462 1 RP-1999-0047 2 3 THE ONTARIO ENERGY BOARD 4 5 IN THE MATTER OF the Ontario Energy Board Act, 1998, 6 S.O. 1998, c. 15, Schedule B; 7 8 AND IN THE MATTER OF an Application by Union Gas Limited 9 for a regulation designating the area known as the 10 Mandaumin Pool in the Townships of Enniskillen, Plympton 11 and the City of Sarnia, Lambton County as a gas storage 12 area; and for authorization to inject gas into, store 13 gas in and remove gas from the said Pool; 14 15 AND IN THE MATTER OF an Application by Union Gas Limited 16 for a regulation designating the area known as Bluewater 17 Pool in the Township of Moore and the City of Sarnia, 18 Lambton County as a gas storage area; and for 19 authorization to inject gas into, store gas in and 20 remove gas from the said Pool; 21 22 AND IN THE MATTER OF an Application by Union Gas Limited 23 for a regulation designating the area known as the Oil 24 City Pool, in the Township of Enniskillen, Lambton 25 County as gas storage area; and for authorization to 26 inject gas into, store gas in and remove gas from the 27 said Pool; 28 463 1 AND IN THE MATTER OF an Application by Union Gas Limited 2 for an order granting leave to construct natural gas 3 pipelines in the Townships of Enniskillen, Plympton, 4 Moore, Dawn-Euphemia and the City of Sarnia; 5 6 AND IN THE MATTER OF an Application by Union Gas Limited 7 to the Minister of Natural Resources for licenses to 8 drill or deepen 7 wells in the proposed designated 9 storage areas; 10 11 AND IN THE MATTER OF an Application by Union Gas Limited 12 for approval of the parties to, the period of, and the 13 storage that is the subject of proposed storage 14 contracts. 15 16 B E F O R E : 17 S.K. HALLADAY Presiding Member 18 J.B. SIMON Member 19 F.A. DROZD Member 20 21 Hearing held at: 22 Holiday Inn, 1498 Venetian Blvd., Great Hall 23 Centre/West, Sarnia, Ontario on Wednesday, 24 February 10, 2000, commencing at 0900 25 26 HEARING 27 28 VOLUME 3 464 1 APPEARANCES 2 JENNIFER LEA Board Counsel 3 CHRIS MACKIE/ Case Manager 4 BOB TREVAIL/ Board Technical Staff 5 ZORRA CRNOJACKI Board Technical Staff 6 7 APPLICANT 8 GLENN LESLIE/ Union Gas Limited 9 JO-ANN PATTERSON/ 10 KAREN HOCKIN 11 12 INTERVENORS 13 PAUL VOGEL/ LAMBTON COUNTY 14 ROBYN MARTTILA STORAGE ASSOCIATION 15 PHILIP WALSH/ CANENERCO 16 JOE GORMAN 17 18 19 20 21 22 23 24 25 26 27 28 465 1 Sarnia, Ontario 2 --- Upon resuming on Thursday, February 10, 2000 3 at 0900 4 THE PRESIDING MEMBER: Good morning. 5 MR. LESLIE: Good morning. 6 THE PRESIDING MEMBER: Before we begin this 7 morning, I understand that there are some landowners who 8 wish to make some representations to the Board. But 9 before we hear from those landowners, are there any 10 other preliminary matters? 11 I take that as being no. 12 MS LEA: No. Thank you. Sorry. 13 MR. LESLIE: No, thank you. 14 THE PRESIDING MEMBER: So if anyone would like 15 to make a presentation to the Board, now is the time to 16 do so. 17 PRESENTATION 18 MR. McMURPHY: Thank you, Madam Chairman and 19 Board panel members. 20 For the last couple of days -- my name is 21 Leonard McMurphy -- and for the last couple of days 22 there has been representatives from a pool which is 23 being considered as a storage facility in Goderich 24 Township near Clinton. And the landowners have been 25 here, I guess, observing the process and learning the 26 ropes, hoping to use the ropes to climb instead of being 27 hung by. And they were concerned yesterday that 28 information concerning easement agreements made between 466 McMURPHY, Pres. 1 the township and the utility, a public utility, would be 2 kept confidential. 3 And I'm inclined as a ratepayer to agree with 4 that that I have concerns. These are public road 5 allowances and a publicly regulated utility and I'm -- 6 maybe there is a reason to keep this stuff confidential, 7 but personally I can't imagine what that reason would 8 be. 9 They returned home and they are unable to be 10 here this morning and they spoke with their Reeve in 11 Goderich Township and I have a letter that was -- I was 12 asked to present this morning on behalf of that Reeve. 13 And it is to the Ontario Energy Board. 14 "The Township of Goderich has been asked 15 to provide a 7 kilometre easement for a 16 natural gas transmission line on township 17 road allowance to serve a proposed 18 natural gas storage pool. Since Goderich 19 Township has never dealt with this issue 20 before, it would be very helpful if the 21 Council could obtain all information 22 contained in easement agreements that are 23 currently being approved by the Ontario 24 Energy Board." 25 I think that is being somewhat presumptuous, but 26 nevertheless, dealing with gas pipeline construction on 27 municipal road allowance. As the Chairman of the GALLO 28 Gas Plant owners of Ontario, we are asked to assist 467 McMURPHY, Pres. 1 landowners as they deal with the matters of gas storage 2 in Ontario, and I think it is important that if there 3 are any deals being struck to this nature that it be 4 available to these people as well so they can make 5 informed decisions. Thank you. 6 THE PRESIDING MEMBER: Thank you, Mr. 7 McMurphy. 8 MR. McMURPHY: I have copies if you -- 9 MS LEA: Yes, please, Mr. McMurphy, if you 10 want to bring that forward, that would be helpful. 11 If it please the Board, we can give this an 12 exhibit number. I think we are at 17.3 for documents 13 received from the public. 14 THE PRESIDING MEMBER: Thank you. 15 EXHIBIT NO. 17.3: Letter from Goderich 16 Township dated February 9, 2000 17 THE PRESIDING MEMBER: Mr. Leslie, do you have 18 any comments or points you would like to clarify for 19 Mr. McMurphy? 20 MR. LESLIE: No, I will make my submissions as 21 part of my overall submissions. 22 THE PRESIDING MEMBER: Okay. Fine. Thank 23 you. Yes. 24 PRESENTATION 25 MR. LAWSON: Good morning, Madam Chair and 26 Panel members. My name is Harry Lawson. I was here 27 yesterday morning as you will recall. 28 There were some questions left yesterday after 468 LAWSON, Pres. 1 the discussions about the zone pool that I would like to 2 have my two cents on. One was the -- an order to 3 inject. I believe that that was granted in 1965 for 4 zone and I had a copy of that order that I had obtained 5 from the MNR staff, but some place in the last three 6 years I have misplaced it. But I do believe it was 7 granted and in letters between the Board and Union's 8 lawyers at the time, I think it is confirmed in there. 9 And also the questions about Union's operating 10 authority in zone. The storage agreements that were 11 signed in the early 1960s, the way I understand it, 12 perpetuates the P&NG leases that were in place at the 13 time. So without the storage agreements, the leases 14 would have expired. 15 So with the sell of the production Union made, 16 they have signed the production leases but they were 17 held by the storage agreement. So Union is -- to me it 18 looks like it's using the storage rights to sell 19 production to somebody else. So it is complicated 20 beyond -- I'm not a lawyer so I can't comment on whether 21 it is legal or not but I'm just concerned about it. 22 And actually those storage rights were 23 obtained, just for the information, five dollars cash 24 was paid to a landowner to sign the storage agreement. 25 And then the payment that continued after that was 26 the -- in most cases a dollar an acre, that was the 27 original payment to the landowner from the P&NG lease. 28 And currently the only payment that comes to the 469 LAWSON, Pres. 1 landowners in every case I know of except one is the 2 payment that comes from Lagasco. So there is no payment 3 that comes from Union at all for storage rights. 4 And speaking about the zone production 5 facilities, just to comment on that. The infrastructure 6 deteriorated under Union's ownership. Leaks that 7 occurred in pipelines because I have firsthand knowledge 8 of a case where a farm that land for the last 25 9 years -- there was a leak there in the middle of the 10 summer and a huge block of frozen soil was pulled out of 11 the ground by the leak because the leaking gas had 12 cooled it and froze this ground in the summertime. 13 So eventually that line was shut down for a 14 few years until after the sale, and then it was 15 reactivated on that section. 16 So the landowners relations in zone, they had 17 decayed pretty bad during the years too and they were at 18 such a point that Union was having difficulty obtaining 19 any new leases and I believe that they just found it was 20 impossible so they -- they sold it. Just give up and 21 sold it. 22 So they -- in that sale Union sold 18,000 23 acres of leases with about a hundred production wells 24 nearing their sunset phase. So that relieves Union of 25 the problem of plugging them when they were empty. And 26 just a little bit further to that, some wells in zone 27 and some of the other pools had been left suspended long 28 enough in the period before that sale that MNR had 470 LAWSON, Pres. 1 actually ordered them plugged. And at that time the 2 Minister of Natural Resources had defined the plugging 3 orders. So it was a fairly, you know, it was the fairly 4 of all process, not as easy as today. 5 But anyway to be fair, during the time when 6 the sale and the subsequent lawsuit, the failed sale and 7 the subsequent lawsuit was going on there was a $60 8 million lawsuit against JD Gas, there was a court order 9 prohibiting Union from plugging those wells. So to be 10 fair they couldn't plug them after they started the sale 11 proceedings. But it had got to the point where they had 12 been ordered to plug them. 13 So I hope that clarifies a few things and if 14 anything I have said is wrong, I would be glad to be 15 corrected on the issues. And as far as the landowner 16 organization in zone, we would be more than willing to 17 talk to anybody that will talk to us, you know, face to 18 face, in good faith to straighten up these matters. 19 Thank you, Madam Chair. 20 THE PRESIDING MEMBER: Thank you, Mr. Lawson. 21 Are there any other people who would like to come 22 forward at this time? 23 All right. Ms Lea, are you ready with your 24 submissions? 25 MS LEA: I believe so. Thank you. 26 THE PRESIDING MEMBER: Thank you. 27 SUBMISSIONS 28 MS LEA: Madam Chair and Panel Members, Board 471 SUBMISSIONS (Lea) 1 staff would like to take this opportunity to put a few 2 points on the record that we believe are still issues 3 that we would invite the applicant to address in its 4 argument, issues that we feel still need some 5 clarification or perhaps there's still a point of 6 contention. 7 Just from an overall perspective, it appears 8 that this project is a good use of provincial resources 9 and should be of economic benefit to Union and its 10 ratepayers and will provide gas storage service for the 11 people of Ontario and also possibly for other customers 12 outside of Ontario or Canada. 13 Many of the issues that Board staff originally 14 identified in its filing were resolved through the 15 interrogatory process, through the technical conference 16 and through cross-examination and for that we thank the 17 applicants. There are, however, as I said, a few 18 outstanding. 19 Issues that arose in our minds from Panel No. 20 1, I think it's clear that the project is economically 21 feasible. The one major gap, of course, which we expect 22 to be filled very shortly is the filing of the contract 23 with Duke and Carthage. We haven't yet seen those 24 contracts. 25 Of course, the Board does not know yet what it 26 is being asked to approve with respect to those two 27 contracts. As a result, we do not yet know whether the 28 Board will have questions, issues or problems with them. 472 SUBMISSIONS (Lea) 1 When we examine those contracts, it may be necessary, of 2 course, to contact Union again to clarify matters. It 3 is important then that we receive those contracts and 4 that it's understood by the applicant that the Board 5 cannot proceed, of course, with approval of contract it 6 hasn't yet seen. 7 MR. LESLIE: Madam Chair, I'm sorry, I was 8 remiss. I should have done this at the outset this 9 morning. I do have the contracts. I got them last 10 night. I appreciate Ms Lea is in the middle of her 11 submission, but I will file them at the earliest 12 opportunity. 13 MS LEA: Certainly. I wouldn't have an 14 opportunity to look at them now, Mr. Leslie. 15 MR. LESLIE: No, but I thought perhaps I could 16 relieve you of any concern. I am filing them today. 17 MS LEA: Well, once we have reviewed those 18 contracts, then we will be able to determine if any 19 issues arise with respect to them. The contracts are 20 important, of course, because they drive the need for 21 the project, these contracts as well as the others for 22 which approval is sought. 23 One thing that I would ask Union to confirm is 24 a factual matter which I neglected to ask in 25 cross-examination was the proposed completion of 26 injection, the first injection date on this project and 27 also when you expect to complete positions injections, 28 that you have the volumes in place ready to serve the 473 SUBMISSIONS (Lea) 1 contracts that you have committed to. We just were 2 hoping that you could reassure us that you will achieve 3 the volumes needed during the injection cycle that you 4 have proposed. 5 If you could tell us the start date and 6 proposed end date of your injection cycles, we would 7 appreciate that. That should, of course, tie into the 8 construction schedule, which we have examined. 9 There are some loose ends to tie up and 10 perhaps submissions remaining about the boundaries of 11 the designated storage areas. There is now, as you 12 heard from Mr. Trevail's evidence, no issue with respect 13 to the boundaries of the Oil City Pool. We would like 14 to make the comment that it would have been better if 15 the evidence that was provided from Mr. Egden on the 16 stand at this hearing could have been filed earlier, 17 even a few days earlier, to allow Mr. Trevail to review 18 it in advance so that his appearance here might have 19 been avoided. 20 We also don't understand completely why a 26 21 metre buffer in the northeast corner of the Oil City 22 Pool is inadequate -- that's in lot 17, tract 5 -- 23 whereas a 25.2 metre buffer is adequate at the south end 24 of the Mandaumin-Bluewater designated storage area. 25 Another point that was raised here was Mr. 26 Feenstra's concern about the boundaries of the 27 Mandaumin-Bluewater Pool. It seems that the removal of 28 his portion of his land, I think it was a 50 acre 474 SUBMISSIONS (Lea) 1 portion, was based on the geology of the pool and that 2 it is not necessary to include those tracts in the 3 designated storage area in order to protect the 4 integrity of the pool and the drilling in it. 5 The policy objective of not unduly reducing 6 exploration by including unnecessary pieces of land is 7 the stronger policy here. 8 I would like to note though that compensation 9 for outside acres may be settled by further discussions 10 between Union and the Lambton County Storage Association 11 or by the section 38(3) application so his concerns, I 12 hope, will be addressed during that process. We are not 13 seeking to have those tracts included certainly. 14 There also was an issue raised or an option 15 put forward by Ms Halladay with respect to the removal 16 of the small house lots that are still without leases in 17 that designated storage area. 18 Now, we understand the MNR policy to include 19 the following concerns. In order to drill in a drilling 20 tract, you have to have an entire tract. Originally we 21 thought this only applied to tracts outside the DSA, but 22 we have confirmed with MNR that in fact it applies to 23 tracts also within a DSA. 24 If you remove small lots from within a tract 25 inside a DSA, then that tract cannot be used for 26 drilling because the buffer area is not sufficient to 27 allow drilling in the middle -- one moment -- because 28 the buffer area is not sufficient to allow drilling in 475 SUBMISSIONS (Lea) 1 the middle of the tract. 2 I should be clear what I mean about drilling. 3 We are not talking about the drilling that Union 4 proposes to do here in order to operate this storage 5 area. What we are talking about is future exploration 6 and development possibly of resources from other 7 formations at different depths in the reef, at different 8 levels, not within the Guelph formation. 9 Although there is no intention by Union or 10 anyone else at this time to do that kind of exploration 11 and drilling, it's not outside the bounds of possibility 12 that this could occur some time in the future. Access 13 to these shallower formations will be prevented if the 14 entire drilling tract is not kept whole in the DSA. 15 I think that that is one of the reasons for 16 the MNR policy regarding keeping tracts both inside and 17 outside the DSA. 18 It's certainly true to say that the Board is 19 the ultimate authority in terms of boundary settings for 20 these designated storage areas. If this Board then 21 decides to change its past practice of keeping tracts 22 whole within the DSA, this will in a sense set a 23 precedent not just for this Board, but for other 24 agencies. 25 The Mining and Lands Commission and so on will 26 look at this and this will be a change in policy that 27 will have ramifications not only for this Board's 28 decisions, but for the other agencies that see 476 SUBMISSIONS (Lea) 1 themselves as subordinate to the Board in terms of 2 designated storage areas. 3 Even if we presume that the house lots can be 4 removed from that particular designated storage area, 5 and as you can hear from what I am saying we are not 6 recommending that, we still have some landowners within 7 the proposed boundaries without leases. For example, 8 Mr. Cascaden, whose property is still without a lease. 9 As is not uncommon in these applications, the 10 Board must determine whether the public interest in the 11 use of the pool as a storage facility is sufficient 12 justification for the taking away of these property 13 owner storage rights without their consent. 14 There is the public interest in the use of the 15 pools to balance against the interests of not taking 16 without consent the storage rights away from the 17 landowners and giving them to Union. 18 There was also the issue raised of the 19 preconstruction of facilities here. The evidence that 20 we have heard during the hearing, however, has I think 21 reduced this concern. The evidence is that all the 22 consents that were required were obtained, but Union's 23 shareholder bears the risk of the cost of construction 24 and cleanup if the facilities are not approved. Union 25 has testified that they can restore the land to its 26 original or very close to its original condition. 27 There is one other loose end that I think 28 needs to be tied up with respect to the facilities 477 SUBMISSIONS (Lea) 1 documents that we have before us and that's I think 2 still on the record, an incorrect licence application 3 for UMB 5. I think that we are still waiting for a 4 corrected licence application. Again, this is another 5 document that the Board must have before it can proceed 6 to approve the well drilling program. 7 I would like now to turn to the question of 8 the necessity for an easement agreement for gathering 9 lines. Gathering lines were found by the Board to be 10 transmission lines in E.B.L.O. 227. This case was 11 actually taken to the Divisional Court. I don't know 12 whether it was on that point merely or not, but it was 13 taken to the Divisional Court. The rulings of the Board 14 were upheld. 15 MR. LESLIE: No, Madam Chair, that's not 16 correct. I was on that. 17 MS LEA: What did happen, Mr. Leslie? 18 MR. LESLIE: Well, I'm sorry, but that's just 19 not true. 20 MS LEA: No, that's fine. What did happen, 21 Mr. Leslie? 22 MR. LESLIE: What happened was that the issue 23 came up in the context of the case in which Union was 24 doing work on a farmer's land. The Board ultimately 25 allowed Union to proceed with the work. When we got to 26 the Divisional Court with the legal issue, the court 27 held that the issue was moot and it declined to hear 28 argument on the issue. 478 SUBMISSIONS (Lea) 1 Sorry. I know I could wait. 2 MS LEA: That's fine. I don't have the case 3 with me. 4 MR. LESLIE: People keep telling me I lost 5 that case. 6 MS LEA: So it's a sore point, is it? 7 MR. LESLIE: Mr. Justice Reid said he had 8 better things to do than decide legal issues that were 9 moot. 10 MS LEA: Okay. I don't have the case before 11 me. You were there. That's fine. I guess the idea is 12 that certainly there was no overturning of the Board's 13 ruling with respect to that. It sounds like the court 14 didn't deal with it from what Mr. Leslie tells us. 15 In any event, this Board has found gathering 16 lines to be transmission lines and utilities do apply 17 for leave to construct for gathering lines under what is 18 now section 90 of the Ontario Energy Board Act. 19 As was pointed out yesterday during the 20 cross-examination of the third panel, section 97 of the 21 Ontario Energy Board Act requires that a leave to 22 construct not be granted until the applicant satisfies 23 the Board that it has offered or will offer each owner 24 of land affected by the approved route or location an 25 agreement in a form approved by the Board, so that it 26 appears that a form must be approved by the Board. 27 Now, as I understand Union's position, with 28 respect to this, at least as of yesterday -- and I'm 479 SUBMISSIONS (Lea) 1 sure that Mr. Leslie will correct me, in his 2 submissions, if I'm wrong -- as I understand Union's 3 position, the form of agreement proposed consists of the 4 gas storage lease, the construction commitment document 5 and the letter of agreement, which lists the well 6 locations and easements -- the letter of 7 acknowledgement, pardon me -- the letter of 8 acknowledgement, which lists the well locations and 9 easements -- and we have examples of that letter of 10 acknowledgement as Exhibits 9.9 and 9.10. 11 So the Board, then, in this case, needs to 12 decide if that form of agreement is acceptable, whether 13 it's sufficient for the purposes of Section 97 and to 14 satisfy public policy. 15 Now, my recollection is that Union has, in 16 previous cases, said that it will offer easement 17 agreements for gathering lines once the well locations 18 and other facilities are approved. I believe that that 19 was the evidence in the Century Pool Phase I. And it's 20 understandable that the utility might not want to offer 21 an easement agreement earlier as the locations may 22 change, if the Board so requires; it doesn't have the 23 approval yet for those facilities, so the locations may 24 change. But the form of the easement, it appears, must 25 be approved by the Board in advance of approval of the 26 lease to construct applications for these gathering 27 lines, according to Section 97. 28 Now, the reason why an easement agreement 480 SUBMISSIONS (Lea) 1 similar to that provided for transmission lines would be 2 desirable, I suggest, includes the following. 3 There's very little or no difference in impact 4 on the lands between a transmission line or a gathering 5 line. In this case, for example, there's one gathering 6 line that is in N -- that's "N" for "Ned" -- PS 12 and 7 one transmission line that's in NPS 10. If we have an 8 agreement -- so, as I said, it doesn't appear that there 9 would be much difference in impact on the land. 10 Now, if the landowner and Union have an 11 agreement that describes the easement needed by the 12 utility in a form of easement, that should ensure that 13 vehicles, machinery and so on stay on the easement. It 14 gives the landowner some certainty and some protection. 15 I'm not sure that the description of the 16 access roads here -- it indicates that this is a 17 five-metre-wide easement adjacent to all of the 18 permanent all-weather access roads. I'm not sure 19 whether that is a sufficient description to provide the 20 certainty that I have talked about here. 21 And, thirdly, if the Board decides to approve 22 a form of easement, it should provide for some 23 consistency of treatment of landowners, on this project, 24 and in other projects; also, some consistency with 25 Consumers Gas and their agreements. 26 So, those are some policy considerations that 27 I would ask the Board to consider, and Union to address, 28 in determining whether what Union proposes as a form 481 SUBMISSIONS (Lea) 1 here is sufficient. 2 Now, another proposal the Board staff has 3 suggested, in cross-examinations, that we have put 4 forward for the Board's consideration is to -- also is 5 intended to provide information, certainty and 6 consistency for landowners; and that's the request to 7 Union to develop a policy regarding abandonment of wells 8 and pipelines. 9 I should be clear about what we are 10 suggesting. 11 We are not asking for the development of such 12 a policy be a condition of approval of this project. We 13 are recommending to the Board -- and, of course, asking 14 Union to comment on -- the desirability of the 15 development of such a company policy to be filed with 16 the Board within one year. 17 So the proposal, then, is that the Board 18 direct Union to draft, create such a policy, file it 19 with the Board within one year so that the Board can 20 review it. 21 Now, the policy can, and should, refer to 22 legislation, such as was mentioned by the witnesses, the 23 Oil, Gas, Salt Resources Act, Ontario Regulation 157 of 24 '97, and to standards such as the Technical Standards 25 Safety Authority abandonment checklist, which we went 26 through yesterday. 27 We are not suggesting that Union's abandonment 28 practices are inadequate. We are suggesting that it is 482 SUBMISSIONS (Lea) 1 desirable to have a policy in place that is easily 2 understood by affected parties and the public and the 3 Board, especially for facilities that were constructed 4 many years ago; that is, the new abandonment policy 5 would apply to any facility abandoned in the future, 6 even if they were constructed some time ago. So, this 7 is not merely a precaution that won't be needed for 30 8 years. 9 The Municipal Franchise Act deals with this 10 matter, for public lands. We are suggesting to Union, 11 and the Board, that we need a statement of policy and 12 practice for private lands. 13 Board staff reviewed the environmental 14 evidence, in this project, in some detail, before this 15 hearing, as well as in cross-examination yesterday. 16 It's inevitable that construction will create 17 some disturbance of natural features in land, but the 18 evidence is that Union will mitigate the damage and 19 restore the land -- and if Union acts in accordance with 20 the evidence, its policies and its manuals that have 21 been filed and presented here, we do not see any further 22 issues arising, with respect to environmental matters. 23 It is to be noted that we have asked -- 24 suggested, in conditions of approval, and Union has 25 agreed to, what is basically a summer construction 26 period to avoid construction in the winter and during 27 times when soils are vulnerable. 28 Now, generally, the special impacts of this 483 SUBMISSIONS (Lea) 1 product have been taken into account. There will be 2 some disturbance, however, to local residents, from 3 noise, dust, flaring and other construction 4 disturbances. But we are still waiting, I think, for 5 the answer to Undertaking 16.10, which may assist the 6 Board by dealing with the practicality of noise 7 abatement measures suggested by the Lambton County 8 Storage Association. but I think that it -- as Union 9 itself has agreed -- it is important for Union to 10 communicate with the local residents and minimize 11 disturbance to them. 12 One matter that was raised yesterday, by the 13 witnesses, was -- I think Mr. Wachsmuth suggested that 14 Condition O on the lease to construct conditions of 15 approval -- that's the one which requires Union to 16 comply with the intent of the County of Lambton 17 tree-cutting buy-law. I think he suggested this was 18 unnecessary. 19 As this Panel will be aware, this issue has 20 been an ongoing debate through several hearings, and in 21 Century Pool Phase I, we did have a witness from Lambton 22 County, Mr. Boyd, testify, and in response to concerns 23 of the County, the Board, in that case, imposed detailed 24 conditions regarding what Union must do about cutting 25 and replanting trees. We are not suggesting that such 26 detailed conditions are called for here, but the more 27 general condition, that the intent of the buy-law be 28 complied with, is something we are suggesting. 484 SUBMISSIONS (Lea) 1 As I said, we understand the objection to this 2 condition; it's not that Union won't comply, but that it 3 is unnecessary. Despite the fact, though, that Union 4 says it will comply with the condition, there is, in 5 fact, no evidence on the record that the County of 6 Lambton agrees with Union's proposal -- and I gathered 7 from the evidence yesterday that Union will not seek 8 confirmation but will rely on the fact that they haven't 9 heard to the contrary from the County. 10 In the absence of confirmation from Lambton 11 County, then, I would suggest that the inclusion of this 12 condition would be prudent, especially given the history 13 of disputes between Union and Lambton County -- and I 14 would invite Mr. Leslie to address what the plans of 15 Union are, in that regard, and make suggestions. 16 The last matter that I wanted to deal with is 17 the question of the status of the agreement with the 18 Township of Dawn-Euphemia and whether this agreement 19 should be on the public record or not. 20 As was pointed out by Madam Chair yesterday, 21 the Board does have rules relating to when documents 22 should be kept confidential -- and Mr. Leslie, in his 23 submissions, if he is seeking to have the documents kept 24 confidential, may wish to address that. 25 The first general principle, of course, is 26 that this is a public board, with public hearings, and 27 that evidence should be on the public record and 28 decision making should be transparent. 485 SUBMISSIONS (Lea) 1 Rule 13 of our Rules of Practice and Procedure 2 deals with confidential documents; and in requesting 3 confidentiality, in I think it's Rule 13.02(b), a person 4 requesting confidentiality is asked to address the 5 details of the nature and extent of the specific harm 6 that would result from disclosure. 7 So there's an assumption there that specific 8 harm is necessary before confidentiality is warranted. 9 That rule, Rule 13, refers to Rule 47, which 10 deals with hearings in the absence of the public. Rule 11 13 says that the Board should look to the criteria given 12 in Rule 47 about when to keep things confidential. 13 And Rule 47.01(b) -- well, (a) and (b) talk 14 about those criteria. The Board can look at them; I 15 don't intend to read them into record. But it's clear 16 that the main principle mentioned in that section is the 17 principle that hearings be open to the public and the 18 section asks the Board to weigh the desirability of 19 avoiding disclosure against the public interest of 20 adhering the principles that hearings should be open to 21 the public. So the Board will have to weigh this. 22 Now, we understand that the Township itself 23 does not object to the disclosure of this agreement, but 24 Union may. However, an agreement entered into by a 25 regulated utility and a municipality may affect the 26 interests of the residents of that municipality, and 27 also other municipalities and their residents. I think 28 that the submissions by Mr. McMurphy, this morning, and 486 SUBMISSIONS (Lea) 1 the letter from the Township of Goderich, may indicate 2 some interest, some public interest in this agreement. 3 Now, Union may wish to keep the document 4 confidential in case it gives other municipalities 5 ideas, frankly, or provide the precedence for agreements 6 with municipalities. This may be, in fact, the very 7 reason to disclose it. 8 Now, the rules for filing of confidential 9 documents does allow for the removal of parts of the 10 document, so you can file a portion of the document. 11 I just found the description by Mr. Leslie of 12 what is in that document. It occurs at page 332 of the 13 evidence yesterday. 14 He starts at 331. He says that there is three 15 main things in it: one, that Dawn-Euphemia wanted Union 16 to move the transmission line in the future if the space 17 that they were taking up was required for other 18 purposes; secondly, whether the franchise agreement 19 allowed Union to use the road allowance for transmission 20 lines or whether it did not make such a provision; also, 21 there is a matter of recovery of costs. 22 Now, of those three things, I think that 23 disclosure on the public record of the cost 24 arrangements -- I don't see any particular benefit to 25 that, so I don't think that people are interested in 26 that. 27 However, the two things mentioned by 28 Mr. Leslie appear, and I would ask the Board to 487 SUBMISSIONS (Lea) 1 consider, to be public interest issues to deal with the 2 use of public lands for transmission lines and the 3 arrangements for those. I think those are the sorts of 4 things that the Township of Goderich is interested in 5 and inquiring about, the easement for a natural gas 6 transmission line on a township road allowance. 7 So there does appear to be some interest by 8 other parties in this. It does appear that the 9 agreement may contain matters relating to the public 10 interest, not merely private interest, and, except for 11 the portion of that agreement relating to cost, we would 12 suggest that it would be desirable to have that document 13 on the public record. 14 We would invite Mr. Leslie to address the 15 reasons why it should not be as he so wishes. 16 One moment. 17 --- Pause 18 MS LEA: Thank you very much, Members of the 19 Board, for your attention. Those are our comments. 20 THE PRESIDING MEMBER: Thank you, Ms Lea. 21 MR. LESLIE: Madam Chair, I have been asked if 22 I could have a few minutes so I can talk to Ms Patterson 23 about the issue of the injection cycle so that I can 24 understand that correctly and respond to Ms Lea's 25 invitation to give you some information about that. 26 THE PRESIDING MEMBER: Do you think that this 27 panel needs to retire for the time being or just that -- 28 MR. LESLIE: No. 488 SUBMISSIONS (Lea) 1 The other thing I was going to raise, I found 2 it very warm in here yesterday so I took it upon myself 3 to turn down the heat and now, being cold, I overdid it, 4 so I would be happy to undo what I did earlier today. 5 --- Laughter 6 THE PRESIDING MEMBER: Mr. Leslie, how long do 7 you think that your submissions will be? 8 MR. LESLIE: My submissions will be about half 9 an hour. 10 THE PRESIDING MEMBER: Fine. Thank you. 11 MS LEA: I will work on the heat. 12 MR. LESLIE: Thank you. 13 --- Pause 14 MR. LESLIE: Thank you, Madam Chair. 15 SUBMISSIONS 16 MR. LESLIE: I propose to deal with the issues 17 on the issues list that appeared to me, yesterday 18 evening, to require some comments, and I will do it in 19 the order in which they appear on the issues list. 20 The first matter is the question of need. I 21 do not think anybody disputes that there is an 22 established need for this project. There is no specific 23 issue. I will simply point out that the storage is 24 underpinned by contracts which will return market value 25 prices and that will result in premiums over 26 cost-of-service rates. 27 The benefits to Ontario of this storage and 28 the contracts associated with it were described by 489 SUBMISSIONS (Leslie) 1 Mrs. Braithwait in evidence. I will give you some 2 references. It is pages 20 to 24, 27 to 28, and 82 to 3 84. Apart from the value that will be returned and 4 available to ratepayers, she was also quite enthusiastic 5 about the competitive effect of the open season storage 6 contracts and talked about price discovery, which I 7 understood to mean price transparency, which in turn 8 leads to enhanced competition, which in turn leads to 9 more efficient economic behaviour. 10 With respect to the open season contracts 11 themselves, I again apologize that I didn't file these 12 at the outset this morning, but I do have them. There 13 was an undertaking, I think it was 16.7. There are 14 three of these contacts -- contracts, I should say, and 15 I will ask Mr. Gagner to pass them up to the Board and 16 to the Board staff. 17 The first is a contract with Duke Energy 18 Marketing Limited. Perhaps I will wait until you have 19 it. 20 MS LEA: I think, actually, Mr. Leslie, you 21 are satisfying Undertakings 16.2 and 16.7. 22 MR. LESLIE: Yes. I was told there were two 23 undertakings. 24 MS LEA: In my zeal to be sure that I had made 25 a note of this I overdid it. So you have satisfied two 26 undertakings. 27 MR. LESLIE: I only have one copy of each. 28 --- Pause 490 SUBMISSIONS (Leslie) 1 THE PRESIDING MEMBER: Ms Lea, in your zeal, 2 and I know of your impeccable record keeping, I think 3 these are replacing previously filed materials that -- 4 MR. LESLIE: Can I just go through that. 5 THE PRESIDING MEMBER: Okay. 6 MR. LESLIE: One of them is; the other two are 7 not. 8 THE PRESIDING MEMBER: Okay. Then my only 9 question is whether we need exhibit numbers for them or 10 not. 11 MR. LESLIE: If you look at section 2, 12 Tab 4 -- and you needn't do this right now -- you will 13 find that the first contract between Union Gas and Duke 14 Energy, dated May 19, 1998 -- and it has the handwritten 15 notation in the upper right "Phase I - For Information 16 Only" -- is already in evidence. The difference between 17 the one I am now giving you and the one in evidence is 18 that the units in the one I am now giving you are 19 expressed in metric, I think, or GJs, I should think, 20 and I was told that it might be important to have the 21 corrected version in the sense they are now using GJs on 22 the record. 23 The other two are not in evidence, and that 24 was the difficulty that Mrs. Braithwait identified the 25 other day. One of those is with Duke Energy. The other 26 is with Carthage. They both have the handwritten 27 notation "Phase II" in the upper right-hand corner. 28 These are the contracts which are in issue in this case, 491 SUBMISSIONS (Leslie) 1 that is, these are the contracts for which approval is 2 being sought in this case. 3 I misspoke myself. It's Galbraith, not 4 Braithwait. 5 MS LEA: Okay. 6 So, Mr. Leslie, just for ease of reference, 7 let's give this package of contracts, if it pleases you, 8 an exhibit number. It's in the 9 series, and what are 9 we up to? I don't know how impeccable this is. I think 10 it is 9.12. 11 EXHIBIT NO. 9.12: Package of three 12 contracts submitted by Mr. Leslie 13 satisfying Undertakings 16.2 and 16.7 14 MR. LESLIE: I don't plan to say anything more 15 about those contracts at this time other than to remind 16 the Board that under your statute your approval is 17 required for the parties to the contracts, the term of 18 the contracts and the space which is subject to the 19 contracts. 20 The volumes associated with those contracts 21 are set out in section 2, page 2 of 5 of the evidence, 22 and there is also a correlation between the volumes 23 under contract and the storage capacity at Interrogatory 24 Response No. 7 -- this is a Board staff interrogatory -- 25 page 2 of 2. 26 With respect to the next heading, "Geology and 27 Reservoir Engineering", and specifically the boundaries 28 of the designated storage areas, I should start by 492 SUBMISSIONS (Leslie) 1 saying in response to Undertaking 16.9, I believe, that 2 we will file a corrected and accurate meets and bounds 3 description of the DSAs as soon as possible. 4 The proposal at this time is to do that so 5 that you can deal with the DSAs, both with the 6 residential properties that have been discussed, in and 7 out, and that will require some survey work. So you may 8 not get those meets and bounds descriptions until late 9 next week or the week after. 10 With respect to the housing lots, I'm told 11 that Mr. Egden has confirmed that apart from the Mac 12 Brown property, which is the one to the south, it would 13 not be a significant compromise of the DSA to exclude 14 the other three lots. I believe there are three to the 15 north. And that is because there is no realistic 16 possibility of people drilling on those lots because 17 they are residential properties and also because of 18 setback requirements. 19 The Mac Brown property on the other hand needs 20 to be included, and that is because that property is 21 right on the base of the gas -- right on the base of gas 22 contour, which was depicted in Exhibit 9.4. 23 I have been asked to say though that Union 24 would prefer, and I gather Board staff's position is the 25 same, to include those lots in the DSA because that 26 would be consistent with the policies of the Ministry of 27 Natural Resources to include whole drilling -- whole 28 tracts within the DSA, whole drilling tracts within the 493 SUBMISSIONS (Leslie) 1 DSA. 2 If there were no -- if there were no issue 3 about the leases, that is if there were leases on this 4 property, they would obviously remain within the DSA and 5 they probably should remain within the DSA for the same 6 reasons. Otherwise I understand there is no issue with 7 respect to the proposed DSA boundaries. Board staff 8 indicated that that was the case for Mandaumin and 9 Bluewater at Transcript 133 and Mr. Trevail's evidence 10 is found at 164 to 170, and Ms Lea, as I understand her 11 comments this morning, has confirmed that. 12 Ms Lea mentioned the disparity between a 13 requirement for a 26 foot buffer in one area while 22 14 feet seemed to be sufficient in another. I will only 15 say that I don't think Mr. Egden was asked about that 16 when he was here. He may have an answer. I don't 17 know -- I don't know that it is terribly important. 18 With respect to delta pressuring, Ms Lea has 19 not raised any issue on this subject. But I thought I 20 should give the Board the references because it was 21 something that was gone into in detail and most 22 thoroughly by Ms Lea during the hearing. 23 Most of this discussion took place at 24 transcript pages 171 to 194. There was some direct 25 evidence at page 132. And in summary, that evidence 26 indicates that the number of cycles doesn't really have 27 any significance, that is the difference between doing 28 it in the first cycle and the second or third cycle is 494 SUBMISSIONS (Leslie) 1 not really material. 2 As Mr. Pardy said, if you just take it to 3 discovery pressure in the first cycle, you don't learn 4 anything because it has been holding gas at those 5 pressures for millions of years. He also said that the 6 delta pressuring is a gradual process and they can 7 determine if there is inventory loss as they go along. 8 That is at transcript page 180. 9 Mr. Egden referred to the cap rock tests. 10 What I would think of as the break point is 1.2 pounds 11 per square inch per foot. The proposal is to limit the 12 pressure in these pools to 0.7 with a 40 per cent safety 13 margin. That is at page 191. Mr. Egden also referred 14 to the fact that there are successive layers of rock, 15 all of which provide a cap and he mentioned the fact 16 that the A2 anhydrite, I believe it is, has plastic 17 qualities which give some comfort as well in terms of 18 its ability to recover were there any kind of a fissure. 19 Board staff filed as Exhibit 15.6 some 20 material dealing with other delta pressuring operations 21 and pointed out that the ratios that they had calculated 22 for these pools, or at least for the Mandaumin and 23 Bluewater Pools, were higher than many of the others. 24 The evidence is that that ratio isn't really a very 25 meaningful number. It is really just a function of the 26 discovery pressure being lower where you get the higher 27 ratios and it doesn't tell you much more than that. And 28 that is at transcript 180 and 174. 495 SUBMISSIONS (Leslie) 1 And finally I will point out that Mr. Egden, 2 in his evidence, gave a description of why these 3 particular pools are, in his words, a very good vessel 4 for delta pressuring. And I won't go through that, but 5 I will give you the references. It is page 183 to 184. 6 With respect to the drilling schedule, the 7 evidence is that Union needs to start on April the 17th 8 in order to complete an injection cycle and that cycle I 9 am told, assuming a start date of April the 17th, would 10 be from July 1 to initial withdrawal at the beginning of 11 November 2000. The April 17th date is discussed in the 12 evidence at pages 264 to 265. 13 And that brings me to the question of 14 gathering lines, which I think is something that I 15 should address in a little more detail, and the need for 16 easements. I will start by pointing out that all the 17 storage facilities proposed in this case, wells, roads, 18 gathering lines, are subject to -- are on land which are 19 subject to storage leases. There are no unleased lands 20 involved in this issue. And all of those leases grant 21 the right to install pipe for the purposes of injecting 22 and removing gas. And all of the people who have given 23 those leases receive annual payments in return for that 24 privilege. 25 Now, in addition with respect to the gathering 26 lines, Union obtains acknowledgements from the 27 landowners and Exhibit 9.9 and 9.10 are examples. Those 28 acknowledgements also go to well locations and road 496 SUBMISSIONS (Leslie) 1 locations. 2 And I wanted to give you some evidentiary 3 records so you can look at those documents. With 4 respect to the Oil City storage pool, the only landowner 5 involved, that is to say the only landowner whose 6 property will have storage facilities on it, is named 7 Vandevelde. And the lease documents with respect to 8 that property are found at section 9, Tab OC, for Oil 9 City, 4-19. The storage lease is dated 1973. The 10 acknowledgement for that property is found at section 11 10, schedule 1 and it is page 1 of 6 and it is dated 12 1999. 13 In the Mandaumin Pool there are two landowners 14 concerned. The first is named Kemper, K-E-M-P-E-R. The 15 storage lease documents for that property are found at 16 section 9, Tab MA-9. That lease was originally granted 17 in 1997 and it was also amended in 1997. In addition, 18 there is a Rawlings, property owned by people named 19 Rawlings. Those lease documents are found at section 9, 20 Tab MA-14. The storage lease was originally granted in 21 1961 and it was also amended in 1997. The 22 acknowledgements for those properties are found in 23 Exhibits 9.10 and 9.9 that were filed earlier and they 24 are dated 2000. 25 With respect to the Bluewater Pool, the 26 landowner is named Hardy. I filed a lease document for 27 part of the Hardy property earlier in these proceedings. 28 This doesn't appear to have received an exhibit number. 497 SUBMISSIONS (Leslie) 1 I think it was inserted in the evidence with the other 2 leases and it is dated 2000. The earlier leases 3 pertaining to the rest of the Hardy property, or earlier 4 lease I should say, is found at section 9, Tab BW 12-1. 5 This lease was originally granted in 1977 and, 6 as I say, the remainder of their property was leased in 7 1999, I believe it is. 8 The acknowledgement for the Hardy property is 9 found at section 10, schedule 1, pages 5 and 6 of 6 and 10 they are dated 1999. When you go to those 11 acknowledgements, you will find that the gathering lines 12 are not included. That is because there is some 13 discussion still going on, I gather, around exact 14 locations, but we will file an amended acknowledgement 15 that includes the gathering lines shortly. 16 I am advised, and I can give the Board the 17 assurance, that the Hardys do know about pipelines and 18 there is no substantive problem. 19 Having said all that, I should point out in 20 this case, apart from the documents I have referred to, 21 there is also the document referred to as the 22 construction commitment letter which is in evidence -- 23 this is Exhibit 9.7 -- which will operate in favour of 24 all those landowners with respect to this construction. 25 Compensation is paid for gathering lines. I 26 don't know whether there is any confusion about that. 27 The compensation is a fee value is paid for the area in 28 which the gathering lines exist. Under the leases, all 498 SUBMISSIONS (Leslie) 1 damages associated with construction must be 2 compensated, and they are, and that's both ongoing crop 3 loss and any other damages arising from the 4 construction. 5 In the first phase of the hearings involving 6 the first phase of this project, Mr. Wilton told the 7 Board that in addition to all the documents I have 8 referred to, it was Union's policy to get an easement 9 from landowners with respect to the location of the 10 gathering line. Mr. Lowe alluded to that the other day 11 as well. That remains Union's policy. 12 The easement is obtained primarily to have the 13 location of the gathering lines identified in a way that 14 can be registered against title, but it is obtained and 15 there is an easement document. It is a different 16 document than the easement that is obtained for 17 transmission lines because with the transmission lines 18 there is no storage lease so that you have terms and 19 conditions in the storage lease that do not have to be 20 in the easement, vice-versa, I guess. 21 I do have, I obtained overnight, a copy of the 22 form of easement that is obtained by Union for the 23 purposes I described. I can file that with your 24 permission now. I do not believe the Board asked for 25 the form of easement in the Century Pool's Phase I 26 hearings. It wasn't an issue. I do have it and I can 27 file it now if that would be of assistance. 28 THE PRESIDING MEMBER: Yes, please. Thank 499 SUBMISSIONS (Leslie) 1 you, Mr. Leslie. 2 MR. LESLIE: This does not pertain to any of 3 the properties that we are currently with because, as Ms 4 Lea has pointed out, the practice is to get these 5 easements. 6 MS LEA: It will be Exhibit 9.13. 7 EXHIBIT NO. 9.13: Transfer/Deed of Land 8 between McMurphy and Union Gas Ltd. 9 MR. LESLIE: The practice is to get these 10 easements once the well drilling is complete and the 11 final location of the gathering lines has been 12 confirmed. That was done in Phase I and it will be done 13 in this phase as well. 14 Now, as a matter of law, I think that the 15 storage leases really do afford Union the ability, the 16 right, to construct the lines in question. The leases 17 clearly provide for that. But as a practical matter, in 18 my submission, the combination of the storage leases, 19 and I will point out they are not storage leases dated 20 1898, the acknowledgements, the form of easement that is 21 obtained should be sufficient documentation in order to 22 allow the Board to proceed with its approvals under the 23 sections of the Act Ms Lea has referred to. 24 THE PRESIDING MEMBER: Excuse me, Mr. Leslie. 25 Have you finished with this point? So what you are 26 saying is that prior to construction, based on the gas 27 storage leases and the acknowledgements signed by the 28 landowners, Union proceeds to construct the gathering 500 SUBMISSIONS (Leslie) 1 line. 2 MR. LESLIE: No. What they do, they do not 3 construct the gathering lines until the wells are 4 drilled. 5 THE PRESIDING MEMBER: Okay. 6 MR. LESLIE: It's at that point they get an 7 easement from the landlord that describes with 8 specificity where that gathering line is going to be. 9 THE PRESIDING MEMBER: So there is ultimately 10 an easement agreement. 11 MR. LESLIE: That's what I have just given 12 you. 13 THE PRESIDING MEMBER: But there was confusion 14 as to whether there was or was not an easement. 15 MR. LESLIE: It's my fault because I had 16 forgotten, frankly, that this was the practice. I 17 clarified that last night. I probably could have 18 avoided some of the controversy yesterday if I had 19 remembered that this was the policy. That's as it may 20 be. 21 THE PRESIDING MEMBER: Thank you. I think 22 that clarifies it. 23 MR. LESLIE: In my own defence, I will say 24 that I think the legal position probably doesn't require 25 some of this, but the practicality is that it happened. 26 I don't think there's much point in arguing the law. 27 THE PRESIDING MEMBER: Okay. Thank you. 28 MR. LESLIE: One of the difficulties you 501 SUBMISSIONS (Leslie) 1 encounter I'm afraid is that the nomenclature sometimes 2 gets in the way. When you use the word "easement", 3 people in this business think of transmission easements, 4 but the reality is we get easements for gathering lines 5 as well, as I said principally so that they can be 6 precisely located and registered on title. 7 The compensation is dealt with largely in the 8 storage lease and the compensation is as I described. 9 They get T value plus any damages as well as the ongoing 10 rentals under the storage lease. The acknowledgements 11 are obtained before any construction takes place. 12 I will turn now to the economics. I don't 13 think this is an issue, but I will simply point out that 14 they are discussed at section 6, schedule 5, and also in 15 a response to Board staff interrogatory No. 89, which 16 was updated. It's a blue page. It shows that all pools 17 have profitability indexing well above one and a net 18 present value of millions of dollars. 19 With respect to the environmental issues, 20 there do not appear to be any. Union will as quickly as 21 possible respond to undertaking 16.10 regarding the 22 suggested measures for noisemaking. 23 With respect to the question of granting 24 storage rights over lands which are not subject to 25 lease, which has been described as an expropriation of 26 storage rights, I think it's important to follow the 27 scheme of the Act as Ms Lea has. That is to say that 28 the initial determination and the public interest issue 502 SUBMISSIONS (Leslie) 1 is whether or not the lands in question should be 2 designated as a storage area and whether it's in the 3 public interest to do that. 4 Once you conclude that it is, that there is a 5 need for the project and the storage area has been 6 correctly defined, then the question of injection 7 withdrawal really becomes a matter of compensation so 8 that it is not, in my submission, a correct way to frame 9 the issue to start asking why should we take away these 10 people's storage rights. 11 The correct way to look at it, in my 12 submission, is to decide whether this is an appropriate 13 designated storage area, and when you have made that 14 determination, then it follows storage rights will be 15 granted, and if agreement is not reached, the Act 16 contemplates that you will then decide what compensation 17 should be given. 18 Now, I will point out that in the great 19 majority of cases agreement has been reached and 20 payments are being made. Offers of compensation and 21 leases have been made to all the landowners. It is 22 simply not possible, in all cases, to get landowners to 23 agree to the storage lease, for whatever reasons, and 24 the Board has, of course, proceeded, in the past, to 25 designate storage areas and grant rights and rejection, 26 storage and withdrawal, where there were no leases. In 27 Phase I, there were two landowners -- and we discussed 28 them yesterday -- the Higgs and the McMurphys; they are 503 SUBMISSIONS (Leslie) 1 receiving compensation but they have no leases. Mr. 2 Lowe indicated there were other cases of that kind -- 3 and that's at transcript 364-365. 4 I will simply point out that, otherwise, the 5 ability to develop storage facilities could be 6 frustrated entirely if any landowner dissented. 7 With respect to abandonment, there's no issue 8 of substance here, I don't think. You heard evidence, 9 and I would describe that evidence as very cogent, from 10 both Mr. Pardy and Mr. Mallette, on what Union does in 11 this area. 12 Mr. Pardy's evidence dealt with abandonment of 13 wells -- and that's found at pages 269, 271, 274 and 14 275. 15 Mr. Mallette dealt with abandonment of 16 pipelines -- and that's at pages 438 to 446. 17 I note that Mr. Vogel and his clients -- and 18 Mr. McMurphy spoke to this, specifically -- are 19 satisfied with the commitments that Union has given and 20 now enhanced, regarding abandonment procedures. 21 There's no evidence of any need for anything 22 more, in this area. 23 As I understand it, Board staff want some 24 document that gives a description of Union's practices 25 that could be circulated -- something like a bill 26 stuffer, I suppose. There's no evidence of any need for 27 that. 28 In addition, I would submit that this is, if 504 SUBMISSIONS (Leslie) 1 it's to be anything, an industry issue, not a Union Gas 2 issue. And you will note that Exhibit 15.7, which deals 3 with pipeline abandonment processes -- it's a 4 checklist -- is an industry document not a Union Gas 5 document. Union Gas participated but it didn't come 6 from Union. So that, in my submission, if anything more 7 is to be done on this issue, it should be done on, I 8 guess, a generic basis. 9 With respect to Dawn-Euphemia, I think you 10 directed me to file the agreement with the Board in 11 confidence, initially, at least, and I have the 12 agreement here, for that purpose. This is sometimes 13 done by delivering the document to the Energy Returns 14 Officer, but I can give it to the Board Members who are 15 here, if you like. 16 THE PRESIDING MEMBER: No, Mr. Leslie, I 17 didn't direct you; I informed you that this was a method 18 by which you could voluntarily submit a document. 19 MR. LESLIE: You are quite right. 20 THE PRESIDING MEMBER: I merely pointed it out 21 to you. 22 MR. LESLIE: You are quite right. 23 Well, then, I will hold onto it, for the 24 moment. 25 We have, obviously, no objection to filing it 26 in confidence. I can tell you that the agreement itself 27 provides that it shall not be filed on the public 28 record, unless so directed by the Board. 505 SUBMISSIONS (Leslie) 1 Now, your Rules require me to identify the 2 harm that would be occasioned by publication of the 3 document, generally; and the harm, in my submission, is 4 not so much the information that's in the document, it's 5 what it does to the process of settlement. The law is 6 very careful to protect settlement negotiations and the 7 results of settlement negotiations. As you well know, 8 discussions of that kind are privileged and it's one of 9 the few privileges that exist in our law, the law with 10 solicitor-client privilege. And it is destructive, in 11 my submission, in that process which the law seeks to 12 protect, to require people to then file and make public 13 the results of their negotiation. 14 So, it's not so much what is in the document 15 itself; it's what it does to the process of negotiation. 16 I mean in the context of the Lambton County Storage 17 Association, the results of those negotiations have, by 18 large, been made public, and that was necessary in order 19 to implement it. In this case, it's not. 20 On the other hand, Miss Lea has the burden, 21 under your Rules -- and it's 13.07, I believe -- of 22 establishing that there's some public interest element 23 in disclosure. You have a letter from Goderich saying 24 that they would like to see it. 25 Miss Lea also said that the Township didn't 26 object to publication, it was Union who did. I don't 27 know that to be the case. It well be; I don't know. 28 One way around this, I suppose, would be to 506 SUBMISSIONS (Leslie) 1 release the Township of Dawn-Euphemia to give this 2 agreement to other townships, if they desire to do so; 3 and if they don't desire to do so, then they won't. And 4 that would go for the landowners, as well. If they can 5 get it from the municipality, then that may satisfy 6 them. But, frankly, I think a lot of this is just 7 curiosity about something people haven't seen. 8 So, in the end, my submission is that it 9 should remain confidential because settlement 10 negotiations are discouraged if the parties cannot keep 11 their bargains in confidence. 12 Finally, with respect to the conditions of 13 approval, if you have those, I will refer to them by 14 page. 15 On page 1, paragraph 1, there's a minor 16 change, I think, that needs to be made. It requires 17 Union to report to the Board on the cost of the wells 18 within six months of completion, and it refers to six 19 wells. I believe there are seven wells now. 20 On the next page, Condition 5 -- and this was 21 the subject of some discussion -- it's the one that says 22 that Union shall, subject to the recommendation by an 23 independent tile contractor, and Mr. Payne said that 24 that should be "consultant" rather than "contractor", 25 and subject to landowner approval. And then it goes on 26 to describe a specific process for remedial action to 27 prevent damage to drainage, and our concern is that the 28 processes involved may well be different than that 507 SUBMISSIONS (Leslie) 1 process; they could include that process, but the 2 remedial action may well be different. So we would 3 suggest that condition be rephrased to provide that 4 Union shall, subject to the recommendation by an 5 independent tile consultant and subject to landowner 6 approval adopt measures recommended by the consultant so 7 that continual drainage will be maintained. That would, 8 presumably, comprehend what Board staff had in mind, as 9 well as other possible remedial action. 10 With respect to the Lambton Country 11 tree-cutting by-law, this has been contentious, I agree. 12 But the detailed conditions the Board inserted in the 13 last -- in the Phase I decision didn't arise because 14 Union required discipline. Those conditions were what 15 Union had agreed to do. There was a certain amount of 16 intransigence on the other side, in my submission. I 17 cross-examined Mr. Boyd, and we gave him everything that 18 he asked for, and we then asked him if that would be 19 acceptable and he said he would have to think about it. 20 In any event, it's been a difficult area for 21 Union dealing with some of the officials of the County, 22 in this area. However, Union has -- and the evidence on 23 this is found at page 429 -- written a letter to the 24 County outlining what they understand the status quo to 25 be. They have had no response. That Mr. Wachsmuth 26 described as having to do with the County being somewhat 27 uncertain as to who should sign things. And I don't 28 think it's fair to say that Union isn't intending to 508 SUBMISSIONS (Leslie) 1 pursue this; I think they have done what they can. The 2 ball is really in the County's court, at this point in 3 time. 4 But in my submission, it's not appropriate to 5 insert, as a condition of approval, that Union shall 6 comply with the intent of the County of Lambton 7 tree-cutting by-law. There's no issue in this case. 8 And the County's view of what that by-law means and 9 Union's view may differ, and there should be some way to 10 adjudicate that, and my submission is that that 11 adjudication should be done in the context of the next 12 case in which there's an issue, but not in these general 13 terms. 14 So I would submit, or my submission is that 15 that condition should be removed. The undertaking that 16 Union has given should be sufficient. And in my 17 submission, Union has done everything within its power 18 to comply with that buy-law, or the intent of the 19 by-law. 20 Subject to any questions you have, those are 21 my submissions. 22 THE PRESIDING MEMBER: Thank you, Mr. Leslie. 23 MEMBER DROZD: Mr. Leslie, with regard to the 24 agreement between Union and Dawn-Euphemia -- 25 MR. LESLIE: Yes. 26 MEMBER DROZD: -- the Board is concerned that 27 the agreement may have economic impact on this project. 28 MR. LESLIE: Well, I can file it with the 509 SUBMISSIONS (Leslie) 1 Board and you can judge for yourself whether it does or 2 not. I mean I will submit that it doesn't. 3 My only concern is -- and the concern that I 4 have been instructed to express to the Board is with 5 publication beyond your review. 6 MEMBER DROZD: Okay. Thank you. 7 THE PRESIDING MEMBER: Mr. Leslie, just to 8 follow up on that. I think that we asked for and got 9 during the evidence -- and there may have been an 10 undertaking to further clarify the economic impact or 11 lack of materiality the economic impact of the 12 settlement agreement with the Lambton County Storage 13 Association. 14 MR. LESLIE: Yes. 15 THE PRESIDING MEMBER: And I guess we just 16 want the economic impact of the settlement with the 17 Township of Dawn-Euphemia to be rolled in for the 18 economic impact of the entire project. 19 MR. LESLIE: Yes. 20 THE PRESIDING MEMBER: Just confirmation 21 that -- 22 MR. LESLIE: Well, I can provide you -- I can 23 do that in one of two -- I can do it both ways, I 24 suppose. I can give you the agreement so you can look 25 at it; and I can get someone to confirm that it doesn't 26 affect the economics, as well; or I can have someone 27 confirm that it doesn't affect the economics without 28 giving you the agreement. 510 SUBMISSIONS (Leslie) 1 As I say, the concern wasn't so much with 2 giving the agreement to the Board; it was just making it 3 generally available. 4 THE PRESIDING MEMBER: Well, I leave it to you 5 which way you would prefer to -- 6 MR. LESLIE: Well, I think the preference 7 would be to give you the assurance -- and we do this as 8 an undertaking -- that it doesn't affect the economics 9 of the project in the way I had Mr. Mallette, yesterday, 10 deal with your other -- 11 THE PRESIDING MEMBER: Okay. Thank you. 12 --- Pause 13 THE PRESIDING MEMBER: Thank you very much, 14 Mr. Leslie, for your submissions. 15 MR. LESLIE: Thank you. 16 THE PRESIDING MEMBER: This concludes the 17 argument portion of the hearing. 18 I would like to thank all of Union, Union 19 staff, Union witnesses, including the consultants for 20 the time that they have spent in preparing the prefiled 21 evidence and appearing before the Board. 22 I would like to thank the landowners who have 23 come out in full force. Congratulations. Even though 24 the weather predictions are not that great for today, we 25 have appreciated your attendance here. We have 26 appreciated the comments of the people who have come 27 forward to make comments. We hope that your attendance 28 here has helped you understand the process better and 511 1 the workings of the Board better, in connection 2 particularly with the designation of storage areas. 3 We would like to thank Board staff for their, 4 as always, able cross-examination and summation of the 5 issues, and we certainly appreciate the input of Board 6 staff. 7 And, of course, we always appreciate the 8 technical people, the auditory people, the court 9 reporters, et cetera. 10 That having been said, we conclude this 11 portion and we are now adjourned. 12 Thank you very much. 13 --- Whereupon the hearing adjourned at 1025 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 512 1 INDEX OF PROCEEDINGS 2 PAGE 3 Hearing commenced at 0901 465 4 Presentation by Mr. Leonard McMurphy 465 5 Presentation by Mr. Harry Lawson 467 6 Submissions by Ms Lea 470 7 Submissions by Mr. Leslie 488 8 Hearing adjourned at 1025 511 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 513 1 EXHIBITS 2 NO. PAGE 3 17.3 Letter from Goderich Township 467 4 dated February 9, 2000 5 9.12 Package of three contracts 491 6 submitted by Mr. Leslie 7 satisfying Undertakings 16.2 8 and 16.7 9 9.13 Transfer/Deed of Land between 499 10 McMurphy and Union Gas Ltd.