Air Emissions Regulation Info Session and Incentive/Grant Programs

Adrienne Headrick, Manager, Regulatory and Environmental Development, Energy, McIntosh Perry, presents an informative session on Air Regulations and Incentive/Grant Programs available to support current initiatives.

Summary of Alberta Incentive Programs for Reducing Emissions in the Oil and Gas Industry

Industrial Energy Efficiency and Carbon Capture Utilization and Storage (IEE CCUS)
The $80-million IEE CCUS Grant Program is part of a $750M investment of the Technology Innovation and Emissions Reduction (TIER) fund. Proponents who wish to reduce emissions at their facilities utilizing new technology can apply for a grant under this program. Run directly by Alberta Environment and Parks (AEP). Deadline for Application: October 30, 2020

Methane Technology Implementation Program (MTIP)
The Methane Technology Implementation Program targets deployment and use of commercially available technologies that emphasize reductions in methane emissions in the discovery, recovery, and processing of Alberta’s energy resources. A fund of $25M has been allocated to this program. Implemented through Carbon Connect International.

Federal Emission Reduction Fund (ERF)
This fund has dedicated $675M towards helping on-shore oil and gas facilities reduce their methane emissions. Applications to fund up to 75% of projects costs for methane reducing technologies and initiatives will be open to industry in November 2020.

Upcoming Incentive Programs

Baseline Reduction Opportunity (BRO) Assessment Program
$10M program to support small and medium-sized oil and gas operators to conduct detailed assessments of methane reduction opportunities and fugitive emissions. The BRO Assessment Program will launch in fall 2020 once government selects a delivery agent.

Air Emission Regulations that Impact the Oil and Gas Industry

Below is a summary of the most impactful regulations or programs with respect to air emissions within the Oil and Gas Industry. It will focus on regulations that impact Alberta but will also touch on where to find more details for federally regulated facilities and also facilities located within Saskatchewan And British Columbia.

Methane

In 2018, the federal government (Environment and Climate Change Canada) released regulations to reduce methane emissions from the Oil and Gas Industry. These regulations were in response to Canada’s commitment in the Paris Agreement to reduce methane by 40-45% by 2025. Alberta, British Columbia and Saskatchewan have all adopted their own regulations to meet the federal targets.

Federal SOR/2018-66

• Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds 

Alberta

• Directive 60 – Upstream Petroleum Industry Flaring, Incinerating and Venting Guideline. Most recent update was in July 2020.

• Directive 17 – Measurement Requirements for Oil and Gas Operations. Most recent update in May 2020.

British Columbia

• Changes were made to the Drilling Production Regulation

Saskatchewan

• Development of the Oil and Gas Emission Management Regulations

Alberta Methane Regulation Summary

Table 1. below is an overview of the methane emission limits in effect for Alberta Facilities that are regulated under Directive 60. The regulations focus on limiting methane from five areas:

1. Overall Facility Venting Limits
2. Pneumatic Devices
3. Compressor Seals
4. Glycol Dehydrators
5. Fugitive Emissions from Leaks

Table 1. Summary of Alberta’s Methane Regulations as outlined with Directive 60

Reporting
Methane emissions are reported annually through One-Stop. The first annual report was due on June 1 2020. In addition to annual reporting, companies must regularly update their Methane Reduction and Retrofit Compliance Plan (MRRCP) which outlines the organizations plan for getting all their sites into compliance and also their Fugitive Emissions Management Plan (FEMP), which outlines their plan for getting all of their fugitive emission surveys completed.

Greenhouse Gas Emissions
Greenhouse Gas Emissions are typically expressed as Carbon Dioxide Equivalents (CO2e). There are several programs in place at both a federal and provincial level aimed for reducing CO2e emissions at both a federal level and a provincial level.

Technology Innovation and Emissions Reduction (TIER) Regulation

What is TIER?

The TIER regulation is at the core of emissions management in Alberta. TIER implements Alberta’s industrial carbon pricing and emissions trading system. TIER is a system to help industrial facilities find innovative ways to reduce emissions and invest in clean technology to stay competitive and save money.
The TIER regulation applies to facilities that emitted 100,000 tonnes CO2e or more per year in 2016 or a subsequent year.

Opting-In to TIER
Facilities with less than 100,000 tonnes of CO2e may be eligible to opt-in to the TIER if it competes against TIER regulated facilities and emits more than 10,000 tonnes CO2e. Conventional oil and gas facilities may also form an aggregate to opt-in.

Being regulated under TIER exempts the owner/operator from the Greenhouse Gas Pollution Pricing Act (GGPPA). The GGPPA is the federal carbon legislation with two main parts: Part 1 applies a charge to 21 types of fuel and combustible wastes and part 2 introduced an output based pricing system (OBPS) for large industrial emitters (over 50,000 tonnes CO2e). I.E The Federal Carbon Tax.

Achieving Compliance Under TIER
Emissions reduction obligations are determined according to benchmark approach (facility specific or high-performance benchmarks). In most cases, a regulated facility is subject to the less stringent of the two approaches for that facility. Facility benchmarks tighten by 1% annually beginning in 2021.

Facilities must report annually, by June 30th of each year, on the emissions of the previous year. Under TIER, the goal is to meet or exceed the benchmarked emission limits for regulated facilities. Facilities that produce less emissions than their benchmark, earn emission offset credits which can be traded/sold in Alberta.

Facilities that exceed their benchmark have several options for compliance:

• Reducing their On-site emissions
• Use of emissions performance credits (produced and traded by facilities that exceed their emission reduction obligations).
• Use of Alberta-based emissions offsets.
• Payment into a TIER fund (for the 2020 compliance year, a price of $30/tonne of CO2e has been set).

In 2020, $750M that was generated from the above was used to initiate a few different programs aimed at reducing emission within the oil and gas industry.

More information on TIER can be found here.

Additional information on Alberta Emission Offset System can be found here.

Multi-Sector Air Pollutant Regulations (MSARP)

These regulations set air pollutant emission standards across Canada for several Industrial sectors. The regulations limit the amount of NOx emitted from gaseous fired non-utility boilers, heaters and stationary spark -ignition fired engines.

The regulations were originally released in 2016 and impacted industries (oil and gas facilities included) were expected to have completed an inventory of their impacted equipment and register all existing engines, boilers and heaters prior to 2019. The actual NOx emissions limits will be phased in through two timelines. The first phase of NOx emission limits is in effect between January 2021 and December 2026. The second phase of NOx reductions has a timeline of January 2026 to June 1, 2036.

Additional information will be provided on these regulations. The MSAPR can be found here.

National Pollutant Release Inventory (NPRI)

NPRI collects and publishes information about substances that may pose a risk to the environmental human health. The Canadian Environmental Protection Act (CEPA) regulates which industries are impacted and what substances need to be reported.

Oil and gas facilities are required to report under these regulations by June 1 of each year. There are over 300 substances, that must be reported on, if used or produced at a facility. For a comprehensive list of all regulated substances, click here.

Alberta Ambient Air Quality Objectives (AAAQO)

Set of air quality objectives, set by provincial regulations that industrial air emissions need to achieve. Air modelling or screening is required to determine compliance with these objectives. The AAAQO’s are intended to provide protection of the environment and human health to an extent technically and economically feasible, as well as socially and politically acceptable. Air quality objectives are generally established for one-hour, 24-hour, and annual averaging periods. Occasionally, the underlying information or ambient monitoring method requires that other averaging periods be used.

Commonly considered objectives that require modelling within for the Oil and Gas industry include: SO2, CO, NO2, and Benzene, among others.

More information on these objectives can be found here.

To schedule a detailed review of the opportunities or additional assistance with the regulations and how they relate to your specific situation, please contact our Energy and Resources team:

Adrienne Headrick
Manager, Regulatory & Environmental Development, Energy
a.headrick@mcintoshperry.com

Mark Ryan
Vice President, Engineering, Energy
m.ryan@mcintoshperry.com

Dean Michaud
Vice President, Projects & Business Development, Energy
d.michaud@mcintoshperry.com