41 st Asia Pacific Economic Cooperation Energy Working Group

1. 2011 Regulating British Columbia’s Natural Gas 41st Asia Pacific Economic Cooperation Energy Working Group Presented by: Paul Jeakins BC Oil and Gas Commission May 10th 2011

2. 2011 Regulating British Columbia’s Natural Gas • Topics • Commission Overview • Resource Overview • Regulatory Structure • Strategic/Tactical/Operational approaches – Basin Management 41st Asia Pacific Economic Cooperation Energy Working Group

3. Commission Overview 3 Stakeholders • Including the Provincial Government as represented by the Minister of Energy and Mines Board of Directors Commissioner Office of the Commissioner Chief Executive Officer and Vice Chair of the Board • Corporate Planning and Performance • Internal Audits • Corporate Affairs • Government Relations • Stakeholder Relations • Internal and External Communications Engineering Division Regulatory Affairs & Stewardship Division Project Assessment & Compliance Assurance Corporate Services Division • Drilling & Production Engineering • Pipeline & Facilities Engineering • Waste Management Reclamation • Petroleum Geology • Reservoir Engineering • Public Safety • Resource Development • Environmental Planning/Analysis • Regulatory Management & Development • First Nations Liaison • Permit Revision & Issuance • Compliance & Inspection • Enforcement • Tenure Administration • First Nations Consultation • Finance & Administration • Information Technology • Records Management • Human Resources • Organizational Development • Property Management

4. Resource Overview 4 • The oil and gas industry now accounts for more than half of total revenue generated by the natural resource sectors in B.C. • All of B.C.’s producing oil and gas is in northeast B.C. • Agriculture is the second leading industry in northeast B.C. • About 1.5 per cent of the province’s population is in northeast B.C. Northeast B.C. is about 1/5 the size of the province. B.C.

5. Resource Overview 5 5 5 • Horn River Basin • Shale • 11,900 sq km • 75-170 Tcf marketable natural gas • 97 Bcf cumulative production* • Shift to unconventional gas • Northern British Columbia is home to four geographic basins which are recognized sources of shale gas. • Liard Basin • Shale • 1,150 sq km • Early development • Cordova Embayment • Shale • 2,590 sq km • 30-68 Tcf marketable gas • Early development 4 1 3 2 • Montney • Tight gas/shale • 15,281 sq km • 77-176 Tcf marketable gas • 577 Bcf cumulative production* * 2010 production numbers

6. BC Energy Plan 6 2 • Meeting Provincial Targets • BC’s Energy Plan: • Grows the Economy • Reduces Greenhouse Gas Emissions • Focuses on Environmental and Economic Leadership • The Commission’s Energy Plan Achievements: • A 30 per cent reduction in total flared volumes from 2008 to 2009. Annual flared volumes have decreased 23 per cent since 2006. • • A 56 per cent reduction in solution gas flaring since 2006 and a 92 per cent reduction since 1997. • • From 1996 to 2009, natural gas production increased by 40 per cent and the amount of gas flared per unit of natural gas production decreased by 54 per cent. • • Ninety-seven per cent of solution gas is currently conserved. • • Well cleanup and well test flaring decreased by 28 per cent from 2008 to 2009 due to increases in inline testing in the Montney and Horn River Basin plays.

7. Oil and Gas Activities Act 7 • Extensive consultations with communities, local government, First Nations, landowners, environmental organizations, industry associations and companies starting in 2002. OGAA Oil and Gas Activities Act TECHNICAL REGULATIONS ADMINISTRATIVE PENALTIES ENVIRONMENTAL PROTECTION & MANAGEMENT CONSULTATION & NOTIFICATION • Drilling and Production • Geophysical Exploration • Pipelines OGC Board Cabinet

8. Oil and Gas Activities Act 8 • Highlights • Consolidation of a number of Acts • Allows for innovation • Technical regulations allow for technical innovation. • Allows either companies or government to propose special projects. • Modernizes oversight • Enables Commission to link past behaviour to current and future operations. • New review and appeal provisions. • Strengthens regulations • Consultation and notification, and environmental protection. • Level playing field • All operators – all activities. • Competitiveness and flexibility • Harmonization with other jurisdictions. • Flexibility on ground. • Flexibility for new technologies, developments • and approaches. • Quick, responsive changes to technical regulations. • Single window regulator • Updates for unconventional approach

9. Social Input 9 Consultation and Notification • Objective • To resolve potential issues prior to application process. • Gives those affected by industry the opportunity to voice concern. • OGAA distinguishes the two as separate processes: • Consultation • A two way exchange of information between industry and those affected by industry. • Notification • The supply of information to potentially affected parties. First Nations Consultation • Objective • Avoid, minimize and mitigate potential adverse impacts on First Nations rights. • Foster relationships with First Nations communities. • Act as facilitators between First Nations and industry. • Enhance decision-making by integrating First Nations input. • Integrate traditional knowledge with science and research.

10. The Environment 10 Environmental Protection and Management Permitting Phase Operations Phase Water Quality Water Quality Wildlife Wildlife Riparian Areas Riparian Areas Wildlife Wildlife Wildlife Range Wildlife Wildlife Old Growth Invasive Plants Wildlife Wildlife Resource Features / Cultural Heritage Forest Health Wildlife Wildlife Soil Wildlife OGAA Information Session--ver 1-0

11. Regulatory Structure 11 Basin Management • Horn River Basin Liard Cordova Embayment East Kootenay • Managing resources at a landscape level (1,000,000 + ha > Shift to unconventional driver for this approach) • Establishing basin boundaries • Linking surface and subsurface: • Footprint analysis • Environmental Stewardship Plan • Basin/Tenure approval approach • Regular reports for each basin • Environmental management: • Protection of groundwater • Source water • Multi-well pads • Utilizing common corridors • Seismic lines • Minimizing flaring

12. Regulatory Structure 12 • Strategic and tactical management helps operational level management Strategic Tactical Operational

13. Regulatory Structure 13 Operational Level • Operational level management • Government environmental objectives • Regulatory requirements • Operational / site level plans • Permit conditions • Inspections and audits

14. Regulatory Structure 14 Basin Management – Water Key features of water basin management

15. Regulatory Structure 15 Moving Forward • Expectations for regulatory oversight and constraint on industry activity are increasing. • Regulatory models are becoming more complex. •  Expectations for greater transparency of industry activity and performance are increasing. • Commission: • Continued commitment to transparency through reports and updates. • Further progress on basin-level management on natural gas plays. • Continued emphasis on environmental values such as water and wildlife.

16. 41st Asia Pacific Economic Cooperation Energy Working Group 2011 Regulating British Columbia’s Natural Gas More information www.bcogc.ca Paul JeakinsDeputy Commissioner (RAS)Paul.Jeakins@gov.bc.ca