DIRECTOR S ORDER. ENVIRONMENTAL PROTECTION ACT R.S.O. 1990, c.e. 19, as amended ( EPA ) Sections 18 & 196

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1 DIRECTOR S ORDER ENVIRONMENTAL PROTECTION ACT R.S.O. 1990, c.e. 19, as amended ( EPA ) Sections 18 & 196 TO: Desrosiers Geothermal Drilling Corporation Unit Matheson Blvd E Mississauga, Ontario, L4W 4J9 Canada Desrosiers Drilling Corporation Unit Matheson Blvd E Mississauga, Ontario, L4W 4J9 Canada David Mitchel Desrosiers c/o Desrosiers Drilling Corporation and Desrosiers Geothermal Drilling Corporation Unit Matheson Blvd E Mississauga, Ontario, L4W 4J9 Canada Oakville Hydro Energy Services Inc. Post Office Box Redwood Sq. Oakville, Ontario, L6J 5E3 Canada SITE: 7688 Cottonwood Crescent Lot 206, Part Lot 67 Plan 59M-388 Niagara Falls, Regional Municipality of Niagara PART 1 LEGAL AUTHORITY AND REASONS 1.1 Pursuant to subsection 1(1) of the Environmental Protection Act, R.S.O. 1990, c.e. 19, as amended (EPA), contaminant means any solid, liquid, gas, odour, heat, sound, vibration, radiation or combination of any of them resulting directly or indirectly from human activities that may cause an adverse effect.

2 -2- Further, pursuant to subsection 1(1) of the EPA, adverse effect means one or more of the following: a) impairment of the quality of the natural environment for any use that can be made of it, b) injury or damage to property or to plant or animal life, c) harm or material discomfort to any person, d) an adverse effect on the health of any person e) impairment of the safety of any person, f) rendering any property or plant or animal life unfit for human use, g) loss of enjoyment or normal use of property, and h) interference with the normal conduct of business. 1.2 Subsection 18(1) of the EPA provides that the Director may, by written order, require a person who owns or owned or who has or had management or control of an undertaking or property to do any one or more of the following: 1. To have available at all times, or during such periods of time as are specified in the order, the equipment, material and personnel specified in the order at the locations specified in the order; 2. To obtain, construct and install or modify the devices, equipment and facilities specified in the order at the locations and in the manner specified in the order; 3. To implement procedures specified in the order; 4. To take all steps necessary so the procedures specified in the order will be implemented in the event that a contaminant is discharged into the natural environment from the undertaking or property: 5. To monitor and record the presence or discharge of a contaminant specified in the order and to report thereon to the Director; 6. To study and to report to the Director on, i. the presence or discharge of a contaminant specified in the order, ii. the effects of the presence or discharge of a contaminant specified in the order, iii. measures to control the presence or discharge of a contaminant specified in the order, iv. the natural environment into which a contaminant specified in the order may be discharged. 7. To develop and implement plans to, i. reduce the amount of a contaminant that is discharged into the natural

3 -3- ii. iii. environment, prevent or reduce the risk of a spill of a pollutant within the meaning of Part X, or prevent, decrease or eliminate any adverse effects that result or may result from a spill of a pollutant within the meaning of Part X or from any other discharge of a contaminant into the natural environment, including, A. plans to notify the Ministry, other public authorities and members of the public who may be affected by a discharge, and B. plans to ensure that appropriate equipment, material and personnel are available to respond to a discharge. 8. To amend a plan developed under paragraph 7 or section 91.1 in the manner specified in the order. 1.3 Subsection 18(2) of the EPA states that the Director may make an order under this section if the Director is of the opinion, on reasonable and probable grounds, that the requirements specified in the order are necessary or advisable so as, (a) to prevent or reduce the risk of a discharge of a contaminant into the natural environment from the undertaking or property; or (b) to prevent, decrease or eliminate an adverse effect that may result from, i. the discharge of a contaminant from the undertaking, or ii. the presence or discharge of a contaminant in, on or under the property. 1.4 Subsection 196(1) of the EPA states that the authority to make an order under this Act includes the authority to require the person or body to whom the order is directed to take such intermediate action or such procedural steps or both as are related to the action required or prohibited by the order and as are specified in the order. 1.5 Definitions: Hazardous Gas: As defined in O. Reg.98/12 made under the EPA Ministry: Ministry of the Environment and Climate Change Professional: 19. "Professional" means a Licensed Engineering Practitioner or Professional Geoscientist as they are defined in O. Reg. 98/12 under the EPA: licensed engineering practitioner means a person who holds a licence, limited licence or temporary licence under the Professional Engineers Act; professional geoscientist means a person who holds a certificate of registration under the Professional Geoscientists Act, 2000 and is a practising member, temporary member or limited member of the Association of Professional Geoscientists of Ontario; Vertical Closed Loop Ground Source Heat Pump: As defined in O.Reg.98/12 made under the EPA

4 This order addresses matters arising from the undertaking carried out at 7688 Cottonwood Crescent, Lot 206, Part Lot 67 Plan 59M-388, Niagara Falls ( Site ), Regional Municipality of Niagara to install a vertical closed loop ground source heat pump. Oakville Hydro Energy Services Inc. (Oakville Hydro) engaged Desrosiers Geothermal Drilling Corporation ( Desrosiers Geothermal ) to install ground source heat pumps. David Mitchel Desrosiers is the principal of Desrosiers Geothermal and had control of the installation at the Site The work to be done was set out in a quote from Desrosiers Geothermal provided to Oakville Hydro. 1.7 Desrosiers Drilling Corporation and Desrosiers Geothermal are in the business of constructing vertical closed loop ground source heat pump systems by drilling boreholes, installing heat exchange loops and grout in the holes, pressure testing the loops and making the loops ready for connection to a heat pump within a structure. Oakville Hydro hired Desrosiers Geothermal to drill 12 boreholes at a depth of about metres (340 feet) each, to install loops and a bentonite grout in the holes and perform additional work for six residences in a new residential sub-division in Niagara Falls Cottonwood Crescent is one of the six residences. The boreholes that are the subject of this Order are in the backyard at the Site and are referenced in this Order as borehole #1 and borehole #2. The location of boreholes #1 and #2 can be seen on the map at Appendix A to this Order. At the time of drilling the ground source heat pump, Desrosiers Geothermal did not hold an Environmental Compliance Approval to construct vertical closed loop ground source heat pump at 7688 Cottonwood Crescent. Instead another company of which David Desrosiers was the principal, called Desrosiers Drilling Corporation, held Environmental Compliance Approval XTPR4 to construct vertical closed loop ground source heat pumps. Desrosiers Geothermal worked under the Desrosiers Drilling Corporation s ECA XTPR4 to construct the ground source heat pump at 7688 Cottonwood Drive. 1.8 Jerry Stenko and Sylvie Laperriere, Provincial Officers with the Ministry of the Environment and Climate Change, conducted an inspection at the Site on April 17, At the time of the April 17, 2014 inspection, the Officers observed a heat exchange loop extending out of borehole #2. At the time of inspection and using a hand held combustible gas detector, Officer Stenko detected Hazardous Gas at the surface by the installed heat exchange loop in borehole #2. During the April 17, 2014 inspection, Mr. Desrosiers reported to Officer Stenko that borehole #2 was drilled on April and the company s employees did not observe Hazardous Gas discharging from the hole. Mr. Desrosiers also reported that when Borehole #1 was drilled on April Hazardous Gas was detected. Condition 12b of the Desrosiers Drilling Corporation ECA XTPR4, the ECA being used to allow for the drilling at the Site, prescribed that a heat exchange loop was not to be installed in a hole where Hazardous Gas had been encountered during the construction of a ground source heat pump. At the time of the inspection, Mr. Desrosiers described a process to gas mitigation decommissioning process for the holes to the officers that was different from what was required by the Work Plan and therefore the ECA. As a result, Officer

5 -5- Stenko advised Mr. Desrosiers to consult his Professional and initiate the Hazardous Gas mitigation plan in accordance with the ECA and its Work Plan. 1.9 Officer Stenko informed me that after the Officers Site visit of April 17, 2014, Mr. Desrosiers communicated the following: Desrosiers Geothermal decommissioned the boreholes at the Site by re-drilling borehole #1 to 310ft and installing 27 batches of killing material. The work was complete at 10:30pm April Borehole #2 decommissioning task was started the morning of April and the work was completed at around 4:20pm the same day using 27 batches of killing material Officers Stenko and Laperriere observations are set out in the Provincial Officer s Inspection Report ( Inspection Report ) written by Officer Stenko and dated April I have reviewed the Inspection Report with Officer Stenko and accept the findings regarding boreholes #1 and #2 at the Site. The Inspection Report is attached to and forms part of the reasons for this Order On May 16, 2014 and again on May , the Ministry received Gas Mitigation Reports from Desrosiers Geothermal s Professional, Egmond Associates Limited (EAL) regarding the decommissioning operation at the Site. On September 8, 2014 the Ministry received a new draft Gas Mitigation Report from Desrosiers Geothermal s replacement Professional, Azimuth Environmental Consulting (AEC). AEC provided the ministry with follow up correspondence on the materials used during the decommissioning at the Site on April 1, Provincial Officer Warren Lusk, hydrogeologist and Professional Geoscientist with the Ministry, considered the April 14, 2014 decommissioning of the boreholes at the Site by Desrosiers Geothermal, including the information provided by Desrosiers Geothermal Professionals, and prepared a memorandum dated April 13, 2015 on the matter. Mr. Lusk sent an to Officer Stenko dated June at 12:45am with additional information as a follow up to the memorandum. The memorandum and dated are attached to and form part of the reasons for this Order The Ministry s hydrogeologist s memorandum and contain findings and conclusions that the methods and materials used by Desrosiers Geothermal to decommission the boreholes do not meet industry standards and are inadequate for long term mitigation of Hazardous Gas. His opinion is based on the quality of the materials used for the decommissioning, the fact that U-loop tubing remains in part of one of the boreholes and a similar decommissioning attempt in a similar environment failed at another site, namely 7667 Goldenrod Trail. Further, the Site is in a high density residential setting with buildings, utilities and other structure within a few metres of the boreholes; Hazardous Gas could move into nearby homes and other structures where the gas could build up to explosive levels. I agree with this opinion and adopt it as my own.

6 Based on the conclusions and recommendations of the Ministry s hydrogeologist outlined in his memorandum and , I am of the opinion that decommissioning to known industry standards, including the over-drilling of the boreholes and proper cementing, are necessary or advisable to prevent or reduce the risk of the discharge of Hazardous Gas from the bedrock into the overburden and possibly into basements of the surrounding homes or underground utilities Notice of my intention to issue this order, written reasons therefore and a copy of the Provincial Officer s Inspection Report, Officer Lusk s Memorandum dated April 13, 2015 and dated June 2, 2015 and the map of Site were all served on Oakville Hydro Energy Services Inc. and Desrosiers Geothermal Drilling Corporation, and David Mitchel Desrosiers on [date] and written submissions were invited within a fortyfive (45) day period from service of the Notice, draft order and the Provincial Officer s Report. Notice of the draft order was posted on the Environmental Registry on [date] and I have considered any comments. PART 2 WORK ORDERED Pursuant to Sections 18 and 196 of the EPA, I hereby order Desrosiers Geothermal, Desrosiers Drilling Corporation, Dave Mitchel Desrosiers and Oakville Hydro Energy Services Inc., jointly and severally, to do the following: 2.1 By x date, retain the services of a Professional with expertise in the management of pressurized natural gas in oil, gas or water wells. 2.2 By x date, provide: (a) to the issuing Director, the name(s) and qualifications of the Professional(s) referred to in Items 2.1, and (b) a copy of this Order to the Professional(s) referred to in Item By x date, submit to the issuing Director a written plan prepared by the Professional referred to in Item 2.1 to re-decommission boreholes #1 and #2 and any other hole that may have been created during the April 2014 decommissioning at the Site and which includes the following: i) a geological prognosis for the Site ii) over-drilling the plastic tubing of the heat exchanger, where it exists, and the cement or cement/bentonite column or columns (if there are more columns present for any reason) through the overburden and into the bedrock at a recommended depth;

7 -7- iii) placing sulphate resistant cement plugs in the over-drilled holes that are at least equivalent to the cement plugging requirements found in Part 11 of the Provincial Standards referred to in s. 2 of Ontario Regulation 245/97 made under the Oil, Gas and Salt Resources Act; iv) making the size of the over-drilled hole sufficiently larger than the existing diameter of the each of the boreholes to ensure the cement plugs, once complete, will effectively prevent the migration and escape of any Hazardous Gas from each of the boreholes or surrounding ground surface; v) employing the use of down the hole video technology at different stages of the over-drilling to verify and record that the operation is over-drilling the plastic tubing of the heat exchanger where it exists and the cement or cement/bentonite column or columns, vi) supervision and monitoring for all on-site work, including the making of sufficient observations and collection of sufficient information for item 2.5 s written report, by a Professional vii) if the conditions at the Site are not as anticipated in the plan, work will be fully stopped, the plan will be updated by the Professional and submitted to the issuing Director, and work will resume once the updated plan is accepted by the issuing Director viii) methods of mixing and placing the sulphate resistant cement in a manner which prevents any migration of Hazardous Gas; and ix) a post-re-decommissioning monitoring plan to verify the above operations were successful and, if unsuccessful, providing further recommendations. 2.4 After x date and before x date and following acceptance by the issuing Director, implement fully the plan required by Item No. 2.3 with all work carried out under the plan being supervised by the Professional referred to in Item 2.1 in a manner which permits the Professional to make sufficient observations and collect sufficient information to prepare a written report on the re-decommissioning. In the event the plan submitted pursuant to the requirements of Item No. 2.3 of this order is changed by the Ministry in any substantive respect, this order will be amended to reflect the change or changes made by the Ministry. 2.5 By x date, the Professional shall prepare a written report on the completion of the redecommissioning of the boreholes including:

8 -8- (a) a description of the work done; (b) the results from the monitoring carried out under the plan in item 2.3; (c) (d) (e) receipts which document the volume of sulphate resistant cement used to redecommission the boreholes; an opinion as to whether the completed re-decommissioning prevents, and will prevent in the long-term, vertical movement of natural gas between sub-surface formations, between a sub-surface formation and the basement of the residence on the Site, and between a subsurface formation and underground utilities. recommendations, if any, for further work necessary to protect the natural environment and the health and safety of individuals. 2.6 By x date, submit to the issuing Director the written report prepared by the Professional which is required by Item No. 2.5 above. PART 3 GENERAL 3.1 The requirements of this order are minimum requirements only and do not relieve you from: (a) complying with any other applicable order, statute or regulation or, (b) obtaining any approvals or consents not specified in this order. 3.2 Failure to comply with a term of this order by the date specified does not absolve you from compliance with that requirement. The obligation to complete the requirement shall continue each day thereafter. 3.3 All orders are issued in the English language and may be translated into the French language. In the event that there should be a conflict between the English original and the French translation, the English original shall prevail. 3.4 The requirements of this order are severable. If any requirement of this order or the application of any requirement to any circumstances is held invalid, the application of such requirement to other circumstances and the remainder of the order shall not be affected thereby. 3.5 Any request to change a requirement in this order shall be made in writing to the Director with reasons for the request, at least three (3) business days prior to any compliance date for that requirement.

9 Subsection 19(1) of the EPA provides that an order of the Director is binding upon the successor or assignee of the person to whom it is directed. 3.7 Subsection 186(2) of the EPA provides that non-compliance with the requirements of this order constitutes an offence. 3.8 In the event you are, in the opinion of the Director, rendered unable to perform or comply with any obligations herein because of: (a) (b) (c) (d) natural phenomena of an exceptional, inevitable or irresistible nature, or insurrections, or strikes, lockouts, or other industrial disturbances, or inability to obtain materials or equipment for reasons beyond your control, or any other cause whether similar to or different from the foregoing beyond the reasonable control of [name or orderee], the obligations hereof, as they are affected by (a), (b), (c), or (d) above shall be adjusted in a manner defined by the Director. To obtain such an adjustment, you must notify the Director immediately of any of the above circumstances, providing details that demonstrate that no practical alternatives are feasible in order to meet the compliance dates in question. PART 4 HEARING BEFORE THE ENVIRONMENTAL REVIEW TRIBUNAL 4.1 Under section 140 of the EPA, you may require a hearing before the Environmental Review Tribunal, if, within fifteen (15) days after service upon you of this order, you serve written notice upon the Environmental Review Tribunal and the Director. 4.2 Section 142 of the EPA provides that the notice requiring the hearing must include a statement of the portions of the order for which the hearing is required and the grounds on which you intend to rely at the hearing. Except by leave of the Environmental Review Tribunal, you are not entitled to appeal a portion of the order or to rely on grounds of appeal that are not stated in the notice requiring the hearing. 4.3 Service of a notice requiring a hearing must be carried out in a manner specified in section 182 of the EPA and Ontario Regulation 227/07 made under the EPA. The address, address and fax numbers of the Director and the Tribunal are as follows:

10 -10- The Secretary Director Environmental Review Tribunal Peter Balaban 655 Bay Street, 15 th Floor and Milner Av Toronto, Ontario M5G 1E5 Toronto ON M1B 3V4 Fax: (416) Fax: Toll Free: 1 (844) Toll Free: ERTTribunalSecretary@Ontario.ca Peter.Balaban@Ontario.ca Where service is made by mail, the service shall be deemed to be made on the fifth day after the day of mailing and the time for requiring a hearing is not extended by choosing service by mail. 4.4 Unless stayed by application to the Environmental Review Tribunal under section 143 of the EPA, this order is effective from the date of issue. 4.5 If you commence an appeal before the Environmental Review Tribunal, under section 47 of the Environmental Bill of Rights (EBR), you must give notice to the public in the EBR registry. The notice must include a brief description of this order (sufficient to identify it) and a brief description of the grounds of appeal. The notice must be delivered to the Environmental Commissioner who will place it on the EBR registry. The notice must be delivered to the Environmental Commissioner at Bay Street, Toronto, Ontario, M5S 2B1 by the earlier of: (a) (b) 2 days of commencing the appeal before the Environmental Review Tribunal; and 15 days after service of this order. 4.6 Pursuant to subsection 47(7) of the EBR, the Environmental Review Tribunal may permit any person to participate in the appeal, as a party or otherwise, in order to provide fair and adequate representation of the private and public interests, including governmental interests, involved in the appeal. 4.7 For your information, under section 38 of the EBR, any person resident in Ontario with an interest in this order may seek leave to appeal the order. Under section 40 of the EBR, the application for leave to appeal must be made to the Environmental Review Tribunal by the earlier of: (a) (b) 15 days after notice of this order is given in the EBR registry; and if you appeal, 15 days after your notice of appeal is placed in the EBR registry by the Environmental Commissioner.

11 -11- To ascertain whether or not an application for leave to appeal this order has been made by any person, you may wish to periodically check the EBR registry up to a few business days after the period mentioned in paragraphs 4.7 (a) and 4.7(b) above. Information about how to access the EBR registry is available by calling the Ministry of the Environment at (416) or ISSUED at, Ontario this day of,. Director Environmental Protection Act, s. 18 & 196