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Eastern Section Meeting

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The Law of Oil and Gas Exploration and Production in Ontario

Abstract

Ontario is the historic home of significant oil production (the names of the towns of Petrolia and Oil Springs as well as the presence of refineries in Sarnia attest to that history). Today, exploration and production continues with the potential for a major increase in light of Ontario's estimated 30 million or more barrels of undiscovered oil. As well, Ontario has conventional gas production, some of which is offshore in Lake Erie, and continuing exploration for conventional natural gas, again with major increases possible in light of the estimated undiscovered reserves in the hundreds of billions of cubic feet. The first topic that will be explored in this paper and presentation is the law relating to the exploration and production of this conventional oil and gas in Ontario. This law is largely, but not exclusively, provincial law. As a result, Ontario's "special purpose" law, the Oil, Gas and Salt Resources Act, and the interaction of that statute with other Ontario laws dealing with the environment, planning and taxation will be covered.

A possible expansion of Ontario's oil production could be accomplished through the use of carbon capture and storage ("CCS") to accomplish enhanced oil recovery ("EOR"). While a prohibition on CCS exists through a relatively recent amendment to the Ontario Environmental Protection Act, the potential for CCS for EOR is not insignificant. A number of issues which have been confronted in other jurisdictions, particularly Alberta, will be touched on in the paper and presentation to illuminate how they might be dealt with in Ontario.

The third topic to be touched on in the paper and presentation is the potential for the production of natural gas through unconventional hydraulic fracturing (large volumes of water and other materials being used to fracture and thereby cause the release of natural gas trapped in shale layers as is done in Pennsylvania, Ohio and other U.S. states as well as British Columbia and Alberta). The status of the law as it relates to unconventional hydraulic fracturing production of natural gas in Ontario will be reviewed with recommendations from the Environmental Commissioner of Ontario being a principal focus.