Alberta is blessed with incredible geologic formations that hold a wealth of resources related to both hydrocarbons and energy transition essentials like lithium-enriched subsurface brines, deep geothermal rock formations and fluids at depths below the base of groundwater protection, formations with high concentrations of helium as well as rock formations that can safely store carbon dioxide (CO2) permanently for carbon capture and storage (CCS). As new industries emerge, they not only access traditional oil and gas technologies, (as voiced in a recent Wall Street Journal article “Frackers are now drilling for clean-power”) but are also accessing pore space.
It is undeniable that pore space management plays a crucial role in accelerating new subsurface industries. However, there is considerable overlap in the basin concerning tenure rights to lithium, helium, and CCS, which are administered under separate regulations.
At the Canadian Energy Geoscience Association (CEGA) Energy and Emerging Technology in Geoscience (ETTiG) Symposium earlier in February, speaker Nick Ettinger of Torys LLP spoke to the challenge of sorting out strategies for developing resources in shared reservoirs, highlighting the criticality of public consultation in determining how various emerging industries will compete for the pore space. Ettinger practices law with an emphasis on regulatory and environmental frameworks in Canada’s electricity and natural resource sectors and he also has a master’s degree in geological sciences, which made his talk especially informative for attendees.
“The topic of competition for pore space and conflicts of rights can be daunting for emerging industries.” Ettinger said, “My hope is that we can increase the level of awareness of the amount of competition there is for pore space in Alberta so that companies can be proactive in trying to mitigate some of the challenges that are associated with it before we have protracted regulatory proceedings and litigation.”
To begin, Ettinger identified some main sources of potential conflict when it comes to deep pore space resources. He highlighted the complexity of mineral rights in Alberta, where freeholders and the Crown own the rights to different resources leading to potential conflicts.
Although the Crown owns 80% of the minerals in the province, about 8% of the province’s minerals are held by freeholders and they’re largely concentrated in the southern half of Alberta, Ettinger said. Southern Alberta is an area of extensive interest for emerging industries and historical industries like oil and gas.
This means that operators in many situations may have to obtain agreements with both the Crown and freehold mineral owners to access the full extent of the resource that they are targeting and may be pitted against each other.
“One source of potential conflict is the split titles to different resources in the same section of subsurface and different mineral activity authorizations at play in some of those same reservoirs. So for any given reservoir or saline aquifer, for example, not only will operators potentially have to contend with freehold and Crown mineral rights, but with respect to the Crown minerals, they’ll also have to deal with parties who have separate tenure to different resources within that same space. For the longest time, deep Crown tenure rights mostly pertained to petroleum and natural gas. But now we have metallic and industrial mineral rights for things like lithium, we have geothermal tenure and tenure for pore space for CCS. And the Crown has also authorized various mineral activities such as water and acid gas disposal, and gas storage. And finally, in Alberta, we have separate ownership of pore space for CCS and gas storage.”
Ettinger referenced amendments to the Alberta Mines and Minerals Act from 2010 that vested the title to all pore space in the province, including freehold land, in Crown. He also mentioned that in the 1990s, amendments clarified that the owner of petroleum and natural gas rights also hold gas storage rights, concluding “So currently, the freeholders still have the rights to storage within the pore space that might also be leased for CCS. Now I think one of the areas that we’ve been hearing about throughout this conference that might present particularly acute sources of conflict is the Devonian and older sections of the subsurface.”
The Devonian carbonates of Alberta are considered a big resource for multiple subsurface activities. Ettinger noted the Devonian and older sections of the subsurface have legacy oil and gas production, and water and acid gas disposal and are now the focus of interest in CCS, lithium, helium and thermal projects. He reviewed several maps based on publicly available Alberta Geological Survey (AGS) data that indicated significant overlap between CCS permits and other emerging industries, as well as many oil and gas wells and historic disposal wells for water and acid gas which have the potential to create conflicts.
The presentation turned to the question of the legal framework for addressing conflicts of subsurface rights and the role of the Alberta Energy Regulator (AER) under the Responsible Energy Development Act (REDA) and all the separate energy resource statutes and regulations. Although we have many court decisions and established regulations for oil and gas contexts, the regulations for many of the emerging industries are still being crafted, or they haven’t been tested according to Ettinger.
“Given Alberta Energy’s practice of granting tenure rights to different resources in the exact same reservoirs across the province, I think that there will be inevitably a variety of split title situations where the interests of different rightsholders are not necessarily aligned. To the extent that projects do go forward in split title areas as one or more operators begin to apply for well licenses or scheme approvals unless there are preexisting agreements between the applicants and other rights holders in the same reservoirs, the Regulator will be in an unenviable position of trying to ensure that the different rights holders have equal opportunity to utilize the pore space to the full extent of their rights.”
In his discussion of potential conflicts due to the significant overlap of emerging industries, Ettinger did offer a solution. He suggested commercial agreements between companies-for example, between lithium and geothermal companies producing the same brines, or between different lithium companies with similar rights that are adjacent to each other. He also suggested arrangements between CCS operators and brine operators to come to mutual agreements on the location and timing of production and injection models could help reduce conflicts. Unitization agreements could also work for injection operations, including water disposal, acid gas disposal, and CCS. In this manner, different rightsholders may be able to coordinate operations to avoid liability for subsurface trespass, as opposed to having to have their claims decided in protracted court or regulatory proceedings.
EETiG Symposium Session Chair and Moderator, Francis Morin, Director of Carbon Advisory at McDaniel echoed Ettinger’s messages.
“Western Canada is seeing a significant expansion in the development of subsurface resources.” Morin said. “A lot of new CCS, geothermal, lithium, helium and other resources projects are being pursued. This adds to the existing businesses including oil & gas extraction, water disposal and acid-gas injection. The main challenge resides in the co-located nature of these new projects. Many of those are within the same region, but some projects are even pursuing the same reservoir. Given the split nature of the resource tenures, this situation has the potential to turn into a powder keg of subsurface conflicts. Early screening for existing stakeholders is paramount to any project success. Proactive engagement with these stakeholders is also imperative for projects looking at progressing toward operations. Western Canada is so rich in subsurface resources, we hope collaboration will enable maximizing the value for industries, governments, and citizens.”
Maureen McCall is an energy professional who writes about issues affecting the energy industry.