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Inuvialuit Energy Security Project Ltd. – Application for Authorization for Well Workover, CER Approval OA-1414-002 Reasons for Decision

Link to Decision Summarized

Oil and Gas – Facilities

Application

By a letter decision issued on June 28, 2023, the CER  approved Inuvialuit Energy Security Project Ltd. (“IESPL”) well workover application (the “WW Application”) for the Inuvialuit Energy Security Project (“IESP”). The CER approved the WW Application subject to certain conditions and with reasons to follow. This decision contains the reasons for the WW Application approval.

In the WW Application, IESPL requested an authorization for the following activities:

  • extending the wellhead and cellar to adjust for additional fill around the pad;
  • constructing the well pad as a work area and to protect the permafrost;
  • installing blowout prevention equipment;
  • drilling out existing cement and plugs;
  • circulating the well to remove debris;
  • installing production tubing and a subsurface safety valve;
  • insulating gas production from the permafrost;
  • installing connections for the subsurface safety valve control line;
  • re-installing the wellhead; and
  • securing the well for a future tie-in with the compressed natural gas, propane, and synthetic diesel-producing prefabricated modular gas processing facility (the “Energy Centre”).

Decision

The CER provided the reasons for its prior decision to approve the WW Application.

Pertinent Issues

Assessment of the Application
  1. IESPL Engagement Activities

The CER found that IESPL appropriately identified and engaged those potentially impacted by the well workover, including Indigenous Peoples, landowners, communities, organizations, co-management boards, and other stakeholders. The CER was satisfied with IESPL’s approach to engagement and engagement activities, including the sufficiency of the notice provided of the WW Application.

Throughout its engagement activities, IESPL made several commitments. The CER imposed Condition 9 (Commitment Tracking Table), requiring IESPL to track and fulfill all the commitments it made in the WW Application and related submissions, including an update on the status of each commitment. This condition also requires IESPL to file with the CER a list of its commitments and post the list on the IESP website, at least 45 days prior to commencing early site works activities and continue to update it on a quarterly basis.

The CER was satisfied that the engagement and consultation was adequate for the purpose of the CER’s decision on the WW Application, which consultation was consistent with s 35 of the Constitution Act, 1982.

The CER found that the well workover was unlikely to adversely affect the rights of Indigenous Peoples because of the location of the well on Inuvialuit private lands, the small scope of the activities involved in the proposed well workover, and the low potential for negative impacts on the environment and socio-economic factors during and after construction.

  1. Environment Matters

IESPL submitted an Environmental Protection Plan (“EPP”) comprised of the following six environmental management plans: Archaeological Site Management Plan, Wildlife Management and Monitoring Plan, Permafrost Protection and Management Plan, Fish and Fish Habitat Protection Plan, Waste Management Plan, and Erosion and Sediment Control Management Plan.

The CER was satisfied that IESPL identified and committed to implementing appropriate mitigation and avoidance measures to protect the environment during the well workover activities. IESPL stated that several environmental procedures were not available when the WW Application was filed but would be available when the application was evaluated in June 2023. Based on IESPL’s confirmation that it would complete all outstanding procedures by June 2023, the CER imposed Condition 6 (Environmental Procedures) requiring IESPL to file the noted procedures, including the procedures for air, noise and light monitoring, at least 90 days prior to commencing well workover activities.

Further, to be satisfied that post-construction environmental monitoring was thorough and effective, the CER imposed Condition 13 (Post-Construction Environmental Monitoring Report), which set out the requirements for IESPL’s post-construction environmental monitoring program for the IESP.

  1. Socio-Economic Matters

The CER found that the well workover for the IESP will have no or negligible negative effects on socio-economic matters and that it will likely result in overall positive social and economic impacts, considering the small scope of the well workover activities and their location on Inuvialuit private lands, and the low potential for impacts on socio-economic valued components, as well as IESPL’s proposed mitigation measures to address any potential negative residual effects of the well workover.

The CER was also satisfied that IESPL addressed all concerns raised to date to the satisfaction of interested parties, including its commitment to continued engagement throughout the CER regulatory processes and the lifecycle of the IESP.

  1. Financial Matters

IESPL is a wholly owned subsidiary of IPC and the Inuvialuit Regional Corporation. The Inuvialuit Regional Corporation is a government entity established in 1984 to manage the settlement outlined in the Inuvialuit Final Agreement. IESPL stated that the largest financial risk it identified for the WW Application was a transport-related spill into a flowing water course. IESPL submitted evidence of insurance that it holds, including a certificate of insurance that details the liability limits for three separate policies held.

The CER approved the use of a parental guarantee from IPC as proof of financial responsibility for the WW Application. The CER also accepted IESPL’s financial risk analysis. To ensure the continued financial position of IPC the CER imposed conditions 7 and 8.

Condition 7 (Parental Guarantee and Insurance) required IESPL to submit a final signed, executed copy of the parental guarantee or approval, at least 45 days before well workover construction.

Condition 8 (Financial Material Changes) required IESPL to update the CER if there were any material changes in the financial position of the guarantor or its proof of financial responsibility.

  1. Engineering Matters

IESPL submitted that the purpose of the well workover phase of the IESP is to develop the TUK M-18 well to put it into production as a gas well to support the IESP. The well workover includes provisions for protection from permafrost and corrosion.

The CER found that the activities proposed for the well workover phase of the IESP are typical for putting a suspended well into production and that IESPL has provided sufficient details regarding well control measures to be employed during this work. The CER also found that IESPL demonstrated an appropriate commitment to following applicable legislation related to the equipment to be used in the well workover for the TUK M-18 gas well.

  1. Safety and Emergency Response Matters

The CER was satisfied that IESPL would sufficiently manage safety hazards and, the health and safety of the well workover. The CER was also satisfied that IESPL’s commitment to adhere to applicable safety standards corresponded to the CER’s emergency management expectations, when combined with the emergency management framework described in the WW Application, the planned engagement with local agencies, and commitments to providing a completed emergency response plan.

To provide transparency and confidence that IESPL would complete the necessary processes and procedures to protect the health and safety of workers before the well workover begins, the CER imposed Condition 5 (Safety and Emergency Management Documents), requiring IESPL to file updated copies of its Contractor Management Procedure and, Incident Accident Reporting and Management Procedure.

The CER noted that the well workover emergency response plan submitted by IESPL lacked information related to company contact numbers, emergency response equipment, and emergency response training for the well workover activities. As a result, the CER imposed Condition 5 (Safety and Emergency Management Documents), requiring IESPL to file a revised well workover emergency response plan and related field operating guides for emergency purposes 90 days before commencing well workover activities.

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