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News Release April 29, 2003

FOR IMMEDIATE RELEASE

EUB Issues 2003 Public Safety and Sour Gas Annual Progress Report

Red Deer, Alberta (April 29, 2003) At a news conference in Red Deer, the Alberta Energy and Utilities Board (EUB) released the 2003 Public Safety and Sour Gas Annual Progress Report. The Annual Report is an update for Albertans on the progress the EUB is making to ensure that sour gas development continues to take place safely in Alberta.

The Annual Progress Report is in response to the work of the Provincial Advisory Committee on Public Safety and Sour Gas, which traveled the province in the year 2000 and heard concerns from Albertans about sour gas development.

Following that consultation, the Advisory Committee delivered a report to the EUB which concluded that Alberta has an extensive and comprehensive oil and gas regulatory and enforcement system. The Advisory Committee report stated further improvements must be made and 87 recommendations for improving regulatory processes and the understanding of sour gas were made. The recommendations addressed issues in five main categories:

• Health effects and sour gas research
• Sour gas development planning and approval
• Sour gas operations
• Emergency preparedness
• Information, communication and consultation

"The Public Safety and Sour Gas Initiative is the number one priority of the Alberta Energy and Utilities Board," said EUB Chairman Neil McCrank. "We are addressing each of the Advisory Committee's 87 recommendations, and this is leading to decisive change in making the development of sour gas in Alberta even safer."

Of the 87 recommendations of the Provincial Advisory Committee on Public Safety and Sour Gas, 18 recommendations have been completed; work continues on a further 52 recommendations and the EUB will begin addressing the remaining 17 recommendations by April 2004.

Sour gas is natural gas that contains poisonous hydrogen sulphide (H₂S) and accounts for about 30 per cent of all natural gas produced in the province. Alberta has over 5,000 producing sour gas wells, more than 240 sour gas processing plants and 12,500 kilometres of sour gas pipelines.

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

This news release, associated backgrounder and the report are available online @ www.ercb.ca

For more information, please contact:

NR 2003-17

Backgrounder

FOR IMMEDIATE RELEASE

EUB Issues 2003 Public Safety and Sour Gas Annual Progress Report

This is the second annual progress report for the Alberta Energy and Utilities Board's (EUB's) Public Safety and Sour Gas (PS&SG) initiative. It reports on the work undertaken to date to address the 87 recommendations of the Provincial Advisory Committee on Public Safety and Sour Gas, proposed work to address the recommendations planned to be started during year-three, non-mandated issues raised by the Advisory Committee, and other work that is ongoing at the EUB related to PS&SG.

Many of the recommendations have been grouped together to form single projects. The projects are grouped into the following five categories:

1. Health Effects and Sour Gas Research
2. Sour Gas Development Planning and Approval
3. Sour Gas Operations
4. Emergency Preparedness
5. Information, Communication, and Consultation

Stakeholder input remains a core component of the work being undertaken to address the recommendations, and all affected stakeholders are invited to participate. As part of the project updates, stakeholders that are potentially impacted by satisfying the recommendations are listed. Many of the same stakeholders are participating in a number of projects, and a strategy for a more coordinated approach to stakeholder involvement is being developed.

In January 2000, the EUB formed the Advisory Committee to review the regulatory system for sour gas as it relates to public health and safety. All major stakeholders (public, industry, government, and others) were represented on this 22-member committee, which undertook an extensive outreach program to gather information from Albertans residing near sour gas development areas.

Based on the input received, the Advisory Committee made 87 recommendations to the EUB for improving regulatory processes and the understanding of sour gas. The Public Safety & Sour Gas Findings and Recommendations Final Report was published in December 2000. Full text of the original recommendations of the Advisory Committee is included with each project update.

Upon receiving the recommendations of the Advisory Committee, the EUB immediately established the Public Safety Implementation Team (PSIT) to develop an action plan for accomplishing these tasks and to coordinate ongoing implementation.

Work on PS&SG began in April 2001, when PSIT published the Public Safety and Sour Gas Implementation Plan: First Progress Report. The EUB committed to starting work on 50 of the 87 recommendations in the first year of a multiyear program At the end of the first year, the first PS&SG Annual Progress Report (2002) reported that work had started on 49 of the recommendations, with 3 recommendations being deferred because of their dependency on other projects. As we start year-three, work on 52 recommendations is ongoing, 18 recommendations have been completed, and the remaining 17 are scheduled to start by April 2004.

PSIT continues to ensure that the recommendations are being addressed and to report publicly every quarter. In the final fiscal year quarter, an annual report is published summarizing the year's work, as well as the schedule for the following year. All of the previous reports can be obtained from EUB Information Services (403-297-8190) or on the EUB Web site at http://www.ercb.ca/docs/default.htm.

The following are summaries from each of the five categories listed above:

Health Effects and Sour Gas Research:

There are a total of seven recommendations within the Health Effects and Sour Gas Research category, and work to address six of these is currently under way as reported under four projects within this section. Work to address Recommendation 13, the seventh recommendation in this category, is scheduled to begin in June 2003. Alberta Health and Wellness (AHW) is leading all of these initiatives and a proposed action plan is included in the year-three project starts section (page 77).

In October 2002, AHW published the report Health Effects Associated with Short-Term Exposure to Low Levels of Hydrogen Sulphide: A Technical Review, which is the result of an evaluation of current health effects literature. This information will form the basis for the EUB's work in defining new requirements for calculating emergency planning zones (EPZs) and establishing evacuation criteria. AHW is continuing with a similar literature review to determine health effects associated with exposure to sulphur dioxide (SO₂).

Work is now under way with other partners to identify research projects necessary to address the gaps in what is known about health effects of exposure to sour gas.

AHW has initiated work to address Recommendation 12, establishing a coordinated, consistent medical response to H₂S exposure. Options to address this matter are being discussed with Alberta Human Resources and Employment and the provincial Chief Medical Officer of Health.

Development of a portable H₂S personal exposure monitor continues. An advanced prototype unit has been field-tested and the results are promising.

Sour Gas Development Planning and Approval:

There are a total of 22 recommendations within the Sour Gas Development Planning and Approval category. Work on three recommendations (6, 35, and 36) has been completed, while work continues on 15 recommendations and work to address the remaining 4 recommendations (1, 2, 84, and 20) is scheduled to begin under the 2003/04 work plan. The 15 ongoing recommendations are being addressed within six projects. A summary of activities related to completed recommendations is included in the "Recommendations Complete" section, beginning on page 56 of this report. Year-three project starts are reported beginning on page 77.

The Advisory Committee recommended the formation of a task force of senior decision makers that would investigate and consider methods for improving coordination between subsurface and surface planning and development. A senior government steering committee co-chaired by the EUB Chairman and the Deputy Minister of the Department of Energy has been formed. A government working level committee has also been established and is tasked with addressing the recommendation under the direction of the steering committee. A terms of reference including a strategy and framework has been developed.

An EUB team has drafted a proposal to address issues around proliferation and planning of sour gas infrastructure. The proposal puts forth suggested new requirements and expectations for conducting a proliferation assessment for all new sour infrastructure and for public disclosure of information about future development plans. Consultation with stakeholders is continuing.

Work is continuing on developing the Protocol for Calculating Emergency Planning Zones for Sour Gas Wells and Pipelines and the Protocol for Estimating Risk from Sour Gas Wells and Pipelines under Recommendations 17, 18, and 19. The hazard analysis component will be based on realistic worst-case scenarios to determine the extent of the H₂S hazard zone following a release from a well or pipeline. The EPZ protocol uses dispersion modeling to predict H₂S concentrations at a health effect end point that will be based on a toxic load. It is anticipated that the protocol will be finalized in fall 2003, following successful testing. Implementation will be undertaken as part of Recommendation 58, determination of EPZs. Some of the work in developing a risk protocol has been deferred until the protocol to calculate an EPZ has been completed in order to ensure that the new tools developed meet stakeholder needs and to allow for further stakeholder involvement on risk. Once developed, the risk protocol will form part of the review of setback distances under Recommendation 52.

Under Recommendation 34, the Advisory Committee asked that the EUB develop a system for involvement of other governments in development of EUB policies, processes, and practices and, where appropriate, in the sour gas application processes. A team involving EUB staff and representatives from AHW, RHAs, and Health Canada's Aboriginal and Inuit Health Branch developed a draft protocol for increased coordination between the EUB and its health stakeholders on public health and safety issues. The protocol is currently before senior executives of the participating agencies for review and approval. Once final approval is received, the team will proceed with implementation plans. Initial discussions have been held with representatives of local governments to identify participation in a similar process with a view to improving coordination between the EUB and rural and urban municipal governments.

Several recommendations were made that focus on improving the EUB's hearing and decision processes. Actions are currently being taken to address the issues raised including a review of procedures for writing decision reports and how past performance of applicants is considered.

Guide 29: Energy and Utility Development Applications and the Hearing Process and the companion brochure Energy and Utility Development Applications, the Hearing Process, and Cost Awards were published in January 2003. The main purpose of these documents is to assist members of the public who wish to participate in the hearing process. A video to accompany Guide 29 has also been produced and is expected to be available in spring 2003.

Sour Gas Operations:

The Sour Gas Operations category contains a total of 17 recommendations. Work to address seven of these is currently under way within six projects. As well, six recommendations (25, 26, 27, 28, 68, and 85) are completed and the remaining four (23, 49, 50, and 78) are scheduled to begin during 2003/04. A summary of activities related to completed recommendations is included in the "Recommendations Complete" section beginning on page 56 of this report. Year-three project starts are reported beginning on page 77.

The EUB contracted graduate students at the University of Calgary to undertake a literature review of existing requirements and guidelines in other jurisdictions regarding reducing the visual and impressionable effects of industrial facilities. A report has been provided to the EUB, and further work will now take place to review the results of the literature search and to investigate possible methods of addressing this matter.

In order to ensure that pipeline requirements focus adequate attention on corrosion-related pipeline failures, the EUB is continuing to work with other stakeholders to address this issue. A review of Guide 66: Pipeline Inspection Manual and the Field Surveillance inspection prioritization system, OSI (operator performance history site sensitive, and inherent risk of the operation) are currently under way. A technical subcommittee of the Canadian Standards Association (CSA) has also been asked to consider additional requirements for sour gas pipelines. Draft changes to CSA standards have been developed.

To address prevention of third-party damage to pipelines, changes to the Pipeline Regulation have been drafted requiring mandatory participation in Alberta One-Call for all pipeline operators. The proposed amendments will be reviewed with external stakeholders and revisions will be made based on feedback before finalizing.

The EUB has drafted an interim directive (ID) documenting requirements for converting existing pipelines to sour service. The draft will be reviewed with stakeholders before finalizing later in 2003.

The EUB and industry stakeholders reviewed Informational Letter (IL) 99-04: EUB Enforcement Process and have developed a revised draft. Once stakeholder feedback has been reviewed and incorporated, the revised IL will be published.

Preliminary work is under way to gather historical data on the original purpose and criteria used to define the existing setback requirements. Further work will proceed once the Protocol for Estimating Risk from Sour Gas Wells and Pipelines (Recommendation 17) is completed later in 2003.

Emergency Preparedness:

A total of 14 recommendations fall within the Emergency Preparedness category. Work is currently under way to address nine of these within five projects, and work to address five (54, 60, 61, 65, and 87) others is complete. A summary of activities related to completed recommendations is included in the "Recommendations Complete" section beginning on page 56 of this report.

The EUB has finalized the Incident Response and Reporting Protocol (IRRP), which ensures timely EUB response, investigation, enforcement, reporting, and follow-up of upstream petroleum incidents such as well blowouts, pipeline failures, and flaring events. EUB staff will draft an additional proposed framework using the IRRP as a model for presentation to other governments. Emergency Management Alberta (EMA) has also revised the Government of Alberta Upstream Petroleum Industry Support Plan, which includes a protocol for government follow-up to major releases and clarifies roles and responsibilities of government departments and agencies.

The EUB is currently developing draft protocols for ERP review and audit/inspection. A pilot project for the audit protocol is planned to begin in mid-2003. Stakeholder feedback regarding the process will be considered before finalizing the protocol in early 2004.

Guide 71: Emergency Preparedness and Response Requirements for the Upstream Petroleum Industry is awaiting final revisions and is expected to be published in late spring 2003. This guide is mainly a consolidation of existing emergency preparedness requirements that completes phase 1 of a 2-phase process. Phase 2 work is ongoing to address outstanding issues relating to emergency preparedness. Once work is completed to address these issues, revisions will be made to Guide 71.

Once the Protocol for Estimating Risk from Sour Gas Wells and Pipelines (Recommendation 17) has been developed, revised requirements for determining EPZs will be implemented through revisions to Guide 71.

AENV has taken the lead in ensuring that air monitoring needs and activities associated with public safety are adequately addressed and coordinated. These responsibilities are reflected in the draft update of the Government of Alberta Upstream Petroleum Industry Support Plan expected to be finalized in April 2003.

Information, Communication, and Consultation:

There are a total of 27 recommendations within the Information, Communication and Consultation category. Work to address 15 of the recommendations is currently under way within 10 projects, four recommendations (29, 37, 48, and 86) have been completed, and work to address the remaining eight (4, 14, 51, 75, 76, 77, 80, and 82) is scheduled to begin in 2003/04. A summary of activities related to completed recommendations is included in the "Recommendations Complete" section, beginning on page 56 of this report. Year-three project starts are reported beginning on page 77.

This grouping of recommendations has both definitive, project-driven-type recommendations with clear deliverables and several open-ended recommendations that are somewhat less definitive.

Recommendation 16 will eventually offer public access to a very useful Web site. Used in conjunction with GIS software, this Web site will show Alberta's sour gas infrastructure information in an easy-to-use map form, with information on the site being constantly updated. Once testing of the site has been completed, it will be made available on line and demonstrated at EUB public open houses.

Recommendation 31 will allow public access to data on EUB level-3 and level-4 enforcement actions against companies, again being constantly updated. This information will be published on the EUB's Web site.

Revised public consultation requirements and expectations have been developed and included in draft Guide 56, which is currently undergoing stakeholder consultation.

A series of user-friendly documents is being developed to assist the public in understanding industry development proposals. One of these is the brochure Understanding Oil and Gas Development in Alberta, which includes a list of questions a potentially affected party may want to ask about an energy development proposal. The EUB has also developed more pamphlets in the EnerFAQs series to explain specific facets of facility, pipeline, and well projects to the public.

Recommendations 45, 46, and 47 relate to the perception of the EUB's neutrality. These recommendations target the public audience, with the intent to correct gaps in the larger public's understanding and perception of EUB neutrality. A strategic communication plan has been developed to address these issues.

Recommendation 81 focuses on the need for public consultation materials outlining the role of the EUB. Constantly evolving roles, issues, and public expectations mean constantly updating and changing those materials. Some of the materials produced to date include the EUB KidZone, Petroleum Play booklet, Introduction to the EUB video, and Eye on Energy science-in-a-crate.

A multi-stakeholder committee has completed its study to determine the nature of net financial benefits to communities impacted by sour gas development. A draft report is currently under review and the final report is expected to be published in June 2003.

An Aboriginal Advisory Committee involving senior leaders from within the Aboriginal community and the EUB has been established to provide the Board with advice on current Aboriginal issues and activities relating to energy and utilities development in Alberta.

Progress on other recommendations within this group, such as Recommendation 3 (First Nations jurisdictional issues) and Recommendation 73 (establish an information office), will also aid greatly in the overall information, communication, and consultation efforts being made under this grouping.

New year-three starts, such as Recommendation 80 (the EUB put greater emphasis on developing relationships with all of its stakeholders), will also add to the overall effectiveness of this series of recommendations.