British Columbia, formerly notorious for erecting rigid regulatory barriers inspired by environmental critics, is now vowing to keep its promise to make its gas-rich northeastern corner more accessible. The BC Oil and Gas Commission is inaugurating a new era of “performance-based” regulation this fall, initially with liberalized procedures for pipeline projects.
The system, akin to practices of the National Energy Board and the Alberta Energy and Utilities Board, replaces a “prescriptive” approach of detailed codes for every aspect of industry behavior. Under the new regime, the regulations emphasize results and grant companies latitude to vary the methods and designs used to achieve them for purposes of efficiency and speed.
BC pipeline builders, for instance, are being given freedom to make minor route variations inside approved, 50-meter-wide construction corridors without having to seek approvals for each change.
Also abolished are irksome aspects of the old prescriptive regime, such as having to provide minutely detailed engineering data up front at the time of initial applications for access to the land surface for pipeline projects.
Builders will be allowed to adapt specifications as developments advance, provided commitments are made to follow industry codes of “best practices.” The duration of rights to occupy and work on the land is being quadrupled to two years from six months.
The commission said “OGC effort will shift from reviewing preliminary surface and technical information at the front end of the planning process to assessing the performance of companies’ activities against clear, relevant standards.”
Builders also will be able to earn a designation of “routine” for projects by making them part of “general development plans” for gas-production regions or by locating them outside zones identified as environmentally sensitive and obtaining private agreements with landowners and other “stakeholders” such as aboriginal communities. For routine projects, the commission set a target of issuing permits within 15 to 20 working days of receiving completed applications.
The new leaf turned on pipeline regulation is the latest in a series of actions taken to open up the northern end of the province to development since the industry signaled intentions to expand on Canada’s gas “near frontier” in the late 1990s. The steps included creation of the commission, modeled after Alberta and federal patterns of “one-window” regulation by a single agency. The policy has been developed in close consultation with the Canadian Association of Petroleum Producers by both BC’s former left-leaning New Democratic Party administration and the current centrist Liberal government.
Results are showing. Since 2002, the average cost of processing applications for BC wells, pipelines and geophysical surveys has dropped by 7% to C$4,619 (US$3,695). The reduction was achieved despite a sharp increase in the commission’s workload, with the annual number of applications rising since 2001 by 64% to 3,944.
The average number of working days taken by the BC commission to process applications has dropped to 15 from 24 over the past three years. Canadian producers have likewise demonstrated that they mean business about expanding in BC if given the opportunity. Although still a minority of Canadian activity compared to low-cost shallow drilling on the Alberta plains, the pursuit of costlier but larger targets in BC is on the rise.
Drilling activity has jumped 86% over the past five years to an annual total expected to nudge 1,200 wells in 2004. The growth is forecast to continue, with BC drilling activity approaching 1,500 wells per year by 2007, excluding potential activity offshore of the province’s west coast is a moratorium is lifted after a review currently under way.
BC’s annual gas production has increased 26% over the past five years, to more than one trillion cubic feet from about 820 Bcf in 1999. Production in the province is forecast to exceed 1.2 Tcf by 2007.
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