November 6, 2006

Upstream petroleum sector continues to reduce solution gas flaring, venting

Solution gas flaring by upstream petroleum industry facilities in Alberta has been reduced by 72% since 1996, with solution gas venting cut by 59% since 2000. These reductions have kept 7.2 million tonnes of greenhouse gas emissions (C02 equivalent) from being released into the atmosphere since 1996, says Alberta's Energy and Utilities Board (EUB) in its latest summary of flaring and venting statistics. Calgary-based Climate Change Central says this is equivalent to taking about 1.5 million cars off of Alberta's roads for one year.

The annual report also indicates that in 2005 - a year of unprecedented levels of oilpatch activity - 96.3% of all solution gas produced in Alberta was conserved for use or sale, rather than being flared and vented. This is the highest conservation level achieved to date, surpassing the 2004 level of 96%. The combined volume of flared and vented solution gas declined to 667 million cubic metres (m3) in 2005, a reduction of 8.4% (62 million m3) from the 2004 volume of 729 million m3. Gas conserved includes gas delivered to a pipeline for sale and that used as fuel for facilities and equipment, as well as gas used for other purposes such as power generation, notes the report.

The EUB further notes that venting of solution gas into the atmosphere was reduced by 22%, while flaring held steady with respect to 2004. Solution gas is natural gas produced in association with crude oil and bitumen production. Flaring is the burning of natural gas that cannot be conserved, while venting refers to the release of natural gas into the atmosphere.

The report attributes the significant progress in reducing solution gas flaring and venting to the combined co-operative efforts of the Clean Air Strategic Alliance (CASA) flaring/venting project team and the upstream petroleum industry itself, as well as the EUB. Even with the success achieved, however, the EUB remains concerned about solution gas venting from crude bitumen projects and is continuing to work with stakeholders to find ways and means of further reducing venting from this source.

The Board cites World Bank figures indicating that flaring gas adds about 350 million tons of CO2 in annual emissions worldwide. The World Bank's global gas flaring reduction partnership supports governments and companies in their efforts to reduce the flaring and venting of gas associated with the extraction of crude oil. The collaborative CASA approach and the work of the EUB as part of the CASA flaring/venting project team was instrumental in the World Bank's development of a global gas flaring reduction standard, which was endorsed by the EUB in 2004.

The EUB's successful experience will be a topic of discussion at this year's World Bank Global Forum on Flaring Reduction and Gas Utilization, to be held in France December 13-15, 2006. More information is available on the World Bank Web site, www.worldbank.org.

The Upstream Petroleum Industry Flaring and Venting report (ST60B-2006) may be viewed on the EUB Web site, www.eub.ca. More information is also available from Davis Sheremata at the EUB, 403/297-2252, E-mail davis.sheremata@gov.ab.ca.

In other activities, the EUB has granted for EnCana conditional approval to drill 15 coalbed methane (CBM) wells in the Torrington area. The project also includes the construction of 46 lengths of pipeline and upgrading of a pipeline compressor.

Based on a four-day hearing held this past April in Torrington, the EUB's Decision 2006-102 sets out a number of terms and conditions intended to address concerns raised during the hearing. The conditions require EnCana to:

* submit fracturing operation data to the EUB and interveners within five days of the fracturing operations;

* install a groundwater quality monitoring well in aquifers deeper than are currently used to determine what impact, if any, nitrogen fracturing operations may have on deep aquifers; and

* demonstrate that night-time noise from the expanded compressor is at or below 25 decibels (db) at one of the interveners' homes. Noise levels must be kept within EUB requirements at all other times. Normally, the maximum night-time noise level is 40 db.

The EUB has also committed to co-ordinate the preparation of a third-party report, specifically written for a public audience, to address the issue of groundwater and water wells and CBM development using surface water for drilling operations.

The EUB has been examining CBM development from a regulatory, geological and scientific perspective since 1991, and has concluded that such wells may be drilled and operated in a manner that ensures the protection of the environment and the public. It will continue to work with Alberta Environment on scientific water well and groundwater information as it relates to oil and gas development.

In 2005/2006, the Board contributed to a multi-stakeholder committee (MAC) report on the subject. The report reflected input from industry, landowner groups and Alberta government departments as well as the EUB. It made 44 recommendations regarding CBM development, many of which are already being carried out. The EUB continues to work with stakeholders on a MAC implementation committee.

Additionally, in January, the EUB strengthened shallow fracturing regulations to include a prohibition on fracturing within a 200-metre radius of water wells whose depth is within 25 metres of a proposed well. The revised regulation also requires companies to submit a comprehensive fracturing program design prior to conducting fracturing operations.

Facts and figures

* As of December 2005, there were 7,764 CBM wells in Alberta.

* Since January 2001, the EUB has received 43 complaints related to CBM development.

* In that same period of time, approximately 5,000 complaints have been lodged with the Board relating to the upstream oil and gas industry as a whole.

* Complaints related directly to CBM development make up less than 1% of all complaints received by the EUB.

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