“Play-based”, “risk-focused” and “collaborative development” are the new watchwords at the Alberta Energy Regulator (the “AER”) as it moves to address the cumulative effects of unconventional resource developments. On September 1, 2014, the AER launched the Play-Based Regulation (“PBR”) Pilot Project, choosing the Duvernay shale formation near Fox Creek, Alberta. The Duvernay pilot program will provide information to refine further use of a PBR framework in the province.
The goals of the pilot project include:
- establish subsurface reservoir management requirements for the pilot area that are relevant to unconventional resource development;
- implement application and decision-making processes for several activities under different pieces of legislation;
- encourage applicants to collaborate on surface development plans and participate in the pilot in order to minimize the number of facilities and other surface impacts during the pilot;
- ensure that effective practices are used to minimize fresh water use and optimize water reuse;
- facilitate transparency by engaging stakeholders on the play-based regulation approach throughout the pilot; and
- explain the costs and benefits of implementing the play-based approach.
On December 4, 2014 the AER issued Manual 009, Play-Based Regulation Pilot Application Guide. The deadline to submit single applications for multiple energy development activities within the pilot area is March 31, 2015, and the pilot project ends on June 30, 2015.
Manual 009 states that applications under the pilot project must include:
- project information describing the project and related activities, its term, and setting the context for stakeholder engagement and risk management;
- a Stakeholder Engagement Plan outlining how the operator intends to engage stakeholders throughout the life cycle of the project, from exploration to reclamation;
- a Risk Management Plan setting out the process used to assess risk and the plans to mitigate those risks; and
- a Reporting Plan indicating how the operator will report progress on the PBR pilot program objectives and on development in accordance with the terms and conditions of a single approval.
The key impacts to industry are:
- instead of multiple applications related to a single energy development, a single application on a project, review, and approval process for a specific “play”;
- modification of the current “activity by activity” regulation;
- movement to “risk-based regulation”, with focus on areas presenting the greatest potential cumulative effect risks;
- regulation becomes based on entire life-cycle of a development from the outset, rather than viewing each activity in isolation;
- a more holistic regulatory approach to managing cumulative impacts of energy development, including in respect of water and air impacts; and
- streamlined decision process as the AER will review and decide on an application within 45 days of the submission of a complete application.
The AER clearly intends to implement PBR more widely across Alberta. Whether or not an energy company takes part in the pilot, it will be critical to monitor the AER’s process and become familiar with the principles of play-based regulation.