06-05-04

The oil and gas industry’s practice of "water-flooding" -- injecting freshwater down wells to recover more oil -- needs to be phased out by tough new government rules, say critics. A provincial advisory committee’s preliminary report on the industry’s use of water doesn’t go far enough in conserving scarce freshwater supplies for the future, the mayor of Red Deer and a landowners’ group say. But the Canadian Association of Petroleum Producers (CAPP) says water-flooding for enhanced oil recovery generates a significant financial return for all Albertans, compared with the relatively small amount of freshwater used.

The advisory committee’s report, released, recommends the oil and gas sector continue to voluntarily reduce its use of freshwater in water-flooding. It didn’t call for a ban on the practice, despite concerns by some rural Alberta communities, farmers, ranchers and other landowners that oilfield water-injection is permanently removing freshwater from the natural water cycle.
"The committee does not feel that immediate, province wide elimination of underground injection of non-saline (fresh) water is a reasonable response to public concerns because of current technical and economic considerations," the report says.

Red Deer Mayor Gail Surkan said the committee needs to go further in its final report, due by the end of June.

"We need a very significant change at the policy level from the provincial government, which clearly signals that there will be an end to the use of freshwater for enhanced oil recovery," Surkan said.

Don Bester, a director of the Butte Action Committee, a group of ranchers and other landowners in the Caroline area northwest of Calgary, said the committee’s recommendations "really don’t have any teeth to them."

But David Pryce, vice-president of Western Canada operations for CAPP, said banning all water-flooding that uses freshwater may not be the wisest choice, if the industry is using the water responsibly and within limits to ensure other water users aren’t negatively affected.
"There’s a significant value-added contribution from the use of this water," said Pryce, who co-chairs the advisory committee along with chairs from Alberta Environment and the environmental community.

Water-flooding is used in half of Alberta’s conventional light oil production and, in 2001, the practice generated $ 447 mm in provincial revenue, according to the committee’s report. Water-injection amounted to 1.9 % of the total 9.4 bn cm of water allocated in the province in 2001, it says. In comparison, irrigation farming received the lion’s share -- 44.8 % -- of total water allocated.

Oil and gas companies used just over 37 mm cm of freshwater for enhanced oil recovery in 2001, compared with almost 230 mm cm of saline or non-potable water obtained from underground reservoirs and re-injected to recover more oil. Mary Griffiths, a policy analyst with the Pembina Institute and the environmental community’s co-chair on the committee, said at least half of the committee supported eliminating oilfield injection of freshwater over the long term. But she said the committee as a whole couldn’t agree on whether an end to the practice was necessary or, if it was, how long it should take to phase out.

Griffiths said it is crucial now for the public and other stakeholders to provide their input before the end of May on the committee’s preliminary recommendations. The committee also recommended that government strengthen its policies to restrict the use of freshwater in enhanced oil recovery if there are cost-effective alternatives -- such as injecting saline water or carbon dioxide gas into wells to recover more oil.

Alberta Environment Minister Lorne Taylor’s preference is that a multi-stakeholder consensus approach be used to find a way to eventually eliminate using freshwater in oilfield injection, said Val Mellesmoen, the department’s communications director. The consensus model has been successful, through the Clean Air Strategic Alliance, in reducing oilfield gas flaring by more than 60 % since 1996.

Taylor also wants to ensure that every water user -- not just one industry sector -- shares the responsibility for conserving water and coming up with alternatives to using freshwater, Mellesmoen said.

"It’s not like he wants to shut the taps off tomorrow." But Red Deer Mayor Surkan said that the government doesn’t need to wait for the committee’s final report to send a strong signal now that using freshwater to recover oil is on its way out.

"We think the very first step to be taken is to stop granting new (oilfield freshwater-injection) licences or the expansion of existing licences," she said.

Surkan and leaders of eight other Alberta communities, along with several ranchers, opposed a water-flooding plan by Capstone Energy at an Alberta Environmental Appeal Board (EAB) hearing in February. Alberta Environment has granted the Calgary company a preliminary licence to withdraw up to 328,500 cm of freshwater from the Red Deer River, and inject it over a period of 15 years into a reservoir near Innisfail to recover more oil.

Taylor received the EAB’s recommendations on the matter, but isn’t expected to make a decision for at least a couple of weeks. Bester, of the Butte Action Committee, said if Taylor is sincere about wanting to eliminate the practice, the minister will require Capstone to find an alternative oil-recovery method, such as using saline water produced by other area wells.

Capstone has argued that this would make its enhanced oil-recovery project uneconomic. The advisory committee also recommends that government expand its current policy on groundwater use in the agricultural area to encompass the province’s forested area.

The policy requires oil and gas companies to look at alternatives to using fresh groundwater for oil recovery. However, the committee didn’t reach any agreement on extending the policy to require companies to also consider alternatives to using fresh surface water.

In the Capstone Energy case, for example, the company wasn’t required under current policy or legislation to do a detailed analysis of alternatives to withdrawing fresh surface water from the Red Deer River. Limiting the industry’s access to surface water could have huge implications for future oilsands projects near Fort McMurray, where three oilsands plants currently draw water from the Athabasca River. Demand for water to make steam used in extracting oilsands bitumen is also forecast to increase.

Bester, who worked in petroleum reservoir engineering for several years, said the technology to inject carbon dioxide into wells to recover more oil was developed 25 years ago and is a common practice in the US.

"We don’t need to push freshwater down the tube," Bester said. "There are plenty of alternatives."

Source: Business Edge