said Wills, who since 2000 has been increasingly focused on preparing environmental impact assessments for oilsands projects.
In Alberta, water is defined as non-saline if it has total dissolved solids of less than 4,000 milligrams per litre. For years there has been talk of changing the definition of non-saline water to less than 7,000 or 10,000 milligrams per litre of water, said Wills.
Ross Nairne, head of groundwater policy within the water policy branch of Alberta Environment, told the symposium that won't happen until at least 2015.
Nairne said the Alberta Water Research Institute will soon come out with some interesting studies on water consumption.
"One of the interesting things that always sticks out in my mind is the water that we put into enhanced oil recovery," said Nairne. "Is that the best use of that water or is it better in agriculture? Is it better in some other form as opposed to how we allocate it now? It's an interesting policy discussion that I think various water professionals should have."
He said managing water in Alberta presents challenges. The population is moving away from rural areas so that Alberta is now the second most urbanized province in Canada and governance structures need to evolve to reflect that. Climate change and variability also call for new solutions to water management, he said.
"It is no longer just about how much we can allocate, but how to optimize the allocation for the benefits it will provide," said Nairne.
He noted the ERCB is conducting a qualitative and quantitative evaluation of the document Water Conservation and Allocation Policy for Oilfield Injection which came into effect in 2006 to address concerns regarding non-saline water use in enhanced oil recovery operations.
Nairne said a new policy document, Alberta Environment Guide to Groundwater Authorization, updates the 2003 groundwater evaluation guide. It provides an updated regulatory framework for the licensing and approval process for groundwater diversions as well as expectations of groundwater evaluations.
It will be distributed to consultants and provided online for viewing, and implemented soon.
An implementation plan is being developed for the analysis of metals in groundwater, in response to a need identified by Alberta Environment's contaminated sites committee. It provides a standard, science-based approach for measuring metals in groundwater at contaminated sites, said Nairne.
So far an agreement has been reached on the methodology. A spinoff is that it will apply to other Alberta Environment applications, he said, adding the policy can be adapted to a much broader allocation for oil and gas.
According to Dr. Jon Fennell, director of water resources for WorleyParsons Canada, while Alberta's population is poised to grow to more than four million over the next 25 years and important industries like energy development, forestry and agriculture rely heavily on water for their existence, there is a lack of critical knowledge, context and accounting for Alberta's water supplies.
People sometimes fail to recognize long-term demand and supply patterns and the associated risks to basin hydrology and hydrogeology from climate variability.
Fennell told the conference that as of 2009, the government of Alberta was allocating 9.89 billion cubic metres per year of surface water and 31 million cubic metres of groundwater, noting not all of that is used. He said water supply risks are evident in certain parts of the province due to climate variability and climate change but there are opportunities to better manage water supplies to ensure a sustainable future.