Regulation - LGIC

Proposed regulatory provisions for 'special projects' using wells to test or demonstrate new and innovative activities, including carbon storage, and to remove well security caps and exemptions for all types of wells under this legislation going forward.

Regulation Number(s):
Ontario Regulation 245/97
Instrument Type:
Regulation - LGIC
Bill or Act:
Oil, Gas, and Salt Resources Act
Summary of Decision:
The decision to move forward with regulating projects to test, assess, pilot or demonstrate an activity, method or technology that is new or innovative to Ontario (called 'special projects') will increase government oversight on projects to test or demonstrate carbon storage and other potentially new activities, methods or technologies. Carbon storage is new to Ontario, and the Ministry of Natural Resources and Forestry wants to ensure the activity is undertaken responsibly. That is why the ministry is taking a phased approach to developing a framework to regulate this activity. The new regulation for special projects (Ontario Regulation 425/23: Special Projects) (O. Reg. 425/23) made under the OGSRA will allow businesses interested in pursuing projects to test, assess, pilot or demonstrate carbon storage projects to pursue special project designation, and if designated, apply for authorizations for their project. While this new regulation applies to both private and Crown lands, initially, special projects for carbon storage will only be enabled on private land as further legislative changes would be necessary to access Crown lands for carbon storage. Access to Crown land for carbon storage projects are intended to be addressed as a part of the commercial scale framework that is currently in development. O. Reg. 425/23 sets out requirements, including: processes for special project designations and applications for licences and injection permits to authorize special projects, including notification and consultation requirements; financial security requirements; transfers for, and amendments to, special project designations and their associated well licences and injection permits; and other requirements. Based on feedback, the proposal was modified to include source water protection authorities to be notified of licence and permit applications for special projects, and to allow individuals holding a limited licence under the Professional Engineers Act to be approved by the ministry as a Class VI Examiner for the purpose of conducting examinations related to special projects. Amendments have also been made to O. Reg. 245/97: Exploration, Drilling and Production under the OGSRA to address special projects and align with O. Reg. 425/23. Also amendments to O. Reg. 245/97 as a first step to improving financial security requirements for wells regulated under the OGSRA, such as those used by oil, gas and brine producers, and hydrocarbon storage companies. Changes eliminate exemptions and maximum security caps, for new wells and wells that are deepened, or their use is converted. When companies amalgamate, well security already in trust is not released back to an operator. Removing caps and exemptions to well security increases the likelihood that subject wells will be properly plugged by the operator at the end of use, improving the protection of people and the environment and helping prevent potential future costs to landowners or the public.
Analysis of Regulatory Impact:
The anticipated environmental, social, and economic consequences of this proposal are neutral to positive.
The creation of an authorization process for projects to test, assess, pilot or demonstrate new activities, methods or technologies (special projects) would support innovation while safeguarding people and the environment. The proposed changes would also enable proponents of special projects to voluntarily have their projects regulated under this Act, where the project would otherwise not have been subject to it. This is expected to lead to positive environmental and social outcomes, as well as economic benefits for proponents seeking to advance innovative projects.
The establishment of a clear framework for special projects to seek authorization would provide for the identification, assessment, and mitigation of potential impacts, including potential impacts to Indigenous communities and Aboriginal and Treaty Rights. It would also provide. It would also provide opportunities for local and Indigenous community engagement on proposals. Impacts to municipalities, and other stakeholders are expected to be neutral to positive resulting from amendments that support the future establishment of clear and transparent processes to designate, authorize and to regulate special projects.
The proposed regulations for special projects will result in direct compliance costs for proponents that choose to pursue a special project designation, including administrative costs, related to the preparation and submission of application information, expert reviews, carrying out notification, engagement and consultation activities, reporting requirements, and administrative fees for applications and transfers under this act. The ministry will be engaging industry representatives during the public consultation process to gather information on the range of costs associated with these activities to inform decision-makers. No direct compliance costs are anticipated for other regulated entities under the Modernizing Ontario for People and Businesses Act, 2020
The proposed changes to the well security requirements would reduce environmental and safety liabilities associated with wells that have reached the end of their useful life by reducing the risk that current operators won't be willing or able to cover the costs of decommissioning. Therefore, the anticipated environmental and social consequences of this proposal are expected to be positive.
Some economic impacts to well operators are expected, particularly for those that were previously exempt from establishing financial security for decommissioning their wells and for those where large numbers of wells would be transferred. These operators have an existing legal obligation to plug and decommission wells under the OGSRA and therefore any increase in costs would be limited to costs associated with establishing and maintaining these funds in security trust accounts during operations. Input on these costs will be sought from industry representatives.
Further Information:
Proposal Number:
Posting Date:
September 1, 2023
Summary of Proposal:
This proposal includes two Parts.
Part 1: Proposed implementing regulations for special projects, including:
• Proposed Minister's regulations for special projects that address
o special project designations
o applications for licences and injection permits to authorize special projects
o financial security requirements
o transfers for, and amendments to, special project designations and their associated well licences and injection permits (including conditions)
o other key requirements related to special projects.
• Proposed amendments to Ontario Regulation 245/97 to recognize special projects
It is proposed that all changes in Part 1 would take effect on January 1, 2024
Part 2: Proposed regulation changes to remove well security exemptions and caps, going forward, for all wells under this act that are newly drilled, deepened or converted to another use, when a well licence is transferred, or companies amalgamate.
It is proposed that all changes in Part 2 would also take effect on January 1, 2024. If approved, the proposed changes to well security exemptions and caps would also apply to operators who make requests for transfers, new well licences, conversions, or consents to adjust security after the date of this posting.
Contact Address:
Effective Date:
January 1, 2024