Last summer a bizarre dispute about dams, fracking, waste water disposal, public safety and earthquakes quietly played out before the BC Oil and Gas Appeal Tribunal.
The drama pitted BC Hydro and the province’s Oil and Gas Commission against a Vancouver-based energy company that wanted to pump toxic waste water down an injection well located near the aging Peace Canyon Dam near Hudson’s Hope.
The case illuminated an issue both industry and regulators have been loathe to discuss publicly.
The commission’s submissions contradicted its public position that “there is no risk to the safety of the public” from seismic activity caused by energy companies’ fracking and underground injection of waste water.
It also sheds light on the secretive nature of decision-making at BC Hydro, which has not raised concerns about fluid injection risks to dams until this year, despite research sending powerful warnings about the seismic hazards of both hydraulic fracturing and water disposal wells.
And it boldly answers a critical question energy and dam regulators don’t really want to discuss in public: can oil and gas activity in the form of fluid injection undermine the safety of dams?
The procedural drama, which involved a tsunami of documents and expert opinions on both sides, unfolded before an obscure quasi-judicial agency that hears complaints about decisions and rulings made by the industry-funded Oil and Gas Commission (OGC).
Normally, the tribunal deals with disputes between landowners and the commission.
But last summer it deliberated on whether industry-created earthquakes can destabilize and damage dams on the Peace River.
The issue comes with some startling recent geological history. In summer 2015, Progress Energy triggered a record 4.6-magnitude earthquake north of Fort St. John while fracking a shale gas well.
The earthquake could be felt almost 180 kilometres from the epicentre. At the Halfway River First Nation, the quake shook the house of Bernice Lilly and moved her couch.
Natural Resources Canada’s Earthquakes Canada called the temblor a “significant earthquake” because anything higher than a magnitude five usually causes physical damage to buildings and roads. Seismic experts later said that the industry-triggered shaking set a world record as the largest tremor ever attributed to the technology of hydraulic fracking.
It broke the previous record of a 4.4 magnitude quake triggered by fracking crews in Alberta just months earlier. That earthquake caused walls to shake and beds to move in the oil and gas town of Fox Creek just weeks after industry activity produced a magnitude 3.8 quake earlier in the month.
“I’d thought for sure that the industry would stop and take a smoke break to figure out what's going on,” said 57-year-old Barb Ryan, a Fox Creek resident. “But they didn’t. Many are in denial here.”
Over the last decade, the petroleum industry has repeatedly broken seismic records in the vast Western Canadian Sedimentary Basin and become a notorious geological force.
The primary culprit is fluid injection, including hydraulic fracturing and waste water disposal. Fracking blasts significant amounts of water, chemicals and additives into wells over short periods, while waste water disposal injects large amounts of water over long periods of time. Both technologies can change pressures along fault lines and cause earthquakes.
More than 50 years ago, the fracking industry drilled 800-metre vertical wells and used pumps with 600 horsepower to inject about 38,000 litres of diesel fuel to fracture hydrocarbon-bearing rock, allowing gas or oil deposits to flow through the cracks. Even on this small scale, engineers found they couldn’t always control the results, with fracking affecting groundwater or other oil and gas wells.
Today’s fracking is far more extreme. The industry now drills one to three kilometres into the earth, often in areas with existing faults and fractures.
Directional drilling lets the companies send the pipe horizontally for up to eight kilometres underground. Fracking units have 20,000 to 60,000 horsepower and can pump up to 160 million litres of water, chemicals and sand underground in short bursts at very high speed.
The process can be repeated 40 to 130 times on just one well. The energy industry enema gobbles up water from lakes, streams, reservoirs behind industry-made dams (many of which are unauthorized) and municipalities.
The technology also produces enormous volumes of waste water, which be highly salty and radioactive.
In 2015 researchers reported that the industry had turned a previously quiet seismic zone in northeastern B.C. into a highly active one. Researchers now suspect that some 12,000 fracking operations in Alberta and B.C. have triggered nearly 40 earthquakes greater than a magnitude of three in recent years.
In March, the issue was dumped in the lap of the Oil and Gas Appeal Tribunal.
The Oil and Gas Commission had abruptly ordered Vancouver-based Canadian Energy Partners to suspend activity at an injection well site three kilometres from the Peace Canyon Dam. The company had spent $3 million drilling, upgrading and operating the well and pumped about 16 million litres of waste water into a 1,600-metre-deep aquifer between January and March.
It appealed the commission’s ruling to the tribunal.
Disposing of waste water from shale formations and hydraulic fracking is a big business in western Canada, according to a report from the Canadian Water Network. In northeastern B.C., for example, every unconventional shale gas well subjected to fracking creates anywhere from 10 million to 25 million litres of waste water. There are more than 100 licensed disposal wells in B.C.
Every year the Canadian oil patch pumps about 16 billion litres of often toxic waste down 11,000 disposal wells. The report noted researchers don’t know much about the fate of the disposed water and that “the degrees to which the current British Columbia and Alberta disposal well regulations (including the permitting process) are sufficient to protect the environment over the long term remains unknown.”
BC Hydro had privately raised concerns about the risk that oil and gas activity near dams would cause earthquakes as early in 2009. In particular, BC Hydro engineers worried about the impact of coalbed methane fracking on local faults and dam safety.
But as investigative journalist Ben Parfitt later documented for the Canadian Centre for Policy Alternatives, the Crown corporation “said nothing publicly about its concerns, opting instead to negotiate behind the scenes with the provincial energy industry regulator, the BC Oil and Gas Commission.”
But early this year, when BC Hydro engineers discovered that Canadian Energy Partners had reactivated its waste water injection well near the Peace Canyon Dam, the Crown corporation launched an effort to shut down the well. The 37-year-old dam generates about six per cent of the province’s electricity.
BC Hydro informed the OGC that “There is a risk of an induced event sufficient to generate the peak ground accelerations necessary to cause damage to the Peace Canyon dam.” In other words, the engineers feared the well would cause an earthquake that would damage the dam.
The consequences could be severe for the dam’s integrity and pose a risk to the public, added BC Hydro.
A media release later warned that “Water disposal activity can cause significant ground motion that has the potential to damage our facilities when in close proximity.”
The OGC, which rarely admits that hydraulic fracturing poses any seismic risks to the public, agreed with BC Hydro’s assessment. It ordered Canadian Energy Partners to suspend operation ofthe well in March.
Shortly after, Canadian Energy Partners appealed the decision as unfair and unsupported by the facts.
The company argued that only two out of 104 active water disposal wells in B.C. had produced seismic events and that these wells were injecting water into the ground at pressures 75 to 175 times higher than its injection well.
The company also quoted past comments by Stephen Rigbey, BC Hydro director of dam safety, saying fracking wasn’t a safety problem for hydro dams on the Peace River. “We have seismographs at all of our dams, and we have never recorded any seismic event related to fracking,” said Rigbey in one interview.
The company appeal also noted that the “disposal of water volumes up to 100,000 cubic metres has not adversely affected the dam and most likely will not precipitate increased seismicity in the area around its water disposal well.”
If the OGC didn’t rescind its shutdown order, the company said that it would consider $7 million in compensation for “preventative safety expropriation.”
The company also thought that the commission should establish a buffer zone around BC Hydro facilities “that it will honour.”
In the middle of the summer the OGC hired Advisian, a global engineering consulting firm, to offer an independent assessment of seismic risks to the Peace Canyon Dam.
Advisian’s short report concluded that “we have not identified any compelling reason for induced seismicity to result in significant damage to or an outright failure of the Peace Canyon Dam.” But the report did recommended seismic monitoring within five kilometres of the dam.
To support its case, BC Hydro submitted affidavits from five of its top engineers, including Rigbey, along with a 15-page memo by Osmar Penner, a BC Hydro engineer who specializes in seismic analysis of concrete dams.
Rigby noted that researchers have now established that water disposal wells can cause larger seismic events than those caused by hydraulic fracturing, and the area of impact for a disposal well is greater than for a fracking well.
In response to CEP’s submissions citing past statements by Rigbey about the fracking and dams, Rigbey said his comments did not include his concerns about water disposal.
Penner’s memo dismissed the Advisian report and said it was riddled with mistakes and incorrect assumptions. Penner also said that the Advisian report used outdated data from 2010 to 2014 that did not reflect the actual hazard posed by industry-made quakes, such as a magnitude 5.7 earthquake in Oklahoma.
“An earthquake induced by operation of the subject disposal well could cause ground motion at PCN [Peace Canyon] dam of sufficient intensity to negatively affect the stability of the dam,” he concluded.
Penner recommended an “avoidance-dominated strategy to managing the induced seismic hazard.”
In response to the BC Hydro affidavits, Canadian Energy Partners hired Kyle Murray, a hydrogeologist with the Oklahoma Geological Survey, to review data on the energy industry and earthquakes.
Murray wrote that “the number of earthquakes of magnitude 3 or more occurring from January 1, 2012 to April 10, 2017 was 51 in B.C.’s Montney Trend, versus 2,228 in Oklahoma, and the water disposal rate in B.C.’s Montney Trend is 3.3 barrels per day per square km, versus 63.4 barrels per day per square km in Oklahoma.”
Murray called Penner’s citing of Oklahoma’s seismic hazards due to water injection wells as “scientifically irresponsible and indefensible.”
BC Hydro replied that there is no indication that Murray “has expertise in assessing risks to public structure or dam safety issues or had any knowledge of the Peace Canyon Dam.”
Benjamin M. Jones, CEO of Canadian Energy Partners, filed the company’s final argument on the issue.
What BC Hydro was trying to do to the company, charged Jones, was “the equivalent of going to provincial authorities and getting the building permit to an existing home below one of their deficient dams cancelled and telling them the home is now condemned and must be torn down without compensation.”
On Aug. 22, the Oil and Gas Tribunal ruled on the appeal.
The 27-page ruling upheld the OGC’s decision to suspend activity at the disposal well and settled the debate about the risk of earthquakes triggered by fracking and waste water injection.
The tribunal found that “there is a low likelihood that disposal activities at the well will cause an induced seismic event that could de-stabilize the Peace Canyon Dam, but the likelihood is still poorly understood.”
“However, it is clear that activities such as underground water disposal and hydraulic fracking do increase the likelihood of induced seismic events occurring,” it found.
The tribunal didn’t contact Gail Atkinson, one of Canada’s top seismic hazard experts. Atkinson has recommended a five-kilometre exclusion zone around dams and extensive monitoring within 25 kilometres to protect infrastructure from industry-triggered earthquakes.
But its decision did quote from her recent scientific papers. In particular, the tribunal highlighted two of Atkinson’s key findings.
One noted that “the increased rate of seismicity in some locations, and the potential for strong shaking from very shallow events, poses an increased hazard to critical infrastructure such as major dams.”
The other reported that “we cannot predict the likelihood or magnitude of such events from specific planned operations (in a deterministic sense) because we do not have enough data on the complex natural rock systems, nor do we have validated predictive models.”
In a press release, Canada Energy Partners noted that it had lost its appeal. But the Oil and Gas Commission is still deliberating whether to lift the suspension or make it permanent, the company said.
In the meantime, the shale gas industry remains a potent geological force in northeastern B.C. that has changed the seismic hazards for dams and other public infrastructure.
The proposed Site C dam sits in the middle of this ongoing controversy. Like the Peace River Dam, it is located in an area of intense fracking in the Montney shale formation. The Clark government repeatedly advocated for the dam as source of clean and cheap energy for the proposed LNG industry as well as shale gas companies.
A 2013 technical memo on seismic considerations at Site C dismissed fracking as a potential threat to public safety.
But since then a wave of industry-triggered earthquakes — and BC Hydro’s concerns about the waste water disposal well near the Peace Canyon Dam — suggest that fracking and dams are simply incompatible land uses.