Policy for licensing private gas wells
The criteria under which operating, pre-existing private gas wells can become licensed by the Ministry of Natural Resources and Forestry under the Oil, Gas and Salt Resources Act.
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- Subject: Approach for Licensing Private Gas Wells
- Policy: PET.2012.01
- Compiled by – Branch: Natural Heritage, Lands and Protected Spaces
- Section: Lands and Non- Renewable Resources
- Date Issued: September 13, 2012
- Replaces Directive Title
This Internal Operating Policy Directive establishes the criteria by which operating, pre-existing private gas wells can become licensed by the Ministry of Natural Resources (MNR) under the Oil, Gas and Salt Resources Act.
The Oil, Gas and Salt Resources Act requires that the drilling, operation, alteration or servicing of a well, whether private or commercial, be done in accordance with a well licence. When this requirement came into effect in June 1997 some operators of private wells obtained licences for their private wells, others did not.
Promoting the licensing of unlicenced private gas wells is in the interest of both public safety and environmental protection. As the Act makes it illegal to service an unlicenced well, there is a danger that unlicenced wells will continue to operate without proper maintenance from a qualified contractor, allowing well conditions to deteriorate, thereby increasing the risks to the safety of the public and to the environment.
Using a risk assessment tool, the following potential risks were identified for active private gas wells:
- contamination of drinking water due to:
- infiltration from the surface,
- flow of sulphurous water or salty water from a deep saline aquifer into a shallow drinking water aquifer,
- surface contamination due to:
- surface spill and release of natural gas or brine, and
- deliberate release of waste fluids (brine),
- loss of well control – a blow-out resulting in the uncontrolled release of gas and/or fluids, and
- personal injury and/or property damage from a natural gas well leaking into a building or water well due to poor casing condition of the gas well.
This Policy Directive clarifies terms and establishes minimum guidelines for licensing pre-existing private gas wells. The Policy Directive addresses the potential safety and environmental risks posed by these wells, while recognizing the benefits of having private well operators come forward to obtain a well licence.
Oil wells are not operated privately in Ontario; therefore there is no policy for the licensing of “private oil wells”.
3.0 Definition of a private gas well
This Policy Directive adheres to the definition of “private well” within the Exploration, Drilling and Production Regulation (Regulation 245/97) of the Oil, Gas and Salt Resources Act.
Under Regulation 245/97, “private well” means,
- an unplugged well drilled for the purpose of oil or gas exploration or production on land of which the operator owns both the surface and mineral rights, and
- if oil or gas is produced from the well, the oil or gas,
- is for the operator’s private use,
- is not used in relation to a business or commercial enterprise, and
- is not sold by the operator.
For the purposes of this Policy Directive, the term “private use” excludes a well that supplies gas to a property other than the property on which the well is located, unless:
- the two properties share a common boundary and are owned by the same person(s), or
- the owner of the other property being supplied gas has a recognized legal interest in the well.
The terms “business or commercial enterprise” are interpreted as meaning a business or commercial enterprise related to the sale, supply, or distribution of gas. In this context, usage within farm operations for heating barns or sheds or for drying crops is not viewed as “business or commercial enterprises”.
4.1 Wells drilled prior to 1997
Only gas wells drilled prior to June 27, 1997, are eligible for licensing under this Policy Directive.
4.2 Wells drilled after 1997
All wells drilled after June 27, 1997, are required to be licensed under Oil, Gas and Salt Resources Act and meet the drilling and operating standards in the Oil, Gas and Salt Resources of Ontario’s Provincial Operating Standards.
4.3 Permit to bore
A private well drilled between 1960 and 1997 under a valid ‘permit to bore’ is deemed licenced under the Act. If the well continues to be owned by the person named on the ‘permit to bore’, then the licence is considered active. If the current well operator is not the person named on the ‘permit to bore’, the well operator is required to apply to the Ministry of Natural Resources for a licence transfer.
5.0 Conditions of licensing
5.1 Well evaluation
As part of the licence application process, an operator of a private gas well must retain a ‘Qualified Person’ to evaluate the well and provide a report to the
Ministry of Natural Resources confirming that the well meets, or could be brought to meet, the licensing requirements defined in this Directive.
A ‘Qualified Person’ is:
- a person who holds a licence, limited licence or temporary licence under the Professional Engineers Act;
- a person who holds a certificate of authorization under the Professional Geoscientists Act, 2000, or is a practising member, temporary member or limited member of the Association of Professional Geoscientists of Ontario (O. Reg. 66/08, s. 2), or
- a person who is qualified as a Class II Examiner as prescribed in Section 23 of the Exploration, Drilling and Production Regulation of the Oil, Gas and Salt Resources Act.
Note: Persons not already qualified as Class II Examiners, including those certified as an engineering technologist or certified technician with the Ontario Association of Certified Engineering Technicians and Technologists, may seek to qualify as a Class II Examiner and thereby become a Qualified Person.
5.2 Acceptable well conditions
To qualify for a licence, an operator of a private gas well must ensure that each of the following minimum requirements is (or will be) met:
- the top of the casing at surface must be sealed with a cap or cover to prevent surface water and other foreign materials from entering the well,
- the casing extends above the ground surface so as to prevent surface water and other foreign materials from entering the well,
- the slope of the ground surface must be away from the well head so that surface water runoff will not collect or pond in the vicinity of the well,
- the well has a properly functioning shut-off valve at the well head,
- there is a 2" casing port attached to the well to allow for pumping of kill fluid into the well to stop the flow of gas (commonly known as “flooding the well”),
- there is a functioning well head pressure gauge suitable for use with natural gas to ascertain shut-in pressure and to monitor pressure during operation,
- there is no leakage of gas or fluids at the ground surface or above, and
- the well has a legible sign affixed, or in close proximity to the well, clearly indicating the licence number and the well operator’s phone number for emergency contact.
A licence granted by the Ministry of Natural Resources to an operator for a “private well” will include the above listed criteria as terms and conditions of the licence.
Note: In accordance with Subsection 10(1) of the Oil, Gas and Salt Resources Act, work cannot be conducted on an unlicensed well. Where a well requires work to meet the above standards, an application for a well licence will be considered and may be issued with conditions attached in order to perform the necessary work.
5.3 Setbacks and restricted areas
If the well meets the acceptable well conditions above, a licence may be issued providing the well is located outside both the Setbacks and Restricted Areas described below.
The wellhead must be located no less than:
- 15 m from any lake, river, stream or municipal drain,
- 75 m from a commercial or industrial building, school, church, or place of public assembly,
- 30 m from a private residence,
- 25 m from a railway, a high voltage (more than 50 KV) transmission line, a transmission pipeline or any other utility right-of-way, and
- 5 m from the edge of a road allowance.
For this Policy Directive these areas are hereafter referred to as setbacks.
5.3.2 Restricted areas
The wellhead must not be located in a:
- 2-year time of travel zone from a municipal well, otherwise known as Wellhead Protection Area B (WHPA-B), as designated by an Assessment Report approved by the Ministry of the Environment under the Clean Water Act, 2006, or
- surface water Intake Protection Zone 1 (IPZ1) as designated by an Assessment Report approved by the Ministry of the Environment under the Clean Water Act, 2006.
For this Policy Directive these areas are hereafter referred to as restricted areas.
5.4 Exceptions to setbacks and restricted areas
5.4.1 Exception to setbacks
If a well meets the acceptable well condition as defined in Section 5.2, but is located within one or more of the setbacks, a report signed by a Professional Engineer that supports the reduced separation distances may be accepted as proof that appropriate mitigation measures are put in place to reduce the risks and a licence may be issued to the operator.
Note: In accordance with Subsection 10(1) of the Oil, Gas and Salt Resources Act, work cannot be conducted on an unlicensed well. A licence with conditions attached may be issued to facilitate an engineer’s investigation, should the investigation require the engineer to perform work on the well in question.
5.4.2 Exception to restricted area
If a private well meets the acceptable well condition as defined in Section 5.2 but is located within a restricted area as described under Section 5.3, a well operator may elect to have a well integrity test conducted in accordance with the Ministry- defined procedure described below.
A report signed by a Professional Engineer may be accepted as proof that the private well meets the acceptable well integrity requirements and a licence may be issued to the operator.
As part of the acceptable well integrity, the Professional Engineer’s report must attest that:
- the casing was properly centred in the original drill hole to create an appropriate annular space around the entire casing,
- if casings of different diameter were used, the interior casing was properly centred in the exterior casing to create an appropriate annular space,
- the annular spaces between the casing(s) have been completely cemented and the integrity of the cement is such that it will prevent any vertical movement of oil, gas, water, brine or other foreign materials in the annular space,
- the casing joints are sealed and the casing does not have perforations, and
- the well is gas- and water-tight, confirmed by casing inspection log analysis and a successful pressure test. The pressure test must show the private well is able to hold reservoir pressure plus 10% for 48 hours.
Note: In accordance with Subsection 10(1) of the Oil, Gas and Salt Resources Act, an integrity test or other work cannot be conducted on an unlicensed well. A licence with conditions attached may be issued to facilitate an integrity test or other work needed to complete the engineer’s investigation of the well.
5.5 Requirements for pooling and spacing
Natural gas ownership is a matter between the operator of an existing private well and third parties who own neighbouring mineral rights. While pooling and spacing requirements still apply to wells licenced under this Policy Directive, proof of existing agreements will not be required with an application for a private gas well licence.
If a neighbour considers themselves aggrieved, they may submit their grievance to the MNR pursuant to Section 8 of Reg. 245/97, and may apply to the Mining and Lands Commissioner for a pooling order.
6.0 Failure to meet licensing conditions
If a private well fails to meet the licence conditions set out in this Policy Directive, the Ministry may order an operator to bring the well into compliance with the terms and conditions of the licence within a specified time frame, or order that the well be plugged.
The Ministry of Natural Resources will continue to respond to complaints and issues of human health and environmental risks associated with private gas wells on a case-by-case basis.
7.0 Term of licence
If the Ministry issues a licence for a private gas well under this Policy Directive, the licence will be issued for a maximum period of 10 years or until a fixed date, whichever comes first. At the expiry of the licence term, the licence will be eligible for an extension of one 10-year term providing an evaluation is conducted by a Qualified Person who files a report to confirm that the well continues to meet the acceptable well conditions as defined in Section 5.2.
If per sub-section 5.4, a licence was originally issued on the basis of evidence provided in an engineer’s report, an engineer must visit the site and provide a written statement that nothing of significance has changed since the original report was filed. If changes have occurred that have a bearing on the licensing of the well, a new engineer’s report will be required before the term of the licence may be extended for an additional 10 years.
Application Fee: There is no licence application fee for a private gas well licensed under this Policy Directive.
Annual Fees: There are no annual licence fees.
Security deposit: No security deposit is required.
Annual reports: No annual reports are required.
The following safeguards are recommended as ‘best practices’ to reduce the risk of public safety hazards.
- Natural gas (methane) detectors should be installed in accordance with manufacturers’ instructions in every building that uses such gas and any buildings in close proximity to the wells. These detectors should be checked periodically to ensure they are working properly.
- Non-commercial natural gas may be odorless, tasteless and colourless. A private gas well may also produce gas containing hydrogen sulphide. Hydrogen sulphide is poisonous and should be treated with caution. It is fatal to humans in small concentrations and causes rapid corrosion in pipes.
- Commercially distributed natural gas has a mercaptan added to give it a distinctive odour.
- Where there is a possibility of vehicular collision with the well structure, physical barriers should be installed to mark and protect the well head.
Incentives will be offered for a limited period of time.
A private well drilled prior to 1997, but already licensed at the time this Policy Directive became effective, is eligible to participate in the incentive program. However, the operator of the well must cede the existing licence and replace it with one issued under this Policy Directive.
11.0 Transfers of licences
A licence issued under this Policy Directive may be transferred to a new property owner. At the time of transfer, the private gas well must be inspected by a Qualified Person who will produce an evaluation report to verify that the well continues to be in functioning order and meets the acceptable well conditions defined in Section 5.0. The Ministry will accept an evaluation report providing it is less than one year old at time the transfer application is submitted.
If per sub-section 5.4, a licence was originally issued on the basis of evidence provided in an engineer’s report, and more than 3 years have passed since the completion of that report, a new engineer’s report will be required to verify that the conditions continue to be met to allow the licence to be transferred.
12.0 Other approvals
A private gas well licence issued by the Ministry of Natural Resources under this Policy Directive pertains to the operation of the gas well only. The well operator is responsible for obtaining any other necessary approvals or permits associated with the use of gas from the well.
13.0 Effective date
This policy becomes effective on September 13, 2012.
This Policy Directive is being provided for information purposes only and is not intended nor should it be construed as providing legal advice in any circumstances.