Alberta's streamlined regulatory regime saves energy industry $140M, minister says

The province is heralding its new regulatory regime for oil and gas projects, saying it's already chalked up more than $140 million in savings for the industry.

The NDP government says the Integrated Decision Approach (IDA) being implemented by the Alberta Energy Regulator is modern and efficient, allowing energy companies to start work on projects faster.

Energy Minister Margaret McCuaig-Boyd told reporters in Calgary that in addition to improving competitiveness, the new process is also more transparent and accessible for everyday Albertans.

Saves time and money

McCuaig-Boyd says the new regulatory regime continues to uphold Alberta's strong environmental and public safety standards.

"We're fighting for jobs and making our oil and gas sector more competitive by modernizing the application process for energy projects," she said.

"This saves industry time and money, while making it easier for everyday folks to make their voices heard. These improvements are a win for communities and a win for hard-working people in Alberta's energy industry."

Work on the new system began in 2016 and has so far resulted in more than $140 million in savings, the province said in a release. By March of next year, it's expected to have saved the industry another $200 million.

Pembina skeptical

Pembina Institute analyst Nikki Way says that while the new process might turn out to be good public policy, there are other pieces of the puzzle that have to complement it.

"We need certainty that cost saving isn't at the expense of other things like protecting the community's health, and the environment and wildlife," she said.

In particular, Way says environmentalists are still waiting to see new mechanisms for managing the cumulative effects of energy projects that were promised when the AER was created about seven years ago.

"So, until we see those, the integrated decision approach is more about … prioritizing cost saving first and not managing the impacts," she said.

McCuaig-Boyd said much of the benefit comes down to going digital.

"[It's] a modern software tool that acts as a one-stop shop for applications and rips up the burden of a lot of unnecessary paperwork," she said.

"This means one application, one review, one decision on applications for energy developments."

Several pilot projects

The new system has not yet been fully implemented, but there have been several pilots, including an application by Suncor for its Meadow Creek East oilsands project.

"This new approach cut the regulatory review from an estimated five years down to 15 months, and it created $64 million in direct savings," the minister said.

The new system has also cut timelines for reclamation approvals by more than 75 per cent, saving the industry more than $90 million per year, she said.

Doug Dafoe with Calgary-based Ember Resources says he welcomes the speed.

"The one-stop system has worked fantastically. The cycle time is immediate, whereas in the past those reclamation certificates were taking upwards of a year-plus," he said.

Dafoe says the faster turnaround time in getting the province to sign off on reclaimed well sites allows his company to terminate surface rentals — which cost as much as $5,000 per lease — much sooner. 

"We like it quite a bit," he said.

A smaller heavy oil development proposal from Canadian Natural Resources saved nearly $1 million and four months in regulatory time under its test case of the new approach, the province says.

"One of the AER's objectives is to find efficiencies by eliminating duplication and simplifying the regulatory approvals process," said AER CEO Jim Ellis.

"The Integrated Decision Approach has improved regulatory efficiency and provides us with a path forward for further savings in the future."

Ellis says that by 2021, when IDA is fully integrated into AER's practices, it should save the industry more than $600 million per year.

He said Alberta is one of only a few jurisdictions in the world to have such an integrated, one-stop review process for energy projects.

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