2017 Soybean Harvest

2017 Soybean Harvest

Wednesday, September 19, 2012

Ontario: Licensing Private Natural Gas Wells

The Ontario Ministry of Natural Resources (MNR) has now released the final version of its "Approach for Licensing Private Gas Wells".  This internal operating policy directive establishes the criteria by which operating, pre-existing private gas wells can become licensed by the MNR under the Oil, Gas and Salt Resources Act.  The requirement for a license came into effect for all wells, private or commercial, in June 1997.  However, many private wells were not licensed.

The policy directive clarifies the terms and establishes minimum guidelines for licensing pre-existing private wells.  According to MNR, the policy addresses potential safety and environmental risks posed by those wells, while recognizing the benefits of having private well operators come forward to obtain a well licence.  Read the policy directive at: Licensing Existing Private Natural Gas Wells.

On the Environmental Bill of Rights Registry, the MNR has also posted a summary of various comments it received during the review process and its responses to these comments:

1. “Private Use” of Gas

Comment: Natural gas from these wells is often consumed by someone on a property other than the one on which the gas well is located. Such a transfer of gas, or the transfer of a gas well itself in some cases, may have been captured in a written agreement between the two parties who believe they are acting within the law. The policy describes any sale of gas as disqualifying the well from being considered as “private use”. The suggestion was made to allow flexibility to recognize these ‘good faith’ agreements as being within the definition of private use.

MNR Response: To accommodate these types of agreements, the interpretation of “private use” has been revised to include persons with a legal interest in the well. MNR recognizes that such agreements exist and will have various levels of complexity and sophistication. Agreements will be examined on a case-by-case basis to determine if there is substantial evidence to support the legitimate use of gas by someone other than the well owner.

2. Annual Consumption of Gas

Comment: The policy requires that the annual consumption of gas from a well be less than 10,000 m3 for it to be considered a private well. Some respondents commented that this threshold should be removed from the policy altogether. Others commented that the limit was too low and should be increased to accommodate farmers who use the gas in the operation of their farm (for drying crops, heating outbuildings, etc).

MNR Response: The annual consumption limit has been removed from the policy.

3. Adjacent Lands

Comment: The policy allows for use of gas on “adjacent” properties so long as those properties are owned by the well operator. The meaning of the term “adjacent” needs to be clarified.

MNR Response: The term adjacent has been clarified in the policy to mean “two properties that share a common boundary.”

4. Pipelines Crossings Right-of-Ways

Comment: Transmission of gas through a pipeline crossing or alongside a municipal road allowance or right-of-way disqualifies the well for licensing unless the pipeline is inspected by the Technical Standards and Safety Authority (TSSA) and authorized by the municipality. A number of respondents were uncomfortable with the idea that TSSA might be contacted by MNR, because TSSA operates on a cost-recovery basis and could cause undue hardship for well owners.

MNR Response: MNR is responsible only for the licensing of the gas well. The intention of this requirement was to ensure well owners recognized that MNR’s gas well licence may not be the only approval needed for the operation of a private well. The wording in the policy has been revised to make clear that it is the responsibility of the well owner to obtain any other necessary approvals that may be required to use and/or transmit gas from a private well. The onus to seek other approvals rests solely with the well owner or operator and will not be a condition of licensing.

5. Qualified Persons

Comment: The list of Qualified Persons in the policy should be expanded to include technicians and technologists, not just engineers, geoscientists, and Examiners. Respondents pointed out that the cost of using an engineer, for example, may be prohibitive.

MNR Response: The policy is revised to state that other persons not already qualified as Class II Examiners may seek to qualify as a Class II Examiner and thereby become a Qualified Person. This would include someone certified as an engineering technologist (C.E.T.) or certified technician (C. Tech) with the Ontario Association of Certified Engineering Technicians and Technologists.

6. Cementing Around the Wellhead

Comment: Generally respondents felt that the requirement to cement around the wellhead was not practical and should be removed from the policy. The freezing and thawing of the ground around the wellhead will cause the cement to fracture and break apart, defeating its intended purpose. In some locales, the ground around a well is made of hard clay and is already impervious to water.

MNR Response: MNR has removed the requirement to cement around the wellhead from the minimum Acceptable Well Conditions described in the policy. However, it is still required that the ground around the wellhead be sloped away in all directions to prevent the pooling of water in the vicinity of the well.

7. Setbacks

Comment: Setbacks from buildings and other infrastructure were the subject of many responses. Some pointed to the fact that many wells had been encroached upon by development (i.e. were there prior to the infrastructure, not vice-versa) and therefore the setbacks unfairly penalize the well owners. The 30 metre (m) setback from a property boundary was the subject of most comments. People noted that many wells were purposefully placed near a property boundary to keep them from obstructing farming operations. Others remarked that utility installations were often located within 10m of a roadway and felt that private gas wells were being unfairly penalized by requiring a 10m setback from the road allowance.

MNR Response: MNR has made the following changes to the setbacks in the policy:

• The 30m setback from a property boundary has been removed.
• Reduced the setback from road allowance to 5m (from 10m).
• Removed the 50m setback from Great Lakes and tributaries. A 15m setback will apply to water bodies.

Other setbacks, namely the 30m setback from private residences and the 75m setback from public buildings, remain unchanged. However, the ministry will consider a reduced separation distance if it is supported by the opinion of a professional engineer hired by the well owner.

8. Term of Licence

Comment: A number of respondents did not agree with limiting the term of a private gas well licence to 10 years. Some thought it should be longer than 10 years; others thought that there term should not be limited at all. There was a general concern that the licensing conditions will be different in 10 years time and wells that had previously received a private licence would no longer qualify.

MNR Response: The policy has been changed so that licences will be eligible for a 10-year renewal upon expiry. The 10-year renewal is subject to an evaluation confirming that the well continues to meet the requirements expressed in the policy.

9. Transfer of Licence

Comment: Most respondents agreed that a private well licence should be transferable to a new land owner. One person suggested that the requirement for an evaluation prior to transfer be waived if the well had recently been evaluated.

MNR Response: The well licence will be transferable without the requirement for a new evaluation if the well owner can provide proof that the well had been evaluated within the last year.

10. Safeguards

Comment: The policy requires that methane detectors be installed in buildings being supplied gas from a private well and that barriers be built around a well with the potential to be struck by a vehicle. Although several respondents recognized methane detectors would improve safety for those using the gas, it was felt by some that that it was not within the MNR’s authority to establish such a requirement. Several respondents supported the requirement for barriers to protect the well where there was potential for a vehicle to collide with the well.

MNR Response: The safeguard section has been reworded to recommend the installation of methane detectors and vehicular barriers as a “best practice”.

11. Incentives

Comment: Many respondents who commented on the proposed incentives thought that the MNR should pay the entire cost of upgrading or decommissioning a well. One commentor suggested that the MNR pay for half (50%) of the well operator’s cost to become compliant. Another commentor did not support the use of government resources to upgrade or decommission private wells.

MNR Response: The MNR has decided to proceed with incentives to help well operators meet the requirements established by the policy.