Gas Flaring and Venting Regulation in Alberta: Shared Experiences and Lessons Learned Taller National: “Impulsando la Alianza para Reducir la Quema de Gas en Ecuador Michael Brown, M.Eng, P.Eng., Senior Production Engineer September 26, 2006 Alberta Energy and Utilities Board
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Gas Flaring and Venting Regulation in Alberta: Shared Experiences and Lessons Learned Taller National: “Impulsando la Alianza para Reducir la Quema de.
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Gas Flaring and Venting Regulation in Alberta: Shared Experiences and
Lessons Learned
Taller National: “Impulsando la Alianza para Reducir la Quema de Gas en Ecuador
Michael Brown, M.Eng, P.Eng., Senior Production Engineer
September 26, 2006 Alberta Energy and Utilities Board
Topics for Discussion Background on Alberta History on Flaring in Alberta Flaring and Venting Reduction Results How we got there:
Multistakeholder approach Guide 60 Reduction Targets Decision Tree Economic Evaluation of Gas Conservation Public Reporting Enforcement
9 Board Members – Government appointed(4 engineers, 2 lawyers, 1 accountant, 2
public)
850 Staff (engineers, geologists, technicians,
accountants, lawyers, 120 field staff)
To ensure that the discovery, development and delivery of
Alberta’s resources take place in a manner that is fair,
responsible and in the public interest
Who is the EUB? Agency form
- independent and quasi-judicial
Legislated mandate
- consider the broad public interest social and economic effects
environmental impacts
Key to effective independence“Nobody controls the Regulatory Authority but the
Regulatory Authority remains under control”
History on Flaring and Venting in Alberta
EUB (previously ERCB) – established in 1938 due to flaringStop wasteful flaring in Turner Valley, Alberta
• “Hell’s Half Acre”• 5,63 x 106 m3 /d for a decade
Conserve and prevent waste of reserves
In 1996, flaring and venting about 1800 106m3 per yearA little better, but public still concerned
By 2005….
The Results flaring reduced 72%, venting reduced 58%
89
9091
9293
9495
9697
98
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Perc
enta
ge U
tiliz
edFlared and vented (bcm
*)Percentage UtilizedVolume Flared and vented
*bcm = billion cubic metres
Year 1996 - baseline for flaring
Year 2000 – baseline for venting
2001 2002 2003
1.2
1.4
1.6
1.8
2.0
2.2
1.0
0.8
1996 @ 1,8 bcmIssue
2004
96%
0,73 BCM
Looking back…
What were the drivers? How did we get there? What worked? What lessons did we learn?
(and what can we share through GGFR?)
What were the drivers?
Public concerns regarding human and animal health poor combustion efficiency harmful pollutants
Waste of a valuable and non-renewable resource
Unpleasant aesthetics of flaring
How our latest process began
In Alberta, the producers group (CAPP - Canadian Association of Petroleum Producers) identified a need to address concerns about associated gas flaring
CAPP requested that the Clean Air Strategic Alliance (CASA – www.casahome.org) form a multistakeholder team to address
But any stakeholder could initiate process
What is the Clean Air Strategic Alliance (CASA)?
Partnership Non-government organization (NGOs) Industry Government
Accountable to the Alberta ministers of: Resource Development Environment Health
VisionThe air will be odourless, tasteless, look clear and have no measurable short or long term adverse effects on people, animals or the environment.
How does CASA work?
CASA operates on a multistakeholder, consensus basis “A process in which participants work together as equals to
realize acceptable actions or outcomes without imposing the views or authority of one group over another”
National Round Table on Environment & Economy Building Consensus for a Sustainable Future, 1998
“A process in which all those who have a stake in the outcome aim to reach agreement on actions and outcomes that resolve or advance issues related to environmental, social, and economic sustainability”
National Round Table on Environment & Economy Building Consensus for a Sustainable Future, 1993
When to use a consensus-based approach?
Not all issues are appropriate for consensus Issues that benefit from broad stakeholder
participationNeed to access stakeholder expertise
Issues where difference of opinions exists and parties have strong positions (e.g. flaring)
Issues needing solutions that are credible to all stakeholders
Transparent and open process needed
What is required? Commitment and goodwill Common understanding of what consensus means
Not comprimise: no one gives up what is important, just to reach agreement Must result in an outcome that is better than next-best for each member
Shared goals and objectives For example: environmental protection, resource conservation / less waste of
gas
Transparent process Fair and open
Fallback option (if consensus not achieved, then…)
Who do you include?
Identify key stakeholders Who could be affected? Who has expertise?
Alberta flaring stakeholders: Oil producers, producers groups (CAPP, Small Producers) Relevant government sectors
• (oil + gas regulator (EUB), environment regulator, royalties regulator) Public representatives
• (NGOs = Non-Government Organizations, people’s groups, environmental groups, land owners, land users (farmers, forestry, etc))
Benefits of NGO involvement New era of citizens becoming more involved,
active participation is more common Citizens well informed and aware of rights
Access to information is increasing
Citizens seeking accountability, fairness and input into decision-making
Leads to better solutions than confrontational tools like media, protests, etc.
Benefits of NGO involvement Public opinion on values and choices is an “expert
opinion” Technical expertise that resides within NGOs Often have creative new ideas, new approaches
Different style of thinking
Bring legitimacy to the process and results
What will it look like?
NGO
NGO GOVT
GOVT
IND
IND
PUBL Government as ArbitratorSpecial Interest LobbyingWin/Lose Outcom es
Government as PartnerGovernment as FacilitatorWin/Win Outcom es
PUBL
Learnings from Multistakeholder Consensus Multistakeholder consensus-based decision
making can work Takes more time
To build trustTo develop understanding of issuesTo develop workable solutions
All members must be prepared to participate! Silence means consensus.
Can lead to better approaches and solutions
Outcomes: Guide 60
Combines all of Alberta’s flaring requirements into one document
Makes compliance easier Improves consistencyMakes enforcement easier
Voluntary Reduction Targets Industry reduction targets
clear objective for flare reduction actionsProvided industry with the flexibility to determine how Initially, there may be lots of “low hanging fruit” that can
be captured improved public confidence in process
Learning: Voluntary targets can work!(but regulatory backstop was key)
Flaring/venting management decision tree
Eliminate solution gas flaring and
venting
Reduce solution gas flaring and
venting
NO
Meet flaring and venting
performance requirements
NO
YES
YES
Implement
Performance requirements
EUB Guide 60 Gas Combustion & Venting and Fugitive Emission Management Requirements
Tests
•Public concern?
•Health impacts?
•Economic alternatives?
•Environmental impacts/benefits?
Defined Economic Evaluation Process Feasibility of associated gas utilization is
determined by an economic test Economic test compares financial benefits vs.
costs of gas utilization Standard calculation methodology provided by
EUB (found in EUB Guide 60) Must utilize if economic (i.e. net present value
greater than $0 (soon changing to -$50,000 CDN)) If not economic, can flare but evaluation must be
kept for audit
Economic Evaluation Assumptions
Before-tax analysis Only includes revenue from gas and byproducts
that would otherwise be flared Must include savings resulting from flare
elimination such as: reduced maintenance, fuel and operating costs
Must consider options such as tie-in to gathering system (i.e. gas to market), use of gas for electrical power generation, re-injection, or other technical options
Economic Evaluation - Requirements
Gas price forecast Electricity price forecast Reserves estimate and production forecast
(decline analysis) Capital and labour cost estimates for
conservation project Operating cost (estimated as a percentage of
capital cost)
Economic Evaluation – Requirements Current and predicted inflation rate Discount rate (cost of borrowing money)
Prime lending rate at a recognized financial institution plus a “cost of borrowing” percentage (3%)
A simple spreadsheet for standardizing and automating the calculation
Barrier removed: royalty on otherwise-flared associated gas
Can apply for royalty waiver if it would make utilization feasible
Measurement and Reporting
Why measure?Monitor emissionsUnderstand impact of flaring on reservoirConduct proper economic evaluations Information and statisticsCalculate production and balance facilities
“What gets measured gets managed”
Reporting Requirements
Production reporting is done monthly Includes production volumes of gas, condensate, oil
and water, and production hours for each well All gas flared and vented must be reported,
including:Routine operationsEmergency conditionsDepressuring of pipeline, compression and
processing systems All gas flaring, incinerating and venting are
reported at the location where it occurred
Publication of Flaring and Venting Data EUB publishes an annual report of flaring and venting –
Report ST60B (available on EUB website at eub.gov.ab.ca)
Report shows annual volume of gas flared and vented for every company
Report shows annual oil production and associated gas production for every company
Report ranks companies, from worst to best based on gas utilization percentage
Learning: Making data available to public provides positive pressure for improvement by companies
Enforcement Principles Goal is to have lasting compliance without
continuous regulator involvement Level of enforcement actions should match the
severity of the situation Enforcement actions should be consistent Expectations and enforcement actions should
be clearly communicated (defined in EUB requirements)
Operator can appeal
Enforcement Process Any repeat or similar noncompliance results in escalating
enforcement actions (“ladder”) The EUB will deal firmly with companies where there is
obvious disregard for requirements The EUB will consider companies’ response to warnings
and obligations when deciding to approve or deny applications (REFER status)
The EUB may shut down facilities until root cause is determined and permanent improvements have been implemented
Removal from the “ladder” occurs when compliance is achieved
Conclusions – Lessons learned in Alberta Multistakeholder consensus worked
Enforcement must be applied, consistently Voluntary targets can work – but need backstop The Decision Tree works (eliminate, reduce, …)
Economic feasibility evaluations can workCalculation parameters need to be clearly defined
Measurement and public reporting are key
The Results flaring reduced 72%, venting reduced 58%
89
9091
9293
9495
9697
98
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Perc
enta
ge U
tiliz
edFlared and vented (bcm
*)Percentage UtilizedVolume Flared and vented
*bcm = billion cubic metres
Year 1996 - baseline for flaring
Year 2000 – baseline for venting
2001 2002 2003
1.2
1.4
1.6
1.8
2.0
2.2
1.0
0.8
1996 @ 1.8 bcmIssue
2004
96%
.73 BCM
Gracias!
Thank you!
Extra slide….
Performance Requirements
Detailed in Sections 7 and 8 of EUB Guide 60 Contains requirements for:
IgnitionFlame stability and heating value (based on latest
research at University of Alberta)Stack heightLiquid separationSpacing from other equipmentNoiseSmoke / visible emissionsMust meet air quality standards