On September 17, 2015, the Alberta Energy Regulator (the "AER") released its draft Directive Fluid Tailings Management for Oil Sands Mining Projects (the "Draft Directive"). The Draft Directive establishes new requirements that operators must meet to manage tailings during and after mine operations, including application filing requirements, the review and approval processes and performance reporting for fluid tailings volume profiles. Once finalized, the Directive will also inform the AER's surveillance and compliance management responses.
The Draft Directive is part of the AER's phased approach to implement the Lower Athabasca Region: Tailings Management Framework for Mineable Athabasca Oil Sands (the "Framework") issued by the Government of Alberta in March 2015. The Framework sets out the government's policy to manage fluid tailings volumes in order to manage and decrease liability and environmental risk resulting from the accumulation of fluid tailings on the landscape.
Notably, the Framework requires operators to demonstrate that all fluid tailings will be treated and reclaimed progressively during the life of the project and that they will be in a ready-to-reclaim state within 10 years of the end of mine life. The Framework also provides direction on reclamation towards various end land uses and promotes outcome-based, proactive management strategies while requiring additional monitoring and reporting.
The AER is responsible for developing and implementing requirements to achieve the Framework's objectives and outcomes. The Framework also specifically charged the AER with undertaking a review of Directive 74: Tailings Performance Criteria and Requirements for Oil Sands Mining Schemes ("Directive 074") and amending, as appropriate. In response, the AER suspended Directive 74 and started working on the new directive.
Directive 074 used a specific strength measurement for the capture of the clay particles within fluid tailings. The Framework requires the use of the volume of fluid tailings as the metric to track reduction of fluid tailings. To introduce consistency in reporting and replace the old determination of fluid tailings volume, the AER has adopted Canada's Oil Sands Innovation Alliance's Guidelines for Determining Oil Sands Fluid Tailings Volumes, June 2015 (the "COSIA Guideline"). The AER considers the measurement tools in the COSIA Guideline to be comparable to those promoted in the Framework.
The Application Process
The Draft Directive requires the submission of a detailed application that includes new and legacy fluid tailings volume profiles in accordance with the COSIA Guideline, a tailings management plan ("TMP") and a map of a project's treated tailings deposits and fluid tailings ponds. The Draft Directive also requires the demonstration of progressive reclamation and ready-to reclaim tailings within 10 years of the end of mine life.
The AER requires the application to contain sufficient information to demonstrate that the TMP is aligned with existing approvals under the Environmental and Protection Enhancement Act, the Water Act and the Oil Sands Conservation Act (the "OSCA"). Any inconsistencies between the TMP and existing approvals must be identified and may require a future amendment application in order to manage risks more thoroughly.
Oil sands projects operating as of the effective date of the final directive must submit an application to the AER by March 31, 2016 that demonstrates that outcomes of the Framework will be met including social, environmental and economic policy outcomes. Projects which have been approved but are not yet operating have until one year prior to bitumen production to submit their application.
For the submission and review of a TMP, the AER will follow the established application and review process for OSCA applications. The application will first undergo a preliminary review to ensure it is administratively complete. The AER will then proceed with a detailed technical review. The AER may request supplemental information to clarify issues or obtain additional information and may approve or deny the application with conditions.
AER Seeking Public Feedback
The AER is seeking feedback on the Draft Directive from oil sands operators, aboriginal groups, environmental nongovernmental organizations, affected municipalities and multi-stakeholder community groups. Comments are accepted until November 17, 2015.
A multi-stakeholder technical advisory committee has also been established. The Draft Directive will be reviewed and amended taking into account policy direction from the Government of Alberta, observations on the effectiveness of requirements and feedback from stakeholders. The AER is then expected to post a summary of the feedback received from stakeholders and finalize the directive. Review of the initial TMP for each operating oil sands operation is expected in 2016.
Enforcement of the Directive
New details on the surveillance and compliance management system, the 5-year review plan and changes to the Mine Financial Security Program to include incentives to manage fluid tailings will be released in the 2016 edition of the directive. The AER has indicated that failure to meet reclamation deadlines may range from financial penalties to production cutbacks. Enforcement tools available to the AER include more frequent and detailed inspections, enforcement orders, shutting down operations, administrative penalties and prosecution. Generally, the larger the fluid tailings volume, the more severe the management response will be.
The implementation of both the Framework and the Draft Directive clearly signal a major shift in tailings management for oil sands development in the Lower Athabasca region. Operators will want to track the changes closely as the implications to existing and new operations will be significant in the years to come.
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