george eynon


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Developing a Regulatory Framework for Unconventional Oil and Gas Development

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  • ERCB and role in information to public – CSPG Reservoir articles Shale gas and frac’ing - ERCB in Europe… I am going to describe the ERCB process of creating a new directive Specifically w.r.t. frac’ing… What we are doing… and what we still need to do
  • ERCB branches currently… though it is highly likely that this will change… with the new single regulator legislation EXPLANATION?
  • Explain… The Alberta Energy regulator But for the next few months we still operate as the ERCB…
  • There is a number of things already in place… Not perfect – but then we are continuously improving All our Directives… Plug ERCB articles in Reservoir – ENSURING FRAC’ING IS SAFE
  • should follow a logical sequence that reflects the things that directives are intended to achieve
  • Given that our primary motive, our priority, is addressing the real risks or operational risks, we identified a few risk themes that we want to focus on, this response should be crafted to deal with everything, but focus on only a few select items that warrant our immediate attention operational hazards, real risks These are framed in terms of things or events or problems that we are trying to avoid or prevent because they may cause harmful things to happen the events – this will allow us to narrow the scope Not that the others are not important – They will be addresses somewhere else And quite differently
  • We keep hearing things around risk, risk is an odd term and a confusing one to most people It’s not well understood by the general public it’s really about converting undesirable events into a mathematical expression an indicator that provides a measure of how serious it is something we should be concerned about... but it does not tell you what to do about it and it does not tell you how you should feel about it. We do a very thorough job of risk assessment In all the areas we deal with Let’s look at the major risks we identified with frac’ing….
  • First, inter-wellbore communication… Whether intentional or otherwise 21 events in past several years Definition of reportable incidents…. The “Innisfail” incident affected the producing horizon not shallow aquifers NOTE ERCB has an on-line abandoned well viewer … With every abandoned well in our files going back as far as we can
  • Deal with slide… Then add concern about CEMENTING!
  • Major public concern… But it can be avoided or mitigated… Almost 100 percent But might be a more fundamental problem with well completion… CEMENTING again…
  • Describe slide… and add concern about compliance assurance
  • The direction we want to move in or the change we want to propel, the
  • This was the case as we developed the concepts last year… We assessed the risks appropriately… But the highly improbable can occur Crew Energy was completing a Caltex well Planned to perf @ 1486m Perf guns went off at 137m but Crew did not recognize problem [thought it was just a a minor kink in the coiled tubing; but were actually over pressured and collapsed the tubing]
  • I am going to go through these slides relatively quickly… They illustrate the types of alternatives we look/looked at… More process than anything else But I think it worth dwelling on one or two of them
  • Skim over…
  • I was going to skim over the next few slides as they are more process than anything… However, in this particular Skim over…
  • Well integrity… But have NOT addressed what is an industry problem of poor cement jobs and practices
  • not just the first well and the next well]
  • george eynon

    1. 1. The Mission of Canada to the EUShale Gas: Sharing Canada’s Regulatory and Industrial ExperiencesJanuary 22, 2013 – Brussels Developing a Regulatory Framework for Unconventional Oil & Gas Development George Eynon PGeo Board Member
    2. 2. URF – Unconventional Oil & Gas Regulatory Framework• Regulating Unconventional Oil & Gas in Alberta Discussion Paper Nov 2012• Hydraulic Frac’ing Directive Draft for comment Dec 2012• Directive 059 update• frac fluid content reporting• Hydraulic frac’ing animation on website• Proof of Concept project to be undertaken 2013• Implementation also via hearing Decisions
    3. 3. ERCB operational organization Applications Field Surveillance & Operations Oil Sands & Coal Geology, Environment & Economics Alberta Geological Survey Law Regulatory Development SEO: Stakeholder Engagement Office Information & Systems Services Corporate Services
    4. 4. A new single regulator…Responsible EnergyDevelopment Act Cradle-to-Grave oversight All current ERCB functions + Front-end public lands approvals + Water use approvals and groundwater protection + Back-end reclamation and remediation = the Alberta Energy regulator to be proclaimed mid-2013
    5. 5. Regulations already in-place• Groundwater protection – Directives 027 wellbore construction – Directives 008 & 009 casing & cementing• Fluid handling & disclosure – Directives 055 & 056 storage, management, handling & disposal – frac fluid reporting• Water use & management – Directive 059 reporting requirements• Flaring & Venting – Directive 060 limitations, gas conservation
    6. 6. Strong Foundation…Dir 008: Surface Casing Depth RequirementsDir 009: Casing Cementing RequirementsDir 020: Well Abandonment…Dir 027: Shallow Fracturing Restricted OperationsDir 029: Applications and Hearing ProcessDir 031: Guidelines for… Cost ClaimsDir 035: Baseline Water Well Testing…Dir 038: Noise Control…Dir 044: Surveillance - Water Production in WellsDir 050: Drilling Waste Management…Dir 051: Injection and Disposal Wells…Dir 055: Storage RequirementsDir 056: Energy Development Applications…Dir 058: Oilfield Waste Management…Dir 059: Drilling & Completion Data Filing…etc…
    7. 7. Strong Foundation…Comprehensivesafety, environmental,and technical requirements…Well designCasing and cementing blowout controlsWell completions shallow frac’ingPipeline specs & operations leak detection and controls
    8. 8. Strong Foundation…Surface casing & conductor pipe base of ground water protection; wellbore isolation minimum depth requirements minimum casing standards conductor pipe cemented full length surface casing centralized & cemented full lengthProduction, intermediate & liner design requirements dependant on fluids, temperatures Special cements may be required [foam, thermal…] cement volumes based on hole size + 20% all strings centralized cement flow returns visually monitored cement tops verified by logs liners cemented full length
    9. 9. Strong Foundation…Facilities design andoperations flaring, venting, and emissionsWaste management drilling wastes production and flow-back water oilfield wastes from operations
    10. 10. Strong Foundation…Produced fluids & waste disposalsafe disposal if not reused disposal via injection wells deep saline aquifers CCS & EOR sequestration at depth resource conservationin situ oilsands… CHOPS, CSS, & SAGD THAI & solvents requirements re: injection pressures and volumes, caprock integrity…
    11. 11. Strong Foundation…Compliance assurance…Surveillanceinspections, audits, response tocomplaintsEnforcementcommensurate with risk levelIndustry-Communitylocal organizations:air-shed/watershed monitoring andprotectionReportingpublically on ERCB web-site
    12. 12. Development process for new regulations Identify key operational hazards Assess associated risks Evaluate alternatives Create draft directive Internal staff/executive review Board review External consultation
    13. 13. Narrowing the scopeIdentify keyoperationalhazards
    14. 14. Discussion of risk
    15. 15. Inter-wellbore communicationEvent Pressure/fluid event with offset energy wellCauses High-density subsurface development Lack of systematic prevention planning;Consequences Uncontrolled release of fluids: surface/subsurface Fluids migration into non-target formations Production delays Varying level of impacts to statutory objectivesAssessment High-risk: based on number of occurrences and severity of potential consequences
    16. 16. Loss of well integrityEvent Cement or casing damage – not fit for purposeCauses Frac’ing down well using single barrier system Cyclical high pressure/volumes: mechanical stressesConsequences Loss of containment and zonal isolation Migration of fluids into non-target formations Production delays Varying level of impacts to statutory objectivesAssessment Moderate-risk: based on serious concerns with current operational practices – no confirmed events
    17. 17. Frac’ into non-saline reservoirEvent Establish a communication pathway Migration of fluids into a non-saline aquiferCauses Lack of systematic planning; emphasizing prevention Operating proximal to the BGWP & non saline aquifersConsequences Impact on quality and/or quantity of water resourcesAssessment Low operation risk: no confirmed events High-risk to public confidence in regulatory system
    18. 18. Problem statementsToo many inter-wellbore events 21 since 2009 - low to moderate impactsWidespread use of single barrier 1000% increase in HZ wells since 2009 70% of all frac’s HZ wells in 2011Frac’ing above/proximal to BGWP Introduces elevated risk element 200m vertical depth cf BGWP exposed Significant ‘risk perception’ issue Low ‘real operational risk’Limited assurance risksbeing appropriately managed
    19. 19. Regulatory outcomesReduce risks of causinginterwell communication event Reduce frequency of events Alleviate consequences by effectively managing responseMaintain well integrity during frac’ingReduce possibility of communicationpathway to non-saline aquiferAugment ERCB monitoring/assurance Ability to assess beyond ‘simple compliance’
    20. 20. Regulatory alternativesPrescriptive high level of certainty; clear minimum standard; minimizes discretion inflexible; rules tend to multiply; slow to change;Performance-based provides flexibility; promotes innovation; cost effective can be difficult to enforce; smaller companies struggle; KPI’s can be problematicOthers Economic regulation; Self-regulation; Information disclosure
    21. 21. “the best laid plans of mice and men…”• Even the most improbable events can occur… – Caltex/Crew well n. Alberta – series of errors and omissions – perf’d & frac’d at wrong depth – guns went off @ 137m; did not notice – cont’d to 1487m and conducted ‘frac’ – Fluid into shallow zone above BGWP – Missed all the signals• Almost always operator error!
    22. 22. Alternatives: Interwell communication Specify regulatory Prescribe planning Prescribe Planning outcomes: approach – tightly Approach – allow licensee to defined IRP-24 Loosely Defined choose process Likely effective at Probably effective at Probably effective atSatisfy Outcomes reducing risk reducing risk reducing risk Incremental cost, Incremental cost, Incremental cost,Industry Impacts more effort more effort more effortAlignment with URF yes yes yesCompliance Complex Very complex Very complexAssuranceERCB Impacts Significant Very significant Very significantPublic Response Receptive Less receptive Less receptive
    23. 23. Alternatives: Wellbore integrity Prescribe standard Specify regulatory Prescribe standard: with exemption to outcomes: dual barrier system select technically allow licensee to equivalent option choose standard Likely effective likely effective Likely effectiveSatisfy Outcomes maintaining WBI maintaining WBI maintaining WBI Incremental cost; may Incremental cost; Incremental cost;Industry Impacts not be commensurate commensurate to risk commensurate to risk to riskAlignment with URF No Yes yesCompliance Assurance Less complex More complex Very complexERCB Impacts Insignificant Significant Very significantPublic Response Receptive Receptive Less receptive
    24. 24. Alternatives: Non-saline communication Prescribe planning Prescribe Planning Specify regulatory + revised shallow + revised shallow outcome: licensee BGWP with 100m zone fixed at 600m to choose process buffer Likely prevent Likely prevent Likely preventSatisfy Outcomes communication communication communication Commensurate to Not commensurate Commensurate toIndustry Impacts risk; incremental to risk, incremental Risk; incremental cost cost costAlignment with URF yes yes YesCompliance More Complex Complex More complexAssuranceERCB Impacts Very significant Significant Very SignificantPublic Response Receptive Receptive Less Receptive
    25. 25. ERCB approachWELL INTEGRITYOptions for well designdual barrier system or technically equivalentsingle-barrier with well integrity testingINTERWELL COMMUNICATIONRisk assessment/planning process continual improvement clause parts of Directive 027 at shallow depthsNON-SALINE AQUIFERSRedefine ‘shallow depths’ above BGWP plus a 100m vertical bufferCOMPLIANCE ASSURANCE
    26. 26. Related ERCB regulatory developmentURFUnconventional Oil & Gas Regulatory Framework• Project/play area full development plans;• Consultation with municipal/rural authorities• and local residents• Collaboration with other producers locally• Coordinated road use, water use, etcFlaring & Venting• Flaring or Incineration• Combustion/destruction efficiencies
    27. 27. What now? Consult with CAPP… Revise draft directive… Assess economic impact… Finalize analysis… Complete compliance assurance strategy… Conduct broader external consultation… Identify resource needs…
    28. 28. Questions?Developing an ERCBHydraulic FracturingRegulatory FrameworkGeorge Eynon PGeoBoard