Update of Saskatchewan Upstream Oil & Gas Industry Regulations

Transcription

1 Update of Saskatchewan Upstream Oil & Gas Industry Regulations Ministry of the Economy SESSA March 19, 2012

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3 Directive S-10 DirectiveS S 10 10provides enforceable regulatory requirements for reducing flaring and venting of associated gas. Directive S 10 provides equivalent control similar to the Alberta Energy Resources Conservation Board s (ERCB) Directive 60, which as a decade of track record. VolumetricReporting system willbe based onrecogni recognized ed and proven Production Reporting System. Saskatchewan is now a partner in the Petrinix.

4 Directive S-10 Applications: Oil Wll Wells and Single Oil WllB Well Batteries Multi Oil Well Batteries Associated Gas Processing Plants (case by case requirements) Any wells and facilities that vents, flare or incinerate associated gas Exceptions Any wells and facilities that t produces, handles or processes or non associated gas

5 Directive S-10 Theemission emission reduction initiative is based on the licensee evaluating the following three criteria: 1. Can flaring, incinerating, and venting be eliminated? 2. Can flaring, incinerating, and venting be reduced? 3. Will flaring, incinerating, and venting meet performance standards? d It is expected that the upstream petroleum industry will pursue continuous improvement in reducing associated gas flaring, incinerating, and venting in Saskatchewan. ECON, in consultation with its stakeholders, will monitor progress of emission reduction performance to determine the need for additional or accelerated implementation of regulatory requirements to facilitate increased associated gas conservation.

6 Directive S-10 The principal regulatory mechanism of Directive S 10 is the establishment and enforcement of flaring and venting restriction volume for associated gas produced from licensed oil wells and facilities. The program is design to restrict the licensee whose well or facility that flares or vents associated gas above a certain limit (900 cubic metres per day). If they exceed the limit they are required to conserve (collect, sell or use) the associated gas. The requirement for conserving may be waived if the licensee can demonstrate that the cost of conserving associated gas exceeds a prescribed economic limit. It is designed so that the energy input to conserve the associated gas doesnotexceed exceed the benefit ofconserving the associated gas. The economic limit for conservation is Net Present Value (NPV) greater than $50,000Cdn (minus fifty thousand dollars).

7 Phase In Periods Effective date of S 10: For new oil wells and facilities licensed on or after July 1, 2012, all parts of this Directive come into effect on July 1, 2012; For existing oil wells and facilities licensed before July 1, 2012, all parts of this Directive come into effect on July 1, Immediately, where valid public complaints are raised (validated by field office investigation) with regards to odours, noise or visible smoke from venting or flaring from a well or an upstream oil and gas facility. Immediately for a well or a facility ordered by ECON to comply with the Directive. These orders can be in the form of a licence condition, memorandum, letter or Minster s Order.

8 S-10 Venting Restrictions Approved Continuous or Routine Venting All continuous venting greater than 900 m 3 per day, which meets the requirements of Appendix 1 and was evaluated using the decision tree, must ensure that a reasonable level of precaution has been taken to protect human health, public safety, the environment, property, and to prevent fire or explosion. ECON may investigate any volume of associated gas venting initiated by public complaint. If, based on the investigation, a stable and uninterrupted combustion of the gas is feasible, upon instruction of ECON, the licensee must provide acceptable justification for volumes not combusted or be required to flare/incinerate or capture the associated gas.

9 S-10 Venting Restrictions Non routine or Temporary Flaring, Incinerating, and Venting Temporary planned venting is not permitted within 500 metres of a residence unless written consent is obtained from the resident or unless approved by ECON where consent cannot be obtained. No person shall vent any volume of gas or vapour (including water vapour) from a well, facility or pipeline that contains H 2 S in a concentration greater than 1000 ppm or a concentration greater than 10 ppm as measured at the edge of the lease or property boundary, whichever is the lesser of the two: unless it is an emergency and a reasonable level of precaution has been taken to protect human health, public safety, property and the environment and to prevent fire or explosion; or unless approved by ECON. Venting of these substances must not result in exceedanceof the Saskatchewan Ambient Air Quality Standards parts per billion (1hrs) or 3.6 ppb (24hrs) Licensee shall design the vent stacks so that it minimizes odour outside the lease boundary.

10 Directive S-20 The use of flare pits and earthen pits as storage receptacles in the production operation of wells and facilities arestrictlyprohibited in Saskatchewan since All flare pits shall be immediately decommissioned and site remediated. Provides comprehensive upstream oil and gas flaring and incineration performance, equipment spacing and set back distance specifications. The standards specified in the Directive S 20 apply to wells and facilities licensed or approved under The Oil and Gas Conservation Act and/or The Oil and Gas Conservation Regulations, Portable incinerator or flare stack used during drilling, servicing, turn around or tests and located and used on the site for less than one year is exempt from these requirements with exception of applicable equipment spacing. ECON may at anytime require the licensee to meet these requirements or shut down the incineration or flaring operations, if in the opinion of ECON, that environmental, public safety or valid public complaints or concerns are present.

11 Directive S-20 Flare stacks or incinerator installed prior to July 1, 2012 at wells or facilities licensed prior to July 1, 2012 must meet the standards specified in the S 01 Version January 1, 2002, Section (referenced in Appendix 1), unless otherwise approved in writing by ECON. If the aforementioned existing flare stack does not meet the S 01, the licensee shall immediately upgrade to the Directive S 20, with exception of equipment spacing requirements, or make a written request for an exemption to ECON. Licensee may use the applicable equipment spacing specified in Section72 Regulations. All written requests must include the licence number of the well or facility and technical rationale on how these flare stack or incinerator can be operated safe and environmentally responsibly. If an exemption is granted, the exemption will be added as a condition of the existing well or facility licence. If you do not have a licensee ECON will likely be having a very serious discussion.

12 Directive S-20 All existing flare stack or incinerator that meets the S 01 version 2002, do not need to upgrade to the Directive S 20 standard unless: Flaring or incinerator system is being upgraded as a part of normal upgrade process of the well or facility, after July 1, 2012; Facility licence is amended due to facility expansion, for example a battery is upgraded to a gas plant; Single Well Battery (a licensed well) is upgraded to a multi well battery; Gas sent to the flare stack or incinerator has [H 2 S] equal to or greater than 10 mol/kilomol (10,000ppm); 000 or Instructed by ECON. Any flare stack or incinerator installed on or after July 1, 2012 shall comply with standards specified in the Directive S 20. Exemption may be granted by ECON if the licensee provides an acceptable technical rationale to support the requested exemption.

13 Directive S-20 Enforcements The licensee shall install a vapour recovery unit to prevent the emission of volatile gases from storage devices and associated processing equipment at a facility or well site when [H 2 S] is equal to or greater than 10 mol/kilomol as measured at the source ofemission or0 0.01mol/kilomol as measured at the edge of the lease. No one shall operate an upstream oil and gas facility or a well in a manner that results in air pollution emission that exceeds the ambient air quality standards prescribed by Saskatchewan Ministry of Environment (MOE), unless the licensee has a permit from MOE approving the activity. Where persistent or significant odour complaints are received at a licensed facility or a well, and obvious and measurable risk exists, or at the discretion of ER, the licensee may be ordered and required to implement one or more of the following mitigative measure(s): conduct an air quality investigation or install air quality monitoring equipment attempt to eliminate the air contaminants at their source implement good housekeeping to minimize fugitive emissions develop and implement a public information and consultation program seal and leak proof storage vessels and equipment install a vapour recovery unit on storage or process equipment direct the recovered vapour to properly operating flares as per section recover associated gas (gas associated with crude oil production) that may be vented or flared any combination of these requirements as ordered by ECON

14 6000 Licences issued

15 Wells Drilled (FDD) Vert Oil HZ Oil Gas COUNT YEAR

16 2011 Oil Well Production Data WATER m3, 320,287,931, 92% 2,017,813,966 BBL GAS e3 m3, 2,463,464, 1% 87,437,530 mcf 14,572,924 BOE CRUDE OIL m3, 24,968,385, 7% 157,300,824 BBL

17 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Natural Gas Production Volume 10 3 m 3 ASSOCIATED NON ASSOCIATED

18 Associated Gas (10 3 m 3 ) Vs. Crude Oil Production (m 3 ) 30,000,000 25,000, E E E E E E E E E E E E E E E+07 ASSOCIATED Crude Oil (cu.m) 2.32E E E E+07 3,000,000 2,500,000 20,000, E E E E E E E E E E E E E E E E+06 2,000,000 1,500,000 15,000,000 10,000,000 5,000, E E E E E E E Associated Gas E3M3 1,000, , Year

19 Associated Gas Flaring and Venting Volume Comparison: Alberta vs. Saskatchewan SK Fl ar e/ Vent AB Fl ar e/ Vent SK Fl ar e/ Vent w/ Non-Recover abl e Gas millio on cubic me etre

20 Comparative Trends Flaring vs. Production (Crude Oil in thousand m 3 ) Gas 106m SK Flare/Vent SK Flare/Vent w/ Non Recoverable Gas 1000 Associated Gas Production Crude Oil Production

21 100.0 GOR, FVOR, AGFVR and Crude Oil Production FVOR (m3/m3) y = x GOR (m3/m3) Crude Oil Production in million m3 AGFVR (m3/m3) at 49% Linear (GOR (m3/m3)) conservation Linear (AGFVR (m3/m3)) Multiple factors y = x you want to see purple line 3.6 comes up to red lines if S 10 was in full force at 21% conservation

22 2011 Associated Gas Utilization (e 3 m 3 ) total 2,463,464 e 3 m 3 Flared, 373,764, 15% Vented, 176,282, 7% Metering Difference, 52,319, 2% Lease Fuel, 674,567, 28% Sales, 1,186,533, 48%

23 2011 CO 2 Equivalent Emission from Associated Gas Utilization (Kt CO 2 e) Metering Difference, 138, 3% Vented, 2010, 41% Lease Fuel, 1774, 36% Flared, 983, 20%