July 9, 2007

Oil and gas sector maintains high level of compliance with EUB rules: 2006 summary report

Alberta energy companies continued to maintain a high level of compliance with Alberta Energy and Utilities Board (EUB) regulations during 2006, as indicated by the EUB's latest Provincial Surveillance and Compliance Summary for 2006.

Industry's compliance rate with high-risk EUB regulations remained stable at 97.2% in 2006, a slight decrease of 1% from last year. High-risk noncompliance was found in only 2.8% of inspections during 2006, down from 1.8% in 2005.

An EUB-licensed facility is deemed to be in high-risk noncompliance when its failure to address a contravention of a regulation has the potential to cause a significant impact on the environment, resource conservation, public health and safety, or stakeholder confidence.

EUB field staff carried out 14,860 inspections, including well site inspections, in 2006 compared to 16,782 in 2005. The decline in number is attributed to an increase in well control incidents and the added time need to investigate these events, together with the redirection of time and resources to staff training in other areas.

Companies that fail to meet EUB requirements or follow its directives are subject to a range of enforcement actions, up to an including temporary or long-term suspensions of operations. In 2006, 177 energy facilities and operations were suspended, including 39 drilling rigs, 100 pipelines and 17 oil production facilities. In 2005, the EUB suspended 91 facilities and in the past five years has suspended a total of 624 facilities, notes the report.

Overall, the Board carried out nearly 5,500 enforcement actions in 2006; only ten of these were appealed to the EUB's enforcement advisor.

The report further notes a continued trend to fewer pipeline failures: the number of pipeline failures per 1,000 km of pipeline was 2.2 in 2006 compared with 3.3 in 2000, a drop of 30% in the rate of failures. Corrosion was still the leading cause of pipeline failures in 2006, although there were far fewer incidences of internal corrosion failures than in 2005-343 compared to 420. External corrosion failures decreased slightly from 116 in 2005 to 110 in 2006. Efforts to reduce failure incidents in older pipeline coating systems continues to present challenges, says the EUB.

The number of spills from oil and gas operations increased to 1,516 in 2005, up from 1,429 the previous year, although the percentage of spills in the three priority categories remained stable. The majority (1,141 or 75.3%) were priority 3 spills, i.e. low-volume spills on-site or brief releases of sweet gas. Another 291 (19.2%) were priority 2, i.e. involving a significant volume or posing an environmental concern. Eighty-four spills (5.5%) were priority one, posing the most serious environmental or public impact.

Equipment failure and pipeline corrosion were the main causes of liquid spills, which is consistent with previous years. Volumes spilled in 2006 included 9,732 cubic metres (m3) of hydrocarbon and 27,287 m3 of produced water. The EUB reports that all releases were contained, with the area affected and the environmental impact kept to a minimum in all but one spill.

The report also notes that annual sulfur emissions from Alberta gas plants have been reduced by 28% since 2000 (56,000 tonnes in 2006, down from 78,000 tonnes in 2000). Since 1974, Alberta gas plants have reduced their sulfur emissions by over 75% (from 229,000 tonnes in 1974 to 56,000 in 2006). Gas plants recovering marketable sulfur have achieved sulfur recovery efficiencies of 98.9%.

The EUB operates two mobile air monitoring units (AMUs), which record hydrogen sulfide (H2S) and sulfur dioxide (SO2) emissions. Its 338 air monitoring inspections conducted in 2006 resulted in a 97.6% compliance rate. EUB field staff also conducted 68 waste management inspections in 2006, with 42 operations found to be in compliance, 25 having low-risk noncompliances and one with a high-risk noncompliance.

The Provincial Surveillance and Compliance Summary for 2006 (Statistical Series 99-2007) may be viewed on the EUB Web site, www.eub.ca.

In conjunction with the annual report, the EUB has begun issuing a Monthly Enforcement Action Summary, which provides industry compliance statistics and a list of enforcement actions taken in response to industry noncompliance. The first report, posted on the EUB Web site June 19, is for January 2007; subsequent summaries will be posted on the last Thursday of each month.

Publication of the monthly summary will occur within 120 days of the enforcement actions. The Board says this period of time allows completion of review and appeal processes and accurate summary preparation in order to ensure regulatory fairness. Any enforcement action with an appeal pending within the EUB will not be included in the summary. Any enforcement action subsequently continued after an unsuccessful appeal will be included in a later monthly summary.

The monthly summary expands on past reporting and includes all EUB compliance categories with requirements that have been designated high-risk. The summary also contains low-risk enforcement - global refer and legislative/regulatory enforcement action.

When enforcement action is necessary, the EUB requires the operator to correct the problem, submit a plan to ensure the problem will not occur again, and review other similar sites to ensure the same problem will not occur elsewhere.

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