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Producers Concede Defeat in Canadian Sour Gas Dispute

The Alberta production industry conceded defeat in the dispute over sour gas production around population centers. Compton Petroleum Corp. put an inconclusive finish to a six-year struggle to overcome local fear and political resistance by abandoning a hotly-contested proposal for new sour gas drilling on the southeastern boundary of the Canadian gas capital of Calgary.

The defeat effectively blocks access to large swaths of the 30% of provincial natural gas reserves that are naturally "sour," or steeped in hazardous concentrations of hydrogen-sulphide.

Compton ended up cutting its losses by ending a community relations nightmare that threatened to drag on for months or potentially years, including more conflict in the law courts and before the Alberta Energy and Utilities Board. Compton abandoned its application by deliberately missing a Jan. 3 AEUB deadline for filing a new emergency response plan that would either appease the drilling opponents or prevail in a further round of hearings that the board tentatively scheduled to start April 18.

The missing accident alert and evacuation scheme was the last piece of a puzzle that appeared to be largely solved last June when the AEUB approved the drilling proposal on condition that a suitable emergency plan would be devised before work started.

In dropping the project, Compton officials stuck to brief, polite statements. The company said there were no plans to keep on trying to push the project ahead, and that the problem was uncertainty over how to define emergency planning zones for sour gas wells near populated areas. There was just no realistic prospect of settling conflicts with opponents of the drilling, Compton said.

The company was blunt in a letter to the AEUB. The document highlighted a political and regulatory dilemma that has become one of the worst industry headaches in Canada's chief gas supply jurisdiction. Hydrogen-sulphide is rated as potentially lethal in concentrations as low as one-tenth of 1%, and the merest whiff of the substance's trademark rotten-egg smell has become a sure cause of near panic in increasingly touchy Alberta communities.

Sour reserves have been tapped since the birth of Alberta production, and the activity has spawned a thriving network of specialists in hazard-proofing equipment and operations. Industry and regulatory agency veterans alike challenge critics to find a single case where an accident with hydrogen-sulphide has killed or seriously hurt an innocent bystander. There have been sporadic injuries and fatalities, but always in small numbers compared to highway accidents and invariably involving industry workers who should have known better, or been better protected by their employers, or both.

But the problem is that Alberta's growing population has expanded out to sour-gas production areas that were formerly remote, or at least well out of sight and mind of most of the public. The Compton case was a classic example. The company and previous owners of the gas deposit involved have been producing sour reserves at the proposed drilling site for decades, and the conflict only arose because new Calgary housing subdivisions sprawled out into the area.

Compton pointed out that it only applied for the new drilling at the request of the AEUB. The idea was to accelerate production with added wells, in order to finish extracting an estimated 68 Bcf of remaining reserves then shut down the site before house builders reached it. Like other sour-gas producers such as Shell Canada, the dean of the specialty, Compton showed itself well prepared to deal with opposition from the general public.

Industry realists acknowledge there will always be a minority advocating zero tolerance for industrial hazards anywhere near population centers, and work on educating and persuading less dogmatic majorities to accept reasonable safeguards. The Calgary drilling proposal was highly unpopular and Alberta's Liberal opposition party leaped on the protest bandwagon. But Compton secured an agreement with landowners directly affected by its current sour-gas operations and the new drilling. The agreement included an emergency response plan devised by the company using draft technical standards developed by AEUB staff.

The fatal flaw in the Compton case was aggressive intervention on the side of the most fearful element in the city population by the Calgary Health Region, a provincial agency responsible for hospital and medical services in the area. The health agency claimed to have its own expertise in safety needs and mounted a court challenge against the AEUB conditional approval of the drilling program. City of Calgary officials, meanwhile, increasingly leaned towards siding with the Health Region.

"Compton has been caught in the middle, to the detriment of not only Compton and the landowners, but also the board and the industry," the company's lawyers wrote in the final letter of the case to the AEUB.

Compton urged the AEUB to retrieve jurisdiction over sour gas by enacting its draft technical safety planning standards, then standing prepared to defend them against civic politicians and medical critics.

The company pointed out that even though the draft AEUB guidelines are two years old, "the board has yet to finalize any standardized protocols for determining emergency planning zones for critical sour gas wells. As a result, consensus between industry and various local authorities is next to impossible, and public confidence in the process has been undermined."

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