Potential Regulations for Canadian Oil Sands Highlight Importance of Industrial Wastewater Treatment

7 Aug 2023  |  Ethan Edwards

It’s no secret that the Canadian economy relies heavily on oil and gas. Canada is the fourth-largest oil producer and sixth-largest gas producer in the world. Oil sand extractions in the province of Alberta produce roughly 3.3 million barrels of oil per day—equivalent to 20% of Canada’s total oil production. Mining oil sands is an environmentally challenging method of extracting oil from a naturally occurring mixture of sand, clay, water, and bitumen. Over the last few decades, however, the oil sands extraction process has produced the equivalent of 883,000 Olympic-size swimming pools of wastewater. The waste, which is a slurry of sand, water, and toxic chemicals, has accumulated indefinitely in massive artificial ‘tailing ponds’.

Around the world, the failure of tailings dams (structures used to store legacy waste materials at sites) has resulted in environmental damage, human health risks, and negative economic impacts. For reclamation and closure work to begin at the sites, the stored industrial wastewater must first be properly treated and disposed of.

Canadian regulations require a special permit for industrial wastewater to be treated and discharged in local, fish-bearing waterways. This permit has previously been given to ore mining and pulp & paper companies but has yet to be granted to oil & gas companies. Currently, Canada’s Environment and Climate Change Canada (ECCC) is considering standards for oil sands wastewater that will likely include strict rules on the quality of wastewater discharged and conditions for the testing, monitoring, and reporting of the releases.

The predicament highlights a driver for different treatment technologies and solutions within Canada’s US$2.78 billion water for oil & gas management market. Strict regulation would make the cost of wastewater disposal from tailing ponds more expensive and increase the opportunity for water treatment providers serving the industry.

Companies continue to contend with the challenges of storing tailing waste. Imperial Oil, a Canadian petroleum company majority owned by Exxon Mobil, faced public scrutiny earlier this year over a leak of its toxic oil sands wastewater at one of its northern Alberta tailing impoundment sites. The leak, which spilled iron, arsenic, and hydrocarbons, endangered local water quality, including that of indigenous communities downstream from the leak.

The total number of serious dam failures around the world has steadily risen since the 1980s, illustrating the complexity of managing toxic wastes. Despite safety concerns and expensive cleanup costs, companies are slow to dewater tailing ponds. In Canada, the risks will persist until the artificial storage ponds are fully treated and disposed of.

Shifting regulations can drive market change. For example, see the Environmental Protection Agency’s decisions on U.S. coal ash ponds. Oil companies in Canada face a challenge that parallels that of coal power plant operators in the U.S., which have generated massive amounts of coal ash as a byproduct of coal combustion for power. Both must find a way to treat stored legacy wastewater within a shifting regulatory landscape. Standards on acceptable closure processes of coal ash ponds have fluctuated recently, with the EPA stating in 2022 that surface impoundments and landfills cannot be closed with coal ash in contact with groundwater. The decision potentially impacts up to 166 existing coal ash ponds, which may be forced to alter their closure plans and turn to more expensive treatment solutions to stay in compliance.

Regulations for produced oil & gas wastewater reuse remain on the horizon. Balancing the diverging interests of local communities, ecology, and industrial operators is a continuous challenge for environmental regulators. Currently, recycled oil & gas water is limited to reuse within industry operations, and standards to allow for beneficial reuse (i.e., reuse of produced water outside of the industry) have yet to be developed. In both Canada’s oil sands and the U.S.’ hydraulic fracturing basins, treating and discharging wastewater is a way to keep the water in the water cycle rather than disposing of the wastewater deep underground.

Canada’s decision on effluent standards for the oil sands wastewater would be a first step in developing broader industry policies …

Canada’s decision on effluent standards for the oil sands wastewater would be a first step in developing broader industry policies, and a ruling could give indications on the level of treatment required for various metals, salts, hydrocarbons, and other contaminants. With few exceptions, companies will trend toward choosing the most cost-effective method to treat their wastewater to meet standards. Ultimately, the regulators’ final decision will shape the oil & gas treatment technology landscape. The more stringent the water quality criteria, the greater the opportunity for innovative water treatment providers.