As oil and gas extraction moves away from more conventional deposits into those that are more difficult to access, so too are regulators moving away from looking at the effects of individual projects in favour of regional impacts.
In the last few years, new technologies in the oil and gas industry have enabled resource companies to begin accessing more unconventional deposits. Techniques such as horizontal wells and hydraulic fracturing have given companies the ability to extract these previously unattainable deposits.
But accessing these harder to reach deposits means a greater scale and impact of development because of the infrastructure involved. Concerns range from water usage to emissions and the cumulative impact of oil sands development on the Alberta landscape.
The Alberta Energy Regulator (AER) has recognized the changes happening in the industry, and has responded with moving towards a regional or “play” based approach to development regulation. A play refers to an area of development and is mainly determined by geographic area, geology, resource properties, and technology required for extraction.
Plays are determined by the AER according to their unique characteristics and by the level of risk development in that specific poses.
This new regional model means companies operating in play areas will have to participate with each other in drafting play-based development plans (PDPs) rather than plans for individual wells.
PDPs will encompass details that show how all industry interests in a certain area will collaborate to both effective and efficiently manage and minimize risk and impact in the following areas:
- water management
- surface infrastructure development
- subsurface reservoir management
- stakeholder engagement
- life-cycle wellbore integrity
The AER stresses that existing regulations will not be thrown out, but represent the baseline from which play-based requirements will be developed. Where appropriate, the play-based plans will either modify or supersede existing requirements.
Interestingly, the regulator is moving away from a prescriptive model for industry towards a performance-based approach.
What do the new AER regulations mean for project developers?
Any developer proposing to operate in a play area is strongly encouraged to work with others in the same play to develop PDPs. The developers must meet or exceed the regulator’s standards.
While each operator will be required to submit a project plan for their own lease holdings, companies with adjoining projects will be encouraged to submit joint plans.
Developers must then begin collaboration early and it must be ongoing, both with other industry players in the area and with stakeholders.
For stakeholders, the AER is envisioning that this collaborative approach will result in early disclosure of development plans to stakeholders, and therefore enhance engagement. Stakeholders will have the opportunity to provide input on PDPs, and these comments will factor into the AER’s decision-making process.
Technology will likely have a big impact on the way oil and gas companies manage the new play-based regulations.
Software, such as Engagement HQ, will allow organizations to participate in the type of private, collaborative engagement that will be required between companies – and public facing engagement with community stakeholders. These types of single engagement platforms will give developers a standardized and collaborative tool to approach these new play area guidelines.
The AER acknowledges that companies will face challenges including varying development schedules. The regulator started with rolling out test projects this year in order to gauge the play process.