A comment to the Herald article below:
Allan MacRae Banff School of Advanced Management
The history of this matter is described below.
Portions of my email have been excerpted for brevity.
From: Allan MacRae
Sent: May-28-16 12:28 PM
To: Senior Executive, Alberta Energy Regulator
Subject: Critical Sour Gas Alert
I have, on usually reliable authority, the following information.
The Mazeppa Sour Gas Plant reportedly has very serious safety concerns, including:
a) Failure to pay surface lease rentals and resulting loss of access to sour gas wells;
b) Infrequent anti-corrosion chemical injection of sour gas pipeline gathering systems;
c) Major cost skimping on sour gas plant maintenance, including on major plant turnarounds.
If true, I regard this matter as very high risk, given that the Mazeppa plant and gathering system collects and processes sour gas (as high as ~30-40% H2S) and is close to highly-populated areas, including the City of Calgary.
Thank you, Allan MacRae, P.Eng.
Energy regulator sounds alarm about safety at oil and gas company by Reid Southwick, August 9, 2016, Calgary Herald
Alberta’s energy watchdog is raising red flags about safety at a Calgary company’s sour gas plant and pipelines, after the firm reported its leak detection system is no longer operational and that it cannot respond to any potential emergency.
The Alberta Energy Regulator said Calgary-based Lexin Resources Ltd. disclosed in late June that it laid off most of its staff. Only six workers are left to manage its sour gas plant in Mazeppa northeast of High River, along with related pipelines and wells in southern Alberta.
Lexin told the regulator that if there was an incident or emergency at any of its facilities, the regulator should handle it because the company cannot respond.
The regulator said in an order released Tuesday that if Lexin and its related company, LR Processing, fail to provide sufficient oversight, sour gas could be released into the environment with potentially dangerous effects.
Sour gas is a “colourless, flammable gas that smells like rotten eggs and is poisonous to humans and animals,” according to the watchdog.
The regulator ordered Lexin to return all of its facilities to a safe state and come up with an emergency response plan, among other steps.
Ryan Bartlett, a spokesman with the energy regulator, said Lexin has shut in its sour gas plant and replaced sour gas with sweet gas at the facility. But he noted there may be risks with sour gas elsewhere in Lexin’s infrastructure, including its pipelines.
A Lexin official said no one was immediately available to comment on the order.
Lexin is already at the centre of a rising number of complaints from landowners who have the company’s wells on their properties and claim they have not been paid annual rents.
The company has also recently informed the energy regulator that its system of monitoring sour gas leaks is no longer working.
Shirley Pocock, a farmer with a Lexin well on her property south of High River, said she and other landowners have been worried about how the company would handle emergencies, “and obviously these concerns are founded.”
Pocock said the well on her property produced sweet gas and does not appear to be operating. Still, she and other farmers hope to get answers from authorities, including the energy regulator, on how they plan to handle the fallout of Lexin’s operations during a town hall meeting in the hamlet of Cayley on Wednesday night.
“It’s nothing less than what we would have expected,” Pocock said about the regulator’s warnings.
“It seems to me they are walking away from all their responsibilities, and they’re being allowed to walk away from them.”
Should Lexin fail to comply with the energy regulator’s order, the watchdog could escalate its response by laying fines and placing the company’s future applications under greater scrutiny. [But would the toothless AER?]
The company is required to submit its emergency response plan, and a separate plan to monitor its facilities, to the regulator by Monday afternoon. [Emphasis added]
Made at Calgary, in the
Province of Alberta, on
August 9, 2016 ALBERTA ENERGY REGULATOR
Under section 113 of the Environmental Protection and Enhancement Act (EPEA)
Under section 27 of the Oil and Gas Conservation Act (OGCA)
Under section 23 of the Pipeline Act
Lexin Resources Ltd.
Suite 300, 1207 – 11 Avenue SW
Calgary, Alberta T3C 0M5
LR Processing Ltd. (LR Processing)
Suite 300, 1207 – 11 Avenue SW
Calgary, Alberta T3C 0M5
WHEREAS Lexin Resources Ltd. (Lexin) is the holder of Facility License No. 2588 issued by the Alberta Energy Regulator (AER) for a sour gas facility located at SE ¼ 35-19-28 W4M (Mazeppa Facility);
WHEREAS Lexin and LR Processing are also the holders of AER well, pipeline, facility and/or other licences associated with and/or connected to the Mazeppa Facility (Mazeppa Infrastructure);
WHEREAS on June 30, 2016, Lexin informed the AER that it has terminated most of its staff, leaving only 6 people to operate and manage the Mazeppa Facility and Mazeppa Infrastructure;
WHEREAS on July 29, 2016, Lexin informed the AER that it cannot respond to an incident or emergency should one occur at or relating to the Mazeppa Facility and Mazeppa Infrastructure, and Lexin will defer to the AER to manage the situation;
WHEREAS on July 29, 2016, Lexin informed the AER that the supervisory control and data acquisition system used to monitor for sour gas releases for the Mazeppa Facility and Mazeppa Infrastructure, is no longer operational;
WHEREAS as the licensee of the Mazeppa Facility and Mazeppa Infrastructure, Lexin and LR Processing have many statutory responsibilities in connection with operation of the Mazeppa Facility and Mazeppa Infrastructure. This includes ensuring safe operation, emergency and incident response, and responding to public and landowner complaints;
WHEREAS sour gas is a substance known to have an adverse effect on the environment (substance);
WHEREAS Lexin and LR Processing are both a “person responsible” for the substance, as defined in section 1(tt) of EPEA;
WHEREAS, under section 113 of EPEA, the Director is of the opinion that, if Lexin and LR Processing do not provide sufficient and adequate oversight of the Mazeppa Facility and Mazeppa Infrastructure, a release of the substance into the environment may occur and such release may cause an adverse effect; [Why no AER Order against Encana for releasing (injecting massive volumes under high pressure, and subsequently injecting more substances under excessive pressure that cracked the remedial cement, causing casing failure) substances into Rosebud’s drinking water aquifers in 2004?]
WHEREAS the AER issued an order dated June 15, 2016 against Lexin under section 22 of the OGCA (June 15 2016 Order);
WHEREAS as of the date of this order Lexin has not complied with the terms of the June 15, 2016 Order in that it has not complied with section 2 of the June 15, 2016 Order; [Why go through the drawn out process below, why is the AER not shutting Lexin down, completely, for failing to heed the June Order?]
WHEREAS Suzanne Belliveau, Acting Director, has been appointed a Director for the purposes of issuing environmental protection orders under EPEA and orders under OGCA and the Pipeline Act;
THEREFORE, I, Suzanne Belliveau, Acting Director, under section 113 and 241 of the EPEA, section 27(3) of the OGCA, and section 23(2) of the Pipeline Act, DO HEREBY ORDER, the following:
1. Lexin and LR Processing shall immediately suspend and discontinue the Mazeppa Facility and Mazeppa Infrastructure in compliance with applicable AER requirements.
Incident Response Plan
2. Lexin and LR Processing shall develop and submit to the AER a comprehensive plan, to the satisfaction of the Director, describing how Lexin and LR Processing will fulfill their statutory responsibility to respond to incidents and emergencies at or relating to the Mazeppa Facility and Mazeppa Infrastructure (Incident Response Plan).
3. The Incident Response Plan shall include detailed information outlining how Lexin and LR Processing will ensure they can respond to complaints, releases, and any other emergencies or incidents at, or related to, the Mazeppa Facility and Mazeppa Infrastructure.
4. Lexin and LR Processing shall submit the Incident Response Plan to the Director by 5:00 pm on August 15, 2016, or otherwise agreed to, in writing, by the Director.
5. Lexin and LR Processing shall implement the Incident Response Plan as approved by the Director.
Ongoing Monitoring Plan
6. Lexin and LR Processing shall develop and submit to the AER a comprehensive plan, to the satisfaction of the Director, describing how Lexin and LR Processing will provide ongoing monitoring of the Mazeppa Facility and Mazeppa Infrastructure (Ongoing Monitoring Plan).
7. Lexin and LR Processing shall submit the Ongoing Monitoring Plan to the Director by 5:00 pm on August 15, 2016, or otherwise agreed to, in writing, by the Director.
8. Lexin and LR Processing shall implement the Ongoing Monitoring Plan as approved by the Director.
Reporting to the Director and the Public
9. Lexin and LR Processing shall provide to the Director, by 12:00 noon on each Thursday following the date of issuance of this order, a weekly written report (Director’s Report), until otherwise directed in writing by the Director.
10. The Director’s Report shall include:
a) Any actions undertaken pursuant to the Incident Response Plan;
b) the monitoring activities conducted by Lexin and LR Processing under the Ongoing Monitoring Plan for the week; and
c) the results of any incident response activities and monitoring activities undertaken by Lexin and LR Processing.
11. Lexin and LR Processing shall provide to the public, by 2:00 p.m. on each Friday following the date of issuance of this order, a weekly written report (Public Report) to be posted on Lexin’s website and, in the case of LR Processing, disseminated broadly to the public by some other means, until otherwise directed in writing by the Director.
12. The Public Report shall include:
a) Detailed information outlining the activities undertaken by Lexin and LR Processing under the Incident Response Plan and the Ongoing Monitoring Plan for the week; and
b) the results of any incident response activities and monitoring activities undertaken by Lexin and LR Processing.
Dated at the City of Calgary in the Province of Alberta, the 9 day of August, 2016.
Suzanne Belliveau, Acting Director, Enforcement and Surveillance West
Alberta Energy Regulator
In complying with this order, the party or parties named must obtain all approvals necessary, notwithstanding the above requirements.
[Refer also to:
Prosperity Alberta style: Record numbers of farmers being ripped off by the oil and gas industry, seeking lapsed payments ]