Rep: OEB Doc: 13893 Rev: 0 ONTARIO ENERGY BOARD Volume: 4 12 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 Thursday, 12 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 12 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 PRELIMINARY MATTERS: [19] TRIBUTE/TIPPERARY PANEL 1 - WALSH, McCONNELL, GORMAN, FISHER, LOWRIE, JORDAN, FRANCIS; CONTINUED: [70] CONTINUED CROSS-EXAMINATION BY MS. PAULUS: [78] RE-EXAMINATION BY MR. LEWIS: [718] QUESTIONS FROM THE BOARD: [965] FURTHER RE-EXAMINATION BY MR. LEWIS: [1063] PRELIMINARY MATTERS: [1079] HURON COUNTY FEDERATION OF AGRICULTURE - PANEL 1 - VINCENT: [1088] EXAMINATION BY MR. VINCENT: [1092] TIPPERARY STORAGE LANDOWNERS' ASSOCIATION - PANEL 1; A. FEDDES, F. DUTOT, C. DUTOT: [1124] EXAMINATION BY MR. CHINNECK: [1128] 10 EXHIBITS 11 EXHIBIT NO. E.4.1: DECISION OF THE ONTARIO ENERGY BOARD RE COMPENSATION IN THE LAMBTON STORAGE ASSOCIATION CASE [818] EXHIBIT NO. E.4.2: SERIES OF PHOTOGRAPHS TOTALLING 9 PAGES [860] EXHIBIT NO. E.4.3: RESUME OF MR. NEIL GRAHAM VINCENT [1095] EXHIBIT NO. E.4.4: SUMMARY OF THE ECONOMIC IMPACTS OF AGRICULTURE ON THE ECONOMY OF HURON COUNTY [1097] EXHIBIT NO. E.4.5: ARTICLE ENTITLED "BREEDERS SEEK POLLUTION PRECEDENT" [1293] EXHIBIT NO. B.3.1: TIPPERARY STORAGE LANDOWNERS' ASSOCIATION DOCUMENT DATED JUNE 7TH [1367] EXHIBIT NO. B.3.2: TIPPERARY STORAGE LANDOWNERS' ASSOCIATION DOCUMENT DATED JUNE 19TH [1368] 12 UNDERTAKINGS 13 ORAL ANSWER TO UNDERTAKING F.3.3: TO REVIEW THE OIL AND GAS LEASE, UNIT AGREEMENT AND GAS STORAGE AGREEMENT ON THE GUINDON LANDS [25] ORAL ANSWER TO UNDERTAKING F.3.4: TO REVIEW PARAGRAPH 5.4.19 OF THE BOARD'S DECISION EBO201/EBLO263, AND TO ADVISE WHETHER THE APPLICANTS WILL ADHERE TO A SIMILAR CONDITION OF APPROVAL [38] ORAL ANSWER TO UNDERTAKING F.3.6: TO PRODUCE A RISK ASSESSMENT PLAN AS A CONDITION OF THE BOARD GRANTING APPROVAL [49] ORAL ANSWER TO UNDERTAKING F.3.7: TO CONSIDER WHETHER TIPPERARY IS WILLING TO PROVIDE A RISK ASSESSMENT PLAN [50] 14 --- Upon commencing at 9:45 a.m. 15 MR. BETTS: Good morning, ladies and gentlemen. 16 Today is day 4 of the hearing of application RP-2003-0253. Yesterday we had begun the cross-examination by Ms. Paulus of the applicants' witness panel. 17 The Board is hopeful that today we will complete the examination of this panel this morning and fully hear from all of the intervenor witnesses this afternoon. 18 Before we begin, are there any preliminary matters? 19 PRELIMINARY MATTERS: 20 MR. LEWIS: Yes, Mr. Chairman. I believe Mr. Jordan would like to provide an answer for Undertaking F.3.3, which reads: "To review the oil and gas lease unit agreement and gas storage agreement on the Guindon lands." 21 MR. BETTS: Thank you. 22 MR. LEWIS: And the undertaking, just by way of background, was given to possibly correct a previous answer that he gave in regards to those documents. 23 MR. BETTS: You may proceed, then. 24 MR. JORDAN: Well, thank you. 25 ORAL ANSWER TO UNDERTAKING F.3.3: TO REVIEW THE OIL AND GAS LEASE, UNIT AGREEMENT AND GAS STORAGE AGREEMENT ON THE GUINDON LANDS 26 MR. JORDAN: The Guindon lands were not really directly in the DSA when we made the application, but upon further scrutiny of the leases and the storage agreement, that we have -- we can report back of the existence of an oil and gas lease that does cover all of the Guindon lands. They are also affected by the unit agreement on all of the Guindon lands. 27 However, due to the way -- there was a parcel sold out of that to the Guindons and then a gas storage lease was taken from the larger lot which excluded the Guindon parcel. Subsequent to that, the Guindon lands added a portion of lands to her parcel that included the adjoining gas storage lease. 28 So Guindon has part of her land under P&NG -- all of her lands under P&NG, all of her lands under a unit operation agreement, and a portion of her lands under a gas storage lease. 29 MR. BETTS: Thank you. 30 In fact, perhaps I would even go so far procedurally - not at this point, but at some point - if someone feels they need to direct a question to the parties about that, I would be willing to accept that. 31 Anything further, Mr. Lewis? 32 MR. LEWIS: Yes. Undertaking F.3.4, we now have an answer for that, and perhaps I could read the undertaking into the record for clarity, if you feel that's necessary? 33 MR. BETTS: It is not necessary. 34 MR. LEWIS: Okay. 35 MR. BETTS: Sorry, did you say you could read the -- 36 MR. LEWIS: I could read the undertaking back into the record before the answer, if you feel that would be helpful. If you think that is redundant, I won't do it. 37 MR. BETTS: I think we can just hear the answer, thank you. 38 ORAL ANSWER TO UNDERTAKING F.3.4: TO REVIEW PARAGRAPH 5.4.19 OF THE BOARD'S DECISION EBO201/EBLO263, AND TO ADVISE WHETHER THE APPLICANTS WILL ADHERE TO A SIMILAR CONDITION OF APPROVAL 39 MS. LOWRIE: The applicant is prepared to annually file, on a confidential basis with the Board's Energy Returns Officer, the annual financial statements for Tribute Resources Inc. and Tipperary Gas Corp.. The applicant is prepared to accept this as a condition of approval. 40 MR. BETTS: Thank you. 41 Anything further, Mr. Lewis? 42 MR. LEWIS: Yes, we have an answer for Undertakings 3.6 and 3.7. But perhaps before I get the witnesses -- or a witness here to provide that answer, I believe there is a mistake on the transcript at line 783 in regards to Undertaking F.3.6. It reads -- now reads: "To produce a risk assessment plan as a condition of the Board granting approval." And I believe the undertaking that was given was to undertake as to whether we would agree to produce a risk assessment plan as a condition of approval. So I believe that the record is slightly inaccurate. 43 MR. BETTS: I agree with your summation of it. It was an undertaking to state the company's position on that question, so -- 44 MR. LEWIS: And similarly, Undertaking F.3.7, I believe there is a slight error in that as well. It reads: "To consider whether Tipperary is willing to provide a risk assessment plan," and I believe the reference should be "a risk assessment strategy". 45 MR. BETTS: Perhaps let us hear the answer to that and then we'll conclude -- the word "strategy" isn't one that just pops back into my mind, but -- 46 MR. CHINNECK: I beg your pardon, I think I said "study," sir. 47 MR. LEWIS: I beg your pardon, "study". 48 MR. BETTS: And that was my recollection as well. So please go ahead with those undertakings. 49 ORAL ANSWER TO UNDERTAKING F.3.6: TO PRODUCE A RISK ASSESSMENT PLAN AS A CONDITION OF THE BOARD GRANTING APPROVAL 50 ORAL ANSWER TO UNDERTAKING F.3.7: TO CONSIDER WHETHER TIPPERARY IS WILLING TO PROVIDE A RISK ASSESSMENT PLAN 51 MS. LOWRIE: The applicant will provide to the Board and the TSLA any environmental or risk assessment studies required by our insurers in order to obtain the additional insurance coverages we have committed to obtain, to have policies of insurance similar to other storage operators. 52 The applicant is prepared to accept this as a condition of approval. 53 MR. BETTS: Thank you. 54 Is that in response to both of those? 55 MR. LEWIS: Yes. 56 MR. BETTS: Thank you. 57 And anything further, Mr. Lewis? 58 MR. LEWIS: No. 59 MR. BETTS: Are there any other preliminary matters for the Panel's consideration? 60 Mr. Chinneck. 61 MR. CHINNECK: Yes, sir, my clients instructed me to advise the Board that none of them will be available next week. They all have commitments that require them to be back at home on their farms, and they just simply wanted you to be aware of that fact. 62 MR. BETTS: I appreciate that information and we'll -- how did you expect that that information will impact our hearing? 63 MR. CHINNECK: I don't think it will impact it, sir. I expect that I will have to make arrangements to be here, although my clients will not be able to be here next week. 64 MR. BETTS: Fair enough, thank you. 65 Anything further? 66 Then, Ms. Paulus, are you prepared to continue with your cross? 67 MS. PAULUS: I am, sir. 68 MR. BETTS: Please continue. 69 MS. PAULUS: Thank you. 70 TRIBUTE/TIPPERARY PANEL 1 - WALSH, McCONNELL, GORMAN, FISHER, LOWRIE, JORDAN, FRANCIS; CONTINUED: 71 P.WALSH; Previously Sworn. 72 K.McCONNELL; Previously Sworn. 73 J.GORMAN; Previously Sworn. 74 J.FISHER; Previously Sworn. 75 J.LOWRIE; Previously Sworn. 76 H.JORDAN; Previously Sworn. 77 D.FRANCIS; Previously Sworn. 78 CONTINUED CROSS-EXAMINATION BY MS. PAULUS: 79 MS. PAULUS: Good morning. 80 I would like to refresh or confirm some of the responses that have been given concerning the marketing plans of the applicant. 81 In one day of evidence, I understood there to be quite a bit of discussion about the possibility that the applicant would be selling gas only what they termed exfranchise, and quite a bit of discussion with Board Counsel about what that really meant. 82 And so I understood at the end of that day that there would be sales by the applicant of gas that they stored in their facility exfranchise, which turned out to mean out of the province. Does that continue to be an intent? 83 MR. FRANCIS: It is a possibility, yes. 84 MS. PAULUS: Yes, and -- 85 MR. FISHER: Could you move your mike over a bit. It's a little hard to hear you. Thank you. 86 MS. PAULUS: You are welcome. 87 And so I should take it now that if it is a possibility that you will be selling your gas exfranchise, which I understand to mean out of the province, that there is a possibility you will be storing some of your own gas as well? 88 MR. FRANCIS: I would consider the gas that could potentially be sold exfranchise to be small volumes in nature, heat value discrepancies, gJ rounding, very small volumes in nature. 89 MS. PAULUS: So do I understand then that it wouldn't be your intent to store your own gas; it is your intent only if you have a bonus of some volumes that aren't credited to anyone, to sell those? 90 MR. FRANCIS: That is a possibility, yes. 91 MS. PAULUS: It is a possibility, but you said that is the only intent for you to sell gas out of the province? 92 MR. FRANCIS: Yes, at this point, yes. 93 MS. PAULUS: At this point. And so your intent, then, is to market all the capacity? 94 MR. FRANCIS: That's correct, that's what the business model calls for. 95 MS. PAULUS: Has the business plan been filed? 96 MR. FRANCIS: No. 97 MS. PAULUS: Do you have a copy of the business plan? 98 MR. FRANCIS: No. It is an internal document. 99 MS. PAULUS: It does exist? 100 MR. FRANCIS: In my own notes, yes. 101 MS. PAULUS: So when you say that you have a business plan, it is not really a business plan that has been adopted by the applicant? 102 MR. FRANCIS: That's correct. 103 MS. PAULUS: Thank you. So in your marketing plan, I understand you are saying that you won't be using the facility for your own gas. Can I just make sure I understand what you mean by your own. So right now there are two applicants here; as well, there is another entity. So in other words, we have been talking all along and mixing up a little bit the limited partnership, the general partner and Tribute Resources. Can you clarify for the record whose gas won't be stored in your facility? 104 MR. FRANCIS: None of the entities' gas will be stored. 105 MS. PAULUS: None of the entities. And while we are talking about gas, perhaps you can tell me whose gas will form the cushion; in other words, when you go to pressurize the reservoir? 106 MR. FRANCIS: My understanding is that the cushion gas, if required, will be purchased and transported to the facility. 107 MS. PAULUS: Will be purchased by whom? 108 MR. FRANCIS: Tipperary Gas Corp. 109 MS. PAULUS: By the general partner? 110 MS. LOWRIE: Yes, on behalf of the limited partnership. 111 MS. PAULUS: And what do you anticipate to be the volumes required? 112 MR. GORMAN: The numbers are in the pre-filed evidence, and I could undertake to get that or if we spend a few minutes, I could dig it up. 113 MS. PAULUS: I would like to be able to talk about it, so perhaps you could locate it for us. While you are doing that, you say it is something that would be purchased by the general partner, and while you don't seem to have the volumes at hand, what do you estimate to be the cost? 114 MS. LOWRIE: At $7 gas, approximately $1.5 million. 115 MS. PAULUS: So that would be $1.5 million that would be contributed by whom? 116 MS. LOWRIE: By the unitholders of the limited partnership. 117 MS. PAULUS: By the? 118 MS. LOWRIE: By the unitholders of the limited partnership. 119 MS. PAULUS: And do I understand that the -- let me pause there for a moment and ask you: Has the limited partnership agreement that has been filed been amended? 120 MS. LOWRIE: It is being amended, but the legal work has not been completed. We have had some tax advice. 121 MS. PAULUS: Can you, for our benefit, tell us the nature of the amendments that you propose? I would like to hear from the applicant, please. 122 MS. LOWRIE: We were just in preliminary discussions on it. 123 MS. PAULUS: So it's not really a case of just some drafting required and the terms settled on. There are some proposals for amendment; is that correct? 124 MS. LOWRIE: We have a tax accountant working on some proposals at this time; we have had a preliminary meeting with Mr. Lewis, myself, and our tax accountant. 125 MS. PAULUS: So there are some thoughts about amendments? 126 MS. LOWRIE: He had some thoughts about amendments, yes. 127 MS. PAULUS: And what is the nature of these amendments? 128 MS. LOWRIE: I think one of the amendments is changing the December 31st, 2001 date. Another amendment was -- 129 MS. PAULUS: The December -- excuse me? 130 MS. LOWRIE: There was -- I believe the units -- the agreement needed to be updated because it was initially done in 1999, so there are some amendments necessary to bring it current, and also they were thinking of taking out the $1,000 per unit charge for the units, for the sale of units. 131 MS. PAULUS: Taking it out and replacing it with? 132 MS. LOWRIE: Just have a variable. It is a bit preliminary to discuss this at the time. It's not a major structural change to the document. 133 MS. PAULUS: So it would -- 134 MS. LOWRIE: He said more detail was needed in the agreement for -- 135 MS. PAULUS: Detail to reflect? 136 MS. LOWRIE: Detail for smooth operations and tax purposes. 137 MR. LEWIS: I don't know if you wish me to assist on this for the clarification. 138 MS. LOWRIE: Yes, that would be great. 139 MS. PAULUS: No, actually, I prefer to have my answers from the applicant. 140 So I understood you, Ms. Lowrie, to say there was an amendment to the December 31st date, but it was not clear to me what the nature of that amendment was and in what context you were referring to that date. Perhaps you could clarify. 141 MS. LOWRIE: I think it is preliminary to discuss this at this point in time. We had a meeting one morning last week with Mr. Lewis and the tax accountant. He was taking it away to review the agreement after discussions and come up with proposed clauses. So it is difficult for me to comment. 142 MS. PAULUS: This is, though, the agreement you are relying on for the structure of the applicant and for all its funding arrangements? 143 MS. LOWRIE: It is the agreement that is currently in place under which we have sold units, yes. 144 MS. PAULUS: And there is no other agreement in place right now? 145 MS. LOWRIE: No. 146 MS. PAULUS: So that is all the Board could rely on as well in making any determination? 147 MS. LOWRIE: The limited partnership agreement as it exists, yeah. 148 MS. PAULUS: As it stands, because it sounds to me like what you have said is one side of the limited partnership is considering amendments, and there isn't any agreement at this point for any amendments? 149 MS. LOWRIE: I'm sorry, one side? 150 MS. PAULUS: Well, there are the unitholders and there is also the general partner and limited partner. In order to amend the agreement, I assume it would take the agreement of all parties? 151 MS. LOWRIE: Yes. 152 MS. PAULUS: And from what you have said to me, it sounded like not all parties have agreed to any amendments; in fact, it's as you have said, quite preliminary and that's why it is premature to discuss? 153 MS. LOWRIE: It was discussed at the board of directors of Tribute that we required some amendments to the limited partnership agreement as we wished to sell additional units. From that point, the board of directors -- from that point, it was taken to the tax accountant to amend. 154 MS. PAULUS: So it was discussed by the board of Tribute Resources? 155 MS. LOWRIE: Of Tribute, yeah. 156 MS. PAULUS: Thank you. 157 So to go back to the cushion gas now, perhaps you do have a volume? 158 MR. GORMAN: Yes, could you repeat the question for me, please? 159 MS. PAULUS: What do you estimate to be the volumes required to pressurize the reservoir? 160 MR. GORMAN: To bring it up to cushion level? 161 MS. PAULUS: That sounds very good to me. 162 MR. GORMAN: For the Tipperary north pool will require 257 million cubic feet to bring it to cushion level. 163 MS. PAULUS: And when you say "north pool," there is no other pool that is the subject of this application? 164 MR. GORMAN: Well, we have the south, the Tipperary south as well, and that will require 274 million cubic feet, if we convert that to storage. 165 Now, that's as of December 31st, 2003 -- or sorry, 2003, yes. 166 MS. PAULUS: When you say that's as a date in 2003, are you suggesting that the amount required will change with time? 167 MR. GORMAN: Yes, we are currently reducing the pool. 168 MS. PAULUS: So you are depleting, and so as time goes on, the amount required will increase? 169 MR. GORMAN: That is correct. 170 MS. PAULUS: And by -- 171 DR. WALSH: I'm sorry, just to point out that we have shut in the pools, so that would be whatever production took place between December 31st of 2003 and the date on which we shut the production in. And I believe Ms. McConnell referred to it earlier in this proceeding, what date that was. 172 MS. PAULUS: Then it shouldn't be inconvenient for you to give me the total estimate of volumes? 173 MR. GORMAN: Current? 174 MS. PAULUS: That's correct. I think you have said that you have shut it in now, so it has stopped moving. You have the date when you last took the estimate. You presumably know how much you produce. 175 DR. WALSH: We can undertake -- we don't have that production information in front of us. However, I can give you a ballpark figure in regards to estimates. 176 I believe both of the pools combined were probably producing more or less about 30,000 cubic feet a day, and it was shut in on June the 10th. So we are talking approximately 5 months of production, so 150 days times 30 Mcf would be about 4.5 million cubic feet, so you can adjust -- 177 MS. PAULUS: Additional that will be required. 178 DR. WALSH: That will be required. 179 MS. PAULUS: So now with those volumes more correctly or accurately stated, Ms. Lowrie, I give you another opportunity to answer the question of what you estimate to be the cost. 180 MS. LOWRIE: I don't know the -- 181 MR. FISHER: Was it 5,000 additional? 182 MR. LEWIS: If you are going to confer with her, you should probably sit back and not -- cover the microphone, if you are conferring. We don't want the conferring on the record. 183 MS. LOWRIE: It is a difference of 5,000 Mcf, which would be an increase of approximately 35,000. 184 MS. PAULUS: So your estimate is 1,535,000? Why don't you give it to me instead of me giving it to you. You might like it better. 185 MS. LOWRIE: I believe the corrected number at $7 gas -- 186 MS. PAULUS: And is $7 gas the estimate that your experts say is appropriate? 187 MR. FRANCIS: That is the number we have been using. 188 MS. PAULUS: That is the number you have been using, thank you. And you have been using it in the past, you have given some consideration to it, and it is appropriate, in your view? 189 MR. FRANCIS: Yes. 190 MS. PAULUS: Thank you. 191 MS. LOWRIE: We have performed sensitivity analysis of it, so we have used different prices. But I believe the current estimate is 7. 192 MS. PAULUS: Good. So at $7, the total price would be? 193 MS. LOWRIE: Approximately 1.8 million. 194 MS. PAULUS: 1.8 million. And you were saying that that 1.8 million would be contributed by the limited partners? 195 MS. LOWRIE: Yes. 196 MS. PAULUS: And that gas, then, would be owned by them? 197 MS. LOWRIE: Yes. 198 MS. PAULUS: And so that would be an asset on the books and there wouldn't be any write-off associated with that? 199 MS. LOWRIE: That's a tax question, I'm sorry. I think -- 200 MS. PAULUS: I thought you have an accountant on the panel here. 201 MR. FRANCIS: Not a very good one. 202 MS. PAULUS: Have you prepared a pro forma financial for this business venture? 203 MS. LOWRIE: Yes. 204 MS. PAULUS: And have you made that available? 205 MS. LOWRIE: No, that is confidential information. 206 MS. PAULUS: One of the issues on the issue list is the financial wherewithal of the applicant, and it seems to me, in order to understand the financial capability, you have to understand what will be required in order to finance the project. 207 So I guess my question is, if you have a financial plan, I think it is appropriate that the Board see it, and -- 208 MS. LOWRIE: The cost of the project was submitted confidentially as a response to one of the interrogatories. 209 MS. PAULUS: And my question is, what are the costs of the project? 210 DR. WALSH: We have filed that information with the Energy Returns Officer on a confidential basis. We trust that the Board and Board Staff will have the opportunity to review the appropriateness of that information. 211 But unfortunately, due to the confidential nature of how our pro forma financials were prepared, the cost estimates were prepared, we are not in a position to file that publicly. 212 MS. PAULUS: You think the costs of this project are confidential? 213 DR. WALSH: That is correct. 214 MS. PAULUS: On what basis? 215 DR. WALSH: On the basis that the costs themselves are developed using information that is confidential between ourselves and other third parties that are going to be supplying services. And because we are involved in a competitive marketplace, it would be inappropriate for us to provide that information publicly. 216 MS. PAULUS: I would like to just review again your responses yesterday. I asked about contracts for construction, and my understanding was there aren't any contracts; that was the answer, was it? Would you like to amend your answer? 217 DR. WALSH: No, I don't need to amend my answer. The elements used in preparing the cost estimates do not necessarily involve signed contracts. What they do involve is they involve numbers and information provided to us that may or may not eventually find themselves in a contract. 218 MS. PAULUS: If there is no contract, there is no confidentiality restriction. 219 DR. WALSH: I'm sorry, I don't see it that way. 220 MS. PAULUS: There is -- do you have a contract with any third party pertaining to the purchase of the equipment that will be required for this project? 221 MR. FISHER: No. 222 MS. PAULUS: Thank you. 223 If I may direct some words to the Board? We are prepared to proceed with our cross-examination without going into further of the information that the applicants have suggested is confidential, but we are not -- we don't want our acquiescence at this point to be taken as an indication that we agree that it is all confidential and not necessary. And by that I mean, if I can get through my questions and I feel like I have had a sufficient answer on the record, well, that will be fine, but if I don't, I may be raising that matter again. Thank you. 224 MR. BETTS: I would suggest, if you haven't already, and it may be worthwhile for all parties to refer to the Board's guidelines on treatment of confidential matters. 225 MS. PAULUS: I have some familiarity with them, and with the guidelines in mind, I continue to feel that there is room for discussion of whether or not all the information that the applicants suggest is confidential is within the guidelines, keeping in mind in particular that the owner is a public entity. 226 MR. BETTS: Thank you. Please proceed. 227 MS. PAULUS: Thank you. 228 You have indicated that you intend to use mostly the storage for third party storage? 229 MR. FRANCIS: That's correct. 230 MS. PAULUS: Thank you. And have you had any change in the responses to the interrogatories pertaining to your open season? 231 MR. FRANCIS: No, no changes. 232 MS. PAULUS: So there hasn't been any open season? 233 MR. FRANCIS: That's correct. 234 MS. PAULUS: And do you have any update then on your marketing efforts? 235 MR. FRANCIS: Yes. We had preliminary discussions with several third party customers, and it was felt from those customers that until we were designated, they weren't willing to or willing to commit to a longer term service. So once we get designated, we have very few -- we have a number of interested parties who want to talk to us about contracting for storage capacity. Designation is very important. 236 MS. PAULUS: So does your plan then contemplate that there will be multiple parties using your services? 237 MR. FRANCIS: We anticipate conducting the open season to as many parties as we can, and we contemplate one, two, three, five, depending on bid and available capacity. 238 MS. PAULUS: And in your discussions, preliminary as they were, did you have occasion to have the third parties review the contracts that you have filed? 239 MR. FRANCIS: We didn't get to that detail. Comments were made surrounding similar contracts with Union Gas and Enbridge, and as mentioned in previous evidence, they would be considered industry standards terms and conditions. 240 MS. PAULUS: That the third parties would be considering? 241 MR. FRANCIS: Yes, the contracts that we would offer the third parties would be consistent with other contracts of storage providers. 242 MS. PAULUS: When you say that, is what you're getting at terms of how you inject and technical matters and standards of -- 243 MR. FRANCIS: Yes. 244 MS. PAULUS: -- type of thing, technical matters. 245 MR. FRANCIS: Yes. 246 MS. PAULUS: Understood. And have you had discussions with Union considering Union's leasing of your storage capacity? 247 MR. FRANCIS: No. 248 MS. PAULUS: And have you had discussions with any other public utility? 249 MR. FRANCIS: No. 250 MS. PAULUS: Do you have any contracts with Union other than the M16 and the balancing agreement? 251 MR. FRANCIS: We have a standard hub contract. The balancing agreement is an enhancement to the standard hub contract. We also -- Tribute also has an M13 contract and Clearbeach Resources has an M13 contract, for a local transportation/production contract. 252 MS. PAULUS: Thank you. I would like to ask you now to please refer to the storage service agreement that was submitted as part of your pre-filed evidence. It was with the evidence of Dereck Francis, and you can let me know when you have that in front of you. 253 MR. BETTS: I think we'll need a reference, if someone can help us with that. 254 MS. PAULUS: It's under tab 6 of the pre-filed evidence of Francis, and Francis' evidence is under the larger tab 2. 255 MR. LEWIS: Volume 1. 256 MR. BETTS: Let's go to coloured tabs. Help us here. We are in volume 1 -- 257 MR. LEWIS: Coloured tab 2. 258 MR. BETTS: Coloured tab 2. 259 MR. LEWIS: White tab 6. 260 MR. BETTS: Thank you. That's got it. 261 MS. PAULUS: Do you have it? 262 MR. FRANCIS: Yes. 263 MS. PAULUS: Good, because I don't have it all. I think what you had was a first portion that was more or less a solicitation of an offer and then an intention that they would enter into the attached -- a new contract at a later date after your rates were approved? 264 MR. FRANCIS: That's correct. 265 MS. PAULUS: And the recitals, turn to the recitals of the original contract, please. 266 MR. FRANCIS: Okay. 267 MS. PAULUS: Was this -- I know you indicated for us earlier that you had drawn significantly from Union's agreements in your drafting? 268 MR. FRANCIS: For the most part, yes. 269 MS. PAULUS: For the most part. But in reviewing it, it looks to me like the cover draft and the recitals in particular were perhaps drafted uniquely for your project? 270 MR. FRANCIS: Absolutely. 271 MS. PAULUS: Absolutely. And so can you read for the record, please, the recitals to that first document, the firm storage service precedent agreement. 272 MR. FRANCIS: Can you provide reference to what you want me to recite? 273 MS. PAULUS: "Whereas Tipperary plans to develop..." 274 MR. FRANCIS: Yes. 275 "Whereas Tipperary plans to develop, construct, own and operate a sub-service natural gas storage facility and associated pipeline facilities in Huron County," and we had a revision to the evidence that should read "Ontario (the storage facility)". That was a misprint. 276 MS. PAULUS: All right. Can you continue, please? 277 MR. FRANCIS: And "whereas prior to applying for the regulatory permits and approvals and committed to the expenditures necessary to develop and construct the storage facility, Tipperary seeks to obtain certain firm and binding commitments from parties that have expressed an interest in utilizing the storage facility at certain minimum prices." 278 MS. PAULUS: And can you please complete the recital. 279 MR. FRANCIS: "And whereas customers willing at this time to commit to using the storage facility and associated services, if the storage facility is placed in service on terms and conditions set forth in this agreement. Now, therefore, for" -- 280 MS. PAULUS: That's okay, that would be the end of the recital. 281 MR. FRANCIS: Sorry, new terminology to me. 282 MS. PAULUS: So this contract, in reviewing it now, it appears to me that you did at one point consider that it would be a good idea to get some commitments for use of your storage facility prior to making your application? 283 MR. FRANCIS: Initially that was the desired approach. 284 MS. PAULUS: And you reconsidered that? 285 MR. FRANCIS: Based on preliminary discussions with customers. 286 MS. PAULUS: All right. 287 I would like you to turn to the second page of that document, and in particular section 3, the conditions precedent. These would be the conditions precedent, as I understand it, before a party would be bound to avail themselves of your storage facilities; -- 288 MR. FRANCIS: Correct. 289 MS. PAULUS: -- right? And it looks to me like you spent some money having this document drafted and gave some consideration to what would be appropriate? 290 MR. FRANCIS: Yes. 291 MS. PAULUS: And so it would be -- you did think at the time that condition A, and if you can just, for the record, read what condition A is, please. 292 MR. FRANCIS: "(A) Receipt of firm finance commitments to enable construction of the storage facility acceptable to owner." 293 MS. PAULUS: That did seem like a reasonable condition precedent before parties would enter into agreements with you to have their gas stored at your facility? 294 MR. FRANCIS: Yes. 295 MS. PAULUS: Does it continue to be a reasonable condition, in your view? 296 MR. FRANCIS: Yes. 297 MS. PAULUS: So then I would expect that you won't be entering into, or you would be surprised if you were able to enter into agreements with third parties to use your storage until you are in a position to show them firm commitments for financing? 298 MR. FRANCIS: Yes, and part of that is all tied into getting the designation. Certainly, there are a number of questions and concerns that contracting parties would have; financial stability certainly is one, and rates would be another, and overall designation, absolutely. 299 MS. PAULUS: So you wouldn't expect that a third party would enter into any commitment with you to store their gas until you could show them a firm commitment to finance, but you don't have any firm commitment to finance at this point? 300 MR. FRANCIS: I believe, as Ms. Lowrie has mentioned, it's in the works. 301 MS. PAULUS: In the works, thank you. 302 MS. LOWRIE: It is part of the designation process as well. As Mr. Francis said, it was dependent upon financing, also the designation and the rates. It is difficult to put it all together without the designation. 303 MS. PAULUS: I know it is really difficult for small companies, but they are difficulties we all have to work around, especially those that are more used to conventional financing. 304 Have you approached banks? Obviously not too recently if it is taking this time -- 305 MS. LOWRIE: No. We have had discussions with Mr. Crich's bankers -- 306 MS. PAULUS: With his bankers. 307 MS. LOWRIE: -- obviously, from the letter that we have received. But he is responsible for the financing. 308 MS. PAULUS: And his commitment is all embraced in the limited partnership agreement? 309 MS. LOWRIE: Yes, it will be, and it's -- and the commitment will be valid on -- on designation, we will proceed. We have the funds on hand to take us to the point necessary, and when our designation is -- if we are successful in our application, he will proceed with the financing. 310 MS. PAULUS: Because he is an honourable man. 311 MS. LOWRIE: Because he has been my business partner since 1989, and he has never -- I have never had a problem yet. 312 MS. PAULUS: That's good. 313 I would like you to turn to condition 3(C), and if you can read that for the record, please. 314 MR. FRANCIS: "3(C) Receipt by owner of adequate interest and commitments to use the storage facility and determination by owner that the storage facility is and will be economical." 315 MS. PAULUS: So is this condition a condition that you consider reasonable? 316 MR. FRANCIS: Yes. 317 MS. PAULUS: And so I wouldn't anticipate parties entering into the contract until you could satisfy this condition? 318 MR. FRANCIS: Absolutely. 319 MS. PAULUS: And can you give me some further idea of what "adequate interest and commitments" means? 320 MR. FRANCIS: It is a general term. We believe that the market price, looking forward, will be adequate to cover all costs in this project. How you interpret "adequate" would be subject to debate between ourselves and the third parties. 321 MS. PAULUS: It is a dangerous way to draft contracts. 322 MR. FRANCIS: I disagree. 323 MS. PAULUS: I wasn't looking for comment. 324 And when you say that the facility will be economical, typically you put in a condition precedent because it is not clear to you at the juncture at which you are entering into the contract that that event has already occurred. In other words, if something has already occurred, I don't have to put in a condition precedent in the contract. So in you putting -- in having put in that term is because you had not determined at that date that the project would be economical? 325 MR. FRANCIS: This is an open-season document. Certainly, we would have to demonstrate to the customers that we are economical and viable for them, obviously, to contract with us. 326 As this was very preliminary in the process, if I must say, there was still some uncertainty regarding rates, designation, and other variable costs. 327 MS. PAULUS: Well, in fact, your intent when you drafted this was to solicit some interest first so that you could bring that -- 328 MR. FRANCIS: Back to the Board. 329 MS. PAULUS: -- back to the Board with your application; that's what the wording says? 330 MR. FRANCIS: Yes. 331 MS. PAULUS: And now, having gone out there, you have changed those plans. 332 MR. FRANCIS: Correct. 333 MR. FISHER: Deeming them unnecessary with respect to determining the economics of the project, that's correct. 334 MS. PAULUS: Thank you. 335 I would like you to turn now to -- your contract doesn't actually have page numbers on the copy I have, but what I am looking at is on the second to last page, paragraph (G). 336 MR. SOMMERVILLE: I'm sorry, Ms. Paulus, what was that reference again? 337 MS. PAULUS: There are no page numbers, so I know it is difficult. But if you go to the second to last page, that would be the page that begins with an "F" at the top of it. 338 MR. SOMMERVILLE: Thank you. 339 MS. PAULUS: And I am asking the applicant to refer to paragraph (G). You have that? Good. 340 And this paragraph contemplates that you may be assigning the contracts to your lenders, does it not? 341 MR. FRANCIS: It reads that way. As initially contemplated, that was a consideration. 342 MS. PAULUS: So are there such plans in the works now? 343 MR. FRANCIS: Not that I am aware of. 344 MS. PAULUS: And if you are not aware of them, is there someone more appropriate that that question should be directed to? In the interests of time, maybe we should -- 345 MR. FRANCIS: No, we are just conferring. 346 MS. PAULUS: Okay. 347 DR. WALSH: At the time that this was drafted and presented to me, it was my understanding that it was a -- it was there, in essence, as an open-ended aspect of this precedent agreement, just in case we had this type of arrangement in place with any lenders. 348 MS. PAULUS: And the question was simply whether you have any present intentions to do assignments of these contracts to lenders? 349 DR. WALSH: As it stands now, no. 350 MS. PAULUS: Thank you. 351 If you can turn now to the storage service agreement, which is Exhibit B, under that same tab, and I'll give everyone a moment, perhaps. Are we okay? Thank you. 352 Now, perhaps you can give us some background on the drafting of this contract? 353 MR. FRANCIS: Yeah, this contract would ultimately be the agreement that we would have with the third parties after the open season and we agreed to the bid price, the term, volume, such as that. 354 MS. PAULUS: So once the conditions precedent were satisfied in the bid contract, then the party would be obliged to enter into this contract? 355 MR. FRANCIS: This is the contract we would -- 356 MS. PAULUS: Right, and now if you could give me some background about the drafting of the contract, is this a cookie-cutter of the Union contract or -- 357 MR. FRANCIS: I wouldn't use that terminology. I am not -- 358 MS. PAULUS: You are not a woman. 359 MR. FRANCIS: I like to make cookies. I am a good cook -- sorry, can you repeat the question again? 360 MS. PAULUS: Perhaps you could just give us some background on the drafting of this contract and inform us the extent to which it parallels the Union contract or some other public utility's contract and the extent to which it is unique? 361 MR. FRANCIS: Yeah, basically what we have tried to do here is capture general standards in the industry, terms and conditions, recognizing that this is a draft contract and I am sure, as we enter into agreements with counterparties, there will be revisions, updates, changes and amendments. 362 MS. PAULUS: Would that be your intent? Because usually -- you know, very frequently, you try and keep all your contracts the same, so that all parties -- 363 MR. FISHER: Contracts evolve. They -- in the gas marketing business, in the gas storage business, how can we understand fully what the requirements of our counterparties are until we sit and negotiate, discuss the agreement that we propose to live to, so I agree a hundred percent with Dereck -- Mr. Francis. 364 MS. PAULUS: So this is the contract that, after consideration, you thought was appropriate? 365 MR. FRANCIS: It is a starting point. 366 MS. PAULUS: So we shouldn't expect then that this is the contract that parties will enter into, so when the Board is asked to approve terms and conditions of your arrangements, am I to understand that this is really just a work in progress? 367 MR. FRANCIS: No. We think materially the contract will stay as is, but there will be obviously some revisions and amendments to the contract. 368 MS. PAULUS: But materially, it will -- you expect -- 369 MR. FRANCIS: That is our intention. 370 MS. PAULUS: -- you expect it to stay the way it is? 371 MR. FRANCIS: That is our intention. 372 MS. PAULUS: And then, again, in drafting it, did you begin with Union's contract? 373 MR. FRANCIS: No. 374 MS. PAULUS: No. What did you begin with? 375 MR. FRANCIS: I have been in the industry -- 376 MS. PAULUS: Several precedents -- 377 MR. FRANCIS: For several years -- 378 MS. PAULUS: I am just asking you. 379 MR. FRANCIS: I have worked in that contract environment for several years, and with the help of counsel, drafted contracts that we think would be applicable to our storage facility. 380 MS. PAULUS: Good, so this is the one that, having looked at the various precedents out there, you thought met the needs of your particular clients, your particular facility? 381 MR. FRANCIS: Yes, having -- I mean, ultimately we decide when we sit down with the client. 382 MS. PAULUS: Understood. 383 MR. FRANCIS: And they would determine. 384 MS. PAULUS: And so in your experience you're saying that you looked at several different arrangements that were out there and put this together. 385 MR. FRANCIS: Yes. 386 MS. PAULUS: We have talked a lot about Union, but we don't want to leave anyone out. What other? 387 MR. FRANCIS: There is utilities and -- to answer your question, yes, we did look at Union, but I would say primarily Michigan Utilities as well as New York Utilities. 388 MS. PAULUS: Was there anybody beside a utility that you looked at? 389 MR. FRANCIS: Yes. 390 MS. PAULUS: And who would that be? 391 MR. FRANCIS: MichCon. 392 MS. PAULUS: And what kind of entity is MichCon? 393 MR. FRANCIS: If I could make a correction, the private storage developers that we looked at, the contracts we reviewed, were in New York State. 394 MS. PAULUS: And these private storage developers, what kind of entities were they? 395 MR. FRANCIS: They were private. They weren't utilities. 396 MS. PAULUS: I'm afraid there is more distinctions than private and utilities. In fact, when we say "private", usually we mean not a public company; we don't mean not a utility. 397 MR. FRANCIS: Okay. 398 MS. PAULUS: So can you advise us whether, for example, these were public companies or what they were? 399 MR. FRANCIS: I would regard them as public companies. 400 MS. PAULUS: They were public companies that had experience in the industry? 401 MR. FRANCIS: Yes. 402 MS. PAULUS: Had assets? 403 MR. FRANCIS: Yes. 404 MS. PAULUS: Thank you. In the contract that I asked you to refer to, that is, the storage service agreement that's marked Exhibit B if you could turn to paragraph 2.1(a), and there is -- perhaps you can read for the record the opening language of that paragraph? 405 MR. FRANCIS: "Company shall receive and deliver, as applicable, gas hereunder on a reasonable efforts basis following good utility operating practice in response to nominations properly given hereunder from time to time by Bidco..." 406 MS. PAULUS: That will be sufficient for the record, thank you. Are you intending to get designation as a utility? 407 MR. FRANCIS: As a private storage company. 408 MS. PAULUS: So you'll operate in accordance with the standards of a utility, but not necessarily be one; is that correct? 409 MR. FRANCIS: Yes, that's correct. 410 MS. PAULUS: Thank you. And your obligation to deliver is on what basis under this contract? 411 MR. FRANCIS: Initially, we have put in language that reads as interruptible, but subsequent negotiations with Union, we have been able to firm-up our capacity, and as such this -- 412 MS. PAULUS: Okay, thank you. 413 MR. LEWIS: Can he not finish his response to the question? I think it is only fair that if the question is asked and the witness would like to finish his response, that he be given the opportunity to do so. 414 MS. PAULUS: I think they have had lots of opportunity, but I don't have a problem if he wants to put more on the record. 415 MR. BETTS: Please finish your answer. 416 MR. FRANCIS: If I may, we've since negotiated firm capacity with Union Gas, which fits better and is a better risk profile for the storage operation. 417 MS. PAULUS: All right, thank you. 418 Before we leave off with this contract, I would like to just consider a few other provisions in it, including provision 2.7, specifically paragraph (C). And maybe, in the interests of keeping us moving, I'll direct you to the part that's pertinent, and if you feel that is out of context, you can let me know. 419 This section gives the storage company the right to comingle gas between different users of their facility and their own; is that correct? 420 MR. FRANCIS: That's correct. 421 MS. PAULUS: And is that a section that, on reflection, you are considering changing? 422 MR. FRANCIS: I would say no. 423 MS. PAULUS: I would like you to turn to paragraph 5.4, and this is a section, again to keep things moving, I'll identify as something that assures you that the parties that use your facility are credit-worthy and you have a right to get letters of credit from them if they don't meet your standard. 424 MR. FRANCIS: Correct. 425 MS. PAULUS: And on reflection, that is a paragraph that you would contemplate leaving in the contract? 426 MR. FRANCIS: Absolutely. 427 MS. PAULUS: And are there any other changes that you are contemplating making about parties providing security? 428 MR. FRANCIS: That would be determined on a party-by-party basis. The form of the financial assurance may not necessarily be a letter of credit; it could be pre-payment; it could be parental guarantee, depending on the counterparty. 429 MS. PAULUS: Right. But right now this contract reads in terms of the counterparty only providing security; is that correct? 430 MR. FRANCIS: That's correct. 431 MS. PAULUS: And is that how you anticipate the contract reading? 432 MR. FRANCIS: Again, subject to negotiations, there could be reciprocal language. Again, that would be something that would be between us and the third party. 433 MS. PAULUS: Okay, thank you. 434 Right now, the applicant has entered into an M16 contract, and it contemplates specific volumes of gas being moved; in other words, you have a commitment for service for specific volumes up to a maximum; is that correct? 435 MR. FRANCIS: That's correct. 436 MS. PAULUS: And do you anticipate using those total volumes? 437 MR. FRANCIS: Yes. 438 MS. PAULUS: And you anticipate using them on what kind of time frame? 439 MR. FRANCIS: We will use the -- we anticipate using the entire summer period, 214 days, and we anticipate using the entire winter period, 151 days. 440 MS. PAULUS: Going back to the term of the contract, when would you anticipate commencing using those total volumes? 441 MR. FRANCIS: I believe it begins April 1, 2005. 442 MS. PAULUS: And so you anticipate by April 1, 2005, moving those kinds of volumes? 443 MR. FRANCIS: Yes, we do. 444 MS. PAULUS: And so if I could refer you now to the draft conditions of approval and I'd ask you if you could have two items before you, both E.2.9 and also E.2.10. 445 MR. FRANCIS: Do you have a copy? 446 MR. GORMAN: No. 447 MR. LEWIS: Has anyone been keeping a set of exhibits for the witnesses? Do you have those? Those are for me; I have to have a set and the witnesses have to have a set. I am just wondering whether we have been keeping a set for the witnesses. If not, I mean, I think I can find another copy of that, but I don't know when -- 448 MR. BETTS: And Mr. Lewis, I'm afraid you are going to have to take care of your witnesses, so if you feel they need copies, please make sure you see that that's done, okay? 449 Ms. Paulus, did I get the nod that this was a good time for a break; is that the idea? 450 MS. PAULUS: I just felt people were floundering looking for documents. If everybody is in -- 451 MR. BETTS: I would like to, if we can, stretch it out to about 11 o'clock, if we can. So let's hang in there. When everyone has got their documents, we'll proceed. 452 MS. PAULUS: All right. 453 Do people have Exhibit 2.9, 2.10 or 2.11 can probably make due. 454 What we were talking about was the time frame in which the applicants intended to use the service that they have committed to with Union, and you indicated for the record that you intended to commence using those full volumes or committed service at the date of April; is that correct? 455 MR. FRANCIS: Or when the facilities are in place to commence injection. If I could defer to Mr. Fisher -- 456 MS. PAULUS: So maybe do you want to revise your response for the record, because I think you did give a response -- 457 MR. FRANCIS: Yes, if I could defer to Mr. Fisher, who takes care of the facilities. Obviously, I can't inject and use the contract until my facility is built. 458 MR. FISHER: It is my understanding that there has been a new injection/withdrawal schedule put together by Mr. Gorman that reflects initial injections around August of '05. And with that, it is implicitly obvious to me, reading the contract, that that's when the contract would start. There is a clause that states it can't come in effect until we are capable of injecting, so it was my understanding and the Board -- 459 MS. PAULUS: You could always start paying fees when things aren't constructed, so maybe we shouldn't take things as obvious, and let's just step through it, if you don't mind. 460 MR. FISHER: Hold my hand. 461 MS. PAULUS: So, to start again, do you want to correct your answer? 462 MR. FRANCIS: Yes, I'll correct that previous statement. The initial term of the contract will commence, we will start injecting and using that contract when my facilities are built and -- 463 MS. PAULUS: And right now you anticipate that to be when? 464 MR. FRANCIS: August of 2005. 465 MS. PAULUS: August of 2005. And so looking at your conditions for approval as proposed with the amendment, that gave you until what date, for the record? 466 MR. FRANCIS: I believe -- 467 MR. FISHER: To reach cushion pressure; is that the clause? 468 MS. PAULUS: Yes. 469 MR. FISHER: I am reading clause 1.7. 470 MS. PAULUS: That's correct. 471 MR. FISHER: And it states: 472 "Achieve a reservoir pressure of 320 psig before December 31st, 2006." 473 MS. PAULUS: So to understand what capacity you will be using and when, if you can put together, please, this condition with your scheme for bringing the reservoir up to full pressure and let us know what portion of transportation you intend to use and what time frame? 474 MR. FISHER: I am going to try and make sure I answer what you are getting at. 475 MS. PAULUS: Good. 476 MR. FISHER: As I understand it, your question boils down to when do you intend to start injections? 477 MS. PAULUS: Well, like I say, my interest is in understanding when -- first of all, when your obligations begin under your agreement with Union, and from a very practical and real position, what portion of that capacity you intend to use in what time frame? 478 MR. FISHER: Could you ask me one question at a time, please? 479 MS. PAULUS: Sure. When do you intend to start using capacity under the M16? 480 MR. FISHER: After the station is ready to inject and currently we anticipate that being August '05. 481 MS. PAULUS: August '05. So looking at August '05, how much of the committed capacity that you have under the M16 do you intend to be using in August of that year? 482 MR. FISHER: How much of the contracted capacity? 483 MS. PAULUS: Yes. 484 MR. FISHER: Do you mean are we going to use the demand -- contract demand quantity? 485 MS. PAULUS: Yes. 486 MR. FISHER: That is our intention, yes. 487 MS. PAULUS: So as you start injecting, you use the full capacity? 488 MR. FISHER: I think I should point out to the Board that these agreements are negotiated by commercial people, and I have done that role and I think that it is natural for the commercial people, when going through and setting different numbers, that they don't necessarily reflect the actuality here. 489 What I mean by that is I have been working with Union, they have been very cooperative regarding what their system is and isn't capable of doing. And it looks to me, on an initial injections, like we'll be flowing a number somewhat below what the contract demand number is. 490 Now, being reasonable counterparties, I would expect Union to sit and talk to us and address these issues. That said, if we are not taking gas physically, I still think there is the option to settle a matter such as a contract demand quantity difference financially. So I believe, in direct answer to your question, it is possible for a day, a week, perhaps even a month, during initial injections, that we don't pull the 70 -- the contract demand amount. 491 MS. PAULUS: But you anticipate, from that start injection date, to be using at full capacity? 492 MR. FISHER: I believe my answer was it is possible physically we don't pull the contract demand amount. That said, we have an agreement with Union, and it is my expectation that they will manage that agreement in a manner that accommodates the terms of the agreement, yes. 493 MS. PAULUS: I am sure they will, but again, I am just really asking you a question about whether that capacity is expected to be used fully from the date you start injecting? And -- 494 MR. FISHER: I have answered the question -- 495 MS. PAULUS: And of course things can change or not, it is just a question of what your expectation is. I do believe you'll make your payments otherwise. 496 MR. FISHER: I've have answered that question. 497 MS. PAULUS: I would like you to repeat that answer then, if you think you have answered it. Do you anticipate using -- 498 MR. FISHER: Yes. 499 MS. PAULUS: Thank you. I would like to turn now to the question of rates, and if I feel that you need some documents before you, I'll alert you; and if you feel you need them, you can alert me. 500 MR. BETTS: Perhaps, if we are moving into a different area, Ms. Paulus, this might be a good time for a break. Would that work okay with you? 501 MS. PAULUS: Just fine. 502 MR. BETTS: Okay. Then let's take I guess approximately a 20-minute break. We'll return at -- let's aim at 20 minutes past 11:00. 503 --- Recess taken at 11:00 a.m. 504 --- On resuming at 11:28 a.m. 505 MR. BETTS: Were there any preliminary matters that arose during the break? 506 Ms. Paulus, thank you for allowing that break in the middle of your cross. Please continue. 507 MS. PAULUS: Thank you. 508 I think when we left off we did still have before us a series of exhibits that related to the draft conditions of approval. Those were Exhibit 2.9 through to 11. I would like you to refer to Exhibit 2.11, and in particular if you could refer to the second paragraph of the letter of Giffen & Partners that forms part of that exhibit and is dated August 4th. 509 MR. LEWIS: Excuse me, just before we begin, I just want to make sure they have a copy. 510 MS. PAULUS: If you could kindly let me know when you are prepared to continue. 511 MS. LOWRIE: Yes. 512 MR. LEWIS: Can you just review the letter? 513 MS. LOWRIE: Yes. 514 MR. LEWIS: You'd better read the letter. 515 MS. PAULUS: Maybe I'll take it as a response from you, Ms. Lowrie, that you are ready. 516 MS. LOWRIE: Thank you. 517 MS. PAULUS: If you could refer to the second paragraph, as I indicated, and if you could read for the record the last sentence of that paragraph. 518 MS. LOWRIE: "In this regard, we would ask that you extend this date to December 31, 2006." 519 MS. PAULUS: I actually asked for the second sentence of that paragraph, so if you could just continue, please. 520 MS. LOWRIE: The second sentence of the same paragraph? 521 MS. PAULUS: Yes, please. 522 MS. LOWRIE: "Order be changed from December 31, 2005 to December 31, 2006. Although my client has an economic incentive to proceed with the injection and pressuring up of the storage area as soon as possible, issues beyond its control, such as the price for storage and other market dynamics or unforeseen issues, may require that this decision be temporarily postponed." 523 MS. PAULUS: Thank you. 524 I think in these proceedings the applicant has put before the Panel a revised injection schedule. With that revised schedule in mind and this change, can you tell us, please, whether the revisions are made, taking into account the conditions that are set out in this paragraph? 525 In other words, does your current schedule meet the -- do you anticipate meeting the new date, or what date? 526 MS. LOWRIE: We anticipate building as soon as possible. I asked Mr. Lewis to put the December 2000 -- December 31st, 2006 date in because I thought it was easier than coming back to the Board, if anything goes wrong. 527 MS. PAULUS: Right. 528 MS. LOWRIE: It is out of an abundance of caution, not any intent not to build. I am not familiar with the regulatory process. The whole process has taken longer than I thought. We are behind what we intended to do. We anticipated an April injection date. 529 MS. PAULUS: But I thought when there was earlier discussion about the withdrawal and injection cycle, the reasons for the changes had more to do with the availability of gas and the appropriate seasons than it did with things like market dynamics or prices for storage? 530 MS. LOWRIE: It is our intent to build this facility as soon as possible. 531 MS. PAULUS: Okay. So the reasons set out in your lawyer's letter that you need the date extended out of an abundance of caution, is it accurate to say that's because prices for storage or market dynamics may change? 532 MS. LOWRIE: They could change. I am -- 533 MS. PAULUS: And would that affect -- 534 MS. LOWRIE: It is my nature to be cautious, and after going through the initial process, I wasn't sure what was involved in changing a condition of approval and would -- 535 MS. PAULUS: No, that's good. But my question is -- my question is what are the reasons that your schedule for injection and withdrawal may be extended, and I am putting to you that the evidence that you had earlier put on the record appeared, from my perspective at least, to touch more on seasonality than it did on a suggestion that you may change your injection timetable depending on what prices for storage or market dynamics look like. 536 MS. LOWRIE: Sorry, could you repeat the question. 537 MS. PAULUS: The question is, do the parameters set out in your lawyer's letter reflect the reasons that you may change your injection timetable? 538 MS. LOWRIE: Yes, issues beyond our control could change the timetable such -- 539 MS. PAULUS: The ones I asked you to direct your attention to were prices for storage and market dynamics. Again, I don't think you -- 540 MS. LOWRIE: It is more the price of the injection gas. If April or August gas were at $12, for instance, I believe that we would delay. We don't anticipate a delay, but -- 541 MS. PAULUS: Right, so -- 542 MS. LOWRIE: -- the market is a bit crazy this year. 543 MS. PAULUS: You can appreciate we want to understand what would impact the timing. So that's fair, you're suggesting that it may be a pricing of the gas that you are required to put in to pressurize. 544 MS. LOWRIE: If we believe that that is a temporary phenomena. If there is a new plateau for gas, then the injection gas becomes an investment that you can recover at a later date. 545 MS. PAULUS: That's right. And now what about the pricing of storage? 546 MS. LOWRIE: The pricing of storage, I do not believe that we would delay because of the pricing of storage. We have done a lot of analysis on the pricing of storage and look at it as a long-term investment, and are not as concerned with temporary fluctuations. 547 MS. PAULUS: Good, thank you. 548 I'd like to move now to some discussion of rates, and maybe the first item on rates, not to confuse you, would be rates that you are paying under the M16. 549 I think the exhibit I would refer you to, if it is helpful to you, is 2.8. But you may not need it. Why don't I ask my question, and then if you have to find a document... 550 What we are looking to understand is the annual contract fees that you will be paying -- you estimate to be paying under that contract on an aggregate basis, assuming that you are utilizing all contract volumes? 551 MR. FRANCIS: We broke it into a per-unit cost, as the price of the commodity, which would dictate the fuel, can vary significantly. In our economics, we have a range between 15 and 20 cents Canadian per gJ. 552 MS. PAULUS: And now if -- in doing your budgeting, I would assume that you have looked at what your annual cost will be for that? 553 MR. FRANCIS: Yes. 554 MS. PAULUS: And -- 555 MR. FRANCIS: Approximately 275,000 to 300,000. 556 MS. PAULUS: Thank you. 557 Now I would like to move to rates for contracting out your storage, and those would be the range rates. And the document that you may or may not want to refer to is Exhibit E.2.5. 558 MR. FRANCIS: Yes. 559 MS. PAULUS: And I know counsel for the Board clarified that most of what is here is really the profit margin and costs of Union and not those of the applicant. And I do recall that, in evidence, the applicant did say that they expected their profit margin to be somewhat less because they are not proximal to Dawn. But we would like further clarification of what you anticipate to be the profit margin? 560 MR. FRANCIS: I would term that as confidential, which would be satisfactory to the investors. That would be for them to determine. 561 MS. PAULUS: You are looking for the Board to approve rates; is that correct? And you are looking for a determination as to whether they are just and reasonable? 562 MR. FRANCIS: Yes. 563 MS. PAULUS: And don't you consider that part of that determination has to take into account what your return is? 564 MR. FRANCIS: In our economic model, we have the M16 charges as a variable cost, and we're confident that we'll be able to -- as long as we have got several variable costs, we'll be able to meet a satisfactory return to the investors. 565 MS. PAULUS: So I can understand, when Union says that they want a range rate and they put before the public what their profit is and what their costs are, that's available, and then you have a range that it is going to move between. Are you suggesting that in setting the rate for yourself, that the public isn't entitled to know what the costs are, nor what the profit margin is, or anything else? 566 MR. FRANCIS: I believe the contracts will be filed in confidence with the Board Return Officer. 567 MS. PAULUS: So are you looking for a range rate and then each contract will be approved separately? 568 MR. FRANCIS: We would look for similar treatment to how Union Gas is treated today. 569 MS. PAULUS: That's what I am trying to understand, and I appreciate that so many of you are used to working for Union, and that does change things. But Union is a public utility, so I am trying to understand, when you say that you want the same treatment, I am having a hard time understanding how these apples and oranges are treated the same. 570 MR. FRANCIS: For the contract, if I could clarify. 571 MS. PAULUS: I beg your pardon? 572 MR. FRANCIS: For the contract, not necessarily the costs that underpin our project, but for the contract. 573 MS. PAULUS: So you are looking to have a range rate that doesn't have anything before the public as to what the costs are or what the profit margin is anticipated to be and doesn't have any evidence of what the market will bear -- 574 MR. FRANCIS: Yes. 575 MS. PAULUS: -- but you will -- thank you. And just so I understand, you are saying you will file each contract? 576 MR. FRANCIS: If that is deemed appropriate, yes. 577 MS. PAULUS: But what are you applying for when you are applying for the range rate then? That's what I am trying to understand. 578 MR. FRANCIS: We would like to have access to that range rate similar to Union Gas. 579 MS. PAULUS: That is a range rate and you still have to have each contract approved, that's what you are anticipating? 580 MR. FRANCIS: Yes. 581 MS. PAULUS: Thank you. I would like to turn now to your organizational chart, and that's Exhibit 1.8. Do you need additional time? 582 So I just want to make clear, because I thought I understood your structure, but the chart looks like it says something else. So when you have a full line between Tipperary Gas Corp. and Huron/Tipperary L.P. 1, and say it is a hundred percent, that's not really the case, is it? The ownership -- typically, when you draw a schematic of companies, a tree, and you draw a full line between the two entities with a hundred percent, you mean that it is a hundred percent ownership. 583 MS. LOWRIE: Tipperary Gas Corp. is a hundred percent owned by Tribute Resources. 584 MS. PAULUS: I agree with that one. 585 MS. LOWRIE: Mm-hm. 586 MS. PAULUS: I am referring you to the next part of that tree. 587 MS. LOWRIE: Okay. 588 MR. GORMAN: We need a copy of that. 589 MS. PAULUS: I think -- 590 MS. LOWRIE: You are correct. 591 MS. PAULUS: Right. 592 MS. LOWRIE: It is the general partner for Huron/Tipperary L.P. 1, I didn't notice that. 593 MS. PAULUS: Exactly, so there shouldn't be any line between Tipperary Gas Corp. and Huron/Tipperary L.P. 1? 594 MS. LOWRIE: Tipperary Gas Corp., I believe, has a very small interest in the general -- in the -- 595 MS. PAULUS: A less than 1 percent interest? 596 MS. LOWRIE: Yeah. 597 MS. PAULUS: That's right. So when we are looking at the consolidated financials for the corporation, it would be accurate to say Tribute Resources Inc. and Tipperary Gas Corp. are companies that are very closely associated, and therefore, the consolidated balance sheet takes into account the assets of both of them; correct? 598 MS. LOWRIE: Yes. 599 MS. PAULUS: But doesn't take into account the assets of the limited partnership; correct? 600 MS. LOWRIE: It takes into account the Tipperary -- or Tribute's 1700 units in the limited partnership. 601 MS. PAULUS: Right. And so just so we understand, because they are not related corporations, that means, of course, when I see the assets on the books of the limited partnership showing the ownership of the storage facilities and their value and then when I see that same value -- the value of the units on Tribute Resources Inc.'s balance sheet, that's really the same money that's just repeated twice because they're not related entities? 602 MS. LOWRIE: If you look at the consolidated statement and the individual statements -- 603 MS. PAULUS: Right. 604 MS. LOWRIE: -- the two are combined to achieve a consolidated statement. 605 MS. PAULUS: But the only two combined on the consolidated balance sheet would be Tribute Resources Inc. and Tipperary Gas Corp. 606 MS. LOWRIE: No, the limited partnership units would be in there as well. 607 MS. PAULUS: And why would that be? 608 MS. LOWRIE: Because Tribute owns 1700 units of the limited partnership. 609 MS. PAULUS: And what percentage is that? 610 MS. LOWRIE: Approximately 70 percent at this time. 611 MS. PAULUS: So you are consolidating with 70 percent? 612 MS. LOWRIE: Yes. 613 MS. PAULUS: Okay. In your evidence, you suggested that the assets would be -- the assets that pertain to storage would be conveyed to the limited partnership after you received approval? 614 MS. LOWRIE: Yes. 615 MS. PAULUS: Do I understand that they have now, though, been sold because the units have been issued; correct? 616 MS. LOWRIE: The storage leases are held in trust in Tribute for the limited partnership. 617 MS. PAULUS: So are there any other assets related to the storage operations? 618 MS. LOWRIE: The P&NG rights will also be transferred. 619 MS. PAULUS: But they have all been sold, they are all held in trust now then? 620 MS. LOWRIE: Not the petroleum and natural gas rights. 621 MS. PAULUS: Well, then they won't be transferred. 622 MS. LOWRIE: They will be upon designation. 623 MS. PAULUS: So will you then be issued more units? 624 MS. LOWRIE: Tribute will be issued additional units. Funds will be placed in the limited partnership by investors for units. 625 MS. PAULUS: To buy more of those same assets that are required to run -- 626 MS. LOWRIE: To raise the funds for the development of the pool. 627 MS. PAULUS: So when the documents show that in consideration of the 1,700 units, the storage assets were conveyed, that was some of the storage assets, and others will be added later? 628 MS. LOWRIE: That was all of the storage assets, but not the petroleum and natural gas rights. Storage rights. 629 MS. PAULUS: But your intent is to move further assets into the L.P.? 630 MS. LOWRIE: The intent is to move the petroleum and natural gas rights into the L.P. Tribute will also be compensated for the cost of drilling what is going to be the injection well. 631 MS. PAULUS: So there will be further expenses yet that the L.P. has to pay for in addition to what they paid for the 1,700 units? 632 MS. LOWRIE: The L.P. will issue units, receive cash, and then pay the cost of development. 633 MS. PAULUS: And the P&NG rights that you are going to move into the limited partnership, those are useful for the storage operations? 634 MS. LOWRIE: Yes. 635 MS. PAULUS: In what sense? How so? 636 MS. LOWRIE: As cushion gas. 637 MS. PAULUS: So when I asked you earlier about how we were -- how the cushion gas was going to be provided and you indicated that it was going to be bought, and I asked whether it would be provided by any of the three entities, and the answer was no, is there some correction on the record required? 638 MS. LOWRIE: I was speaking of the incremental cushion. When I speak of cushion gas, I am thinking of the incremental amount necessary to bring the pressure to 300 pounds. The pool pressure is above the 50 pounds, so... 639 MS. PAULUS: So -- 640 MS. LOWRIE: There is gas in place in the pool currently. 641 MS. PAULUS: So the intent is that the L.P. will require the in situ gas from Tribute and then, in addition, it will buy third party gas? 642 MS. LOWRIE: Yes. 643 MS. PAULUS: Thank you. 644 I think you indicated that the limited partnership agreement may be subject to some further amendment, but there are no amendments at this time? 645 MS. LOWRIE: That is correct. 646 MS. PAULUS: So if we can turn to that document now, and that document, I believe, was filed under tab 1E -- I'm sorry, in response to Board Interrogatory 1E. And I'll refer you to paragraph 4.2. 647 MR. LEWIS: Which tab is that? 648 MS. PAULUS: I think if I read the sections, you may find you don't need the document, but -- 649 MR. BETTS: That works. 650 MS. PAULUS: All right. And if someone feels like they need it... 651 I am referring you to section 4.2, and that is the section that deals with the issuance of additional units. I believe that section, as currently drafted, provides that additional units will only be issued up until December 31st, 2001; is that correct? 652 MS. LOWRIE: Yes. 653 MS. PAULUS: And is that the section you were indicating you thought required amendment? 654 MS. LOWRIE: That is one of the sections. 655 MS. PAULUS: Thank you. 656 Then I would like to refer you to section 10.7, and that is a section that deals with no management by any of the limited partners. It is a section that is required in most agreements in order that limited partners maintain their limited liability; is that correct? 657 MS. LOWRIE: It's in most documents, sorry? 658 MS. PAULUS: I said it is a section that is typically required in order that the limited partners maintain their limited liability. 659 MS. LOWRIE: I believe that is correct. 660 MS. PAULUS: And is that a section that you intend to amend? 661 MS. LOWRIE: As previously stated, that is why I believe that Tribute is liable, because they will participate in the limited partnership, in the management of the limited partnership. 662 MS. PAULUS: Oh, so your intent, in using a general partner that was a separate corporation, was what? 663 MS. LOWRIE: I received legal advice and set it up the way it was suggested. 664 MS. PAULUS: So when this agreement -- let me rephrase the question. 665 Is it your practice to comply with the terms of your agreements? 666 MS. LOWRIE: Yes. 667 MS. PAULUS: So when this document says that no limited partner will participate in the management or control, it is not your intent to comply with that one? 668 MS. LOWRIE: As previously stated, our tax accountant is reviewing this agreement and our lawyer is reviewing this agreement. It is my practice, when I undertake -- this agreement was done in 1999 by my former partner, Mr. Doug Brett, who was then the president. 669 It is my practice when I undertake a venture to assemble the expertise necessary to take -- to do -- to complete a project competently, and I do not have the legal or account -- or tax expertise to draft this agreement, or comment on. 670 MS. PAULUS: But again, we -- 671 MS. LOWRIE: As previously stated, there are sections that need to be changed, that's correct. 672 MS. PAULUS: But we can only work with what is before us, and what we have before us is a structure of limited partnership. 673 MS. LOWRIE: Yes. 674 MS. PAULUS: And I don't think it is putting it -- surprising anyone to say you use a limited partnership with the intent to limit liability, and that your shareholders of your public company may be surprised to hear that your intent is not to limit your liability? 675 MS. LOWRIE: It was Tribute's project, and I believe Tribute should be responsible for the project. 676 MS. PAULUS: And so these agreements say what they say, but that's not necessarily what you intend to occur? 677 MR. LEWIS: If I can just interject, my client is being asked questions that are of a legal nature and we have run into this thing two or three times, and I object to any sort of further questions that pertain to legal issues. I believe my friend -- 678 MS. PAULUS: I don't -- 679 MR. LEWIS: If I could just finish my objection. 680 I believe my friend has asked and got an answer on the point that Tribute are, in this witness's mind, legally obligated under limited partnership law in connection with this contract. They have also given an undertaking to this Board to be legally liable for the obligations of this storage operation. And if we could possibly stick to business and concepts that relate to the hearing as opposed to trying to get into legal, technical questions involving limited partnership law and tax law that relate to a document that this witness has said on at least two occasions she is not competent or capable of giving. 681 MS. PAULUS: We certainly will keep our questions as brief and to the point as we can, and I believe we have done so. I certainly take exception to the idea that these matters are extraneous to these proceedings. They go to the heart of the matter. The heart of the matter certainly is one of the issues on the list, which is the financial capability of the applicants. 682 And it is important to understand what the applicants characterize these arrangements to be, and it is not far-fetched at all to expect that presidents of companies and companies that are before us understand, when they enter into a limited partnership agreement, that that means that you intend to limit your liability. And it is surprising and important evidence if their evidence is that, even though the agreement is intended to limit liability, they don't intend to in fact operate in that manner. 683 Further, an undertaking to the Board to be responsible is nothing that a third party could rely upon and is no assurance to any third party that the applicants will not use their agreements to shelter their liability. 684 On these bases, I do intend to proceed; however, I do not have many more questions on this agreement. 685 MR. BETTS: I don't believe we can separate the legal issues from the questions here, but I do also not expect all witnesses to be able to answer every question. And I'll remind witnesses that they can simply say, I can't answer that, if they are in a position -- if they are unable to answer that. 686 But certainly, the legal matters are certainly before us and have to be considered. So please continue, but Mr. Lewis, I don't mind you helping your witnesses through objections where that is necessary. So please, both of you, try to continue with what you are trying to do. 687 MS. PAULUS: Thank you. 688 I direct you, as the last question, to section 14.1. And this is a section that confirms the limited liability of the limited partners; is that correct? 689 MS. LOWRIE: Yes. 690 MS. PAULUS: Thank you. And this is the section that you intend to amend? 691 MS. LOWRIE: I have not received the information from our tax accountant. 692 MS. PAULUS: Do you take that to be a section relating to tax or you're just being abundantly cautious? 693 MS. LOWRIE: I am just -- I am being cautious. 694 MS. PAULUS: Okay, all right. 695 MS. LOWRIE: The intent, when this is set up, was the investors are to be protected. That's why you set up a limited partner. 696 MS. PAULUS: That's right. 697 MS. LOWRIE: But the intent was not to make Tribute -- have Tribute with limited liability. If that was the intent, they would not have owned the shares of Tipperary Gas Corp., because at that point they participate in the management. This is non-legal. 698 MS. PAULUS: Right, right. But you do understand that the general partner, while it is a subsidiary of Tribute Resources and therefore, for accounting purposes, you may combine the assets, but at the end of the day you understand that you set up separate corporations because the general principles are a corporation is a separate entity and the shareholder, which in this case would be Tribute Resources Inc., is not liable for the obligations; do you understand that? 699 I only say that because, frankly, from the answer you gave, it didn't sound like you were considering the general partner a separate corporation. That's okay. 700 DR. WALSH: Can you repeat the question? 701 MS. LOWRIE: No, I think I -- this was set up in 1999. It is the intent that -- that is why we put both Tribute and Tipperary on this application. 702 MS. PAULUS: So -- 703 MS. LOWRIE: It's Tribute or Tribute's assets -- 704 MS. PAULUS: Because you feel bound, but the assets, at the end of the day, will all be transferred to the general partner, so it is really almost more of a moral thing? 705 MS. LOWRIE: The assets -- oh, that is a legal -- the assets are held by the general partner in trust for the limited partners, I believe. 706 MS. PAULUS: Right. Which means Tribute Resources Inc. doesn't own any of them on its own? 707 MS. LOWRIE: Own -- they will own a percentage of the partnership. 708 MS. PAULUS: But they won't own the assets; the assets will be owned by the limited partnership; is that your intent? 709 MS. LOWRIE: They will own units in the limited partnership. 710 MS. PAULUS: Thank you. Has Tribute Resources Inc. provided a general or specific guarantee of any of the obligations of the general partner? 711 MS. LOWRIE: No. 712 MS. PAULUS: Thank you. That completes my examination. 713 MR. BETTS: Thank you very much, Ms. Paulus. 714 I would ask all of you that are going to be leading evidence just to pay attention to this. Typically, the Board Panel would ask questions at this point. It is my preference, and I know my fellow Panel Members don't object to this, that we allow you to re-direct at this point. We will then ask questions, and we will invite you, following our questions, to re-direct again, if any further clarification is needed. Just the purpose is that often our questions of clarification can be resolved in your re-direct questions to your witness. So if you would continue with that, Mr. Lewis. Are you prepared to proceed with your re-direct? 715 MR. LEWIS: Yes, I am, Mr. Chairman. 716 MR. BETTS: And Ms. Paulus, you are welcome to resume your previous seating, if you would like. 717 MS. PAULUS: Thank you. 718 RE-EXAMINATION BY MR. LEWIS: 719 MR. LEWIS: Perhaps, if we could turn to a gas storage lease that is in volume 1 -- no, I'm sorry, I might be wrong. 720 MS. McCONNELL: It would be 2 or 3. 721 MR. LEWIS: Volume 2, I believe, of the materials has got the gas storage leases, and if you could please turn to volume 2, white tab 4, yellow tab 8. I guess more correctly, it would be green tab 5, since that is the first one -- coloured tab 5. This lease is -- I am trying to find the lease that would be from Van de Brand, Cornelius and Anna Van de Brand, to PPC Oil & Gas. Okay, at tab 8, there are two gas storage leases and a specific lease -- 722 MS. McCONNELL: You are in the assignment. 723 MR. LEWIS: Yes, pardon me for the confusion. It is the gas storage lease agreement dated May 17, 1990, and it was from Cornelius and Anna Van den Brand of PPC Oil & Gas. And as I understand it, this is the lease that covers the Feddes property; is that correct? I guess it would be Mr. Jordan. 724 MR. JORDAN: Yes, it is. 725 MR. LEWIS: The Feddes lease. And does that gas storage lease cover all of the Feddes' lands? 726 MR. JORDAN: No, it doesn't. The Feddes' acreage is 65 acres. That lease covers 63 acres. 727 MR. LEWIS: And that lease has the paragraphs in it that deal with the setting or determination of compensation, the ones that were referred to earlier, 16, 17, 18 and 19; is that fair to say? 728 MR. JORDAN: Yes, it does. 729 MR. LEWIS: And similarly, just why is the lease -- why was the lease initially in the name of Vandebran. 730 MR. JORDAN: He was the current landowner at that time. 731 MR. LEWIS: And in a similar fashion, is there a lease to Vermue's predecessors in title in the materials? 732 MR. JORDAN: There is in volume 2, white tab 4, yellow tab 2. It was to Triple DJ Enterprises Limited. 733 MR. LEWIS: And does that lease cover all of the Vermue lands or part of them? 734 MR. JORDAN: Partial surrender of the original lease leaves 80 acres in place. 735 MR. LEWIS: So it is on part of the Vermue lands and there is some lands that are not covered by -- some of the Vermue lands not covered by a gas storage lease, as we said the other day? 736 MR. JORDAN: That's correct. 737 MR. LEWIS: When you -- and I believe both Mr. Vegh and Mr. Chinneck touched on this issue of compensation in your discussions. 738 When you were speaking to the landowners or their representatives regarding the new compensation agreements that we talked about in evidence, what did you tell them in the event that a compensation arrangement couldn't be reached? 739 MR. JORDAN: In any gas storage lease arrangement, I advise landowners, any rate that's in the document can and could be amended at an OEB hearing when it goes to designation. 740 MR. LEWIS: But my question is, what discussions did you have with the landowners in this pool regarding this issue? 741 MR. JORDAN: They were made aware, upon designation, that rates compensation, if not agreed on beforehand, will be agreed at the hearing. 742 MR. LEWIS: And specifically, we saw yesterday that there was a May 11th letter that included the first, I might call it, amending agreement that's in evidence. Did you have any discussions of that nature after that May 11th offer was -- which I believe you indicated you delivered May 14th to the landowners. Did you have any similar discussions with the landowners at that time? 743 MR. JORDAN: We had follow-up discussions, agreeing that the prices that were asked for matched the Union compensation but led us to further discussion on the expiry date in the Union arrangement. So we have developed and drafted and sent back to TSLA a clause 7 leaving that expiry date open-ended. 744 MR. LEWIS: No, my question was, did you have any discussions, that you described generally a few minutes ago, that if the issue of compensation couldn't be negotiated, that the Board would determine it as per the terms of the storage leases? 745 MR. JORDAN: Yes. The landowners are aware that the Board can arbitrate the rates at the hearing if we do not agree beforehand. 746 MR. LEWIS: And they are aware of that because? 747 MR. JORDAN: I have told them that, and it is written in their gas storage leases. 748 MR. LEWIS: I understand from your evidence yesterday, and I believe Mr. Chinneck was asking you some questions about sort of the timing between the May 14th - I'll call it the May 11th offer, because your letter was dated May 11th and it is in evidence - and the July 27th offer. There seems to have been a gap there. And if I recall the evidence yesterday, I think Mr. Chinneck suggested to you that on about May 20th or thereabouts, Mr. Dutot responded to your May 11th offer and indicated that he had concerns about the price adjustment clause. 749 And then it seems from yesterday's evidence that there was a sizable gap in what happened until somewhere towards the end of July, and I am just wondering whether you can explain what might have been going on, because it appears from yesterday's evidence you didn't get back to Mr. Dutot what might have been going on internally to explain some of that delay. 750 MR. JORDAN: Some of the delay was caused by the receipt by TSLA of further interrogatories, which they required time to look at before they could discuss any of the other land matters at that time. 751 We also were working on the pipeline arrangements with the municipality. We were also working on the survey of the compressor site. The issue of the northern boundary from the MNR came up; we had to attend with landowners on that issue. 752 I had two weeks of holidays in there with the family, which were great, thanks. And on July 7th, I had gotten back to the landowners with this issue. 753 MR. LEWIS: On July 7th? 754 MR. JORDAN: Yes. 755 MR. LEWIS: Did you get back to them in writing, or who did you get back to? 756 MR. JORDAN: I contacted Dwayne Feddes and asked if he wished to sign his lease before going to the hearing. He still had issues about the decommissioning of the production facilities we had talked about previously, so his answer was no. 757 I could not reach Mr. Vermue at that time. I also called Mr. Dutot -- 758 MR. LEWIS: What are you reading from or what are you looking at? 759 MR. JORDAN: I am reading an abbreviated summary of my contacts with the landowners that I had prepared from my daytimer notes. 760 MR. LEWIS: Did you have that summary yesterday? 761 MR. JORDAN: I had it yesterday. I had to fill in a few dates that were -- or a few of these comments in between that sort of weren't big highlights. 762 MR. LEWIS: So between yesterday when Mr. Chinneck was asking you questions about this and today, you have done what? 763 MR. JORDAN: I went back to my daytimer to find some of these other dates of contact and... 764 MR. LEWIS: Pardon me? 765 MR. JORDAN: And just put on some more little notes. 766 MR. LEWIS: Okay. And then we know that on or about the 27th of July, the next written offer was delivered; is that -- or don't let me interrupt you. If you have got more dates to fill in, or more things that happened in that gap, perhaps you can explain them. 767 MR. JORDAN: Further to July 7th, Mr. Dutot and myself discussed the McCulough surface agreement and the Feddes restoration of site, removal of the old pipeline when it gets decommissioned, and we had internal discussion -- what to do with the expiry date on the Union Gas arrangement, and we had wording provided from the Landowners' Association in which they wished to have us place in clause 7, which we looked at internally in preparing our revised clause and sent it to them by fax on the 28th. 768 MR. LEWIS: Is that the language -- the language of the TSLA regarding the revised clause, is that the language that is in the TSLA's pre-filed evidence? Have you seen the TSLA's pre-filed evidence? 769 MR. JORDAN: Which date was that, please? The language shows up on Exhibit 2.1 of our amending agreement, clause 7. 770 MR. LEWIS: No, no, I am thinking about the language that was proposed to you by the TSLA. 771 MR. JORDAN: Oh, it was just with a phone call with Mr. Dutot. 772 MR. LEWIS: Excuse me just for a moment. I am trying to locate the reference in the TSLA evidence. 773 I am looking at evidence filed by the TSLA dated June 7th, 2004. It is a typed letter to the Ontario Energy Board. I am not sure I can cross-reference the exhibit number. If anyone could help, that would be -- I'm sorry, it would be on the initial exhibit list. 774 MS. LITT: It has been assigned Exhibit No. B.3. 775 MR. LEWIS: B.3? 776 MS. LITT: Correct. 777 MR. LEWIS: Thank you. And I am making reference to page 8 of that letter. I'm sorry, it is the July 30th, 2004, answers to interrogatories; it's the TSLA's answers to Board Staff interrogatories dated July 30th, 2004. I beg your pardon. And it is the answer to -- it is labelled 6(a) in that letter on page 4. 778 Perhaps I could ask Mr. Jordan to read into the record the suggested language by the TSLA as referred to in that answer, and I will -- I am happy to wait until everyone has found it, because I know it was very confusing based upon the explanation I have given so far. 779 MR. BETTS: Please proceed. 780 MR. JORDAN: Thank you. "Example: If TSLA landowners provide to Tribute the same services that Lambton landowners provide to Union Gas, that TSLA's compensation at any point in time would always be equal to the Lambton landowners' compensation. The agreement would be continuous until it could be demonstrated that the services were not equal in nature." 781 MR. LEWIS: And in your -- to the best of your recollection, is that an accurate statement of the type of language suggested by the TSLA to you in or about the time you were having these discussions? 782 MR. JORDAN: Yes. 783 MR. LEWIS: Is there anything else from your daytimer notes that sort of fills in the gap between May 11th and July 27th, in terms of these negotiations? 784 MR. JORDAN: After faxing up the revised version with our wording reflecting what I just read, which was clause 7 of our Exhibit 2.1, Mr. Dutot was to have a meeting with the landowner group. 785 MR. LEWIS: When that faxing take place? 786 MR. JORDAN: July 28th. 787 MR. LEWIS: And carry on. 788 MR. JORDAN: Okay. August 3rd, I called Mr. Dutot. He had had a meeting with the landowners. He is sending the amending agreement to a lawyer to review our clause 7 and he was to fax those amendments to us by the afternoon of August the 4th. 789 MR. LEWIS: Can I ask you, up to this point in time, the beginning of August, can you tell me whether you had been alerted to the fact that there was some issue or concern over the method of splitting residual gas that had been communicated to you by the landowners? 790 MR. JORDAN: Yes. They asked about splitting out the residual gas on the outline of the reef. 791 MR. LEWIS: When did that happen? 792 MR. JORDAN: I don't have a date for that one. But I can tell you what I asked them to do, is that being that the application is filed with the unit agreements which sets out the participating area that our application is making the residual gas payment to, that they should find out from the Board what had been done in previous hearings to that effect. 793 So to identify, being that we are enlarging the pool at that time, seismic -- 794 MR. LEWIS: When you say enlarging, you mean enlarging from what? 795 MR. JORDAN: Well, as explained prior to by our sub-surface experts, you know, the pool exists structurally where it does. I am not an expert in that area, so I suggested that they would -- I referenced them the last couple of storage pools, Mandaumin, I didn't know what the Sarnia airport pool had been through hearings, but to get an opinion from someone where a decision had been made before to reflect on the request to change the whole residual gas payment structure under how we are filing to do it. 796 MR. LEWIS: But you referred to some change in the pool. Are you referring to a change from the way it was depicted in the unit operation agreements? 797 MR. JORDAN: Yes, they wished that the landowners would share in a different format than under the unit operation agreements, and I told them then they would need the agreement with every landowner in the pool because some would then be volunteering to reduce their interest in residual gas in order for others that have no interest under our unit agreement to be granted an interest in residual gas that they may not have. 798 So but we told them too that we are going to pay on a volume of gas regardless, so to Tribute, the volume won't change on a residual gas payment, and if they want to bring a mechanism that is different, they would need every landowner that that would affect to do so, so that's -- they asked the question, and that's how I presented them to pursue it. 799 MR. LEWIS: And what was their response or when was the next time they got back to you with some position on this issue of changing the split on residual gas? 800 MR. JORDAN: They were to the Board, I understand, and the Board was seeking to find that information for them. 801 MR. LEWIS: How do you know that? 802 MR. JORDAN: I was advised that by Mr. Dutot. 803 MR. LEWIS: What did he tell you? 804 MR. JORDAN: That the Board has not identified his information for him at that point. 805 MR. LEWIS: What time are we talking about? 806 MR. JORDAN: August 3rd, maybe, yeah, no information on -- yeah, August 3rd. 807 MR. LEWIS: So is it fair to say that on August the 3rd there is still some confusion in the landowners' mind and I guess in your mind as to what their position is on changing the residual gas split as proposed by you on July -- or in May and in July? 808 MR. JORDAN: They were investigating another means of distributing the residual gas. It wasn't in our application as filed, and if they can bring evidence that would change that and present it to the Board, I told them that they have the option to do that. We are splitting as filed under the unit agreements as they exist. 809 MR. LEWIS: Can anyone on the panel tell me any -- or give me any information about any complaints received from any of the landowners during your involvement with the pool regarding the splitting of payments under the unit operation agreements? 810 MS. LOWRIE: As it pertains to oil and gas operations? 811 MR. LEWIS: Yes. 812 MS. LOWRIE: We did not receive any complaints. 813 MR. LEWIS: I just want to enter as an exhibit here, before we leave this point -- actually, before I do that, Mr. Jordan, what sort of was the final contact with the TSLA in regards to this issue of compensation? When and how was it left off? Because I think you got us up to somewhere about August the 3rd and -- 814 MR. JORDAN: Okay. I had not received my fax on August the 4th to amend the clause 7, being that Mr. Dutot and myself were still trying to get this done before the hearing, including comments of working on the weekend. 815 August the 4th, that time he was going to go and meet with his legal again and fax us updates on the 5th. By the afternoon, I hadn't received them. I called Mr. Dutot on the 5th; I left a message. On the 6th, Mr. Dutot returned my call, and we were out of time and we were going to leave it for the hearing. But he did recognize the offer was made. 816 MR. LEWIS: Okay. I want to enter as an exhibit a decision and order made by this Board in RP-2000-0005, which perhaps we can refer to as the Lambton Storage Association compensation decision. 817 MS. CRNOJACKI: That would be E.4.1, exhibit. 818 EXHIBIT NO. E.4.1: DECISION OF THE ONTARIO ENERGY BOARD RE COMPENSATION IN THE LAMBTON STORAGE ASSOCIATION CASE 819 MR. LEWIS: Mr. Chairman, you are no doubt familiar with this decision. 820 MR. BETTS: I am. 821 MR. LEWIS: I just thought, for the purposes of completing the record, it might be helpful to get it in the record. 822 Mr. Jordan, you made reference in your evidence to -- and there has been a fair number of references to this Lambton decision. Is this the decision you were referring to? 823 MR. JORDAN: Yes, it is. 824 MR. LEWIS: And I take it you have had an opportunity to look at this decision? 825 MR. JORDAN: I have. 826 MR. LEWIS: And can you comment on the compensation package that is described in this decision with the one that is still outstanding to the TSLA? 827 MR. JORDAN: Well, the rates of compensation are the same except for the expiry date issue that we are working on through our clause 7. 828 MR. LEWIS: Mr. Walsh, I believe Mr. Chinneck asked you a question about the Lakeville lawsuit, which was a lawsuit where you were a defendant. And as I recall his question, the lawsuit involved some allegations of a breach of confidential information. 829 Can you tell us what became of that lawsuit? 830 DR. WALSH: Lakeville Holdings Inc. found the confidential information eventually and the suit was dropped. 831 MR. LEWIS: Yesterday, there was certain talks of -- certain discussions in connection with Mr. Chinneck's questions about a spill, and my first question is, did Mr. -- or has Mr. Dwayne Feddes, or anyone on his behalf, ever complained about the need to clean up a spill of hydrocarbons or brine on his lands? Has anyone on the panel received any such complaint? 832 MS. McCONNELL: Not at the well site. 833 MR. JORDAN: Not prior to entering into the renegotiation for purposes of our leasing and stuff that it has become a condition of granting his lease that the site is to be restored after decommission. 834 MR. LEWIS: As I understood your evidence before, the restoration was in terms of taking out the tank battery and taking out the pipelines. 835 I am more specifically inquiring about a spill. Like, were the words "spill" ever used? 836 MR. JORDAN: There is not an environmental spill that would require a call to the MOE -- 837 MR. LEWIS: Did Mr. -- 838 MR. JORDAN: -- that I have heard of from anybody. 839 MS. McCONNELL: I was never notified of a spill. 840 MR. LEWIS: So no one in the TSLA area has ever called anyone on the panel complaining about a spill? 841 MS. McCONNELL: No. 842 MR. LEWIS: Can you describe any requests received for crop damage payments as a result of a spill of hydrocarbons or brine? 843 MR. JORDAN: No. 844 MR. LEWIS: Pardon? 845 MR. JORDAN: No. 846 MR. LEWIS: No, you can't recall or no, you didn't receive any? 847 MR. JORDAN: I am just saying, I haven't had a call for damages for a spill. I am aware of damages that exist for work we are doing on the property, though. So I don't want to be misunderstood that there is damages that are occurring and that occurred that we have known about. But as far as a spill and compensation for spill damage, no. 848 MR. LEWIS: Mr. Francis, is it your understanding that all contracts for storage services would be filed with the Board? 849 MR. FRANCIS: Yes. 850 MR. LEWIS: And by "contracts for storage services," those would be the storage services agreement or an agreement similar to the one that Ms. Paulus walked you through this morning? 851 MR. FRANCIS: That's correct. 852 MR. LEWIS: And the agreement appended to that, or the agreement to which that was appended, would that also be filed with the Board? I believe the storage service agreement was Exhibit B to the -- 853 MR. FRANCIS: Yeah, it would be the storage service agreement, Exhibit B, that would be filed with the Board. 854 MR. LEWIS: I would just like to enter as an exhibit a series of photographs which Ms. McConnell will identify. 855 MS. McCONNELL: These are photographs -- 856 MR. LEWIS: Just wait until everyone gets them. 857 MS. McCONNELL: Sorry. 858 MR. BETTS: I think some of these exist some -- or maybe all of them exist in the record. But since they have been handed out separately, just to make sure that they are identified, I think we'll establish an exhibit number for this package of photographs. 859 MS. CRNOJACKI: It is E.4.2, series of photographs, 9 pages. 860 EXHIBIT NO. E.4.2: SERIES OF PHOTOGRAPHS TOTALLING 9 PAGES 861 MR. LEWIS: Thank you. Does everyone have a set? 862 Ms. McConnell, can you explain what these photographs represent? Let's start with the first page. 863 MS. McCONNELL: Well, if I could give a bit of background, Mr. Lewis? 864 MR. LEWIS: Yes. 865 MS. McCONNELL: I received a copy of the TSLA July 19th, 2004 letter, which included photographs of the well sites and the battery site. I was given these on July 21st by Tribute resources and asked to investigate these photos. 866 I went to the well site and the battery sites on July 23rd, and I found that the conditions depicted in the photographs from the TSLA were not as shown in these photos. 867 MR. LEWIS: Not as shown in which photos? 868 MS. McCONNELL: The photos that were attached to the July 19th, 2004, TSLA letter, my -- 869 MR. LEWIS: So, did you prepare this exhibit? 870 MS. McCONNELL: Yes, I did. 871 MR. LEWIS: Okay. On the left, I see on the first page, if we can look at that, maybe you can explain for the Board the purpose of this, and what you've done? 872 MS. McCONNELL: Okay. What I have tried to do is the TSLA photos out of their July 19th letter are on the left-hand side, and the photos that I took are on the right-hand side. 873 MR. LEWIS: When did you take those photos? 874 MS. McCONNELL: I took them July 23rd, 2004. 875 MR. LEWIS: And those would be the ones on the right side of each page prefaced and labelled "TRB/TIPP", and then an appropriate number; is that correct? 876 MS. McCONNELL: Yes. 877 MR. LEWIS: Okay. I'm sorry, go ahead. And if you could just explain the comparison. I don't want to belabour this, but I just want you to fill us in on what you've done here. 878 MS. McCONNELL: My photo on the right-hand side shows that the tank isn't there, the wellhead is painted, it is a different site compared to the photos on the left. I mean, it is not a different site, I'm sorry. It is a different -- the site had been cleaned up. 879 MR. LEWIS: And can you tell us when that clean-up might have occurred? 880 MS. McCONNELL: It has been an ongoing thing. It has been an ongoing process. 881 MR. LEWIS: When did you receive the TSLA photos again? 882 MS. McCONNELL: July 21st. 883 MR. LEWIS: So the clean-up, did it occur after July 21st? 884 MS. McCONNELL: No, it occurred before July 21st. 885 MR. LEWIS: Carry on. 886 MS. McCONNELL: The second page shows -- this is the topsoil that was removed for the building of the roadway and piled adjacent to the roadway. There are weeds on top of that -- oh, I'm sorry, I have a different order. 887 MR. LEWIS: You have a different order. My second page has it looks like an electrical box on it. I don't know whether they have been stapled together -- okay. 888 MS. McCONNELL: Okay. I have the same set now. 889 MR. LEWIS: Are we on the same page? 890 MS. McCONNELL: Yes. 891 MR. LEWIS: Okay. 892 MS. McCONNELL: Sorry about that. 893 The top left-hand photo entitled "TSLA number 10C" shows an electrical panel open and broken apart, the photo adjacent to it shows the electrical panel intact and locked. 894 MR. LEWIS: As it existed when you took the photo? 895 MS. McCONNELL: Correct. 896 The photo TSLA number 10D shows tire tracks, I'm assuming, in a wheat crop. When we removed the tank from that site in the spring, we did some damage but we did contact -- I didn't contact Mr. Feddes personally. Mr. Jordan contacted Mr. Feddes to let him know that we were coming in there and that we would compensate him for that crop loss. 897 MR. LEWIS: So TRB/TIPP number 10D-3 photo is Mr. Feddes' field? 898 MS. McCONNELL: Yes, it is. 899 MR. LEWIS: And what happened with this crop compensation discussion, Mr. Jordan? 900 MR. JORDAN: I phoned Mr. Feddes. He wasn't in, and I left a detailed message advising him that Ms. McConnell would be doing work at the well sites and there could be some minor crop damage. 901 MR. LEWIS: When was this, approximately? 902 MS. McCONNELL: June, I believe. 903 MR. JORDAN: Actually, I have the date. June 17th. 904 MS. McCONNELL: 2004. 905 MR. JORDAN: 2004. 906 MR. LEWIS: So he didn't contact you; you contacted him? 907 MR. JORDAN: Yes. 908 MR. LEWIS: Okay. 909 MS. McCONNELL: The next page shows the driveway into the well site. Basically my photo beside it just shows the current condition of the driveway into the well site. 910 MR. LEWIS: So you are comparing TSLA number 11C with TRB/TIPP number 11C-3; correct? 911 MS. McCONNELL: Correct, and also the photo below, 11C-4, it is kind of a composite of the two photos that gets you what the origin TSLA number 11C is. 912 The following page shows again photos relating to the roadway into the well site. 913 MR. LEWIS: Which well site is that? 914 MS. McCONNELL: Into the well site that is currently being drilled. It just shows the current conditions compared to those -- my photos on the right-hand side TRB/TIPP number 11A-1, and number 11B-2 show the current condition of the roadway and the property along the concession road. 915 The following page shows -- this is around the well site that is currently being drilled, Tribute number 22. It shows damage that was done during the building of the roadway into the well site. It is my understanding that Mr. Jordan has also spoken with Mr. Middleton, who is a tenant/farmer, and we will be tendering crop damages on Mr. Middleton for this. 916 MR. LEWIS: You are talking about the top photos on that page, ours being TRB/TIPP number 11D-5? 917 MS. McCONNELL: And also TRB/TIPP number 12A-1. 918 MR. LEWIS: So whose property is that? 919 MS. McCONNELL: This is on the McCulough property, but Mr. Fred Middleton farms the property. 920 MR. LEWIS: And Mr. Jordan, when did you have discussions with Mr. Middleton regarding this? 921 MR. JORDAN: We had discussions prior to going on the property how we would commence damage payments, and we have talked with him during this operation on there to confirm with him that, yes, it is taking a long time, and we are going to pay damages, but typically we pay damages at the end when we are done, when we can confer with the landowner on his harvest volumes. And if we -- he is okay with that, that's fine. 922 MR. LEWIS: Who initiated these damage discussions with the tenant/farmer? 923 MR. JORDAN: They were discussed, Mr. Middleton being the tenant/farmer, when we proposed the access road into the well that they are drilling now -- 924 MR. LEWIS: My question was who initiated the discussions? 925 MR. JORDAN: We did, with Mr. Middleton and Mr. Dutot and, on his behalf, Mr. McCulough. 926 MR. LEWIS: Let's move on to the next page. 927 MS. McCONNELL: The next page -- 928 MR. BETTS: Sorry to interrupt, just before you do, I was going to say, could you help us find the original submission? We have just found it, so thank you. 929 MS. McCONNELL: Oh, I'm sorry. 930 MR. BETTS: That's okay. That was the submission from the -- 931 MR. LEWIS: TSLA. 932 MR. BETTS: -- TSLA. So sorry to interrupt, please continue. 933 MS. McCONNELL: The following page also shows crop damage and the roadway around the well that is currently being drilled. Again, we will pay Mr. Middleton for the crop damages. 934 MR. LEWIS: They look very similar to the -- 935 MS. McCONNELL: Preceding page? 936 MR. LEWIS: At least the top two look very similar to the preceding top two? 937 MS. McCONNELL: Correct. 938 MR. LEWIS: Okay. And the next page? And now, just so everyone knows where we are at, the one in the upper left is TSLA number 12D? 939 MS. McCONNELL: Yes, and our photo TRB/TIPP number 12D-4 is again at the well site, Tribute number 22 well site that is currently being drilled. 940 The photos located below are from -- or located on the -- or they show the battery site located on Mr. Feddes' property and also another well -- the other well located on Mr. Feddes' property. 941 MR. LEWIS: And then over the page? 942 MS. McCONNELL: And the last page shows the sign that was placed at the well site, the Tribute 22 well site, on the roadway. That sign has been replaced. I would also -- it also shows the weeds along the side of the roadway into the well. 943 MR. LEWIS: And Eastern Oilfields Services Limited does what? 944 MS. McCONNELL: They are the drilling contractor. 945 MR. LEWIS: Okay. And the last page? 946 MS. McCONNELL: These photos are, again, at the drill site for Tribute 22. It shows the weeds on the topsoil. 947 MR. LEWIS: What is that pile of topsoil? Where did that come from, or why is that there, do you know? 948 MS. McCONNELL: We -- Tribute stripped off the topsoil underneath the roadway in agreement with the request of the landowners. Perhaps Mr. Jordan can clarify that. 949 MR. JORDAN: It is common practice, in agricultural areas, to protect the mixing of the topsoil and the subsoil. The stripping of the topsoil was plowed along the north side of the access road and ditched for surface run-off. It would be -- if the site is decommissioned, the gravel driveway can be removed and the topsoil replaced, and normal agricultural practices may continue. 950 MR. LEWIS: Okay, thank you. 951 One last point in my re-direct, and I'll be finished. 952 Ms. Lowrie, earlier on this morning, I believe, Ms. Paulus was directing you to the terms of the limited partnership agreement, and there was a discussion about proposed amendments. And I guess rather than getting into the technical side of it, I'd ask you to tell us what's your understanding of the purpose of amending that agreement so that you can issue new units? What is the purpose of that amendment? 953 MS. LOWRIE: To issue new units. 954 MR. LEWIS: And why do you want to issue new units? 955 MS. LOWRIE: Because I am hoping that the project will be approved, and I want to be in a position as soon as possible to start construction. 956 MR. LEWIS: The issuing of new units will bring with it the raising of the money, will it not? 957 MS. LOWRIE: The cash necessary to proceed with the project. 958 MR. LEWIS: And there is a problem with that as it sits now because of the -- 959 MS. LOWRIE: The only problem is the agreement needs to be amended, so there is some legal work that needs to be done. 960 MR. LEWIS: Do you anticipate any problems in getting the required votes to effect any amendments that you have referred to? 961 MS. LOWRIE: No, I do not. 962 MR. LEWIS: Those are my questions in re-direct. 963 MR. BETTS: Thank you, Mr. Lewis. 964 I believe the Board Panel may have a few questions for you as well. 965 QUESTIONS FROM THE BOARD: 966 MR. BETTS: Mr. Sommerville. 967 MR. SOMMERVILLE: Ms. McConnell, I just want to get some clarification with respect to this last line of questioning that your counsel has taken you through. And it relates to the evidence that was filed by the Landowners' Association on July the 19th, and the photos related to that. 968 I just want to be very clear about this. And really the photograph in particular that I am interested in is the one that relates to -- I guess it bears on your exhibit, TSLA number 10A. It is the photograph of a large tank. 969 MS. McCONNELL: Yes. 970 MR. SOMMERVILLE: And the property around it. 971 MS. McCONNELL: Yes. 972 MR. SOMMERVILLE: And that document, or that photograph was filed with the Board on July the 19th, 2004. I want to be very clear about the burden of your evidence. When was the photograph TRB/TIPP 10A-1 taken? 973 MS. McCONNELL: July 23rd. 974 MR. SOMMERVILLE: July 23rd. Now, did the clean-up of that property occur between the 19th of July and the 23rd of July? 975 MS. McCONNELL: No, it did not. It occurred prior to July 19th. 976 MR. SOMMERVILLE: How much prior? 977 MS. McCONNELL: Subject to check, I would estimate a month. 978 MR. SOMMERVILLE: Okay. Just with respect to that same photograph, what is the approximate capacity of the tank that's depicted? 979 MS. McCONNELL: I believe that it is a 5,000 gallon tank. 980 MR. SOMMERVILLE: And what would it contain in the normal course? What is this tank used for? 981 MS. McCONNELL: It would have been used to collect brine. 982 MR. SOMMERVILLE: Brine? And is that brine that's naturally occurring in the reservoir? 983 MS. McCONNELL: Yes. 984 MR. SOMMERVILLE: And you referred to a battery. 985 MS. McCONNELL: Yes. 986 MR. SOMMERVILLE: That's what I would refer to as a tank farm; the same thing? 987 MS. McCONNELL: Yes, there is also production equipment on there, like dehydrators and treaters. 988 MR. SOMMERVILLE: How many tanks of this nature would be located in this area? 989 MS. McCONNELL: There is -- this tank was located at this well, and there is a small tank located at Tipperary number 2. It was under -- I am fairly positive that it is under 90 barrels. 990 MR. SOMMERVILLE: So it is a much smaller tank? 991 MS. McCONNELL: Yes. And there was also -- and Mr. Jordan can correct me if I am wrong, but I believe there was also two tanks at the battery site. 992 MR. SOMMERVILLE: And would they have been used for brine as well? 993 MS. McCONNELL: Yes, they would have. 994 MR. SOMMERVILLE: I gathered from some of the evidence that there may be water that's contaminated with oil from time to time; is that right? 995 MS. McCONNELL: I believe that there is a small amount of oil produced with the brine. 996 MR. SOMMERVILLE: So as part of the naturally occurring brine, there is also an oil component from time to time? 997 MS. McCONNELL: Yes. 998 MR. SOMMERVILLE: The thing that caught my interest is simply that this tank is sitting on the ground; there is no containment associated with the tank. 999 MS. McCONNELL: That's correct. 1000 MR. SOMMERVILLE: Would that be normal engineering practice? 1001 MS. McCONNELL: No, it would not. 1002 MR. SOMMERVILLE: Could you elaborate on that? 1003 MS. McCONNELL: I don't know why there was not a berm placed around that tank. 1004 MR. SOMMERVILLE: That would be your practice? 1005 MS. McCONNELL: Yes, it would. 1006 MR. SOMMERVILLE: Do you have tanks out there now with this kind of configuration that do not have containment? 1007 MS. McCONNELL: In the Tipperary pool? 1008 MR. SOMMERVILLE: Yes. 1009 MS. McCONNELL: No. All the tanks have -- the tanks that are left, there is one tank left at Tipperary number 2, and it has a berm around it. 1010 MR. SOMMERVILLE: And in your view, are you competent to make -- to give an opinion with respect to the capability of that berm to protect against the spill of material out of that tank? 1011 MS. McCONNELL: Yes, I believe that the berm that we have around the storage -- the tank at Tipperary number 2 would contain any fluid. 1012 MR. SOMMERVILLE: Just very briefly on the same subject matter. I note that there are in photograph TSLA number 13B, there are drums. 1013 MS. McCONNELL: Yes. 1014 MR. SOMMERVILLE: And it is not a very good photograph, but once again, I see that there is no containment underneath the drum. 1015 MS. McCONNELL: I didn't take this photo, and I don't honestly know if those drums were full or empty at the time. 1016 MR. SOMMERVILLE: Is it your practice to maintain drums on the property without containment? 1017 MS. McCONNELL: I don't believe so. We usually store them inside the berm. 1018 MR. SOMMERVILLE: Thank you. Those are my questions. 1019 MR. BETTS: Ms. Nowina. 1020 MS. NOWINA: My first question is for Dr. Walsh. 1021 Dr. Walsh, during the cross-examination of Mr. Leslie, you got into a discussion about odourized gas and the fact that you would be storing odourized gas. 1022 Can you help me understand the implications of that, and I guess the risks, given the discussion? 1023 DR. WALSH: Well, subject to the engineers on the panel, since I am not a petroleum engineer, but given my experience in looking at the Chatham D facility where we were concerned about a similar problem, I think we pointed out that the mercaptans which Union uses as a matter of policy in order to odourize its gas was a little different than the natural odours that we received in the gas at Chatham D as a result of the fact that when we brought the gas into our pool off of Union's system, we were taking it off with a Panhandle system which was receiving a lot of local Ontario gas, which was somewhat higher in sulphur content than one might normally see in pipeline quality gas. 1024 So we were concerned about that prior to the initiation of that project, but we didn't see any problem with it, and at the same time, we looked at -- because Chatham D was also taking gas off of the Tupperville -- the Panhandle-Tupperville line, which was a distribution line, we were concerned about whether or not there would be the effect of mercaptans, and Mr. Gorman who worked with me, we didn't see any problems whatsoever associated with that. 1025 MS. NOWINA: Mr. Gorman, anything to add to that? 1026 MR. GORMAN: No, I can't recall any problems associated with that at all. 1027 MS. NOWINA: So you don't anticipate any problems with the storage of odourized gas in this situation? 1028 MR. GORMAN: No, not at all. 1029 MS. NOWINA: Thank you. Another question. This came up I think during Mr. Chinneck's cross and to whomever on the panel that would like to answer it. It came up that there was an agreement between Union and Enbridge that they would not exceed the initial pressure in a storage facility by more than 30 percent. Can anyone give an opinion as to why you think they have an agreement like that, and if it might be prudent for you to have the same kind of standard? 1030 MR. GORMAN: I am not aware of that agreement, and I don't know the background behind it, and I can't conceive of why they would enter into that sort of agreement, so I just -- I don't think it would be prudent to enter into that sort of agreement at all, not from an engineering standpoint. 1031 DR. WALSH: I concur. I was unaware of it, as I believe I responded to Mr. Chinneck on that. It doesn't -- we rely, as we said in our evidence, on our engineering evaluation as it relates to overburden. The policy, if we call it, of limiting our delta pressuring to .7 pounds per square inch per foot of depth of the reservoir, that, in my experience, has always been the traditional policy for storage development in the province. The standards state that the CSA Z341 standard states that that limit should be .8, so we are actually 10 percent lower than the accepted standard. And as a result, that is the type of thing that we look at in determining the appropriate pressure for developing storage. 1032 As it relates to what Mr. Chinneck raised, unless I have more specific technical details, I can't add any further comment. 1033 MS. NOWINA: Thank you. One final question, and this question is for both Mr. Gorman and Ms. McConnell. 1034 Dr. Walsh very clearly stated and gave assurances, I think is the word he used, that there will not be contamination to the water table. Do you feel comfortable in giving those same kind of assurances? 1035 MR. GORMAN: Well, I am an engineer, and I am constantly reminded that failures can occur. I mean, this building can collapse within the next five minutes. 1036 MR. SOMMERVILLE: We better break for lunch then. 1037 MR. GORMAN: Before I make it to the washroom. But, you know, the well design and the facilities design and the pool pressuring and delta pressuring is going to be based on good engineering practice, good industry practice, and the CSA standards. And based on that, I firmly believe that there is not going to be any contamination of the water supply. 1038 MS. NOWINA: Thank you, Mr. Gorman. Ms. McCulough? 1039 MS. McCONNELL: I don't believe that there will be any contamination of the fresh water zone. We -- the drilling of the well is completed to the standards. We are trying to do everything possible to adhere to the standards and to the Oil, Gas and Salt Resources Act, and I believe that as long as we adhere to those standards, there will not be any contamination. 1040 MS. NOWINA: Thank you, those are my questions. 1041 MR. BETTS: I have just a couple as well. 1042 First of all, Mr. Jordan, have I heard you correctly that there has not been -- or there is not at this point, to your knowledge, a dispute about the specific rates that are being offered for compensation? 1043 MR. JORDAN: That is correct. 1044 MR. BETTS: I have heard that there is a dispute over the agreement, the compensation agreement, because there is still clauses that are to be negotiated, but the rates component has not risen as an issue at this point? 1045 MR. JORDAN: That is correct. 1046 MR. BETTS: Okay. And Ms. Lowrie, and this may be a little unfair because I am going to be asking you questions about Mr. Fisher, and I may invite Mr. Fisher's response as well, and I am asking you because I believe you have been the person that would have hired Mr. Fisher for his position? 1047 MS. LOWRIE: Yes. 1048 MR. BETTS: And what do you see his responsibilities to be? 1049 MS. LOWRIE: He will be in control of the project as far as building the project, hiring what necessary outside expertise that -- for design, for the design of the project. 1050 MR. BETTS: And what about the operations after the project is functioning or the -- 1051 MS. LOWRIE: He will be in charge of the operations as far as hiring personnel to operate the compressor and the field, as he deems necessary. 1052 MR. BETTS: Now, and this is where it perhaps is a little unfair, but I am looking at Mr. Fisher's resume, and I don't see a lot of operational background. And what were you looking for in a person -- or why did you choose Mr. Fisher for this? What did you see in his background that made you comfortable that he could perform the functions that you were looking for? 1053 MS. LOWRIE: He built compressor facilities at Union Gas before he went back to school to receive his MBA. He has worked in gas marketing for Duke since that time, so he is familiar with that end of the operation as well. 1054 And I felt he would be a good overall manager for the project. 1055 MR. BETTS: Thank you, and it probably was unfair to be talking about you, Mr. Fisher, and keeping you out of the conversation, so let me allow you into it, and say: What skills do you feel you are bringing to this job that make you comfortable to -- and I am really looking more at the ongoing operational aspects of the storage facility. 1056 MR. FISHER: I like your question, because it is one I have asked myself. And the answer I came up with myself was I hadn't built a compressor station before I built the first one, and I was able to do that successfully. 1057 I have, over the past week, been talking a lot to Joe Gorman who had the experience of building and operating the Chatham D facility that CanEnerco owned, and a lot of the issues -- I am finding a lot of the issues I tried to identify up front as being trouble areas are things that he related to me, and I am also gaining some insight into some new ones based on his experience. 1058 So Jane has built a team of people and assembled resources that I can draw from in addition to my own experiences and within the context of that, I have concluded, yeah, Ming, my wife, you should come out, we'll get an apartment in Toronto and we'll do this thing. So I have concluded I can do it. 1059 MR. BETTS: You feel comfortable you could access additional skills that weren't within your reservoir of skills? 1060 MR. FISHER: In the shower this morning, I was asking myself, can we get someone living in Goderich or Bayfield that has the requisite skills to operate a pool and be on-site quickly? I concluded the answer was yes. I looked at all the people that are in the room today, while I was washing my hair, and just concluded there are various skills around, and I believe I'll be able to find it. I concluded that, yes. 1061 MR. BETTS: Thank you. Those conclude my questions. 1062 Mr. Lewis, do you feel the need to ask any questions in reply to those offered by the panel? 1063 FURTHER RE-EXAMINATION BY MR. LEWIS: 1064 MR. LEWIS: I had one short question in reply to something Mr. Sommerville asked Ms. McConnell, and I am just wondering in regards to TSLA photo number 10, and I am referring to Exhibit 4.2. I believe we heard Ms. Lowrie indicate that the sites that she picked up from time to time would undergo changes and there was a point in time when some of this equipment was decommissioned. 1065 I guess I am looking at TSLA number 10A, and I would ask you, and I appreciate that you didn't take this photo, but it looks, from the labelling on them, they were all taken, the TSLA photos, in 2000. 1066 Is that tank in use? Is it hooked up to the well, or is it a tank that appears to have been decommissioned and is sitting there? 1067 MS. McCONNELL: I don't know if the tank was hooked up at that time. 1068 MR. LEWIS: Does the photo -- I mean, I am not familiar with brine tanks and I don't know if it was hooked up, where the pipe would lead to it or not. And I guess that's what I am asking you. 1069 MS. McCONNELL: It's hard for me to tell from the photos whether it is hooked up to the well or not. 1070 MR. LEWIS: Fair enough. Thank you. 1071 MR. BETTS: Thank you. 1072 I think that concludes our need of this witness panel. I want to thank you and commend you all for your endurance, if nothing else, and certainly for your cooperation and participation. And you will help the Board in making a decision on this matter. 1073 We'll break momentarily and return following our lunch break with evidence to be brought forward by intervenors. I believe an order has been discussed, so one way or the other, when I come back, if I can be advised of the order of intervenor witnesses, that would help. 1074 Apart from that, let us break now and we will return at 2:30. 1075 --- Luncheon recess taken at 1:14 p.m. 1076 --- On resuming at 2:35 p.m. 1077 MR. BETTS: Welcome back, after our lunch break. 1078 Before we begin, are there any preliminary matters for the Panel's attention? 1079 PRELIMINARY MATTERS: 1080 MR. VEGH: Thank you, sir. Before lunch you asked for the order of the presentation for the rest of the proceeding. There has been some discussion with counsel, so the order that we will be proceeding with is as follows: First, we will hear from the Huron County Federation of Agriculture. That statement will be followed by the Tipperary Storage Landowners' Association, followed by Northern Cross Energy, and then followed by the Ministry of Natural Resources. 1081 MR. BETTS: Thank you. 1082 Okay, Ms. Broadfoot, would you like to introduce your panel at this point, or would you like them sworn in first? 1083 MS. BROADFOOT: Sir, I am not doing the speaking today. The president of the Federation of Agriculture in Huron County is -- and his name is Neil Vincent. 1084 MR. BETTS: Okay. If you are giving evidence, one way or another, we'll need to have you sworn. 1085 MR. VINCENT: Yes. 1086 MR. BETTS: So let's do that first. 1087 MR. VINCENT: Thank you. 1088 HURON COUNTY FEDERATION OF AGRICULTURE - PANEL 1 - VINCENT: 1089 N.VINCENT; Sworn. 1090 MR. BETTS: Thank you. And can you help me here? You may be seated, by the way. It is easier if you direct all of your words into the mike there. 1091 Can you help me, are you intending just to make a presentation at this point, or one way or the other, we would like to have in the record a little bit about yourself, as to who you are and things like that. It is all there? 1092 EXAMINATION BY MR. VINCENT: 1093 MR. VINCENT: Honourable Members of the Panel, we request that two items be entered into the evidence: A, a personal resume for myself; and B, a summary of Huron agriculture economic impact study. 1094 MS. CRNOJACKI: A resume of Mr. Neil Graham Vincent, Exhibit E.4.3. 1095 EXHIBIT NO. E.4.3: RESUME OF MR. NEIL GRAHAM VINCENT 1096 MS. CRNOJACKI: And a summary of the economic impacts of agriculture on the economy of Huron County, that is the Exhibit number E.4.4. 1097 EXHIBIT NO. E.4.4: SUMMARY OF THE ECONOMIC IMPACTS OF AGRICULTURE ON THE ECONOMY OF HURON COUNTY 1098 MS. CRNOJACKI: Here are the copies. 1099 MR. BETTS: Have copies of those been taken to the back for intervenors? Yeah, they are. 1100 Thank you, Mr. Vincent. You may proceed. 1101 MR. VINCENT: Thank you, Mr. Chairman. 1102 I am Neil Vincent, president of the Huron County Federation of Agriculture. I am a fifth generation farmer in Huron County, primarily a dairy producer, but also in beef and grain sales as well. I am a graduate of Centralia College in agricultural business management. I have led a very active role in my community, working on many boards and committees. The development of gas storage pools in Huron County is in its infancy. Huron County Federation of Agriculture seeks to provide input to the Ontario Energy Board to become aware of the agricultural interests in Huron County. 1103 What is Huron County Federation of Agriculture? We are a grass-roots organization of over 2,000 farm families in Huron County. We believe in environmental protection, and work closely with both of our conservation authorities. 1104 Huron County Federation supports such provincial environmental initiatives as source water protection, nutrient management, environmental farm plans and healthy futures program, and well aware program. 1105 Huron's agriculture is part of a constantly evolving industry, adopting responsible and innovative and more efficient farming methods. We live on the farms, drink the water and eat the food that we produce our entire working careers. 1106 The Lake Huron effect contributes to a climate that is perfect for a wide variety of crops. That climate, plus the soil quality and the water supply, proximity to markets, and strong supporting infrastructure combine to create a highly productive system. High quality food production is a given. 1107 Successful farmers work with many elements, including the weather, and are prepared to work long hours, planting and harvesting, in addition to the daily care and maintenance of livestock and properties when the window of opportunity arrives. To do that, effective planning and preparation are necessary. Examples that we have to have our seed, fuel, fertilizer, parts and everything on-site. We have to have our equipment serviced and ready to go when the weather cooperates. 1108 Our children learn the importance of being prepared, adaptability, because the everyday unpredictability of agriculture changes many best-laid plans. For some farm youth, these learned actions, values and work ethics translate into responsible adult jobs and leadership in positions beyond the borders of Huron County. Yes, we export brains, and people who will make decisions and get the job done in many fields of endeavor. 1109 In order to quantify the high level of agricultural production in Huron, we have submitted the summary of the agricultural impact study, 1998, that was commissioned by the Huron County Federation of Agriculture, Ontario Federation of Agriculture and the Huron County Planning Department, and prepared by Dr. Harry Cummings, Karen Morris and Dan McLennan of the University of Guelph. 1110 I would like to draw your attention to the employment multiplier factor. For every on-farm job in Huron, there is an additional 3.53 jobs created off the farm. Note the sales expenditure multiplier. For each dollar in farm gate sales, there are $2.91 in sales in businesses that deal with farmers. 1111 The most recent Statistics Canada figures, 2001, Huron County had farm gate sales of almost $656.5 million. This surpasses any other county in Ontario by over $100 million. And our farm gate sales are larger than any of the maritime provinces. This clearly demonstrates Huron County's agricultural position within the county, the province and national economics. 1112 Elements of Huron County agriculture that use natural gas on a regular basis are grain dryers, poultry barns and greenhouses, as well as others. There is room for expansion of a natural gas consumption within the county. Huron County Federation is in favour of gas storage development in a safe and responsible manner. We hope that the development of gas storage would result in increased availability of natural gas for the benefit of the society in Huron County as well as at large. 1113 We hope that we have put a face on the questions that we submitted and presented our case for a safe and responsible gas storage. Our concern for environmental standards and safeguards is consistent with our work in other areas. Thank you for the opportunity to address the Ontario Energy Board. 1114 MR. BETTS: Thank you. And I assume at this point you are available for cross-examination on any of that? 1115 MR. VINCENT: Yes. 1116 MR. BETTS: Are there any parties that would like to cross-examine Mr. Vincent on the evidence he has presented? 1117 There appear to be none, Mr. Vincent, so thank you very much for your contribution. 1118 MR. VINCENT: Thank you. 1119 MR. BETTS: Mr. Chinneck, you are up next. If you could just organize your people to take these seats, I would appreciate it. 1120 MR. CHINNECK: Thanks. I will. 1121 MR. BETTS: And Mr. Chinneck, as I have asked others, would you like your witnesses sworn in at this point, or would you like to introduce them prior to that? 1122 MR. CHINNECK: I would like to have them sworn in first, sir. 1123 MR. BETTS: Thank you. We can do that. And Ms. Nowina will take care of that. 1124 TIPPERARY STORAGE LANDOWNERS' ASSOCIATION - PANEL 1; A. FEDDES, F. DUTOT, C. DUTOT: 1125 A.FEDDES; Sworn. 1126 F.DUTOT; Sworn. 1127 C.DUTOT; Sworn. 1128 EXAMINATION BY MR. CHINNECK: 1129 MR. BETTS: Thank you. The witnesses have been sworn in. 1130 Mr. Chinneck, please proceed. 1131 MR. CHINNECK: Yes, thank you very much, sir. 1132 Just by way of introduction, I wonder if each of the panel could introduce themselves. I'll start first with Mr. Feddes. Can you please tell us your full legal name, for the record. 1133 MR. A. FEDDES: Allard Feddes; A-l-l-a-r-d, Feddes. 1134 MR. CHINNECK: And can you provide the Board with some indication of your background? 1135 MR. A. FEDDES: Yes. I am a landowner in the DSA, plus also a farmer. We operate a 1,300 acre cash-crop farm. My wife and I and three sons, we operate a dairy farm, a 200-head dairy farm, and a 2,000-head hog farm, and a 50,000-head poultry farm. 1136 In addition to this, I have been a director in the Hensall District Co-op for the last eight years. The last two years, I have been president of the Hensall District Co-op, and I am still president today. 1137 Hensall Co-op is an agriculture business. There is $190 million worth of business each year, last year, and the year before it was 180 million. We employ over 200 employees. So it's a very -- makes a very big impact on Huron County, the co-op 1138 MR. CHINNECK: And can you tell the Board what your connection with the TSLA is? 1139 MR. A. FEDDES: I am the executive director in the TSLA. 1140 MR. CHINNECK: All right. And do you actually live in the DSA? 1141 MR. A. FEDDES: No, I do not live in the DSA. 1142 MR. CHINNECK: And how long have you been dealing with these landowner issues in the DSA? 1143 MR. A. FEDDES: I would say about five years now. 1144 MR. CHINNECK: Thank you. 1145 Now, I wonder if I might just ask Carol Dutot if she could tell us -- your full legal name? 1146 MS. DUTOT: Carol Lynne Dutot. 1147 MR. CHINNECK: All right. And can you provide the Board with some indication of your background? 1148 MS. DUTOT: I am a landowner in the DSA and I live in the DSA. I had been employed as office manager of a construction company for 17 years. They have over 75 employees. I am semi-retired now, and I'm a landowner. And we have been a dairy farmer for 25 years, but we have got rid -- sold our dairy business at the moment, we have. 1149 MR. CHINNECK: Thank you. And how long have you been dealing with the landowner issues? 1150 MS. DUTOT: I believe since 1999 we have been dealing with them. 1151 MR. CHINNECK: All right. And are you connected with the TSLA? 1152 MS. DUTOT: Yes, I am a member of the TSLA. 1153 MR. CHINNECK: All right, thank you. 1154 Now, perhaps I could just ask Mr. Fred Dutot to give us his full legal name. 1155 MR. DUTOT: How close do I have to get? Here? 1156 My name is Fred Dutot. I am a retired dairy farmer. I don't have all these credentials everybody has, but I think we can speak well on agriculture. And I was instrumental in forming this association, the TSLA. I am also executive director. And the question on timing is September 1999, this has been an ongoing issue. It was dropped for awhile and picked back up again and -- 1157 MR. CHINNECK: So you have been dealing with the issue for approximately five years? 1158 MR. DUTOT: That's true. 1159 MR. CHINNECK: All right. And can you just tell the Board what your relationship with the other members of the TSLA is? The scope of your authority in dealing with them. 1160 MR. DUTOT: Okay. When we set this organization up, there was three executive directors -- am I going too fast? -- there was three executive directors appointed. They are also a negotiating panel. 1161 The mandate within was if the negotiating directors were to reach some kind of a decision that affected all parties within the organization, that we then had to go back to the organization so that each person had a little input into whether or not whatever agreement we could reach would be voted on and accepted. 1162 MR. CHINNECK: So are you able to bind the membership of the TSLA group without having ratification from the membership? 1163 MR. DUTOT: I would say no, without a meeting -- 1164 MR. CHINNECK: All right. 1165 MR. DUTOT: -- with the full membership. 1166 MR. CHINNECK: All right, thank you. 1167 Now, just turning to the matter of the evidence that was filed by you and the answers to the interrogatories - I have trouble with that word - are you adopting all of the evidence and answers that were given and filed by you? 1168 MR. DUTOT: I do. 1169 MR. CHINNECK: All right. And does TSLA adopt all of those answers as well? 1170 MR. DUTOT: I hope so. 1171 MR. CHINNECK: Yeah. And is the information that you have filed, is it true and correct, to the best of your knowledge? 1172 MR. DUTOT: It is. 1173 MR. CHINNECK: All right. And do you wish to make any changes to any of that documentation that was filed? 1174 MR. DUTOT: I don't believe so. 1175 MR. CHINNECK: All right. 1176 Now, can you just tell me, there was a -- a question that was asked earlier in these proceedings about the emergency response that might arise, and there was some indication that there was an expectation that the drive from Bothwell to the DSA was about an hour. Would you agree with that conclusion? 1177 MR. DUTOT: I probably would not. I have driven to Bothwell not too long ago with some of this evidence, and I believe it took me an hour and 45 minutes. 1178 MR. CHINNECK: All right. So closer to 2 hours then? 1179 MR. DUTOT: I probably don't break the speed limit. 1180 MR. CHINNECK: All right. Now, I just wanted to speak now about the overall position of the TSLA on this application that is being considered by the Energy Board. 1181 Does TSLA object to storage designation that is being requested or the drilling of two wells? 1182 MR. DUTOT: No, we don't. 1183 MR. CHINNECK: But is it fair to say that you have some issues? 1184 MR. DUTOT: We certainly do. 1185 MR. CHINNECK: All right. And is it your desire that these issues be dealt with as conditions of approval? 1186 MR. DUTOT: It's a must, yes. 1187 MR. CHINNECK: Now, if that were the case, would it be your desire that the conditions of approval would override the draft conditions of approval that have been prepared by the Board Staff? 1188 MR. DUTOT: Yes. 1189 MR. CHINNECK: Where it's inconsistent therewith? 1190 MR. DUTOT: Right. 1191 MR. CHINNECK: So then can you just give the Board a summary or an overview of the issues that you have so that we can later speak in more detail about each of those issues? 1192 MR. DUTOT: I am sure this Board Staff is well aware of the number one issue, it has been there since day one, and it is the question as to what can happen to our water supply, and if it did, what position does it leave this agriculture community in. 1193 MR. CHINNECK: And what sort of condition are you looking for with respect to that issue? 1194 MR. DUTOT: Well, I think it has been in the interrogatories and questions as they have been passed back and forth, but we need a study that would demonstrate where they could find another source of water if there were water pollution, and maybe a cost estimate on to how it could be brought to the community and hooked to the properties, and all of that isn't any good unless somebody is going to put some finances behind it, true? 1195 MR. CHINNECK: And what do you mean by that? 1196 MR. DUTOT: Well, we need a bond, a financial instrument, some kind of insurance, something. 1197 MR. CHINNECK: And why would you feel that you need that? 1198 MR. DUTOT: Well, who is going to pay other than the landowners if this were to happen? 1199 MR. CHINNECK: Okay. And what is the next issue that you have? 1200 MR. DUTOT: Well, I guess we just spoke about it. We have issues with insurance. We have issues with the water. 1201 MR. CHINNECK: And the next -- 1202 MR. DUTOT: We have raised an issue that the plugging of those two wells, we feel it is inadequate and antiquated methods and some of the regulations we see say a plugged well by today's standards should have, like, 100 feet of cement on top of it. 1203 MR. CHINNECK: All right. Was that your third -- is that your third issue? 1204 MR. DUTOT: Yes, it is. 1205 MR. CHINNECK: All right. And are you referring to the Imperial wells 397 and 368? 1206 MR. DUTOT: I am. 1207 MR. CHINNECK: And would you just mind telling the Board what your next issue would be then? 1208 MR. DUTOT: We have an issue of compensation; it has not been agreed upon, and we have gotten somewhat close, but it has been a difficult job. 1209 And we finally ran out of time before this hearing got called. 1210 MR. CHINNECK: Okay. And what would your next issue be? 1211 MR. DUTOT: We have an environmental issue where Mr. Feddes has required or is asking for a simple piece of documentation where his lands could be inspected by Ministry of Environment, I would say, and stating that those lands were free of any contamination from this production facilities. It is now being abandoned or will be abandoned, subject to this application, and he would like to know that there is no leftover liabilities from that former enterprise. 1212 MR. CHINNECK: All right. And are there any more issues that you would like to bring to the Board's attention? 1213 MR. DUTOT: There is this issue of residual gas payment, and I would like to go into that in a little detail and why it actually arose maybe now or later? 1214 MR. CHINNECK: Let's talk about that later, let's just give them a summary at this stage of the game and give them more detail later on down the road. 1215 MR. DUTOT: Okay. 1216 MR. CHINNECK: What is the next issue then? 1217 MR. DUTOT: We think that we could probably get these issues solved, but we need something from the Board or some order that would provide a little more time to solve these issues before the injection occurs, because we feel once the injection occurs, that we have absolutely no leverage to get anything finished. 1218 MR. CHINNECK: Now, do you have any issues about the delta pressuring that has been spoken about earlier in these proceedings? 1219 MR. DUTOT: Well, I myself have read all this evidence, and I am no expert in geology and don't pretend to be, but I see concerns that this Huron County area is of a very low discovery pressure. We have the well records from London from the library, and we have gotten some other information. They appear to me to be about half of what the other storage pools in Ontario would be. 1220 And we wonder, when the suggestion was I guess way back in '99 when Mr. Brett was the president, he suggested that they may take this up to 1300 pounds, and now I believe we are down to 1,096 pounds of pressure, but we are wondering what can happen when they do that. 1221 MR. CHINNECK: So that is an issue for you then, is it? 1222 MR. DUTOT: Well, it is, you know, because you wouldn't blow your car tires up 300 percent and expect them to last, would you? 1223 MR. CHINNECK: All right. And do you have any other conditions then, Mr. Dutot, as part of this summary? 1224 MR. DUTOT: I am thinking, but that covers the major ones, I believe. 1225 MR. CHINNECK: All right. And I understand that you would -- that you will be asking the Board for these to be conditions that have to be satisfied before there is injection of gas into the structure; is that correct? 1226 MR. DUTOT: Yes, it would be. 1227 MR. CHINNECK: Let's just talk now then about the issue of the potable water study. 1228 Can you give us some comments about the quality of the farming and the farm land in the area in the DSA and around the DSA? 1229 Now, I understand that the Board had made some inquiries about the area that was within 1 kilometre of the DSA boundary, so can we call the DSA and the one area square around it the block, would that be all right for our discussion? 1230 MR. DUTOT: Yeah, it would, and I could verify that. There is a question in the Board's first evidence that relates to the sub-surface activities which was in turn related to water wells and their direction was in a 1 kilometre distance outside the DSA. 1231 MR. CHINNECK: Okay. 1232 MR. DUTOT: And back in 1999, when Mr. Wessenger and I were trying to agree on who was going to be water tested in the first round of water tests before the drilling would take place, and I think we found that in our evidence there was an area that was roughly about the same distance, 1 kilometre outside the DSA boundary. 1233 MR. CHINNECK: Okay, so -- 1234 MR. DUTOT: So we have fashioned most of our evidence to speak on that boundary. 1235 MR. CHINNECK: All right, thank you. Could you just comment quickly then on the quality of the farming and farm land in the area, in the block? 1236 MR. DUTOT: Well, I have lived there all my life, and I have watched a lot of changes on that block. And there is new buildings; there is just a huge investment over the 50, 60 years that I have watched it grow, in the land itself, drainage systems, newer buildings. It is a growth area. It is the largest single agro area in the municipality where this DSA is situated. 1237 MR. CHINNECK: How long have you actually lived in the DSA. 1238 MR. DUTOT: Unfortunately, all my life. 1239 MR. CHINNECK: And I am wondering, Mr. Feddes, if you can comment on the type of farming in the DSA and surrounding area of the block? 1240 MR. A. FEDDES: Yeah, there is poultry farming, very much so, there is hog farming and there is dairy farming and then there is cash crop farming. 1241 MR. CHINNECK: All right. And can you comment on the numbers of humans, pigs, chickens and cattle in the block? 1242 MR. A. FEDDES: Humans, I would say there would be about 50. 1243 There is pigs, there is, as far as I know, 2,000 in the block. The poultry, there is about 150,000. 1244 MR. CHINNECK: Okay. And then can you comment on the value of the quota in the block? 1245 MR. A. FEDDES: Well, within the DSA, there is about $3 million worth of quota value, and within a kilometer, there is another $7 million worth. So actually, in the whole thing where we speak of, it would be about $10 million worth, just quota. 1246 Then we have land values from about 7 million in the same area, and then we have building values for about 5 or 6 million. All the new hog barns that were built in the last ten years, new poultry barns, they all cost very much money. 1247 MR. CHINNECK: Can you comment on the total value, then, of the animals and farm equipment and buildings and land in the DSA -- in the block? 1248 MR. A. FEDDES: Well, we are roughly in the neighbourhood of over $32 million. 1249 MR. CHINNECK: Okay. And can you comment on the importance of water to the farmers and their businesses in the block? 1250 MR. A. FEDDES: Well, we operate a poultry farm ourselves, and if chickens are without water on a hot day, I would say about six hours, they start dying. 1251 MR. CHINNECK: All right. 1252 MR. A. FEDDES: Probably earlier, but six hours for sure. 1253 Hogs, they can do ten hours without water, but after that, they are gone too. And they start dying, anyway. 1254 Cattle, we have a dairy farm, and if they are without water for 12 hours, let's say they give 50 litres of milk in the morning, you don't give them any water that day, you'll be down to 10 litres that evening, and the next morning they'll be dry, because -- and a milk cow drinks 90 -- over 90 percent of their milk is water, so without water, they won't produce. Within a day, a farmer is pretty well out of business. 1255 MR. CHINNECK: Okay. And where does the water that is used in the block come from? 1256 MR. A. FEDDES: It all comes from 300-foot wells, roughly 300-foot wells. Every farmer has their own private well. 1257 MR. CHINNECK: All right. And how many wells would there be, approximately, in the block? 1258 MR. DUTOT: I think when I was doing my water study, in the block, I think we are something near 30 wells. 1259 MR. CHINNECK: All right, thank you. 1260 And can one of you on the panel comment about the quality and quantity of the existing water supply? 1261 MR. DUTOT: The dairy farm we used to own, the well was drilled there in 1947, and it is still in production today and there is no process on that well other than a water softener. And it still works well today. 1262 MR. CHINNECK: Is that the same of all the other wells in the block? 1263 MR. DUTOT: To the best of my knowledge, yes. 1264 MR. CHINNECK: Any issues with the supply of the water? 1265 MR. DUTOT: No. Quantity and quality is excellent. I might add that it costs $20,000 to drill a water well up there. 1266 MR. CHINNECK: All right, thank you. 1267 Are there any municipal water systems that are close by? 1268 MR. DUTOT: Clinton is the closest municipality -- or municipal water supply. It again is a well system. And I am not sure where you are going, but that system right now is under a water -- you can not use water outside your home. They have a water restriction, I guess I could say. 1269 MR. CHINNECK: All right. And are there any other communities nearby that have a municipal system? 1270 MR. DUTOT: The next closest, I believe, would be Goderich, and that would be about 13 or 14 miles to the north. And a comment on that was that, since this Walkerton water tragedy, whatever you care to call it, has happened, there is a lot of the municipal wells that feed more than one area that have come under a lot of testing and high expense. 1271 So this community just outside of Goderich, which may be the next annexed part of Goderich, had asked for a supply of water from the Goderich municipal system and they were not given it. 1272 MR. CHINNECK: Okay. So if there was a problem, then, in this area, would you -- do you think that you would be able to obtain water from any of these close-by municipalities? 1273 MR. DUTOT: My answer would be no, but you know, I have not asked. 1274 MR. CHINNECK: All right. What might cause a problem with the water in your area in the block? 1275 MR. DUTOT: Well, it has been so good for so long, I presume if this thing, this storage pool was to go forward, we would be looking at that first. 1276 MR. CHINNECK: Are you aware -- actually, what would happen if there were quality problems or supply problems with the water in your area? Perhaps I could direct that question to Mr. Feddes. 1277 MR. A. FEDDES: Say that question again, please. 1278 MR. CHINNECK: What would happen if there were problems with the quality or the volume of supply water in the block? 1279 MR. A. FEDDES: Well, as I previously stated, within 24 hours, all the livestock would be starting to die, or a lot of it would be dead. Poultry could very well be dead within 24 hours; the hogs and cattle, they can hang on a lot longer than that. But they wouldn't grow and it wouldn't be a viable livestock operation, simple as that. 1280 MR. CHINNECK: Are any of you on the panel aware of any other situation where there are or have been problems with contamination of water? 1281 MR. DUTOT: We know of the John and Mary Fields case. There was a well, I guess it was being drilled and not being drilled properly, at least that's the way I read the article. It was in the local newspaper. And it back-fed from below the aquifer up to the aquifer, and they were in the hog business. And if I remember the article properly, there was a long-term lawsuit as to who was responsible. I am not sure I can elaborate on the conclusion, because it was an ongoing issue for a long time. 1282 MR. CHINNECK: Were those people involved in litigation, do you know? 1283 MR. DUTOT: I believe they were. 1284 MR. CHINNECK: And do you have any idea how long it was that they were in litigation or having the problem? 1285 MR. DUTOT: It seemed to me, if I recall, it was, like, a ten-year period. 1286 MR. CHINNECK: All right. And did you come across an article that dealt with that case? 1287 MR. DUTOT: I have. 1288 MR. CHINNECK: All right. 1289 Sir, I wonder if I might enter an exhibit that is a copy of an article entitled "Breeders Seek Pollution Precedent". 1290 MR. BETTS: Yes. 1291 MR. CHINNECK: Thank you, sir. 1292 MS. CRNOJACKI: It is Exhibit E.4.5, "Breeders Seek Pollution Precedent," a copy of an article from... 1293 EXHIBIT NO. E.4.5: ARTICLE ENTITLED "BREEDERS SEEK POLLUTION PRECEDENT" 1294 MR. CHINNECK: Thank you. 1295 And how much water would be required in the block to service the daily livestock and fields and human population if there was a problem with the existing supply? 1296 MR. DUTOT: I believe, if people read my first submission to the Board, we attempted to evaluate the number of livestock in that block, and using a water well management book from the OMAF, which -- 1297 MR. CHINNECK: What does OMAF mean? 1298 MR. DUTOT: The Ontario Ministry of Agriculture and Food. I have a copy of it here. I don't suppose we want to enter a whole bunch of copies of it. 1299 But it indicates in there how much water on a daily basis each livestock would use. And through that calculation, we have determined it would take something in the neighbourhood of 36,000 gallons to do that block. 1300 And I would just say that's a little on the light side. There is a few of the rural/residential areas that were omitted from that study. 1301 MR. CHINNECK: All right. So what do you think of the applicants' plan for dealing with water in the event that there is a problem with your supply? 1302 MR. DUTOT: Well, the plan, if it is a plan, seems rather inadequate and we don't believe it could be carried out. It is basically an emergency measures situation. It does not address a long-term plan. 1303 MR. CHINNECK: All right. Well, have they done anything along the lines of dealing with an issue and water so far? 1304 MR. DUTOT: Before the well that they're drilling at the present time was started, they did offer to four of the landowners -- I understand the one person was the person who actually got this started because of his wide-ranging complaints. 1305 And it was offered to four of the livestock barns, a supply tank and a -- there was a pump, I am not sure, one I know was put in, I am not sure if the other people were just given the pumps and said, if something happens. 1306 The part that was -- the part that was probably not proper was they were told to fill these tanks from their own supply, so if you have a water problem and you are told to fill the tank from your own supply and your supply is no good, where is the supply coming from and how quick is it going to get there and what kind of condition is it going to be when it does get there? 1307 MR. CHINNECK: All right. Was there anything delivered to these farms for human consumption? 1308 MR. DUTOT: There was a case of bottled water given to the households. I think it was across the DSA, but the people at least close to the well. 1309 MR. CHINNECK: All right. Now, what do you want to see in a study? 1310 MR. DUTOT: Well, I think we are there, but we got to do the studies to start with, right. And in the study, you got to determine where the water is coming from, and then, again, there is a cost of piping it; there is a cost to get it into properties. And when that cost is determined, we would like to see something that is going to pay for that cost. 1311 MR. CHINNECK: Okay. Do you have any comment about determining what the triggers might be for responding? 1312 MR. DUTOT: The triggers? 1313 MR. CHINNECK: Yes, to see who would respond and when. 1314 MR. DUTOT: Well, that should all be pre-determined by this study, should it not? 1315 MR. CHINNECK: Right. Are you looking for security in that study? 1316 MR. DUTOT: Yes, we are. 1317 MR. CHINNECK: What would you want the applicant to do if there was a problem with the water quality? 1318 MR. DUTOT: Well, first of all, we would hope that we wouldn't have to get into a legal situation to decide who was responsible, because by then your animal population would be pretty well nil. 1319 MR. CHINNECK: Right. And why would you want to have security for a water plant? 1320 MR. DUTOT: Why would we want to have it? 1321 MR. CHINNECK: Right. 1322 MR. DUTOT: It's a must. 1323 MR. CHINNECK: Why is it a must? 1324 MR. DUTOT: Well, I don't believe that the farm people could shoulder the expense if it wasn't looked after properly. 1325 MR. CHINNECK: Okay. Any other reasons why? 1326 MR. DUTOT: Well, you can have farm values that would be declining rapidly, you are going to have buildings that would -- you know, if you have no livestock, you don't need the buildings, right? 1327 There is some high-priced buildings there, extremely, that local dairy farmers built in '99, you know, and it was probably $800,000. 1328 MR. CHINNECK: Are you happy that the applicants would handle a contingency arrangement satisfactory at this time? 1329 MR. DUTOT: I don't believe it has been demonstrated to be satisfactory, no. 1330 MR. CHINNECK: And do you have any reasons why you would support that position? 1331 MR. DUTOT: Yes, I probably do. We have had great difficulty getting any agreements of any kind from this company since 1999, as you -- you know, basically, anything that is on paper has had to come through the interrogatory system. Other than that, it is mostly word of mouth, and I believe this is too big a thing to be supported by word of mouth. 1332 MR. CHINNECK: All right. And do you have any other reasons why you think that way? 1333 MR. DUTOT: I could ask -- would you like to ask some of the other people? They may have some other -- 1334 MR. CHINNECK: I can ask, yes, I can. Carol, do you have any input into that? 1335 MS. DUTOT: What was the question? 1336 MR. CHINNECK: Oh, are you comfortable that the applicant will handle the contingency involving a water problem satisfactorily at this time? 1337 MS. DUTOT: Well, I can just reiterate what Fred has said, that I am not happy with the water proposal either, because there isn't one. 1338 I would like to look out for the inheritance of my children, and still have a viable farm operation for them to inherit. 1339 MR. CHINNECK: All right, thank you. 1340 Now, let's turn now quickly to the next issue, which is the issue of liability insurance. What do you want under that head? 1341 MR. DUTOT: Well, we have studied a few articles; we have talked to some insurance people, and it seems like when there is multiple names and people, that usually the farm owners, in this case, names would be added to maybe the commercial liability situation. 1342 MR. CHINNECK: And why would that be? 1343 MR. DUTOT: Well, it would help limit liabilities if there were a liability problem and it would not be returned to the landowner; at least that's the way I see it. 1344 MR. CHINNECK: Now, do you have any idea how much insurance you would like this operation to carry? 1345 MR. DUTOT: Well, again, I'm not in the insurance business, but I think we've demonstrated in some of our evidence that $5 million is required, if you simply want to go and cut grass on one of Ontario Hydro's transformer sites. And there is another situation there where a windmill company has offered $11 million and offered to put farmers' names on to the policy, and you know, I would think you would be suggesting closer to the 11 than the 5. 1346 MR. CHINNECK: Right. And are you referring to documents that you filed in these proceedings? 1347 MR. DUTOT: I am. 1348 MR. CHINNECK: All right. Would you know where those are? 1349 MR. DUTOT: We can find them here quickly. 1350 MR. CHINNECK: I believe it is Exhibit B.3, sir. 1351 MR. DUTOT: Yeah, unfortunately, we don't have numbers on those documents. It was -- 1352 MR. CHINNECK: It is a letter from -- 1353 MR. DUTOT: It was filed on -- 1354 MR. CHINNECK: To Mr. Dutot of July 19th, 2004, and directed to the Ontario Energy Board. 1355 MR. LEWIS: What is the date on the letter? 1356 MR. CHINNECK: July 19th. 1357 MR. LEWIS: I think that is exhibit -- 1358 MS. CRNOJACKI: You want to enter it as an exhibit? 1359 MR. CHINNECK: No, it is an exhibit now. 1360 MS. CRNOJACKI: Yeah, it is an exhibit, that is my understanding. 1361 MR. CHINNECK: And I believe it is Exhibit B.3, but I may be wrong? 1362 MS. LITT: To clarify, Exhibit B.3 is the evidence of the Tipperary Storage Landowners' Association. I suggest we give Exhibit number B.3.1 to the material filed June 7th, Exhibit number B.3.2 to the material filed July 19. 1363 The interrogatory responses from the TSLA are Exhibit B.3.1. 1364 MR. BETTS: Ms. Litt, sorry, you are going to have to help me again. You wanted to be more definitive on that number, could you, and could you describe it again for me? 1365 MS. LITT: Exhibit B.3 is captioned "Tipperary Storage Landowners' Association", and I am suggesting because there is two pieces of material that we give the piece dated June 7th Exhibit number B.3.1, and the material dated July 19th Exhibit number B.3.2. 1366 MR. BETTS: Thank you. 1367 EXHIBIT NO. B.3.1: TIPPERARY STORAGE LANDOWNERS' ASSOCIATION DOCUMENT DATED JUNE 7TH 1368 EXHIBIT NO. B.3.2: TIPPERARY STORAGE LANDOWNERS' ASSOCIATION DOCUMENT DATED JUNE 19TH 1369 MR. CHINNECK: I am not sure -- we have still got the -- I have got a document -- in the upper right-hand corner, there is an indication of TSLA number 9, a notation in the upper right-hand corner of it, and it appears to be two articles, one with a headline word of "see fourth," the other with the headline word of "request for quotation grass-cutting". 1370 MR. BETTS: And Mr. Chinneck, that is now -- that was in our package attached to a letter dated July 19th? 1371 MR. CHINNECK: Correct. 1372 MR. BETTS: And that is the one that Ms. Litt has recommended calling E.3.2. 1373 MR. CHINNECK: Thank you. I am referring to that document now. Thank you very much. Again, I do apologize for the confusion about numbering. 1374 And are these the documents that you filed in support of your responses? 1375 MR. DUTOT: They are. We are trying to demonstrate a need for an amount. 1376 MR. CHINNECK: All right. And you think that the amount should be closer to the $11 million that is reported in the article on page 3 of that document; is that correct? 1377 MR. DUTOT: That's correct. 1378 MR. CHINNECK: All right. And the reference to $11 million is down in the lower right-hand corner with a solid box around it? 1379 MR. DUTOT: That's true. 1380 MR. CHINNECK: All right. And would you please read that paragraph for the record. 1381 MR. DUTOT: "Liability was another issue, but Edie notes the company would also pick up the tab for that cost with an $11 million liability policy, with all the participating landowners on it so that they would be under no obligation". 1382 MR. CHINNECK: Right. And is that environmental insurance? 1383 MR. DUTOT: It doesn't actually say. 1384 MR. CHINNECK: What type of insurance do you think it is? 1385 MR. DUTOT: I presume that's more of a commercial liability policy. 1386 MR. CHINNECK: All right. Thank you. 1387 Now, let's move to your third issue, which I believe was plugging of the old holes. And I believe you indicated initially that you were talking about Imperial number 397 and 368; is that correct? 1388 MR. DUTOT: That's correct. 1389 MR. CHINNECK: And the reason why you want those holes plugged? 1390 MR. DUTOT: Well, we -- the records show that they were plugged in 1953. Now, the standards today are much higher than that, and I don't know if in 1953 anybody thought of pressurizing this cavity by 275 percent. That would be the reason, and could there be leakage, would be the problem we might see, could there be leakage that would come to the groundwater. 1391 MR. CHINNECK: All right. And so do you have any comment, then, about the current regulations? 1392 MR. DUTOT: Well, I think I stated earlier, the way I read it now, if you plug the well by today's standards, it requires, like, 30 metres, I believe, if I remember rightly, 30 metres of cement would be required to cap it off properly. 1393 MR. CHINNECK: And that is significantly more than the 11 that is in there now. 1394 MR. DUTOT: I believe so. 1395 MR. CHINNECK: All right. Thank you. 1396 Now, moving to the fourth issue that I believe you indicated was of interest to you, that being the issue of the Feddes' environmental clean-up, can you please tell the Board why it is that you want that? I believe it is the Dwayne Feddes property; is that correct? 1397 MR. DUTOT: That's true. I can answer some of it. Maybe Mr. Feddes - this is Mr. Feddes' father beside me - he should have some input here too as well. But carry on. 1398 MR. CHINNECK: Well, why is it that you want the environmental clean-up? 1399 MR. DUTOT: Well, he has asked for this environmental clean-up for two reasons. One was demonstrated by some photos that were re-photoed and talked about earlier this morning here. 1400 Secondly, the battery site, it has been there for a long time, and -- a long time. And there was a spill at that site earlier on. Now, that was before Ms. Lowrie had bought the site. It was probably not her problem, for sure. And it was fairly significant as to the fact that it got into the local municipal drain there and travelled, like, three-quarters of a mile down to an open outlet where a member of the Ministry of Environment gathered bottles with oil actually in the water. 1401 I can't put a date on that. I believe Mr. Jordan was trying to find some records on that to verify that, but we are not sure how that was cleaned up. It was recorded and there was some clean-up there. At that time, the tanks just sat on the ground. There was no berming, no gravel. 1402 MR. CHINNECK: Right. But I am still just trying to address the reasons why you want the clean-up. 1403 MR. DUTOT: Well, the reasons are that when this is cleaned up, the land gets turned back to the landowner, and one of the reasons could easily be, when you go to sell a piece of property and someone might know that those fixtures were there, you could be asked to produce a certificate as part of your sale. 1404 And, for instance, we have seen a gas station just this summer in town where that happened, and there hadn't been gas pumps there for many, many years. But to facilitate the sale of the property, this gentleman had to -- I believe they drilled some holes or something, collected some core samples, but he ended up getting into a significant amount of money to get this property sold. 1405 So this is one of the reasons, I believe, that he should have this, and he believes it, for sure. 1406 MR. CHINNECK: Well, don't you think Mr. Feddes should pay for that? 1407 MR. DUTOT: No, I don't think so. 1408 MR. A. FEDDES: If I may add to this? 1409 MR. CHINNECK: Yes, you may. 1410 MR. A. FEDDES: My son, he owns this property. If he were to sell this property to a person, likely in the neighbourhood, because they would buy it, they knew it been -- there were oil tanks on it at one time or another, if they were to go to the bank to borrow money to buy this property, they would have to supply a certificate that it would be clean. 1411 So I don't see a reason why he should pay for this environmental test, because he has really nothing to do with it, and the applicant should pay for this environmental test. And if there is any problems there, it should be cleaned up. 1412 Basically, that's about it. 1413 MR. CHINNECK: All right. 1414 Now, can you describe the applicants' conduct to date with respect to the Feddes property. Can someone on the panel share that with the Board? 1415 MR. A. FEDDES: I could talk about part of it. There was another spill on well AG-1, which is further south on the property, and apparently this spill was in the year 2000. 1416 MR. CHINNECK: All right. 1417 MR. A. FEDDES: Photos were taken of it, and apparently it wasn't reported. 1418 MR. CHINNECK: All right. Should it have been reported? 1419 MR. A. FEDDES: Well, yeah, any spill is supposed to be reported. 1420 MR. CHINNECK: Who held the oil and gas rights to the property at that time? 1421 MR. A. FEDDES: I believe Ms. Lowrie did. 1422 MR. CHINNECK: All right. 1423 MR. A. FEDDES: Recently, they took the tanks away from there. Ms. McConnell said it was done a month ago, the clean-up on this particular well site, but it actually was only done August the 4th; that was last Wednesday, a week ago. In the pouring rain, in the morning, they were there and cleaned it -- after the tank was done -- the tank was done a month ago, but the clean-up was done one -- Wednesday a week ago. In the rain, they cleaned up the debris that was laying around there, and they dumped a load of topsoil over top of it and levelled it. 1424 So it wasn't done a month ago on this particular site; it was only done the 4th of August. 1425 MR. CHINNECK: And why do you think it would have been done on August 4th in the rain? 1426 MR. A. FEDDES: Well, because Mr. Dutot filed these photos, I believe it was the 29th of July, and they received them probably the 2nd of August, or whatever the date was, and so they quickly went out and did this. 1427 MR. CHINNECK: Mr. Dutot, do you know what date those photos were filed? 1428 MR. DUTOT: I believe it to be July the 20th, with the -- there was supportive evidence that was filed a little later that had these photos in it. We thought that this would maybe show reason why this should be done. 1429 MR. CHINNECK: All right. And do you believe that it did? 1430 MR. DUTOT: Well, all I can say is that there has been a bit of activity around there since two days after, or maybe the third day a new sign appeared at the gate, and I somehow think that that had something to do with it, yes. 1431 MR. CHINNECK: Well, how do you feel that the applicants have conducted themselves with respect to you with respect to this property and these issues? 1432 MR. DUTOT: Well, we have asked for this for some time now, and at first they say they have to clean it up to a certain standard, and that's all that's required. 1433 If there had been no issues there with spillage, that would probably have been acceptable, but we are basically told, you know, there -- I got to go back to that. There was some last eleventh hour decisions trying to be made with us, and this being one of the things, and we just -- it's just we were told that this was not going to be done the way we were asking for it. This was one of the issues that has not been resolved. It could be resolved, you know, with a little bit of negotiations, I believe. 1434 MR. CHINNECK: All right. Are you satisfied with the timeliness of the responses from the applicants? 1435 MR. DUTOT: Timeliness in what respect? 1436 MR. CHINNECK: Well, have they handled -- are your requests handled in a timely way? 1437 MR. DUTOT: Well, like I said, we can't seem to get any paper -- any negotiations on paper other than what we can force the answers out of this company through the interrogatory system, and I guess, if I am answering your question properly, the time frame, I believe back in May sometime that we added or were asking for a clause on that amending agreement because it had no time or termination date on it, as was offered to the Lambton group. 1438 And we entertained Mr. Jordan there probably in a phone call, which we have had many and many -- we entertained would they be willing to keep the compensation equal. That was also asked in one of our interrogatories, and I believe the answer was no. 1439 And we felt that -- well, we felt it would be advantageous to the company, and probably to this Board -- they don't want to listen to us about issues like that, I don't think. They got better things to do. 1440 But this issue, to have a compensation agreement that might be equal to Lambton we thought could be worked out through a clause, and we talked about it with Mr. Jordan a few times on the phone, and I think it got to be July 22nd he indicated to me that if I would send him the wording of this clause, Mr. Lewis would attempt to put it into the agreement and get back to me, and I said that I didn't feel I had the expertise to write that clause. 1441 So if Mr. Lewis would write the clause and return even by fax how he would word it, we would try and circulate that or have a meeting with our membership, and if it passed agreement, that we would stroke that off the list. 1442 I think that document came at 8:00 p.m. on July the 28th, with Mr. Lewis's clause in it. I read it and felt that it should maybe have some scrutinization by a legal person. So it was not returned. We didn't feel we could deal with it until we were sure of exactly what it was saying. 1443 Just -- I don't know, the whole summer was there. We were available, my wife and I have cancelled a couple of holidays because of this project, but at no time did this company ever call and say, Get your people together that can negotiate and either come there or come here, and we'll sit down and see if we can hammer out these small issues. 1444 There is a number of other smaller issues that were agreed upon in the interrogatories and we also got letters on them on the 28th of July and indicating that they would do some of the things that we had asked for and some of the things that were mentioned in the interrogatory system that they had agreed to. 1445 But I don't understand why it took all summer, because these were not hard issues to deal with. We weren't asking for anything that I don't think any other landowner in Ontario would be asking for under similar circumstances. 1446 MR. CHINNECK: Well, in your view, who was responsible for the delay in dealing with these compensation issues? 1447 MR. DUTOT: My personal feeling is that Mr. Jordan has to take our discussion and go back to some principal in the company, whoever, and get an okay and then the has to return to us, which takes time, you know, and if -- when the issues were all on the table, I think the fairest way to approach that would have been to somehow put our negotiating team together with Tribute's negotiating team and you could narrow it down in a hurry, but this back-and-forth thing seems to have been the problem, I think. 1448 MR. CHINNECK: But there was some discussions in some earlier testimony about the delay or the time frame between May 11th of this year and July 28th. Can you speak to that? What is your knowledge of the type of communications that occurred during that time frame and who you think might have been responsible for the delays during that period? 1449 MR. DUTOT: Well, during that time frame, there was telephone discussions, but there was never any results that were -- you know, there just weren't results. People had gone on holidays and different excuses. I am not sure, I really don't know what the problem is. 1450 MR. CHINNECK: All right. Now, how many spills have there been in the DSA to date? 1451 MR. DUTOT: Sorry? 1452 MR. CHINNECK: How many spills have there been in the DSA? 1453 MR. DUTOT: Well, just the two that I would know of. 1454 MR. CHINNECK: All right. And are you happy with the way that the operators handled those spills? 1455 MR. DUTOT: Well, the one was not their problem. The other one was, and I heard evidence this morning. I am not sure, you know, is it up to the landowners to ask, you know, to tell that these spills are being made? Does nobody keep an eye on the stuff here? 1456 The pictures would demonstrate to me that there were pipes removed between the well and the collection barrel and the pump was allowed to run. That would be my interpretation. 1457 MR. CHINNECK: All right. Now, there were some photographs that were filed earlier today by the applicants. Can I refer you to that? That is document E.4.2. 1458 MR. DUTOT: Mm-hm. 1459 MR. CHINNECK: Yes, this is the one. 1460 Do you have comments that you wish to make to the Board about these exhibits? 1461 MR. DUTOT: Yeah, I could make some comments. It's unfortunate that there is some clarity lost. I do have the originals here in the reproduction of these things, but we can talk about this. 1462 Where would you like to begin? 1463 MR. CHINNECK: Well, let's start with page -- with the first page. 1464 MR. DUTOT: So this is the first page of the filed ones this morning, true? 1465 MR. CHINNECK: That's correct. 1466 MR. DUTOT: Okay. So the upper-left picture? 1467 MR. CHINNECK: Yes. Just share with the Board -- I don't want to spend too much time on this document, but I'd just appreciate your sharing with the Board your comments about this document. 1468 MR. DUTOT: Okay. I can do this. 1469 The upper-left picture, TSLA number 10A, that was taken in 2000. Now, my pictures, the originals show by a calendar date on the camera that it was the 6th of 2000, and I wish I could hand these originals around. They are much, much clearer. It indicates oil on the ground, oil around the pumpjack, I guess you would call it, and oil around the head, or whatever it is, coming out of the ground here. 1470 MR. BETTS: Mr. Chinneck, is it worthwhile to have the originals entered as -- 1471 MR. CHINNECK: I was thinking that might be a good idea, sir. 1472 MR. DUTOT: I only have one copy, sir. 1473 MR. BETTS: It may very well be that everyone will have to have a look at it, but if you are referring to something we don't have, I think we better have it. 1474 MS. LOWRIE: They are in evidence, the originals. 1475 MR. CHINNECK: Yes. 1476 MR. DUTOT: They are filed as evidence, but I do have the originals. 1477 MS. NOWINA: But they are a better copy than today's copy. 1478 MR. BETTS: Yes, sorry, what I understand is that you have a copy of these that is a better copy than the ones we have. 1479 MR. DUTOT: That is true. 1480 MR. BETTS: Then if we can, we can enter those. 1481 MR. CHINNECK: Yes, I would ask to enter those as an exhibit. 1482 MR. DUTOT: Can we finish our presentation before I give them up? 1483 MR. CHINNECK: Sure, you can talk about them. 1484 MR. DUTOT: This is number 10, 11, 12, 13, and they were filed with the document dated July 19th. 1485 MR. CHINNECK: So I am presenting original photographic pages marked 10 through 13 that were filed with the TSLA's letter to the Board dated July 19th. 1486 MS. CRNOJACKI: That will be Exhibit E.4.7. 1487 MR. BETTS: We are just going to take a minute to compare, and if we don't see a significant change in quality, we may not even bother with this. 1488 MR. CHINNECK: That's fine, sir. 1489 MR. BETTS: And we are not comparing to the Exhibit 4.2, we are comparing it to our version of your original evidence. 1490 MR. CHINNECK: Right. 1491 [The Board confers] 1492 MR. BETTS: Thanks. 1493 The Panel has had a look at the pictures that Mr. Dutot has and we're satisfied that the pictures that were originally submitted as your evidence are satisfactory reproductions of that, so there's no need for these to be entered as an exhibit. 1494 MR. CHINNECK: Thank you, sir. 1495 MR. CHINNECK: So, Mr. Dutot, we were just going to start receiving your comments about the first page of Exhibit 4.2. 1496 MR. DUTOT: And I have almost forgotten where I was. I think we were talking about, there appears to be oil on the ground, and -- 1497 MR. CHINNECK: And where would you think that that is? 1498 MR. DUTOT: Well, it is between this pumpjack and in the general area in the lower half of the picture. And in the picture below that, you'll see the pipes laying neatly in a pile beside the barrel, I would say, and there's valves or plumbing or something sticking out of the ground, open. 1499 These were taken June 6th of 2000, so the picture to the right, of course, was taken just last week, so it indicates that they are cleaning up this site. But I think the reason -- 1500 MR. BETTS: I am going to give you a bit of help. When you are talking about pictures to the right and below, we have got -- 1501 MR. DUTOT: Okay. You want the identification number? 1502 MR. BETTS: Yes, please. 1503 MR. DUTOT: Okay. Tribute/Tipperary number 10A-1 picture indicates that some of the apparatus is still there and it is painted. It is taken from a different angle, and I am not sure that the site where the barrel sat is actually showing. 1504 Any other questions on that page? 1505 MR. BETTS: Which barrel are you referring to? 1506 MR. DUTOT: The storage barrel in TSLA A -- number 10A. 1507 MR. BETTS: Sorry, are you referring to the tank, the storage tank? 1508 MR. DUTOT: The tank, yes. 1509 MR. CHINNECK: Sir, I believe he is referring to Exhibit 4.2, which is the one that was most recently filed today. 1510 MR. BETTS: I'm sorry, I don't look at that tank and think of it as a barrel, so I was wanting to make sure we understand what we are talking about. 1511 MR. CHINNECK: I apologize. 1512 MR. BETTS: And I see that you talk about the angle, but I see the same house in the upper left-hand corner, so it strikes me that -- I just want to be certain that we are talking about the same things. But I see the same white building on the left with trees beside it, so... 1513 It looks like a similar angle to me, and I am wondering where the... 1514 MR. DUTOT: So it would appear, then, that the barrel was sitting a little -- or sorry, the -- 1515 MR. CHINNECK: By "barrel," you mean tank? 1516 MR. DUTOT: The tank was sitting a little to the right in Tribute/Tipperary number 10A-1. So it demonstrates the barrel is gone, and I am not disputing the barrel is gone. 1517 What we were trying to show by entering those pictures is the fact that there should be some kind of a clean-up on that piece of property at that well site, because I believe that well site is to be abandoned in the near future if this application goes forward. 1518 MR. CHINNECK: Mr. Dutot, if I can just direct your attention to the TRB/TIPP number 10A-1, the photo on the right side of the first page. Do you notice a depression in the ground just to the right of the wellhead? 1519 MR. DUTOT: I do. 1520 MR. CHINNECK: All right. Is that where you think the barrel was originally located? 1521 MR. DUTOT: It could have been. It could have been there. I don't see this barn that the other gentleman is referring to, to indicate that that's where it would have been. 1522 MR. CHINNECK: All right. Let's move on to the next page. Do you have comments about the next page? 1523 MR. DUTOT: Once again, this was a hydro panel that was back at that well site, and again taken in 2000. And I believe that hydro would operate that pumpjack. And it didn't look very safe-looking at the time. 1524 MR. CHINNECK: Well, how long did that installation in the upper left photograph, which is TSLA number 10C, how long was it in that condition? 1525 MR. DUTOT: I don't really know how long it was in that condition. We just noticed it was in that condition when we went to take the pictures from the spill. And I am not sure if I got there while that happened. 1526 Mr. Feddes' son came to my house one afternoon and wondered what -- if they were working or something back there. He had been over to inspect his wheat and they had actually been driving in it and noticed this oil on the ground, and that was the reason the pictures got taken. 1527 Now, since Mr. Feddes was the landowner, if he felt it should have been reported, but he doesn't remember whether he did or not and he couldn't remember whether he did or not get compensated for the wheat damage. 1528 These pictures came to light as a last-minute thing, and we felt by filing them it would justify the reason why he wants an environmental inspection on this particular area of his property. 1529 MR. CHINNECK: And just comparing the two paragraphs at the top of the page, the left one being your photograph, the right one being presented by the applicants, in your view are they photographs of the same location? 1530 MR. DUTOT: Well, not being at the site, but I see buildings in the background that I believe this picture may have been taken at the battery site. I don't see pictures in the other one, because it was taken when it was darker, but it appears that that would be -- I see some items in the background that appears that that might have been taken at the battery site. 1531 MR. CHINNECK: All right, thank you. 1532 MR. SOMMERVILLE: Just so that I am clear, Mr. Chinneck, is the answer to your question yes or no? 1533 MR. DUTOT: I would say no. 1534 MR. SOMMERVILLE: So these are from different locations? 1535 MR. DUTOT: That is my belief, without standing at the site. 1536 MR. SOMMERVILLE: That's fine, thank you. 1537 MR. CHINNECK: Thank you. 1538 Now, do you have any further comments with respect to that page? 1539 MR. DUTOT: Well, since -- no, I don't think what is left on that page is really relevant. 1540 MR. CHINNECK: Do you have any other comments about the photographs that you wish to bring to the Board's attention? 1541 MR. DUTOT: Yes, I do. 1542 MR. CHINNECK: All right. Would you please provide it then? 1543 MR. DUTOT: Since there is -- I would like to move to page -- well, there is no page. Let's call it TSLA number 11A. It is a page beyond where we were looking. 1544 MR. CHINNECK: Is that the one showing the snow on the ground? 1545 MR. DUTOT: It is, sir. 1546 Is everybody comfortable with the right picture? 1547 What I have taken that picture -- what I was trying to indicate in the next several pictures is that we don't believe Stantec evidence as to their environmental suggestions were being followed for the entry to this property. We are looking at a picture here which is approximately March 15th/16th. We call it spring thaw, and they have started down through the farm to construct. 1548 Unfortunately, my pictures are in a better order than these. There are pictures a little later that shows water trapped behind the -- you know, I would really like to go back to my own pictures. 1549 What is being shown here is pictures taken in March and the pictures being provided by Tribute/Tipperary are taken in July. 1550 Now, the conditions are not the same by any means. 1551 MR. CHINNECK: Well, how is it that the photograph bearing the number TSLA number 11A, how is it that that shows that they were not constructing the road in accordance with the Stantec recommendations? 1552 MR. DUTOT: That particular picture probably does not show that, but I did not take that picture. 1553 MR. CHINNECK: No, the one on the left, Mr. Dutot. 1554 MR. DUTOT: You said 11A? 1555 MR. CHINNECK: 11A. 1556 MR. DUTOT: Well, you can see that there is snow on the ground there, and in the agricultural business, you don't go on your land when it is like that. The land is at its most fragile time of the year, as the snow is melting and seeping into the ground, rains can come at the same time yet the construction went ahead. 1557 Now, in the Stantec evidence, page 6.10, called "protective measures," indicates that roads and drill pads be constructed during drier summer months. In the fall, wet weather precautions should be taken, and this took place on the 17th of March during spring thaw, and we just don't feel that the land conditions were proper to be going in there. 1558 MR. CHINNECK: All right. Do you have any further comments regarding the photographs? 1559 MR. DUTOT: That one in particular or all of them? 1560 MR. CHINNECK: No, the rest of them. 1561 MR. DUTOT: The photograph immediately below, TSLA number 11B, as you can see, there is heavy construction equipment being run up and down the outer edge of the road, leaving tracks. Probably some of that would be a foot deep. Again, showing that we are entering this property under wet-weather conditions. 1562 MR. CHINNECK: All right. Anything further? 1563 MR. DUTOT: Well, Tribute/Tipperary picture 11B-2, on the lower right-hand corner, that's actually a picture shot from where the Tribute driveway leaves the concession road down the lawn on the front of my property. 1564 MR. CHINNECK: So that's a -- 1565 MR. DUTOT: So I would have to give my wife the credit for keeping that looking as nice as it is. 1566 MR. CHINNECK: I am glad you brought that to the attention of the Board. 1567 The photo opposite the one you just referred to, being TRB/TIPP 11B-2, and the one opposite being TRB/TIPP 11B, are you suggesting that the photograph to the left is not the same piece of road as in the photograph on the right? 1568 MR. DUTOT: It is, but it is taken from a different vantage point. It is the same concession road, but it is taken from a different position. 1569 MR. CHINNECK: All right, thank you. 1570 MR. BETTS: Mr. Chinneck, before you leave this, and you may not be, I would like to have entered in the record at some point, since the photographs seem to be consuming a fair bit of our time, if you could -- if your witnesses could identify any photographs that they actually took personally? 1571 MR. CHINNECK: Oh, all right. I wonder if you could advise the Board who took the photographs that were submitted in your evidence with the July 19th letter to the Board? 1572 MR. DUTOT: Both my wife and myself. 1573 MR. CHINNECK: Thank you. 1574 MR. BETTS: And all of them were taken by the Dutots? 1575 MR. CHINNECK: Yes. Were all of the photographs taken by you and your wife or your wife? 1576 MR. DUTOT: That's true. 1577 MR. BETTS: Okay, thank you. I thought at one point that you indicated that Mr. Feddes' son had taken pictures. 1578 MR. DUTOT: No, what I indicated was Mr. Feddes' son had came to us, and when we returned to the site to examine it, we had taken the photos at that time. 1579 MR. BETTS: Thank you very much for the clarification, and sorry to interrupt. 1580 MR. CHINNECK: No trouble, sir. 1581 MR. BETTS: I guess we are getting a little close to time, but is there something -- is there a better place to break than now, Mr. Chinneck? 1582 MR. CHINNECK: I think, if we can just finish up the queries about the photos, then I think that would be an appropriate time to break. 1583 MR. BETTS: That's fine, let's proceed with that. 1584 MR. CHINNECK: Thank you, sir. 1585 MR. DUTOT: I would like to further go to the next page, which is TSLA number 11D. 1586 MR. CHINNECK: Yes. 1587 MR. DUTOT: That is probably the best indication there that the land was not fit to be running heavy construction equipment on. There are very deep ruts. I am not sure what made them. And there is water in them. And they are seriously deep. I would say they are down to where the topsoil would meet the subsoil, I guess would be the word in my language. 1588 And if you look immediately to your right, Tribute/Tipperary number 11D-5, that is a picture taken probably recently, I understand, and there appears to be no attempt to do anything with those ruts from early in the spring right up until the 1st of August. 1589 If we could move quickly to the back page, I think that would finish the photos. TSLA number 13A, now I took that picture to demonstrate the total lack of weed control for the whole distance of the topsoil that has been removed to make the roadway. And when the pictures got developed, I noticed there was no name on that well entry sign. Again, the TSLA number 13 has the date blacked out on the camera date. 1590 MR. CHINNECK: What is the date of that photograph? 1591 MR. DUTOT: From the originals, it appears to be the 16th of the 7th month -- no, sorry the 7th of the 16 -- wait. I believe that is July the 18th, so that was the most recent taking. 1592 MR. CHINNECK: All right. 1593 MR. DUTOT: Now, the picture to the immediate right is Tribute/Tipperary number 13A-2. That sign appeared on this site a couple of days after we had filed the pictures with the Board as evidence. So I have a feeling there is some problem with these pictures that have spurred these people into taking this series of new pictures. 1594 The final picture there is TSLA number 13C. It is taken from the well site towards the road, again indicating that there is no weed control. 1595 There is a serious weed that's -- we call it Prosomillet. It's hard to control. And there is quite a large bunch of it on that driveway site. It seeds itself and it is difficult to spray and get rid of it if you are not kept on top of it on an annual basis. 1596 I think if there is no other questions, that would probably do the pictures. 1597 MR. CHINNECK: Thank you, sir. I would ask your permission, then, to rest for today. 1598 MR. BETTS: By all means. There may very well be questions in cross-examination, but this would be an appropriate place to rest on your examination-in-chief, so let us do that at this point. 1599 We have -- I think we are perhaps a little bit beyond the schedule we had -- or a little later in the schedule than we had hoped to be, but nonetheless, we do have to get all of the evidence in that is required. 1600 So let us break for today. We will reconvene tomorrow morning, the same place, at 9:30 a.m. Thank you. 1601 --- Whereupon the hearing adjourned at 4:11 p.m.