Critics blast BC Oil and Gas Commission performance

Regulator’s management of fracking dams, release of timely information among concerns - Jan. 23, 2018

Investment in northeastern B.C.’s gas fields has soared in the last several years, thanks to the abundance of gas and liquids in the Montney formation and the promise of a new liquefied natural gas industry developing.

Jeakins said the commission’s annual budget of $50 million and staff of 250 have kept pace with the industry’s growth.

“This is not just an issue related to staffing,” he said. “I think it’s much more the latter, which is a mindset, which to my way of thinking is troubling.”

Parfitt began raising concerns about unauthorized dams used in fracking in the spring of 2017. The B.C. Ministry of Environment and the commission have since taken action.

The dams are used to store water used in hydraulic fracturing. In some cases, they are large enough that they should have triggered an environmental review, Parfitt said.

“We now know that, of 48 structures that have been inspected by the oil and gas commission – after the fact – fully one-third of them have serious structural problems,” Parfitt said. “The fact that you have almost 50 dams that were built on Crown lands under the oil and gas commission’s watch, that were built in violation of key pieces of provincial legislation, is troubling.”

Unlike tailings ponds for mining, the dams used by the gas industry do not contain contaminated effluent. They contain fresh water, so the environmental concerns are not as high as they would be for other industrial storage dams.

But even fresh water can cause damage when a large dam breaches.

At the end of October, the B.C. Environmental Assessment Office ordered Progress Energy (NYSE:PNG) to limit the water behind two of its dams to no more than 10% of the storage capacity.

Jeakins said the commission has also ordered seven of the dams drained and five reduced in volume by 50%.

He said part of the problem relates to changing regulations. In 2016, the Water Act was replaced by the Water Sustainability Act, which has new regulations for water storage dams. Under the old act, Jeakins said, some of the storage dams would not have required the kind of regulatory approvals they require now under the new act.

“When the new Water Sustainability Act came in, half of the structures that we found should have been dealt with as dams. And the other half was an oversight, certainly, on our part and on the company’s part.”

Another recent criticism levelled against the commission is that it withheld reports and studies from the public and government. Parfitt said the commission released some reports only after he and others began digging and filing freedom of information requests.

For example, Parfitt said it was only after he filed a freedom of information request that the commission released a report that showed it had conducted dam inspections.

Similarly, it was only on November 20, 2017, after the Tyee made inquiries about a report on leaking gas wells that the report, which had been concluded in 2013, was publicly posted. That report, based on an inspection of 308 gas wells, found cases of “gas migration” – methane leaks.

“There are currently 47 reports of existing gas migration; however, based on inspection results, there may be 235 instances of visible gas migration and 900 instances of gas migration in the north zone,” the report stated.

It appears former natural gas minister Rich Coleman never saw that report. In 2014, the Council of Canadian Academies produced a report that identified methane from leaky wells as being “a long-recognized yet unresolved problem that continues to challenge engineers.”

Coleman said the report did not concern him.

“We’ve never had contamination from a drill,” he was quoted as saying in various media reports. “We’ve never had a drill stem leak or fail.”

Had Coleman seen the commission’s report, he would have known that there had been documented leaks, at least from existing wells, if not newer fracking operations.

“It’s not so much that the information was withheld for four years – it’s the context, the political context, in which that information was withheld,” Parfitt said. “That sure looks to me like the commission is withholding information from the public until, essentially, it is forced to release it.”

Jeakins described the report in question as a rough field study done by staff that the commission did not think was worth a public release.

“Basically, it was presentation material that was containing pretty rough data that would guide us in how to undertake a more thorough field review.”

He added that a more detailed report, based on better methane detection methods, is forthcoming and gave assurances it will be publicly released when it’s done.

The most recent criticism of the commission came not from the CCPA, but from the BC Supreme Court.

In mid-December, the court overturned the commission’s approval of a 37-kilometre pipeline. In doing so, the court found the commission had failed in its obligation to do proper consultation with the Fort Nelson First Nation, which had raised concerns about the pipeline’s contribution to cumulative impacts on a small herd of boreal caribou in the region.

The court has not yet published its written decision. But as Jeakins understands it, the court is saying the commission cannot rely on consultations or plans done by other ministries – Environment, for example – for specific concerns raised by First Nations, but must conduct its own consultations and reconciliation. In other words, the commission might have a lot more work to do in the future when it comes to dealing with First Nations.

“In this case, sure, we could have done a better job of linking them with the other government agencies,” Jeakins said. “Court saw that. But it’s not like we didn’t do any consultation. We did a lot of consultation.”

Asked if she has concerns about the commission, Michelle Mungall, minister of Energy, Mines and Petroleum Resources, said: “We expect the oil and gas commission to monitor all operations closely to ensure oil and gas activity is conducted responsibly and in accordance with provincial regulations. The new government is committed to working with the oil and gas commission to make sure they have the resources and direction to ensure oversight is strengthened and our expectations for the industry are upheld.”