Directive 084: Requirements for Hydrocarbon Emission Controls and Gas Conservation in the Peace River Area Stakeholder Feedback and AER Response February 2017 Section numbers referenced in the Section column refer to the February 2017 version of the directive. Stakeholder comments in the feedback columns (i.e., Issue, Possible Solution or Recommendation, and Rationale to Support Solution or Recommendation) have not been edited. Names of individual respondents have been redacted for privacy. Section 3.2, Clarity on the term conserving facilities is required Understanding what defines a conserving facility versus a non- Flaring pg. 5 before a recommendation can be made. conserving facility is critical to utilizing this Directive. 1 Baytex Energy Corp. 2 Baytex Energy Corp. Section 4.2, pg. 6, requirement 6 It is unclear how a conserving facility is selected and defined. Greater detail around this terminology is required. Unless otherwise set out in a gas conservation plan that has been accepted by the AER, all licensees of existing heavy oil and bitumen operations must achieve a cumulative gas conservation rate of 95 per cent for their heavy oil and bitumen operations in the Peace River area. This statement creates a two tiered regulatory regime with those companies that have submitted gas conservation plans held to a different standard. Unless otherwise set out in a gas conservation plan that has been accepted by the AER, All licensees of existing heavy oil and bitumen operations must achieve a cumulative gas conservation rate of 95 per cent for their heavy oil and bitumen operations in the Peace River area. A level playing field for all existing and new producers should be maintained by the regulator. Gas Conservation The definition of "conserving facility" has been removed from the appendix because nonroutine flaring now applies to all facilities. Gas conservation plans from existing operators have already been reviewed and accepted. The 95 per cent gas conservation rate is a minimum. Operators are expected to show continuous improvement in order to achieve full gas conservation. 3 Baytex Energy Corp. Section 4.2, pg. 6, requirements 6 and 7 For an existing producer who is developing a new area (within Peace River) what are the conservation requirements? New development areas often have no infrastructure and imposing aggressive conservation requirements can make the first wells and batteries uneconomic. A company s first battery, in a new area, can conduct an economic evaluation (as per D 60) to achieve gas conservation. If uneconomic the company has a waiver from conservation requirements until: 1) a second battery is built; or 2) 60 months have elapsed. It is important for the company and the province that new step out developments are not stifled. As such an easing of the regulations is appropriate until critical development mass is achieved and conservation can be realized in an economically viable manner. Gas Conservation The 95 per cent gas conservation rate is calculated across all the heavy oil and bitumen operations of an existing operator. If there are other new operations that are developed by an existing operator within the defined area (figure 1 in the directive), it is up to the company to ensure that at least 95 per cent of all gas being produced cumulatively in the area is being conserved. 4 Baytex Energy Corp. Pg. 12 FEMP Training There should be a recognized standard for training that both industry and the AER staff would be required to receive before working with, or auditing, a company s FEMP. Allowing each company to develop their own training standard could lead to significant variability in competence amongst producers and ultimately to variability in the quality of the Programs data. As outlined in section 5.2.7.1, operators must have an effective training program and be able to demonstrate the training program. The AER would encourage the industry, if necessary, to develop appropriate standards. 5 Murphy Oil Section 1, pg. 3, 1st paragraph after bullets "The requirements in this directive prevail unless otherwise directed by the AER Murphy recommends this sentence should be more specific to which AER directives this new directive is superseding. For example, this directive prevails specific requirements in Directive 60, such as economic evaluation for flaring vs. gas conservation. Clarifying this sentence will help the AER ensure full transparency to the public and industry regarding this directive. General - Front of Directive The following line has been added to section 1.1: "Licensees are advised that many requirements in other AER directives, such as Directive 060: Upstream Petroleum Industry Flaring, Venting, and Incinerating (Directive 060), continue to apply to heavy oil and bitumen operations in the Peace River area." 6 Murphy Oil Section 1, pg. 3, 2nd paragraph after bullets Facilities in this area may also operate under EPEA approval, and the requirements in this document are in addition to, and separate from, EPEA approval There exists conflict between EPEA approvals and other AER requirements. Murphy recommends the AER follow EPEA s requirements, unless the AER can specifically identify which requirement should be superseded. Providing more details into up-front resolutions into areas where conflicts exist between EPEA and AER will ensure a robust new Directive and achieve a best in class regulator. General - Front of Directive The Environmental Protection and Enhancement Act (EPEA ) and the Peace River directive have separate requirements, and both need to be met. The Peace River requirements are in addition to the EPEA requirements. If there are any specific conflicts, the operator can ask for guidance and the AER will provide direction. The AER has added this clarification to the directive. This directive will follow the AER compliance program. 7 Murphy Oil Section 1.2, pg. 4 Industry is directed to Directive 019 (the AER's Compliance Assurance Framework) for advice with respect to compliance under this Directive. D 19 commits the AER to updating its associated Compliance Table and to providing a rationale for its decisions with respect to how it has decided to categorize noncompliance events as low and high risk and it is critical that these requirements are available to industry in advance. Murphy recommends that the AER ensure that it has met its commitments to industry as per Directive 019 including updating the Compliance Table and providing the associated rationales for its decisions in advance of the release of this new Directive. Increasing transparency between AER and Industry, ensures that the public fully understands what it means for companies to be in full compliance. General - Compliance Assurance Directive 084: Requirements for Hydrocarbon Emission Controls and Gas Conservation in the Peace River Area Stakeholder Feedback and AER Response 1 of 35
Section 2, functional controls to prevent nonroutine venting Changing this sentence does not compromise AER s intent of Venting pg. 5, minimizing emergency venting. Changing this sentence ensures that requirement 2 technically possible solutions are considered. 8 Murphy Oil Murphy recommends to change this sentence to indicate: functional controls to minimize the volume of nonroutine venting. By nature nonroutine venting is a result of an emergency event, preventing this event is technically impossible, and adding controls to minimize the volume released would be more practical. Section 2.11 of Directive 060, for example, already states that licensees must minimize nonroutine venting during upsets. This requirement is about implementing controls so that nonroutine venting does not occur. 9 Murphy Oil Section 2, pg. 5, requirement 2 functional controls to prevent nonroutine venting Please provide acceptable examples to the AER for functional controls. Providing acceptable control examples would ensure that companies do not install controls that are not compliant with the AER s mandate, and prevent misalignment between companies and the AER on the efforts to minimize nonroutine events. Examples include 24-hour monitored sites, auto-shut ins for wells, auto- speed reduction of well drives. Venting The AER has provided operators the flexibility to install controls that would meet the outcome of the requirement. The AER has defined the terms "suitable" and "functional" in appendix 1. 10 Murphy Oil Section 3, pg. 5, requirement 4 Starting January 1, 2018, a licensee s nonroutine flaring volume must not exceed 3% of total gas production Murphy strongly recommends the 3% non-routine Balancing the needs of the public to reduce flaring with Industry s flaring is set as a target, and require companies to operational reliability and safety, is no easy task for the AER. This submit reports on non-routine flaring volumes. suggestion ensures companies meet the intent and spirit of reducing This will allow Operators to establish an annual flaring in Peace River, while not compromising the reliability and baseline on non-routine flaring, and determine if 3% is safety of their operations. a technically realistic target. Non-routine events are typically emergency situations, and by nature cannot be curtailed as they are occurring. Flaring Limiting nonroutine flaring was a key recommendation from the panel that the AER accepted. The three per cent limit would be a requirement and calculated based on total volume of gas produced. There has been flexibility provided to operators, since the three per cent limit is calculated based on the cumulative gas produced by all the heavy oil and bitumen operations of the individual operator. 11 Murphy Oil Section 3, pg. 5, requirement 4 total annual gas flared at all conserving facilities Murphy recommends for clarity this should indicate total annual gas flared non-routinely at all conserving facilities. This suggestions is a small technicality in the formula. Existing conserving facilities can have a mixture of routine and non-routine flaring. It would benefit the AER and public to ensure that accurate information is provided and not doubly accounted for in Industry reporting. Flaring The AER has added "nonroutinely" to the equation in section 3. 12 Murphy Oil Section 4, pg. 6, requirement 6 Compliance requirement date not shown. Murphy strongly recommends to show Starting January 1, 2018, a licensee s gas conservation rate must achieve This date ensures that AER is transparent to the public and Industry about the implementation of this program. This will ensure there is no confusion about compliance to this directive, during the implementation of Industry s gas conservation plans targeted for completion in 2017. Gas Conservation The AER will include the compliance requirement date for each section in the directive. Existing Peace River area operators must follow their approved gas conservation plan timelines, or provide rationale acceptable to the AER prior to the approval of any revisions. Any new operator within the Peace River area is required to meet the 95 per cent gas conservation rate for its first battery within 12 months of the on-production date. 13 Murphy Oil Section 4, pg. 6, requirement 6 Must achieve a cumulative gas conservation rate of 95 percent Murphy strongly recommends the AER consider Directive 60 was amended in detail on May 1, 2014 to capture the changing the sentence to state: must achieve a results of the AER s inquiry into Peace River. cumulative gas conservation of 95 % for an operator s This recommendation will ensure that the AER s hard work into conserving facilities as indicated in Directive 60. This satisfying the public s needs for stringent and transparent change ensures that the new Directive is not in requirements for flaring are not lost in the new Directive. conflict with the Directive 60 economic evaluation requirement for conservation. Directive 60 was amended in May 1, 2014 to reflect the new requirements in Peace River, Alberta. In Directive 60, it is mandatory to perform the economic evaluation in order to determine if an oil facility should have its gas conserved or flared safely. Once a facility has been selected for conservation, Directive 60 indicates that at least 95% of produced gas must be conserved at the affected facility. Gas Conservation The 95 per cent requirement applies to all facilities on an area basis and does not include nonroutine volumes in the calculation. Directive 084: Requirements for Hydrocarbon Emission Controls and Gas Conservation in the Peace River Area Stakeholder Feedback and AER Response 2 of 35
Section 4, Percent gas conservation rate equation Murphy recommends Total gas flared should Non-routine flaring is already accounted for in Section 3 and should Gas Conservation pg. 6, indicate Total gas flared routinely. not be double accounted for percent gas conservation rate. requirement 6 14 Murphy Oil The equation in section 4 (gas conservation) has changed to "total gas routinely flared from all facilities." 15 Murphy Oil Section 4, pg. 6, requirement 6 Percent gas conservation rate equation Murphy recommends Total gas vented should be removed. Operators must not vent hydrocarbons in Peace River. Gas Conservation Gas vented has been removed because there is no routine venting allowed and the equation in section 4 (gas conservation) applies to routine operations only. 16 Murphy Oil Section 5, pg. 7, requirement 11 b In response to an odour complaint. Murphy recommends this should indicate in response to a legitimate odour complaint. Adding the word legitimate ensures that that complaints filed are not subject to abuse or mal intent. A licensee must conduct an inspection in response to an odour complaint. 17 Murphy Oil Section 5.2.5, pg. 10, requirement 25 Within 24 hours of identification Murphy recommends within 48 hours of identification For reasons of practicality this should be extended to at least 48hrs. It could take longer than 24 hours to bring a shut down a facility especially in thermal operations. The wide variety of potential leaking equipment would require an excessive inventory of parts to be maintained. The Peace River panel recommended a 12-hour repair timeline. The AER is providing more time for the repair of leaks than what the Panel had recommended. The repair response is based the potential to cause off-lease odours and the leak rate. The 24- and 120-hour timeframe has been set based on consultations with operators, equipment manufacturers and fugitive emissions consultants. For thermal facilities the AER will consider an extension if a thermal operation requires a shutdown of the central processing facility to repair a leak. If an extension is granted, the leak must be quantified with the volume reported in the comment section of the monthly leak report. The AER has made changes to section 5.2.5 in order to address this. 18 Murphy Oil 19 Murphy Oil Section 5.2.5, pg. 10, requirement 25 Section 5.2.6.1, pg. 11, requirement 28 quantification of 0.2 cubic meter per hour requirement Monthly Leak Reports Murphy recommends that this requirement is focused towards leaks identified by FLIR cameras and offlease odours, and that quantification requirement is removed. Murphy recommends that a provision is added into the frequency of reports to acknowledge progress of leaks detected. Quarterly or biannual reporting may be sufficient after the first year of the program s implementation. FLIR cameras are very good at identifying leaks. Measuring every leak to determine if it is more or less than 0.2 cubic meter per hour is not practical in northern Alberta s winter environment. Identifying offlease odours is not necessarily related to the leak rate of a component. This change ensures that the public is fully aware of Operator s effort into eliminating off-lease odours by minimizing leaks, and at the same balancing what is practical and implementable in the Field. If the repair is done within 24 hours, no quantification is required. The AER is addressing a specific recommendation from the Report of Recommendations on Odours and Emissions in the Peace River Area on requiring monthly surveys and the reporting of the results of these surveys. All components do not need to be inspected during the monthly surveys only the targeted components need to be surveyed on a monthly basis. The AER may review this frequency in the future once more data is available. 20 Murphy Oil 21 Murphy Oil Section 6.2, requirement 36 b Section 6.2, pg. 13, item 39 cleaning and desanding storage tanks The AER requires that emissions control program for truck loading/unloading and tank cleaning/desanding identify and describe: compounds that have the potential to cause off-lease odours or AAAQO exceedances; and methodologies and analyses used to determine the compounds with the potential to cause offlease odours or AAAQO exceedances"". There is no definition of the term compounds so it is not possible to know what level of analytical detail is required to comply with this requirement." Murphy recommends this requirement should clarify that hydrovac trucks used for cleaning and desanding should have emissions control. Murphy recommends that the AER provide as an Appendix to this Directive a list of the compounds that it has identified to date as potential sources of odour as well as references to the analytical techniques it would find acceptable for their detection to ensure there is clarity around this requirement. Cleaning and desanding typically involve opening the tank manway/door, which essentially opens the tank to the atmosphere. Controlling emissions once tank door is open would be solely on the hydrovac truck s emissions. The absence of direction from the AER around this issue creates a significant opportunity for companies to be inadvertently noncompliant with AER expectations. Truck Loading and Unloading Truck Loading and Unloading The AER requirements speak to the activity not a specific technology or equipment used. Licensees have the flexibility to use any technology that would meet the regulatory outcome. The objective of the emissions control program is to ensure that controls are suitable and functional. For the purposes of section 6, the AER neither requires licensees to identify and describe compounds that are contained in their gas streams nor dictates which controls they may use. However, depending on the control that a licensee is using, licensees may need to identify and describe the compounds to ensure that the control is suitable and functional. Directive 084: Requirements for Hydrocarbon Emission Controls and Gas Conservation in the Peace River Area Stakeholder Feedback and AER Response 3 of 35
Letter The Directive needs to set a clear date for the entire General Directive or for each section when it comes into effect. Murphy notes that the majority of the steps required to address emissions are underway according to approved plans and will have been taken by mid-2017. The effective date of 2018 would be fair and appropriate for the entire Directive and not result in any meaningful risk to the public interest. 22 Murphy Oil The AER does not accept that the effective date of all the sections should be Jan 1, 2018. The effective date of the directive is included at the beginning of the directive. Those sections with different effective dates state those dates clearly. 23 Murphy Oil 24 Shell Canada Ltd. Section 1.1, pg. 3 Letter It is critical that it be made clear in Directive that 95% gas conservation requirement should apply to conserving facilities only. "Facilities in this area may also operate under an Environmental Protection and Enhancement Act (EPEA) approval, and the requirements in this document are in addition to, and separate from, EPEA approval requirements. Licensees must meet all applicable requirements." There are cases where contradictions arise between flaring limits and timelines within operator EPEA approvals and the proposed Directive. If situations like this occur, operators should be permitted to work within their EPEA approval limits. EPEA requirements should not be changed without extensive consultation with the affected EPEA approval holders. Thermal operators are instructed by the AER to follow EPEA flaring guidelines. Gas Conservation Improving clarity. General - Compliance Assurance The 95 per cent requirement applies to all facilities on an area basis and does not include nonroutine volumes in the calculation. EPEA and the Peace River directive have separate requirements, and both need to be met. The Peace River requirements are in addition to the EPEA requirements. If there are any specific conflicts, the operator can ask for guidance and the AER will provide direction. The AER has added this clarification to the directive. 25 Shell Canada Ltd. Section 1.1, pg. 3 "This directive does not apply to AER-approved waste disposal facilities located in the Peace River Area." We believe the AER should reconsider this exemption, as by leaving out specific facilities, it is difficult to effectively eliminate all odour sources or guarantee future complaint reductions. Improving clarity. General - Front of Directive The AER already has requirements pertaining to odours at waste management facilities. The AER retains the right to introduce further requirements in the future if it finds that waste management facilities located in the Peace River area are a source of odour or emission problems. 26 Shell Canada Ltd. Section 1.2, pg. 4 "The AER recommends that all documentation be kept on file for the life of the well and all facilities associated with it." The practicality of this recommendation may prove difficult for operators, as some wells and facilities may have lifespans on the order of 20-30+ years. We suggest making requirements consistent with Section 5.2.8 Record Keeping. Ensuring practical records retention requirements. General - Compliance Assurance This recommendation has been removed from the directive. Upon request by the AER, a licensee must produce those documents, records, or plans required to be completed by this directive and any additional documentation needed by the AER to assess compliance with the regulatory requirements in this directive. 27 Shell Canada Ltd. Section 3.2, pg. 5, requirement 4 "Starting January 1, 2018, a licensee's non-routine flaring volumes must not exceed 3 per cent of its total gas production volumes in any calendar year." Flaring is a form of ensuring the safety of our personnel and the public, and this fact should be acknowledged by the AER in the proposed Directive. Although every effort is made to minimize flaring, some amount of flaring is unavoidable. Shell notes that performance toward this target could easily be affected by unforeseeable and unavoidable events (such as power outages). We recommend provisions be made in the proposed Directive to account for such situations that are outside of the operator's control. If such situations are not accommodated, actions of an operator aimed at ensuring compliance with the proposed Directive could result in increased safety exposure incidents. Enabling flexibility for operators. Flaring Limiting nonroutine flaring was a key panel recommendation that the AER accepted. The three per cent annual limit is a requirement calculated based on the total volume of gas produced annually. There has been flexibility provided to operators since the three per cent limit would be calculated based on the cumulative gas produced by all the heavy oil and bitumen operations of the individual operator within the Peace River area. 28 Shell Canada Ltd. Section 3.2, pg. 5, requirement 4 Percent nonroutine flaring = (total annual gas flared at all conserving facilities I total annual gas production at all conserving facilities) x 100" We suggest that flexibility be added to allow operators to apply this calculation on an individual facility basis where appropriate, as well as on a cumulative facility basis. This will not lessen the compliance limit, but would offer operators flexibility and a potential reduction in administrative burden. Enabling flexibility for operators. Flaring The requirement does not limit your assessment to be done at the facility level. By doing the calculation at the operations level, it adds to the flexibility of this requirement. These requirements are geared towards the licensee and not individual sites. 29 Shell Canada Ltd. Section 5.2.3, pg. 9, requirement 19 "Inspect components perpendicular to the wind direction." Please clarify the sources of wind information which are deemed acceptable by the AER for this purpose (i.e., the nearest continuous air monitor, onsite wind socks, etc.) Improving clarity. This is a guidance statement for licensees. It is up to the operator to ensure that techniques are reliable and appropriate. Directive 084: Requirements for Hydrocarbon Emission Controls and Gas Conservation in the Peace River Area Stakeholder Feedback and AER Response 4 of 35
30 Shell Canada Ltd. Section 5.2.3, pg. 9, requirement 19 "Hydrocarbon leak-imaging infrared cameras must be capable of detecting a methane leak rate of approximately 1.0 gram per hour." Typical temperature ranges for these cameras are from approximately -20 to 35 deg C (Reference: http://www.flir.com/ogi/display/?id=55671 #tab3). It should be noted that monthly surveys could prove difficult in winter months if temperature conditions are unfavorable, and this could impact operators' ability to meet monthly inspection requirements. We recommend provisions be made in the proposed Directive to account for such situations that are outside of the operator's control. Enabling flexibility for operators. Monthly surveys need to be separated by at least seven days, so there is flexibility built in. This requirement speaks to the design of the equipment and not to actual operating conditions. Wording in section 5.2.3 has been changed to provide further clarity. 31 Shell Canada Ltd. Section 5.2.5, pg. 10, requirements 23 and 24 "A licensee must start addressing the leak (e.g., repair, shut-in, bypass, isolate, or eliminate) immediately upon detection. A leak must be repaired immediately if the source of a leak is a failed pilot or ianitor on a flare stack." The use of the term "immediately" could be problematic here. It may take operators at least 12 to 24 hours to arrange a work order notification and deploy staff to perform corrective work. We recommend the term "immediately'' be replaced with " as safe and as quickly as work can be planned and executed." Improving clarity. According to requirement 23, the licensee must start addressing a leak immediately upon detection. The repair must be immediately completed only if there is a failed pilot or ignitor on a flare stack. Nonroutine venting must be prevented in the Peace River area per the requirements contained in section 2. If the failed pilot or ignitor is not addressed immediately, there may be venting happening. That is why the AER requires that such sources be addressed immediately. 32 Shell Canada Ltd. Section 6.2, pg. 13, requirement 19 "A licensee must develop, document, implement, and retain an emission controls program for truck loading, truck unloading, tank cleaning, and desanding that ensures that emissions controls are suitable and functional, in the opinion of the AER. This program should identify and describe: emission controls installed and implemented, including their effectiveness." The effectiveness of the emission controls installed Improving clarity. for truck loading/unloading and tank cleaning/desanding would be difficult to accurately quantify as part of the Emissions Controls Program. Ultimately, the effectiveness will be demonstrated through the results of the regional ambient air quality monitoring network, and through the results of AER inspection surveys. We suggest this requirement be removed from the contents of the program, as it is determined elsewhere. Truck Loading and Unloading The effectiveness statement in this section is for guidance and quantification is not required. It is up to the licensee to ensure that the controls installed are "suitable" and "functional" as defined in appendix 1. The AER considers effectiveness as the design effectiveness of the technology installed for this guidance. 33 Shell Canada Ltd. Section 7.1, pg. 14 "To establish an ambient air monitoring program in the Peace River area that provides credible and comprehensive data to permit the identification and appropriate response to odour- and emission-related issues from heavy oil and bitumen operations." Local oil and gas industry operators in the Peace Avoid duplication. River area are already contributing substantial funds into the AEMERA Oil Sands Monitoring (OSM) Program on an annual basis, in addition to funding the ongoing Peace River Area Monitoring Program (PRAMP). It is highly recommended the two programs be merged and funds from the OSM Program be provided to cover Peace River area monitoring objectives. Ambient air monitoring The OSM program only applies to monitoring for oil sands projects with EPEA approvals. Conventional heavy oil producers are not currently covered under OSM program. The intention of the Peace River directive is to enable monitoring for all heavy oil and bitumen producers in the Peace River area. It is up to AEMERA/GOA to determine the funding model for the regional monitoring program in Peace River. The AER has already raised this funding issue with AEMERA/GOA and will continue to discuss this matter further. 34 Shell Canada Ltd. Section 8.2, pg. 15, requirement 42 d) iii For the 2016 and 2017 interim years provide information on progress related to meeting these truck loading and unloading, tank cleaning, and desanding requirements. Given that that elements of this directive will not be enforced until January 1, 2018 Shell requests clarification for both the rational and intended outcomes for providing information related to progress in 2016 and 2017. Improving clarity. Reporting The objective of the annual performance reports is to allow the AER to track progress being made by the operators in meeting the overall outcomes of the directive. Directive 084: Requirements for Hydrocarbon Emission Controls and Gas Conservation in the Peace River Area Stakeholder Feedback and AER Response 5 of 35
Monthly Leak Report Form Annual Survey Report Form Improving clarity. 35 Shell Canada Ltd. Appendix 2-3, pg. 19-21 Reducing administrative burden There are two reports that operators are required to provide the AER the monthly leak report and the annual performance report (which would include the annual survey report and the FEMP analysis report). In order to ensure consistency in reporting, the AER has provided the template for the monthly leak report (see appendix 2) and the annual survey report form (see appendix 3). In both forms, the AER has now included extra space for any general comments that operators may have in order to provide any extra information or clarification. Any extra information that may help readers better understand the monthly survey data can be added to this general comments sections. Operators have the flexibility to include an explanation on any data being included in the annual performance report, as well. The AER has identified key performance metrics and will be tracking progress through the performance dashboard. 36 Shell Canada Ltd. Appendix 4, pg. 24 "Rank-order sites according to the number of leaks detected and the numbers of repeat leaks. Discuss the results (e.g., why certain sites are higher than others)." Rank-ordering is possible, but definitive information to explain why some sites are higher than others may not always be available, or may be difficult to speculate. Shell recommends this requirement be removed from the FEMP Analysis Report requirements. Improving clarity. Licensees should provide whatever information they have about why certain sites are ranked higher or lower than others. 37 Shell Canada Ltd. General comment Effective Dates & Definitions It is noted that most, but not all, components of the new requirements have been given effective dates. Please provide effective dates for all requirements in the proposed Directive (i.e., 95% gas conservation rate, FEMP). This will ensure operators have sufficient time to adopt and implement compliance plans. Also throughout the Draft Directive there is use of the terms "facilities", "sites", and "operations". Shell requests clarification in how these terms are applied. Improving clarity. General The effective date of the directive is included at the beginning of the directive and in the bulletin. Where effective dates vary for a section, the effective date is stated as part of the section's objectives. The AER has reviewed the directive and made changes where necessary in order to be consistent. Additional definitions have been added to appendix 1. 38 Shell Canada Ltd. Letter Reporting The new regulations will require a substantial increase in the level of reporting. While Shell acknowledges that reporting key performance indicators is important for transparency and to drive improvement in the industry, Shell believes the challenge will be prioritizing appropriate measurements such that the reporting will show improvements that can be shared and interpreted with both the AER and the community. General As noted, reporting is a key component of the directive. There are various objectives of the directive and the reporting requirements allow the AER to assess whether these objectives are being met. The AER may review the frequency of reporting in the future once more data is available. Directive 084: Requirements for Hydrocarbon Emission Controls and Gas Conservation in the Peace River Area Stakeholder Feedback and AER Response 6 of 35
39 Shell Canada Ltd. Letter Reporting It is unclear how the collected data will be stored and in what format it will be provided to our various stakeholders. As the AER is aware, the provision of complex, unrefined data without appropriate explanation can lead to misinterpretation and confusion. From a transparency perspective, Shell would like to share key performance indicators that are well understood with stakeholders; but more complex data should be left to experts to analyze and make recommendations versus causing confusion on operational performance. Reporting There are two reports that operators are required to provide the AER the monthly leak report and the annual performance report (which would include the annual survey report and the FEMP analysis report). In order to ensure consistency in reporting, the AER has provided the template for the monthly leak report (see appendix 2) and the annual survey report form (see appendix 3). In both forms, the AER has now included extra space for any general comments that operators may have in order to provide any extra information or clarification. Any extra information that may help readers better understand the monthly survey data can be added to this general comments section. Operators have the flexibility to include an explanation on any data being included in the annual performance report, as well. The AER has identified key performance metrics and will be tracking progress through the performance dashboard, which will be made available to stakeholders. 40 Shell Canada Ltd. Letter Thermal/Cold production facilities - Repairs The Draft Directive does not clearly distinguish between thermal facilities and cold production facilities with respect to leak repair. For example, certain repair or shut-in clauses are not realistic for thermal production facilities since emissions produced from flaring could potentially be greater than the effects caused by a small leak The Peace River panel recommended a 12-hour repair timeline. The AER is providing more time for the repair of leaks than what the panel had recommended. The repair response is based on the potential to cause off-lease odours and the leak rate. The 24- and 120-hour timeframe has been set based on consultations with operators, equipment manufacturers, and fugitive emissions consultants. For thermal facilities, the AER will consider an extension if a thermal operation requires a shutdown of the central processing facility to repair a leak. If an extension is granted, the leak must be quantified with the volume reported in the comment section of the monthly leak report form. The AER has made changes to section 5.2.5 in order to address this. 41 Penn West 42 Penn West Pg. 3, The term nearly all seems vague 4th bullet Pg. 3, There exists conflict between EPEA approvals and second paragraph after bullets other AER requirements Conserve a minimum of x% of casing gas and tanktop gas. Provide consistency with other parts of the directive. Specific mention of this conflict and citing of examples Provide consistency with other parts of the directive. would be helpful General - Front of Directive General - Front of Directive The term "nearly" has been replaced with "at least 95 per cent." EPEA and the Peace River directive have separate requirements, and both need to be met. The Peace River requirements are in addition to the EPEA requirements. If there are any specific conflicts, the operator can ask for guidance and the AER will provide direction. The AER has added this clarification to the directive. 43 Penn West Pg. 3, Bullet point Conserve nearly all casing gas and tank top gas HVS tank top gas is 0.012% (approx.) of the total gas, at a high level it shouldn t be considered an issue Gas conservation should be tied to hearing assessment that conservation is based on feasibility Gas Conservation The Peace River panel identified tank-top emissions as the most significant potential source of odours (see page 32 of 2014 ABAER 005, para 128). Furthermore, the Alberta Geological Survey found that the heating of the heavy oil and bitumen was the reason for increased reduced sulphur compound concentrations in the tank-top gas, which can be odorous when vented. Directive 084 requires that at least 95 per cent of the solution gas is conserved in the area. 44 Penn West Pg. 3, Bullet point - Participate in a regional ambient air monitoring program Currently we participate in the Oil sands environmental monitoring program at our thermal sites. The costs for this are ~ $300k and on a % basis ~25% of our revenue at these facilities. Monitoring program needs to also be reasonable in the cost. It is unreasonable to pay this amount in a marginal play. Ambient air monitoring The ambient air quality monitoring program required by Directive 084 is coordinated by the Alberta Environmental Monitoring, Evaluation and Reporting Agency. 45 Penn West Pg. 4, middle paragraph Reference to list of non compliance events is available from the general website www.aer.ca Further specific address to locate this list would be helpful. General - Compliance Assurance This clause has been removed from the directive. Directive 084: Requirements for Hydrocarbon Emission Controls and Gas Conservation in the Peace River Area Stakeholder Feedback and AER Response 7 of 35
Pg. 5 In the Objective section there is some vagueness in the Alternate wording is effectively control nonroutine A non-routine event by definition is one in which there is little control Venting wording venting of casing gas and tanktop gas. and is not reasonable to state that these can be eliminated. 46 Penn West In order to be consistent, the term "effectively eliminate" has been replaced by "prevent" in section 2.1. Due to the variability of each facility design, there may be more than one "suitable" and "functional" controls for each application. Licensees need to assess each of their facilities and use the appropriate controls. Section 2.11 of Directive 060 already states that licensees must minimize nonroutine venting during upsets. This requirement is about implementing controls so that nonroutine venting does not occur. The footnote has been removed. 47 Penn West Pg. 5, requirement 2 Can there be some examples of suitable and functional controls. In other places in the document there are lists of examples provided. Venting In order to be consistent, the term "effectively eliminate" has been replaced by "prevent" in section 2.1. Due to the variability of each facility design, there may be more than one "suitable" and "functional" controls for each application. Licensees need to assess each of their facilities and use the appropriate controls. Section 2.11 of Directive 060 already states that licensees must minimize nonroutine venting during upsets. This requirement is about implementing controls so that nonroutine venting does not occur. The footnote has been removed. 48 Penn West 49 Penn West Requirement 3 The term reduce nonroutine flaring From what levels are these to be reduced from? Is this even necessary as Rqmnt 4) seems to cover this? Requirement 4 Application of this requirement Does this apply on a per facility basis or on a company s aggregate production of the fields listed in the directive. Also what consequences if the volume % is exceeded? 3%tha Flaring The AER has removed requirement 3. Flaring The three per cent nonroutine flaring level is calculated cumulatively for all heavy oil and bitumen operations in the Peace River area not at the facility level. In order to clarify this further, the AER has removed requirement 3. Any noncompliance with AER requirements will be dealt with through the AER's compliance assurance processes (see section 1.2 of the directive). 50 Penn West Pg. 5, requirement 5 It seems that the information requested here is already available to the AER and seems like it is an unnecessary addition to an already excessive reporting regimen. The 95% conservation rate Flaring This information is no longer required as part of the annual performance reports. 51 Penn West Pg. 6, requirement 6 NO targeted cumulative gas conservation rate should be implemented to address gas production that is not currently tied in to existing gas conservation facilities. These non-conserving facilities must be dealt with on a one off basis and determined to the extent reasonably practical whether that gas should be conserved. This would be determined based on economic feasibility based on the gas production/sales being able to justify the capital required to conserve the gas. Capturing off all gas volumes has been accomplished and this has dealt with the main problem in the area and issues leading up to and including the hearing. Conservation is a separate issue. This is a heavy oil area with relatively small amounts of natural gas associated with the oil production and as such the volumes tend to be less thereby having poorer economics associated with gas conservation. Gas Conservation In the Peace River area, according to the Peace River panel, flaring is undesirable since it results in emissions as well as the burning of valuable resources. In order to minimize routine flaring in the Peace River area, the AER is requiring that a minimum of 95 per cent of all casing gas and tank-top gas be conserved in this area regardless of economics. Operators are being provided with flexibility since it is being calculated cumulatively for all heavy oil and bitumen operations located in the defined Peace River area. 52 Penn West Requirement 7 Within 12 months New wells brought on will be exempt from the 95% conservation requirement? These should be exempt. Needs to be consistent with appendix 4. Gas Conservation Requirement 7 pertains only to new operators with no facilities or gas conservation infrastructure. Existing licensees must meet the minimum 95 per cent cumulative conservation requirement, unless set out in an approved gas conservation plan. Directive 084: Requirements for Hydrocarbon Emission Controls and Gas Conservation in the Peace River Area Stakeholder Feedback and AER Response 8 of 35
53 Penn West Pg. 5 Non routine flaring Hard limits on area due to potential reasons outside our control. Follow existing D60 logic of limiting gas volumes during events. General D60 calls for reductions in gas production to allow for Flaring reasonable continued operation of equipment that could be impacted by a full shut down. A full shut down due to a hard limit could result in large incremental costs to purge/clean /repair equipment due to a nonroutine flaring issue As stated in section 3.2, Directive 060 table 1 requirements are still in effect in the Peace River area. The three per cent limit for nonroutine flaring is in addition to this requirement. Any noncompliance with this requirement will be dealt with under the AER's compliance assurance processes (see section 1.2). 54 Penn West Pg. 6 Gas conservation Hard limit on area is unrealistic and feasibility of accomplishing things must be taken into account. Area specific regulation should definitely take into account economics. This area has incremental costs associated with the oil produced and is more marginal than other plays. GAS CONSERVATION HAS TO BE DRIVEN BY ECONOMICS. Gas Conservation While the economic test provisions of Directive 060 apply to the whole province, for the Peace River area, the AER wants to achieve a minimum of 95 per cent conservation of all casing gas and tank-top gas regardless of economics. 55 Penn West Pg. 6 Gas conservation Also sounds like exploratory wells would need to conform to this Exploration will be limited if the wells need to be fully conserved on start up. Results drive programs, potential for wasted capital / environmental impact if conservation is required up front. Gas Conservation The requirement is cumulative across the field. If there is any gas that is being produced and flared at exploratory wells, then that amount of gas would need to be conserved within the whole field. 56 Penn West Pg. 7, requirement 11 b Response to an odour complaint There needs to be wording that suggests legitimate odour complaint. There are too many past frivolous complaints which are not legitimate. A licensee must conduct an inspection in response to an odour complaint. 57 Penn West Pg. 8, requirement 14 Compressor seals Further specification is needed regarding this- e.g. include distance pieces. Also pumps that are driven by compressed gas should be considered as fuel and exhaust the gas to the atmosphere. The definition of fugitive emissions in appendix 1 already accounts for this. 58 Penn West Pg. 9, requirement 17 An independent third party Need specifics regarding qualifications of third parties The AER expects that third parties should be qualified and have adequate training to detect leaks, in line with the training program the operator will develop in order to meet section 5.2.7.1 requirements. 59 Penn West Pg. 10, requirement 21 Leak rate measurement methods may include The practicality of the use of some of the suggested measurement techniques is very questionable. Have these actually been used for the type of service we are contemplating in the Peace River region? Requirement 21 provides a few examples of measurement techniques. Flexibility has been provided to the operators to use any measurement technique that meets this requirement. The technique used must be documented and provided to the AER upon request. 60 Penn West Requirement 25 Within 24hrs Change to 48 hrs Has the regulator considered that by shutting down and bringing back on a plant that there could be more emissions than allowing the leak to be repaired in place. For reasons of practicality this should be extended to 48hrs. It could take longer than 24 hrs to bring a plant down especially in thermal operations. The wide variety of potential leaking equipment would require an excessive inventory of parts to be maintained. The Peace River panel recommended a 12-hour repair timeline. The AER is providing more time for the repair of leaks than what the panel had recommended. The repair response is based on the potential to cause off-lease odours and the leak rate. The 24- and 120-hour timeframe has been set based on consultations with operators, equipment manufacturers, and fugitive emissions consultants. For thermal facilities, the AER will consider an extension a shutdown of the central processing facility is required to repair a leak. If an extension is granted, the leak must be quantified with the volume reported in the comment section of the monthly leak report form. The AER has made changes to section 5.2.5 in order to address this. 61 Penn West Pg. 12, requirement 32 Training There should be a recognized standard for this training that both industry and the AER staff would need to receive rather than each company develop their own which will vary amongst producers. As outlined in section 5.2.7.1, operators must have an effective training program and be able to demonstrate the training program. The AER would encourage the industry, if necessary, to develop appropriate standards. 62 Penn West 63 Penn West Pg. 13, requirement 36 Must implement suitable and functional controls Some examples of these controls would be helpful Truck Loading and Unloading Requirement 37 The thresholds described. Which elements are being targeted for off lease and It is not practical for companies to be responsible for odours a Truck Loading and how far off lease is this referring to? kilometer away from their sites. Unloading Emission control examples have been provided in section 6.2. "Thresholds" has been changed to "objectives." This requirement has been moved from section 6 to section 1 in the directive. Refer to the published AAAQO for a list of substances. Licensees are responsible for ensuring their sites are compliant with all AER requirements. 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