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Canadian Military, EnCana Skirmish Over Well Permits

After 34 years of peaceful co-existence, friction has erupted between EnCana Corp., Canada's top producer, and Ottawa's Department of National Defense (DND) over a windswept Alberta plain that doubles as a prolific natural gas field and a military training range.

DND contested the latest drilling application by EnCana, saying that proliferating wells, pipelines and access roads threaten to undermine the military's environmental stewardship duty and interfere with live-fire heavy weapons practice exercises.

EnCana won the regulatory skirmish. Alberta's Energy Resources Conservation Board (ERCB) granted licenses for three wells to test shallow geological formations as a prelude to a fresh wave of drilling on Canadian Forces Base Suffield.

But the battle is potentially far from over. In a side ruling on a constitutional point, the ERCB conceded that even though the province owns the Suffield mineral rights it has no power to grant surface access to the range covering 2,690 square kilometers (1,040 square miles) of southeastern Alberta. Next come the DND decisions about whether to let the contested wells go ahead. What is unknown is whether DND will try to negotiate a management plan for future drilling with the company and provincial authorities or bar entry to more rigs and tighten control over industry on Canada's biggest land forces base.

The military preserve, set aside in 1941, is heavily used by the Canadian and British armies for combat training and weapons testing with live ammunition. The Suffield range is the heart of a region so rich in gas that roving British author Rudyard Kipling famously described it as having "all Hell for a basement" after witnessing pioneer drilling and industrialization that earned its chief community, Medicine Hat, a nickname as the Pittsburgh of the West.

EnCana obtained rights to Suffield gas as a founding asset of its first incarnation as Alberta Energy Co., created in 1975 by the provincial legislature and half-owned by the government until the mid-1990s. The province secured surface access for drilling on the military preserve by its industrial brainchild through a special agreement with DND.

More than 10,000 wells and construction of a large connecting web of pipelines and storage facilities later, the access deal still stands. But there is a catch. The Suffield base commander always retained rights to restrict or prohibit entry, or order relocation of planned wells and facilities, if industrial activity poses a safety threat, interferes with military operations or potentially undermines a general duty to keep the environment in good enough condition to be eventually restored to a natural condition.

To date the friction between the military and industry is out of public view. DND and EnCana averted an embarrassing open confrontation by agreeing to have the case of the three test wells settled by a silent "paper-hearing" exchange of documents.

The military resistance developed last winter after EnCana lost a noisy fight with environmental groups. In a prolonged duel before a joint review panel of ERCB and federal environmental officials, the critics successfully fought to a standstill a 1,275-well drilling program on a pristine, 458-square-kilometer (183-square-mile) part of the range that has been off limits to the armies since 1971 and was designated as a Canadian National Wildlife Area in 2003.

The latest EnCana drilling program is on the opposite side of the Suffield block and nowhere near the protected natural area. But DND quietly adopted a new standing order for the entire range that restricts industrial disturbances -- wells, pipelines, compressors, roads -- to a maximum of 16 per section (one square mile or 2.6 square kilometers). The three new wells -- coupled with a large drilling program planned depending on the initial results -- are on sections that already exceed the limit.

The ERCB noted that prior to the battle over the protected wildlife area the military was urged to adopt a conservation regime by Canada's auditor-general and a special hybrid federal-provincial watchdog agency created by the 1975 agreement with Alberta, the SEAC, or Suffield Environmental Advisory Committee. The DND described its new order capping industrial disturbances as a precautionary measure until a conservation blueprint, now being developed as the Suffield Sustainability Management Plan, can be developed as a guide for environmental stewardship.

The ERCB also noted that the military intends to step up training by formations of 5,000 or more troops plus supporting aircraft -- all doing live-fire practice exercises with new generations of increasingly powerful and long-range weapons.

In granting the three contested well licenses, the ERCB said it was satisfied that their environmental impact will be minimal because EnCana has pledged to use low-impact methods, follow mitigation procedures and have reclamation plans up to current standards. The board added that it knows of no DND decision to enforce the new order limiting land disturbances against EnCana -- yet.

When it comes to future drilling, however, the ERCB urged the company and the military to declare a truce and try for a negotiated settlement on environmental rules for anticipated high-density development of Suffield's remaining shallow gas reserves. Completion of the sustainability plan and a new deal on conservation guidelines would be preferable to the blanket limit on numbers of surface disturbances, the decision said. The board emphasized that it "strongly recommends that EnCana and DND reengage in a dispute resolution process," and said the effort should include representatives of the ERCB and the special Suffield environmental watchdog agency.

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