Board Upholds Water Diversion
-- Subject to Amount Reduction

Editor’s Note: APEGGA's Environment Committee is committed to keeping members informed on environmental issues that may affect professional practice. Alberta's water resources, particularly the use of fresh water, have recently been an area of intense public interest.

The latest focal point for stakeholders interested in the use of Alberta’s water resources was an Alberta Environmental Appeal Board hearing. This hearing dealt with a decision made by Alberta Environment's Central Region under the Water Act, regarding an oil-and-gas company's application to use fresh water for enhanced oil recovery.

Following is the executive summary from the recently released Environmental Appeals Board report and recommendations.

ALBERTA ENVIRONMENTAL APPEALS BOARD Report and Recommendations: Mountain View Regional Water Services Commission et al. v. Director, Central Region, Regional Services, Alberta Environment re: Capstone Energy (26 April 2004), Appeal Nos. 03-116 and 03-118-121-R (A.E.A.B.).

Alberta Environment issued a Preliminary Certificate and associated Proposed License to Capstone Energy Ltd. (Capstone) for the diversion of water from the Red Deer River for oilfield injection at SW 4-36-1-W5M near Red Deer, Alberta. The Mountain View Regional Water Services Commission, Mr. Gerald Oxtoby, the City of Red Deer, Mr. Terry Little, and Mr. Kelly Smith (the Appellants) appealed Alberta Environment’s decision.

The Appellants argue that fresh water is a scarce resource and it should not be used for oilfield injection. The Appellants believe that once fresh water is injected into the ground in this way, it is gone forever. In considering these appeals, the Board highlights the importance of fresh water; it is essential for human existence and it is a limited resource. The Board is also aware of the importance of the oil and gas industry in Alberta and the work they are undertaking to reduce their use of fresh water in keeping with the principles of sustainable development. The Board must balance the protection of our fresh water supplies with sustaining this essential element of our economy.

With respect to these appeals, the Board accepts the Appellants’ argument that when fresh water is injected into the ground in this way it is, for all practical purposes, lost from the hydrologic cycle. Section 2 of the Water Act, in our judgment, requires that any use of water resulting in the loss of fresh water should undergo much greater scrutiny. Further, where fresh water is being used in this way, there should be no distinction between surface water and ground water, because the overall effects on the environment are the same.

Based on all of the evidence received in these appeals, the Board has concluded that the Preliminary Certificate and Proposed License should be upheld, but subject to a number of changes, including a reduction in the quantity of water and a staggered, shorter term for the license. The Board encourages the Government to provide direction through an oilfield injection policy that focuses on minimizing the use of fresh water regardless of its source. In the Board’s view, if fresh water is going to be used for oilfield injection, the Water Act requires that an alternatives analysis be conducted, looking at the technical, economic, and regulatory feasibility of the alternatives and demonstrating that the fresh water will be used not only efficiently, but as the last option considered.

In the Board’s view, the amount of water allocated should be reduced to 600 m3/day, for a total allocation of 219,000 m3 annually.* The reduction is consistent with evidence provided by Capstone that 150 m3/day of produced water is possibly available elsewhere and that the amount of water to be used during the first year of the project is less than peek requirements. To encourage the use of alternate water sources, before the Proposed Licence is issued, Capstone should provide Alberta Environment with a report detailing a more complete investigation of alternate water sources. Subject to certain conditions detailed in this Report and Recommendations, the amount of water finally allocated in the Proposed Licence may be further decreased if alternate water sources are available.

In all of the circumstance, even though past policies are contradictory and data is lacking, the Board believes Alberta Environment did its best to consider the effects of the Proposed License on other users, including recreational users, and on fish and wildlife. However, as water shortages have occurred in the last number of years, and to protect our aquatic ecosystem, an additional safety margin of 10 percent should be added to the minimum residual flow level. Further, to provide additional protection to other water users, a number of the clauses in the Proposed License should be varied to provide greater certainty, particularly in dealing with complaints.

The Board recommends that the Minister order that the term of the Proposed License be staggered or phased with shorter terms. In this case, the initial term should be for a one year, and the second term should also be for one year, unless an applicable plan, guideline, or change in regulations provides otherwise. If no applicable plan, guideline or change in regulations is in place after the second one year term, any subsequent renewals of the Proposed License should not exceed a term of three years. Every renewal of the Proposed License should require that an alternatives assessment be conducted based on a list of criteria that should be part of the application process.

* The Preliminary Certificate and Proposed License issued to Capstone allows for a diversion of 328,500 m3

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