Enhancing Assurance: The first 90 days

Executive Summary

Message from the chair
Introduction
Creating Enhanced Overall Assurance
    Towards an Effective System
    Achieving Timely Results
Achieving Near-Term Enhancements
    Enhancements Specified in Energizing Investment
    Additional Enhancements Realized
Enabling Technology and Innovation
Conclusion

Executive Summary

Energy is an essential part of Alberta’s economic future.  Over the next 25 years, upstream oil and gas development in Alberta has the potential to add $2.5 trillion in new economic activity, creating millions of person-years in jobs and contributing to sustained prosperity for our province.

To realize these substantial benefits, Alberta must continue to attract significant levels of oil and gas investment.  As part of broad efforts under the Competitiveness Act, the Government of Alberta is working to position Alberta as one of the most competitive places in North America to invest in upstream oil and natural gas development.

In March, the Government of Alberta released Energizing Investment: A Framework to Improve Alberta’s Natural Gas and Conventional Oil CompetitivenessPDF icon, which identified a series of actions for improving Alberta’s competitive position.  These included a comprehensive review of Alberta’s regulatory system for oil and gas, and making specific enhancements to the system in the near-term.

The government appointed a Regulatory Enhancement Task Force to oversee review and improvement of Alberta’s regulatory system, and instructed the Task Force to issue a progress report within 90 days. 

Enhancing Assurance: The First 90 Days identifies how Alberta government ministries and agencies are pursuing a comprehensive review of Alberta’s regulatory system for oil, natural gas and oil sands development.  It illustrates successes that have been achieved on specific enhancements, and the process that will be followed to realize broader improvements.

Alberta’s regulatory system is intended to support the development of Alberta’s oil, natural gas and oil sands, while providing assurance in three key areas: protection of the environment, public safety, and resource conservation.  Alberta Environment, Alberta Sustainable Resource Development, and the Energy Resources Conservation Board external link icon(ERCB) are responsible for various aspects of oil and gas regulation.  Alberta Energy is responsible for administering Crown mineral rights and royalties.

To be regarded as a competitive destination for oil and gas investment, Alberta needs to have a regulatory system that is flexible, modern, efficient and effective.  It must be a system that places an appropriate level of accountability on resource developers, with requirements that meaningfully support environmental protection, public safety, and resource conservation.  It must also place a focus on achieving outcomes, and provide developers with the flexibility to use innovative approaches and new technologies that will help achieve those outcomes.

The Regulatory Enhancement Project is a review of the oil and gas regulatory system, being overseen by the Task Force that is examining how to enhance Alberta’s regulatory system so that it meets these objectives.  A cross-ministry team is undertaking a comprehensive review of Alberta’s regulatory system, and determining how it can be renewed to best achieve outcomes and provide assurance to Albertans.

The Regulatory Enhancement Project has identified key issues and barriers.  The project has also begun a stakeholder engagement process with industry, landowners, environmental organizations and other groups with interests, expertise and experience in resource development.  The views of stakeholders will help the project identify solutions and opportunities for improvements.

By the end of 2010, the Regulatory Enhancement Project will make recommendations to the Government of Alberta on how to best align provincial policies around oil, gas and oil sands; and how to implement a renewed policy assurance system for the province that is flexible, modern, efficient and effective.

In addition to this comprehensive system-level review, Alberta’s regulatory agencies have identified, acted upon and achieved several near-term enhancements to Alberta’s current system. Considerable work has been undertaken by government officials, not only over the last 90 days but over the past several months to making these changes, which include:

  • Pilot work towards a system of coordinated compliance inspections;
  • Successful streamlining of Pre-Disturbance Assessments for oil sands developments;
  • Simplification of sub-surface well spacing requirements;
  • Improved access to information and regulations;
  • Clarification and simplification of regulatory publications;
  • The elimination of obsolete and expired regulatory publications; and 
  • Harmonizing regulations with other provinces.

The ERCB, as an example, has undertaken several enhancements as part of its new strategic plan, and has reduced its regulatory publications from 205 to 164 through an ongoing program initiated in 2004. An additional 10 publications are in the process of being eliminated in the near term.

These near term enhancements are already resulting in improvements to Alberta’s regulatory system.  These include savings in time and cost for both industry and the Government of Alberta, while protecting public safety, conserving resources and ensuring industry complies with high environmental standards.

Near-term enhancements will simplify requirements and improve timeliness, and will result in major benefits to industry and government, including:

  • Substantial annual financial savings to industry which can be re-invested into the Alberta economy, including an estimated savings of between $80 million and $170 million from a number of ERCB initiatives alone;
    (Preliminary estimates provided by industry for ERCB initiatives related to harmonization of well spacing for Development Entities 1 and 2, simplifying coal-bed methane (CBM) control well requirements, and harmonization of regulations.)
  • Reductions in time delays and associated delay-related costs;
  • Elimination of the need for between 250 and 300 applications per year to the ERCB reflecting the use of new technologies (Harmonization of well spacing for Development Entities 1 and 2); and
  • Improved clarity and navigability of rules and regulations.

The cost savings from regulatory efficiencies that are reinvested in Alberta will benefit hundreds of communities and thousands of businesses in the province though increased jobs, economic activity and provincial revenues.

The Government of Alberta is collaborating with industry and the research community on several fronts, to build knowledge regarding new technologies and innovations that will help achieve our energy and environmental objectives.  This includes research and demonstration projects in carbon capture and storage, re-use of water in tailings, and integrated clean gas production.

The first 90 days of action have been productive.  Real and substantial progress has been made in improving Alberta’s regulatory system.  Alberta’s regulatory agencies are on track to renew the regulatory system to provide greater clarity, predictability, certainty and efficiency, consistent with the goals of Energizing InvestmentPDF iconand Alberta’s Competitiveness Act.

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