Unconventional Gas Regulatory Framework—Jurisdictional Review by the Alberta Energy and Utilities Board

Unconventional Gas Regulatory Framework—Jurisdictional Review by the Alberta Energy and Utilities Board January 28, 2011. Report 2011-A
Depths of prospective shale gas zones range from relatively shallow (less than 300 metres [m]) to quite deep (greater than 3000 m). In Alberta, there is potential for both shallow and deep shale gas plays. Drilling long-reach horizontal wells is the preferred exploitation strategy for the deeper, thicker gas shales, where as vertical wells may more typically be used to exploit shallower, thinner shales, such as those in eastern Alberta. Whether a well is horizontal or vertical, stimulation of the shale formation is necessary for economic production, and this is currently most commonly done by hydraulic fracturing. Given the common characteristics of shale gas development, many of the regulatory issues that have arisen are similar from one jurisdiction to another, but an issue’s importance and the regulatory response may be influenced by regional circumstances. Issues that have arisen in other jurisdictions can be expected with shale gas development in Alberta. 

In areas where unconventional, primarily shale gas is currently being developed, considerable attention is on the possibility for hydraulic fracturing of shale gas reservoirs to contaminate useable water aquifers with fracturing fluid chemicals and natural gas. For shallower zones, this is a recognized risk that must be managed because the fracturing operation is nearer the base of groundwater.

Regulatory Change Opportunities
Assess need and develop an effective regulatory response to manage the risk of hydraulic fracturing creating a conduit, via existing wellbores, to surface or porous formation outside of the zone being fractured. Possible response components: evaluation of potential conduits, operational considerations such as planned wellbore geometry and fracturing program design, remediation of compromised wellbores, and assignment of responsibility. 
Assess the risk of natural fracturing allowing gas to move from a post-fractured gas shale to a shallow water aquifer and what information would need to be evaluated to mitigate the risk. 
Assess the need for minimum separation distances (i.e., buffers) between hydraulic fracturing and acid gas disposal schemes (also consider potential carbon dioxide sequestration schemes) and enhanced recovery schemes to prevent loss of scheme cap rock integrity. 
• Manage the risk of fracturing pressure communication interfering with offsetting producing or drilling wells by requiring notification of intent to fracture. Also, evaluate the need for extraordinary drilling requirements in areas of past and/or present fracturing operations because of the potential to encounter overpressured zones during drilling.
Evaluate existing equity-related legislation for regulatory remedies of potential cases of fracturing vertically into a zone of different ownership. 
• Evaluate the public interest value of microseismic and other fracture propagation monitoring methods to increase understanding of fracture behaviour.
Evaluate the need to collect and disseminate hydraulic fracture fluid chemical composition (pre-fracture) information
• In collaboration with Alberta Environment, evaluate potential regulatory options to effectively manage water uses for shale gas development. This might include regional or project-based water management plans to accompany commercial shale gas development proposals. Plans would evaluate all feasible water supply options, including saline aquifers, as well as assess impacts of water withdrawal on supply sources, evaluate source locations with consideration of transportation options and impacts, and evaluate recycling and disposal options.
Advise Alberta Environment of industry-suggested regulatory opportunities to encourage the use of borrow pits to supplement hydraulic fracturing water needs.
• Evaluate the need for authorizing/allocating withdrawals of saline water from deeper aquifers to protect capital investment. 
• As a minimum, ensure that there are regulatory requirements for the approval and operation of fracture fluid recycle facilities and/or schemes, and evaluate regulatory options to encourage recycling of fracture fluid flowback.
Evaluate the adequacy of current water storage and waste regulation to accommodate hydraulic fracturing. 
• Evaluate whether regulatory requirements for approval and operation of temporary water delivery pipelines meet hydraulic fracturing water transport needs.

Landowner/Public Concerns
The most common landowner complaints related to unconventional gas development in jurisdictions surveyed are traffic, noise, light pollution, local air quality, groundwater contamination, spills, general disturbance, and property trespass and damage. Concern that hydraulic fracturing is contaminating groundwater is increasing and is driving an upcoming study by the United States Environmental Protection Agency (EPA). Increased subsurface well density can translate to increased density of surface sites and operations, which compounds the surface impacts. 

In some jurisdictions, local surface effects of unconventional gas development are exacerbated by the close proximity of drilling sites to urban areas. Unconventional gas is also being developed in areas that have not had conventional oil and gas development, so local landowners are unfamiliar with what to expect. Responses to local concerns have included establishing setback distances between well sites and residences or other inhabited structures, and for well sites close to people, imposing stricter operating requirements for noise suppression, hours for construction activity and heavy truck access, venting and flaring, site lighting, fencing and maintenance, and dust, vibration, and odours.

In response to local concerns that hydraulic fracturing causes groundwater contamination, some regulators have implemented, or are considering implementing, a requirement that operators disclose fracturing fluid composition. Regulators commonly have information on their Web sites about shale gas development in their state or province to inform the public about activities and issues. Regulators may also target information more directly at landowners and communities that are being affected or might expect to be affected by unconventional gas development. 

Alberta landowner concerns are likely to be similar to those raised in other jurisdictions: groundwater protection, surface disturbance, flaring, noise, traffic, and other nuisances caused by drilling and completion operations.
Because of the large areal extents of both shale and coal seams that are prospective for gas production, the potential for these resource developments to encroach on future growth areas of Calgary, Edmonton, and other urban areas in Alberta could necessitate increased planning and extraordinary regulatory requirements to mitigate impacts of operations. Many rural landowners today are affected by surface well sites and infrastructure associated with coalbed methane development, and this can be expected as well for shale gas development. Drilling and completion operations for unconventional gas wells may be considerably more disruptive to local landowners and communities than conventional gas or oil drilling. 

Extended periods (24–36 months) of virtually continuous industrial activity at a single, large well pad site will be necessary to drill and complete numerous wells. Truck traffic to and from the site can be expected to be very heavy, moving in drilling equipment and supplies, fracturing equipment and supplies, and especially large volumes of water needed for hydraulic fracturing. Siting of pad drilling operations and separation between residences and wellsites will need to be considered carefully to manage the noise and other activity-related impacts of these drilling and completion operations on landowners. [Emphasis added]

[Refer also to: 2009: The National Energy Board’s Primer for Understanding Canadian Shale Gas – Energy Briefing Note ]

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