FOR IMMEDIATE RELEASE                                      

EUB RELEASES ANNUAL FIELD SURVEILLANCE REPORT

CALGARY (May 12, 2004) - The Alberta Energy and Utilities Board (EUB) today released its annual Field Surveillance Provincial Summary (Statistical Series 57), which supplies stakeholders with information on industry compliance, EUB enforcement actions, and the wide range of activities carried out by EUB field staff.

The Provincial Summary reports on inspections and results for drilling, servicing, oil and gas production facilities, pipelines, and spills. The report also covers enforcement actions taken by the EUB during the year, statistics on the numbers and types of public complaints the EUB responded to, and field staff participation with the public.

In 2003, the EUB reported record-breaking levels of activity, including a 29 per cent increase in drilling licenses issued, to 17,108, compared to 13,193 in 2002.

Despite the increased activity, the EUB recorded improved overall industry performance, including a 23 per cent decrease in major unsatisfactory inspections. In addition, the number of corrosion-related pipeline failures dropped 22 per cent, and there were 6 per cent fewer public complaints received about industry operations and activities.

The EUB is encouraged by the improvement in industry's overall compliance rate. In 2004, field staff will continue to focus on pipeline corrosion, noncompliant licensees, air monitoring activities, facilitation, reduction of odours, and improving communication with synergy groups and communities throughout the province

An overview of the EUB's Field Surveillance Provincial Summary report for 2003 is provided in the attached backgrounder.

The EUB ensures that the discovery, development, and delivery of Alberta's resources take place in a manner that is fair, responsible, and in the public interest.

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This news release, backgrounder and the Field Surveillance Provincial Summary are available on the EUB Web site at http://www.ercb.ca.

Darin Barter, EUB Communications
Phone: (403) 297-4116 Fax: (403) 297-3711
E-mail: darin.barter@gov.ab.ca

NR2004-16

The EUB oversees the safe, responsible development of Alberta's energy resources. To ensure that energy projects are constructed and operated safely, the Field Surveillance Branch annually inspects a portion of Alberta's 180 000 operating wells, 16 500 oil batteries and associated satellites, 733 gas plants, 8365 gas batteries, and over 330 000 kilometres of pipelines. EUB field staff enforce standards and conditions set out in licences, approvals, and EUB regulations and requirements using a prioritized inspection system referred to as OSI, which is based on operator performance, sensitivity of the location and inherent risk of the operation.

Operating out of eight EUB Field Centres throughout Alberta, field staff inspect construction, operation, and abandonment operations at oil, gas, and oil sands facilities (including pipelines, compressors, and processing plants). They respond to emergencies and public complaints on a 24-hour basis and ensure a consistent approach to enforcement of requirements with noncompliant operators.

The Field Surveillance Branch also spends considerable time facilitating the resolution of landowner-industry conflicts and participating in public-industry liaison committees in an effort to reach mutually agreeable solutions between landowners and energy companies.

In the year ahead, Field Surveillance staff will continue to focus on pipeline corrosion, noncompliant licensees, air monitoring activities, facilitation, reduction of odours, and improving communication with synergy groups and other communities throughout the province.

The percentage of satisfactory inspections increased to 71.5 per cent in 2003 from 70.6 per cent in 2002. The minor unsatisfactory inspection percentage remained constant at 25 per cent, while the overall percentage of major unsatisfactory inspections decreased from 3.9 per cent in 2002 to 3.0 per cent in 2003, about a 25 per cent improvement.

Definitions:

A satisfactory inspection finds that all regulations and requirements are met.

A minor unsatisfactory inspection finds a contravention of regulation(s) and/or requirement(s) that does not result in a direct threat to the public and/or the environment and does not adversely affect oil and gas operations.

A major unsatisfactory inspection finds a contravention of regulation(s) and/or requirement(s) that an operator has failed to address and/or has the potential to cause an adverse impact on the public and/or the environment.

A serious unsatisfactory inspection finds a total disregard for regulation(s) and/or requirement(s) that is causing or may cause significant impact on the public and/or the environment.

Field inspections, 2003

The EUB is confident that most Alberta energy industry operators strive to comply with EUB regulations, requirements, and programs. However, companies that fail to meet requirements or follow EUB direction are subject to escalating enforcement consequences. Enforcement actions always include deadlines for fixing a problem and may be reinforced by penalties, such as temporary or long-term suspension of operations.

Drilling and servicing in Alberta over the last five years have been extremely active, with over 70 000 wells drilled. This has resulted in many challenges for both industry and the EUB to ensure the drilling and servicing of wells safely with minimal impact to the environment and public.

Blows and blowouts during drilling and servicing operations are among the most serious incidents for well operations and have the potential to cause public safety and environmental impacts. The EUB regards the number of blows, blowouts, and kicks* as a primary indicator of industry's drilling and servicing performance and pays particularly close attention to industry's response to these incidents.

Requirements for high training standards and sophisticated blowout detection and prevention equipment have helped to keep well control occurrences to a minimum. Of the 17 108 wells drilled in 2003, the EUB recorded

• 1 blowout and 3 blows during drilling, compared to 6 blowouts and 0 blows in 2002

• 4 blowouts and 7 blows during well servicing, versus 5 blowouts and 2 blows in 2002.

All were brought under control with minimal environmental damage and no public safety impacts. The EUB will continue to review all blows and blowouts related to drilling and servicing operations to identify changes to equipment, procedures, and regulations that may be required to reduce drilling and servicing blows and blowouts.

EUB staff conducted 3483 oil battery and satellite inspections in 2003, compared to 3443 inspections the previous year. There were 78 major/serious inspections (2.2 per cent) in 2003, compared to 113 major/serious inspections (3.3 per cent) in 2002.

The major unsatisfactory inspection percentage on gas plants and batteries decreased to 1.6 per cent in 2003 from 2.3 per cent in 2002. The minor unsatisfactory inspection percentage decreased to 31.5 per cent in 2003 from 33 per cent in 2002. The improved compliance can be attributed to industry's improved understanding of EUB requirements, self-audits, operator awareness sessions and presentations by EUB staff.

Corrosion continues to be the main cause of pipeline failures, and staff investigate 100 per cent of corrosion failures. While not all corrosion failures are physically inspected, EUB staff follow up on all failures through an investigation into the incident. Internal corrosion failures decreased to 350 in 2003 from 447 in 2002, a 21.7 per cent decrease. In addition, external corrosion failures decreased to 86 in 2003 from 116 in 2002, a 25.9 per cent decrease. These significant decreases are attributed to failure mechanisms being investigated and mitigation measures implemented by licensees. EUB field staff conducted a total of 468 inspections on pipeline failure/hits in 2003, compared to 516 last year.

In 2003, there were 451 satisfactory inspections, 4 minor unsatisfactory inspections, 12 major unsatisfactory inspections, and 1 serious unsatisfactory inspection. This compared to 516 inspections in 2002, when there were 456 satisfactory inspections, 14 minor unsatisfactory inspections, 46 major unsatisfactory inspections, and no serious unsatisfactory inspections.

The significant decrease in major unsatisfactory inspections of some 74 per cent is attributed to the implementation of Guide 66: Pipeline Inspection Manual, which details EUB requirements and enforcement action when a noncompliance occurs.

EUB field staff conducted 439 pipeline construction/test inspections in 2003, of which 405 were satisfactory (92.3 per cent of total, up from 283, or 85.8 per cent, in 2002), 25 were minor unsatisfactory (5.7 per cent, down from 40, or 12.1 per cent, in 2002), and 8 were major unsatisfactory (essentially unchanged from 2002), with 1 serious unsatisfactory inspection.

A total of 1381 spills were reported to EUB Field Centres in 2003, a decrease from 1445 in 2002. Of the 1381 spills,

• 57 were priority 1 (4.1 per cent),

• 264 were priority 2 (19.1 per cent), and

• 1060 were priority 3 (76.8 per cent).

Priority 1 spills represent the greatest potential for environmental and/or public impacts. In Priority 2 releases, there is a significant volume of product released or the potential for environmental impacts. Priority 3 releases tend to be low or medium volumes.

It is important to note that more than three-quarters of all spills were low volume and were usually contained on lease. Inspections were conducted on 506 spill sites. There were 474 satisfactory spill inspections, 12 minor unsatisfactory spill inspections, 20 major unsatisfactory spill inspections, and no serious unsatisfactory spill inspections. This compares to 631 inspections conducted last year, when 23 minor unsatisfactory spill inspections, 14 major unsatisfactory spill inspections, and no serious unsatisfactory spill inspections were identified.

In 2003, the EUB's two mobile air monitoring units conducted a total of 695 inspections, compared with 461 the previous year. The percentage of unsatisfactory inspections decreased from 8.7 per cent in 2002 to 4.7 per cent in 2003, a 47 per cent improvement. Industry continues to improve its compliance record with respect to reducing emissions from oil and gas facilities. The leading sources of emissions were leaking tank hatches, tank truck loading and unloading, and inadequate maintenance.

In 2003, the EUB received and responded to 817 public complaints, compared to 869 in 2002, a decrease of 6 per cent. Since a number of complaints involved more than one concern, the EUB identified 921 issues associated with the 817 complaints, compared to 1019 issues in 2002. Last year, 88 per cent of individuals surveyed were satisfied with the response from the EUB, compared to 91 per cent in 2002.

In 2003, field staff were involved with 169 facilitations, of which 127 were completed and 94 were successfully resolved. Fourteen of the remaining 33 files proceeded to mediation through the EUB's Appropriate Dispute Resolution program, of which 9 were successfully resolved and 1 required a hearing. For the remaining 19 files, 12 applications are either on hold or have been withdrawn by the applicant and 7 required or are in the process of going to hearing.

Synergy groups are another effective means of identifying and addressing issues. These groups are usually made up of public, industry, and government representatives. The size, structure, and membership of a synergy group depends on factors such as population, production type, industry activity, geographical location, and sensitivity of an area. EUB field staff participate in most of these groups and strongly endorse this cooperative approach as an effective way to improve communication and identify and address issues.

In January 2000, the EUB established a 22-member multistakeholder Advisory Committee on Public Safety and Sour Gas to review Alberta's sour gas regulatory system. The committee made a report of 87 recommendations, 12 of which specifically related to the Field Surveillance Branch's role.

As part of Recommendation #82, Field Surveillance staff have initiated meetings with over 50 aboriginal communities and groups since 2001. In 2004, the remaining communities and groups will be contacted. All issues under EUB jurisdiction have been addressed or are under way. Communication between the EUB, aboriginal people, and industry has improved as a result.