Best Practices for Urban Oil and Gas Wells in Alberta

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Graduate Studies Master of Public Policy Capstone Projects

2017-09-05 Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

Peterson, Kristy

Peterson, Kristy. (2017). Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta. (Unpublished master's thesis). University of Calgary, Calgary, AB. http://hdl.handle.net/1880/106817 master thesis

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MASTER OF PUBLIC POLICY CAPSTONE PROJECT

Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

Submitted by:

Kristy Peterson

Approved by Supervisor: Dr. Robert Mansell, September 5, 2017

Submitted in fulfillment of the requirements of PPOL 623 and completion of the requirements for the Master of Public Policy degree

Capstone Approval Page

The undersigned, being the Capstone Project Supervisor, declares that

Student Name: ______Kristy Peterson

has successfully completed the Capstone Project within the

Capstone Course PPOL 623 A&B

______Dr, Robert Mansell (Name of supervisor)

______September 5, 2017 (Supervisor’s signature) (Date)

Acknowledgements My Capstone Project process has truly been a team effort. Firstly, I would like to thank Dr. Robert Mansell for generously sharing his time and expertise with me from my initial ideas through to this completed project. His thoughtful questions, guidance, and recommendations were instrumental to this project, as well as my own academic development. I would also like to thank Dr. Jennifer Winter. It was in her Energy and Environmental Policy course that I first explored urban drilling policy. She played a significant role in building a strong foundation for this project. Also at the School of Public Policy, I would like to thank Brendan Boyd and Kent Fellows who pointed me in the direction of key resources for my research. To collect urban drilling data for quantitative assessment, I used a computer program called geoScout, a service provided by geoLogic Systems. I would like to extend my sincere thanks to Natalie St. Hilaire who took time to ask me about my project, and ultimately introduced me to the program. Also from the geoLogic Systems team, Jennifer Parker patiently trained and guided me through the program. It is important to note that I would not have met the geoLogic Systems team without my peer, friend, and colleague Amber Griffith. I would like to thank Amber for sharing her community with me, and being a key source of support for me throughout this process, and entire MPP program. I would also like to thank the Department of Geoscience at the University of Calgary for granting me access and time in their labs. In the initial stages of this project, I was fortunate to meet with professionals throughout Calgary’s policy community. I would like to thank Candice Laws who provided tangible advice on approaching this kind of project, as well as for generously opening her network to me. I would also like to thank Shawna Stirrett and Shafak Sajid who shared their insights into key issues around energy developments based on their own professional experiences. My MPP mentor Justin Lo has been a pillar of support for me throughout this project, as well as my own professional development. I would like to thank Justin for sharing his Capstone Project experience, ideas, and recommendations throughout our many conversations and email exchanges. Finally, I would like to extend my most sincere appreciation to my husband, Brandon Peterson. He is my source of motivation, constructive criticism, and professional expertise in oil and gas engineering. I feel beyond fortunate for Brandon’s unwavering support and instrumental contribution to this project. Also on a personal note, I would like to thank my family - Colleen, Keith, and Connor Thomson. With Brandon, they offered encouragement, celebration, and most importantly, patience throughout the Capstone Project and MPP program.

Table of Contents

Capstone Executive Summary ...... 1 1.0 Introduction ...... 2 1.1 Background ...... 2 1.2 Study Objective ...... 4 2.0 Literature Review ...... 5 2.1 Role of Local Communities in Energy Development Decision-Making ...... 5 2.2 Alberta Regulatory Regime ...... 6 2.3 Alberta Case Studies ...... 12 2.4 Policy Response by Other Jurisdictions: Colorado and Texas ...... 13 2.5 Parallels to Crude-by-Rail Policy Issues ...... 16 3.0 Methodology ...... 18 3.1 Definitions and Qualifications ...... 18 3.2 Data Collection for Quantitative Assessment ...... 19 3.3 Matrix for Qualitative Assessment ...... 20 4.0 Assessment of Urban Oil and Gas Activity in Alberta ...... 22 4.1 Number of Wells in Alberta Urban Municipalities ...... 22 4.2 Percentage of Wells of Various Statuses in Alberta Urban Municipalities ...... 23 4.3 Active Wells versus All Wells in Alberta Urban Municipalities ...... 24 4.4 Urban Well Density in Alberta ...... 25 4.5 Ratio of Wells Near versus Within Alberta Urban Municipal Boundaries ...... 26 4.6 Urban Wells Drilled versus All Wells Drilled between 2000 and 2017 ...... 27 4.7 Municipality Breakdown of Urban Wells Drilled between 2000 and 2017 ...... 28 4.8 Best Practices from Colorado and Texas: Applicability to Alberta ...... 31 5.0 Policy Recommendations and Implementation ...... 33 5.1 Timing and Engagement ...... 33 5.2 Population-based Setback Distances ...... 35 5.3 Implementation ...... 35 6.0 Future Policy Considerations...... 36 References ...... 37 Appendices ...... 42 Appendix A ...... 42 Well Symbols Key ...... 43

Capstone Executive Summary

Recent urban drilling projects in Alberta have met substantial opposition from municipal governments and members of communities within close proximity to the developments. Alberta policymakers only appear to acknowledge urban drilling as a policy issue when a specific project proposal ignites fiery public debate and media coverage. High profile Alberta cases include proposals by Kaiser Exploration Ltd. in Calgary (2012) and Goldenkey Oil Inc. in Lethbridge (2014). Public promises by Alberta’s provincial government to address urban drilling at the policy level have been stagnant throughout changes in premiers, energy and municipal affairs ministers, and eventually a wholesale change in government with the 2015 election victory by Alberta’s New Democratic Party led by Premier Rachel Notley. This Capstone Project explores and provides a response to the following question: What are best practices for oil and gas wells in Alberta’s urban context? For the purposes of this project, the term “urban municipalities” refers to municipalities with populations of 30,000 people and more. Using the geoScout computer program, data and visual representations of drilling activity near and within Alberta’s 11 urban municipalities are outlined. Due to the prevalence and frequency of urban drilling in other jurisdictions, their policymakers have moved forward on related issues in more substantive ways than those in Alberta. In this project, the states of Colorado and Texas provide examples of jurisdictions where key issues associated with urban drilling have been addressed at the policy level. The Colorado Oil and Gas Task Force emphasizes the importance of collaboration among local governments, regulators, and energy companies to manage energy developments relative to urban planning. In Texas, setback distances play a significant role in urban drilling policy. However, Texas policymakers have been criticized of using setback distances as a politically-motivated, rather than empirically-designed, tool. Based on findings relative to the scope of urban drilling in Alberta, it is argued that drilling activity factors into Alberta urban municipalities to a degree that justifies provincial policy specific to oil and gas wells near and within urban municipal boundaries. After surveying the broadest landscape of literature and relevant cases, the following best practices should be employed in Alberta urban drilling policy: • Timing: Urban municipal governments receive earlier notification of project proposals. • Engagement: The application stage for proposed projects involves increased participation by urban municipal governments. • Population-based setback distances: Setback distances factor distinctions for urban municipalities into measurements based on population sizes. Through both quantitative and qualitative assessment, it is determined that there is no single, ideal model for urban drilling policy. Instead, it is concluded that a flexible approach to urban drilling policy will serve Alberta most effectively. This approach should employ the identified best practices in the following order, ranked on applicability to Alberta’s urban context: 1) Engagement; 2) Timing; and 3) Population-based setback distances. The Modernized Municipal Government Act and City Charter regulation provide mechanisms to implement these best practices, and ultimately improve intergovernmental and community relations over urban drilling projects. The Alberta Energy Regulator continues to control the final decision on proposed projects.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

1.0 Introduction

1.1 Background

Recent urban drilling projects in Alberta have met substantial opposition from municipal governments and members of communities within close proximity to the developments. Both municipal governments and community associations cite a variety of reasons for their opposition, ranging from insufficient consultation to safety concerns. According to a June 2014 Alberta Energy report, 19 per cent of Alberta’s urban communities had producing wells within their boundaries.1 Based on quantitative analysis conducted in this project, oil and gas wells inside Alberta urban boundaries total 0.31 per cent of all wells; this figure is 0.68 per cent when including wells within 2 kilometres of urban boundaries.

Alberta policymakers only appear to acknowledge urban drilling as a policy issue when a specific project proposal ignites fiery public debate, which leads to media coverage. Municipal leaders and community members in some Alberta urban municipalities have vehemently protested recent proposals for urban drilling projects in their cities.2 For example, in Lethbridge in 2014, a project proposal by

Goldenkey Oil Inc. prompted Mayor Chris Spearman to launch an argument that provincial drilling policies should take municipal planning into account.3 That same year, Lethbridge City Council proposed a resolution to amend sections of Alberta’s Municipal Government Act that allow drilling to trump municipal land-use designations.4 Calgary City Councillor Ward Sutherland worked with

Spearman on raising this issue to Alberta’s provincial government, both calling for a stronger voice at

1. Alberta, Alberta Energy, Energy Development In and Near Urban Areas, June 2014, http://www.energy.alberta.ca/LandAccess/pdfs/ERSfsEDUAPrevEngagement.pdf. 2. No Drilling Lethbridge, About Us, “No Drilling in Lethbridge,” date accessed November 29, 2016, http://www.nodrillinglethbridge.ca/news; Rocky Ridge Royal Oak Community Association, Community News, Planning and Development, “Update on the Kaiser Oil Well,” last modified August 31, 2013, http://rrroca.org/en/category/planning-and-development/. 3. Teri Fikowski, “Goldenkey Oil Cancels Plans to Drill within Lethbridge,” Global News, April 30, 2014, http://globalnews.ca/news/1303309/goldenkey-oil-cancels-plans-to-drill-within-lethbridge/. 4. Chris Spearman, “Mayor Chris Spearman: Many Challenges, Achievements for City Council in 2014,” Lethbridge Living, December 18, 2014, http://lethbridgeliving.com/news/general/item/mayor-chris-spearman-many-challenges- achievements-for-city-council-in-2014.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta the municipal level over drilling projects near and within urban boundaries.5 Public promises by the provincial government to address urban drilling at the policy level date back to 2012,6 but have been stagnant throughout changes in premiers, energy and municipal affairs ministers,7 and eventually a wholesale change in government with the 2015 election victory by Alberta’s New Democratic Party led by Premier Rachel Notley.8 Shortly after the election, the new NDP government pledged to ban urban

9 gas drilling.

At the time of writing, a new case is developing in Red Deer. Vesta Energy Ltd. has proposed six sweet oil wells near Red Deer’s municipal boundaries, with potential for eight additional wells depending on the production results of the first set.10 At this stage, the energy company has requested input from the municipal government.11 In terms of municipality response, Red Deer Mayor Tara Veer said the challenge facing Red Deer is around protecting the municipality’s “long-term interests in future growth areas.”12 Again, the discussed case in Red Deer is in the earliest phase of the application process.

Thus, it is yet to be seen if this case will generate municipality and community opposition similar to other high-profile cases in Alberta. At the crux of this policy issue, urban municipal governments and

5. James Wood, “NDP Promises to Ban Gas Drilling in Urban Areas.” 6. Amanda Stephenson, “Communities Want More Input in Urban Drilling Decisions,” Calgary Herald, May 12, 2014, http://calgaryherald.com/news/local-news/communities-want-more-input-in-urban-drilling-decisions. 7. Alberta, Legislative Assembly, Premiers, The Honourable Alison M. Redford, QC, 2011-2014, date accessed November 29, 2016, https://www.assembly.ab.ca/lao/library/premiers/a-redford.html; Alberta, Legislative Assembly, Premiers, The Honourable David G. Hancock, QC, 2014, date accessed November 29, 2016, https://www.assembly.ab.ca/lao/library/premiers/d-hancock.html; Alberta, Legislative Assembly, Premiers, The Honourable Jim Prentice, PC, QC, 2014-2015, date accessed October 16, 2016, https://www.assembly.ab.ca/lao/library/premiers/j-prentice.html. 8. Alberta, New Leadership, New Voices, and a New Way of Doing Things, news release, September 15, 2014, http://www.alberta.ca/release.cfm?xID=37061CA87AB2C-CD29-40C8-5B5B07243D826549. 9. James Wood, “NDP Promises to Ban Gas Drilling in Urban Areas,” Calgary Herald, May 21, 2015, http://calgaryherald.com/news/politics/ndp-promises-to-ban-gas-drilling-in-urban-areas. 10. Mary-Ann Barr, “Six Oil Wells Proposed North of Red Deer City Limits; Eight More Could Follow,” Red Deer Advocate, June 28, 2017, http://www.reddeeradvocate.com/news/six-oil-wells-proposed-north-of-red-deer-city-limits-eight- more-could-follow/. 11. Ibid. 12. Ibid.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

affected communities contend they should have increased influence over decisions about drilling projects

13 near and within their boundaries.

1.2 Study Objective

In this project, the following research question is explored: What are best practices for oil and gas wells in Alberta’s urban context? The identified policy issue is addressed through the following:

• Surveys the policy issues and landscape related to urban drilling, and similar energy

developments

• Captures the scope of urban oil and gas drilling activity in Alberta through quantitative analysis

• Identifies issues that consistently underline urban drilling debates through qualitative analysis

• Identifies best practices for urban drilling policy implemented by other jurisdictions

• Develops a qualitative assessment matrix to weigh and rank the applicability of the identified best

practices in Alberta’s urban context

• Concludes with two major recommendations for Alberta’s provincial government

To develop a set of best practices applicable to Alberta, policies that take municipality demands, public opposition, and population size are considered in this project. These include: 1) Mandating earlier notification and expanded engagement for Alberta’s urban municipal governments, and 2) Standardizing setback distances based on population sizes. The following policy pieces provide mechanisms to bridge identified gaps in Alberta’s current policies as they relate to urban drilling: 1) Modernized Municipal

Government Act (MGA) under development 2) City Charter regulation for Edmonton and Calgary, also

14 under development.

13. Kelly Cryderman, “Urban Drilling for Oil and Gas Raises New Questions in Alberta,” Globe and Mail, May 4, 2014, http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/alberta-community- takes-a-dig-at-urban-drilling/article18454202/. 14. Bill 21, Modernized Municipal Government Act, 2nd sess., 29th Legislature, 2016 Alberta, date accessed November 11, 2016, http://www.assembly.ab.ca/ISYS/LADDAR_files/docs/bills/bill/legislature_29/session_2/20160308_bill-021.pdf.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

2.0 Literature Review

To survey the policy and issues landscape related to urban drilling, academic and professional literature are reviewed that cover the following topics:

• Role of Local Communities in Energy Development Decision-Making

• Alberta’s Regulatory Regime

• Alberta Case Studies

• Policy Response and Literature on Urban Drilling Issues in Other Jurisdictions

o State of Colorado

o State of Texas

• Parallels to Crude-by-Rail Policy Issues

2.1 Role of Local Communities in Energy Development Decision-Making

The issue of local involvement in decision-making factors heavily into discussions about urban drilling. In fact, this issue is at the centre of debates over various types of energy development projects.

The Canada West Foundation produced a comprehensive research report on this issue, A Matter of Trust:

The role of communities in energy decision-making, which addresses the main factors behind local opposition to energy developments.15 Among these is local involvement in decision-making; others include safety, need, distribution of benefits, local environmental impacts, and restrictive consultation and communication practices.16 The authors point to the importance of early engagement, and the substance of the engagement process.17 This process must involve more than notices and town halls, potentially including the local community to a significant degree - for example, establishing a stake in

15. Michael Cleland, Stephen Bird, Stewart Fast, Shafak Sajid, and Louis Simard, “A Matter of Trust: The Role of Communities in Energy Decision-Making,” Canada West Foundation, November 2016, http://cwf.ca/wp- content/uploads/2016/11/CWF_uOttawa_MatterTrust_Report_28NOV2016_WEB.pdf. 16. Ibid. 17. Ibid.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta the project for the affected community.18 A major recommendation from this report is a “fundamental

19 rethink” of the role of local governments, as illustrated by the following statement:

“We need to think through the fundamental importance of community planning and the appropriate powers and roles of local authorities in project decision-making.”

Here, the authors point to the challenge that confronts policymakers when factoring local concerns into decisions that affect broader society. This dynamic involves trade-offs for politicians relative to

20 local demands versus societal interests in energy developments.

2.2 Alberta Regulatory Regime

Energy companies explore a variety of land opportunities for oil and gas drilling in Alberta, including sites near and within urban municipalities.21 The current MGA governs all municipalities in the province and, as stated in section 618, does not distinguish between urban and rural land when it comes to oil and gas development.22 Energy companies obtain mineral rights in urban areas through section 23 of the Mines and Minerals Act.23 Alberta Energy facilitates petroleum and natural gas sales to energy companies.24 Geophysical exploration marks the first stage of the application process for all energy developments across Alberta; geophysical exploration refers to surface and subsurface exploration of land through activities such as drilling.25 The Alberta Energy Regulator (AER) is

18. Ibid. 19. Ibid. 20. Ibid. 21. Alberta, Alberta Energy, Energy Development In and Near Urban Areas. 22. Alberta, Municipal Government Act, Revised Statutes of Alberta 2000, c. M-26, http://www.qp.alberta.ca/documents/Acts/m26.pdf. 23. Alberta, Mines and Minerals Act, Revised Statutes of Alberta 2000, c. M-17, http://www.qp.alberta.ca/documents/Acts/M17.pdf. 24. Alberta, Alberta Energy, Petroleum and Natural Gas Sales, date accessed November 11, 2016, http://www.energy.alberta.ca/Tenure/607.asp. 25. Alberta, Alberta Energy Regulator, Mines and Minerals Act Fact Sheet, date accessed May 24, 2017, https://www.aer.ca/documents/enerfaqs/MMA_FS.pdf.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

responsible for regulating and governing geophysical exploration, which falls under part 8 of the Mines and Minerals Act.26 The AER assumed responsibility for this part of the act on November 30, 2013 from the provincial ministry formerly called Alberta Energy and Sustainable Resource Development (now

Alberta Environment and Parks).27 This transition occurred under the Responsible Energy Development

28 Act.

Regarding public notification, the AER publishes all applications for proposed developments online.29 Prior to accepting an application, the AER may require a company to provide information about its proposal to certain individuals and groups; these include landowners and local authorities, but depend on the nature of the proposal.30 At this stage, the AER requires the company to provide information about its rationale for the location of its proposed energy development, as well as expected equipment and operations during production.31 According to the AER website, through digital publication of all applications, the AER aims to “encourage public participation in the approval process.”32 The AER’s

Statement of Concern provides a means for Albertans to engage in this process. In a Statement of

Concern, a member of the public files a written submission about specific concerns over an application for an energy development.33 Submitting a Statement of Concern requires only that the member of the public believes there is potential for direct, adverse effects from a proposed energy development.34 In the

35 AER’s review of applications, it considers any Statements of Concern that meet their requirements.

26. Alberta, Alberta Energy Regulator, Mines and Minerals Act (Part 8) Transitions to the AER, date accessed May 24, 2017, https://www.aer.ca/applications-and-notices/application-process/mma. 27. Alberta, Alberta Energy Regulator, Applications and Notices, Frequently Asked Questions, date accessed May 24, 2017, https://www.aer.ca/applications-and-notices/application-process/mma%20-%20faqs. 28. Alberta, Alberta Energy Regulator, Mines and Minerals Act Fact Sheet. 29. Alberta, Alberta Energy Regulator, Public Notice of Applications, date accessed May 24, 2017, http://search.aer.ca/pnoa-en/search/theme/pnoa?fq%5b%5d=feed_str:all&sort=recent. 30. Alberta, Alberta Energy Regulator, EnerFAQs, Expressing Your Concerns, date accessed May 24, 2017, https://www.aer.ca/about-aer/enerfaqs/enerfaqs-expressing-your-concerns#whatis. 31. Ibid. 32. Alberta, Alberta Energy Regulator, Applications and Notices, Statement of Concern, date accessed May 24, 2017, https://www.aer.ca/applications-and-notices/statement-of-concern. 33. Alberta, Alberta Energy Regulator, EnerFAQs, Expressing Your Concerns. 34. Ibid. 35. Ibid.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

Alternative Dispute Resolution (ADR) is another avenue for involvement by stakeholders; ADR processes include direct negotiation and mediation, either by the AER or a third party.36 Stakeholders may employ ADR prior to a formal AER application, during the review process, as well as for operational disputes.37 The ADR program follows a set of key principles, including a requirement that

ADR follows earlier resolution attempts, voluntary participation, and maintaining AER neutrality.38

Finally, the AER may conduct a hearing about an application. AER hearings provide a public forum for

39 those who may be directly affected by a proposed energy project to voice their concerns.

The AER regulates approved developments through various mechanisms, such as setback distances.40 Setback distances create buffer zones between residents and energy facilities as a safety measure in the event of an emergency situation.41 As illustrated by the AER’s image below, these distances range from 100 metres to 1,500 metres between an energy development and an urban centre,

42 public facility, unrestricted county development, and permanent dwelling.

36. Alberta, Alberta Energy Regulator, Alternative Dispute Resolution, date accessed June 2, 2017, https://www.aer.ca/applications-and-notices/alternate-dispute-resolution. 37. Ibid. 38. Ibid. 39. Alberta, Alberta Energy Regulator, EnerFAQs Hearings, date accessed June 2, 2017, https://www.aer.ca/about- aer/enerfaqs/enerfaqs-hearing#whatis. 40. Alberta, Alberta Energy Regulator, Explaining AER Setbacks, March 2015, https://www.aer.ca/documents/enerfaqs/AER_EnerFAQs05_Setbacks.pdf. 41. Ibid., 2. 42. Ibid.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

The distances depend on the type of energy development, such as sour wells versus pipelines,

43 versus other energy facilities.

2.3 Alberta Case Studies

Table 1 captures recent cases in Alberta where urban drilling projects have prompted municipalities to call for major legislative changes and community associations to organize opposition campaigns. At the time of writing, a new case has emerged in Red Deer involving Vesta Energy Ltd.

Table 1: Alberta Case Studies

City and Year Energy Opposition Result Company Red Deer Vesta No public opposition as of July 2017 Ongoing project 44 2017 Energy Ltd.

Lethbridge Goldenkey Mayor Chris Spearman speaks out; City Goldenkey Oil Inc. 45 2014 Oil Inc. Council facilitates a public information abandons its session, and proposes a resolution to proposed project amend the MGA; community members launch the “No Drilling Lethbridge” petition, as well as a social media campaign and protests Calgary Kaiser Community Association President Ward Kaiser Exploration 46 2012 Exploration Sutherland organizes community Ltd. finds a new Ltd. members, a social media campaign, location for its signage, and protests; Sutherland wins a proposed project council seat, and becomes the point person on this issue for Calgary City Council

43. Ibid. 44. Mary-Ann Barr, “Six Oil Wells Proposed North of Red Deer City Limits; Eight More Could Follow.” 45. Teri Fikowski, “Goldenkey Oil Cancels Plans to Drill within Lethbridge,” Global News, April 30, 2014, http://globalnews.ca/news/1303309/goldenkey-oil-cancels-plans-to-drill-within-lethbridge/. 46. James Wood, “NDP Promises to Ban Gas Drilling in Urban Areas,” Calgary Herald, May 21, 2015, http://calgaryherald.com/news/politics/ndp-promises-to-ban-gas-drilling-in-urban-areas.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

The case underway in Red Deer may once again prompt a response, or promise of a response, to urban drilling policy by Alberta policymakers. As illustrated by Table 1, the Vesta Energy Ltd. proposal is not currently facing public opposition. According to news media, Vesta Energy Ltd. is seeking input from the City of Red Deer on the proposed project.47 The Red Deer Municipal Planning Commission does not object to the project if Vesta Energy Ltd. engages in the City of Red Deer’s Consultation and

Process Agreement.48 Consistent with the cases in Calgary and Lethbridge, dialogue around the Red

Deer case brings issues related to public safety, environmental concerns, setback distances, and long-

49 term municipal planning to the forefront of the policy discussion.

2.4 Policy Response by Other Jurisdictions: Colorado and Texas

Due to the prevalence and frequency of urban drilling issues in some jurisdictions, their policymakers have addressed these issues in more substantive ways than those in Alberta. The states of

Colorado and Texas provide examples of jurisdictions where key issues associated with urban drilling have been addressed at the policy level. In February 2015, the Colorado Oil and Gas Task Force

(hereinafter “the Task Force”) released a major report into oil and gas development across the state; this report stemmed from an executive order by the State of Colorado for a “Task Force on State and Local

Regulation of Oil and Gas Operations.”50 The Task Force specifically addressed “adjustments to regulations that may reflect population density, geographic diversity and the unique conditions that may distinguish urban, suburban, and rural communities.”51 Ultimately, the Task Force approved nine final

52 recommendations, including the following on urban drilling:

47. Mary-Ann Barr, “Six Oil Wells Proposed North of Red Deer City Limits; Eight More Could Follow.” 48. Ibid. 49. Ibid. 50. State of Colorado, “Colorado Oil and Gas Task Force Final Report,” Keystone Centre, February 27, 2015, http://dnr.state.co.us/ogtaskforce/Documents/OilGasTaskForceFinalReport.pdf. 51. Ibid., 5. 52. Ibid., 3.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

Recommendation to facilitate collaboration of local governments, Colorado oil and gas conservation commission and operators relative to oil and gas locations and urban planning.

53 The key takeaways from the Colorado Oil and Gas Tax Force are summarized in Table 2. Table 2: Key Takeaways from the Colorado Oil and Gas Task Force Report

Rules Rationale Key Considerations

Define and adopt a Local governments argue that they require increased • Scale process to enhance involvement earlier in the process of applications and • Proximity local government approvals for drilling operations. • Intensity participation during the application stage The recommended process provides local for a proposed governments with an opportunity to discuss proposed project projects with energy companies prior to decisions Define what about project location. qualifies as “Large Scale Oil and Gas This process acts as a mechanism for local Facilities” governments to collaborate with both energy companies and the regulating agency (in this case, Address the the Colorado Oil and Gas Conservation Commission authority of and - COGCC). procedures relative to the location of If the local government and energy company fail to proposed projects to agree on a location, the process moves to a mediation reduce impacts and stage. conflicts with communities

53. Ibid., 5.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

Ultimately, the Task Force recommendation affords significant weight to the role of designated

“Urban Mitigation Areas,” which refer to any point within 1,000 metres of a school, hospital, or home.54

Critics argue that the Task Force narrowly defined its recommendation to only impact 1 per cent of drilling projects.55 However, according to the COGCC, the number of drilling projects that fall within

Urban Mitigation Areas is growing.56 Therefore, the desired outcome is achieved by instituting a process for local governments and energy companies to increase communication between parties.

Consistent with the experiences of other jurisdictions discussed, drilling activities in Texas within close proximity to urban centres raise concerns about safety, the environment, and other neighbourhood impacts, such as property values.57 In Texas, setback distances have been the primary mechanism employed to address these concerns. As outlined in Section 2.2, setback distances play a similar role in

Alberta. In “Urban Gas Drilling and Distance Ordinances in the Texas Barnett Shale,” Matthew Fry succinctly summarizes the policy purpose of setback distances in Texas, which is consistent in the

58 Alberta context:

The purpose of this buffer space is to protect public health, safety, and welfare; safeguard environmental quality; promote efficient gas extraction; and minimally impact the rights of property owners.

However, according to Fry’s research, almost all setback distances originate in negotiations between municipal policymakers and interested parties.59 Consequently, setback distance policy can

54. Mark Jaffe, “Is Peace at Hand over Oil and Gas Drilling in Colorado,” The Denver Post, February 5, 2016, http://www.denverpost.com/2016/02/05/jaffe-is-peace-at-hand-over-oil-and-gas-drilling-in-colorado/. 55. Ibid. 56. Ibid. 57. Matthew Fry, “Urban Gas Drilling and Distance Ordinances in the Texas Barnett Shale,” Energy Policy (2013), DOI: 10.1016/j.enpol.2013.07.107. 58. Ibid., 86. 59. Ibid., 86.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta represent a “highly politicized and negotiated space.”60 Fry contends that setback distances as employed in Texas do not have an empirical basis, but rather serve only as a political tool.61 Setback distances vary among jurisdictions, and thus Fry recommends that other jurisdictions contending with urban drilling issues develop a stronger understanding of the political - versus empirical - influences behind setback

62 distances to improve their effectiveness as a component of urban drilling policy.

2.5 Parallels to Crude-by-Rail Policy Issues

As discussed, setback distances are a key mechanism that policymakers use to address issues of proximity and safety around urban drilling projects. These issues involve similar concerns as those associated with the transportation of crude oil by rail. Canada’s Lac-Mégantic disaster in 2013 prompted the Federation of Canadian Municipalities (FCM) to submit a formal call for action from the federal government on the issue of rail safety for communities.63 Transport Canada has since issued Protective

Directives No. 32, No. 34, and No. 36, as well as an Emergency Response Task Force and new legislation.64 While each action addresses community safety relative to the transportation of dangerous goods by rail, Protective Directive No. 32 specifically responds to the issue of municipal resources for emergencies; this directive requires railways to provide local first responders with information about dangerous goods.65 Regarding urban drilling and emergency response, energy developers currently notify or consult with affected municipalities about development plans, and coordinate with the municipalities on emergency response planning.66 The FCM’s work on rail safety illustrates the role for

60. Ibid., 86. 61. Ibid. 62. Ibid., 88. 63. Federation of Canadian Municipalities, “Municipal Leaders Call for Concrete Federal Action on Rail Safety,” news release, August 23, 2013, http://www.fcm.ca/home/media/news-and-commentary/municipal-leaders-call-for-concrete-federal- action-on-rail-safety.htm. 64. Federation of Canadian Municipalities, National Municipal Rail Safety Working Group, date accessed November 12, 2016, http://www.fcm.ca/home/issues/public-safety-and-emergency-preparedness/rail-safety/national-municipal-rail-safety- working-group.htm. 65. Ibid. 66. Alberta, Alberta Energy, Energy Development In and Near Urban Areas.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

higher levels of government to standardize safety measures around the transportation or development of dangerous goods near and within urban boundaries.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

3.0 Methodology

3.1 Definitions and Qualifications

For the purposes of this project, the term “urban municipalities” refers to municipalities with populations of 30,000 people and more. In Alberta, this group includes the following 11 municipalities based on 2016 municipal census data:

67 • Airdrie: 61,842

68 • Calgary: 1,235,171

69 • Edmonton: 899,447

70 • Fort McMurray: 66,573

71 • Grande Prairie: 63,166

72 • Leduc: 30,498

73 • Lethbridge: 96,828

74 • Lloydminster: 31,400

75 • Medicine Hat: 63,260

67. Airdrie, Population Growth, date accessed May 11, 2017, http://www.airdrie.ca/index.cfm?serviceID=485. 68. Calgary, 2016 Census Results, date accessed May 11, 2017, http://www.calgary.ca/CA/city- clerks/Documents/Election-and-information-services/Census2016/2016-Census-Results-Book.pdf. 69. Edmonton, City Government, Edmonton Census 2016, date accessed May 11, 2017, https://www.edmonton.ca/city_government/facts_figures/municipal-census-results.aspx. 70. Statistics Canada, 2017, Fort McMurray [Population centre], Alberta and Saskatchewan [Province] (table), Census Profile, 2016 Census, Statistics Canada Catalogue no. 98-316-X2016001, Ottawa, May 3, 2017. http://www12.statcan.gc.ca/census-recensement/2016/dp- pd/prof/details/page.cfm?Lang=E&Geo1=POPC&Code1=0292&Geo2=PR&Code2=48&Data=Count&SearchText=Fort%20 McMurray&SearchType=Begins&SearchPR=01&B1=All&TABID=1. 71. Grande Prairie, City Government, Quick Statistics, date accessed May 11, 2017, http://www.cityofgp.com/index.aspx?page=756. 72. Leduc, Community: About Leduc, Population & Demographic, date accessed May 11, 2017, https://www.leduc.ca/about-leduc/demographics. 73. Lethbridge, News Centre, 2016 Census Results, June 27, 2016, http://www.lethbridge.ca/NewsCentre/Pages/2016Census.aspx. 74. Statistics Canada. 2017. Lloydminster [Population centre], Alberta/Saskatchewan and Alberta [Province] (table). Census Profile. 2016 Census. Statistics Canada Catalogue no. 98-316-X2016001. Ottawa. Released May 3, 2017. http://www12.statcan.gc.ca/census-recensement/2016/dp- pd/prof/details/page.cfm?Lang=E&Geo1=POPC&Code1=0478&Geo2=PR&Code2=48&Data=Count&SearchText=Lloydmi nster&SearchType=Begins&SearchPR=01&B1=All&TABID=1. 75. Medicine Hat, Government, Municipal Census, date accessed May 11, 2017, http://www.medicinehat.ca/index.aspx?page=226.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

76 • Red Deer: 99,832

77 • Spruce Grove: 33,640

In this project, “near” refers to drilling activity within 2 kilometres of municipal boundaries.

Regarding scope, all drilling activity associated with oil and gas wells near and within urban municipal boundaries is considered.

3.2 Data Collection for Quantitative Assessment

Using a computer program called geoScout, data and visual representations of drilling activity associated with oil and gas wells near and within each of Alberta’s urban municipalities are produced.

To quantitatively assess urban drilling activity, a set of graphs illustrate the scope of this policy issue in

Alberta. Appendix A provides a set of maps, which indicate wells near urban municipal boundaries through blue symbols and wells within urban municipal boundaries through red symbols.

Based on drilling activity tracked by the geoScout program, wells of various statuses are organized into the following categories:

• Active

• Abandoned

• Completed

• Suspended

• Other

Regarding limitations, the inclusion of various statuses may appear to overstate the number of oil and gas wells near and within Alberta’s urban municipalities. Thus, the municipality maps in Appendix

A, and findings based on quantitative analysis of the data, may appear to overstate the overall scope of the issue of urban drilling in Alberta. However, through quantitative assessment and visual

76. Red Deer, About Red Deer, Population and Demographics, date accessed May 11, 2017, http://www.reddeer.ca/about-red-deer/population-and-demographics/. 77. Spruce Grove, Spruce Grove Demographic Report 2016, date accessed May 11, 2017, http://www.sprucegrove.org/Assets/pdf/reports/census/census_2016.PDF.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

representations of all activity related to oil and gas drilling near and within Alberta’s urban municipalities, the overall objective is achieved.

3.3 Matrix for Qualitative Assessment

To qualitatively assess urban drilling issues, a matrix is used to weigh and rank the potential application of recommendations employed by other jurisdictions to the Alberta context. The matrix includes categories that capture best practices associated with urban drilling, as identified through review of both professional and academic literature. The matrix includes weights for each category as a mechanism to rank the applicability of each best practice to Alberta. From surveying the broadest landscape of literature and relevant cases, Table 3 provides a set of standard criteria by which to organize and apply best practices from other jurisdictions’ experiences to Alberta. The assigned weights refer to the importance of the identified best practices to address the issue of urban drilling, as determined by the review of professional and academic literature, as well as relevant cases.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

Table 3 – Qualitative Assessment Matrix

Best Practice Issue Weight Rationale Addressed (on a scale of 0.0 – 1.0) Timing: It is Urban 1.0 Consistent in the Alberta case studies, and supported mandated that municipality by the Colorado Oil and Gas Task Force urban municipal support recommendation, the timing of notifying an urban governments versus municipal government about a proposed project receive earlier opposition factors into municipality reaction. When notification of municipalities receive notice at the proposal stage of project a project, they are more likely to support, rather than proposals. oppose, the project. Timing impacts urban municipal government response because the municipality has an opportunity to contribute to the discussion about next steps, rather than receive notification once the proposed project is further along in the process. Engagement: It Urban 0.8 Consistent in the Alberta case studies, and supported is mandated that planning by the Colorado Oil and Gas Task Force the application recommendation, increasing municipal government stage for participation in the application stage of a proposed proposed project contributes to a municipality’s ability to plan projects involves ongoing and future development accordingly. increased participation by urban municipal governments. Population- Empirical 0.6 Consistent in the Alberta case studies, and supported based setback versus by the Texas experience regarding setback distances, distances: It is political adjusting and standardizing these distances mandated that design specifically for urban municipalities legitimizes their setback distances use. Employing empirical analysis in this process factor addresses the criticism that setback distances are distinctions for political tools to make drilling more publicly urban palatable. municipalities into measurements based on population sizes.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

4.0 Assessment of Urban Oil and Gas Activity in Alberta

As illustrated by mapping in Appendix A, activity related to drilling oil and gas wells near and within Alberta’s urban municipalities is not sparse. Figures 1 through 7 provide visual representations of the scope of urban drilling in Alberta, paired with a brief explanation of the associated findings.

4.1 Number of Wells in Alberta Urban Municipalities

Figure 1 shows the number of wells of various statuses near and within Alberta’s urban municipalities. Edmonton decisively leads the group with the highest total number of wells. There are around half as many wells in Medicine Hat, but more of those wells are active in Medicine Hat than in

Edmonton. Lloydminster and Fort McMurray follow, but with the majority of their wells abandoned. In

Calgary, there are few active wells relative to those abandoned and completed. Red Deer follows, but with more active wells than Calgary, Fort McMurray, and Lloydminster.

Figure 1: Number of Wells in Alberta Urban Municipalities

Source: Data collected through the geoScout program, a service offered by geoLogic Systems

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

4.2 Percentage of Wells of Various Statuses in Alberta Urban Municipalities

Figure 2 shows the percentage of urban wells of various statuses among municipalities. The municipalities with the highest percentage of active urban wells are Medicine Hat and Spruce Grove. For both cities, around 70 per cent of urban wells are active. Leduc and Lethbridge follow with just under 50 per cent, and Red Deer and Edmonton with around 40 per cent. The majority of wells in Lloydminster,

Fort McMurray, Calgary, Airdrie, and Grande Prairie are abandoned.

Figure 2: Percentage of Wells of Various Statuses in Alberta Urban Municipalities

Source: Data collected through the geoScout program, a service offered by geoLogic Systems

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

4.3 Active Wells versus All Wells in Alberta Urban Municipalities

Figure 3 shows urban well density (wells per thousand people), comparing active wells against all wells near and within Alberta’s urban municipalities. Medicine Hat has the highest active urban well density with nearly 10 active urban wells per thousand people, followed by Lloydminster and Spruce

Grove - both with approximately 2 active urban wells per thousand people.

Figure 3: Active Wells versus All Wells in Alberta Urban Municipalities

Source: Data collected through the geoScout program, a service offered by geoLogic Systems

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

4.4 Urban Well Density in Alberta

Figure 4 compares the number of urban wells in each municipality to urban well density in each municipality (wells per thousand people). While Edmonton has the highest number of wells,

Lloydminster has the highest urban well density. Medicine Hat has the highest density of active urban wells.

Figure 4: Urban Well Density in Alberta

Source: Data collected through the geoScout program, a service offered by geoLogic Systems

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

4.5 Ratio of Wells Near versus Within Alberta Urban Municipal Boundaries

Figure 5 shows the ratio of wells near Alberta’s urban municipalities to wells within Alberta’s urban municipalities. With the exceptions of Calgary and Fort McMurray, there are more active urban wells near than within urban municipal boundaries.

Figure 5: Ratio of Wells Near versus Within Alberta Urban Municipal Boundaries

Source: Data collected through the geoScout program, a service offered by geoLogic Systems

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

4.6 Urban Wells Drilled versus All Wells Drilled between 2000 and 2017

Figure 6 shows the change in number of urban wells drilled per year and all wells drilled per year between 2000 and 2017 in Alberta. Urban drilling activity peaked between 2007 and 2008, spiking again

(although to a lesser degree) between 2011 and 2012. Drilling activity, both urban and in general, is currently at its lowest over this time period.

Figure 6: Urban Wells Drilled versus All Wells Drilled between 2000 and 2017

All Wells Urban Wells

35000 140

30000 120

illed

25000 100

illed

ells

W 20000 80

of of ells

15000 60 an

Number Ur

10000 40

al t

T 5000 20

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7

0 0 0

0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Source: Data collected through the geoScout program, a service offered by geoLogic Systems

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

4.7 Municipality Breakdown of Urban Wells Drilled between 2000 and 2017 Figure 7 shows the number of urban wells drilled in each of Alberta’s urban municipalities between 2000 and 2017. In the early 2000s, Lethbridge had the highest number of urban wells drilled per year. In 2008, Calgary peaked and led the group, followed by Medicine Hat in 2009, and Fort McMurray in 2011. Most recently, the highest number of urban wells drilled per year has been in Edmonton.

Figure 7: Municipality Breakdown of Urban Wells Drilled between 2000 and 2017

Source: Data collected through the geoScout program, a service offered by geoLogic Systems

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

Based on findings outlined by Figures 1 through 7, it is argued in this project that drilling activity for oil and gas wells factors into Alberta’s urban municipal landscape to a degree that justifies provincial policy specific to urban drilling. This issue is not new in Alberta, is ongoing, and varies across the province’s urban municipalities. When considered in conjunction with Alberta case studies, the findings show the prevalence of high-profile cases of local opposition to urban drilling projects is not proportional to the prevalence of drilling activity for oil and gas wells near and within urban municipal boundaries. This inconsistency supports the need for specific policy to standardize the process around proposed urban oil and gas wells. A standardized process reduces the potential for opposition founded in public misconception rather than scientific evidence, as well as improves local confidence in approved developments. Therefore, it is argued in this project that specific urban drilling policy will close the identified gap between the prevalence of local opposition in proportion to urban drilling activity.

Additionally, the findings give rise to policy considerations relative to the status of urban wells, as well as their locations. For example, data for Calgary, where urban drilling generated public debate and garnered media attention as recently as 2012, shows more active wells within than near municipal boundaries (Figure 5). Data for Lethbridge, where the municipal government called for amendments to the MGA in 2014 due to urban drilling, shows that nearly 50 per cent of its urban wells are active

(Figure 2). The data and experiences of Calgary and Lethbridge suggest that well status (active versus abandoned and suspended), as well as location (near versus within) municipal boundaries, factor into local palatability of urban drilling.

Regarding levels of concern varying among types of oil and gas wells, such as sour versus sweet, these differences are outside the project’s policy focus. It is recommended that policy relative to types of oil and gas wells is pursued separately from its discussion around timing, engagement, and setback distances. This recommendation is further discussed as a future policy consideration in Section 6.0.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

4.8 Best Practices from Colorado and Texas: Applicability to Alberta

Table 4 captures best practices for urban drilling identified in the experiences of Colorado and

Texas, ranked relative to their applicability to Alberta.

Table 4: Best Practices from Colorado and Texas: Applicability to Alberta

Best Practice Issue Weight Applicability to Alberta (on a scale of 0.0 – 4.0 Addressed with 4.0 being the most applicable) and Rationale Timing: It is Urban 1.0 3.0 – Currently, Alberta’s provincial government may mandated that municipality require an energy company to provide information urban municipal support about a proposal to local authorities and landowners. governments versus However, this requirement depends on the proposal. receive earlier opposition Therefore, while Alberta applies this best practice, it notification of is to a limited degree. It is determined in this project project that mandating timing applies in the Alberta context proposals. at a ranking of 3.0/4.0 to effectively fill the identified policy gap. Engagement: It Urban 0.8 4.0 – Currently, Alberta’s provincial government is mandated that planning does not mandate municipal government participation the application in the application stage of proposed projects. stage for Therefore, it is determined in this project that proposed mandated engagement of municipalities in the projects involves application stage applies in the Alberta context at a increased ranking of 4.0/4.0 to effectively fill the identified participation by policy gap. urban municipal governments. Population- Empirical 0.6 1.0 – Currently, the AER mandates setback distances based setback versus for different types of developments. However, distances: It is political implementing standardized distances specifically for mandated that design urban municipalities addresses concerns that arise setback distances around implementation as a politically-, rather than factor empirically-, based policy tool. It is determined in distinctions for this project that population-based setback distances urban apply in the Alberta context at a ranking of 1.0/4.0 to municipalities effectively fill the identified policy gap. into measurements based on population sizes.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

Based on the weighting, ranking, and rationale outlined above, the following best practices as developed and implemented in other jurisdictions apply in Alberta in the following order (with 1 being the most applicable): 1) Engagement 2) Timing 3) Population-based setback distances.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

5.0 Policy Recommendations and Implementation

While the majority of energy development in Alberta happens in rural areas, the provincial government must address the hotly debated issues associated with drilling activity for oil and gas wells near and within urban boundaries. The case developing in Red Deer gives rise and relevance once again to this policy issue in Alberta. As discussed, at the time of writing, the energy company and municipality are cooperating and collaborating on the proposed drilling activity. The energy company has asked for municipal government input, and in this case, the municipal government follows a previously-developed consultation process that emphasizes open communication and collaboration on future urban planning.78

This case exemplifies the application of recommended best practices for Alberta policymakers relative to increased engagement and earlier timing of notification relative to urban municipal governments.

However, it is important to note that these best practices are voluntary by both the energy company and municipal government, and thus not regulated or consistent across the province. Consequently, Red

Deer’s experience does not translate into that of other Alberta urban municipalities. Therefore, it is recommended in this project that Alberta’s provincial government follows the Red Deer case closely to determine if its process serves as a model for provincial policy.

Based on both quantitative and qualitative assessment, it is determined that there is no single, ideal model for urban drilling policy. Instead, it is concluded that a flexible approach to this policy issue will serve Alberta most effectively through the following recommendations:

5.1 Timing and Engagement

Under current policy, the timing of notification and level of engagement relative to urban municipal governments is insufficient to address municipality and community concerns - and thus opposition - to urban drilling projects. Starting this process at a stage where energy companies present development plans to municipalities and communities is too late for these parties and other key

78. Mary-Ann Barr, “Six Oil Wells Proposed North of Red Deer City Limits; Eight More Could Follow.” 33

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

stakeholders to provide meaningful input. The modernized MGA and City Charter regulation - both under development - provide mechanisms for the provincial government to address municipality and community concerns over Alberta’s current urban drilling policy.79 To improve intergovernmental relations, a provision in both the modernized MGA and City Charter regulation is recommended to mandate earlier and formal input by urban municipal governments in the decision-making process for all urban drilling projects. In terms of community input, mandatory public forums for urban drilling projects held prior to and in tandem with the AER’s evaluation of applications would expand involvement by community members, as well as other key stakeholders. Both municipality input and community forums should happen in advance of the AER’s final decision for all proposed projects, and thus mobilization of development plans.

By mandating earlier timing of notification and expanded engagement, the provincial government provides the municipality and community with an opportunity to play an active role in addressing concerns over the key issues that underline urban drilling debates. By addressing these factors through improved urban drilling policy, the provincial government minimizes the extent of opposition to urban drilling projects from municipalities and community members. This method improves the chances for urban drilling projects to move forward, and thus contribute to Alberta’s economy with support from key stakeholders.

Therefore, mandating earlier timing of notification and expanded engagement relative to urban municipalities ahead of the AER decision-making process for an urban drilling project benefits all parties involved in the process, including municipal and provincial governments, energy companies, and

Albertans. In terms of costs, an increased and mandated emphasis on timing and engagement does not negate the potential for issues to surface in areas of municipality and community concern, such as

79. Alberta, Government Projects, Priorities, and Consultations, City Charters, date accessed October 10, 2016, http://www.alberta.ca/city-charters.aspx.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

emergency situations or decline in property values. However, meaningful engagement among municipalities, communities, and key stakeholders further legitimizes the AER decision-making process while also minimizing politicization of the process. This outcome thus addresses municipality and community concerns over limited voice in urban drilling decisions - key issues that underline urban drilling debates.

5.2 Population-based Setback Distances

While the current AER process addresses safety concerns associated with all energy facilities, this process would benefit from explicitly distinguishing urban centres from other categories. It is recommended that population sizes of affected communities be factored into setback distances for urban centres through empirical means, as well as standardized for various levels of population sizes. Through a set of requirements with province-wide application, the provincial government would address concerns that setback distances are purely a political tool. The FCM’s work on rail safety demonstrates the role for higher levels of government to standardize safety measures around the transportation or development of dangerous goods near and within urban boundaries. Thus, while Alberta’s current policy acknowledges the importance of safety measures, standardized setback distances, empirically determined and based on population sizes, further increase stringency around urban drilling projects.

5.3 Implementation

It is recommended that Alberta’s provincial government mandates earlier timing of notification and expanded engagement relative to proposed energy projects and urban municipalities. The modernized MGA and City Charter regulation provide mechanisms to improve intergovernmental and community relations over urban drilling through participation at an earlier stage of the decision-making process. Additionally, this policy option presents a means to incorporate population-based setback distances to further increase safety measures. The AER ultimately continues to control the final decision on project applications.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

6.0 Future Policy Considerations

Implementation of the discussed policy recommendations will improve relations among local communities, municipalities, and the provincial government. Additionally, the recommendations will improve outcomes for proposed urban drilling projects due to the mandated processes and measures in place. To further develop Alberta’s urban drilling policy, the provincial government may consider a distinct policy for proposed sour gas wells. This distinction may apply to setback distances, as well as municipality engagement relative to emergency response planning. The discussed consideration specifically addresses municipality and community safety concerns over sour gas wells.

An additional consideration may be public perception, and how it differs around urban drilling in different areas of Alberta. For example, Edmonton has the highest number of wells, Lloydminster has the highest urban well density, and Medicine Hat has the highest density of active urban wells. Yet, urban drilling in these municipalities has not prompted public debate and media coverage in recent years to the same degree as in Calgary and Lethbridge. Therefore, it is recommended that future policymakers consider an urban municipality’s proximity to other types of energy developments, as well as the energy industry, and how that proximity factors into support versus opposition for urban drilling.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

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Statistics Canada. 2017. Fort McMurray [Population centre], Alberta and Saskatchewan [Province] (table). Census Profile. 2016 Census. Statistics Canada Catalogue no. 98-316-X2016001. Ottawa. Released May 3, 2017. http://www12.statcan.gc.ca/census-recensement/2016/dp- pd/prof/details/page.cfm?Lang=E&Geo1=POPC&Code1=0292&Geo2=PR&Code2=48&Data=C ount&SearchText=Fort%20McMurray&SearchType=Begins&SearchPR=01&B1=All&TABID= 1.

Statistics Canada. 2017. Lloydminster [Population centre], Alberta/Saskatchewan and Alberta [Province] (table). Census Profile. 2016 Census. Statistics Canada Catalogue no. 98-316- X2016001. Ottawa. Released May 3, 2017. http://www12.statcan.gc.ca/census- recensement/2016/dp- pd/prof/details/page.cfm?Lang=E&Geo1=POPC&Code1=0478&Geo2=PR&Code2=48&Data=C ount&SearchText=Lloydminster&SearchType=Begins&SearchPR=01&B1=All&TABID=1.

Stephenson, Amanda. “Communities Want More Input in Urban Drilling Decisions.” Calgary Herald. May 12, 2014. http://calgaryherald.com/news/local-news/communities-want-more-input- in-urban-drilling-decisions.

Wood, James. “NDP Promises to Ban Gas Drilling in Urban Areas.” Calgary Herald. May 21, 2015. http://calgaryherald.com/news/politics/ndp-promises-to-ban-gas-drilling-in-urban-areas.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

Appendices

Appendix A

Appendix A provides a set of maps, which include and show the following:

• Alberta provincial map: Overall scope of oil and gas drilling activity across Alberta

• Individual municipality maps for each of Alberta’s urban municipalities: Drilling activity near and

within each urban municipality’s boundaries

Blue symbols indicate wells within 2 kilometres of an urban municipal boundary. Red symbols indicate wells within an urban municipal boundary. The following Well Symbols Key provides descriptions for abbreviations as they appear on the municipality maps, which indicate the status of oil and gas wells represented.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

Well Symbols Key Source: geoScout program, a service offered by geoLogic Systems

ACB Abandoned Cbm Gas; Abandoned Zone Cbm Gas; Abandoned Zone Shale Gas

ABO Abandoned Whipstocked Bitumen Oil; Abandoned Cyclical Bitumen Oil; Abandoned Whipstocked Cyclical Bitumen Oil; Abandoned Zone Bitumen Oil; Abandoned Zone Triple Zone Bitumen Oil; Abandoned Zone Cyclical Bitumen Oil

AFG Abandoned Gas Farm; Abandoned Zone Gas Farm

AG Abandoned Whipstocked Gas; Abandoned Gas; Abandoned Gas Disposal; Abandoned Gas Producer; Abandoned Gas Undefined; Abandoned Shale Gas; Abandoned Zone Shale Gas

AGD Abandoned Acid Gas; Abandoned Acid Gas Disposal; Abandoned Gas Disposal; Abandoned Zone Acid Gas Disposal

AGI Abandoned Acid Gas Injector; Abandoned Whipstocked Gas Injector; Abandoned Gas Injector; Abandoned Lpg Injector; Abandoned Zone Acid Gas Injector; Abandoned Zone Gas Injector; Abandoned Zone Lpg Injector

AGS Abandoned Gas Storage; Abandoned Re-Entered Gas Storage; Abandoned Zone Gas Storage; Drilled and Abandoned Cavern Gas Storage

AGZ Abandoned Dual Zone Gas; Abandoned Triple Zone Gas; Abandoned Gas Producer; Abandoned Gas Undefined; Abandoned Zone Gas; Abandoned Zone Dual Zone Gas; Abandoned Zone Triple Zone Gas; Abandoned Zone Four Zone Gas

AO Abandoned Commingled Oil Producer; Abandoned Oil; Abandoned Whipstocked Oil; Abandoned Oil Undefined

AOZ Abandoned Commingled Oil Producer; Abandoned Oil Producer; Abandoned Oil Undefined; Abandoned Zone Cyclical Oil; Abandoned Zone Oil; Abandoned Zone Dual Zone Oil; Abandoned Zone Oil Disposal

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

ARG Abandoned Re-Entered Commingled Producer; Abandoned Re-Entered Gas Producer; Abandoned Re-Entered Gas Undefined

ARO Abandoned Re-Entered Bitumen Oil; Abandoned Re-Entered Oil; Abandoned Re- Entered Oil Producer

AUV Abandoned Drilled Observation; Abandoned Gas Observation; Abandoned Whipstocked Observation; Abandoned Observation; Abandoned Oil Observation; Abandoned Zone Observation; Drilled and Abandoned Observation

CBM Flowing Cbm Gas; Flowing Cbm Shale Gas; Pumping Cbm Gas

CBT Testing Cbm Gas; Testing Cbm Shale Gas

CMO Active Commingled Oil; Active Commingled Oil Producer; Active Oil Producer

CLG Closed Gas; Closed Dual Zone Gas; Closed Triple Zone Gas; Closed Gas Farm; Closed Shale Gas

CLO Closed Oil; Closed Dual Zone Oil; Closed Triple Zone Oil

CSD Cased; Cased Dual Zone; Cased Triple Zone; Cased Four Zone; Cased Acid Gas; Cased Dual Zone Acid Gas; Cased Cavern Gas Storage; Cased Commingled Undefined Disposal; Cased Disposal; Cased Gas Disposal; Cased Gas Storage; Cased Helium Producer; Cased Observation; Cased Oil; Cased Oil and Water Source; Cased Polymer Injector; Cased Producer; Cased Potash; Cased Potash Test Hole; Cased Steam Injector; Cased Stratigraphic Test Hole; Cased Re-entered Service; Cased Undefined; Cased Water Disposal; Cased Water Injector; Cased Water Source; Drilling

CSO Cased Commingled Oil; Cased Oil; Cased Oil Disposal; Cased Oil Injector; Cased Oil Producer; Cased Oil Undefined

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

D&A Abandoned Drilled; Abandoned Drilled Air Injector; Abandoned Drilled Commingled Gas; Abandoned Drilled Commingled Oi; Abandoned Drilled Co2; Abandoned Drilled Cyclical Oil Injector; Abandoned Drilled Gas; Abandoned Drilled Gas Disposal; Abandoned Drilled Gas Injector; Abandoned Drilled Oil; Abandoned Drilled Oil and Gas; Abandoned Drilled Oil and Water Source; Abandoned Drilled Potash; Abandoned Drilled Water Disposal; Abandoned Drilled Water Injector; Abandoned Drilled Water Source; Abandoned Dual; Abandoned Salt Water Source; Abandoned Stratigraphic Test Hole; Abandoned Service; Abandoned Undefined; Cancelled; Cancelled Oil Producer; Cancelled Potash; Cancelled Steam Injector; Cancelled Water Disposal; Cancelled Water Injector; Cancelled Water Source; Drilled and Abandoned; Drilled and Abandoned Dual Zone; Drilled and Abandoned Four Zone; Drilled and Abandoned Gas; Drilled and Abandoned Helium; Drilled and Abandoned Observation; Drilled and Abandoned Oil; Drilled and Abandoned Stratigraphic Hole; Drilled and Abandoned Water Disposal; Drilled and Abandoned Water Injector; Drilled and Abandoned Water Source

DRL Abandoned Co2 Injector; Abandoned Drilled; Abandoned Drilled Helium; Abandoned Undefined; Completed; Drilled and Abandoned; Drilled and Abandoned Gas; Drilling; Drilling Air Injector; Drilling Cavern Gas Storage; Drilling Co2 Injector; Drilling Cyclical Oil Injector; Drilling Gas Storage; Drilling Gas Undefined; Drilling Helium Producer; Drilling Lpg Storage; Drilling Observation; Drilling Oil; Drilling Oil Producer; Drilling Oil and Gas Producer; Drilling Potash Test Hole; Drilling Steam Injector; Drilling Stratigraphic Test Hole; Drilling Service; Drilling Undefined; Drilling Waste Disposal

FG Flowing gas; Flowing shale gas

FMG Active Gas Farm; Active Dual Zone Gas Farm

FO Flowing Four Zone Oil; Flowing Oil; Flowing Dual Zone Oil; Flowing Triple Zone Oil

G Active Gas Producer; Active Gas Undefined; Drilling Stratigraphic Test Hole

GD Active Acid Gas Disposal; Active Gas Disposal; Active Dual Zone Gas Disposal

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

J&A Active Alternating Water and Gas Injector; Active Gas and Water; Active Water and Gas Injector; Completed Cavern Gas Storage; Completed Gas Storage; Completed Helium; Completed Lpg Storage; Junked and Abandoned; Junked and Abandoned Gas; Junked and Abandoned Gas Storage; Junked and Abandoned Helium; Junked and Abandoned Stratigraphic test Hole; Junked and Abandoned Service; Junked and Abandoned Re- entered Service

LCT Cancelled; Completed Stratigraphic Test Hole; Flowing Oil; Junked and Abandoned; Junked and Abandoned Oil; Junked and Abandoned Potash; Junked and Abandoned Potash Test Hole; Junked and Abandoned Water Disposal; Junked and Abandoned Water Injector; Licenced; Licenced Air Injector; Licenced Brine Water; Licenced Cavern Gas Storage; Licenced Co2 Injector; Licenced Co2 Producer; Licenced Cyclical Oil Injector; Licenced Gas Injector; Licenced Gas Producer; Licenced Gas Storage; Licenced Lpg Storage; Licenced Observation; Licenced Oil Producer; Licenced Polymer Injector; Licenced Potash; Licenced Potash Disposal; Licenced Stratigraphic Test Hole; Licenced Service; Licenced Re-entered Service; Licenced Undefined; Licenced Waste Disposal; Licenced Water Disposal; Licenced Water Injector; Licenced Water Source

OIL Active Oil; Active Oil Producer;

PG Pumping Gas; Pumping Shale Gas

PO Pumping Triple Zone Oil; Pumping Four Zone Oil; Pumping Oil; Pumping Dual Zone Oil; Pumping Oil Injector

PTG Completed Commingled Gas; Completed Gas; Completed Gas Disposal; Completed Gas Injector; Completed Gas Producer; Completed Gas Source; Completed Gas Undefined; Testing Gas; Testing Dual Zone Gas; Testing Gas Producer; Testing Shale Gas; Undefined

PTO Completed Commingled Oil; Completed Cyclical Oil Injector; Completed Oil; Completed Oil Disposal; Completed Oil Producer; Completed Oil Undefined; Completed Oil and Gas Injector; Completed Oil and Water Source;

SCB Suspended Cbm Gas; Suspended Cbm Shale Gas

SG Shut In Gas Producer; Suspended Commingled Gas Producer; Suspended Gas; Suspended Gas Producer; Suspended Gas Undefined; Suspended Shale Gas

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta

SO Shut In Commingled Oil Producer; Shut In Oil Disposal; Shut In Oil Producer; Suspended Commingled Oil Producer; Suspended Cyclical Oil; Suspended Oil; Suspended Oil Disposal; Suspended Oil Injector; Suspended Oil Observation; Suspended Oil Producer; Suspended Oil Undefined

SUS Suspended

UV 80 Observation

80. Abbreviations and associated descriptions collected through the geoScout program, a service offered by geoLogic Systems. While some of the maps include the following symbols, the geoScout program does not filter them as related to oil and gas wells: ADO, AED, AK, ARE, ASD, ASI, ASW, ATR, AVI, AWD, AWI, AWS, AZN, CMM, C2I, DRO, ED, FMW, FSW, N2I, PUV, PWS, SE, PTN, SL, SWD, SWI, SWS, TH, TRN, WD, WI, WSC.

Kristy Peterson Urban Drilling: Best Practices for Urban Oil and Gas Wells in Alberta