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January 2006

Vol. 11, No. 2 Week of January 08, 2006

Producer fades away in sour gas case

Compton Petroleum will continue to produce from two wells on outskirts of Calgary, Alberta board denies request for extension of filing to August, January filing deadline passes

Gary Park

For Petroleum News

It is back to square one in a test case involving trillions of cubic feet of Alberta’s gas future.

A showdown between gas producer Compton Petroleum and a formidable array of local government, health, environmental and community organizations — already the most protracted well license hearing in the province’s history — may have to start from scratch if Compton hopes to develop sour gas on Calgary’s outskirts.

The company passed up the chance to file an emergency response plan with the Alberta Energy and Utilities Board by a Jan. 3 deadline.

That, in turn, could scuttle any hopes by other producers to start developing sour gas resources close to major population centers.

In a surprise pre-Christmas ruling, the board denied Compton’s request to extend to Aug. 1 the deadline for submitting its response plan tied to plans for drilling four sour gas wells southeast of the Calgary city limits.

However, Compton said it will continue to produce gas from two previously approved wells in the area.

Future of 40% of remaining gas in doubt

What is now in some doubt is the future of 40 percent of Alberta’s remaining gas reserves, as operators and rapidly growing cities reach a crossroads.

The energy board has estimated that 6,000 “significant” sour gas wells are producing close to settlements in Alberta, including 105 in the vicinity of Calgary, pumping C$1.5 billion a year into government revenues and accounting for 37,000 jobs.

The cost has been equally high, with 37 industry workers killed by exposure to sour gas over the past 30 years.

But, other than a 68-day blow out in 1982 that killed two workers and spread a rotten-egg smell over a wide swath of Alberta, sour gas has been slow to register on the minds of most Albertans until more recent years.

Plans unveiled in 2001

That changed in 2001 when Compton unveiled plans to drill wells near Calgary to tap a reservoir of 68 billion cubic feet, with a hydrogen sulfide content of 35.6 percent that could affect 250,000 residents — 25 percent of Calgary’s population — in the event of a blowout or leak.

Community fears dominated a 30-day board hearing that culminated June 22 when the regulator approved four of Compton’s proposed six wells, but underscored its own concerns by requiring Compton to develop an improved emergency response plan after rejecting the initial plan as inadequate.

The City of Calgary and the Calgary Health Region were in the forefront of those objecting to Compton’s wells.

They have appealed the board’s decision and declined to cooperate with Compton in developing a response plan.

Board: Compton didn’t complete all tasks

But the board said Compton had failed to demonstrate that it had completed all of the tasks that didn’t require cooperation with other organizations and had failed to demonstrate that it was prevented from meeting the Jan. 3 deadline as a result of circumstances beyond its control.

Missing the deadline has been deemed by the board as an abandonment of the applications and will result in the file being closed.

That is a serious blow to industry proponents such as the Canadian Association of Petroleum Producers who argue that the expertise has been developed to safely drill for and develop sour gas and Energy Minister Greg Melchin, who argues that driving a car is a “far greater hazard” than developing sour gas.

With the board taking a hard line and community opposition at such a high level, it is expected that other companies hoping to follow a successful Compton application and drill close to Calgary will quietly fade from the scene.






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