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Shale gas subsidies threaten BC water supply: CCPA report

A new report on an industry billed as the province’s “new prosperity driver” warns that subsidies to shale gas companies now threaten provincial water supplies, the reduction of ocean acidifying emissions as well the province’s hydro electric budget.

The comprehensive 53 page report for the Canadian Centre of Policy Alternatives and the Climate Justice Project also warns that shale gas industry has created as many complex liabilities for the owners of the resource (British Columbians) as Alberta’s vast bitumen deposits in the oil sands.

“Shale gas is the natural gas equivalent of Alberta’s tar sands oil. Both require tremendous amounts of water and energy to produce,” says Ben Parfitt, the report’s author and a long-time resource analyst. “Why is B.C. subsidizing a polluting industry instead of developing a true green jobs plan?”

In fact the province’s shale gas industry could produce as many as 22 million tonnes of CO2 a year. In contrast current oil sands production, the nation’s largest growing source of ocean acidifying emissions, produces and vents 49 million tonnes a year.

The province’s shale gas industry currently employs less than one per cent of the population and generates volatile revenue for the provincial government that have fallen from nearly $4-billion a year to less than $500-million due to low natural gas prices.

In fact the government could now be subsidizing the industry with water, energy, roads and low royalties at a public cost much higher than earned public revenues from shale gas production.

Nevertheless corporate presentations claim that B.C.’s shale gas plays combined with U.S. developments have sparked a 100 year long “Natural Gas Renaissance” that could fuel Asian markets and create something called “World Leading Clean Energy Transportation Corridors” based on vehicles powered by methane.

However independent analysis by experts not employed by industry such as Dave Hughes and Arthur Berman suggest the resource has been greatly over-hyped and that North America has little more than a 25-year supply in the ground and all with big ticket environmental issues.

Water issues associated with the industry have poorly regulated or monitored, adds Parfitt.

“Shale gas industry records are being set for water usage and fracking at individual well pads in northeast B.C., with up to 600 Olympic swimming pools worth of water used at some sites. Thousands of such sites could be developed in the decades ahead, in regions of the province where little meaningful data on water resources exists.”

In addition British Columbia lacks comprehensive groundwater rules to govern groundwater withdrawals and conservation, an issue even highlighted by Auditor General John Doyle in 2010. (He concluded that the government was “not yet a good steward of this treasure.”)

The shale gas industry, like bitumen producers, is also a large energy user. In order to crack open deep shale formations the industry injects million of gallons of highly pressurized streams of water and sand, a process that requires vast amounts of power.

As a consequence BC Hydro recently calculated in a 2010 assessment that the oil and gas industry will require an eight-fold increase in power demand by the province’s oil and gas industry.

Given that the electrical power needs of the industry will range between 2,300 megawatts and 3,250 megawatts, the province may have to build more than two dams the size of the controversial proposal for Site C and all at taxpayer’s expense.

“Much more 'green' hydro power will be needed to produce much more 'brown,' GHG-intensive gas,” warns Parfitt.

The high carbon content of many shale gas fields in northern B.C. poses another critical problem. With a 12 per cent CO2 content Horn River shale gas could produce nine times the province’s total GHG emissions and kill the government’s climate change goals. (The resource is as dirty as coal.)

Even a 2010 report for the Business Council of British Columbia admitted that “British Columbia’s aggressive climate action objectives are a significant issue for the natural gas sector. Growing British Columbia’s natural gas sector while reducing emissions from the sector will be a major challenge for government and industry.”

The proposed solution, capturing and storing that carbon underground, is a costly and largely unproven science experiment. Earthquakes in the Fort Nelson region, triggered by fluid injection or hydraulic fracturing, could well compromise the security of such a complex system.

Regulation has largely been lax or completely reactive says Parfitt. It’s now “largely in the hands of B.C.’s Oil and gas Commission, whose primary mandate is to facilitate energy industry expansion, not to protect the environment.”

By any standard the OGC is a captured energy regulator. A member of the Canadian Association of Petroleum Producers set it up in 1998 and is now 100 percent funded by industry. Residents of the Peace River region commonly dismiss the agency as an industry “facilitator.”

In August the director of the OGC, Alex Ferguson, abruptly resigned to assume a senior position with Apache, a major shale gas operator in northern B.C. In most developed nations such a move would be regarded as illegal or unethical.

The report recommends an end to Soviet-like industry subsidies in the form of free water, low royalties and road building credits; better water monitoring and regulation; and a cap on annual natural gas production to avoid high grading the resource. It also proposes a moratorium on shale gas developments in undeveloped watersheds.

Independent MLAs Bob Simpson and Vicki Huntington have called for a wide-ranging public inquiry on the impact of shale gas development on water, energy, carbon emissions, government revenues, public policy First Nations and local landowners.

In fact British Columbia remains one of the few jurisdictions in North America that has not demanded rigorous accounting of the economic and environmental impact of the shale gas development and the practice of hydraulic fracturing.

[Full Disclosure: Andrew Nikiforuk, who has written about oil and gas issues for 20 years, has strongly supported the independent call for a full public inquiry on the province’s important shale gas resources. ]

Andrew Nikiforuk writes about energy issues for The Tyee and others.

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