A news report about Petronas safety issues in Malaysia raises question of whether foreign companies have to follow Canadian laws - and it's an easy answer
British Columbia’s regulatory environment for LNG
A few months back, Resource Works stepped into the topic of natural gas and LNG exports in British Columbia with an innovative new product called the Citizen's Guide to LNG. One question we asked was to what extent is the natural gas value chain in BC supervised by regulations that ensure safety that ensures companies cannot get away with cutting corners.
This question is in the news with a report from The Vancouver Sun showing that a company that wants to build and operate an LNG plant in BC, and ship its gas to overseas customers in Asia, has a less than stellar safety record with oil and gas production in its own country of Malaysia.
Any company operating in Canada has to follow Canadian laws, and there is no reason to expect that Petronas would fail to do so. So while the Page One treatment today does hit the mark by creating a moment of unease, on closer examination this is not a Canadian problem. If the inference the writer wants us to draw is that no foreign company should operate in Canada unless it could prove that it had a perfect record on everything, international trade would grind to a halt.
All the same, while the topic is in the spin cycle let's take a look at the rules that do apply in British Columbia today. Here is what the Citizen's Guide has to say about BC's oil and gas regulations.
Extraction and transportation of natural gas
To understand the policy environment, for the Citizen's Guide project, we commissioned an expert analysis of regulations in place. What we discovered was a complex regulatory environment consisting of numerous legal obligations in place for government agencies to perform permitting and monitoring of a wide range of activities.
We were able to find strong evidence that British Columbia’s natural gas industry has been operating safely for more than half a century. As early as the 1930s, evidence shows that British Columbians have been aware of the benefits that can come from natural gas extraction. The regulatory framework was developed under the watch of a succession of governments, with the broad trajectory toward a safe and beneficial industry evidence – regardless of the political party of the day.
As recently as Fall 2014, legal challenges to processes in place have helped to add transparency and accountability so that citizens can better understand the risks faced. British Columbia’s tradition of environmental activism is one of the factors that ensured rules and processes have been put into place that allow for transparency and accountability. This is one of the unique characteristics of British Columbia’s natural resource sector generally that sets it apart from many places in the world where safety and environmental protection can be closed to public scrutiny and accountability.
A survey of safety rules in place in British Columbia
Regulatory responsibility is delegated to the Oil and Gas Commission through the Oil and Gas Activities Act (OGAA). The OGC is known as a “full life-cycle: regulator using a single-window structure to exercise its authority to provide most permits required for oil and gas activities, including those under separate provincial acts. Personnel who work at the OGC are subject-area experts, decision makers and inspectors. Together, they hold authority for compliance related to all permits.
Flaring, water safety, seismicity, abandoned gas wells, fracking, and pipeline safety are some of the topics subject to supervision by the OGC.
Officials in the OGC are legally obliged to carry out Section 4 of the Oil and Gas Activities Act, including these specific provisions:
- the sound development of the oil and gas sector, by fostering a healthy environment, a sound economy and social well-being;
- conserving petroleum and natural gas resources;
- ensuring safe and efficient practices
- assisting owners of petroleum and natural gas resources to participate equitably in the production of shared pools of petroleum and natural gas
During 2013/14, the OGC performed 4,467 site inspections. According to the commission, its inspectors conduct site inspections and enter their findings into a database. Operators are required to fix any problems within a set time frame to fall into compliance. Failing to meet standards means the operator is subject to a more formal enforcement, further investigation and enforcement actions.
The OGC’s annual report states: “There is increased public interest in potential health effects from oil and gas development, specifically from noise, traffic, dust, air quality and hydraulic fracturing.
“Water use in shale gas extraction continues to be of particular interest to stakeholders. The Commission has implemented a regulatory requirement for companies to disclose the ingredients, combination and concentration of chemicals in hydraulic fracturing fluids used at each well where the technique is performed.”
The Oil and Gas Commission approves and regulates the following:
- Exploration, development, production, processing, storage and disposal of oil and gas and associated water
- Construction and operation of provincially regulated pipelines for oil, gas and associated water
- Gas plants and facilities
- Emergency Response Plans
- Oil and gas roads
- Water allocation
- Air emissions & liquid waste discharges
- Crown Land use (includes some aggregate extraction)
- Regulation of all petroleum and natural gas activities;
- Regulation of all provincially regulated pipelines; and,
- Issuing Land Act tenures for oil and gas drill sites, well sites, access roads as well as campsites, air strips, gravel pits, power and telecommunication lines and provincial pipelines, any of which are used solely for oil and gas production purposes.
- Timber harvesting (Crown land only)
- Environmental protection
- Archaeological impacts
- Remediation and reclamation
- Some provincial permits on federally regulated projects
- First Nations and stakeholder consultation related to above
- Some projects normally regulated federally
- All compliance and enforcement for the above
Geophysical Exploration Regulation Service Regulation
 2013/14 Annual Service Plan Report, BC Oil and Gas Commission, p. 5.
 BC OGC Compliance and Enforcement Activity Report for 2010/2011
 2013/14 Annual Service Plan Report, BC Oil and Gas Commission, p. 19. https://www.bcogc.ca/node/11258/download
 LNG from Well Head to Global Markets, presentation BC Oil & Gas Commission to SPE/ASME – October 23, 2014.