NOTE: References to enforcement ladders and noncompliance in Appendix A: Enforcement Ladder for Resource Recovery Requirements for Oil Sands Mine and Processing Plant Sites have been replaced by Directive 019: EUB Compliance Assurance - Enforcement, effective January 1, 2006
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Interim Directive ID 2001-7
October 9, 2001
To: All Mineable Oil Sands Leaseholders and Oil Sands Mine and Processing Plant Operators
OPERATING CRITERIA: RESOURCE RECOVERY REQUIREMENTS FOR OIL SANDS MINE AND PROCESSING PLANT SITES
1 Introduction
In the past the Alberta Energy and Utilities Board (EUB) has assessed and approved resource recovery from oil sands mine and processing plant sites on a case-by-case basis. However, in cooperation with the oil sands mining industry, the EUB will be moving to a more standardized approach in which uniform resource recovery requirements will be applied to all oil sands mine and processing plant sites through the use of operating criteria.
Under this approach, the EUB will use a set of four operating criteria to identify the oil sands that an operator will be required to mine as part of its operation and to estimate the volume of bitumen that an operator will be required to recover from its mining and processing operations. Use of the criteria will allow industry greater operational flexibility, while at the same time fulfilling the EUB's mandate "to effect conservation and prevent waste of the oil sands resources of Alberta." 1
1 Oil Sands Conservation Act, Section 3(a).
Based on discussions with the oil sands industry and having regard for current technical, economic, and geological conditions, the criteria aid in defining what the EUB believes is the minimum required level of resource recovery for existing and greenfield operations and below which the EUB will take enforcement action. Notwithstanding that the criteria define the EUB's minimum requirements, industry has committed to a program of continuous improvement, which it hopes will enable it to exceed requirements.
The use of operating criteria will make the regulatory process more efficient and effective by establishing, up front, clearly defined requirements that will
- reduce the need for an application for technical changes or modifications to approved mine or processing plant sites when the changes or modifications relate to resource recovery;
- reduce information relating to resource recovery that must be provided in an application;
- reduce the extent to which resource recovery aspects of an application will be subject to a detailed review;
- establish a clear basis for reporting on resource recovery;
- establish a clear basis for determining compliance with resource recovery requirements; and
- reduce the level of EUB involvement if compliance with resource recovery requirements has been demonstrated.
The EUB does not intend operating criteria to in any way reduce or eliminate its responsibility to assess the impact of development activities in areas not associated with resource recovery.
Effective January 1, 2002, the EUB will be introducing regulation by operating criteria on a one-year trial basis, during which the enforcement actions outlined in Appendix A will not be applied. This will allow the EUB and industry to focus efforts on resolving issues in areas of uncertainty. Within the one-year trial period, each operator will go through two representative reporting cycles.
The EUB will review the operating criteria approach, including the levels at which the criteria have been set, in 2005 to allow the opportunity to assess the effectiveness of the approach and the suitability of the criteria.
2 Bitumen Recovery Requirements
Four criteria have been developed to estimate the volume of bitumen that an operator will be required to recover from its mining and processing operations. For the purposes of estimating, the criteria will not be measured or enforced individually but will be used collectively. The criteria are
- in situ oil sands cutoff grade,
- minimum mining thickness,
- ratio of cutoff total volume to bitumen in place, and
- processing plant recovery.
The in situ oil sands cutoff grade has been set at 7 weight per cent bitumen and is defined as the minimum bitumen content of the oil sands that would be classified as ore.
The minimum mining thickness (mining selectivity) has been set at 3 metres and is defined as the minimum thickness of ore that can be separated from waste or waste that can be separated from ore.
The ratio of cutoff total volume to bitumen in place (TV/BIP) 2 has been set at 12 and is defined as the minimum value for TV/BIP that would be used to determine the pit crest limits.
2 TV/BIP = (Ore Volume + Interburden Volume + Overburden Volume) (Volume of Bitumen in Place) where ore, interburden, and overburden volumes are in bank cubic metres and bitumen in place is in cubic metres and refers to the volume of bitumen in zones passing the minimum mining thickness and cutoff grade criteria.
Processing plant recovery is a variable factor based on the average bitumen content of the as-mined ore. 3 The factor is
- 90 per cent for an average bitumen content of the as-mined ore of 11 weight per cent bitumen or greater.
- For an average bitumen content of the as-mined ore of less than 11 weight per cent bitumen, recovery is determined by the following equation:
Recovery = -202.7+54.1(X)-2.5(X 2 ),
where X is the average weight percent bitumen content of the as-mined ore.
3 A 0.5 m swap thickness at the base of each ore or waste zone will be allowed for to account for the impact of dilution/reduction on in situ grade and to convert "ore" to "as-mines ore."
For each reporting period, the EUB will conduct a compliance check of an operator's bitumen recovery. During the one-year trial, each operator will go through two representative reporting periods. Following the initial one-year trial, the reporting period will be increased to one year. The reporting period may subsequently be adjusted as experience with operating criteria is gained and as an operator's performance warrants.
The operating criteria will be used to calculate the volume of bitumen that an operator was required to recover from its mining and processing operations. To ensure accuracy, an operator will be required to submit to the EUB its nonlicensed drillhole data. An operator will also be required to provide quality mine survey data to allow the total volume of material mined during the reporting period to be calculated to within an accuracy of 1 per cent.
An operator will be in noncompliance if its bitumen recovery for the reporting period, as reported on its S-23 production reports, is less than what the EUB calculates using a standardized methodology. 4 In the event of noncompliance, enforcement actions will be based on the enforcement ladder detailed in Appendix A.
4 This methodology will be developed in consultation with industry during the first year of implementation. The interim directive will be subsequently amended to include a description of the methodology.
It is critical to the success of operating criteria that each operator have in place an appropriate system to measure and report on its actual bitumen recovery for comparison against the calculated recovery. As stated in the Oil Sands Conservation Regulations, it is an operator's responsibility to demonstrate to the satisfaction of the EUB that it has the necessary measurement and reporting systems in place.
3 Applications
In accordance with Sections 10 and 11 of the Oil Sands Conservation Act, an application is required for a new mine or processing plant site or an extension in project area for an approved mine or processing plant site. The information requirements for applications are in accordance with Guide 23: Guidelines Respecting an Application for a Commercial Crude Bitumen Recovery and Upgrading Project (September 1991), as amended by the EUB from time to time. Drilling requirements in support of an application are set out in Appendix B. The EUB is prepared to consider requests by an applicant to vary the drilling requirements if the applicant demonstrates that circumstances warrant. However, it is the applicant's responsibility to meet with the EUB well in advance of filing an application if it intends to request any variance in drilling requirements to minimize the risk of the application being declared incomplete on the basis of inadequate drilling data.
No application will be required for technical changes or modifications to an approved mine or processing plant site 5 unless the change or modification impacts areas other than resource recovery. However, the EUB will require satisfactory notification and documentation of the proposed changes or modifications so that it may maintain an awareness of development activities and to ensure that the technical changes or modifications are consistent with existing approval conditions.
5 In general, a technical modification or change to a mine or processing plant site refers to modifications or changes relating to the capital equipment employed.
3.1 Sterilization
The EUB will use operating criteria to identify the oil sands that an operator, all things being equal, will be required to mine from a given project area. It will also use these criteria to identify oil sands that may be affected by a proposed development but are outside the project area.
Any action of an operator that results or tends to result in a reduction in the volume of oil sands mined (as identified by operating criteria) may be a case of sterilization. Such actions could include, but are not limited to, the location of permanent surface facilities on oil sands, bypassing oil sands located outside the mine site, or bypassing oil sands within the mine site.
While the EUB recognizes that some oil sands may be sterilized due to valid environmental, technical, economic, or operational reasons, it is the EUB's objective to minimize the sterilization of any oil sands identified by operating criteria. As a result, an operator must apply to the EUB for all cases of potential sterilization. Any economic evaluation submitted in support of an application will be based on the principles previously established under Resource Recovery Economics. 6 Each application for sterilization will be subject to a detailed review by the EUB, and the EUB may approve or deny the application.
6 As per letter to industry from the EUB dated August 28, 2000.
3.2 Annual Mine Plan
Pursuant to Section 30 of the Oil Sands Conservation Regulations, an operator is required to submit to the EUB, for its approval, details of its annual mine plan for the next calendar year of operation. This is required in order for the EUB to maintain an awareness of development activity, identify potential issues that may affect resource recovery, and address areas of uncertainty that may be identified at the time of an application.
In addition, the EUB will also require an operator to submit its annual drilling plan for approval. Submission of the drilling plan will provide the EUB with a better opportunity to assess resource recovery issues such as the establishment of final pit limits and the impacts of out-of-pit developments on resource recovery. The requirement to submit the annual drilling plan is not intended to critique an operator's drilling density in support of ongoing production requirements. However, if the EUB is of the opinion that the proposed drilling plan will not provide sufficient high-quality geological data to determine an operator's compliance with bitumen recovery requirements, the EUB will identify the deficient areas and will expect the operator to address them through additional drilling.
Drilling requirements for ongoing operations may be specified by the EUB on a case-by-case basis.
[Original signed by]
J. D. Dilay, P.Eng.
Board Member
NOTE: Appendix A has been superseded by Directive 019, effective January 1, 2006
APPENDIX A -- ENFORCEMENT LADDER FOR RESOURCE RECOVERY REQUIREMENTS FOR OIL SANDS MINE AND PROCESSING PLANT SITES
|
Noncompliance Item |
Level/Enforcement Action |
|
Level 2 |
|
|
Major -- Bitumen recovery less than that determined by the operating criteria. |
Advise the company of the noncompliance event and identify the applicable requirement.
Meet with company representatives to discuss the reasons for noncompliance.
Require the submission of a written explanation and a proposal to address the issue within a specified time period.
On approval of the submission, require the implementation and subsequent verification of the proposed action plan.
Advise the company of the consequences of further non-compliance. |
|
|
|
Level 3 |
|
|
Failure to respond to a Level 2 enforcement action
or
Two Major non-compliance events in the previous 5 years
or
Serious -- Fraud or demonstrated disregard for requirements. |
Advise the company of the noncompliance event and identify the applicable requirement.
Meet with senior company executives to discuss the reasons for noncompliance.
Issue a directive requiring the company to take corrective action.
Require the company to undertake an independent, third-party audit of the company's measurement, reporting, and operational practices.
Advise the company of the consequences of further noncompliance.
Record noncompliance as COMMENT on EUB's corporate database (CDIS).
Other enforcement actions could include prosecution. |
|
|
Level 4 |
|
|
Failure to respond to a Level 3 enforcement action
or
Three Major noncompliance events in the past five years
or
Two Serious noncompliance events in the past five years. |
Apply all enforcement actions described in Level 3.
Noncompliance recorded as REFER* on CDIS.
Conduct an inquiry to determine the cause of continued noncompliance, establish conditions for further operations, and determine enforcement actions, such as vary, suspend, or cancel the operator's approval. |
*REFER status indicates the company's inability or unwillingness to comply with the requirements and will be considered with any future or pending applications.
APPENDIX B APPLICATION DRILLING REQUIREMENTS
The following drilling requirements allow the EUB to evaluate an application for a new mine or processing plant site or an extension in project area at an approved mine or processing plant site. The EUB is prepared to consider requests by an applicant to vary the drilling requirements if the applicant demonstrates that circumstances warrant. However, it is the applicant's responsibility to meet with the EUB well in advance of filing an application if it intends to request any variance in drilling requirements to minimize the risk of the application being declared incomplete on the basis of inadequate drilling data.
1 Drilling Data Quality
1.1 All new drilling must contain a suite of quality resistivity, gamma, and density logs; quality-controlled Dean/Stark core analysis; no more than 15 per cent evenly distributed lost core within the bitumen-bearing zone; and identifiable McMurray Formation top and base markers.
1.2 Older drilling results contain various qualities and combinations of the above information over all or portions of the McMurray Formation. Each of these older drillholes must have no more than 20 per cent evenly distributed lost core within the complete McMurray Formation and quality-controlled Dean/Stark core analysis. Drillholes whose analysis coverage and quality is suspect and log-only results are not accepted unless an applicant justifies their inclusion.
2 Drilling Density
An applicant must delineate the bitumen resource base under the mine and processing plant sites in accordance with the following requirements:
2.1 For all areas subject to development within the first ten years and for a 1 kilometre (km) buffer around these areas, the maximum spacing between drillholes meeting the drilling data quality requirements will be 350 metres (m) as determined by triangulation. If any one side of the triangle is greater than 350 m, the EUB will determine if additional drilling is required.
2.2 For all other areas subject to development after the first ten years and for a 1 km buffer around these areas, the maximum spacing between drillholes meeting the drilling data quality requirements will be 700 m as determined by triangulation. If any one side of the triangle is greater than 700 m, the EUB will determine if additional drilling is required.
