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Alberta Undergoing Energy Regulatory Reform

Time savings and a method to ensure that environmental rules match or exceed international standards are promised by an overhaul of resource industry supervision in Canada's chief natural gas-, oil- and coal-producing jurisdiction.

Exit the Energy Resources Conservation Board (ERCB), to be replaced by an expanded Alberta Energy Regulator (AER), under a reform bill titled the Responsible Energy Development Act, which the province's Conservative government introduced last week. The ruling party's 61-member majority in the 87-seat provincial legislature assures that the measure can pass as planned this fall. The reform bill aims to cut project approval times and clarify rules by compressing hitherto separate industrial and environmental conduct codes and enforcement structures into a single bundle of law court- and police-like judging and patrolling.

When project approval cases raise questions about provincial standards, a new "policy management office" (PMO) will have a mandate to come up with answers, including recommendations to fill in gaps or make changes and improvements. The new energy czar's bureau has already been set up and is recruiting expert staff, using provincial cabinet executive powers over government organizational structures.

The regulatory reform package is intended to cover almost every aspect of oil, gas and coal development from cradle to grave. The AER mandate ranges from resource exploration to reclamation of exhausted wells or mines and cleaning up processing facilities or pipelines at the end of their useful lives. The main exception is determining compensation for landowners affected by industrial development, a field that continues to rate its own surface rights board. Protecting private ownership powers and property values remains viewed as a separate technical matter from assessing effects on the land, air, water and wildlife.

Landowners in and around resource development hot spots -- a strong political force across the province's widely dispersed oil, gas and coal deposits -- gain power in the regulatory overhaul.

Provisions include a voluntarily registry where property owners can file copies of land-surface agreements with resource developers, then demand AER enforcement if lapses occur. Greatly expanded use is planned for an "appropriate dispute resolution" (ADR) program, which encourages companies to settle arguments by voluntarily modifying projects rather than fight off changes to projects at regulatory hearings.

A smaller but no less thorny issue, aboriginal rights claims, is declared off-limits for the AER. The new legislation declares that the agency will have no jurisdiction over an issue that repeatedly ignites time-consuming regulatory and legal contests in Alberta and across the rest of Canada: the adequacy of provincial or federal government behavior under a provision of 1982 national constitutional reforms that require consultation with natives on development that affects their reserves and larger claims to traditional territories.

But on provincial Crown (public) lands -- about two-thirds of Texas-sized and sparsely populated Alberta -- the AER will take over management authority from a formerly separate government bureau in the Department of Environment and Sustainable Resource Development.

Details of the new regime are to be worked out over the next 20 months. The government set targets of being ready to receive all-in-one project applications as of June 2013, then of being capable of handling them within a fully unified public service apparatus a year later. A shuffle of functions and personnel is already in the planning stage. Numerous official roles are expected to move to the AER in the provincial business capital of Calgary from the government department in the political capital of Edmonton and other northern centers such as Vegreville, home town of a powerful early-1970s Conservative environment minister.

Unlike a pro-development regulatory reform package that the Conservative majority government in Ottawa enacted for projects under federal jurisdiction in June, the Alberta program so far stops short of setting review time limits or approval deadlines. However, Alberta Energy Minister Ken Hughes predicted that time savings will be measured in months, and possibly many of them for major development schemes. "There is certainly that potential," said Brad Herald, Alberta operations manager with the Canadian Association of Petroleum Producers. "We're condensing the process."

The new regime will, for instance, boil down a big oilsands project into a single request for approval from as many as 200 applications for permits from dispersed provincial authorities, Hughes pointed out. Large natural gas development schemes of wells, pipelines and processing plants have been no less complex, especially if they involve sour gas deposits steeped in hazardous hydrogen-sulfide impurities. However, Hughes and provincial Environment Minister Diana McQueen emphasized that the legislative reform aims to achieve efficiency without diminishing effective regulation of industrial effects on the land, air, water, wildlife and human communities.

"We know the world is watching to see the environmental outcomes that we achieve," said McQueen, alluding to international eco-attacks that have branded Alberta as a "dirty oil" source and contributed to delaying export pipeline projects. The environmental battles are poised to spread beyond the oilsands into drilling fields as the province's industry accelerates use of hydraulic fracturing to tap rich deposits of tight oil and liquids-rich gas embedded in shale deposits that carpet much of the province.

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