Preliminary and Final Decisions

Penalty Ranch Ltd. v. Oil and Gas Commission

Decision Date:
October 20, 2020
File Numbers:
Decision Numbers:
Third Parties:
Crew Energy Inc., Third Party

Decision Summary

Decision Date: October 20, 2020

Panel: Darrell Le Houillier

Keywords: Oil and Gas Activities Act – s. 72(2); Administrative Tribunals Act – s. 34(3)(b); preliminary decision; permit; waste water storage; relevant evidence

Penalty Ranch Ltd. (the “Appellant”) appealed a permit issued by the Oil and Gas Commission (“Commission”) to Crew Energy Inc. (“Crew”). The permit authorizes Crew to construct and operate a water containment facility on Crown land that is subject to an agricultural lease held by the Appellant. The Appellant operates a cattle ranch.

Crew’s facility will include two in-ground containment ponds to store water produced from Crew’s oil and gas activities in the area, including water injected into natural gas wells and any chemicals added during the production/treatment process. Water produced from Crew’s oil and gas activities in the area was being stored in numerous above-ground containment ponds before the facility was built.

The Appellant appealed the permit on the grounds that the fluid stored in the facility will contain contaminants that could cause harm to groundwater, vegetation, and the Appellant’s cattle. The Appellant maintained that the area experiences earthquakes that could cause a spill of the stored fluids, and the stored fluids could contaminate vegetation on surrounding grazing land due to evaporation. If cattle consumed toxins arising from the fluids, it would harm the Appellant’s business.

Before the appeal was heard, the Appellant applied to the Tribunal for an order under section 34(3)(b) of the Administrative Tribunals Act requiring Crew to produce samples of fluid from its processing plant and above-ground containment ponds, and residue on the walls of the containment ponds.

In determining whether to grant the order, the Tribunal applied a three-part test: (1) whether it is reasonable to suppose that the requested samples may be relevant to proving or responding to an issue in the appeal; (2) whether the requested samples are admissible; and (3) whether the person asked to disclose the samples has possession and control of the samples.

With respect to the first part of the test, the Tribunal found that the main issue in the appeal was whether the Commission had due regard to the submissions provided by the Appellant before the permit was issued. Those submissions included concerns about the potential toxicity of the fluid to be stored at the facility, and the effects off gassing. The Tribunal found that, to the extent that the samples could assist in addressing that issue, they needed to be interpreted by an expert with relevant qualifications, but no such expert had been tendered. The Appellant had previously advised that it did not intend to tender expert evidence, and the deadline for the Appellant to give notice of expert evidence had expired. Only the Commission intended to tender evidence from an expert witness, but the witness did not have the expertise to assess the composition of the samples or the potential effects of chemicals in the samples. For those reasons, the Tribunal concluded that it was not reasonable to suppose that the requested samples may be relevant to an issue in the appeal. As a result, it was unnecessary to address the remaining parts of the test.

Accordingly, the application was denied.