Facility Application – Bitumen Battery
Introduction
In this decision, the AER considered Canadian Natural Resources Limited’s (“CNRL”) application for approval to construct and operate a single-well battery to produce and store bitumen containing no hydrogen sulphide (“H2S”) at an existing well site about seven kilometres (“km”) west of Canadian Forces Base Cold Lake (the “Application”). CNRL made the Application under section 7.001 of the Oil and Gas Conservation Rules (“OGCR”) and section 5.5(12) of AER Directive 056: Energy Development Applications and Schedules (“Directive 056”).
The AER approved the Application subject to the conditions.
The Application
In the Application, CNRL proposed:
(a) to re-complete an existing gas well at the site, which had been shut-in since December 2016, to produce bitumen; and
(b) to construct a battery, consisting of a wellhead, storage tank, and compressor, to store bitumen containing no H2S (that is, less than 0.01 moles per kilomole) (the “Battery”).
CNRL also requested:
(a) a variance to the AER’s surface spacing requirements, since part of the Battery was proposed to be located less than 60 metres from an existing pipeline owned by Husky; and
(b) a licence with a two-year term to begin project activities, instead of the standard one-year term, to allow CNRL to consider market conditions and related factors before starting construction.
Framework for the Decision
The AER set out the following legal framework for its decision on the Application:
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Under section 2(1) of the Responsible Energy Development Act (“REDA”), the AER’s mandate is to provide for the efficient, safe, orderly, and environmentally responsible development of energy resources in Alberta and to regulate, in respect of energy resource activities, the protection of the environment.
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The AER’s decision must be consistent with the purposes set out in sections 4(b), (c), and (f) of the Oil and Gas Conservation Act (“OGCA”), including providing for the following:
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safe and efficient practices in the locating, spacing, drilling, operating, and abandonment of wells and facilities and in operations for the production of oil and gas or the storage or disposal of substances [s 4(b)];
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economic, orderly and efficient development in the public interest of the oil and gas resources of Alberta [s 4(c)]; and
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pollution control [s 4(f)].
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Under section 15 of REDA and section 3 of the REDA General Regulation, the AER had to consider:
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social and economic effects of the proposed Battery;
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effects of the proposed Battery on the environment; and
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impacts on landowners from use of the land for the proposed Battery.
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List of Issues
The AER considered the following issues:
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participant involvement program;
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infrastructure spacing requirements;
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·project need and location;
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·potential impacts on the leaning tree;
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potential impacts of air emissions, dust, and odours on human health;
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noise;
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traffic and safety concerns;
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future subdivisions, land use, and land sales;
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emergency response; and
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potential impacts on water wells, groundwater, or aquifers.
Participant Involvement Program
Under the OGCR and Directive 056, a single-well facility producing resources containing no H2S does not require a licence if there are no outstanding concerns about the development. Because CNRL was unable to resolve the concerns of all potentially affected landowners, it was required to file a nonroutine application with the AER.
The AER found that CNRL’s participant involvement program satisfied the requirements of Directive 056 and that CNRL was responsive to requests to expand the program.
Infrastructure Spacing Requirements
Section 8.030(4) of the OGCR requires that a tank containing fluids other than fresh water be located at least 60 metres (“m”) from surface improvements, subject to a lesser distance permitted by the AER.
The dike for the bitumen storage tank was proposed to be located 20 m from Husky’s existing pipeline. Since the pipeline was considered a surface improvement under the OGCA, CNRL requested a variance to permit the tank to be located less than 60 m from the pipeline.
The AER granted the spacing relaxation request based on the follow:
(a) CNRL’s request could be accommodated within the current lease area;
(b) granting the spacing relaxation request would not create any safety concerns;
(c) Husky consented to CNRL constructing the facility 20 m from its pipeline; and
(d) no other surface improvements were located within 60 m of the tank.
Project Need and Location
The AER found that:
(a) there was a need for the project; and
(b) the project, if successful, would have economic benefits and was consistent with the safe, orderly, efficient, and environmentally responsible development of Alberta’s energy resources.
The AER supported these findings based on the following:
(a) no party submitted evidence to demonstrate that any alternative location for the project would be better than the proposed location;
(b) CNRL owned the mineral rights in the area, and the proposed project would allow CNRL to test the Waseca Formation and potentially extract bitumen efficiently;
(c) the project would minimize potential environmental and landowner impacts by using an existing lease and well; and
(d) the potential revenue for CNRL and fiscal benefits to governments and the local economy represented positive economic impacts of the project.
Potential Impacts on the Leaning Tree
The AER went on to consider landowners’ concerns that CNRL’s activities could negatively affect the “leaning tree,” a jackpine estimated to be about 100 years old, located on the lease site.
The AER noted that:
(a) the leaning tree had been gradually leaning closer to the ground for many years; and
(b) it had appeared in a book of heritage trees of Alberta due to its age and distinctive appearance.
The AER found that by implementing the mitigation measures imposed as a condition by the AER, CNRL would take reasonable steps to mitigate potential impacts on the leaning tree.
To reduce risks to the leaning tree, the AER required CNRL to implement the following mitigation:
(a) observe a minimum 13 m buffer between the tree and construction and operation activities;
(b) before construction, hire a professional arborist to assess whether the leaning tree is still alive and share the arborist’s findings with the landowners; and
(c) if the leaning tree was still alive when construction began, install a liner and clay over the grass and topsoil to limit ground vibrations and minimize disturbances to the tree.
Potential Impacts of Air Emissions, Dust, and Odours on Human Health
The AER found that the project would have minimal effects on air quality and was not likely to cause adverse health impacts under normal operating conditions, based on the following:
(a) air emissions would be relatively limited from this type of project (single-well, single storage tank, two small engines, tank heater);
(b) the project emissions would not result in exceedances of Alberta’s ambient air quality objectives, which are intended to protect the environment and human health;
(c) the project was not expected to release H2S, which can contribute to odours; and
(d) the 50 km/hr speed limit on the access road would limit dust.
Noise
AER Directive 038: Noise Control (“Directive 038”) sets limits for noise levels during energy project operations.
In this case, the AER found that:
(a) modelling conducted for CNRL’s Noise Impact Assessment (the “NIA”) satisfied the requirements of Directive 038;
(b) the NIA predicted that daytime and nighttime sound levels at all nearby existing and planned residences would be at or below permissible sound levels during project operations, and meet the requirements in Directive 038 (before mitigation); and
(c) the additional mitigation measures recommended in the NIA would further reduce the potential for noise impacts.
Traffic and Safety Concerns
With respect to landowners’ concerns regarding traffic and road safety impacts, the AER explained that it does not have jurisdiction over highway traffic or safety matters. The AER’s jurisdiction is limited to the clean up of spills of oil, water, or unrefined products that occur during transportation associated with the project, the location of the access road, and conditions relating to its construction and operation.
Based on Alberta Transportation’s approval of the sight lines in both directions from the well site’s access road and CNRL’s requirement for its drivers to respect the speed limits and drive courteously, the AER did not expect any safety concerns related to the marginal increase in traffic at the well site.
Future Subdivisions, Land Use, and Land Sales
The AER was not persuaded by landowners’ submission and evidence that the project would reduce their property values or adversely affect their future land use plans.
The AER found that:
(a) the Battery would not be visible from current residences or planned retirement homes; and
(b) the Battery might be visible from one or more of the landowners’ proposed subdivided lots, but the distance and the trees between the project and the lots would reduce the visual impact.
The AER further noted that oil and gas facilities were a common sight in the area and that there were no specific regulatory requirements related to visual impacts of energy projects.
Emergency Response
The AER found that CNRL’s plan for emergency response was reasonable and met all AER requirements, based on the following:
(a) there was an exceedingly small chance of a high-impact emergency situation requiring evacuation of nearby residents for this type of facility;
(b) CNRL’s corporate Emergency Response Plan (“ERP”) satisfied the requirements of Directive 071, namely:
(i) average emergency response time of two hours or less was reasonable;
(ii) the containment ring around the storage tank would capture any large spills from a tank failure; and
(iii) operators would be able to contain any small spills on the lease site by immediately implementing the ERP.
Potential Impacts on Water Wells, Groundwater, and Aquifers
The AER found that with the condition set out below, the project was unlikely to negatively affect groundwater, water wells, aquifers, or surface water bodies, such as the Beaver River.
The AER imposed as a condition a requirement that CNRL pressure test the well casing at the level set out in Directive 013 for medium-risk wells before re-completion activities begin.
Conclusion
The AER concluded that the project met or exceeded all applicable AER regulatory requirements, could be constructed and operated safely, and was consistent with the efficient, safe, orderly, and environmentally responsible development of Alberta’s energy resources.
The AER therefore approved:
(a) CNRL’s single-well bitumen battery, with conditions; and
(b) CNRL’s request for a two-year licence and spacing variance.
