Alberta oil and gas companies may see water use restricted as extreme drought persists into 2024

Producers that use groundwater closer to southern Alberta may ‘have to stop producing altogether,’ a University of Calgary professor said

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Oil and gas producers in Alberta could be forced to stop diverting scarce water next year as the province remains in the grips of a record-setting drought, the province’s energy regulator said last week.

Alberta has already asked some water licence-holders to stop taking water due to low river levels, according to a recent presentation by the Ministry of Environment and Protected Areas — though it does not say to whom those requests apply nor the industries they’re in.

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The ministry did not immediately respond to a request for comment.

The Alberta Energy Regulator (AER) wrote in a recent bulletin that water licence-holders could be restricted from diverting water to fuel their operations due to low water levels.

“If conditions remain dry over the course of this winter and spring 2024, water availability could become a significant issue,” an AER spokesperson wrote in a statement to Postmedia.

Producers could be asked to limit water use, among other scenarios. Oil and gas production averages between one and four barrels of water for every barrel of oil that’s extracted, said Tricia Stadnyk, professor at the University of Calgary’s Schulich School of Engineering and Tier II Canada Research Chair in hydraulic modelling.

The AER said producers in the region south of Red Deer should prepare for water diversion restrictions heading into 2024.

“For the South Saskatchewan River Basin, where the situation is more severe, the AER will reach out to industry licence-holders this winter to seek estimates of their 2024 future water demand,” it wrote. “Licensees at risk of not being able to divert water in 2024 should prepare contingency plans.”

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The Canadian Association of Petroleum Producers did not immediately respond to a request for comment on the effect the drought may have on producers.

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Much of Alberta east of Calgary experiencing ‘exceptional drought’

The South Saskatchewan River Basin — which covers most of southern Alberta up to Red Deer — is the leading area of concern, the AER’s bulletin said.

The 50,000-square-kilometre Red Deer River Basin, though experiencing slightly less significant drought, is a major oil and gas producing region. A 2013 report said there were 130,000 oil and gas wells in the basin.

That basin is currently under five water-shortage advisories.

Francine Forrest, executive director of the Red Deer River Watershed Alliance, said the drought is “pretty serious” in the basin, though its reservoir is around 85 per cent full.

East of Calgary, municipalities such as Brooks, Drumheller and Oyen are experiencing “exceptional drought” — the highest rating on Agriculture Canada’s drought monitor. The Bow River Basin, which covers Brooks, Calgary and much of the Rockies, is at 54 per cent of historic natural flow.

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And some of southern Alberta’s major reservoirs are less than 30 per cent full, according to a recent Alberta government presentation.

Southern Alberta has borne the brunt of the ongoing drought — the Oldman River Basin, which encompasses much of the area around Lethbridge up to High River, is seeing 37 per cent of its historic natural flow. That area’s water-use needs are dominated by irrigation.

Drought map November 2023

Municipalities and livestock are at the top of the food chain when droughts hit emergency levels. While exceptions are made to keep municipalities with enough water and to keep animals alive, those with the longest-running licences get priority, while the newest licence-holders are further down the line.

Oil and gas producers, meanwhile, use Temporary Diversion Licenses (TDL) to divert water to their operations, giving them minimal seniority.

Melting glaciers poses long-term threat to oil and gas companies: U of C researcher

Whether oil and gas companies will need to curtail or stop producing depends on whether their wells rely on surface water or groundwater, said Stadnyk.

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Producers that use groundwater closer to southern Alberta may “have to stop producing altogether” at some point next year. But the bulk of producers in Alberta draw from the Athabasca River, she said, which is slightly healthier than other water sources at the moment.

Those in the north, meanwhile, have more time to increase efficiencies around water use, though the clock is ticking.

“(Producers) might look at the historical streamflow records and say the trend is the streamflow is increasing,” she said. “They wouldn’t be wrong to say that in the Athabasca River, but why it’s increasing is a result of increasing glacial melt contribution — and the problem is that it’s not infinite. It’s going to run out,” she said.

Alberta would declare emergency in early- to late-summer 2024

Any provincial decision to declare an emergency hinges on snowpack and rain levels going into next spring.

But early signs acknowledged by the province show southern Alberta is projected to see less snow than average, and the ongoing El Niño weather pattern makes it 62 per cent likely the warm and dry conditions will continue from April to June 2024. Temperatures are also forecast to be 50 to 60 per cent above normal.

The province plans to develop and implement collaborative agreements by May.

If the drought conditions continue, it would declare an emergency between May and August 2024.

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