Skip to main content

The BC Energy Regulator has accepted all of the recommendations of the B.C. Auditor General’s report The BC Energy Regulator’s Management of Non-operating Oil and Gas Sites and is working to address all of the matters raised in the report.

DATE ISSUED: March 14, 2019

2018 20 orphan fund levyamendedThe BC Energy Regulator has accepted all of the recommendations of the B.C. Auditor General’s report The BC Energy Regulator’s Management of Non-operating Oil and Gas Sites and is working to address all of the matters raised in the report. Our official response can be found below:

The BC Energy Regulator (Regulator) thanks the Office of the Auditor General for its audit of the The BC Energy Regulator’s Management of Non-operating Oil and Gas Sites, which focused on the period between January 2015 and October 2018. As part of its continual improvement to its strategic management systems, the Regulator instigated a number of new initiatives prior to, during and since the audit period, including:

  • Partnering with First Nations from northeast B.C. to restore former oil and gas industry sites to their natural state, News Release 2019-01;
  • Developing a Comprehensive Liability Management Plan, Information Bulletin 2018-02;
  • Changes to orphan liability levy, Industry Bulletins, 2018-20 and 2019-01; and,
  • Developing a Restoration Framework.

Many of the responses below reference these initiatives.

In May 2018, the provincial government enacted the Energy, Mines and Petroleum Resources Statutes Amendment Act (Bill 15) enabling a number of improvements to the regulatory framework in B.C. for management of non-operating oil and gas sites. The amendments have allowed the Regulator to improve the funding model, strengthened the Regulator’s authority to make regulations in the areas of orphan site treatment and closure, risk assessment/mitigation, and accelerate the rate of inactive site restoration. These new tools will address the restoration of orphan sites in a timely manner, while ensuring no direct costs to taxpayers.

As part of its ongoing improvement efforts, the Regulator is developing a Comprehensive Liability Management Plan (CLMP), which holds industry accountable, addresses unrestored oil and gas sites, and protects the environment and public safety. Phase one of the CLMP involves the Regulator establishing regulations to increase industry’s rate of restoration and reduce the number of inactive oil and gas sites. Requiring timely restoration will also reduce the number of potential orphan sites in the province. Engagement on the CLMP with local governments and local First Nations, industry, land owners, stakeholders and the public is ongoing.

The Regulator is developing a Restoration Framework that integrates restoration initiatives undertaken by the Regulator and other ministries. Incorporating the recommendations from this audit into the Framework will assist in establishing a prioritized, effective and coordinated approach to restoration.

These activities, and the actions associated with implementing the recommendations, will improve the Regulator’s management of non-operating oil and gas sites within British Columbia.

Office of the Auditor General RecommendationThe BC Energy Regulator Response
1.We recommend that the BC Energy Regulator review its
restoration regulations and guidelines and make changes as needed to ensure that the expected outcomes and timelines for ecologically suitable revegetation are clear.
Agreed
Through the establishment of a Restoration Framework, the Regulator,
in conjunction with the Ministry of Energy Mines and Petroleum Resources
will review the current restoration regulations, incorporate input
from several pilot programs underway, seek input from Industry,
First Nations and government ministries, and consider amendments as appropriate.
The Regulator will update its restoration guidelines as appropriate.
2.We recommend the BC Energy Regulator complete its work to develop and implement regulations, policies and procedures to ensure that operators decommission wells and restore sites in a timely manner.Agreed
The Regulator is committed to ensuring operators decommission
and restore wells sites in a timely manner. The passing of Bill 15 in 2018 provides
the Regulator with the authority to develop regulations for
timely restoration outcomes. The Regulator will continue to build
on its improvement efforts in this area through the projects associated
with the phased implementation of Bill 15. This includes the development and implementation of the Dormant Site Regulation, designed to achieve timely clean up, provide flexibility to achieve cost-efficient restoration and promote communication with land owners, local governments and First Nations with an interest in such sites.
3.We recommend that the BC Oil and
Gas Regulator include surface
reclamation (Part II of the Certificate
of Restoration) as part of its field
investigation work to ensure that
sites are adequately reclaimed.
Agreed
The Restoration Framework under development will
include compliance verification activities of surface
reclamation.
4.We recommend that the BC Oil and
Gas Regulator review, in
coordination with Ministry of
Environment and Climate Change,
the Memorandum of Understanding
and the Oil and Gas Site Classification
Tool to ensure the effective oversight
of high-risk contaminated oil and gas
sites.
Agreed
The Regulator will develop a plan in conjunction
with ENV for the review of the Memorandum of
Understanding and the Oil and Gas Site Classification
Tool with the objective that there is effective
oversight of high-risk contaminated oil and gas sites.
5.We recommend that the BC Oil and
Gas Regulator continue to partner with local First Nations to identify
and implement improvements to
restoration policies and practices.
Agreed

The Regulator will continue partnering with First
Nations from northeast B.C. to restore former oil
and gas industry sites and utilize the learnings from
these pilot programs in the Restoration Framework.
The Regulator will continue to consult on the
development of the Dormant Site Regulation with
First Nations from northeast B.C.

6.We recommend that the BC Oil and
Gas Regulator report annually on
the outcomes of site restoration
activities to ensure transparency and
accountability to the legislature, the
public and First Nations.
Agreed
The Regulator will report on the development and
implementation of various projects associated with
the Restoration Framework, including annual
outcomes of site restoration as a component of its
transparency initiative.
7.We recommend that the BC Oil and
Gas Regulator manage the
environmental risks of legacy sites by
using a risk-based approach to
ensure that any contamination is
identified and addressed, including
setting timelines for completing the
work, and monitoring and reporting
on progress.

Agreed
The Regulator will develop and implement a plan
to manage legacy sites. The risk-based approach will
include:

  • Defined environmental risks.
  • Timelines based on risk and the availability of resources.
  • Transparent reporting.
  • Monitoring based on risk and the availability of resources.
8.We recommend that the BC Oil and
Gas Regulator continue work to
understand the long-term
environmental risks of
decommissioned wells and restored
sites, and develop a plan to mitigate
those risks.
Agreed
Will develop a plan to explore the options with First
Nations, Geoscience BC, universities, industry and
others.
9.We recommend that the OGC review
the Liability Management Rating
program to ensure that it is
responsive to changing industry risks
and results in operators covering
their restoration costs.
Agreed
Under the Comprehensive Liability Management
Plan, the Regulator has begun to enhance its
approach to Liability Management. This initiative will
build on the existing Liability Management Rating
program and provide additional tools to assess and
mitigate risk to the public and the orphan site
reclamation fund.
10.We recommend that the BC Oil and
Gas Regulator monitor and assess
whether implementation of the new
funding process for the Orphan Fund
is resulting in adequate funding to
restore orphan sites in a timely manner, and implement changes as
needed.
Agreed
The Regulator has allocated sufficient funding for
the $14 million orphan program for 2018/19. Plans
are in place to collect sufficient funds to address
orphan expenditures in accordance with the
Regulator’s policy for timely treatment and closure.
11.We recommend that the BC Oil and
Gas Regulator ensure timely
restoration of orphan sites by
assessing and reporting on its
progress against the orphan site work
plan, and making adjustments to the
plan as needed.
Agreed
The Regulator has implemented a policy to
restore orphans within 10 years of designation, and
progress tracking indicates we are meeting this
commitment. Measures are reported through
internal and external documents, and additional
vehicles will be considered as part of the
transparency initiative.

For more information regarding this Information Bulletin, please contact:

Media inquiries:

Lannea Parfitt
Manager, Communications
BC Energy Regulator

Lannea.Parfitt@bcogc.ca
250-980-6081

Technical inquiries:

Sean Curry
Vice President, Operational Policy & Environment
BC Energy Regulator

Sean.Curry@bcogc.ca
250-419-4480