Decision Date: June 4, 2019

Panel: Norman Yates

Keywords: Oil and Gas Activities Act – s. 72(2); oil and gas well; permit; fracking; groundwater; surface water; earthquakes

Penalty Ranch Ltd. (the “Appellant”) appealed 25 permits issued by the Oil and Gas Commission (“Commission”) to Crew Energy Inc. (“Crew”). The permits authorized Crew to drill and operate 22 natural gas wells from three well pads located on Crown land, subject to a number of conditions.

The Appellant holds an agricultural lease over the Crown land covered by Crew’s permits. The Appellant conducts ranching and farming operations on the Crown land. The Kirschbaum family owns and operates the Appellant, and owns and occupies a home on private land approximately two kilometres away from the well pad.

Four natural springs and a marsh are located on or near the Crown land. One of those springs is located approximately 2.2 kilometres from the well pad and a short distance uphill of the main driveway to the home. The Appellant and its owners use that spring for drinking water, domestic and livestock needs. It is their principle source of potable water. The other springs are also, or may be, used for watering livestock or other ranching activities.

Before Crew applied for the permits, it delivered notice of its intention to apply for the permits, and it invited the Appellant to make submissions regarding the proposed permits. In response, the Appellant provided submissions to the Commission.

The following concerns were raised in the Appellant’s submissions to the Commission, and were reiterated and expanded upon in the appeals:

• potential contamination of Worth Marsh from construction activities related to the well pads, drilling the wells, processes used to extract natural gas, and other activities associated with the well pads;
• potential adverse effects that drilling and fracking could have on the aquifer(s) that supplies water to the springs which the Appellant relies on, due to upward seepage of contaminants along the wellbore;
• potential impacts of induced seismic activity associated with fracking;
• potential air pollution from stored waste water and from flaring related to natural gas production, and
• past incidents involving Crew and others that demonstrate that the permitted activities are unsafe.

On appeal, the Appellant asked the Tribunal to rescind the permits.

The sole issue in the appeals was whether the Commission gave due regard to the Appellants’ submissions before the permits were issued.

Based on the parties’ evidence, the Tribunal concluded that the Commission gave due regard to the concerns that were stated in the Appellant’s submissions.

Specifically, the Tribunal found that the Commission added conditions or requirements to the permits that were designed to address the Appellant’s concerns. The Appellant’s concerns were also addressed by legislative requirements that pertain to permit holders. For example, the permits required Crew to monitor water quality and flow in the springs and Worth Marsh, to monitor and report seismic activity, and to suspend operations if fracking caused a seismic event of magnitude 4.0 or greater within three kilometres of a drilling pad. In addition, the permits that involved activities near Worth Marsh included wetland protection conditions. The permits also addressed flaring, and permit holders are subject to stringent regulatory provisions that deal with flaring. Furthermore, the evidence showed that Crew was in compliance with the permits.

Accordingly, the appeals were dismissed.