Regulating Hydraulic Fracturing: Regulatory Recourse for Subsurface Communication

Abstract

This article provides an overview of the legal framework for the regulation of hydraulic fracturing in Alberta and examines the potential regulatory options and liability for subsurface reservoir communication caused by hydraulic fracturing activities. Specifically, this article examines the jurisdiction of the Alberta Energy Regulator (AER or the Board) to: (1) order that operations be shut-in or suspended due to subsurface reservoir communication; (2) impose obligations on industry to provide notification of hydraulic fracturing activities, including subsurface reservoir communication; (3) order mandatory commingling orders; (4) encourage production sharing agreements; and (5) impose testing, monitoring, production controls, and reporting obligations.

With the widespread use of multistage horizontal hydraulic fracturing, disputes related to subsurface communication will continue to be raised with the AER and in the courts. Thus far, the AER has taken a risk management approach through monitoring and testing requirements. Generally, the AER has permitted development to occur by endorsing an approach which relies on the known and inevitable consequences of mining and recovering the minerals. This approach has been justified by the AER on the basis that any production of another party’s minerals does not result in irreparable harm. The harm or damage caused can be identified, quantified, and compensation paid.