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Regulator accepts recommendations for Peace River area oil operations

EDMONTON – The Alberta Energy Regulator (AER) has agreed to tighten the rules on the way Peace River area oil companies handle their emissions in the wake of a report that found they may be making people sick.

The independent AER panel, which held public hearings in January, heard evidence from local residents, scientists, engineers and oil companies on the issue of odours and emissions from heavy oil operations near Peace River.

“Obviously, we’re very pleased with the outcome,” said Brian Labrecque, whose family has argued for years the smells have made them sick and driven them from their homes.

“We’re hoping that other families won’t have to go through what we’ve gone through.”

“Yes, we’re going to see some regulatory changes, and we’re going to see some improvements, and that’s going to benefit everyone as a whole, but – at the end of the day – it still doesn’t really help the families who’ve had to relocate, and have left their homes… and I think it’s very important that we don’t forget that,” added Labrecque.

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Baytex Energy, the subject of many of the complaints, stressed its emissions met all regulations and were well below the level for acceptable toxins in the air.

READ MORE: Alberta inquiry finds oil odours may be making people sick

In a report released in March, the panel found that odours from heavy oil operations in the area have “the potential to cause some of the symptoms experienced by residents.” As such, the panel recommends that the odours be eliminated as much as possible and the linkages between odour and health be studied more closely.

“The AER accepts the recommendations contains within the report,” said AER’s Vice President of Regulatory Operations, Carol Crowfoot on Tuesday.

“The AER is taking immediate action on the recommendations.”

(Read the full AER response below)

She added that some of the recommendations will take a bit longer to implement, but several are being acted on right away.

“The AER will require new heavy oil and bitumen operations in the Peace River area to capture all produced gas effective May 15, 2014,” explained Crowfoot.

“Secondly, the AER will require existing heavy oil and bitumen operations in the Three Creeks and Reno area to capture all produced gas effective Aug. 15, 2014.”

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The panel had recommended that the regulator require that all produced gas be captured, and that gas from bitumen storage tanks (a particular concern for many residents) be captured using vapour recovery technology. It recommends that this equipment be installed within four months on existing facilities, and immediately on any new facilities in the area.

“The regulator announced today that they’re giving Baytex four months to put in the new equipment,” said Keith Wilson, a lawyer who’s representing some of the Peace River area families.

“The question is why isn’t Baytex being asked to turn off the pumps tomorrow?”

“Should they be allowed to continue to open-vent these known harmful emissions from 86 of these tanks within 500 metres of these people’s homes – that have driven them from their homes? During that four month period, should those people still be out of their homes or should Baytex shut down while its putting in proper pollution controls?”

The AER also released a revised Directive 60 on Tuesday, which it says strengthens regulations to reduce impacts related to flaring, venting, and incineration. Revisions to the Directive give the AER tools to require gas conservation regardless of how much it will cost companies to implement. The revisions come into effect June 16, 2014.

But the new rules will only apply for some, likely populated, areas.

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“We intend to use this tool where operations are occurring and affecting people,” said AER technical specialist, Gerald Palanca. “So, in isolated areas we may not use that conservation tool.”

“We will assess on a case-by-case basis whether or not that tool will be used. It may be used in other parts of the province.”

Crowfoot said some of the panel’s recommendations will take a bit longer to put into place, that includes:

–          Increasing gas conservation

–          Looking at ways to reduce upset and emergency flaring

–          Reducing overall emissions in the Peace River area

–          Investigating additional sources of emissions and odours

–          Collaborating with the Alberta government to establish and expand on a regional air quality monitoring program

“The AER has accepted the work … and believes that the recommendations are certainly valid and will go a long way and will hopefully eliminate the odour and emissions from that area,” said Crowfoot.

She said that all existing operators in the Seal Lake and Walrus area must submit a report to the AER outlining targeted actions “to achieve phased reduction and eventual elimination of venting in these two areas.”

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AER will also review regulatory approaches to require Peace River area operators to collect and submit geochemical analyses from their bitumen.

READ MORE: Alberta families leaving homes for health reasons, blame oil giants next door 

The panel also recommended the regulator prohibit gas venting. In an emergency situation where flaring is not available, the report suggests, the well should be immediately shut in. And when gas leaks are discovered, the problem should be repaired within 12 hours, or the facility should be shut down until repairs are completed.

“With all of these new regulations that the AER will be enacting as a response to these recommendations, there will be a focused surveillance program for the Peace River area that will ensure that there is compliance by the operators in the area,” said Crowfoot on Tuesday.

“If there’s found to be non-compliance…  enforcement actions will occur and could also results in shut-in of a well or a facility.”

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There are five operations in the area: two Baytex facilities, Shell, PenWest, and Murphy.

“The recommendations from the panel talk about capturing gas, eliminating venting,” said Crowfoot. “So, as I said, you have to do something then with that gas. There would be flaring that would occur, but will end as soon as we can get the gas conservation plans in place.”

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She said Shell has already been successful in using vapour recovery technology, and said Baytex is in the process of doing that as well.

Existing operators will have four months to adopt gas-capturing methods or there will be consequences, said Crowfoot.

“The non-compliance action if they are venting during what we call ‘constant state operations’ would be enforcement action that could also result in the shutdown of the well until they stopped.”

“If you’re venting and there are no conservation measures in place, and you don’t have a flare stack, you will be shut in immediately,” she added.

“There will be no venting.”

Global News has contacted Baytex for its response to the AER decision.

Late Tuesday evening, Baytex issued a statement, saying it supports the regulatory initiatives announced Tuesday by the AER.

The company said its operations “are compliant with existing regulations and the company plans to comply with the new regulations within the specified timelines. Baytex has been proactively implementing a number of the AER Panel’s recommendations.”

“Baytex’s gas conservation activities and plans are consistent with the AER initiatives announced today,” said James Bowzer, President and Chief Executive Officer. “In Three Creeks, along with our partner – Genalta Power, an expansion to existing gas conservation facilities is underway and by the end of 2014 it is estimated that Baytex will deliver sufficient excess natural gas to Genalta’s power facility, which will generate the daily energy requirement equivalent to more than 14,000 homes. In the Reno field, which we acquired in 2011, excess natural gas is conserved through the connection of our recently constructed pipelines to the TransCanada pipeline system and work is underway to fulfill our commitment of capturing tank top vapours from all existing and future well sites.”

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“Baytex is, and has always been, committed to operating in a safe, environmentally responsible manner in all our operations. We are committed to minimizing the impact of our activities on the residents in the vicinity of our operations,” Bowzer said.

Alberta’s energy minister was pleased to hear about AER’s response.

“The ministry of environment, the ministry of energy, the regulator have the opportunity to hear, and citizens have the opportunity to be heard,” said Diana McQueen. “Certainly I think this is good example of what the new regulator looks like and the work that they’re doing.”

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