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
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]
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
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• www.fracfocus.ca frac fluid content reporting• Hydraulic frac’ing animation on website• Proof of Concept project to be undertaken 2013• Implementation also via hearing Decisions
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
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
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
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
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
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
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’
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
“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!
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
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
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
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
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