1
    
 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, Sched. B; and in particular, sections
 7    38(1), 39(2), 40(1), 90(1), 127(1)(e), and 127(2)
 8    thereof,
 9    AND IN THE MATTER OF an Application by Union Gas Limited
10    for a regulation designating the area known as the
11    Mandaumin Pool, in the Townships of Enniskillen,
12    Plympton, and the City of Sarnia, in the County of
13    Lambton, as a gas storage area;
14    AND IN THE MATTER OF an Application by Union Gas Limited
15    for a regulation designating the area known as the
16    Bluewater Pool, in the Townships of Moore and the City
17    of Sarnia, in the County of Lambton, as a gas storage
18    area;
19    AND IN THE MATTER OF an Application by Union Gas Limited
20    for a regulation designating the area known as the Oil
21    City Pool, in the Township of Enniskillen, in the County
22    of Lambton, as a gas storage area;
23    AND IN THE MATTER OF an Application by Union Gas Limited
24    for authority to inject gas into, store gas in and
25    remove gas from the areas designated as the Mandaumin,
26    Bluewater and Oil City Pools, and to enter into and upon
27    the lands in the said areas and use the said lands for
28    such purposes;

                                                            2
    
 1    AND IN THE MATTER of an Application by Union Gas Limited
 2    to the Ministry of Natural Resources for licences to
 3    drill wells in the said areas;
 4    AND IN THE MATTER OF an Application by Union Gas Limited
 5    granting leave to construct natural gas pipelines in the
 6    Townships of Enniskillen, Plympton, Moore,
 7    Dawn-Euphemia, and the City of Sarnia, all in the
 8    Country of Lambton;
 9    AND IN THE MATTER OF an Application by Union Gas Limited
10    for approval of the parties to, the period of, and the
11    storage that is the subject of proposed storage
12    contracts.
13    
14    
15    
16    
17    Hearing held at:
18    2300 Yonge Street, 25th Floor, Hearing Room No. 1,
19    Toronto, Ontario on Friday, December 17, 1999,
20    commencing at 0900
21    
22    
23    
24    
25    
26                      TECHNICAL CONFERENCE
27    
28                            VOLUME 2

                                                            3
    
 1                           APPEARANCES
 2    CHRIS MACKIE/       Case Manager
 3    WILFRED TEPER/      Board Technical Staff
 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    ROBERT LIDDLE/      STORAGE ASSOCIATION
15    DOUGLAS NAPIER/
16    ROBYN MARTTELA
17    JOE GORMAN/         CANENERCO
18    ROBIN INWOOD
19    BARBARA BODNER      ENBRIDGE CONSUMERS GAS
20    BARRY CARD          TOWNSHIP OF DAWN-EUPHEMIA
21    STAN KLAPAK         ON HIS OWN BEHALF
22    
23    
24    
25    
26    
27    
28    

                                                            4
    
 1                                            Toronto, Ontario
 2    --- Upon resuming on Friday, December 17 1999
 3        at 0900
 4              MR. MACKIE:  Ladies and gentlemen.  Good
 5    morning and welcome to day two of this technical
 6    conference.
 7              I detect a couple of new faces here this
 8    morning.  Are there any parties that want to put in an
 9    appearance who were not present yesterday?
10              MR. CARD:  Yes, sir.  My name is Barry Card
11    and I am appearing for the Corporation of the Township
12    of Dawn-Euphemia.
13              MR. MACKIE:  Thank you, Mr. Card.
14              MR. KLAPAK:  Excuse me.  I'm Stan Klapak.
15              MR. MACKIE:  Stan?
16              MR. KLAPAK:  Klapak.
17              MR. MACKIE:  Could you spell your surname,
18    sir?
19              MR. KLAPAK:  K-L-A-P-A-K.
20              MR. MACKIE:  Thank you.
21              MR. KLAPAK:  I am a concerned property owner. 
22    The pipeline is crossing in front of my property.
23              MR. MACKIE:  Thank you, Mr. Klapak.
24              MR. INWOOD:  Robin Inwood for CanEnerco.
25              MR. MACKIE:  Thank you, Mr. Inwood.  Any other
26    parties that wish to be recognized today?
27              I just want to repeat a couple of
28    announcements that were made yesterday for those people

                                                            5
    
 1    putting in an appearance this morning, and that is that
 2    the Board has tentatively scheduled the hearing for this
 3    application to be held in Sarnia at the Holiday Inn
 4    beginning on February 8, 2000, although Mr. Leslie has
 5    already approached me with some concerns as to his
 6    availability during that week.  But I might add that it
 7    is not the Board's usual practice to restructure its
 8    hearings given its very tight schedule unless it is
 9    clearly able to do so.  There is no guarantee at this
10    stage that we are going to be able to change that date.
11              The other matter I should note is that the
12    Board will sit next week on Wednesday from 9:00 until
13    11:30 if we cannot by consent adopt an issues list and,
14    in that respect, we had some proposed additions to the
15    issues list yesterday and I would like to make some time
16    available.  I am going to suggest just after the lunch
17    break so that we can have an off-the-record discussion
18    of those issues.  I hope that we can proceed by way of
19    consent.
20              Mr. Card, do you have any additional issues
21    that you could add to the list on behalf of your client
22    at this stage?
23              MR. CARD:  I am content with the issues as set
24    out in the proposed issues list by Board staff, in
25    particular Item E5 and Items F3 and 5.  Those are very
26    general descriptions for the issues that have been
27    raised by the Township of Dawn-Euphemia and have been
28    addressed by Union in its response to the

                                                            6
    
 1    interrogatories which the Township submitted.
 2              There is nothing additional to those matters,
 3    and I take it that the summary of issues was based on
 4    the analysis of the interrogatories in any event.
 5              MR. MACKIE:  The issues list that the Board
 6    staff proposed for consideration is based upon our
 7    experience in similar applications and a review of the
 8    pre-filed evidence and the interrogatories.  But I judge
 9    from your comments that you are content that your
10    client's interests are covered by those issues you have
11    identified.
12              MR. CARD:  That is correct.
13              MR. MACKIE:  Thank you.  Mr. Inwood, do you
14    have anything to add on behalf of CanEnerco?
15              MR. INWOOD:  No, we do not.
16              MR. MACKIE:  Thank you.
17              Mr. Klapak, do you have anything as a
18    concerned landowner?
19              MR. KLAPAK:  No.
20              MR. MACKIE:  Thank you, sir.
21              I think we are ready to continue with Union's
22    witness panel.  Is there anything else that needs to be
23    said as a preliminary matter?
24              Glenn, are you --?
25              MR. LESLIE:  No, I have nothing.
26              MR. MACKIE:  Thank you.
27              Wilf Teper is going to start with our
28    questions this morning.

                                                            7
    
 1              MR. TEPER:  This question is just to put the
 2    scope of this project into perspective compared to
 3    Union's other storage facilities.  This question is for
 4    Mr. Marusic.
 5              Can Union confirm that Bluewater and Oil City
 6    Pools will each be close in capacity to the smallest of
 7    Union's storage pools in southern Ontario of which they
 8    are about 17 and a half?
 9              MR. MARUSIC:  Yes.
10              MR. TEPER:  Thank you.
11              In our Interrogatory No. 80 and response, we
12    refer to CanEnerco's facilities at the Sarnia Airport
13    and what facilities might be necessary in connecting it
14    up with Union's facilities at Mandaumin and
15    Bluewater -- this is Interrogatory 80 and your response.
16              In your response basically you didn't give too
17    much information on the grounds that when it happens,
18    then you will apply for whatever facilities may be
19    necessary.
20              But just to, again, put this into perspective,
21    can you confirm that the Sarnia Airport Pool is
22    approximately 13 kilometres to the northwest of the
23    Mandaumin Bluewater Pools?
24              MR. MARUSIC:  I don't have a measurement in my
25    head except that is subject to check.
26              MR. TEPER:  Subject to check, it is
27    approximately 13 kilometres or 10 kilometres or that
28    kind of order of magnitude.  Okay?  Fine.

                                                            8
    
 1              If these facilities, the Airport Pool
 2    facilities are connected to the Union facilities, will
 3    any additional compressor capacity be necessary on
 4    Union's existing system -- and I ask those questions
 5    just to see if at present compressor capacity is sort of
 6    sitting on the cusp of a big expansion or whether it
 7    should be able to handle the Airport Pool's requirements
 8    without too much additional capital increase?
 9              MR. MARUSIC:  Incremental compression is one
10    of the alternatives we have been considering to provide
11    service for the Sarnia Airport Pool.
12              MR. TEPER:  So basically you are saying it is
13    possible, perhaps probable?
14              MR. MARUSIC:  It is possible, yes.
15              MR. TEPER:  Okay.  Thank you.
16              Referring to Interrogatory No. 73 and the
17    response, we asked for various volumes to the various
18    compressors.  If you just turn to Interrogatory 73 and
19    the response, please?
20              MR. MARUSIC:  I have that.
21              MR. TEPER:  I just need some clarification on
22    these numbers.  The volumes associated with the
23    Mandaumin Pool when added up come to about 47.2
24    10(3)m(3) and the capacity is 120.
25              Are we to assume that the additional volume to
26    bring that up to 120 considering that the capacity will
27    be fully utilized will basically be free-flowing from
28    the Dawn compressor?

                                                            9
    
 1              MR. MARUSIC:  There are two components to that
 2    remaining volume, the first being a free float where
 3    there is no compression used.  The second would be Dawn
 4    compression used.
 5              MR. TEPER:  And in the figures that appear
 6    over here basically, are the compressors Dawn 156 and 
 7    Enniskillen 28 to do the final outer compression, if I
 8    can call it that?
 9              MR. MARUSIC:  Yes, that is correct.
10              MR. TEPER:  Fine.  And these figures that
11    appear here are the seasonal volumes, the compression
12    seasonal volumes?
13              MR. MARUSIC:  Yes, that is right.
14              MR. TEPER:  Okay.  Thank you.
15              Interrogatory No. 85 -- if you could turn to
16    that please?
17              We asked basically whether you would be
18    running the new line and the 12-inch line in parallel
19    and you responded that you would run it for maximum
20    efficiency and minimizing cost.
21              Does that basically mean that at times these
22    two pipes will be running independently of each other
23    and sometimes cross-link?
24              MR. MARUSIC:  Yes, that is correct.
25              MR. TEPER:  So it will have that capability?
26              MR. MARUSIC:  Yes, that is correct.
27              MR. TEPER:  Pool flexibility, as you speak.
28              MR. MARUSIC:  Yes.

                                                           10
    
 1              MR. TEPER:  Thank you.
 2              In order to do the additional compression that
 3    is necessary to compress the gas into the Mandaumin,
 4    Bluewater and Oil City Pools, you will be using
 5    basically existing compressor capacity.
 6              Will that capacity basically be compressed for
 7    more days?  Is that basically how the additional
 8    capacity will be used?
 9              MR. MARUSIC:  Yes, that is correct.  Union is
10    not proposing to add any additional horsepower in this
11    application.
12              MR. TEPER:  So there are sufficient extra
13    compression days available in order to do the
14    compression job?
15              MR. MARUSIC:  Yes, that is correct.
16              MR. TEPER:  Thank you.
17              There are a few technical questions here.  In
18    Interrogatory No. 83, we asked you if there were any
19    compression specifications in respect of well drilling,
20    and we mentioned that you have construction
21    specifications for pipeline construction and in response
22    you provided -- not the specifications, but rather the
23    drilling process that you filed with the Ministry of
24    Natural Resources, of which we have copies here.
25              Are there any construction specifications or
26    drilling specifications similar to pipeline construction
27    specification?
28              MR. MARUSIC:  Yes, there are specifications

                                                           11
    
 1    for the construction of compression station facilities.
 2              MR. TEPER:  I was referring to basically well
 3    drilling.
 4              MR. MARUSIC:  Oh, I am sorry.  That question
 5    should have been referred to Mr. Pardy.  He is
 6    responsible for well drilling at Union.
 7              MR. LESLIE:  If you like we can take that
 8    under advisement and get back to you.  We'll get Steve
 9    to deal with it.
10              MR. TEPER:  Thank you very much.
11              Basically, I would have requested that these
12    be filed with the Board so that we have a complete set
13    of specifications for pipeline, well drilling,
14    compressors and that type of thing.
15              MR. LESLIE:  I think we did, but let me --
16    there is a letter dated December the 10th.  It is
17    addressed to Chris Mackie and it enclosed a copy of the
18    drilling program for the injection/withdrawal well and
19    for an observation well.  Did you have that material,
20    Wilf?
21              MR. TEPER:  Yes, that material was filed and
22    there are copies here.  But these are not drilling
23    specifications.  These are basically instructions on how
24    to drill these particular wells.
25              MR. LESLIE:  Yes.  And you are looking for
26    something beyond that?
27              MR. TEPER:  General specifications that you
28    would provide to drilling contractors saying, "When you

                                                           12
    
 1    drill for us, you drill in this manner."
 2              MR. LESLIE:  Fine.
 3              MR. TEPER:  Thank you.
 4              MR. MACKIE:  Glenn, I just want to interject
 5    here and clarify for the record what appears to have
 6    happened.  Board staff did request at Interrogatory 83,
 7    I think it was, copies of the relevant specifications
 8    for well drilling.  And then I had a conversation with
 9    Ms Hockin in which I asked if we, Board staff could have
10    a complete set of the well drilling specifications and
11    we received then these documents, which were available
12    for everybody.  I received those under cover of the
13    letter to which you have made reference.
14              When the interrogatory or the supplementary
15    interrogatory response came in, it made reference to
16    those specifications which had been submitted to me
17    under cover of that letter.  So we have made ten copies
18    of those specifications, which are really the full
19    response to that interrogatory and we have copies
20    available for parties here this morning to the extent
21    that they are interested in this.
22              MR. TEPER:  If I can just interject here. 
23    These weren't specifications.  These are basically the
24    drilling process for these three holes.
25              MR. MACKIE:  Yes.  What we got, in fact, was
26    not really what we were asking for in any case.  But
27    what we have got should be on the public record in
28    response to that interrogatory.

                                                           13
    
 1              MR. LESLIE:  We will ask Mr. Pardy if there is
 2    anything that conforms to what you have described, and
 3    if so we, will provide it to you.
 4              MR. TEPER:  Thank you very much, Mr. Leslie.
 5              And this last question is for Mr. Mallette. 
 6    In respect to the calculation of the pipeline wall
 7    thickness, does standard CSAZ 662-96, which basically
 8    was referenced in the response, define location factor,
 9    joint factor, temperature derating factor?  And if not,
10    will Union please provide definitions and quantitative
11    numbers?  The general gist of the question is that if we
12    ask why is the pipe thicker here and not thicker there,
13    presumably the location factor is specified, or if it is
14    not specified, whether Union has got their rules of
15    thumb.
16              MR. MALLETTE:  Yes, all of the -- all of the
17    parameters and all of the variables within the formula
18    that we have provided in answer to one of the
19    interrogatories, 84, are provided in the CSAZ 662-96.
20    Definitions are provided in there as well.
21              MR. TEPER:  Thank you very much.  Those are
22    all my questions.
23              MR. MACKIE:  Thank you.  I am going to
24    continue from that point.
25              Would you, Panel, please turn to Schedule 4,
26    section 3 of the prefiled evidence and that is a table
27    providing the casing design summary.  That is the table
28    providing the casing design summary for all of the

                                                           14
    
 1    wells.
 2              MR. MARUSIC:  Could you repeat the reference,
 3    please?
 4              MR. MACKIE:  Yes, I'm sorry.  I didn't have
 5    the microphone turned towards me.
 6              It is section 4, Schedule 3 and this is just a
 7    question of clarification.
 8              I noticed that for well UD #3 that both the
 9    conductor casing and the production casing are of
10    smaller diameter than for the other injection/withdrawal
11    wells.  Why is that?
12              MR. MARUSIC:  I believe we will have to get
13    that information from Mr. Pardy.
14              MR. MACKIE:  Could you also provide an
15    explanation or definition of conductor casing?
16              MR. MARUSIC:  Certainly.
17              MR. MACKIE:  I'm not aware of what that is. 
18    Thank you.
19              It appears that Union Bluewater #3 falls into
20    the same category; however, that is a license
21    application that I believe Union has withdrawn.  Is that
22    correct?
23              MR. MARUSIC:  Yes, that is correct.
24              MR. MACKIE:  That is included on the letter of
25    reference we have received from the Ministry of Natural
26    Resources.  But we will notify them in the Board's
27    report to the Minister that Union has withdrawn that
28    application.  That is correct?

                                                           15
    
 1              MR. MARUSIC:  I thought we had sent a letter
 2    to the Ministry indicating that that well -- we were
 3    withdrawing the application for that well.
 4              MR. MACKIE:  You might well have.
 5              MR. MARUSIC:  Yes.
 6              MR. MACKIE:  It is just that that letter
 7    hasn't been passed on to the Board.
 8              MR. MARUSIC:  Okay.
 9              MR. MACKIE:  Would you turn to page 4-4 of
10    your prefiled and in particular paragraph 18, and this
11    relates to measurement of the design of the measurement
12    and control stations.
13              I note from that that the maximum operating
14    pressure of the Mandaumin and Bluewater measurement and
15    control station is 9,930 kiloPascals whereas the
16    gathering lines and the transmission lines have a higher
17    maximum operating pressure of 10,550 kilopascals.  Why
18    is the measurement and control stations designed to
19    allure maximum operating pressure from the pipeline?
20              MR. MARUSIC:  The maximum operating pressure
21    of the gathering lines is 9,930 kPa.  It is only the 16
22    inch transmission line that has been designed with the
23    higher operating pressure of 10,550.
24              MR. MACKIE:  So the transmission line and the
25    control station have a common MOP and it is the
26    gathering system which is the lower MOP?
27              MR. MARUSIC:  No, the station has an MOP of
28    9,930 and the gathering lines have an MOP of 9,930.

                                                           16
    
 1              MR. MACKIE:  I'm sorry.  You are correct. 
 2    Yes, I got it back to front.  Thank you.
 3              In the case of the Oil City pool, however, the
 4    MOPs are the same in both cases?
 5              MR. MARUSIC:  Yes.
 6              MR. MACKIE:  Is there a reason why that should
 7    be the case in the Oil City pool and not in the
 8    Mandaumin and Bluewater pools?
 9              MR. MARUSIC:  In the case of the 16 inch
10    transmission line that feeds Mandaumin and Bluewater
11    pools we wanted to include a little bit of extra
12    capacity in the event there is another pool up in that
13    area, and that was done at very little incremental cost.
14              MR. MACKIE:  Would that be ultimately the
15    Sarnia Airport pool?
16              MR. MARUSIC:  That is one possibility, yes.
17              MR. MACKIE:  One of your interrogatory
18    responses when we explored what provision had been made
19    to accommodate the Sarnia Airport pool, one of your
20    interrogatory responses indicated that there would be no
21    additional capacity or costs incorporated into this
22    project to accommodate the Sarnia Airport pool.  Are you
23    now qualifying that answer?
24              MR. MARUSIC:  No, we made the decision to go
25    with the higher MOP prior to us becoming aware of Sarnia
26    Airport pool.
27              MR. MACKIE:  All right.  Thank you.
28              I want to turn to consider the proposed

                                                           17
    
 1    storage operation, the usage of these pools.  The three
 2    pools in question are to be operated as base load pools. 
 3    Is that correct?
 4              MR. MARUSIC:  Yes, that is correct.
 5              MR. MACKIE:  Does that mean generally speaking
 6    that the flow control valves are opened as soon as the
 7    winter heating or the heating season commences and they
 8    remain open for the balance of the withdrawal season?
 9              MR. MARUSIC:  That is generally correct, yes. 
10    We would open them up and they would run until they were
11    empty.
12              MR. MACKIE:  Right.  Thank you.
13              Now, yesterday we had a discussion relating to
14    Union's plan to delta pressure these pools to full delta
15    pressure during the first injection cycle, and I
16    expressed some concern about that and that was addressed
17    by Mr. Egden from a geological perspective.
18              Without going into the details, I just want
19    to, from an operational perspective, canvass that issue
20    with you.  Apart from the urgent need to service the
21    open season storage contracts that Union has presented
22    to this Board for approval, is there any other reason
23    why Union should not adopt a more cautious approach to
24    delta pressuring these pools?
25              MR. MARUSIC:  The reality in the situation is
26    that we have contracts to fulfil and we need to delta
27    pressure those pools fully in order to meet the terms of
28    those contracts.

                                                           18
    
 1              MR. MACKIE:  Well, that may be a matter of the
 2    tail wagging the dog.  I understand at the end of the
 3    day you are anxious to service those contracts, though
 4    at the moment I am more concerned with the prudence of
 5    doubling the pressure of two of these pools in one
 6    injection cycle.
 7              And I might add that the basis for my concern
 8    is based upon Union's previous practice in which it used
 9    delta pressure pools with some caution.  And secondly,
10    the current practice of Consumers Gas, which is to
11    approach full delta pressure over several injection
12    cycles.  And I am wondering in what respect Union's
13    operation of these pools should be so much different?
14              MR. MARUSIC:  We have delta pressured fully
15    other pools in the first year of operation, those being
16    Oil Springs East and Bent Path East pools.  We haven't
17    encountered any difficulties in doing so and feel that
18    it is also prudent in this case to do so.
19              MR. MACKIE:  Do you accept the proposition
20    that by applying for designation of the surface areas in
21    question, that the province has an interest in seeing
22    that the resource will be properly protected and
23    developed?
24              MR. MARUSIC:  Yes.
25              MR. MACKIE:  In other words, the Ontario
26    Energy Board has a responsibility to ensure that the
27    resource will be properly utilized and protected by
28    whoever is granted authorization to inject, store and

                                                           19
    
 1    withdraw gas from these pools?
 2              MR. MARUSIC:  Yes.
 3              MR. MACKIE:  If Union were to be restricted by
 4    the Board to pressurizing the pools to only the
 5    discovery pressure, during the first injection cycle,
 6    then, the working volume in the Mandaumin Pool, I
 7    believe, would be reduced to approximately 42,000
 8    10(3)m(3); the Bluewater Pool would be reduced to 20,000
 9    10(3)m(3); and the Oil City Pool to 30,900 10(3)m(3).
10              I have taken those volumes from your summary
11    table, in Table 1, at the end of the summary of the
12    application.
13              MR. MARUSIC:  Can you be more specific about
14    the reference, there, please?
15              MR. MACKIE:  Yes, sure.  If you turn to
16    Section 1, the project summary, there's a Schedule 1
17    attached to that.
18              MR. MARUSIC:  I have that, yes.
19              MR. MACKIE:  And I have taken -- to determine
20    the working volumes, I have taken the original gas in
21    place and subtracted from that the cushion volume
22    required for each pool.
23              I don't think you need to do the arithmetic,
24    now; it's just a general proposition I'm going to put to
25    you.
26              MR. MARUSIC:  Okay.
27              MR. MACKIE:  I would be glad if you wanted to
28    check those volumes later.

                                                           20
    
 1              And the total working volume, in that
 2    instance, for all three pools, would be 102,210
 3    10(3)m(3), in place of the 225,000, or the 222,500
 4    10(3)m(3) that Union is seeking.
 5              Under those circumstances, Union certainly
 6    would not be able to service all the open season storage
 7    contracts, would it?
 8              MR. MARUSIC:  That's correct.
 9              MR. MACKIE:  And is it that concern that is
10    driving Union's operating plan to fully delta pressure
11    these pools, commencing July the 1st, and fully
12    pressurize them within the first injection cycle?
13              MR. MARUSIC:  We believe that it is safe to
14    fully delta pressure the pools in their first year of
15    operation -- and that allows us to serve the contracts;
16    not the reverse.
17              MR. MACKIE:  Right.  Thank you.
18              That's the balance of our questions, I
19    believe.
20              Could we have questions from other parties,
21    for this panel, please?
22              MR. VOGEL:  I have a number of questions.
23              In response to LCSA Interrogatory No. 12, with
24    respect to noise levels, I understood from the response
25    to the panel yesterday that you don't have decibel data
26    for noise levels.
27              With respect to the drilling sites, can you
28    tell me how far these drilling sites, in each of the

                                                           21
    
 1    pools where there's proposed drilling, how far the
 2    drilling sites are from the nearest residences?
 3              MR. MARUSIC:  I believe Mr. Pardy, again,
 4    would have to provide that information.
 5              MR. VOGEL:  All right.  I'm interested in that
 6    information and, as well, how far those drilling sites
 7    are from the nearest farm buildings.
 8              Could you undertake to provide that
 9    information to me?
10              MR. MARUSIC:  Yes.
11              MR. VOGEL:  I'm also interested in the
12    distance between the respective drilling sites.
13              Could you ask Mr. Pardy for that, as well?
14              MR. MARUSIC:  Yes, I can.
15              MR. VOGEL:  In LCSA Interrogatory No. 40, LCSA
16    asked for certain information, regarding access roads,
17              MR. LESLIE:  Which question was that, Paul?
18              MR. VOGEL:  That was No. 40.
19              As I understand it, there is a drainage issue
20    created by these access roads because their profile is
21    located higher than the adjacent lands.  Is that
22    correct?
23              MR. McNALLY:  I think Steve Pardy talked about
24    the roadways yesterday and the drainage implications.
25              If they are higher and there are drainage
26    concerns, we would have a drainage consultant provide
27    expertise as to the resolution of the drainage matters.
28              MR. VOGEL:  Well, your response to the

                                                           22
    
 1    interrogatory indicates that there would be mutually
 2    satisfactory solutions derived.
 3              The only proposed method of addressing
 4    drainage, at the moment, in your evidence, I believe, is
 5    a swale.
 6              What I'm interested in is, what other
 7    measures, beyond the swale, may be used to address the
 8    drainage issues which are created by these access roads?
 9              MR. McNALLY:  Subsurface drainage would be
10    another alternative.
11              MR. VOGEL:  Are we talking about header
12    installation?
13              MR. McNALLY:  Possibly.
14              MR. VOGEL:  There's an indication that
15    whatever the solution is, it's to be discussed with the
16    landowner.
17              Can you tell me whether these drainage issues
18    have been discussed with the landowners to date?
19              MR. McNALLY:  I don't have that information.
20              MR. VOGEL:  Can you ask Mr. Pardy that
21    question?  And if so, what discussions have occurred?
22              MR. McNALLY:  Sure.
23              MR. VOGEL:  The indication, also, in your
24    response, is that these issues, drainage issues, are
25    resolved through access to a drainage consultant.
26              Does the landowner participate in the
27    selection of the drainage consultant?
28              MR. McNALLY:  Not normally, no.

                                                           23
    
 1              MR. VOGEL:  Does Union have any objection to
 2    canvassing the landowners' views on who an appropriate
 3    drainage consultant would be, in any particular case, to
 4    address drainage issues?
 5              MR. McNALLY:  We would certainly take their
 6    opinion into consideration, absolutely.
 7              MR. VOGEL:  In LCSA Interrogatory 41, with
 8    respect to -- there was a question with respect to weed
 9    control and the method that Union proposes to use to
10    control weeds adjacent to the fenced areas and access
11    roads, and we never received a response to that portion
12    of the interrogatory.
13              Could you provide that information to me?
14              MR. McNALLY:  In the sense that we will ask
15    Steve how they do that, we will do that, as well.
16              MR. VOGEL:  In Interrogatory 42, dealing with
17    well installation and removal of temporary access roads
18    following the installation of drawing pads, et cetera,
19    the question about re-contouring and application of a
20    survey to ensure that original grades or surface
21    profiles were reinstated, you indicate that surveys are
22    not required and existing grades will be matched.
23              How are the existing grades matched without
24    access to a survey?
25              MR. McNALLY:  Because of the small area that
26    we are talking about, it was deemed -- I think it's
27    deemed practical that those adjacent grades can be
28    matched fairly easily without requiring a surveyor.

                                                           24
    
 1              MR. VOGEL:  Are the access roads surveyed
 2    prior to construction?
 3              MR. McNALLY:  Yes, they are.
 4              MR. VOGEL:  And don't those surveys provide
 5    the existing grade?
 6              MR. McNALLY:  They would if we asked them to
 7    do that.
 8              MR. VOGEL:  Could Union ask them to do that?
 9              MR. McNALLY:  We could.
10              MR. VOGEL:  And if Union did ask them to do
11    that, then they could be used to established existing
12    grades, following construction and in the restoration
13    process.  Is that correct?
14              MR. McNALLY:  We could do that.  If it was
15    deemed practical to do that.
16              MR. VOGEL:  Will you do that?
17              MR. McNALLY:  Some of them are already built.
18              MR. VOGEL:  Yes.  What about the ones that are
19    not?
20              MR. McNALLY:  I would have to ask Steve about
21    that.
22              MR. VOGEL:  Could you do that?
23              MR. McNALLY:  We sure could.
24              MR. VOGEL:  In LCSA Interrogatory 46, the
25    issue is accommodation of existing and future drainage. 
26    And Union's response was that future drainage would be
27    accommodated, in the event that plans are available at
28    the time of construction.

                                                           25
    
 1              Can you tell me what Union's practice is if,
 2    following construction, at some point in the future,
 3    drainage plans are developed, what efforts will, or
 4    does, Union make to accommodate future drainage?
 5              MR. McNALLY:  If we are talking about plans
 6    that are not available at the time of construction --
 7              MR. VOGEL:  Correct.
 8              MR. McNALLY:  -- then we would work with the
 9    landowner, in consultation with a drainage consultant,
10    to find the best solution to his drainage problems.
11              We don't ask the landowner to do things to --
12    we don't expect that our pipe will create obstacles that
13    can't be overcome.
14              MR. VOGEL:  For example, as I understand
15    agricultural land, your proposal is that pipe be
16    installed at a depth of 1.2 metres.
17              Is that correct?
18              MR. McNALLY:  That is the normal practice,
19    yes.
20              MR. VOGEL:  My question is:  If following
21    construction the location of your pipe at that depth was
22    to cause interference with a landowner's proposed
23    drainage plan, has Union, and does Union, in working
24    with the landowner, include as one of the options the
25    movement or lowering of its pipe to accommodate
26    drainage?
27              MR. McNALLY:  Normally there is a more
28    practical solution to the drainage concerns.

                                                           26
    
 1              MR. VOGEL:  Absent a more practical solution,
 2    is one of the options to lower or move the pipe?
 3              MR. McNALLY:  If that was the most practical
 4    solution, which I have a hard time understanding that it
 5    would be.
 6              MR. VOGEL:  What are some of the other
 7    solutions in the scenario I have just outlined to you?
 8              MR. McNALLY:  I am not a drainage expert, but
 9    I heard that there are other alternatives to do that.
10              MR. VOGEL:  In Interrogatory no. 47, the
11    issued addressed was resolving compaction following
12    construction.  Is there any pre-construction testing
13    done to establish compaction levels?
14              MR. McNALLY:  I think I would like to defer
15    that to Greg Payne who will be up later.
16              MR. VOGEL:  I have other questions about other
17    sorts of pre-construction testing.  Is he the
18    appropriate person to be asking about that, with respect
19    to fertility testing, or SCN or other issues?
20              MR. McNALLY:  Yes.
21              MR. VOGEL:  With respect to when this
22    compaction remediation takes place, is he the
23    appropriate person to ask about that, or are you?
24              MR. McNALLY:  It would take place as part of
25    the clean-up operation.
26              MR. VOGEL:  Would it take place prior to
27    restoration of the topsoil?
28              MR. McNALLY:  Yes.

                                                           27
    
 1              MR. VOGEL:  Whatever method is going to be
 2    used to resolve compaction in the penatrometer testing
 3    to ensure that compaction issues have been resolved, all
 4    that takes place prior to the return of the topsoil?
 5              MR. McNALLY:  Prior to, and again after if
 6    required.
 7              MR. VOGEL:  With respect to post-construction
 8    testing, I don't know whether you want me to ask
 9    Mr. Payne these questions as well.  But with respect to
10    post-construction testing, to what standard is
11    compaction?  In other words, what is the testing
12    program, the penetrometer testing program, in order to
13    resolve compaction issues?
14              MR. McNALLY:  If you are looking for the
15    criteria that we are looking for, then I think Greg is
16    the best guy to ask about that.
17              MR. VOGEL:  In response to LCSA Interrogatory
18    no. 59 dealing with breaches by the contractor of
19    Union's commitments in the environmental assessment, the
20    LOU, or in the course of the hearing, the response
21    simply indicates that if there is such a breach by a
22    contractor Union will deal with the issue.
23              How does Union deal with those issues?
24              MR. MALLETTE:  I believe the interrogatory
25    related to environmental issues that may be best
26    addressed by the Environmental Panel, represented by
27    Greg Payne.
28              However, if there is any aspect of this that

                                                           28
    
 1    may be more strictly construction related, I would be
 2    happy to help out if we could, if you could be more
 3    specific.
 4              MR. VOGEL:  I suppose my question is:  Is
 5    there provision in the contracts that Union enters into
 6    with contractors for liquidated damages or other sorts
 7    of penalty clauses for breaches of Union's commitment as
 8    made to the Board during the course of these
 9    proceedings?
10              MR. MALLETTE:  There are no punitive clauses
11    in the contract as it currently stands and is
12    contemplated for this project.  However, there are other
13    allowances in there, or there are other arrangements
14    made for situations that may arise, such as liability
15    insurance.  And there is a clause in there that if the
16    specifications and contract conditions as provided by
17    Union to the contractor are breached, it is cause to
18    terminate the contract.
19              MR. VOGEL:  There is also reference in that
20    response to Union's landowner complaint resolution
21    system.
22              Is a description of that complaint resolution
23    system contained somewhere in this material?
24              MR. MALLETTE:  Yes.  I believe it was provided
25    in an interrogatory response.  I believe it was provided
26    by Ron Haley, our lands representative.
27    --- Pause
28              MR. MALLETTE:  Yes, that was provided by Ron

                                                           29
    
 1    Haley in the LCSA Interrogatory no. 54.
 2    --- Pause
 3              MR. VOGEL:  I don't want to get into that in
 4    particular.
 5              As I recall, that provides for appeals by a
 6    landowner to persons of progressively higher authority
 7    in Union Gas.
 8              Is that a fair description of the complaints
 9    procedure?
10              MR. MALLETTE:  Yes, I think that is part of
11    it.  It matches my understanding of that procedure.
12              MR. VOGEL:  Can you tell me whether that
13    procedure or any other procedure offered by Union Gas
14    gives the landowner access to a third party expert
15    consultant or mediator or arbitrator in an attempt to
16    resolve issues that may arise during construction?
17              MR. MALLETTE:  I believe you would have to --
18    the best person to answer questions regarding the
19    complaints resolution system is Ron Haley.
20              But to my knowledge, another example of access
21    to a third party consultant would be on the drainage
22    issues, as we have recently spoken about.
23              MR. VOGEL:  What about other sorts of issues? 
24    Is Ron Haley the person to talk to about that? 
25    Compaction issues or productivity issues.
26              MR. MALLETTE:  I would say if you could
27    categorize it into a productivity or environmental type
28    of issues, that would be best addressed to Greg Payne. 

                                                           30
    
 1    If it is a lands issue, that would be Ron Haley.  And if
 2    it is a construction issue, that would be ourselves.
 3              MR. VOGEL:  How would you characterize
 4    remediation issues:  construction, land or
 5    environmental?
 6              MR. MALLETTE:  Soil remediation you are
 7    referring to here?
 8              MR. VOGEL:  Yes.
 9              MR. MALLETTE:  Well, the actual physical
10    process is completed by the construction crew, which
11    would come in our area.  The testing would be included
12    in the environmental area.
13              And compensation which is not really part of
14    this hearing -- or not this hearing but this discussion
15    on the OEB application -- but compensation and other
16    issues surrounding the letter of understanding and the
17    easement agreement, and so forth would be a lands issue.
18              MR. VOGEL:  In Interrogatory No. 62 dealing
19    with tile repairs, your response reference says "tile
20    repair inspectors".  Can you tell me what are the
21    qualifications of Union's tile repair inspectors?
22              MR. McNALLY:  They have experience with
23    tile-drainage repairs and they have past experience in
24    doing tiling work themselves.
25              MR. VOGEL:  Do they have any academic
26    qualifications?  Have they taken any particular course
27    or qualification which qualifies them to be tile repair
28    inspectors?

                                                           31
    
 1              MR. McNALLY:  Not necessarily, no.
 2              MR. VOGEL:  They are not professional
 3    engineers?
 4              MR. McNALLY:  No.
 5              MR. VOGEL:  The experience that they have, is
 6    this experience acquired during the course of their
 7    employment with Union or is it rather former experience
 8    that they have?
 9              MR. McNALLY:  As I mentioned, some of them may
10    have a tiling background.
11              MR. VOGEL:  They have a -- sorry?
12              MR. McNALLY:  Tiling background.  They may
13    have worked for a tiling contractor prior to becoming a
14    union inspector or they may have acquired the expertise
15    while working for Union.
16              MR. VOGEL:  They are not licensed tiling
17    contractors?
18              MR. McNALLY:  No.
19              MR. VOGEL:  Union indicates that an
20    experienced tile-drainage engineer or specialist could
21    perform the function.
22              Given that the issue is of considerable
23    concern to landowners, and presumably also to Union,
24    because of its continuing liability for damage, is Union
25    prepared to commit to using either experienced
26    tile-drainage engineers or specialists?
27              MR. LESLIE:  I think it would be preferable,
28    from our standpoint, if we could focus on what the facts

                                                           32
    
 1    are and if there is something that you want to talk
 2    about changing, we can talk about that, but I don't
 3    think it is appropriate to be asking witnesses while
 4    they are on the stand to be making those kinds of
 5    commitments.
 6              It may be a matter of discussion.  The
 7    evidence is that these people are qualified to do what
 8    they do.  There is no evidence to the contrary at this
 9    point.
10              MR. VOGEL:  Well, except the reference in the
11    response is the potential for the employment of such
12    people so I am pursuing with that potential.
13              MR. LESLIE:  Potential for the employment of
14    which people?
15              MR. VOGEL:  Experienced tile-drainage
16    engineers, the specialists who perform this function.
17              MR. LESLIE: I don't think -- well, I will let
18    Mr. Mallette comment on whether an engineer is a member
19    of the Ontario Association of Professional Engineers or
20    simply somebody who has tiling experience.
21              MR. MALLETTE:  Yes, the term that was used in
22    the answer, the sentence that reads "An experienced
23    tile-drainage engineer specialist could perform this
24    function", if I could translate that perhaps?  The
25    drainage engineer specialist, as we understood from the
26    question -- and that was the term that was used in the
27    question -- we understood that to be somebody who may or
28    may not be a professional engineer, but would perhaps

                                                           33
    
 1    earn their livelihood year around from consulting in
 2    drainage and tile functions.
 3              Just to perhaps explain the entire picture
 4    without looking at individual segments of this
 5    thing -- and to explain the overall picture and why we
 6    have proposed what we are proposing -- is that we begin
 7    the process by discussing with the landowner what type
 8    of drainage they have on their property and what their
 9    requirements are, we do involve a drainage consultant
10    specialist to work with the landowner to develop
11    drainage plans that are drawn up and presented to the
12    landowner for approval before construction.
13              Landowners are also asked if they have a
14    preference for local drainage contractors, people that
15    they are used to seeing and using and working on their
16    land.  These are the contractors that we instruct our
17    mainline contractor to hire, so they are not seeing
18    somebody that they are unfamiliar with or that is
19    incapable of doing a very good job on a regular basis on
20    that property.
21              So the contract, the installation is actually
22    being done by highly qualified drainage contractors that
23    the landowner is familiar with.
24              Additionally, we have our inspector there who
25    has a lot of experience with this type of installation
26    and is there to ensure that quantities are recorded and
27    that repairs are made according to normal construction
28    practices, tile construction practices.

                                                           34
    
 1              After construction, and at the end of the day,
 2    the landowner has a guarantee from Union Gas that the
 3    system that has been installed will work and if it
 4    doesn't work for whatever reason, we will come back and
 5    repair it.
 6              So they are involved from the outset through
 7    the end and there are guarantees in place to ensure that
 8    the system that is installed, the repair that is made
 9    will work.
10              MR. VOGEL:  And on the issue of that
11    guarantee, does that extend then to any interference
12    with the drainage tiling system whether it involves
13    directly a tile which has been installed or repaired at
14    the time of construction or other tile which has been
15    adversely impacted by the construction?
16              MR. MALLETTE:  I am sorry.  Could you repeat
17    that one more time?
18              MR. VOGEL:  Does the guarantee extend to any
19    tile drainage problem that the landowner experiences
20    following construction which is attributable to the
21    construction?
22              MR. MALLETTE:  Yes.
23              MR. VOGEL:  Union's response to LCSA
24    Interrogatory No. 75 deals with the mitigation of damage
25    to agricultural soils.
26              The question was what was your approximation
27    to the per cent that soils would be mitigated, assuming
28    the cover crop program after two years following

                                                           35
    
 1    construction.
 2              Do you have any studies or reports which have
 3    been prepared in that regard?
 4              MR. MALLETTE:  I really believe it would be
 5    best to ask the environmental people to answer this
 6    question.
 7              MR. LESLIE:  If I might -- and I don't like to
 8    interfere but because we do have limited time -- but
 9    almost in all of these interrogatories there is a name
10    indicated at the bottom left of the page which hopefully
11    will provide some guidance as to the witnesses that are
12    best able to deal with the matters.
13              Now I appreciate that may not always be a
14    perfect way of proceeding, but to the extent that you
15    can you might take a look at the name at the bottom of
16    the page.
17              MR. VOGEL:  What I find, unfortunately though,
18    is with some of these issues, as Mr. Mallette points
19    out, there are either construction-related,
20    environmentally related or land-related and usually all
21    three.
22              MR. LESLIE:  I understand that it is not a
23    perfect system, but because we do have limited
24    time -- Mr. Payne will be here and if you can't deal
25    with something we will done as we have done, we will
26    undertake to get back to you.
27              In response to Interrogatory No. 27, which,
28    Mr. Mallette, which made reference to leakage surveys

                                                           36
    
 1    have been completed on some basis.  Is there a
 2    consolidated historical report which has been prepared
 3    on leakage and some other types of incidence or concern
 4    at Union's storage pools and related facilities?
 5              MR. MALLETTE:  I am not aware of one.  We can
 6    check and see if there is such a report in existence. 
 7    My knowledge of the situation, on an anecdotal nature,
 8    would be that there have never been any serious leaks. 
 9    There have been an occasional -- what could be qualified
10    as a very minor leak -- say a bolted flange, that kind
11    of thing.
12              Other than that, nothing.  But I will check
13    and see if there is an official report.
14              MR. VOGEL:  Well, I am interested in any form
15    of report which will give me some consolidated
16    historical data.  So if you have that, can you provide
17    that to me?
18              MR. MALLETTE:  If we have it, yes.
19              MR. VOGEL:  Interrogatory No. 34 LCSA related
20    to risk assessment.  I gather from the response that
21    there has been no risk assessment conducted with respect
22    to any aspect of the proposed facilities which are the
23    subject of this application.  Is that correct?
24              MR. MALLETTE:  Yes, that is correct.
25              MR. VOGEL:  And the response to the question
26    deals with the worse case scenario being a release of
27    the gas from the -- all of the gas from the Mandaumin
28    pool and the ignition of that gas.  In the event of such

                                                           37
    
 1    a scenario transpiring, what are the ignition sources
 2    present which might contribute to the ignition of the
 3    gas?
 4              MR. MALLETTE:  I would think it would be
 5    something the likes of a piece of pipe breaking and
 6    causing a spark or maybe some stones striking together
 7    and creating a spark or something like that.  I don't
 8    know if that has ever been fully determined in that kind
 9    of a situation.
10              MR. VOGEL:  Are you aware of any study or
11    investigation which would indicate the probable lapse of
12    time between the facility failure and the ignition?
13              MR. MALLETTE:  I'm not personally aware.  I
14    know that that can happen.
15              MR. VOGEL:  But you don't know sort of whether
16    there is any data which would assist us in determining
17    probable time of ignition relative to the time of
18    facility failure?
19              MR. MALLETTE:  I am not personally aware.
20              MR. VOGEL:  If Union had that information, I
21    gather you would be the one who was aware of it.  Is
22    that correct?
23              MR. MALLETTE:  Well, there is a chance that
24    perhaps Mr. Pardy would have a better -- might have that
25    knowledge.  I just don't know.  I can't speculate on
26    that.  You know, I guess one of the things that maybe we
27    should say is that we never have had a well failure like
28    that and we anticipate that we never will.

                                                           38
    
 1              The answer to the interrogatory answered the
 2    question directly and straightforwardly without adding
 3    additional information.  But the release of all the gas
 4    in a pool is unlikely to the extreme.  First of all, we
 5    haven't had a pool failure like that, and secondly, if
 6    we did, it would be controlled and contained before all
 7    of the gas escaped.
 8              MR. VOGEL:  Well, pool failures in the
 9    industry are not unknown.  You would agree with that,
10    Mr. Mallette?
11              MR. MALLETTE:  No, that is true.
12              MR. VOGEL:  And you say Union doesn't
13    anticipate they ever will have one.  What is that
14    anticipation based on?
15              MR. MALLETTE:  On the track record.
16              MR. VOGEL:  Yes.
17              MR. MALLETTE:  Track record and our
18    maintenance activities that are ongoing.  We have a high
19    level of confidence.  It is not that we are not
20    prepared.  It is just that we think that there is a low
21    likelihood of that happening.
22              MR. VOGEL:  I suppose the question was really
23    directed at risk assessment.  And while that is Union's
24    subjective feeling, you will agree with me that no risk
25    assessment has ever been carried out to determine what
26    the probability of such an event occurring in Union's
27    storage pools is.  Is that correct?
28              MR. MALLETTE:  I am unaware of any risk

                                                           39
    
 1    assessment.  There certainly was not a risk assessment
 2    done for this project.
 3              MR. VOGEL:  All right.  Now, you have also --
 4    in the event of ignition, would there also be an
 5    explosion?
 6              MR. MALLETTE:  I don't believe so.  I don't
 7    believe there would be an explosion in the sense that it
 8    would be like an explosive going off, TNT or whatever. 
 9    That would imply that there is a combustible material
10    confined in a space and then the right mixture of air
11    and combustible material in a confined place that would
12    be -- when ignited would cause an explosion.  In the
13    case that we are contemplating here, it would be a
14    situation where there would be a plume of pure gas that
15    would at the edges mix with air to the extent that it
16    could ignite but it would not be in a confined space.
17              MR. VOGEL:  Well, it would not be at ambient
18    air pressure.  The substance which ignited would still
19    be under pressure.  Is that correct?
20              MR. MALLETTE:  I'm sorry.  I really don't know
21    how the pressure falls off.  But considering that it
22    would have to mix with air to the extent that it would
23    be combustible, I would think that the pressure would
24    have fallen off to virtually atmosphere.
25              MR. VOGEL:  You indicate there is potential
26    for injury to persons and damage to property in close
27    proximity.  What do you mean by "close proximity"?
28              MR. MALLETTE:  Well, that is a qualitative

                                                           40
    
 1    term and it is meant to be that because that would
 2    depend on numerous factors:  the nature of the release,
 3    that is the direction in which it might be pointing or
 4    it might not be pointing; the actual size of the volume
 5    escaping per unit time; the wind direction.  So we
 6    haven't really tried to quantify that.
 7              MR. VOGEL:  Do you have any idea?  I mean that
 8    is fair enough.  You haven't looked at it so you
 9    wouldn't have any idea I suppose.
10              MR. MALLETTE:  That is correct.
11              MR. VOGEL:  And response to LCSA Interrogatory
12    No. 14 deals with compressor noise, the response
13    indicates that short term noise levels may be of
14    concern.  What do you mean by "short term"?
15              MR. McNALLY:  Short term in the sense that
16    they are starting up the compressor.  You have a motor
17    that starts the compressor and station blow downs, which
18    are generally "sh" kind of thing, less than a minute.
19              MR. MACKIE:  That was less than a second.
20              MR. McNALLY:  "Sh-sh-sh."
21              MR. MALLETTE:  I want to see the transcripts
22    on that.
23              MR. VOGEL:  That was fast forward.
24              What notice is provided to neighbours of blow
25    downs?
26              MR. McNALLY:  Normally if there is going to be
27    increased noise, the adjacent neighbours would be
28    notified so that they don't worry about the noise, that

                                                           41
    
 1    there is a problem at the station.  We just go and tell
 2    them that we are going to be doing some work at the
 3    station and they may hear some short increased noise
 4    levels.
 5              MR. VOGEL:  So that notice is delivered to
 6    them verbally?
 7              MR. McNALLY:  Yes.
 8              MR. VOGEL:  And how long in advance of the
 9    blow down would they be notified?
10              MR. McNALLY:  It may be just prior to.
11              MR. VOGEL:  In terms of minutes, hours, days?
12              MR. McNALLY:  Minutes to hours.
13              MR. VOGEL:  The response also indicates Union
14    is looking at ways to reduce the nuisance from at least
15    the one station.
16              What ways is Union looking at, in order to
17    reduce nuisance?
18              MR. McNALLY:  Currently looking at putting a
19    muffler on the compressor starter at the 156 station. 
20    The studies indicated only 65 dBA noise level at the
21    compressor starter itself.
22              MR. VOGEL:  Why haven't similar studies been
23    conducted at Enniskillen 28?
24              MR. McNALLY:  I'm not sure, but I think the
25    studies were originated at this station because of a
26    landowner who was concerned that there was going to be
27    increased noise as a result of this project; we wanted
28    to have some baseline data available to us.

                                                           42
    
 1              MR. VOGEL:  Is there any reason why whatever
 2    measures are instituted at the one station couldn't be
 3    instituted at the other station?
 4              MR. McNALLY:  I don't see why there would be.
 5              MR. VOGEL:  Why there would be any problem
 6    doing it?
 7              MR. McNALLY:  Right.
 8              MR. VOGEL:  Mr. Mallette, Interrogatory No. 35
 9    LCSA deals with emergency response.
10              Does Union have an emergency procedures
11    manual?
12    --- Off record discussion
13              MR. McNALLY:  We can check on that.
14              MR. VOGEL:  If there is such a manual, can you
15    provide it to me?
16              MR. LESLIE:  Paul, I would like to take that
17    under advisement.
18              If there is such a manual, the thought occurs
19    to me that there may be security risks with publication
20    of that kind of a document, so let's see what it is and
21    whether or not there are concerns around it, and then we
22    will get back to you.
23              MR. VOGEL:  Fine.
24              MR. MALLETTE:  I would think that we could get
25    that answer today.  I mean whether or not we have one.
26              MR. VOGEL:  Okay.  In subparagraph (e) of your
27    response, you have indicated that emergency equipment
28    and materials that would be required by operations

                                                           43
    
 1    personnel are readily available to them.
 2              What equipment and material are you talking
 3    about?
 4    --- Off record discussion
 5              MR. MALLETTE:  They would have whatever
 6    equipment is needed to deal with the situation at hand.
 7              MR. VOGEL:  That was my question:  What
 8    equipment and material are we talking about which is
 9    emergency response equipment and material?
10    --- Off record discussion
11              MR. MALLETTE:  I guess I don't really know
12    what you are looking for here, particularly.
13              They would be carrying a lot of stuff with
14    them, so if we can, maybe, once again, make a promise to
15    maybe expand upon that a little bit.
16              They would have tools and breathing apparatus;
17    protective clothing; their vehicles; access to power
18    equipment, such as hydraulic equipment, that type of
19    thing.
20              I don't really know what you are looking for
21    beyond that.
22              I guess I could, you know, as I say, see if we
23    could look for a more full listing.
24              MR. VOGEL:  Well, that might be helpful.
25              I mean the response indicates equipment and
26    material required to perform daily duties and, really,
27    what I'm interested in is what, precisely, we are
28    talking about, in terms of their daily duties, related

                                                           44
    
 1    emergency response, and the equipment and material which
 2    are available to them for that purpose.  So, that's what
 3    I'm asking about.
 4              MR. MALLETTE:  So you are asking what
 5    equipment they need for the daily duties?
 6              MR. VOGEL:  Yes, I'm asking what -- you told
 7    me that they have equipment and material available to
 8    them which are -- in connection with the performance of
 9    their daily duties, in this context of emergency
10    response.
11              My question to you is:  What equipment and
12    material?
13              I'm content with an undertaking to advise me,
14    in that regard.
15              MR. MALLETTE:  Okay.
16              MR. VOGEL:  In Interrogatory No. 79 LCSA, the
17    question referenced an abandoned well and asked for
18    Union's position concerning its ongoing responsibility,
19    both physically, to address a leakage problem, and
20    financially, with respect to any liability which might
21    be incurred as a result of that, and the answer is
22    non-responsive.
23              Make the assumption that you have a well which
24    is no longer operating, that has been capped, and Union
25    continues to own the storage facility, of which it was a
26    part; and the question is:  Does Union acknowledge its
27    liability, physically and financially, for dealing with
28    the problem?

                                                           45
    
 1              MR. LESLIE:  Paul, I wrote the answer to that
 2    question.
 3              I mean read Rylands and Fletcher.
 4              Generally, I think the answer is probably,
 5    yes, but there may be circumstances in which the answer
 6    is not yes, and you really have to know all the facts. 
 7    But I mean, clearly, the principle is that if they are
 8    the owner of that kind of facility and it causes a
 9    problem, they are going to have to bear responsibility.
10              MR. VOGEL:  I will just ask you one more
11    question, then, Mr. Leslie; which is:  Does Union take
12    the position that if it is no longer the owner -- that
13    is, if it's assigned its rights -- that it no longer has
14    any liability or --
15              MR. LESLIE:  Well, that would depend
16    entirely -- likely not, again, because you can't assign
17    obligations.  But that would depend on whether the
18    landowner was a party to the assignment, whether there
19    had been releases, things of that kind.  But, as you
20    know, generally, you can't assign obligations.  You may
21    have a right of indemnity over -- against the person who
22    you assigned it to.
23              MR. VOGEL:  Yes.
24              MR. LESLIE:  But I think that's probably a
25    fair summary of the law on it.
26              MR. VOGEL:  Right.
27              Would Union's position be the same, with
28    respect to other related facilities, compressors,

                                                           46
    
 1    pipelines, et cetera?
 2              MR. LESLIE:  Generally, yes, I think so.
 3    --- Pause
 4              MR. MACKIE:  Mr. Vogel, we are going to need
 5    to take a 10-minute break fairly shortly.
 6              Could you use that opportunity to review your
 7    briefing notes, with an aim of speeding this up a little
 8    bit.
 9              MR. VOGEL:  Certainly.
10              MR. MACKIE:  Could I ask you if you have many
11    more questions for this panel?
12              I am concerned that we are running into a
13    timing constraint and I'm anxious that we allow enough
14    time to accommodate the fourth panel, which addresses
15    the environmental assessments and what I judge to be the
16    majority of the landowner-related issues.
17              MR. VOGEL:  I have a few more questions for
18    this panel.  I think Ms Marttela will have questions for
19    them.  And I think that the two consultants, Mr. Liddle
20    and Dr. Napier, will also have questions for this panel.
21              MR. MACKIE:  Well, then, we need to address
22    some sort of scheduling for the balance of the material
23    because, at five o'clock, this technical conference has
24    to stop to accommodate our contract with the court
25    reporters.
26              Could I just canvas other parties?  Are there
27    other parties that have questions of this witness panel?
28              MR. CARD:  Yes, I have some.

                                                           47
    
 1              MR. MACKIE:  Thank you.
 2              MR. INWOOD:  CanEnerco doesn't anticipate
 3    questioning this panel.
 4              MR. MACKIE:  Right.  Thank you.
 5              And could I just ask, with regards to the
 6    environmental assessments?
 7              Board staff have quite a few questions, in
 8    that area.  I'm assuming that the Lambton County Gas
 9    Users Association have questions in that area, also.
10              MR. VOGEL:  We do have some questions in that
11    area.  I would say that the focus of our concern is
12    probably on the land and right-of-way matters and
13    issues -- particularly land and right-of-way matters, I
14    would say.
15              MR. MACKIE:  Would it be more helpful if we
16    stood down, reviewed the environmental assessment, and
17    went straight into land and right-of-way matters with
18    the fourth panel when it is up?
19              MR. LESLIE:  We were going to put those two
20    panels up together, to get maximum flexibility.
21              MR. MACKIE:  I understand that, Glenn, but I
22    was going to deal with the environmental assessments
23    first and work our way through, since that is the order
24    in which the evidence is presented.
25              I see a natural sequence to the presentation
26    of the evidence.  But frankly, we are not going to get
27    through everything today.  That is becoming quite
28    apparent.

                                                           48
    
 1              Mr. Vogel, could I ask you to use this
 2    ten-minute break to try and expedite the balance of your
 3    questions?  I certainly don't wish to cut off or
 4    prejudice your client's position.  But at the end of the
 5    day, if we have not covered all of the material, there
 6    is no other opportunity to reconsider it.
 7              MR. VOGEL:  We will see what we can do.
 8              MR. MACKIE:  Thank you.  We will take a
 9    ten-minute break.  There is coffee, juice and muffins
10    outside, I hope.  Everybody is welcome to tuck in.
11    --- Short recess at 1032
12    --- Upon resuming at 1048
13              MR. MACKIE:  By way of a preliminary matter, I
14    would like to put on the record that the Board, if
15    necessary, could make facilities available to continue
16    this Technical Conference on Tuesday of next week.  I am
17    not advocating that; but if parties want to consider
18    that, that is a possibility.
19              CanEnerco approached me with regard to the
20    issues list.
21              Mr. Gorman, we would like to hear from you,
22    sir.
23              MR. GORMAN:  During the past two days there
24    has been considerable questioning relating to the timing
25    of delta pressuring of storage pools and queries
26    regarding the prudency of doing this delta pressuring in
27    the first year of operation.
28              We would like to have an item added to the

                                                           49
    
 1    issues list in section (c), titled "Timing of Delta
 2    Pressuring Operations".  We think it is a significant
 3    issue that should be addressed once and for all.
 4    --- Off Record Discussion
 5              MR. MACKIE:  Thank you, Mr. Gorman.
 6              Could you just restate this additional issue,
 7    which would be issue 12.  I heard it as timing of delta
 8    pressure operations.
 9              MR. GORMAN:  That is correct.
10              MR. MACKIE:  All right; thank you.
11              Mr. Vogel.
12              MR. VOGEL:  Thank you, Mr. Mackie.
13              In the interests of time, I am going to leave
14    off my questions.  Ms Marttela and the two consultants
15    for LCSA have some questions for this panel.
16              MS MARTTELA:  I understand from looking at
17    section 8 of the application that Union is intending to
18    use agreements for the Century Pool Phase 2 projects
19    that it has used for similar projects in the past, and
20    in particular in this case that they are intending to
21    use the easement agreement that was developed in
22    connection with the EBLO 267 matter.
23              MR. LESLIE:  Robyn, I think that is accurate. 
24    Just in anticipation, I would point out that the people
25    who are familiar with those agreements are the lands
26    people, Mr. Haley and Dave Lowe.
27              MS MARTTELA:  I understand that Mr. Haley will
28    be on the next panel.  Some of the issues that I will be

                                                           50
    
 1    getting into I think are probably more -- there is a bit
 2    of overlap -- construction related matters.
 3              MR. LESLIE:  That is fine.
 4              MS MARTTELA:  I thought initially I would
 5    address them to this panel; and if it is not
 6    appropriate, I will give them to Mr. Haley.
 7              MR. LESLIE:  Mr. Lowe was the other name that
 8    is floating around in the back of my head.
 9              MS MARTTELA:  Given that Union has indicated
10    that it is using the 267 easement agreement and that it
11    is using agreements for projects that have been similar
12    to this project, I am assuming that at least the
13    pipeline portion of this particular project is
14    sufficiently similar to 267, and that is why you had
15    used the 267 easement agreement.
16              MR. MALLETTE:  The easement agreement that is
17    being used was filed in response to Board Interrogatory
18    no. 123, I believe.
19              I'm sorry, that was the letter of
20    understanding that was filed.
21              MS MARTTELA:  I think the easement agreement
22    is in the evidence.
23              MR. MALLETTE:  It is not identical to 267.  I
24    would suggest that it simply be considered on its own
25    merit.
26              MS MARTTELA:  It is not identical, but we are
27    talking about lands in the immediate vicinity of the 267
28    construction.  Is that not correct?

                                                           51
    
 1              MR. MALLETTE:  Yes, I think that is fair.  It
 2    is in the same general geographical area.
 3              MS MARTTELA:  These are lands, from what I
 4    understand, that are similar in topography and have the
 5    same type of soil characteristics or very similar soil
 6    characteristics to the lands that were involved in 267.
 7              MR. MALLETTE:  That is my general
 8    understanding from a construction viewpoint,
 9    particularly with respect to the lands that are on
10    easement.
11              MS MARTTELA:  The lands, as in 267, are
12    predominantly used for agricultural purposes at this
13    time?
14              MR. McNALLY:  Yes.
15              MS MARTTELA:  That 267 agreement, I
16    understand, was developed in January of this year and
17    involved significant input from landowners that were
18    affected by the construction in the 267 application.
19              Is that correct?
20              MR. McNALLY:  Yes, that is correct.
21              MS MARTTELA:  So it is a fairly recent or new
22    precedent for an easement agreement or new form of
23    easement agreement?
24              MR. McNALLY:  We don't know all the
25    differences between the original and the new.  Ron Haley
26    would be better to talk to regarding specifics of the
27    agreement.
28              MS MARTTELA:  Are you aware that there was

                                                           52
    
 1    also a letter of understanding negotiated at that time
 2    dealing with the 267 construction?
 3              MR. McNALLY:  Yes, we are.
 4              MS MARTTELA:  Given that you have indicated
 5    that Union is using agreements on this project that they
 6    have used on similar projects in the past and that this
 7    project is similar enough that you are using a 267
 8    agreement -- we have the same or similar soil
 9    characteristics; we have similar topography; we are
10    dealing with agricultural lands; and those agreements
11    are fairly recent and involve landowner input -- I am
12    wondering if Union would be prepared to adopt and use
13    the LOU that was developed in connection with the 267
14    application for this pipeline construction?
15              MR. LESLIE:  Robyn, I don't think this panel
16    can give you the answer to that question.  I will have
17    to talk to my client about it.  I think there are
18    differences.
19              MS MARTTELA:  Okay.  Are you indicating, then,
20    that you are not prepared to adopt the 267 model, or you
21    are going to take it under advisement?
22              MR. LESLIE:  Yes, I will talk to my client
23    about it.  I am told there are reasons why it would not
24    be appropriate to do that.
25              I think the people that are directly
26    responsible for that are the people that I mentioned
27    earlier.
28              MS MARTTELA:  In the next panel.

                                                           53
    
 1              MR. LESLIE:  Yes.
 2              MS MARTTELA:  I have a number of questions
 3    relating to specific construction measures that are
 4    adopted in the 267 LOU and whether those specific
 5    measures could be applied in this instance.
 6              Given that the next panel is going to be able
 7    to tell me whether we can adopt the 267 model in whole,
 8    if that is the case that would avoid the necessity of me
 9    going through each particular construction measure in
10    the agreement.
11              What I would propose to do is to wait until I
12    hear from Mr. Haley.  If the answer is no, then I would
13    like to be able to put to Mr. Haley, and he may have to
14    come back to this panel to get a response as to whether
15    particular measures could be implemented from that
16    agreement.
17              That would save us some time.
18              MR. McNALLY:  I think Mr. Haley would tell you
19    that the contents of the LOU will be negotiated between
20    ourselves and the landowners.  We don't intend on doing
21    that here.
22              I think that would be his answer.
23              Whether we agree to certain construction 
24    measures will be talked about between the lands group
25    and the engineering group through the process, as we
26    normally would.
27              MS MARTTELA:  I will reserve the balance of my
28    questions for the next panel.

                                                           54
    
 1              I think Dr. Napier may have some questions --
 2    sorry, Mr. Liddle I think is going to precede
 3    Dr. Napier.
 4              MR. LIDDLE:  I just have very few.
 5              To follow up on your earlier discussion about
 6    code changes because of location factors, I think the
 7    code you were discussing with Board staff was the
 8    pipeline code.
 9              MR. MALLETTE:  Yes, the reference was to
10    CSAZ662-96 which is the pipeline code.
11              MR. VOGEL:  And are there similar codes that
12    would be applicable to the compressors and wells in
13    terms of specifying different levels of  requirements
14    and so on relative to location?
15              MR. MALLETTE:  For the facilities that we are
16    testifying to primarily, which does not include the
17    wells themselves -- and we are trying to be as helpful
18    as we can today with respect to the questions relating
19    to wells -- that code does cover off everything.
20              MR. LIDDLE:  And to the extent that there is a
21    code that relates to wells, perhaps the earlier panel
22    should have been asking what you are telling me, but
23    could you check to see if that identifies what code is
24    applicable there?
25              MR. LESLIE:  Applicable to what?
26              MR. LIDDLE:  To the wells, in the sense that
27    the document that describes the drilling of a particular
28    well and the --

                                                           55
    
 1              MR. LESLIE:  The thing that I was told this
 2    morning wasn't specifications, is that what are you are
 3    referring to?
 4              MR. LIDDLE:  I am asking about --
 5              MR. LESLIE:  I am just trying to make sure
 6    what we are talking about.  Maybe you could give it to
 7    me and I could take a look?
 8              Yes, that is what I thought you meant.  And
 9    you want to know whether there is a code that governs
10    all that?
11              MR. LIDDLE:  Yes.  And whether that code has
12    location factors in the same manner that is described
13    for pipelines.
14              MR. LESLIE:  All right, we will ask Mr. Pardy
15    then.
16              MR. LIDDLE:  In terms of the application
17    material where there are changes in location code for
18    the pipeline facilities, is that identified or are all
19    the facilities captured in the same location code?
20              MR. MALLETTE:  If you are referring to
21    CSAZ662-96, yes.
22              MR. LIDDLE:  And all the facilities are at the
23    same location or governed by the same location factor,
24    or does it change in terms of some areas it is one
25    location code and --?
26              MR. MALLETTE:  Yes, the code explains and
27    defines what class locations are and we have designed
28    the facilities to meet or exceed the requirements of

                                                           56
    
 1    that code.
 2              MR. LIDDLE:  Yes, I understand that you
 3    designed according to code.  What I am saying is in the
 4    application materials, is it defined somewhere if there
 5    are location changes in the sense of going from Class 2
 6    to Class 3 or are all the facilities in the same
 7    location classification?
 8              MR. MALLETTE:  Yes, that information is in the
 9    application.
10              MR. LIDDLE:  In terms of your design of
11    facilities, do you consider the location code in the
12    sense of whether movement of facilities could get you
13    into a less demanding location class and, thereby,
14    improve the economics, or do you simply design the
15    facility that is best in a geographical sense and let
16    the code requirements fall where they may?
17              MR. MALLETTE:  Yes, the routing is primarily
18    driven by the environmental constraints and the end
19    points that we were trying to connect the pool line to
20    Dawn, in this case, or to 156.  So we accept whatever
21    constraints are in there in design according to the
22    route that is selected.
23              MR. LIDDLE:  Have you had any experience in
24    terms of previous storage installations where you have
25    had to go back and install thicker pipe because of
26    changes in density?
27              MR. MALLETTE:  I would generalize that a
28    little bit, and say that not just to pool storage

                                                           57
    
 1    facilities, but other pipelines.
 2              MR. LIDDLE:  Well, certainly in other
 3    pipelines I am aware that has happened.  I wondered
 4    whether it has happened in your storage operation?
 5              MR. MALLETTE:  Yes, we are not aware of any
 6    changes on pool lines.
 7              MR. LIDDLE:  And in terms of your discussion
 8    with respect to the worse case failure scenario -- and I
 9    realize there is some undertakings in terms of providing
10    more information -- but to the extent that that worse
11    case relates to a well failure, presumably part of your
12    preparation is you have some contact or know where you
13    would go to a well control, well blow-out control
14    specialist or that kind of thing, or is that something
15    you would have to do at the time?
16              MR. MALLETTE:  Yes, we are preparing an answer
17    to the previous question and I believe that will be
18    included as part of our answer -- those arrangements.
19              MR. LIDDLE:  Those are my questions.  Thank
20    you.
21              MR. LESLIE:  Just with respect to the earlier
22    exchange between Ms Marttela and myself, my recollection
23    is that the letter of understanding that was agreed upon
24    ultimately for the Dawn Enniskillen project to the
25    extent that the provisions were applicable, were carried
26    through were the important -- they were identified to be
27    some principles that were significant -- that were
28    carried through the first phase of the Century Pools

                                                           58
    
 1    development and I am advised that the letter of
 2    understanding that is being used, proposed to be used
 3    here, would be identical to, I think, to the letter of
 4    understanding that was used in Phase I, but I need to
 5    talk to my client a little further about the extent to
 6    which a template of the EBLO 267 letter of understanding
 7    would be appropriate for a storage project because that
 8    was a looping project, as you know, on the
 9    Dawn-Trafalgar line.
10              And I'll get back to you after the lunch hour
11    presumably on that.
12              MR. VOGEL:  I think what we need to know,
13    Mr. Leslie, if Union takes the position that certain
14    portions of the 267 LOU are not applicable to this
15    project, we would like you to identify those for us and
16    give us your rationale.
17              MR. LESLIE:  Okay, I understand that.
18              MR. MACKIE:  Does Mr. Napier have some
19    questions?
20              MR. NAPIER:  Good morning, gentlemen.  My
21    questions will be concentrated in the area of safety and
22    risk.  Mr. Vogel has already addressed LCSA
23    Interrogatory 34, and I would like to commence there.
24              It is my impression -- and I hope you will
25    correct me if I am wrong -- that your design process,
26    your design philosophy consists of honouring codes,
27    honouring statutory requirements and industry and
28    cooperation designs, if that is correct, and perhaps you

                                                           59
    
 1    would indicate?
 2              MR. McNALLY:  Is that the end of your
 3    question?
 4              MR. NAPIER:  Is that how you design?
 5              MR. McNALLY:  What is the question?  I am
 6    sorry, what is the question?
 7              MR. NAPIER:  Do you design by honouring codes,
 8    statutory requirements and the use of industrial and
 9    corporate designs or, as an alternative, do you work
10    from first principles?
11              MR. McNALLY:  All our facilities are designed
12    to meet or exceed the provincial regulations that govern
13    pipeline design.
14              The CSA code we refer to was established to
15    create minimum standards to which we would design to. 
16    We would also use good engineering judgement and we
17    think that Union's safety records speaks to the adequacy
18    of both the CSA's minimum standards and Union's good
19    engineering judgement.
20              MR. NAPIER:  Good.  Thank you.
21              So my picture is that you would arrive at a
22    design, a frozen P&I possibly, and then what happens
23    next?  How does that assist?  Let me just give a
24    background to that question.  You don't do hazard and
25    operability studies, you don't do failure mode and
26    effects analysis, as per the response to 34.  What
27    happens then to the frozen P&I?
28              MR. MARUSIC:  I don't think we understand your

                                                           60
    
 1    metaphor -- frozen?
 2              MR. NAPIER:  Well, you stop at some stage.
 3              MR. LESLIE:  What is your metaphor, frozen
 4    what?
 5              MR. NAPIER:  The piping and instrumentation
 6    diagram.
 7              MR. MARUSIC:  Could you perhaps repeat the
 8    question again?
 9              MR. NAPIER:  I think we have arrived at the,
10    in broad terms, a method of design.  At some stage, the
11    design is decided upon and I have used the word "frozen"
12    and you have in front of you a piping and
13    instrumentation diagram.  How do you asses that?  You
14    don't do HAZOPS, you don't do FMEA.  How do you assess
15    it?
16              MR. McNALLY:  We asset it to make sure that it
17    meets or exceeds the requirements.
18              MR. NAPIER:  To make sure that it satisfies
19    the requirements, to make sure that the design is a safe
20    one which will not give rise to major hazards at an
21    unacceptable frequency?
22              MR. McNALLY:  To make sure that it meets or
23    exceeds the requirements, and Union builds safe
24    facilities and our record attests to that.
25              MR. NAPIER:  Can I move then in that area to
26    ask you how you arrive at spacing distances between
27    installations such as wells, the compression stations
28    and buildings, residences?

                                                           61
    
 1              MR. McNALLY:  I think we meet or exceed all
 2    the setback requirements as set out by the various
 3    legislative bodies with respect to setbacks from
 4    dwellings, whether it is a setback from a pipe or a well
 5    or a compressor.
 6              MR. NAPIER:  Do you model releases?  Do you
 7    check those levels?
 8              MR. McNALLY:  Not that I'm aware of.
 9              MR. NAPIER:  I see.  So you cannot quote to me
10    a maximum acceptable level of thermal radiation?
11              MR. McNALLY:  No.
12              MR. NAPIER:  Can I just follow a matter that
13    Mr. Vogel raised, namely, the large release from the
14    pool.  I understood, perhaps incorrectly, but I
15    understood from the answers that were given that you
16    discount vapour cloud explosions.  Am I correct in that?
17              MR. MALLETTE:  In the previous discussion with
18    Mr. Vogel I believe I defined the context in which the
19    comments were made in that we or I said that we did not
20    see a situation for a confined explosion as a
21    definition.
22              MR. NAPIER:  Perhaps I misunderstood the
23    answer.  But I thought reference was made to release as
24    a release of pure methane, which is true at zero level,
25    but, of course, the release is a momentum jet, is it
26    not?  So the mixing takes place.  Now, in that context
27    you discount the vapour cloud explosion?
28              MR. MALLETTE:  We are not -- we are not

                                                           62
    
 1    discounting it.  As a matter of fact, we are not
 2    examining it at all.  Again, I want to clarify that this
 3    is an area that is related to the wells and we are
 4    trying to be as helpful as we can by offering the
 5    information that we have available to us.
 6              However, I believe the questions that you are
 7    asking are pieces that would be used were we to go from
 8    first principles and limit states design or whatever
 9    that may involve HAZOP or FMEA.  And as we have stated
10    we did not do that type of analysis.  I think you were
11    correct in stating that we comply with codes and
12    regulations and that has -- and industry standards that
13    have a proven track record.  We have a very typical type
14    of installation here and we felt there was no
15    requirement to go to a further analysis.  So do we have
16    pieces of that analysis?  No, we don't.
17              MR. NAPIER:  Just before I leave that, could I
18    ask you one more question.  You have referred to -- you
19    have referred to codes.  Do you work to the MIACC code,
20    Major Industrial Accident Council of Canada?
21              MR. MALLETTE:  We are aware of the work being
22    done by MIACC and we are maintaining our awareness of
23    that.  When the work that they produce becomes a part of
24    legislation and code, then we will comply with it.
25              MR. NAPIER:  Thank you.  Can I go back to
26    Interrogatory 17, please, 17 and 18.  Fuel stored on
27    site.  I wonder if you could tell us the quantities of
28    these various fuels:  gasoline, diesel, natural gas,

                                                           63
    
 1    acetylene and propane.  The quantities that will be
 2    stored and how they are stored?
 3              MR. McNALLY:  The question read what range of
 4    fuels will be used in the proposed project and we tried
 5    to list all the fuels we could think of.
 6              MR. NAPIER:  Yes, thank you.
 7              MR. McNALLY:  The different contractors that
 8    we would hire would have gasoline and diesel fuel
 9    perhaps in their set-up yards and we would not know what
10    quantity that they would have on hand.  Natural gas was
11    included because it is going to be used obviously in the
12    purging process as well as be within the facilities at
13    the completion of the commissioning process.  Acetylene
14    is used by the welders to cut the pipes whenever
15    required.  So they would have bottles of acetylene on
16    each welding rig that is on site and each welder would
17    also have a propane tank on their trucks that they use
18    for pre-heating the pipe prior to welding.
19              So the fuels will be stored in the appropriate
20    containers as outlined on Interrogatory No. 18 and the
21    quantities we wouldn't have that information.
22              MR. NAPIER:  Am I to conclude from that answer
23    that propane then will not be stored in bulk?
24              MR. McNALLY:  That is probably a safe
25    statement.
26              MR. NAPIER:  Thank you.  Moving to the
27    response to Interrogatory LCSA No. 20, the measurement
28    and flow control station.  Am I to conclude from the

                                                           64
    
 1    answers given that that station relies in total upon
 2    signals from transmitters?  In other words, it is an
 3    electronic set up and there is no gas at all in the
 4    station.
 5              MR. McNALLY:  There is gas in the station. 
 6    There is no gas in the building.
 7              MR. NAPIER:  So the building contains
 8    controlled equipment that is entirely electronic?
 9              MR. McNALLY:  That is correct.
10              MR. NAPIER:  Thank you.  I would like to move
11    over to 22 now.  Just a very simple clarification.  I
12    didn't understand the second sentence.
13                   "Samples taken at other pools have
14                   contained 75% sodium, 20% calcium, 2%
15                   potassium."
16    That seems to add to add up to 97 per cent of metals. 
17    That doesn't seem to be correct.
18              MR. McNALLY:  Those are the main components. 
19    The remainder were trace components.
20              MR. NAPIER:  With respect, sir, that is
21    impossible.
22              MR. McNALLY:  I will take your word for it.
23              MR. NAPIER:  Would those be chlorides I
24    wonder?  If they are, that makes sense.
25              MR. McNALLY:  We would have to confirm that.
26              MR. NAPIER:  Thank you, sir.  Moving over to
27    23, gentlemen, that separated liquid, what sort of bulk
28    are we talking about?  How frequently does that have to

                                                           65
    
 1    be moved away from the separators?
 2              MR. MALLETTE:  We really don't have a
 3    frequency on the removal of that at this time.  It is
 4    going to depend on what we get.  So we don't anticipate
 5    a lot.  But, you know, we will empty it as needed.
 6              MR. NAPIER:  What does that mean, not a lot? 
 7    Once a week?
 8              MR. MALLETTE:  Well, it won't be every day. 
 9    Again, I guess we could obtain for you some typical
10    frequencies based on other pools if you want us to do
11    that.
12              MR. NAPIER:  Thank you, sir.  I think that
13    would be helpful.
14              MR. MALLETTE:  Okay.
15              MR. NAPIER:  And finally I want to really move
16    back to 34.  We have established between us I think the
17    situation relating to hazard and risk and how you
18    approach that matter.  I wanted just to extend that
19    thinking towards maintenance and my first question is,
20    do you have a -- do you have a failure rate data bank or
21    do you draw on a failure rate data bank?
22              MR. MALLETTE:  Are you referring to gas well
23    failures?
24              MR. NAPIER:  No; I'm referring to the whole of
25    your operation:  valves, components, valves,
26    compressors, parts and compressors, motors, pipes.  The
27    lot.  The sort of thing that is stored in the large
28    databank, such as the Citadel databank, for example, in

                                                           66
    
 1    the U.K.
 2              MR. MALLETTE:  I'm not aware of a databank as
 3    you describe it, with consolidated information about
 4    failures.  However, I can say that we have never had a
 5    pool failure, a pool line failure, or a transmission
 6    line failure.  So I guess it would be a small databank
 7    when it comes to actual failures.
 8              MR. NAPIER:  I was thinking much more of
 9    component failures.  which brings me to my next
10    question.
11              You have said that you take great pride in
12    your maintenance program, and your track record shows
13    the value of that program.
14              On what is the program baseD, really?  It's
15    not based, then, on failure rate data.  What is the
16    basis of that program?
17              MR. MALLETTE:  If I understand your question
18    correctly -- I hesitate to ask you to repeat it,
19    again -- I will answer this; and that is:  the
20    prevention, I guess, would be -- if I looked to
21    anything, prevention -- first of all, designing it in
22    the methods that we have described today; having a
23    high-quality installation; and then maintaining it by
24    doing a variety of things to prevent a situation
25    occurring that could cause an emergency situation.
26              MR. NAPIER:  I don't think I have put my
27    question very well.  Let me try it just once more.
28              The control equipment that is in that

                                                           67
    
 1    building -- that measurement and control building to
 2    which we have referred -- how frequently do you maintain
 3    that instrumentation and how do you decide on the
 4    interval?
 5              MR. MALLETTE:  We have identified, I believe,
 6    in one of the interrogatories -- and if you can just
 7    give me a moment, I will find the correct one.
 8              MR. NAPIER:  Thank you, sir.
 9    --- Pause
10              MR. MALLETTE:  I found it.  It's the LCSA
11    Interrogatory Response No. 31.  And we identified,
12    there, that the communication equipment is inspected and
13    tested quarterly.  That frequency would be adjusted if
14    it was found not to be effective.
15              MR. NAPIER:  So if I can put that in other
16    terms, you arrive at your test intervals by trial and
17    error.  Would that be fair?
18              MR. MALLETTE:  Well, we have been in this
19    business for a very long time -- I believe the company
20    started back in the early 1900s; 1912 or so -- and so,
21    yes, we have a good history to base that on.
22              MR. NAPIER:  And one final question -- still
23    at 34:  Could we be told, please, what the worst-case
24    releases are for transmission lines, gathering lines and
25    compressors?
26              You told us -- thank you very much -- relating
27    to the storage.  Could we told the other quantities,
28    please?

                                                           68
    
 1              MR. McNALLY:  Are you speaking "worst case",
 2    as defined by EPA?
 3              MR. NAPIER:  Yes, sir.
 4              MR. McNALLY:  I believe it would be a complete
 5    release of the quantity of gas within the pipeline at
 6    the time of the release.
 7              MR. NAPIER:  I realize that, sir, but I wanted
 8    to know what the quantity was because you know the
 9    timing and I don't.
10              MR. McNALLY:  Worst case would be when it's at
11    its maximum operating pressure.
12              MR. NAPIER:  I realize that, sir.  I also do
13    not know the distance between the block valves.  You
14    tell me that they are driven in within five minutes, so
15    I'm interested in the blowdown, clearly, as that line
16    comes -- depressurizes --
17              MR. McNALLY:  You would like the quantity of
18    gas between the longest distance of the 16-inch line;
19    the quantity of gas at the highest operating pressure? 
20    We can figure that out for you.
21              MR. NAPIER:  Thank you, sir.
22              MR. MALLETTE:  Could you -- I guess we can --
23    we will check this transcript, but could you repeat the
24    facilities that you were particularly interested in?
25              MR. NAPIER:  Yes, sir.
26              The transmission lines, the gathering lines
27    and compressors.  The worst-case scenarios.
28              I'm grateful, gentlemen.  Thank you.

                                                           69
    
 1              MR. MACKIE:  Thank you.
 2              Are there other questions from other parties
 3    for this panel?
 4              MR. CARD:  Yes, I have some.
 5              MR. MACKIE:  Yes, Mr. Card.
 6              MR. CARD:  I would like to turn to the answers
 7    to the interrogatories provided to the Township of Dawn. 
 8    And the first I would like to look at is No. 5.
 9              The last sentence of the response indicates
10    that:
11                   "When installing a NPS 16 pipeline in
12                   road allowance, the actual installation
13                   can normally be contained in a 10 metre
14                   wide area."
15              Can you tell me if there are setbacks that are
16    required within this area from other utilities that
17    might be present in that 10-metre-wide area?
18              MR. McNALLY:  The setbacks from other
19    utilities underground?
20              MR. CARD:  Yes.
21              MR. McNALLY:  There are setback restrictions,
22    yes.
23              MR. CARD:  Do you know what those are?
24              MR. McNALLY:  Twelve inches from a gas
25    pipeline paralleling another utility.
26              MR. CARD:  And if those other utilities or
27    services are constructed after the pipeline is in place,
28    is the setback the same; also 12 inches?

                                                           70
    
 1              MR. McNALLY:  Yes, it is.
 2              MR. CARD:  Thank you.
 3              Next is the answer to Question No. 11.  This
 4    relates to the installation of the pipeline.
 5              Are there any restrictions on crossings by
 6    other utilities and services, either above or below the
 7    gas pipeline?
 8              MR. McNALLY:  Yes, there are.
 9              MR. CARD:  And do you know what those are?
10              MR. McNALLY:  Ideally, we would still like to
11    maintain the 12-inch separation.  There are ways to
12    reduce that number; by providing a buffer between the
13    crossed utility and the pipeline, in the sense that you
14    could put a piece of rubber, or something, between the
15    two.
16              MR. CARD:  And is that buffering provided for
17    in a code that one refers to in assessing what the
18    minimum separation would be?
19              MR. McNALLY:  Yes.
20              MR. CARD:  Next is Question 16.  The question
21    relates to any consideration being given to the use of
22    multi-use, I guess, easement corridors by Union and
23    other utility and service providers, and the answer is
24    that there's an additional pipeline being proposed by
25    CanEnerco for portions of Churchill Line and Mandaumin
26    Road.
27              Is Union sharing with CanEnerco, at these
28    locations?

                                                           71
    
 1              MR. McNALLY:  To the extent that both
 2    pipelines are within the same road allowance, we would
 3    be sharing.
 4              MR. CARD:  But there's no easement being
 5    proposed; it's simply within the same road allowance?
 6              MR. McNALLY:  That's correct.
 7              MR. CARD:  Does Union plan, or anticipate, any
 8    further transmission pipelines running parallel to the
 9    proposed pipeline?
10              MR. McNALLY:  We don't have any planned.
11              MR. CARD:  Well, does Union expect that this
12    is going to be the last transmission pipeline in this
13    immediate area?
14              MR. MARUSIC:  We can only say that we have
15    no -- we are not aware of any other need for
16    transmission pipelines in that area.  However, I
17    wouldn't want to say that it would never happen.
18              MR. CARD:  Well, in order to achieve a
19    multiple-use corridor, there would have to be some
20    advance planning. done by Union and other utilities, to
21    achieve that result.
22              Is there any discussion under way. between
23    Union and other utility providers, with respect to the
24    development of multiple-use corridors in Lambton County?
25              MR. McNALLY:  No.
26              MR. CARD:  Thank you.  Next is Question 17.
27              The question asks what future municipal
28    requirements for road allowance plans were taken into

                                                           72
    
 1    account.
 2              The answer refers back to the answer to
 3    Interrogatory No. 4.
 4              I take it that that means only those
 5    requirements which were identified by the Township's
 6    road superintendent.  Is that right?
 7              MR. McNALLY:  We expected the road
 8    superintendent is acting on behalf of the municipality. 
 9    To the extent that he has knowledge of future planned
10    facilities, that is who we are relying on, yes.
11              MR. CARD:  And what requirements were
12    identified?  Do you know?
13              MR. McNALLY:  Are you speaking in
14    Dawn-Euphemia?
15              MR. CARD:  Yes, I am; strictly in
16    Dawn-Euphemia.
17              MR. McNALLY:  There were no additional
18    requirements for additional facilities on behalf of the
19    municipality expressed by the road superintendent.
20              MR. CARD:  So your planning was not required
21    to take into account the need for municipal use of the
22    road allowance to provide future services because none
23    were identified to you.
24              Is that right?
25              MR. McNALLY:  That's correct.
26              MR. LESLIE:  Mr. Card, just to supplement
27    that -- somebody has been telling me stuff while you
28    were asking your questions -- there is apparently a

                                                           73
    
 1    regional utility planning committee that meets on a
 2    regular basis and it comprises all the utilities within
 3    the region.  They are charged, among other things, with
 4    discussing what their plans are and indicating what is
 5    required. Union participates in that process.
 6              That, I think, would be an important component
 7    in the answers to your questions.
 8              MR. CARD:  Perhaps.  How long in advance does
 9    Union know what its plans are so that when it is
10    participating in this committee it is able to reveal its
11    plans to others?
12              MR. LESLIE:  I can't answer that question, but
13    I can certainly try and get the information for you.
14              MR. CARD:  Thank you.  Next is Question 20.
15              The question relates to the criteria that were
16    applied to measure the suitability of road allowance
17    lands for transmission pipeline purposes.
18              The answer appears to be that Union considers
19    whether or not the pipeline can be installed
20    economically and safely according to company
21    specifications.
22              May I take it from this answer that these are
23    the only criteria that Union considers?
24    --- Pause
25              MR. McNALLY:  Those are the criteria that are
26    used, considering all other factors:  the topography,
27    the location of existing utilities, the requirement for
28    future municipal services that may be planned.

                                                           74
    
 1              MR. CARD:  So that is included within the term
 2    "economically".  It is not simply economically for
 3    Union.  You also take into account the economics of
 4    others providing services, whether that is the
 5    municipality or other utility providers.
 6              Is that right?
 7              MR. McNALLY:  Could you repeat that please?
 8              MR. CARD:  Yes.  The criteria that you have
 9    identified are simply that the pipeline can be installed
10    economically and safely.
11              What we were talking about there is
12    economically for whom?  Is the focus of economically
13    solely Union, or is it Union and anyone else who might
14    be using the road allowance?
15              MR. McNALLY:  To the extent that we need to
16    install the project economically, in the sense that if
17    it is not economic we are not going to do the project,
18    then we have to make sure that it can be installed
19    within the budget constraints that we have.
20              We do consider the municipality's
21    requirements, if they know of any, ahead of time.
22              I think that is evidenced by Century Pool
23    Phase I where we moved the opposed route off of road
24    allowance to accommodate a future municipal service that
25    was made aware to us by the road superintendent.
26              That didn't sound like very good grammar.
27              MR. CARD:  So economically for union and
28    economically for the municipality, to the extent you are

                                                           75
    
 1    aware of planned projects within the road allowance.
 2              MR. McNALLY:  That is correct.
 3              MR. CARD:  And is that the limit of
 4    economically?
 5              MR. McNALLY:  Yes.
 6              MR. CARD:  Now with respect to safely, again
 7    safely in making the initial installation of the
 8    pipeline.  Do you also consider the safety of those who
 9    may be subsequently involved in constructing utilities
10    within the road allowance?
11              MR. McNALLY:  Safely during the installation
12    and the people who are going to be installing afterwards
13    would ensure that they could install their facility
14    safely, given the fact that the pipeline is there.
15              MR. CARD:  Is the NPS-16 pipeline armoured?
16              MR. McNALLY:  It is armoured with steel.
17              MR. CARD:  Is that designed to withstand
18    impact from a bucket on a loader or something?
19              MR. McNALLY:  Union belongs to the Ontario One
20    Call, which means any time someone is digging in the
21    area, digging period, they are obligated to call Ontario
22    One Call.  Union will come out and provide a locate of
23    the existing facilities at no charge to the contractor
24    or the owning company of the facility.
25              MR. CARD:  Thank you.  Are there
26    specifications for the design of the pipeline which
27    indicate to you that it is designed to resist impacts
28    from the business end of a front-end loader?

                                                           76
    
 1              MR. McNALLY:  Pipelines are designed to have
 2    certain toughness qualities, and those minimum standards
 3    are also established in the CSA Code Z662-96.
 4              MR. MALLETTE:  I would add to that, however,
 5    that it is certainly not the intention that we would
 6    want anybody hitting the pipeline, clearly.
 7              MR. CARD:  No, I wouldn't suggest that.
 8              MR. MALLETTE:  Yes, it does have some inherent
 9    ability to withstand that kind of punishment.  But it is
10    not the intent to try to use that ability on a regular
11    basis.
12              Perhaps I could add, also, that we do have a
13    lot of pipelines and other road allowances across
14    southwestern Ontario, and it has not been an undue
15    burden on other utilities to locate alongside us, to my
16    knowledge, or to cross us.
17              One thing is that if it is a buried Bell
18    cable, or whatever, with the depth of the pipeline and
19    where it is, usually they are able to go above it. 
20    Water lines are often able to go below it when crossing.
21              Again, the idea here is that we can peacefully
22    co-exist with other uses of the road allowance.  That
23    has been our experience.
24              MR. CARD:  The specifications that you
25    mentioned, CSA Z662-96, does that indicate what the
26    resistance to impact is of the MPS pipeline, what type
27    of a force it can withstand?
28              MR. McNALLY:  No.

                                                           77
    
 1              MR. CARD:  Question 26.  The answer refers to
 2    a drawing that has also been produced.  I wonder if you
 3    would examine the drawing with me for a moment, please.
 4              There are two sections of the pipeline shown. 
 5    The top one I would like to discuss with you first.
 6              Union has an existing 18.288-metre wide
 7    easement along the west side of Dawn Valley Road.  Why
 8    not put the new pipeline in that easement?
 9              MR. McNALLY:  That easement was specific to
10    the pipeline that is currently in that easement, and it
11    was seemed that there was adequate room within the road
12    allowance for the proposed pipeline.
13              MR. CARD:  If you only need 12 inches between
14    pipelines, it is physically possible, I take it, for you
15    to locate your pipeline entirely within your own land.
16              MR. McNALLY:  Easement lands are not owned by
17    Union Gas.
18              MR. CARD:  I'm sorry, lands on which you have
19    the right to place pipelines.
20              MR. McNALLY:  We have a right to place a
21    pipeline, and that pipeline is currently there.
22              MR. CARD:  Is it your evidence that the
23    easement permits only one pipeline?
24              MR. McNALLY:  Mr. Haley would have to answer
25    the exact conditions of that easement agreement.
26              MR. CARD:  My questions to you regard the
27    physical aspects of it.
28              I take it that we need no more than 12 inches

                                                           78
    
 1    between the MPS 30-pipeline and any new pipeline, such
 2    as the proposed MPS-16 pipeline.
 3              Is that right, from a physical standpoint?
 4              MR. McNALLY:  That is the minimum requirement,
 5    according to the Code.
 6              MR. CARD:  Thank you.  Turning to the bottom
 7    drawing, there appears to be a gap in the easement along
 8    the left side of Dawn Valley Road going to the
 9    intersection of Aberfeldy Line.
10              But does the pipeline follow an easement along
11    Aberfeldy Line to the east of the intersection with Dawn
12    Valley Road?
13              MR. McNALLY:  Are you talking about the gap on
14    Dawn Valley Road on the west side starting at the
15    Aberfeldy Line and going to where the easement starts?
16              MR. CARD:  It goes east of Dawn Valley Road to
17    Match Line B-B and that is on an easement, is it?
18              The portion of pipeline running parrel to the
19    portion of pipeline running parallel to Aberfeldy Line
20    is on a private easement on the south side of the road
21    allowance.
22              Now, what was it about that particular segment
23    of the road that motivated Union to acquire or use an
24    easement for the purpose of the transmission pipeline?
25              MR. McNALLY:  Similar to us deeming that there
26    was adequate room on Dawn Valley Road for the pipeline,
27    we deemed that there wasn't an adequate amount of room
28    on Aberfeldy Line, and that is why the environmental

                                                           79
    
 1    consultants placed it in a private easement there.
 2              MR. CARD:  And the lack of room, does that
 3    pertain to the presence of existing services within the
 4    road allowance?
 5              MR. McNALLY:  The presence of existing
 6    services, the width of the road allowance and the
 7    presence of municipal drainage ditches, et cetera.  We
 8    look at all the factors there.
 9              MR. CARD:  Thank you.
10              MR. MALLETTE:  if I could also add another,
11    just a point to that, and that is that in reference to
12    our location of facilities we also refer to
13    Interrogatory No. 6, which identifies that there are
14    environmental considerations that need to be taken into
15    consideration when looking at the routing of a pipeline
16    and that often road allowances are environmentally
17    preferred.
18              So that is also a factor that weighs heavily
19    on the location of a pipeline, and again from the
20    engineering side of things we can identify whether we
21    feel it is feasible, given a location provided by
22    environmental routers, but it often gets there in the
23    first place because of the environmental considerations.
24              MR. CARD:  Well, I was going to ask questions
25    to the environmental panel of that nature, but is there
26    any environmental constraint between the limit, the
27    northerly limit of the existing easement on Dawn Valley
28    Road and Aberfeldy Line that would prevent the

                                                           80
    
 1    continuation of that easement along the west side of
 2    Dawn Valley Road?
 3              MR. MALLETTE:  I believe that is an
 4    environmental question.
 5              MR. CARD:  Thank you, yes.
 6              MR. MACKIE:  Mr. Card, before you leave this
 7    diagram, could I just ask one clarifying question,
 8    please?
 9              MR. CARD:  Okay.
10              MR. MACKIE:  First, the reference that
11    Mr. Card made to the first part of the Dawn Valley Road,
12    the existing Union easement accommodating the NPS
13    30-inch line, is that partly on the Road allowance and
14    partly on private property, or is the entire easement
15    located on private property?
16              MR. McNALLY:  That existing pipeline is
17    entirely on private easement.
18              MR. MACKIE:  And the heaving dotted line, that
19    is the NPS 10-inch line, I take it?
20              MR. McNALLY:  Sixteen, yes.
21              MR. MACKIE:  I beg your pardon, 16.  And where
22    actually is the west boundary of the road allowance?  I
23    tend to lose it between the heavy dotted line and the
24    private easement -- there is an arrow indicating the
25    west road allowance?
26              MR. McNALLY:  Yes.
27              MR. MACKIE:  Okay.  Thank you.
28              Thank you, Mr. Card.

                                                           81
    
 1              MR. CARD:  Question 27.  The question asked
 2    about before and after inspection reports for road
 3    allowance lands.  The answer is that Union does not
 4    provide before and after inspection reports as a general
 5    practice.
 6              Is Union willing to do so in this case?
 7              MR. McNALLY:  Yes.
 8              MR. CARD:  Thank you.  And lastly is question
 9    119 from the Boards staff.  Now this deals with land and
10    right of way matters and if this is a question more
11    properly addressed to others, I hope you will tell me,
12    but the third paragraph of the answer to the question,
13    "Please identify what agreements Union has with the
14    Township...", et cetera, Union does not attempt to place
15    facilities within a road allowance where adequate space
16    is not available.
17              Now, is the context for that answer, where
18    adequate space is not currently available, or do you
19    look to the future to see what services might have to be
20    provided within the road allowance lands in the future
21    in making the determination whether or not to place
22    facilities within the road allowance?
23              MR. McNALLY:  If you look at the second
24    sentence of that paragraph, Union also accommodates
25    future planned municipal services in the determination
26    of whether adequate space is available.
27              MR. CARD:  Right.  So the answer is you
28    wouldn't attempt to put a pipeline in a road allowance

                                                           82
    
 1    if you knew that future planned municipal services would
 2    require that space.
 3              MR. McNALLY:  If there was inadequate space
 4    for the pipeline and the future planned municipal
 5    service, then we would not attempt to put the pipeline
 6    in there.
 7              MR. CARD:  Now you go on in the same paragraph
 8    to qualify that somewhat by saying Union would resist
 9    not using a road allowance to accommodate a municipal
10    service that cannot be realistically foreseen or other
11    non-municipal utilities.
12              Now, supposing that a service is required,
13    that hasn't been foreseen when Union installed its
14    pipeline, is Union prepared to bear the whole cost of
15    removing or relocating its pipeline off road allowance
16    lands in that event?  And, for example, and this is a
17    hypothetical questions, but supposing a sewer is
18    required to go along road allowance lands, is Union
19    prepared to bear the expense of moving its pipeline off
20    road allowance lands so that the municipality can use
21    its land in this way?
22              MR. McNALLY:  I would just say that relocation
23    clauses are contained in the applicable franchise
24    agreements that we have with the various municipalities.
25              MR. CARD:  They are.  In the case of
26    Dawn-Euphemia, there is a provision for the splitting of
27    the cost of relocating the Union Gas facility.
28              I am wondering if it is Union's position that

                                                           83
    
 1    that should also apply to transmission pipelines?
 2              MR. LESLIE:  Mr. Card, I know there has been
 3    some negotiations between your client and mine and some
 4    correspondence and what I would like to do is take
 5    instructions, make sure I understand the situation as it
 6    now exists and then respond to your question.
 7              I take it your question is directed at the
 8    arrangements between Union and Dawn-Euphemia?
 9              MR. CARD:  Yes, certainly it is and I would be
10    pleased to discuss that matter when we deal with the
11    land matters later on.
12              MR. LESLIE:  Well, I think what I would like
13    to do is take to the people at Union Gas that you have
14    been dealing with and make sure I understand the
15    situation correctly and perhaps we can deal with it that
16    way.
17              MR. CARD:  Is that the same as an undertaking?
18              MR. LESLIE:  No.
19              MR. CARD:  I guess I understand your answer. 
20    Those are all my questions, thank you.
21              MR. MACKIE:  Thank you, Mr. Card.
22              Are there other questions for this panel?  I
23    believe Mr. Marusic had an undertaking he wished to put
24    on the record before this panel disappears?
25              MR. MARUSIC:  Yes, that is correct.  During
26    yesterday's testimony we were asked if we could provide
27    a facilities design, a cost estimate and a discounted
28    cash flow analysis to separately serve Bluewater and

                                                           84
    
 1    Mandaumin Pools and I checked with my staff last night
 2    on whether that could be done easily or whether it
 3    would, in fact, require the week's worth of work that I
 4    indicated it would and they confirmed with me that the
 5    week's worth of work would be required to do that with
 6    sufficient accuracy to provide it before the Board.
 7              MR. MACKIE:  Thank you for that response.  We
 8    all withdraw that request on the basis of that
 9    information and I just think we are going to keep you
10    busy in other areas before this case is over.
11              Thank you.
12              There being no other questions for this panel,
13    I just wish to thank this panel for the time they have
14    spent here with us, and particularly for staying over
15    last night.  That wasn't the original game plan and at
16    12:00 we have now reached the point that I hoped we
17    would reach at 5:00 yesterday evening.
18              So we will move on to Union's next witness
19    panel as quickly as possible.
20    --- Pause
21              MR. MACKIE:  The fourth panel covers the area
22    of both environmental assessments, construction
23    practices, land and right-of-way matters.  I would like
24    us to divide up our questions so that we at least cover
25    one of these areas in its entirety.
26              Do I sense that parties here would prefer to
27    start with the right-of-way and land-related issues
28    before we deal with the environmental assessments?

                                                           85
    
 1              MR. VOGEL:  That would certainly be the
 2    position of LCSA.
 3              MR. MACKIE:  Mr. Card.
 4              MR. CARD:  I have no preference, thank you.
 5              MR. MACKIE:  If we start with the
 6    environmental assessments, we may not reach the
 7    land-related matters this afternoon before five o'clock. 
 8    But you have no preference?
 9              MR. CARD:  No, I am interested in both so it
10    doesn't matter.
11              MR. MACKIE:  Are there other parties present
12    that have a --
13              MR. KLAPAK:  I would like the land related.
14              MR. MACKIE:  Land related?
15              MR. KLAPAK:  Yes, please.
16              MR. MACKIE:  All right.  Well, I am going to
17    propose then we start with the land related, thus we
18    will get questions on the record from all parties on
19    land related matters before we move on and start with
20    environmental assessments.  I don't want to start one
21    topic and have one party at the end of the day squeezed
22    out of their opportunity to ask questions.
23              And is there any party then that would like to
24    commence before Board staff?  Mr. Vogel, Mr. Card, do
25    you have a strong interest or preference in this area?
26              MR. CARD:  No, sir.
27              MR. VOGEL:  I am certainly prepared to go
28    ahead and cover what is of principal concern to us.

                                                           86
    
 1              MR. MACKIE:  Is it your preference to do so?
 2              MR. VOGEL:  Certainly.
 3              MR. MACKIE:  All right.  Mr. Card, would you
 4    like to proceed Board staff also?
 5              MR. CARD:  No, thank you.
 6              MR. MACKIE:  No?
 7              MR. CARD:  No.
 8              MR. MACKIE:  All right.  We will start with
 9    Mr. Vogel and Mr. Vogel will go to 12:30 and thereabouts
10    and then you indicate please when you are at a
11    convenient spot to stop and we will take our lunch
12    break.
13              MR. VOGEL:  Thank you, Mr. Mackie.
14              MR. MACKIE:  Thank you.
15              MR. MACKIE:  Mr. Leslie, not everybody is
16    familiar with every member of your panel.  Could you
17    give us a quick introduction?
18              MR. LESLIE:  Yes.  By reference to the answer
19    to Interrogatory 1, the members of this panel are at the
20    far end, Mr. Dave Lowe who will deal with storage land
21    matters as well as any roadway land matters.  At the
22    other end, Mr. Ron Haley who is also in the lands
23    business and he will deal with pipeline matters. 
24    Mr. Wachsmuth is next to Mr. Haley and Mr. Wachsmuth
25    will deal with environmental matters as will Mr. Greg
26    Payne who is sitting to Mr. Wachsmuth's right. 
27    Hopefully that is sufficient for everybody's purposes.
28              MR. VOGEL:  Mr. Lowe, if I could start with

                                                           87
    
 1    you.  In LCSA Interrogatory 87 the question was directed
 2    at whether there are any -- from a landowner perspective
 3    any restrictions on acres within the DSA as opposed to
 4    the so-called outside acres.  You have referred in the
 5    response something to the OEB Act, I presume, with
 6    respect to section 38 which provides for compensation
 7    for damages.  Is that correct?
 8              MR. LESLIE:  Well, sorry, Mr. Vogel.  Again, I
 9    wrote that answer.  I think the restrictions that are
10    created by DSA are really a matter of looking at the
11    legislation.  I don't know what more we can tell you.  I
12    mean sections 38 and 39 deal with this.
13              MR. VOGEL:  Well, I am familiar with sections
14    38 and 39.  I guess, Mr. Lowe, in terms of your
15    perspective as Union's representative dealing with
16    landowners, is there any difference in the landowner
17    perspective, either in that regard or under the leases
18    that Union proposes for landowners, any different
19    treatment of lands within or outside the DSA?
20              MR. LESLIE:  You mean by Union, Mr. Vogel?
21              MR. VOGEL:  Yes.
22              MR. LOWE:  Are you speaking with respect to
23    similar activities?
24              MR. VOGEL:  Activities or any dealings with
25    the lands.  Is there any difference?  Any difference
26    from a -- should the landowners be aware of any
27    difference in how Union -- how Union's position with
28    respect to their treatment of acres inside and outside

                                                           88
    
 1    the DSA?
 2              MR. LOWE:  I think we have to put them on the
 3    equivalent basis.  If there were facilities on both
 4    types of lands or if there were leases on both types of
 5    lands, the treatment would be similar.
 6              MR. VOGEL:  Okay.  Dealing with the status of
 7    the MacRae lease, in response to Interrogatory 81, you
 8    provided certain information about the leases.  Union
 9    acknowledged that it does not have a valid lease with
10    the MacRaes?
11              MR. LOWE:  That is correct.
12              There was a -- we had a lease there.  Two of
13    the principals of the property had signed, but two had
14    not.
15              MR. VOGEL:  So there is no valid lease on that
16    property?
17              MR. LOWE:  That was our conclusion.
18              MR. VOGEL:  Dealing with your response to
19    Board staff Interrogatory 124, you have given us some
20    information about leased and unleased acres in those
21    pools.  I gather that that reflects -- the unleased
22    acres are those situations where you have been unable to
23    come to agreement with landowners on a lease.  Is that
24    right?
25              MR. LOWE:  For the time being, yes.
26              MR. VOGEL:  And so for the time being those
27    landowners haven't agreed to enter into a lease which
28    would support the application -- the storage application

                                                           89
    
 1    that Union has brought.  Is that correct?
 2              MR. LOWE:  Some of those negotiations are
 3    still ongoing, but yes.
 4              MR. VOGEL:  Assume for the moment that those
 5    negotiations to the extent you have indicated here are
 6    unsuccessful.  What are Union's intentions in that
 7    event?
 8              MR. LOWE:  Our intention would be to make one
 9    last offer prior to injection for those lease rights and
10    to offer the standard package of compensation to those
11    landowners.
12              MR. VOGEL:  And if that is rejected?
13              MR. LOWE:  If that is rejected, a decision --
14    either party, either Union or the landowners have the
15    option to make an application to the Ontario Energy
16    Board to have their rates determined.
17              MR. VOGEL:  In response to Board staff
18    Interrogatory 129, Union has indicated it has been
19    unable to obtain a written acknowledgement from the
20    landowner consenting to UMD 6.  There is some reference
21    to a verbal acknowledgement from the landowner
22    Mr. Harris.  Can you describe circumstances in which
23    that verbal acknowledgement was obtained and what it
24    consisted of?
25              MR. LOWE:  Yes, I can.  After we acquired the
26    Rawlings and Kember acknowledgement forms, I phoned
27    Mr. Harris and advised him of that.  I described to
28    him --

                                                           90
    
 1              MR. VOGEL:  When did that conversation take
 2    place?
 3              MR. LOWE:  I don't have a date in front of me. 
 4    I believe it was some time in July of '99.
 5              MR. VOGEL:  I'm sorry.  Continue.
 6              MR. LOWE:  I advised him that we had acquired
 7    the interest from the other landowners and had described
 8    what it was that we wanted to do on Mr. Harris'
 9    property.  I discussed the possibility that we were
10    prepared to abandon the existing Union gas well and that
11    we would like to discuss with him the possibility of
12    replacing that well and installing a roadway to that
13    well.
14              We discussed two possible options for a
15    roadway to that well, one being straight in off of
16    Mandaumin Side Road, the other possibility being a
17    roadway that we had previously discussed running on the
18    south side of the south 50 acres of his 150-acre
19    property and then heading south into the well location.
20              At that time, Mr. Harris said that he was
21    ecstatic about the lack of facilities that we would be
22    proposing and he would be agreeable to a roadway and a
23    well based on the fact that there was only one well
24    versus the six that he had previously thought might be
25    possibly built on his property.
26              MR. VOGEL:  This was during your telephone
27    conversation with him?
28              MR. LOWE:  Yes, correct.  And his preference

                                                           91
    
 1    was for the well straight in off of Mandaumin Road,
 2    which surprised me.
 3              MR. VOGEL:  Did you subsequently meet with
 4    Mr. Harris to amplify on this proposal?
 5              MR. LOWE:  Yes, I indicated to him that I
 6    would be putting together a letter of acknowledgement
 7    for presentation to him.  I had a further
 8    conversation -- I had also indicated to him that the
 9    acknowledgement forms on his property weren't the most
10    urgent work that I was doing at that time and had a
11    further discussion with him at the -- I think it was the
12    August 19th environmental assessment meeting at Brigdon
13    and suggested that I would be putting those
14    acknowledgement forms together for presentation to him.
15              MR. VOGEL:  And did you ever attend at his
16    property to further amplify and discuss your proposal
17    and show him exactly what it consisted of?
18              MR. LOWE:  Yes, I brought the copies of the
19    acknowledgement forms and accompanying sketches to his
20    property, I believe it was November 13th, subject to
21    check, of 1999.  And he informed me at that time that he
22    wasn't prepared to discuss the matter any further and
23    said if we wanted to discuss the drilling of that well
24    further that we should contact yourself.
25              MR. VOGEL:  And when you attended at his
26    property with the specifics of your proposal, he
27    indicated at that time that it was not a satisfactory
28    solution for him.  Is that correct?

                                                           92
    
 1              MR. LOWE:  Mr. Harris actually refused to
 2    discuss any details of the proposals.  He just advised
 3    me to speak to you.
 4              MR. VOGEL:  Now, there is an amending
 5    agreement in place, as I understand it, which deals with
 6    the placement of wells on Mr. Harris' property.  Is that
 7    correct?
 8              MR. LOWE:  Yes, that is correct.
 9              MR. VOGEL:  And that amending agreement was
10    entered into with Union on January 12th 1998?
11              MR. LOWE:  Do you happen to have that
12    reference handy?
13              MR. VOGEL:  No, I don't.
14              MR. LOWE:  M8-17, I believe.
15              MR. LESLIE:  Yes, M8-17 and it is a quarter of
16    the way in, no, half way in, sorry.
17              MR. LOWE:  Yes, I have that.
18              MR. VOGEL:  As I read it, it is paragraph 13
19    of that agreement between Union and Mr. Harris that
20    governs the placement of wells on his property; is that
21    correct?
22              MR. LOWE:  That is correct.
23              MR. VOGEL:  And under that agreement, you were
24    principally responsible at Union for the negotiation and
25    concluding of this agreement with Mr. Harris and other
26    landowners; is that correct, Mr. Lowe?
27              MR. LOWE:  Actually, the drafting of this
28    document was a cooperative effort.  The phraseology of

                                                           93
    
 1    this particular clause was actually drafted by, I
 2    believe the Harris'.
 3              MR. VOGEL:  Did you negotiate this agreement
 4    with the Harris' on behalf of Union?
 5              MR. LOWE:  Yes, I did.
 6              MR. VOGEL:  And this paragraph 13, as I read
 7    it, distinguishes between primary and secondary wells;
 8    is that correct?
 9              MR. LOWE:  That is right.
10              MR. VOGEL:  And primary wells, Union is given
11    certain rights with respect to the construction of
12    primary wells adjacent to roadways which are in agreed
13    locations as provided in that agreement.  Is that a fair
14    description of primary wells?
15              MR. LOWE:  Primary wells were wells that were
16    to be drilled butting roadways which were to be located
17    along property lines.
18              MR. VOGEL:  And secondary wells, as provided
19    in the agreement, were by contrast, mid-sealed wells not
20    adjacent to just the roadways; is that correct?
21              MR. LOWE:  That is correct.
22              MR. VOGEL:  Will you agree with me that what
23    the agreement provides for is that the only secondary
24    well on the Harris property was the deemed secondary
25    well, the existing well, and that there was to be no
26    other secondary well on Mr. Harris' property?
27              MR. LOWE:  The provision in this clause was
28    for one secondary well per property with the exception

                                                           94
    
 1    of Mr. Rawlings who provided a more extensive roadway
 2    option.  The existing well was deemed to satisfy the
 3    condition for the secondary well on the Harris'
 4    property.
 5              MR. VOGEL:  So under this agreement, Union has
 6    no right to construct a secondary well, another
 7    secondary well on Mr. Harris' property; is that correct?
 8              MR. LOWE:  This provision provides that there
 9    was not to be a secondary well, that the existing well
10    satisfied the condition.
11              MR. VOGEL:  All right.
12              MR. LOWE:  In other words, there were not to
13    be two secondary wells.
14              MR. MACKIE:  Mr. Vogel, if I could just
15    clarify something.  I am trying to follow this
16    discussion --
17              MR. VOGEL:  Yes.
18              MR. MACKIE:  -- and I am a little confused.
19              I have the agreement, the amending agreement
20    that you made reference to in section 9 of the pre-filed
21    evidence under M8-17 and that is in agreement, as I read
22    it, with -- well, it might be in agreement with 839160
23    Ontario Limited, and we have this map in evidence which
24    identifies land held by 839160 Ontario Limited.
25              Is that land the same land owned by Mr.
26    Harris?  Is that the Harris property that you are making
27    reference to --
28              MR. VOGEL:  Yes.

                                                           95
    
 1              MR. MACKIE:  -- in your questions?
 2              MR. VOGEL:  Yes.
 3              MR. MACKIE:  Thank you.
 4              MR. VOGEL:  Yes.
 5              MR. MACKIE:  I apologize for interjecting but
 6    I was quite confused by that.
 7              MR. VOGEL:  That is fine.
 8              MR. MACKIE:  Okay.
 9              MR. VOGEL:  So apart from the deemed secondary
10    well, existing well on Mr. Harris' property, you will
11    agree with me then, Mr. Lowe, there was to be, under
12    this agreement, Union agreed there would be no other
13    secondary well located on Mr. Harris' property?
14              MR. LOWE:  As long as the existing well was
15    there, that is correct.
16              It is my understanding of this clause that
17    should the existing -- in a situation where the existing
18    well would be, say, abandoned, the provision of -- for
19    the provision of a replacement secondary well is
20    possibly captured in that language.
21              MR. VOGEL:  You say "possibly".
22              MR. LOWE:  I say "possibly" because during the
23    negotiations, I tried to add wording to this clause.  As
24    I said earlier that this was actually drafted by the
25    Harris' for our review.
26              When I tried to add clarification on that
27    specific possibility, I guess basically the Harris'
28    refused to discuss it any further.

                                                           96
    
 1              So I say --
 2              MR. VOGEL:  I don't want to --
 3              MR. LOWE:  -- possibly because there was some
 4    doubt in their minds but I guess it was my intent to try
 5    and have that covered.
 6              MR. VOGEL:  I don't want to pursue with you
 7    here, Mr. Lowe, the legal interpretation of this clause,
 8    but you will agree with me that one of the principal
 9    considerations for the Harris' in undertaking these
10    negotiations and concluding this agreement with Union
11    was restricting the service facilities on their
12    property, and in particular, the location of access
13    roads and mid-field installations.  Would you agree with
14    that?
15              MR. LOWE:  That is correct.  The secondary
16    wells under this language were not to have roadways
17    constructed to them without further negotiations and
18    consent for the lessor.
19              MR. VOGEL:  Yes.  In fact, it was the concern
20    out of the Harris' in negotiating this agreement that
21    they not have mid-field installation.  That was the
22    reason for primary wells as opposed to secondary wells
23    as provided for in paragraph 13; correct?
24              MR. LOWE:  Yes.  They were concerned that they
25    have no additional impacts than one secondary well.
26              I might add that during our negotiations, it
27    was always presumed that this was a base document that
28    allowed us to proceed with our development but we were

                                                           97
    
 1    not precluded from approaching land owners at any time
 2    in the future to renegotiate any term of the agreement.
 3              MR. VOGEL:  Well, absent Mr. Harris
 4    renegotiating another agreement with you -- never mind. 
 5    I won't pursue this with you.
 6              LCSA Interrogatory 85 --
 7              MR. LOWE:  Was that 85?  Did I hear correctly?
 8              MR. VOGEL:  Yes.
 9              Union has clarified its evidence by noting
10    competition for developed storage services.  Do I imply
11    from the response that you have given me to
12    Interrogatory 85 that Union does not consider that there
13    is competition for land rights?
14              MR. LOWE:  I guess, just for clarification, I
15    was a little confused by this question, that the
16    reference appeared to be related to storage services and
17    the second part of the question related to competition
18    for gas storage rights.  So we tried to answer both
19    parts.
20              MR. VOGEL:  Well, what I am asking you then is
21    from Union's perspective, is there competition for the
22    land rights acquired from landowners?
23              MR. LOWE:  Yes, there most certainly is.
24              MR. VOGEL:  In that respect then, who are your
25    storage competitors?
26              MR. LOWE:  Are you talking about
27    acquisitions --
28              MR. VOGEL:  Acquiring rights from landowners.

                                                           98
    
 1              MR. LOWE:  -- of storage rights for storage
 2    development purposes or leasing?
 3              MR. VOGEL:  I am talking about leasing now.  I
 4    am talking about with whom is Union competing to obtain
 5    land rights from landowners?
 6              MR. LOWE:  Okay.  You directed me to
 7    Interrogatory 85, 85 deals with storage rights, and I
 8    thought I saw you or heard you straying off into leasing
 9    to be an exploration matter -- do you want me to --
10              MR. VOGEL:  I think, Mr. Lowe, my question is
11    clear.
12              In section 85, you responded by referring to
13    the competition for developed storage spaces amongst
14    companies.  Now, you indicated to me that Union's
15    perspective is that there is also a competitive market
16    in which it competes for the lease rates with
17    landowners; is that correct?
18              MR. LESLIE:  Mr. Vogel, just listening, I
19    think there are two kinds of leases being discussed, one
20    is storage leases and the other would be, I think, P&NG
21    leases and my understanding is that your question
22    relates to, at this point, the storage leases; is that
23    correct?
24              MR. VOGEL:  Well, I will ask the question with
25    respect to both.
26              MR. LESLIE:  All right.  Well, that is fine.
27              MR. VOGEL:  Is Union competing with respect to
28    storage and P&NG leases?

                                                           99
    
 1              MR. LOWE:  Not generally, no.
 2              MR. VOGEL:  Is Union competing with respect to
 3    storage leases?
 4              MR. LOWE:  With respect to storage leases in
 5    potential storage pools, yes.
 6              MR. VOGEL:  Union is competing with other
 7    companies with respect to the acquisition of storage
 8    space in potential storage pools; is that a fair
 9    conclusion from your answer?
10              MR. LOWE:  Do you mean to say "storage rights"
11    as opposed to "storage space"?  I just want to be clear. 
12    I think you said --
13              MR. VOGEL:  Storage rights.  That is right,
14    you are quite correct.
15              MR. LOWE:  Yes.
16              MR. VOGEL:  You are quite correct.
17              Who is Union competing with?
18              MR. LOWE:  As stated in response to
19    Interrogatory 85, it would be generally Enbridge and
20    CANENERCO.  A number of other small independents are
21    trying to aggregate leases for future sales as well.
22              MR. VOGEL:  Who are the small independents?
23              MR. LOW:  In the past there are companies like
24    Underground Storage Limited, I believe, is their name.
25              MR. VOGEL:  I am interested in people
26    currently competing with Union.
27              Who are the independents currently competing
28    with Union?

                                                          100
    
 1              MR. LOWE:  I would say they are still in the
 2    marketplace.  Other companies, Jade Limited, I don't
 3    think they are in business either.
 4              MANTI Resources, a number of companies use
 5    other land agents, land service companies, to acquire
 6    interests in leases.
 7              MR. VOGEL:  I understand these companies use
 8    land agents.  I am just trying to get a handle on who
 9    these other companies are.
10              Apart from the ones you have listed, are there
11    any others?
12              MR. LOWE:  Tribute Resources.
13              MR. VOGEL:  Any others?
14              MR. LOWE:  No others come to mind at the
15    moment.
16              MR. VOGEL:  Does Union have the leases and
17    compensation packages that these other companies,
18    Union's competitors, are using in the marketplace?
19              MR. LOWE:  Could you repeat your question?
20              MR. VOGEL:  Yes.  Does Union have the leases
21    and compensation packages that these other companies are
22    using to compete for acquisition of storage rights in
23    the market that you have described?
24              MR. LOWE:  We don't have them per se.  They
25    are accessible at the Registry Office.
26              MR. VOGEL:  The leases are accessible at the
27    Registry Office?
28              MR. LOWE:  Once they are registered, yes.

                                                          101
    
 1              MR. VOGEL:  What about the compensation
 2    packages?
 3              MR. LOWE:  Generally, the only information we
 4    have on that is what is at the Registry Office and
 5    registered on title.
 6              MR. VOGEL:  You don't know what these other
 7    companies are paying in the marketplace?
 8              MR. LOWE:  No, I didn't say I wasn't aware of
 9    what their practices are.
10              MR. VOGEL:  I am asking you for what
11    information you have, Mr. Lowe.
12              MR. LOWE:  I am generally aware of the
13    competition.
14              MR. VOGEL:  Sorry...?
15              MR. LOWE:  I am generally aware of the
16    competition and the use of compensation.
17              MR. VOGEL:  Can you provide me with
18    particulars of what these other companies are offering
19    in the marketplace?
20              MR. LESLIE:  Paul, as you know -- I realize
21    that compensation isn't entirely irrelevant, but it is
22    not something that the Board will deal with in this
23    proceeding.  Clearly, when it comes to storage the Board
24    may ultimately have to deal with it.
25              We went some distance in responding to
26    interrogatories that deal with compensation, but I don't
27    think it is appropriate at this point to be putting
28    information on the record that really isn't relevant to

                                                          102
    
 1    this hearing.
 2              MR. VOGEL:  Well, for the record, LCSA's
 3    position is that compensation is relevant to the extent
 4    that it affects public interest.  Whether or not
 5    landowners are receiving fair compensation for their
 6    interest is a matter which goes to how the directly
 7    affected public is impacted by this --
 8              MR. LESLIE:  Well, that is an interesting
 9    argument, and we are going to have it some day.  But for
10    now, we take the position that compensation is something
11    that the Board deals with separately.
12              MR. MACKIE:  I would just like to qualify that
13    view, Glenn, on behalf of Board staff.  It has always
14    been the policy of Board staff to secure disclosure from
15    the applicant as to the general terms and provisions
16    that are being offered for compensation related matters.
17              I shall be reviewing that matter further in my
18    questions.  We do that, to the extent that the Board
19    then can draw some comfort from the knowledge that all
20    the lessors within a pool are being treated on an equal
21    basis, and we generally look at the compensation package
22    with regard to the level of compensation that Union is
23    currently paying to its other lessors within Lambton
24    County.
25              The Board is not here to arbitrate
26    compensation matters, but in order to grant
27    authorization to inject rights to Union it does need to
28    know that a fair and reasonable offer for compensation

                                                          103
    
 1    is on the table.
 2              MR. LESLIE:  Chris, do you think it would be
 3    helpful to the Board, having said what you just said, to
 4    have detailed information about what other companies are
 5    offering?
 6              MR. MACKIE:  In my view, we already have on
 7    the record of these proceedings, before this Board, what
 8    Enbridge Consumers Gas pays.  We dealt with the
 9    Ladysmith Pool designation last spring, and prior to
10    that we had an application from CanEnerco for the
11    Dresden Pool, the Chatham Pool, and CanEnerco fully
12    disclosed the terms of its compensation.
13              So the information is there on the public
14    record.  I was a little surprised at Mr. Lowe's response
15    that he has knowledge of that information, but it is
16    here at the Board.  It is on the public record.
17              MR. LESLIE:  All right.
18              MR. LOWE:  I was just about to get to that
19    actually.
20              MR. LESLIE:  Chris, I didn't mean to suggest
21    that we wouldn't get into what we propose to offer
22    people.  It was more a question of how far we should get
23    into comparisons, and that evidence would be clearly
24    relevant to an arbitration of what is fair as opposed to
25    what we propose to do and whether we are being fair as
26    between the various people we are dealing with.
27              MR. MACKIE:  There is no question that the
28    Board in this proceeding is not arbitrating

                                                          104
    
 1    compensation.  There is no application under section
 2    38(4) of the Ontario Energy Board Act.
 3              MR. LESLIE:  And that suggests to me that
 4    there should be some limit to the amount of information
 5    about compensation that is put on the record.
 6              MR. MACKIE:  I agree with that.
 7              MR. VOGEL:  After all of that, is Union
 8    prepared to provide the information which it has with
 9    respect to the nature of the market in which it is
10    competing?
11              MR. LOWE:  At section 9.2 we fully disclose
12    our proposed compensation package in response to
13    basically what Mr. Mackie has just said.
14              I guess the difficulty I have is that I don't
15    have permission from these other companies to disclose
16    information.  I am happy to provide the numbers that
17    have been previously filed in EBO reference numbers, if
18    that is helpful.
19              MR. VOGEL:  That would be a good place to
20    start.
21              MR. LOWE:  In the Enbridge Ladysmith
22    application they proposed a storage lease rental payment
23    of $52.15.
24              MR. VOGEL:  This is the per-acre payment?
25              MR. LOWE:  Yes.  And in CanEnerco's Dresden
26    Pool application they propose $52 an acre.
27              MR. VOGEL:  Is that the per well payment and
28    the compensation payment?

                                                          105
    
 1              MR. LOWE:  The per well payment for each
 2    company was disclosed in that evidence, at $500 per
 3    well.
 4              MR. VOGEL:  In which application?
 5              MR. LOWE:  That was EBO 212 for Enbridge
 6    Ladysmith; and I am sorry, I don't have the EBO
 7    reference at hand for --
 8              MR. VOGEL:  But you are saying that in each
 9    application the per-well payment was $500?
10              MR. LOWE:  That is correct.
11              MR. VOGEL:  What about road rights?
12              MR. LOWE:  Only in the Enbridge application
13    did they indicate they paid $500 per acre.  And I am
14    uncertain on any statement on roadway payments in
15    CanEnerco's application.
16              MR. VOGEL:  What was the compensation with
17    respect to crop loss in both applications?
18              MR. LOWE:  I don't have any specific
19    information on that.
20              MR. VOGEL:  What about outside acres?
21              MR. LOWE:  No information.
22              MR. VOGEL:  In LCSA Interrogatory 89 the
23    question related to total consideration being paid by
24    Union to landowners in its storage pools.  The response
25    is really non-responsive, indicating that you don't have
26    records.
27              How many storage pools does Union have in
28    Lambton County?

                                                          106
    
 1              MR. LOWE:  Subject to check, I think we own
 2    and/or operate 17 storage pools.
 3              MR. VOGEL:  For each of those pools does Union
 4    maintain records for each of the properties within the
 5    pool?
 6              MR. LOWE:  Yes, we do.
 7              MR. VOGEL:  Those records indicate what Union
 8    has paid on an historic and current basis for each of
 9    those properties?
10              MR. LOWE:  The records would indicate what our
11    current lease obligations are under the lease interest
12    that we carry.
13              MR. VOGEL:  And they would also indicate
14    historically the lease arrangements and what
15    compensation you have paid to landowners.
16              Is that correct?
17              MR. LOWE:  Yes, to some extent.
18              MR. VOGEL:  How many landowners are we talking
19    about, Mr. Lowe?
20              Let me ask you this:  How many properties are
21    we talking about?
22              MR. LOWE:  I don't have a specific number.  It
23    is in the neighbourhood of 250.
24              MR. VOGEL:  All right.  I suppose my question
25    really relates to this:  Of those 250 properties, I am
26    interested in what is beyond the regular package lease
27    that Union has offered to landowners, that it has paid
28    to landowners, say from 1990.

                                                          107
    
 1              That would require you to look at those 250
 2    files and advise me as to what payments, beyond the
 3    package payments, have been paid to individual
 4    landowners in that period of time.
 5              Can you undertake to do that?
 6              MR. LESLIE:  Paul, Mr. Lowe was qualifying his
 7    answers.
 8              My understanding from previous discussions --
 9    and I did discuss the answer that is in this
10    interrogatory -- is that a search of all those files may
11    or may not disclose the kind of information you are
12    looking for.
13              Mr. Lowe can comment on that.
14              There may be another way to get at what you
15    want, but I don't think that kind of search is going --
16              MR. VOGEL:  Well, I really don't care how you
17    come up with the information.  It is the information
18    that I want.
19              MR. LESLIE:  You can ask Mr. Lowe if there is
20    another way to go about it.
21              MR. VOGEL:  Mr. Lowe, are you capable of
22    producing the information that I have just asked for,
23    regardless of how you obtain it?
24              MR. LOWE:  I am not certain.
25              MR. VOGEL:  Could you investigate to determine
26    if that information is reasonably available to you; and
27    if it is, can you produce it?
28              MR. LESLIE:  We will take it under advisement,

                                                          108
    
 1    Paul, and leave it at that for now.  We will discuss it
 2    and get back to you.
 3              MR. VOGEL:  If there is an issue with respect
 4    to the identity of an individual landowner, I am not
 5    really concerned about the identity of individual
 6    landowners.  I am more concerned with the nature of the
 7    compensation arrangement.
 8              MR. LOWE:  I guess we would respond by saying
 9    those negotiations are business confidentiality issues,
10    and generally we would not provide that information.
11              MR. VOGEL:  I am not interested in a
12    particular landowner so much as I am in the nature of
13    the compensation arrangements which Union is making. 
14    That is the information I want.
15              I see that I have gone over the 12:30 break
16    time.
17              I can indicate, Mr. Mackie, that I have had
18    certain discussions with Mr. Leslie which may allow us
19    to deal with some of these issues by way of undertaking,
20    and that may expedite the proceeding so we can get
21    through the environmental issues as well.
22              I have a few more questions for this panel,
23    and then with what Mr. Leslie and I can work out over
24    the lunch break perhaps we can shorten the proceedings
25    that way.
26              MR. MACKIE:  That would be very helpful.
27              Could we break now for 60 minutes.  I suspect
28    some of us are getting quite an appetite.

                                                          109
    
 1              We will reconvene at ten to two.
 2              Could I remind parties, before we break, that
 3    I would invite Mr. Leslie to give us a response to the
 4    additional issues that have been proposed to the issues
 5    list.  I suggest we have a brief off-the-record
 6    discussion to try to ensure that we have consent on
 7    those issues.
 8              That could be done off the record.  I would
 9    like to do that after lunch before it gets lost.
10    --- Luncheon recess at 1250
11    --- Upon resuming at 1402
12              MR. MACKIE:  If we could continue, then.  Does
13    Union, before we start, have any further undertakings it
14    wants to put on the record before Mr. Vogel continues? 
15    No?  Okay.
16              Mr. Vogel the floor is yours.
17              MR. VOGEL:  Thank you.
18              Mr. Lowe, in response to LCSA -- I am sorry,
19    this is Board staff Interrogatory 126, the Interrogatory
20    deals with the status of negotiations with the LCSA and
21    the response indicates that your negotiations have been
22    ongoing with Mandaumin representatives since September
23    of 1998.
24              As I understand it there was an amending
25    agreement entered into with some or all of the Lambton
26    County Storage Pool landowners in 1990, effective
27    January 1989.  Is that correct?  Dealing with updating
28    compensation?

                                                          110
    
 1              MR. LOWE:  Yes, we have a number of amending
 2    agreements.  There was also one in 83, but I would agree
 3    with 1989.
 4              MR. VOGEL:  The last sort of, if we can call
 5    it universal type of agreement, the one that was entered
 6    effective in January 1989.
 7              MR. LOWE:  Yes, that is correct.
 8              MR. VOGEL:  And was that entered into with
 9    landowners in all of the 17 Lambton County Storage Pool?
10              MR. LOWE:  No, it was not.
11              MR. VOGEL:  How many of the 17 storage pools
12    entered into this form of amending agreement?
13              MR. LOWE:  I believe all but three.
14              MR. VOGEL:  Tell me which three did not.
15              MR. LOWE:  Edys Mills, Oil Springs East, Dow,
16    and I believe the 17 counts I gave you earlier included
17    our position in Black Creek Pool as well as Dow-Moore.
18    The Black Creek people came on since 89, so they were
19    under similar agreement, but not that one that you
20    referred to.
21              MR. VOGEL:  And the other pools accepted from
22    the 1989 agreement, are they all presently under a
23    similar form of amending agreement?
24              MR. LOWE:  What was the first part of your
25    question again?
26              MR. VOGEL:  These pools that you have just
27    listed for me, are they all part of a similar form of
28    amending agreement if not since the 1989 agreement?

                                                          111
    
 1              MR. LOWE:  All but Edys Mills.
 2              MR. VOGEL:  And are these amending agreements,
 3    are they part of Union's record in this proceeding?
 4              MR. LOWE:  No, they are not.
 5              MR. VOGEL:  Was this form of amending
 6    agreement entered into with all of the landowners in all
 7    of the pools but for the ones that you accepted?
 8              MR. LOWE:  I think I answered that already
 9    earlier.  The answer was yes.
10              MR. VOGEL:  All of the landowners?
11              MR. LOWE:  Possibly one exception.  I can't be
12    any clearer than that on that point.
13              MR. VOGEL:  Are you in a position to tell me
14    who the exception was, or do you know?
15              MR. LOWE:  My suspicion is it is the Robson
16    family on the Bickford Pool.
17              MR. VOGEL:  The Robson family on the Bickford
18    Pool?
19              MR. LOWE:  Yes.
20              MR. VOGEL:  Now, apart from them, then I
21    conclude that all landowners in all pools but for the
22    ones that you accepted, entered into this form of
23    amending agreement effective January, 1989.  Is that
24    fair?
25              MR. LOWE:  Subject to check on the odd one,
26    yes.  I think I have captured the exception, but I can't
27    be 100 per cent sure.  I am 99 per cent sure.
28              MR. VOGEL:  And with respect to these accepted

                                                          112
    
 1    pools, except for Edys Mills Line, there is a similar
 2    form of agreement.  Can you provide me with a copy of
 3    that form of agreement which would apply to these other
 4    pools?
 5              MR. LESLIE:  Can you explain the relevance?
 6              MR. VOGEL:  What is relevant is the nature of
 7    Union's lease arrangements with the landowners.  The
 8    simplest way, I suppose, to deal with it would be to
 9    have the whole of whatever lease arrangements are
10    presently in effect as part of the record.  But that
11    doesn't appear to have been what has happened so I am
12    trying to get at what the current leasing arrangement
13    with these landowners is.
14              MR. LESLIE:  Which landowners?  All the
15    landowners everywhere?
16              MR. VOGEL:  The landowners in the pool
17    which -- I will just accept it then from my earlier
18    question.
19              MR. LESLIE:  That is why I asked what the
20    relevance is since they are not in this pool or in this
21    proposed development I should say.
22              I mean we are getting pretty far afield.  I am
23    starting to rethink my reaction to the issues list.  I
24    mean, when you look at the Act, the Board deals with
25    compensation.  These leases are really a matter of
26    negotiation between Union and the landowners for
27    somewhat different purposes.
28              I just don't see us getting into an

                                                          113
    
 1    examination of every combination and permutation of
 2    leasing arrangements.
 3              MR. VOGEL:  Let's deal with the 1989
 4    agreement.  I am content to pursue that at the moment,
 5    Mr. Lowe.
 6              This form of agreement entered into in
 7    January, 1989, is relevant to and forms part of Union's
 8    lease arrangements with the landowners whose lands are
 9    affected by this application.  Is that correct?
10              MR. LOWE:  It forms part of the compensation
11    arrangement, not the lease arrangements.
12              MR. VOGEL:  The agreement, as I have and have
13    reviewed it, appears to be in the form of a lease
14    amending agreement.  Is that not correct?
15              MR. LESLIE:  Paul, is this document in
16    evidence?
17              MR. VOGEL:  I am not sure.  Mr. Lowe, do you
18    know that?
19              MR. LOWE:  I already answered that it was not
20    in evidence.  I don't have a copy in front of me to
21    refer to and the name of the agreement is An amending
22    agreement schedule of payments.
23              MR. VOGEL:  Yes.
24              MR. LOWE:  Which strictly deals with
25    compensation.
26              MR. VOGEL:  Was that form of agreement ever
27    registered against the title to the lands affected?
28              MR. LOWE:  I can't be certain of that.

                                                          114
    
 1              MR. VOGEL:  You don't know?
 2              MR. LOWE:  I don't know for certain, no.
 3              MR. VOGEL:  And that agreement, as I read it,
 4    expired in 1998.  Was that the reason why you undertook
 5    negotiations commencing in 1998?
 6              MR. LOWE:  That agreement does not expire in
 7    1998.
 8              MR. VOGEL:  I am sorry, the provision for
 9    payment under this agreement provided that for
10    renegotiation in 1998.  Is that correct?
11              MR. LOWE:  That is correct.
12              MR. VOGEL:  Were those then the negotiations
13    which you undertook in 1998 and have continued to this
14    point?
15              MR. LOWE:  That is correct.
16              MR. VOGEL:  And those negotiations have not
17    resulted in a further agreement?
18              MR. LOWE:  Not to this point, no.
19              MR. VOGEL:  In your response to LCSA
20    Interrogatory No. 90, you dealt with the possibility of
21    making a service available to certain landowners.  And
22    you indicate in part B of your response that you have
23    prepared an analysis regarding providing service to the
24    home owners on the proposed Mandaumin/Bluewater route. 
25    Is that analysis in the form of a report?
26              MR. LOWE:  That interrogatory is more properly
27    directed to Mr. Mallette who responded to that.  It is
28    not my -- it is not my interrogatory?

                                                          115
    
 1              MR. VOGEL:  Well, is Mr. Mallette here?
 2              MR. LESLIE:  No, I don't believe he is.
 3              MR. VOGEL:  I suppose what I would ask for is
 4    an undertaking on the part of Union to investigate
 5    whether or not that analysis was completed in the form
 6    of a report and if so, to provide me with a copy of the
 7    report?
 8              MR. LESLIE:  I will ask Mr. Mallette about
 9    that, yes, or we will.
10              MR. VOGEL:  In dealing with the impact on
11    Union's DCF analysis of alternate landowner compensation
12    arrangements yesterday with the first panel, there were
13    certain questions adjourned to this panel.
14              In the interest of saving time I have provided
15    to Mr. Leslie in the form of a supplementary
16    interrogatory the information which LCSA is requesting,
17    and I believe that Mr. Leslie's position is that he is
18    going to provide me with a response to question 1 of
19    that supplementary IR.  Question 2, Union is considering
20    whether it will provide the DCF analysis as requested or
21    some alternative formulation which demonstrates the
22    sensitivity which I think is the purpose of that
23    question.
24              So I am content to, as I say in the interests
25    of dealing with this issue in this way.  Is that fair,
26    Mr. Leslie?
27              MR. LESLIE:  Yes.  Just to be clear, the
28    initial part deals -- it's a matrix, would have us

                                                          116
    
 1    indicate in summary form what amounts are being paid for
 2    various items under the existing agreements, and I have
 3    told Mr. Vogel I think it is more efficient to do it
 4    that way than to do it through the question and answer
 5    process.  With respect to the second part of the
 6    document, it really is just a repetition of an earlier
 7    interrogatory that was dealt with yesterday or discussed
 8    yesterday and we will consider how best to respond to
 9    that if at all.
10              MR. VOGEL:  I am satisfied with that.
11              Mr. Mackie, those are my questions with
12    respect to the land and right-of-way matters.  And as I
13    indicated earlier, I do have some questions on the
14    environmental assessment.
15              MR. MACKIE:  Yes, thank you, Mr. Vogel.  I
16    think we all have questions on the environmental
17    assessments, but I would like that to be dealt with at
18    one time on the transcript.  And do your questions
19    satisfy your team as a whole?
20              MR. VOGEL:  Yes.
21              MR. MACKIE:  Thank you.  Mr. Card, I think you
22    indicated you would prefer to go before Board staff.
23              MR. CARD:  Yes, thank you.  I do have a few
24    questions.  They relate to the answers to the
25    interrogatories from the Township of Dawn-Euphemia.  The
26    first is Number 7.  The question asked how Union would
27    go about obtaining authorization for the use of
28    municipal road allowances.  The answer was that the

                                                          117
    
 1    existing franchise agreements permit Union to use the
 2    road allowances.
 3              Is it Union's position that no further
 4    permissions are needed then from the council?
 5              MR. LESLIE:  Yes, that is correct.
 6              MR. CARD:  The next question is Number 9.  It
 7    relates to the compensation for use of road allowances. 
 8    The question was whether Union would be paying it for
 9    use of road allowances and the answer was that the
10    franchise agreements governed the question of
11    compensation.
12              There is also reference to the payment of
13    taxes.  Is the amount of tax that Union pays any
14    different whether the pipeline is located on or off the
15    road allowance?
16              MR. LESLIE:  I frankly don't know the answer
17    to that question.  The reference to taxes is simply to
18    explain that we do pay substantial taxes to the
19    municipalities.  As you know, Mr. Card, there is an
20    ongoing issue between the utilities and the
21    municipalities as to the payment of user fees.  And my
22    understanding is that that issue will be brought forward
23    in the context of the model franchise agreement which is
24    currently under discussion.
25              MR. CARD:  So the contention is not there is
26    some additional amount paid in taxes for the use of road
27    allowance land?
28              MR. LESLIE:  No, I don't think so but I don't

                                                          118
    
 1    know for sure.
 2              MR. CARD:  The next is question 26.  The
 3    question is with reference to the easement that appears
 4    on the drawing and how many pipelines are permitted on
 5    the easement that runs -- that abuts and runs parallel
 6    with the west side of the Dawn Valley road allowance.
 7              MR. HALEY:  Typically our easements only allow
 8    one pipeline within them, but our department has not
 9    been asked to look into easement possibilities along
10    that road.  So I can't say that for sure in relation to
11    the easement that is there.
12              MR. CARD:  May I ask you to do that, please,
13    find out whether or not it is possible to locate another
14    pipeline, specifically MPS 16 pipeline on that easement?
15              MR. HALEY:  My guess is that it would not be
16    because it would be a one pipeline easement.  But I can
17    check that when I am back in the office.
18              MR. CARD:  Thank you.  That is what I am
19    after.
20              And the last question pertains to number 31. 
21    Union had indicated in its prefiled evidence that it
22    proposed to comply with local bylaws.  And the question
23    was what local bylaws applied in this municipality would
24    be complied with.
25              The answer is referenced to a decision of the
26    Ontario court, I guess it was the Supreme Court at that
27    time.  I gather that no by-law has been identified which
28    Union would comply with in either Dawn or Euphemia.

                                                          119
    
 1              MR. LESLIE:  Well, we will comply with
 2    speeding by-laws.
 3              No, I think the intention there was to
 4    indicate that we would comply with by-laws and there are
 5    no doubt many of them, except to the extent that the
 6    principals in the township of Dawn, would apply that as
 7    to the extent that the by-law would frustrate the rights
 8    that Union otherwise has by virtue of the Board's --
 9    however they deal with this application.
10              MR. CARD:  Had Union identified the by-laws
11    that might --
12              MR. LESLIE:  Might frustrate --
13              MR. CARD:  -- be applicable?
14              MR. LESLIE:  No, no.  I am sure there are none
15    that would frustrate but the -- no, ones that might be
16    applicable to the manner in which Union conducts its
17    activities, for example, in constructing on-road
18    allowances.
19              MR. CARD:  I have not -- I do not know whether
20    they have or not.  I don't think -- I don't know.
21              MR. LESLIE:  Thank you.  Those are all my
22    questions.
23              MR. MACKIE:  Thank you, Mr. Card.
24              Are there other questions of this Panel before
25    Board staff commences?
26              MR. KLAPAK:  I have one for Mr. Haley.
27              MR. MACKIE:  Yes, go ahead, please.
28              MR. KLAPAK:  I would like to know what the

                                                          120
    
 1    setback is for the pipeline for residential housing, the
 2    distance.
 3              MR. HALEY:  That is probably a question that
 4    Mr. Mallette would have been able to answer better.  I
 5    am sorry, Mr. Klapak, but I understand that the
 6    guidelines are 20 metres.
 7              MR. KLAPAK:  Twenty (20) metres.
 8              If the residence falls within that distance,
 9    is there a contingency that Union takes into
10    consideration to upgrade the pipe or, I don't know, do
11    they have an alternative plan to deal with that?
12              MR. HALEY:  That would be definitely out of my
13    jurisdiction.
14              MR. KLAPAK:  No further questions.
15              MR. MACKIE:  Thank you, Mr. Klapak.
16              Are there any other questions for any parties?
17              Right.  Thank you, Panel.
18              Welcome particularly to David Lowe who was
19    being characterized yesterday as the font of the answer
20    of all questions.
21              I am interested that Mr. Lowe has been
22    referring questions back to Mr. Mallette but we will --
23    I hope that won't happen later on.
24              Panel, would you turn to the response to Board
25    Staff Interrogatory 119, please, and this deals with the
26    relocation of the line along Aberfeldy Line on a private
27    easement.
28              Mr. Haley, is this your area?

                                                          121
    
 1              MR. HALEY:  To the extent that we, our
 2    department, would approach the land owner to acquire the
 3    easement, it would be in my area.  Mr. Mallette has
 4    provided the answer to the interrogatory.
 5              MR. MACKIE:  Yes, he has.
 6              When was the decision made to place the NPF
 7    16-inch line along Aberfeldy Line?
 8              MR. HALEY:  It is my understanding that that
 9    was identified in the environmental assessment by Mr.
10    Payne, perhaps, could address that more accurately.
11              MR. MACKIE:  Mr. Payne.
12              MR. PAYNE:  Yes.  As found in the Gore &
13    Storrie -- CH2M Gore & Storrie Report, that is the
14    decision process laid out in there as to when the
15    Aberfeldy Line section became final in the route
16    selection process.
17              At that point, Mr. McNally had reviewed the
18    area previous to that and indicated to the consultant
19    that the use of road allowance in that area would not be
20    available due to construction constraints, those of
21    which would be probably best detailed by him and I
22    believe he did that this morning.
23              But when the route selection was complete,
24    then the easement for Aberfeldy Line was identified, I
25    guess, at that point.
26              MR. MACKIE:  So originally the plan was to
27    place that section of line in the road allowance but as
28    a result of the detailed environmental assessment

                                                          122
    
 1    process, these road restrictions were identified and
 2    then it was decided to move it off the road allowance
 3    onto a private easement.  Is that correct?
 4              MR. PAYNE:  Mr. McNally had given the
 5    information to the environmental consultants that the
 6    road allowance would not be available at that location
 7    and that was laid out in their decision-making process.
 8              MR. MACKIE:  Now, would you turn then to
 9    section 8, schedule 1, which contains a list of the
10    easement requirements.
11              First of all, can you tell me whether this
12    schedule includes the easements required along the
13    Aberfeldy Line, and if so, would you take me to them?
14              MR. HALEY:  Yes, it does.
15              MR. MACKIE:  Thank you.
16              And they are?
17              MR. HALEY:  On page 4, Mills Land Farm Inc.
18              MR. MACKIE:  Just a moment, Mr. Haley.  I have
19    just got to page 4 of 4, and beginning with the name and
20    address, which is the first party?
21              MR. HALEY:  There is only property involved.
22              MR. MACKIE:  Mills --
23              MR. HALEY:  Mills Land --
24              MR. MACKIE:  -- Farms Inc.
25              MR. HALEY:  -- Farms Inc.
26              MR. MACKIE:  Yes, that is the only property?
27              MR. HALEY:  That is the one.
28              MR. MACKIE:  Thanks very much.

                                                          123
    
 1              MR. HALEY:  You are welcome.
 2              MR. MACKIE:  Now, in response to Board Staff
 3    Interrogatory 120, if you would turn to that now.
 4              Mr. Haley, this is one of your responses.
 5              Union was asked to review the status of the
 6    easement agreement, and it appears as of the date of
 7    that answer no easement had been attained or options to
 8    purchase an easement had been obtained.  Is that fair?
 9              MR. HALEY:  That is a correct statement.  It
10    might be helpful if I elaborate on --
11              MR. MACKIE:  Yes, please do.
12              MR. HALEY:  -- the negotiation status and what
13    has occurred between Union and the landowners.
14              MR. MACKIE:  Well, I was going to get to that,
15    Mr. Haley.
16              MR. HALEY:  Okay.  I will wait then.
17              MR. MACKIE:  Why don't you wait a second but I
18    want to give you every opportunity to explain the
19    situation.
20              At what point in the application process, and
21    by the application process I am referring to Union's
22    application to the Board pursuant to the Ontario Energy
23    Board Act, does Union sit down and seriously commence
24    face-to-face negotiations with land owners from whom it
25    needs to negotiate such easements?
26              MR. HALEY:  I think the best answer to that
27    question is that it varies from project to project.
28              MR. MACKIE:  Well, let's talk about this

                                                          124
    
 1    project.
 2              MR. HALEY:  In this project, and this is where
 3    I may get into the status of negotiations.
 4              I have to define three types of easements that
 5    are involved in this project.  The first six easements
 6    identified on the landowner's schedule, Schedule 1 in
 7    section 8 --
 8              MR. MACKIE:  Sorry, the first six properties?
 9              MR. HALEY:  Yes.
10              MR. MACKIE:  Yes.
11              MR. HALEY:  Those are the properties for the
12    easement properties for the NPS-10 Bluewater Line.
13              MR. MACKIE:  Yes, I recognize that.
14              MR. HALEY:  Although I was not directly
15    involved myself, there was a meeting held in July with
16    those landowners and at that time, the landowners were
17    advised of the -- in general terms of the construction
18    practices, environmental aspects and a discussion was
19    had concerning the route across their property.
20              Subsequent to that, recently we have met with
21    those six landowners.  Actually, five were able to
22    attend, and we delivered a package to these six, then I
23    followed up with a phone call and talked to that
24    gentleman.
25              We had a meeting, at which time we presented
26    the route across their property.  The understanding we
27    have is that it captures the location that they would
28    like to see the NPS-10 transmission line follow their

                                                          125
    
 1    property.
 2              We presented them with the various documents
 3    that would be involved in the project, together with the
 4    letter of understanding.  They have taken those away for
 5    review, and we plan to meet with those landowners again
 6    early in the New Year to discuss the aspects related to
 7    their individual properties.
 8              The second group of easements involved are
 9    three easements, and I am going to have to turn to that
10    schedule myself.
11              MR. MACKIE:  Could you give us the names of
12    those individuals?
13              MR. HALEY:  Actually, maybe a better place to
14    look would be the answer to Interrogatory No. 74, to the
15    schedule of landowners attached to that interrogatory.
16              MR. MACKIE:  I have a map attached to that.
17              MR. HALEY:  Actually, there is a listing.
18              MR. MACKIE:  There is, thank you; page 1 of 2.
19              MR. HALEY:  A listing of 13 properties.  No.
20    8, no. 9 and no. 11, the situation there is that a
21    number of years ago the County of Lambton took road
22    widenings along Mandaumin Road.  And for whatever reason
23    those road widenings were not completed on those three
24    properties.
25              In the case of the Corporation of the Township
26    of Moore and Ontario Hydro Services Company we have
27    corresponded with those two organizations and anticipate
28    there will be no problem obtaining the necessary

                                                          126
    
 1    easement.  The land is pretty much designated as road
 2    widening.
 3              No. 8, Franz Turkey Farms, we had an initial
 4    meeting to discuss with them the location of the
 5    pipeline on their property and some of the construction
 6    practices that would happen there.  Recently that
 7    property owner has been presented with a package of
 8    material related to the easement and the letter of
 9    understanding, and so on.
10              You can appreciate that a turkey farm is --
11    well, I didn't when I called.  I should have.  A turkey
12    farm is a very busy place at this time of the year, so
13    he asked if we would wait until January to meet with him
14    again.
15              The other three easements involved are no. 10,
16    no. 12, which we have already discussed, and no. 13. 
17    Those all involve situations where the road allowance
18    conditions made the running line difficult in those
19    locations.
20              We have already talked about the situation on
21    Mills Land Farms.
22              No. 10, the Persichili property, there is a
23    high bluff along the edge of the road there.  Mr. Ken
24    Jeans of the pipeline project's group and myself have
25    met with the Persichilis and they are quite receptive to
26    our having an easement there.  They will be reviewing
27    the materials and we will be meeting with them again
28    early in the New Year.

                                                          127
    
 1              Finally, the Ward property is in the very end
 2    of the Oil City Pool section.  We have had two meetings
 3    already with that landowner:  an initial meeting to
 4    determine whether they had any problems related to
 5    granting an easement, and a subsequent meeting to
 6    present documents, et cetera.  Those negotiations are
 7    going quite well.
 8              MR. MACKIE:  Thank you, Mr. Haley.
 9              Could we just back up for a moment.  You lost
10    me with the three properties from whom Union requires an
11    easement associated with the township road widening.
12              The first of those is Franz Turkey Farms
13    Limited.
14              MR. HALEY:  That's right.
15              MR. MACKIE:  The second is the Corporation of
16    the Township of Moore.
17              MR. HALEY:  Yes.
18              MR. MACKIE:  And which is the third?  I had
19    assumed that it was property no. 10.  But that is not
20    so.
21              MR. HALEY:  No.  It is no. 11, Ontario Hydro
22    Services Company.
23              There is an Ontario Hydro corridor that goes
24    through there, and for some reason the road widening was
25    never completed with Ontario Hydro in the past.
26              MR. MACKIE:  Thank you for that summary of the
27    discussions and negotiations for pipeline easements.
28              I sense from your response that what I refer

                                                          128
    
 1    to as negotiations and what you have responded to is
 2    somewhat a little different, Mr. Haley.
 3              What you have provided is a response as to the
 4    information that Union Gas has provided the landowners
 5    in question.
 6              My concern is to establish whether you, as an
 7    agent of Union Gas, or Mr. Wilton, or somebody else in
 8    the Lands Department who has actually sat down face to
 9    face and made an offer of compensation for the land that
10    Union requires in order to secure these easement.
11              MR. HALEY:  An actual offer of compensation
12    has been made to nos. 1, 2, 3, 4, 5, 6.  I will skip no.
13    7 because Mr. Lowe can better discuss that particular
14    property.
15              No. 8, no. 10, no. 12 and no. 13.
16              MR. MACKIE:  So Union has made an offer and
17    you are currently waiting to hear back from the parties
18    in question as to whether the offer is acceptable?
19              MR. HALEY:  In all cases we have indicated
20    that we will follow up in early January and have further
21    discussions with those people.
22              MR. MACKIE:  Thank you.
23              MR. HALEY:  I might add that the compensation
24    package that has been presented is in keeping with the
25    compensation packages in two other projects in Lambton
26    County last year.  We are confident that the packages
27    that we have brought forward are equitable and based on
28    the principles that we currently use in our

                                                          129
    
 1    negotiations.
 2              MR. MACKIE:  Mr. Haley, my concern is not with
 3    regards to whether the offer of compensation is fair,
 4    because I assume that that, rather like beauty, lies in
 5    the eyes of the beholder.
 6              I am concerned, however, that we seem to have
 7    entered into these hearings with Union often requiring
 8    easement agreements from affected property owners and we
 9    reach the actual hearing of the application and the
10    easements have not been secured.
11              I expect that you are aware, Mr. Haley -- and
12    if you aren't, other people in the room are -- that in
13    the past Union has applied for expropriation rights in
14    respect of lands for which it could not negotiate an
15    easement agreement.
16              Are you aware of that, sir?
17              MR. HALEY:  I am aware of it, but I believe it
18    has been a number of years since that has taken place.
19              I might elaborate on the hearing process and
20    the status of land negotiations.  I have been involved
21    in hearings and projects in the past where we have had
22    100 per cent of the land requirements arranged prior to
23    the hearing.
24              Last year I was involved in a project where we
25    had approximately 65 per cent of the land rights secured
26    going into the hearing, and we were successful in
27    obtaining the remaining easements prior to the time of
28    construction.

                                                          130
    
 1              And going back a few years ago we were
 2    involved in a hearing where we had none of the land
 3    rights acquired, but that took place after.
 4              So there is a wide variety of these completion
 5    of agreements going into the hearing process.
 6              MR. MACKIE:  Yes, thank you.
 7              It is my understanding -- and I am just
 8    inviting you to confirm my understanding, or else to
 9    correct it -- that generally Union is reluctant to
10    negotiate an easement agreement prior to a project
11    having been approved by the Board but prefers rather to
12    negotiate an option for the required easement, subject
13    to the Board approving the leave to construct.
14              Have I understood Union's position?
15              MR. HALEY:  I would suggest that that has been
16    the practice the last few years.  There was a time going
17    back further when we acquired easements prior to the
18    hearing.
19              MR. MACKIE:  In this instance, Mr. Haley, are
20    you involved in negotiating for an option for an
21    easement; and if so, will those options be filed before
22    the hearing commences?
23              Or are you negotiating and making an offer
24    outright for the required easement?
25              MR. HALEY:  The offer being made is an option
26    for easement.  To the extent that we have options signed
27    by the time of the hearing, we would be prepared to
28    testify in that regard.

                                                          131
    
 1              MR. MACKIE:  There are a limited number of
 2    landowners affected.  Could I ask you, then, to file
 3    those option agreements as they are executed between
 4    Union and the parties?
 5              MR. HALEY:  The offer being made is an offer
 6    for easement to the extent that we have options signed
 7    by the time of the hearing we would be prepared to
 8    testify in that regard.
 9              MR. MACKIE:  Well, there are a limited number
10    of landowners affected.  Could I ask you then to file
11    these option agreements as they are executed between the
12    Union and the parties?  Is there a problem of
13    confidentiality?
14              MR. HALEY:  I am not sure whether there is. 
15    It is not something we have ever done in the past.
16              MR. MACKIE:  Let's ask Mr. Leslie.
17              MR. LESLIE:  Neither am I.
18              MR. MACKIE:  All right.
19              MR. LESLIE:  Let me start by asking if it
20    would be sufficient if we just gave you notice that we
21    have signed the option agreement and then if you think
22    you need to see it, we can deal with it separately.
23              MR. MACKIE:  No, my issue here is not to
24    explore the level of compensation that has been
25    negotiated between the parties.  That is a private
26    matter as far as Board staff are concerned.  I think the
27    Board would draw some comfort to know that negotiations
28    had reached a sufficient stage to know that option

                                                          132
    
 1    agreements had been negotiated.
 2              MR. LESLIE:  Why don't we just advise you as
 3    they are negotiated.
 4              MR. MACKIE:  Sure.  And I think the
 5    number -- but I am certainly looking, and I am certainly
 6    hoping, by the time we reach the hearing that Union will
 7    have evidence to indicate that it has secured a majority
 8    of the options required.
 9              MR. HALEY:  We will certainly be making our
10    best efforts in that regard.
11              MR. MACKIE:  I am sure you will, Mr. Haley,
12    thank you very much.
13              Now at page 83 of your pre-filed evidence, in
14    paragraph 9, Union states that Union had implemented a
15    comprehensive program to provide landowners, tenants and
16    other interested parties with information regarding the
17    proposed Bluewater, Mandaumin and Oil City Pools, and I
18    assume that this comprehensive policy also includes
19    pipeline matters.  Is that correct Mr. Haley?
20              MR. HALEY:  Yes, it does.  I believe the
21    process -- I know the process begins with the
22    environmental review process and I think probably
23    Mr. Payne can elaborate to a larger extent in that
24    regard.
25              MR. MACKIE:  Well, I am not sure that I need
26    that elaboration, but I wanted to ask you about Schedule
27    3, which provides a schedule of landowner contacts, and
28    in particular can you tell me whether Item 4 on that

                                                          133
    
 1    schedule has occurred yet, which requires a lands agent
 2    to visit all affected landowners?
 3              MR. HALEY:  Again, I guess I would refer you
 4    to the attachment to No. 74.
 5              MR. MACKIE:  Yes?
 6              MR. HALEY:  In terms of the six properties,
 7    the form of our involvement with those six landowners
 8    beyond the environmental stage has involved a meeting
 9    that I alluded to earlier which was attended by
10    Mr. Payne, Mr. Lowe, Mr. Ken Jeans from the Pipeline
11    Projects Group and myself and one other land agent and
12    we outlined many of the items.  Subsequent follow-up
13    meetings will be held in January.
14              As for No. 8, a meeting was held between
15    Mr. Gerrhad Franz and Mr. McNally and Mr. Payne and I
16    and we discussed the construction matters related to
17    that property.  No. 10, the Persichillis, Mr. Ken Jeans
18    have met with the Persichillis and discussed the
19    construction matters related to that property.
20              No. 12, Mills Land Farms, Mr. Jeans and I have
21    met with them, and No. 13, Mr. Ward was a landowner on
22    the Dawn Enniskillen project, EBLO 267 this summer, and
23    Mr. Donahue, the landowner relations agent on that
24    project has met two or three times with the Ward's to
25    discuss the construction aspects of the project and
26    presented our offer.
27              MR. MACKIE:  All right.  Thank you.
28              So some of those meetings, those face-to-face

                                                          134
    
 1    meetings have occurred, but the first group you
 2    identified, I think you explained those face-to-face
 3    meetings -- I call these face-to-face meetings, I hope I
 4    have characterized that correctly -- are now scheduled
 5    for January.  Is that correct?
 6              MR. HALEY:  That is right.
 7              MR. MACKIE:  Okay.  Thank you.
 8              Now you have provided, in response to
 9    Interrogatory 123, a letter of understanding, and I
10    guess I want to ask you about a couple of matters which
11    are addressed in this letter.
12              Does this letter of understanding, by the way,
13    go to all landowners affected within the proposed DSAs?
14              MR. HALEY:  This LOU is for the transmission
15    pipeline landowners.
16              MR. MACKIE:  Only?
17              MR. HALEY:  That is right.
18              MR. MACKIE:  We have some difficulty at the
19    Ontario Energy Board differing the status of gathering
20    lines as being separate from transmission lines.  It is
21    really a legal matter, if you like.
22              Would this letter of understanding also go to
23    landowners who will have gathering lines constructed on
24    their property?
25              MR. HALEY:  In the case of the first property
26    in Bluewater, Mr. Hardy has both gathering lines and
27    transmission lines and to the extent that the
28    transmission line is on his property, he will receive a

                                                          135
    
 1    letter of understanding.
 2              MR. MACKIE:  But otherwise Union uses this
 3    solely for property owners impacted by what you classify
 4    as a transmission line?
 5              MR. HALEY:  That is right.
 6              MR. MACKIE:  All right.  Thank you, sir.
 7              Now Section 5 of this agreement deals with
 8    landrights.  That is found at page 9 and the second
 9    paragraph indicates that:
10                   "Consideration for landrights will be
11                   based on appraised market values of the
12                   affected lands".  (As read)
13              Have these land appraisals been completed yet,
14    Mr. Haley?
15              MR. HALEY:  Yes, they have.
16              MR. MACKIE: Thank you.
17              And there is a reference under Section 8 to
18    tree replanting -- actually, that is not the correct
19    section, on page 8.  And I am interested in the section
20    which reads:
21                        "Landowners whose wood lots are to
22                        be cleared may apply in writing to
23                        the company should they wish to
24                        participate in this program".  (As
25                        read)
26              And the program is the replanting policy. 
27    What happens if a landowner does not wish to have the
28    trees replanting on his or her property?  Is an

                                                          136
    
 1    equivalent area then replanted on land made available by
 2    the county of Lambton?
 3              MR. HALEY:  Maybe this would be a good
 4    opportunity for me to explain the concept of the LOU. 
 5    There is input from pipeline projects, there is input
 6    from environmental people and therefore I am going to
 7    pass that question off to Mr. Payne.  That would be his
 8    area.
 9              MR. MACKIE:  That is fine.  Yes, thank you,
10    Mr. Haley.  Mr. Payne.
11              MR. PAYNE:  It certainly is our preference to
12    have tree replanting done right on site where any
13    removal would be and we would have discussions in that
14    manner with the landowner.  Should the landowner not
15    request the trees go back there, we would deal with that
16    landowner to have the trees planted somewhere on his
17    property in that area.
18              Should the landowner not want the trees at
19    all, we would look for a suitable location to plant
20    those trees within Lambton County.
21              MR. MACKIE:  But what would be a suitable
22    location?  That is what I need some help with, Mr.
23    Payne.
24              MR. PAYNE:  There is different sources
25    available for that sort of thing.  The Conservation
26    Authority, the St. Clair Conservation Authority is a
27    good source of locations for tree planting.  They have
28    some ongoing programs of that nature that we could link

                                                          137
    
 1    into.
 2              MR. MACKIE:  Thank you.  And, Mr. Haley, just
 3    a couple of questions of clarification concerning this
 4    agreement.  Under item 6.2 which deals generally with
 5    crop compensation and I know that can be quite
 6    complicated.  Can you just tell me what constitutes a
 7    specialty crop?  On page 13, option 2 does not apply to
 8    specialty crops.
 9              MR. HALEY:  I think we would consider
10    something like tobacco or tomatoes or something along
11    that line.
12              MR. MACKIE:  Ginseng.
13              MR. HALEY:  I would suspect, yes.
14              MR. MACKIE:  Thank you.
15              And this is a must ask question, on page 16
16    another question of clarification.  Testing for soy bean
17    cyst nematode.
18              MR. HALEY:  This is a provision that was in
19    the Dawn-Enniskillen EBLO 267 letter of understanding
20    that has been brought across to the letter of
21    understanding for this project and I'm not sure whether
22    Mr. Wachsmuth or Mr. Payne wish to address that.
23              MR. MACKIE:  I take it that it is a crop pest
24    of some type?
25              MR. WACHSMUTH:  That is correct.
26              MR. PAYNE:  Yes, that is correct.  It is, if
27    you will, invading that part of Ontario from the United
28    States and the concern is that we be cognizant if it is

                                                          138
    
 1    in the field because it can be transported out of the
 2    field.
 3              MR. MACKIE:  So it is a danger when soil is
 4    being moved from one location to another?
 5              MR. PAYNE:  That is correct.
 6              MR. MACKIE:  Thank you for that explanation,
 7    Mr. Payne.
 8              And moving on now to section 9, if I can find
 9    it in the prefiled evidence, which deals with the
10    historic -- and that appears at the beginning of Volume
11    II of the prefiled evidence.
12              Mr. Lowe, I think these questions might be for
13    you.  They are generally related to the broader question
14    of compensation.
15              Now, that page you have indicated that Union
16    is proposing to offer a compensation, a combined storage
17    rental figure of $63.53, and my understanding is that
18    that is equal to the amount paid by Union to all other
19    lessors within the existing 17 storage pools.  Am I
20    correct?
21              MR. LOWE:  That is correct.  Just a point of
22    clarification.  That has been expressed in 1999 dollars.
23              MR. MACKIE:  That is correct.
24              MR. LOWE:  The Year 2000 payments will be
25    issued shortly and there is an increase to those numbers
26    to account for the inflation.
27              MR. MACKIE:  And you have also, in response to
28    a Board staff interrogatory, confirmed, I believe, that

                                                          139
    
 1    if your current negotiations for the Lambton County Gas
 2    Storage Association results in a higher level of
 3    compensation, that same offer will be made available to
 4    the lessors in these three pools.  Have I stated that
 5    understanding correctly?
 6              MR. LOWE:  Do you have the -- happen to have
 7    the interrogatory reference?
 8              MR. MACKIE:  I thought you would ask me that
 9    and the answer is I don't.  But let's just spend a
10    moment and find it.
11              It was actually referred to earlier by
12    Mr. Vogel.
13              MR. VOGEL:  It is 126.
14              MR. MACKIE:  One-twenty-six (126).  Thank you.
15              MR. LOWE:  We are not currently negotiating
16    with Lambton County Gas Storage Association.  We are
17    still in negotiations with the representative committee
18    of the landowners.
19              MR. MACKIE:  Oh, I see.  In the response you
20    say:
21                   "The Lambton County Gas Storage
22                   Association is a newly formed group
23                   representing some of these landowners."
24              So who are the negotiations currently under
25    way with?
26              MR. LOWE:  There was a process to elect a
27    single representative from each of the pools and they
28    formed a committee.  That committee has elected a

                                                          140
    
 1    negotiating team.
 2              MR. MACKIE:  Can you speak up, Mr. Lowe.  I'm
 3    sorry.  I can't hear, sir.  I heard one
 4    representative --
 5              MR. LOWE:  One representative from each of the
 6    pools --
 7              MR. MACKIE:  Yes.
 8              MR. LOWE:  -- is on a committee.
 9              MR. MACKIE:  Yes.
10              MR. LOWE:  And we are currently negotiating
11    with a negotiating team which is a subset of that
12    committee of representatives.
13              MR. MACKIE:  And the one representative from
14    each pool, I am assuming, refers to the existing 17
15    designated gas storage pools and would therefore not
16    have a representative from these three proposed pools on
17    it.  Is that correct?
18              MR. LOWE:  That is correct.
19              MR. MACKIE:  Thank you.  However, it is the
20    last sentence in that interrogatory response to which I
21    wish to direct your attention and to which I referred a
22    moment ago.
23              MR. LOWE:  If the negotiations result in a new
24    amending agreement that same offer will be extended to
25    these three pools.
26              MR. MACKIE:  And it is the amending agreement,
27    I assume, that then deals with the level of
28    compensation?

                                                          141
    
 1              MR. LOWE:  That is correct.
 2              MR. MACKIE:  Thank you.  Now, I want to go
 3    back to the combined storage rental price of $63.53. 
 4    Does this combined storage rental go into effect upon
 5    first injection of gas into each of the three pools?
 6              MR. LOWE:  Yes, under the gas storage lease
 7    agreements we are required to make an offer prior to
 8    injection and then upon injection the payments will
 9    begin for those that have signed.
10              MR. MACKIE:  So if a party hasn't accepted
11    your offer of compensation and injection commences on, I
12    am going to suggest August the 1st as a more plausible
13    date, that party doesn't receive any compensation?
14              MR. LOWE:  We have proposed that we would
15    issue the same form of compensation.
16              MR. MACKIE:  Well, are you going to pay people
17    or lessors who choose not to execute your offer of
18    compensation or are you going to pay them?
19              MR. LOWE:  Yes, we would pay them the same
20    amount.
21              MR. MACKIE:  Whether they had chosen to
22    execute the agreement or not?
23              MR. LOWE:  That is correct.
24              MR. MACKIE:  Thank you.  Now, I am interested
25    in the payment of $13.79 for the P&NG lease rental.  Is
26    it possible, Mr. Lowe, that for some lessees the amount
27    of $13.79 per acre per annum is actually less than the
28    minimum rental they are currently receiving under their

                                                          142
    
 1    existing P&NG leases?
 2              MR. LOWE:  Yes, that's possible.
 3              MR. MACKIE:  It's possible.  And would it
 4    occur?
 5              MR. LOWE:  We know that it currently exists.
 6              What we have done in the past is offered the
 7    people the same package and they have accepted.  One of
 8    the options that we have, if their P&NG is higher, is to
 9    make an adjustment on the storage rate to bring the
10    combined storage rate in at the same level.
11              MR. MACKIE:  I'm was going to get to that in
12    just a moment.  I want to take this one step at a time.
13              The adjustment, of course, to which you refer
14    is a reduction?
15              MR. LOWE:  We focus our attention on the
16    combined rate and keeping that competitive.
17              This is simply an offer.  If the landowners
18    don't want to do with this, that is the proposal that I
19    would have to bring the combined rate in at the same
20    level.
21              MR. MACKIE:  I understand that it is an offer,
22    Mr. Lowe, but I want to make sure that I just understand
23    the components of this offer.  They seem to consist of
24    two parts:  a payment for the P&NG lease, and a payment
25    for the gas storage lease.
26              If a lessee were presently receiving a minimum
27    of $15 per acre per annum under the P&NG lease, would
28    they not view the combined rental payment, then, of

                                                          143
    
 1    $63.53 per acre as being $15 for the P&NG lease and
 2    $48.53 for the gas storage rights?
 3              MR. LOWE:  Subject to a calculator, yes, I
 4    would agree that that would be what they would end up
 5    with.
 6              MR. MACKIE:  All right.
 7              MR. LOWE:  The focus is to maintain the
 8    combined storage rental at a common level.
 9              MR. MACKIE:  I understand that.  I'm not
10    unduly critical of that in the sense that I think that
11    we, at the Board, look to see that all lessors within a
12    pool are receiving an offer of compensation at a common
13    or uniform level as being one aspect of fairness,
14    certainly not the only one but one aspect of fairness.
15              Mr. Lowe, "outside acres" refer to land, as I
16    understand, under a common lease, with part of that area
17    falling inside the DSA with the balance falling outside,
18    and that balance then gets compensated at a different
19    level.  In this case, the offer is $19.09 an acre.  Is
20    that correct?
21              MR. LOWE:  That's correct.
22              MR. MACKIE:  Is that for -- it is -- it is for
23    a combined P&NG and gas storage lease arrangement.
24              MR. LOWE:  We actually have separate
25    documents, but it is for the combined payment between
26    the two leases.
27              MR. MACKIE:  So what payment, then, is offered
28    where a landowner or where Union holds a P&NG lease on a

                                                          144
    
 1    property, part of which falls within and part of which
 2    falls outside the DSA, but not the gas storage lease? 
 3    What level of payment do you offer then?
 4              MR. LOWE:  Could you repeat the question?  I
 5    wasn't quite --
 6              MR. MACKIE:  Yes.
 7              I understand the concept of the payment for
 8    outside acres, and the payment identified here is for a
 9    combined P&NG and gas storage lease.  What happens if
10    the lessor in question has a P&NG lease with Union but
11    no gas storage lease?  What is the payment offered then
12    for outside acres?
13              MR. LOWE:  Okay.  I see.  Yes.
14              The way we have set up our leasing system is
15    to have $13.79 assigned to the P&NG rental and the
16    balance to be assigned to the storage lease payment.
17              MR. MACKIE:  Right.  So there are two
18    components to that also.  So $13.79.  And the balance
19    would be $6.40?
20              MR. LOWE:  I believe that is the way we do it,
21    yes.
22              MR. MACKIE:  Okay.  Thank you, Mr. Lowe.
23              I'm leaving the question of compensation at
24    this point.
25              Could you refer to paragraph 8 of that
26    prefiled evidence dealing with the Oil City Pool.
27              MR. LOWE:  Yes.
28              MR. MACKIE:  Now, I understand from this that

                                                          145
    
 1    Union acquired its interest in the Oil City Pool from
 2    the Michigan group.  How much did Union pay for that
 3    interest?
 4              MR. LOWE:  You are talking the entire
 5    purchase?
 6              MR. MACKIE:  Yes.
 7              MR. LOWE:  For the Oil City Pool?
 8              MR. MACKIE:  For the Oil City Pool.
 9    --- Pause
10              MR. LOWE:  The figure I have is $988,000.
11              MR. MACKIE:  And that payment was made by
12    Union when, Mr. Lowe?  The year.
13              MR. LOWE:  Actually, it was over a number of
14    years.  Each of the parties to the Michigan group sold
15    out at different periods of time on different pools, so
16    it is very difficult to respond to that.
17              MR. MACKIE:  Fair enough.
18              So that was the aggregate total that Union
19    paid to the various holders of interest in the Michigan
20    pool -- I'm sorry -- in the Oil City Pool?
21              MR. LOWE:  In the Oil City Pool, yes.
22              MR. MACKIE:  Okay.
23              Now, did that payment, then, cover the three
24    gas wells and the production equipment?
25              MR. LOWE:  Yes, it did.
26              MR. MACKIE:  Did that payment also cover the
27    P&NG rights which Union purchased and the gas storage
28    rights?

                                                          146
    
 1              MR. LOWE:  Yes, it did.
 2              MR. MACKIE:  It was a total package?
 3              MR. LOWE:  That's correct.
 4              MR. MACKIE:  Thank you.  That's very helpful.
 5              Now, Mr. Lowe, with that information, we need
 6    to go back together to a response to an interrogatory,
 7    No. 89, that Ms Callingham provided in which she
 8    disaggregated the cost component and provided a DCF
 9    analysis for each of the pools on a standalone basis.
10    --- Pause
11              MR. MACKIE:  Perhaps one of the regulatory
12    staff could help you with that interrogatory.
13              MR. LOWE:  Yes.  I have that.
14              MR. MACKIE:  You have that.  Thank you,
15    Mr. Payne, for providing that.
16              And if you will look under the Oil City Pool
17    with me, which shows a PI of 1.0, and then go down to
18    the column "Breakdown by cost component of", and then
19    for storage rights there is a figure or $920,000.
20              MR. LOWE:  Yes, I see that.
21              MR. MACKIE:  I understood from Ms Callingham's
22    testimony yesterday that that cost figure was provided
23    by yourself.
24              MR. LOWE:  Actually, what happens is when we
25    purchase it it goes into our construction-work-in-
26    progress account.  There would also be some interest
27    accumulated during construction, so we won't be able to
28    reconcile.

                                                          147
    
 1              MR. MACKIE:  Well, I have some difficulty with
 2    that comment, Mr. Lowe.  I would not have thought that
 3    Union's purchase on a speculative basis of assets in a
 4    producing oil or gas pool, which are part of a
 5    non-regulated entity, could be entered as work in
 6    progress -- which is part of rate base, as you and I
 7    very well know.
 8              MR. LOWE:  At the time of the purchase the
 9    pool had been depleted.  So it was being purchased with
10    the expectation of a storage development project which
11    was on the books in 1993, which was deferred due to lack
12    of market.
13              MR. MACKIE:  So had the purchase of these
14    assets then occurred in 1993; that is, the payment of
15    $988,000 had been made by 1993?
16              MR. LOWE:  I can't answer that precisely. 
17    Most of it had, but I can't say 100 per cent that all of
18    it had.
19              MR. MACKIE:  All right.  The question of
20    course that we are interested in is how a total interest
21    payment, or total payment for Union's interest in the
22    Oil City Pool, of $988,000, which you have just
23    confirmed covered the purchase of the three gas wells,
24    the infrastructure, the production equipment, and the
25    P&NG rights, and the gas storage rights -- how did you
26    determine that $920,000 of the $988,000 was the
27    appropriate allocation to storage rights?
28              MR. LOWE:  Storage rights value is a specific

                                                          148
    
 1    negotiation between the parties.  It wasn't an
 2    allocation.
 3              MR. MACKIE:  So the storage rights were
 4    obtained from several partners.
 5              MR. LOWE:  That is correct.
 6              MR. MACKIE:  And the total payment for those
 7    storage rights came to $920,000.
 8              MR. LOWE:  The purchase plus the construction
 9    work in progress costs accumulated to that amount for
10    the purpose of this application.
11              MR. MACKIE:  Do you have source documents that
12    could be filed confirming (1) the acquisition of the gas
13    storage rights, and (2) a calculation of the interest of
14    the CWIP component to reconcile with this figure of
15    $920,000?
16              Is that something that you are, first of all,
17    able to provide and then willing to provide, Mr. Lowe?
18              MR. LOWE:  I would respond by saying the
19    contract documents are commercial contracts, subject to
20    confidentiality.  I think we can provide a split of the
21    CWIP allocation versus the purchase cost.
22              MR. MACKIE:  All right.  Would you then
23    undertake to provide what was the initial purchase price
24    plus the CWIP component to raise it to $920,000?
25              MR. LOWE:  I will have to check with Laura
26    Callingham on the availability of that number, but we
27    will undertake to try and provide that.
28              MR. MACKIE:  I'm sorry, I lost your

                                                          149
    
 1    explanation.
 2              You have to check with Mr. Callingham to
 3    determine what?
 4              MR. LOWE:  She has access to the numbers, so I
 5    will have to get them from her.
 6              MR. MACKIE:  But it was Ms Callingham who
 7    deflected these questions to yourself.  Are we not
 8    running around in circles here?
 9              MR. LOWE:  I think what was deflected to me
10    was the source of the numbers.  She is the one that has
11    the access to the numbers, or the Accounting Department.
12              MR. MACKIE:  Between you, could you sort
13    something out?
14              MR. LOWE:  Yes.
15              MR. MACKIE:  Thanks very much.
16              I just want to move on to tab 2 of your
17    prefiled.  That is one of these maps that shows the
18    status of the existing P&NG rights within the area to be
19    designated.
20              I understand that Union holds all the P&NG
21    rights for the Oil City Pool except for parts of Lot 16,
22    Concession 5 in Enniskillen Township.  Much of that
23    block of land is held by the Crown.
24              Is that correct?
25              MR. LOWE:  I believe the Management Board
26    Secretariat is a division of the Ontario Government.
27              MR. MACKIE:  Yes, it is.
28              MR. LOWE:  Yes.

                                                          150
    
 1              MR. MACKIE:  They are acting as an agent on
 2    behalf of the Crown in this matter.
 3              MR. LOWE:  Yes.
 4              MR. MACKIE:  So you are having discussions
 5    with the Management Board Secretariat with regards to
 6    acquiring a lease on that block of land.
 7              MR. LOWE:  Yes, we are.  They have indicated
 8    to us they have no problem leasing.  It is just a matter
 9    at this point of finding out who the appropriate signing
10    authority is for that property at the moment.  It is
11    under restructuring, I understand.
12              MR. MACKIE:  Yes.
13              MR. LOWE:  They have agreed to lease, and the
14    operating people responsible for that property have
15    agreed to lease.  It is just a matter of --
16              MR. MACKIE:  I don't have a problem with the
17    fact that that land is under negotiation.
18              I wonder, though, if somebody from the
19    Regulatory Affairs group could just confirm for my
20    satisfaction that the Management Board Secretariat was
21    actually served with a notice of Union's application in
22    this case.
23              It would be part of the Affidavit of Service,
24    I suppose, Mr. Leslie.  I don't need that information
25    right now.  I am assuming that it is a straight
26    confirmation.
27              MR. LESLIE:  That's fine.
28              MR. MACKIE:  Thank you very much for providing

                                                          151
    
 1    the details of that part of the Oil City Pool in a
 2    second schedule.  It appears from this enlarged section
 3    that there are also three severed lots, in addition to
 4    the Crown land, that are not under lease.
 5              Is that correct?  There are actually four?
 6              MR. LOWE:  On page 1 of 2, at the bottom of
 7    the Management Board Secretariat property, there is a
 8    property in the name of Brown, in addition to the three.
 9              MR. MACKIE:  Yes.  So there is Brown; there is
10    Cunningham; there is Charlton; and there is MacKenzie.
11              MR. LOWE:  That's correct.
12              MR. MACKIE:  And I assume that you are also
13    negotiating with those property owners?
14              MR. LOWE:  All those landowners have been
15    approached and made offers and they have all refused.
16              MR. MACKIE:  Can you turn over the page to tab
17    3.  That shows the status of the gas storage releases in
18    the Oil City Pool.
19              MR. LOWE:  Correct.
20              MR. MACKIE:  I believe there has been a change
21    in the status as shown on this map, and that is
22    identified in response to Board staff Interrogatory 124.
23              A new gas storage release has been acquired
24    with Mr. George Hoven.
25              MR. LOWE:  Yes, that is correct.
26              MR. MACKIE:  When will that lease be filed as
27    part of this application?
28              MR. LOWE:  I guess I will look to counsel

                                                          152
    
 1    to -- like, we can do it any time.  I think there was
 2    some co-ordination of any and all changes to be done. 
 3    We didn't want to send them in haphazardly.
 4              MR. MACKIE:  That's fine.  I am not critical. 
 5    I just want to make sure we get it.
 6              MR. LOWE:  We will provide it.
 7              MR. LESLIE:  Yes, we will be filing it, Chris. 
 8    I am not sure of the time.
 9              MR. MACKIE:  A package will be fine, Glenn.  I
10    can see you don't want to be sending things in on a
11    day-by-day basis.  As long as it is not over-long;
12    that's all.  There is no issue resulting from that.  We
13    just want to see it.
14              I just want to deal with this table and the
15    information contained in it, Mr. Lowe.  You provided
16    this table, and thank you very much.
17              We are still on the Oil City Pool.  I see that
18    as of December 6th a total of 80.6 acres within that
19    pool remain unleased as far as the gas storage leases
20    are concerned.
21              MR. LOWE:  That is our calculation, yes.
22              MR. MACKIE:  I just want to query this figure
23    of 80.6 acres.
24              If you will look at tab 3 with me -- and I
25    apologize.  My eyes aren't really up to reading all the
26    fine print, but I can see something that looks like
27    Cascadon property, 99.7 acres.
28              MR. LOWE:  Yes.  We are speaking of

                                                          153
    
 1    approximately half of that amount.
 2              MR. MACKIE:  And I see the Brown property at
 3    .94 of an acre, and we have the management board
 4    secretariat at 10.5 acres.  And that all adds up to
 5    quite a bit more than 80.6 acres.
 6              So what has gone wrong with the arithmetic in
 7    this interrogatory response.
 8              MR. LOWE:  I beg your pardon?  What are you
 9    using for Mr. Cascadon?
10              MR. MACKIE:  Ninety-nine point seven acres.
11              MR. LOWE:  There is only about 50 acres of
12    that that is in the DSA.
13              MR. MACKIE:  I have misinterpreted then the
14    land plat information.  You see, where I see Cascadon
15    99.7 acres, he holds 99.7 acres of which how much lies
16    in the DSA?
17              MR. LOWE:  That number of 80 acres, 80.6 acres
18    was generated off the autocad mapping through the
19    polygon calculations.  So it is more precise than I can
20    do, but basically you would subtract four drilling
21    tracks or --
22              MR. MACKIE:  One hundred acres?
23              MR. LOWE:  Oh, sorry.  Two drilling tracks are
24    50 acres off the 99.7, so that would give you 49.7.
25              MR. MACKIE:  Right.
26              MR. LOWE:  The balance of the acreage is
27    confined to the road allowances which you are not going
28    to be able to calculate easily.

                                                          154
    
 1              MR. MACKIE:  No, that is right.
 2              MR. LOWE:  No, it doesn't accept the balance.
 3              MR. MACKIE:  Okay.  Thank you.
 4              MR. LOWE:  And that is similar in each of the
 5    pools.  If you have other questions about
 6    reconciliation, the unseen acreage will always be the
 7    township road allowance.
 8              MR. MACKIE:  As it happens I don't, but I do
 9    have a question about township road allowances.  As part
10    of this table, Mr. Lowe, could you also indicate that
11    each of the pools, the acreage included in the road
12    allowances passing through the pools?
13              MR. LOWE:  I am sure that could be done on the
14    graphics.  What we have done here is we have used that
15    acreage as a back out number.  We are able to generate
16    the polygon as created by the boundaries quite easily
17    and we can do large polygons, but --
18              MR. MACKIE:  You see, the difficulty we have
19    the table is that we have the DSA acres unleased, but
20    the DSA acres unleased also include the road allowances,
21    and at the end of the day I would like the Board to know
22    which lands in private ownership remain unleased, and we
23    can't substantiate that from the table as it is
24    presented.  It is a very useful table.
25              MR. LOWE:  So you would like split out the
26    unleased acreage into what we call typical landowners
27    versus --
28              MR. MACKIE:  Road allowance.

                                                          155
    
 1              MR. LOWE:  -- township holdings.
 2              MR. MACKIE:  Yes.
 3              MR. LOWE:  Okay, I think we can do that.
 4              MR. MACKIE:  If that could be done.  If you
 5    would give that a shot and then get back to us.
 6              MR. LOWE:  Okay.
 7              MR. MACKIE:  Now let's go back to the Oil City
 8    Pool and this table shows that 20.7 per cent of the
 9    acreage remains unleased.  Is that correct?
10              MR. LOWE:  That is the calculation, I believe
11    it is correct.
12              MR. MACKIE:  Yes, that is the calculation. 
13    That is correct.
14              Why should Union be granted authorization to
15    inject, given that Union has not yet acquired the gas
16    storage rights on what I am going to characterize as a
17    significant --
18              MR. LOWE:  I guess, first of all, I don't
19    believe it is a requirement to have all of the lands
20    leased.  That would be point number one.  We do have 80
21    per cent, or close to 80 per cent leased.  We have more
22    than 80 per cent of the wreathe structure included in
23    the lands we do have leased.
24              MR. MACKIE:  I am sorry, Mr. Lowe, could you
25    speak up?  You have more than 80 per cent of the what?
26              MR. LOWE:  Of the wreathe structure or the
27    reservoir rock enclosed by our leases.  Those would be
28    three reasons to grant authority to inject in this pool.

                                                          156
    
 1              MR. MACKIE:  So does Union then attribute more
 2    value to leasing the land over the crest of the wreathe
 3    rather than the balance of the land that it requires
 4    within the DSA?
 5              MR. LOWE:  That argument can be made.  We try
 6    not to treat them any differently, but there is
 7    certainly an argument there.  Previous Board panels have
 8    ruled that the land is of equal value.
 9              MR. MACKIE:  That is correct.  So is Union
10    effectively requesting the Board to expropriate the gas
11    storage rights in favour of Union?
12              MR. LESLIE:  Chris, I don't think the effect
13    of a designation order is to expropriate the gas storage
14    rights as such.
15              MR. MACKIE:  How would describe it?
16              MR. LESLIE:  Well, the effect of the DSA
17    designation in the Act is really to allow Union, or
18    whoever, the utility as it is developing to drill the
19    wells and the other facilities that are required to
20    proceed.  But insofar as there are rights beyond that,
21    that can be characterized as storage rights, they are
22    not really effective, I don't think.
23              MR. MACKIE:  Well, I think you are right to
24    the extent that my proposition was based on the
25    establishment of the DSA.  If I put that proposition in
26    terms of if Union is granted authorization to inject,
27    store and remove gas from the pool, does that not
28    effectively expropriate the gas storage rights?

                                                          157
    
 1              MR. LESLIE:  Well, I think with the
 2    qualification, effectively, because I am not sure what
 3    is left after the injection withdrawal store mandate has
 4    been granted, I am not sure what would be left to deal
 5    with that could be characterized as storage rights.
 6              My only point was that the effect of the
 7    designation, if there is anything left, it is not
 8    expropriate.
 9              MR. MACKIE:  And I agree with you that it is
10    not the designation per se that creates the
11    expropriation.  I would suggest that the Board order, if
12    Union is successful, in granting it authorization to
13    inject --
14              MR. LESLIE:  In theory you don't really, in
15    theory, have to get storage leases at all.  You could do
16    this just on the basis of the designation and the
17    payment of compensation.
18              That suggests to me that the designation in
19    itself does not expropriate the storage rights in their
20    totality, although you are right.  If you have the right
21    to inject withdrawn storage, you probably go about all
22    that is of value that could be described as storage.
23              MR. MACKIE:  Thanks for those --
24              MR. LESLIE:  Sorry.
25              MR. MACKIE:  But that was helpful and I thank
26    you.  Certainly this is a technical conference.
27              MR. VOGEL:  Mr. Mackie in that vein if I could
28    just interject myself.  Obviously leases are relevant in

                                                          158
    
 1    that they indicate an agreement between Union and
 2    affected landowners as to the basis upon which rights
 3    are to be taken.  Absence of leases, therefore, is a
 4    significant element in my submission and goes directly
 5    to public interest.
 6              MR. MACKIE:  Yes, thank you, Mr. Vogel.
 7              Now panel I want to revisit the Phase I
 8    application for a brief moment and in the Black Creek
 9    Pool, I recollect, the boundaries of that designated
10    storage area were broadened during the pre-hearing phase
11    of the application and I recollect that Union did not
12    hold the gas storage rights on three properties, two of
13    which in particular caused some critical examination in
14    that proceeding; namely, for the Higgs property and also
15    for a property held by Leonard and Debra MacMurphy.  Are
16    you aware of that situation, Mr. Haley?
17              MR. HALEY:  I believe Mr. Lowe can better
18    answer that.
19              MR. MACKIE:  Mr. Lowe.
20              MR. HALEY:  I was not involved.
21              MR. MACKIE:  You were not.
22              MR. LOWE:  Yes, I am not currently involved
23    with the actual discussions but I am familiar with the
24    situation.  I can try and be helpful.
25              MR. MACKIE:  No, thanks.  Has Union acquired
26    the gas storage releases for those two properties yet?
27              MR. LOWE:  As I said, I am not currently aware
28    of the state of discussions on those properties.  I am

                                                          159
    
 1    fairly positive that the MacMurphy property is not.  I
 2    am not certain on the Higgs.
 3              MR. MACKIE:  And it goes without saying,
 4    Mr. Lowe, that you would not know then when Union last
 5    met to offer or negotiate the terms of the gas storage
 6    lease with those respective landowners?
 7              MR. LOWE:  No, I'm not.
 8              MR. MACKIE:  Is Mr. Wilton available in the
 9    room.  He might be able to help us with this line of
10    questioning?
11              MR. LESLIE:  I might be able to help you
12    actually, Chris.
13              MR. MACKIE:  Okay, Glenn.
14              MR. LESLIE:  I had a letter from Mr. Vogel
15    about this and I got some information.  Mr. Wilton
16    appears to have spoken to Mr. MacMurphy in September. 
17    That was a follow up.  He spoke to Mrs. MacMurphy to the
18    delivery in December of '98, a package of documents
19    which constituted Union's offer to lease petroleum and
20    natural gas and storage.  That was, I guess, he was
21    following up in September about that and I have a letter
22    from Mr. Vogel's office, to which I should have
23    responded earlier, but I haven't had time.  It is dated
24    December the 2nd.
25              So it would appear from what is available to
26    me that there isn't a lease but that the MacMurphys do
27    have all the documents that constitute the offer that
28    Union was making and there was some discussion of that

                                                          160
    
 1    in September of this year.
 2              MR. MACKIE:  That was September of '99 you are
 3    referring to, Glenn, obviously?
 4              MR. LESLIE:  Yes.
 5              MR. MACKIE:  Thank you.  And I might add, I
 6    didn't realize that Mr. Vogel was acting for
 7    Mr. MacMurphy in this matter and I don't wish to trample
 8    around on his client's interests in that case.
 9              Do you have any information concerning the
10    status of the Higgs' property?
11              MR. LESLIE:  No, I do not but I can find out
12    for you.
13              MR. MACKIE:  Okay.  Thank you.
14              MR. VOGEL:  Mr. Mackie, I don't regard these
15    questions as trampling around and if it is of any
16    interest to you, as Mr. Leslie has indicated, the offer
17    that was made prior to the hearing of the Board in the
18    spring of 1999 and I can advise the Board through you
19    that there have been no negotiations with Mr. MacMurphy
20    at this time since the hearing.
21              MR. LESLIE:  Well, to be fair I don't think
22    Mr. MacMurphy has initiated negotiations with us either.
23              MR. VOGEL:  Well, I think my letter was in
24    follow up to the undertaking to be given by Union at the
25    Phase I hearing, Mr. Leslie, if my letter is an issue
26    here.
27              MR. LESLIE:  No, your letter simply said he is
28    still waiting for Union to fulfil its undertaking.

                                                          161
    
 1              MR. VOGEL:  That is correct.
 2              MR. LESLIE:  To negotiate a satisfactory
 3    arrangement with him.  And the note I had indicates that
 4    there was some contact in September.  As far as I am
 5    aware neither side has followed up since then.  Maybe we
 6    better get at it.
 7              I think Union's position, Paul, if it is in
 8    any doubt and this is probably not the right place for
 9    this, is that the offer he has got is their offer.
10              MR. VOGEL:  The answer to the question is they
11    don't have lease rights on MacMurphy's property.
12              MR. MACKIE:  But you see the reason I raised
13    this and the difficulty I have is that we are entering a
14    situation where Union is requesting from the Board
15    authorization to inject, and it has not yet secured gas
16    storage leases for 20 per cent of the acreage in the Oil
17    City pool.
18              Now, I recollect very clearly the evidence of
19    Mr. Wilton given in Phase I that as soon as Mr. Higgs
20    returned from his hockey tour in northern Ontario,
21    Mr. Higgs was ready to negotiate and to sit down and
22    Union would be there executing a gas storage lease.
23              MR. LESLIE:  Well, that may have happened,
24    Chris.  I don't know.
25              MR. MACKIE:  Sure.  Fair enough.  And we don't
26    know if that has happened.  Let's hope that it has.  We
27    don't know.
28              But similarly, in the MacMurphy case, and,

                                                          162
    
 1    Glenn, your argument at the end which I felt was very
 2    fairly stated, I have no difficulty with what you
 3    stated, was that with respect to the MacMurphys, and I
 4    am reading from page 538 of the transcript from
 5    Wallaceburg, you stated that:
 6                   With respect to the MacMurphys there is
 7                   an understanding reached and that has
 8                   been filed and that refers to the letter
 9                   agreement.  Compensation hasn't been
10                   agreed to.  That is also true of the
11                   Higgs.  Negotiations with both are
12                   contemplated."
13              Now, that is as far as you went.  But I think
14    the Board expects when we get these types of assurances
15    from witnesses on the stand that there is going to be
16    some urgency, that Union will start these negotiations.
17              MR. LESLIE:  Chris, let me say this.  Look, I
18    mean what you do is you make the company hostage to
19    people, and I don't mean to centre -- in any way centre
20    out the MacMurphys.  But there is an offer that has been
21    made to the MacMurphys.  Telephones work both ways.
22              If people want to negotiate, fine.  But the
23    policy of the company has been and this is common
24    knowledge that once compensation is decided that same
25    offer is made to everyone else.  And there are some
26    landowners who do not want to reach agreements and it
27    just isn't possible.
28              I mean you can lead a horse to water but you

                                                          163
    
 1    can't make it skate.  And there is an offer in front of
 2    the MacMurphys.  Mr. Vogel is a very competent counsel. 
 3    Apart from anything else the Act provides that if these
 4    people are not satisfied, then they can apply to the
 5    Board to have their compensation adjudicated.  But Union
 6    cannot force people to enter into agreements with them.
 7              MR. MACKIE:  I think that is fair.  It takes
 8    two to tango.
 9              Could we just confirm then for the record, Mr.
10    Lowe, please that whether agreements have been executed
11    with the Higgs or not, that both the Higgs and the
12    MacMurphys are receiving compensation at the level that
13    was offered to the other lessors within the Bluecreek
14    pool?
15              MR. LOWE:  I can assure you that the
16    compensation is equal.  They sign a letter of agreement
17    annually with us to receive an equal payment treatment.
18              MR. MACKIE:  And they are receiving that
19    compensation --
20              MR. LOWE:  Yes.
21              MR. MACKIE:  -- along with everybody?
22              MR. LOWE:  That is my understanding.
23              MR. MACKIE:  Thank you.  I will leave it at
24    that.
25              MR. LOWE:  As far as lease agreements, I can't
26    speak to that.
27              MR. MACKIE:  All right.  Thank you.
28              Now, I want to move on to the Mandaumin pool,

                                                          164
    
 1    Mr. Lowe.  We are still with your prefiled evidence and
 2    the question is how much did Union pay to acquire the
 3    assets of the Mandaumin pool.  And I want to then take
 4    you back, as I did before, to Interrogatory Response
 5    No. 89.
 6              MR. LOWE:  The answer to that question is
 7    $589,000.
 8              MR. MACKIE:  And as before, that would have
 9    included the wells, the pipelines, the infrastructure,
10    the P&NG rights and the gas storage leases that were
11    outstanding?  It was a package purchase?
12              MR. LOWE:  That is correct.
13              MR. MACKIE:  Yes, okay.  Thanks.
14              And in this instance Ms Callingham has
15    included 610,000 for the gas storage rights in this pool
16    and you will see that in response to Interrogatory 89.
17              MR. LOWE:  I have it as Interrogatory 36, but
18    okay, I see where you are going with that.  Yes.
19              MR. MACKIE:  Have I stated that figure
20    correctly?
21              MR. LOWE:  Yes.
22              MR. MACKIE:  So we clearly need some
23    explanation, a total purchase price of $589,000.
24              MR. LOWE:  The answer is the same as I
25    provided earlier, Mr. Mackie.  The difference is in an
26    IDC construction work in progress.
27              MR. MACKIE:  Could you also undertake to
28    provide the equivalent purchase price for the gas

                                                          165
    
 1    storage rights in that pool plus the CWIP impact?
 2              MR. LOWE:  The response would just be the
 3    difference between the two numbers.
 4              MR. MACKIE:  Yes.
 5              MR. LOWE:  Yes.
 6              MR. MACKIE:  Okay.
 7              MR. LOWE:  Do you still need to see that?
 8              MR. MACKIE:  I beg your pardon?
 9              MR. LOWE:  Do you still need to see that?
10              MR. MACKIE:  Yes, please.  Yes, you could
11    include that with the previous undertaking.  We may as
12    well have all this information together.
13              Now, if I can just take you back to your
14    response to Interrogatory 124, Mr. Lowe, and we are
15    looking at the Mandaumin Pool.  I will learn to
16    pronounce that word one of these days. There are 30
17    acres that remain unleased.  My understanding is --
18              MR. LOWE:  I apologize.  I think I am the only
19    one that requires all five binders.
20              Yes.
21              MR. MACKIE:  We are on Interrogatory 124 and
22    we are talking about the Mandaumin Pool.  There are 30
23    acres that remain unleased and do those 30 acres refer
24    to the road allowance?  There are two roads
25    crisscrossing the pool.
26              MR. LOWE:  Yes, that should represent the
27    difference.
28              MR. MACKIE:  Can you just explain this to me

                                                          166
    
 1    as a general matter.
 2              Can you just remind me of the explanation as
 3    to why road allowances are not considered under lease
 4    for the purpose of payment?
 5              MR. LOWE:  We contract with the counties and
 6    the townships for a lease, gas storage lease agreement
 7    on the roads.
 8              MR. MACKIE:  So why don't they refuse
 9    compensation?
10              MR. LOWE:  They do.  Those negotiations have
11    been under way for some time now.  As you can imagine,
12    there is quite a complicated land description required
13    for -- to count for road widenings and things like that
14    that have taken place over the years.
15              In this case, we are at a four-township corner
16    so there is actually the counties of Lambton, Moore
17    Township, Plympton Township and the City of Sarnia
18    involved.  So all those property descriptions have to be
19    segregated out and presented in a lease agreement to the
20    various townships.
21              MR. MACKIE:  Fair enough.  So at the end of
22    the day when the road and the property descriptions are
23    being sorted out, and there is a meets and bounds
24    matter, it must be quite complicated.
25              The townships respectfully will receive the
26    same level of compensation that we discussed earlier
27    that has been offered to the landowners?
28              MR. LOWE:  Yes, they will.

                                                          167
    
 1              MR. MACKIE:  Thank you.  I didn't realize
 2    that.
 3              Now, paragraph 21, you make reference to the
 4    negotiated amending agreement for the Mandaumin Pool
 5    landowners.  That, I believe, was being referred to
 6    earlier.
 7              Does that agreement effectively the
 8    compensation payment for the gas, the residual gas --
 9              MR. LOWE:  Yes, it does.
10              MR. MACKIE:  -- from two cents per Mcf to
11    something like four cents per Mcf?
12              MR. LOWE:  Yes, it does.
13              MR. MACKIE:  So that is the condition that is
14    being amended?
15              MR. LOWE:  That is correct.
16              MR. MACKIE:  And those leases then are clearly
17    different from the leases from the other two pools where
18    the residual gas is being compensated for based upon a
19    royalty of 12.5 per cent at an estimated or current well
20    head price of gas?
21              MR. LOWE:  That is correct.  That was a
22    negotiated term.  The landowners understood the value of
23    that clause but they were more concerned with getting
24    special provisions on their property with respect to
25    physical facilities.
26              MR. MACKIE:  Okay, thank you.
27              Now, turning to the Bluewater Pool, I have the
28    same question and we won't spend time on it if you will

                                                          168
    
 1    undertake to provide the undertaking, Mr. Lowe, with
 2    regards to the $364,000 that Ms Callingham provided for
 3    in response to Interrogatory 89.
 4              Could you provide the purchase price that
 5    Union paid for the assets in that pool, in particular,
 6    the gas storage rights, and then the CWIP component to
 7    reconcile that figure, please?
 8              MR. LOWE:  That pool was basically purchased
 9    in the past year so there is no CWIP component.
10              MR. MACKIE:  And then what is the figure of
11    $364,000 based upon?
12              MR. LOWE:  That is the acquisition of storage
13    rights.
14              MR. MACKIE:  And was that negotiated as a
15    separate part of this purchase agreement?
16              MR. LOWE:  It is not with the same parties but
17    it was a separate agreement, yes.
18              MR. MACKIE:  All right, okay.
19              Now, would you turn to interrogatory 125 over
20    the page, and it is particularly the last sentence in
21    which you say:
22                   "By definition, the persons entitled to
23                   the payment for residual gas of the
24                   holders of the mineral interests as
25                   identified in the Unit Operation
26                   Agreement..." (As read)
27              Why is it necessary to restrict residual gas
28    payments to parties to the Unit Operation Agreement if

                                                          169
    
 1    that Unit Operation Agreement had been entered into many
 2    years ago and you had more current geological
 3    information, determining and specifying the extent of
 4    the reservoir?
 5              MR. LOWE:  That is the exact reason we are
 6    presenting a new voluntary pooling unitization agreement
 7    to the Bluewater Pool because we have uncovered
 8    significant geological evidence to cause a change.
 9              MR. MACKIE:  But apart from the Unit Operation
10    Agreement that might have been entered into many years
11    ago, the gas storage lease deals with compensation for
12    residual gas, I believe.
13              MR. LOWE:  That is correct.
14              MR. MACKIE:  So why wouldn't you rely upon the
15    gas storage release rather than determining whom you can
16    pay based upon a Unit Operation Agreement?
17              MR. LOWE:  The Storage Lease Agreement speaks
18    to the participating acreage, entitlement for each of
19    the landowners and that participating acres component is
20    derived out of the unit agreements so they are
21    symbiotic.  They are tied together.
22              MR. MACKIE:  Yes, I think --
23              MR. LOWE:  The obligation to pay comes out of
24    the storage agreement, the values used in the
25    determination come out of the unit.
26              MR. MACKIE:  Fine.  Just put aside the
27    agreements for one moment.  I'm not saying they are
28    insignificant.

                                                          170
    
 1              Wouldn't it be good corporate policy, good
 2    public relations to go out there and say, "Yes, there is
 3    gas under your land.  We want to use this as a gas
 4    storage reservoir.  We are prepared to pay you a royalty
 5    for the residual gas in place."
 6              MR. LOWE:  That is exactly what we do.
 7              MR. MACKIE:  You are disguising it.
 8              Okay, Mr. Lowe, thanks.
 9              Now I have to go back.  And I am sorry, I am
10    getting tired, and I am sure you are too.  But there are
11    a number of matters which were left on the record for
12    you to address from previous panels.  I have made a
13    quick note of some of these, and I just want to deal
14    with them quickly.
15              There was this question of the residual gas
16    versus the injected cushion gas payments that
17    Ms Callingham provided for in her table; again response
18    to Interrogatory 89.
19              Witnesses confirmed yesterday, Mr. Lowe -- and
20    I don't believe you were present in the room at the
21    time -- that the injected cushion gas required in each
22    of the pools has been estimated at $152.40 per
23    10(3)m(3), and that was obtained by myself simply
24    dividing the figure that Ms Callingham had by the
25    required cushion volume for each of the respective
26    pools.
27              MR. LOWE:  Yes, that is correct.
28              MR. MACKIE:  And witnesses confirmed yesterday 

                                                          171
    
 1    that in Imperial units that is equivalent to $4.32 per
 2    Mcf.
 3              MR. LOWE:  I would agree with that.
 4              MR. MACKIE:  At the same time I believe I
 5    noted that in response to Lambton County Storage
 6    Association I.R. No. 37, you are offering to compensate
 7    landowners for the volume of gas under their land times
 8    a royalty, where applicable, at the rate of $3.31 per
 9    Mcf.
10              I was inquiring yesterday as to the
11    discrepancy between those two prices, and that question
12    was referred to yourself.
13              MR. LOWE:  That's fine.  I can explain that.
14              We are really dealing with two different
15    things.  There is a requirement in the Gas Storage
16    Agreement to make an offer for the residual gas.  That
17    offer is to be priced at the current market value.  So
18    it is a point-in-time purchase.
19              My estimate -- and it is not an offer at this
20    point.  The offer will be the exact price in probably
21    the month of June or July of this year.  This is simply
22    an estimate.
23              MR. MACKIE:  I understand that.
24              MR. LOWE:  The cushion gas purchase is
25    calculated by accounting rules as the weighted average
26    cost of gas expected to be purchased over the course of
27    the entire year.
28              There was a ruling in the Dow Moore hearing

                                                          172
    
 1    that did not allow Union to stream specific gas
 2    contracts into storage for cushion gas.  So there are
 3    really two different bases of payment:  one is a
 4    point-in-time payment, and based on past practice it is
 5    the Ontario producer price.  That has different
 6    transportation toll elements in it than the weighted
 7    average cost of gas.  As well, it is a point-in-time
 8    estimate versus an annual average.
 9              So there are a number of reasons for the
10    distinction.
11              MR. MACKIE:  Yes, there are.  And I thank you
12    for that explanation.  I have a couple of follow-up
13    questions.
14              The weighted average cost of gas, then, is
15    based upon Union's gas supply portfolio for the next 12
16    months.  Is that correct?
17              MR. LOWE:  That is my understanding, yes.
18              MR. MACKIE:  As approved in the rates
19    proceeding.
20              MR. LOWE:  I believe that is correct.
21              MR. MACKIE:  That's fine; thank you.
22              And the point of time that you made reference
23    to for the local market produced gas, there must be a
24    reference for that point in time.
25              Is it the date of injection of gas into the
26    pool; that is, when Union first starts the pool?
27              What is this point in time?
28              MR. LOWE:  The point in time is the obligation

                                                          173
    
 1    in a storage lease agreement to make an offer prior to
 2    injection.  Historically, if we get an order from the
 3    Board and then begin our development activities, we
 4    would normally make that offer approximately 30 days in
 5    advance of the projected date of injection.
 6              So that is the basis that I have used for my
 7    forecast.
 8              MR. MACKIE:  That point in time would be 30
 9    days before the projected injection date.
10              MR. LOWE:  That is correct.
11              MR. MACKIE:  Has any thought been given to,
12    instead of taking a point in time, looking at an average
13    price over a wider window?
14              MR. LOWE:  That is certainly the subject of
15    negotiations.
16              MR. MACKIE:  Is it not generally true to say
17    that spot gas prices fall in the summer months when
18    demand for spot gas is less than in the winter months?
19    --- Pause
20              MR. LOWE:  I would not make that conclusion on
21    a general statement basis.
22              MR. MACKIE:  It might not have been true last
23    summer because natural gas prices have been rising
24    consistently since last February or March.  But as a
25    general proposition, in preceding years I think the
26    price of natural gas generally has a rise and fall on a
27    seasonal basis.
28              MR. LOWE:  I have in front of me the Ontario

                                                          174
    
 1    Producer prices for 1999, and the two lowest months are
 2    January and March.
 3              MR. MACKIE:  Thank you.  There were some other
 4    questions on a completely different subject, Mr. Lowe,
 5    that got referred to you.  I discussed with Steve Pardy
 6    yesterday the co-ordinates of the various wellhead
 7    locations which I referenced to each of the drilling
 8    licences.  There were inconsistencies between those
 9    locations and the letters of acknowledgement that had
10    been provided as part of the lands evidence.
11              Can you help explain those discrepancies?
12              MR. LOWE:  Yes.  The primary difference is the
13    fact that the initial letters of acknowledgement were
14    proposed based on scaled numbers off of the autocad
15    drawings as opposed to detailed survey dimensions that
16    were used in the applications.
17              The applications are the correct values.
18              If you look at my letters of acknowledgement,
19    we use the word approximate for all numbers.  If you
20    look at the notation in no. 3 -- I am referring to
21    section 10 in Schedule 1, page 2 of 6 as an example.
22              MR. MACKIE:  Could you just slow down there. 
23    I need to get this.
24    --- Pause
25              MR. MACKIE:  Okay.  I have section 10.
26              MR. LOWE:  Schedule 1.
27              MR. MACKIE:  I have that.
28              MR. LOWE:  Page 2 of 6 dealing with the

                                                          175
    
 1    Rawlings acknowledgement.
 2              MR. MACKIE:  Yes.
 3              MR. LOWE:  If you look at the notation in no.
 4    3, we give the landowner the opportunity to review the
 5    staked locations upon surveying, prior to drilling.
 6              MR. MACKIE:  I'm sorry, when you say item 3,
 7    the item 3 I have on page 2 of 6 reads:  Drill storage
 8    well Union-Mandaumin-3, at a location of our property
 9    approximately 87.3 metres north or south.
10              What are you referring to there, Mr. Lowe?
11              MR. LOWE:  The notation just below that.
12              MR. MACKIE:  I beg your pardon.
13              MR. LOWE:  These are approximate locations
14    scaled off of an autocad map, which obviously is not as
15    precise as a survey fabric.
16              So the difference is -- there is one
17    exception, but the differences in dimensions are
18    strictly what was assumed or picked as the lot line
19    boundary.  There was approximately nine metres
20    difference between the line that was picked on the
21    scaling drawing versus the actual lot line.
22              That is primarily due to road allowance
23    adjustments.
24              MR. MACKIE:  I am not concerned about a
25    nine-metre difference, but in the case of
26    Union-Mandaumin No. 3, there is a 200-metre difference.
27              MR. LOWE:  Yes.  And I have to apologize.
28              MR. MACKIE:  Is that an approximate --

                                                          176
    
 1              MR. LOWE:  Where the error has occurred -- and
 2    I apologize for this -- the words west of easterly
 3    should be reversed to east of westerly.
 4              That dimension was measured off of the
 5    westerly lot line as opposed to from the road allowance
 6    where the survey drawing was --
 7              MR. MACKIE:  That is fine, Mr. Lowe, and these
 8    mistakes obviously happen and, as I suggested yesterday,
 9    it is much better to unearth them now than to take up
10    time in the hearing.
11              Now what I want from you is an undertaking
12    please to see that you will revisit these letters of
13    acknowledgement, you will have them corrected and
14    resigned by the affected property owners and have them
15    presented to the Board so the letter of acknowledgement
16    clearly can be related to and support the drilling
17    license application in each case.
18              Will you undertake to do that?
19              MR. LOWE:  I may have difficulty with the
20    Rawlings.  I know that they go down to Florida every
21    November.
22              MR. MACKIE:  Well, you better rush after them
23    pretty quickly.
24              MR. LOWE:  We are already in December.
25              MR. LESLIE:  Chris?
26              MR. MACKIE:  Yes?
27              MR. LESLIE:  What we are proposing to do is
28    just amend the letters of acknowledgement to show the

                                                          177
    
 1    correct coordinates and get both parties to initial.
 2              MR. MACKIE:  No, that is fine.
 3              MR. LESLIE:  As Dave has pointed out there may
 4    be some problems physically with some of these people.
 5              MR. MACKIE:  Thank you, panel.  Those are my
 6    questions.
 7              MR. LESLIE:  Chris, you asked earlier about
 8    service on the Ministry of Government Services.  They
 9    are listed in the affidavit in service.
10              MR. MACKIE:  Thank you.  I just wanted
11    confirmation that they had --
12              MR. LESLIE:  I can give you a confirmation
13    number for the --
14              MR. MACKIE:  No, I don't need that.  I accept
15    that, this is fine.  I just wanted to be sure that they
16    had been served and they were aware of these
17    proceedings.  That is absolutely fine.
18              MR. LESLIE:  One other thing, I can tell you
19    that with respect to the Hicks, I am advised by Mr.
20    Wilton that he has been in touch with them on numerous
21    occasions following the hearing last spring and as
22    recently as last week.  There are, as you know, some
23    ongoing negotiations amongst the landowners and
24    Union -- the landowners of all the pools and
25    Union -- the Hicks apparently indicated that they want
26    to wait for the outcome of those negotiations before
27    doing anything.  They are now being paid at the going
28    rate, they are taking that money without prejudice to

                                                          178
    
 1    their right to perhaps get more.
 2              I gather there is also some thought that as a
 3    result of initiatives that are being made, the leases
 4    may be restructured in a more fundamental way and the
 5    Hicks are looking to that as well, but we are in contact
 6    with them and have been.
 7              MR. MACKIE:  Yes, thank you for that advice
 8    and I accept your proposition that it takes two to
 9    tango.  I just want to make sure that consultations have
10    actually started and are not just being ignored.
11              I don't believe there are any more questions
12    for this panel so that we can then move on with thanks
13    to this panel for the information that they provided.
14              I am sorry, we haven't dealt with the
15    environmental assessments yet.  That is right.  I
16    thought that things were looking too good.
17              MR. LESLIE:  You have questions in that area,
18    Chris?
19              MR. MACKIE:  Actually I would like to hear
20    from other parties.  I can tell you that from Board
21    staff perspective we are actually reluctant to start on
22    questions of the environmental assessment unless all
23    parties are going to be given an opportunity to raise
24    questions.  It does not help this technical conference
25    to have questions from one party and not for everybody
26    to have that opportunity.  But I would like to hear
27    suggestions as to how we can use the remaining 55
28    minutes to our advantage.

                                                          179
    
 1              MR. VOGEL:  Relative to some of the other
 2    areas, Mr. Mackie, I think that the remaining enquiries
 3    that we have in this area are probably -- how long does
 4    Board staff think that their enquiries may be?
 5              MR. MACKIE:  Some time, but we would be quite
 6    willing to stand down our questioning and I know that
 7    Mr. Card has a few questions of this panel.  Does
 8    CanEnerco have any questions of the environmental
 9    assessments?
10              Well, what I would suggest then is that we
11    proceed, if this is acceptable with the intervenor party
12    questions, and Board staff will stand down for the
13    purpose of this afternoon, and we would probably then
14    have a full cross-examination on environmental
15    assessments at the hearing.
16              MR. LESLIE:  Chris, there was suggestion of
17    sitting next week?
18              MR. MACKIE:  Yes.  I confirmed at the break
19    that if parties wish we can continue, that is facilities
20    can be made available, and this room is available on
21    Tuesday of next week.
22              MR. LESLIE:  Now, if we proceeded on Tuesday,
23    would you need all four of these witnesses or just the
24    environmental panel?
25              MR. MACKIE:  As far as I am concerned we are
26    finished with Mr. Lowe and Mr. Haley.  If Board staff
27    were to proceed with our questions on Tuesday, we would
28    only need Mr. Payne and Mr. Wachsmuth.

                                                          180
    
 1              MR. LESLIE:  I am advised that Mr. Payne and
 2    Mr. Wachsmuth can be available next Tuesday.
 3              MR. MACKIE:  That is fine from our
 4    perspective, but Glenn I am a little reluctant to ask
 5    all the parties to come back on Tuesday, particularly
 6    for the landowners.  This is a long hike here and also
 7    for Mr. Card, probably, coming from London.
 8              I wonder the if we couldn't use the remaining
 9    50 minutes now to have intervenor questions to see how
10    far we get.  I mean, if we can everybody's questions in
11    except Board staff, I think we can deal with this.
12              MR. LESLIE:  I am a little uncertain as to
13    what is being proposed.  Are you proposing the
14    intervenors now ask the questions they have regarding
15    environmental matters?
16              MR. MACKIE:  Yes.
17              MR. LESLIE:  And if they finish, then you
18    could do it on Tuesday is what you are suggesting.
19              MR. MACKIE:  Well, I am not sure.  We can
20    either do that or we would withhold it all to the
21    hearing.
22              MR. LESLIE:  I see.  So now I am told we need
23    a five-minute break.
24              MR. MACKIE:  We haven't a tea break.  Thank
25    you for reminding me of that.  I'll speak to Mr. Card
26    and Mr. Vogel while we have a quick break.
27              Thank you.
28    --- Upon recessing at 1608

                                                          181
    
 1    --- Upon resuming at 1618
 2              MR. MACKIE:  (Technical difficulties) We will
 3    put their questions on the record concerning the
 4    environmental assessment, and Board staff then would
 5    return on Tuesday for Board staff to put our questions
 6    to the environmental assessment panel.  We are happy to
 7    do that.  We are happy to accommodate the parties in
 8    whichever way we can.  So let's proceed now with Mr.
 9    Card, please.
10              COURT REPORTER:  I'm sorry, sir, could you
11    just wait one second.  Okay.
12              MR. CARD:  Mr. Klopak is here today as well?
13              MR. KLOPAK:  Yes, I'm here.
14              MR. MACKIE:  Do you have questions of this
15    panel?
16              MR. KLOPAK:  Just with the time of
17    construction.  Like, if it was --
18              MR. MACKIE:  We will make sure we fit you in.
19              Mr. Card.
20              MR. CARD:  Thank you.  My questions on behalf
21    of the Township of Dawn-Euphemia pertain to the answers
22    that were provided by Union to the interrogatories.  And
23    the first one I would like to review with you is the
24    answer to question number 13.
25              The question asked if consideration was given
26    to the creation of a new multiple use right-of-way.  The
27    answer was that the multiple use right-of-way was not
28    considered appropriate.  I wondered if the multiple use

                                                          182
    
 1    right-of-way was considered and then rejected or simply
 2    was not considered.  Could you tell me which of those it
 3    was, please?
 4              MR. PAYNE:  If you look at the routing
 5    alternatives put forward by the consultant in the area
 6    as it pertains to yourself, there wasn't really a
 7    multi-use corridor available there or, I guess, area to
 8    put one forward.  Space was available in the road
 9    allowance.  The creation of a new multi-use right-of-way
10    wasn't considered.
11              MR. CARD:  Thank you.  Would that be the
12    standard practice to consider whether you could use the
13    road allowance, first and only if you could not do that,
14    you would consider creating a new corridor?
15              MR. WACHSMUTH:  Sir, maybe I guess we got --
16    I'm not sure I understand what the term "multi-use
17    right-of-way."  I guess when I hear the term "multi-use
18    right-of-way," I think something like the Parkway
19    Greenbelt outside of Toronto here where there is hydro,
20    natural gas, oil, a four-lane freeway, or there is
21    another one south of Sarnia where there are a number of
22    pipelines, railways, three or four hydro lines.  And
23    maybe when that -- when we see the term "multiple use
24    right-of-way" that was what we were looking at.  Is that
25    not what you were asking?
26              MR. CARD:  That is what I was asking, yes.
27              MR. WACHSMUTH:  And I guess here we did not
28    see or I don't believe the consultants seen something in

                                                          183
    
 1    there where there was opportunity for hydros and oils
 2    and gas to get us in the direction between the two
 3    common end points which we were going to and from.
 4              MR. CARD:  And that is having regard to the
 5    prospects for there to be other pipelines by both Union
 6    and other companies in the future or not?
 7              MR. PAYNE:  Currently Union Gas, I can speak
 8    for what I know at Union Gas, we don't have anything
 9    planned for the area where this pipeline is running that
10    would go, you know, from the A point to the B point.
11              MR. CARD:  Would you turn to the answer to
12    question 15, please.  Does Union own any of these
13    multi-use corridors in Lambton County?
14              MR. PAYNE:  As the response indicates in 15,
15    these corridors are not owned by Union Gas and it is
16    Union that are listed here.  In the county itself, I
17    can't speak to that information.
18              MR. CARD:  And does Union plan any?
19              MR. PAYNE:  Not at this time that I am aware
20    of.
21              MR. CARD:  Thank you.  Question number 18. 
22    The question addresses cumulative impacts.  The answer
23    deals with short-term disruptions on residents and there
24    are a number of bullets dealing with the impacts on
25    residents.  Is it fair to say then that Union has not
26    identified any cumulative long-term impacts from the use
27    of township roads for transmission pipeline purposes?
28              MR. PAYNE:  The short-term impacts that are

                                                          184
    
 1    listed here in response to this IR are readily
 2    mitigatable.  They are short-term for the year of
 3    construction.  We recognize that there is impacts and we
 4    want to avoid the longer term impacts associated with
 5    work on agricultural lands.
 6              MR. CARD:  There are no long-term impacts with
 7    respect to use of the road allowance.  Is that the
 8    correct conclusion?
 9              MR. WACHSMUTH:  I don't believe there are any
10    long-term significant cumulative impacts associated with
11    putting a pipeline within a road allowance.
12              MR. CARD:  Thank you.  Next, number 19.  I had
13    asked if official plan policies had been taken into
14    account.  The response does deal with policies from the
15    county official plan.  Was this -- was this answer taken
16    from a planning report that had been prepared for Union
17    or was the response prepared directly in response to the
18    question?
19              MR. PAYNE:  I think stated simply that the
20    environmental consultants reviewed the official plan and
21    these comments are based on that.
22              MR. CARD:  To the extent they have reviewed
23    the official plan, will I find their review and report
24    in the environmental volume?  I haven't seen it.  If it
25    is there, I may have missed it.  But is there any other
26    document that they developed in the course of their work
27    that is not included in the environmental binder?
28              MR. PAYNE:  No, there is not.

                                                          185
    
 1              MR. CARD:  Thank you.  So to the extent that
 2    they considered official plan policies, they have only
 3    done so mentally and they haven't put their thoughts to
 4    writing?
 5              MR. WACHSMUTH:  That is correct and I mean
 6    that would be the same with any of the other background
 7    documents they looked at.  They have gone and collected
 8    the forest information along in the study area as well,
 9    but there is not a separate document that talks about
10    all of the forests that are within the study area.
11              MR. CARD:  All right.  That takes us to number
12    21 which pertains to the township's official plan.  And
13    would the answers be the same with respect to it as to
14    the Lambton official plan that to the extent that it was
15    considered it was considered by the people who were
16    involved on the project and their thoughts were not
17    reduced to writing and those thoughts do not appear in
18    the environmental binder.
19              MR. PAYNE:  I believe there is -- there is
20    note to the official plan of both the county and Dawn in
21    the environmental report itself, but there isn't a
22    separate document.  No.  That is correct.
23              MR. CARD:  Thank you.  The last question
24    pertains to the answer to number 26 and there is a
25    drawing that came with the response to question 26, and
26    the drawing shows, if you have the drawing, there are
27    two --
28              MR. PAYNE:  I don't have the drawing.

                                                          186
    
 1              MR. CARD:  There is a top map and a bottom
 2    map.  The bottom map in particular I would like you to
 3    consider in answering this question, and you will see
 4    that on the west side of Dawn Valley Road there is an
 5    easement that extends about halfway between Match Line
 6    AA and the intersection with Aberfeldy Line.
 7              My question to you is:  Is there any
 8    environmental constraint which would prevent the
 9    extension of that easement in a northerly direction from
10    where it now terminates up to Aberfeldy Line?
11              MR. PAYNE:  The easement that is referred to
12    on that drawing is for an existing pipeline.  I believe
13    Mr. Haley has indicated that that -- he was going to
14    look into the fact that that is a one-pipeline easement
15    like the easements that we put forward.
16              MR. CARD:  Yes, that's true.
17              I'm not interested in the legal or property
18    issues at this moment.  The reason for raising it with
19    you is that I understand the preference -- from your
20    answers I understand the preference for use of road
21    allowance corridors is that there is already a
22    disturbance that accompanies that corridor so that you
23    avoid creating a new disturbance by using the corridor. 
24    And, presumably, to the extent there is a pipeline in
25    that easement, there already has been a disturbance so
26    that from an environmental standpoint it would make some
27    sense to use that corridor if it became necessary to
28    locate the pipeline off the road allowance.

                                                          187
    
 1              Is that a fair description of the
 2    circumstances that you describe in your report?  You are
 3    trying to avoid a disturbance by using road allowances.
 4              MR. PAYNE:  Yes, we are trying to avoid the
 5    disturbance by using road allowance.
 6              MR. CARD:  Right.
 7              MR. PAYNE:  If we were to parallel that
 8    existing easement with another easement, there would be
 9    a given amount of disturbance above and beyond what
10    would occur in the road allowance.
11              MR. CARD:  I'm not suggesting that a new
12    easement would be taken.  I'm suggesting that the
13    existing easement would be extended.  The area of
14    disturbance is already identified and confined to that
15    easement.  The easement would be extended up to
16    Aberfeldy line.
17              Is there any environmental constraint which
18    indicates that that should not happen?
19    --- Pause
20              MR. PAYNE:  There is no constraint per se in
21    that area that comes to mind with me.  However, in
22    having the environmental consultants look at the route
23    we did not tell them to look solely at road allowance
24    nor to look solely at easements.  It was their choice to
25    utilize the existing road allowance when it was made
26    available -- or indicated by Union that there was room
27    in that area.
28              MR. CARD:  That's true.

                                                          188
    
 1              There is a map that accompanies the answer, I
 2    believe, to Interrogatory No. 108, and whose it is I'm
 3    not sure, but the map is labelled "Existing Conditions
 4    and Alternative Pipeline Route".  It purports to show
 5    the environmental features that exist along the routes
 6    that were considered.
 7              The only constraints that appear in this
 8    vicinity are what are identified as rare flora and
 9    fauna, both east and west of Aberfeldy Line and Dawn
10    Valley Road.
11              MR. WACHSMUTH:  Rare flora and fauna, I
12    believe, are east and west -- Mandaumin Road on
13    Aberfeldy?
14              MR. CARD:  That's correct.  It's Mandaumin
15    Road.  It's not Dawn Valley Road.  That's right.
16              So those are the closest environmental
17    features?
18              MR. WACHSMUTH:  Those are the closest natural
19    environmental features in there.
20              MR. CARD:  Good.  So I was reading that
21    correctly, then.  There are no constraints in this
22    immediate area, the area of --
23              MR. WACHSMUTH:  No.  No natural environmental
24    constraints?
25              MR. CARD:  Right.  Natural environmental
26    constraints.  That's correct.
27              MR. WACHSMUTH:  But there is agricultural land
28    and other things along here that this map doesn't

                                                          189
    
 1    identify specifically on the legend.
 2              MR. CARD:  Yes.  I understand it is
 3    agricultural land along the west side of Dawn Valley
 4    Road.  That's the constraint?
 5              MR. WACHSMUTH:  Yes, it is, sir.
 6              MR. CARD:  Thank you.  Those are my questions.
 7              MR. MACKIE:  Could we have Mr. Klapak next,
 8    who has a few questions, and then the balance of the
 9    time is yours, Mr. Vogel?
10              MR. VOGEL:  Thank you.
11              MR. MACKIE:  Mr. Klapak.
12              MR. KLAPAK:  My concern is the time of
13    construction of the pipeline from Oil City Pool to the
14    station.  When would that be?
15              MR. PAYNE:  I hate to do this to you, but the
16    construction scheduling is usually handled by the
17    engineering group and not ourselves, so if we can find
18    the reference to where the schedule is in the --
19              MR. WACHSMUTH:  In the IRs.
20              MR. PAYNE:  -- in the IRs, we can then --
21              MR. KLAPAK:  Okay.  Well, let me proceed a
22    different way, then.
23              If construction was to begin in April, say, in
24    the spring, historically that section of -- where the
25    possible location of the pipe would go, I have a
26    hand-drawn map here.  I don't know if it is of any use
27    to fellows here, but I have done some measurements. 
28    It's not drawn to scale, but the measurements are

                                                          190
    
 1    accurate.
 2              In the spring we have a ditch that would be
 3    very close to the pipeline.  Depending on the amount of
 4    rainfall and snow melt-off in the winter this ditch
 5    becomes filled to possibly nine feet depth of water in
 6    that ditch.  That being the case, if construction was in
 7    April, I would say that the environmental impact would
 8    be tremendous in that area, considering that there is
 9    only a small seven-foot grass verge separating this
10    ditch from the shoulder of the road.  To place that
11    pipeline in 16 feet of corridor there -- that was the
12    proposed location for the pipeline -- I have met with
13    Ken Jeans and we had a discussion and he basically told
14    me he wants to put the pipe in the shoulder of the road
15    one meter off of the highway which would therefore leave
16    basically 13 feet in which to locate this pipeline.  If
17    the pipeline was to go on that grass verge, I don't know
18    what the environmental impact would be.
19              Have you guys looked at that situation or are
20    you going to deal with that when the time arises or --
21              MR. PAYNE:  In the situation with the drain
22    along what was Highway 80, now Courtright Line --
23              MR. KLAPAK:  Yes.
24              MR. PAYNE:  -- I have had discussions with
25    both Mr. Jeans and Mr. McNally.  It is my understanding
26    that, you know, we have -- for that particular section
27    of pipeline there is -- in the event that thing was
28    completely full of water, we could be doing work in

                                                          191
    
 1    other locations and then come in at a more optimal time
 2    and install the pipe there.
 3              The actual method of installation, Mr. McNally
 4    and Mr. Jeans are probably best to speak to.  My concern
 5    at that location would be additional entrants of
 6    sedimentation into that waterbody.
 7              Should it be done by an open-cut method, would
 8    material migrate down and into the watercourse or could
 9    that material come back to -- as it is excavated out of
10    the trench, come back toward the road and be set on the
11    side of the road?  Basically, as the pipe is installed
12    and then backfilled that way, that is the sort of thing
13    we have done in the past.
14              We started Phase I construction of Century
15    Pools early in the year, much along the lines of what
16    you see here, and we didn't have any significant issues
17    that way with the other drains along that route, and
18    that is the method that we used as well.
19              Care is taken to ensure that we don't have
20    major problems like that.
21              MR. KLAPAK:  There is also eight three-foot
22    diameter drainage culverts that run underneath the
23    highway to take surface water from the south side of the
24    road because that is a smaller waterway.  It's gaining
25    access to the ditch on the north by these culverts.
26              How do you intend to bypass these culverts, I
27    guess, without any environmental impact to -- disturbing
28    the water being taken from the south side to the north?

                                                          192
    
 1              MR. PAYNE:  There are really a number of
 2    methods that we could deal with ensuring that the drains
 3    are properly located ahead of when excavation would
 4    come:  thread our pipe underneath there if the drains
 5    are flowing, the use of directional drilling techniques
 6    are available to us should there be a lot of water
 7    flowing through them.
 8              There is also the option of if there isn't
 9    actually water coming out of those drains at the time to
10    take a section out, install the pipeline and put that
11    section back in.  But care would be taken to ensure that
12    they aren't just crashed through and water would
13    presumably boil up in the trench then, and that would
14    cause a significant impact both on the watercourse and
15    the construction program.
16              MR. KLAPAK:  Okay.
17              Also the slope on that grass verge is very
18    steep.  I guess I wouldn't know how you would prevent
19    soil erosion and so forth if the pipeline was to go in
20    that grass verge with the way the slope is on the road.
21              MR. PAYNE:  There is a number of methods we
22    can use.
23              The intent is to stay near the top of that
24    slope and away from the steeper section of the slope. 
25    If the material is excavated out it can move again
26    toward the road minimizing the impact on that, the lower
27    portion or more erodible portion of that slope, and then
28    once material is put back into the trench, feeding and

                                                          193
    
 1    trying to stabilize that is the best method of holding
 2    that slope together.  If deemed necessary, we can go to
 3    a hydro seed or an erosion control matting that will aid
 4    actually in the regrowth of vegetation.
 5              But that is certainly something that we will
 6    have our eye on during the construction program when
 7    material is put back in there.  We don't want it sliding
 8    down into the drain at all because there are concerns in
 9    terms of sedimentation into that waterbody.
10              MR. KLAPAK:  Thank you.
11              MR. MACKIE:  Mr. Vogel.
12              MR. VOGEL:  Thank you, Mr. Mackie.
13              As we indicated with an earlier panel, we have
14    a number of concerns related to differences, if any,
15    between the letter of understanding which governs
16    construction in the EBL 267 project and the letter of
17    understanding proposed here.  I was hoping, as I
18    indictated earlier with Mr. Leslie, and we have agreed
19    to handle those issues by way of Union undertaking to
20    advise us as to the differences, if any, between EBL 267
21    letter of understanding and that proposed here.
22              And to the extent that there are differences,
23    the rationale for those differences -- as I said
24    earlier, I am content with that undertaking to address
25    those issues for the purpose of the Technical
26    Conference.
27              So we will not be pursuing those questions
28    here.

                                                          194
    
 1              I do have a few additional questions arising
 2    out of IR responses that I would like to cover, however.
 3              Turning to LCSA Interrogatory 70, the issue
 4    was protecting the integrity of stockpile.  In the
 5    stockpiling of topsoil, particularly the integrity of
 6    the undisturbed soils upon which the soil is piled, the
 7    answer is that Union's experience is that it can be
 8    restored.
 9              My question really is:  What mitigation
10    measures is Union proposing here to protect the
11    integrity of the underlying soils?
12              MR. PAYNE:  It is standard practice that
13    stripped topsoil be placed directly on to adjacent
14    topsoil and, for that matter, any excavated subsoil be
15    placed on the area that was stripped on to subsoil.
16              In the case of topsoil where it is placed on
17    to an existing layer of topsoil, the existing crop is
18    either available for harvest, depending upon its state
19    of growth of the time, or it is mulched and provides a
20    layer between the two and aids in the clean-up effort as
21    well.
22              If subsoil is to be placed on topsoil, it is
23    standard to provide a suitable medium between the two. 
24    It is our experience that topsoil can be removed from
25    that existing topsoil in a manner that does not impact
26    that underlying existing non-stripped portion of the
27    topsoil.
28              MR. VOGEL:  I had not understood that there

                                                          195
    
 1    was any proposal here that you would be putting subsoil
 2    on top of topsoil.  Is that any part of what is being
 3    proposed?
 4    ---  Pause
 5              MR. PAYNE:  If I could refer you to Board
 6    Staff Interrogatory 123, the letter of understanding,
 7    part 1(a)(i), that is an option available to landowner
 8    should they choose to utilize that.
 9              MR. VOGEL:  Fair enough.  But it is not part
10    of Union's standard or recommended practice.  Is that
11    correct?
12              MR. PAYNE:  It is not an option the landowners
13    choose readily, no.
14              MR. VOGEL:  Just dealing with the situation,
15    then, of topsoil being stockpiled on top of topsoil, the
16    measure to protect the integrity of the underlying soil,
17    as I heard it, was the existing crop or the cover crop,
18    I suppose, if a cover crop is available.
19              Is that correct?
20              MR. PAYNE:  Yes, cover crop being hay or
21    whatever is on the field at the time.
22              MR. VOGEL:  In the absence of a crop, does
23    Union use hay as the mulch layer?
24              MR. PAYNE:  Sorry?
25              MR. VOGEL:  Does Union use hay, straw as a
26    mulch layer?
27              MR. PAYNE:  In the absence of a crop?
28              MR. VOGEL:  In the absence of a crop.

                                                          196
    
 1              MR. PAYNE:  No.  The topsoil would go directly
 2    on to the undisturbed topsoil.
 3              MR. VOGEL:  Mr. Payne, an earlier panel
 4    referred this issue to you.  It arises out of a response
 5    to LCSA Interrogatory No. 75.
 6              Upon the expiry of the two year cover crop
 7    program, what is Union's anticipation as to the extent
 8    of remediation; in other words, residual production loss
 9    at the end of two years?
10              MR. PAYNE:  At the end of two years our
11    standard cover crop program is a three-year program.
12    That is what I have tried to indicate in this answer. 
13    It is not two years, as recommended in the Gore &
14    Storrie report.
15              MR. VOGEL:  Answer the question, then, for
16    three years.
17              MR. PAYNE:  We have also a document that was
18    filed during 267, and that is the pipeline construction
19    and impacts on agricultural lands historical review of
20    Union Gas' soil and crop monitoring program.  The soil
21    and crop monitoring program occurs one, three and five
22    years post construction.  And that would be on
23    agricultural lands that were part of that program.
24              That, however, is not indicative of what is
25    part of the cover crop program.  It does give an
26    indication of what the recovery rates are at three years
27    post-construction on lands that are not in the cover
28    crop program, if you will.

                                                          197
    
 1              MR. VOGEL:  Are there any similar studies
 2    which indicate the value of the cover crop program in
 3    terms of remediation?
 4              MR. WACHSMUTH:  In the historical review
 5    report which Ecological Services prepared, they did not
 6    differentiate out whether or not the properties were or
 7    were not in cover crop programs.  Some of the properties
 8    that sampling took place on were properties within cover
 9    crop programs.
10              What that generally showed is that five years
11    after construction crops had returned to roughly the 90
12    per cent level.
13              MR. VOGEL:  With respect to Union's well
14    testing program, has Union tested all of the wells
15    within the lands proposed to be leased for all three of
16    the pools which are subject of this application?
17              MR. PAYNE:  Sorry, could you repeat your
18    question.  I didn't quite hear it.
19              MR. VOGEL:  My question was, with respect to
20    Union's water well testing program, whether Union has
21    tested all -- in the preconstruction now -- of the wells
22    on the lands which are proposed to be leased in
23    connection with the three pools which are the subject of
24    this application.
25              MR. PAYNE:  With respect to Union water well
26    testing program, it is really conducted, in the case of
27    a storage pool, in two phases.  During the drilling of
28    wells or the drilling that goes on prior to getting the

                                                          198
    
 1    project under way on an approvals level at the Board,
 2    any pre-drilling of that nature is covered in the first
 3    phase.
 4              What happens is we indicate to the consulting
 5    hydro geologist what wells are going to be drilled and
 6    have him review the hydrology of the area and sample any
 7    wells that he deems could possibly be impacted by our
 8    drilling program at that stage.
 9              Phase no. 1 is complete.
10              Phase no. 2, which would occur when additional
11    drilling is conducted and the construction of the
12    pipeline occurs, is done in the same fashion.  The
13    consulting  hydro geologist reviews the situation and
14    would test any wells that he or she deemed might be
15    impacted by the program.
16              I guess the answer to your question is
17    two-phased:  some is done and some is yet to be done.
18              MR. VOGEL:  Do you know what the criteria are
19    for the selection of the wells to be tested in each of
20    these two phases?
21              MR. PAYNE:  As I stated, we tell the
22    hydrogeologists where we are going to be working and it
23    is his professional judgment, knowing the hydrology,
24    which wells to sample.
25              MR. VOGEL:  Let's approach it this way.
26              Do you know whether all wells on those subject
27    properties have been tested or whether there was only
28    some portion of the wells tested?

                                                          199
    
 1              MR. PAYNE:  It would be some portion of the
 2    wells tested, to the best of my knowledge, without
 3    further check.
 4              MR. VOGEL:  And can you advise me as to what
 5    criteria then were used in the selection of this limited
 6    number of wells?
 7              Maybe the way to handle this is by way of an
 8    undertaking.  What I am interested in is the number of
 9    wells that were tested in that criteria for their
10    selection.
11              MR. PAYNE:  The wells tested are appended to
12    the back of the Century Pool Phase II Environmental
13    Report.
14              MR. VOGEL:  This is in Phase I?
15              MR. PAYNE:  No, Phase II.  Century Pool Phase
16    II Environmental Report.
17              MR. VOGEL:  Yes.  Phase I of the well testing
18    program you just described to me.
19              MR. PAYNE:  Yes, that is correct.
20              MR. VOGEL:  Okay.  And attached to the
21    environmental assessment I will find a list of the wells
22    which have been tested; is that correct?
23              MR. PAYNE:  That is correct.
24              MR. VOGEL:  Okay.  Now, with respect to Phase
25    II of the testing program, assuming that the project
26    were improved, what I need to know is which wells are
27    slated to be tested and what criteria you applying for
28    the testing of those wells?

                                                          200
    
 1              MR. PAYNE:  We have not initiated that process
 2    yet.  There is --
 3              MR. VOGEL:  And can you advise me as to what
 4    criteria were used in selecting the listed wells
 5    attached to the environmental assessment?
 6              MR. PAYNE:  Again, that is the professional
 7    judgment of the hydrogeologist based on the geology of
 8    the area --
 9              MR. VOGEL:  And there is no criteria that he
10    applies --
11              MR. PAYNE:  Well, I am sure there --
12              MR. VOGEL:  -- within so many feet of a
13    proposed drawing?
14              MR. PAYNE:  It is done based on what occurs
15    underground, where the aquifer is and what else is
16    there.  It is not based on an arbitrary surface
17    dimension from a drilled well.
18              MR. VOGEL:  Thank you, Mr. Mackie, those are
19    my questions.
20              MR. MACKIE:  Thank you, Mr. Vogel.  You
21    finished right on time.  Well done.
22              MR. VOGEL:  What a coincidence.
23    --- Laughter
24              MR. MACKIE:  Well, basically then we are
25    adjourned until Tuesday morning when I understand that
26    Union is prepared to have these two witnesses available
27    for the staff questions.
28              Is that Union's wish, Glenn?

                                                          201
    
 1              MR. LESLIE:  Yes, that is correct.
 2              MR. MACKIE:  So we will continue then on
 3    Tuesday at 9:00.
 4              I would just like to make a couple of
 5    observations on the record before we break.
 6              Glenn, a number of undertakings have been made
 7    by Union and I am assuming then that Union will put
 8    together a package and make these undertakings available
 9    to all intervenors to the process?
10              MR. LESLIE:  We will treat them like
11    interrogatory responses.
12              MR. MACKIE:  Yes, thank you.  So everybody
13    will get a copy of the undertakings so we have a
14    complete record as we go forward.
15              I just want to comment for a few moments on a
16    provision that the Board has made in procedural order.
17              Number one, which was for the possibility of
18    an ADR process, an alternative dispute resolution
19    process taking place before going or bringing this
20    application onto a hearing.
21              The Board is under considerable pressure these
22    days, particularly with the electricity restructuring
23    and the open market set for November the 1st, and
24    encourages staff to seek a resolution and to limit the
25    amount of hearing time to the extent possible.
26              I think the Board would welcome an ADR process
27    if indeed it would be beneficial to the parties.  I
28    might add for the benefit of intervenors here who don't

                                                          202
    
 1    regularly appear before the Board, that we hold an ADR
 2    process as part of all our major rate applications and
 3    those ADR processes generally extend over or up to a
 4    two-week period.
 5              That certainly is not contemplated in this
 6    instance and I think that we will probably make two days
 7    available towards the end of January if the parties wish
 8    to participate in an ADR.
 9              For an ADR in a rates proceedings, the Board
10    retains a professional facilitator to act in a neutral
11    role.  I don't contemplate that would happen in this
12    instance.  Probably it would befall a staff member such
13    as myself to both act as a facilitator -- the only
14    problem with that is that we would be an advocate on
15    behalf of certain issues.
16              Whether we go forward with an ADR depends very
17    much upon the wishes of the parties and I invite both
18    Union, the applicant and parties to give this some
19    consideration and if you feel that your interests would
20    be better advanced with an ADR process, that can be
21    arranged but you need to let the Board know of your
22    interest and I would suggest a brief written note to the
23    Board secretariat so that it is on the record.  I would
24    ask that that be done by the end of the first week in
25    January or Friday, January 7, which is the filing date
26    for intervenors' evidence and could also let me know.
27              But we need more than an oral indication of
28    your interest.  If there is significant interest then we

                                                          203
    
 1    will certainly arrange an ADR process.
 2              There are down sides to an ADR process.  The
 3    facilitators have to be dedicated to it at the time and
 4    resolve this and if you don't achieve an agreement at
 5    the end of the day, you might feel that that is
 6    additional money that your client is going to have to
 7    pay.  So there is a down side as well as an upside.
 8              That is the ADR process.
 9              I just want to thank the court reporter again
10    who has solidly soldiered on his own without much
11    backup.  We appreciate your help.  Thanks very much.
12              And just a general note of appreciation. 
13    Union's witnesses and to the parties for a fairly good
14    humoured, good natured technical conference.  I tend to
15    feel for myself that I have not done my job properly
16    unless I have upset Union on several occasions.
17    --- Laughter
18              MR. MACKIE:  So maybe I have not done my job
19    as well as I should have but I think we have achieved
20    quite a lot and I appreciate the good humour of
21    everybody.
22              So a happy and safe Christmas to everybody and
23    we will see you sometime in January.  Thank you.
24              MR. WACHSMUTH:  Please don't save them all for
25    Tuesday.
26    --- Whereupon the hearing adjourned at 1702,
27        to resume on Tuesday, December 21, 1999
28        at 0900