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MGM Energy Corp. Application for an Operations Authorization – Shut In Well Inspections, MGM Wells, Mackenzie Delta Area, CER Authorization Approval: OA-1202-001 Letter Decision

Link to Decision Summarized

Oil and Gas – Facilities

Application

MGM Energy Corp. (“MGM”) applied for an authorization to inspect ten wells and four associated drilling sumps (the “Application”) in the Mackenzie Delta, within the Inuvialuit Settlement Region, Northwest Territories.

Decision

The CER approved MGM’s Application and issued the authorization OA-1202-001 for a seven-year term ending on 31 August 2030, subject to conditions.

Pertinent Issues

The scope of the inspections included the following:

  • Verifying accessibility to the wellhead and operability of the valves and related equipment;
  • Recording pressures on the tubing and annuli of the well;
  • Conducting a Surface Casing Vent Flow (“SCVF”) check (i.e. a bubble test); and
  • Depending on the results of the above steps, additional tests may be required.

The Application did not include decommissioning and abandonment activities, and no further right of entry was required since no operation would occur on private lands. The Government of Northwest Territories confirmed that MGM has satisfied the benefit plan requirements of s 17(2) of the Oil and Gas Operation Act (“OGOA”).

Assessment of the Application

Environmental Matters

The CER found that MGM has identified and committed to implementing appropriate mitigation and avoidance measures to protect the environment during the inspection activities.

Engineering Matters

The CER found that MGM provided adequate details for the inspection of the ten suspended wells in the Mackenzie Delta. The CER noted MGM’s statements that sump inspections were covered by MGM’s current and past water licences and land use permits, and that the activity is reported to the Inuvialuit Water Board and the Government of Northwest Territories’ Department of Lands.

The CER imposed two conditions regarding engineering matters. Condition 4 (Licences and Permits) required MGM to file with the CER the most recent Water Licences and Land Use Permits issued to MGM by the appropriate regulator related to all drilling sumps associated with the suspended wells. Condition 8 (Inspection Reports) required MGM to file with the CER an inspection report within 30 days of any inspection activity related to the suspended wells and associated sumps.

The CER was satisfied that the suspended wells and sumps will be monitored and inspected to maintain their continued integrity and to prevent pollution.

Financial and Economic Matters

MGM stated it is a wholly owned subsidiary of Paramount Resources Ltd. (“Paramount”), and that Paramount is a financially strong company, capable of and committed to meeting its obligations under current regulations, including any unforeseen events arising from its operations.

MGM submitted that the most conceivable “worst case” event associated with inspection activities would be a small spill of a liquid hydrocarbon (typically diesel fuel) during bleed off operations, the clean-up and disposal costs of which was estimated at $15,270.

The CER accepted MGM’s submission that the appropriate financial responsibility for this specific application was $15,270, which was related to a spill of a liquid hydrocarbon. The CER imposed Condition 5 (Financial Responsibility) requiring MGM to file for approval an executed letter of credit 30 days before the inspection activities commence.

Safety and Emergency Management Matters

The CER was satisfied that MGM’s Emergency Response Plan (“ERP”) was adequate for the proposed inspection activities, noting that, in the event of an accident or malfunction, the CER will hold MGM accountable for an appropriate response under the ERP. However, the CER determined that, while the information required for the ERP is complete, the information is found in various documents, which may not be readily accessible by field staff on site during the applied-for activities. The CER imposed Condition 6 (Safety Plan), requiring MGM to submit a single consolidated safety plan.

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