Request for Regulatory Appeal – Gas Over Bitumen – Request Denied
In this decision, the AER considered ISH Energy Ltd. (“ISH”)’s request for a regulatory appeal of the AER’s decision to issue Approval 11475X to Canadian Natural Resources Limited (“CNRL”).
The AER denied ISH’s request for regulatory appeal.
ISH has interests in gas resources located in the Gas Over Bitumen (“GOB”) zone above CNRL’s bitumen operations subject to Approval 11475. ISH’s gas well interests have been shut-in since 2005 by order of the Alberta Energy and Utility Board (“EUB”) (the AER’s predecessor).
The applicable provision of REDA, section 38, states:
38(1) An eligible person may request a regulatory appeal of an appealable decision by filing a request for regulatory appeal with the Regulator in accordance with the rules. [Underlining added.]
Section 38(1) of REDA sets out a three-part test for standing for a regulatory appeal. The components of the test are:
(a) The requester must be an “eligible person”;
(b) The decision from which an appeal is sought must be an “appealable decision”; and
(c) The request must have been made in accordance with the requirements of the Alberta Energy Regulator Rules of Practice (the “Rules”).
Further, where a requester meets the tests set out in section 38(1) of REDA, the AER has the discretion pursuant to section 39(4) of REDA to dismiss a request for regulatory appeal if the AER considers that for any reason the request is not be properly before it, including where it concludes the request is without merit.
Request for Regulatory Appeal
In its request for a regulatory appeal, ISH submitted that it was an “eligible person” to request a regulatory appeal because:
(a) ISH would be directly and adversely affected if CNRL was to conduct operations under Approval No. 11475X, without the drilling of observation wells;
(b) the EUB had found that the barrier between the Wabiskaw gas resource and the Wabiskaw-McMurray bitumen formation was insufficient, and therefore ISH’s interests in gas in the GOB zone were at risk; and
(c) ISH’s gas located in the GOB zone overlying CNRL’s operations was even more at risk in the absence of observation well monitoring taking place during bitumen production operations.
AER Reasons for Decision
The AER denied ISH’s request for regulatory appeal, finding that there was no ‘appealable decision’ and that ISH was not an ‘eligible person’ as it was not directly and adversely affected by the AER’s decision to approve the application. The AER’s findings in support of this determination included the following:
The adverse impact that ISH alleged (that its rights to the overlying GOB may be impacted by steam chamber growth into the GOB), did not arise from the removal or absence of CNRL’s proposed observation wells, but related primarily to CNRL’s previously approved operations.
ISH should have properly raised these concerns in 2007 in response to CNRL’s Application No. 1527354 to obtain approval for the Kirby Project, or in 2011 in response to CNRL’s Application No. 1712215 to amalgamate existing approvals for Kirby North and Kirby South.
There was no assurance that the presence of the observation wells would have prevented against or mitigated the potential for adverse effects to the GOB.
The drilling of observation wells was the result of a previous commitment by CNRL and was not a condition of Approval 11475, or any approval. Therefore, in the AER’s view, its decision to approve the application removing the requirement for observation wells was not an appealable decision.