Jim Ellis had barely settled into his new Calgary office when two major crises in the oilpatch dropped onto his desk.
In spring 2013, sticky bitumen was seeping into the forest near Cold Lake, while up in Peace River farmers were growing increasingly unhappy about air pollution problems.
Ellis, just appointed CEO of the brand new Alberta Energy Regulator, knew his responses to these problems would help – or hinder – the job of establishing credibility as chief enforcer in the oilpatch.
From its outset in 2013, the new regulator had its share of skepticics. Set up at the request of oil companies, funded solely by them with a goal of faster approvals for pipelines and mines – it looked like industry’s friend.
When industry insider Gerry Protti was appointed as chairman of the board, critics howled.
In Peace River, Ellis opted for bold, public action, ordering a hearing into landowners’ grievances over pollution – the first one ever in Alberta.
Ellis is pleased with the outcome. So are the landowners who stood up to big oil and found the new regulator backed their case.
The AER panel concluded the oil company, Calgary-based Baytex, must install pollution-control equipment and capture highly smelly emissions that farmers said were making them sick.
“We accepted all those recommendations and announced a work plan to the public,” said Ellis, a former deputy minister in energy and environment departments. This was a major change from the past.
“The hearing raised all kinds of issues; it was an open, transparent process and a very successful model for us,” says Ellis, adding he’d use the hearing again to resolve contentious issues.
But the bitumen leaks on the CNRL Primrose lease are taking much longer. A final report on the causes won’t be ready until spring 2015, two years after bitumen was found flowing into the forest.
The regulator costs about $245 million to run, mostly salaries for 1,200 employees.
Ellis dismissed the suggestion that the oil industry has influence because it pays the bills.
There’s an important layer between the regulator and oil companies – government.
“We go to government and tell them what we need to have and government approves the amount we want to collect,” he said.
Ellis is also proud of the fact he’s saved industry about $125 million with more efficient approval processes.
Transparency is important to gain public trust, especially as the regulator enforces environmental laws (a job that used be done by the environment department).
For public benefit, the agency set up a website called “incident tracker,” which lists pipeline spills, leaking wells or faulty well bores, although listings are not always timely – at times, weeks after incidents occur.
The goal, he says, is to create a world-class regulator. To that end, he set himself a rather direct challenge.
Ellis hired professors from University of Pennsylvania to design the perfect energy regulator and then see how closely the Alberta agency resembles that model.
“It’s called a best-in-class study” and it will be done next summer.
“We’ll see where we sit.”
But meanwhile, Albertans have other ways to measure the effectiveness of the new regulator.
On the environmental side, stubborn problems remain and new polices are still in the works. Tailings ponds are still growing, caribou herds are disappearing, greenhouse gases are rising, air pollution is getting worse in the northeast and mines are expanding with very little reclamation of the land.
A brand new policy on air pollution kicked in during 2014, but action was limited.
The Lower Athabasca Regional Plan calls for specific action when air pollution hits certain “trigger” levels.
The first air pollution report showed Level 2 and 3 pollution (on a scale of four) for sulphur dioxide emissions and Level 2 for nitrogen dioxide rises at some of the dozen monitoring sites in the northeast.
The regulator called for more investigation, not action to reduce the levels.
“The LARP is where the rubber hits the road,” Ellis said.
But government is ultimately the responsible agency, he added.
Can a regulator be world class without strong policies to enforce?
Ellis says policy development is mostly the responsibility of government, though the regulator has some input.
“So we are working with government and the new policy management office (in the energy department) to get those policies settled,” said Ellis.
For instance, new rules aimed at reducing toxic tailings lakes should be ready in 2015, says Ellis. The question how fast will they go into action?
The big test will come later – if a new oilsands project will push air pollution over the legal limit, will the regulator say ‘no’?
“We don’t have the authority to go over those limits,” Ellis stressed.
The regulator has built a strong international reputation with countries like Mexico now coming to Alberta for advice, says Ellis.
But the most important job is back at home.
“To be an open, trusted regulator, that’s very important to us,” says Ellis.
“Albertans need to look with confidence at the regulator, that we are doing the right thing.”