Friday, July 14, 2017

Global Shale Law Compendium: Shale Governance in Canada (Alberta, Manitoba, and Saskatchewan)

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series addresses legal developments and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. In this article, we will highlight governance actions taken by the Provinces of Alberta, Manitoba and Saskatchewan to develop policies specific to shale gas development. In our two previous articles, we respectively addressed shale gas development in the Provinces of Newfoundland and Labrador, Ontario and Prince Edward Island as well as shale gas development in the Provinces of New Brunswick, Québec and Nova Scotia.

Alberta

The Canadian province of Alberta has significant shale resources estimated at 967 Tcf of shale gas in place, of which approximately 200 Tcf are technically recoverable, and 140 billion barrels of shale oil in place, of which approximately 7.2 billion barrels are technically recoverable. According to the U.S. EIA, there are five important shale formations in Alberta, including the Banff and Exshaw in the Alberta Basin, the Duvernay Shale in the Deep Basin of west-central Alberta, the Nordegg Shale in the Deep Basin of west-central Alberta, the Muskwa Shale in northwest Alberta, and the Colorado Group Shales in southern Alberta.

The Canadian government recorded more than 10,000 hydraulically fractured wells in the Alberta province since 2008, noting that the technique of hydraulic fracturing was first used in the 1950s. Exploration and development of Alberta’s shale gas resources is well underway with Stealth Ventures Ltd, a Calgary-based company, announcing in March 2008 that it had developed Alberta’s first commercial shale gas resource play in the Colorado Group Shales.

Alberta is a province with a great wealth of natural resources, including natural gas, crude oil, and oil sands – also known as tar sands. Alberta is the third largest producer of crude oil globally with an estimated production level of 2.5 million barrels per day. According to estimates by the U.S. EIA, the province of Alberta accounted for 78% of Canadian oil production in 2014 and about 81% of Alberta’s total crude oil production came from oil sands. Interestingly, the provincial government of Alberta reports that “Alberta’s oil sands are the third-largest proven crude oil reserve in the world, next to Saudi Arabia and Venezuela.” As for natural gas, the Canadian National Energy Board (NEB) stated that Alberta represents two-thirds of Canada’s gross natural gas production placing Canada in fifth rank worldwide among the natural gas producing countries. Consequently, there is already in place a developed and robust legal framework governing oil and gas activities in the province. This legal framework is also applicable to shale gas operations. There are, however, no specific regulations governing shale gas development.

The Alberta Energy Regulator (AER) is responsible for regulating and monitoring oil and gas exploration and production activities within the province as well as managing such activities in an environmentally responsible manner. AER has developed multiple policies and directives applicable to oil and gas development – including shale gas exploration and extraction activities – relating to water management, groundwater protection, wellbore integrity, air quality, noise and light, and induced seismicity.

With regard to water management, AER has developed a Water for Life action plan to address concerns over the environmental sustainability of water resource systems towards developing a water management strategy. AER also implemented guidelines applying to industrial water supply projects. Five directives regulate protection of groundwater, including Directive 055: Storage Requirements for the Upstream Petroleum Industry; Directive 058: Oilfield Waste Management Requirements for the Upstream Petroleum Industry; Directive 059: Well Drilling and Completion Data Filing Requirements; and Directive 083: Hydraulic Fracturing – Subsurface Integrity.

In addition, the AER imposes strict requirements upon well casing through Directive 008: Surface Casing Depth Requirements; Directive 009: Casing Cementing Minimum Requirements; and again Directive 083: Hydraulic Fracturing – Subsurface Integrity. Concerning air quality, the Alberta Environment and Parks released the Alberta’s ambient air quality objectives and guidelines “to provide protection of the environment and human health to an extent technically and economically feasible, as well as socially and politically acceptable.” Furthermore, AER issued Directive 060: Upstream Petroleum Industry Flaring, Incinerating, and Venting. To address noise and light pollution, AER developed Directive 038: Noise Control and Directive 056: Energy Development Applications and Schedules. AER also implemented a liability management program through the issuance of Directive 006: Licence Liability Rating (LLR) Program and License Transfer Process.

Finally, regarding induced seismicity, the Alberta Geological Survey (AGS) has implemented the Alberta Earthquake Studies Project (AESP) in order to monitor seismic activity in the province of Alberta and gather data for the purpose of assessing the frequency of natural and induced earthquakes. AER uses the Regional Alberta Observatory for Earthquakes Studies Network (RAVEN) as well as networks developed by Natural Resources Canada, the University of Alberta, University of Calgary, Montana Bureau of Mines and Geology, and the University of Western Ontario to monitor and record seismic waves. 

Manitoba

Shale gas resources in the Canadian province of Manitoba are located in the Williston Basin in southwestern Manitoba; however, there is currently no shale gas development in the province despite some potential. Interestingly though, the technique of hydraulic fracturing has been used to enhance oil production from the Amaranth and the Bakken-Torquay formations since 2005 and is regulated under the provincial Oil and Gas Act.

Saskatchewan


According to Canadian authorities, the province of Saskatchewan may possess some shale gas reserves as well as oil sands from the Bakken Shale formation located in the central and east-central portions of the province. Since the 1990s, a number of wells have been horizontally drilled and have used the technique of hydraulic fracturing. There are no specific regulations, however, concerning the use of hydraulic fracturing in Saskatchewan.

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