We're Cogent Environmental Solutions Ltd.!

WHAT IS EVERYONE TALKING ABOUT

IN THE ENVIRONMENTAL INDUSTRY IN ALBERTA?

THE RECENT CHANGES TO AER DIRECTIVES 001 AND 011

The Alberta Energy Regulator (AER) recently changed Directives 001 (Requirements for Site Specific Liability Assessments - SSLA) and 011 (Estimated Liability).  The revised versions of both directives were published on February 7, 2025.  Links are provided below for these documents.  With respect to environmental implications of the revised directives, we are providing the following comments to our clients.  This is not an exhaustive review rather than a highlight of what the recent changes can mean for an environmental program executed by an oil and gas producer in Alberta.  

https://www.aer.ca/regulations-and-compliance-enforcement/rules-and-regulations/directives/directive-001

https://www.aer.ca/regulations-and-compliance-enforcement/rules-and-regulations/directives/directive-011

 

1. Updated Liability Estimation Requirements:

• The new Directive 011 consolidates and updates liability estimation methods for abandonment, reclamation, facility abandonment, and pipeline liability assessment (Directive 011, Section 4).
• The Directive 011 revision provides new regional cost estimates are detailed for abandonment and reclamation (Directive 011, Sections 5.1 and 5.2).
• The Directive 011 revision introduces new liability assessment methods for different license types (Directive 011, Appendix 1).

2. Expanded Site-Specific Liability Assessment (SSLA) Requirements:

• Sites requiring an SSLA must now adhere to more strict guidelines (Directive 011, Section 6).
• SSLA reports are now part of a broader Liability Management Framework (Directive 011, Section 1.3).
• Section 6.1 of Directive 011 states “When required by Section 6 of this directive, appendix 1, or when otherwise directed by the AER, a licensee must conduct an SSLA in accordance with Directive 001.” This is significant as we have been seeing the AER request an SSLA when we submit annual groundwater monitoring and Record of Site Condition (RoSC) documents for reports detailing serious environmental issues such as phase separated hydrocarbons, widespread dissolved hydrocarbons in groundwater and soil, or serious produced water salinity impacts. Our interpretation of the statement is that the AER can ask for an SSLA on any site where it is deemed necessary.
• If contamination is identified and indicates more significant liability than the typical Regional Estimated Liability, the licensee must notify the AER within 30 days and submit an SSLA within 90 days (Directive 011, Section 6.2). This is significant for sites where Phase 2 projects or monitoring are completed. If contamination is noted and increases the environmental liability materially, an SSLA must be submitted to the AER.  There are also several other conditions that may trigger an SSLA detailed in this section such as remedial measures are expected to continue for more than 10 years or off lease contamination is present. Overall, many sites that did not previously require n SSLA now will.

3. Conditional Adjustment of Reclamation Liability Program (CARL):

• The revised Directive 011 allows temporary liability reductions for reclamation if specific conditions are met (Directive 011, Section 7.2).
• The revised Directive 011 may impact licensees nearing reclamation certification (Directive 011, Section 7.2).

4. More Frequent Liability Updates:

• Estimated liability is reassessed daily with new data (Directive 011, Section 3).
• Licensees must provide closure spending reports to the AER to adjust liability estimates (Directive 011, Section 5).

5. Changes to the Orphan Well Fund:

• Recalculation of orphan fund levy based on updated liability figures (Directive 011, Section 9).
• Stricter eligibility checks for orphan status are now included (Directive 011, Section 9).

6. Stricter Compliance and Audits:

• Licensees must update SSLAs every five years (Directive 011, Section 6.1).
• Failure to report significant contamination (off-lease or long-term) will result in regulatory action (Directive 011, Section 6.2).
• License transfers now require up to date SSLAs (Directive 011, Section 6.3).

 

These changes may impact how a licensee deals with contaminated sites as follows:

1. Higher Deemed Liability Costs:

• Sites with phase separated hydrocarbons, long-term contamination (>10 years), or off-lease contamination and potentially other issues as per AER interpretation will see higher estimated liability (Directive 011, Section 6.2).
• Companies must submit updated SSLAs if contamination increases liability by $2M or 20% (Directive 011, Section 6.1).
• Both may increase the overall liability for a licensee and as a result increase the Annual Mandatory Spend amounts.

2. Faster Identification of Liability Risks:

• Daily monitoring by the AER will accelerate the identification of high-risk sites (Directive 011, Section 3).

3. Tighter Restrictions on License Transfers:

• Licensees must now submit an SSLA with transfer applications, leading to greater scrutiny of liabilities for buyers (Directive 011, Section 6.3).

4. Increased Requirements for SSLA Reporting (Directive 001):

• The revised Directive 001 indicates Phase 1 and potentially Phase 2 Environmental Site Assessments (ESAs) are now mandatory for SSLA reports (Directive 001, Section 5.1).
• If a Phase 1 identifies areas of environmental concern, a Phase 2 is required.
• The Phase 2 results must be used to develop a remedial action plan (RAP) if contamination is noted.  The RAP must be sufficient to estimate soil and groundwater remediation costs. 
• Stricter delineation for contaminated soil and groundwater is now required (Directive 001, Section 5.1.2.1).
• Section 5.1.2.2 of Directive 001 also makes specific reference to sites where access is restricted – assuming this is operating or non-decommissioned facilities. Where there are data gaps, a contingency must be assigned and supporting rationale for assumptions is required.
• On-site treatment must be proven effective in Alberta before approval (Directive 001, Section 5.2).
• More details must be provided regarding the reclamation plan for the site.
• Directive 001, Section 6 addresses specific requirements for the actual SSLA reporting and makes the report format more prescriptive.

 

HOW CAN WE HELP?

Cogent personnel have many specific areas of environmental expertise. We are very experienced with all of types of environmental project work which will ensure cost effective management of environmental liability and obtaining compliance with the recently revised AER Directives 001 and 011. We can effectively complete all aspects of project, field and reporting work related to SSLAs as well as cost tracking and cost reporting and can specifically provide support to smaller and medium size licensees operating in Alberta. Additional details are as follows:

• We are very experienced environmental consulting services for oil and gas companies.  In addition, we have provided part-time and contract in-house and remote support for several Calgary based producers for more than twenty years.  If you do not have a full-time environmental coordinator, we can help! This arrangement avoids overhead costs, reduces burdens on operations and executive staff and ensures the work is conducted in a cost effective, technically correct and efficient manner.
• We provide a broad range of environmental consulting services including setup of liability management and reclamation programs for smaller and medium-sized oil and gas companies, assigning priorities for the environmental projects, prioritizing projects based on property locations, ages of properties, annual surface rental amounts, landowner relations, environmental risks and deemed liabilities. Specific details of recent project work are as follows:

·        Preparation and successful submission of more than 100 SSLA reports to the AER.

·        Preparation of Asset Retirement Obligation (ARO) information; reclamation program development, support, review, and maintenance

·        Preparation of end-of-life liability estimates during acquisition and divestiture projects

·        Completing detailed Liability Management Reviews

·        Significant experience conducting Phase 1 and 2 projects including historical reviews, field program design, execution of drilling and sampling programs and reporting

·        In-house capability with electromagnetic (EM) surveys (Geonics EM 31 and 38), GPS and total station surveying and mapping, high resolution drone photography

·        Completion of Conceptual Site Models (CSMs), Tier 2 criteria adjustments and site specific risk assessments, application of the Subsoil Salinity Tool (SST), remedial action plans (RAPs), and Record of Site Condition (RoSC) documents

·        Conducting large scale soil remediation projects, groundwater investigations and monitoring and operating in situ groundwater recovery and remediation systems

·        Supervision of site reclamation projects on cultivated, native prairie, pasture, natural areas and forested site on both Freehold and Crown lands and both white and green area locations across Alberta

 

If you would like to discuss your environmental programs and how to cost effectively achieve compliance with the recent changes in these directives or require other types of environmental consulting work, please contact Trevor Macleod 403-371-9110 or trevor.macleod@cogentenv.ca.