Alberta is facing calls to launch an audit of its regulatory framework after a second refinery in the province was sanctioned for operating without provincial approval.
The Sundre oil refinery, also known as the Sundre fractionation facility, has been issued an enforcement order by Alberta Environment, five months after its sister facility in Slave Lake was hit with an enforcement order for the same regulatory lapse.
The province and operator AltaGas blame historic changes in Alberta’s regulatory framework for leaving the site without appropriate oversight for years.
Experts in environmental law say the twin breaches raise doubts about the strength of Alberta’s regulatory systems and should prompt a sweeping audit of the province’s compliance and enforcement practices.
‘A system failure’
Nigel Bankes, an emeritus professor of law at the University of Calgary who specializes in natural resources and energy law, said Alberta’s auditor general should conduct an independent audit.
“If we’re seeing a pattern of non-compliant behaviour, then perhaps it’s appropriate for someone to be looking at Alberta Environment’s systems, because that’s what this is — it’s a system failure,” Bankes said in an interview.
“What’s the problem in the department’s monitoring and and reporting?”
The province should also prosecute the operator, Bankes said.
The order against the Sundre refinery — about 250 kilometres southwest of Edmonton — was issued to Enerchem International Inc. on Nov. 9, more than three decades after the plant began operating.
According to the order, the refinery violated Alberta’s Environmental Protection and Enhancement Act by failing to seek permission from the province to operate.
The order states that no approval has been issued “for the construction, operation and reclamation” of the plant.
In June, the province issued an enforcement order against Enerchem’s Slave Lake refinery — 22 years after it began processing oil.
Jason Unger, executive director of Edmonton’s Environmental Law Centre, said the breaches require further investigation.
“With the first instance, there was a question of whether it was just an oversight or a mistake,” Unger said. “Now, there’s another facility.
“We pride ourselves on a strong regulatory system. If it’s not being effectively applied, then we have to question how we can ensure there’s transparency and accountability for the system itself.”
The Sundre and Slave Lake refineries produce hydrocarbon fluids for fracturing and drilling of oil and gas wells, along with consumer fuels including furnace fuel, diesel and specialized jet fuels.
The plants use fractionation, a distillation process that separates crude oil into more useful products.
AltaGas took over the sites in 2022 after taking a controlling stake in Petrogas Energy Corp.
A jurisdictional shift
In a statement, AltaGas said the Sundre plant began operations more than 30 years ago in compliance with regulations that were in force at the time.
“The Sundre facility was recently interpreted to be included within the definition of an oil refinery, which would place it under the jurisdiction of [Alberta Environment and Protected Areas],” the company said.
AltaGas is working with Alberta Environment to ensure compliance under the refinery’s “new designation,” which it said became effective in spring of this year.
The company did not provide details on how the regulatory jurisdiction for the Sundre refinery has changed.
For decades, oil refineries have been included on the list of operations that require approval under the Environmental Protection and Enhancement Act.
The act has been in place since 1992. And the definition of an oil refinery — “a plant for manufacturing hydrocarbon products from oil, heavy oil, crude bitumen or synthetic crude oil” — has remained unchanged since 1996.
In a statement, Alberta Environment blamed the breach at the Sundre refinery on regime changes in the province’s regulatory system.
“This case was unfortunately due to changes in the regulatory boards and oversight process several years ago,” Alberta Environment said in a statement.
“These were unique facilities due to changes in their production lines and designs.”
The ministry declined to specify how long the operation has been in contravention, or if charges are being considered, but suggested the confusion arose about a decade ago when the province brought in a new regulator.
The Energy Resources Conservation Board was disbanded when the Alberta Energy Regulator began operating in 2013.
The AER was touted as a way to bring all of Alberta’s regulatory functions under one roof but the portfolio remains split, with Alberta Environment regulating power plants, alternative energy plants and oil refineries.
The ministry said stronger processes have since been put in place to ensure oversight is maintained.
“We’re pleased to say that, based on internal reviews conducted by the department, we believe all other former Energy Resources Conservation Board-regulated facilities are appropriately regulated.”
Under conditions set in the orders, the Sundre and Slave Lake refineries can continue operating — under conditions — as AltaGas seeks required approvals.
The order issued to the Sundre facility outlines a series of compliance measures, including reporting requirements for air monitoring, emissions tracking, and containing industrial runoff.
It also outlines requirements for a reclamation plan.
The company must apply for provincial approval three months before the order expires in December 2024.
Unanswered questions
Unger said the Alberta Environment response raises questions around how the refinery slipped through cracks and for exactly how long. He said it’s troubling that the refineries have been allowed to continue operating, undermining the formal approvals process.
He said a government investigation should examine the paper trail for each facility and determine if companies are following through on their environmental requirements for protecting the landscape, including water, soil and airshed testing.
“We don’t know what monitoring [was done]or if there was any reporting from this facility when it was not properly authorized,” he said. “There’s a lot of questions that need to be answered.”
The case also demonstrates a more ingrained problem within Alberta’s regulatory framework, Unger said. It’s important that government processes for safeguarding the environment are open to public scrutiny, he added.
“We don’t necessarily have a system where we can really identify the shortcomings because we don’t know the details of the system itself.
“An audit of those systems would be worthwhile if it’s open and transparent.”
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