Rep: OEB Doc: 1388Z Rev: 0 ONTARIO ENERGY BOARD Volume: 1 9 AUGUST 2004 BEFORE: R. BETTS PRESIDING MEMBER P. NOWINA MEMBER P. SOMMERVILLE MEMBER 1 RP-2003-0253 2 IN THE MATTER OF a hearing held on Monday, 9 August 2004, in Toronto, Ontario; IN THE MATTER OF the Ontario Energy Board Act, 1998; AND IN THE MATTER OF an application by Tribute Resources Inc. and Tipperary Gas Corp. for an order designating a gas storage area; AND IN THE MATTER OF an application by Tribute Resources Inc. and Tipperary Gas Corp. for an order authorizing the injection of gas into, storage of gas in, and removal of gas from a gas storage area; AND IN THE MATTER OF an application by Tribute Resources Inc. and Tipperary Gas Corp. for an order granting leave to drill two wells in the proposed designated storage area; AND IN THE MATTER OF an application by Tribute Resources Inc. and Tipperary Gas Corp. for an order approving or fixing just and reasonable rates for the storage of gas. 3 RP-2003-0253 4 9 AUGUST 2004 5 HEARING HELD AT TORONTO, ONTARIO 6 APPEARANCES 7 GEORGE VEGH Board Counsel ZORA CRNOJACKI Board Staff KATHI LITT Board Staff CHRIS LEWIS Tribute Resources and Tipperary gas Corp. JOHN CHINNECK Tipperary Storage Landowners' Association JONI PAULUS Northern Cross Energy FRANK THIBAULT Market Hub Partners Ltd. MARILYN BROADFOOT Huron County Federation of Agriculture and Landowner GLENN LESLIE Union Gas 8 TABLE OF CONTENTS 9 APPEARANCES: [22] MOTION: [47] SUBMISSIONS BY MR. LEWIS: [72] SUBMISSIONS BY MR. LESLIE: [106] SUBMISSIONS BY MS. PAULUS: [137] SUBMISSIONS BY MR. VEGH: [196] REPLY SUBMISSIONS BY MR. LEWIS: [219] PRELIMINARY MATTERS: [256] TRIBUTE/TIPPERARY PANEL 1 - WALSH, McCONNELL, GORMAN, FISHER, LOWRIE: [305] EXAMINATION BY MR. LEWIS: [313] PRELIMINARY MATTERS: [594] DECISION: [662] TRIBUTE/TIPPERARY PANEL 1 - WALSH, McCONNELL, GORMAN, FISHER, LOWRIE: [675] CROSS-EXAMINATION BY MR. VEGH: [681] 10 EXHIBITS 11 EXHIBIT NO. E.1.1: AMENDMENT TO ISSUE 5(C) [54] EXHIBIT NO. E.1.3: TWO-PAGE DOCUMENT ENTITLED "AMENDED APPLICATION NUMBER 2" [274] EXHIBIT NO. E.1.4: PRE-FILED EVIDENCE: ADDITIONAL INFORMATION FILED JUNE 30, 2004 [299] EXHIBIT NO. E.1.5: DR. WALSH'S CLARIFICATION EVIDENCE [349] EXHIBIT NO. E.1.6: CURRICULUM VITAE OF JAMES FISHER [382] EXHIBIT NO. E.1.7: CURRICULUM VITAE OF JANE LOWRIE [412] EXHIBIT NO. E.1.8: TRIBUTE APPLICATION, AUGUST 9, 2004, ORGANIZATIONAL CHART [425] EXHIBIT NO. E.1.9: LETTER FROM THE MINISTRY OF NATURAL RESOURCES TO THE SECRETARY OF THE ONTARIO ENERGY BOARD DATED JUNE 9TH, 2004 [739] 12 UNDERTAKINGS 13 UNDERTAKING NO. F.1.1: TO PROVIDE INFORMATION REGARDING WHO, AMONG THE APPLICANTS, WILL BE RESPONSIBLE FOR LANDOWNER COMPENSATION [731] UNDERTAKING NO. F.1.2: TO REFILE THE PROPOSED RESERVOIR MONITORING PROGRAM TO CONTAIN SPECIFIC AND MANDATORY DIRECTIONS [1026] 14 --- Upon commencing at 9:45 a.m. 15 MR. BETTS: Good morning everybody. Can you hear me all right at the back? Great. We have communication. 16 The Board's sitting today to hear application RP-2003-0253, submitted by Tipperary Gas Corporation and Tribute Resources Inc., in connection with the Tipperary storage pool project. 17 They've applied for orders designating a natural gas storage area, authorizing injection and withdrawal of gas, authorizing the drilling of natural gas wells, and approving a rate. 18 The Board has assigned this Board file number RP-2003-0253 as well as EB's 2003-0314 through to 2003-0317 inclusive. 19 Primary to this application is a proposal to convert a depleting natural gas production well into a natural gas storage pool to offer to provide natural gas storage. 20 My name is Bob Betts. I will be the Presiding Member at this hearing. And sitting with me are Board Members Mr. Paul Sommerville and Ms. Pamela Nowina. 21 First of all, may I have appearances, first, perhaps, from the applicant? 22 APPEARANCES: 23 MR. LEWIS: My name is Lewis, initial C.A., and I appear for the applicant. 24 MR. BETTS: Thank you Mr. Lewis. 25 And parties representing intervenors in this matter, may I hear from you. 26 MR. CHINNECK: My name is Chinneck, C-h-i-n-n-e-c-k, initial J. I represent the Tipperary Storage Landowners' Association. 27 MR. BETTS: Thank you, Mr. Chinneck. I appreciate there's a lot of people that are new to the Board process, and that's fine, we'll work our way through it together. There's no need to stand, and, in fact, we depend quite significantly on our microphones, so I end up being kind of the MC to tell everybody when to get closer to the mike or further from it. But by sitting, then, you'll be able to be picked up very clearly on the microphones. 28 So, thank you, Mr. Chinneck. And next? 29 MS. PAULUS: My name is Joni Paulus, and I'm here representing Northern Cross Energy. 30 MR. BETTS: Ms. Paulus, welcome. 31 MS. PAULUS: Thank you. 32 MR. THIBAULT: I'm Frank Thibault, and I'm here representing Market Hub Partners Ltd. 33 MR. BETTS: Thank you. Could you spell your name? 34 MR. THIBAULT: Frank Thibault, T-h-i-b-a-u-l-t. 35 MR. BETTS: Thank you, Mr. Thibault. And next? 36 MS. BROADFOOT: Marilyn Broadfoot, representing Huron County Federation of Agriculture. 37 MR. BETTS: Thank you, Ms. Broadfoot. 38 And are there any others? Yes, sir? 39 MR. LESLIE: My name is Glenn Leslie, and I appear for Union Gas. 40 MR. BETTS: Mr. Leslie. 41 Are there any other intervenors? And for Board Staff, who would be representing the Board? 42 MR. VEGH: George Vegh, V-e-g-h, Board counsel. 43 MR. BETTS: And obviously well known to the Board panel, Mr. Vegh. Good morning. 44 I have no housekeeping items to talk about initially, so perhaps I'll ask if there are any preliminary matters to be dealt with by the Panel. Mr. Vegh, are you aware of any? 45 MR. VEGH: Just if we're ready to get to the -- there are a couple of motions before the Panel, if we're ready to get to those now. 46 MR. BETTS: Thank you. Then if there are no preliminary matters to be dealt with, will the applicant be speaking first to the motion? Or Mr. Vegh, perhaps, you could introduce this motion for us. 47 MOTION: 48 MR. VEGH: Thank you, sir. 49 Just be way of background into the motion, the Board issued, on August 5th, Procedural Order No. 4 in this proceeding. Procedural Order No. 4 indicated that the Board will be setting an issues list and will be determining the motion brought by the applicant to strike the evidence of Northern Cross. 50 Just by way of some housekeeping, the issues list that accompanied that notice of motion has had one revision since the time it was issued on August 5th, and the new draft issues list was circulated to counsel this morning. The one change from the draft issues list circulated this morning and the draft issues lists that accompanied Procedural Order No. 4, was an addition to issue 5(c), so that 5(c) now reads: 51 "Does Tipperary possess the financial capacity and possess or have access to the necessary expertise to own, develop, and operate a gas storage pool?" 52 So the effect of the change is to add the issue of whether Tipperary possesses sufficient financial capacity. That was discussed and agreed to among all counsel. 53 That has been handed out this morning. And I don't believe we have -- we should add an exhibit number to this. This will be Exhibit E.1.1. 54 EXHIBIT NO. E.1.1: AMENDMENT TO ISSUE 5(C) 55 MR. VEGH: With that in place, we'd be prepared to turn to the motion brought by the -- 56 MR. BETTS: Mr. Vegh, just before you do that, I want to clarify something for the record. You referred to -- okay. I've been looking at two different documents. I believe the appendix to Procedural Order No. 4, the appendix being the issues list, referred to -- they had a different nomenclature for these issues. And, for example, under issue V, Roman numeral (v) they had 1, 2, 3, 4, and now we're seeing A, B, C on this document. 57 I just want to make sure that there is no confusion as to what issue list we're dealing with. 58 MR. VEGH: Sir, you may be looking at an earlier draft. If you turn to Appendix A of procedural 4, it should have the same approach, that is Roman numerals identifying the major issues and then the subissues with small letters? Do you have a copy of procedural order 4? 59 MR. BETTS: Okay. My print actually came up with numerals followed by numbers. So that's okay. I will just go with exhibit. And we'll just point out that I had a different copy, anyway, if nobody else did. 60 Thank you. Sorry for that interruption, Mr. Vegh. 61 MR. VEGH: Before proceeding with the motion, as the Chair mentioned, we do have the benefit this morning of being joined by a number of parties who have not participated in OEB proceedings before, and the Panel has asked me to welcome these parties, and also just to provide a little bit of background on the role of Staff in these proceedings that will hopefully make things clear and be of assistance to all parties. 62 So, for the benefit of the parties, I'd like to first just introduce the Staff who are here and their roles in assisting in this proceeding. 63 To my furthest right are Kathi Litt of the OEB Staff. Next to Ms. Litt is Bob Cochrane. Bob Cochrane was retained by the OEB Staff to provide expert assistance on geology. And next to Mr. Cochrane is Zora Crnojacki of OEB Staff. 64 Staff's role in this proceeding is to assist the Board by ensuring that there is a full record on which the Board can rely in making its decisions. 65 Staff's responsibility in this hearing is to facilitate a complete record. And this involves questioning and even sometimes challenging the evidence put forward by the parties. It may also involve commenting on parties' submission if that would be of assistance to the Panel. 66 Staff does not take a position on any of the issues in this proceeding or on any of the orders requested in this proceeding. Staff hopes to assist the Board in making its determination by having a full record. 67 And finally, Staff hopes to be able to provide assistance to the participants in this proceeding as well. So if there are matters that arise that you're not familiar with and you would like to discuss during a break or during lunch with Staff, please feel free to do that. 68 So, with that, Mr. Chair, the first item of business is a motion brought by the applicant, Tribute and Tipperary, to both strike the evidence of Northern Cross Energy Ltd. and to address the final issues list in this proceeding. 69 MR. BETTS: Thank you. And is the applicant ready to speak to that motion and their position on the issues list at this point? 70 MR. Lewis: Yes, Mr. Chairman. 71 MR. BETTS: Then I'd ask you to please proceed. 72 SUBMISSIONS BY MR. LEWIS: 73 MR. Lewis: Thank you. Just before I begin, I would like to introduce, sitting to my right, Jane Lowrie who is president and a director of Tipperary Resources Inc. and Tipperary Gas Corp., who I will refer to collectively as the applicant in my submissions. 74 MR. BETTS: Thank you. 75 MR. LEWIS: This is a motion for an order striking Northern Cross's evidence on the grounds that it is irrelevant. Northern Cross's evidence largely deals with the issue of the appropriateness of Union's M16 rate, and all aspects of Northern Cross's evidence are inextricably linked and entwined with this issue. 76 It is therefore difficult, if not impossible, to sever the irrelevant parts of Northern Cross's evidence from those parts that may have some relevance. It is therefore submitted that all of Northern Cross's evidence should be ordered inadmissible. 77 The applicant's motion, if successful, necessitates the deletion from the issues list, the draft issues list, of issues 5(g), (h), and (i). 78 Issue 5(g) reads: 79 "Is it appropriate for an embedded storage provider to hold firm service on a distribution system?" 80 (h) reads: 81 "What may Union charge Tribute/Tipperary for such service?" 82 And (i) reads: 83 "Are the charges for these services reasonable?" 84 I would also ask the Board, in determining the issues on the application, to delete these issues from the issues list. 85 Each of these issues, I submit, is irrelevant to this proceeding and should be addressed at Union's next rate case as part of the study of Union's M16 rate, and not in these proceedings before you. 86 This is a storage designation hearing, among other things, and the M16 contract with Union should only be relevant in the fact that the applicant has signed such a contract to permit its project to be complete so gas can be transported to and from the designated storage area, or the proposed designated storage area. 87 The Board has already spoken on the M16 issue. At Union's last rate hearing, a study was ordered regarding the appropriateness of its M16 rates, and the issue is to come back before this Board at Union's next rate hearing in 2005. Not here, I would submit. 88 The applicant and Northern Cross will undoubtedly participate in that hearing to discuss Union's M16 rates at the appropriate time. Northern Cross's attempt to make the M16 rate an issue here is, in effect, I would submit, an attempt to interfere with a Board-ordered process, a process that is underway, and its attempt to interfere with that process, I would submit, is akin to an appeal of the Board's previous order at Union's rate case. 89 Northern Cross participated in that rate hearing, and if it was not satisfied with the Board's order regarding this issue, it should have appealed that order. It didn't. Instead, Northern Cross comes before this Board in this hearing and asks the Board to revisit the issue now. I would submit that this is inappropriate and interferes with a process well underway. 90 What is Northern Cross really trying to do by making the M16 rates an issue at this hearing, as evidenced by issues 5(g), (h), and (i)? 91 Northern Cross is a potential competitor to the applicant as a storage provider in Huron County. Northern Cross brought an application before this Board to designate its Ashville pool in May of 2003. For reasons only known to Northern Cross, it did not sign an M16 transportation contract with Union before its hearing. 92 Its hearing was adjourned for technical reasons, and no doubt also because Northern Cross didn't have a transportation contract with Union. Northern Cross, I would submit, wasn't ready and its application is now on hold. 93 The applicant, on the other hand, has signed an M16 transportation contract with Union. It is ready to access more of its available financing, and stands ready to complete the drilling of its injection well, which has been commenced. It is also ready to build facilities this fall and employ more staff immediately. It has already spent significant funds to get to this point of project ripeness, and it would be unfair and prejudicial to the applicant to defer a decision on these applications as urged by Northern Cross. 94 The applicant has had numerous meetings with all stakeholders, including landowners, regulators, and affected parties. Delay in implementing the project will only harm these relationships. The applicant is ready to go in all respects. 95 Northern Cross, I would submit, is trying to cause the applicant's project to be put on hold just as their project is on hold, pending further order of this Board on Union's M16 rate. In doing so, it is making Union's M16 rate an issue in the applicants' case before this Board. This is improper, and I would submit that any evidence relating to this issue is irrelevant to this proceeding, and should be ruled inadmissible. 96 The Board should see Northern Cross's motive in its evidence for what it is. Peel away the disguise and see it as an attempt by Northern Cross to use the OEB to thwart, stall, and sidetrack my client's project. The applicant is confident that the Board can see through Northern Cross's nefarious strategy, disguised in alleged public policy debates on contract terms. 97 The Board should reject Northern Cross's attempt to obtain a broader hearing on the development of storage in Huron County generally, and focus on one project now before it, my clients'. 98 The applicant submits that Northern Cross's pre-filed evidence should be excluded from this proceeding because it is largely irrelevant and seriously prejudicial to my clients' application. 99 Mr. Chairman and Members of the Board, in my respectful submission, this motion should be granted because it is the right thing to do. Those are my submissions. 100 MR. BETTS: Thank you. I will just see if the Panel has any questions on your submissions. 101 [The Board confers] 102 MR. BETTS: We may have questions based on that in your reply arguments. So perhaps what I'll find out now: Are there any parties here that wish to speak in favour of the applicants' motion in this case? 103 MR. LESLIE: Yes, I did, Mr. Chair. Glenn Leslie for Union Gas. 104 MR. BETTS: And, Mr. Leslie, would you like to make your submissions at this point, please. 105 MR. LESLIE: Yes. Thank you very much. 106 SUBMISSIONS BY MR. LESLIE: 107 MR. LESLIE: Mr. Chair, Members of the Panel, what I'd like to do is start by referring you to the directive that the Board gave in Union's last rate case that's the basis for this dispute, and it is found, most conveniently, I think, in Union -- in, I should say, Northern Cross's pre-filed evidence, the evidence that is the subject matter of the motion. It's at page 7 of that evidence. And there are two paragraphs, the first -- and they're both italicized. The first deals with the Board's reasons for giving the directive, and then the directive itself is set out mid-page: 108 "The Board directs Union to review the cost causality associated with Northern Cross's energy storage operations with special emphasis on the allocation of storage costs. Union should take into consideration the reduced level of storage and the ability of the storage operation to inject and withdraw different rates, different rate and time versus service requirements of pure gas consumer in its rate design. The Board also directs Union to review the cost allocation and rate design applicable to distributed storage pools, such as the Ashville pool..." 109 That's the Northern Cross proposed development. 110 "...and submit such evidence as part of its 2005 rates application." 111 Now, that directive was given in, I believe, March of this year, of 2004. And when it was given, both the Tribute and the Northern Cross applications were before the Board. The Board was presumably aware of them and contemplated that those applications might be dealt with in the interim. 112 Now, I think the other part of the equation for today's purposes is what Northern Cross is asking the Board to do, precisely. And that's found at -- well, it's found in a number of places, but it's set out in pages 11 to 12 of their pre-filed evidence. 113 And to summarize, they're asking the Board to postpone a decision on the Tribute application pending completion of the work that was contemplated by the directive that I've just read to you. 114 Everybody agrees, Northern Cross agrees, and Mr. Lewis just made the submission, that this is not the appropriate place to deal with the directive itself. Nobody's asking you to do that. Everybody agrees there are other parties who may have an interest in this, and that it will be the subject of a separate proceeding. That's not in contention. 115 So, in my submission, the only issue before you this morning, really, is whether or not Tribute's proposal, its project, should be delayed for up to a year or more, so that the concerns that Northern Cross raised in Union's last rate case can be addressed in the way that the Board directed in its decision. 116 In my submission, that is neither necessary, nor productive. Two points: One, to hear the Northern Cross evidence isn't going to serve any purpose, even on their view of things. Because they're not asking you to deal with the M16 rate and how it should be redesigned, if at all. What they're asking you to do is postpone a decision on this application until that can be dealt with. So the evidence really goes nowhere in this proceeding, other than to presage what may come later. 117 Insofar as the application itself is concerned, Tribute have signed a contract in the form of the M16 rate. They're satisfied with that rate for now. And they're prepared to go ahead on that basis. And I submit it makes no sense whatever to delay that project for a year while others decide whether that rate is appropriate for them. 118 And the reality is, if the Board ultimately decides that the M16 rate is not the appropriate approach, either on the basis of terms of service or cost of service, then the directive is really directed more to cost of service than terms of service. 119 If the Board makes that decision, Tribute accepts the risk that the rate will change and that the parameters of the service they receive will change. That's always a possibility. The Board is not bound by any contract, and the Board can change contracts as the Board thinks is appropriate. 120 And if Tribute chooses to proceed with its application in the knowledge that things may change, in our submission they should be allowed to do so; and that it really serves no purpose whatever to hear the Northern Cross evidence in this proceeding or to delay the Tribute project until those matters can be sorted out, when Tribute is prepared to proceed. 121 And I'll say, for what it's worth, that Northern Cross was also prepared to proceed last year and early this year, with an application for a storage development on the Ashfield project. That application was postponed, not for any reasons having to do with the M16 rate, but rather for technical reasons. And that's in one of the answers to an interrogatory that Union asked Northern Cross. 122 So Northern Cross is, in effect, asking you to prevent Tribute from doing what they themselves were prepared to do earlier this year. 123 I've been asked to tell you that Union is working on the directive. There were a number of directives coming out of that rate case, and the Board gave deadlines and Union, obviously, worked on the ones that were the most urgent, in accordance with the Board's deadline. 124 But Union's expectation is it will have something that people can look at by the end of this year. The Board will then have to decide how it wishes to proceed from there. 125 Those are my submissions. Thank you. 126 MR. BETTS: Thank you, Mr. Leslie. 127 MR. SOMMERVILLE: Mr. Leslie, the difficulty here, it seems, is that the directive requires Union to produce some analytical material respecting this M16 rate, and that's tied to the 2005 and presumably subsequent rate applications. 128 As it now appears, there's not going to be a 2005 rate application. And I guess the difficulty is, this process now lies within Union's sole prerogative as to when it brings its next rate application. 129 I would think that the difficulty here is, how do we cope with that situation, the idea that there's no necessary horizon here that isn't within the scope of your own client's discretion? 130 MR. LESLIE: That's why I just made the remarks I did, Mr. Sommerville. That is, in effect, I think you can take it as a commitment from my client to produce that material within the time frame I've indicated. Or explain why it hasn't, and to do so as quickly as possible. 131 But the expectation is that that will be ready for the Board's review and other parties' review by the end of 2004. 132 MR. SOMMERVILLE: Thank you, Mr. Leslie. 133 MR. LESLIE: Notwithstanding whether there's a rate case or not. 134 MR. SOMMERVILLE: Thank you. 135 MR. BETTS: Thank you, Mr. Leslie. The Panel has no further questions on your submission. 136 Are there any other parties that wish to make a submission in support of the applicants' position? And I would assume that Northern Cross would like to speak in opposition to the motion. Are there any other parties that would also like to speak in opposition to that motion? Ms. Paulus? 137 SUBMISSIONS BY MS. PAULUS: 138 MS. PAULUS: Thank you, sir. First, let me begin by assuring the Board, the applicants, and the other intervenors that Northern Cross doesn't have any intention of subverting these proceedings and trying to convert them into a review of the M16 or a generic hearing of any kind. That's not our intent and we're not going to do that. 139 We have made clear, as the applicants and Mr. Leslie have acknowledged, that we agree that the review of the M16, while a pressing matter, is a matter that should be heard in an arena where there will be all parties that are affected present. So that's not our intent here. 140 Neither are we here to be obstructionist or to unnecessarily interfere with the applicants' application. And frankly, I think that is apparent from the way we have conducted ourselves. We have not put into evidence or issued interrogatories relating to any of the more general technical information relating to the applicants' applications. So we have tried in all respects to limit our evidence and our interrogatories to those issues that do have an impact on Northern Cross. 141 And we are quite comfortable that this Board will be able to control its proceedings to ensure that things don't get away from the true purpose of this proceeding and go where they should not. 142 Having said that, we do say that the issue of how the M16 entered into by the applicants affects that project, including such things as the project's economics and viability. 143 We also say that a proper issue before this proceeding is how that M16 which is executed by the applicants and underpins the applicants' project affects other projects in Huron County. And in this respect I think it's important to recognize that Northern Cross has interests not only in projects that relate to storage but is also an active producer and explorer for gas in Huron County. It also has interests in power generation activities, and these are all impacted by the proponents' project and its use of particular transportation in the particular area of Huron County. 144 And it is these impacts and these impacts alone that we say are appropriate issues to be dealt with by this Board in these proceedings. 145 Northern Cross is here at its expense to canvass these issues because they're legitimate concerns to Northern Cross. Northern Cross was granted intervenor status in these current proceedings, just as Tribute was granted intervenor status in Northern Cross's storage application. 146 Northern Cross's intervention is based on the impact of the applicants' project on Northern Cross's several interests in Huron County, and these, as I have said, include not only potential storage but also its existing production and cogeneration activities. 147 As Mr. Leslie has said, the Board has already determined that the M16 and its applicability to embedded storage providers is a matter that should be investigated. And, as the Board Members themselves have indicated, this is a matter within Union's control, and I must say, until now we have not been able to obtain any information about when that review can be conducted and completed. So it's welcome now to here that there is some prospect on the horizon. 148 The applicants suggest that this proceeding and the review of the M16 contract should be treated as entirely separate, and that one has no impact on the other. But with respect, that kind of isolationist view is naive at best. 149 First, with respect to how the review of the M16 contract affects these current proceedings. Take as an example, if those proceedings result in a change in structure to the service offered embedded storage providers, that change may well impact the type of arrangements that Tribute can enter into with third parties for the leasing out of its storage. And they have made, as part of their application, a request for setting of rates for storage. 150 This means that if you proceed with the application of Tribute and grant the applications now, then they are really free to enter into contracts with third parties that depend on things being structured the way they are today. 151 That will make it very difficult to, at the later M16 review, disentangle things, and it would result in interfering with the contracts that Tribute would have entered into with the users of its storage. So it becomes apparent that if you let things get away, it will become difficult, and may, practically speaking, make dealing with the outcomes of the M16 review not too realistic. 152 It is also important to note that these changes that may occur to the M16 may not only affect the cost side of the finances to Tribute's project, but also the revenue stream, because they would have you look at the cost side and suggest, Well, a change in the M16 could only make their project better. But this is not necessarily true, and it's really premature to speculate that way, because if the M16 is restructured, then it's possible that the type of arrangements that the storage provider can make with third parties to lease out their storage may be different, and this difference may result in a change to the revenue stream that is not anticipated now. 153 With respect, the applicants didn't contest Northern Cross's standing as an intervenor, and the applicants themselves put the M16 contract in issue by making it part of their pre-filed evidence. The Board Staff must have seen some relevance in Northern Cross's evidence as it delivered interrogatories based on it, as did Union Gas. 154 It's not surprising that both the applicants and Northern Cross would prefer that issues relating to the M16 be excluded. But to do so would be to ignore significant and controversial aspects of the applicants' project. 155 In this regard, we note that when you look at the issues list and specifically part V, items (d) through (i), it's important to note that the only issue that was added at Northern Cross's request is item (g). That means the other issues, issues which the applicant now says should be deleted, specifically, (h) and (i), were always on the issues list that was prepared by the Board Staff and was agreed to by the applicant. 156 In fact, there is correspondence on the record indicating that the applicant didn't have any problem with the issues list as drafted with the inclusion of all items with the exception of (g). 157 So it's quite clear that, one way or another, issues pertaining to the service that underlies the applicants' project was always in issue. It's part of the evidence, and it is clearly relevant to these proceedings. 158 Now, with respect, it does seem to Northern Cross that if these issues are just looked at in isolation and out of context, it's possible to see them as unduly wide. And for this reason Northern Cross would suggest that if it was agreeable to the Board, the way to deal with this is to have the issues stand with the caveat or limitation that they should be addressed only insofar as they impact on the applicants' projects and only insofar as that project, as it is underpinned by the M16, impacts on third parties in Huron County. And that is the extent of it, and that is the extent to which Northern Cross would propose to use its evidence. 159 In determining the applicants' motion, it's important to distinguish between relevancy, weight, and merit. The purpose of the preliminary motion is not to judge the weight to be given Northern Cross's evidence, nor even its merit. These will be determined in due course. 160 I should add, similarly, the issue before you in this preliminary motion is not whether the remedy that Northern Cross is asking for is appropriate or will unduly impact on the applicant. Those are matters that will be dealt with in due course. 161 Remedy is quite apart from evidence. The evidence stands before you, and the only issue to be dealt with now is whether it is relevant to, that is, pertains to, the applications before you. 162 In determining relevancy, the Board should bear in mind that it is not constrained by the same rigid rules of evidence that constrain courts. Generally, boards and tribunals take a flexible and pragmatic approach to evidentiary issues, and the question often becomes one of weight, not admissibility. 163 These last points are taken from a recent article on evidence in administrative proceedings, and I have brought copies for each of the Board members, as well as the other intervenors and the applicant. 164 Board Staff requested that in this preliminary motion, counsel confine its arguments to relevancy in relation to the issues on the draft issue list. As we have indicated, Northern Cross takes the position that its evidence is relevant to the issues described in part V, items (d) through (e), and, as well, that its evidence is relevant to issue IV, issue (a) and (b), which is rate-setting. 165 Northern Cross's evidence, generally speaking, can be divided into four categories. First is a brief description of Northern Cross's interests in Huron County, and this is evidence that's necessary in order that Northern Cross can establish for the Board its knowledge base, and also to set a background for how Northern Cross is affected by the applicants' project. 166 The second category is comprised of information pertaining to the particular physical aspects of Union's distribution system in Huron County, and how it relates to the applicants' project. This evidence is required so that the Board can understand how and why Northern Cross and other producers and consumers in Huron County may be affected by the applicants' project. 167 The third category is information pertaining to the M16 contract, including a description of the type of service provided under it and the fee structure for that service. The firm service aspect is important because it is the aspect which Northern Cross says causes the applicants' project, which is predicated on this firm service, to unnecessarily limit the availability of service to other parties with interests in Huron County, to detract from the benefits of the applicants' storage project relative to other storage projects, to increase the costs, and arguably increase the fees that will be associated with its storage. 168 The fourth and final category of evidence is evidence that relates to the review of the M16 that was recently ordered by this Board in the Union rate hearing. This evidence underscores the reliability of Northern Cross's evidence relating to the M16, its inappropriateness for embedded storage providers, and also the likelihood that this rate structure may change. 169 In sum, the four categories of evidence are relevant to the determination of the applications before this Board, and specifically issues relating to the service arrangements that underpin the applicants' project, affect the applicants' project, and affect other projects in Huron County. 170 Moreover, these issues are themselves appropriate and necessary to the proper review of the applications before the Board. And in this regard, before I close, I'd like to bring to the Board's attention that, as stated in Northern Cross's evidence, Northern Cross was and continues to be prepared to have any storage application that it brings before the Board conditional upon it entering into service arrangements that are satisfactory to the Board. So it's misleading to suggest that Northern Cross would have had you approve its application without having the service issues finally dealt with. Northern Cross had found it amenable to have all its approvals conditional upon that issue being determined. 171 At the end of the day, to a great extent, the purpose of allowing intervenors to enter into a proceeding pertaining to a third party's applications is so that the intervenors may have an opportunity to bring to the attention of the Board the effects that the proponents' project may have on the intervenors. 172 It is then the Board's duty to weigh the competing interests of the project proponents and the intervenors, and in doing so, to determine whether or not to grant the applications sought by the project proponents. 173 To perform its duty, the Board must have before it the evidence of the project's proponents as well as the intervenors. To artificially limit the issues before the Board so as to make the intervenors' evidence irrelevant, and therefore inadmissible, is really to make a mockery of the intervenors' rights. 174 This is something that Northern Cross is confident the Board would not intend to do. 175 Thank you. 176 MR. BETTS: Ms. Paulus, you indicated that the Northern Cross evidence falls into basically four sections. And I don't take from this a suggestion that the Board has made up its mind or anything else, but if the Board were to grant the request of the applicant and strike the last three subsections of V, you've indicated that some of your evidence speaks to issue IV on the issue list as well. Is it any specific one of the four sections? Or all of the four? 177 MS. PAULUS: Section IV pertains to rates for storage. And it deals with whether the rates applied for are just and reasonable, and the terms and conditions. Northern Cross's evidence touches on these matters because, as we have begun to say, the costs associated with the service that Union offers Tribute would, or at least should, bear some relationship to the costs it then has to pass on to those that would lease its storage capacity. So that would go to the rates and whether they're just and reasonable. 178 And, in addition, as we have indicated, if the type of service that is made available to the applicants changes and is restructured, then the terms and conditions upon which they offer the storage to third parties may have to change. So there is a relationship there as well. 179 MR. BETTS: Thank you. 180 MS. PAULUS: You're welcome. 181 MR. BETTS: I asked earlier if there were any other intervenors that would like to speak in opposition to this motion. And I didn't get any positive response, so I'm going to assume that's still the case. 182 I'd just ask: Does Board counsel have any question -- appreciating that you would not be taking a position on this, are there any questions or any submissions that might keep this matter clear in the Panel's mind? 183 MR. VEGH: Thank you, sir, there are a couple of areas. 184 MR. BETTS: Mr. Vegh, just before you do, Mr. Sommerville has a question he would like to bring up. 185 MR. SOMMERVILLE: Thank you, Mr. Chair. 186 In your material, the filed evidence, Ms. Paulus, you indicate that the Board ought not to deal with this application in its entirety now because that will inevitably prejudice subsequent arrangements. 187 Now, we've heard from Union that action is being taken with respect to the directive. And I wonder if your concern about the prejudicial effect, if I can use that word -- I don't think you quite used that word, but the prejudicial effect that approval of this application might have on subsequent applications in light of Union's undertaking and in light of any other thoughts that you may have with respect to limiting the scope of this application to avoid that prejudicial effect. Would you comment on that, please. 188 MS. PAULUS: I would be pleased to. Thank you. 189 I think that there are many possible ways to accommodate the interests of all the parties before the Board. Unfortunately, I think, the exact nature of how to do that is one that all parties would best be able to answer at the end of these proceedings rather than at the beginning. And let me clarify that. 190 If, for example, it turns out that there are other technical or operational issues that should be addressed, it may be that the timing of addressing those other issues are coincidental with the timing of addressing the matters that are of concern to Northern Cross, namely, the M16 review. 191 Also, as has been suggested by the Panel Members themselves, the review is something that's within the control of Union, and insofar as its customers or potential customers are being adversely impacted by the weight, it may be that Union Gas is prepared to accommodate its customers by expediting this review and agreeing to some procedural aspects so that this review can be done in a timely manner, one that doesn't interfere or prejudice unnecessarily any third parties, and in particular, the applicants, of course. 192 And it is really -- in no sense is Northern Cross here to have an order appealed. I have to say, on behalf of my clients, we were most satisfied when the review of the M16 was ordered and we're surely not here in any way to appeal it or even to presage what should be done at that review. We're merely here to make sure that that review can effectively occur, and we're here to say that, without knowing the outcome of that review, some of the information that the applicant has filed, its reliability is questionable; and thirdly, that without acknowledging any change and having to review the applicants' application on the assumption that the M16 stays, we then say that is prejudicial to our interests. 193 I hope that was some help. 194 MR. SOMMERVILLE: Thank you. 195 MR. BETTS: Mr. Vegh. 196 SUBMISSIONS BY MR. VEGH: 197 MR. VEGH: Thank you, sir. 198 One area, perhaps, of clarification, and then -- clarification that Board Staff can offer about the draft issues list, and the submissions that Ms. Paulus made with respect to the issues list. But also, then, just a question on an observation made by Mr. Leslie, and then perhaps the applicant or Mr. Leslie can clarify that, because at least I didn't really understand it. 199 In terms of the issues list, the observation was made by Ms. Paulus that the original draft issues list included issues (e) to -- under large Roman numeral V, issues (e) to (i), and that that should be taken as some sort of indication that Staff considers these issues to be relevant. Just as a matter of clarification of process, this draft issues list was put together on the basis of the evidence as filed without trying to take any position on relevance. So that's just for the clarification of parties. 200 The second thing is an area where I'm a bit confused coming out of this submissions, and that is with respect to the timing and how this -- the M16 review ordered by the Board may impact on the timing to have the operations in this case. 201 Mr. Leslie referred to the remedy requested by Northern Cross in its prefiled evidence, which is to effectively defer this decision pending the M16 review. And that's set out at page 12 of the pre-filed evidence. 202 Ms. Paulus pointed out in response that the evidence may support other remedies as well, and those may be put forward by or proposed by Northern Cross or by -- or the Board may just determine other remedies. 203 But in any event, I'm a little confused about the point around the prejudice that would be caused by deferring a decision in this case until the M16 review, in part because there was -- the statement made by Union this morning that the M16 review, I guess, will be filed by the end of this year, for the first time that's been put on the record. And there's also in the evidence -- I don't really have a firm -- the evidence that's been filed so far is not really firm as to the start date of the project. The only reference we've seen is to -- response to Staff IR 114, which asks for the results of the open season, the date, and the response was that the open season has been delayed due to unfavourable marketing pricing. 204 So to tie all that together, what I'm not clear on is the issue of whether it is at all possible to have a deferral of the M16 review pending an outcome -- sorry, a deferral of the decision in this case, pending the outcome of the M16 review. 205 I'm not sure if it's relevant to the issue that has to be decided in this motion, but Mr. Leslie made that point that there is some prejudice to be caused, so it may be helpful to clarify on the basis of evidence that is in the record what would -- what would that impact be. 206 MR. BETTS: Let me just -- questions? 207 [The Board confers] 208 MR. BETTS: Then, Mr. -- and Mr. Vegh, is there anything else that you wanted to make a submission on? 209 MR. VEGH: That's all. 210 MR. BETTS: So you're hoping to get clarify on that from Mr. Leslie in his reply. 211 MR. VEGH: Yes. Well, Mr. Leslie, and perhaps the applicant can comment on that issue. 212 MR. LESLIE: Mr. Vegh, I can tell you what my assumptions were based on my reading of the evidence, and then I guess the applicant can tell you whether I was assuming correctly. 213 I'm assuming the construction in this project was planned to proceed this year, and that given that the M16 review is unlikely to be completed this year, that would put the construction into next year and would delay the project and the availability of the storage accordingly. 214 MR. BETTS: Mr. Leslie (sic). And this is your opportunity to reply on all comments, so please take it as such. 215 MR. LEWIS: Thank you, Mr. Chairman. 216 MR. BETTS: And if you need to confer with Ms. Lowrie, please do so. I don't know that we -- we have to be cautious at this point about taking what could be perceived to be evidence until everybody's been sworn in, so it would simply be argument at this point. 217 MR. LEWIS: Understood, sir. 218 MR. BETTS: Sorry, Mr. Lewis. Did I call you something different? I'm sorry. Thank you. 219 REPLY SUBMISSIONS BY MR. LEWIS: 220 MR. LEWIS: Yes, as Mr. Leslie says, we do have plans to move ahead, hopefully in the fall, to build a pipeline. As I indicated in my initial submissions, there's a considerable amount of investment in this project at this point in time, unlike a regulated utility that might be coming forward asking for storage. That's private investment. So a considerable amount of money has been spent. And obviously investors are looking to get a return on their investment sooner rather than later. 221 The injection well has been drilled to a horizontal depth, and again, we'll hear evidence on this. The vertical leg, we're awaiting orders on this application to complete that. So there's an investment in that injection well which has been partly completed, partly in order to get some caprock. 222 My client is prepared to move ahead to build facilities, employ more staff. Funds are lined up and ready to go to complete this project, or at least get it underway as soon as possible. 223 So it is for those reasons, and the other reasons I mentioned, that there have been meetings with landowners and regulators and affected parties, and there are expectations on the part of those other interested parties as to when this might go forward. 224 Putting this on hold, I would submit, is entirely prejudicial to my client, and I would certainly urge against it. 225 That, hopefully, answers Mr. Vegh's query. 226 In terms of my friend Ms. Paulus's submissions, I'm somewhat confused. I hear her saying that Northern Cross doesn't intend to obstruct our application. Yet the relief that they're asking for is that our application be adjourned pending the determination on the Union rate matter, as I understand it. 227 To me it's one and the same. That, to me, is obstructive. The reality of this is that, at this point in time, unless Union builds more pipe up in Huron County area, there, I believe, is only one storage project that can be accommodated by the existing infrastructure up there. And I would submit that Northern Cross is now, after the fact, trying to better their position by having our project, my client's project, put on hold just as their project is put on hold. And I would submit that's improper. Our project, I submit, is ready to go. 228 We have signed the M16 contract. And for Northern Cross to try to put our project on hold for a later date, and then possibly -- and we can only contemplate their strategy -- bring on their own project application and join it with our application, and have, as it were, a competition between two storage projects for Board approval -- and again, I'm only surmising what might be their strategy -- I would submit that is totally improper. 229 The purpose, I would submit, of this hearing is to hear this application and not confuse it with or permit Northern Cross a forum to better their own position. They're the authors of their own fate to be where they are without a contract, an M16 contract, and with a project on hold for technical reasons. 230 We are not in that position, and we wish to proceed without clouding this hearing with the three issues that I would ask be removed from the issues list. 231 And as a matter of timing, yes, our geologist did indicate that he had no issues with the issues list, which was a draft when it was first circulated. But I would submit that our motion to strike Northern Cross's evidence followed fairly quickly on the first draft issues list which preceded the one that's appended to the Procedural Order 4. 232 In fact, I believe our notice of motion was issued approximately three days after that first draft issues list was faxed out. So I would submit that the motion in and of itself, calls into question the legitimacy of certain issues. And I would submit that the matter is basically a fairly simple one. If the Board reviews issues V(g), (h), and (i), the question that should be asked is: Are those issues proper issues for this proceeding, or are they issues that are probably better dealt with on Union's next rate hearing, in the context of the ongoing study? 233 I would submit that if the answer is that they are better dealt with in Union's next rate proceeding, they are not proper issues for this proceeding and should be struck. And any evidence that relates to those issues should also be struck. And I would submit that my friend, who has characterized their evidence in four neat categories, it's not quite that simple. If the evidence is read and reviewed in its totality, I would submit that the M16 rate issues and the issues (g), (h), and (i), pervade that evidence, and it should be struck as a whole. 234 I'm not suggesting that Northern Cross aren't entitled to participate in this hearing. They most certainly are. And they can ask questions pertaining to the range rates. They can test the applicants' other submissions as to the viability of the project. But to get off on a tangent, I would submit, in respect of these three issues that I'm asking the Board to reject is improper and is the underpinning for my argument. 235 I think my friend indicates that, on the cost side, if the M16 rate is restructured and costs increase, as I understood her submission, that could have an impact on our project. Well, the private investors behind this project are prepared to take that risk, or they wouldn't be here. And unlike a regulated utility with a rate base and so forth, I would submit that that is a risk that they should be permitted to take, in these circumstances. 236 And if there's an adjustment to the M16 rate, and as I understand Northern Cross's submissions, they want the M16 rate lowered, not raised -- so if there is an adjustment to the M16 rate, I would submit that in all likelihood it will be a reduction of that rate which will be favourable to this project, not detrimental. 237 In any event, those putting up the funds are prepared to take that risk and proceed. 238 Those are my submissions. 239 MR. BETTS: Thank you, Mr. Lewis. The Panel has no questions. We have your reply. 240 MR. LESLIE: Mr. Chair, I wonder if I might be permitted to make just two observations. 241 MR. BETTS: I think, Mr. Leslie, as much as I'd like to get everybody in -- 242 MR. LESLIE: No, that's fine. 243 MR. BETTS: I'd like to stick to a certain -- 244 MR. BETTS: You want to stop somewhere. 245 MR. BETTS: -- procedure, and that won't allow it. So thank you anyway. 246 I think it's appropriate now for us to take a short break. The Panel will give some deliberation to this question. But more than that, we're all going to just take a coffee break or whatever at this point. Let's aim to be back at 11:15. I'll just take a minute to explain a little bit of the scheduling. 247 First of all, we're a little late in starting this morning, and that's because everybody had to find their seats and get organized. It is the Board's desire that we start on time, and that will be 9:30 a.m. every morning until we conclude this matter. 248 We do like to minimize the number of breaks. We try to have a break in the morning for coffee and refreshment. We try to take a later lunch break. It might start around 1 o'clock. And then there would be, when we return, our objective would be not to have a break in the afternoon, but to conclude at approximately 4 o'clock. 249 Saying that, the Panel is also respectful of your witnesses and your own schedules, and if for some reason any of you feel we need to sit longer, the Board would entertain that request and try to be as flexible as possible. 250 So, with that being said, let us break now, and we will reconvene at 11:15. Thank you. 251 --- Recess taken at 10:55 a.m. 252 --- On resuming at 11:28 a.m. 253 MR. BETTS: Please be seated, everybody. 254 Thank you, everybody. The Panel did not reach any decision on the motion at this point, but we are hoping to be able to deliver that decision, hopefully after lunch. 255 I think with that we will proceed with the evidence and the first witness panel by the applicant, and I would invite you to invite those people to their chairs. While that's happening, I will ask if there are any preliminary matters for the consideration of the Panel before we begin that. 256 PRELIMINARY MATTERS: 257 MR. LEWIS: Yes, Mr. Chairman. I have a couple of preliminary matters. 258 One of them that I have discussed with my friends and circulated is an amended application number 2, which is a blue two-page document that I've circulated. And I would ask, as a preliminary matter, that this be accepted by the Board. I understand there are -- or there is an issue with respect to this, which hopefully we can get resolved shortly. 259 I don't know whether that would be replacing Exhibit A.1.2. And I have copies of that document here for those who don't have them. So I'm requesting leave to file an amended version 2 application on behalf of the applicants. 260 MR. BETTS: Thank you. And, Mr. Lewis, to what extent have the intervenors been made aware of this? 261 MR. LEWIS: I have provided this morning copies of this document to counsel for all intervenors that are here. I was under the impression that the Tipperary Storage Landowners Association represented all landowners, and I am told that there are two landowners who are not represented by that association and those two landowners are not present at this hearing. 262 This amendment, for those who have been served and are represented, I would submit, is not of any substance because the evidence that will be presented as to the offer of compensation made is in the materials, and everyone's seen that in the pre-filed evidence. 263 MR. BETTS: Very well. I think the Board at this point will simply enter this into the record as an exhibit. And I'd like, first of all, for the Board Panel to give some consideration to it, and perhaps allow the opportunity for any submissions on this, this requested amendment so we can understand the parties' positions on it and understand the amend -- the proposed amendment ourselves to make sure that procedurally it fits. 264 First of all, can we establish an exhibit number for this, Mr. Vegh? 265 MS. CRNOJACKI: E.1.3. 266 MR. BETTS: Sorry, D.1? 267 MS. CRNOJACKI: E.1.3. 268 MR. VEGH: "E" like Edward, 1 dot 3. 269 MR. BETTS: And we've had a D.1.1, I think. 270 MS. CRNOJACKI: Sorry, it's "E" as in -- 271 MR. LEWIS: Sorry, sir, I can't hear what she's saying. 272 MR. BETTS: Zora, you have to get a mike in front of you. 273 MR. VEGH: So the amended bracket 2 application will at this stage be identified as Exhibit E.1.3. 274 EXHIBIT NO. E.1.3: TWO-PAGE DOCUMENT ENTITLED "AMENDED APPLICATION NUMBER 2" 275 MR. LEWIS: What was E.1.2? I thought we were -- the amended Board Staff issues list was E.1.1, and we hadn't got an E.1.2 yet. 276 MR. VEGH: I see it hasn't been announced on the record, but the excerpt that was referred to from the Canadian Journal of Administrative Law has been identified for the record as E.1.2. 277 MR. LEWIS: Is that going to be distributed? I haven't received a copy of that. 278 MR. VEGH: Counsel for Northern Cross provided us with a copy of that, and we'll make sure that it's distributed today. 279 MR. BETTS: And just to get the procedures organized here, I'd like any request for an exhibit to be addressed when the exhibit is presented. A number will be established at that time and described appropriately. And everybody who intends to provide exhibits must have sufficient copies for all parties, and they should be handed out when the exhibit is introduced to the Panel. 280 So, again, don't worry, we've got some learning to do here as we work things through together, but from now on we'll do it that. 281 MR. BETTS: Yes, Ms. Broadfoot? 282 MS. BROADFOOT: May we have a copy of Exhibit E.1.3? 283 MS. PAULUS: We did provide the Staff with ten copies, but we are prepared to make more if that isn't sufficient, and we regret not knowing the formalities. 284 MR. BETTS: And where are those ten copies at this point? 285 MS. LITT: I have them. 286 MR. BETTS: And can you circulate to intervenors? You can do that now, if you like. 287 I would invite all parties to, first of all, analyze those amendments to the application. And I'd like some initial comments on it, perhaps after lunch. And it may be necessary even to receive more in-depth submissions, in which case we could schedule it for tomorrow morning. But other than that, the Board Panel would appreciate your comments after the lunch break. 288 Are there any other preliminary matters, Mr. Lewis? 289 MR. LEWIS: Just one, Mr. Chairman, and I don't know whether we could possibly give an exhibit number to -- and I bear in mind what you just indicated. But there was some additional pre-filed evidence of the applicant, which is entitled: "Additional Information, Submitted June 30, 2004." It's a white binder that was sent out to everyone at the Board's direction. It does not appear on the existing exhibit list, and I was just -- I was going -- I was proposing to enter the other exhibits as they arise through my examination in-chief of the witnesses, but this is an exception because it was sent out on June the 30th, and I'm wondering if we can give this an exhibit number now. 290 MR. BETTS: Does the Panel have a copy of that? 291 MS. LITT: Yes, we do. 292 MR. BETTS: Can you help us find it? 293 Thank you. We were trying to determine, from the Board Panel's point of view, whether we had that, and apparently we do but it has basically been filed into our books. 294 It would be helpful to enter that document as an exhibit now, and we'll ask for three copies at least to be regenerated for us and then we can use it as a full exhibit. 295 So let us establish, first of all, an exhibit number for that document. 296 MS. LITT: E.1.4. 297 MR. BETTS: Thank you. And a description of that? 298 MS. LITT: "Pre-filed Evidence: Additional Information filed June 30, 2004." 299 EXHIBIT NO. E.1.4: PRE-FILED EVIDENCE: ADDITIONAL INFORMATION FILED JUNE 30, 2004 300 MR. BETTS: Thank you. And Mr. Lewis, are you ready to begin with your first witness panel? 301 MR. LEWIS: Yes, I am. 302 MR. BETTS: Would you invite them to their seats. And did you intend on introducing them first or would you like them sworn in first? 303 MR. LEWIS: I would like them sworn in first. Then I propose to have them, basically, introduced and briefly run through their own credentials and background. 304 MR. BETTS: Very well. Ms. Nowina will swear in the witnesses. 305 TRIBUTE/TIPPERARY PANEL 1 - WALSH, McCONNELL, GORMAN, FISHER, LOWRIE: 306 P.WALSH; Sworn. 307 K.McCONNELL; Sworn. 308 J.GORMAN; Sworn. 309 J.FISHER; Sworn. 310 J.LOWRIE; Sworn. 311 MR. BETTS: Thank you. And the witnesses have been sworn in. 312 Please proceed, Mr. Lewis. 313 EXAMINATION BY MR. LEWIS: 314 MR. LEWIS: Dr. Walsh, I'm wondering if you could introduce yourself to the Panel and briefly describe your background and qualifications. 315 DR. WALSH: My name is Philip Richard Walsh. I am an officer of Tribute Resources Inc. I'm also an energy management consultant. I have been involved in the energy industry in Canada since 1981. I began as a petroleum geologist in western Canada, and subsequent to that I became a consultant where I had achieved a Masters in business administration at the University of Western Ontario. 316 My geology degree is from the Queen's University in Kingston, and I have a doctorate in strategic management from the University of Bradford in the United Kingdom. 317 After graduation from Queen's University, I worked for Dome Petroleum, Hudson's Bay Oil and Gas Ltd. -- Dome Petroleum. You have to be a certain age to remember that company. And in 1984, I left Calgary to become the staff geologist at Union Gas Limited in Chatham, Ontario. 318 As a staff operations geologist, I was responsible for conducting all geological evaluations and geophysical evaluations for Union Gas relative to their gas production properties and their underground gas storage operations. 319 In 1987, I left Union Gas to start my own consulting firm, where I undertook work, geological and geophysical work for a number of utilities here in the province dealing with underground gas storage. In the mid-1990s, upon completion of my Masters degree in business, I also began consulting in the area of strategic energy planning, dealing in particular with deregulation of the energy markets here in the province of Ontario. 320 Upon completion of my doctorate in strategic management, I moved to the United Kingdom where I had been invited to lecture and do research in the area of strategic-change management, in particular, as it relates to deregulating markets. And I continue as well to provide technical expertise in the area of underground gas storage and oil and gas production. 321 MR. LEWIS: Mr. Walsh, I believe you indicated that you were an officer of Tribute. Are you also a director of that corporation? 322 DR. WALSH: Yes, I am. 323 MR. LEWIS: Could you tell us what you were retained to do by this applicant? 324 DR. WALSH: Yes. My responsibilities in this proceeding initially involved primarily dealing with the area of the use of storage. Subsequent to that, I have also added additional evidence related to the geological and geophysical information provided in this application. 325 MR. LEWIS: How long have you worked for Ms. Lowrie or entities that she's associated with in a consulting capacity? 326 DR. WALSH: I have worked with Ms. Lowrie since 1988 on and off, in regards to various projects within the province. I have been involved with Tribute Resources in regards to this particular project from about 2001 onwards. 327 MR. LEWIS: And do you adopt the pre-filed evidence and answers to interrogatories relating thereto that bear your name? 328 DR. WALSH: Yes, I do. 329 MR. LEWIS: And are there any corrections to that pre-filed evidence? 330 DR. WALSH: Not that we haven't already submitted. 331 MR. LEWIS: Okay. There is -- and perhaps this is a convenient time to mark this as an exhibit. I understand that there was some geological evidence that was part of our prefiled evidence authored by Mr. Welychka. Can you briefly tell us what your role was in regards to that geological evidence, and then I will hand out some clarification evidence that you've recently prepared that's been distributed to other solicitors on this application. 332 DR. WALSH: The geologist referred to, Mr. Ed Welychka, had been working with Tribute Resources prior to my arrival at that firm. He had originally prepared the geological evidence. Mr. Welychka is a well known geologist here in Ontario. 333 As a result of issues related to licensing in the province; whereas, I am a licensed professional geoscientist here in the province of Ontario, as well as a professional geologist licenced to practice in Alberta, Mr. Welychka was not. So it was felt by the management of Tribute that it would be more appropriate for myself to be involved in regards to providing geological evidence at this particular proceeding. 334 So certain aspects of that initial evidence were reviewed by myself and were subsequently amended to essentially come into line or more in line with my thoughts as a geologist as opposed to Mr. Welychka. 335 The information that you're about to provide essentially represents some finetuning of information provided, and I believe it was referred to as an exhibit earlier this morning. 336 MR. LEWIS: Perhaps if we can just enter this and identify it as an exhibit, and then you can speak to it? 337 DR. WALSH: Fair enough. 338 MR. LEWIS: Perhaps we could call this "clarification evidence of Dr. Walsh" and it consists of a series of geological interpretations that have been, as I say, distributed to counsel. I have extra copies here for anyone who would like copies of them. 339 MR. VEGH: Sorry, Mr. Lewis, are you referring to this memo dated July 27th? 340 MR. LEWIS: No. I'm referring to a series of geological drawings. I believe Mr. Cochrane has been provided with a copy of those, and as I say, I do have extra copies for anyone who would like to have them. 341 MR. BETTS: I don't know that there is -- the Board Panel doesn't have copies of that, to my knowledge. So we'll need some copies. 342 MS. LITT: That will be Exhibit E.1.5. 343 MR. LEWIS: How do you want to go about... 344 MR. VEGH: Mr. Lewis, the document is entitled "Response to Board Staff Supplementary Interrogatory 27B." Is this the document? 345 MR. LEWIS: That is the first -- yes, that is the -- those are the first couple of pages of this handout. There are seven pages in total. At the very top of the first two pages it's titled "Response to Board Staff Supplementary Interrogatory 27B." 346 I am proposing to call the entire package Dr. Walsh's clarification evidence -- clarification evidence. I'm in your hands as to how to handle it but... 347 MR. BETTS: That title works for me. 348 MR. VEGH: So that's been given Exhibit E.1.5. 349 EXHIBIT NO. E.1.5: DR. WALSH'S CLARIFICATION EVIDENCE 350 MR. BETTS: Please proceed, Mr. Lewis. 351 MR. LEWIS: Dr. Walsh, I was just wondering if you could explain how and why this Exhibit 1.5 was created by you, and at whose request, and the purpose of this exhibit. 352 DR. WALSH: Well, all elements of that exhibit were filed, pre-filed, with the Board. But in discussions with Board Staff's consultant, it was felt that, given the complex nature of the geology and the concern that the -- it may be difficult for certain people to understand the complexity of the geology, that perhaps we could clarify some things. 353 And so, as a result, each of the items in this exhibit have been further amended to provide issues of clarification, and I'll go through it just very briefly. 354 The very first page has been changed. It was initially filed as figure 7 in the evidence. It was then subsequently filed with the designated storage area defined on it in response to Board Staff supplementary interrogatory 27B, and has been subsequently, as you see in front of you now, further labelled to point out the interpretation of what is the A1 carbonate reef portion of the reef itself. 355 The second page of that exhibit was originally filed as figure 8 in the pre-filed evidence, was subsequently amended to provide the designated storage area boundary, at least the proposed designated storage area, in response to Board Staff Supplementary Interrogatory 27B, and has been further amended, as per this exhibit, to point out that the structure map there that is on that page, and the information related to the structure of the reef, includes the A1 carbonate reef section. 356 The issue at hand for all of these pages within this exhibit comes down to the geological definition of what constitutes the reef itself. In the original evidence that was filed, the reef is identified only as being the Guelph Formation. In my opinion, the reef at Tipperary is comprised of not only reef within the Guelph Formation but also within the overlying A1 carbonate formation. As a result, we needed to make these amendments to clarify that for the purposes of this proceeding. 357 So, as I point out, within the exhibit, the third item is labelled "Tipperary Pool Well Data Summary," which was originally filed in the pre-filed evidence. This well data summary, which is comprised of four pages, has been amended within this exhibit to take into account the recognition that a portion of the A1 carbonate formation is reefal. 358 And then, finally, within this exhibit, there's the cross-section A-A prime through Tipperary south and Tipperary north pools. This cross-section was filed as part of the additional evidence referred to that I believe was filed on the 27th of June, if I'm not mistaken. And what has been done here is that additional notes are provided on this cross-section to further identify the extent of A1 carbonate reef. 359 Just to make it clear for the Board as we will eventually discuss this later in this proceeding. 360 MR. LEWIS: Thank you. Mr. Gorman, I'm wondering if you could -- and again, the curriculum vitae of all of these witnesses on this panel are in the materials with the exception, I believe, of Ms. Lowrie and Mr. Fisher. And I intend to make those exhibits. But perhaps you can just briefly describe yourself and your background, and qualifications. 361 MR. GORMAN: I'm a registered Professional Engineer, and I graduated from the Memorial University of Newfoundland -- can you hear me okay there? 362 MR. BETTS: Very well, thank you. 363 MR. GORMAN: -- in 1981. Directly from university, I worked for Textile Canada Resources Limited, which doesn't exist anymore. I spent a period of six years with Texaco, five years as a production engineer, and one year as a unitization engineer. 364 Subsequent to that I was employed by Union Gas in Chatham, Ontario, as a reservoir operations engineer. I left Union Gas in 1990, and at that time my position was senior reservoir operations engineer. 365 From 1991 to 1997, I worked for the Newfoundland Department of Mines and Energy, which had the jurisdiction over the onshore exploration, drilling and production in onshore Newfoundland. I was the sole petroleum engineer in that group. 366 In 1997, I left the department and I was hired by CanEnerco Limited to build and manage their gas storage operation near Dresden, the Chatham storage field. 367 In 1999, I left CanEnerco. However, I continued to consult with them and a number of other companies, and in 2002 I returned to Newfoundland and I continued to consult for groups in Newfoundland, involved in oil and gas exploration, and in Ontario, involved in petroleum and storage activities. 368 MR. LEWIS: Mr. Gorman, how long have you consulted for Jane Lowrie or any of the corporations that are related to her? 369 MR. GORMAN: I've consulted for Jane since 1999, five years. 370 MR. LEWIS: And what were you retained to do in connection with this application? 371 MR. GORMAN: With this application, I was retained to evaluate the pool with respect to size, the original gas in place, the storage capacity of the pool under various scenarios, to generate the scenarios, and the well deliverability of the pool. 372 MR. LEWIS: And do you adopt the pre-filed evidence that bears your name and the answers to the interrogatories relating thereto? 373 MR. GORMAN: Yes, I do. 374 MR. LEWIS: Do you have any corrections of that material? 375 MR. GORMAN: No, I do not. 376 MR. LEWIS: Mr. Fisher, I'm wondering if you could just briefly introduce yourself and tell us about your background and qualifications. 377 MR. FISHER: Yes. 378 MR. LEWIS: And just perhaps before we do, I will enter as an exhibit your curriculum vitae. It will probably be Exhibit 1.6. 379 MS. LITT: That's correct. 380 MR. LEWIS: Again, I have provided copies to counsel and I have copies for the Board here. 381 MR. BETTS: Thank you. And that is Exhibit E.1.6. 382 EXHIBIT NO. E.1.6: CURRICULUM VITAE OF JAMES FISHER 383 MR. VEGH: Yes, Exhibit E.1.6, curriculum vitae of Jim Fisher. 384 MR. BETTS: Thank you, Mr. Lewis. Please continue. 385 MR. FISHER: James Fisher, commonly known as Jim or Jamie, based on personal or professional relationships. Born and raised in Calgary. I got a degree in chemical engineering from the University of Calgary in 1984. 386 I worked as an equipment manufacturer and project manager for approximately five years, at which time I moved to Ontario to work for Union Gas for three years. 387 During that time, I was an intermediate station engineer and was responsible for design, construction, and initial start-up of -- I forget, approximately 13 Bcf of storage and briefs similar to what we're working with here. 388 After three years, I went to London and got an MBA, and following the degree, went back to Chatham and traded in a company called CoWest Energy. We were one of the original participants in the evolving gas commodity market at Dawn/Parkway and other points in Ontario. 389 I did that for approximately two-and-a-half years and went back home to Calgary, where I got a job with Duke Energy. 390 During that time I was involved in trading natural gas, marketing natural gas, and was also one of the designated people involved in valuing the storage for the company, and by that I mean North America. 391 In that six-year span, I've traded, sold, bought, managed, taught how to trade storage from a marketing point of view. I was packaged out when Duke closed their trading offices, and took care of my kids for a year and met Jane approximately six months ago and have worked with her and her group in the capacity of project engineer from a pipeline and station construction point of view, and also bring my commercial experience to bear with respect to some of the decision-making. 392 MR. LEWIS: Mr. Fisher, do you adopt the prefiled evidence and any answers to interrogatories relating thereto bearing your name? 393 MR. FISHER: I do. 394 MR. LEWIS: And do you have any corrections of any of that evidence? 395 MR. FISHER: None. 396 MR. LEWIS: Ms. McConnell, I'm wondering if you could just give us a brief rundown of your background and your qualifications. 397 MS. McCONNELL: My name is Kathy McConnell. I'm a professional geologist licenced to practice in the province of Ontario by trade. I have been involved in the oil and gas industry in Ontario for 18 years, eight years with the Ministry of Natural Resources as a petroleum resources inspector -- 398 MR. LEWIS: I'm just wondering if you could lean over and speak into the microphone. Some people may be having a hard time hearing you. 399 MS. McCONNELL: Shall I start again? 400 MR. LEWIS: No, I think you're fine to carry on. 401 MS. McCONNELL: Eight years as an inspector, ten years in the private industry as a consultant to oil and gas companies, hydrocarbon storage companies and salt-solution mining companies. 402 I am a class 1, 2, 3, and 4 examiner, licenced by the Ministry of Natural Resources. Class 1 and 2 examiner is licenced to examine production, drilling and plugging operations. Class 3 examiner is licenced to examine salt-solution mining activities. And class 4 examiner is licenced to examine hydrocarbon storage operations. 403 MR. LEWIS: And what were you retained to do in connection with this application? 404 MS. McCONNELL: I was retained by Tribute to provide technical services related to the drilling and plugging operations, designing the drilling and plugging program, supervising the operations. I was also retained to help in the land matters and leasing matters for Tribute. 405 MR. LEWIS: And how long have you consulted to Jane Lowrie and any of her related entities? 406 MS. McCONNELL: I have worked with Ms. Lowrie since 1996. 407 MR. LEWIS: And do you adopt the prefiled evidence and answers to interrogatories relating thereto bearing your name? 408 MS. McCONNELL: Yes, I do. 409 MR. LEWIS: And do you have any corrections of any of that prefiled evidence? 410 MS. McCONNELL: Yes, I do. In the application in section 5, which is the land section, at white tab 4, the second break, and then in small tab 4, the Vermue lease was mistakenly put at tab 4. It should have been placed at tab 3. And the lease that should have gone at tab 4, the Middleton lease, was mistakenly left out. And I do have copies of that lease. 411 MR. LEWIS: Ms. Lowrie, before we carry on, I'd like to mark as an exhibit your curriculum vitae. Again, this has been provided to counsel, and I have extra copies for the Board. And I would assume that this is Exhibit E.1.7. Curriculum vitae of Jane Lowrie. 412 EXHIBIT NO. E.1.7: CURRICULUM VITAE OF JANE LOWRIE 413 MR. VEGH: Exhibit E.1.7, curriculum vitae of Jane Lowrie. 414 MR. BETTS: Thank you. 415 MR. LEWIS: Ms. Lowrie, I'm wondering if you could introduce yourself to the Board and perhaps tell us something about your background and experience in oil and gas matters. 416 MS. LOWRIE: Okay. My name is Jane Lowrie. I have a BA in history from the University of Toronto and an MBA from the University of Western Ontario. I think I graduated in 1981. 417 Since that time I've worked in the Ontario oil and gas industry. I began working in a family corporation, and have grown that company to daily production of approximately 400 BOE per day. We have two main areas of business. We explore for oil and gas and drill wells to increase our production, and also, we are in the business of buying older wells in later phases of their production life, and take the wells, re-evaluate them, plug what is no longer necessary, clean up the sites, and make them profitable. 418 We purchased Tipperary Field in 1998, January of 1998, as well as some other Huron County production, and put the wells back on production, installed different production facilities, such as a different compressor, and started to clean up the sites and have plugged two wells at Tipperary since that time. 419 MR. LEWIS: What is your relationship with Tribute? 420 MS. LOWRIE: Tribute was formed in 1997, and I have been the treasurer of the company since that time. 421 Late in 2002, I purchased most of the shares. I organized -- I purchased some of it myself, and other people in our group purchased the remaining shares from the existing president, and I became president of the company. 422 MR. LEWIS: Perhaps we could take this opportunity to mark as an exhibit an organizational chart for Tribute and Tipperary Gas Corp. Again, I've provided copies to counsel. This would be Exhibit E.1.8 entitled: "Tribute application organizational chart." 423 MR. VEGH: Okay, so this is Exhibit E.1.8, Tribute application, August 9, 2004, organizational chart. 424 MR. BETTS: Thank you. 425 EXHIBIT NO. E.1.8: TRIBUTE APPLICATION, AUGUST 9, 2004, ORGANIZATIONAL CHART 426 MR. LEWIS: Perhaps you could just take the Panel through this chart and explain the interaction between Tribute Resources Inc. and Tipperary Gas Corp. as described on this. 427 MS. LOWRIE: Tribute Resources Inc. is a public company traded on the TSX Venture Exchange. The top four panels show widely held, 39 percent; I own approximately 25 percent; and Jack Shoenmaker, 14 percent; and Crich Holdings & Buildings, 22 percent. The three parties on the right of this are the only parties owning over 10 percent of the company. 428 In 1999, when we decided to take Tipperary -- to begin development of Tipperary as a storage project, Tipperary Gas Corp. was formed as the general partner for a limited partnership that would own the asset after designation. The reason for this is because the funds needed to develop Tipperary are being raised privately through the limited partnership. 429 MR. LEWIS: I understand that Murray Brown -- I'll come back to that. 430 I believe there is one page of pre-filed evidence that bears your name. And do you adopt that pre-filed evidence as your own? 431 MS. LOWRIE: I do. 432 MR. LEWIS: And any interrogatories that may have arisen out of that? 433 MS. LOWRIE: I do. 434 MR. LEWIS: And do you have any corrections of that pre-filed evidence? 435 MS. LOWRIE: No. 436 MR. LEWIS: I would ask, Mr. Chairman, that the Board accepts these witnesses with expert qualifications and qualify them as experts to give evidence, opinion evidence, in their fields. 437 MR. BETTS: Do I have any submissions from any parties with respect to that request? 438 We don't usually deliberate that long on such a question, so I'll try to let you know what it was about. And I'm going to invite Mr. Vegh to give us some support on this one. 439 It's simply a matter of the classification of Dr. Walsh. This has nothing to do with his expert knowledge and the evidence that he's providing, but whether or not -- because of his relationship to the company, whether it changes his status as an expert witness rather than a corporate witness giving opinion evidence. 440 By the way, the Board would not change its level of respect of that evidence as a result of that determination, but I would be interested in Mr. Vegh's comments, and perhaps any comments from Mr. Lewis as well. I don't think it's a matter of substance, it's just a matter of procedure for us. 441 MR. VEGH: Sure, and I'm not -- I'm not entirely sure what's added by identifying the members of the panel as expert witnesses to give opinion evidence. As I understand it, each of the panel members has prepared evidence in these proceedings. They've now adopted that evidence under oath. And usually the practice is, you know, the panel elaborates on that evidence and can give additional evidence, answers questions. 442 But I think there's -- it's a general question of why is it that you're requesting the Board to recognize them as experts. And there's also the question of each member's category of expertise. I'm not sure if Ms. Lowrie is being put forward as an expert witness, and if so, on what topic. 443 So it may be -- it may be simpler, without arguing about the expertise of any of the members, that the members of the panel just simply adopt their evidence and have it put forward and cross-examined on that basis, including the evidence that goes to their history and expertise in the area. In other words, I'm not sure why it is you're requesting that they be categorized as expert witnesses. 444 MR. LEWIS: I guess there are three issues. 445 To address that one first, it's my experience and understanding that only a qualified expert can give opinion evidence that has any weight or bearing on a proceeding. And if there is any other opinion evidence tendered on any of the matters before this proceeding, then it would be my position that a qualified expert's opinion is of more weight and value than perhaps a layperson's. That addresses your first question, Mr. Vegh. 446 In terms of Mr. Chairman's comment about Mr. Walsh's status as an officer and director of Tribute, I fully accept his comment, so long as Mr. Walsh is viewed as an expert in his area. We specifically brought forward his interest in that company, to put it on the record so that the Board could see that he does indeed have an interest in that corporation. Whether that colours his evidence or not is something to, perhaps, be brought out in cross-examination. 447 The third point, and it's a good one, is that Ms. Lowrie is not - and I'm sorry for broad-brushing it - is not being tendered as an expert. It is the other four witnesses on this panel that are being tendered as experts in their respective fields as evidenced by their curriculum vitae, which speak for themselves. And if the Board would like them to speak on those areas in which they feel they have expertise, I'm sure that we can have that done. 448 [The Board confers] 449 MR. BETTS: Are there any final submissions from any other parties on this question? I hope we don't make small questions this large in every case. But the Board is prepared to recognize the expertise of the four panel members, so please proceed. 450 MR. LEWIS: Thank you, Mr. Chairman. 451 Dr. Walsh, could you outline your geological interpretation of the pool. And you may want to make specific reference to certain expanded versions of the pre-filed evidence. 452 DR. WALSH: Yes. If the Board Members, Board Staff and the various parties involved in this proceeding would indulge me, it might be easier for me to provide a very brief explanation of the geological evidence using presentation material that we have here. 453 MR. BETTS: Very well. Please proceed. We don't have a mike for you, Dr. Walsh, so I'd just ask you to project your voice, if you can. 454 DR. WALSH: Well, part of the experience in the last year or so of lecturing is to make sure I project accordingly so that a class of 240 somewhat bored undergraduates will listen to me. 455 The first board that I have here, I refer to, is figure 13, which was pre-filed by the applicant. And what figure 13 presents is the -- 456 MR. VEGH: Excuse me, Mr. Walsh, where would that 13 be in the evidence filed? 457 DR. WALSH: It's in the geological evidence originally filed. So that would be volume 1. It's book 1 of 2. Major tab 3. So in the first volume, book 1 of 3, major tab 3, and then minor tabs 2. Okay? Do you have it? 458 It was the original prefiled evidence of Mr. Ed Welychka. 459 MR. BETTS: Thank you. We have it. 460 DR. WALSH: Lovely. Okay. 461 Now, this particular figure 13 that was included in that report is a geophysical interpretation of the A1 carbonate Guelph reef structure. It is a three-dimensional seismic interpretation. In other words, the data acquired to make this interpretation was as a result of the acquisition of three-dimensional seismic data. 462 Now, using this as the interpretation of the reef boundary, we looked at the various wells that had also been drilled, and combined that geological information in those singular points to develop the interpretation of the reef itself, which on this figure, which is figure 14 within that same package -- so the following figure -- to derive an interpretation of the extent of the reef and the appropriate distances that are required to assure protection of that reef under a storage scenario. 463 And as you can see, highlighted in red is the proposed designated storage area, and various distances calculated to determine the distance or the buffer between the edge of the proposed designated storage area and the interpreted boundary of the reef itself. 464 Now, what's significant about this is that once we have defined the outer limits to have reef through the use of the three-dimensional seismic and the appropriate buffer, we now have some assurances from a technical standpoint that the gas itself that is injected into the pool will be contained within this reef structure, and will not be in a position to migrate away from what is determined as the appropriate designated storage area. 465 Now, with that in mind, once we understand where the reef itself exists, if you look at revised figure 10. Now, this was included in the additional evidence filed at the end of June, which was referred to as an exhibit earlier. And I believe, if I'm not mistaken, that Board Chair has recognized that it does exist within those binders and that you have further requested additional copies of that. 466 MR. LEWIS: For clarification, I believe you're referring to Exhibit 1.4 -- 467 DR. WALSH: That's correct. 468 MR. LEWIS: -- entitled "additional evidence." And where in that, just so we're clear, is this referred to? 469 DR. WALSH: There are a series of maps, which would be contained in tab... 2? I'm sorry, it's at tab -- oh, sorry, tab 1. You're right. In tab 1. And it's contained -- it's one of the maps within that document. 470 MR. BETTS: Are there any extra copies of that? The Board Panel's requested copies be made for us, but I think if we're talking about that now, we should have at least one up here. 471 MR. LEWIS: I have one. 472 MR. BETTS: And does Board Staff have any? I think all of them have been kind of separated into the bigger binders. One way or the other, until we get a copy of that, we'll have to make sure we're looking at exactly the same diagram as you're referring to, Dr. Walsh. 473 MR. LEWIS: This is not in binder form but it contains everything that's within the binder. 474 MR. BETTS: Thank you. That will do us for now. And can you give us a reference again, Dr. Walsh? I'm sorry. 475 DR. WALSH: It's described as "Figure 10 Revised, Gross Gas Isopach Guelph formation." 476 MR. LEWIS: At tab 1. 477 DR. WALSH: The very last page in tab 1. 478 MR. BETTS: Thank you. We do have a version up here. 479 DR. WALSH: Now, what is different about this particular map as I'm referring to, is that this was prepared subsequent to the original prefiled evidence that had been filed, which is why it's not as easy to reference. But it's contained within that package. And I believe everyone has seen it. 480 Now, what you see on this particular figure is, again, the interpretation of the extent of the reef, highlighted in light blue, that was derived from the three-dimensional seismic interpretation and the various well information that existed. 481 But what I've done in this particular map is I have interpreted the extent of the gas, the gross gas reservoir, for both pools, the Tipperary north pool and the Tipperary south pool. 482 A cross-section, which I will show you in a second, which is also contained within that package, the additional evidence package, is drawn through this map to give you an idea of what was looked at in regards to making this interpretation in regards to gross gas pay. But what's important to note is how the gross gas itself, the reservoir, is contained within the reef structure, and based on the geological information that we have, are isolated from each other. So that there is no effective communication between the North pool and the South pool. 483 And just for information's sake, where my finger -- where I'm pointing in the centre on this particular display -- I don't believe it's on the map that was filed with the Board, but here is where the new well, vertical well is being drilled. The purpose of which will eventually be to drill a horizontal leg that will run northward into this gas reservoir here for the purposes of injecting and withdrawing natural gas. 484 So the cross-section that I'm referring to, what we call A to A prime, gives you a cross-section of that map. To give you an indication as to where that gross gas pay that I had contoured earlier exists. 485 MR. VEGH: Excuse me, Mr. Walsh. This was a document that was marked -- I am just trying to make sure we have a reference for this on the record. The document you're referring to now is part of the additional information marked as exhibit -- for clarification. E.1.5. 486 MR. LEWIS: Now, it's Exhibit 1.4, tab 1, and we were at the last diagram at the last page, and if we go towards the front of that document, approximately ten, 12 pages, you'll see the same document as is up on the easel. 487 MR. BETTS: I think part of the confusion is that in that filing which was E.1.5 there are also those documents as well. 488 DR. WALSH: And I will explain the difference in a second. 489 MR. BETTS: Thank you. 490 DR. WALSH: The difference being -- and this is a point of clarification and, therefore, the reason for the submission this morning -- is that for the purposes of the layman, and I hate to use the term "layman" but -- it was important to further distinguish the difference between the A1 carbonate reef portion and the A1 carbonate formation off-reef portion. 491 And, as a result, I have taken the A to A prime cross-section that had originally been submitted in the additional evidence, and I have further clarified that the A1 reef portion as found the latest submission, filed on a blue sheet of paper, the A1 carbonate reef portion which fits over top of the Guelph reef portion is defined on this section. Just for clarification. 492 MR. LEWIS: So, by "the blue package," I believe the witness is referring to Exhibit E.1.5. 493 Perhaps, and I don't know if you're going to get to this, Dr. Walsh, you could explain for us the difference between the cross-section that's in Exhibit E.1.4 and the cross-section that's in Exhibit E.1.5. 494 DR. WALSH: Well, I just did, I think, prior to that. You probably were busy looking at the evidence. 495 The difference being the identification of what we would refer to as the A1 carbonate reef section which overlies. And what I mean by that, to distinguish the difference between the A1 carbonate reef portion and what we call the A1 carbonate off-reef portion, is that when the reef itself was growing, 400 and some million years ago, the reef was building up to a point which we called the Guelph time. It's a matter of stratigraphy and amount of depositional time. 496 At some point we began seeing a second stage of reef buildup occurring in what we call the A1 carbonate time, and it is classified as the A1 carbonate formation. So while this is building up on top of the Guelph, we also have in the off-reef positions continued deposition as well. And that we call the A1 carbonate. 497 Now, Mr. Welychka, in his original evidence that he filed, he was dealing with it from the standpoint that it is all reef structure, and didn't distinguish the difference between A1 carbonate and Guelph as it relates to the reef. So the original well data summary essentially classified the reef as all of this. Therefore the latest submission, Exhibit -- help me with that, Chris. 498 MR. LEWIS: The blue one, E.1.5? 499 DR. WALSH: Correct, E.1.5, represents the clarification, the addendum, in order to make sure that we are dealing specifically with the A1 carbonate reef and the Guelph reef as opposed to the entire reef itself. 500 MS. NOWINA: Dr. Walsh, can I ask you a question? 501 DR. WALSH: Certainly. 502 MS. NOWINA: You are indeed dealing with laypersons, so keep that in mind. So the significance in the difference between your diagram and the previous one to the layperson is, so we know the terms now and we know that the deposition was at different times and so on. 503 DR. WALSH: Exactly. The question is, So what? From a practical standpoint, in this particular case -- now, it means a lot to the technical person, okay, and there are technical people in the room here who want to address that and deal with that. But from the standpoint of where the gas exists and where the porosity and the permeability exists, we're dealing purely with the Guelph reef portion as outlined in this cross-section. 504 This area, the red area defined on this section, represents the interpretive reservoir or the interpretation of the reservoir. That's where the gas existed and where we will be reinjecting gas. 505 As it turns out, based on the geology found in the wells that were drilled, there was no porosity within the A1 carbonate that held any gas. That's not to say that in some pools in Ontario that couldn't exist. In some cases, you do get porosity and permeability developed in the A1 carbonate where gas can be found. But in this particular pool, that's not the case. 506 Now, to finalize things, I said I'd keep it brief. The intent for the purposes of developing this pool for storage, both Tipperary north initially, and hopefully, in the long run, Tipperary south portion, is to drill a well, which we've initiated, in about this -- in the mid position, middle of the reef, and to turn a horizontal well through the most porous and permeable section as we have found to date, and allow us the opportunity to enhance the deliverability of gas both in and out of the pool. 507 So from a technical standpoint, this field has all the characteristics required of it to be a suitable gas storage facility. 508 MR. LEWIS: Does your geological interpretation of the pool support using this pool to store gas? 509 DR. WALSH: Yes, it does. 510 MR. LEWIS: And in your opinion, how appropriate is the pool boundary as you've identified it on, I believe, the first figure you were examining? 511 DR. WALSH: The methodology that's been used in order to determine the appropriate boundary for this pool is consistent with the manner in which designated storage areas have been determined in prior gas storage facilities. 512 MR. LEWIS: What about the DSA boundary itself, the outer boundary? How appropriate is that, in your opinion? 513 DR. WALSH: I refer again back to figure 14, which was included in the original pre-filed evidence, to point out that the distances involved between the interpreted outer edge of the reef, which, as I've shown in the cross-section, has been tight - in other words, in some situations the outer edge of the reef has no gas in it -- but from a safety factor, we know that that is the maximum extent that gas could exist in any case because that's where the reef stops. 514 We have determined that the areas involved between the designated storage area as proposed and the position of the reef itself is suitable for the protection of the gas storage facility. 515 MR. LEWIS: And what is your opinion as to the suitability of this pool to store gas? 516 DR. WALSH: Well, subject to Mr. Gorman's comment from a reservoir perspective, but from a geological perspective, the characteristics are consistent with other gas storage facilities in Ontario. And I have no reason to believe that it wouldn't make a suitable storage field, given that we're relying on the horizontal drilling technology to ensure the types of deliverability that would be required to make it an economic facility. 517 And again, I defer to Mr. Gorman in regards to the horizontal drilling technology and reservoir capability. 518 MR. LEWIS: But on this issue of characteristics, are you referring to porosity and permeability which you referred to before in. 519 DR. WALSH: Absolutely, yes. 520 MR. LEWIS: Thank you. 521 Perhaps we can turn to Mr. Gorman. Could you tell the Board what the applicants' plans to pressure up this reef are if these applications are granted. 522 MR. GORMAN: In the long term, the plan is to bring this pool up to a pressure equivalent to .7 psi per foot, which is currently the maximum pressure that has been -- that storage pools in Ontario have been subjected to. That translates to a pressure in the range of about 1,096 psia. 523 Is everybody familiar -- everybody comfortable with my use of "psi" and "feet"? 524 MR. VEGH: Maybe you should define these terms for the record. 525 MR. GORMAN: Yes. Well, the maximum pool pressure is calculated by multiplying a specific gradient times the depth of the pool. And one of the parameters that's used is the pressure increase with depth. So, for example, a pool at 1,000 feet would be subjected to a pressure of 700 psi in a storage scenario. 526 MR. LEWIS: What does "psi" mean, just so we can get that on the record? 527 MR. GORMAN: Pounds per square inch. 528 MR. LEWIS: Mr. Gorman, I understand that a core has been taken of the caprock over this reef. 529 MR. GORMAN: That is correct. 530 MR. LEWIS: Can you tell us the purpose of taking the core. 531 MR. GORMAN: Yes. There's two main determinants in -- with respect to an appropriate operating pressure in a storage pool. One is the pressure gradient, which I just mentioned, and the other one is the integrity of the overlying rock, what we call the caprock, which is relatively impermeable, and in most cases, for all intents and purposes, a perfect seal, solid seal. So that the core, the well was drilled and the core was taken of this caprock -- 532 MR. LEWIS: Just before we go on, when you say "the well was drilled," which well are we referring to? 533 MR. GORMAN: The recent vertical well that Dr. Walsh referred to. 534 A core was obtained from the well. And that will be subject to -- subjected to a series of standardized tests that have been developed by the laboratories specifically in regards to determining suitability for storage and the upper pressure limits that could be applied and still maintain the integrity of the caprock. 535 This is generally referred to as threshold pressure. It's been subjected to a threshold pressure test. The core is -- pressure is applied against the core and at the point at which failure occurs, or water in the rock becomes mobile and it no longer becomes a sealing mechanism, it becomes a threshold pressure limit for the core. 536 And to date, all caprocks that we've had experience with in Ontario, the strength of this caprock has far, far, far exceeded pressures to which it would be subjected. 537 MR. LEWIS: I understand that that caprock sample is out for analysis as we speak, is that -- 538 MR. GORMAN: That's correct. 539 MR. LEWIS: And how long do you expect it will take before the results of that caprock analysis will be available? 540 MR. GORMAN: It could be as much as a month. 541 MR. LEWIS: And is the applicant prepared to undertake not to delta pressure this reef until the Ontario Energy Board has been provided with a geological report confirming that the caprock analysis is satisfactory and the integrity of the reef can withstand Delta pressuring as you've described it? 542 MR. GORMAN: Definitely. We wouldn't ourselves -- the Ontario Energy Board aside, if this wasn't a regulated operation, I mean, from an engineering standpoint and good storage practice standpoint, we wouldn't proceed with a storage operation without evaluating the caprock. 543 MR. LEWIS: Now, I understand that the landowners within the proposed designated area have a concern, based upon their prefiled evidence, that the delta pressuring of the proposed DSA is approximately 2.75 percent -- pardon me, 2.75 times the original discovery pressure of this reef. 544 I'm wondering if you could comment on those concerns. 545 MR. GORMAN: Well, we've noted the concerns, and we take the landowner concerns very, very seriously and we attempt to address them as in the best manner possible. 546 But I believe that their concerns are unfounded, in the sense that the comparison of our storage pressures to original discovery pressures, which is the pressure that the exploration has discovered in the pool before gas was extracted, a comparison of that pressure to the pressure that we will utilize is not a valid one from an engineering standpoint. 547 What is valid is the depth of the pool and the integrity of the caprock above the pool. There are a number of reasons why the pool could have been -- was as low as it was upon discovery, the pressure, but it does not have anything to do whatsoever with the integrity of the pool. 548 MR. LEWIS: And just in layman's terms, can you explain to us how the depth of the pool is a factor in, I guess, to put it another way, being confident in the safety of the pool once it's delta pressured? 549 MR. GORMAN: Yes. We were trying to come up with an appropriate analogy. And in layman's terms, it's basically, if you can think of it as the pool and the gas are in an inverted dome, with a seal on top. And you've got all this weight on top of it. And so, the deeper you go, the more gas you can put into the pool, the higher the pressure the pool can be without causing a rupture or a fracture of the pool or the formation. 550 And this is a commonly, commonly accepted methodology for evaluating pressures and suitable pressures. It's used in the oil and gas industry for other applications as well, and in the drilling regulations and that sort of thing. Always takes this -- the depth and then acceptable gradient into account. 551 DR. WALSH: If I might add an analogy, first of all, we like to think of the reservoir itself. It's not a hole in the ground, I mean, that's a very -- that's a common myth. What we're dealing with is a reef. And for those of us who have had the opportunity to snorkel in the Caribbean, where reef deposition is currently going on, it is more like a big sponge, so if you think of a household sponge or a natural sponge that you may purchase, that's what we're dealing with. So we have pores within the sponge that are available to hold gas and other fluids. 552 In the case of Tipperary, it's gas. And think of it as putting that sponge in a big box, and then piling layers of plaster of Paris on top of it. And as you build up that depth of plaster of Paris, you are increasing the integrity of that sponge for the purposes of injecting gas at higher pressures. So the determination of that depth becomes important in regards to calculating the maximum allowable pressure that you can subject that sponge to. 553 I hope that works. 554 MR. LEWIS: What was the original discovery pressure of this pool approximately? 555 MR. GORMAN: 425 pounds per square inch. 556 MR. LEWIS: And is that original discovery pressure in any way relevant to this issue of the ultimate integrity of the pool once it's pressured up? 557 MR. GORMAN: No, it isn't. 558 MR. LEWIS: Mr. Walsh, I'm wondering if you could comment on the landowners' concern, which I believe they've set out in their prefiled evidence, regarding the thickness of the caprock that is currently being analyzed. 559 DR. WALSH: Again, if you could indulge me, I'll show the representation on the cross-section for the clarity of everyone involved. 560 Cross-section A to A prime, as referred to earlier, shows the various geological formations involved with this pool. And part of the geology is as Mr. Gorman referred to, this caprock mechanism in particular, which we call the A2 anhydrite caprock. 561 Now, this is the section of rock that is currently being analyzed for the purposes of determining appropriate threshold pressure to be applied to this pool. And this caprock sits over top of the reef itself. 562 Now, in circumstances where the reef has porosity and permeability throughout it, in other words, both within the Guelph reef section and the A1 carbonate reef section, this A2 anhydrite caprock represents that seal. 563 In our particular case we have not only the A2 anhydrite caprock, but we also have tight A1 carbonate -- when I say "tight" no porosity or permeability -- we have tight A1 carbonate formation and tight Guelph formation surrounding the known gas reservoir. So this adds further protection. 564 And this A1 -- A2 anhydrite caprock thickness is consistent with the thickness of other A2 anhydrite caprock in other underground gas storage pools in southwestern Ontario. 565 So, again, it leads me -- or at least my opinion is that there doesn't appear to be any evidence that suggests that this wouldn't be suitable as a caprock, and I would suggest to all parties that they should feel secure about the ability to put the gas into this pool at the pressures that are being proposed. 566 MR. BETTS: Dr. Walsh, just for clarification, what are the units on the left-hand scale, the depth scale? 567 DR. WALSH: Yes. It's common practice for us to deal with depths -- see at the very bottom of that cross-section it says: "Depth sub-sea level?" -- to calculate the depth from sea level. And that's what that represents. And it's in meters, so you have picked out an error, and those are meters. 568 MR. BETTS: Thank you. 569 MR. GORMAN: An error in that we don't refer to the actual unit of measurement. These are meters. 570 MR. BETTS: Thank you. 571 MR. LEWIS: Mr. Gorman, I understand that the applicant has suggested a reservoir monitoring program to be implemented if these applications are granted, or if this application is granted, if the orders flowing from this application are granted. 572 I'm wondering if you could describe what that reservoir monitoring program is for us. 573 MR. GORMAN: Yes. I developed a short-form reservoir monitoring program which was based on the CSA standards for underground gas storage, as well as based on my operating experience with the Chatham D pool -- 574 MR. LEWIS: Just before we go on, could you explain for those of us who might not be familiar with that term "CSA standards," like, who formulates those standards? What does "CSA" stand for? 575 MR. GORMAN: CSA stands for the Canadian Standards Association, and there's a specific standard, Z341, which covers the storage of hydrocarbons in underground formations that's been developed with input from industry and regulators, and it continues to evolve. 576 The standard has been accepted by companies like Union Gas, Tecumseh Gas Storage, and all gas storage operators in Canada. And it lays out some specifics as well as goal-oriented standards and requirements for the prudent development and operation of a storage pool. 577 For the purpose of this hearing and the evidence submitted in response to concerns, I assembled a short-form plied reservoir monitoring program which the applicant should undertake when it initiates operations. And this involves good practice activities of a general nature, as well as activities specifically related to the monitoring of the performance of the pool and measurement of the volumes in and out of the pool, in an attempt to identify and mitigate any problems that may occur from our storage operations. 578 In other words, we continuously monitor our pressures and volumes, and there's a standardized methodology used there where you're plotting the pressure against the volume pumped into the pool. And when you take it out, if pressure goes down when it comes out, it goes up when it goes in and it's a straight line, after you make some adjustments to it. But if you find that it deviates from the line, it may be an indication of a problem with the pool or with your facilities or some gas loss on surface, or anything like that. It's a good -- it's a good operating practice manual, basically, that I've put together. And it covers the injection, first-season injection, and withdrawal, as well as second-season injection/withdrawal, and ongoing activity. 579 And this was based on my experience and what I experienced in developing a previous pool and operating it successfully. And it's my recommendations, basically, on what they should do when they run the pool. 580 MR. LEWIS: And is the applicant prepared to put that program in place as a condition of approval? 581 MR. GORMAN: Yes, it's my understanding they are. It's been submitted as evidence. 582 MR. LEWIS: Mr. Fisher, I'm wondering if you could indicate to us what you understand your future role to be with respect to this project, and then comment on whether, in your view, the pool could be operated safely by the applicant. 583 MR. FISHER: It's my understanding that I'll have two roles. The first role will be the design and construction of the pipeline and the station that connects the pool via its wellhead to Union's system. Once the construction is complete and the pool's operational, I'll then be the day-to-day commercial and operational manager for the facility on behalf of the owners. 584 In answer to your question, is there any impediments to storage operations being conducted safely? My answer is no. The pool has been deemed to be suitable for storage by technical experts. We are talking about a well being connected through a wellhead via pipe and a compressor to Union's system. This is well-established practice. It's a closed-loop system. There are standards in place that govern how this should be done. There are facilities in place, multiple facilities across the province of Ontario that have been built this way. 585 And the group putting together the project have assembled the resources - personnel, financial - to complete the project. No, there is no impediment to it being operated safely. 586 MR. LEWIS: Ms. Lowrie, what is your expectation in regards to the role of Mr. Fisher if these orders are granted? 587 MS. LOWRIE: He will be building the facility and managing Tipperary Gas Corp. 588 MR. LEWIS: Those are my questions in chief, thank you. 589 MR. BETTS: Thank you very much. I think, then, before we begin cross-examination, it would be appropriate to take a lunch break. We will return in an hour and five minutes and begin cross-examination at that point. So we'll recess now until 2 p.m. 590 --- Luncheon recess taken at 12:55 p.m. 591 --- On resuming at 2:14 p.m. 592 MR. BETTS: Thank you, everybody. Please be seated. I apologize for being late after my lecture on being prompt. And here we are, the first two occasions we're late. But you've given us in each case a question to consider, and we've been deliberating while we've been eating, and that's caused the delay. 593 Before I begin, I'll just ask if there are any preliminary matters that arose during the lunch break? 594 PRELIMINARY MATTERS: 595 MR. LEWIS: Yes, Mr. Chairman. I have had an opportunity to discuss with other counsel as to whether they wish to cross-examine our environmental witness, Mr. Wessenger, and they've indicated they don't want to do this. So we're seeking the Board's permission to enter his evidence by way of an affidavit, which we will subsequently file by way of undertaking, whereby he adopts that evidence and it simply goes in that way, rather than calling him, if no one is intending to cross-examine. 596 MR. BETTS: Thank you. And if there are no concerns with anyone present, then that's quite satisfactory to the Board. Please go ahead with that. 597 MR. LEWIS: Thank you. 598 MR. BETTS: Are there any other preliminary matters? 599 MR. LEWIS: I don't know whether you would like to address this issue of the amendment to the application at this stage or whether you want to do that later. 600 MR. BETTS: No, it's a good question, and let's -- let's just do that now. 601 And I did indicate, and the Panel feels this way, if this matter -- we're not necessarily going to decide this matter as we speak. But if it requires more thought on behalf of anyone present here, we're more than satisfied to deal with it tomorrow morning and receive submissions at that point. But I wondered whether there were, first of all, any recommendations from parties as to how to proceed, or whether there were any initial comments or whether they're satisfied to give their full submission at this point. 602 So, first of all, I guess, Mr. Lewis, is there anything you would like to add? I know you introduced the amendment earlier. Is there anything you would like to add? 603 MR. LEWIS: Yes, Mr. Chairman. 604 The amendment, we submit, is just a procedural matter in the sense that the factual underpinnings that are the basis for that amendment, which is an offer of compensation, a total compensation package which was presented to the landowners back in May, they're in the materials. They're in the evidence. And it's my submission that the counsel for the Tipperary Landowners' Association is here, is able to consent to this amendment on behalf of all of those landowners that are indeed represented by the Tipperary Landowners' Association, which are all but two landowners, he can consent to that here and now. He's not in any way prejudiced by being caught by surprise because the evidence that supports that amendment is in the materials and has been in the materials for some time. 605 So it's our position that this is a very minor procedural matter vis-a-vis the TSLA. And they're under no prejudice, and should be able to deal with this issue here and now. 606 In regards to the other two landowners that aren't represented by the TSLA, I can make submissions to comfort the Board that there's no needed service in regards to those landowners. My remarks are basically directed at the parties that we have here today represented who could consent to this amendment. 607 MR. BETTS: Can you explain your reference to the other two and your opinion that no further advice is -- 608 MR. LEWIS: Yes. The gas storage leases that are signed by those other two specifically contain clauses permitting the compensation to be dealt with as per either offer -- and I can refer you to the specific provisions in those gas storage leases. It's a matter of contract. It's a matter of agreement. And under section 38(2), the only time the Board has to step in and make a determination is if there is no agreement between the parties. 609 And in regards to those unrepresented landowners there is an agreement. There's an agreement contained in the gas storage leases for a compensation package, and we have reason to believe, and hope to obtain, an agreement to the more enriched offer that we've made, which is better than that contained in the leases. 610 MR. BETTS: Thank you. And does that complete your submissions on the matter? 611 MR. LEWIS: Essentially. 612 MR. BETTS: Thank you. Are there any submissions? 613 MR. CHINNECK: Yes, there are, sir. Chinneck, initial J., acting for the TSLA. 614 Sir, this notice was served on me and became, I guess, part of my knowledge base today, at the hearing. I was not expecting to have to deal with that issue. There are two landowners, as my friend has indicated, that are not aware of this particular application. With respect to the timeliness of the materials, I understand that there was an offer that was part of the materials. That was dated the 28th of May. But the attempts to deal with the landowners' concerns really only happened in the last little while, and I understand it was the 28th or so of last month, so in the last week or so. The parties are attempting to negotiate something, but I was not expecting to deal, I guess, formally, with the issues of compensation at this particular hearing today. 615 And my suggestion would have been or would be that if the order were to contain a condition of approval, that the landowners enter into an agreement with the applicants before the injection, and given that they'll be at least a year before they're in a position to inject, there will be plenty of time for them to finalize and get those negotiations out of the way. 616 MR. BETTS: I'm not sure whether you've injected a new question for me or not, Mr. Chinneck. But I'd like you to, if you could, just focus first of all on this request for this amendment, and if you advise me whether you feel this amendment of the application in any way prejudices your client. 617 MR. CHINNECK: Well, I think I would speak against the proposed amendment, first of all, and I think it prejudices my client because they were not expecting, and I was not expecting, to deal with those issues in this hearing. 618 MR. BETTS: Thank you. It's clarified for me. 619 Any further submission on that? 620 MR. CHINNECK: No, sir. 621 [The Board confers] 622 MR. LEWIS: Mr. Chairman, if I could just reply to Mr. Chinneck? 623 MR. BETTS: Just wait a second. I'm trying to get us back on the air here. I have a very complicated little computer. They're all complicated. 624 MR. BETTS: Okay. We're back on the air. First of all, Mr. Chinneck, that was all of your submissions on this question? 625 MR. CHINNECK: Well, that's essentially it. Just the other point is that there are a number of issues that are -- that deal with landowners' compensation, some of which are contained in that document, others of which are contained, I guess, in other documents. And we're not prepared to deal with those issues. 626 MR. BETTS: Okay. And by inclusion of this particular amendment in the application, it wouldn't necessarily say that the Board would set rates; it's a request for the Board to set rates, you appreciate that? 627 MR. CHINNECK: I understand that, sir. 628 MR. BETTS: Are there any other submissions on this matter? And I'll look to Board Staff counsel for comments as well. 629 Mr. Vegh, are there any comments you could make to help clarify this question? 630 MR. VEGH: Sure. Thank you. Well, you've heard from the represented landowners who, I guess, have taken a substantive position on whether or not it's appropriate to grant leave to amend the application as requested, and I have nothing, really, in addition to say on that issue. 631 There is a concern, or at least a lack of clarity in my mind, as to the unrepresented landowners who would not have received a notice of this request for the Board to effectively set their compensation, and which was not part of the application before that. Mr. Lewis said that there was contractual language in the record. 632 As a way to -- at least these preliminary comments, I could perhaps make more complete comments tomorrow. It would be helpful to address whether those contracts in fact amount to a waiver of any further notice for any request for the Board to set compensation. If counsel can advise where we could find those contracts and the specific clauses he's referring to, we would be in a better position to address that claim. 633 MR. SOMMERVILLE: Mr. Vegh, just so that -- it seems to me that even if we have the contracts, there may be a difficulty if there's no notice of our consideration of that issue. The other parties to those contracts may have submissions with respect to the validity of that particular contractual term. That's a concern that I would have in that context. 634 MR. VEGH: Well, that's why, as I said, I'd like to see those terms, because it seems to be a pretty broad claim that's being made for those contracts. 635 MR. BETTS: Mr. Lewis? 636 MR. LEWIS: Yes. The applicants' position in regards to the two unrepresented landowners is that, if the gas storage leases that they have signed are examined, in particular, clauses 16 and following, which are in the applicants' pre-filed evidence. It's the large binder containing the landowners' evidence. It's volume 2, 3 -- it's at coloured tab 5. I'm sorry, white tab 4, yellow tab 5. 637 It's a copy of a gas storage lease agreement between Goff Brand and Bernadine Brand as lessors and PPC Oil and Gas Corp. as lessee. And if one examines clauses 16, 17, 18, and 19, there's essentially a mechanism there for the applicant to serve notice on that landowner as to what it's prepared to pay for compensation, and if that landowner doesn't respond to that notice, then there's a provision that that compensation as tendered, will be the compensation. 638 The clause in the OEB Act, at section 38(2), essentially says: 639 "Subject to any agreement with respect thereto" - that's the way it's prefaced - "the person authorized by order under subsection (i) shall make offers of compensation..." et cetera. 640 And then it goes on to say that the Board can, in the absence of an agreement under subsection 38(3), fix the compensation. 641 Well, it's our submission that those clauses in each of the gas storage leases are, in effect, an agreement. The agreement is, we tender to you a compensation package. If you respond, then there's a mechanism to have it determined here. If you do not respond, then what we tender is the compensation package. 642 So I would submit that, in the case of those two landowners concerned, we do have an agreement, so we don't have to enter into section 38(3) that says: 643 "No action or other proceeding lies in respect of compensation payable under this section, and, failing agreement, the amount shall be determined by the Board." 644 It's my submission that the Board doesn't have to determine compensation vis-a-vis those two landowners because we have an agreement that specifically provides for it. 645 So their notice of that provision -- or their notice of the amended application that we're asking the Board to determine isn't necessary. It just so happens that the default package that they might get under our agreement is substantially less than what we're offering to the rest of the landowners. 646 And we believe, and we've made preliminary contacts with them, that they are in agreement with the enhanced package rather than the default package that they're entitled to by contract. And we're very confident that, by the end of this proceeding, we can have signed copies of our amending agreement from those two landowners, which I would submit isn't necessary, based upon the language of the statute. 647 It's the landowners that are represented by the TSLA, and in particular, the two that do not have gas storage agreements with the applicant, that we need this amendment for. 648 And again, I would submit that my friend, who was just retained two days ago, has not made out a case for prejudice. On a technical amendment akin to an amendment of a pleading at trial, I would suggest that the test is one of prejudice, and prejudice to the applicant weighed against prejudice to the party who's objecting to the amendment. 649 And I would submit that, because my friend is now here, he knows that the compensation is a live issue. It's been a live issue since May. There will be additional evidence tendered whereby the offer has been modified or bettered within the last couple of weeks. The entire factual underpinning for this issue is in the record, or will be in the record. He's not caught by surprise. He may end up with an order he doesn't like. But to force this on for another day at another proceeding isn't going to benefit him in any way. He can seek instructions here. He's aware of the evidence. His client's aware of the evidence. And part of the reason he may not have -- well, no one knew about it until today, but he was only retained two days ago. His client has certainly been aware that the compensation issue is a live one for -- since May, anyway. 650 So I would submit that because the potential prejudice to the applicant far outweighs any prejudice that has been demonstrated by Mr. Chinneck on behalf of his client, that I would urge you to allow this amendment. I don't believe that Mr. Vegh's service concern -- let me put it this way: I believe Mr. Vegh's service concern can be dealt with both in the language of the statute and also by way of signed amendments, which, as I've indicated, I expect to have in hand by the end of this proceeding based upon discussions that we've had with these people, these two unrepresented landowners who have signed gas storage agreements. 651 MR. BETTS: Mr. Vegh, any final comments? 652 MR. VEGH: Sure. I would just request a clarification. As I understand these most recent submissions, the applicant is saying that they're not looking for an order from the Board to set compensation for who we've been calling the two unremitted landowners; is that right? 653 MR. LEWIS: That's correct. In regards to those two, we can handle that by contract, we already have it handled by contract, and we believe we can enhance that and better that for them. 654 MR. VEGH: Well, you may or you may not. But in terms of the application, the amendment to the application, do you want to take that away and perhaps make the amendment a little more clear as to what it is you're asking for, so that you're asking the Board to grant -- to fix just and equitable compensation for the landowners represented by the landowners association here, and not the unrepresented landowners? 655 So, in terms of that particular issue, of those landowners not being provided with notice, at least that issue would be taken care of clearly on the record. 656 MR. LEWIS: Yes. I'm happy to provide an exception for the two landowners that are not represented by the TSLA. 657 MR. BETTS: Mr. Chinneck, there's been a few words processed since you spoke last, and that's a slightly different slant. Any final comments from you? 658 MR. CHINNECK: Nothing, sir, other than to say, it's simply not fair at this stage of the proceedings to be making that request. If this is something that my friend was seeking, why did he not put it in his initial application? It is prejudicial, and it's not fair to say that it's not prejudicial. And I would urge you not to acquiesce to his request. 659 MR. BETTS: Any reply to that? 660 MR. LEWIS: I think I've said enough. 661 MR. BETTS: Thank you. The Board will defer its decision probably until tomorrow morning. 662 DECISION: 663 MR. BETTS: The Board was a little late in arriving because we did reach a decision on the motion. 664 The Board has considered the motion of the applicant and the draft issues list. First with respect to the issues list, and specifically issues V(g), (h), and (i), the Board has determined that issue V(i) will be removed from the issues list. 665 Furthermore, it has determined that issue V(g) will remain on the issue list as it currently reads, and V(h) will remain on the issue list but be modified to read as follows: "With respect to the Union contract, what are the expected charges to Tribute/Tipperary for such a service?" 666 With those modifications, the Board therefore accepts or adopts the issues list as amended to define the issues in this matter. 667 As a result of its decision with respect to the issues, the Board will deny the applicants' motion to strike the evidence of Northern Cross. That being said, the Board advises all parties that this proceeding must be confined to the specific matters associated with this application, it must not be used as a venue to review the M16 rate as has been directed in another Board proceeding. 668 During the course of submissions, counsel for Union undertook to file materials directed for the M16 review by the end of 2004. The Board expects Union to follow this schedule, and if Union requires any more formal direction from the Board, please speak to Staff. 669 That concludes the Board's decision on that matter. 670 Then are we -- Mr. Lewis, any -- 671 MR. LEWIS: No. Thank you, Mr. Chairman. 672 MR. BETTS: Then are we able now to -- I guess we're at the stage -- I forgot, quite frankly, that we were going to begin cross-examination of the witness panel. 673 Mr. Vegh, would you like to lead off the cross-examination and perhaps you can set the stage for other parties. 674 MR. VEGH: Thank you. Thank you, sir. 675 TRIBUTE/TIPPERARY PANEL 1 - WALSH, McCONNELL, GORMAN, FISHER, LOWRIE: 676 P.WALSH; Previously Sworn. 677 K.McCONNELL; Previously Sworn. 678 J.GORMAN; Previously Sworn. 679 J.FISHER; Previously Sworn. 680 J.LOWRIE; Previously Sworn. 681 CROSS-EXAMINATION BY MR. VEGH: 682 MR. VEGH: Good afternoon, panel. I wanted to ask some preliminary questions and then some questions on issue I of the issues list. 683 Before getting into the specific questions, the panel is a combination of expert witnesses and Ms. Lowrie, your company witness, and I just want to ensure that we're not confused by this later: That the answers of all witnesses, whether they are formally company witnesses or not company witnesses, are binding on the applicants. So if an answer was given by a witness that is not a company witness and the applicants do not want to be bound by that answer, please let me know. Otherwise, for the record, the applicant will be taken to be bound by and accept the answers of all witnesses. 684 Is that fair? Thank you. 685 What I'd like you to do to address this portion of the cross-examination is to turn up, please, a copy of the notice -- I'm sorry, the amended application. I have some preliminary issues on framing the application. 686 And I've asked your counsel to also have available a copy of the Ontario Energy Board Act, because your counsel may be of assistance for some of these questions on the nature of this application. 687 So, if the witness panel could have in front of it the amended application. If someone -- do you have that? 688 So the documents I'll be referring to are the amended application. I have some questions coming from the Ontario Energy Board Act, and I also have some questions coming from the organizational chart which was entered this morning as Exhibit E.1.8. 689 Okay. So before going into the substantive issues in that application, I would just like to ask some questions about the nature of the application. And you should have in front of you the amended application. 690 The applicants in this proceeding are both Tribute Resources Inc. and Tipperary Gas Corp. Is that right? 691 MS. LOWRIE: Yes. 692 MR. VEGH: And in looking at the organization chart at Exhibit E.1.8, Tipperary is 100 percent owned by Tribute? 693 MS. LOWRIE: Yes. 694 MR. VEGH: And both corporations are applicants for all of the requests before the Board; is that right? 695 MR. LEWIS: The intended operator of the facility will be Tipperary Gas Corp. And I believe Ms. Lowrie can explain the intention and terms of the transfer of the gas storage leases and other assets upon designation. 696 The reason the application was framed in the manner in which it has been is because -- and I believe the pre-filed evidence indicates this -- Tribute Resources Inc. currently holds the legal title and is the registered holder of the gas storage leases in petroleum and natural gas leases regarding this project. The intention is that, upon designation, if this is successful, those assets will be transferred to Tipperary Gas Corp., who will be the operator of the pool and the intention is that the orders be issued in the name of Tipperary Gas Corp. 697 I believe, again, that's in the evidence. 698 MR. VEGH: Thank you. And I'll have some questions about that transfer. 699 So, if we look at the specific requests that are being made, first, there's a request for the Board to designate the storage area under section 36.1 of the Act. And that storage area is the area that's identified in schedule A to the application that's been blown up as a large picture on the tripod; is that right? 700 DR. WALSH: That's correct. 701 MR. VEGH: The second thing that the applicants are asking for is an order under section 38 to inject gas into, store gas and remove gas from the designated storage area? 702 DR. WALSH: That is correct. 703 MR. VEGH: And Mr. Lewis, from your last answer, I take it that the person who is seeking authorization under the Act to store the gas and to inject the gas and withdraw the gas, the person seeking authorization is Tipperary Gas Corp.? 704 MR. LEWIS: Yes. 705 MR. VEGH: And you've been discussing with Board Staff -- or when I say "you," the applicants have been discussing with Board Staff certain conditions of approval for the storage operation, and we'll get to the conditions of approval later, but I wanted to get a clearer sense now. If those conditions of approval are incorporated, who is it that will be bound by those conditions? Will it be Tipperary? Will it be Tribute? Will it be both? How do you see that playing out? 706 MS. LOWRIE: Tipperary Gas Corp. will be the operator of the facility, so they will be bound by the conditions of the approval. We added Tribute into the application. It's the intent that Tribute will also be bound by the conditions of approval. 707 MR. VEGH: So they'd both be bound? 708 MR. BETTS: Ms. Lowrie, I'm sorry, your voice is fading a little bit there. 709 MS. LOWRIE: Tribute will also be bound by the conditions of approval. 710 MR. VEGH: So, if there's a failure to meet any of those conditions, then both Tipperary and Tribute will be accountable for that? 711 MS. LOWRIE: Yes. 712 MR. VEGH: And we talked a bit about making the owner of -- the owner of lands reasonable compensation. Who will be responsible to make the owners of land reasonable compensation? Will it be Tribute or Tipperary or both? 713 MS. LOWRIE: Funding is done through Tipperary Gas Corp. so Tipperary Gas Corp. will be making compensation to the landowners. 714 MR. VEGH: Okay. Now, the person so far, though, has been Tribute -- it's Tribute that has made the offers of compensation up until now; is that right? 715 MS. LOWRIE: I believe that there were -- was it? I believe it was done jointly. It may have been Tribute because -- I believe the last one was done jointly. Initial offers, the PNG or P&NG rights are held by Tribute. 716 MR. VEGH: Okay, the rights are held by... 717 The evidence I'm referring to is volume 2, tab 1. 718 DR. WALSH: I'm sorry, Mr. Vegh, I would just like to comment that because this panel was dealing with geology and reservoir matters, that issue is perhaps more of a land issue, and as a result, I'm not sure that we're fully prepared to answer that question at this time, in that the documents are not in front of us at this point in time, the ones at least that you're referring to. 719 MR. VEGH: Okay. So I guess the evidence I'm referring to is the evidence of Ms. McConnell. So that's you, Ms. McConnell? 720 MS. McCONNELL: Yes. 721 MR. VEGH: And I believe, and you could accept this subject to check, but the evidence that you asked yourself and answered at volume 2 - so that's book 2 of the evidence, tab 1 - asks if Tribute has made an offer to the lessors for the additional annual gas storage rental payment, and the answer to that is yes. So perhaps, if you don't have the material in front of you, you could perhaps undertake to confirm, who is it that has actually made the offers so far of compensation to the landowners? Has it been Tribute, has it been Tipperary, or has it been both? 722 MS. McCONNELL: I would like to undertake to check on that. 723 MR. VEGH: Thank you. 724 MR. BETTS: We'll establish an undertaking for that, then. 725 MS. LITT: It will be F.1.1. 726 MR. BETTS: Undertaking F.1.1? And can we define that? 727 MS. LITT: Witness undertakes to check who will be paying landowners' compensation. 728 MR. BETTS: Yes, and I think that was with reference to who made the offers; is that correct? 729 MR. VEGH: Right. So it will be both. Who has made the offer for landowners compensation and who will be responsible for landowner compensation among the applicants. 730 MR. BETTS: Thank you. 731 UNDERTAKING NO. F.1.1: TO PROVIDE INFORMATION REGARDING WHO, AMONG THE APPLICANTS, WILL BE RESPONSIBLE FOR LANDOWNER COMPENSATION 732 MR. LEWIS: I don't mean to interrupt, but perhaps the second portion of that can be answered. 733 Who will be responsible for paying the compensation? 734 MS. LOWRIE: Both companies -- both Tribute and Tipperary will be responsible for paying the compensation. 735 MR. VEGH: Okay. Thank you. And when we get to the substantive compensation issues in this proceeding, we can address that further. 736 Then the final request of the Board is under section 40 of the Act, and that's a request for leave to drill two injection and withdrawal wells. And just as matter of housekeeping, the way section 40 works - I don't have to take you to it - is that an application is originally made to the Minister of Natural Resources and then the Minister of Natural Resources refers the application to the Energy Board. Is that your understanding of how this process is carried out? 737 MR. LEWIS: Yes. That's what the section says. 738 MR. VEGH: Okay. So, just to complete the record, as I've said, I'd like to -- this has been distributed to counsel, but if we could mark for the record a letter from the Ministry of Natural Resources to the secretary of the Ontario Energy Board dated June 9th, 2004, which actually refers the request for a report to the Board. And that will be Exhibit E.1.9. 739 EXHIBIT NO. E.1.9: LETTER FROM THE MINISTRY OF NATURAL RESOURCES TO THE SECRETARY OF THE ONTARIO ENERGY BOARD DATED JUNE 9TH, 2004 740 MR. VEGH: So, in a sense, for this request under -- which is identified as item 6 in the application, when you say you're applying for necessary approvals pursuant to section 40 of the OEB Act, I guess what you're asking for is that the Board produce a favourable report under section 40 and provide that report to the MNR; is that right? 741 MR. LEWIS: That's correct. 742 MR. VEGH: And then your final request is for an order of the Board to set rates, and that's under section 36 of the Act. Could you please turn up section 36. Do you have that? I'm looking at section 36.1. And again, Mr. Lewis, or your panel may answer, I'll just read it out loud, 36.1 says: 743 "No gas transmitter, gas distributor or storage company shall sell gas or charge for the transmission, distribution or storage of gas except in accordance with an order of the Board, which is not bound by the terms of any contract." 744 So what you're seeking under section 36, then, is an order, effectively, relieving Tribute and Tipperary from this prohibition against storing gas; is that right? 745 MR. LEWIS: No, we're seeking for -- we're looking for a range rate, and that will be dealt with in the last section of our evidence. 746 MR. VEGH: Yes. But, again, just trying to get the pieces of this puzzle together, section 36.1 has a prohibition against certain activities unless there's an order of the Board allowing those activities, and one of those activities is the storage of gas. So I take it that what you're asking for is an order of the Board authorizing Tribute and Tipperary to store gas under section 36.1 of the OEB Act? 747 MR. LEWIS: Yes. 748 MR. VEGH: Now, 36.1 refers to these other activities, so it says: 749 "No gas transmitter, gas storage company or gas distributor..." sorry, I got the order wrong "...shall sell gas or charge for the transmission, distribution, or storage of gas..." 750 I take it that the applicants, apart from the storage of gas, do not plan to carry out these other activities, that is, transmission, distribution, or selling gas. Is that right? 751 DR. WALSH: There's no intention on our part to distribute gas or transmit gas. The definition of selling gas may be a funny one in that, obviously, at some point in time, we have to sell the gas to somebody, and it would be our intention to market that gas at Dawn. 752 So, for the purposes of deciding what it is you refer to when you say "selling gas," we are in the business to market the gas, and we're in the business to market that gas at Dawn or any other ex-franchise trading point that exists in the province. 753 MR. VEGH: So then -- okay, well, you make that sound fairly obvious. That wasn't clear at all to me from the application, that what you're seeking approval for under section 36.1 is not just approval as a storage company to charge for the storage of gas but to sell gas as well? 754 DR. WALSH: Well, no, the point I'm trying to make, Mr. Vegh, is that the issue in regards to selling gas as it's described in the Act may be something different by definition than what it is that ourselves are planning to do and every other marketer in the province does without the oversight of the Board. 755 MR. VEGH: I'm not trying to get into a legal argument with you, but every other marketer in the province is not a gas transmitter, gas distributor, or gas storage company, and so the restrictions on selling gas apply to distributors, transmitters, and storage companies. 756 DR. WALSH: Well, from that standpoint, then, we would not be selling gas, under that definition as you put it forth to mean. 757 MR. VEGH: Well, then -- okay. So then the applicants undertake that they will not be selling gas? 758 DR. WALSH: As, as you've put it forth, no. As the storage company, we will not be selling gas from that storage. 759 MR. VEGH: I don't know what you mean by "as a storage company" and "from that storage." 760 DR. WALSH: Well, you've made a point that if you're a company that's either defined as a distributor, transmitter or storage company, under the Act there's an issue regarding rates relative to the sales of gas by either one of those types of companies. And because we will be physically storing gas, we will be by definition a storage company. 761 We have asked the Board to consider a range rate in regards to marketing storage to third parties. In regards to selling gas, the company as a storage company has no intention of selling that gas from storage. It has intention to move that gas out of Union's -- or out of the franchise area or out of the province of Ontario for the purposes of marketing that gas. 762 MR. VEGH: I'm sorry, out of the province? 763 DR. WALSH: That's correct. Our plans are to move the gas to Dawn and to other ex-franchise delivery points. At which point in time the gas may be sold to a third party. 764 MR. VEGH: Both within Ontario and outside Ontario? 765 DR. WALSH: No, outside of Ontario. 766 MR. VEGH: So in all cases exported from Ontario? 767 DR. WALSH: That's correct. 768 MR. VEGH: I'll ask you some more questions about the business model later, but I guess for our present purposes you've answered my question, and there may be an argument about whether or not that constitutes a sale of gas under section 36.1. But we'll leave that for legal argument. 769 Now, those are the specific requests made in the application -- or in the filed application. There are also some requests referred to in the evidence that are not in the application, and I would just like to address those for the purposes of having some clarity. 770 And Mr. Walsh, if we could take a look at your pre-filed evidence, which I have at general tab 4, "Witness: Walsh." You have that? 771 DR. WALSH: Yes, I do. 772 MR. VEGH: Under the heading: "Purpose of the application," the evidence states: 773 "The purpose of the application is to designate the gas field as a storage area, receive authorization to inject and withdraw, and to seek leave to construct a gas transmission line." 774 I take it that that request is no longer being made? 775 DR. WALSH: That's correct. Further to this application, based on the design work undertaken, it is my understanding that we no longer need to seek that approval based on the size of the transmission line and the costs associated with constructing that transmission line. 776 MR. VEGH: And at page 4 of that evidence -- sorry, page 4 of that evidence, second -- there's a title called: "Request for forbearance." So that would have been a request for a forbearance order with respect to setting rates, that is, the Board forbear from setting rates, and I take it that that request for forbearance has been rescinded; is that right? 777 DR. WALSH: That is correct. 778 MR. VEGH: And so you're not seeking any forbearance order of the Board in this application? 779 DR. WALSH: That is correct. 780 MR. VEGH: And in this application, the applicants are not seeking forbearance from the Board on any of the other regulatory restrictions that apply to storage companies apart from setting rates? I'll be more specific, if -- 781 DR. WALSH: Well, I apologize for the delay. It's just that we're -- our understanding was we were dealing with geology and reservoir matters and panel 5, which includes Derek Francis, which will be one of our experts in regard to marketing and use of storage, is not available. So as a result, I'm concerned about giving an answer on the record that precludes his opportunity to participate in some formal discussion here or informal discussion with regards to providing you with the appropriate answer. 782 MR. VEGH: Well, then perhaps, why don't I put my questions on the record, you can answer them if you can, or your counsel can answer them as well. And if you're not in a position to answer them, and there's a panel that has a better person or set of persons to answer this question, you can let me know. 783 The other particular provisions I was referring to were in section 39(2) of the OEB Act, which says that: 784 "No storage companies shall enter into an agreement or renew an agreement with any person for the storage of gas unless the Board has approved..." 785 Then it goes on to set out the components of the agreement that the Board has to approve. 786 I take it that there's no request made in this application for the Board to forbear from its power to approve storage agreements? 787 DR. WALSH: That's correct. 788 MR. VEGH: And section 43(1) of the Act requires leave of the Board to dispose of all or part of a gas storage system. You're aware of that restriction? 789 It reads: 790 "No gas transmitter, gas distributor or storage company without first obtaining from the Board an order granting leave shall sell, lease, or otherwise dispose of its transmission, gas distribution, or gas storage system as an entirety or substantially as an entirety." 791 It goes on. 792 DR. WALSH: Yes. It hadn't crossed my mind that we'd want to dispose of it so, as a result, I needed to check it. But the answer to you is that we would not look for forbearance in regards to that. 793 MR. VEGH: And under section 44 of the Act, the Board has authority to make various rules, rules that apply to gas storage companies, including things such as conditions of access, requiring statements and reports, regulating affiliate conduct, requiring a uniform system of accounts, and you understand that the applicants will be bound by those rules as well in the absence of a specific order to the contrary? 794 DR. WALSH: That is correct, yes. 795 MR. VEGH: Okay. With that background in place, then I would like to turn to issue I, which relates to the designation of the storage area. And the first item to discuss under issue I is something you addressed this morning, Mr. Walsh, and that's the physical characteristics of the Tipperary pool. So I guess I'll address most of these questions to you. 796 You'll have to bear with me. You talked about using generous terms, a layman, the uninitiated. I'll give you another one. I'm the lowest common denominator. So I will ask you questions, the answers to which will be simple enough, hopefully, for me to understand, and then if I can understand them, then I'm sure everyone else in the room can understand them. 797 So, Mr. Walsh, as a general proposition, is it fair to simplify this issue, and hopefully not oversimplify this issue, by agreeing that a gas storage pool must be a sealed container capable of storing a large volume of gas under pressure; is that fair? 798 DR. WALSH: That's a fair statement, yes. 799 MR. VEGH: And as I understand it, making this determination really involves three main components: First, the area must have a vertical impermeable seal to prevent upward migration of gas? 800 DR. WALSH: Yes. 801 MR. VEGH: And that's what you talked about this morning? We called that the caprock. 802 DR. WALSH: That is correct. 803 MR. VEGH: And second, the formation must have a lateral seal to prevent the horizontal displacement of gas? 804 DR. WALSH: That is correct. 805 MR. VEGH: And then, third, the reservoir that is within the boundaries must be sufficiently porous and permeable to allow the injection and withdrawal of gas? 806 DR. WALSH: That is correct. 807 MR. VEGH: And that's the sponge, as you described it this morning. 808 DR. WALSH: Yes. 809 MR. VEGH: And that's the area where Mr. Gorman gave some evidence this morning on the porosity. 810 DR. WALSH: That's correct. 811 MR. VEGH: Okay. So I'd like to look at these three components, then, in the context of this particular proposed gas storage area. 812 So, first, the vertical seal or the caprock. I'd like you, Mr. Walsh, to... 813 MR. BETTS: Sir, just for terminology, and pardon me, it's my technical background, shall we refer to that as a vertical seal? It's a horizontal layer. I just want to make sure that the terminology is understood. Perhaps I'd look to the experts as to how they'd refer to the cap. 814 DR. WALSH: Well, by the nature of the structure of the A2 anhydrite caprock, it acts as a vertical and lateral seal, to a certain extent. 815 There is also, as you would see in the cross-section, tight A1 carbonate on the flanks of the reef as well beneath that A2 anhydrite caprock that acts as a seal. 816 MR. BETTS: So we can call it whatever we want. In fact, it's a horizontal layer that prevents vertical migration. 817 DR. WALSH: Yes. I think that's a fair statement. It certainly was initially before it draped over the reef. 818 MR. BETTS: Thank you. Sorry to interrupt, Mr. Vegh. 819 MR. VEGH: Not at all. 820 If we could -- perhaps, Mr. Walsh, by turning to the cross-section A-A prime that you referred to this morning, we can identify some of the labels that we've just discussed. 821 Perhaps while you're doing that as well, the other document I'd like you to have available is part of your pre-filed evidence at volume 1, orange tab 2. It's a document called "Tipperary Reef Report." 822 DR. WALSH: Yes, I have it. 823 MR. VEGH: I have a blue updated version. Is this your evidence, Mr. Walsh, the Tipperary reef report? 824 DR. WALSH: The Tipperary reef report was prepared by Mr. Welychka. As part of my responsibility in this proceeding, I have reviewed that report and have adopted certain elements of the evidence that I've noted with the Board prior to this hearing. And I have chosen not to adopt certain elements of it. In order to get -- avoid the confusion, we'll move forward and I can advise you. If there's an issue about my adopting that evidence I certainly will raise it. 825 MR. VEGH: Okay, we'll see how it goes. 826 DR. WALSH: Yes. 827 MR. VEGH: Okay. So we're talking first about what I have called the vertical seal, and that's really the seal to prevent upward migration of -- upward migration of gas. That's what I'm asking about. 828 DR. WALSH: Yes, that's correct. 829 MR. VEGH: And when we look at your cross-section of A to A prime, the seal that fits that description is this caprock? 830 DR. WALSH: That is correct. 831 MR. VEGH: The A2 anhydrite caprock? 832 DR. WALSH: That is correct. 833 MR. VEGH: And there's a description of the caprock at page 5 of the Tipperary reef report. 834 MR. LEWIS: I'm sorry, where is that again? 835 MR. VEGH: It's at volume 1, orange tab 3, white tab 2. 836 MR. LEWIS: Thank you. 837 MR. VEGH: Blue pages. 838 DR. WALSH: Yes. Which page? I'm sorry. 839 MR. VEGH: Page 5. 840 DR. WALSH: Yes. 841 MR. VEGH: At the top there's a description of the caprock? 842 DR. WALSH: Yes. 843 MR. LEWIS: By "blue pages" you mean Exhibit E.1.5 that was separately labelled this morning? 844 DR. WALSH: No. He's referring to the geological report that was filed. And under -- I believe as a result of some supplementary interrogatories, a revision may have been made and resulted in a blue copy being forwarded to the Board. 845 MR. LEWIS: I'm sorry. 846 MR. VEGH: Do you have that? 847 DR. WALSH: I do, yes. 848 MR. VEGH: Okay. So at page 5 there's a description of the cap right -- or, sorry, the caprock in this storage area. There's only two paragraphs. Could you take a moment to read that and tell me whether you agree with that. 849 DR. WALSH: Yes, I do. 850 MR. VEGH: And can you tell me, in terms of the description of the caprock for this particular storage area, how does that compare to other designated storage areas in the province? 851 DR. WALSH: It's consistent with other storage pools. 852 MR. VEGH: Now, on the -- okay, so I'd like to turn to the lateral seal, the side. 853 There's a discussion on the same page, page 5 of this reef report, under the heading, "Unit Porosity Development." Does that discussion address the boundary of the reef or the lateral seal of the reef? 854 DR. WALSH: It addresses an element of the lateral seal of the reef. It refers to what we call the A1 carbonate unit, which, as I discussed this morning, is the non-reefal portion of the A1 carbonate. And because it falls adjacent to the flanks of the reef, in some pools in Ontario, we see development of what's known as sucrosic dolomite. Now, sucrosic dolomite is really just essentially a remnant of the reef. At the time the reef was being deposited, wave action broke apart pieces of the reef and settled that -- what we called detritus, settled that detritus on the northerly/southerly flanks and around the backside of the reef. 855 In circumstances where you find that sucrosic porosity or sucrosic A1 carbonate development, one needs to be concerned about the migration of gas out of the storage field into that adjacent porous section. 856 In the case of the Tipperary pool, we have no geological evidence to support the existence of that type of development, and therefore we don't see any concern in regards to the lateral seal related to this reef. It's competent, as far as we can tell, based on the information available to us. 857 MR. VEGH: Now, the evidence or the discussion in that area, when it discusses the lateral seal, says: 858 "Based on all available evidence, secondary reservoir development around the Tipperary reef pool will be effectively non-existent." 859 Do you see that statement? 860 DR. WALSH: Yes, I do. 861 MR. VEGH: Do you agree with that statement? 862 DR. WALSH: Yes, I do. 863 MR. VEGH: So can you tell from -- well, does that statement provide evidence on whether or not there is, in fact, a lateral seal to this pool? 864 DR. WALSH: Well, the statement is based on the geology that we have, and is supported by the geology that we have. 865 MR. VEGH: And so your view of the geology as an expert is that the geology does identify that there is a lateral seal to this pool? 866 DR. WALSH: That is correct. 867 MR. VEGH: Now, third, in terms of porosity and permeability within the pool, I understand that this is measured through measuring flow rates; is that right? 868 DR. WALSH: Well, flow rates are one mechanism in regards to determining whether or not the reservoir has good permeability and good porosity. We can do visual examinations of the samples. We undertake geophysical well-log analysis, which allows us the opportunity to directly measure the porosity of the rock. The flow rates would be more of a permeability issue. Permeability is somewhat more difficult to define using sample analysis and geophysical well-log analysis. 869 So, just excluding it to flow rates, I think, is minimizing the type of material -- or information you need in order to determine porosity and permeability. 870 MR. VEGH: Well, when you go to -- thank you for that. 871 When you go to page 4 of this document, the Tipperary reef report, there is at the bottom of the page a heading called "Porosity and Permeability." Mr. Gorman, I don't know whether you're the person to address this or not, but -- or whether it's Mr. Walsh, but if you read the paragraph under that heading, first, do you agree with that -- with that -- the statements in that paragraph? 872 DR. WALSH: Well, I agree with the statement. The range of porosities in that statement are consistent with my evaluation of the geophysical well logs and the samples. 873 There is an assumed permeability, though. There is no direct measure of permeability contained within that -- within that paragraph. I can say that, given my experience, those reefs that we have developed for storage that exhibited that kind of porosity typically had good permeability. 874 MR. VEGH: Okay. Thank you. 875 I'd like to ask you a question about a revision in the evidence from what was originally filed, and I believe, Mr. Walsh, you referred to this revision this morning. Turn to Exhibit E.1.4. E.1.4 has a revision to figure 10. 876 Okay. The original -- we had a revision to figure 10. The original figure 10 was in the reef report as well. 877 DR. WALSH: That's correct. 878 MR. VEGH: And I wanted to ask you about the revision. 879 Now, this illustration refers to the growth gas isopach. Could you explain what the isopach is? 880 DR. WALSH: The isopach is a measure of the thickness of the zone, if you want to call it, where gas was encountered. 881 MR. VEGH: Okay. The original figure 10 seems to be different than the revised figure 10. And before I take you to the difference and ask you about that, I just want to make sure I understand it. 882 So, when you look at, on this isopach, the outer boundary is marked -- well, the line that's next to the complete outer boundary is marked by a zero, and then the line in front of that is a 10 line, then the next line is a 20, then a 30. What do those numbers refer to? 883 DR. WALSH: Those are contour lines. Those are an interpretation of the thickness or the isopach of the gas section. 884 MR. VEGH: So, moving from zero outwards there's no more gas? From zero inwards there is gas? 885 DR. WALSH: That's correct. 886 MR. VEGH: Okay. So the original figure 10 had marked gas throughout the storage area, and, in fact, going slightly outside of the storage area is -- sorry. This is the unit agreement area that's marked off in the -- let me back up a bit. 887 So we have the isopach, and that's surrounded by the heavy dotted line on the map. And I take it that the heavy dotted line, that's the unit area? The unit operating area? 888 DR. WALSH: Yes. You're referring to the straight dotted lines? 889 MR. VEGH: Yes. 890 DR. WALSH: That's the original unit operating area. Yes. 891 MR. VEGH: Okay. So in the original figure 10, the presence of gas was identified as being outside of the unit operating area? 892 DR. WALSH: That's correct. 893 MR. VEGH: Now, in your revised figure 10 that you provided this morning, the residual gas, as we go to -- as we go to the east, takes a pretty sharp turn right, and no longer goes around the area or the entire reservoir, and, in fact, no longer extends beyond the unit operating area; is that right? 894 DR. WALSH: That's correct. 895 MR. VEGH: Now, what is the geological rationale for terminating the finding there, that is, the finding that the gas is restrained there? 896 DR. WALSH: Well, the determination of the restraint -- and you're referring to the northerly end of the pool, the gas found in the northerly end which we call the Tipperary north pool. 897 MR. VEGH: Actually, I'm referring to the southern. 898 DR. WALSH: Oh, are you referring to the southern one? 899 MR. VEGH: Yes. 900 DR. WALSH: That is essentially based on two elements. One is the fact that there are no wells supporting the existence of gas in a northerly direction. And secondly, the fact that, based on information provided to me by Mr. Gorman as it relates to the initial reserves in place, that the volumetric calculation based on my contouring is consistent with the volume of gas associated with Tipperary south. 901 If I were to extend the contours further north it would make my evaluation inconsistent with the volume of gas found in the Tipperary south pool. 902 MR. VEGH: But just on this second point, in terms of the volumes that you've been advised are here. Do those volumes tell you where the line ends, or just how much gas is there? 903 DR. WALSH: No. I mean, it's still an interpreted issue in regards to the exact location of the contours. But the contours will be based not only on the orientation of the reef; obviously you don't contour gas where the reef doesn't exist, but you also recognize that you can't contour gas existing in areas where you have no evidence that gas exists. 904 Now, one may argue that you also don't have any evidence that gas, you know, doesn't exist there. Like, maybe it is there. 905 MR. VEGH: So is it a matter of judgment? 906 DR. WALSH: Well, it's a matter of professional judgment, but it's also a matter of then looking at the next step, which is: If I were to extend my contours farther north, how would that then corroborate or correlate with the reservoir volumes determined by pressure and volume analysis undertaken by the reservoir engineer? 907 And in this particular case, I felt comfortable with contouring the way I did. 908 MR. VEGH: Is it your opinion that the contours laid out in the original figure 10 are incorrect in that there is a geological rationale for rejecting those -- the contours as mapped out on the original figure 10? 909 DR. WALSH: Yes, I do not agree with it. 910 MR. VEGH: Now, the next questions that I have are around the operating pressure, which really fall into issue 2, because we were looking at the order to inject and withdraw, I think, is where we've categorized the issue around the operating pressure. Though, Mr. Gorman, you did give evidence on that matter this morning. 911 So if it's convenient for the Panel, perhaps I'll go into that line of questioning before handing it over and see if there are other parties that want to ask questions to this panel. 912 MR. BETTS: Yes. Please proceed. 913 MR. GORMAN: Excuse me. If I could just clarify one thing here. I was under the understanding that we would run to 4 o'clock. I've been sitting on this panel for the past hour and I take blood pressure medication, which is a diuretic, and I would ask leave to use the washroom before we get into anything here, unless Mr. Vegh is going to be quite short in his questioning. 914 MR. BETTS: Quite appropriate, and I appreciate you bringing that up, actually. So let's take five minutes, and there may be other people joining you. We'll return as close to 3:30 as possible. 915 --- Recess taken at 3:23 p.m. 916 --- On resuming at 3:33 p.m. 917 MR. BETTS: Thank you, everybody. Please be seated. 918 During the break, were there any procedural matters that popped up? 919 MR. LEWIS: Just one minor one. I'm wondering if I can ask, Mr. Chairman, the Board's indulgence to be able to speak with my panel on clarification issues and perhaps potential undertakings, notwithstanding the fact that they're under oath, this evening or... 920 MR. BETTS: Yes, that's fine. 921 MR. LEWIS: Thank you. 922 MR. BETTS: Anything else? 923 Mr. Vegh, please continue. 924 MR. VEGH: Thank you. 925 As I mentioned before the break, I was about to ask some issues -- some questions that arose under issue 2. But just before leaving issue 1, I'd like to ask you, Mr. Walsh, another question around your cross-section A to A prime. 926 In particular, I wanted to ask you about the difference between your revised cross-section and the original cross-section. And as I understood it, the only difference was that the jagged line and the A1 carbonate that sets out the extent of the A1 carbonate reef; is that right? 927 DR. WALSH: That's correct. 928 MR. VEGH: And I think you were asked this before, and I just wanted to confirm it. What are the practical implications of this deal? 929 DR. WALSH: There are none, really. 930 MR. VEGH: Yeah. It has no impact on the boundaries of the designated storage area or any of the issues that the Board -- 931 DR. WALSH: No, it has no impact. 932 MR. VEGH: -- that the Board will be deciding in this proceeding? 933 DR. WALSH: No, it does not have any impact. 934 MR. VEGH: Okay. And then in that case I'd like to ask some questions around the order to inject and withdraw gas, and in particular, these questions are going to be around the operating pressure of the pool. And Mr. Gorman, I believe you gave some evidence on that this morning. 935 MR. GORMAN: Yes, I did. 936 MR. VEGH: So these questions will largely be directed towards you, I think. 937 And these are in issue 2 of the issues list, that is, the order to inject and withdraw. And many of these issues are addressed by reference to CSA standard Z341 which you referred to this morning, Mr. Gorman, and which I believe is in the record of this case as a schedule to the evidence of the MNR. 938 So I'd like you to pull up that document, if you could. It is schedule 5 to the evidence filed by the Ministry of Natural Resources in this case. 939 MR. BETTS: Can Board Staff assist the panel in finding that? 940 MR. VEGH: Thank you. Do you have that? 941 MR. GORMAN: Yes, I do. 942 MR. VEGH: Okay. And I'm looking at section -- I want to look at the section that addresses the maximum operating pressure of the pool, and I believe that's section 7.5.2. 943 MR. GORMAN: Yes. 944 MR. VEGH: Do you have that? And you're familiar with this? 945 MR. GORMAN: Yes, I am. 946 MR. VEGH: Okay. So sub (b) of 7.5.2 says: 947 "The operator shall use the discovery pressure as the maximum operating pressure for the storage zone unless it can be demonstrated that the integrity of the reservoir is not comprised at a higher pressure by caprock testing or by operating experience." 948 And the particular pool that we're looking at now for operating pressure is the north pool; is that right? 949 MR. GORMAN: That's correct. 950 MR. VEGH: And what was the discovery pressure of that pool, approximately? 951 MR. GORMAN: 425 psia. 952 MR. VEGH: And what is the proposed maximum operating pressure? 953 MR. GORMAN: 1,096 psia. 954 MR. VEGH: So the difference between those two numbers, the 425 and the 1,096, that's what they call -- that's what's called the delta pressure? 955 MR. GORMAN: That's correct. 956 MR. VEGH: And the standard that we've looked at, 752, requires caprock testing to demonstrate that the integrity of the reservoir will not be compromised by operating at the delta pressure; right? 957 MR. GORMAN: That's correct. 958 MR. VEGH: And I think you or Mr. Walsh referred to that as the threshold pressure test? 959 MR. GORMAN: Yes, I did. 960 MR. VEGH: And you mention in your testimony that some testing has been undertaken. 961 MR. GORMAN: No, I mentioned -- I said the core was obtained -- 962 MR. VEGH: Yes. 963 MR. GORMAN: -- and shipped to a laboratory, and they were going to undertake a series of tests, kind of the whole package that these groups do for storage operators with respect to integrity testing of the caprock. So I don't know if they've completed tests yet or started them yet. 964 MR. VEGH: So we're still waiting on the test results. 965 MR. GORMAN: Yes, we are. 966 MR. VEGH: Well, the -- when the tests are completed, will the results go -- where will the results go? Will they go to you? Will they go to the MNR? 967 MR. GORMAN: Well, they'd be delivered directly to Tribute. I would review them, the geologist would review them as well, and a copy would be submitted to the MNR at the same time. Within a day or so, because in transmitting them to the MNR, I may want to put a cover page in, if there was any anomalies or inconsistencies in the report. 968 MR. VEGH: And you mentioned in your evidence earlier that you absolutely would not proceed in delta pressuring without evaluating the caprock test results. Do you remember that? 969 MR. GORMAN: Yes, I did. 970 MR. VEGH: And I take it that the applicant -- the applicant is bound by the same restriction that the applicant would not proceed without receiving the test results? 971 MS. LOWRIE: That is correct. 972 MR. VEGH: And so what would the steps be, then? You'd get these test results. They go to MNR. Would you then come back to the Board for leave to delta pressure? Let me put it this way: Are you prepared to agree to come back to the Board for leave to delta pressure after you receive the test results? 973 MR. GORMAN: Yes, I assume that it would be a condition of approval. 974 MR. VEGH: And the company's prepared to accept that condition? 975 MR. GORMAN: Yes, they are. 976 MR. VEGH: And once these tests are completed, and assuming that the pool can withstand the proposed pressure, what is the proposed schedule for delta pressuring? 977 MR. GORMAN: The proposed schedule, which was submitted as evidence in our last package around the end of June, took into account the fact that the hearing -- 978 MR. VEGH: Sorry, Mr. Gorman, could you identify -- you're referring to some evidence. I just want to see which one... 979 MR. LEWIS: E.1.4. 980 MR. VEGH: So that's E.1.4, that's at tab 2, the proposed storage schedule. Is that the document? 981 MR. GORMAN: Mm-hm. Yes, that's correct. 982 MR. VEGH: Okay. Sorry for interrupting. And so what's the schedule, again? 983 MR. GORMAN: Well, the schedule, of course, is based on certain logistical considerations in addition to the caprock testing. One is the timing of the hearing and our anticipated timing of approvals, and the pipeline installation sequence and compressor installation and the well-draining. 984 So, as a result, we won't be able to start injecting until late in or midway through the normal injection season. And as a result, by the end of the first injection season, we will have reached 758 psia, which is above the original pool pressure. 985 MR. VEGH: So you stagger it, then, stagger the remainder, then, into the next season, is that the idea? 986 MR. GORMAN: Yes, we basically run out of time and we start taking the gas out. In the next season we'll have a full season, and if things -- facilities and wells -- go as planned, we'll be able to put all of the planned gas in and out in a full season. So serendipity -- well, I shouldn't say serendipity. Because of the logistical considerations we won't be able to achieve full delta pressuring until the second year. 987 MR. VEGH: You also referred this morning in your evidence, Mr. Gorman, to a proposed reservoir monitoring program? 988 MR. GORMAN: Yes, I did. 989 MR. VEGH: And the program you're referring to, that was the -- that's the program that's written out and included in Exhibit E.1.4 at tab 2? 990 MR. GORMAN: That's correct. 991 MR. VEGH: Now, this is described as a proposed monitoring program. Is it still subject to change or is this your final recommendation? 992 MR. GORMAN: Well, this program was assembled as a result of concerns raised by, I believe, the MNR. And so, hence the title: "Proposed reservoir monitoring program." 993 I consulted with the MNR on some of their concerns, and wanted to address them and show that they would be addressed. And so I had kept it as a proposed program. If it's acceptable to the MNR, I'll take the "proposed" off and it will be become the reservoir monitoring program. 994 MR. VEGH: Okay. So, as far as you're concerned it's complete, and you are just waiting for the MNR to sign off on it? 995 MR. GORMAN: Yes, that's correct. 996 MR. VEGH: Okay. Can I ask you some questions, then, about that program, or the proposed program. And these questions are all related because one issue that keeps jumping up is the use of the word "should" instead of "shall," and I'll just give you some examples. 997 Under the heading: "Prior to injection..." The fourth bullet point down, it says: 998 "Tribute's check meter should be one with accuracy at or near custody transfer specifications." 999 And you use the term "should be" a few times in that bullet point, and, in fact, in all the rest of the bullet points. And again, my question is are these tentative recommendations or are these commitments that these are, in fact, standards that would be met? 1000 MR. GORMAN: Well, it depends on the point. I hate to be tedious here. In the case of the check meter, Union's metering has to meet custody transfer specifications. There is not a requirement that our meter, which basically double-checks Union's meter, meet those same specifications. I mean, we're talking very, very expensive pieces of equipment. 1001 For example, in the case of the Chatham depot, which I operated, which was one of -- the first pool, I believe, in Ontario to have full-time well monitoring, well-metering on it, we elected through the advice of our engineering consultants to install what we call a mass meter, a mass meter. A very accurate meter, but it had not been certified for custody transfer specs in Canada. But from an engineering standpoint and measuring gas going in and out of the pool and serving as a check on Union's meter, which theoretically should be more accurate, it did the job. 1002 So from a practical standpoint, I'm saying we should be close to -- close to -- the accuracy of what Union's meter is, but you don't have to match it. Because it's just used as a flag to see if there's problems with Union's meter. Actually, that "should" you know, it's a judgment call, you know, will you spend $50,000 on that meter or $100,000? Especially when it's just going from here to Union's meter, and we've already paid for Union's meter as well, too, or whatever, in the meter station. So it was intended as a double-check. 1003 So in that case that "should" is more -- it's a recommendation. I mean, I leave it to the operations manager, at that point in time, when he's designing it with the engineering firm that he works with, to determine what's an appropriate meter in order to act as a double-check on Union's gas volumes. 1004 MR. VEGH: So in this case, for this bullet point, you're saying: Ideally it should be that level of meter, but there's a matter of discretion. So "should" is a more accurate word than "shall." 1005 MR. GORMAN: That is correct. 1006 MR. VEGH: Because you want to maintain that discretion? 1007 MR. GORMAN: Mm-hm. 1008 MR. VEGH: So let's be tedious, then, and go to the next... 1009 MR. GORMAN: I wish I could sum it up -- 1010 MR. VEGH: The next bullet point where you say: 1011 "Continuous or daily monitoring of surface pressures should be initiated at the start of the injection site." 1012 Is that mandatory, that should be done, or is that a suggestion left to the discretion of the operator? 1013 MR. GORMAN: You said the next one. Can you point me to the page? I'm sorry. 1014 MR. VEGH: Top of page 2, under the heading: "Early-stage injection." 1015 MR. GORMAN: Yes. I gave them the -- well, I gave a couple of operations. One was a continuous monitoring system of surface pressures which we happen to have in Chatham D. It made economic sense at the time. We put pressure transducers on the wells and we were wired through a monitoring system that was an add-on to a compressor information package. So, you know, it worked. 1016 It's not necessary. You could have your operator check pressures every two days. Every week. It's really a function of what's happening operationally, and it's a judgment decision that the operations manager really has discretion over. I'm not saying it's not as good a monitoring system. It's whether it's needed continuously every hour, every day, every week. And I want to leave -- I want to give the storage operations manager that level of discretion, as I had when I built Chatham D. It was my decision to do this or that pool. But it wasn't based just solely on reservoir monitoring considerations. There were other considerations, including cost and convenience and the time required to monitor this by our operating people. 1017 So -- 1018 MR. FISHER: Mr. Vegh, could I make a suggestion. Perhaps given I've been nominated to act as operations manager, perhaps I could take the referenced exhibit and work with counsel to come up with an undertaking that states clearly what it is we will and won't do, and resubmit it, that way avoiding any ambiguity. 1019 MR. VEGH: That would be very helpful, Mr. Fisher. Because what we'd like to see are at least what are the minimum obligations, clear minimum obligations, that will apply to the monitoring program? 1020 And Mr. Gorman, I understand what you're saying about discretion. But given all of that, I'm not sure what it is -- what kind of comfort you're expecting people to take from this document since this is, you know, very open-ended recommendations subject to judgment. 1021 So, Mr. Fisher, if you could take it away and be more specific and precise about what the standards would be, I think that would be very helpful. Thank you for that. Shall we mark that as an undertaking, then? 1022 MS. CRNOJACKI: F.1.2. 1023 MR. VEGH: And that is to -- 1024 MS. CRNOJACKI: Revise -- 1025 MR. VEGH: To refile the proposed reservoir monitoring program to contain specific and mandatory directions. 1026 UNDERTAKING NO. F.1.2: TO REFILE THE PROPOSED RESERVOIR MONITORING PROGRAM TO CONTAIN SPECIFIC AND MANDATORY DIRECTIONS 1027 MR. VEGH: Thank you. Panel, I'm actually a fair ways into issue 2. I did canvass other counsel during the break and was advised that anyone else had questions on issue I, so that's one of the reasons I was storming ahead. But this is a convenient time for a break. I was going to get into the issue of the abandoned wells, and I'm not sure if that's the same -- that's a safety issue. I'm not sure if that's the same panel or not. I'm in your hands. If you would like me to switch topics now or to hold over until the morning. 1028 MR. BETTS: I think, with five minutes to our aimed termination time, it's probably appropriate to break now, give everyone a bit of a rest. 1029 So we will recess at this point, or adjourn for the day to reconvene tomorrow morning. And I don't think there are any announcements required for that, so we will reconvene here tomorrow morning at 9:30 a.m. Thank you all very much. 1030 --- Whereupon the hearing was adjourned at 3:55 p.m.