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BC Auditor General wants better oil and gas oversight

The British Columbia agency that regulates the oil and gas industry needs to provide better information to the province about the liabilities posed by contaminated sites and to provide clearer information to the public about how those site risks are being managed, said a report by the province's auditor general.

“I had expected more progress because this is not our first audit dealing with contaminated sites in British Columbia,” John Doyle wrote in yesterday's report, Oil and Gas Site Contamination Risks: Improved Oversight Needed.

His office raised similar issues in a 2002-2003 report, he said. “The oil and gas industry in British Columbia has grown rapidly over the last several years and the number of sites that have not been restored has similarly grown.”

The audit, completed last March, took into account the potential contamination risks from “upstream” oil and gas activities, such as exploration, well completion and production. The report called on the Oil and Gas Commission to ensure that operator assets are sufficient to cover the potential cost to the province of dealing with site restoration, and to establish a formal program to look at the cumulative environmental effects of B.C.'s 20,400 oil and gas well sites.

Doyle also took issue with the OGC's claim of a 98 percent compliance rate by industry during inspections of operators’ exploration and development activities. The OGC currently allows operators a grace period in which to correct deficiencies found during inspections, and reports the compliance rate only after allowing time for changes to take place.

“The good news story that comes out of this process is that there's going to be a tighter view on how these risks are managed, as we follow up on our recommendations at the end of this year, and into next year,” said Doyle in an interview with The Tyee.

The report came out the day after the OGC and EnCana faced pointed questions from nearly 100 upset residents at a meeting in Pouce Coupe, the northeastern B.C. town closest to an EnCana wellhead that sprung a sour gas leak last November. The toxic plume forced the evacuation of 15 people from their homes after an emergency shut down valve failed to prevent the leak.

Ire at the OGC was centred around the fact the commission doesn't have the tools to discipline EnCana,which has yet to face any fines in relation to the Nov. 22 accident. The OGC also wasn't informed of the leak until two hours after it was detected.

“I'm a little heated about the notion that this didn't happen,” said OGC commissioner Alex Ferguson, who explained at the meeting that the OGC can shut down a company outright, but cannot issue binding orders to an operator.

EnCana, North America's largest natural gas producer, has taken full responsibility for the accident and has pledged to implement the directions handed down by the OGC in its Feb. 4 report. The producer has also shut-in 225 wells in B.C. as a precaution, and are assessing risks on 500 well sites, including 14 wells near where the accident occurred.

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