On October 30, 2013, the Canadian National Energy Board (“NEB”) approved an application for exploratory horizontal drilling and hydraulic fracturing in the Northwest Territories. The decision marks the first time such activity will be allowed in the remote region, which straddles the Arctic Circle. The authorization will remain in effect until October 2018.
Specifically, NEB has approved two wells, which were granted land and water permits earlier this year, to be drilled in Norman Wells, located in the Canol Shale Play and approximately 100 miles south of the Arctic Circle. NEB’s approval was based, in part, on the operator’s risk assessment of hydraulic fracturing in the area, which included the following:

  • Review of geology and fault identification
  • Proposed mitigation measures regarding microseismic monitoring
  • Proposed commitments regarding wellbore integrity, including casing design
  • Proposed cementing program
  • Proposed cement bond log evaluations
  • Proposed casing integrity pressure tests

The operator has also agreed to abide by the Mackenzie Valley Resource Management Act and other applicable laws and regulations, including those requiring measures to ensure local water supplies are not affected. NEB and the operator also set an expected maximum daily gas flow rate, and the operator must report any exceedances of that rate to the NEB. The operator has stated that drilling is slated to begin in late December 2013, with hydraulic fracturing to potentially follow in late January 2014.

NEB is an independent, federal Canadian agency established by the Parliament of Canada to regulate international and interprovincial aspects of the oil, gas and electric utility industries. In the last few years, NEB has conducted over 25 public information and community engagement sessions in Northern Canada on the regulation of hydraulic fracturing. In a statement, the NEB said, “the board recognizes the importance of fostering better understanding and communication with all stakeholders that take part in board processes and engaging Canadians is a priority.”

This article was prepared by Lauren Brogdon (lauren.brogdon@nortonrosefulbright.com or 713 651 5375) from Norton Rose Fulbright’s Energy Practice Group.