Ex-deputy minister named CEO of energy regulator, Jim Ellis joins Gerry Protti to lead replacement for the ERCB by Dan Healing and Stephen Ewart, April 30, 2013, Calgary Herald
Energy Minister Ken Hughes has announced that Jim Ellis will be CEO of the Alberta Energy Regulator. The chief executive of the Alberta Energy Regulator said Monday he doesn’t foresee any problem with political interference as the agency heads to a June startup. Jim Ellis, a former deputy minister of provincial energy and environment departments, spoke with reporters at a Calgary news conference to announce his appointment. “Government is responsible for setting the policy and the regulator is responsible for implementing the policy, so we will maintain a fairly close relationship, probably at the CEO to deputy minister level,” he said. “It’s a two-way street … you need the regulator to help the policy folks understand what’s going on, on the ground. “You need the policy people to understand whether or not those policies can be implemented by the regulator.”
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The government appointed Gerry Protti as chairman about a month ago. He is a former assistant deputy minister of energy, Encana executive and the founding president of the Canadian Association of Petroleum Producers. “When we began seeking leaders for this new organization, we knew we needed people with governance, industry, and environmental knowledge, the skills to run a large organization, and a commitment to responsible development,” said Energy Minister Ken Hughes. “We are confident we have found the right team.” The government said Protti is responsible for setting the general direction of the regulator’s business and affairs and Ellis will handle the day-to-day operations with nearly 1,000 staff and a $200-million budget. Ellis, who was most recently the lead Alberta official on the Canadian energy strategy, said his new job will include explaining to broad audiences the province’s regulatory controls and how industry is operating in an environmentally sustainable way. “Part of the role of the energy regulator will, in fact, be an outward speaking role to deal with these people around the world and explain what we’re doing,” he said. Ellis’ military career included service in Germany and command responsibilities in Bosnia. His final overseas mission was as senior commander for Canada’s mission to Afghanistan in 2004-05. The new regulator will be responsible for upstream oil, oilsands, natural gas and coal development.
Alberta energy regulator fees jump 36 per cent
Move to industry-pay model adds at least $42M to administration levy by Dan Healing, April 30, 2013, Calgary Herald
Alberta energy regulator fees jump 36 per cent. Administration fees paid by Alberta’s energy industry to support its regulator are going up by 36 per cent, according to a bulletin placed on the Energy Resources Conservation Board website Tuesday. And fees could go up again in June when the new Alberta Energy Regulator is created to take on the ERCB’s role, plus functions now being performed through Alberta Environment and Sustainable Resource Development (AESRD). In the statement on its website, the ERCB said it will collect $154 million in revenue to cover administration costs in 2013-14, an amount approved by the government in its recent budget. Industry last year paid $113 million, supplemented by a $45-million government grant, for a total of $158 million. Most of the 2013-14 money will come from conventional oil and gas producers, at $112 million, up from $81 million. Oilsands producers are expected to pony up $40 million, up from $29 million, and coal producers account for the rest. Dave Pryce, vice-president of operations for the Canadian Association of Petroleum Producers, said the cost increase is “significant” but the industry hopes to realize longer term benefits from a provincial review of regulatory efficiency. “The regulatory enhancement project or REP was about providing for improved and modernized process,” he said. “So we’re going to be looking to get efficiencies through REP to offset the direct costs that are there and the indirect costs of a cumbersome system we’ve seen built up over the years.”
He agreed it makes sense that the new regulator that replaces the ERCB in June could have higher costs because it is also taking on functions performed by AESRD [Alberta’s fresh water regulator] that are now primarily government funded. But he added the government has not clarified where those additional funds will come from. Mike Feenstra, spokesman for Alberta Energy Minister Ken Hughes, said Tuesday the ERCB revenue will be absorbed by the new regulator, adding that industry will also be on the hook for the cost of functions now performed by AESRD [Alberta’s fresh water regulator].
“The AER, just like the ERCB, is now, after Budget 2013, entirely industry funded,” he said, adding the new board will determine how much is needed and how it’s collected. As far as the efficiencies, Pryce said they likely won’t be seen for more than a year, given migration of functions and policies to the new regulator, integration of Alberta regional land use plans and a new system for environmental monitoring of oilsands. The ERCB administration fees are collected from operators of facilities based on operating statistics including production volumes for the year. … The ERCB is also to collect $2.4 million in voluntary fees to support CAPP and the Explorers and Producers Association of Canada “to fund broad industry initiatives in 2013,” it said.
No oil and gas reps on oil and gas commission? The ban plan is back by Ed Sealover, April 30, 2013, Denver Business Journal
A prohibition against industry employees serving on the Colorado Oil and Gas Conservation Commission is back in a proposal to change the mission of that state agency. And the bill, which arguably has created the largest divide between supporters and detractors of all measures in the 2013 legislative session, continues to advance. … The measure removes promotion of the oil and gas industry from the COGCC’s mission. It also changes the definition of waste so that state public-safety regulations can get in the way of all resources from being pulled from a well, and also aims to eliminate conflicts of interest on the commission. Foote originally proposed banning anyone paid by the industry from serving on the COGCC, but removed that provision and strengthened conflict-of-interest disclosure rules instead because he said he wanted to achieve some compromise with opponents. However, sponsoring Sen. Matt Jones, D-Louisville, got committee Democrats to reinsert the outright industry ban after seeing polling results that showed 84 percent of respondents agreed with the full ban. “I think we all agree that oil and gas companies should take accountability,” Jones said. “I think this bill does that.”
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Plus, making protection of public health and safety the sole mission of the COGCC could allow it to deny well permits if there is found to be even a minor impact on a human, animal or the environment, said Howard Boigon, a partner with the Denver office of Hogan Lovells US LLP and past president of the Colorado Oil and Gas Association. “This change, while sounding good on the surface, would open almost every decision made by the commission to questions,” Boigon said. “It would unsettle Colorado law, invite obstruction in the regulatory process and create regulatory uncertainty in the industry.” Yet, Judith Blackburn, a volunteer with the Our Health Our Future Our Longmont campaign that got voters in that city to pass a ban on fracking in November, summarized the feelings of many bill backers when she said: “Maybe Colorado law in this realm needs a little unsettling.” Former COGCC member Tracy Houpt said that while the commission has the power to regulate how drilling is done in many sites, it has little ability to deny permits — something she believes HB 1269 finally would give it, especially as oil rigs creep closer to homes and neighborhoods. And many of the Longmont residents who testified for the bill painted it not just as a conflict-of-interest measure but as a law that is needed to curb the power of the oil and gas industry in the state.
Michael Belmont of Longmont said the COGCC “ignores” public-health problems because of industry influence. And Kaye Fissinger, also of the Longmont citizens’ group, said the COGCC “has never considered the constitutional rights of the state’s citizens.” She accused drillers of not helping America by selling some products overseas and said that Gov. John Hickenlooper, who sued Longmont for imposing drilling restrictions harsher than the state’s and has expressed concerns with HB 1269, “should be ashamed of himself.” “I suggest that if you put this vote to people throughout Colorado, at least people in populated areas, you would see something similar in every city, every community,” to the landslide margin of victory with which Longmont passed the fracking ban, Fissinger said.
Promise of Duvernay spinoff benefits for region strengthen by Drew A. Penner, April 30, 2013, Mountain View Gazette
Renewed interest in pumping oil and gas from the south Duvernay shale basin could provide a boost to Red Deer County’s economy, industry experts say. Though the lion’s share of investment to date has taken place in the Kaybob region of the sedimentary layer in the Fox Creek area, multi-million dollar projects have increasingly targeted the southern edge of the formation. “Most of the activity has been focused on the north part of the trend,” said Dan Allan, executive vice-president of the Canadian Society of Unconventional resources, who estimates the commercially viable deposits could stretch as far south as Twp. Rd. 360. “It’s only recently that it’s been moving south.” With companies remaining tight-lipped and many wells still in exploratory stages, a lot of uncertainty surrounds the billions of dollars being poured into land acquisitions and drilling operations. But already local economic development teams and provincial regulatory officials are making strides to keep up with the pace of interest in one of Alberta’s hottest emerging liquids-rich windows. “The Duvernay’s probably the biggest opportunity,” said Brad Herald, manager of operations for Alberta with the Canadian Association of Petroleum Producers. “This play is really in the proof of concept stage.” The Duvernay sedimentary basin is credited as the original source rock for much of the early oil discoveries, including the famous Leduc field. While much of the oil seeped out into easily accessible pools, huge quantities of hydrocarbons remained tightly trapped further up.
Recent developments in fracturing technology have made these extensive deposits economically accessible. While EOG Resources declined to comment for this article on the results of its Red Deer County wells drilled just east of Sylvan Lake, some nearby wells have produced positive initial results. In March Talisman reported it had pumped 600 million barrels of oil equivalent in its southern Duvernay extraction operations so far. One well, located about 60 kilometres northwest of the EOG well, reportedly had a 30-day initial production rate of about 300 barrels a day of condensate with a total liquids yield topping 1,000 barrels per cubic feet of gas. “That’s very high liquids content,” said Dave Russum, director of geoscience for AJM Deloitte, an independent assessment firm that focuses on resources and reserves. But he cautions that initial production can taper off quickly. “I’m not sure if that’s an economic well or not. I think they’ve got a lot of work to do yet.” … With much of the investment coming from Japanese, Chinese, Malaysian and Korean firms, interest has also been ramping up into developing ways to ship oil and gas overseas. Recently Central Alberta: Access Prosperity gave four Chinese oil company representatives a tour of industrial land from Innisfail to Ponoka, considering the possibility of locating a liquified natural gas plant in the area.
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The Energy Resources Conservation Board is also trying to anticipate future oil industry exploration and wants to make sure the public is aware of what’s going on. In January the ERCB started populating www.fracfocus.ca with information about the wells going into resident neighbourhoods. Now residents can find out how much water and what chemicals are being pumped into the ground, though they do still protect many trade secrets. “We’re down closer to the ground coming up with practical solutions,” said Bob Willard, senior advisor with the ERCB, noting the potential dangers to air quality, aquifers and if companies don’t communicate effectively. “We’ve drawn the line pretty sharp here, tighter than other jurisdictions in this regard.”
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Source: FrackingCanada No Duty of Care