On February 24, 2012 the Energy Resources Conservation Board
(ERCB or Board) released its decision in the matter of Kallisto
Energy Corp.'s application for a well licence in the Crossfield
East field. This decision saw the ERCB assess an alleged conflict
between the provincial interest in developing the oil and gas
resource and protecting the underground natural gas storage
Kallisto applied for approval to drill a vertical well targeting
the Basal Quartz (BQ) formation. The proposed well is located
approximately 1 km from the boundary of the CrossAlta Gas Storage
& Services gas storage reservoir. CrossAlta, a joint venture of
TransCanada Energy and BP Canada, uses the depleted Amoco East
Crossfield Elkton pool to store natural gas for customers
transported on TransCanada's mainline.
In 2001, another nearby well (the 7-25 well) was fracked in the
BQ "A" pool. Subsequently, it became apparent that there
was communication in the 7-25 well between the BQ A and the Elkton,
CrossAlta's storage reservoir. CrossAlta argued that the
fracking of the 7-25 well induced communication with its storage
reservoir. CrossAlta objected to Kallisto's application on the
basis that the drilling and fracking of the proposed well would
similarly pose a significant risk to the integrity of its gas
In its decision, the ERCB stated that Kallisto's application
raised the following 3 issues:
The risk of communication between the Elkton gas storage
facility and the proposed well;
The rights of the parties and the public interest; and
The mitigation of risks.
On the first issue, the Board found that on balance the evidence
did not support CrossAlta's view that pressure communication
between the BQ A and the Elkton formations was caused by the small
(5 tonne) frac at the 7-25 well. Further, the Board held that the
proposed well was too distant from the storage reservoir for
fracking to be of concern. The Board also rejected CrossAlta's
position that local geological conditions were such that there was
a high risk of communication between the well and the storage
On the second issue, the Board held that while gas storages
facilities perform a public function, most of CrossAlta's
arguments were based on adverse impacts on its commercial interests
as opposed to the provincial public interest. Further, the Board
held that the risk to the integrity of the storage reservoir must
be balanced against the public interest in exploring for and
developing proximal hydrocarbon resources and, where the risk can
be appropriately and responsibly managed, such development should
On the third issue, given the Board's finding that drilling
and fracking the proposed well poses a low risk to the integrity of
storage reservoir, it found that commitments given by Kallisto to
obtain stabilized initial pressure data, pre- and post-frac, and to
limit the size of the fracture stimulation to 40 tonnes, were
acceptable to mitigate risk.
The ERCB's decision highlights that solid technical evidence
is required, by both applicants and objecting parties, to support
positions taken before the ERCB. Also, the decision reconfirms the
importance given to the Board's primary legislative objective
of fostering the orderly and efficient development of the oil and
gas resources of Alberta.
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