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Update of Saskatchewan Upstream Oil & Gas Industry Regulations
Ministry of the EconomySESSASESSA
March 19, 2012
Directive S 10Directive S 10
• Directive S 10 provides enforceable regulatory requirements
Directive S-10Directive S-10
• Directive S‐10 provides enforceable regulatory requirements for reducing flaring and venting of associated gas.
• Directive S‐10 provides equivalent control similar to the p qAlberta Energy Resources Conservation Board’s (ERCB) Directive‐60, which as a decade of track record.
• Volumetric Reporting system will be based on recogni ed and• Volumetric Reporting system will be based on recognized and proven Production Reporting System. Saskatchewan is now a partner in the Petrinix.
Directive S-10Directive S-10• Applications:
Oil W ll d Si l Oil W ll B i– Oil Wells and Single Oil Well Batteries
– Multi‐Oil Well Batteries
– Associated Gas Processing Plants (case‐by‐case– Associated Gas Processing Plants (case‐by‐case requirements)
– Any wells and facilities that vents, flare or incinerate associated gas
• Exceptions
A ll d f iliti th t d h dl• Any wells and facilities that produces, handles or processes or non‐associated gas
Directive S-10Directive S 10
The emission reduction initiative is based on theThe emission reduction initiative is based on the licensee evaluating the following three criteria: 1. Can flaring, incinerating, and venting be eliminated?
2. Can flaring, incinerating, and venting be reduced?
3. Will flaring, incinerating, and venting meet performance d d ?standards?
It is expected that the upstream petroleum industry will pursue continuous improvement in reducing associated gas flaring, incinerating, and venting in p g g g, g, gSaskatchewan. ECON, in consultation with its stakeholders, will monitor progress of emission reduction performance to determine the need for additional or accelerated implementation of regulatory requirements to facilitate increased associated gas conservationconservation.
Directive S-10Directive S-10• The principal regulatory mechanism of Directive S‐10 is the establishment
and enforcement of flaring and venting restriction volume for associated
Directive S 10Directive S 10
and enforcement of flaring and venting restriction volume for associated gas produced from licensed oil wells and facilities.
• The program is design to restrict the licensee whose well or facility that flares or vents associated gas above a certain limit (900 cubic metres perflares or vents associated gas above a certain limit (900 cubic metres per day). If they exceed the limit they are required to conserve (collect, sell or use) the associated gas.
• The requirement for conserving may be waived if the licensee can• The requirement for conserving may be waived if the licensee can demonstrate that the cost of conserving associated gas exceeds a prescribed economic limit. It is designed so that the energy input to conserve the associated gas does not exceed the benefit of conserving theconserve the associated gas does not exceed the benefit of conserving the associated gas. The economic limit for conservation is Net Present Value (NPV) greater than ‐$50,000Cdn (minus fifty thousand dollars).
Phase In PeriodsPhase In PeriodsEffective date of S‐10:
Phase In PeriodsPhase In Periods
• For new oil wells and facilities licensed on or after July 1, 2012, all parts of this Directive come into effect on July 1, 2012;
• For existing oil wells and facilities licensed before July 1, 2012, all parts of g y , , pthis Directive come into effect on July 1, 2015.
• Immediately, where valid public complaints are raised (validated by field office investigation) with regards to odours, noise or visible smoke from g ) g ,venting or flaring from a well or an upstream oil and gas facility.
• Immediately for a well or a facility ordered by ECON to comply with the Directive. These orders can be in the form of a licence condition, ,memorandum, letter or Minster’s Order.
S-10 Venting RestrictionsS 10 Venting Restrictions4.3.2 Approved Continuous or Routine Venting
All continuous venting greater than 900 m3 per day, which meets the requirements of Appendix 1 and was evaluated using the decision tree, must ensure that a reasonable level of precaution has been taken to protect human health, public safety, the environment, property, and to prevent fire or explosion. ECON may investigate any volume of associated p p y g ygas venting initiated by public complaint. If, based on the investigation, a stable and uninterrupted combustion of the gas is feasible, upon instruction of ECON, the licensee must provide acceptable justification for , p p jvolumes not combusted or be required to flare/incinerate or capture the associated gas.
S-10 Venting RestrictionsS 10 Venting Restrictions4.3.3 Non‐routine or Temporary Flaring, Incinerating, and Venting
Temporary planned venting is not permitted within 500 metres of a residence unless written consent is obtained from the resident or unless approved by ECONwhere consent cannot be obtained.
No person shall vent any volume of gas or vapour (including water vapour) from a well, facility or pipeline that contains H2S in a concentration greater than 1000 ppm or a concentration greater than 10 ppm as measured at the edge of the lease or property boundary whichever is the lesser of the two: unless it is an emergency and a reasonable levelboundary, whichever is the lesser of the two: unless it is an emergency and a reasonable level of precaution has been taken to protect human health, public safety, property and the environment and to prevent fire or explosion; or unless approved by ECON.
Venting of these substances must not result in exceedance of the SaskatchewanVenting of these substances must not result in exceedance of the Saskatchewan Ambient Air Quality Standards. 10.8 parts per billion (1hrs) or 3.6 ppb (24hrs)
Licensee shall design the vent stacks so that it minimizes odour outside the lease boundary.boundary.
Directive S-20Directive S 20• The use of flare pits and earthen pits as storage receptacles in the production
operation of wells and facilities are strictly prohibited in Saskatchewan since 2002.operation of wells and facilities are strictly prohibited in Saskatchewan since 2002. All flare pits shall be immediately decommissioned and site remediated.
• Provides comprehensive upstream oil and gas flaring and incineration performance, equipment spacing and set‐back distance specifications.
• The standards specified in the Directive S‐20 apply to wells and facilities licensed or approved under The Oil and Gas Conservation Act and/or The Oil and Gas Conservation Regulations, 2012.
bl fl k d d d ll d• Portable incinerator or flare stack used during drilling, servicing, turn‐around or tests and located and used on the site for less than one year is exempt from these requirements with exception of applicable equipment spacing. ECON may at anytime require the licensee to meet these requirements or shut‐down the y q qincineration or flaring operations, if in the opinion of ECON, that environmental, public safety or valid public complaints or concerns are present.
Directive S-20Directive S 20• Flare stacks or incinerator installed prior to July 1, 2012 at wells or facilities
licensed prior to July 1, 2012 must meet the standards specified in the S‐01 Version January 1, 2002, Section 2.2.1 (referenced in Appendix 1), unless otherwise approved in writing by ECON.
• If the aforementioned existing flare stack does not meet the S‐01, the licensee h ll i di t l d t th Di ti S 20 ith ti f i tshall immediately upgrade to the Directive S‐20, with exception of equipment spacing requirements, or make a written request for an exemption to ECON. Licensee may use the applicable equipment spacing specified in Section72 Regulations.g
• All written requests must include the licence number of the well or facility and technical rationale on how these flare stack or incinerator can be operated safe and environmentally responsibly.
• If an exemption is granted, the exemption will be added as a condition of the existing well or facility licence.
• If you do not have a licensee ECON will likely be having a very serious discussion.
Directive S-20Directive S 20• All existing flare stack or incinerator that meets the S‐01 version 2002, do not need
to upgrade to the Directive S 20 standard unless:to upgrade to the Directive S‐20 standard unless:
• Flaring or incinerator system is being upgraded as a part of normal upgrade process of the well or facility, after July 1, 2012;
• Facility licence is amended due to facility expansion for example a battery is• Facility licence is amended due to facility expansion, for example a battery is upgraded to a gas plant;
– Single Well Battery (a licensed well) is upgraded to a multi‐well battery;
– Gas sent to the flare stack or incinerator has [H2S] equal to or greater than 10 mol/kilomol(10 000 )(10,000ppm); or
– Instructed by ECON.
• Any flare stack or incinerator installed on or after July 1, 2012 shall comply with standards specified in the Directive S‐20.
• Exemption may be granted by ECON if the licensee provides an acceptable technical rationale to support the requested exemption.
Directive S-20 Enforcements• The licensee shall install a vapour recovery unit to prevent the emission of volatile gases from storage
devices and associated processing equipment at a facility or well site when [H2S] is equal to or greater than 10 mol/kilomol as measured at the source of emission or 0 01 mol/kilomol as measured at the edgethan 10 mol/kilomol as measured at the source of emission or 0.01 mol/kilomol as measured at the edge of the lease.
• No one shall operate an upstream oil and gas facility or a well in a manner that results in air pollution emission that exceeds the ambient air quality standards prescribed by Saskatchewan Ministry of Environment (MOE), unless the licensee has a permit from MOE approving the activity. p pp g y
• Where persistent or significant odour complaints are received at a licensed facility or a well, and obvious and measurable risk exists, or at the discretion of ER, the licensee may be ordered and required to implement one or more of the following mitigative measure(s):
– conduct an air quality investigation or install air quality monitoring equipment
– attempt to eliminate the air contaminants at their source
– implement good housekeeping to minimize fugitive emissions
– develop and implement a public information and consultation program
– seal and leak proof storage vessels and equipment p g q p
– install a vapour recovery unit on storage or process equipment
– direct the recovered vapour to properly operating flares as per section 2.2.1
– recover associated gas (gas associated with crude oil production) that may be vented or flared
– any combination of these requirements as ordered by ECONany combination of these requirements as ordered by ECON
6000
4600
50695000
Licences issued
3795
42004036
3420
3898
4600
3816
4212
4526
4097
4526
39484000
3111
24852531
2306
3283
2700
3420
2208
3000
11851238
997
12721486
12381033961
1185972 1046
1294
1527
1886
1644
2069
15031430
1120
1684
2208
1000
2000
19129 283134581056871117155
509694793926
807802593665651
997 1033961972
735660665
291281269
544
1046
748879 923 863
0
1000
1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20151940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Wells Drilled (FDD)
28913000
Wells Drilled (FDD)
Vert Oil
HZ Oil
1976
2318
2000
2500Gas
1393
19761860
14471426
1305 1301
15021378 1407
1509
1417
1699
2019
1409
18741942
1794
15111500
2000
COUNT
809
10731253
1305 1301
707
1031
717 706
838919
1417
903
634
1038
12091409
11561230
1000
488563
717
255318
536477
390451 435
706
268369 327
233
9850
0
500
1995 1997 1999 2001 2003 2005 2007 2009 20111995 1997 1999 2001 2003 2005 2007 2009 2011
YEAR
2011 Oil Well Production Data WATER m3, 320,287,931 , 92%
2,017,813,966 BBL
CRUDE OIL m3, 24,968,385 , 7%
GAS e3 m3, 2,463,464 , 1%
87,437,530 mcf 14 572 924 BOE
157,300,824 BBL
14,572,924 BOE
Natural Gas Production Volume103m3
8,000,000
9,000,000
Natural Gas Production Volume 10 m
ASSOCIATED NON‐ASSOCIATED
6,000,000
7,000,000
4,000,000
5,000,000
2,000,000
3,000,000
0
1,000,000
991
992
993
994
995
996
997
998
999
000
001
002
003
004
005
006
007
008
009
010
011
19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20
Associated Gas (103m3) Vs. Crude Oil Production (m3)
2
2.35E+0 7
2.32E+0
2.17
2.42E+07
2.48E+07
2.44E+07
2.43E+07
2.46E+07
2.43E+07
2.49E+07
2.48E+07
2.56E+07
2.46E+07
2.45E+07
2.51E+07
25,000,000
30,000,000
2,500,000
3,000,000
ASSOCIATED Crude Oil (cu.m)
1 1
1.9
2.11E+0
2.24E+06
2.32E+06
2.46E+06
1. 5
1.72E+07
1.87E+07
.09E+07
7 07 7E+07
20,000,000 2,000,000
M3
1.
1.40 E
1.43E+
1.52E+06
1.56E+06
1.54E+06
1.48E+ 0
1.71E+06
1.89E+06
1.89E+06
96E+06
06
1.24E+07
1.34E+07
50E+07
7
15,000,000 1,500,000
Associated Gas E3M
7.61E
7.96E+
8.71E+05
1.02E+06
1.07E+06
1.18E+06
29E+06
E+06
+06
6 06
5 000 000
10,000,000
500 000
1,000,000
A
E+05
+05
5
‐
5,000,000
‐
500,000
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Year
Associated Gas Flaring and Vent ing Volume Comparison: Alberta vs. Saskatchewang g p
15551 6 0 0
1 8 0 0
SK Fl ar e/ Vent
AB Fl ar e/ Vent
SK Fl ar e/ Vent w/ Non Recover abl e Gas
12241 2 0 0
1 4 0 0
etre
SK Fl ar e/ Vent w/ Non-Recover abl e Gas
1016
843
728 7238 0 0
1 0 0 0
on cub
ic m
e
450 436517 529 506
562 543 550
728667 689 672
723
4 0 0
6 0 0
millio
430 450 436 414351
405
0
2 0 0
2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 10 2 0 11
C ti T d Fl i P d ti (C d Oil i th d 3)
24752 24586 24854 2482125591
24633 2452025083
300003000
Comparative Trends Flaring vs. Production (Crude Oil in thousand m3)
1957
2113
22442321
246324245
24752 24415 24338 24586 2430024854 24821 24633 24520
20000
25000
2000
2500
1523 1558 15411477
1711
1889 1891
150001500
Gas 106
m3
SK Flare/Vent
517660
730 724
100001000
SK Flare/Vent w/ Non‐Recoverable Gas
Associated Gas Production
Crude Oil Production
430 450 436 414 405
517529 506
562
351
543 550516
351
0
5000
0
500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
GOR, FVOR, AGFVR and Crude Oil Production
82 6
91.194.7
98.2y = 3.5173x + 53.666
9.0
10.0
90.0
100.0
FVOR (m3/m3)GOR (m3/m3)Crude Oil Production in million m3AGFVR (m3/m3) at 49%
conservation
62.8 62.9 63.1
69.6
77.776.1
78.882.6
6.47.0
8.0
70.0
80.0 Linear (GOR (m3/m3))Linear (AGFVR (m3/m3))
conservation
60.7
4.2 4.34.5
y = 0.1309x + 3.177
4 0
5.0
6.0
40 0
50.0
60.0
Multiple factors at 21%
conservation
24.2 24.8 24.4 24.3 24.6 24.3 24.9 24.8 25.6 24.6 24.5 25.1
3.5 3.5 3.5 3.6 3.7 3.63.9 3.8
2 0
3.0
4.0
20 0
30.0
40.0 you want to see purple line comes up to red lines if S‐10 was in full force
17.7 18.2 17.9 17.0 16.5
21.3 21.3 20.422.0
14.2
22.1 21.9
0.0
1.0
2.0
0.0
10.0
20.0
0.00.02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Vented, 176,282 , 7% Metering Difference, 52 319 2%
2011 Associated Gas Utilization (e3m3)total 2,463,464 e3m3
Flared, 373,764 , 15%
52,319 , 2%
Lease Fuel, 674,567 , 28%
Sales, 1,186,533 , 48%
Metering Difference, 138 3%
2011 CO2 Equivalent Emission from Associated Gas Utilization(Kt CO2e)
138, 3%
Lease Fuel, 1774, 36%Vented, 2010, 41%
Flared , 983, 20%