Copyright of the Daily Oil Bulletin 2017
Shell Pipeline Licences For Duvernay Well Approved By AER
The Alberta Energy Regulator (AER), following a public hearing last year, has approved licences sought by Shell Canada Limited application for two 6.99 kilometre four-inch sweet natural gas pipelines near Rocky Mountain House in west-central Alberta.
The AER panel in its decision also has approved an amendment proposed by Shell to change the applied-for tie-in point to an existing Shell riser from an existing ConocoPhillips Canada compressor station, reducing the length of the pipeline by 200 metres.
The O’Chiese First Nation, whose reserve is 27 kilometres to the southeast, had opposed the project, stating that the land in the area is one of historic and cultural significance to it and has been used for generations. It stated that “construction of the pipeline will prevent O’Chiese elders, harvesters and other members from using the project areas.” O’Chiese cited concerns about habitat fragmentation, saying the project would prevent its harvesters from hunting in the area during construction and operation due to safety concerns.
The hearing panel found that the Ferrier-area project, which includes a spare pipeline, is needed to transport production from an existing well at 9-8-40-8W5 (Rocky 7) which is expected to produce from the Duvernay formation. Producing from the well would assist it in assessing long-term production from and the commercial viability and reservoir performance of the Duvernay in the area, according to Shell.
The gas will be processed at the Centrica Canada Ferrier gas plant, the only one in the area with sufficient capacity, according to the company.
Based on its current economic model, Shell estimated the net present value of royalties at $2.85 million in addition to $2.25 million in federal corporate taxes, $1.75 million in provincial corporate taxes and $207,000 in municipal taxes.
In its decision, the panel addressed what it said it believed to be the most contentious issue in the hearing—that of the potential effects of the project on the ability of O’Chiese members to practice their constitutionally guaranteed Aboriginal and treaty rights.
There currently are a number of land uses including a power line, a road and existing pipelines in the area immediately adjacent to the proposed route which parallels these linear facilities for about 94 per cent of its length, the panel noted. It therefore found that “there will be limited effects on O’Chiese members’ ability to exercise their Aboriginal and treaty rights during construction and minimal [effects] during the long-term operational phase of the project.”
Shell in the hearing acknowledged there would be some temporary impacts to the O’Chiese during construction but that any potential impact could be effectively minimized or mitigated by routing, design and construction practices. The company also said it has made substantial efforts to mitigate effects.
“While Shell’s proposed mitigations will not eliminate all effects, the panel finds that these proposed mitigations reflect a responsible approach to this proposed energy resource development and will adequately minimize or mitigate impacts that have been identified by the O’Chiese,” said the report. For example, continued avoidance by Shell of the prayer flag areas would reduce impacts to the O’Chiese’s use of those areas because there would be less intervention by Shell on those sites.
The Alberta Aboriginal Consultation Office also was involved in the proceeding. It concluded that consultation with the O’Chiese First Nation was adequate. It also concluded that “OCFN’s concerns regarding potential adverse impacts of the proposed project on the continued exercise of OFCN’s treaty rights and traditional uses have reasonably been heard, considered and addressed by Shell.”