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ERCB Reverses Panel Decision on Standing

10-Feb-11

by Evan Dixon

On February 2, 2011 the Energy Resources Conservation Board released its decision in West Energy Ltd./Daylight Energy Ltd.'s1 Section 39 Review of Linda McGinn’s status under section 26 of the ERCA re Hearing of Application No. 1623169 Pembina Field.

The Decision considered the test for standing and its interrelationship with other notification requirements under Board practice. The Board found that merely residing within a flaring notification radius zone is insufficient evidence of potential direct and adverse affect as contemplated in s.26 of the Energy Resources Conservation Act (“ERCA”). The Decision also confirms that the notification requirements for flaring under ERCB Directive 60 apply regardless of whether a well is an oil well, or a gas well.

The review application was brought by Daylight and arose from a decision of a panel of the Board to grant standing to Linda McGinn in respect of a well application seeking approval to drill a sour crude oil well near Drayton Valley. The well has a 2.11km emergency planning zone (“EPZ”) and McGinn lives 2.7km away from the well, outside the EPZ.

McGinn objected to the application brought by Daylight. A panel of the Board appointed to hear the initial application concluded that McGinn may be directly and adversely affected in accordance with s.26(2) of the ERCA, entitling her to participate in a hearing of the matter, on the basis that she resided within the 3km flaring notification radius for the subject well.

Daylight applied to the Board under s.39 of the ERCA requesting a review of the panel’s decision granting standing to McGinn. The Board (excluding members of the original panel) concluded that Daylight met the test to trigger a review of the panels decision and convened a written process to consider Daylight’s request. The Board considered two primary issues in connection with the review application:

  1. whether the panel erred in finding that the applicable flaring notification radius for the well in the proposed application was 3km; and 
  2. whether the panel erred in finding that McGinn met the test under s.26 of the ERCA in respect of the hearing of the application because she resides within the flaring notification for the proposed well.

After determining that the applicable flaring notification radius was 3km the Board then moved on to consider whether the fact that McGinn resided within the flaring notification radius established that she had the potential to be directly and adversely affected by the proposed well.

The Board discussed the background to the requirements of flaring notification including the proper purpose of Directive 60. Flaring is not permitted except in accordance with Directive 60. The Board concluded that the purpose of Directive 60 is to “reduce or eliminate the flaring, incinerating or venting of solution gas produced during drilling, completion and production”. In considering applications for flaring the Board examines the amount of gas proposed to be flared, the sulphur content of the gas, the potential health and environmental effects as well as economic alternatives to flaring. The Board noted that flaring is not approved unless the proposed flaring can meet Alberta’s Ambient Air Quality Objectives, the economic hurdles established by the Board, and can be completed in a safe manner that is consistent with protection of the environment and human health.

The Board concluded that flaring notifications are not based on concerns about public health and safety or potential adverse effects of the activity, rather notice is provided as a courtesy to avoid surprise. Merely residing within a flaring notification zone is not evidence that residents within the area may be directly and adversely affected by the flaring. The Board concluded that the panel in originally granting standing to McGinn did so solely on the basis of her residing within the 3km zone and this is insufficient evidence that McGinn’s rights would be adversely affected by a decision in the Daylight application. On this basis, the Board concluded that McGinn does not have standing and reversed the panel’s decision.

McLennan Ross represented Daylight on this successful review application.

1 During the course of the proceeding West Energy Ltd. and Daylight Energy Ltd. amalgamated. For ease of reference the remainder of the article will refer to the applicant as “Daylight”.

 

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