The vast majority of approvals for Alberta’s oil and gas wells will soon be automated, reducing waiting times for drilling companies to as little as 15 minutes, The Narwhal has learned.
The Alberta Energy Regulator confirmed to The Narwhal by e-mail that it expects to begin implementing automated approval for routine well licences later this year, though lobbying records indicate the system could be rolled out as early as next month.
With the change, staff will no longer review most applications from companies seeking to drill a new oil or gas well.
In lobbying records obtained by The Narwhal through a freedom of information request, Richard Wong, manager of operations with the Canadian Association of Petroleum Producers (CAPP), said the association anticipates 90 per cent of routine well applications could soon be automatically approved by OneStop, the online tool used to submit requests for permits and licences to the Alberta Energy Regulator.
The Narwhal was charged $643.95 by the Alberta Energy Regulator — an industry-funded corporation in charge of overseeing Alberta’s energy industry — to access the documents. The fee was paid by readers who donated specifically to cover these costs.
When asked for details, CAPP told The Narwhal by email that these approvals refer to applications that are “anticipated to be low-risk and, as such, the approval of each of those applications would be expedited.”
Wong, who shared CAPP’s analysis of the proposed new processes with the Alberta Energy Regulator, wrote in the documents obtained by The Narwhal that CAPP anticipated the move to automation could contribute to between $67 million and $136 million in cost savings, and that the “average business days for those approvals would accelerate … to 15 minutes.”
‘A concern for a whole host of reasons’
Thousands of new oil and gas wells are drilled every year in Alberta, and Premier Jason Kenney vowed during the recent election campaign to speed up approvals for new wells, having promised a “rapid acceleration of approvals.”
Over the past year, concerns have been raised about industry’s ability to pay for the cleanup of the hundreds of thousands of wells already drilled in the province, with internal estimates pegging the bill at $100 billion.
Automated approvals are “a concern for a whole host of reasons,” Mark Dorin, an Alberta landowner who has worked in oil and gas for decades, told The Narwhal.
“I’m not an anti-energy person,” Dorin said. “But it’s about fair, balanced decision making.”
“If we put rules in place, I’d have no concerns about new wells whatsoever,” he said.
Dorin is concerned that current processes do not protect the land where wells are drilled, ensure the safety of sites or provide any guarantee that oil and gas infrastructure will be cleaned up by the companies responsible.
Nikki Way, a senior analyst with the Pembina Institute, is concerned efficiency has been prioritized over safety and environmental quality in the regulator’s roll-out of automated systems.
“We’ve seen the announcements about fast-tracking [licences] and saving money, but where are the systems that incorporate the science and data into these automated decisions, which they’ve promised for years?” she asks.
Way is concerned the regulator doesn’t have the systems in place to safeguard air and water quality in rural communities when the regulator is “fast-tracking even more projects with no human oversight.”
How, she wonders, can Alberta “claim that we have a world-class regulator when it hasn’t prioritized the essential systems that fulfill the second half of its mandate that protects families, their land and our environment?”
‘Processed in minutes’
Other activities under the purview of the Alberta Energy Regulator are already largely automated and handled through OneStop — including reclamation certificates.
The Narwhal previously reported that 97 per cent of applications for reclamation certificates are approved without a visit to the site, and 87 per cent are approved automatically without any human oversight.
For companies seeking to drill new wells, applications that do not flag any of the regulator’s automated “risk assessment rules” can proceed automatically, without any scrutiny by staff.
A video produced by the regulator to introduce OneStop boasts that the previous automation of other types of approvals means that “25,000 pipeline applications processed annually — automatically” and that “low-risk applications [can be] processed in minutes.”
CAPP told The Narwhal by email that “CAPP sees OneStop as a significant opportunity to enable a more predictable regulatory process in Alberta, and to help enable industry competitiveness while maintaining environmental, social and regulatory outcomes.”
In an October 2018 statement about its shift to automated systems, the Alberta Energy Regulator said its “new approach is truly game changing and something that few regulators have attempted.”
Approvals are already speedy
Despite the rhetoric employed by Kenney during the recent provincial election campaign, the Alberta Energy Regulator estimates the current processing time for well and facility applications is just “five business days.”
The regulator has an internal goal that 95 per cent of new routine wells applications are approved within that time frame.
In 2018, 97 per cent of 5,691 new routine wells were approved within five days. That figure was lauded as a “big win” in internal emails sent by CAPP and obtained by The Narwhal under the Freedom of Information and Protection of Privacy (FOIP) Act.
When asked how long new well approvals would take once the system is automated, the Alberta Energy Regulator told The Narwhal by email that it “cannot provide details about the process or approval timelines at this time.”
Both CAPP and the regulator were careful to note that only “routine” applications would be processed automatically.
Alberta Energy Regulator spokesperson Samantha Peck confirmed by email that “approximately 95 per cent of new licence applications are routine.”
“An application is considered routine when the applicant has met all requirements (including participant involvement), has no outstanding public or industry concerns and regulatory waivers or relaxations are not requested,” Peck said.
But Dorin is concerned that wells like the ones drilled on his land won’t get individualized attention.
“They are always unique circumstances and they should be dealt with on a one-by-one basis,” Dorin said.
“There are no two wells that are the same.”
CAPP: automation a ‘priority’
According to the documents obtained by The Narwhal, the automation of new well approvals is part of the work of the regulator’s “regulatory efficiency council,” a “committee of senior-level energy industry executives and representatives” formed to “help the [regulator] identify, evaluate and prioritize regulatory reductions.”
CAPP correspondence with the Alberta Energy Regulator states that “automation of routine well licence approvals” has been identified as a “priority” to improve regulatory efficiency.
Last summer, Terry Abel, CAPP’s vice president of Canada operations and climate, wrote to the Alberta Energy Regulator then-president and CEO, Jim Ellis, to express his support of automation on a “priority basis,” noting that CAPP is “pleased” with the regulator’s efforts thus far.
The regulator told The Narwhal it “began work to implement well licence applications into OneStop prior to receiving Terry Abel’s August 2018 letter.”
The documents obtained by The Narwhal contain many expressions of gratitude from industry for the regulator’s efforts to increase efficiency.
“Industry has recently seen clear evidence of the [Alberta Energy Regulator’s] staff’s renewed commitment and increased focus on efforts to reduce unnecessary regulatory burden and costs,” CAPP wrote at one point.
“We wish to thank you for the ongoing efforts undertaken by the Alberta Energy Regulator to deliver a modern, efficient and performance-based regulatory system,” Abel wrote to the regulator in August.
Tim McMillian, CAPP’s president and CEO, wrote to the regulator to laud the “collaborative spirit” that had characterized the two groups’ working relationship.
The regulator says its automated system will only apply to what it calls “low-risk” applications for new well licences.
“OneStop uses a complex set of risk assessment rules that automate low-risk (baseline) applications and forwards higher-risk and more complex applications to technical experts for an additional, manual review,” Peck, the regulator spokesperson, told The Narwhal by email.
“This ensures we are focusing our manual efforts on medium- and high-risk applications, and using our existing and continually growing wealth of data to automate low-risk applications.”
“Any applications considered to have a potential impact on the environment or stakeholders are not automated,” Peck added.
The regulator’s website offers an example of a low-risk application: the company reports to the regulator that “the landscape includes a well that produces shallow, sweet gas,” and that the well will be drilled on “flat, private grazing land and the landowner has consented to the activity, [and] no sensitive species are nearby.”
In this scenario, the approval of the licence to drill the well is automated, though the company is subject to audits and inspections.
The Narwhal previously reported that the number of sites visited for some types of audits is far fewer than previously promised, and the number of field inspectors has declined by 16 per cent since the Alberta Energy Regulator took over compliance monitoring from the government five years ago.
Way, the analyst with the Pembina Institute, is careful to point out that the automation in itself isn’t what she’s concerned about — it’s the underlying assessment of risk.
“The process of automating approvals in the oil and gas industry isn’t inherently a bad idea, if it is matched with checks and balances in that system to ensure that the right information is being considered and integrated into these automated approvals,” she told The Narwhal.
“Our concern is that the [regulator]’s promised programs for that balance have been under-resourced, de-prioritized and all but swept under the rug while the [Alberta Energy Regulator] has gone full steam ahead with automating approvals.”
Dorin said the regulator’s processes are insufficient when it comes to the approval of new well licences.
“They’re just rubber stamping these things like crazy,” he said.
The Petroleum Services Association of Canada has forecast 2,685 wells will be drilled this year in Alberta — a number viewed as low by industry.
Conventional oil and gas wells are drilled thousands of feet below the surface through layers of soil, rock and drinking water aquifers.
As a Government of Alberta fact-sheet put it, the “only way to determine whether a rock formation contains petroleum or natural gas is to drill a well.”