CALGARY- The Energy Resources Conservation Board (ERCB) is modifying the way it processes amendments for in situ oilsands applications in the first steps to reforming oil and gas rules as part of the provincial government's regulatory overhaul.

Under Directive 78, amendments to existing in situ oilsands applications will be separated into three categories depending on the nature and scope of the proposed modifications. There, they will be ranked in a three-tier system designed to prioritize the level added regulatory scrutiny.

The directive also requires companies to conduct "appropriate consultation" on amendment applications that have the potential for "adverse" public impact.

According to Terry Abel, the board's executive manager for oilsands and coal, in situ projects are the most likely to see after-the-fact changes to configurations and optimizations of wells and facilities.

"We do anticipate, and in fact, are already seeing a trend to in situ development, it's fast catching up with the amount of production on the mining side and we're seeing a lot of activity in that area," he said in an interview ahead of the directive's formal announcement Friday. "As the technology evolves and operating experience is gained, we're finding these in situ projects see a lot of amendments over time."

In many cases, Abel said the changes are relatively simple tweaks designed to increase recovery factors or minimize environmental impacts. Those applications will be sped up while other amendments that involve significant process modifications with the potential to alter the environmental and socioeconomic impact assessments will be given more careful scrutiny.

ERCB officials said almost 80 per cent of in situ applications are amendments to existing projects and most are "relatively simple modifications" that require little or no further investigation.

In situ oilsand projects, typically involving some form of steam assisted drainage, are expected to overtake mined oilsands as the leading contributor to Alberta's oil production within the next few years.

The basic thermal technology developed by the Alberta government in the 1980s is also undergoing constant evolution as producers experiment with solvents and other ways to increase the effectiveness of the basic technique.

An additional directive will be released in the coming days that is designed to encourage the development of experimental technologies, board representatives said. The changes are directly related to the province's regulatory overhaul as part of the competitive review announced in March, Abel confirmed.

Cenovus Energy (TSX:CVE) has made continuous improvements to its Foster Creek and Christina Lake thermal projects to increase recoveries and recycle water used to make steam that have become standard industry practice. According to FirstEnergy Capital, both projects have the lowest steam-oil ratios in the industry which is a measure of efficiency that gauges how much water is needed to make a barrel of oil.

Last year the company began experimenting with "wedge wells" drilled in between existing production wells to capture oil left behind from the primary steaming process. About 15 per cent of current Foster Creek production of 50,000 barrels per day comes from wedge wells. Under the new guidelines, those would be considered "significant modifications that could affect recoveries but are not expected to adversely alter environmental or socioeconomic impacts" and would thus be sped through the queue.

Mike Pittman, Cenovus's regulatory affairs manager, said it could previously take several months to get approvals for wells that require no additional land or water.

The company is pinning its hopes on the wedge wells to increase production without additional steam in a drive to further reduce its steam to oil ratio and increase the economics of its operations.

He said the new directive will allow the board to allocate more time and resources to more pressing regulatory issues while prompting operators to make process improvements that might have been ignored due to the added regulatory burden.

spolczer@calgaryherald.com