Steward: 75 Years of Alberta Energy Regulation by Gordon Jaremko
© 2013 by the Energy Resources Conservation Board; 179 pages;
Download the book at
this address
An edited version appears in the August issue of Oilsands Review
By
Peter McKenzie-Brown
“I think of it as a non-Internet book,” says Gordon
Jaremko. Commissioned to help celebrate the 75th anniversary of the
Energy Resources Conservation Board – recently renamed the Alberta Energy
Regulator – by writing a history of that organization, he says almost
everything was prepared from original documents and interviews. Although the
board makes its directives and technical publications available online, Jaremko
wasn’t much interested in that material.
A newspaperman
since 1972, Jaremko has worked for the Calgary Herald and other large papers,
and also as editor of Oilweek (a sister publication of OSR) and other
petroleum-related magazines. Although he has written other books (including
co-authoring a history of Canada’s oil industry with David Finch and myself), the ERCB gig was his first contracted book. Steward is the product of about two years of Jaremko being embedded within the regulator's folds.
The
ERCB Approach
According
to Jaremko, his contract “used an ERCB approach. The organization is full of
professionals. They bring you in for a project and then they leave you alone. I
gave them a one-page outline when I started, and then they basically said ‘Do
it!’ I got myself embedded in a small cubicle in the communications department
and wrote the first draft. After I provided that draft to the communications
department, they sent a copy to Board Chairman Dan McFadden, whose project this
was. He gave it to a couple of board members and they went through it and had a
few questions. We went back and forth, but apart from a couple of changes in
detail my presentation held up.”
Jaremko
says there were several advantages to his ability to stay in journalistic mode.
“I went into the situation as a journalist, and I dealt with the organization
by function rather than worrying about people’s place in the organization
chart. If you’re ever going to do this one and if you’re going to make it
readable, it’s critical that you operate like that.” In reference to Alberta’s
recent announcement that it is creating an Environmental Monitoring Commission that
will regulate water, air, land, habitat and biodiversity across the province,
he says “I knew that there was going to be a provincial regulator [because I
had interviewed former environment minister Ron Liepert]. I knew that there was
no point in structuring the book around the organization chart, because the
organization chart was going to change.”
With
virtually no direction from the board, Jaremko wrote his draft in 11 months.
Then, he says, “Process took over. You know there’s going to be a process right
up front. For something like this you take the amount of time that it would
require is, for example, you are still working in magazines, and you multiply
it by two. There is a lot of process involved, no matter how efficient you are.”
According
to Jaremko, “The only request I had from the chairman was to put more people in
it, so I did a swing through the province to collect a bunch more people, [none
of whom] were actually employees of the board. In the first document, I had
written profiles of people who were employees of the ERCB. In the second go-around,
I interviewed people whose only real connection with the project was that they
had been involved in court cases with the board. These included Jim Gray, Gwyn
Morgan, Peter Lougheed, a number of aboriginal folks, a lot of industry people
and some who had worked” both for the board and the industry.
Out of
Control
Jaremko’s
knowledge of both the oilsands and Alberta politics is formidable. We talk
about Lougheed’s famous complaint a decade ago, in which he said the industry
was out of control and the source of environmental problems.
“Think
about it,” says Jaremko. “Things were a mess. There was a huge expansion at
Suncor, Syncrude was going through another big expansion, CNRL was building the
Horizon Project, Shell was developing Albian Sands, and Petro Canada had
received approval for Fort Hills.That
was too much development in the oilsands mineable areas. Peter Lougheed” –
whose government had developed a policy in 1971 that no more than two oilsands
mines should ever be developed at the same time – “was just right.” But that’s
only half the story, he says. “The other part of what he said is that that idea
doesn’t apply to in situ development, which is very much like conventional oil
development.”
Warming
to the topic, Jaremko says “One of the arts of doing history is to try to walk
in the shoes of people like Peter Lougheed, who didn’t have the perspective of
how things would develop over the next 40 years. Nowadays, looking back on that
area, we tend to do so through the lens of environmental critic. But just look
at Lougheed’s speeches as opposition leader and his annual state of the
province messages after he became premier. That was an era of activist,
vigorous government. Today even the NDP wouldn’t do what he was proposing. [If
you factor in government loan guarantees and other concessions], Syncrude was
mostly funded by government, don’t forget.”
Because
big volumes of oilsands production are a recent development in a
hundred-year-old industry, the book devotes only modest amounts of space to the
oilsands, but his coverage is nonetheless important. For example, Jaremko provides
valuable information on the steps the board took to proration conventional oil
production before it would enable GCOS (Suncor) and Syncrude to go ahead.
In the
case of Syncrude, he writes that panic about the huge Prudhoe Bay discovery in
Alaska contributed to bringing an unhappy judgment to the table. Quoting Gwyn
Morgan – who became a highly successful oilman after beginning his career with
the board – the ERCB decision to defer Syncrude’s 1968 application for
development “was a bizarre experience…. It was the beginning of my life lessons
of how overdoing regulation could totally screw things up. The problem wasn’t
Syncrude’s plant. It was lack of pipeline capacity and prorationing.”
That panic
dwindled as Atlantic Richfield faced one delay after another, and the Social
Credit government asked the board whether it would review its decision. They
did so in 1969, Jaremko writes, “after Syncrude agreed to postpone the
production start date until at least 1976.” Oilsand development was “a political
hot potato from the get go,” he writes, adding that “The ERCB also put GCOS
through more than one hearing characterized by long, hard fights among business
factions.”
The
Dead Ducks Affair
Although
the experience in Alberta has been toward steadily stricter regulation, for the
most part these changes reflect the development of improved technology and the
impact of enhanced best practices. Every once in a while, though, a disaster of
some sort leads to more tightly ratcheted regulation. One example was the 1947
blowout at Atlantic Leduc #3, which wasted oil and endangered the public. The
1982 sour gas blowout at Lodgepole led to loss of life, wasted resources and
the inconvenience of a rotten egg odour people could sometimes smell as far
away as Winnipeg.
The highest-profile
disaster for the oilsands took place in 2008, when 1,600 migrating waterfowl
landed in a tailings pond and died. The board was already working on a new
tailings pond regime when this event took place, but the dead ducks affair
heightened public and ERCB concerns. The result was an end to “[t]he old
pattern of lighter regulation [which] was a legacy from lean times when giant
complexes were pioneers on the industry’s technology frontier, struggling to survive
low oil prices,” Jaremko writes. “No longer content to assign conditional
approvals that allowed owners to comply with regulations at their economic
convenience, the ERCB took action.”
The
board’s response can be found in Directive 073. Titled “Requirements for
Inspection and Compliance of Oil Sands Mining and Processing Plant Operations
in the Oil Sands Mining Area,” it is tough. Not surprisingly, given concern
within and without the industry about the waterfowl calamity, most companies quickly
endorsed the new rules. “Some have even identified potential improvements,”
writes Jaremko, “and urged ERCB inspectors to recommend their ideas, bumping
them up the corporate priority ladder.”
Again
putting on his historian’s cap, Jaremko describes the oilsands as part of “a great
Canadian theme.” Since Confederation, the country has recognized itself as an enormous
geographical area, with lots of resources but not many people or companies to
develop them. “Governments have always been involved in developing our
resources and transportation systems. The first technical public agency the
government created was the Canadian Geographical Survey.”
Mentorship
As the
prairies struggled for ownership of their resources, part of Alberta’s strategy
was to create the Alberta Research Council (then known as the Alberta Council
of Scientific and Industrial Research) in 1921. Today called Alberta Innovates
– Technology Futures, oilsands-related development remains a key part of its
mandate.
After
describing the mandate of the ERCB, Jaremko builds his book upon a structure
that describes the board’s key functions – Conservation, Safety, Environment,
Peacemaker and Mentor. The first four are self-explanatory, but the board’s
mentorship role is less obvious. In this book, it is the most interesting.
Numerous
oil patch people cut their teeth with the board and went on to become industry
stalwarts. That’s part of the mentorship role. More important is that the board
has an open-door approach to knowledge about the industry.
The
board makes all manner of material available to the public, Jaremko writes:
“core samples from wells, cuttings from drill bits, and rig tour reports.” For
technical people, its Core Research Centre is huge. It “now houses 1.3 million
boxes, each weighing 14 to 18 kilograms. By heft, the rock archives gathered
from Alberta’s oil and gas fields dwarfed the 225-tonne Statue of Liberty. The
18,000-square-metre building also held 18.5 million vials of drill-bit cuttings
and nearly 400,000 rig tour reports.” Those materials played a vital role for
companies wanting productive oil sands leases as SAGD became a reality, for
example.
The
mentorship chapter, which illustrates how that trove has helped companies
compete by using information that may actually have originated with their
competitors, is a tour de force. Take the time you need to enjoy it.
The
press run for this book was a modest 2,000 copies – extremely modest, actually,
when you consider that 116,000 men and women now work for Alberta’s petroleum
industry.
