- 1 - Critical Success Factors in Flaring & Venting Reduction: the Alberta/Canada Experience George Eynon PGeo Board Member

2 Key Elements CONTEXT Albertas history of industry regulation Recent history of flaring & venting DATA Measurement, collection, and public availability STAKEHOLDER INVOLVEMENT Governments, Industry, and NGOs ECONOMIC TEST Price/Cost Sensitivity

3 GGFR: the Canadian Context Canada first to submit a Country Implementation Plan Required co-operation among provinces Canadian Flaring and Venting Regulators Forum [CFVRF] created ERCB-led process

4 The Alberta Context Provincial ownership of resources Legislated oversight of industry 75-year experience in regulation Arms length quasi-judicial tribunal Technical expertise; 900 staff

5 ERCB Mission …to ensure that development of Albertas energy resources is orderly, efficient and effective …and is conducted in a manner that is safe, fair, responsible, and in the public interest

6 Beginnings… 1930s massive flaring at Turner Valley oil fields nr Calgary 1938 Alberta created regulator Gas Conservation Board 1949 ERCB authorized to regulate removal of gas from Alberta 1950s NGTL created to gather gas in Alberta & TCPL created to move gas across North America Gas required for pipelines so conservation required

7 Separate Roles… GOVERNMENT Alberta Dept of Energy P&NG licenses & leases Royalties REGULATOR ERCB at arms length Delegated regulation-making authority Data gathering & analysis Reporting requirements Compliance/enforcement Compliance infractions publically reported

8 Data… Alberta economy resource-based oil & gas development facilitated by public availability of data/information to industry, government, and NGOs ERCB role and reputation based on collection and analysis of information and data If it gets measured, it gets done No data, no analysis! Shows where to focus efforts Public reporting positive pressure on companies to do better recognition for those that do a good job shows where to focus our efforts

9 Definitional Problems… Federal/Provincial terminology needs to be harmonized Data/Reporting inconsistencies NRCan/Environment Canada working with Provinces e.g., fuel gas definition and reporting requirements

10 Verifiable Data…

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12 N2 in vented gas?

13 Gas Flared in Testing?

14 Other Sources Mineable oil sands Difficult to estimate vented volumes What emissions factor should be to estimate volumes of gas emitted per cubic tonne of oil sands? Upgraders Not previously reported in annual reports. Flare and vent data reported to ESRD not ERCB May change with a single regulator

15 Economic Test… Gas Conservation Orders Initial methodology set level of conservation field/product specific based on economic conservation Stakeholder involvement CASA – industry, government, public now incl. municipalities, communities, NGOs, etc Economic test ERCB sets economic parameters Ability to audit and review Compliance/enforcement

16 Directive 060… Economic test Based on gas conservation economics only If… NPV of sales revenues less than… NPV of conservation costs and >($50,000) then conservation required

17 Challenges… Low gas prices affect economics… result in less conservation Companies only required to consider the gas; gas/oil ratio needs to be used? The NPV threshold needs revision? Using gas as fuel at wells and batteries also needs to be encouraged

18 Looking Ahead… Canadas GHG emissions policy to play a larger role Harmonization of definitions across Canadian jurisdictions? Revise economic test in Alberta if gas prices remain low? Impacts of URRF? Alberta Unconventional Resources Regulatory Framework based on play trends/project areas Impact of single regulator and Land Use Framework legislation in Alberta? Gas conservation orders again?

19 Thank you! Questions? Georg Eynon PGeo Board Member – ERCB