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News Release

December 16, 2003

FOR IMMEDIATE RELEASE

EUB DENIES CRITICAL SOUR GAS WELL APPLICATION BY POLARIS RESOURCES

Calgary, Alberta (December 16, 2003) The Alberta Energy and Utilities Board (EUB) today issued Decision 2003-101, which denies an application by Polaris Resources Ltd. to drill a level 3 critical sour gas well near Maycroft, Alberta. The decision also denies the companys applications for special gas well spacing, compulsory pooling, and a flaring permit.

Having carefully considered all the evidence, the EUB did not believe that it was in the public interest to approve the application. The EUB notes that this decision does not necessarily preclude further development in this area.

Areas of concern for the EUB included: the companys inability to provide detailed information about mitigation of potential environmental effects; the companys emergency response plan; the companys overall ability to deal with the challenges presented by this well; certain technical aspects of the well application, and ineffective communication and consultation with the community.

The applications by Polaris were considered at a public hearing held in Maycroft from September 9 to September 22, 2003.

The EUB regulates investor-owned natural gas, electric, and water utilities to ensure that customers receive safe and reliable service at just and reasonable rates, and ensures that the discovery, development, and delivery of Alberta's resources take place in a manner that is fair, responsible, and in the public interest.

This news release, backgrounder, and Decision 2003-101 are available on the EUB Web site at http://www.ercb.ca.

For more information, please contact:
Bob Curran, EUB Communications
Phone: 403-297-3392
Fax: 403-297-3757
Email: bob.curran@gov.ab.ca

NR 2003-48

Backgrounder

What conclusions did the EUB reach in this decision?

In considering whether to grant the well licence, the EUB must return to the initial question: Can this well be drilled by this applicant in this location at this time in a manner consistent with the public interest? After a careful review of all the evidence, the EUB concluded that it must deny the well licence application.

First the EUB repeats that the need for the well is solely to provide information. To grant the application, the EUB would have to be satisfied that the wells inherent risks to the environment and the public were sufficiently mitigated as to not outweigh the benefits for the well. The evidence brought before the EUB did not provide that measure of satisfaction in this matter.

The EUBs conclusion is based on the following:

• the inadequacies identified in Polariss drilling plan;
• the overall failure of Polaris to engage in an effective plan of consultation and communication, which not only hampered its initial dealings with local residents but caused serious doubt as to Polariss ability to properly consult and communicate on an ongoing basis, thereby undermining its ability to implement many of its plans for mitigation;
• the inadequacies in Polariss assessment and mitigations of environmental impacts;
• the inadequacies of Polariss development plan;
• the inadequacies in Polariss ERP; and
• the lack of a coherent management plan that would outline how Polaris would be able to deal with the eventualities of a project of this magnitude in light of its size and Polariss lack of experience coupled with its own lack of resources.

In light of these considerations, collectively the EUB is of the view that it cannot in the public interest grant the application. However, the EUB must emphasize that any future application would be considered on its own merits and that this decision should not be perceived as necessarily excluding resource development in this area.

The EUB concludes that as a result of the foregoing findings, it will not approve the applied-for licence for the 11-32 well. This disposition of the well licence application renders moot the special spacing and compulsory pooling applications. However, the EUB sees significant benefit in completing its analysis of and decision on these applications as well. In addition, the EUB believes that the flaring permit application is a unique item bearing further consideration here. In light of this, the EUB herein provides the reasons for its disposition of these applications without the normal recitation of applicant and intervener evidence.