Petroleum and Natural Gas Act – Regulating Oil
and Gas Operations
The Petroleum and Natural
Gas Act also regulates the operations of an oil and gas company by requiring
approvals for many steps in an oil and gas project. The Oil and Gas Commission is the government agency that issues most of the
authorizations under the Act.
A typical oil and gas project
involves the following steps: ‘geophysical exploration’ (trying to locate
subsurface deposits), well drilling and testing, well production, processing to
remove unwanted impurities, transportation, and abandonment. The Petroleum and Natural Gas Act and
its regulations govern each step in this process except for
transportation—which is regulated by the Pipeline Act. The Waste Management Act’s Oil and Gas
Waste Regulation and Spill
Reporting Regulation also regulate many of the steps.
Watershed advocates working on
oil and gas issues should be aware of the powers in the Act because each step
in a project has potential serious consequences for the health of a watershed.
The following are examples of
powers of the Oil and Gas Commission, and restrictions on Oil and Gas
operations, under the Act and its regulations that can be used to protect
watersheds:
Exploring for Oil and Gas
·
Before it begins any geophysical exploration, a company
must supply information about terrain conditions and anticipated environmental
impacts of access to an area.
·
The Oil and Gas Commission can stop a company if it believes
exploration will cause unreasonable damage to ‘terrain or environment’.
·
If exploration causes damage to ‘land or property,’ a
company must take immediate steps to prevent further damage, and repair the
damage as soon as possible. If it fails
to act, allows the Commission to make the repairs and
recover costs from the company.
·
The Oil and Gas Commission has the power to require a
company to post a performance bond of up to $100,000.
Drilling and Operating a Well
·
If the Oil and Gas Commission believes the location or
condition of a well may become a source of ‘serious water pollution,’ the
company must abandon the location.
·
A company cannot drill a well within 100 m of a body of
water or permanent stream (‘normal high water mark’) without building
structures to contain escapes, submitting a ‘spill limiting and recovery’ plan,
and installing automatic shut off equipment
·
The Oil and Gas Commission has power to, by regulation
or order, specify or limit well practices in order to protect wildlife or prevent
water, air or land pollution.
·
A company must not allow oil, drilling fluid, waste,
chemical substances or refuse from a well, tank or other facility to:
·
Run into, contaminate, or remain in a place that might
contaminate any fresh water,
·
Pass into a body of water frequented by fish (exception
for water based drilling fluids discharged into the ocean from offshore
drilling operations), or
·
Pass into water frequented by migratory waterfowl.
·
A company must make ‘every reasonable effort’ to
prevent spills (defined as substances escaping, leaking or spilling from a
well, flow line or production facility), ‘promptly remedy’ the cause or source,
and ‘promptly report’ location and severity to the Oil and Gas Commission
·
The Commission has the power to shut down a well if it
believes waste, damage to property or pollution can be prevented
Abandoning a Well
·
Before a company can abandon a well, test hole, or
production facility, the Oil and Gas Commission must issue a ‘certificate of
restoration’. The Commission cannot
issue the certificate until it has received assurances from officials
administering the Waste
Management Act, that (for example) an inspection is not needed or the
site is not contaminated.
Related Guide Pages:
For more information on the Petroleum and
Natural Gas Act:
