The oil and gas industry is doing a better job of protecting the environment than it has in the past, according to a range of experts and a new industry- commissioned survey.

At the same time, most oil and gas firms and government regulators are still too slow to deploy or require the use of new environmental technologies that can safeguard the public and eliminate pollution, industry players and observers say.

“The oil and gas industry has made great strides,” says Eric Lloyd, president of Petroleum Technologies Alliance Canada (PTAC), which helps companies get exposure for their new oilpatch technologies. “But there is still a lot of unrealized potential and a long ways to go.”

PTAC’s Eric Lloyd

Still-to-be-released results from a survey by Ipsos-Reid, commissioned by the Canadian Association of Petroleum Producers (CAPP), show that the public believes the industry’s environmental performance has improved and oil and gas companies are doing a better job of managing environmental issues, says David Pryce, CAPP’s vice-president, Western Canada operations.

“They believe we’ve gotten better over time. But they say we have to continue to do more,” Pryce says.

Peter Watson, Alberta Environment’s assistant deputy minister of environmental assurance, says the industry has accomplished “some really good things” – such as cutting its oil and gasfield flaring emissions by 62 per cent since 1996.

But as oil and gas reserves decline in Western Canada, major corporations are shifting exploration to other countries. With smaller and often less experienced firms coming on the scene, improving environmental performance further “is going to be an ongoing challenge for the industry,” Watson says.

Part of the problem, say new technology entrepreneurs, environmental groups and PTAC’s Lloyd, is that most of the oil and gas industry’s response to environmental problems is not proactive. It is driven by public pressure and – because of that – eventually tougher regulations.

Dave Olecko photos, Business Edge
Marty Matthews, general manager of Adoil, assembles a wellhead skirt containment device that can capture leaking oil and salt water.

Industry’s actions on the environment tend to be driven by crises, public concerns and the media spotlight on those concerns, says Tom Marr-Laing, acting executive director of the Pembina Institute for Appropriate Development, an Alberta-based environmental policy and research group.

While industry has become more sensitized to the potential negative environmental and social impacts of their activities, “it’s a minority of companies that are at the leading edge of trying to take progressive environmental action,” Marr-Laing says.

“The industry has a tendency to wait until somebody gives them a kick in the butt. It boils down to mindset and not looking for the solutions,” says Quinn Holtby, who started as rig roughneck 25 years ago and is now president and CEO of Edmonton-based Katch Kan Ltd.

His firm has pioneered a “zero-spill” pollution-prevention system for rigs.

Marty Matthews, president of Adoil Inc. in Calgary, whose technology stops fluids leaking from wellheads on to the ground, says too often a company’s
environmental policies “are made ‘on the broadloom’ in downtown offices. But when it comes to the field where the policy is supposed to really go, it doesn’t.”

“They talk a good game, but they’re not walking the talk,” agrees Dan Motyka, president and CEO of Calgary-based Questor Technology Inc., whose portable incinerators eliminate gasfield flaring emissions.

The entrepreneurs are quick to give credit to some companies that strive to go beyond the minimum required by a slow-to-respond regulatory regime.
Matthews says Imperial Oil Ltd. has installed his Adoil wellhead skirts and jackets on every well in its Everdell oilfield near Rocky Mountain House.

Audrey Mascarenhas, executive vice-president and chief operating officer at Questor Technology, says the proactive oil and gas firms realize they not only can help protect the environment with new technologies, they can save money and improve relations with nearby landowners and communities.

A Questor Technology incinerator puts a lid on polluting and potentially harmful oil- and gasfield flaring emissions. Proactive oil and gas firms are embracing such technologies.

Compton Petroleum Ltd., in response to landowners’ concerns about new drilling planned near Grande Prairie, spent $40,000 on one of Questor’s incinerators to eliminate the emissions, visible flame and black smoke caused by flaring.

Compton not only got a return on its investment in the incinerator in seven months, through savings on the natural gas required to maintain a flaring operation, landowners stopped objecting to every new well proposed, Mascarenhas says.

Companies such as Compton, Dominion Exploration, a U.S.-based firm working in Alberta, and a few others “recognize that it pays off for them by being more responsive to their immediate community,” Questor’s Motyka says.

Katch Kan’s Holtby points to BP Canada, which uses his company’s zero-spill system on its well-servicing rigs. “Their consultants see what the results are of being proactive,” in terms of saving money on clean-up costs from spills, worker accidents and regulatory fines, he says.

The frustrating thing, Holtby and other players say, is that there are too few Alberta- and Canadian-based firms willing to take the lead in implementing innovative solutions to long-standing environmental problems.

Adoil’s Matthews says 80 per cent of his wellhead products’ sales are to U.S.-based companies, which, he points out, reward employees for coming up with better ways to do their jobs.

Katch Kan’s technology, which has won a prestigious national Manning award for innovation and other accolades, usually gets a better welcome from foreign firms than companies here at home.

Holtby says that PEMEX, the state-owned oil and gas giant in Mexico, recently sent the Edmonton company a rarely issued letter of recommendation, saying that PEMEX plans to install Katch Kan’s pollution-prevention system on all its drilling rigs.

Entrepreneurs say that government support, such as the federal Industrial Research Assistance Program to help fledgling companies commercialize their new environmental technologies, are helpful. However, such programs don’t ensure that Canada’s oil and gas industry will actually embrace and use proven, cost-effective technologies.

“Why should we be sending these guys on trade missions to promote this stuff if we’re not using it at home?” Holtby says.

The Canadian industry and Alberta energy regulators, while acknowledging the industry’s sometimes-slow pickup of new technologies, defend the home-grown oilpatch’s progress on environment issues.

“Across the board, if you look at all of our regulations, we’re seeing that generally there is improvement (in compliance) and a positive trend,” says Brenda Poole Bellows, senior communications adviser for the Alberta Energy and Utilities Board (EUB).

The EUB’s alternative dispute resolution (ADR) process, introduced about four years ago, is also “making a big difference” in helping companies and landowners resolve issues through mediation rather than going to confrontational and expensive hearings, says Bill Remmer, ADR co-ordinator.

“You’re dealing with the underlying interests of the people and you’re trying to develop win-win solutions that people are satisfied with.”

CAPP’s Pryce notes that the industry voluntarily worked, through the multi-stakeholder Clean Air Strategic Alliance, to cut flaring emissions across Alberta by 63 per cent since 1996 and venting, or unburned emissions, by 29 per cent since 2000.

This sort of collaborative approach has also achieved a 75-per-cent reduction in the industry’s emissions of toxic benzene from small oilfield facilities, he says.

To minimize its environmental “footprint” on land, the industry has reduced the average width of its seismic lines from about six metres to 2.7 metres, and employed new technology – like multi-well pad drilling and directional drilling – to cut almost in half the average size of wellsite pads.

Alberta Environment’s Watson says the regulators and industry worked together during the last decade to establish science-based land reclamation and remediation standards that are now used widely.

The industry also has been proactive in funding an orphan facility program to ensure oil and gas wells, gas plants and other facilities are properly abandoned and cleaned, even if the company goes out of business.

Spurred by government policy, oil and gas companies have also reduced their use of potable fresh groundwater in agricultural areas of the province, although the industry needs to improve its fresh-water conservation in the forested areas, Watson said.

When it comes to industry’s overall environmental performance, he adds, “a lot of the concern and comment that we hear stems from the public not getting the right information from the right parties. It’s one of the challenges for the industry if they want to maintain their social licence to operate.”

CAPP agrees, which is one reason why it’s now mandatory for the association’s 150 or so member companies – which produce 97 per cent of the oil and gas in Canada – to participate in CAPP’s stewardship program.

Introduced about four years ago, the program provides tools to help companies continuously improve, measure and report on their environmental performance. Reporting will be mandatory staring next year, Pryce notes, adding: “I think we are doing a good job.”

When it comes to adopting new environmental technologies, he says, companies face the challenge of weighing a potential environmental risk against what the regulations require, along with the cost of new technology versus the cost of dealing with the risk in a conventional way – such as cleaning up a rig spill or flaring. The bottom line is: “How can you frame the issue in a business case and do it?”

But PTAC, technology entrepreneurs and environmentalists say a new approach is needed to ensure that technologies that do have a sound business case are adopted and used. Regulators need to play a greater role in learning about such technologies, evaluating them against current regulations, and providing incentives for the industry to adopt proven and cost-effective technologies, says Questor’s Mascarenhas.

The potential opportunities are tremendous, noted the Pembina Institute’s Marr-Laing. He says some research shows industry could reduce its greenhouse gas emissions by 30 million tonnes just by using existing technologies, which represents 60 per cent of the total 55-megatonne cut required of all of Canada’s large industrial emitters under the federal Kyoto plan.

“We can be really progressive here when it comes to the environment,” Lloyd says. “We just need a driver.”

ENVIROTECH PROVIDERS
The oil and gas industry can draw from dozens of new or well-established environmental technologies In Alberta. Here are some examples:

* Adoil Inc., Calgary (www.adoil.net): wellhead leak containment jackets and skirts.
* Katch Kan Limited, Edmonton (www.katchkan.com): a zero-spill system for drilling and service rigs.
* Questor Technology Inc., Calgary (www.questortech.com): incinerators for permanent facilities and portable applications.
* REM Technology Inc., Calgary (www.remtechnology.com): a product to reduce fuel consumption and emissions from reciprocating natural gas-fueled engines/compressors.
* MJ Blair Corporation, Morin, AB (www.ptac.org/search1.html): a pump that captures methane emissions.
* Boreal Laser Inc., Spruce Grove (www.boreal-laser.com): a laser-based detector for toxic and hazardous gases.
* Synodon Inc., Edmonton: (www.synodon.com): airborne gas leak detection.
* Sulphur Experts Inc., Calgary (www.sulphurexperts.com): processing engineering consulting and sulphur plant testing.
* Clearstone Engineering Ltd., Calgary (www.clearstone.ca): air emission assessments and industrial air pollution control.
* CDK Services Ltd., Calgary (www.cdkservices.com): a device to eliminate greenhouse gas emissions at wellheads.
* New Paradigm Engineering Ltd., Edmonton (www.newparadigm.ab.ca): solutions to reduce the environmental impacts of new and existing oil and gas operations.
* New Paradigm Gas Processing Ltd., Calgary (www.npgas.ca): use of microbes to remove toxic hydrogen sulphide from sour gas.
* CETAC-West, Calgary (www.cetacwest.com):
energy-efficiency audits for natural gas processing plants.
* Sirius Products, Calgary (www.siriusproducts.ca): technology to reduce vented greenhouse gas emissions.
* UNOTEC (Unique Oilfield Technology Services), Calgary (www.unotec.com): biotreatment for oily drilling waste.
* Tornado Technologies Inc., Stettler, AB (www.tornadotech.net): smokeless flare systems and waste gas incinerators.
* Total Combustion Inc., Calgary (www.totalcombustioninc.com): incineration equipment for waste gas.