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News Release

FOR IMMEDIATE RELEASE

EUB RELEASES FINDINGS AND RECOMMENDATIONS FROM ACCLAIM ACHESON BLOWOUT INVESTIGATION

Edmonton, Alberta (August 17, 2005) The Alberta Energy and Utilities Board (EUB) has issued its report on the blowout that occurred at a well owned by Acclaim Energy Inc. in the Acheson Field in the County of Parkland, just west of Edmonton city limits, on December 12, 2004.

Once the blowout was over, the EUB immediately began its investigation into the incident. The EUB's investigation team considered Acclaim's reports, the information provided by other parties, and EUB staff observations, knowledge, and experience. The EUB was also assisted by science and technical advisors Dr. David Wilson, P.Eng., University of Alberta engineering professor emeritus, Ray Woods, former energy executive, and Jim Dilay, P.Eng., EUB Board Member.

The investigation team's report made 16 recommendations on matters ranging from operations to emergency response to environmental impacts. The EUB's Board has accepted all recommendations made by the investigation team, and has committed to implementing those that relate to the EUB directly.

The blowout, which occurred as a result of a downhole explosion, lasted 30 days, until January 10, 2005.

However, the EUB determined that Acclaim failed to calculate an emergency planning zone (EPZ) for the service operations on the well, and that there were communication problems on the first day between the company, the EUB, and other government agencies.

Based on the characteristics of the well, including gas composition and flow rate, available at the time of the blowout, the EPZ had a radius of 220 metres and included no residences. Therefore, there was no need to evacuate any people. However, the absence of the necessary information about the size of the EPZ led to the evacuation of more than 500 residents of Parkland County, including the town of Enoch.

Accordingly, the EUB has issued a Major Level 2 Enforcement Action for Acclaim's failure to determine an initial EPZ . This requires a company to take immediate corrective action to address the noncompliance item, which Acclaim has done, and ensure compliance at all similar sites in the province. The company must submit a documented action plan to the EUB to ensure that the issue does not recur.

Despite the high profile of the blowout and the impacts to nearby residents, the EUB found that public safety was never compromised during the incident and there have been no lasting environmental impacts from the blowout. The EUB also stated that Acclaim did an effective job of regaining well control.

The EUB has also committed to review (and update if necessary) its emergency planning requirements for industry, internal notification protocols, and the process by which emergency response is coordinated among the EUB and municipal, provincial and federal agencies. The attached Backgrounder contains further information about the blowout as well as EUB actions and recommendations.

The EUB ensures 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.

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For more information, please contact:

Bob Curran
EUB Communications
Phone: (403) 297-3392
Cellular: (403) 613-5554
Email: bob.curran@gov.ab.ca

NR2005-23

Backgrounder

On December 12, 2004, a blowout occurred at the well ACC Acheson 2-26-52-26 (the 2-26 well), located at Legal Subdivision 2-26-52-026W4M in the County of Parkland, just west of Edmonton city limits. The well is licensed to 1107882 Alberta Ltd., owned by Acclaim Energy Inc. (Acclaim). The flow from the well was stopped on January 10, 2005, and the Alberta Energy and Utilities Board (EUB/Board) declared the blowout over on January 11, 2005.

On December 12, routine well-servicing operations were under way on the 2-26 well. During these operations, a downhole explosion occurred, which ruptured the surface and production well casings at a depth of about 18 metres, allowing extremely large quantities of salt water, some oil, and sour natural gas to flow to the surface.

When the explosion occurred, personnel at the site did not know the size of the emergency planning zone (EPZ) for the well because the calculations for its determination had not been made. This contributed to communication problems between Acclaim and emergency-response providers, the Parkland 911 dispatch operator, the RCMP, and the Enoch Cree Nation police.  Based on the characteristics of the well and gas available at the time of the blowout, the EPZ had a radius of only 220 metres and included no residences. Therefore, there was no need for evacuation of any people. However, the absence of the necessary information about the size of the EPZ led to the evacuation of more than 500 residents of Parkland County, including the town of Enoch.

Had Acclaim's on-site personnel known the EPZ, the evacuation likely would have been avoided. The response was overly protective, but public safety was not compromised by the evacuation.

In addition, the EUB should have categorized the incident at Level 3 (the highest level) sooner due to the evacuation. Had this happened, a more coordinated response by Acclaim and the government agencies would have occurred earlier. This would have resulted in clearer and timelier information about the incident and its impacts being communicated to everyone involved, including the public. The EUB elevated the incident to Level 3 early on the second day.

It is important to note that actions taken to secure the immediate area and bring the well under control were generally very good. For example, although some areas were subjected to strong hydrogen sulphide (H ₂ S) odours during the first few days of the blowout, public safety was never compromised during the incident. In fact, air monitoring showed that H ₂ S levels never reached a point where notification would even be required, much less evacuation (in accordance with Alberta Health and Wellness standards).

The flow of gas was accidentally ignited on December 13 as crews attempted to stabilize the wellhead. The fire was subsequently extinguished, but the flow was deliberately reignited early on December 16 to allow for safer working conditions at the site and to eliminate odours in the surrounding area.

Because Acclaim could not stop the flow from the well through control measures at surface, it drilled two relief wells adjacent to the 2-26 well. On January 10, 2005, the first relief well intersected the wellbore of the 2-26 well. Drilling mud was pumped into the wellbore, and the flow from the well ceased. Acclaim secured the well the next day, and the EUB declared the blowout over. It had lasted 30 days.

On January 13, the EUB announced that its investigation into the incident had already begun. This report contains the findings and conclusions of the investigation team formed by the EUB and numerous recommendations made to the EUB's Board for actions to be taken by the EUB, Acclaim, industry, and other government agencies.

The process for the investigation included analysis of reports provided by Acclaim and government responders; the advice of senior advisors, and the knowledge and experience of the investigation team. The process took longer than anticipated because of the amount of time taken to prepare the reports needed for the investigation, the time to analyze the very large amount of information and data, and a broader-than-usual scope for the investigation.

The EUB's Board has accepted all 16 recommendations made by the investigation, and committed to implementing those that pertain to the EUB directly. The EUB will also issue a follow-up report at a later date that summarizes its progress in implementing the recommendations. Some of the investigation team's recommendations follow:

• In accordance with the EUB Generic Enforcement Ladder (Informational Letter [IL] 99-4: EUB Enforcement Process), the EUB issue a Major Level 2 Enforcement Action for contravention of Section 2.1 in Directive 71, Emergency Preparedness and Response Requirements for the Upstream Petroleum Industry , which states that a licensee must determine an initial EPZ . Major level enforcement requires a company to take immediate corrective action to address the noncompliance item related to the specific incident, which Acclaim has already done, and ensure compliance at all similar sites in the province. Temporary suspension of certain operations may be necessary to correct deficiencies or alleviate potential impacts. The company must submit a documented action plan within 30 days to the EUB to ensure that the issue does not recur. (Refer to Section 3.)
• The EUB require Acclaim to complete a successful emergency response exercise within six months of the issuance of this report with joint participation from local, provincial, and federal agencies. This exercise should focus on testing communication flow among all emergency responders, include representatives from the public, and be evaluated by the EUB. (Refer to Section 3.)
• The EUB update Directive 71 to direct licensees to communicate EPZ information to well-site personnel prior to conducting any well servicing on a sour well where a site-specific ERP is not required and consider requiring licensees to notify and advise the EUB of all sour workovers prior to commencing operations. (Refer to Section 3.)
• The EUB coordinate a review (and update if necessary) of the Upstream Petroleum Incident Support Plan (UPISP) to consider municipal, provincial, and where applicable, federal jurisdictional issues, roles and responsibilities, and inconsistencies between emergency response documents. (Refer to Section 4)
• The EUB place increased emphasis on its effort to enhance its information systems and databases that support its ability to respond to emergencies. (Refer to Section 4)
• The EUB ensure that there is a sufficient level of coordination and communication among its groups responsible for public safety during an emergency. (Refer to Section 4)
• Since Directive 13: Suspension Requirements for Wells, has been in place only as of December 1, 2004, and was implemented after a thorough review of Interim Directive (ID) 90-4 , the EUB review the effectiveness of Directive 13 after a further period of experience of one year. (Refer to Appendix 14)
• The EUB require that the licensees of the wells in the Acheson and Acheson East Fields advise the Board by November 1, 2005, as to how they will meet the requirements of Guide 10: Guide to Minimum Casing Design Requirements for the remaining life of the wells. (Refer to Appendix 14)

The investigation team has made other recommendations that are contained in the main report.