Industry Carbon-Capture Steamroller Could Crush BC First Nations

Donald Gutstein
Saskatchewan’s Boundary Dam 3 carbon capture and storage facility is one of three major CCS projects in Canada, and has consistently failed to meet its targets. Photo from SaskPower.

Oct. 26, 2022

Corporations, the province and allies like the Fraser Institute are pushing ahead with a flawed alternative to greener energy.

Big Oil and supportive governments have stalled action on climate change for so long that, as the clock ticks toward catastrophe, one of the last hopes is the expensive and unproven technology of carbon capture and storage, or CCS.

But oil and gas companies are happy with the claimed solution because it means they can continue profiting from fossil fuels while they bury their emissions with financing provided largely by public subsidies.

And the B.C. government — and neoliberal industry allies like the Fraser Institute — are backing the plan.

The lands in B.C. have been the site of hundreds of logging, mining, agricultural and oil and gas projects. Add to that the massive impacts of the WAC Bennett dam in the 1960s, Peace Canyon dam in the 1980s and two projects currently under construction — Site C dam and the Coastal GasLink pipeline — and you have a severely disrupted traditional way of life for these First Nations, which have been connected to and dependent on the land for thousands of years.

The disruptions became so severe that the Blueberry River First Nations — a signatory to Treaty 8 — commenced an action in B.C. Supreme Court claiming the province “unjustifiably infringed its treaty rights by permitting the cumulative impacts of industrial development to meaningfully diminish Blueberry’s exercise of its treaty rights.”

The court sided with the First Nation in a landmark June 2021 decision, and ordered the province to consult and negotiate with the nation to establish timely, enforceable mechanisms to assess and manage the cumulative impacts of industrial development on Blueberry’s treaty rights.

The province did not appeal the decision and instead set out to work with Blueberry and other Treaty 8 First Nations to develop a framework to be used in authorizing future projects. The province also contributed $65 million to Blueberry for restoration work and for protecting the nation’s cultural way of life.

But a new threat looms for Blueberry and the other Treaty 8 First Nations thanks to the BC NDP government’s carbon emissions reduction strategy.

Carbon capture and storage may be the next assault on Treaty 8 lands that will have to be incorporated into cumulative impacts negotiations.

‘Clean’ energy and political connections

Treaty 8 traditional lands overlap the major oil and gas reserves of the Montney Formation. According to a 2013 report by federal, B.C. and Alberta energy regulators, “the Montney’s marketable unconventional gas resource is one of the largest in the world.”

“Unconventional” resources means that they can only be extracted by hydraulic fracturing, or fracking — drilling horizontally into the ground and directing a high-pressure mixture of water, sand and chemicals at a rock layer in order to blast it open and release the gas inside. Fossil fuel companies have been fracking in the Montney for years, with thousands of oil and gas wells and 20,000 kilometres of pipeline covering the landscape.

Now it will be the source of feedstock for the $40-billion Shell Canada-led LNG Canada liquefied natural gas project near Kitimat.

Much of the supply for this project will come from Shell’s 250,000-hectare Groundbirch gas fields west of Dawson Creek, with 500 producing wells and four gas plants. This is where the Coastal GasLink pipeline starts, near the Saulteau and West Moberly First Nations reserves on Moberly Lake.

Shell needed a plan to deal with its greenhouse gas emissions, and it came up with one that will be financed largely by taxpayers. In July 2021, the federal and provincial governments, and Shell, each kicked in $35 million to set up the BC Centre for Innovation and Clean Energy.

“Shifting from our reliance on fossil fuels to low-carbon energy requires an all-hands-on-deck approach,” he said.

But Horgan misspoke. The centre’s first project has little to do with low-carbon energy. It is to identify and assess suitable carbon storage locations in the Montney region. That means more facilities to capture carbon, more pipelines to carry carbon to storage places and more burial grounds. And it means more industrial developments in Treaty 8 territory.

There won’t be much time for the consultation and negotiation required by the B.C. Supreme Court decision. The province has to move quickly. Alberta and Saskatchewan already have carbon capture programs up and running. Fossil fuel companies in those provinces are lining up to take advantage of the federal government’s generous investment tax credit for capital expenses on CCS projects. In fact, just a few weeks prior to the clean energy centre announcement, Shell unveiled a proposal for a large-scale CCS project in Alberta. The tax credits may be dwindling by the time B.C. has its program in place.

It’s worth noting that B.C.’s Ministry of Energy, Mines and Low Carbon Innovation — not the Ministry of Environment and Climate Change Strategy, nor the Ministry of Land, Water and Resource Stewardship — is in charge of the CISE operation. Energy Minister Bruce Ralston said that “carbon capture and storage is one of the key pathways to reducing greenhouse gas emissions as we transition from fossil-based fuels to cleaner sources of energy.”

That’s cleaner sources — fracked gas is cleaner than coal — and not clean sources, which are renewables such as wind, solar and thermal that emit zero carbon.

Ralston doesn’t seem to worry about the negative impacts of methane gas fracking, such as a poisoned water supply or earthquakes. He has the research of the Fraser Institute — Canada’s top neoliberal think tank — to help him understand how beneficial this industry will be to the province. And he may have been pointed in that direction by his deputy minister Fazil Mihlar, who was once director of regulatory affairs (a.k.a. deregulation) at the Fraser Institute in the 1990s.

Soon after Christy Clark became B.C.’s premier, her government began promoting the vast potential of the Montney Formation. Almost in lockstep, the think tank began studying major Canadian unconventional natural gas formations and the contribution they could make to the Canadian economy, while downplaying negative effects. Montney was a particular focus.

Six months before a major study was produced, the institute recruited a new director, one Ronald Poelzer, a Calgary oil and gas executive who is a director and large shareholder of NuVista Energy, a fracking company with significant Montney operations.

Poelzer brought to eight the number of Fraser Institute directors from the Calgary oil patch. They covered all segments of the industry: exploration and development, venture capital and investment, pipeline transportation, and production and marketing.

The most prominent member of this contingent was Gwyn Morgan, former CEO of Encana (now Ovintiv), who built his company into a major presence in B.C. fracking operations and advised former premiers Gordon Campbell and Clark on how to exploit the resource.

When Morgan retired, he donated $1 million to the Fraser Institute.

Clark brought Mihlar into the B.C. government as assistant deputy minister in the Ministry of Natural Gas Development; Horgan promoted him to the energy portfolio. Today Mihlar is the top official leading the Horgan government’s energy efforts.

Since 2020, Mihlar and Ralston have been lobbied about the same number of times — Ralston 592 and Mihlar 610. But it’s Mihlar the bureaucrat and not Ralston the elected official that the fossil fuel industry turns to for action on oil, gas and pipeline developments.

Of Ralston’s 592 lobbying contacts, only 90 — or 13 per cent — were connected with oil, gas and pipeline officials or their consultant lobbyists. For Mihlar, it’s 328 of 610 contacts — 54 per cent — connected with fossil fuel representatives. Shell Canada met or communicated with Mihlar 80 times over the two-year period, and five times with Ralston. The Canadian Association of Petroleum Producers, Big Oil’s top lobby group, met 45 times with Mihlar and 18 times with Ralston.

There’s a further connection between the neoliberal think tank and BC Centre for Innovation and Clean Energy sponsor Shell Canada. Susannah Pierce was a Shell Canada senior executive. Then she was appointed director of corporate affairs and external relations with 40-per-cent Shell-owned LNG Canada. She joined the Fraser Institute board and secured a position on the executive committee. She left two years later to take on the position of president and country chair of Shell Canada.

Meanwhile, the BC Centre for Innovation and Clean Energy is moving quickly to find locations for burying carbon. It opened its doors in October 2021 with the appointment of a three-person board of directors. The government said that CICE “will be established as a member-based, non-profit corporation operating independently from government and private entities.”

Independent from government perhaps, but not from private entity Shell. Neither federal nor provincial governments are represented on this board, but Shell is.

Founding director Kim Code is vice-president of Shales Canada at Shell, which operates the Groundbirch wells, gas plants and pipelines. (Code was replaced by Andrea Brecka, who is vice-president of Shell Fleet Solutions, which provides services to large corporate vehicle fleets.) The other two directors have policy and technocratic backgrounds.

Shell gets a seat at the table while putting up just $2 million in the project’s first year. After four years, Shell will have contributed half its pledge. The B.C. government, in contrast, paid its full $35 million in year one, with no representation.

CICE’s executive director is an engineer “who concentrates on the development and commercialization of clean technology solutions.” The deputy executive director is from Shell.

As 40-per-cent owner of LNG Canada, Shell was already receiving significant financial benefits from the Horgan government: exempting LNG Canada (and other LNG projects) from provincial sales tax for the construction of the facility; reducing the carbon tax on the plant’s operation; cutting electricity rates; and scrapping income tax surcharges that had been levied by the Christy Clark government. B.C. will forego $6 billion in revenues — about 20 per cent of what it would have otherwise received from the project over 40 years — or about $150 million a year.

Treaty 8 lands are a tantalizing target

Working with Geoscience BC, the BC Centre for Innovation and Clean Energy is creating the Northeast BC Geological Carbon Capture and Storage Atlas to identify and assess “potentially suitable geological carbon storage targets in the Northeast Region.”

Questions abound: Where can industry bury its carbon? How much in total? And how much each year?

Capturing and burying carbon is a costly proposition. As of 2022, Canada has three major CCS facilities: Shell’s Quest Carbon Capture and Storage project near Edmonton; Alberta Carbon Trunk Line; and Saskatchewan’s Boundary Dam 3 carbon capture and storage facility. Together the three projects cost more than $4 billion to construct, with nearly half contributed by federal and provincial governments. They remove a total of 3.2 million tonnes of greenhouse gases a year, barely a rounding error considering Canada’s total annual emissions of about 730 million tonnes.

Recent research suggests they are not even achieving their design targets. The Boundary Dam 3 project promised a capture rate of 90 per cent. It never reached that target, so SaskPower lowered expectations to 65 per cent, which the facility still fails to consistently meet. The government utility has to pay penalties each year.

And research published in January by the international NGO Global Witness suggests Shell’s Quest facility emits more greenhouse gases than it captures. To reach this conclusion, Global Witness took into account the methane pollution resulting from extracting and transporting gas — pollution Shell does not report. The study found that over a five-year period, the plant captured 4.8 million tonnes of greenhouse gases and emitted 7.5 million tonnes, rendering it a net emitter. Shell rejected the report’s findings, but provided no evidence.

These facts don’t seem to matter. By 2030, the Justin Trudeau government plans for a carbon tax of $170 per tonne, an amount that will be applied in B.C. The cost of disposing of carbon through CCS can be less. World Oil magazine estimates that a carbon price of $145 can make CCS a profitable activity.

As the icing on the cake, the federal Liberals brought in a 50-per-cent investment tax credit for capital investment in CCS.

The financial attractiveness of a high carbon price combined with the tax credit will draw investment into CCS projects instead of into zero-emissions solutions such as wind, solar and thermal.

Treaty 8 lands may be a convenient target for CCS projects, despite the B.C. Supreme Court’s requirement for cumulative impacts assessments. There’s just too much money at stake.

[Top photo: Saskatchewan’s Boundary Dam 3 carbon capture and storage facility is one of three major CCS projects in Canada, and has consistently failed to meet its targets. Photo from SaskPower.]