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EnCana's Suffield Block Drilling Plans 'Put on Ice'

In a decision cheered by conservationists as a turning point in their direction, EnCana Corp. has been barred at least temporarily from drilling in a spot that was a cornerstone of its growth into Canada's top natural gas producer for 34 years.

EnCana was denied permission to start a C$233 million (US$186 million) program of 1,275 shallow gas wells and 220 kilometers of gathering pipelines on an area of the southeastern Alberta plains known as the Suffield Block. The drilling was forecast to produce 125 Bcf of low-cost gas.

The Alberta Wilderness Foundation (AWF) declared victory on behalf of an environmental coalition that fought the plan through more than a year of preliminary wrangling and then a month of public hearings last fall. "It does represent a certain turning point that we can actually have a fairly substantial development essentially put on ice," the AWF said.

The decision was handed down by an institution that did not exist when EnCana predecessor company Alberta Energy Co. got its start as a gas producer on the Suffield Block, a Joint Review Panel appointed cooperatively by the federal and provincial governments under the Canadian Environmental Assessment Act.

As the latest round in a contest between forces of development and preservation that has spread from Alberta's northern oilsands to its gas rich southern plains, the ruling sent a message to industry that times are changing in Canada's chief producer province.

The decision said EnCana can apply again, but not until a new governance apparatus is set up on the Suffield Block. The territory is a 2,690-square-kilometer (2,152-square-mile) NATO military practice range created in 1941 for live-fire training of tank, artillery and infantry forces. It is heavily used by British and Canadian units.

The ruling affected a 458-square-kilometer (183-square-mile) segment of the block that was designated a Canadian National Wildlife Area in 2003 -- ironically, with support from EnCana, in a display of corporate citizenship. The area has about 30% of Alberta's remaining natural grassland, saved from farming and ranching for generations by being inside the military range. The place is home to 1,100 wildlife species including 15 -- from kangaroo rats to songbirds -- designated as endangered, threatened or of special concern. The military has been barred from this portion of the area since 1971. There is no public access because it is ringed by a firing range for rapidly mobile army hardware.

EnCana's 9,400 producing Suffield wells include 1,145 previously drilled in the protected zone. The company pledged the new program would continue to use "minimal disturbance techniques that mitigate the impact of our activities." The methods include searching for rare wildlife, detouring around wildlife homes and drilling only from October to April, when the prairie is frozen and the animals are hibernating in burrows safely out of harm's way.

But the panel made it plain that the times when governments could go along with requests by companies just to be trusted are long gone. The federal and provincial representatives unanimously found that a light policing regime created when EnCana first obtained access to the block in 1975 is not up to contemporary standards. "Requirements for environmental protection and the legislative framework have evolved considerably," the decision said.

Even the old regime's minimalist Suffield Environmental Advisory Committee -- created by a federal provincial agreement that opened up the block to the company at the request of Alberta, which owns the mineral rights -- is "under-resourced," the new ruling said. "There appears to be considerable uncertainty regarding the roles and responsibilities of various participants." In addition, "oversight activities intended in the 1975 agreement do not appear to be fully functioning." Final responsibility for approving drilling programs has been in the hands of the military base commander, with the advisory committee providing information.

No new drilling should be approved until a modern regulatory apparatus is set up with a clear mandate, up-to-date performance standards and the resources to enforce them, the panel said. The Canadian defense department needs to develop an environmental management plan, the decision added.

The ruling said the gas program could conceivably turn out to be acceptable after government environmental scientists identify sensitive wildlife habitat that needs to be declared entirely off-limits to industry. That exercise is expected to take six months to two years.

The panel said its decision is "without prejudice" to any future drilling applications, but added that "the proposed project may not be feasible" or only "a reduced version" might be acceptable. It was impossible to tell from EnCana's rejected application because it did not include a sufficient environmental assessment to make a decision, the ruling said.

EnCana made no immediate moves to appeal or otherwise get around the decision. The company is expected at least to encourage the authorities to set up an acceptable regulatory apparatus, because the contested drilling program was part of a larger plan to keep Suffield Block gas production going for up to 40 more years.

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