For Arthur Hadland, the news that the BC Oil and Gas Commission has assumed responsibility for 401 orphan wells left by a bankrupt oil and gas company is both a blessing and a curse. 

The blessing is that Hadland’s 99-year-old father — one of three dozen Peace region landowners with inactive wells on their properties following the bankruptcy of Ranch Energy — will finally receive almost $25,000 in overdue rent for two wells on the family’s grain and seed farm in northeast B.C.

“He was very pleased,” said Hadland, who can’t visit his father in a Fort St. John senior’s home because of the COVID-19 pandemic, but speaks to him regularly on the phone. 

“His speech is somewhat disassembled because he had that stroke, but he’s fully intelligent. Those oil wells have just stuck in his craw his whole life. It’s always on his mind. So when he heard that, he said ‘very good, very good.’ I’m pleased that he was able to hear that towards the end of his life.”

But the curse is that Hadland and his father Austin, in a small but symbolic way as federal taxpayers, could wind up paying to decommission and restore some of the 401 orphan well sites and three facilities left by Calgary-based Ranch Energy, whose court-approved bankruptcy transaction closed on June 12.

That’s because $15 million in funding for B.C.’s orphan site reclamation fund comes from federal taxpayers, as part of a $1.7 billion economic stimulus package announced by the Trudeau government in April to clean up orphan and inactive oil and gas wells in Alberta, Saskatchewan and B.C. 

The orphan fund, managed by the BC Oil and Gas Commission, is responsible for decommissioning and rehabilitating well sites whose owners have gone bankrupt or can’t be found.

The addition of 401 Ranch orphan wells and three facilities, announced on June 17, more than doubles B.C.’s orphan well tally, bringing it to 770.

That compares to 220 orphan wells in March 2017 — an increase of 250 per cent.

Nine wells from Fort Nelson-based Norcan Energy were also designated as orphans this month and are included in the new total, according to the commission. 

Hadland said he’s happy the restoration work on his father’s wells and other Ranch wells will finally take place. “But it shouldn’t be on our backs as individual taxpayers,” he told The Narwhal. “It should be on the backs of industry. And it’s not.” 

“The process is absolutely wrong. There should have been a fund set aside on every well so that when it came to the end of its term it would be totally rehabilitated by the industry that benefited. But there was no planning like that done at all.” 

“Now we’re going to pay for the remediation, and that bothers me.”

‘A limbo situation’: B.C. landowners owed more than half a million dollars after oil and gas company goes bankrupt

Money to reimburse landowners like Austin Hadland for Ranch back rents — a sum The Narwhal earlier calculated to be in excess of $520,000 — will come from the orphan fund, but not from the federal $15 million, according to an email from the BC Oil and Gas Commission. 

The orphan fund compensates landowners for missed rental payments on designated orphan sites. 

The federal funding will be “strictly used for decommissioning and/or restoration activities,” the commission said. 

Out of $120 million in federal funding to clean up inactive wells in B.C., $100 million has been earmarked to decommission and restore about 2,000 dormant wells that could pose environmental hazards such as methane leaks or groundwater contamination. Dormant wells, which still have owners, have been inactive for at least five consecutive years and are unlikely to return to service.

Another $5 million is for a new “legacy” fund to address the historic impacts of oil and gas operations. 

The orphan site reclamation fund is fully funded by industry contributions, according to the oil and gas commission. 

But critics have said the budget falls considerably short of what is needed for the timely restoration of B.C.’s growing number of orphan oil and gas well sites, noting that taxpayers could ultimately be on the hook for clean-up costs. 

Restoring oil and gas wells is a multi-year process. First, wells need to be decommissioned, or sealed with cement. Full reclamation involves cleaning up contamination and restoring the land to pre-drilling conditions. 

Last year, B.C.’s former Auditor General Carol Bellringer reported that it costs an average of $370,000 to seal a well and restore a site.

At that price tag, the bill for decommissioning and reclamation Ranch’s 401 orphan well sites and three facilities would be almost $150 million. 

But the company left only a $15.6 million security, according to previous reporting by The Narwhal, meaning that other industry operators — or, critics predict, taxpayers — will have to make up any difference. 

Prior to the infusion of federal cash, the BC Oil and Gas Commission planned to clean up 15 orphan well sites this year with funds collected from industry. 

The federal funding for orphan wells will be used for the abandonment (proper closure and sealing) of 22 wells, the decommissioning of 65 equipment sites, remediation of 21 contaminated sites and reclamation of 36 sites, along with associated roads and other disturbances, the commission previously told The Narwhal.

As B.C. readies for a fracking boom to supply the LNG Canada export project — which will ship fracked gas from the northeast to Kitimat through the Coastal GasLink pipeline — the provincial government recently took steps to help insulate taxpayers and the environment from liabilities associated with dormant and orphan wells.

‘A massive liability’: B.C.’s orphan fracking wells set to double this year

But industry observers question if the new culture will be much different, noting long timelines for most newly announced dormant well clean ups, insufficient securities collected from oil and gas companies, and a growing number of bankruptcies as gas prices reach record lows. 

Asked about the financial implications of paying Peace region landowners more than $520,000 for missed rental payments on Ranch wells, the BC Oil and Gas Commission said it is currently in discussions with landowners to collect information.

Hadland said he received a call from the commission early this week.

“They said the Ranch issue had been resolved and that Dad’s two wells had been declared orphan wells and that they would be doing a full decommissioning.”

Hadland said he’s eager for the work to begin on the two well sites, known on the family farm as “the boneyard.” His father refused to allow access to the company that drilled the sites, so access was obtained through a court order, Hadland said.  

“There’s all kinds of iron in there and other junk … They’ve destroyed the soil.” 

When Ranch Energy went into receivership in 2018, the company left behind 700 wells, a sea of debt and a large leaking fracking wastewater pit 400 kilometres north of Fort St. John. 

More than 400 of Ranch’s oil and gas wells, along with the wastewater pit, were transferred to Erikson Energy in the court-approved transaction, the BC Oil and Gas Commission said.

The pond held 113,000 cubic metres of sludge and water, according to The Narwhal’s review of Ranch’s receivership documents. 

The oil and gas commission subsequently spent $470,000 from Ranch’s security deposit to remove and dispose of less than one-tenth of the wastewater in the fracking pit, suspected of contaminating soil and groundwater through a leak in the outer lining.

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Calling orphan and inactive oil and gas wells “an environmental stain on British Columbia,” Premier John Horgan announced on Wednesday a plan to clean-up more than 2,000 wells and create 1,200 jobs in northern B.C.  

Funding for B.C.’s plan will come from the federal government, which in April announced it will spend $1.7 billion to clean up orphan and inactive wells in Alberta, Saskatchewan and B.C. 

Alberta received the lion’s share of the funding — $1.2 billion — while $400 million was designated for Saskatchewan and $120 million for B.C. 

Horgan said the federal funding will help B.C. decommission, reclaim or restore oil and gas well sites, noting that B.C.’s Auditor General has repeatedly called on the oil and gas industry and the province “to clean up its act.”

“Today I’m happy to say, with a $120 million injection of funds from the federal government as part of their COVID-19 response — a welcome investment — we will be able to continue the clean-up of orphan wells,” the Premier told reporters. 

The bulk of B.C.’s funding — $100 million — is for cleaning up dormant well sites that could still have owners, while $15 million is earmarked to clean up orphan well sites whose owners have gone bankrupt or can’t be found. 

The remaining $5 million is tagged for a new program to address the legacy impacts of historical oil and gas activities.

“These are areas that continue to have environmental impacts, such as on wildlife habitat or traditional use by Indigenous peoples,” Bruce Ralston, B.C. Minister of Energy, Mines and Petroleum Resources, told reporters.

Ralston said Indigenous communities, local governments and landowners will be able to “nominate” dormant orphan and legacy sites for priority consideration for decommissioning, reclamation or restoration. 

“[It’s] good news for workers and communities in the northeast of our province, for the environment and for our economy during these challenging times,” Ralston said. 

Julia Levin, climate and energy program manager for Environmental Defence, said she is concerned that most of B.C.’s funding is earmarked for dormant sites that likely still have owners, rather than to clean up the province’s fast-growing orphan well sites. 

“That’s offloading costs from still-viable companies to taxpayers, in a clear example of privatizing profits and socializing costs … the dine and dash model,” Levin told The Narwhal. 

“Companies came, ate their meal and made a mess and taxpayers are stuck paying for it.” 

B.C. has about 25,000 oil and gas well sites. About 7,700 are dormant, meaning they have been inactive for five consecutive years and are unlikely to return to service. 

There are 348 orphan wells in B.C., but that number is poised to double this year once 300 to 400 wells from Ranch Energy, a Calgary-based company that went bankrupt, are added to the list. 

‘A massive liability’: B.C.’s orphan fracking wells set to double this year

“This kind of support for cleaning up huge environmental liabilities, while putting people to work in some of these communities that are really dependent on oil and gas and have lost employment, is really positive,” Levin said.

“But it has to be done in a way that still upholds the ‘polluter pays’ principle.” 

In April, citing the COVID-19 pandemic, the B.C. Oil and Gas Commission gave oil and gas companies a reprieve from making their annual contributions — worth more than $11 million this year — to a fund for cleaning up orphan wells. 

In an emailed response to questions, the commission said on Wednesday that companies will still be charged for the orphan liability levy, but invoicing will be deferred until September 1. 

The commission said the new funds will result in the abandonment (proper closure and sealing) of 22 wells, the decommissioning of 65 equipment sites, remediation of 21 contaminated sites and reclamation of 36 sites, along with associated roads and other disturbances. 

The number of orphan wells in B.C. is set to double this year, while oil and gas companies are excused from paying $11 million into a fund to clean them up until Sept. 1. Photo: Garth Lenz / The Narwhal

That’s in addition to previously planned work that will see the abandonment of 80 well sites, investigation of 40 sites, remediation of 20 sites and reclamation of 15 sites — and possibly up to 25, the commission said.

Restoring oil and gas wells is a multi-year process. First, wells need to be decommissioned, or sealed with cement. Full reclamation involves cleaning up contamination and restoring the land to pre-activity conditions.

Calling Canada’s orphan well problem “unacceptable,” B.C. Green Party MLA Sonia Furstenau said it’s important to address environmental liabilities, especially when they affect groundwater.

“An announcement that says money from the federal government is going towards cleaning up these sites is welcomed. However, it is something that should never happen again,” Furstenau, House Leader for the B.C. Green Party, said in an interview. 

“Going forward from this moment there has to be the political will and decision making that says no company can drill a new well unless they have the clean-up costs up front and ready to go. And that has to become the new reality.”

Chiefs from four First Nations in the Peace region — which is ground zero for oil and gas development in the province — welcomed the announcement.

B.C. left holding massive bill for hundreds of orphan gas wells as frack companies go belly-up

Fort Nelson First Nation Chief Sharleen Gale called it a win-win for the oil and gas sector and the environment. 

“It will bring much needed local employment for former oil and gas workers and clean up dormant, legacy and orphan wells,” Chief Gale said in a statement. 

“We look forward to continuing our collaboration with B.C. to reclaim old wells to the highest standards using innovative techniques that the FNFN [Fort Nelson First Nation] and the BCOGC [BC Oil and Gas Commission] have been piloting over the past two years.”

Saulteau First Nations Chief Ken Cameron said his nation welcomes new programs that support reclamation projects and job creation. 

“We are ready to share our traditional knowledge, technical expertise and project management skills,” Chief Cameron said. 

“We believe that by working together with government and industry, we can create long-term sustainable economies and restore landscapes to their natural state, after oil and gas activities are completed.”

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Citing the COVID-19 pandemic, the B.C. government has given oil and gas companies a reprieve from making their annual contributions — worth more than $11 million this year — to a fund for cleaning up orphan wells that could pose a threat to the environment. 

The B.C. Oil and Gas Commission posted the notice on its website on April 16 — the day before Prime Minister Justin Trudeau announced the federal government will shell out $1.7 billion to clean up orphan and inactive oil and gas wells in Alberta, Saskatchewan and B.C. 

The break for oil and gas companies came shortly after the Canadian Association of Petroleum Producers sent a series of letters to the federal government asking it to reduce environmental liabilities and “temporarily suspend, delay or reconsider certain regulatory actions that will add costs to industry at this time.”

The postponement of the orphan well liability levy was announced in an information bulletin listing the commission’s “initial” actions in response to the pandemic. It came just two days after yet another gas operator in B.C., Calgary-based Delphi Energy Corp., filed for creditor protection, leaving 15 wells that could be added to B.C.’s growing tally of orphans.

That tally is expected to double this year, to as many as 750 wells, according to the B.C. Oil and Gas Commission.

‘Makes no sense’ 

Dale Marshall, national program director for Environmental Defence, called the decision to postpone invoicing “disturbing.”

“To me it’s unfathomable at this point, when we have multibillion-dollar liabilities across the country with respect to oil and gas development, that a government in Canada would simply lift the need to have companies pay for the damage they produce.”

Marshall said the big question is how the liability levy — invoiced once a year, on April 1 — will be repaid. The B.C. Oil and Gas Commission has not said when, or if, companies will be invoiced this year. 

“Will the B.C. government, in the future, increase the amount of money that needs to be paid into that levy from oil and gas companies?” Marshall asked. 

“Or will it be the B.C. government, or inevitably the federal government, that’s going to pay for that? When it’s government paying … it’s taxpayers who pay.” 

Marshall said many oil and gas companies made huge profits in 2019 and continue to pay dividends to shareholders and generous compensation to their executives. 

“It is disturbing that the big oil lobby has been pushing for this and even worse that governments are granting these kinds of concessions, which essentially put the liability for oil and gas development on to citizens and not the oil and gas companies that are profiting from the development.” 

John Werring, a senior scientist and policy analyst with the David Suzuki Foundation who has documented fugitive emissions from wells, said the decision to give oil and gas companies a reprieve from the orphan well liability levy “makes no sense.” 

“The fund is underfunded as it is. The oil and gas commission can’t even keep up with the number of orphan oil and gas wells,” he said in an interview. 

The federal government funding was not intended to be a hand-out to industry but a stimulus to create jobs, while addressing the escalating problem of orphan wells and the lack of sufficient funds to clean them up at a reasonable pace, Werring said. 

“If that shortfall is made up by the federal government, then the rest of the country is paying for what the industry in B.C. is required to do by law.” 

Negotiations underway to determine how $120 million will be spent

The bulk of federal funding for clearing up orphan and inactive wells — $1 billion — went to Alberta, while $400 million was designated for Saskatchewan and $120 million for B.C. 

Before the federal announcement, the B.C. Oil and Gas Commission anticipated a $36-million deficit this year in its orphan site reclamation fund, a threefold increase from last year.  

The liability levy covers the cost of annual orphan well clean-ups, which are necessary to reduce the likelihood that oil, methane gas and saline water will move up through the well into freshwater aquifers, surface water, the ground or the atmosphere. The levy was set to increase to $15 million next year.

In an emailed response to questions from The Narwhal, the commission said invoicing for the orphan well liability levy will continue to be postponed while negotiations between the federal government and the B.C. Ministry of Energy, Mines and Petroleum Resources are underway to determine how the $120 million earmarked for B.C. will be spent. 

The commission said two new wells have been added to the orphan well tally of 346 it reported in February in its annual service plan. 

That compares with a total of 45 orphan wells four years ago. 

The number of orphan wells in B.C. is poised to double this year once 300 to 400 wells belonging to an insolvent company called Ranch Energy are added to the list — leaving the oil and gas commission to find an estimated $34 million for Ranch’s clean-up costs.

Three dozen landowners in the Peace region are also owed about half a million dollars in unpaid rent from Ranch’s bankruptcy.

Ranch, a Calgary-based company, went into receivership in 2018, leaving behind 700 wells, a sea of debt and a large leaking fracking pond 400 kilometres north of Fort St. John. 

Orphan wells are only designated once bankruptcy proceedings are complete. 

The oil and gas commission said it collected “full” security of $1.57 million from Delphi prior to the company’s financial woes — an amount the commission said will cover the estimated cost of decommissioning and restoring the company’s wells. Yet, based on an estimate from B.C.’s former auditor general, $1.57 million is likely not enough to cover the cost of clean-up if all 15 wells are designated orphans.

Restoring oil and gas wells is a multi-year process. First, wells need to be decommissioned, or sealed with cement. Full reclamation involves cleaning up contamination and restoring the land to pre-activity conditions. 

It costs an average $370,000 to seal a well and restore a site, according to a 2019 report by former B.C. auditor general Carol Bellringer. 

At that average cost, the clean-up bill for the 15 Delphi wells would be $5.5 million.

Only four orphan wells restored last year 

Prior to the federal government announcement, B.C. taxpayers had not paid for any orphan well clean-ups, which are proceeding at a glacial pace. 

The oil and gas commission’s stated goal is to clean up and restore all orphan wells in B.C. within 10 years of their designation as orphans. 

But last year, according to the commission’s service plan, only four orphan wells were restored as 10 new orphan wells were added to the list — seven from an insolvent company called Sun Oil and three from Calgary-based Success Energy, which failed last year. 

This year, the oil and gas commission plans to reclaim 15 wells. 

In its service plan, the commission also said it aims to restore 25 wells two years from now and 35 wells three years down the road.

The commission budgeted $10.5 million for reclamation this year, $12 million next year, and $10 million and $9 million in each of the following years, according to its service plan. 

In an emailed response to questions, the ministry said details about the use of federal funding to support the clean-up of orphan wells is “being finalized” and will be announced shortly.

Richard Wong, manager of operations with the Canadian Association of Petroleum Producers, said in an email that the association continues to support the “efficient and timely closure of orphaned and inactive sites across Western Canada.”  

Wong said B.C.’s share of the federal program to address orphan and inactive well sites will support jobs and accelerate environmental restoration. 

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Originally published by the Canadian Centre for Policy Alternatives.

More than half of nearly 50 dams that fossil fuel companies built in recent years without first obtaining the proper permits had serious structural problems that could have caused many of them to fail.

And now, B.C.’s Oil and Gas Commission (OGC), which appeared to be asleep at the switch in allowing the unlicensed dams to be built in the first place, is frantically trying to figure out what to do about them after the fact.

Information about the unprecedented, unregulated dam-building spree is contained in a raft of documents that the OGC released in response to Freedom of Information requests filed by the Canadian Centre for Policy Alternatives.

The documents obtained by the CCPA, along with other materials recently posted on the OGC’s website, reveal that 28 of at least 48 unlicensed dams on Crown (meaning public) lands had significant structural flaws or other problems belatedly identified by Commission staff.

All of the dams were built to trap freshwater used by energy companies drilling and fracking for gas in northeast B.C. In some fracking operations in the region, companies are pressure-pumping the equivalent of 64 Olympic-size swimming pools of water underground to break open gas-bearing rock formations, triggering earthquakes in the process.

ICYMI: A Dam Big Problem: Fracking Companies Build Dozens of Unauthorized Dams in B.C.’s Northeast

The OGC paved the way for the construction of the dams by granting companies numerous permits under the Land Act to use Crown or public lands to “store water.”

But in approving the applications, OGC personnel failed to ask basic, critical questions: How did companies intend to store the water? In tanks? In pits? Behind dams?

Since the OGC didn’t ask, the companies didn’t disclose that they planned to build dams — lots of them.

Nor did they disclose that in many cases the water sources for their dams would be creeks and other water bodies that the companies were not entitled to draw from because they hadn’t applied for, let alone received, water licences.

Since they hadn’t applied for those licences they weren’t legally entitled to build the dams.

Petronas Proposed to Dig Pit, Built Seven-Storey Dam Instead

In one notable case, documents obtained by the Canadian Centre for Policy Alternatives indicate that one of the companies, Progress Energy, also mischaracterized what it proposed to build.

In that case, Progress Energy, a subsidiary of the Malaysian state-owned corporation Petronas, filed documents with the OGC indicating where a water storage “pit” was to be excavated on land just to the west of the Alaska Highway and a short distance south of the Sikani river.

The document was submitted to the Blueberry River First Nation as part of the company and government’s “consultation” record with the First Nation.

Instead of an excavated pit or hole in the ground, what was built was an earthen dam 23 metres high, or roughly as tall as a seven-storey apartment building.

In approving the applications, BC regulatory personnel failed to ask basic, critical questions: How did companies intend to store the water? In tanks? In pits? Behind dams? https://t.co/fXMkNnhsfy

— DeSmog Canada (@DeSmogCanada) December 18, 2017

Regulator Retroactively Assessing, Approving and Denying Dam Permits

Having allowed one unauthorized dam after another to be built, the OGC confronts a daunting regulatory challenge of its own making. In some cases years after the fact, Commission personnel must retroactively approve, deny, or order modifications to dozens of dams that are already built on Crown lands.

The after-the-fact review process will include ruling on the environmental and health and safety risks posed by dams whose engineering specifications and construction plans were never vetted by any provincial agency before construction. It will also include retroactively reviewing, approving, or denying dozens of pending water licence applications.

How First Nations will be consulted in all of this remains unclear, as the consultations will also occur well after the fact.

Regulator Fieldwork Reveals Serious Problems at Dam Facilities

Less than two weeks after the CCPA published its initial research on the unauthorized dams last spring — and after numerous media outlets picked up on the story — OGC personnel stepped up efforts to understand just how structurally unsound some of the dams built on its watch might be.

That effort included sending personnel by helicopter just two weeks after the story broke to 47 suspected unlicensed dams. These inspections (which took place on May 16 and 17, 2017) occurred shortly after heavy rains had pummelled the region and fossil fuel companies had been warned by the OGC to protect their infrastructure against possible flood damage.

ICYMI: B.C. Regulator Finds Numerous Frack Water Dams Unsafe, At Risk of Failure

The fieldwork uncovered serious problems at seven facilities, or 15 per cent of all dams visited. Among the most significant problems were dams built without spillways to safely divert water away from the dam’s reservoirs when they became dangerously full.

Building a dam without a spillway can cause it to fail. It is the residential construction equivalent of building a house without a door. There’s no safe exit point.

Progress Energy Dam Danger Spotted By Chance

At one Progress Energy dam, the inspectors arrived to find a work crew using four pumps to partially drain a reservoir holding back nearly 50 Olympic swimming pools worth of water.

The pumped water was racing downhill away from the dam toward a steep bluff beside Blair Creek, about a 40-minute helicopter ride north and west of Charlie Lake. The pumped water was rapidly eroding the bluff. With no properly designed spillway for the dam’s water, the company’s jerry-rigged pumping operation was in danger of causing the bluff to destabilize and slide into the creek.

Only by chance did the inspectors arrive in time to spot the “erosion and slope stability” problem unfolding near the creek, the FOI documents reveal. The inspectors phoned Progress Energy’s Calgary offices and told the company to stop pumping the water.

According to the FOI documents, Progress Energy was responsible for building five of the seven dams that were issued orders following the May inspections. ConocoPhillips Canada Resources, a wholly owned subsidiary of ConocoPhillips, one of the largest oil and gas companies in the world, was responsible for the other two.

Progress was also identified in the inspection reports as having 14 additional dams with evident problems.

Dams Constructed Without Engineering Designs and Plans, Docs Reveal

Noted “deficiencies” at these other 14 dams included no armoured spillways, evident slumping of earthen dam walls, “erosion and cracking” issues, no water licences having been applied for before the dams were built, and two instances where the dams were so tall that they qualified as “major projects” under B.C.’s Environmental Assessment Act.

In an undated “summary of information” written some time after the May 2017 inspections numerous concerns were raised about Progress’s dams. The summary was penned by OGC hydrologist Allan Chapman, OGC compliance and enforcement officer Ken McLean, and the OGC’s recently-named and first-ever dam safety officer Justin Anderson.

“We are aware that Progress Energy submitted water licence applications for many dams on December 23, 2016,” the memo reads. In point of fact, Progress had actually applied for 13 water licences that day — an exceedingly rare event in and of itself, to say nothing of the fact that each and every application involved water rights at dams that the company had built without obtaining the licences first.

“Chapman is generally aware that the Progress Energy dams were constructed without engineering designs and plans, without clear adherence to and consistency with dam safety requirements, and that some have an array of deficiencies associated with fill and berm instability, and that some (possibly most) lack basic dam construction standards such as spillways or outlets designed for a specified inflow.”

Of the 47 dams inspected in mid May, three turned out to not be dams. Another three were definitely dams and had problems. But in those three cases, the companies had essentially deactivated the dams at some point after unspecified problems arose.

That brought the number of dams that the inspectors dealt with over the two days of fieldwork down to 41. The 41 dams were all located in the Montney region, which is in the more southern portion of B.C.’s vast northeast region.

Since those May inspections, further fieldwork was done. OGC personnel inspected a number more dams, including four built by Nexen Energy (a wholly owned subsidiary of the Chinese state-owned oil and gas giant CNOOC) in the Fort Nelson area further north from where the May inspections took place.

As a result of this second round of inspections, the OGC announced on November 14, 2017 that Nexen had been ordered to “remove” virtually all of the water impounded behind the four dams. These unlicensed dams, according to a short bulletin published on the OGC’s webpage, all showed troubling signs of deterioration, including “slumping, surface erosion and surface water channel erosion” problems.

Nexen was ordered to drain all “live water” from behind the problematic dams. Live water refers to the water impounded by a dam that is above ground level and therefore capable of escaping should a dam fail.

Two other companies were issued orders that day as well. Saguaro Resources Ltd. (a private, Calgary-based gas production company) was ordered to take action at two of its dams, and ConocoPhillips at one.

Between the May inspections and the subsequent inspections further to the north, it now appears that there are at least 48 unlicensed dams on Crown lands, with an as-yet undisclosed number more built on private property, primarily farmlands.

Of the 48 Crown land dams, a total of 16 or one third have been hit with retroactive orders. Fourteen of those orders were made by the OGC, following belated inspections of the dams. (The orders include the seven issued in May and the seven issued in November.)

Dams Skirted Environmental Assessments Under B.C. Laws

B.C.’s Environmental Assessment Office (EAO), has issued a further two orders. Those orders, as spelled out in documents first obtained by the CCPA, apply to the two largest dams built by Progress Energy — the previously mentioned 23-metre-high dam, known as the Lily dam, and another nearby dam known as the Town dam, which is more than 16 metres high.

Because both dams exceeded 15 metres in height, they qualified as “major projects” under B.C.’s Environmental Assessment Act, and therefore should have undergone provincial environmental assessments before they were built.

ICYMI: Fracking Company Ordered to Drain Two Unauthorized Dams in B.C.’s Northeast

Because the company never referred its plans to the Environmental Assessment Office before commencing construction, and because the Oil and Gas Commission failed to stop the company from building the dams, the EAO launched an investigation.

On October 31, the EAO ordered the company to drain virtually all of the water from behind these two very large dams and to keep water levels at no more than 10 per cent of their holding capacity, adding that the company was “not compliant” with Section 8.1 of the Environmental Assessment Act.

In the meantime, the EAO continues to consider an extraordinary application by Progress Energy to retroactively “exempt” the two dams from having to undergo environmental assessments at all.

The CCPA and a number of other organizations filed documents with the EAO recommending that the company’s request be denied. The EAO is expected to make its decision early in 2018.

Under the Environmental Assessment Act, companies found to have violated the act can be subject to fines of up to $100,000 for a first offence and subsequent offences can triggers fines of up to $200,000.

Unpermitted Dams ‘Disconcerting’: Premier Horgan

Commenting recently on the proliferation of unlicensed dams during an appearance on the Shaw TV political affairs show, Voice of BC, Premier John Horgan said that “the revelation” that nearly 50 dams were built on the OGC’s watch in violation of existing regulations was “disconcerting.”

He added that both Environment Minister George Heyman and Energy Minister Michelle Mungall were aware of the issue and were “working together to try and find ways to make sure that enforcement and compliance can be done in a way that gives the public confidence.”

ICYMI: Coalition Calls for Public Inquiry Into B.C. Fracking

“At the end of the day, our systems fail if the public has no confidence in them,” Horgan said. “We’re going to do what we can to make sure that the existing Oil and Gas Commission regulatory regime is either being enforced, and if it’s not, we’ll bring in others to do so.”

Horgan’s comments also came after numerous non-governmental organizations, environmental groups, physician associations and First Nations called on the provincial government to launch a public inquiry into fracking, including how effectively the OGC regulates its fossil fuel company clients.

Image: The largest unauthorized dam built by Progress Energy. Photo: Ben Parfitt

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

A First Nation in northeastern B.C. is challenging the province’s approval of a proposed gas pipeline that would cut across critical habitat of threatened boreal woodland caribou.

Fort Nelson First Nation (FNFN) has filed for a judicial review of B.C. Oil and Gas Commission’s approval last month of a pipeline, proposed by Rockyview Resources Inc. and Shanghai Energy Corp., that would run through FNFN territory, resulting in 78 hectares of disturbance to caribou habitat.

“The 39-kilometre proposed gas pipeline cuts right through core caribou habitat in our territory, in an area with the most concentrated and highest-known use by boreal caribou for forage, calving, rearing and protection from predators,” said Lana Lowe, FNFN land and resources director.

“This area has been important harvesting grounds for our people, but, in particular, the area contains very important habitat for caribou, which our people have relied on for many generations to feed our families,” she said.

#FortNelson First Nation Files Legal Challenge to Gas Pipeline Claiming It Will Threaten #Caribou Habitat https://t.co/4WqPg5ICl3 #bcpoli pic.twitter.com/oQyqV7AyHw

— DeSmog Canada (@DeSmogCanada) July 18, 2017

The legal challenge is necessary because the Oil and Gas Commission did not adequately consult the First Nation or consider their concerns about the threatened caribou population, according to a news release from the band.

A plan, put together by FNFN, to support the recovery of caribou in the area and a suggested consultation process was ignored by the Oil and Gas Commission, says the news release.

“The BCOGC refused the invitation to work out a specific consultation process and deemed it not practical to consider the FNFN Caribou Report. This resulted in the BCOGC using inadequate and incomplete data to determine that the proposed pipeline poses ‘no material adverse effect’ to the caribou populations in the area,” it says.

“The BCOGC demonstrated an inadequate, unlawful and wholly unacceptable approach to consultation with FNFN regarding how this pipeline will impact boreal caribou in our territory,” said acting Chief Sharleen Gale.

The First Nation is questioning why the project would be approved only months after former premier Christy Clark acknowledged that some woodland caribou herds are in danger of disappearing and announced $27-million for a revamped caribou recovery program.

About 728 boreal caribou remain in B.C. with five range areas, most in the north-east of the province. Boreal caribou are listed as threatened under the federal Species At Risk Act and are red-listed provincially, meaning their status is threatened to endangered.

The pipeline would be in the Maxhamish boreal caribou range and that population has decreased to from 306 to 104 animals since 2004 and calf survival rates are consistently below the level required to avoid further population declines, according to FNFN numbers.

“There is no evidence to suggest that the herd is stable, yet the province and Rockyview Resources insist that it is,” Gale said.

First Nations are working to restore populations and,once populations are stabilized, hope to resume treaty rights to harvest caribou, says the news release.

More than 80 per cent of boreal caribou habitat in B.C. is within FNFN territory, Gale said.

“We clearly have an interest in saving and helping restore caribou populations and, for this reason, our community has chosen not to hunt caribou until the population stabilizes. We expect the same stewardship ethic from companies who wish to access our territory for economic purposes,” she said.

Economic development is encouraged in FNFN territory provided it creates long-term benefits for members and respects land, water and treaty rights, Gale said.

According to an FNFN background paper, there have been 77 referrals for projects within the territory over the last year and the Rockyview proposal is the only one the community rejected.

“FNFN wants to support projects in our territory. We also need proponents to engage with us early in the planning process, commit to building long-term relationships and operate in a way that supports FNFN development objectives,” Gale said.

Recovery plans for boreal caribou herds has sparked controversy for several years as the province tracks and shoots wolves from helicopters in an effort to stop predation, while conservation groups say that the major culprit is habitat destruction as resource companies open up the area.

Earlier this year, the Canadian Parks and Wilderness Society launched a lawsuit against federal Environment Minister Catherine McKenna, saying she has not acted to protect the habitat of boreal woodland caribou even though critical habitat was identified in 2012.

Image: Woodland caribou in Jasper National Park. Photo: Parks Canada

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Since January 1, 2017 there have been more than 50 accidental releases from pipelines and oil and gas facilities in Alberta. These spills and leaks, ranging from large to small, from hazardous to non-hazardous, happen almost every single day.

Don’t believe it? You can check for yourself via the Alberta Energy Regulator’s incident reporting dashboard where spills are documented and information about volume, location and response is made available to the public.

In B.C., however, the provincial regulator’s pipeline incident reporting page has been offline for eight months (yes, you read that correctly).

DeSmog Canada has been reporting on the missing map since October and the issue was recently taken up by the Globe and Mail.

“In a province where the public debate over increased oil pipeline capacity has consumed so much energy, the lack of transparency about the province’s management of its existing system is surprising,” wrote Justine Hunter as politicians returned for the spring sitting at the legislature.

George Heyman, environment critic for the B.C. NDP, said getting the map back online should be a priority for the province.

“It’s shocking that the portal and the online incident report would be offline for such a significant amount of time,” Heyman told DeSmog Canada.

“This is an important mechanism for British Columbians to know if a spill has happened and to seek further information on how it might impact community health, whether the release be sour gas or crude oil.”

The B.C. Oil and Gas Commission describes its pipeline incident map as providing “timely, factual information on all pipeline incidents” to ensure “companies respond effectively and that the interests of British Columbians are protected through a 24/7, 365 day per year incident response program.”

The commission regulates more than 43,000 kilometres of pipeline in the province, 6,100 kilometres of which carry crude oil or natural gas.

In a summary report for the year 2015, the commission documented 45 pipeline incidents, indicating a slight increase in crude oil pipeline spills in recent years.

While there were three crude oil pipeline spills in 2011, there were six in 2012, four in 2013, seven in 2014 and seven in 2015. Spill volumes are not released in the B.C. Oil and Gas Commission’s annual summary reports.

A spokesperson for the B.C. Ministry of Natural Gas Development said the map is offline while a new system is put in place that includes “substantial improvements to the incident map.”

Companies are legally required to report spills to the B.C. Oil and Gas Commission and pipeline performance reports are released annually, the spokesperson added.

Heyman said that’s not enough to keep the public informed.

“We know there were 45 incidents in 2015, so over this eight-month period there may have been 30 pipeline incidents in B.C. that haven’t been reported to the public,” Heyman said.

Screenshot of B.C.'s pipeline incident map webpage, October 2016.

Screenshot of B.C.'s pipeline incident map webpage, March 2017.

The problems don’t end with pipelines under provincial jurisdiction.

A 2013 CBC investigation found B.C. was home to the highest number of pipeline safety incidents for federally regulated pipelines managed by the National Energy Board between 2000 and 2013.

That investigation also found the rate of pipeline incidents nationally had doubled since the early 2000s.

“Not having this information available is disappointing especially in the context of major new pipelines proposed in B.C.,” Sophie Harrison, a campaign co-ordinator at B.C. democracy group Dogwood, told DeSmog Canada.

She said at the time the province approved the federally regulated Kinder Morgan Trans Mountain pipeline the B.C. government was insistent robust land-based spill response was in place.

“It’s hard to simply trust there’s world-leading pipeline spill response in B.C. if there isn’t real time data available to people in the province.”

“Not even having this basic level of accountability I think it speaks to the issue of public trust around the safety of pipelines in B.C.,” she said. “What we’re hearing from the B.C. government is, ‘oh just trust us.’ ”

Dermod Travis, executive director of IntegrityBC, said the current government has a problem with transparency.

“It speaks to the duplicity of a government that once promised to be the most open and transparent in Canada and has since proven to be the most secretive. It also speaks to a government that picks and chooses which laws apply to it, at its political convenience,” Travis told DeSmog Canada.

In #Alberta there’s an accidental oil “release” [read: spill] nearly everyday. In BC? We’re left in the dark https://t.co/UDOflPoSxM #bcpoli pic.twitter.com/UclwXqHx7z

— DeSmog Canada (@DeSmogCanada) March 3, 2017

Travis pointed to the 2013 findings of Information and Privacy Commissioner Elizabeth Denham that B.C. failed to proactively disclose information regarding a risk of harm to the environment or public health.  The commissioner found the Ministry of Forests, Lands and Natural Resource Operations withheld inspection reports from the public that showed the 80-year-old Testalinden Dam was near the end of its life and “a hazard to people and property downstream."

“This isn't a one-off failure that could be blamed on technology,” Travis said. “This is a consistent — and seemingly intentional — failure.”

In some instances government disclosure is the public’s only means of information about pipeline spills. 

In October 2016, the public learned of a large crude oil spill from a remote Alberta pipeline owned by Trilogy Energy Corp. only after the company reported the incident to the provincial regulator, which then posted (scant) information to its incident dashboard.

The company only learned of the spill after a routine helicopter inspection of the line.

B.C.’s existing pipeline infrastructure is aging, a problem some say will lead to increased incidents.

Heyman said all jurisdictions with aging pipeline infrastructure are vulnerable.

“That’s why online, real time reporting to the public is very important for releasing public information. We need to ensure the public knows what is happening so it can hold government and companies accountable,” Heyman said.

Phil Rygg, spokesperson for the B.C. Oil and Gas Commission, told DeSmog Canada “the map is expected to be available online by March 31.” The commission previously stated the map would be back online at the end of 2016. 

Image: Oil spill in Dalian, China. Photo: Peter Ma via Flickr cc 2.0

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The B.C. Oil and Gas Commission describes its vision as providing “oil and gas regulatory excellence for British Columbia’s changing energy future” and lists its values as “respectful, accountable, effective, efficient, responsive and transparent.”

Carrying out those lofty goals is difficult, however, when the commission’s main public accountability portal for its more than 43,000 kilometres of pipelines — an online ‘incident map’ — has been offline for more than a month.

DeSmog Canada notified the Oil and Gas Commission that the incident map had been down for over one week via e-mail on September 7. A message posted online in lieu of the interactive map — which is meant to provide up-to-date and historical data related to pipeline incidents including accidents, ruptures and releases — said the site was down for maintenance.

On September 20, a representative from the commission notified DeSmog Canada the site was undergoing “AMS [association management software] implementation” and could not say “at this time when it will be back online.” A follow up email from the commission noted the pipeline incident map could be down for "a few months" and that requests for specific information can be made through the website's contact portal.

According to the commission the purpose of the incident map is to provide “timely, factual information on all pipeline incidents” as a part of ensuring “companies respond effectively and that the interests of British Columbians are protected through a 24/7, 365 day per year incident response program.”

The pipeline incident report is one of the few ways members of the public, including researchers and journalists, can learn of spills, pipeline ruptures and other major accidents.

For residents living near a pipeline spill or accident, the pipeline incident report is often their only way of accessing up-to-date information on spill volume, environmental impact, human health risks and cleanup measures.

BC's Pipeline Incident Map Quietly Went Offline Over a Month Ago https://t.co/mtHvOIInNA #bcpoli #oilspills #nothingtoseehere @carollinnitt

— DeSmog Canada (@DeSmogCanada) October 13, 2016

According to an Oil and Gas Commission report released this summer, there were 45 pipeline incidents in 2015, an increase from the previous three years. That works out to approximately one incident for every 1,000 kilometres of pipeline in the province.

Two of those incidents involved sour gas, an extremely deadly toxin, and another 17 involved either natural gas or crude oil.

B.C. received attention in 2013 for having the highest rate of pipeline incidents across Canada since 2000: 279 out of 1,047 incidents nationwide.

In Alberta, the provincial energy regulator regularly releases information on not just pipeline incidents, but any reported incidents involving oil and gas wells and related facilities.

Since the beginning of September, the Alberta regulator’s incident reporting page lists 20 pipeline incidents, two of which required emergency response.

If the same is happening in B.C., the public would currently have no way of knowing.

Image: Emergency responders inspect oil spilled from a ruptured Enbridge pipeline in Minnesota in 2002. Photo: MPCA Photos via Flickr CC BY-NC 2.0

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Two B.C. environmental groups are taking the B.C. Oil and Gas Commission to court next week over practices they argue unlawfully permit oil and gas companies to use water.

Sierra Club B.C. and Western Canada Wilderness Committee — in documents filed with the Supreme Court of B.C. — argue the Oil and Gas Commission has been engaged in a “systemic” practice of issuing back-to-back “short-term” water approvals and call for permits issued to Encana to be quashed.

The case will be heard in the Supreme Court of B.C. in Vancouver on March 17 and 18.

“Under the Water Act, if you want long-term access to water, you need a water licence,” says Caitlyn Vernon, campaigns director with Sierra Club B.C. “What the Oil and Gas Commission is doing is granting consecutive short-term approvals to oil and gas companies.”

The case centres around water approvals under Section 8 of B.C.’s Water Act, which governs short-term use and diversion of water for up to 24 months.

By requesting and analyzing Section 8 water approvals going back seven years, Sierra Club B.C. and the Wilderness Committee — represented by lawyers from Ecojustice — determined the approvals were being given to the same companies for consecutive terms.

“Multiple approvals are routinely granted over multiple years to the same company, for the same purposes, at the same locations and thereby violate s. 8 of the Water Act,” reads the groups’ petition to the court.

The groups argue this is illegal — that if a company requires water for more than one term or more than 24 months, they should have to obtain a water licence, not a short-term approval.

This is an important distinction, says Karen Campbell, the Ecojustice lawyer arguing the case. When a company applies for a water licence, its application has to be posted publicly and there’s opportunity for a public hearing. With a Section 8 approval, the public is not notified and there’s no chance for public input, she says.

83% of “short-term” approvals granted for more than one term

Sierra Club paid more than $1,000 to obtain copies of 1,352 Section 8 approvals — 83 per cent of which grant the right to use or divert water for more than one term to the same company, for the same purposes, from the same location.

Encana, along with other companies working in B.C.’s northeast gas fields, requires vast amounts of water to conduct hydraulic fracturing, or fracking — a process that involves injecting a mixture of water, sand and chemicals underground at pressure to fracture the rock and release the natural gas trapped inside. Afterward, some of the water is re-used, but much of it is contaminated and stored in tailings ponds or injected into deep wells underground, where it is removed from the hydrological cycle.

The Encana water approvals that could be revoked are in the Montney shale basin in the South Peace, near Dawson Creek.

“People in the north are already seeing their water depleted and contaminated by fracking and drilling,” Vernon says. “The case is about fixing the way water permits are handed out, so any long-term water withdrawals go through a review process with oversight.”

One lake, five “short-term” approvals

In an affidavit filed with the court, Eoin Madden of Western Canada Wilderness Committee notes Encana has five approvals at Wasp Lake, which allow Encana to use water for the same purpose for five years. Encana also has a water licence for the same lake.

The short-term approvals allow eight times more water to be drawn annually than the water licence does — up to 69,000 cubic metres per year, or enough water to fill 27 Olympic-sized swimming pools. The approvals also allow water to be drawn year-round, while the licence prohibits withdrawals between May and October.

If Encana withdrew the daily limit set out in the approval, it would take less than three days to withdraw the annual limit of their Wasp Lake water licence, says Morgan Blakley, a staff lawyer with Ecojustice.

“They’re violating the spirit of the legislation,” Blakley says.

The LNG connection

Image credit: Shell via Flickr

With all the talk of building liquefied natural gas (LNG) export facilities on B.C.’s coast, Vernon says it’s important for people to make the connection between fracking and LNG.

“Building any LNG terminals will require an increase in fracking, with associated impacts on water,” she says. “In a climate-changing world, freshwater is an increasingly scarce resource and we need to be managing it responsibly for communities, for agriculture, for our children’s future.”

In a recent blog in the Vancouver Sun, Ben Parfitt, a resource policy analyst with the Canadian Centre for Policy Alternatives, and David Hughes, a geoscientist, wrote that if even 70 per cent of the current LNG proposals go ahead, about 39,000 new wells would be required by 2040. If nine of ten of those wells were fracked, at least 582 billion litres of water would be polluted and removed from the hydrological cycle.

Encana, Oil and Gas Commission Respond

In an affidavit filed with the court, Cameron Buss of Encana Corporation says the company tends to rely on Section 8 water approvals during the exploratory phase.

“Encana’s use of water under Section 8 approvals is for discrete operations, which are short term in nature, but continue throughout the life of a play,” his statement reads.

Encana argues that if the Oil and Gas Commission’s practice of granting back-to-back short-term water approvals is declared unlawful, there will be significant harm to Encana and others.

“There are not readily available alternative water sources for Encana's ongoing operations in the Montney area,” Buss states.  “Many of these operations would cease if the order sought … is granted.”

The Oil and Gas Commission’s response to the petition says: “The Water Act contains no express prohibition on repeats of approvals under Section 8” and argues it interpreted the Water Act “reasonably.”

Main image: Jeremy Buckingham via Flickr

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