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History of Alberta Energy Regulation

Regulation of oil and gas activities in the province of Alberta, Canada, has evolved from its first regulatory body (The Alberta Board of Public Utility Commissioners) in 1915 to the current overarching body of Alberta Energy Regulator, created in 2012.[1] Currently, the Alberta Energy Regulator oversees an estimated 181,000 active wells, 27,800 oil facilities, 20,000 gas facilities, and 405,000 kilometers of pipelines.

In the tables below are a history of major oil and gas events in Alberta, from discovery to present. Included are regulation reforms, major environmental violations, major oil and gas discoveries, and other milestones important to the history of why and how regulation in Alberta evolved the way it did.

Early Years: pre-1938

This period marks the beginning of Alberta's discovery and interest in its energy-related natural resources. Drilling activity at this time is focused on the Turner Valley area. Several early regulatory bodies are created for both administrative and environmental conservation reasons.

Pre-1938 Era: Discovery and Creation
Year Development
1883 Natural gas is discovered in Alberta in Medicine Hat on June 1st.
1909 Second natural gas discovery, at Bow Island.
1914 Naptha production from Dingman No. 1 well sets off first Turner Valley boom (1914). Second Turner Valley boom (1924) begins with discovery of liquids-rich gas. Third Turner Valley boom (1934) results in discovery of geological reservoir containing 1.3 billion barrels of oil. + Viking gas field is discovered.
1915** Alberta Board of Public Utility Commissioners is created as the province’s first public utility regulator.
1920** The Alberta Geological Survey (AGS) is created and gives a glowing report to the legislature regarding the province’s mineral potential.
1925 Alberta’s first oil pipeline is built from Turner Valley to a Calgary refinery.
1926 The Alberta Oil and Gas Wells Act grants the province authority to develop conservation regulations for designated areas, but no action is taken.
1930** The federal Natural Resources Transfer Act turns over ownership of all Crown minerals within their borders to Alberta, Saskatchewan and Manitoba. Premier Robert Brownlee forms the Alberta Department of Lands and Mines.
1932** The Alberta legislature creates the Turner Valley Gas Conservation Board (TVGCB), with a mandate to control wasteful flaring.
**: indicates creation of regulatory bodies or policies

[1]

Expanding Industry: 1938-1956

Oil and gas production begins to increase in areas outside Turner Valley as more resource-heavy locales are discovered. As a result, Alberta begins to develop a surplus which is sold to other provinces and to the United States. Regulation at this time is broadened with a focus on conservation of resources. Part of that expansion includes both new permitting powers, and increased regulation of the energy economy to prevent operator monopolies from forming with each new discovery.

1938-1956: Further Discovery and Expansion
Year Development
1938** The Government of Alberta established the quasi-judicial Petroleum Natural Gas Conservation Board (PNGCB) in order to ensure the effective conservation of the province’s oil and gas resources. Also made the choice of having an investor-owned energy sector.
1940 Alberta Supreme Court inquiry defuses popular suspicion of price fixing by oil firms and urges the PNGCB to maintain a public data bank of energy and resource knowledge.
1944 The first in a series of large resource discoveries: Jumping Pound (1944), Leduc (1947); Redwater (1948); Golden Spike (1949); Cessford (1949); Bonnie Glen (1952); Pembina (1953).
1945 The PNGCB supervises the first “unitization” agreement, overseeing the orderly and fair sharing or pooling of large discoveries made by multiple companies at Jumping Pound.
1949** The PNGBC role is expanded to include granting or denying “removal permits” for out-of-province sales under a new Gas Resources Preservation Act, approving pipeline construction within the province’s borders, and setting oil production levels. The PNGBC sets the regulated stockpile to 30 years.
1950 The Interprovincial Pipe Line (now Enbridge) is built to take oil from Edmonton to central Canada and the United States.
1954 PNGCB concludes the industry’s growing surplus should be made available for out-of-province sales.
1955 The Alberta legislature passes the Bituminous Sands Act, which permits the government to exempt oil sands projects from the market-sharing pro-rationing regime that is in place for conventional wells.
**: indicates creation of regulatory bodies or policies

[1]

Tightening Control: 1956-1970

Discoveries of new resource-rich areas continues, and oil sands projects begin in earnest. Regulations at this time grant more power to the main regulatory body, the Oil and Gas Conservation Board to oversee the oil and gas production processes, again with a pointed focus on conserving natural resources. There is conflict between oil sands producers and conventional oil drillers at this time, as a result of the Albertan energy economy. New provincial and national boards are created at this time in response to the growing energy market and to the environmental hazards that come with drilling.

1956-1970: Tightening Control in the Oil Sands
Year Development
1956** The PNGCB is renamed the Oil and Gas Conservation Board (OGCB) under the Oil and Gas Conservation Act. Its purposes include conserving oil and gas resources, securing safe and efficient oilfield practices, providing owners with the opportunity to receive their share of the production of any pool, and advising the minister of mines and minerals regarding the application for pipeline permits.
1957 Discoveries for this period: Swan Hills (1957), Crossfield (1957), Judy Creek and Swan Hills South (1959), Edson (1962), Rainbow (1965).
1959** National Energy Board (NEB) created.
1960 OGBC approves the Great Canadian Oil Sands, the first oil sands mine. Production starts in 1967.
1962** A new provincial policy grants the oil sands a five per cent share of the market for Alberta crude. Conventional producers protest.
1963 The OGCB defers approval of two additional Fort McMurray projects, with planned production of 100,000 barrels per day each, on the grounds that oil sands production would then exceed the five per cent market quota.
1970 Following pipeline ruptures, the OGCB leads industry in developing Western Canadian Spill Services Ltd., a non-profit network of cleanup equipment and training depots.
**: indicates creation of regulatory bodies or policies

[1]

Boundary-Setting: 1970-1995

This era is heavily influenced by new national attention on Albertan oil exports. A tug-of-war between provincial and national bodies occurs in regards to US exports, with several national export taxes and restrictions being put in place in order to ensure Canada is self-sufficient in terms of energy. Later, those restrictions are overturned and the national quotas are reduced in order to ensure free trade with the US. Alberta's own energy regulating bodies are given more duties, including oversight of coal, electricity, and pipelines, though staffing is reduced. Environmental concerns rise.

1970-1995: State vs. National Boundaries
Year Development
1970** The mandate of the newly named Energy Resources Conservation Board (ERCB) is expanded to include pipelines, coal and electricity.
1971** Alberta establishes Canada’s first environment ministry.
1972 Peter Lougheed’s government raises royalties on oil and gas projects to between 19 and 23 per cent.
1973 The federal government freezes Canadian oil prices, imposes an export tax on Alberta deliveries to the United States and sets a policy goal of national energy self-sufficiency.
1979 The ERCB approves the Cold Lake oil sands project, the first in situ bitumen extraction development. + The ERCB deems a 25-year supply comprises an adequate surplus for the provincial stockpiles of natural gas.
1980 The National Energy Program implements price controls, restricts exports and raises taxes. + The ERCB tightens regulations on sour gas emissions by raising sulfur recovery requirements to an average of 98 per cent.
1982 A sour-gas blowout at Lodgepole kills two well-control crewmen, injures 16 others and burns for 68 days.
1984 The ERCB’s Lodgepole inquiry report determines that faulty equipment and human error were responsible for blowout. Regulatory clampdown on sour-gas drilling.
1985 The Western Accord on Energy scraps the NEP and ushers in oil and gas free trade with the United States.
1987 The ERCB and the provincial utilities board reduce the mandatory reserves of natural gas to a 15-year supply for a “core market.”
1991 The ERCB inaugurates carbon dioxide emissions forecasting.
1994 Oil pro-rationing is eliminated as part of “regulatory streamlining.” ERCB reduces staff. + The ERCB institutes an industry levy to clean up orphan wells.
**: indicates creation of regulatory bodies or policies

[1]

Safety and Efficiency: 1995-2007

Several of the independent energy-related regulatory bodies are merged during this 8-year span, in an attempt to cut energy costs. Environmental impact continues to be a major concern, and the newly-formed conglomerate energy body, the Alberta Energy and Utilities Board, focuses heavily on safe, controlled drilling.

1995-2007: Streamlining and Safety
Year Development
1995** Alberta Energy and Utilities Board, or EUB, formed through the cost-cutting merger of the ERCB and the provincial Public Utilities Board. The Alberta Geological Survey also becomes an arm of the EUB.
1996 The EUB launches facilities application process, emphasizing streamlined review, corporate compliance, and audits and enforcement.
1999 The EUB focuses its attention on reducing small waste-gas flares at oil wells and starts a review of sour-gas safety with a public advisory committee.
2000 The EUB orders the shut-in of 146 natural gas wells to protect oil sands deposits against the loss of underground pressure. + The orphan well program expands to include pipelines, processing facilities, and land reclamation at old industry sites.
2001** The EUB helps create the Cumulative Environmental Management Association and Wood Buffalo Environmental Association for Alberta’s northern oil sands region.
2003 The EUB and the federal Canadian Environmental Assessment Agency team up to scrutinize the Horizon Oil Sands Project and the Athabasca consortium expansion plans.
**: indicates creation of regulatory bodies or policies

[1]

Into The Future: 2007 and onward

In 2007, the conglomerate regulatory body is broken up into its respective parts again. Oil and gas in Alberta continues to expand, along with the environmental hazards which accompany it. In 2012, the Alberta Energy Regulator is formed as the primary regulatory agency.

2007-present: Improving Infrastructure
Year Development
2007 The Energy Resources Conservation Board and the Alberta Utilities Commission are restored as two independent entities, ending a 12-year merger of expedience to reduce administrative costs.
2008 Hundreds of migrating ducks die in an oil sands tailings pond. + The price of oil soars to US$147.27 a barrel then dives to US$30.28. The Great Recession begins.
2009 Alberta consents to transferring jurisdiction of NOVA Gas Transmission Ltd. to the National Energy Board, enabling the project to extend beyond Alberta’s borders.
2012** The Responsible Energy Development Act is created as a single regulatory agency, which expanded and renamed the ERCB to be the Alberta Energy Regulator, adding staffing to approve and supervise all oil and gas projects.
**: indicates creation of regulatory bodies or policies

[1]

References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Staff, Alberta Oil (06/19/2014). "The Evolution of Alberta’s Energy Regulator". Alberta Oil: The Business of Energy (Alberta Oil Magazine). Retrieved 07/07/14.  Check date values in: |date=, |accessdate= (help)Category:CS1 errors: dates