Shale Gas Rules & Regulations

North America versus Europe

How to deal with differences in rules & regulations when it comes to shale gas

George Eynon has seen it all.

A member of the Board at the Energy Resources Conservation Board, which regulates the energy sector as authorized by various acts of the province of Alberta in Canada and the regulations under those acts. Mr. Eynon told conference attendees at the European Unconventional Gas Summit Paris 2011 that his organization had been around for 72 years.

“We’ve looked at all the problems so far and are looking at them when a new source comes along,” he said, in an obvious reference to unconventional gas.

Eynon said his organization had worked in numerous oil & gas jurisdictions worldwide and said, based on those experiences, there were advantages to having a good regulator in place, like good data to start from.

“We’ve probably drilled 450,000 wells,” he reported. “A well regulated industry environment can ensure that the public interest is served properly; it makes it easy for the industry, which is one of the reasons we get so much activity in Alberta.”

According to Eynon, the ERCB is at arm’s length from the government and was delegated responsibility for creating regulations.

“We gave a close relationship with industry itself,” he explained, “because they have the knowledge of the technology that helps us create the regulations properly.

Eynon continued, “It’s important to have a regulator at arm’s length and have a connection to the public where the activity takes place. We are a single regulator. When you have members of the public who have legitimate objections, there’s someone to listen to their complaints.”

He said the organization’s mandate was important: to ensure that developments take place in a manner that is fair, responsible and in the public interest.

He listed some of the criteria that lie in the public interest.

“Public health is obvious, while resource conservation are charged with getting an optimum recovery rate and maximizing resources; protection of the public purse is not something the public’s always aware of; ensuring the wells and facilities are not left and there’s someone around to cover the financial liability, as there’s an enormous potential for financial liability, so we create mechanisms to mitigate those,” explained Eynon.

He mentioned a ‘licensee liability system’ whereby companies had to post a bond to the extent they were not able to cover their liability at drilling operations.

Eynon explained that orderly development meant balancing residents’ concerns with a company’s. He said he believed the two sides had the ability to coexist.

“A large number of residents are employed by the industry in Alberta,” he stated. “We have 250 employees doing inspections, making sure the regulations are being followed.

According to Eynon, the ERCB was adapting regulations to accommodate unconventional resources by looking at the organization’s experience with coal bed methane, and by examining best practices in other jurisdictions.

“Some of the states leave a bit to be desired in terms of the compliance end of completion,” he commented, adding, “with all respect to my America colleagues.”

“We make sure we’re up to date on the technologies and have identified a whole range of potential risks.”

In terms of the impact of high volume, high pressure multiple fracks, Eynon said the ERCB was “not particularly worried about groundwater protection, but rather the levels above and below that already have been or will be exploited.”

Mr. Eynon stressed the importance of effective communications with stakeholders, including the public and industry.

“There is a large number of fracks and wells on a pad,” he explained, “and you’re going to be there for 15-18-21 months and you’re only dealing with one square mile. Those pads become a light industrial site and you’ve got to reconcile that if it’s happening in small towns. This is a very different process and we’ve had to think about how to manage that.”

“We’re working with industry to make sure that they consult with the public,” concluded Eynon, “so when and if there are objections we can arbitrate between the industry and the public.”