41st Asia Pacific Economic Cooperation

Energy Working Group 201 1

Regulating British Columbia’s Natural Gas

Presented by: Paul Jeakins

BC Oil and Gas CommissionMay 10th 2011

41st Asia Pacific Economic Cooperation

Energy Working Group

201 1

Regulating British Columbia’s Natural GasTopics

• Commission Overview• Resource Overview• Regulatory Structure• Strategic/Tactical/

Operational approaches – Basin Management

Stakeholders

Engineering Division

Regulatory Affairs & Stewardship Division

Project Assessment & Compliance Assurance

Corporate Services Division

Board of Directors

Commissioner Office of the Commissioner

• Corporate Planning and Performance• Internal Audits

• Corporate Affairs• Government Relations• Stakeholder Relations• Internal and External Communications

• Finance & Administration• Information Technology• Records Management• Human Resources• Organizational Development• Property Management

• Permit Revision & Issuance• Compliance & Inspection• Enforcement• Tenure Administration• First Nations Consultation

• Resource Development• Environmental Planning/Analysis• Regulatory Management & Development• First Nations Liaison

• Drilling & Production Engineering• Pipeline & Facilities Engineering• Waste Management Reclamation• Petroleum Geology• Reservoir Engineering• Public Safety

• Including the Provincial Government as represented by the Minister of Energy and Mines

Chief Executive Officer and Vice Chair of the Board

Commission Overview

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Resource Overview

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Northeast B.C. is about 1/5 the sizeof the province.

• The oil and gas industry now accounts for more than half of total revenue generated by the natural resource sectors in B.C.• All of B.C.’s producing oil and gas is in northeast B.C.• Agriculture is the second leading industry in northeast B.C.• About 1.5 per cent of the province’s population is in northeast B.C.

B.C.

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Horn River Basin• Shale • 11,900 sq km • 75-170 Tcf marketable natural gas• 97 Bcf cumulative production*

Montney• Tight gas/shale • 15,281 sq km• 77-176 Tcf marketable gas• 577 Bcf cumulative production*

Cordova Embayment• Shale • 2,590 sq km• 30-68 Tcf marketable gas• Early development

Liard Basin• Shale • 1,150 sq km • Early development

Shift to unconventional gas• Northern British Columbia is home to four geographic basins which are recognized sources of shale gas.

* 2010 production numbers

Resource Overview

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BC Energy Plan

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Meeting Provincial Targets BC’s Energy Plan:

Grows the Economy Reduces Greenhouse Gas Emissions Focuses on Environmental and Economic Leadership

The Commission’s Energy Plan Achievements:

• A 30 per cent reduction in total flared volumes from 2008 to 2009. Annual flared volumes have decreased 23 per cent since 2006.• A 56 per cent reduction in solution gas flaring since 2006 and a 92 per cent reduction since 1997.• From 1996 to 2009, natural gas production increased by 40 per cent and the amount of gas flared per unit of natural gas production decreased by 54 per cent.• Ninety-seven per cent of solution gas is currently conserved.• Well cleanup and well test flaring decreased by 28 per cent from 2008 to 2009 due to increases in inline testing in the Montney and Horn River Basin plays.

OGAAOil and Gas Activities Act

TECHNICAL REGULATIONS

CONSULTATION &NOTIFICATION

ENVIRONMENTALPROTECTION & MANAGEMENT

ADMINISTRATIVEPENALTIES

• Drilling and Production• Geophysical Exploration• Pipelines

7Oil and Gas Activities Act

• Extensive consultations with communities, local government, First Nations, landowners, environmental organizations, industry associations and companies starting in 2002.

OGC Board Cabinet

Highlights Consolidation of a number of Acts Allows for innovation• Technical regulations allow for technical innovation.• Allows either companies or government to propose special projects.

Modernizes oversight• Enables Commission to link past behaviour to current and future operations.• New review and appeal provisions.

Strengthens regulations• Consultation and notification, and environmental protection.

Level playing field• All operators – all activities.

Competitiveness and flexibility• Harmonization with other jurisdictions.• Flexibility on ground.• Flexibility for new technologies, developments

and approaches.• Quick, responsive changes to technical regulations.

Single window regulatorUpdates for unconventional approach

8Oil and Gas Activities Act

Social Input

9Consultation and Notification

Objective To resolve potential issues prior to application process. Gives those affected by industry the opportunity to voice concern. OGAA distinguishes the two as separate processes:

Consultation A two way exchange of information between industry and those affected by industry.Notification The supply of information to potentially affected parties.

Objective Avoid, minimize and mitigate potential adverse impacts on First Nations rights. Foster relationships with First Nations communities. Act as facilitators between First Nations and industry. Enhance decision-making by integrating First Nations input. Integrate traditional knowledge with science and research.

First Nations Consultation

OGAA Information Session--ver 1-0

WildlifeWater Quality WildlifeWater Quality

WildlifeRiparian Areas WildlifeRiparian Areas

WildlifeWildlife WildlifeRange

WildlifeOld Growth WildlifeInvasive Plants

WildlifeResource Features / Cultural

Heritage WildlifeForest Health

WildlifeSoilFebruary, 2011 10

Permitting Phase Operations PhaseEnvironmental Protection and Management

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The Environment

Managing resources at a landscape level (1,000,000 + ha > Shift to unconventional driver for this approach) Establishing basin boundaries Linking surface and subsurface:• Footprint analysis• Environmental Stewardship Plan• Basin/Tenure approval approach

Regular reports for each basin Environmental management:• Protection of groundwater• Source water• Multi-well pads• Utilizing common corridors• Seismic lines• Minimizing flaring

Basin ManagementHorn River Basin Liard Cordova Embayment East Kootenay

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Regulatory Structure

Tactical

Operational

Strategic and tactical management helps operational level management

Strategic

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Regulatory Structure

Government environmental objectives Regulatory requirements

Permit conditions

Inspections and audits

Operational / site level plans

Operational level management

Operational Level

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Regulatory Structure

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Regulatory Structure

Basin Management – Water

Key features of water basin management

Moving ForwardExpectations for regulatory oversight and constraint on industry activity are increasing.o Regulatory models are becoming more

complex.  Expectations for greater transparency of industry activity and performance are increasing.

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Commission: Continued commitment to transparency through reports and updates. Further progress on basin-level management on natural gas plays. Continued emphasis on environmental values such as water and wildlife.

Regulatory Structure

Regulating British Columbia’s Natural GasMore informationwww.bcogc.ca

Paul JeakinsDeputy Commissioner (RAS)Paul.Jeakins@gov.bc.ca

41st Asia Pacific Economic Cooperation

Energy Working Group 201 1