WHEREAS the Mines and Minerals Act and associated regulations are the authority for administration and regulatory procedure regarding tenure and tenure extension; and
WHEREAS the draft Water Conservation Policy for Upstream Oil and Gas is an update of the Water Conservation and Allocation Policy for Oilfield Injection (2006) and places a greater emphasis on the use of alternative water sources such as industrial or municipal wastewater and impaired quality ground water, and is extended to oil sands mining, conventional enhanced recovery, and hydraulic fracturing water use; and
WHEREAS the Alberta Energy Regulator initiated a multi-stakeholder panel in the Area-Based Regulation Pilot Project in the M.D of Greenview, which examined the draft Water Conservation Policy for Upstream Oil and Gas and presented 23 consensus recommendations for improving the use of alternate sources of water and supporting the implementation of the policy; and
WHEREAS the draft Caribou Range Plan requires industry to engage in integrated land management to reduce the environmental impacts and fragmentation of landscape through regional access plans, multi-use corridors, and phased restoration to in the protection of caribou and restoration of caribou habitat; and
WHEREAS the federal Species at Risk Act will require similar actions to protect and restore other threatened and endangered species across the province; and
WHEREAS the current tenure process encourages the fracturing of the landscape and reduces orderly development of energy resources as industry is focused on planning activities around maintaining tenure; and
WHEREAS industry and municipalities support actions to reduce ecological footprint and environmental impacts, and seek to protect endangered species in Alberta through compliance with provincial and federal legislation and regulation, while maintaining and enhancing economic prosperity;
THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta (RMA) requests the Government of Alberta review and examine tenure extension requirements for unconventional resource development, removing the need for industry to plan activities around securing tenure, and thereby allowing more orderly development and reduced impact on the environment.
Tenure systems enable companies to explore for, and develop Alberta’s resources, such as petroleum and natural gas. Alberta’s Crown petroleum and natural gas rights are issued in the form of licenses or leases through a competitive bid system. The tenure ends when an agreement holder can no longer prove it is capable of producing resources in paying quantities, is lost through rental or royalty payment default, or by voluntary surrender.
When tenure holders wish to extend their tenure, they are required to engage in a process called “holding the land.” With conventional resources, wells are required to demonstrate reasonable reserves in the area where an extension is sought. This process was developed to prevent companies from holding and not developing their leases.
When applied to unconventional resource development, such as hydraulic fracturing or horizontal drilling, the target for tenure extension is a well-defined geological formation, such as the Duvernay or Montney. Companies are required to drill wells away from current development in order to hold the lease to land where it is already known that the resource exists creating isolated patches of development. Therefore, the current tenure extension process does not allow for orderly development creating non-optimal disturbance on the landscape and adds significant costs to operators. The additional drilling, roads, pipelines and infrastructure required to extend tenure increases industry’s overall footprint and further fragments the landscape.
The discussion about tenure extension emerged as a supplementary issue in the Area-Based Regulation (ARB) Pilot Project in the M.D of Greenview. The ARB approach was initiated by the Alberta Energy Regulator to make geographically-specific rules and practices that consider the unique environment, energy resources, and communities of targeted areas in collaboration with the people that live, work and recreate in those locations. The pilot project involved a multi-stakeholder panel which developed recommendations specific to water use by the energy sector within the M.D of Greenview. The panel involved representatives from municipalities, environmental organizations, industry, and Indigenous and Metis groups. The panel presented 23 recommendations aimed at improving the use of alternative sources of water and supporting implementation of the draft Water Conservation Policy for Upstream Oil and Gas.
During the panel, there was discussion of the current energy tenure system. The current effects of the requirements for extending tenure holdings was seen by panel members to hamper the ability to implement the draft Water Conservation Policy for Upstream Oil and Gas. This issue was outside the panel’s scope as defined in their terms of reference, but the panel felt that altering tenure extension requirements would help achieve environmental and economic outcomes across the province.
The Government of Alberta is in the process of receiving feedback on the draft Caribou Range Plan, which will be followed by a number of plans under the federal Species at Risk Act for the protection of threatened or endangered species across the province. These plans have a number of significant potential impacts on municipalities and industry throughout Alberta. In its current form, the range plan would require industry to engage in integrated land management, including best practices to reduce their ecological footprint through regional access plans, multi-use corridors, and phased restoration. Alterations to tenure extension will allow industry to comply with changes to regulations and reduce their environmental footprint, reduce costs to operators, and maintain industry prosperity.
Changes to tenure extension requirements would reduce the need for industry to plan activities around maintaining tenure. Particularly, but not limited to, unconventional development, these changes would allow for more orderly development, reducing environmental impacts and fragmenting of the landscape. These changes are required as soon as possible as there are a number of tenure expirations occurring in 2019 and 2020.
There are a number of benefits to changing tenure extension requirements. There is potential for acceleration of provincial revenue streams as production from wells would be in focused development areas, rather than if wells were drilled to secure tenure away from the existing development. More orderly development would allow for improved water management, especially reduced impacts on aquatic ecosystems through improved water recycle and reuse planning. It also allows for reduced land fragmentation through focused development. Changes to tenure extension would also encourage operators to increase the use of alternative water resources in unconventional resources development.
RMA has no active resolutions directly related to this issue.