Baytex blames oil tank explosions on absence of program standards

Baytex Energy blames "inadequate program standards" as the root cause of explosions at a well site last summer near Nampa, south of Peace River.

On July 27, explosions at a cold heavy-oil production with sand, or CHOPS, operation run by Calgary-based Baytex Energy, blew the roofs off two huge storage tanks.

In an update to area residents on Sept. 14, Baytex explained that a damaged valve and a second valve that was left open allowed oxygen to re-enter a tank, creating the conditions for the blast to occur.

But in its report to the Alberta Energy Regulator or AER, Baytex characterized the valve problem as an "indirect cause of the incident."

Instead the company pointed to unclear shutdown procedures for CHOPS sites as the main cause.

While procedures for traditional oil wells are clear, they are not so for operations using CHOPS, Baytex claims.

Producing oil using CHOPS is radically different than extracting conventional crude as bitumen is heated in surface tanks before being moved by truck for further processing.

In its report, Baytex Energy explained that "the current procedure in place to shut in well pad facility in the Peace River/Reno operational region does not address the requirements for continuing to use the high pressure flare system while the low pressure flare system, VRU (vapor recovery unit) and make-up gas flow are shut in."

For the most part, the AER says it relies on the operator to use their own safe and orderly shutdown procedures for well sites.

The AER says there are several directives for operators to follow that are constantly updated, but there's no step-by-step guide specifically for shutting down a CHOPS operation.

"The oil and gas conservation rules, which the AER is responsible for administering, mandates that operators provide their due diligence in preventing a future occurrence like this one and requires that all facilities are designed and operated in a safe manner," said AER spokesperson Carrie Rosa in an email.

Independent oil well researcher Regan Boychuk says area residents can't be terribly reassured now, by what appears to be gaps in procedures designed to safeguard against incidents at shut-in CHOPS sites.

"They appear to be learning the hard way on a number of different fronts," said Boychuk, who notes that it was complaints from area residents about odour emissions from the CHOPS wells that led to an unprecedented public inquiry by Alberta's Energy Regulator in 2014.

"They're still scrambling to fill the gaps on how to safely regulate these kinds of operations which have been ongoing for many years."

He called the explosion a very serious incident, it being "just dumb-luck that no one was hurt."

According to the AER, as of November 2013, there were 18,250 licensed CHOPS wells in Alberta.

The AER says it continues to meet with Baytex Energy to review its shutdown procedures. No fines or charges have been issued against the company for the incident, and there is no indication rules were not followed.