An extensive study by the U.S. Environment Protection Agency (EPA) has concluded that highly toxic and cancer-causing fluids from shale gas drilling most likely contaminated shallow groundwater in Pavillion, Wyoming.

The findings, which strengthen the hands of those calling for a public inquiry on B.C.'s shale gas industry, contradict industry claims that hydraulic fracturing "is a proven technology used safely for more than 60 years in more than a million wells."

The controversial technology, now deployed for most oil and gas wells, blasts millions of gallons of water, sand particles and toxic chemicals into both deep and shallow sandstone formations in order to release small amounts of methane or oil over areas as great as 16 square kilometres.

The Liberal government of British Columbia touts shale gas as a "game changer" for the province and now heavily subsidizes the industry with low royalties, infrastructure giveaways, and large volumes of water from hydro dams, rivers, dugouts and aquifers in regions with poor data on baseline water quality.   

The highly volatile industry, which wants to export the gas to Asia, now accounts for nearly half of all resource revenue in the province and nearly four per cent of provincial revenue in 2010.

1,000 cases of water contamination reported

The EPA investigation began after many residents of the small rural town, including a former Vietnam War hero, Louis Meeks, complained about loss of well water, objectionable taste and foul smelling odors.

The water contamination issues appeared after EnCana, Canada's largest gas company, fracked scores of vertical wells in the region more than six years ago.

Across the United States landowners have reported nearly 1,000 cases of water contamination in the wake of shale gas fracking operations according to the independent press group, Pro Publica. Scores of contamination problems have also been reported in Alberta. 

After finding elevated levels of methane and diesel fuel in domestic Pavillion water wells in 2010, the EPA installed two deep groundwater monitoring wells to determine if the contamination was coming from deep or shallow sources.

The EPA's 121-page report found evidence of both. High levels of benzene, xylenes and gasoline and diesel compounds were detected in groundwater from shallow monitoring wells near industry pits for disposing of drilling and fracking fluids.

In the deep groundwater monitoring wells the EPA discovered a brew of toxic chemicals commonly used in hydraulic fracturing. The contaminants included benzene, toluene, ethyl-benzene, and xylenes (BTEX), diesel oil, which is used to make a liquid gel, heavy aromatic petroleum naptha, a solvent, and tri-ethylene glycol, another solvent.

"When considered together with other lines of evidence, the data indicates likely impact to ground water that can be explained by hydraulic fracturing," said the EPA report. Furthermore there didn't appear to be solid rock barriers "to stop upward vertical migration of aqueous constituents of hydraulic fracturing in the event of excursion from fractures."

The EPA also detected methane in both monitoring wells and local domestic water wells that came directly from the gas zone being fractured by EnCana.

The agency added that gas could have migrated up well holes into groundwater because steel piping to prevent such leaks (known as surface casings) "do not extend below the maximum depth of domestic wells in the area of investigation."

Industry has recently admitted that poor surface well casing, a chronic issue for the oil patch, could cause methane contamination of water wells in Pennsylvania and other locations.

A 2011 Duke University study found concentrations of methane in domestic water wells 17 times higher near shale gas drilling and hydraulic fracturing. It concluded that the practice polluted groundwater either via surface casing leaks or chaotic fractures that connected to water zones.

At Pavillion, Encana drilled its gas wells as deep as 372 metres or 1,220 feet. But local domestic water wells lie directly above the company's fracking zone at depths of 244 metres or 800 feet. Groundwater is the principal source of water for towns, ranchers and livestock in the region.

The EPA added that, "Citizens' complaints often serve as the first indication of subsurface contamination and cannot be dismissed without further detailed evaluation, particularly in the absence of routine ground water monitoring prior to and during gas production."

No link between drilling and contamination, says EnCana

The finding represents more bad news for EnCana, one of North America's premier gas barons. Even its stock tumbled by six per cent after the release of the EPA report.

Nearly a decade ago the firm pioneered hydraulic fracturing to blast open both deep sandstone formations and shallow coal beds in industrial like plays over large geographies sometimes known as "carpet bombing."

But the shale gas boom that EnCana helped to engineer ultimately delivered so much natural gas to market that prices crumbled. EnCana, which has amassed a land base almost as large as Nova Scotia (11 million acres), is now struggling to remain afloat by selling key assets such as a billion worth of gas processing plants in B.C. last week. It's also pushing hard for natural gas exports to Asia.  

The company even tried to sell its troubled Pavillion leases last month for $45-million, but Texas based Legacy Resources backed out the deal even though EnCana said it would retain all responsibility for the outcome of the EPA's study.

Encana has denied any link between drilling and the contamination in Wyoming.

"The EPA's draft report and current view is based on a possibility, not a conclusion built upon peer-reviewed science. The cause of the compounds in the water remains inconclusive," said a company release.

"We live and work in the communities where we operate and we care about the impacts of energy development on the environment. We work very hard to ensure our operations do not impact groundwater."

For several years now EnCana has been at the centre of shale gas and water contamination controversies in rural communities across North America.

Two years ago its aggressive drilling practices in the poisonous Montney shale gas play (it contains hydrogen sulfide) made it the target of a bombing campaign around Dawson Creek, B.C., between 2008 and 2010.

Half a dozen highly coordinated attacks on EnCana pipelines sparked a multi-million dollar RCMP investigation that ultimately treated many local residents like Taliban suspects. The case remains unresolved.

In 2004 the Colorado Oil and Gas Commission fined the company $378,000 for fracking a natural gas well that leaked methane into West Divide Creek in Garfield County.

And this year a former EnCana and oil patch consultant, Jessica Ernst, launched a $33-million lawsuit against the company for shallow gas fracturing near Rosebud, Alberta that resulted in extensive contamination of groundwater with chemicals and explosive amounts of methane.  

The statement of claim charges that EnCana, beginning in 2001, "negligently injected chemical fracturing fluids at high pressure into coal seams located at shallow depths below ground and near the underground  fresh drinking water supplies of rural Albertans."

The claims have not yet been proven in court.

BC's big bet on shale gas

Earlier this year Alberta's energy regulator, the Energy Resources and Conservation Board, admitted that hydraulic fracturing could contaminate "useable water aquifers" with toxic chemicals in shallow zones and "is a recognized risk that must be managed because the fracturing operation is nearer the base of groundwater."

British Columbia, Canada's second largest natural gas producer after Alberta, has banked its economic future on the resource. Critics say the province has done so without any serious examination of its depletion rates, economic risks or environmental liabilities.

As a consequence Independent MLAs and rural communities in the Peace River region have demanded a public inquiry on a "game changing" resource that most residents of the Lower Mainland know nothing about.

Given that shale gas plays cover extensive land bases, consume vast amounts of water and industrialize rural landscapes for long periods of time, "shale gas is more like oil sands development than it is like traditional... natural gas development," explained lawyer Chris Sanderson at a recent B.C. Summit on shale gas last month.

Several speakers also noted that the industry could loose its social license if critical issues such as groundwater contamination, greenhouse gas emissions, surface water demands and air pollution are not addressed in a rigorous manner.

The United States Geological Survey has also identified the resources impact on earthquakes, landscape changes and aquifer quality as critical issues. It also identifies the final destination of ten of millions of gallons of fracking fluids (most remains in the ground) as a scientific mystery.

British Columbia's Oil and Gas Commission has drawn criticism for responding slowly to public concerns about shale gas. The commission was set up by a former member of the Canadian Association of Petroleum Producers. Its last director, Alex Ferguson, left the commission to get a higher paying job with Oklahoma-based Apache, one of the biggest shale gas extractors in the province.