Decision Date:  October 8, 2013

Panel:  David H. Searle, Q.C.

Keywords: Oil and Gas Activities Act – ss. 4, 72(2); permit; land owner; well site; odours; health impacts; proximity to residence

Ben and Frieda Unruh appealed a decision of the Oil and Gas Commission (“Commission”) to issue a permit authorizing Encana Corporation (“Encana”) to drill and operate a ‘sweet’ natural gas well, and to construct and maintain a road, on land (“Section 18”) owned by the Appellants. The Appellants reside on an adjacent parcel, to north of Section 18. Their home is 387 metres north of the well site (“Site 3”). The Appellants operate a cattle ranch on their property, and there are already 11 natural gas wells on their property.

In March 2012, Encana notified the Appellants of its proposal to apply for a permit to drill the gas well at Site 3. Encana had considered five possible sites for the well before choosing Site 3. The other four locations included one that was deemed to be too close to the Appellants’ home, one that would have negatively affected the Appellants’ cattle operations, and two to north of the Kiskatinaw River. The latter two locations were considered by Encana to be unacceptable, because one site had slope and terrain issues and the other a site was considered to be too far for drilling to reach Section 18 and would risk missing four portions of Encana’s gas tenure.

In April 2012, the Appellants provided a written submission to the Commission regarding Encana’s proposal. In their submission, they objected to locating the well at Site 3 on the basis that it was too close to their residence, and the smell, gas, and air quality associated with the well would adversely affect Mr. Unruh’s health, because he has a serious lung disease. The Appellants preferred that the well be located at one of the sites to the north of the Kiskatinaw River. The Appellants also expressed concern that vibrations from the drilling activity would cause large cracks and sink holes on the surface of the land around their home.

In March 2013, the Commission issued the permit to Encana.

At the appeal hearing, the Appellants submitted that the Commission failed to give due regard to their written submissions, particularly with respect to Mr. Unruh’s health concerns. They submitted that he has suffered from serious lung infections when previously exposure to gases and odours from oil and gas activities on his land. They also submitted that the land surface is unstable near their residence, and the instability may be caused by vibrations from drilling.

Both the Commission and Encana argued that the Commission gave due regard to the Appellants’ submissions, as required by the Oil and Gas Activities Act. They did not dispute that Mr. Unruh has a serious lung disease. However, the Commission submitted that it addressed the Appellants’ concerns by imposing specific conditions in the permit that: limit gas flaring; require Encana to prepare a site specific emergency response plan; require Encana to prepare a geotechnical report assessing terrain, drainage, and stability issues at the well site and around the Appellants’ residence; require Encana to report seismic events above magnitude 2 in the vicinity of the well site during fracturing operations, and to suspend fracturing operations if there is a seismic event greater than magnitude 4; and require Encana to reduce impacts from noise and light, and utilize hospital grade mufflers.

The Tribunal considered the parties’ evidence including: the Appellants’ written submissions to the Commission; Mr. Unruh’s uncontested testimony as to the effects on his health, including hospitalization, when he was previously exposed to gas and odours from oil and gas activities; the Commission’s rationale for its decision; and, the testimony of Encana’s witnesses regarding the various well sites it considered. The Tribunal found that the Commission tried to accommodate the Appellants’ concerns by adding several conditions to the permit. However, the Tribunal found that, due to Mr. Unruh’s serious health issues and the potential negative impact to his health from the permitted activities, giving “due regard” in this case must include a more thorough review of alternative well sites. The Tribunal held that the Commission should have required further and better justification from Encana regarding possible well sites that are further from the Appellants’ residence; specifically, the sites to the north of the Kitkatinaw River. The Tribunal also found that section 4 of the Oil and Gas Activities Act places importance on health and safety in the regulation of oil and gas activities. For these reasons, the Tribunal concluded that the Commission failed to give due regard to the Appellants’ written submissions regarding the potential effects of the permitted oil and gas activities on Mr. Unruh’s health.

In these circumstances, the Tribunal found that the matter should be sent back to the Commission with the following directions:

• Site 3 is unacceptable for the reasons provided above, and should not be included in any future permit;
• additional well site locations should be examined, including sites to north of the Kiskatinaw River, to determine their acceptability for the extraction of natural gas from Encana’s tenures; and
• health and safety shall be the paramount concern.

Accordingly, the appeal was allowed.