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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
At these events, our Labour & Employment lawyers will present an informative summary of some of the most interesting and significant labour and employment cases from the past year and provide timely and practical advice on how changes to the law will affect the workplace in 2017.
This year the Labour & Employment Year in Review seminars will be held in Edmonton, Calgary and Yellowknife, with the Yellowknife seminar once again being broadcast via webinar for those in the north who are not able to attend in person.
Join Glenn Tait and Kendal Gummer as they go “back to basics” on the laws impacting employers in Alberta, the Northwest Territories and Nunavut. Whether you’re looking for a refresher on recent legislative changes or an introduction to key labour and employment law concepts, this webinar will provide attendees with a strong foundation in the following areas
2016 was a busy year from some of the energy regulators. The National Energy Board was moving two pipeline projects forward with approvals of the Trans Mountain expansion and Enbridge's Line 3, both with Federal Government approvals following in December 2016.
This post provides an overview of the new details regarding the REP and an update with respect to the upcoming AESO education session on Alberta's capacity market to be held in Calgary on February 7th, 2017.
The Alberta Government ushered in sweeping legislative changes that spanned from broadly-based carbon levies to a specific cap on oil sands emissions. In 2016, no industry was affected more than power generation.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).