The New Energy Economy Series

Written by Kenryo Mizutani, Shawn Munro, Deirdre Sheehan, Keely Cameron, Thomas McInerney and Colm Boyle

Following the release of Alberta's Recovery Plan, which included plans to diversify Alberta's economy and develop a new energy strategy, the Alberta government has made a series of announcements on plans to develop strategies and regulations to assist in the diversification of the province's energy industry. 

After its announcement on October 7, 2020, to develop a geothermal strategy, the Honourable Sonya Savage, the Minister of Energy, introduced Bill 36, Geothermal Resource Development Act, on October 20. When enacted, Alberta will be the second province in Canada after British Columbia to have geothermal-specific legislation.

Policy Background

In introducing Bill 36, the Alberta government has emphasized the role of geothermal energy in energy diversification and low-carbon emissions. In addition, in its press release, the Alberta government highlights the repurposing of inactive oil and gas wells and associated infrastructure as one of the purposes of Bill 36.

In our two part series, we explored the benefits and challenges of such repurposing (see Wellsite Repurposing Projects: Part 1 and Part 2). In addition, we reported that the Alberta Utilities Commission (AUC) revised a draft version of Rule 007 on August 7, 2020, to update and streamline the existing application processes for power plant approvals issued under the Hydro and Electric Energy Act to address emerging technologies, including geothermal power plants.

Key Features of the Proposed Geothermal Resource Development Act

Bill 36 introduces geothermal-specific legislation in the Geothermal Resources Development Act. The Act is largely modelled on Alberta's Oil and Gas Conservation Act.

The purposes of the Geothermal Resources Development Act largely mirror those found in the Oil and Gas Conservation Act and include:

• Establishing rules and processes for geothermal resource development;
• Protecting the rights of surface, mineral, and subsurface reservoir owners;
• Managing liability and land use; and
• Protecting the environment.  

The proposed Geothermal Resources Development Act establishes legislative authority for land use and liability management, and designates the Alberta Energy Regulator (AER) to oversee geothermal resource development, including well and facility licensing, inspection, suspension, abandonment, and remediation requirements. The proposed act will apply to any geothermal resource development in Alberta, regardless of whether such development commenced before or after the entry into force of the proposed act. Similar to the Oil and Gas Conservation Act, the proposed Geothermal Resources Development Act gives extensive authority to the AER to make rules and the Lieutenant Governor in Council to make regulations respecting geothermal resource development.

Impacts on Existing Legislation

If passed, Bill 36 will also make consequential amendments to the Environmental Protection and Enhancement Act, the Mines and Minerals Act, the Oil and Gas Conservation Act, the Pipeline Act and the Responsible Energy Development Act.

The changes to the Environmental Protection and Enhancement Act (EPEA) include listing "the recovery, transfer, injection or storage of natural heat from the earth for the purpose of heating" in EPEA's Schedule of Activities. This amendment potentially brings geothermal resource development into the scope of activities regulated under EPEA and requiring approval or registration.

More significantly, Bill 36 also introduces amendments to the Mines and Minerals Act that would vest the owners of the mineral title with the right to explore, develop, recover, and manage the geothermal resources associated with those minerals and with any subsurface reservoirs under the land. In Alberta, the Crown is the mineral owner in most cases, and Bill 36 also introduces amendments to the Mines and Minerals Act to allow the Crown to enter into contracts respecting the exploration for or the development and recovery of geothermal resources, and any payments to the Crown for such exploration, development and recovery.

Way Forward

If passed, Bill 36 will take effect upon proclamation. The Alberta government plans to engage with industry partners and other stakeholders to develop and implement necessary regulations.

The introduction of Bill 36 is expected to encourage further geothermal resource development in Alberta by clarifying tenure and regulatory requirements. While detailed regulations are still underway, Bill 36 opens the door for increased regulatory certainty to promote geothermal resource development, repurposing of existing oil and gas wells (see Wellsite Repurposing Projects: Part 1 and Part 2), and further business opportunities for Alberta's industry.

Geothermal resource development faces a number of issues common to all energy developments, as well as issues particular to geothermal generation of heat and power. Project proponents on new energy development in Western Canada will need to seek outside support to, among other tasks:

• acquire subsurface and surface rights, including for repurposing existing resource development sites;
• resolve any surface and subsurface conflicts between overlapping resource developments;
• address potential formation communication and reservoir integration;
• develop applications and approvals respecting facility development, environmental impact, and connection to the electrical grid;
• deal with regulators, resolve and address stakeholder objections, engage with local communities, consult with indigenous stakeholders, and secure project approvals; and
• address regulatory and environmental issues as they may arise during operation and through abandonment.

Bennett Jones has extensive experience with the above and many other elements of energy development and major capital projects. If you have any questions regarding geothermal resource development in Alberta, please contact a member of Bennett Jones' Regulatory or Power & Renewables groups.