Alberta Oil Refinery Operated Without Regulatory Approval for 22 Years

The Enerchem refinery near Slave Lake, Alberta, is under scrutiny for operating without regulatory approval for 22 years, in violation of Alberta’s Environmental Protection and Enhancement Act (EPEA).

The facility, owned by Calgary-based AltaGas, was given an enforcement order on June 20 but has been permitted to continue its operations while it seeks provincial approval. The Enerchem plant, which was constructed in 2001, uses fractionation to separate crude oil into useful products, such as hydrocarbon fluids used in fracking and drilling of oil and gas wells, as well as consumer fuels like furnace fuel, diesel, and specialized jet fuels.

Upon taking ownership of the refinery in 2022, AltaGas notified the government of its lack of provincial approval, citing confusing jurisdiction on regulatory requirements and historical amendments to laws as the reason for failing to take action up until now. “As soon as we were alerted to the facility’s current operations, the department took action,” Alberta Environment director of communications Tom McMillan explained to CBC News.

The enforcement order, which expires in June 2024, necessitates various compliance actions, such as environmental monitoring for water, air, soil, and emissions. AltaGas attributes the regulatory oversight to confusion over who has jurisdiction over the operation, pointing towards historical changes in regulatory laws.

Alberta Environment is responsible for regulating oil refineries under the EPEA, but the refinery was first authorized under the Alberta Energy and Utilities Board (EUB) before construction commenced in 2001. In 2002, that authorization was changed into an industrial development permit until 2008, during when the EUB was replaced by the Energy Resources Conservation Board.

By 2011, the Energy Resources Conservation Board made sweeping regulatory changes, and eliminated the need for industrial development permits. The move ultimately left the Enerchem plant “without the approvals required for operation,” Alberta Environment claimed.

AltaGas, for its part, insists that the Slave Lake facility was in compliance with existing regulations when it began operations in 2001, pledging to work with regulators to maintain compliance as regulations evolve. “As regulations and regulatory bodies have changed since operations began, we have and will continue to work collaboratively with our regulators to ensure we continue to operate in compliance,” the company said in a statement. A spokesperson added that the facility was recently interpreted to fall under the jurisdiction of Alberta Environment and Protected Areas as an oil refinery.

This situation has sparked concerns among environmental law experts, who view this as a glaring example of the weaknesses in Alberta’s regulatory system. Emeritus Professor of Law at the University of Calgary, Nigel Bankes stressed the need for Alberta Environment to ensure that the plant complies with regulations and that there’s no lack of oversight at other facilities. “The idea of a significant industrial development operating without approval for years, it’s off the charts,” he said, as cited by CBC News. “I would describe it as negligence.”

It remains unclear how this oversight went unnoticed for so long or what environmental checks were in place during this time. According to Edmonton Environmental Law Centre executive director Jason Unger, the attempt to enforce environmental regulations retrospectively is not productive. “You have to question the diligence of compliance overall,” Unger told CBC News. “It’s problematic from a robust regulatory perspective in terms of managing risks and understanding what those risks are.”

Bankes and Unger both highlighted that the existing environmental protection act— in place since 1992— should have always been the regulatory framework under which the refinery sought approval. “The repeal of the development permit provisions of the act shouldn’t have created a gap in the environmental approvals process,” added Bankes. “It should have been Alberta Environment all along.” 

Bankes continued: “If you’re running a refinery, you’re presumably putting out some pretty nasty stuff into the atmosphere, so you’d need an air-quality approval and all sorts of things like that… the industrial development permits never, ever dealt with that aspect of an operation.”

Information for this story was found via CBC News. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.