Well Applications – Water Act – Applications Denied
In this decision, the AER provided its reasons for denying Bashaw Oil Corp.’s (“Bashaw”) well applications 1842705, 1851246, and 1851250 and Water Act application 001-00400207 (the “Applications”), without prejudice to any future application.
The AER explained that section 15 of the Responsible Energy Development Act (“REDA”) and section 3 of the REDA General Regulation require the AER to consider:
(a) the social and economic effects of the proposed wells;
(b) the effects of the proposed wells on the environment;
(c) the interests of landowners; and
(d) the impacts on a landowner as a result of the use of the land for the proposed wells.
Landowner Consultation Insufficient
The AER found that Bashaw’s consultations with the landowners were inadequate for the Applications.
The AER heard landowner accounts that it found troubling, especially for consultation for proximity critical sour wells. Bashaw did not meet with the landowner whose land was adjacent to the well site. Bashaw was non-responsive to legitimate questions from others.
The AER noted that:
(a) Applicants are required by Directive 056 to implement an effective consultation plan before filing an application; and
(b) Directive 056 requirements are considered the minimum acceptable consultation and notification for routine applications and the starting point for effective participant involvement, which is expected to take place throughout the life cycle of the project.
The AER found that:
(a) Bashaw chose to complete the majority of its participant involvement program after it submitted the well applications to the AER, by its own admission due to the perceived opposition from landowners;
(b) while consultation does not have to satisfy concerns, the parties should be respectful, responsive, and responsible; and
(c) Bashaw’s consultations failed to meet this expectation.
The AER explained that the consultation process facilitates the raising of issues so that proponents can understand concerns and address them effectively. Directive 056 provides that “in some areas of the province, public expectations regarding personal consultation and notification may be higher than in others.” In this case, the AER panel found that public expectations regarding personal notification and consultation were higher in the area where the wells were proposed to be located. The AER rejected Bashaw’s argument that it exceeded the minimum requirements, finding that Bashaw’s consultation did not meet the spirit or intent of Directive 056. The AER found that Bashaw’s decision to do the minimum was not appropriate in these circumstances given the landowners’ concerns and the potential risks of a high-consequence incident.
Adequacy of Emergency Response Plan
Bashaw filed a basic Emergency Response Plan (“ERP”) with the Applications and indicated that it planned to work out site-specific details after it received its licences from the AER. The AER found Bashaw’s ERP to be deficient because it lacked sufficient site-specific information.
AER Directive 071: Emergency Preparedness and Response Requirements for the Petroleum Industry (“Directive 071”) requires an applicant to include as part of its application an ERP. An ERP must address three core principles:
(a) what could go wrong, who could be impacted, and who needs to be involved;
(b) what resources and training are needed; and
(c) whether the licensee could respond during a real incident.
Licensees must ensure that they are fully prepared and capable of responding to any level of emergency, considering the site-specific area terrain and demographics. The AER must be confident that an applicant has a sufficient level of preparedness and the capability to implement its ERP.
For the reasons summarized below, the AER found that Bashaw failed to satisfy the panel that it was capable of planning and carrying out a complex evacuation that would be required in the case of an uncontrolled H2S release.
Risk of H2S Release
The AER explained that in the event of an uncontrolled release of H2S from a critical sour well, there would commonly be time to ignite the release so that no H2S would escape the well pad. However, in a situation where the well could not be ignited, and an H2S plume escaped the immediate area of the well site, people in the emergency planning zone (“EPZ”) would be directed to shelter in place until the plume dissipated. For those sheltering in place, it is unlikely that they would be exposed to H2S at a concentration that could seriously injure them. The plume would disperse, and the H2S concentrations would not likely be at a high enough level to cause injury from the short-term exposure.
The AER noted multiple specific regulatory requirements for drilling a critical sour well to prevent an H2S release, including requirements for well design, proper operational drilling practices, and safety precaution measures.
The AER explained a full-scale prolonged blowout of a sour well would be a high-consequence incident with the potential for serious injuries or deaths. While a remote possibility, in the event of an uncontrolled release of H2S, an area evacuation would have to be carried out.
The AER concluded the ERP lacked sufficient site-specific information and therefore Bashaw failed to demonstrate a sufficient level of preparedness and the capability to implement its ERP, because:
(a) an evacuation process in the event of a serious incident would be extremely complex and would have to be fluid regarding reacting to the situation at hand;
(b) addressing an incident could be hampered by the complicated circumstances of the residents, frequent poor road conditions in the area, intermittent cell phone coverage, and the area’s deep valleys, large hills, and the river valley
where people live and engage in outdoor recreational activities;
(c) many of the landowners’ concerns, including spotty cell phone coverage, health and mobility issues, evacuation of horses and companion animals, and egress towards the well site were not sufficiently taken into consideration by Bashaw in its ERP;
(d) the fact that a landowner within the egress zone did not know whether she was in the emergency response planning zone suggested that Bashaw had clearly not engaged in effective communications with that individual; and
(e) of its poor consultations, Bashaw did not have a strong enough understanding of the many local challenges that it would face in an emergency situation.
Alternate Egress
The AER found that Bashaw was required, but failed to include in its ERP an alternate egress.
Directive 071 does not explicitly mandate an alternate egress route for proximity critical sour wells and allows for egress through the EPZ. However, applicants must plan for all levels of emergencies and the safe evacuation of people potentially in harm’s way. Sometimes applicants may need to go beyond the minimum requirements to ensure public safety, and the AER found that this was such a case.
The AER noted factors, in this case, necessitating an alternate egress road to ensure safe development of the resource:
• The occupants from 26 residences in the EPZ would need to egress towards the well site if required to evacuate.
• The people engaging in outdoor activities east and northeast of the well would not be easily reached or able to shelter in place.
• The local terrain, with its deep valley where the release could potentially flow and stagnate, increases the risk that certain residents may be exposed to H2S at levels that could cause health impacts. People living northeast of the well site would be particularly vulnerable in this regard, and they are the ones who have no alternative egress route.
• The County, which has jurisdiction over the roads, advised the AER of its concerns about the problems with the existing roads in certain conditions and that it recommends an alternate egress for the safety of residents and its employees.
Social and Economic Effects
The AER explained that the economic benefits of the project must be weighed against considerations of public safety. Given the safety concerns outlined above, the AER concluded that the risk of safety-related impacts outweighed the economic and social benefits the project might bring.
Conclusion
For proximity critical sour wells, the AER explained that it must ensure that the safety of the public will not be compromised. The AER found that it could not conclude that public safety would be ensured if the licences were to be issued.
Therefore, the AER declined to issue the well licences to Bashaw because to do so would be inconsistent with the AER’s mandate to ensure the safe development of energy resources in Alberta.
