On April 4, 2013, the Energy Resource Conservation Board (ERCB
or Board) denied applications by Bernum Petroleum Ltd. (Bernum) for
a facility license and two well licenses. The applications involved
surface locations in the Bearspaw area between Calgary and
Cochrane. Bernum had previously applied for a licence to drill a
single well from essentially the same location; that application
was also denied by the Board, in November 2011 (see our earlier
The Importance of Assessing Alternative Sites").
The decision is of note for the ERCB's comments on the
acceptability of continuous flaring in close proximity to
residential development and the need for applicants to consider the
full extent of energy projects located in areas with substantial
residential development. Also interesting is the fact that it is a
rare split decision by the ERCB.
Bernum applied for approval of a two-well battery for its proposed
wells. Bernum's economic evaluation concluded that gas
conservation would not be economic. Bernum therefore proposed to
continuously flare or incinerate solution gas until conservation
became economic, which it admitted could take several years. In
denying the facility application, the Board stated that it was not
convinced that gas conservation would be uneconomic, noting that
Bernum presented a "worst case scenario" to justify
The ERCB also considered the impact of flaring on the potential
future residential development of the land. The Board concluded
that gas conservation would eliminate the 500 metre flaring setback
and thereby substantially reduce concerns about its impact on
future country residential development.
The flaring setback is contained in ERCB Directive 60, which
prohibits flaring of volumes greater than 900 m3/day within 500
metres of an existing residence but permits the construction of
new residences within 500 metres of a flaring battery. The
Board found that allowing new development within 500 metres of the
battery would be "inconsistent" when it is planned
country residential development.
Bernum argued that its plan to drill both wells and construct the
battery on a single surface location minimized surface impacts.
However, Bernum acknowledged it had plans to drill additional wells
and would require at least one more surface location to accomplish
The landowners argued that the Board must consider not only the
two wells applied for but also the future wells. They also argued
that the Board must consider the country residential character of
the neighbourhood and submitted evidence that while their land is
currently agricultural, it is ripe for residential
The ERCB split 2-1 on the issue of the well applications. The
Board unanimously concluded that there was another surface location
from which Bernum likely could drill all the wells, not just the
first two. It also concluded that country residential development
was likely to occur and therefore the impact of flaring on that
development was an important consideration. Finally, the Board
unanimously agreed that flaring would have a significant adverse
effect on future development potential.
The ERCB split on whether the well licences should be approved,
with the majority finding that they should not because Bernum
failed to take into account the impact of its entire development
and the future development potential of the lands. The majority
stated that an appropriate balance that would allow the minerals to
be developed while also allowing the landowners to realize the
future development potential of their lands has yet to be
In several previous decisions, the ERCB has been unwilling to deny
well licence applications based on impact on future development
potential—actual approved developments were required. In the
Bernum decision, the Board has signaled that if a proposed well is
to be drilled in an area with obvious existing and future
residential development, applicants will be held to a higher
standard in terms of disclosing full development plans and showing
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