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Decision Summary

(This summary repeats the "Views of the Board" taken from EUB Decision 99-16 which is 42 pages in length. It does not include "Views of Cdn 88," or "Views of the Interveners." Those views are available in the full Decision report, which is available on the EUB website at www.ercb.ca)

APPLICATION AND HEARING

Canadian 88 Energy Corp. (Cdn 88) applied, pursuant to section 2.020 of the Oil and Gas Conservation Regulations, for a licence to drill a level 4 critical sour gas well to be located at Legal Subdivision 10 of Section 35, Township 26, Range 3, West of the 5th Meridian (10-35 well). This location is approximately 11 kilometres north west of the City of Calgary.

The application and interventions were considered at a hearing in Calgary, Alberta commencing on 4 May 1998, before Board Members F. J. Mink, P.Eng., J. D. Dilay, P.Eng., and G. J. Miller.

ISSUES

The Board considers the issues respecting the application to be:

• need for the well
• proposed location of the well
• potential H₂S release rate
• drilling and completion considerations
• public safety risks
• emergency preparedness
• land use impacts and
• public consultation

NEED FOR THE WELL

The Board notes that, while a number of parties argued against the development because of its public health and safety aspects, there was little dispute about the need for the well and Cdn 88's right to recover the natural gas underlying Section 35-26-3 W5M. The Board acknowledges that the ability to exercise property rights are a compelling component of determining need for the well unless other public interest issues related to the development are of overriding interest. The Board accepts Cdn 88's right to explore for its gas resources in the Lochend area and accepts that, provided the development can be carried out in an acceptable fashion, there is a need for the well.

PROPOSED LOCATION OF THE WELL

The Board notes that Cdn 88 identified the proposed location seismically and that it identified it as its optimum location providing the greatest chance for success of its exploratory well, matters not disputed by the other parties. The Board also notes that the surface owners were satisfied with the location of the proposed well. While other interveners considered other surface locations to be more appropriate, the Board is satisfied the proposed location meets or exceeds the normal requirements for siting of such wells. The concerns about siting of the well raised by the interveners related largely to impacts and risk of personal safety which are discussed in some detail in the decision.

POTENTIAL H₂S RELEASE RATE

The Board recognizes that determining the H₂S release rate is an important element in preparing for and drilling critical sour wells in a safe manner. Implied in the process is identifying parameters that could realistically be encountered in the operation. The Board's expectations are clearly stated in ID 97-6 and are repeated below:

• the maximum concentration that can be expected and the source of that information
• the maximum surface deliverability that can be expected against zero back pressure for casing or open-hole flow configuration
• the methodology used to determine the above

The Board accepts the Caroline Beaverhill Lake A Pool as a reasonable analog to be used for the proposed Lochend well. The Board notes that H₂S concentrations as high as 59 per cent are on record for the analog pool. However, many of these concentrations, specifically those greater than 34 per cent, were obtained from samples of separated well streams and are not representative of the reservoir fluid. The H₂S concentration in the wellbore fluid of 33.9 per cent used by Cdn 88 is acceptable to the Board.

The use of wellhead deliverability, instead of sandface deliverability, is more realistic and is an acceptable approach as dictated by ID 97-6. The Board notes that Cdn 88 did not use the maximum surface deliverability of the three similar wells, but rather used the wellhead rate based on the one sandface rate available in the EUB records for the three similar wells. Given that the maximum surface deliverability of the three similar wells of 2450 10³m³/d is only about 8 per cent greater than the flow of 2266 10³m³/d used by Cdn 88, the Board considers Cdn 88's estimate to be a reasonable representation of the maximum surface deliverability. The Board cannot accept that exaggerated levels of H₂S that cannot be reasonably substantiated in the fluid should be incorporated into the evaluation. In summary, the Board accepts the methodology presented by Cdn 88 in evaluating the potential H₂S release rate.

DRILLING AND COMPLETION CONSIDERATIONS

The Board believes that the practices and procedures used during the drilling of any well, in particular a critical sour well, are integral to ensuring public and environmental safety. In this respect, it is generally satisfied that its requirements as detailed in ID 97-6 are adequate. The Board notes the importance of the ARPs for Drilling Critical Sour Wells to provide sound guidance to licensees. The current requirements and recommended practices were developed in response to the 1982 Lodgepole blowout with great care and effort, and reflect the importance placed on safe drilling operations and contingency planning to prevent or respond to inadvertant events. The Board believes that the requirements and recommended practices expected from industry since then have contributed significantly to safe sour gas drilling and operation within the industry.

The Board notes that Cdn 88 is an active explorer of sour gas reserves in Alberta, and it is aware that Cdn 88 has drilled numerous sour gas wells. While it notes Cdn 88's statements of intent to meet or exceed EUB requirements and implement industry recommended practices, it recognizes that concerns were expressed about Cdn 88's ability to effectively undertake the drilling plan for the proposed 10-35 well. The Board is alarmed at the lack of trust in the company to fulfill its obligations under the regulations.

Regarding the need for a diverter system to be installed during the drilling of the surface hole, the Board notes that the purpose of a diverter system is to redirect fluids from the well in the event of a fluid influx into the wellbore. The Board accepts Cdn 88's conclusion that a diverter is not required, and it is satisfied that 440 m of surface casing is sufficient for the drilling of the intermediate main hole.

The Board notes that, while a minor occurrence of lost circulation at depths where Cdn 88 would be drilling the intermediate main hole was reported from the nearby offset 8-13-27-03W5M well, the well was successfully drilled, cased, and cemented. Accordingly, the Board is satisfied that the provision for materials as identified by Cdn 88 to address potential lost circulation is adequate for the 10-35 well.

With respect to completion and testing of the 10-35 well, the Board would, as Cdn 88 noted, require a new application before any well testing could proceed. While it agrees with the Committee's suggestion that sour well testing should be done into a pipeline where possible, it believes that testing could proceed if done in accordance with EUB guidelines. Respecting suspension of the well, the Board is satisfied that the measures Cdn 88 plans to take to suspend the 10-35 well safely represent acceptable industry practice. The Board recognizes Mr. Goodhart's concerns respecting vandalism of oil and gas facilities, however, it believes the risk to be very low. Notwithstanding, the Board recognizes the important role of appropriate emergency response plans should a release of sour gas occur for any reason.

The Board notes the specific concerns raised by the Coalition about Cdn 88's casing bowl welding procedure, as well as the more general concerns related to Cdn 88's management processes for equipment design, specification, procurement, construction, and operations. Respecting the issues related to the casing bowl, the Board notes that it would play a reduced role in well containment after intermediate casing has been run, and that there was no evidence presented indicating overall industry problems related to surface casing bowl weld failures. However, it believes that appropriate welding procedures must be employed to maintain the highest wellbore integrity possible. Respecting the management processes used by Cdn 88 for equipment design, specification, procurement, construction and operations, the Board accepts that Cdn 88 has completed numerous sour gas wells in the recent past. However, it is not satisfied with Cdn 88's general response that these matters were simply the responsibility of its drilling manager. It believes that these processes are integral to successful implementation of the regulatory requirements and that Cdn 88 should more clearly demonstrate and communicate industry practices to the public. In view of this general concern respecting materials selection, and given its importance to overall wellbore integrity, both during drilling operations and any subsequent production operations, the Board believes it would be prudent to review the steel mill certificates specific to the casing and drill pipe to be used. Additionally, while it notes Cdn 88 plans to qualify existing drill pipe in accordance with ARP 1.2.3, it believes that drill pipe meeting the requirements of ARP 1.2.5 New Grade E Specifications and/or ARP 1.2.6 SS-95 Drill Pipe Specifications would further reduce operational risk, and therefore, would specify it for the drilling of the 10-35 well, if approved.

In general, respecting drilling, completion and production matters, the Board is satisfied that the equipment and procedures proposed by Cdn 88 to drill the 10-35 well are consistent with regulatory standards including the APR for Drilling Critical Sour Wells. However, in recognition of the sensitivity of the location as demonstrated by the concern of the nearby residents about Cdn 88's abilities to undertake safe drilling operations, the Board would require the following to grant a licence for the 10-35 well:

1. Develop and document the management processes, including policies and procedures for equipment design, specification, procurement, construction and operations, including an assessment of the effectiveness of them by a suitably qualified third party.
   
   
2. Confirm the aforementioned management processes are applied and demonstrate clearly that the equipment and procedures to be used by the contractors selected are suitable for the intended service. Additionally, Cdn 88 would be required to demonstrate to the EUB that all personnel employed in the drilling operation are experienced in sour gas drilling operations and hold the necessary certifications.
   
   
3. Develop and document a casing bowl welding procedure by a qualified professional engineer to be included in its detailed drilling plan.
   
   
4. Submission of a report respecting the review of steel mill heat certificates for the casing and drill pipe to be used in the construction of the 10-35 well.
   
   
5. Drill pipe meeting the requirements of ARP 1.2.5 New Grade E Specifications and/or ARP 1.2.6 SS-95 Drill Pipe Specifications or better be used for the drilling of the 10-35 well.
   
   
6. Daily communication with the EUB Calgary South Field Centre, including submission of daily drilling reports during the critical period.
   
   
7. Attendance by EUB Field Surveillance personnel at pre-spud and pre-critical zones penetration safety meetings.

In addition to Cdn 88 having to meet the above conditions, the EUB would carry out detailed EUB drilling rig inspections prior to spud, and drill out of intermediate casing, including blowout prevention drills.

PUBLIC SAFETY RISK ASSESSMENT

Issues considered in reviewing the public safety risk assessment are:

1. purpose and approach
2. source characterization
3. uncontrolled sour gas releases
4. consequence modeling
5. risk evaluation

Purpose and Approach

The Board believes that before risk can be managed, it must be understood. Prior to making decisions and taking action, the risk management process develops options and evaluates their impact with respect to public safety. Risk assessments have several purposes:

1. To understand the nature and the extent of the risk and the factors that predominate the risk
   
   
2. To establish the extent of reasonable emergency awareness planning zones taking into consideration plume dispersion modelling for H₂S and SO₂
   
   
3. To compare the risks of this proposed development to other familiar risks
   
   
4. To address concerns of the public in the area which may be impacted by accidental releases
   
   
5. Cdn 88 has focussed on item 3, comparing the risk of the well to show that the risks are acceptable, and in the Board's view did not address the other issues adequately

The Board believes that quantitative analysis should be one of a number of factors used to evaluate the risk of facilities. Considering the wide variety of factors that need to be considered, the Board also believes reasoned judgement to be a critical component of any evaluation or decision to proceed with such projects. The EUB has no prescribed method of performing risk assessments, although it has published many documents and has been involved with several public consultation committees in order to provide some guidance on the matter. There are also many other references outlining approaches to doing risk assessments. Quantitative risk analysis requires considerable computer modeling to simulate the release events. The assumptions and approach used in such models should be conservative but realistic. The uncertainties associated with the risk estimates should be discussed.

Source Characterization

An important step in analyzing the risks is defining the source conditions. Clearly, from the evidence presented, a lighter-than-air sour gas composition is not expected. Accordingly, none of the lighter-than-air sour gas mixture results submitted were considered by the Board.

Defining the release conditions at atmospheric pressure, before air is entrained is critical in estimating the dispersion and rise of the release determined by the model. This is evidenced by the long narrow plumes predicted by Cdn 88 versus the short wide plumes of the interveners using very different inputs to the SLAB model for the same release. The Board expects some liquids to be present as an aerosol at the reduced temperatures associated with expansion to atmospheric pressure. A dense gas model is therefore required. The Board believes that a reasonable conclusion would be somewhere between the diverse range of predictions by the experts of Cdn 88 and interveners.

Frequency of Uncontrolled Sour Gas Releases

The Board concludes that there is no significant difference between the uncorrected blowout probabilities used by Cdn 88 and interveners. The Board believes that the annualization factors used by Cdn 88 are not applicable to drilling release probabilities or servicing release frequencies. For drilling, the release probability is an event-based statistic, and since there is one drilling event per year, the annualization factor is one. Therefore, the risk estimates presented by Cdn 88 for drilling are low by a factor of 13. For servicing, the release frequency is based on the assumption that one servicing operation is made per well per year. The servicing rate is already on an annual basis, and therefore, should not be reduced by the annualization factor of 26 used by Cdn 88.

An application of the critical well factor to reduce the blowout probability is acceptable to the Board. Although no statistical evidence exists, in the Boards judgement the 0.25 critical well factor and the application of a depth correction factor is reasonable for this situation. The Board believes that the exploratory well factor is inter-related to the depth correction factor. Cdn 88 did not mention either of these factors in its risk analysis. Given the previous EUB-published work on well blowout probabilities, the Board expected discussions on why deeper exploratory wells tend to have higher blowout rates and what is being done by Cdn 88 to prevent similar cases from happening.

The Board notes that the term "immediate ignition" has been used loosely by industry and could lead to some confusion about ignition in the mind of the public. The probability of ignition cannot be accounted for until attempts have been made to ignite the release. Obviously a one minute sour gas release would have considerably less consequences than a 30-minute release. The Board believes that the risk results presented by the interveners showing the importance of reduced ignition delay time are significant. Cdn 88 committed to demonstrating that an ignition delay time of one minute to quickly evacuate the drilling crew to safety is achievable. A similar commitment will be required for servicing operations should the well be approved.

Consequence Modelling

Given the work that has been done in Alberta to date, the Board believes a probit approach with triple-shifted Rijnmond parameters is helpful in evaluating the risk from sour facilities. The Board notes the Advisory Committee specifically recommended that irreversible health effects, defined by the triple-shifted Rijnmond parameters be identified as a criteria for defining consequences from sour gas exposure. The Board believes these conservative results can then be used to estimate risk for comparison to risk acceptability guidelines. Mitigative steps can also be adopted to reduce the identified risk and to avoid unnecessary risk on the hypersusceptible population.

The Board notes that the lethal threshold of 500 ppm for H₂S presents different results to those using the triple-shifted Rijnmond parameters. The Board also notes that Cdn 88 had redone the SLAB risk assessments using a triple-shifted probit parameter approach and concluded

Cdn 88's H₂S modeling using SLAB is of limited use to the Board because the source term is inappropriate. Given the high H₂S, carbon dioxide and heavy hydrocarbon composition of the sour gas, a fraction of the sour gas release is expected to be in the form of an aerosol once it has expanded to atmospheric pressure and before air is entrained. The SLAB model simulates the initial dense behavior as air is added and the liquids evaporate resulting in a sour gas-air mixture. The Board considers the results presented by the interveners to be more representative of a potential release than those of Cdn 88.

The concentration contours of maximum predicted ground-level SO₂ provided by Cdn 88 have purpose in verifying the size of the EPZ but they are not useful during an emergency. The Board suggests that plume isopleths for the range of dispersion conditions would be helpful to emergency measures organization. The Board expects Cdn 88 will work with all affected emergency measures organizations to assist in the preparation of such plans.

Risk Evaluation

Public safety is of paramount concern to the Board and therefore the risks of sour gas developments are taken very seriously. Cdn 88's submissions suggest that the risks associated with level 4 wells are negligible relative to other risks typically encountered in society. Recognizing adjustments discussed earlier for source term, frequencies and probit parameters, the Board believes Cdn 88 has underestimated the risks. The Board also believes the use of over conservative parameters in risk assessments would present an unrealistically high level of risk from such facilities. The Board suggests that realistic factors which have a foundation in fact or judgement should be the norm to evaluate risk. Where the risk is found to be acceptable, but mitigative steps can be taken to reduce or minimize that risk, such steps should be taken. Using the risk estimates supplied by the interveners as an upper estimate, the Board believes by strict adherence to the risk control measures, required in the existing regulations and the extra conditions included in this decision, the actual risk to the public to be very small.

In the Board's view, the proposed well does not represent a materially higher risk than existing facilities throughout Alberta. However, with respect to acceptable levels of risk, the Board disagrees with Cdn 88's conclusion that the Advisory Committee suggested an absolute risk of 10^-4 to be acceptable. Risks of 10^-4 were predicted within level 4 pipeline right of ways in the Advisory Committee studies. As no one lives within 100 m of level 4 sour gas pipelines, the public is not exposed to these maximum levels. The Board notes however that the Advisory Committee concluded after extensive study and consultation that the present setbacks from all sour facilities are acceptable. The Board also notes that the risk at a setback of 100 m from a level 4 pipeline is about 10^-5 (10 in a million) in the Advisory Committee studies and that this is comparable to what other jurisdictions consider acceptable for low population densities. The Board does not believe it appropriate to adopt specific limits for acceptable levels of individual risk but rather considers each application on its own merits.

The Board does not agree with justifying the size of an emergency response planning zone on the basis of predicted risk. Emergency response planning is done to facilitate appropriate actions being taken for a reasonable worst-case release scenario to ensure the safety of the public. The priority in such remote events must be on the public in close proximity to the facility where the risks are the greatest. Sound contingency plans should be in place to advise those within the awareness zone who could be affected but are in little immediate danger. Companies cannot be expected to plan for the absolute worst case imaginable event, but they must plan for events that have a reasonable chance of occurring. Mitigating factors such as igniting the release can be accounted for recognizing that there could be a modest delay in ignition.

EMERGENCY PREPAREDNESS

The Board is satisfied that Cdn 88 has developed a comprehensive ERP that meets EUB general requirements, although some enhancements are necessary due to site specific circumstances as discussed in this section. The Board requires operators to develop site specific ERPs for the drilling of sour gas wells. Each plan must identify the size of the EPZ being used and must address site specific measures to be taken to protect the public in the event of an emergency. Although the operator's plan is expected to focus on actions to protect the public within the EPZ, it must also address how the plan will be co-ordinated with municipal and provincial plans for assistance and protection of the public beyond the EPZ. Board policy provides applicants with the opportunity to apply to use a reduced EPZ, where the calculated EPZ would be considered unmanageable in the early stages of an emergency. The criteria used to determine whether a reduced EPZ is appropriate includes a review of the size of the calculated EPZ, local terrain, population density, evacuation, ignition and sheltering criteria, and air quality monitoring strategy. Several components of the ERP would usually require enhancement if a reduced EPZ is approved.

The Board notes that Cdn 88 has proposed to use a 4-km EPZ with an additional awareness zone to 8-km. The purpose of the awareness zone would be for notification only to residents of drilling and testing operations and no further emergency response measures have been defined. As it is important that the operator and the public understand the possible extent of the hazard area, the Board will require that Cdn 88 work with parties within the EPZ to assure it is complete and that the public has an opportunity for input, to understand the content and to appreciate the nature of the follow up. The Board notes that Cdn 88 has addressed public safety beyond the 4-km EPZ in the draft ERP by way of the stringent ignition criteria and co-ordination of the plan with the MD. However, in this particular case, the Board believes that Cdn 88 should identify sensitive individuals within the 8-km awareness zone. The ERP should outline procedures to notify those designated as sensitive at a level 2 emergency and provide the option to evacuate and to evacuate all those who are sensitive if the well is ignited. These measures would provide sensitive individuals protection from any exposure to SO₂. Although the draft ERP does include SO₂ evacuation criteria, based on provincial criteria no procedures have been defined.

A common safety measure for a sour gas release is to ignite the gas. Igniting the well would convert the H₂S in the gas to SO₂ which would be more widely dispersed due to thermal rise and limit the public risk. The Board recognises that there is concern over the extent of the area which may be impacted by SO₂. However, it is the Board's judgement that SO₂ levels would not likely reach provincial evacuation levels and that procedures, including those noted above would be in place to assist those who may experience discomfort. Given the circumstance, the Board believes that any uncontrolled flow of sour gas should be ignited immediately to provide assurances that prompt action is taken and impacts are minimized. The Board expects the ERP to be modified to reflect this condition and to reflect the management protocol to implement the necessary actions.

The Board is confident that immediate ignition of a release is possible if the crew responsible is adequately trained, and that, once the well is ignited, it would remain burning due to the mixture of methane and H₂S. The Board notes that Cdn 88 has proposed redundant ignition equipment, including an automatic ignition system at the well site, an auxiliary automatic ignition system at the emergency control centre and a flare gun. While the Board is satisfied that the basic evacuation criteria proposed by Cdn 88 should be acceptable, it will require it to be tested to assure all individuals required to implement the evacuation are sufficiently familiar with the details. According to the draft plan, evacuation of the public within the EPZ would begin at a level 1 emergency and would be completed at a level 2 emergency before there is any risk of exposure to H₂S. The Board would expect Cdn 88 to identify and include in its ERP procedures to address special evacuation needs of the public.

With respect to evacuation of animals, protection of the public is of primary importance and should remain the focus of a site-specific ERP. Evacuation of animals may be possible at the early stages of a well control problem before a release occurs but only if it is safe to do so.

The Board considers Cdn 88's proposal to use the computerized telephone call out system to deliver emergency messages to be acceptable. It notes that the computerized messages would be followed up with telephone contact and a physical search of the area to ensure evacuation has taken place. The system should be in place and tested before the well is spudded to assure it performs as expected. With respect to ambient air quality monitoring, the Board believes that two mobile monitoring units stationed at the well site during drilling in the sour zones and the four stationary monitors located at sub-divisions beyond the 4-km zone would be adequate to detect and monitor H₂S and SO₂ levels n the event of an emergency.

The Board notes that effective emergency response protocols rely on the public to be knowledgeable about the event and to respond in an informed way to the measures taken. To do so, the ERP should be developed with assistance of the public and address reasonable concerns raised by them.

The Board believes that it is Cdn 88's responsibility to ensure that an adequate ERP is developed and in place to protect the public in the event of a well control emergency. The Board recognizes that such a plan would include responsibilities of other parties to work with the company personnel in responding. It is acceptable to and expected by the Board that the operator co-ordinates its plan with municipal and government plans. Local and provincial authorities also share responsibility for protection of the public and should have complementary plans in place to provide assistance. In this case, the MD has agreed to assume responsibility for emergency response measures beyond 4-km, although this agreement has not been finalized and does not eliminate Cdn 88's responsibility to provide assistance. The Board will need to be satisfied that adequate municipal and provincial resources would be available to assist the MD. The Board notes that the MD has acknowledged responsibility for protection of the public within its area of jurisdiction and must be prepared to respond regardless of the type of emergency. The Board expects the written agreement between Cdn 88 and the MD to be finalized and submitted to the Board prior to drilling if a licence is issued. The Board notes the concerns raised by the City and some agencies that large scale evacuation may be necessary in Calgary. Given the available information such actions are both unreasonable and unlikely.

The Board expects Cdn 88 to review details of the plan and update all information including resident information, mapping, emergency contacts and resources and submit the final plan to the Board for review and approval prior to drilling if a licence is issued.

The Board also believes that it would be necessary to test all procedures detailed in the ERP prior to drilling to ensure that response personnel are adequately trained and capable of carrying out responsibilities. The Board notes that no evidence was presented to suggest that Cdn 88 would not be capable of responding to an emergency, however, this is difficult to assess without testing the ERP. The Board expects Cdn 88 to test all key components of its ERP, including the chain of command, computerized telephone call out system, communications equipment, communications linkages including outside services, evacuation procedures, and ignition procedures and to satisfy the Board that the systems are in order for immediate implementation.

The Board expects Cdn 88 to implement a system of safety briefings for all individuals in the drilling operation to assure full knowledge of the ERP and the actions to be taken, in particular to matters relating to the ignition criteria.

LAND USE IMPACTS

The Board recognizes the exploratory nature of the proposed well and agrees that only a conceptual development plan is possible at this stage. The Board considers the plan to be adequate at this time. The Board further recognizes the difficulty in providing details with any degree of certainty. In the Board's view it is premature to determine the optimum development plan. The Board notes that all of the five existing, nearby processing facilities have the potential required spare gas capacity, but that only one has the spare sulphur capacity.

The proposed well is consistent with current land use zoning. Continued country-residential development will make it increasingly more difficult to locate facilities and pipelines in the future, so it is reasonable to determine the potential of the reserves now. Should the well be drilled and found to be commercial, the Board expects future developments to take into account the conflicting priority of resource recovery and residential growth.

As noted by Cdn 88, future developments will require separate applications and the Board will deal with them at that time. If this well proceeds and is successful, the information will allow the proponent to refine the definition of the resources. At that time a detailed development plan will need to be developed in consultation with the stakeholders, before additional wells or facilities may be considered by the Board.

PUBLIC CONSULTATION

The Board accepts that Cdn 88 provided information packages containing information about the well characteristics, its proposed location, and about the ERP. The Board notes that Cdn 88 attempted a door-to-door consultation program and held a public meeting to provide further information to the public. The Board believes that these types of public notification and consultation processes are necessary. However, the Board believes that proponents must recognize and evaluate the nature of a proposal, and the vast complexities and public unknowns associated with it in carrying out a satisfactory consultation program.

The Board notes the concerns of the interveners who, in most cases, believed that the information provided was misleading, difficult to understand, and left them with uninformed perceptions. The Board further notes that the interveners' attempts to obtain additional information to understand the details of the application, the technical basis and exact nature of the risks involved, proved to be frustrating, painstaking and time consuming. The interveners indicated that when information was provided, it was piece-meal, revised repeatedly and a constant moving target. The Board believes that proponents should be proactive in their attempts to assist the public to understand a project, especially when the public has assembled a willingness to work with a proponent. The Board believes Cdn 88 would have greatly assisted the interveners and the Board by providing information in a more consistent, accurate and timely fashion, that would have helped the process to be more efficient leading up to the hearing.

The Board notes that the actions taken by Cdn 88 appear to have compromised the integrity of the company in the mind of the public. It left the interveners with little sense of security, and prompted a lack of trust. The Board notes that as a result, many of the interverners did not believe Cdn 88 would be a responsible operator able to ensure that the public safety issues could be met.

The Board accepts Cdn 88's stand that communication is a two-way street. The Board notes that in many cases during Cdn 88's notification and consultation process that there may have been an unwillingness by the public to participate in meaningful dialogue. However, the Board believes that the perception by the interveners of Cdn 88s unwillingness to understand the many different consultation needs of the public led to a polarization. The Board believes proponents need to be aware of these needs and be sympathetic in attempting to understand these needs.

The Board believes that appropriate notification and public consultation must be conducted well in advance of the submission of an application to the Board. It must be thorough enough to allow all parties who are or may be affected to be sufficiently aware of not only the proposed project, but the Board process as well. The Board believes that the public must have sufficient information to participate meaningfully in the decision-making process, to voice their concerns, have their concerns heard and properly addressed, and if possible, resolved. The proponent's information must be extensive, consistent, factual and disclosed in a timely way, and if the proposal is part of a larger project, the proponent should be prepared to discuss the entire project and to explain how its components complement other energy development plans in the area. Cdn 88 did not meet this level of public notification and consultation. The consequence was misapprehension of the risks, inflamed relationships, and an unnecessary anxiety. Given the conduct, the Board can only conclude that the Company is unable or unwilling to embrace the spirit of public consultation expected from operators in Alberta. In the Board's view the Company needs to expend considerable effort to rebuild the trust with the community or turn over the operation to others who have that trust.

DECISION

The Board believes that the public safety risks associated with the proposed well are representative of normal industrial risks accepted by society and that the well can be drilled safely. Additionally, the Board believes that these risks are similar to existing facilities and are acceptable if managed through strict adherence to the risk control measures required in the existing regulations. However, the Board is not satisfied that the public within the EPZ and associated awareness zone understand the ERP and how it would be executed. Very few individuals have seen and or have participated in an ERP exercise to understand its implementation, which the Board believes lead to the perceived risks by the public.

The Board is also concerned with the state of readiness of Cdn 88 to involve the county and others in implementing its ERP. The Board believes that Cdn 88 should carefully design and implement a process that would allow members of the public who are prepared to participate in completing the ERP do so in a meaningful way.

Given the above, and having considered all of the evidence, the Board is prepared to issue the well licence after Cdn 88 has undertaken, committed to, and will be submitting the following for Board review:

1. Cdn 88 shall develop documented management processes, including policies and procedures for equipment design, specification, procurement, construction and operations for drilling, completing and testing the well. An assessment of the effectiveness of the management processes shall be audited and endorsed by a suitably qualified third party before submission to the EUB.
   
   
2. Cdn 88 shall satisfy the Board that the equipment and procedures to be used by the contractors selected are suitable for the intended service for drilling, completing, and testing this well. Additionally, Cdn 88 is required to demonstrate to the Board that all personnel employed in this operation are experienced in sour gas drilling operations and hold the necessary certifications.
   
   
3. Cdn 88 shall develop a casing bowl welding procedure by a qualified professional engineer to be included in a detailed drilling plan.
   
   
4. Cdn 88 shall submit a report respecting the review of steel mill heat certificates for the casing and drill pipe to be used in the construction of the 10-35 well.
   
   
5. Cdn 88 shall satisfy the Board that ARP 1.2.5 New Grade E Specifications and/or ARP 1.2.6 SS-95 Drill Pipe Specifications or better will be used for the drilling of the 10-35 well.
   
   
6. Cdn 88 shall commit to daily briefings of the EUB Calgary South Field Centre, including submission of daily drilling reports during the critical period.
   
   
7. Cdn 88 shall notify EUB Field Surveillance personnel and have them attend pre-spud and pre-critical zones penetration safety meetings.
   
   
8. Cdn 88 shall commit to detailed EUB drilling rig inspections prior to spud, and drill out of intermediate casing, including blowout prevention drills.
   
   
9. Drilling and testing in the critical zone shall not take place other than during the summer months, in particular, not before April nor after October.
   
   
10. Cdn 88 shall demonstrate and implement immediate ignition within one minute of the ignition criteria being met.
    
    
11. Cdn 88 shall test all key components of its ERP, including the computerized telephone call out system, communications equipment, communications linkages including outside services, evacuation procedures, and ignition procedures and satisfy the Board that the systems are in order for immediate implementation, prior to drilling into the critical sour zone.
    
    
12. Cdn 88 and the MD shall identify sensitive individuals within the additional 4-km awareness zone. Additionally, Cdn 88 shall update its ERP to include procedures to notify those designated as sensitive at a level 2 emergency and provide the option to evacuate. All those who are sensitive must be evacuated if the well is ignited.
    
    
13. Cdn 88 will satisfy the Board that all individuals involved in implementing the ERP are familiar with the program and capable of implementing it as required. Cdn 88 shall alert the public included in the ERP on the progress of drilling each week until drilling and testing is complete.
    
    
14. Cdn 88 shall notify all individuals in the EPZ and awareness zone prior to drilling in the critical zone.
    
    
15. Cdn 88 shall provide two air mobile monitoring units stationed at the well site during drilling in the critical sour zone. The Board believes that these mobile air monitoring units and the four stationary monitors located at sub-divisions beyond the 4-km EPZ would be adequate to detect and monitor the level of H2S and SO2 in the event of an emergency.
    
    
16. Cdn 88 shall satisfy the Board that adequate municipal and provincial resources would be available to assist the MD for protection of the public within its area of jurisdiction. The Board must be satisfied that the MD is prepared to respond regardless of the type of emergency. The Board expects a written agreement between Cdn 88 and the MD to be finalized and submitted to the Board prior to drilling.
    
    
17. Cdn 88 shall review details of the ERP and update all information including resident information, mapping, emergency contacts and resources and submit the final plan to the Board for review and approval prior to drilling.
    
    
18. Cdn 88 shall work with all affected emergency planning organizations to prepare contingency plans in the event of an emergency.

END

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