Alberta and Federal Governments Reach Preliminary Equivalency Agreement on Methane Reduction Regulations

May 15, 2020

The Alberta and Federal governments have come to a preliminary agreement on the equivalency of Alberta’s Methane Emission Reduction Regulation[1] (the “Alberta Methane Regulations”) with the Federal government’s Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds[2] (the “Federal Methane Regulations”). While the text of the proposed agreement has yet to be released, the equivalency agreement is expected come into effect upon publication of an order pursuant to section 10 of the Canadian Environmental Protection Act, 1999. Once the agreement is executed and brought into force, the Federal Methane Regulations will cease to apply in Alberta.

British Columbia and the Federal government entered into a similar equivalency agreement respecting the application of the Federal Methane Regulations in February 2020.

The Federal Methane Regulations set a slightly more aggressive baseline for its methane emissions reduction target relative to the Alberta Methane Regulations. The Federal Methane Regulations aim to reduce annual methane emissions by 45 per cent by 2025 from 2012 levels, resulting in an annual methane emissions reduction of about 20 megatonnes of CO2-equivalent. The Alberta Methane Regulations set a target for reducing methane emissions from the provincial upstream oil and gas sector of 45 per cent by 2025 from 2014 levels (or approximately 14 megatonnes of CO2-equivalent). As part of the Alberta Methane Regulations, upstream oil and gas facilities will need to capture methane gas, and either re-use it, re-inject it, send it to a sales pipeline, or route it to a flare.

Specifically, the Alberta Methane Regulations require “duty holders” – defined as the holder of a licence or approval for: (i) a pipeline installation under the Pipeline Act, (ii) a well or facility under the Oil and Gas Conservation Act; (iii) a scheme or operation under section 10 of the Oil Sands Conservation Act, or (iv) the operator of a facility that does not require a licence or approval under the Oil and Gas Conservation Act – to comply with fugitive emissions management requirements under Alberta Energy Regulator Directive 060: Upstream Petroleum Industry Flaring, Incinerating, and Venting (“Directive 060”), and to furnish annual reports on volumes received, vented and destroyed at applicable facilities.

The Alberta Methane Regulations establish equipment, design and operating requirements to limit venting and impose new parameters for flaring under Directive 060 and new measurement and reporting requirements under Directive 017: Measurement Requirements for Oil and Gas Operations. Notably, Directive 060 limits overall vent gas volumes at a site to less than 15.0 103 m3 per month or 9.0 103 kg of methane per month. However, Directive 060 recognizes that certain technology used at upstream oil and gas facilities needs to be grandfathered for operational purposes. Specifically, the determination of the overall vent gas volume limit at a site excludes, until 2023, for gas volumes from pneumatic devices, compressor seals, and glycol dehydrators. Commencing in 2023, these sources will be subject to specified limits, according the age of the equipment.

Next Steps

Although Alberta and the Federal government have come to a preliminary agreement, both the Federal Methane Regulations and the Alberta Methane Regulations continue to be effective until such time as a final agreement becomes effective.

The text of the preliminary agreement is expected to be posted on the Environment and Climate Change Canada website for a 60-day comment period, then the agreement will be finalized and subject to cabinet approval and an order-in-council.

[1] Enacted on January 1, 2020.

[2] Came into effect on April 26, 2018.

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