paul jeakins

Shale Gas: British Columbia’s Regulatory Response January 22, 2013

Paul Jeakins Commissioner and CEO BC Oil and Gas Commission

• Overview of B.C. • Legislative Structure • The Commission’s Approach • The Future

Europe British Columbia

British Columbia is Canada’s second largest producer of natural gas.

Horn River Basin 11,400 sq km

Montney 29,850 sq km

Liard Basin 9,340 sq km

Cordova Embayment 2,690 sq km

Geological Horn River Basin • Shale Gas • OGIP – 448 TCF • 202 wells • Daily production- 432 MMcf/d • Cumulative production – 373 BCF • Depth: 2,200-3,100 m

Montney • Tight gas – Shale Gas Hybrid • OGIP – 450 TCF (under review) • 1,246 wells • Daily production 1.6 BCF/d • Cumulative production – 1.5 TCF • 1,500 – 3,500 m average depth

Liard Basin • Shale Gas • OGIP – no estimate (large) • 3 wells • Cumulative production is confidential • Depth: 3,000-3,100 m

Cordova Embayment • Shale Gas • OGIP – 200 TCF (preliminary) • 19 wells • Daily production is confidential • Cumulative production is confidential • Depth: 1,500-2,300 m

Muskeg

Sub-Boreal Forests

Geographical

Prairies

Mountains

Social

Landowners First Nations Stakeholders

Environmental

Water Wildlife Footprints

GIS map

The Commission is a single-window agency

Authorizes and ensures compliance with regulations: Exploration Production Gathering Processing Storage Disposal Pipelines Reclamation Oil and gas roads

Legislative Structure

Where we came from

Petroleum and Natural Gas Act – 1970s

Pipeline Act – 1950s

Oil and Gas Commission Act - 1998

How we responded

Oil and Gas Activities Act 2010

• Oil and Gas Activities Act and General • Petroleum and Natural Gas Act and General • Environmental Protection and Management Regulation • Administrative Penalties Regulation • Prescribed Road Regulation • Service Regulation

• Geophysical Exploration Regulation • Drilling and Production Regulation • Pipeline & LNG Facility Regulation • Consultation and Notification Regulation • Fee, Levy and Security Regulation

Legislation and Regulations

Legislation enacted by the provincial government

Regulations maintained by Oil and Gas Commission Board

Occupation of Crown Land

Short Term Use of Water Changes in and About a Stream

Licence to Cut Road Use Permit

Heritage Protection Hazardous Waste, Storage and Disposal

Land Act:

Water Act:

Forest Act:

Other Enactments:

Enactments specific to oil and gas activities

Ministry of Forests, Lands and Natural Resource Operations

Ministry of Environment

Ministry of Forests, Lands and Natural Resource Operations

Various Ministries

Innovative aspects of OGAA for shale

Perceived Hazard Regulatory Mitigation

Groundwater Contamination • Cemented surface casing set to competent formation. • Non-toxic drilling fluids until porous formations within 600

metres of surface are isolated.

Hydraulic Fracturing • Specific review requirements for fracturing above 600 metres. • Records of fluid composition required. • Temporary fluid storage on site in dual containment and

monitored pits and ultimate disposal via deep well injection.

Carbon Footprint • Venting only allowed by exception. • Surface casing vents controlled and reported. • Flaring limits and conservation requirements. • In-line testing requirements.

Noise and Nuisance • Noise limitations. • Requirements for air monitoring stations near larger plants. • Flaring limits. • Consultation and notification requirements.

Multi-activity permitting

Modified Subsurface Requirements

Drilling and Production Regulation

Well spacing

Logging

Sampling

Testing

OGAA

Created to allow for multi-activity permitting.

Tools used to permit multi-activity more effectively: • Area Based Analysis • NEWT

Special Projects

OGAA Created to allow for development of special projects.

Strongly Distrust Somewhat Distrust Strongly Trust Somewhat Trust Neither

Trustworthiness of different sources of information about oil and gas development

Universities/Colleges

ENGOs Internet Friends National Media Experts

Local Media Local Leaders Religious/Spiritual Leaders

Government Politicians

The Commission’s Approach

NEWT

Sample map shows:

• Upstream and downstream.

• Existing Section 8 and Water Licence Points of Diversion (POD).

Users: Public Statutory Decision Makers Industry

Area Based Analysis

Land Use

Valued Components

Area-based Management

Triggers & Requirements

First Nations & Stakeholder Consultation and Notification

Monitoring &

Reporting

Management Strategies

Multi-activity Development Plans

Infrastructure Coordination

Adaptive Management

Area Based Analysis

Valued Components

Hydro-riparian ecosystems

Old forest

Groundwater

High priority wildlife habitat, ecosystems and features

Boreal caribou

Resource and cultural heritage features

Most Valued Components:

• Defined spatially by the Commission in collaboration with the Ministry of Environment and other agencies.

• Based on stakeholder

and First Nations input and interpretation of strategic government direction and policy using a broad-scale, ecosystem defined approach.

Non-Operating Area Land Base

Operating Area Land Base

Open Water Bodies (Lakes and Rivers)

Wetlands (W2 and enclosed uplands)

Federal Lands

Provincial Parks and Protected areas

Riparian Reserve Areas (Lakes, Rivers and Wetlands)

Riparian Management Areas (Lakes, Rivers and Wetlands)

Research Forest

Recreation Features and Sites

Known First Nation Cultural Features

Stream Riparian Areas

Operating Area Land Base

Private and Municipal Lands

Old Forest

Boreal Caribou Habitat (UWR)

Muskwa Kechika Management Area

Potential First Nations Cultural Areas of Interest

Area Based Analysis

Seismic Investigation

Objectives: • Examine linkage

between oil and gas activities and observed seismicity.

• Review current research on induced seismicity.

• Consider mitigation methodologies if a link between oil and gas activities is seen.

Greater than Mag 0.5 = fault movement

Tattoo 7 events (mag 2.4 to 3.1) Dec 2011

Etsho 31 events (mag 2.2-4.1) April 2009 to July 2011 20 station dense array operated June 16 – August 15, 2011

Kiwigana 72 events (mag 0.5 to 1.86ML) October 25, 2011 – Jan 27, 2012 151 station dense array

Seismic Investigation

Confidential Working Group

Consultative Fair

Open Participatory

Challenge Results

Industry Operators • Data • Peer Review • Communications

CAPP • Peer Review • Communications

Federal & Provincial Government

• NRCan • Alberta Geological

Survey • BC and Alberta Gov’t • Communications

Academia • UBC • Literature Search

Scientists/Geologists • GeoScience BC • NRCan Seismologists • US experts • Industry Scientists

Commission Staff • Expert Analysis of

Data • Scientists/Geologists • Investigation • Communications

Connecting to science and research

Evaluation of gas migration in unconventional wells

Cementing and surface casing vent flows

Air quality impacts

Seismicity

Public perception

University of British Columbia

University of British Columbia

University of British Columbia

University of Northern British Columbia

University of British Columbia

University of British Columbia

The Future

The economically viable recovery of huge volumes of gas from shale or similar tight formations means that:

Canada

• North American markets are saturated and an oversupply situation may persist for decades.

• Alternative global markets are accessible via shipping LNG from Canada’s west coast.

Without LNG capacity or other markets, Canadian production will decline.

Currently the U.S. accounts for 2/3rd of our production.

Within the next 10 to 15 years, the U.S. will not need to import natural gas from Canada.

2013

2020

With LNG Canadian

Production could

significantly increase.

Challenge for all of us is to meet world oil and gas demands while benefiting all citizens: • Be strong regulators. • Analyze and share knowledge. • Regulate effectively.

Paul Jeakins Commissioner and CEO BC Oil and Gas Commission