BC’s oil and gas sector is booming, and Victoria has responded by overhauling the legislation that governs it.
The province’s new Oil and Gas Activities Act (OGAA), which came into effect earlier this month, modernizes a legislative framework that’s half-a-century old and repeals the Pipeline, the Oil and Gas Commission and the Petroleum and Natural Gas acts.
Minister of Energy, Mines and Petroleum Resources Bill Bennett told Business in Vancouver the legislation took a while to complete because the government didn’t want to run afoul of an industry that generated $6 billion in investment activity last year.
“The last thing in the world we wanted – and it’s why we took two years to do it – is to rush forward with a new regulatory regime that sent a negative signal to industry,” Bennett said. “So we have industry totally on side with this.”
The OGAA provides the BC Oil and Gas Commission (OGC) with stronger compliance and enforcement powers to govern oil and gas producers.
A new appeal tribunal has also been set up to respond to any challenges raised about the commission’s decisions.
The OGAA also provides new clarification around landowner rights in regard to oil and gas companies that want access to private land for drilling, well or pipeline activities.
“Since I’ve taken over this position [I’ve noticed] there’s probably more angst being expressed by people who live in the northeast about the industry,” Bennett said. “A lot of it is private landowners.”
He hopes that trend will abate now that legislation provides clearer guidance about access to land issues at a time when B.C.’s oil and gas sector shows no signs of slowing down.
In a recent example of that activity, Spectra Energy Corp. (NYSE:SE) filed a September 24 B.C. Supreme Court petition to expropriate 15 parcels of private land in northeast B.C. for a 33-kilometre pipeline.
According to the OGC, 1,127 kilometres of pipeline were built in B.C. last year.
Not all pipelines or oil and gas activity in B.C. requires access to private land, but Bennett said the OGAA provides a stronger framework to deal with those issues when landowners are affected.
Blair Lekstrom, Bennett’s ministerial predecessor, was responsible for the OGAA until he resigned and cut his ties with the Liberal government in June over the HST.
Lekstrom said he still supports the legislation, adding that it gives more power to landowners in the northeast.
“Over 90% of all access issues are solved between the landowner and the companies with no problem,” said Lekstrom, “[but] we do deal with some on access issues that the Oil and Gas Activities Act will bring some balance back to the landowner.”
The legislation has also garnered the industry’s support, although the Canadian Association of Petroleum Producers (CAPP) said it’s concerned the new rules could lengthen the time it takes to get a permit.
“That’s not trying to be selfish on the part of industry, but planning and getting things done between the weather windows in northeast B.C. is an interesting challenge,” said David Pryce, CAPP’s vice-president, operations. “So we like to find ways to make them move forward as quickly as possible in a fair way.”
The province’s oil and gas sector could soon be in for another legislative change as the Liberal government looks to overhaul its century-old Water Act.
Last month, Victoria released its Water Act Modernization Report, which summarized public, First Nations and industry input as to how the province should update its Water Act to meet the impacts of climate change, population growth and increasing demands from industry.
Among the four key goals for modernizing B.C.’s Water Act is “regulating groundwater use in priority areas and for large withdrawals.”
In the past, the public has criticized gas producers in the northeast for excessive water use during droughts.
Low water supply forced the Oil and Gas Commission to suspend dozens of water withdrawal permits in August.
Environment Minister Barry Penner told Business in Vancouver an updated Water Act could mean changes for gas producers.
“Issues that we’re working on through the Water Act Modernization process could potentially have implications for water use in oil and gas operations,” Penner said “and may result in changes to the conditions on diversion or extraction of the water.”
But government and industry are trying to stay ahead of any potential changes.
Energy, Mines and Petroleum Resources Minister Bill Bennett said Geoscience BC has been directed to find groundwater reservoirs deep in the earth that producers could draw on if surface withdrawal rules change.
Meanwhile, the City of Dawson Creek has signed an agreement with Shell Canada to build an $11.25 million water-reclamation plant that will treat city wastewater that can then be used for oil and gas production.
Bennett said government is aware of the environmental concerns around the industry’s water use and the updated Water Act will definitely affect producers.
Said Bennett: “Industry and government are going to have to locate new sources of water in the future if we keep seeing the kinds of droughts we’ve seen in the northeast.”