New Details on BC Energy Companies that Broke Enviro Regulations

British Columbians are slowly learning more about which oil and gas companies broke environmental laws and regulations last year.

The BC Oil and Gas Commission, a provincial regulatory agency, says it noted more than 800 deficiencies during 4,223 inspections conducted in the provincial oil and gas industry in 2012.

Among those, 77 tickets were issued, mostly under the provincial Water Act for the non-reporting of water volumes and a very few under the B.C. Environment Management Act. That year the commission also sent 14 enforcement orders under the provincial Oil and Gas Activities Act, 22 warnings, 76 letters requiring action and three referrals to other agencies.

"It's not possible to find details of the violations, or which company is responsible, because the commission will not provide that information," the Vancouver Sun reported last February.

Through a Freedom of Information request, The Tyee obtained databases from the BC Oil and Gas Commission naming the companies that were sent the 14 enforcement orders in 2012 and those that were issued the 77 tickets. (They have been converted to PDFs for viewing.)

Warnings and action letters are less serious and are not classified as enforcement actions. They allow for and require correction of the identified deficiency. The Tyee has not yet learned which companies received such letters, as this query was not within the scope of the first request and the commission has not published their names, yet The Tyee will apply for these.

Hardy Friedrich, the commission's communications manager, said Paul Jeakins, BC Oil and Gas Commission CEO, was not available for an interview. But by email Friedrich emphasized that many of the 2012 orders were not necessarily related to hydraulic fracturing, or fracking, in the province:

"The process of hydraulic fracturing is just one stage of the life cycle of a well, lasting about two weeks, wherein hydraulic fracturing fluid (99.5 per cent water and sand) is injected into the well to allow gas to flow.

"Enforcement statistics are not searchable by the process of hydraulic fracturing. In the 2012 enforcement actions you were provided, it's discernible that the majority are related to pipelines or disposal wells, in which case they would not be to linked to a natural gas production well site. For instance, while a failure to produce/keep water records would not be directly related to the process of hydraulic fracturing, the water volume in question may be used for hydraulic fracturing."

In 2012, 86 per cent of the 476 wells drilled in northeastern BC used fracking, said the commission. The rules were created so that water used in the fracking process would never come into contact with the environment, including groundwater aquifers, during storage, fracturing or disposal. These assurances have been disputed by environmental groups.

The enforcement orders

The commission issued the 14 enforcement orders in 2012 for the reasons below. None of these resulted in charges, fines or convictions, and no court actions and convictions were taken against these companies by the commission that year.

Under the Oil and Gas Activities Act, Section 49(1)(a):

• Shut in of all infrastructure due to an outstanding security deposit (for Storm Cat Energy Corporation Canada Inc. of Kootenays)
• Ceasing operations of a disposal well until the commission orders operations can be restarted (for Orefyn Energy Advisors Corp. of Fort St. John)
• Remedy field inspection deficiencies (for Renalco Energy Inc. of Petitot)
• Compliance with pipeline permit (for Murphy Oil Company Ltd. of Dawson Creek)
• Ceasing operations of a pipeline until the commission orders operations can be restarted (for Murphy Oil)
• Ensuring flaring emissions do not exceed those contained in the flaring permit (for Encana Corp. of Dawson Creek)

Under the Oil and Gas Activities Act, Section 49(1)(b):

• Proper management of disposal well (two orders for Orefyn Energy Advisors Corp. of Fort St. John)
• Secure flow back ponds from waterfowl, i.e., erecting preventative measures to protect birds and wildlife from storage areas (for Progress Energy Canada Ltd. of Fort St. John)
• Management of sump waste (for Artek Exploration Ltd. of Fort St. John)
• Protection of livestock from hazards and contaminants (for Pavillion Energy Corp. of Peejay)
• Ceasing operations of a pipeline until the commission orders operations can be restarted (for Legacy Oil & Gas Inc. of Fort Nelson)
• Ceasing operations of a disposal well until the commission orders operations can be restarted (for Newalta Corporation and Tervita, both of Fort St. John)

Water Act tickets

The Tyee also obtained a database of companies for which the commission issued 77 tickets under the Water Act in 2012, mainly for not recording water volumes (each count is worth $230). The most ticketed were:

• Pengrowth Energy Corporation of Fort St. John -- 14 counts (for $3,220) under Section 22. Failure to keep/produce water records
• Penn West Petroleum Ltd. of Fort St. John -- 5 counts (for $1,150) under Section 93(2)(r). Breach term/condition of approval

Two companies respond

The Tyee tried to reach all the above named companies for comment on how and why these orders were issued. Only two responded, both from their Calgary head offices. ("Sorry I couldn't get back sooner," said one, "but today it's Calgary Stampede Parade Day!")

Alan Boras, director of National Public Relations, spoke on behalf of Progress Energy. He said that after a review in spring 2012 of a temporary storage tank that contained produced water at a Progress Energy Canada well site, the BC Oil and Gas Commission asked Progress to upgrade its wildlife deterrence measures.

"Progress promptly installed netting and flags to prevent birds from reaching the water in the tank, and fencing to prevent animals from contacting the water. That temporary storage tank has since been dismantled." Boras added that all Progress Energy produced water storage facilities now have such wildlife deterrence measures in place, which meet or exceed all regulatory guidelines.

Speaking for Pengrowth Energy, Wassem Khalil said the $3,220 fine was due to an administrative oversight by the company, for not submitting water usage reports in the required time. "None of the licenses where we had failed to submit the required reporting had any water usage to report, and I think that was part of the problem. Since then our internal process has been modified to prevent this happening in future."

Several anonymous convictions

Besides the actions noted above, there were also several court convictions in 2011/12 for more serious offences.

Convictions can bring fines as high as $1-million, as well as six months in jail. Despite repeated questioning, the commission still refuses to name the companies convicted (despite the fact these details are publicly available at courthouses). The fines were for:

• One violation under the Water Act for in-stream work -- $20,000 alternative justice measures donation to Northern Lights College Environmental Program.
• One violation under the Water Act for in-stream work -- $10,575 fine ($10K to habitat Conservation Trust Fund).
• Two violations under B.C. Environmental Management Act: Fail to report spill; Introduce business waste, sour gas release. Alternative justice measures donation of $250,000 to affected communities and Ducks Unlimited.

The most recent Compliance and Enforcement Activity Report on the commission's website dates from 2010/11. It reports that in more than 5,000 inspections, nearly 700 instances of "non-compliance" were noted, although only six were cases of "serious" or "high" level issues. The commission plans to publish on its website a new report of enforcement actions for the first quarter of 2013, which includes orders, tickets, administrative penalties and court convictions.