Air Emissions Regulations in Western Canada – A Primer

Air emissions regulations and reporting requirements in Western Canada are in constant evolution and can be a very confusing topic! Often there are different regulations in each Province and Federally, and with the Climate Change Initiatives in each jurisdiction, new regulations are still being developed. This article provides a high level overview of the existing and upcoming regulatory and reporting requirements for air emissions, specifically those focused around climate change, but touching on other aspects that affect the Upstream Oil and Gas (UOG) Industry as well.

1) Methane

Methane has been recently the subject of intense activity at various industry-government forums, including the development of an accord between Canada, Mexico and the US on Methane emissions reductions from the UOG. Due to its potent global warming potential (compared to CO2), Methane is getting significant focus both within the oil and gas industry and in other sectors. Here is the current (end 2016) state of regulation in various jurisdictions:

a. Alberta:

Alberta will reduce methane emissions from oil and gas operations by 45 percent from a 2012 baseline by 2025 using the following approaches:

• Applying new emissions design standards to new Alberta facilities. Applying standards at the planning stage will be less expensive.
• Improving measurement and reporting of methane emissions, as well as leak detection and repair requirements.
• Developing a voluntary joint initiative on methane reduction and verification for existing facilities, and backstopping this with regulated standards that take effect in 2020, to ensure the 2025 target is met. This initiative will include Alberta industry, environmental groups and Indigenous communities.

Draft Regulations are supposed to be available in 2017, with possible implementation starting in 2018.

b. British Columbia:

BC will reduce methane emissions from oil and gas operations by 45 percent by 2025 using the following approaches:

• Targets for fugitive and vented emissions for legacy facilities (built before Jan 1, 2015)
• New facilities between 2015 and 2018 will have an offset protocol and a clean infrastructure royalty credit program
• Post 2018 – will include mandatory LDAR, coordination with other jurisdictions.
• More efficient Engines
• Supplying Clean LNG

c. Saskatchewan:

No methane specific policy or regulation being discussed at this time, other than to follow the Federal Government.

d. Federal:

Canada will reduce methane emissions from oil and gas operations and will include that reduction in the promised national reduction of methane by 40-45 percent (below 2012 levels) by 2025. This will be regulated under the Canadian Environmental Protection Act (1999). Proposed regulations are due in early 2017.

2) Greenhouse Gases (GHG)

For oil and gas, this usually means CO2, CH4, and N2O. Additionally there are Ozone (O3) and Fluorinated Gases (CFCs, HCFCs, SF6, NF3). These gases (total) have had regulations in most jurisdictions for some time, however, regulations will be tightening and validation/verification will be more stringent going forward. Here is the breakdown by jurisdiction:

a. Alberta:

• SGRR (Specified Gas Reporting Regulation, Alberta Environment and Parks) – If a facility emits over 50,000 tonnes CO2e per year, they must report emissions
• SGER (Specified Gas Emitters Regulation, Alberta Environment and Parks) – If a facility emits over 100,000 tonnes CO2e per year, it must reduce its emissions intensity by 15% in 2016 and 20% in each reporting period thereafter. These can be accomplished by:
  • Improving Operations
  • Emissions Offsets (can purchase at $20/tonne in 2016; $30/tonne in 2017)
  • Emissions performance credits from a previous period

Note that this SGER will be replaced by a "Carbon Competitiveness" regulation by 2018

• Carbon Tax: Starting January 1, 2017: $20/tonne CO2e in 2017; $30/tonne CO2e in 2018. (Equivalent to $1.011/GJ for 2017, $1.517/GJ for 2018+). Tax is charged on:
  • Fuel Imported into Alberta
  • Fuel sold within Alberta
  • Fuel flared or vented in Alberta
  • Natural Gas Produced / Consumed on site is EXEMPT

b. British Columbia - Oil and Gas Commission (BCOGC):

• Facilities (linear) emitting 10,000 tonnes or more CO2e/year must report emissions.
• Facilities (linear) emitting 25,000 tonnes CO2e or more per year must have emission reports third party verified.
• Emissions must be calculated using rules as laid out in the Western Climate Initiative (WCI).

c. Saskatchewan:

Waiting on Federal rules and regulations. Current focus is on Carbon Capture and storage and de-carbonizing the power system in Saskatchewan.

d. Federal:

• GHGRP – Greenhouse Gas Reporting Program – since 2004
  • Mandatory reporting of total GHG for facilities emitting more than 50,000 tonnes/yr CO2e.
  • Voluntary program for smaller emitters.
• Carbon Tax: - Minimum price on carbon. Currently set at $10/tonne CO2e starting in 2018. Negotiations with provinces ongoing.

3) Other Gases

a. National Pollutant Release Inventory (NPRI) – This is a federal program that requires reporting of many air, water and ground emissions. Many oil and gas facilities are too small to require full reporting under NPRI (<20,000 manhours per year). These smaller facilities are only required to report combustion equipment emissions – Criteria Air Contaminants (CACs) - which include:

• Particulate Matter (PM)
• SOx
• NOx
• VOCs
• CO
• NH3

b. Benzene – as a Type I Carcinogen, this pollutant has no ‘safe’ limit. It is often emitted during the course of dehydrating natural gas in the field. As a result, all provinces have regulations on the amount of Benzene that can be emitted per facility per year. These regulations are:

• Alberta: Directive 39 (Alberta Energy Regulator)
• BC: Oil and Gas Operations Manual Appendix J
• Saskatchewan: Directive S-18

4) Flared and Vented Volumes

These volumes of gas have been regulated for a considerable amount of time, however, as they directly impact the amount of other emissions (see Sections 1 and 2 in particular), the volumes have specific regulation written about them, as follows:

a. Alberta: Directive 060 (Alberta Energy Regulator)

b. BC Oil and Gas Commission: Flaring and venting Reduction Guideline: Eliminate Routine Flaring by 2016 (this year!)

c. Saskatchewan: Directives S-10 and S-20

5) AQMS – Air Quality Management System

This is a federal initiative (except Quebec) and consists of 3 parts:

a. CAAQS – Canadian Ambient Air Quality Standards – These are issued under the authority of the Canadian Environmental Protection Act (1999) and cover many pollutants. Particularly of interest to the oil and gas industry are newly reduced limits on PM2.5 and Ozone.  These standards are intended to be inspirational targets to drive the system.

b. BLIERs – Base Level Industrial Emission Requirements are aimed at major industrial emitters to ensure a good base level of environmental performance – i.e. these are minimum acceptable performance standards. One Instrument that is used federally to define the minimum standards for Oil and Gas is the MSAPR - Multi-Sector Air Pollutants Regulation. The highlights of the MSAPR are the regulation of:

• NOx from large boilers (>10.5 GJ/h), heaters and stationary spark engines
• In future there will be further standards around: SO2, VOCs, NH3 and Particulate Matter

c. Provincial and Regional Air Quality Management (see other directives written above).

Conclusions

The wider world

There are news reports every day regarding climate change and government regulations and action on emissions. The terminology can get confusing. Canada and the Oil and Gas producing provinces are party to all of the following bodies that have a part to play in setting objectives for policy as well as helping develop best practices and recommendations on processes to reduce emissions.

• Conference of the Parties (United Nations) – COP22 was the most recent, in November 2016 in Marrakech, Morocco. This is a yearly conference.
• United Nations Economic Commission for Europe (UNECE) – Best Practices
• Global Methane Initiative (GMI)
• Climate and Clean Air Coalition (CCAC)
• Global Gas Flaring Reduction Partnership (World Bank)
• Arctic Council

Local Impacts

Here in Alberta (and most of Western Canada), the regulations on methane emissions are still not clear. Questions still exist on things such as: ‘How will a carbon tax on ‘Vented’ material work?’ What type of audit/verification structure will exist?

The largest focus currently is on methane reduction, due to its higher global warming potential (GWP). Industry currently struggles with defining the baseline of emissions accurately. In addition, carbon offset protocols (accepted by government) are limited – currently only two carbon offset protocols exist to support methane reductions in the oil and gas sector:

• An offset protocol to encourage converting existing pneumatic equipment to highly efficient options
• An offset protocol for solution gas conservation

Where from here?

As we wait to hear what federal and provincial regulations will be imposed to meet emission reduction targets, oil and gas companies can be proactive and ready with an accurate baseline of emissions through a combination of engineering estimates and measurements. Participating in industry working groups and providing feedback to regulators when possible is an excellent way to impact the process. If you have questions about any of these reporting requirements and how we can help you determine a baseline or get involved, please don’t hesitate to contact us.