Flaring in Canada: Overview and Strategic Considerations – Cap-Op Energy to ECCC
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Flaring in Canada: Overview and Strategic Considerations – Cap-Op Energy to ECCC Cap-Op Energy Inc. Suite 610, 600 6 Ave SW Calgary, AB T2P 0S5 403.457.1029 www.CapOpEnergy.com Flaring in Canada: Overview and Strategic Considerations Part 2 March 31, 2017 Flaring in Canada: Overview and Strategic Considerations – Cap-Op Energy to ECCC Table of Contents List of Tables / Figures................................................................................................................................... 3 Flaring in Canada: Overview and Strategic Considerations .......................................................................... 4 Review of Part 1 ............................................................................................................................................ 4 Definitions ..................................................................................................................................................... 5 GGFR Flaring Definitions ........................................................................................................................... 5 Expanded Flaring Definitions .................................................................................................................... 6 Gas and Gas Release System Definitions .................................................................................................. 6 Facility Definitions ..................................................................................................................................... 7 Considerations for a Canada-wide Policy ...................................................................................................... 7 Sources of Flaring and Venting ................................................................................................................. 8 Quantities of Gas Flared or Vented........................................................................................................... 9 Lost Royalty Revenues from Flared/Vented Gases ................................................................................... 9 Conversion Efficiency: ............................................................................................................................. 10 Flaring vs. Incineration ........................................................................................................................ 10 Gas Content ............................................................................................................................................. 10 Notification Rules and Radii .................................................................................................................... 11 Important Components of Effective Flaring Regulation ............................................................................. 11 Potential Fiscal Policies ........................................................................................................................... 12 Incentives ............................................................................................................................................ 12 Penalties .............................................................................................................................................. 12 Regulatory Components ......................................................................................................................... 13 Definition and Boundaries .................................................................................................................. 13 Regulatory Approval ........................................................................................................................... 13 Measurement ...................................................................................................................................... 14 Economic evaluation ........................................................................................................................... 14 Monitoring .......................................................................................................................................... 15 Reporting ............................................................................................................................................. 15 Enforcement ........................................................................................................................................ 16 Public Disclosure ................................................................................................................................. 17 Zero Routine Flaring in Canada ................................................................................................................... 17 Gas Utilization Project Types .................................................................................................................. 17 Vent Flaring Measurement Technology .................................................................................................. 20 Conclusion ................................................................................................................................................... 21 Policy Considerations .............................................................................................................................. 21 Policy Interactions and Consequences ................................................................................................... 22 High Level Policy Recommendations ...................................................................................................... 23 Flaring in Canada: Overview and Strategic Considerations – Cap-Op Energy to ECCC Major References ........................................................................................................................................ 25 Appendix A: Major US Flaring Regulations (WORC, 2014) .......................................................................... 26 Appendix B: Greenhouse Gas Emissions by Type of Activity, Facility and Emission Source (Engineering, Clearstone, 2014) ........................................................................................................................................ 28 Appendix C: Canadian and Alberta VFF Emission Volumes (Taylor, 2017) ................................................. 30 List of Tables / Figures Table 1: GGFRP Types of Flaring and Definitions .......................................................................................... 5 Table 2: Types of Gas Utilization Projects, Infrastructure and Capital Requirements ................................ 17 Table 3: Recommendations and rationale in context of World Bank guidance ......................................... 24 Figure 1: GHG emissions from the Canadian upstream oil and gas industry ............................................... 5 Figure 2: Flaring from All Upstream Oil and Gas Sources in Alberta (2000-2013) ........................................ 9 Figure 3: Distribution of volumes flared and/or vented at individual batteries in 2008 ............................ 19 Figure 4: Distribution of Capital Costs Required to Tie-in Batteries to the Existing Pipeline Network ...... 19 Figure 5: Methane sources measurement by cost and accuracy ............................................................... 20 This report forms Part 2 of a two-part study that aims to understand flaring regulations in the oil and gas industry across Canada and provide a framework for policy development. Part 1 provided a detailed assessment of the policy instruments for reducing flaring in jurisdictions across Canada, and Part 2 will focus on considerations for a Canada-wide approach to eliminating routine flaring from oil and gas production. Emphasis was placed on routine flaring from the upstream oil and gas sector in accordance with Canada’s role as a signatory to the Zero Routine Flaring by 2030 Initiative. Flaring in Canada: Overview and Strategic Considerations – Cap-Op Energy to ECCC Flaring in Canada: Overview and Strategic Considerations Part 2: Strategic Considerations Review of Part 1 The Canada Oil and Gas Drilling and Production Regulation is the only national regulation that applies to flaring in the oil and gas sector. The regulation states that no operator should flare or vent gas unless it receives special approval, or if it is otherwise necessary to do so because of an emergency situation. However, there are no national procedures for getting approval, no definition for flaring events included, and no guidance on what kinds of operators are covered. Furthermore, there are very loose enforcement measures for violations of any of the provisions in the regulation. Violators may be given a written notice by the Minister and if no response is received by the Ministry within 90 days, the Minister may cancel the licence, permit or lease1. If response is provided within 90 days, it is unclear what guidelines and evaluation criteria will be applied or whether any enforcement for unsatisfactory responses would in fact apply. Alberta (AB), Saskatchewan (SK) and British Columbia (BC) have more comprehensive rules and regulations for flaring, venting and incineration. Regulations are managed by Provincial bodies who provide standard operating procedures for managing flaring and venting activities, and standards for reporting emissions. • AB: Under the Oil and Gas Conservation Act, the Oil and Gas Conservation