November 27, 2017…

November 27, 2017

Mr. Andrew MacDonald

Policy Adviser

Ministry of Natural Resources and Forestry

Policy Division

Natural Resources Conservation Policy Branch

Resource Development Section

300 Water Street

Peterborough Ontario K9J 8M5

Dear Mr. MacDonald

Re:Regulation change under the Oil, Gas and Salt Resources Act: Regulating compressed air energy storage in porous rock reservoirs and solution-mined salt caverns

The Ontario Petroleum Institute (OPI) is the industry association that represents the oil and natural gas production, hydrocarbon storage, and salt solution mining industries in Ontario. Ontario producers have been contributing to the energy needs and the economy of the province for more than 150 years. Since the 1880’s producers have explored for, produced and supplied oil and natural gas to Ontario homes and businesses.

The OPI welcomes the opportunity to comment on the proposed regulation amendment under the Oil, Gas and Salt Resources Act that relates to compressed air energy storage (CAES) projects. The OPI views the development of CAESs as an enhanced use of the geology of Ontario and in particular maximizing the benefits of years of oil and natural gas exploration and production in the province which has resulted in the availability of porous rock reservoirs where production has expired but valuable space remains.

The OPI members have considerable experience with hydrocarbon storage, a fundamental part of the industry in the production of oil and natural gas. Substantial volumes of these fuels are stored in Southwestern Ontario. One of the main value-added aspects of oil and natural gas production is the extended life of a well being depleted is its continued use for the storage of natural gas. It follows that these same depleted wells represent a similar value for the storage of compressed air.

As Ontario is now proposing to establish a regulatory framework under the act with respect to the use of wells and underground geological formations for CAES the OPI would like to take this opportunity to be involved in the development of the standards for underground compressed air energy storage in salt caverns as well porous rock reservoirs.

/2

2.

The OPI supports the Ministry of Natural Resources and Forestry’s (MNRF) primary objective for a safe and level playing field for the development of CAES proposals taking into account their varying and specific geological characteristics. We believe that a standardized regulatory process be developed for both salt caverns and porous rock formations.

The OPI offer the following summary of comments regarding the regulation amendment under the Oil, Gas and Salt Resources Act relating to CAES:

1) The OPI supports the use of porous rock formations, specifically, natural gas reservoir rock that:

a) properly assesses the capability of the cap rock to withstand multiple delta pressures/cycles; b) purges the residual natural gas to an acceptable level to ensure no risk of fire or explosions; and c) ensures enhanced well casing thickness to mitigate risks of corrosion due to salt and air interacting on metal surfaces.

2) The MNRF create and set a range of CAES standards and regulations that will be substantially similar for salt or rock formations, subject to their individual geological characteristics.

3) The regulatory/application process at the MNRF be similar for rock and salt formation assessments.

4) The CAES for salt and rock formations be protected by a provincial regulation boundary designation to ensure that there is no interference with the formation once it has been assessed as it will be declared a “provincial resource”.

5) The OPI’s support of salt caverns for CAES comes with caution that:

a) heat from the compression process is not injected to a point that cause the salt formation to weaken structurally; b) the salt caverns can tolerate increased storage pressure that account for the ongoing re-pressurization cycles; and c) on-going cycles eliminate dampness through dehydration.

The OPI believes that by following closely scrutinized industry standards for safety the CAES development process can review proposals to accept volumes of compressible air, natural gas or hydrogen in pressurized formations.

The OPI would welcome the opportunity to provide any additional input in the development process. Thank you for the invitation to comment on the proposed regulations for CAES in Ontario.

Sincerely,

Hugh Moran

Executive Director

[Original Comment ID: 211396]