Blog PostCarpe Diem - Two steps forward, three steps back in shale gas debate

Alberta Oil

Two steps forward, three steps back in shale gas debate
Progressive regulatory steps made amid widespread concern
BY JEFF LEWIS
September 18, 2011

Like the threat of natural gas and chemicals migrating into fresh-water aquifers from a poorly constructed well, concern over shale gas is slowly seeping north from the United States. The backlash against hydraulic fracturing is not altogether surprising. As Canada West Foundation president Roger Gibbins told Alberta Oil last year: “Fraccing is about the toughest word you can get. You can’t put nice bells and whistles on it.”
That hasn’t stopped some in the industry from trying. You’ll remember earlier this summer when an executive from Halliburton took a swig of a trial fracture fluid the company was testing. The stunt was designed to show how benign the chemical-laced fluids used in frac jobs really are. It is hardly surprising that such showmanship has done little to sway skeptics of shale gas drilling. After all, there are real problems with U.S. regulations.
Against this backdrop, the resource continues to gain traction. Year-over-year production in U.S. shale gas basins has surged 48 per cent, the Energy Information Administration reports. Canada has likewise seen its gas supply grow steadily “tighter” in the last decade. As much as 36 per cent of Canadian natural gas production came from so-called tight reservoirs last year, compared to 18 per cent in 2000.
The similarities end there. It’s always struck me as odd that descriptions of the oil and gas industry tend to lump all operators in together, these days more often than not under the heading of environmental laggards. This is strange, as we rarely describe other industries this way. We distinguish Ford from Chrysler, for example. Why not Exxon from BP, or Encana from Chesapeake? Canada from the U.S.? Each company has markedly different approaches to health, safety and the environment, just as both countries police the industry with varying degrees of success. It seems misleading to say all shale drillers are nefarious, although the tendency is understandable (See former Chevron vice-chairman Peter Robertson’s comments here).
I encountered the inclination during a recent half-hour spot on Sean Holman’s Public Eye Radio program in Victoria, B.C. Richard Garrett, an advocate with the Wyoming Outdoor Council, provided some thoughtful feedback on the state’s experience with public disclosure of chemicals used by drillers. It was an engaging interview, but it failed to address, in full, the differences both within and between states’ regulatory systems. Michael Binnion, president and chief executive of Questerre Energy Corp., whose firm has been stymied by fierce opposition in Quebec, has been a vocal critic of allegations made against the shale industry. He put it to me this way, using the open-air pits used by companies to store hazardous drilling byproducts as an example:

There’s a lot more inconsistency in regulation in America. Just as one example, I think it’s only in the last two years that New Mexico requires people to line their pits, so for some period of time they were holding their frac water in unlined pits. You can see that’s a faulty process.

He went on:

In Canada we’ve got a lot more consistency. With Saskatchewan, Alberta and B.C. right next to each other, for the most part there’s a lot of demand for regulations to be the same or similar, because you’ve got rig crews moving between provinces and you don’t want the rules to dramatically change from province to province.

We’ve seen some progressive regulatory steps here in the last month, both related to the prickly issue of disclosure. Perhaps sensing the issue could get away from them, the Canadian Association of Petroleum Producers issued a new series of “guiding principles” for hydraulic fracturing. One of the agreed-upon principles is disclosure of additives used in the process. The B.C. government has indicated it will follow suit. It will be interesting to watch reaction to these measures unfold.