The newly formed body overseeing Alberta’s oil and gas sector intends to reduce industrywide costs for companies wending their way through the regulatory process by roughly $60-million annually, a goal it counts as one of its major achievements in its first year of operation.
The Alberta Energy Regulator (AER) marked its first anniversary Thursday by rolling out a strategic plan that stretches until 2017. Reduced costs for energy companies, along with cutting pipeline incidents, feature prominently on its list of priorities.
AER officials say they’ve made the regulatory process more efficient. It is eliminating regulatory overlap between departments, expected to save companies roughly $60-million a year. The disjointed application process that existed prior to the AER’s streamlining was one of industry’s biggest complaints.
The regulator’s anniversary comes as oil sands companies go through another wave of growth and the pipeline industry remains under extreme scrutiny. Suncor Energy Inc., Cenovus Energy Inc. and Canadian Natural Resources Ltd. – Canada’s dominant energy companies – are working through expansion plans and also face challenges tied to having mature projects.
The AER has merged responsibilities into one body that were previously handled by the Energy Resources Conservation Board, public lands regulations and the Water Act and Environmental Protection and Enhancement Act. It still has to fold in the branch that looks after environmental impact assessments, which it expects to complete this summer or fall.
“This was like changing tires on a moving vehicle,” Gerry Protti, the AER’s chairman, said in an interview. He borrowed this line from the organization’s chief executive, Jim Ellis.
Mr. Ellis said the AER’s leaders are measuring the new body against regulators in the United States, Norway, the United Kingdom and Australia in an effort to become a “best-in-class” regulator.
“We know there’s a club of top regulators in the world, and we want to be part of that club,” Mr. Ellis said. But he wasn’t clear on what rules the AER intends to import from other jurisdictions. “I can’t give you an exact example because all of those regulators are struggling to move forward,” he said. Water and air emissions, he said, are two examples of areas regulators around the world are struggling to manage. “We’re doing the same. We’re having the same issues”
The AER still faces criticism when it comes to environmental protection and enforcement.
While it aims to reduce the “pipeline incident rate” – referring to problems such as leaks – by 4 per cent, one of its most recent enforcement actions was perceived as soft. It took Alberta’s regulator two years to bring charges against Plains Midstream Canada after it spilled 2,900 barrels of sour crude into the Red Deer River when its Rangeland pipeline failed in June, 2012. The AER notes it assumed jurisdiction over the matter in March, 2014, with charges coming in May. Its report was critical of the company’s behaviour.
Joseph Doucet, dean of the Alberta School of Business at the University of Alberta, believes the AER should be applauded for merging multiple organizations, while not losing sight of the importance of transparency and environmental protection.
“They have made significant strides in developing the culture of the organization and I think that’s important,” he said. “Bringing the different organizations together was probably harder than expected. And the overarching goals of both streamlining the regulatory process and making it more transparent and easy for firms, and also, very very importantly, making sure the objectives of environmental performance, health and safety responsibilities, and other goals are not lost.”
“This is not just about making it faster for firms to get approval,” he said.