Canada: New Federal Methane Reduction Regulations For The Upstream Oil And Gas Sector

The government of Canada has released its proposal for the first federal regulations on greenhouse gas emissions applicable specifically to the upstream oil and gas sector, titled Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector).

The proposed regulations, which will be enacted under the Canadian Environmental Protection Act, 1999, SC 1999, c 33, introduce facility and equipment standards to reduce fugitive and venting emissions of "hydrocarbon" gas (defined in the proposed regulations as methane and certain volatile organic compounds but for the purposes of this summary referred to collectively as "gas") from Canada's oil and gas industry. These standards will apply as of January 1, 2020 (with several exceptions noted below). The proposed regulations are part of the "Pan-Canadian Framework on Clean Growth and Climate Change" to meet greenhouse gas reduction targets.

The reduction requirements contemplated in the proposed regulations can be categorized broadly into two categories: (i) general requirements applicable to upstream oil and gas facilities; and (ii) requirements specific to upstream oil and gas facilities producing or receiving an aggregate of more than 60,000m3 of gas in a 12-month period.

The proposed regulations define an "upstream oil and gas facility" as:

"the buildings, other structures and stationary equipment — that are located on a single site, on contiguous or adjacent sites or on sites that form a network in which a central processing site is connected by gathering pipeline with one or more well sites — that function together in an integrated manner for the purpose of

  1. the extraction of hydrocarbons from an underground geological deposit or reservoir;
  2. the primary processing of those hydrocarbons; or
  3. the transportation of hydrocarbons — including their storage for transportation purposes — other than for local distribution."

I. General Upstream Oil and Gas Sector Requirements

Gas Conservation and Destruction Equipment

  • Gas conservation equipment used at upstream oil and gas facilities must operate in a manner such that at least 95 percent of the gas routed to the equipment is captured and conserved, and must operate continuously (other than normal service and repair periods).
  • Gas destruction equipment used at upstream oil and gas facilities must meet the requirements of:
    1. British Columbia's Oil and Gas Commission's Flaring and Venting Reduction Guideline, if the facility is in British Columbia;
    2. Government of Saskatchewan's Directive S-20: Saskatchewan Upstream Flaring and Incineration Requirements, if the facility is in Saskatchewan;
    3. Canada-Nova Scotia Offshore Petroleum Board or the Canada-Newfoundland & Labrador Offshore Petroleum Board's authorization, as the case may be, with respect to venting and flaring of gas, if the facility is offshore; and
    4. Alberta Energy Regulator's Directive 060, Upstream Petroleum Industry, Flaring, Incinerating, and Vent­ing, in any other case.

Well Completion by Hydraulic Fracturing

  • Wells that have been subject to hydraulic fracturing and have a gas-to-oil ratio of at least 53:1 cannot vent gas during flowback. Gas associated with flowback must be captured and routed to gas conservation or destruction equipment.
  • The above provision does not apply to upstream oil and gas facilities in British Columbia or Alberta as existing provincial measures (e.g., British Columbia's Oil and Gas Commission's Flaring and Venting Reduction Guideline and Alberta Energy Regulator's Directive 060, Upstream Petroleum Industry, Flaring, Incinerating, and Vent­ing) already cover these activities.

Compressors

  • Compressors installed before January 1, 2020, must route emissions to gas conservation or destruction equipment, or to a vent. If routed to a vent, emissions from such a vent shall not exceed 0.023 m3 per minute for reciprocating compres­sors and 0.17 m3 per minute for centrifugal compressors.
  • Compressors installed on or after January 1, 2020, must capture and route emissions to gas conservation equipment.

II. Requirements for Upstream Oil and Gas Facilities Producing More than 60,000m3/year of Gas

Any upstream oil and gas facility that produces or receives an aggregate of more than 60,000m3 of gas in a 12-month period, is subject to a number of requirements pertaining to venting limits, leak detection and repair, and use of pneumatic controllers and pneumatic pumps.

Venting Limit

  • By January 1, 2023, such facilities will be required to limit vented volumes of gas to 250m3/month, subject to certain exceptions.

Leak Detection and Repair

  • Such facilities will be required to implement leak detection and repair programs, with regular inspections mandated three times per year. Leaks are to be repaired within 30 days.
  • If repairs are not possible without shutting down the equipment, such facilities operator will be required to schedule a shutdown to take corrective action before the volume of gas from the leak is larger than the volume of gas that will be released by shutting down the equipment.
  • If the such facilities is located offshore and the equipment can­not be repaired while operating, corrective action is to be taken within 365 days.

Pneumatic Controllers and Pneumatic Pumps

  • Pneumatic controllers at such facilities with an aggregate compressor power rating of 745 kilo­watts or higher will be prohibited from emitting gas as of January 1, 2023.
  • Pneumatic controllers at such facilities with a total compressor power rating of less than 745 kilo­watts must operate with a design bleed rate of 0.17 standard m3/h or less as of January 1, 2023.
  • Pneumatic pumps must be equipped with an emis­sions control device at such facilities where liquid pumping exceeds 20L per day as of January 1, 2023, subject to certain exceptions.

Stakeholders have until July 27, 2017, to provide comments to Environment and Climate Change Canada on the proposed regulations.

In tandem with the proposed regulations, the government has also proposed Regulations to Reduce the Release of Volatile Organic Compounds (Petroleum Sector), which requires refineries, oil sands upgraders, and petrochemical facilities to regularly check and repair leaks from equipment, use cleaner technologies to minimize emissions, and monitor and report results.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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