3 Application of the Sulphur Recovery Guidelines to "Grandfathered" Approvals

3.1 Grandfathered Sour Gas Plants

As of January 1, 2002, sour gas plants with approved sulphur recoveries less than the calendar quarter-year values given in Table 1 (grandfathered approvals) are required to increase sulphur recovery, unless plant capacity use meets the criteria for continued grandfathering. A complete list of grandfathered sour gas plants, related baseline capacities, and grandfathered sulphur recovery efficiencies are given in Appendix 1.

Sour gas plants with grandfathered sulphur recovery approvals operating in declining gas supply situations will be permitted to continue operations without upgrading sulphur recovery until January 1, 2017, on the following basis:

1. Grandfathered sour gas plant approvals may continue in effect provided that sulphur inlet rates are declining at least 7.5 per cent per year according to the following relationship:
   • between January 1, 2002, and December 31, 2004,
     maximum grandfathered capacity = baseline capacity
   • between January 1, 2005, and December 31, 2016,
     maximum grandfathered capacity = baseline capacity x 0.925 ^{(year - 2001)}

   The maximum grandfathered capacity is defined as the maximum average sulphur inlet (tonnes/day) permitted in any calendar quarter-year for facilities where sulphur recoveries stipulated in related EUB approvals do not meet Table 1 guidelines. The maximum grandfathered capacity will not be less than 1 tonne/day, as the sulphur recovery guidelines do not apply to lesser sulphur inlet rates.

   The baseline capacity is defined as the annual average daily sulphur inlet (tonnes/day) for the calendar year 1999. Baseline capacities for grandfathered sour gas plants are provided in Appendix 1: Grandfathered Sour Gas Plant Approvals.

2. Grandfathered sour gas plants approved to flare acid gas (i.e., that do not have any sulphur recovery capability) operating at average calendar quarter-year sulphur inlet rates in excess of the maximum grandfathered capacity must comply with the Table 1 guidelines by January 1, 2005.
3. Effective January 1, 2002, grandfathered sour gas plants that propose to operate at average calendar quarter-year sulphur inlet rates greater that 125 per cent of baseline capacity must comply with Table 1 sulphur recovery guidelines. "Blended sulphur recovery," as described in item 4 below, does not apply to plants that plan to operate in excess of 125 per cent of the baseline capacity. Enhanced sulphur recovery performance credits (see Section 4.4) may not be used to meet sulphur recovery requirements for plants with calendar quarter-year sulphur inlet rates greater than 125 per cent of the baseline.

   Operators must notify the EUB Applications Branch and AENV specifying the maximum daily raw gas inlet rate, the maximum daily sulphur inlet rate in tonnes/day, and the calendar quarter-year sulphur recovery rate that will appear in the revised plant approval. If the plant is capable of meeting the sulphur recovery guidelines without significant modification, if the maximum raw gas inlet and sulphur inlet rates are not greater than the existing plant approval values, and if the calendar quarter-year sulphur recovery complies with Table 1, the EUB will amend the plant approval accordingly without formal application. With respect to AENV operating approvals, as there is no change in activity or equipment modifications, the SO ₂ emission limits will be adjusted at the time of approval renewal or at a time and in a manner agreed to after consultation with AENV regional staff.

4. Between January 1, 2002, and December 31, 2011, grandfathered sulphur recovery gas plants with average calendar quarter-year sulphur inlet rates greater than maximum grandfathered capacity but less than 125 per cent of baseline capacity must meet a "blended sulphur recovery" requirement according to the following relationship. The formula is based on the requirement that sulphur inlet in excess of the maximum grandfathered capacity must be processed to recoveries listed in Table 1. Note that enhanced sulphur recovery performance incentive credits may be used to meet sulphur recoveries that are higher than grandfathered approvals (see Section 4.4).

   SR _min = ([Inlet _GFC x SR _Approval ] + [(Inlet _Actual Inlet _GFC ) x SR _New ]) / Inlet _Actual

   Where:

   SR _min = calendar quarter-year blended sulphur recovery requirement (%)

   Inlet _GFC = maximum grandfathered capacity (tonnes/day)
   = baseline capacity x 0.925 ^{(year - 2001)}

   SR _Approval = calendar quarter-year sulphur recovery specified in the
   grandfathered sour gas plant approval (%)

   Inlet _Actual = actual average calendar quarter-year sulphur inlet (tonnes/day)

   SR _New = calendar quarter-year sulphur recovery specified in Table 1 that
   is applicable for Inlet _Actual or the grandfathered sour gas plant approval recovery, whichever is greater (%)

   Grandfathered acid gas flaring plants that propose to operate at rates in excess of the maximum grandfathered capacity must meet Table 1 recovery levels for the total sulphur inlet. Blended sulphur recovery provisions do not apply to acid gas flaring plants.

5. Effective January 1, 2012, plants operating at average calendar quarter-year sulphur inlet rates greater than the maximum grandfathered capacity must comply with Table 1 sulphur recoveries.
6. All sulphur recovery grandfathering ends effective December 31, 2016.

The limitations on grandfathered sulphur recovery facilities are illustrated in Figure 1. Performance credits noted in Figure 1 are explained in Section 4.4.

Figure 1. Limitations on grandfathered sour gas plant approvals

3.2 Application Requirements Related to Grandfathered Sour Gas Plants

Prior to January 1, 2005, operators of grandfathered sour gas plants must notify the EUB Applications Branch and AENV in writing of their intentions for the plant.

• If the operator intends to change sulphur recovery to comply with the sulphur recovery guidelines (to degrandfather), the notification must specify the maximum daily raw gas inlet rate, the maximum daily sulphur inlet rate in tonnes/day, and the calendar quarter-year sulphur recovery rate as a percent of sulphur inlet that will appear in the revised plant approval. Provided that the maximum daily raw gas inlet and sulphur inlet rates are not greater than the existing plant approval values and provided that the calendar quarter-year sulphur recovery complies with Table 1, the EUB will amend the plant approval accordingly without formal application. With respect to AENV operating approvals, if there is no change in activity or equipment modification, the SO ₂ emission limits will be adjusted at the time of approval renewal or at a time and in a manner agreed to after consultation with AENV regional staff.
• If the operator intends to continue the grandfathered status of the plant, notice to that effect must be provided to the EUB and AENV. In the event that operators fail to provide notice, the EUB will assume that the intention is to continue grandfathering. In such cases, the EUB will monitor and enforce the blended sulphur recovery and sulphur inlet limitations for the plant on a calendar quarter-year basis. AENV will work with the EUB in this regard.

In situations where it is proposed to increase approved capacities or install significant new facilities, this ID does not waive the approval application requirements set out in EUB Guide 56: Energy Development Application Guide or EUB Guide 65: Resources Applications for Conventional Oil and Gas Reservoirs. ( Guide 65 is relevant for acid gas injection scheme applications.)

EUB applications related to sulphur recovery must be submitted for

• new acid gas injection schemes,
• increases to the maximum daily raw gas inlet or sulphur inlet rates stipulated in existing gas plant approvals,
• change to lower approved sulphur recovery levels, ^[2]
• significant ^[3] additions to or modification of plant process systems,
• change in facility category/type (e.g., from D to E or in the case of acid gas injection from E to D),
• addition of compression, including acid gas injection compressors, and
• after January 1, 2005, increases of grandfathered sour gas plant sulphur inlet rates above 125 per cent of the baseline capacity.

For approvals issued by AENV, a specific amendment application for sulphur recovery is required only if plant modifications are necessary. The application would be comprehensive in nature (i.e., must address air, water, and soil issues) and must be in place before construction begins. AENV application processes require public notice and should be discussed with AENV regional approvals staff.

If no physical equipment changes or modifications are required, AENV will adjust approval SO ₂ emission limits during the regular approval renewal process. Procedures and protocols for approval renewal will follow normal AENV processes or will be adjusted at a time and in a manner agreed to after consultation with AENV regional staff.

3.3 Other Upstream Petroleum Industry Facilities

Subject to the conditions noted in Section 2.2, upstream petroleum industry facilities other than sour gas processing plants approved prior to January 1, 2000 (the effective date of Guide 60 ) must comply with the sulphur recovery guidelines on the same basis and time frame as established for grandfathered sour gas plants in Section 3.1 (i.e., facilities flaring acid or sour gas must comply with Table 1 by January 1, 2005, unless throughput is declining at greater than 7.5 per cent per year).

3.4 Industrial and Downstream Petroleum Industry Facilities

Recent approvals for heavy oil and bitumen upgraders in Alberta are consistent with the sulphur recovery guidelines.

Requirements for upgrading sulphur recovery to comply with the guidelines at other industrial and refining facilities have been determined on a sector-specific review basis with AENV. Any facility operator that remains unclear about the application of this ID to its operations should consult directly with AENV regional staff.

4 Variance of Guidelines and Enhanced Performance Credits

Operators may apply for variance in guideline sulphur recovery levels or on how the guidelines are applied to specific situations. Variance will be considered for technical reasons and in other situations where alternative approaches may be in the public interest in achieving the intent of this ID. Section 4.4 describes an enhanced performance emission credit program for grandfathered sour gas plants.

4.1 Applications for Variance from Sulphur Recovery Guidelines

An operator who believes that a variance from the minimum recovery levels in Table 1 is warranted must submit a nonroutine Guide 56 facilities application to that effect. The EUB and, if applicable, AENV will consider these applications if

1. the theoretical recovery capabilities (e.g., on the basis of Claus reaction equilibrium) are less than guideline values due to low acid gas H ₂ S content, having regard for the feasibility of implementing selective sweetening and/or acid gas enrichment processes;
2. acid gas injection is not technically or economically feasible due to lack of a suitable reservoir within a reasonable distance; or
3. sulphur recovery upgrading or tie-in costs to other plants are not economically justified in terms of potential revenues from remaining reserves. (In such cases, applicants must provide documentation on the expected remaining plant life and the economic evaluation of alternatives with the application.)

Any EUB and, if applicable, AENV approvals involving exceptions to the sulphur recovery guidelines, including the revised requirements for grandfathered gas plants, will be limited to five years, with potential for renewal upon application. EUB renewal applications must be submitted as nonroutine Guide 56 facilities applications.

4.2 Nonroutine Applications for Local Area Emissions Offset Arrangements

The EUB and AENV recognize that in some situations it may be appropriate to regulate overall sulphur recovery from a grouping of facilities within a local area, as opposed to requiring each individual facility to meet the sulphur recovery guidelines. In some situations, it may be more economic to exceed recovery guidelines at one facility in order to offset lower-than-guideline recoveries at another plant. The EUB and AENV will consider nonroutine applications for local sulphur recovery offsets on a case-by-case basis subject to the following criteria:

1. Overall sulphur recovery must be at least equivalent to the situation that would exist if all facilities involved individually met the calendar quarter-year sulphur recovery levels in Table 1. Calendar quarter-year reports will be required to verify compliance.
2. The offset arrangement may only involve facilities within a reasonable local airshed. The applicant must demonstrate, using methodologies acceptable to AENV, that predicted ambient air SO ₂ concentrations and acid deposition for receptors (e.g., residential locations) near the participating facilities will be similar under the offset arrangement to impacts predicted if all facilities individually met the guidelines in Table 1.
3. The public in the vicinity of each of the facilities proposed for inclusion in the offset arrangement must be consulted. The information provided to the public must include an explanation of the offset program and explain the alternative involving individual upgrading of facilities to achieve compliance with guidelines. Guide 56 notification distances appropriate to the classification of each facility must be used. The application must provide information on any objections to the proposed offset program.
4. If approval is granted for the offset arrangement, each of the participating facilities will be relicensed and treated jointly with respect to compliance with sulphur recovery requirements. The approval will designate one operator responsible for submission of a calendar quarter-year report for the offset arrangement that summarizes performance of the plants involved with respect to the offset approvals. Situation-specific approval conditions will be developed as appropriate to the offset arrangement proposed by the applicants.

Applications to the EUB Applications Branch for offset arrangements may be made as nonroutine Guide 56 facilities applications.

4.3 Consolidation of Sour Gas Plants

The EUB and AENV believe that public and environmental benefits will result from the consolidation of sour gas processing from facilities with no or lower sulphur recovery into existing plants with higher recovery levels. It is recognized, however, that the limitations on grandfathered sour gas plant capacity use may discourage consolidation. Therefore, the following measures facilitate consolidation of grandfathered and non-sulphur recovery sour gas plants:

1. When one or more sour gas plants are shut down and related raw gas production is connected to an existing grandfathered sulphur recovery sour gas plant, the baseline capacity for that plant can be increased by the baseline values for the plants that have been consolidated up to the approved maximum sulphur inlet rate for that plant.
2. It is expected that production would typically be consolidated to the facility with the highest sulphur recovery. In situations where production is consolidated to a plant that intends to operate under a grandfathered sulphur recovery approval, the highest grandfathered sulphur recovery requirement of the plants being consolidated must be applied.
3. The limitations on grandfathered sulphur recovery as described in Section 3.1 will apply on the basis of the combined baseline capacity and item 2 above.

Applications to the EUB Applications Branch for consolidation may be required, depending on the facility modifications or changes in category/type (refer to Section 3.2 and Guide 56 for application requirements).

4.4 Enhanced Sulphur Recovery Performance Incentive for Grandfathered Sour Gas Plants

The EUB and AENV believe that the sulphur recovery requirements represent minimum expectations and that it is in the public interest for operators of sour gas plants to implement continuous improvement programs to reduce emissions. Particularly in the case of grandfathered sour gas plants, operators are encouraged to take cost-effective measures early to enhance sulphur recovery beyond the minimum requirements discussed in Section 3.1. The EUB will recognize enhanced recovery performance and facilitate flexibility in how grandfathered sour gas plants meet increased sulphur recovery requirements on the following basis:

1. Operators of grandfathered sour gas plants will earn bankable sulphur emissions reduction credits for recovery performance that exceeds requirements described in Section 3.1 provided that the minimum sulphur recovery specified in the plant approval is met. The emission reduction credits will be determined for each calendar quarter-year as follows:

   Credit _Q = Inlet _QActual x (SR _Actual SR _min )/100

   Where:

   Credit _Q = sulphur emission reduction credits earned in a calendar quarter-year (tonnes sulphur)

   Inlet _QActual = actual total calendar quarter-year sulphur inlet (tonnes)

   SR _{Actual = actual calendar quarter-year sulphur recovery(%)}

   SR _min = minimum required sulphur recovery for the calendar quarter-year ^[4] (%)

2. Operators of grandfathered sour gas plants may apply the credits to meet increased sulphur recovery requirements, as explained in Section 3.1. Each 1 tonne of emission reduction credit may be applied as the equivalent of 1 tonne of sulphur recovery. Credits are not transferable from the plant in which they were earned. Credits will be deducted from the prior balance for the plant in any calendar quarter-year when Credit _Q , determined by the equation given in item 1 above, has a negative value.
3. Credits must be earned before they may be applied. The EUB will consider operators in noncompliance if grandfathered plants fail to meet the sulphur recovery requirements defined in Section 3.1 and if emission credit balances are insufficient to offset the excess sulphur emissions in any calendar quarter-year.
4. Actual calendar quarter-year sulphur recoveries must at least comply with the values specified in grandfathered sour gas plant approvals. Failure to meet minimum sulphur recovery levels specified in grandfathered sour gas plant approvals will result in EUB enforcement actions, as described in Section 7, regardless of the plant credit balance.
5. Effective January 1, 2017, credits may no longer be used to meet minimum sulphur recovery requirements for grandfathered sour gas plants.

4.4.1 Credit Reporting Requirements for Grandfathered Sour Gas Plants

Participation in the sulphur recovery performance incentive program is optional. Operators that choose to participate will be subject to additional reporting requirements as follows:

1. Operators must attach the Sulphur Emission Performance Credit Report Form in Appendix 2 to the S-30 Monthly Gas Processing Plant Sulphur Balance Report for the last month of the calendar quarter-year (i.e., the credit report must be attached to the March, June, September, and December S-30 reports). Operators must provide details of the credit calculations, credits used or earned, and credits accumulated to date on the Sulphur Emission Performance Credit Report Form. Credits earned or used are calculated as defined in Section 4.4
2. Credits must be claimed by the 18th day of the month following the last production month of each calendar quarter-year.

   Sulphur emission performance credits may be claimed starting with the calendar quarter-year commencing October 1, 2001. Operators that choose to opt into the program must submit the first Sulphur Emission Performance Credit Report Form on the 18th of January 2002 (for the October-December 2001 production period).

3. Operators of grandfathered sour gas plants may choose to begin reporting credits on a go-forward basis at any future date. However, reports may not be filed retroactively for prior periods of time.
4. Once reports have been submitted for a plant, they will be required from that time forward until December 31, 2016, or until the plant is degrandfathered or shut down.

5 Evaluation of Grandfathering Phase-Out

The EUB and AENV expect improved sulphur recovery over the period that grandfathering is phased out to result from the requirements described in Sections 3.1 and 4.4, which provide operators with flexibility and performance incentives. The EUB will monitor the sulphur recovery of the grandfathered sour gas plants and will prepare an annual summary report on industry performance resulting from the implementation of this ID. This summary report will be available to industry and the public.

With AENV, the EUB will conduct a multistakeholder review of industry performance in improving sulphur recovery at grandfathered plants in the second half of 2005. This review will assess the effectiveness of the enhanced sulphur recovery performance incentive program relative to more prescriptive recovery improvement approaches. The EUB and AENV are prepared to review the sulphur recovery requirements for grandfathered sour gas plants if the review finds that elements of this ID are not effective.

6 Sour Gas Facility Proliferation

To preclude the unnecessary development of new sour gas processing plants, applicants must vigorously explore and assess all existing facilities in the area that afford technically viable alternatives, regardless of ownership or interest, prior to applying for approval to construct a new sour gas plant. The assessment must thoroughly evaluate the feasibility of upgrading existing facilities and/or forging commercial partnerships with related operators. Operators of existing sour gas processing plants are expected to cooperate in the assessment of alternatives, including the evaluation of upgrading existing facilities to accommodate additional sour gas volumes. Applicants must consult and involve local residents in their evaluation of alternatives. It is expected that applicants will assess, compare, and document the following as a minimum:

• surface disturbance impacts of a new plant project with potential impacts of incremental pipelines and other facilities required to use existing facilities; ^[5]
• overall air emissions (SO ₂ , NO _x , CO ₂ ) of alternatives and estimated contribution to cumulative impacts in terms of acid deposition rates and ambient concentrations;
• public proximity to alternative facilities and relative health and safety risk concerns;
• views of local stakeholders regarding the alternatives under consideration; and
• estimates of future local oil and gas development and the impacts such development may have on the viability of the options examined.

In particular, applicants must clearly demonstrate to the EUB that any proposed new sour gas plant within 15 kilometres of an existing sour gas processing plant is justified in terms of social and environmental effects. Figure 2 summarizes the process for evaluating alternatives. It is recognized that there will be situations where construction of new sour gas processing plants will be more acceptable from an environmental and public impact standpoint than construction of lengthy sour gas pipelines and related facilities necessary to connect to existing processing plants.

Figure 2. Plant proliferation assessment process

Applicants must contact other reserve operators in the area, assess longer-term gas processing needs, and account for regional processing needs in the design of proposed new sour gas plants. As a minimum, the area to be assessed must be consistent with industry notification requirements for sour gas plants, as described in Guide 56 .

If the primary rationale for establishing a new facility is related to economic considerations, including processing fees or inability to obtain firm capacity access, applicants must include supporting information in their applications to the EUB. The EUB may not consider high fees for using existing or modified facilities as an acceptable justification of new sour gas plants. In such situations, the EUB has processes for dispute resolution and EUB legislation provides for the review of facility processing fees.

In addition to documentation of the comparison of alternatives, applicants must demonstrate that they formally contacted operators of existing sour gas plants regarding capacity, feasibility, and costs of using existing plants as alternatives to the proposed project. Related documentation should support the applicant's conclusions regarding capacities and the feasibility of using or modifying the plants. Information on the assessment of alternatives must be submitted to the EUB as part of the Guide 56 facility application audit package for proposed new sour gas plants.

7 Enforcement

The following enforcement actions will be undertaken on plants that fail to meet requirements relating to sulphur recovery and sulphur inlet rates. Actions described in Section 7.1.1 were in effect prior to the date of this document, while Sections 7.2.1 and 7.2.2 will be enforced as of the dates specified below. The EUB will also be increasing its surveillance of existing requirements referred to in Section 7.1.2.

The EUB expects that the measurement difference between the sulphur inlet and sulphur outlet on the S-30 report should be no more than 5 per cent of the sulphur inlet. Stack emissions measurement accuracy must comply with applicable codes issued by AENV.

7.1 Rules Applying to All Sour Gas Processing Plants with Sulphur Inlets Greater than 1 tonne/day

This section applies to all sour gas plants with sulphur recovery processes.

7.1.1 Failure to Meet the Approved Calendar Quarter-Year Sulphur Recovery Efficiency

1. If the minimum sulphur recovery specified in a facility approval is not met in any calendar quarter-year, the operator must file with the EUB Operations Group, Production Operations Section, a letter describing the causes of the noncompliance and explaining what actions will be taken to ensure that requirements are met in future quarters.
2. If the minimum sulphur recovery specified in the facility approval is not met for another calendar quarter-year period in the next 12-month period, the operator must notify the EUB Operations Group, Production Operations Section. EUB staff will meet with the operator's senior operating and technical personnel to review operations and actions taken to correct the noncompliance. In addition, the EUB will notify the operator that failure to meet the approved sulphur recovery levels for another calendar quarter-year in the next 12-month period will result in a 30 per cent reduction in the raw gas inlet for a period of 90 days or suspension of the plant approval.

7.1.2 Exceeding Approved Maximum Daily Sulphur Inlet Rate

1. If the maximum daily sulphur inlet rate specified in the facility approval is exceeded for one or more days in any calendar quarter-year, the operator must file with the EUB Operations Group, Production Operations Section, a letter describing the causes of the noncompliance and explaining what actions will be taken to ensure that future exceedances do not occur.
2. If the maximum daily sulphur inlet rate is exceeded in another month in a 12-month period, the operator must notify the EUB Operations Group, Production Operations Section. EUB staff will meet with the operator's senior operating and technical personnel to review operations and actions taken to correct the noncompliance. In addition, the EUB will notify the operator that if the maximum daily sulphur inlet capacity is exceeded for one or more days in another calendar quarter-year in the next 12-month period, enforcement may result in a 30 per cent reduction in the raw gas inlet for a period of 90 days or a suspension of the plant approval.

7.2 Rules Applying to Grandfathered Sour Gas Processing Plants with Approved Sulphur Inlets Greater than 1 tonne/day

This section applies only to grandfathered sour gas plants with sulphur recovery processes.

7.2.1 Exceeding 125 Per Cent Baseline Sulphur Inlet Commencing January 1, 2002

Effective January 1, 2002, grandfathered gas plants that do not meet sulphur recovery levels as described in Section 3.1 must not exceed 125 per cent of the baseline capacity in any calendar quarter-year. Grandfathered gas plants exceeding 125 per cent of the baseline sulphur inlet on a calendar quarter-year basis starting January 1, 2002, will be subject to the following:

1. If the calendar quarter-year daily average sulphur inlet exceeds 125 per cent of the baseline, the operator must file with the EUB Operations Group, Production Operations Section, a letter describing the causes of the noncompliance and explaining what actions will be taken to ensure that future exceedances do not occur.
2. If the calendar quarter-year daily average sulphur inlet exceeds 125 per cent of the baseline in another calendar quarter-year in a 24-month period, the operator must notify the EUB Operations Group, Production Operations Section. EUB staff will meet with the operator's senior operating and technical personnel to review operations and actions taken to correct the noncompliance. In addition, the EUB will notify the operator that if the sulphur inlet exceeds 125 per cent of the baseline for another calendar quarter-year in the next 24-month period, it will result in a 30 per cent reduction in raw gas inlet for a period of 90 days and may result in a suspension of the plant approval or a requirement that the plant install facilities to comply with Table 1 sulphur recoveries within a specified time period.

Effective January 1, 2012, grandfathered plants must not exceed the maximum grandfathered capacity unless sulphur recoveries comply with Table 1. The enforcement provisions of this subsection will apply to noncompliance with maximum grandfathered capacity exceedances after January 1, 2012.

7.2.2 Failure to Maintain Credit Balance

Sulphur emission performance credits must be earned before they are used. Commencing January 1, 2002, grandfathered sour gas sulphur recovery plants having a negative credit balance at the end of any calendar quarter-year will be subject to the following:

1. If there is a negative credit balance at the end of the calendar quarter-year, the operator must file with the EUB Operations Group, Production Operations Section, a letter describing the causes of the noncompliance and explaining what actions will be taken to ensure that negative credit balances will not be incurred in the future.

   In situations where grandfathered sour gas sulphur recovery plants do not have sufficient credits, operators must not exceed the maximum grandfathered capacity or such other sulphur inlet rate that the plant is fully capable of operating in compliance with the recovery requirements described in Section 3.1. If on investigation it is determined that the operator knowingly operated under conditions that generated a negative balance, the EUB may escalate enforcement as described in item 2.

2. If a plant has a negative credit balance at the end of a second calendar quarter-year in a 12-month period, the operator must notify the EUB Operations Group, Production Operations Section. EUB staff will meet with the operator's senior operating and technical personnel to review operations and actions taken to correct the noncompliance. In addition, EUB staff will advise the operator that another negative credit balance at the end of a calendar quarter-year will result in a 30 per cent reduction in raw gas inlet for a period of 90 days or a suspension of the plant approval.
3. If a plant has a negative credit balance at the end of another calendar quarter-year in a 12-month period, the plant will lose its grandfathered status and not be allowed to operate in excess of the applicable maximum grandfathered capacity until the plant is degrandfathered (i.e., modifications are installed so that the plant will comply with Table 1 sulphur recoveries).

7.3 AENV Enforcement

All incidents of noncompliance with approval conditions (e.g., exceedance of SO ₂ emission limits) and all contraventions of the Alberta Environmental Protection and Enhancement Act and regulations will lead, where appropriate, to an investigation. That investigation may lead to any number of enforcement responses, including remedial measures, such as environmental protection orders, for the proactive prevention of environmental problems; administrative actions to deter and punish offenders, including warning letters, administrative penalties, and enforcement orders; and prosecutions for the most serious offences.