Decision Date:  October 15, 2013

Panel:  Tony Fogarassy

Keywords: Oil and Gas Activities Act – ss. 31(2), 72(2); well permit; amendment; due regard; land owner; access road; horizontal drilling; hydraulic fracturing

Mike and Aspen Fraser appealed two permit amendments issued by the Oil and Gas Commission (the “Commission”) in 2012. The amendments were made to a well permit that was issued to Encana Corporation (“Encana”) in 2011.

The well permit originally authorized the drilling, operation and flaring of a vertical well, and the construction and operation of an access road. The well pad and part of the access road were to be built on the Frasers’ land. Another part of the access road was to be built on a neighbour’s land (the “Fell land”).

In 2011, the Frasers appealed the original well permit. Following an oral hearing, the Tribunal allowed the appeal and sent the matter back to the Commission with directions to amend the permit (Decision No. 2011-OGA-008(a), issued January 19, 2012), to require Encana to complete certain studies on the Frasers’ land, and to disclose the results of the studies to the Frasers and the Commission. Subsequently, the results of the studies were disclosed as required.

In July 2012, Encana notified the Frasers that it intended to change the location of part of the access road. Rather than crossing the Fell land, Encana proposed to develop part of a road allowance (the “247 road”) located on Crown land along the boundary of the Frasers’ land. Consequently, Encana intended to apply to the Commission for a permit amendment which would remove the permission to construct part of the access road on the Fell land. Encana also sought to amend the associated cutting permit, due to the changes in the area to be cleared. However, Encana had to apply to the Ministry of Transportation and Infrastructure (“MOTI”), rather than the Commission, for permission to use the road allowance, as the MOTI has jurisdiction over road allowances on Crown land.

Also, in July 2012, Encana notified the Frasers that it intended to apply for a permit amendment that would authorize a horizontally drilled well, rather than a vertically drilled well.

Between August and November 2012, the Frasers provided several submissions to the Commission and/or Encana. Among other things, the Frasers expressed concerns about a mineral lick on their land that was used by wildlife within the proposed well site. They requested that the mineral lick not be destroyed. They also advised that they have Métis status, and expressed concerns about the adequacy of the Commission’s consultation regarding Aboriginal interests associated with the Frasers’ land.

In October 2012, the Frasers and representatives of the Commission, Encana, and others attended two site visits on the Frasers’ land at the proposed well site. A wildlife feature (mineral lick) was identified, and Encana retained a consultant to assess moose habitat in the vicinity. The consultant’s report recommended measures to mitigate the potential impacts of Encana’s well development on the wildlife feature.

Subsequently, Encana advised that it would make concessions, and would commit to certain mitigation measures, to reduce impacts on the wildlife feature. Encana advised that it had revised its construction plan for the well site, and would move the southern boundary of the well site to create a 40 metre buffer from the wildlife feature.

In October and November 2012, the Commission issued the well permit amendments sought by Encana. Also, in November 2012, the MOTI issued a permit authorizing Encana to use the 247 road allowance.

The Frasers appealed on the basis that the amendments were so significant that they amounted to a new permit, and would result in a substantial increase in activity at the well site, including hydraulic fracturing or “fracking” and increased road traffic. The Frasers also submitted that the amendments were made without due regard to the report on moose habitat. In addition, they submitted that the 247 road allowance was previously deemed “unviable” by a Commission witness at the hearing of the Frasers’ previous appeal to the Tribunal. They requested an order rescinding the amendments and/or the original well permit.

Regarding the scope of the appeals, the Tribunal found that its jurisdiction was limited to deciding whether the Commission granted the amendments without giving due regard to the Frasers’ submissions to the Commission regarding those amendments. The Tribunal had no jurisdiction to consider matters relating to the original well permit, which was the subject of the Frasers’ previous appeal, or to rescind the well permit in its entirety.

Next, the Tribunal considered whether the amendments were so substantial that they resulted in a new well permit, such that the Commission and Encana must carry out anew their respective obligations under the OGAA. Based on the Tribunal’s review of the legislation, the original well permit, and the amendments, the Tribunal found that the amendments did not make such substantive changes to the oil and gas activities authorized in the original well permit that the two amendments, in effect, constituted a new permit.

Regarding the amendment that authorized the change from vertical drilling to horizontal drilling, the Tribunal fond that most of the Frasers’ concerns were actually in regard to potential impacts from surface activities authorized in the original permit; i.e., potential impacts on wildlife, wildlife habitat, and Aboriginal cultural activities on their land. The Tribunal found that the October 2012 amendment was limited to subsurface activities; namely, drilling horizontally rather than vertically. Any potential effects arising from the previously authorized surface activities were beyond the scope of the Commission’s considerations in granting the amendment, and were outside of the scope of these appeals.

However, in regard to the Frasers’ concerns about the wildlife feature, the Tribunal noted that, although Encana had committed to certain mitigation measures, including a 40 metre setback between the well pad and the wildlife feature, there was no evidence that Encana had provided a rationale for using a 40 metre setback, rather than a 100 metre setback as recommended in the Commission’s Environmental Protection and Management Guide. Also, the Tribunal was concerned that the Commission did not incorporate Encana’s mitigation measures into the conditions in the well permit, as amended, which would have made the mitigation measures enforceable.

Regarding the Frasers’ submissions to the Commission about their Métis status, the Tribunal found that the Frasers did not indicate to the Commission (or the Tribunal) specifically how the proposed amendments may affect their rights or interests as Métis persons. Also, there was no evidence as to how the subsurface horizontal drilling may impact wildlife, wildlife features, or Aboriginal cultural activities on the Frasers’ land. Without further information to support their assertion that the subsurface drilling may affect their rights or interests as Métis persons, the Tribunal was unable to conclude that the Commission granted the amendment without due regard to that aspect of the Frasers’ submissions.

Finally, on a review of the evidence, the Tribunal found that the Frasers’ concern that horizontal drilling would result in more road traffic and noise was not raised in their written submissions to the Commission. The Commission is obliged under section 31(7) of the OGAA to consider a written submission made by a land owner regarding a proposed amendment. The Commission is not obligated to consider, and give due regard to, concerns that are not expressed to it before an amendment is issued.

Regarding the Frasers’ submissions to the Commission about the changes to the access road, the Tribunal found that it had no jurisdiction to adjudicate the MOTI permit, which was not issued by the Commission under the OGAA. In any event, the Tribunal reviewed the transcript of the previous appeal hearing, and found that the witnesses’ comments about road access had no bearing on the Commission’s amendment which simply deleted permission to utilize the Fell lands, and did not authorize the use of the 247 road allowance.

For all of those reasons, the Tribunal found that the Commission gave due regard to the Frasers’ submissions to the Commission regarding the proposed amendments.

The appeals were dismissed.