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WHAT WE REGULATE

What we regulate

what we regulate

WHAT WE DON'T

what we don't regulate


Original graphic provided by Oilweek Magazine

MESSAGES

Message from the
Chair

Message from the President and CEO

Message: An Employee’s Perspective

“...the AER exists to protect what matters most to Albertans: public safety and the environment, specifically Alberta’s land, water, air, and biodiversity. This is the heart of our mandate.”

— Jim Ellis, President & CEO

ABOUT
THE AER



OUR MANDATE
The AER’s mandate is to ensure the safe, efficient, orderly, and environmentally responsible development of hydrocarbon resources over their entire life cycle. This includes allocating and conserving water resources, managing public lands, and protecting the environment while providing economic benefits for all Albertans.


OUR VISION
The Alberta Energy Regulator is recognized as best in class, ensuring the safe, environmentally responsible development of energy resources for the benefit of all Albertans.


The Alberta Energy Regulator (AER) is the single provincial regulator for oil, natural gas, oil sands, and coal development in Alberta.

YEAR IN REVIEW

 Our Second Year

Our first full year was largely focused on the complex task of merging the functions of three regulatory bodies into one, a challenge considering that all energy regulation activities in the province had to continue throughout the transition.

 Highlightsyear in review icon

The AER launched a new tool with information on incidents, our compliance and enforcement activities, and investigations.
Following through on our commitments from last year’s Peace River proceeding, we conducted “compliance sweeps” to ensure that industry is complying with the new rules. We continue to monitor compliance and work with the community to deliver on all of the recommendations.
The AER completed its audit of Plains Midstream Canada’s operations in Alberta following instances of noncompliance and several significant pipeline incidents. The AER’s audit identified key areas for improvement and made it clear the company has to comply with our pipeline requirements.
We created new seismic monitoring and reporting requirements for oil and gas operations in the Fox Creek area. We now have thresholds for when to report seismic events and when to invoke a response plan or halt activity entirely.
To support the Government of Alberta’s Tailings Management Framework, we are developing new regulatory tools to ensure that oil sands tailings are appropriately managed and that all environmental requirements are met.
We established a multistakeholder engagement advisory committee whose members represent environmental nongovernmental organizations, landowners, community groups, First Nations and Métis groups, and others to create more opportunities for open communication with our stakeholders.
We carried out the play-based regulation pilot: a first step towards a new framework for regulating oil and gas development. The pilot will help develop new regulatory requirements for unconventional oil and gas development that addresses cumulative effects and encourages collaboration among operators.
With new responsibilities for overseeing reclamation, we completed our first reclamation certificate inquiry, ensuring that industry is meeting its reclamation commitments.
As the final step in our transition to becoming the single energy regulator in Alberta, we have begun reviewing environmental impact assessments (EIAs) associated with new energy developments.
The AER has begun implementing the six recommendations made by the Auditor General of Alberta’s pipeline safety audit. With a focus on enhancing staff training, enhancing surveillance, and establishing performance measures and targets, we’re committed to improving our performance.
With the BC Oil and Gas Commission, the Saskatchewan Department of Economy, and the National Energy Board, we created the Western Regulators’ Forum to strengthen energy regulation in western Canada with a focus on flaring, venting, emissions, wellbore integrity, and pipeline safety.
The AER launched a new program that significantly improved processing times for applications during the winter drilling season. We achieved our targets during the 2014/15 winter drilling season, meeting our turnaround time for applications 97 per cent of the time.
We forged three new partnerships with our peers, signing memorandums of understanding with Mexico’s energy regulator, the Government of the Northwest Territories, and the Dutch water research institute Deltares.
Through our alternative dispute resolution (ADR) process, we helped Albertans and companies resolve disputes in a positive way. Last year, at least 20 formal concerns were resolved due to agreements reached through ADR, and three hearings were cancelled.
In our 2014–17 strategic plan, we committed to reducing industry costs by $60 million in the 2014/15 year; we actually reduced costs by $270 million.
Receiving responsibility for dams related to energy resource development in 2014, the AER takes dam safety seriously. Responding to the Auditor General of Alberta’s recommendations, the AER launched a program to inspect the 65 AER-regulated dams by the end of October 2015 and make the results available to the public.

2014-2015 PROGRESS REPORT


To become best in class and to deliver on the priorities set out in our 2014–17 strategic plan, we must achieve results and report on our progress. This means demonstrating how we’ve ensured public safety and protected the environment, how we’ve been effective and efficient in ensuring compliance, how we’ve engaged our stakeholders and whether Albertans are confident in the AER.

Last year, we identified performance measures and targets that align with our priorities; these are guideposts to help AER define success and demonstrate the results of our actions. As we complete the first full year of our journey, we are refining our targets and measures and assessing where we need to improve our performance. In some cases we have made changes to our strategic plan to better refine our targets.

See the updated strategic plan

OUR PRIORITIES

Protective

Effective

Efficient

Credible

DELIVERING THE STRATEGIC PLAN

A World-Class Resource

Alberta’s energy resource reserves rank among the world’s largest

POTENTIAL ENERGY SUPPLY

world class resource

Drivers for Change

The energy development landscape in Alberta, as elsewhere, is changing rapidly, driven by advances in technology

Refining Our Strategic Plan

The AER is expected to protect what matters most—public safety and the environment—while protecting economic benefits for all Albertans. This is important work.

The Year Ahead

The AER is committed to delivering on our strategic plan and becoming a best-in-class regulator, all while delivering excellence in our day-to-day regulatory work.

OPERATIONAL OVERVIEW

Our first full year was largely focused on the complex task of merging the functions of three regulatory bodies into one, a challenge considering that all energy regulation activities in the province had to continue throughout the transition.

CORPORATE
GOVERNANCE

How an organization is governed determines how it carries out its daily business and how successful it is at achieving its goals. For this reason, corporate governance was a key consideration when the AER was created in June 2013.

The AER’s governance structure separates the corporate, operational, and governance responsibilities from adjudicative functions (hearings on energy applications). Through this model, the AER seeks to realize its full potential as the single regulator of Alberta’s energy resource development, as well as gain the confidence of its many stakeholders.

 Board of Directors

Board of Directors

 Executive Leadership Team

Executive Leadership Team

 Hearing Commissioners

Hearing Commissioners

MD&A

Management's Discussion and Analysis

This management’s discussion and analysis (MD&A) should be read in conjunction with the audited financial statements of the Alberta Energy Regulator (AER) for the years ended March 31, 2015 and 2014, and accompanying notes. The AER’s financial statements and the financial data in this MD&A have been prepared in accordance with Canadian public sector accounting standards (PSAS).

All comparisons are between the years ended March 31, 2015 and 2014, unless otherwise noted. The 2014 figures combine 77 days of the Energy Resources Conservation Board (ERCB) operations from April 1, 2013 to June 16, 2013 with the balance of the fiscal year being those of the AER. All amounts are expressed in thousands of Canadian dollars, unless otherwise noted.

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GLOSSARY

Alberta Ambient Air Quality Objectives and Guidelines

A set of objectives developed by Alberta Environment and Sustainable Resource Development to protect the quality of Alberta’s air. Objectives and guidelines are based on scientific and technical research and also account for social and economic factors. Where applicable, objectives align with other North American jurisdictions.

Best-in-class

The best of its kind or providing the highest level of service, guidance, or expertise possible. The AER’s vision is to be “recognized as being best in class,” and has launched the Best-in-Class Project with the University of Pennsylvania to help define this term.

Caprock

A relatively impermeable rock, such as shale, that forms a barrier above and around a hydrocarbon (oil, gas, or bitumen) deposit to prevent fluids from migrating beyond the reservoir.

Complex applications

Applications for oil and gas development projects that have multiple factors to consider, such as land access, associated infrastructure, water use, and emissions.

Compliance sweeps

A series of targeted inspections the AER does in a specific area, like Peace River; in June 2014, August 2014, November 2014, February 2015, and May 2015 compliance sweeps took place to ensure that Peace River operators were complying with new requirements for managing emissions.

Continuous improvement initiative

The AER began the continuous improvement initiative to encourage employees to bring forward solutions that will improve the way we do business; employees share their ideas through an intake system and AER leadership decides whether to implement them.

Cumulative effects/impacts

The combined effects of development in a specific area that puts pressure on the environment and residents.

Cyclic steam stimulation (CSS)

A technique that produces bitumen by injecting steam into underground oil sands reservoirs (i.e., wells) to heat bitumen, separate it from the sand, and allow it to flow to the well and be produced.

Emissions

Gases that are released, intentionally or unintentionally, into the air from energy developments. The AER regulates emissions through Directive 060: Upstream Petroleum Industry Flaring, Incinerating, and Venting.

Flaring

The burning of natural gas that cannot be processed or sold at the end of a flare stack (i.e., a long metal pipe that gas is sent up, much like a chimney). This causes the flame associated with flaring.

Incinerating

The mixing and combusting of waste gas streams, air, and fuel in an enclosed chamber. Air and gas are mixed at a controlled rate and ignited. No flame is visible from an incinerator that is operating properly.

Venting

The intentional and controlled release of uncombusted gas.

Environmental impact assessment (EIA)

The process used to predict the environmental effects (positive or negative) of an energy development project. The information gathered for an EIA helps the AER decide on applications for complex or large projects.

Environmental Protection and Enhancement Act (EPEA)

Legislation, or law, supporting and promoting the protection, enhancement, and wise use of the environment. The AER assesses applications under EPEA for all activities relating to energy development.

Integrated Resource Management System (IRMS)

The Government of Alberta’s approach to managing Alberta’s energy resources that considers the combined effects of existing and future development and aims to coordinate the environmental, economic, and social aspects of energy development. The IRMS includes the AER; the Government of Alberta; the Alberta Environmental Monitoring, Evaluation and Reporting Agency; the Aboriginal Consultation Office; and the Policy Management Office.

Levy-neutral regulator

Every year, the AER levies an administration fee on industry to fund our regulatory activities; as part of our goal to become a best-in-class regulator, we are trying to offset the cost of this levy by finding cost-saving efficiencies that offset the annual industry levy.

Local magnitude

A measure of the strength of an earthquake within 100 kilometres of its centre, as measured by a seismograph—the instrument used to record and measure vibrations during an earthquake. Values range from one to ten on the Richter scale.

Maximum operating pressure

A limitation set on operating pressures for some energy development operations, e.g., pipelines and in situ oil sands recovery, in order to prevent problems with infrastructure or geological structures that can be caused by high operating pressures.

Near-Term Action Program (NTAP)

An AER project that aims to increase our efficiency by eliminating duplication and streamlining regulatory requirements for low-risk activities.

New Activity Life-Cycle Approach (NALA)

An AER project that will change how we process applications for development; under NALA, we will accept a single application for a single project, rather than the eight to ten (or more) applications that are often required under our current regulations.

Organic-rich shales

Fine-grained rocks with low permeability that are rich in hydrocarbons—i.e., oil, gas, or natural-gas liquids.

Pipeline integrity management project

A project initiated by the Western Regulators’ Forum to enhance industry’s pipeline safety performance.

Pipeline Rules

A regulation governing pipelines.

Play-based regulation

An AER project designed to give stakeholders a clearer picture of development, more effectively address cumulative effects (i.e., on a holistic basis), reduce industry’s footprint by encouraging collaboration between operators, and reduce duplicative and unnecessary infrastructure.

Public Lands Act

Legislation, or law, guiding the use of land owned by the province of Alberta (i.e., public land). The AER regulates energy resource development on public lands, ensuring that energy exploration, development, and ongoing operations on public lands are carried out responsibly.

Reclamation certificate

Reclamation certificates are required for all publicly-owned land as stated in the Environmental Protection and Enhancement Act. Operators are required to return the land to its equivalent state—i.e., as close to its pre-project state as possible—once an oil and gas project is complete.

Reclamation certificate inquiry

An on-site investigation that confirms the statements in a reclamation certificate application.

Regulatory diplomacy

An AER effort to increase cooperation and knowledge sharing among energy regulators around the world.

Responsible Energy Development Act (REDA)

A piece of legislation, or law, establishing and empowering the AER. REDA sets out the AER’s mandate, structure, powers, duties, and functions.

Risk-based

The practice of focusing on higher risk areas or activities.

Risk-based regulation

Part of the AER’s effort to meet the demands of a new energy development landscape, risk-based regulation will allow us to be more effective by concentrating our resources on higher-risk activities. Many of the AER’s major projects, including the one application, one review, one decision approach, the Near-Term Action Program, and the play-based regulation project, are part of the effort take a more risk-based approach to regulating energy development.

Steam-assisted gravity drainage (SAGD)

A method of in situ oil sands recovery where steam is injected into a horizontal well to heat the bitumen in a reservoir and allow it to flow; gravity pulls the heated bitumen to a second horizontal well positioned below the first and the bitumen is then produced to the surface.

Subsurface Order

A subsurface order is issued pursuant to section 11.104 of the Oil and Gas Conservation Rules and specifies rules and requirements to better suit development, production, and data gathering for specific geological zones over a defined area.

Tailings

Tailings are a by-product of the process used to extract bitumen from mined oil sands and consist of water, silt, sand, clay, and residual bitumen. Sand and other heavy particles quickly separate from the water, but smaller particles of clay and silt remain in suspension, forming fluid tailings. Fluid tailings can take decades to settle and are an ongoing challenge for the oil sands mining industry.

Tailings Management Framework of the Mineable Athabasca Oil Sands

Developed by the Government of Alberta to provide the AER with direction to manage fluid tailings volumes.

Temporary field authorization

Short-term authorizations under the Public Lands Act and the Mines and Minerals Act.

Tight rock

Low-permeability rock (i.e., fluid does not transmit easily through the rock) from which hydrocarbon recovery is difficult. Unconventional recovery techniques, such as hydraulic fracturing, are required to produce resources in tight rock.

Wellbore integrity

Preventing the escape of fluids (liquids or gases), either at the surface or to other subsurface zones.