mongoid.yml

development: &defaults
  # Configure available database sessions. (required)
  sessions:
    # Defines the default session. (required)
    default: &default_session
      # Defines the name of the default database that Mongoid can connect to.
      # (required).
      database: delight_development
      # Provides the hosts the default session can connect to. Must be an array
      # of host:port pairs. (required)
      hosts:
        - localhost:27017
      options:
        # Change whether the session persists in safe mode by default.
        # (default: false)
        # safe: false

        # Change the default consistency model to :eventual or :strong.
        # :eventual will send reads to secondaries, :strong sends everything
        # to master. (default: :eventual)
        # consistency: :strong
  # Configure Mongoid specific options. (optional)
  options:
    # Configuration for whether or not to allow access to fields that do
    # not have a field definition on the model. (default: true)
    allow_dynamic_fields: false

    # Enable the identity map, needed for eager loading. (default: false)
    # identity_map_enabled: false

    # Includes the root model name in json serialization. (default: false)
    # include_root_in_json: false

    # Include the _type field in serializaion. (default: false)
    # include_type_for_serialization: false

    # Preload all models in development, needed when models use
    # inheritance. (default: false)
    preload_models: true

    # Protect id and type from mass assignment. (default: true)
    # protect_sensitive_fields: true

    # Raise an error when performing a #find and the document is not found.
    # (default: true)
    raise_not_found_error: false

    # Raise an error when defining a scope with the same name as an
    # existing method. (default: false)
    # scope_overwrite_exception: false

    # Skip the database version check, used when connecting to a db without
    # admin access. (default: false)
    # skip_version_check: false

    # User Active Support's time zone in conversions. (default: true)
    # use_activesupport_time_zone: true

    # Ensure all times are UTC in the app side. (default: false)
    # use_utc: false

test:
  <<: *defaults
  sessions:
    default:
      <<: *default_session
      database: delight_test

<% uri = URI.parse(ENV['MONGOHQ_URL']) %>
production:
  <<: *defaults
  sessions:
    default:
      <<: *default_session
      database: <%= uri.path.sub('/','') %>
      username: <%= uri.user %>
      password: <%= uri.password %>
      hosts:
        - <%= uri.host %>:<%= uri.port %>

I found I had trouble with this as I don't have a pseudo environment variable set up for MONGOHQ_URL on my local development machine, I therefore changed it slightly such that the uri is extracted like this

<% uri = URI.parse(ENV['MONGOHQ_URL'] || 'mongodb://host:user@pass:1000' ) %>

Thanks! This works.