APPLICANT GUIDE Private Gas Well Policy and Incentive Program ontario.ca/privategaswells
Ministry of Natural Resources Petroleum Operations Section Integration Branch Regional Operations Division 659 Exeter Road London, ON N6E 1L3 September 2012
TABLE OF CONTENTS The Private Gas Well Incentive Program 1 Eligibility 1 Available Grants 2 Applying For Grants 3 The Well Evaluation Report 4 Completing the Incentive Application Form 5 Notice of Approval 8 Terms and Conditions of Funding 8 Legislative and Regulatory Requirements 8 Reimbursement after Work is Completed 8 More Information 9 Forms 11
The Private Gas Well Incentive Program The Ministry of Natural Resources (MNR) has recently developed a new policy for licensing existing private gas wells. To view the policy, go to the Environmental Registry website (Registry #011-2981) at ontario.ca/ebr or MNR s website ontario.ca/privategaswells. The requirements established by this policy recognize that private gas wells generally present lower risks than commercial wells because they produce a low volume of gas and operate at much lower pressures. The policy establishes requirements that reflect the nature of these risks. The ministry is implementing a five-year Incentive Program to support the new licensing policy. The incentive program will provide financial assistance to well operators for well evaluation and wellhead retrofitting or well plugging. Purpose of This Guide This guide will help you understand Ontario s Private Gas Well policy and the related financial incentives by providing detailed information about: Grants available to help you licence your well What you need to qualify How to apply. As of 1997, all operating private gas wells are required to have a licence issued by the Ministry of Natural Resources. To obtain a licence, a private gas well must meet minimum requirements. The ministry has created the Private Gas Well Incentive Program to help operators meet these requirements. Natural gas wells that are improperly constructed or poorly maintained can potentially have a negative effect on the environment, and may pose a threat to public health and safety. Plugging or upgrading substandard wells will reduce the risk of contamination to local aquifers, protect the environment and help to ensure public health and safety. Eligibility The Private Gas Well Incentive Program is open to landowners who operate a natural gas well drilled prior to June 27, 1997, provided that gas produced from the well: is for the operator s private use is not used in relation to a business or commercial enterprise that sells, supplies, or distributes gas, and is not sold by the operator. 1
Available Grants 100 per cent of the cost of a wellhead and well location evaluation by a Qualified Person (QP), up to a maximum grant of $500 per well including HST. This grant is available to all private gas well operators, provided the well was drilled prior to June 27, 1997. Applicants can also qualify for one of the following grants: 50 per cent of the cost of retrofitting the above-ground portion of your wellhead to conform to the requirements as outlined in the policy up to a maximum grant of $500 per well including HST. OR 50 per cent of the cost to plug your well if located outside the setback distances or source water protection areas defined in the policy, to a maximum grant of $10,000 per well including HST. OR 100 per cent of the cost to plug your well if located within the setback distances or source water protection areas as defined in the policy. Costs That Will Be Reimbursed The following costs qualify for reimbursement: Costs associated with obtaining required records and completing applications for well licensing and incentives Purchased materials and supplies Contracted labour only (should you decide to do the work yourself, you will only be reimbursed for the cost of materials used) Professional fees and technical support from a Qualified Person. Costs That Will Not Be Reimbursed The following costs are not eligible for reimbursement: New well construction Labour and machinery costs of the applicant and/or family dependents 2
Well integrity testing Well work-overs, which involves upgrading the sub-surface well bore Conversion to an alternative fuel source Wellhead upgrades beyond what is required to meet licensing requirements Post-plugging cosmetic landscaping Environmental cleanup Removal of any associated equipment on the site. Applying For Grants Step 1 Well Evaluation The first step is to have the wellhead and its location evaluated by a Qualified Person. A Qualified Person must be one of the following: A person who holds a licence, limited licence or temporary licence under the Professional Engineers Act, 1990; 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 under the Oil, Gas and Salt Resources Act (persons not already qualified as Class II Examiners may seek to qualify as a Class II Examiner and thereby become a Qualified Person). For information on who is qualified as a Class II Examiner, go to the Ontario Oil, Gas and Salt Resource Library website at www.ogsrlibrary.com/examiner_list_ontario. Individuals whose Examiner number ends in a 2 are qualified as Class II Examiners. The well operator is responsible for arranging to have the QP evaluate the well. Once on site, the QP will check the distances from the well to any nearby buildings, roads, railways, hydro lines and bodies of water. The new licensing policy defines specific setback distances for all of these features. In addition, the QP will check with the local source water protection authority to determine if the well is located inside any source 3
water protection zones identified in the policy. The QP will prepare a location sketch documenting the setback distances. The QP will also evaluate the above-ground portion of the wellhead to determine if the following requirements have been met or if retrofit work must be completed: 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 must extend above the ground surface to prevent surface water and other foreign materials from entering the well; The slope of the ground surface must be away from the wellhead so that surface water runoff will not collect or pond in the vicinity of the well; The well must have a properly functioning shut-off valve at the wellhead; There must be a 2 in. casing port attached to the well to allow for pumping of kill fluid into the well to stop the flow of gas; There must be a functioning wellhead pressure gauge suitable for use with natural gas to ascertain shut-in pressure and to monitor pressure during operation; There must be no leakage of gas or fluids at the ground surface or above; and The well must have a legible sign affixed or in close proximity to the well, clearly indicating the licence number (once assigned) and the well operator s phone number for emergency contact. The Well Evaluation Report The QP will complete a Well Evaluation Form documenting the details related to the well, including a well location sketch, which will be provided to you. The QP may also be able to provide advice on filling out the grant application and well licensing application. Please note that the ultimate decision regarding well licensing and grant approval rests with the ministry. In order to be reimbursed for the Well Evaluation Report, you must submit a copy of the QP s receipt for payment of services with your application for incentives. Step 2 Complete Incentive Application Package A complete Incentive Application package includes: 4
A completed Incentive Application Form (Form 0234); A completed Private Gas Well Licence Application Form (Form 0233), if applicable; A completed Well Evaluation Form (Form 0235); A well location sketch; Four photographs of the well, one from each of its four sides in its current state; Proof of payment to the QP for services provided; Quotes for wellhead retrofit or well plugging, if applicable; Proof of legal interest in the well (copy of deed, tax bill or other legal document); An engineer s report, if applicable; and Other documents as required to complete the applications. All Incentive Program Applications for unlicensed wells must be accompanied by a Private Gas Well Licence Application. Completing the Incentive Application Form The Qualified Person will be able to assist you in completing the form. Both you and the QP are required to sign page two of the form. The Terms of the Grant are outlined on Page 2 of this form; please read these thoroughly so you are aware of the terms of the grant agreement. You will need to keep a copy of the form as your record of application to MNR. Please ensure that all forms are filled out completely. Incomplete applications or well evaluations will be returned to the applicant for more information. The ministry will not reimburse applicants for any additional QP costs that may be associated with completing returned applications. Well Evaluation Grant All private gas wells covered by the licensing policy qualify for a Well Evaluation Grant. To ensure efficient application processing, please make sure that you have the QP sign the grant application verifying that payment has been received for the well evaluation. Evaluation Grant 100 per cent of the cost to a maximum of $500 per well You may also be eligible for either a wellhead retrofit grant or a plugging grant, described below. Use the same application form to apply for either grant. Retrofit Grant To be eligible for a wellhead retrofit grant, your well must be located outside all prescribed setback distances or source water protection areas. The QP will provide you with information on how to bring your wellhead up to the requirements established in the policy. If qualified to perform the retrofit, the QP may also provide you with a quote for 5
your grant application. Otherwise, you will need to get a quote for the work and include that information with your application. Retrofit Grant 50 per cent of the cost to a maximum of $500 per well The well operator should be aware that working on a well can result in some unintended outcomes. For example, if the well must be depressurized in order to perform the work, the pressure may not return to the same level once the work is completed. In addition, the amount of casing above ground may not be of sufficient quality to allow the reinstallation of the retrofitted or new wellhead. You must submit a completed private gas well licence application as no work can be conducted legally on an unlicensed well. Therefore you should not proceed with a retrofit until a licence is issued for the well. Ministry of Natural Resources staff will contact you regarding approval to proceed with the wellhead retrofit. Plugging Grant All wells drilled prior to June 27, 1997, are eligible for some form of plugging grant. However, the amount of the grant will vary depending on the wellhead condition and well location setbacks. Plugging Grant 100 per cent of the cost when the well is within setbacks or the source water protection zone Where a well is located within the setback distances outlined in the policy or in the source water protection area, 100 per cent of the cost to plug the well will be paid by the Ontario government. You are not required to obtain a quote and will not contract for the work to be done. The contracting for plugging will be managed by MNR and staff will work with you to ensure that you have ample notice of when the well will be plugged. Plugging Grant 50 per cent of the cost when the well is not within setbacks or the source water protection zone Where a well is not located within the setback distances or a source water protection area as defined in the policy, 50 per cent of the cost to plug the well will be paid by the government up to a maximum grant of $10,000. In this case, you are required to obtain written quotes supplied by two companies that have proof of Workplace Safety and Insurance Board and Liability Insurance coverage and submit this information with your grant application. You will be managing the plugging contract and will be contacted by ministry staff regarding approval to proceed with the plugging. The operator of the well will be in control of the well plugging contract and is responsible for: 6
Payment of the contractor; Ensuring completion of the well plugging; Removal of any infrastructure associated with the well that is regulated by the ministry; Maintenance of all receipts related to the well plugging for submission to the ministry; Completion and submission of Form 10 Plugging of a Well Report in accordance with the Oil, Gas and Salt Resources of Ontario Provincial Operating Standards (Provincial Operating Standards); Rehabilitation of the well site in accordance with the Provincial Operating Standards; and Notifying MNR at least 48 hours in advance of commencement of the well plugging. The operator should be aware that plugging older wells may result in budget overruns, caused by increased labour and equipment costs associated with: Corroded casing, preventing easy removal; Multiple strings of casing adding to the cost of casing removal; Loss of circulation of cement; and Missing casing which can cause the well to collapse on itself. The applicant will be responsible for paying any costs that exceed the grant provided by the ministry. You must submit a completed well licensing application as no work can be conducted legally on an unlicensed well. Ministry staff will issue you a licence for plugging purposes. Step 3 Submit Completed Grant Application Once you have all the required documents listed in step two, you may submit them in person or by mail to: Private Gas Well Incentive Program Ministry of Natural Resources Petroleum Operations Section 659 Exeter Road London, ON N6E 1L3 7
Notice of Approval A proposed well plugging or wellhead retrofit grant is subject to approval by the ministry. The ministry will notify you in writing of its decision regarding your application. It is recommended that no work be started in advance of receiving written notice of approval. The ministry will not reimburse you for any unapproved work. Please be aware that in providing its decision, the ministry does not endorse any particular company, service provider or equipment. Terms and Conditions of Funding Funding is available for wellhead and well location evaluation by a QP and wellhead retrofit on a first-come, first-served basis until all funds are allocated. Funding for costsharing of plugging will also be allocated on a first-come, first-served basis, while the ministry-contracted plugging will be prioritized based on a determination of health and safety risk. Legislative and Regulatory Requirements It is the well operator s responsibility to meet all legislative and regulatory requirements and obtain all necessary municipal, provincial and other permits and approvals that may be required for the completion of the project. If the well operator is required to plug the well, the approved applicant must ensure all notifications, forms, examiner s reports and documents are submitted in accordance with the Oil, Gas and Salt Resources Act, Ontario Regulation 245/97 and Oil, Gas and Salt Resources of Ontario Provincial Operating Standards. Reimbursement After Work is Completed In order to receive reimbursement from the ministry, you must submit a statement of actual expenses incurred and provide copies of paid invoices. All approved work must be completed by December 31 of the year approval was given. Once all required information has been submitted and verified, the ministry will issue you a cheque. Note that the ministry cannot make payments directly to contractors (with the exception of the 100 per cent plugging incentive, which will be directly contracted by the ministry). 8
More Information For more information, including Frequently Asked Questions, please refer to the ministry s website at ontario.ca/privategaswells. The relevant forms and the policy are available at this website and are included at the end of this guide for your reference. You can also call the Ministry of Natural Resources Petroleum Operations Section from Monday to Friday, 8:30 a.m. to 5:00 p.m., at 519-873-4680, or toll free at 1-888-990-0902. Email inquiries can be sent to pgwincentives@ontario.ca. 9
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MNR 52699 ISBN 978-1-4606-0298-0 (Print) ISBN 978-1-4606-0299-7 (PDF) Queen s Printer for Ontario, 2012 Printed in Ontario, Canada