The government agency that regulates Alberta's oil and gas industry lifted its ban on new sour gas projects Friday.

The Energy Resources Conservation Board (ERCB) suspended the issuing of licences for sour gas drilling, pipelines and other projects on Nov. 3, after an Alberta Court of Appeal ruling.

The ERCB says companies planning sour gas projects will still have to determine whether more residents need to be included in public hearings (CBC)

Sour gas contains hydrogen sulphide, which can be fatal, even in small concentrations. It occurs naturally as a result of the decay of organic matter, and is present in one-third of Alberta's natural gas wells.

The court decided on Oct. 28 that the ERCB erred by not following its own regulations when it denied three women living near Drayton Valley, 140 kilometres southwest of Edmonton, their right to participate in public hearings on the drilling of two sour gas wells by Calgary-based Grizzly Resources Ltd. The board had said the three women did not live close enough to the well site to be affected by any leak.

The board said it has now corrected its error, but the changes will be controversial. Previously it had required oil and gas companies to identify two zones, one within which a gas leak would cause death, injury or damage, and a wider one in which sour gas could still drift from wind but in lower concentrations.

It said the larger zone will be reduced and be the same size as the smaller one. Although the court ruling requires that the public hearing be held again, and that the three women who won the court ruling be consulted. The change means they would still be excluded from a similar future hearing.

'Public safety has been in no way lessened or compromised'—Dan McFadyen, Chairman, ERCB

"Public safety has been in no way lessened or compromised at any time," said ERCB chairman Dan McFadyen. "The ERCB still has the most stringent sour oil and gas regulations in the world."

Board spokesman Bob Curran told CBC News the risks outside the smaller zone are "negligible" but "in any situation it's impossible to get down to a risk of zero."

One of the women who won the case, Lillian Duperron, told CBC News earlier that she was concerned that the sour gas even at low concentrations would affect her asthma or the large number of school-aged children in the area.

The suspension by the board affected applications for 69 wells, pipelines and other facilities. Curran said all companies will have to review their applications to determine whether more residents need to be included in public hearings.

"There's going to be some work for industry to do on that front," he said.