Oil and Gas Appeal Tribunal

Transcription

1 Oil and Gas Appeal Tribunal Fourth Floor, 747 Fort Street Victoria, British Columbia V8W 3E9 Telephone: (250) Facsimile: (250) Mailing Address: PO Box 9425 Stn Prov Govt Victoria BC V8W 9V1 DECISION NO OGA-007(a) In the matter of an appeal under section 72 of the Oil and Gas Activities Act, S.B.C. 2008, c. 36. BETWEEN: Karl Bryce Mattson APPELLANT AND: BC Oil and Gas Commission RESPONDENT AND: ARC Resources Ltd. THIRD PARTY BEFORE: Cindy Derkaz, Panel Chair DATE: September 12 and 13, 2016 PLACE: APPEARING: Dawson Creek, BC For the Appellant: For the Respondent: For the Third Party: Karl Bryce Mattson and Tanya Clary Andrea Jarman, Counsel Rick Williams, Counsel APPEAL [1] Karl Bryce Mattson appeals the permit amendment issued by the Oil and Gas Commission (the OGC ) to ARC Resources Ltd. ( ARC ) on August 7, The amendment increases the maximum permitted hydrogen sulfide ( H 2 S ) content from 0.5% to 1.4% 1 in ARC s natural gas pipeline (the Pipeline ), which is located, in part, on Mr. Mattson s property. [2] The Oil and Gas Appeal Tribunal has the authority to hear this appeal under section 72 of the Oil and Gas Activities Act, S.B.C. 2008, c. 36 (the OGAA ). Section 72(6) of the OGAA gives the Tribunal the power to confirm, vary, or rescind the determination, or to send the matter back, with directions, to the person who made the determination. [3] The scope of a land owner s appeal is limited by section 72(2) of the OGAA, which provides that a land owner may appeal a determination only on the basis that the determination was made without due regard to (a) a submission previously made by the land owner, or (b), a written report submitted to the OGC. [Underlining added] 1 Gas containing H 2 S is known as sour gas. It is highly toxic and fatal at levels of 1,000 parts per million (0.1%).

2 DECISION NO OGA-007(a) Page 2 [4] Mr. Mattson asks the Tribunal to rescind the permit amendment, and seeks related orders or directions from the Tribunal. BACKGROUND The Property and the Pipeline [5] Mr. Mattson lives with his partner, Tanya Clary, and his school-aged daughter, in a 103-year-old house on a farm near the community of Rolla, located approximately 20 kilometres ( kms ) northeast of the City of Dawson Creek, BC, and 10 kms from the BC/Alberta border. The farm has been owned by the Mattson family for many generations. Mr. Mattson has lived there all of his life. [6] In 2014, Mr. Mattson became the registered owner of the farm legally described as: The Northeast ¼, Section 31, Township 79, Range 14 W6M, Peace River District, Except Plan B3947 (the Mattson Property ) [7] In addition to the farm house, there are several outbuildings on the Mattson Property, including an art studio and guest/rental accommodation. Mr. Mattson and Ms. Clary run the small farm and work full-time at other jobs. In the summer, they host an art festival on the farm. [8] Rolla is in the heart of the natural gas field known as the Dawson Field in Northeast BC. ARC, and other companies, are actively carrying on exploration and production activities in the area. [9] Between 2002 and 2012, ARC designed and constructed the 2.36 km Pipeline, which is part of a gathering system used to transport sour natural gas from the north end of the Dawson Field to ARC s processing plant near Rolla. The Pipeline was authorized by a permit issued by the OGC in 2010, which allowed ARC to transport sour natural gas with a maximum H 2 S content of 0.5%. [10] The Pipeline crosses a number of quarter sections of privately-owned land, including the Mattson Property. The relevant portion of the Pipeline route is highlighted on Appendix A, attached to this decision. 2 A general description of the Pipeline route is as follows. [11] The Pipeline carries natural gas south from ARC s well site on the Southwest ¼ of Section W6M. The Pipeline runs parallel to the east side of Dokken/Parnell Road 3 (also shown as 213 Road), through the adjacent Northwest ¼ of Section W6M, where it crosses under Rolla Creek, and continues to the southern corner of that quarter section. The Mattson Property is on the west side of Dokken/Parnell Road, directly across from the Pipeline. The farm house and 2 Appendix A is a scanned copy of the map that was attached to the 2010 pipeline permit issued by the OGC to ARC. 3 The name of the road changes from Dokken to Parnell at or near the Mattson Property boundary.

3 DECISION NO OGA-007(a) Page 3 art studio are located approximately 91 metres and 40 metres, respectively, from the Pipeline. [12] From the southwest corner of Northwest ¼, Section 32, the Pipeline makes a 90-degree turn west, crosses under Parnell Road, and enters the southeast corner of the Mattson Property, where it makes another 90-degree turn to the south and exits the Mattson Property. The Pipeline then proceeds through the neighbouring Southeast ¼, Section W6M, parallel to the west side of Parnell Road. [13] The Pipeline was located in the southeast corner of the Mattson Property pursuant to a 2010 statutory-right-of-way agreement between ARC and Mr. Mattson s parents, Larry and Emily Mattson. This right-of-way agreement was registered on the title. The Pipeline is buried 1.5 metres below ground, and at a greater depth below Rolla Creek. The Permit Amendment and Appeal [14] In late 2014, ARC drilled a new well in the Dawson Field which initially tested at a H 2 S content of 0.9%. ARC plans to tie-in the new well to its existing gathering system, including the Pipeline, to transport the gas from the new well to its processing plant. To do so, it requires an amendment to its permit to accommodate the flow of natural gas with a H 2 S content higher than the permitted 0.5%. [15] In early 2015, ARC began the permit amendment application process, which requires notification and consultation with land owners on the proposed application, obtaining an engineering assessment, and other things. [16] ARC s application to the OGC to amend the permit was one of 19 concurrent applications, involving 12 land owners. ARC notified each of the land owners of its intention to apply to the OGC for approval to increase the permitted concentration of H 2 S from 0.5% to 1.4%. It also notified the Peace River Regional District. Mr. Mattson was the only land owner who expressed a concern. The Peace River Regional District did not respond. [17] ARC s April 15, 2015, notification letter to Mr. Mattson stated, in part: The changes are required due to new drills in the area producing higher H2S concentrations than anticipated. As a landowner/resident/occupant or other affected party falling within the prescribed consultation radius, and pursuant to section 13 of the Consultation and Notification Regulation, you may provide a written response to ARC within 21 days of receiving this invitation to Consult that does one or both of the following: (1) sets out the reasons why the proposed activities that will be the subject of ARC s application to the OGC should not be carried out or should be modified; and or (2) request a meeting with ARC to discuss the proposed activities.

4 DECISION NO OGA-007(a) Page 4 Under Section 22 (5) of the Oil and Gas Activities Act, a submission in writing can also be made directly to the Oil & Gas Commission prior to a permit being issued for the above-mentioned project. Future Development ARC has an on-going exploration and development plan within the Dawson area. ARC will continue to drill and tie-in wells as part of this development. All new pipelines and facilities will require OGC approval and landowner/resident approval and notification. [Bold in the original] [18] Mr. Mattson responded to ARC by on April 23, 2015, requesting a meeting to discuss the proposed amendment. [19] On June 11, 2015, ARC employees met with Mr. Mattson and Ms. Clary at their residence. In attendance were: Kris Kruse, Senior Operations Production Engineer; Jordan Oliver, Foreman; and Darren Rosie, Senior Surface Landman. ARC prepared minutes of the meeting dated June 16, 2015 (the Minutes ). [20] On June 16, 2015, Mr. Rosie ed the Minutes to Mr. Mattson for review and asked Mr. Mattson to advise whether he agreed with them. Mr. Rosie followed up by on June 26 th, and again on August 4 th, when he advised: We haven t heard from you regarding the minutes of our June 11 th meeting so I ve taken that as you being in agreement with them. I want to let you know the applications and the minutes have been submitted to the OGC and they are in the process of making a decision on the applications. Please let us know if you have any comments.. Please also be advised that you also [may] make a written submission to the OGC under section 22(5) of the Oil and Gas Activities Act. [21] Mr. Mattson did not respond to ARC s s, nor did he make a submission to the OGC. [22] The Minutes formed part of ARC s application to the OGC for the permit amendment. [23] Fereshteh Bahramian, Pipelines Engineer, OGC, was the decision-maker for the permit amendment application. She considered ARC s application, including the Minutes, and approved the permit amendment on August 7, [24] By letter dated August 10, 2015, the OGC notified Mr. Mattson that a permit amendment had been issued to ARC, increasing the maximum permitted H 2 S content from 0.5% to 1.4%. The notice advised Mr. Mattson that he may appeal the permit amendment to the Tribunal under section 72 of the OGAA. [25] Mr. Mattson s Notice of Appeal was received by the Tribunal on August 21, He stated that the approved increase in H 2 S in high pressure lines next to

5 DECISION NO OGA-007(a) Page 5 his house and studio is extreme and unacceptable. His grounds for appeal, summarized by the Panel, are as follows: The permitted increase in H 2 S is based on future projections and exceeds the current level needed by ARC. Any increases in H 2 S should be in smaller increments to allow for better public notification and consultation. There needs to be a proper emergency response plan. There needs to be better and wider consultation zones. [26] In his Statement of Points filed with the Tribunal on January 13, 2016, Mr. Mattson requests the following remedies as summarized by the Panel: Rescind the amendment allowing a 0.9% increase in sour gas content in the Pipeline; order bi-yearly public distribution of ARC s pipeline Integrity Management Plan (the IMP ) to area residents within 200 metres of ARC pipelines that transport gas with a H 2 S content of 0.5% or greater; order air quality monitoring systems, personal safety equipment and leak-detection systems to protect all residents on the Mattson Property; and acknowledge devaluation of the Mattson Property due to the increase in permitted H 2 S in the Pipeline. [27] The OGC and ARC request that the Tribunal confirm the permit amendment and dismiss the appeal. They submit that many of the issues and arguments set out in Mr. Mattson s Statement of Points, and the relief sought, were not raised with either ARC or the OGC during the consultation period, and were not before the OGC decision-maker at the time of her determination. Therefore, the decision-maker could not have had due regard to these matters, and they are not properly before the Tribunal in this appeal. [28] The Tribunal set the hearing for February 3, The hearing was postponed until September 12 and 13, 2016, to accommodate Mr. Mattson s and Ms. Clary s schedule. ISSUE [29] The appeal raises the issue of whether the OGC s determination to issue the permit amendment was made without due regard to a submission previously made by the land owner, Mr. Mattson.

6 DECISION NO OGA-007(a) Page 6 RELEVANT LEGISLATION [30] Section 31 of the OGAA establishes the process which must be followed by a permit holder and the OGC to amend a permit. Amendment of permit 31(1) Before submitting an application under subsection (4) for an amendment to a permit, a permit holder must provide notice to the land owner of the land on which an operating area is located, and the notice must (a) provide a description of the proposed amendment, and (b) advise the land owner that he or she may make a submission to the commission under subsection (2). (2) A land owner who receives a notice under subsection (1) may make a written submission to the commission regarding the proposed amendment within 15 days of receiving the notice. (4) After complying with subsection (1), a permit holder may apply to the commission for an amendment to the permit holder s permit by submitting an application in writing. (5) On receipt of an application under subsection (4), the commission may require the permit holder to carry out one or more of the prescribed consultations or provide one or more of the prescribed notices, as applicable, with respect to the proposed amendment. (6) A permit holder required to carry out consultations or provide notice under subsection (5) must submit a written report to the commission regarding the results of the consultations or notice. (7) On receipt of an application under subsection (4) and after considering a submission made under subsection (2), if any, and the results of consultations carried out or notices provided under subsection (5), if any, the commission may amend the permit holder s permit or refuse to amend the permit. (9) If the commission amends a permit under subsection (7), the commission must provide notice to the land owner referred to in subsection (1) in accordance with subsection (10), unless notice was not required under subsection (1.1). (10)A notice under subsection (9) must (a) advise the land owner of the amendment,

7 DECISION NO OGA-007(a) Page 7 (b) state that the land owner may appeal under section 72 the decision to amend the permit if the amendment changes the effect of the permit on the land of the land owner, and (c) provide an address to which an appeal may be sent. [31] As noted above, section 72 of the OGAA establishes a land owner s right of appeal to the Tribunal; however, the scope an appeal is limited by section 72(2), which states: 72(2) A land owner of land on which an operating area is located may appeal a determination under this section only on the basis that the determination was made without due regard to (a) a submission previously made by the land owner under section 22 (5) or 31 (2) of this Act, or (b) a written report submitted under section 24 (1) (c) or 31 (6). [Underlining added] RELEVANT CASE LAW [32] In reaching a decision in this appeal, the Panel has considered and applied the following principles established by prior decisions of the Tribunal. [33] In an appeal before the Tribunal, the onus is on the appellant to prove, on the balance of probabilities, that the decision under appeal should be changed: Bell v. Oil and Gas Commission, (Decision No OGA-003(b), December 12, 2013) [Bell], at paragraphs 43, 44 and 45. Moreover, in Bell, the Tribunal found that an appellant must be able to establish that the concerns expressed are reasonable and legitimate and that the OGC, and now the Tribunal, should give them greater weight and should make a different decision. The Tribunal states as follows at paragraph 45 of Bell: [45] In the context of appeals to this Tribunal, the Tribunal has previously found that the Legislature has limited a land owner s grounds for filing an appeal which, by implication, narrows the types of issues that may be relevant in land owner appeals. Those issues must relate to the decision-maker s failure to have due regard to the appellant s written submissions (see Kerr v. Oil and Gas Commission, Decision No OGA-005(b), December 12, 2011). However, in that decision, the Tribunal also found that it could hear new evidence. This Panel finds that both the submissions in relation to the original submissions, and any new evidence provided in support of those submissions, must meet the burden and standard identified above. In particular, an appellant must be able to establish that the concerns expressed are reasonable and legitimate and that the OGC, and now the Tribunal, should give them greater weight and should make a different decision. [34] In Bell, the Tribunal found at paragraph 41 that the test is not whether an appellant s concerns are addressed to his or her complete satisfaction. Rather, a

8 DECISION NO OGA-007(a) Page 8 land owner s reasonable and legitimate concerns must be given due regard by the OGC. For this to happen, the appellant s concerns must have been before the decision-maker when she made the determination (OGAA, section 72(2)(a)). DISCUSSION AND ANALYSIS 1. Whether the OGC s determination to issue the permit amendment was made without due regard to a submission previously made by the land owner, Mr. Mattson. Mr. Mattson s concerns raised before the permit amendment [35] The Minutes of the June 11, 2015 meeting attended by Mr. Mattson, Ms. Clary, and representatives of ARC, was the only submission before Ms. Bahramian with respect to Mr. Mattson s concerns about the proposed permit amendment. [36] The Minutes indicate that Mr. Mattson and Ms. Clary identified three main areas of concern relating to the permit amendment application: the size of the H 2 S increase, the scope of notification and consultation, and the safety of their family. Specifically, the Minutes indicate that Mr. Mattson and Ms. Clary advised ARC as follows at the meeting: 1. The increase in permitted H 2 S from 0.5% to 1.4% is excessive given that ARC s new well had tested at 0.9%. ARC should apply for an increase to 0.9%, and re-apply for 1.4% if future test results show that it is necessary. 2. There is a need for better public information and wider consultation zones. The community of Rolla should be included in any consultations. 3. They are concerned about their family s safety in the event of a gas leak. They discussed ARC s Emergency Response Plan ( ERP ); maintenance of the Pipeline (ARC s IMP); the location of emergency shutdown valves and H 2 S monitoring. They would like a H 2 S monitor in their yard. They also would like more information about the existing pipeline system. [37] The Minutes state: ARC explained that they will send these minutes out for everyone to agree on and would not submit anything to the OGC once this was done [sic]. It was also explained that they [Mattson/Clary] could send a written submission to the OGC. [38] ARC ed the Minutes to Mr. Mattson on June 16, and followed up on June 26 and August 4, Mr. Mattson did not respond to ARC s s, nor did he make a written submission to the OGC. Mr. Mattson s evidence and argument at the hearing [39] Mr. Mattson and Ms. Clary explained that the summer is a very busy time for them and they did not have time to respond to Mr. Rosie s s. They also note that their internet service is unreliable. They state that they do not agree with

9 DECISION NO OGA-007(a) Page 9 ARC s summary of the June 11, 2015 meeting. However, no specific errors were brought to Panel s attention. [40] At the hearing, Mr. Mattson and Ms. Clary expanded upon two of the concerns identified in the Minutes, as follows. i) The size of the H 2 S increase [41] Mr. Mattson states that ARC has not demonstrated an operational need for an increase in maximum H 2 S to 1.4%. A buffer of 0.5% (the difference between the current results of the new well (0.9%) and the amended limit of 1.4%) is unreasonable given the danger to life posed by H 2 S. He argues that any permit amendment should be based upon current test results, not future projections: producers should be required to apply for increases in smaller increments, which would give land owners the opportunity to stay up to date, and would result in more transparency and accountability. ii) The family s safety [42] Safety is the primary concern for Mr. Mattson and Ms. Clary, and was the focus of their evidence at the hearing. They testified that they fear a deadly sour gas leak near their farm. They do not feel safe, and do not have trust or faith in the system. [43] Both Mr. Mattson and Ms. Clary gave evidence about incidents near the Mattson Property that have caused them to fear for their safety. For example, on December 20, 2010, there was a sour gas odor coming from ARC s well site on the Miller property, about ¼ mile (0.4 km) from the Mattson Property. It was determined to be sour gas venting from the surface of a well casing. The gas was ignited and burned off in a flare. This incident is not related to the Pipeline, which was not installed until [44] In addition, there have been times that Mr. Mattson s handheld H 2 S sensor has given a warning, and he had to leave home with his camper because of fugitive emissions. On other occasions, there have been fireballs as close as 1 km to the Mattson Property. However, there was no evidence of any incidents relating to the Pipeline. [45] Mr. Mattson and Ms. Clary also identified issues with flaring, smell, noise and traffic from natural gas exploration and production activity in the area, which diminish their use and enjoyment of the property. [46] Mr. Mattson and Ms. Clary also explained their concerns with flooding and erosion caused by Rolla Creek, which flows under Parnell Road and through the Mattson Property, about 95 metres from their house. Mr. Mattson states that Rolla Creek has washed out Parnell Road at least three times in the last 21 years. He provided photographs taken in the spring of 2016 showing such a wash out. Both Mr. Mattson and Ms. Clary are concerned about the integrity of the Pipeline buried beneath the Creek.

10 DECISION NO OGA-007(a) Page 10 [47] Further, as the farm house is in a low spot in relation to the surrounding topography, Mr. Mattson and Ms. Clary are concerned that this makes them more vulnerable in the event of an escape of sour gas, especially if there is unfavorable wind. Ms. Clary notes that ARC s emergency response public handout calls for a shelter-in-place procedure, and instructs residents to tightly close all outside doors and windows and to seal any gaps with tape. She points out that this is impracticable for a 103-year-old farm house. She also notes that the art studio and other buildings on the Mattson Property are not shown on ARC s emergency response map. [48] To address some of their safety concerns, Mr. Mattson states that ARC should provide emergency breathing apparatus for each of the occupants of the Mattson Property, as well as a high-quality air monitoring and H 2 S alarm system. Mr. Mattson and Ms. Clary are willing to take training in the operation of this equipment. [49] Both Mr. Mattson and Ms. Clary advised the Panel that they lack confidence in ARC s ERP and IMP. They are frustrated by not receiving information from ARC in a timely manner, and state that the information is not publicly available. They want more information about the Pipeline and safety measures. Ms. Clary believes that her requests to ARC for information are treated as an inconvenience. [50] Mr. Mattson and Ms. Clary state that they would be more comfortable with oversight by the OGC, rather than relying on a company to oversee itself. iii) Additional concerns [51] Mr. Mattson and Ms. Clary also raised the issue of a minimum setback for pipelines in respect to buildings. The Panel notes that there are currently no legislated minimum setbacks for pipelines in BC. [52] Mr. Mattson also sought an acknowledgement that there has been a decrease in the value of the Mattson Property because of the increase in permitted H 2 S from 0.5% to 1.4%. Mr. Mattson did not provide any evidence to support his claim. [53] In any event, the Panel finds that these two issues were not part of a submission previously made by the land owner, and were not before Ms. Bahramian when she made the determination to issue the permit amendment. Therefore, according to subsection 72(2)(a) of the OGAA, these matters are not properly before the Panel in this appeal, and the Panel will not address them further. The OGC s and ARC s evidence and argument [54] The OGC submits that Ms. Bahramian properly followed the legislated process, and considered all relevant materials before her when she made the determination to issue the permit amendment. [55] ARC submits that there is no basis to set aside or revise the OGC s decision, and that the appeal should be dismissed.

11 DECISION NO OGA-007(a) Page 11 [56] Ms. Bahramian testified that, for an amendment to increase the amount of permitted H 2 S in a pipeline, an applicant must provide: an engineering assessment; an updated pipeline implementation diagram; the design specifications of the pipeline; a report detailing the consultation or notification undertaken by the applicant; a map; and any concerns of land owners. [57] She confirmed that ARC provided this documentation, which included the Minutes. [58] In the Minutes, Mr. Mattson expressed a concern that there should have been wider consultation and notice in respect to the permit amendment. Ms. Bahramian testified that ARC exceeded the statutory requirements for notice and consultation. Based upon the requirements of the Emergency Management Regulation, B.C. Reg. 204/2013 and the Consultation and Notification Regulation, B.C. Reg. 279/2010, the consultation and notification zone for ARC s application is 480 metres. ARC used an emergency planning zone of 722 metres, and notified the Peace River Regional District. Mr. Mattson is the only land owner to respond with any concerns. [59] The other two topics of concern identified in the Minutes related to the size of the H 2 S increase, and safety. In reviewing ARC s application, Ms. Bahramian considered the following questions: Is there an operational need for the increase in permitted H 2 S? Is the pipeline engineered to handle H 2 S? Is the pipeline in suitable condition? Are there any land owner concerns and have they been addressed? [60] Based upon the information before her, Ms. Bahramian was satisfied that the application should be granted. Both the OGC and ARC presented evidence in support of Ms. Bahramian s conclusion, and in response to Mr. Mattson s concerns. i) Is there an operational need for the increase in H 2 S? [61] Ms. Bahramian noted that, at the time of ARC s application, another producer s well in the area had tested close to 1.4% H 2 S. Based on the trend of higher test results in the north end of the Dawson Field, and the fact that this is where ARC plans to drill new wells, she concluded that there is an operational need for an increase in permitted H 2 S to 1.4%. [62] Ms. Bahramian stated that it is appropriate to licence a higher amount than the test results to provide a buffer. Before drilling, a producer needs to know that it can flow gas through its pipeline. If the H 2 S content from a well is higher than

12 DECISION NO OGA-007(a) Page 12 the permitted maximum it is dealt with by flaring, which releases sulphur dioxide into the atmosphere. [63] Kristopher Kruse, Senior Operations Production Manager, ARC, oversaw the 19 applications for permit amendments. He testified that, since the application to amend the permit, the well has tested at 0.99% H 2 S. If the permit amendment had set the maximum H 2 S at 0.9%, ARC would have had to shut down and apply for another amendment, or use flaring. Mr. Kruse testified that, if gas can be flowed in-line, the typical time required for flaring drops from days, to 1-3 days. [64] Mr. Kruse stated that the application for an increase in maximum H 2 S was based on a test result of 1.3% H 2 S from a third party s Leucrota well. Since the permit amendment, the Leucrota well has tested at 1.4% H 2 S. ARC plans to drill to the south and west of the Leucrota well and would expect similar test results. ARC wants to tie-in the new wells to its gathering system. [65] Further, Mr. Kruse noted that, when the permit for the Pipeline was issued in 2010, H 2 S content was testing at 0.2%, but the permit approved a maximum of 0.5%. Even under the original permit the OGC built in a buffer for future increases. ii) Is the Pipeline engineered, and suitable, to handle the increase in H 2 S? [66] As part of its application, ARC provided an Engineering Assessment (the Assessment ) in accordance with section 3 of Pipeline Regulation, B.C. Reg. 281/2010. [67] The Assessment, prepared by Trevor Skippen, P.Eng. of TNT Engineering Ltd., states: The operating pressure and temperature of the pipeline in the proposed services will be the same as the current service. The pipeline design for a 0.5% H 2 S pipeline and a 1.4% H 2 S pipeline do not change. The pipelines were constructed out of the same materials that would have been used today. (page 3) [68] The Assessment reviewed ARC s operating records, considered the maximum corrosion factor, maintenance records, and emergency shut down and check valves. It concluded that the pipelines are acceptable for the increase in H 2 S content. [69] Based on Ms. Bahramian s review of the Assessment, the pipeline specifications and drawings, and the location of the emergency shutdown valves, she concluded that the Pipeline is suitable, and could handle the applied for increase in H 2 S content. iii) Have the land owner s concerns been addressed? [70] Ms. Bahramian considered Mr. Mattson s concerns as outlined in the Minutes, which were the only written submissions before her at the time of her determination. The Minutes identified concerns about their family s safety in the event of a gas leak. They were concerned with the adequacy of ARC s ERP and

13 DECISION NO OGA-007(a) Page 13 IMP, the location of emergency shutdown valves and H 2 S monitoring. They sought a H 2 S monitor in their yard, and wanted more information about the existing pipeline system. [71] In considering Mr. Mattson s concerns about emergency response, Ms. Bahramian noted that ARC has an emergency response program and a response contingency plan, as required by section 38(1)(b) of the OGAA. She states that these documents were prepared after the permit was issued, but the amended permit includes a condition that ARC must submit an updated ERP to the OGC prior to beginning operation of the Pipeline under the amended permit. [72] With respect to ARC s IMP, Ms. Bahramian notes that it passed an audit in 2014, and will be audited again this year. [73] Peter Dalton, Director of Public Protection and Safety Compliance Operations, OGC, gave evidence about emergency preparedness in the Dawson Creek area, and the emergency management exercises that are conducted. He stated that ARC recently conducted a desktop exercise in the Dawson Creek/Rolla area and met all criteria. Land owners were not invited to participate in this exercise. He was not aware of the configuration of the Mattson Property, nor did he address their specific concerns. [74] Mr. Kruse gave evidence about ARC s maintenance and inspection program, and about the location and operation of the Pipeline and safety equipment. He stated that the Pipeline does not surface at the Mattson property. He does not know how deep the Pipeline is buried below Rolla Creek, but expects that it would have been at a depth of five to six metres to meet a 1:100 year flood. [75] Mr. Kruse testified that emergency shutdown valves and H 2 S sensors are installed on the risers at each end of the Pipeline, 2.36 kms apart. The emergency shutdown valves are designed to fail closed (i.e., shut the system down) if there is an increase or decrease in pressure in the Pipeline. A decrease in pressure may be the result of a leak. [76] Cory Belliveau, Health and Safety Manager, ARC, provided an overview of ARC s emergency response program and training. In his experience, a H 2 S concentration of 1.4% is not extremely high. He has worked with a H 2 S level of 42% within the City of Calgary. [77] Mr. Belliveau stated that ARC s ERP is prepared for First Responders, and is updated whenever any operational change occurs, and at least annually. The ERP is approximately 1,200 pages, and is not usually distributed to land owners. However, in response to the concerns expressed by Mr. Mattson and Ms. Clary, he met with them in February 2016 and provided them with a complete digital copy. [78] Regarding Mr. Mattson s requests in his Statement of Points for air quality monitoring systems, personal safety equipment (e.g., emergency breathing apparatus), and leak-detection systems to protect all residents on the Mattson Property, Mr. Belliveau states that, in his view, it is not appropriate to supply personal breathing apparatus and survival gear for the residents of the Mattson Property. He notes that ARC requires medical clearance before employees are issued personal breathing apparatus, and training is required in the proper use of

14 DECISION NO OGA-007(a) Page 14 the equipment. Employees have the survival equipment because they may be sent into the source of the leak or other problem. [79] Mr. Belliveau states that ARC s ERP is based on keeping residents safe either by sheltering-in-place or evacuation. He said that residents can request that they be on the immediate evacuation list if their situation warrants. Further, he stated that ARC prefers monitoring sensors to be at well sites, rather than in residents yards. [80] In response to a question from the Panel, Mr. Belliveau undertook to amend ARC s ERP to note the location of both the art studio and the guesthouse on the Mattson Property, and to indicate that the family has requested immediate evacuation in the event of an incident. The Panel s Findings [81] The Panel finds that both Mr. Mattson and Ms. Clary were sincere and credible witnesses. It is clear to the Panel that they live in fear of a catastrophic incident occurring near their home and farm. [82] The Pipeline, which transports deadly sour gas, is located only 91 metres from their home and 40 metres from their art studio. The Creek that floods and causes significant erosion also flows over the Pipeline, approximately 95 metres north of their home. Mr. Mattson and Ms. Clary put up with the noise, odor and traffic that are caused by, or directly related to, the Pipeline, all of which affects their quiet enjoyment and use of the property. They are frustrated by the difficulties they have experienced in getting information from ARC about activities in the area. Mr. Mattson and Ms. Clary have no confidence in the oil and gas industry, or in its ability to keep them safe. [83] However, the narrow issue before the Panel is whether the OGC s determination to issue the permit amendment was made without due regard to a submission previously made by the land owner, Mr. Mattson. As has been noted earlier in this decision, the test is not whether an appellant s concerns are addressed to his or her complete satisfaction. The onus is on Mr. Mattson to demonstrate, on the balance of probabilities, that his reasonable and legitimate concerns were not given due regard by the OGC, and that this Panel should come to a different conclusion. [84] The Panel finds that the increase in the permitted maximum concentration of H 2 S from 0.5 to 1.4% was based on relevant data and was reasonable. Specifically, it was appropriate for Ms. Bahramian to consider both ARC s test results, and the trend to higher H 2 S in the north end of Dawson Field. Requiring ARC to re-apply to amend the permit in smaller increments when higher test results could reasonably be predicted, would be both inefficient and onerous. Further, it may have resulted in an increase in flaring and the release of sulphur dioxide to the atmosphere. [85] With respect to the safety concerns raised by Mr. Mattson and Ms. Clary, the Panel finds they have general concerns about gas exploration and development in the area. There is no evidence before the Panel about the construction or maintenance of the Pipeline, or about ARC s ERP or IMP, to indicate that an increase

15 DECISION NO OGA-007(a) Page 15 in H 2 S concentration from 0.5% to 1.4% should not be approved. The evidence before the Panel is that that the Pipeline is the same design and construction as would be used for a pipeline constructed today to carry gas with a H 2 S concentration of 1.4%. Further, the evidence establishes that the increase in H 2 S will not cause a change in the operating pressure or temperature of the Pipeline. [86] Finally, to the extent that Mr. Mattson s concerns were identified in a previous submission, the Panel finds that the decision-maker, Ms. Bahramian, gave due regard to those concerns, and was satisfied that Mr. Mattson s concerns, as set out in the Minutes, were addressed by the design of the Pipeline and the OGC s regulatory structure for operation, maintenance, and emergency response. Although Mr. Mattson and Ms. Clary said that they would feel safer if they had survival equipment on the property, including personal breathing apparatus, an air quality monitor and an alarm system, the Panel finds their request that ARC be required to supply the equipment is not supported by the evidence. [87] Accordingly, based upon all of the evidence, the Panel upholds the permit amendment. DECISION [88] In making this decision the Panel of the Tribunal has carefully considered all relevant documents and evidence before it, whether or not specifically reiterated herein. [89] For the reasons stated above, the appeal is dismissed. [90] However, given that Mr. Belliveau agreed to update ARC s ERP to show the location of the art studio and any guest or rental accommodation on the Mattson Property, and to note that Mr. Mattson and Ms. Clary have requested immediate evacuation in the event of an incident, the Panel directs that Mr. Belliveau make these changes and to advise Mr. Mattson when the updates are done. Cindy Derkaz Cindy Derkaz, Panel Chair Oil and Gas Appeal Tribunal November 23, 2016

16 DECISION NO OGA-007(a) Page 16 APPENDIX A