A company that wants to drill a $9-million exploratory sour gas well beside the protected Whaleback area in southwest Alberta is short of the land needed and is offering to buy the rest from a national conservation group.
Polaris Resources Ltd. also is promising the Nature Conservancy of Canada a share of revenue from the development, which would enable the group to buy and protect ecologically valuable land elsewhere in the Foothills.
“We have made them a proposal where we would basically buy them (the Nature Conservancy) out,” said John Maher, president of Polaris. “We would either buy them some more environmentally friendly land somewhere or pay them a (sum) so that they’re gone.”
The Nature Conservancy has so far rejected the offer. But Polaris will ask a regulatory hearing this fall to order the conservation group to accept a working partnership with the company.
Provincial energy rules require a company to acquire the mineral rights for a full section of land in order to drill a natural gas well.
So far, Polaris has secured the rights for only a half-section of land.
The Nature Conservancy holds in trust the adjacent public and private lands, as part of a land-conservation agreement reached nine years ago with the Alberta government and Amoco Canada Petroleum Co. (now BP Canada Energy Company).
In that 1994 arrangement, Amoco agreed to surrender more than $1 million worth of its mineral leases in the Whaleback area to the province. This enabled the government to protect the ecologically sensitive montane region, named for its rolling hills that rise from the prairie grass like the backs of giant whales.
In 1999, the government created the Bob Creek Wildland Provincial Park and the Black Creek Heritage Rangeland, protecting 28,755 hectares of the Whaleback under Alberta’s Special Places program.
Polaris subsequently acquired the mineral rights under a half- section of privately owned land about 1.5 kilometres outside the boundary of the protected area.
Nearly a decade after the agreement to protect the area, the Nature Conservancy still holds in trust the mineral rights on private land adjacent to the half-section where Polaris plans to drill its gas well.
“We just couldn’t see selling or farming out our interests (to Polaris),” said Larry Simpson, Alberta director for the Nature Conservancy. “We just didn’t think it was going to be in keeping with the manner in which we were given them.”
However, the mineral rights on the private land held by the Nature Conservancy are to be returned to the provincial government next spring, which marks the end of the 10-year arrangement to protect the Whaleback.
The government has decided to put these mineral leases – which are outside the boundaries of the protected Crown lands – up for sale again.
Simpson said that decision came as a surprise, because the Nature Conservancy, Amoco and area ranchers all believed 10 years ago that the leases were a gift to conservation, and that they would not be resold to the highest bidder.
Mac Blades, a member of the Pekisko Land Owners Association of foothills ranchers, said the government “is definitely going back on what they said or what everybody understood” in terms of the Whaleback’s future protection.
Polaris has applied to the Alberta Energy and Utilities Board (EUB) for an order that would compel the Nature Conservancy to include its adjacent half-section of land as part of Polaris’s proposed gas-well development.
The company would then have a sufficiently large piece of land to meet spacing regulations to drill the well.
Provincial rules allow for such “compulsory pooling” of leases in order to recover oil and gas when it is in the public’s interest.
“It’s reasonably common, because sometimes people just can’t agree on things,” said EUB spokesman Greg Gilbertson. “We act as that independent, neutral third party to try to resolve their differences.”
Simpson refused to speculate on what the Nature Conservancy will do if the EUB approves Polaris’s well and orders compulsory pooling. “We will simply evaluate things when and if the well is approved.”
While the Nature Conservancy would earn revenue from its leases if Polaris drills a successful well, the group would leave itself open to criticism for collecting resource revenue on leases that were donated so the land could be protected from such development.
The EUB has scheduled a public hearing Sept. 9 in Maycroft, about 120 kilometres south of Calgary, on Polaris’s application.
The Level 3 critical sour gas well, to be drilled near the ranching community of Maycroft, is expected to contain more than 28 per cent poisonous hydrogen sulphide.
Polaris is facing formidable opposition from some prominent individuals and assorted groups, including the Whale- back Coalition which successfully campaigned to have the land protected 10 years ago.
“The local landowners have completely rallied against it (Polaris’s plan),” said coalition member James Tweedie, who lives within four kilometres of the proposed wellsite. “This is a major hit to the whole landscape here if they allow it to go ahead.”
Polaris intends to drill up to three additional gas wells if the first one is successful.
However, all four wells would be drilled from the same wellsite near an existing gravel road outside the protected area, Maher said. Pipelines and associated facilities also would be built outside the Whaleback’s protected boundary, he added.
The geological structure that Polaris has identified may hold up to 300 billion cubic feet of gas, so successful wells would produce for at least 15 to 20 years, Maher said.
“We really think that it’s beneficial for the province,” he said.
“It’s absolutely minimal environmental impact, and it’s really just the neighbours that don’t want any industrial development there.”
Also opposing Polaris’s plans are the Oldman River Coalition of Maycroft-area landowners.
Coalition members and area cattle ranchers Einer and Judy Nelson’s home would be the closest to the proposed well, within two kilometres.
Judy Nelson says that a big concern is that the well would have to be flared for several days – with the resulting air pollution – to test its production capability, because there are no nearby pipelines in which to test the gas flow.
Also, a pipeline to carry gas from the well would have to follow the Oldman River, which would restrict landowners’ ability to develop their river frontage and decrease property values, Nelson said.
“This development is just so inappropriate for this location that it shouldn’t go ahead.”
The Pekisko Land Owners Association, along with the Alberta Wilderness Association, and the Federation of Alberta Naturalists are also opposing Polaris’s plans.
The Pekisko Land Owners, a group of ranchers that includes country singer Ian Tyson, last year fought a plan by Vermilion Resources of Calgary to drill a sweet-gas well on rangeland near Longview. Vermilion withdrew its application just days before an EUB hearing was to start.
Observers say the EUB’s decision on the Polaris application will have significant implications for how natural gas development will occur on Alberta’s environmentally sensitive Eastern Slopes, as companies explore farther west and drill deeper wells in their search for diminishing natural gas reserves.
