The government agency that regulates Alberta's oil and gas industry Tuesday temporarily suspended the issuing of licences for sour gas projects.

The move followed a court ruling that may have far-reaching effects on the industry and on the rights of people living near sour gas wells.

A court ruling has led to the suspension of sour gas drilling in Alberta. (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.

Before gas can be moved through the pipeline system, the hydrogen sulphide must be removed not only because it's poisonous but also because it is highly corrosive.

The decision by the Energy Resources Conservation Board affects applications for 69 wells, pipelines and other facilities.

The move follows a decision made by the Alberta Court of Appeal on Oct. 28. The province's highest court ruled that the ERCB erred when it denied three residents 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 refused, saying the three women did not live close enough to the well site. All three live between three to six kilometres from the wells.

Gas could drift up to nine kilometres

Modelling done for the company suggested any gas leak would spread only a little over two kilometres. But a regulation enacted by the ERCB last year creates another zone around wells where the gas might be spread by wind and that extended, in this case, beyond nine kilometres.

The court said the ERCB's own regulations did, in fact, give the residents the right to take part and ordered the board to rehear the application.

One of the women who brought forward the challenge, Lillian Duperron, told CBC News she is amazed their efforts have led to the court's decision.

"I was really pleased that the court had realized that our health and safety could be jeopardized," she said.

"I’m a sensitive individual with asthma and there are many people like me out there. We react —or can react — to much lower concentrations of [hydrogen sulphide] and I’m concerned there are a lot of school children in this area. There are no long-term studies on how low doses of [hydrogen sulphide] exposure will affect a person, let alone a person that’s growing."

No gas production until a new hearing

The court also ruled that the fact that the wells have already been drilled does not mean Grizzly can go ahead and operate them until the new hearing has been held.

The board said in a release it will not approve any more applications until it can formulate a response to the court ruling. However, it added, it will continue to accept applications.

The extent to which the development applies to other sour gas wells already approved isn't clear.

ERCB spokesman Bob Curran said it won't likely result in a long suspension of drilling.

The lawyer for the three women, Jennifer Klimek of Edmonton, said the scope of the ruling remains an open question.

The ruling does appear to require companies in the future to consult with residents over a wider area before they are allowed to drill.