1. Water Management in Alberta’s Oilfields – Issues and Opportunities (Recovery and Reuse of Produced Water in Alberta: Regulatory Challenges and Opportunities) Greg Shyba, BA, LLB APEGGA April 17, 2008

2. This presentation does not necessarily reflect the views or policies of ARC

3. Alberta’s freshwater resources are facing increased pressure and there is a desire to reduce the amount of water lost through deep well injection.

4. How much water is deep well injected? Produced water disposal injection volumes are significant: 265 million m3 per year - approximately 720,000 m3/day.

5. An Outline of Produced Water Regulations in Alberta

6. In Alberta, ownership of water vests with the Crown by virtue of the Water Act. Permits to divert and use water are granted by legislative authority.

7. Applicable Alberta Legislation and Authorities: Water Act ERCB Oil and Gas Conservation Act Environmental Protection and Enhancement Act

8. Federal Fisheries Act Prohibits the deposit of a deleterious substance in water frequented by fish or in fish habitat without a permit.

9. What is happening in other jurisdictions, the USA, for example? “I think the bill will change an energy- industry problem into an opportunity, not just for oil and gas producers but for everyone else who would benefit from increased supplies of useable water. Developing beneficial uses for produced water could reduce costs of oil and gas development, while also easing demand for water by alleviating drought conditions in Colorado and the west and providing water for agriculture, industry, and other uses…” HOUSE PASSES UDALL WATER BILL Industry, Bush administration support ‘More Water and More Energy Act’

10. What are the drivers influencing current practices and how might they influence future practices ? Economics –Deep well injection is relatively inexpensive and transportation costs are a factor –Challenge recovering treatment costs as many users - agricultural users in particular - ‘pay’ very little, if anything, for their water Regulatory environment –At present, the precautionary principle may be limiting beneficial reuse opportunities and tighter water conditions may result in new rules and regulations Liability

11. Legal Liability is an Important Issue Not much in the way of legal precedent in Canada.

12. Nuisance Damage to property Risk to health and safety Interference with use

13. Negligence Foreseeable Relationship between the parties Reasonable standard of care

14. Strict Liability A non-natural use or application of produced water Liability may be found even when every reasonable precaution has been taken

15. So far, there have really only been two “safe” ways to deal with produced water in Alberta: 1.Water flooding and enhanced oil recovery 2.Deep well injection

16. What opportunities does this present? New water treatment technologies have been and are being developed to allow for the beneficial use of produced water (besides utilizing existing technologies to reduce the amount of water being produced)

17. Opportunities: Agricultural use (caution here regarding the principle of reliance) –Livestock watering –Irrigation Silva culture Potable water Aquifer recharge Frac fluids Completion fluids Dust suppression Enhancing stream flows Wetland creation and enhancement

18. “ERCB welcomes applications for beneficial use of produced water and requests applicants to demonstrate that environmental impacts have been assessed and appropriate mitigation, if necessary, is in place, management of wastes and the product is appropriate, and monitoring systems are in place to confirm impact is not occurring.” ERCB’s Position:

19. For further information: CBM Produced Water- The Emerging Canadian Regulatory Framework, Ingelson, McLean and Gray, ISEEE, University of Calgary http://www.iseee.ca/files/iseee/ABEnergyFutu res-04.pdf http://www.iseee.ca/files/iseee/ABEnergyFutu res-04.pdf Produced Water Beneficial Re-Use – High TDS Waters, Fossil Water for PTAC http://www.ptac.org/etalk/dl/HighTDS.pdf http://www.ptac.org/etalk/dl/HighTDS.pdf Cost-Benefit Analysis of Treating Saline Groundwater, AENV, AMEC http://environment.gov.ab.ca/info/library/7 816.pdf http://environment.gov.ab.ca/info/library/7 816.pdf

22. Questions and Discussion