The Alberta Energy Regulator ("AER") has extended its
pilot project for a "play-based" regulatory framework for
unconventional oil and gas development in part of the Duvernay
shale play in west-central Alberta.
The Duvernay shale play is a large, developing shale play
covering much of western and northern Alberta and eastern British
Columbia. It is particularly rich in light oil and petroleum
liquids such as propane and butane. Hydraulic fracturing has been
key in developing the vast underground rock formation that covers
an area the size of South Korea.
The Duvernay play is still in its early stages with only about
200 wells drilled to date, with about 60 wells completed and on
production. The average initial production rate is about 2.5 mmcf
per well per day. The Kaybob area in the northwestern portion of
the Duvernay is particularly liquids rich, with some wells having
condensate yields of 200 - 480 barrels a day.
"Play-based" regulation involves implementing a single
application and decision-making process for multiple wells,
pipelines and facilities under different pieces of legislation. It
requires all of the operators in the pilot area to collaborate and
jointly bring a single application for a single regulatory approval
which will be used for regulating all of their unconventional oil
and gas activities in the pilot area.
Presently, each activity by a company, such as building a road,
diverting water, drilling a well, constructing a pipeline and so
forth, requires its own separate AER regulatory approval. This
current approach makes it difficult to reduce the cumulative
environmental impacts of the additional roads, well pads and
pipelines required by each company in the area. Extracting oil and
gas out of shale requires many more wells, more pipelines and much
more water usage than conventional oil and gas production. Area
landowners and communities are expected to benefit with play-based
regulation as it is hoped that they will get a sense of the full
scope of all development in the play area and have earlier input
into how the play is developed on the surface.
Area operators have to submit the single application to the AER
by January 31, 2015. The pilot was scheduled to run until March 31,
2015 but has been extended until June 30, 2015 to allow oil and gas
operators in the pilot area sufficient time to prepare the
application and undertake the required stakeholder engagement.
The Duvernay shale play was chosen for the pilot as it is just
starting to be developed and extensive drilling and production is
expected over the next several years.
If playbased regulation is successful, the AER may implement it
more broadly throughout Alberta in the future.
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