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Tyler and Rachel Herbert move cattle with their two children and Tyler’s mother on their property near Nanton, Alta. on July 4. Looming drought conditions have the province's environment ministry saying it will develop agreements to manage the water shortages with users.Sarah B Groot/The Globe and Mail

The Alberta Energy Regulator has warned fossil fuel companies that their access to water, a key resource for extracting and processing hydrocarbons, may be restricted next year because of parched conditions in Western Canada.

The AER, which oversees oil, natural gas and coal producers in Alberta, issued a bulletin this week advising energy companies to prepare for water shortages, particularly in the southern part of the province. Some companies may not be able to divert water toward their operations in 2024, the regulator said.

The water crisis stretches far beyond Alberta. The federal government has classified 72 per cent of the country as abnormally dry, or under moderate to exceptional drought conditions. This included 81 per cent of Canada’s agricultural landscape as of the end of November.

But the Prairie region is under the most pressure, with 97 per cent classified as abnormally dry or experiencing moderate to exceptional drought, according to Agriculture and Agri-Food Canada’s most recent report. Alberta is preparing a drought emergency plan for 2024, and some parts of the province have been operating under water restrictions for months.

The AER’s warning applies to all energy companies that hold water licences, which are required in the province for diverting water for industrial, municipal or agricultural use. But the regulator hinted that those operating in the southern part of the province are most at risk of being affected by mitigation measures.

“For the South Saskatchewan River Basin, where the situation is more severe, the AER will reach out to industry licence holders this winter to seek estimates of their 2024 future water demand,” the bulletin, dated Dec. 12, said.

“Licensees at risk of not being able to divert water in 2024 should prepare contingency plans.”

The Alberta government has 51 water shortage advisories in place right now. The southern part of the province is under the most stress. In that region, the St. Mary Reservoir was at 11.4-per-cent storage on Dec. 13, according to the province’s Ministry of Environment and Protected Areas. Normally, it would be at 45 to 73 per cent at this time of year. The Oldman Reservoir was at 27 per cent on Dec. 13, compared to its normal 63 to 79 per cent. The Waterton Reservoir was at 59 per cent, compared to the typical 52 to 69 per cent.

Teresa Broughton, a spokesperson for the AER, said in a statement Friday that the regulator could ask energy companies with water licences to cut back on use, or transfer water allocations from one licensee to another. She said the AER could also trigger a mechanism where the newest licensees would be cut off in favour of those who have more seniority.

“If conditions remain dry over the course of this winter and spring 2024, water availability could become a significant issue,” she said. The AER will meet with water licence holders, she said, to discuss possible restrictions and contingency plans.

Some municipalities and agricultural players are already under restrictions.

Alberta’s water management plan consists of five stages, ranging from minor drought to province-wide emergency. Alberta is in the fourth stage, which means a significant number of water licensees and households are unable to divert water, and shortages are expected to continue. If Alberta proceeds to the fifth stage and declares an emergency under the Water Act, it will mean there is a “significant risk to human health and safety due to insufficient water supply and water quality degradation,” according to the province’s dedicated drought website.

In a presentation for major water users, the environment ministry said it will “develop collaborative agreements” to manage the water shortage between January and March, 2024. Depending on snowpack and spring precipitation, the ministry expects to implement these agreements between March and May, and could declare an emergency between May and August, according to the presentation.

The document, prepared in November, pointed to Environment and Climate Change Canada’s forecast for an El Nino winter, which would mean warm, dry conditions. The presentation noted there is a 62-per-cent chance these conditions will persist into April, May and June.

Alberta, in the presentation, noted “some licence holders have been asked to stop taking water due to low river levels” and that the government is working with them to find alternative water sources.

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