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Unauthorized Fracking Dam Problem Growing

At least 92 dams built without approval; safety risks feared. Part 1 of a series.

By Ben Parfitt 29 Mar 2018 |

Ben Parfitt is a resource policy analyst with the BC office of the Canadian Centre for Policy Alternatives. His recent research for the CCPA is published here.

The number of unlicensed and potentially dangerous dams built in recent years in northeast British Columbia is nearly double what has been reported, according to one of the province's top water officials.

At least 92 unauthorized dams have been built in the region where natural gas industry fracking operations consume more water than just about anywhere on Earth.

That's far more than the 51 dams previously identified in documents obtained through Freedom of Information (FOI) requests by the Canadian Centre for Policy Alternatives (CCPA).

With the number of unlicensed dams built to impound freshwater used in fracking operations approaching 100, more questions are being raised about how so many structures were built without provincial agencies halting their construction.

Ted White, director and comptroller of water rights in BC's Water Management Branch, confirmed the higher number, which includes an additional 41 dams to those originally documented by the CCPA, all built on private lands, most if not all, on rural farm lots in the provincial Agricultural Land Reserve .

White's confirmation came after his ministry - the Ministry of Forests, Lands, Natural Resource Operations and Rural Development - quietly posted a consultant's report on its website early in the new year.

The report, posted without an accompanying press release, called some of the unauthorized dams potential "time bombs" and said a top priority must be "to find the high consequence dams and make sure they are properly constructed and operated and maintained in an appropriate manner before any of them fail."

Jim Mattison, who wrote the report, was also once B.C.'s water comptroller.

Mattison based his conclusions on satellite imagery analyzed by ministry staff who looked at the vast network of artificial water bodies in the northeast where B.C.'s largest natural gas reserves are found. The analysis revealed that nearly 8,000 water bodies have been constructed in the region, more than half of which are relatively small holes or "dugouts" in the ground that capture and store water used by farmers or natural gas companies.

Additionally, the report identified 268 "large" or "very large" artificial water bodies that could be dam reservoirs. These water bodies, all at least a half hectare in size and many much larger, became a top priority for further study.

After Mattison submitted a first draft of his report in March 2017, dam safety officials with the ministry flew by helicopter to 80 suspected dams. Those inspections, White said, identified 41 previously undocumented dams that were built without the proper licences and authorizations.

In an emailed response to questions, White said "the 41 dams identified by the Ministry are in addition to the 50 or so that the OGC [Oil and Gas Commission] had identified previously."

In contrast to previous reports that identified dozens of unauthorized dams built on public lands, the recently identified 41 dams are all on private lands, including farmlands, White said, adding that "the Ministry and OGC have been working closely together to identify dams that require regulation."

The unprecedented scale of problematic dams built in the region coincided with a rapid expansion in the amount of water that fossil fuel companies use in their fracking operations, particularly in the Montney Basin, the more southern of the two largest natural gas plays in northeast B.C.

According to a 2016 analysis by consulting firm Foundry Spatial, fracking operations in the region now consume between 20 and 100 times more water than they did just over a decade ago.

Around the time Mattison submitted his draft report last March, the CCPA received a tip that many unauthorized dams had been built by fossil fuel companies without the required water licences or submitting engineering and construction plans to provincial dam safety officials.

The CCPA subsequently flew to Fort St. John, identified unlicensed dams in the field and published findings showing how dozens of such structures had been built in apparent violation of provincial acts and regulations including the Water Act, the Environmental Assessment Act and the provincial Dam Safety Regulation.

Unprecedented scale of problematic dams

FOI requests later confirmed that 51 such dams had been built. All but three were on Crown or public lands shared with First Nations. B.C.'s Oil and Gas Commission (OGC), which regulates fossil fuel companies, is now responsible for regulating those dams.

Nearly one third of the dams first identified as unauthorized were later found to have structural problems that posed serious enough risks to human health and safety and the environment that the companies were ordered to take corrective actions. Among the most significant design flaws were dams built without spillways, which are essential to divert water safely away from dam reservoirs in the event that they overfill. Without spillways, dams are at heightened risk of catastrophic failures.

The 41 dams on private land are the regulated by the ministry of forests, lands, natural resource operations and rural development not than the OGC's. White said dams on private lands are nevertheless subject to the same laws and regulations as those on public lands. Once dams exceed a certain height and/or impound enough water, they become regulated structures. The 41 identified dams on private lands and the 51 on Crown lands meet the criteria for regulated dams.

The story of one of the dams on private land sheds light on the challenges ahead for the ministry's dam safety and water officials. Old Faithful Water Inc. is an offshoot of Swamp Donkey Oilfield Services, a Dawson Creek-based company owned by Trent Lindberg. The company is in the business of selling water to natural gas industry clients.

Like the famed geyser that spews forth water with regularity in distant Yellowstone Park and that the company named itself after, Old Faithful's owners boast on the company's website that they can sell water to the fracking industry winter, spring, summer and fall. Each of the company's four "all season" facilities in the Peace River region straddle the B.C.-Alberta border and are near major hauling routes like the Alaska Highway.

Each facility has room for incoming trucks to hook up to pumps that can fill the average tanker with 32 cubic metres of water in just eight minutes. Then the trucks can rumble off to nearby gas drilling pads where the water is pumped underground during some of the most water-intense methane gas industry fracking operations on Earth.

Much of that information is on the Dawson Creek company's website, which features a somewhat bucolic photograph of grasses and flowers in front of what appears to be a small lake - except the lake's far banks look like they've been bulldozed into place.

"When it comes to easy water," Old Faithful's website gushes, "we have it for you." But the "easy water" story has an edgier, uneasy narrative.

At least some of what the company sells to its industry clients comes from a reservoir impounded by a large earthen dam on private land owned by Trent and Twyla Lindberg. (The Lindbergs could not be reached for comment.) According to a document filed with the Peace River Regional District, when the dam's reservoir is at "full capacity," the impounded water is six metres "above grade." In other words, a wall of water roughly as high as a two-storey house is at risk of spilling if the dam failed.

The company built the dam in violation of provincial regulations, including the requirement to obtain a water licence before constructing it. According to documents filed with the Peace River Regional District by a surveyor working for the company, the dam was built in mid-2013, long before the provincial government issued the water licence.

Old Faithful's dam and reservoir are also on farmland in B.C.'s Agricultural Land Reserve, land that can no longer produce crops because it is either covered by the dam and reservoir, the road leading to and from the facility or the large clearing constructed for the tanks and pumps used to fill the incoming trucks with their frack water. And the water used to fill the unlicensed dam's reservoir was pumped without permission from nearby Six Mile Creek. The surveyor's report incorrectly claims that the creek is a "non-fish-bearing" stream when in fact the creek is home to spawning and rearing fish.

Last April - four years after the unlicensed dam was built - the ministry retroactively issued Old Faithful's owners a water licence, allowing the dam to continue operation.

White said the government elected not to fine or charge the company for violating the rules.

"When instances of non-compliance are discovered related to a dam, the goal of the Ministry is to bring owners into compliance with the WSA and its regulations through application of the Dam Safety Compliance and Enforcement Policy. By applying for and being granted a water licence, the owner is demonstrating progress toward coming fully into compliance with the WSA and regulations," White said in an emailed response to questions. "There are currently no outstanding orders or fines related to this file."

The lack of fines for building a dam without the required pre-approvals does not surprise Arthur Hadland, a longtime area resident, farmer and former elected director for the Peace River Regional District.

"It's the Wild West up here," says Hadland, who while a regional district director between 2008 and 2014 represented about 7,000 rural residents living in the outlying region around Fort St. John.

"There's no sense of stewardship anymore," Hadland laments. "We've lost that."

Most people living in the region may have never heard of Old Faithful Water Inc.

Shell Canada, a subsidiary of the global fossil fuel behemoth Royal Dutch Shell, is another matter. The company's sign can be seen at Shell gas stations in just about every community in the province and the company also has subsurface rights to oil and gas in an area totalling more than 88,200 hectares in northeast B.C.

In 2016, Shell had drilling rights on an even greater area of land before selling rights on nearly 24,700 hectares to Tourmaline Oil Corporation as part of a $1.03-billion cash and stock transaction. The subsurface rights that Shell sold were in the Gundy area (generally north of Fort St. John) and included farmland where Shell, like Old Faithful, had a role in constructing two dams that violated key provincial laws.

Documents obtained by the CCPA through FOI requests filed with the Oil and Gas Commission indicate that commission personnel were aware of the two Shell dams that contravened provincial legislation.

In an October 2016 email with the subject line "Shell Canada - Gundy - dams," the issue of the two dams is addressed by Allan Chapman, the commission's then chief hydrologist, in a note to numerous forest, lands and natural resources ministry personnel.

Chapman notes that Shell had recently retroactively applied for water licences for two dams "and related stream diversions" on a rural property north of Fort St. John. He went on to write in the email that because Shell subsequently sold its leases, it was expected the company would withdraw its water licence applications and leave it to the new lease owner to come into compliance with all relevant provincial laws.

"There is a long saga with these dams and stream diversion. Everything was done 3-4 years ago without authorization," Chapman wrote.

FOI documents also reveal that both dams are located on a "district lot" within B.C.'s Agricultural Land Reserve.

A provincial land title search shows the property - District Lot 2615 - is in the Peace River District and owned by Joleen Meservy whose mailing address is listed in La Glace, Alberta. On her LinkedIn page Messervy describes herself as an owner and manager of the Bar 4A Cattle Company and as a "civil consultant" for Meservy Holdings Ltd. The word Shell and the corporation's distinct bright yellow seashell logo outlined in red is prominently displayed beside the Meservy Holdings name.

According to the land title document, Shell holds three registered leases on the Meservy property. The document does not indicate how much Meservy paid to purchase the property, or how much she may have received from Shell in a one-time payment or annual lease payments, or what arrangements may have been made to let the company to access the land and take water away.

Meservey could not be reached for comment.

One of the Shell dams is identified in the document as "Water Pit #3" and was built in the middle of a wetland on the property. B.C.'s Ministry of Environment notes that wetland losses have accelerated in many parts of the province, that they are "one of the most important life support systems on earth," providing critical habitat.

There is no information in the documents about whether the two dams were built to engineering standards.

In an emailed response to questions, Graham Currie, the OGC's director of public and corporate relations, said the it "intends to issue and enforce" orders at the dams and that the commission holds Shell responsible for the structures.

Like the dams built on public land, those on private land were all built for one purpose: to supply water to natural gas companies for use in their hydraulic fracturing or fracking operations.

While prospects appear dim for a much-hyped liquefied natural gas industry in B.C., natural gas drilling and fracking operations are intensifying in the Montney region, thanks to an abundance of naturally occurring liquids or "wet gases" that flow to the surface following fracking operations. The liquids include pentane, butane and condensates, prized commodities in the Alberta tar sands.

High-volume fracking - a process where immense volumes of water are pressure-pumped deep underground to create cracks or fractures in gas-bearing rock - is now essential to coax gas liquids and methane gas to the surface because the best, easiest to access gas resources are long gone.

A need for more and more water

Methane - a gas, not a liquid - was long the mainstay of B.C.'s oil and gas industry. But with gas prices remaining stubbornly low, profits in the Montney now derive almost entirely from naturally occurring "wet" gases that flow to the surface with the gas following fracking. The drive to coax as many wet gases from the ground as possible has triggered a sharp increase in the amount of water used at fracking operations.

Encana, one of the region's largest holders of wet gas deposits, predicts it will double its methane gas production in the Montney by 2019 while at the same time its gas liquids output will soar fivefold to reach 70,000 barrels per day.

That accelerating production means a need for more and more water.

In August 2015, a Progress Energy fracking operation in the Montney Basin consumed 160,000 cubic metres of water - the equivalent of 64 Olympic swimming pools - at just one well, according to award-winning investigative reporter and author Andrew Nikiforuk. The fracking operation triggered a 4.6 magnitude earthquake, a tremor far more powerful than the two 2.7 magnitude earthquakes that may have contributed to the recent failure of a tailings pond dam at an Australian gold mine in New South Wales.

The water pumped during the Progress Energy fracking operation was eight times more than the amount used in an average fracking procedure in the continental United States.

Just as the OGC must now rule retroactively on whether companies that built dozens of dams without permits on Crown lands should be allowed to continue to operate those facilities, it now falls to ministry personnel to decide the fate of at least 41 frack-water dams built on private land.

The dams in question are tiny compared to the region's nearby hydroelectric dams or to larger tailings pond dams operated by mining companies, however, the Mattison report is clear that plenty of damage could occur in the event one of the unlicensed fracking dams were to fail.

Some fracking dams dwarf other earthen structures that have given way in other parts of the province causing great damage, Mattison said.

"Testalinden Lake was a small reservoir in the Okanagan holding about 55,000 cubic metres of water, artificially created by a small dam less than 10 metres high. In mid June 2010, the dam failed. Only about 20,000 cubic metres of water escaped and ran down a gully for 8 kilometres, by which time it was a debris flow of about 200,000 cubic metres. It destroyed five houses, blocked Highway 97 for five days, covered a four hectare orchard and a vineyard with one and a half metres of mud, and resulted in nine million in damages. Fortunately, there was no loss of life," Mattison noted.

FOI documents reveal that some of the unauthorized fracking dams impound 150,000 cubic metres of water, roughly three times what the Testalinden dam held back.

The potential damage from the failure of even modest dams is one reason why the penalties for building dams without permits can be significant. If charged and convicted for violating the Water Sustainability Act or B.C.'s Dam Safety Regulation, fines can run to $200,000 and in the most extreme cases $1 million. The worst offences can also result in jail terms.

To date, however, neither the Oil and Gas Commission nor the ministry of forests, lands, natural resource operations and rural development have laid charges against any companies for violating provincial laws by building unlicensed fracking dams.

Instead, government has taken the softer approach of coaxing companies to "come into compliance" after the fact.

Time will tell whether or not that approach safeguards the public interest and proves a sufficient deterrent.

Part one of a series: On Monday, how the government imposed secrecy on the risks posed by industry's unregulated dams.  [Tyee]

Read more: Energy

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