O. Reg. 424/23: EXPLORATION, DRILLING AND PRODUCTION

 

ontario regulation 424/23

made under the

oil, gas and salt resources Act

Made: December 7, 2023
Filed: December 22, 2023
Published on e-Laws: December 22, 2023
Published in The Ontario Gazette: January 6, 2024

Amending O. Reg. 245/97

(Exploration, Drilling and Production)

1. Subsection 1 (1) of Ontario Regulation 245/97 is amended by adding the following definition:

“special project” means a project that has been designated as a special project by the Minister under section 11.1 of the Act, as described in the designation;

2. Section 2.1 of the Regulation is amended by adding the following subsection:

(2) Subsection (1) does not apply to a person who uses or drills a hole in the ground as part of a special project.

3. Section 2.2 of the Regulation is amended by adding the following subsection:

(2) Subsection (1) does not apply with respect to special projects.

4. Section 2.3 of the Regulation is amended by adding the following subsection:

(3) Subsection (1) does not apply with respect to special projects.

5. Section 2.4 of the Regulation is amended by adding the following subsection:

(1.1) Subsection (1) does not apply with respect to special projects.

6. Subsection 2.5 (5) of the Regulation is amended by striking out “included in the report” in the portion before clause (a) and substituting “included in the application”.

7. Subsection 3 (2.1) of the Regulation is amended by adding “or a special project” after “CAES project in a porous rock reservoir”.

8. (1) The Table to subsection 5 (2) of the Regulation is amended by adding the following item:

 

7.

Special project well

$250.00

 

(2) Subsection 5 (4) of the Regulation is revoked and the following substituted:

(4) Despite subsection (3), if a natural gas producing well operated by the holder of a well licence is a private well, no fee is payable for the private well.

9. Section 6 of the Regulation is amended by adding the following subsection:

(3) Subsection (1) does not apply with respect to special projects.

10. Section 6.1 of the Regulation is amended by adding the following subsection:

(4) Subsection (1) does not apply with respect to special projects.

11. Section 6.2 of the Regulation is amended by adding the following subsection:

(5) Subsections (1) and (2) do not apply with respect to special projects.

12. Section 7 of the Regulation is amended by adding the following subsection:

(6) This section does not apply with respect to special projects.

13. (1) Subsection 16 (3) of the Regulation is amended by striking out “subsection (4)” in the portion before clause (a) and substituting “subsections (3.1), (4), (4.1) and (4.2)”.

(2) Section 16 of the Regulation is amended by adding the following subsection:

(3.1) Clauses (3) (a), (b) and (c) do not apply if,

(a)  after September 1, 2023,

(i)  the well is a new well that is proposed to be or has been drilled,

(ii)  the use of the well is proposed to be or has been converted, or

(iii)  the total depth of the well is proposed to be or has been deepened; and

(b)  the Minister’s approval to drill the well or make another change referred to in clause (a) is to be or was granted on the basis of an application or request that was made or submitted to the Ministry on or after September 1, 2023.

(3) Subsection 16 (4) of the Regulation is amended by striking out “required is” in the portion before clause (a) and substituting “required by an operator under subsection (1) is”.

(4) Section 16 of the Regulation is amended by adding the following subsections:

(4.1) Despite subsection (4), the maximum security for any company that has amalgamated on or after September 1, 2023 is the greater of,

(a)  the amounts set out in subsection (4); and

(b)  the amount that was required under subsection (3) or (4) for each company that was amalgamated, prior to the amalgamation.

(4.2) The maximum security set out in subsections (4) and (4.1) does not apply to the security required to be established by an operator for any well that,

(a)  meets the criteria set out in subsection (3.1); or

(b)  is used, or has been used, in a CAES project in a porous rock reservoir or in a special project.

(4.3) An operator of a well that is required by subsection (3.1), (4.1) or (4.2) to establish an increased amount of security for one or more wells shall have a maximum period of 60 days to establish the required increase in security, commencing from the day this subsection came into force, if the following conditions are met:

1.  The operator notifies the Ministry, in writing, that the required security has been established on or before the day that is 60 days after the day this subsection came into force.

2.  One of the following conditions is met:

i.  In the case of increased security required under subsections (3.1) and (4.2), the Minister’s approval referred to in clause (3.1) (b) was issued before the day this subsection came into force.

ii.  In the case of increased security required under subsection (4.1), the amalgamation occurred before the day this subsection came into force.

14. Paragraph 1 of subsection 16.1 (10) of the Regulation is amended by striking out “section 2.4” at the end and substituting “section 2.5”.

15. The Regulation is amended by adding the following sections:

16.1.1 (1) The operator of a well or work that is being converted to another use after the term of the special project designation ends shall establish security as financial assurance that, at the end of each well’s lifecycle or before that time, where required, the operator will comply with all requirements in the operator’s licence and permit, the Act, this Regulation and any order of the Board or Tribunal with respect to,

(a)  the plugging, abandonment and decommissioning of all wells and associated works, including any reservoirs or caverns, that are subject to the security provisions in this section;

(b)  any necessary site rehabilitation work; and

(c)  any ongoing maintenance or monitoring work that is required after plugging, abandonment, decommissioning and site rehabilitation have been completed.

(2) For greater clarity, any use of a well or works that continues beyond the termination of a special project designation is considered to have been converted to another use even if the well was used for the same or similar purpose prior to or during the special project.

(3) Despite any provision of a regulation made under the Act, if an operator referred to in subsection (1) has previously established security under the Act for any of the wells or other works to which this section applies, the operator shall maintain that security until security is established under this section in respect of the wells or other works.

(4) Prior to converting a special project well or another work to another use, the operator shall submit a plan to the Ministry addressing the plugging, abandonment and decommissioning of all wells and other associated works that are to be converted after being used in the special project, including any associated caverns or reservoirs, the site rehabilitation and any ongoing maintenance or monitoring programs related to any of those activities.

(5) The plan referred to in subsection (4) shall include,

(a)  a detailed schedule of the activities set out in the plan and an estimate made by the applicant of the costs of carrying out these activities, including an itemized list of the costs of all activities set out in subsection (1);

(b)  identification of the individuals who prepared the plan, including their qualifications and relevant experience;

(c)  the signature of the individuals who prepared the plan and, where appropriate, their seal or stamp; and

(d)  the date the plan was completed.

(6) The security established by the operator of the wells and other works that are subject to this section shall be in an amount equal to the costs estimated by the operator in the plan referred to in subsection (4).

(7) Despite subsection (6), on reviewing the plan referred to in subsection (4), the Minister may determine that the amount of security estimated by the operator in the plan is insufficient and should be increased to an amount that the Minister believes is a more accurate estimate of the costs described in subsection (6), based on any records or information the Ministry has relating to the cost of abandoning or decommissioning similar wells, caverns, reservoirs and other associated works in Ontario or other jurisdictions.

(8) If the Minister determines that the amount of security should be increased under subsection (7),

(a)  the Ministry shall, before making any decision with respect to granting approval for the conversion of wells and other associated works, give the operator notice in writing of the amount of security that is required; and

(b)  the operator shall provide the amount of security required in the notice.

(9) The security established under subsection (6) or (7) shall be in the form of,

(a)  a trust fund administered in accordance with the Trustee Act; or

(b)  an irrevocable letter of credit from a bank named in Schedule I or II of the Bank Act (Canada).

(10) If the security established under subsection (6) or (7) is in the form of a trust fund,

(a)  the trustee of the fund must meet the requirements in subsections 16 (1.1) and (1.2); and

(b)  the operator of the wells and other works subject to this section shall ensure that the trustee of the fund,

(i)  does not make any payments out of the trust fund without the written consent of the Minister, and

(ii)  follows the directions of the Minister with respect to payment out of the trust fund.

(11) If the security established under subsection (6) or (7) is in the form of an irrevocable letter of credit, the form and terms of the letter of credit shall be approved by the Minister.

(12) If the bank that establishes the letter of credit as security under subsection (9) gives the Ministry notice that the bank intends to allow the letter of credit to expire, the Ministry shall promptly forward the notice to the operator.

(13) The operator who receives notice of the expiration of a bank’s irrevocable letter of credit under subsection (12) must, at least 30 days before the expiration date,

(a)  obtain an irrevocable letter of credit from the same bank or from another bank named in Schedule I or II of the Bank Act (Canada) in the same amount as the letter of credit that is about to expire; or

(b)  establish security in the form of a trust fund in the same amount as the letter of credit that is about to expire and with a trustee that meets the requirements in subsections 16 (1.1) and (1.2).

(14) The operator of one or more wells that are subject to this section shall establish or confirm the establishment of the security in the amount required under subsection (6) or (7) before any authorization from the Minister to convert the use of the well or other work is granted.

(15) Subsections 16 (5) to (7) apply with necessary modifications to security that is provided under subsection (6) or (7) of this section.

(16) The Minister may give directions to the trustee of a trust fund established as security under this section to make payments out of the trust fund, or may draw on the letter of credit established as security under this section, as the case may be, in order to remedy a situation where,

(a)  a work represents a hazard to the public or environment; or

(b)  the operator does not comply with the requirements mentioned in subsection (1).

(17) The operator of the wells subject to this section may apply to the Minister for a reduction in the amount of the security required under this section if the operator has completed a portion of the work described in subsection (1).

(18) The Minister may consent to the reduction of the amount of security required under this section if the Minister is satisfied that,

(a)  the amount of security sought to be reduced corresponds to the estimate for the cost of carrying out work described in subsection (1) on which the amount of the security was based; and

(b)  the amount of security remaining after the reduction will be sufficient to carry out the remaining work described in subsection (1) that is required for the wells and other associated works.

(19) For greater certainty, if the costs incurred by the operator in carrying out a portion of the work described in the plan referred to in subsection (4) exceed the estimate of those costs based on which the security was provided under subsection (6) or (7), the excess amount incurred for the work shall not be reflected in the reduction of the amount of security under subsection (18).

16.1.2 (1) Sections 16 and 16.1 do not apply to the operator of a well or other works that are being used in association with a special project with respect to the wells, caverns, reservoirs or other associated works that are a part of the special project.

(2) Sections 16 and 16.1 do not apply to the operator of a well or other works that were previously used in association with a special project with respect to the wells, caverns, reservoirs or other associated works that are a part of the special project, except to the extent provided for in section 16.1.1.

16. Section 16.2 of the Regulation is amended by striking out “section 16 or 16.1” and substituting “section 16, 16.1 or 16.1.1”.

17. Section 20 of the Regulation is amended by adding the following subsections:

(3) No person shall complete, service or otherwise perform work of any kind on a well within 1.6 kilometres of the surface area of a special project to test, assess, pilot or demonstrate the permanent storage of carbon dioxide in a cavern or reservoir or of a special project that involves the temporary storage of one or more substances in a cavern or reservoir if the performance of such work will, or is likely to, fracture the cavern or reservoir or result in communication with it.

(4) The surface area referred to in subsection (3) is the surface area for a special project set out on a map that is attached to a licence or permit issued with respect to a well associated with the project and made available to the public on a website maintained by the government of Ontario.

18. Subsection 20.1 (1) of the Regulation is amended by striking out “this Regulation” in the portion before clause (a) and substituting “the Act, any Regulation made under the Act”.

19. (1) Paragraph 3 of subsection 21 (2) of the Regulation is amended by striking out “this Regulation” and substituting “any Regulation made under the Act”.

(2) Paragraph 1 of subsection 21 (6) of the Regulation is amended by adding “or required to be shared as a part of an application process under the Act or any Regulation made under the Act” at the end.

20. Section 22 of the Regulation is amended by striking out “section 7 of the Act” and substituting “section 7.0.1.2 of the Act”.

21. (1) Subsection 23 (6.1) of the Regulation is amended by adding “and special projects” at the end.

(2) Subsection 23 (6.2) of the Regulation is amended by striking out “a licence or temporary licence” and substituting “a licence, limited licence or temporary licence”.

Commencement

22. This Regulation comes into force on the later of the day section 8 of Schedule 23 to the Less Red Tape, Stronger Economy Act, 2023 comes into force and the day this Regulation is filed.