Eleven of Canada’s largest oil and gas companies have dozens of subsidiaries and related companies in known tax haven jurisdictions, according to a new report from the Ottawa-based non-profit Canadians for Tax Fairness.

Those companies include Suncor, Enbridge, CNRL, TransCanada, Imperial Oil, Cenovus and Husky.

The report, titled “Bay Street and Tax Havens: Curbing Corporate Canada’s Addiction,” examined the largest 60 companies listed on the Toronto Stock Exchange and found that just four didn’t have a publicly listed subsidiary in a known low-tax or no-tax haven.

“If you can afford the lawyers and accountants and it’s legal to do, you’ll do it,” report author Diana Gibson, told DeSmog Canada.

“Maximizing shareholder returns is the job of the CEOs and if it’s legal to avoid taxes then they will.”

Knowing how pervasive the issue is among oil and gas companies in Canada is important in order to pressure lawmakers to act, Gibson added.

“We’re not talking about slapping the hands of a couple of folks — we’re talking about a problem that needs to be fixed in the legislation.”

The new report shows companies like Enbridge and TransCanada are in line with global oil and gas industry practices. In 2015, a federal parliamentary inquiry in Australia found ExxonMobil and Chevron hold a combined $87 billion USD in tax havens.

Canadian Oil and Gas Companies Own a Combined 46 Entities in Tax Haven Countries

The report arrives on the heels of the explosive Paradise Papers, which contained 13.4 million confidential documents implicating many renowned figures — including the Queen, Bono and three former Canadian prime ministers — in the legal but ethically dubious practice of storing money in offshore tax havens.

The revelations also come as many oil and gas companies claim government policies such as methane regulations, carbon pricing or higher royalty rates create undue financial burdens and could cripple their business case.

“We constantly hear these stories about these large corporations — particularly oil and gas corporations in Alberta — operating on the margins: that they can barely make ends meet; that any shift will ultimately affect their bottom line and cost jobs and all of those things,” Ricardo Acuña, executive director of the Parkland Institute, told DeSmog Canada.

Those common talking points paint of picture of an industry without profits to hide, Acuña said.

The new report contradicts that, he said.

In total, the report calculated that oil and gas companies own a combined 21 listed subsidiaries and 25 companies inferred to be related.

These were identified by using information from corporate filings and company registries.

There could be more: Gibson from Canadians for Tax Fairness said the figures in the report are likely incomplete due to a lack of transparency required from companies.

Enbridge, TransCanada Among 11 Canadian Oil and Gas Firms Using Tax Havens https://t.co/iDlneUBXEv #cdnpoli @CdnTaxFairness @ParklandInst #oilsands

— DeSmog Canada (@DeSmogCanada) November 16, 2017

Canadian Direct Investment in Tax Havens Grew A Hundredfold in 20 Years

The report’s definition of a “tax haven” provided by the Organisation for Economic Co-operation and Development (OECD), has four simple components: an extremely low or non-existent tax rate, a separation of tax rates from the country’s regular economy, a lack of regulatory supervision and an absence of information exchange.

In other words, a region where money is kept solely to house excess profits that people or corporations wish to remain untaxed.

The best known tax havens are based in Caribbean countries, including Barbados, Bermuda, the Cayman Islands and the Bahamas. The U.S. state of Delaware actually served as the most popular location for Canadian companies to house their money, sporting 472 subsidiaries from only 60 companies.

It’s virtually impossible to know how much companies actually store in these jurisdictions.

But as noted in the report, Canadian foreign direct investment (FDI) into the top 10 tax haven jurisdictions has increased from $2.1 billion in 1994 to more than $284 billion in 2016.

While companies might claim that such a spike is associated with productive investments, there’s a complete disconnect from local employment: in Bermuda, there’s only one person hired for every billion dollars in assets, increasing to a mere 16 people per billion in Barbados.

Dozens of notorious tax treaties and tax information exchange agreements (TIEAs) allow for the easy transfers of money between jurisdictions.

“We don’t know how much of this money is being hidden, how much of it’s being legitimately invested,” Acuña said.

“We’re trying to piece this together from information we don’t have. The government needs to crack down on what companies have to report out when they’re moving money around and in terms of their foreign direct investment.”

Canada Losing Estimated $10 Billion to $15 Billion Per Year

The report found Canada was missing out on an estimated $10 billion to $15 billion in taxes per year from the 60 companies listed.

Four of the oil and gas companies identified in the report were also listed in Canadian Business magazine’s 2014 investigation into corporations that were paying “unbelievably low tax rates.”

That investigation reported that over the course of a decade, CNRL, Enbridge, TransCanada and Suncor only paid between 13.6 per cent and 15.6 per cent of their income in taxes.

While companies like CNRL and Suncor receive significant deductions due to capital costs and royalty payments, such percentages are still extremely low when compared to the average Canadian’s tax rate of 42 per cent.

As noted by Acuña, it’s not enough to just increase corporate income rate rates or revamp the nonrenewable resource royalty framework if companies can continue to move their profits to low-tax jurisdictions. Such a move would have to be paired with a serious clampdown on rules about tax havens.

“The issue is that the law needs to change,” Gibson said. “You can’t crack down on legal tax avoidance.”

Billions Likely Needed in Coming Decades to Cover Environmental Costs

Gibson pointed to NDP MP Murray Rankin’s recently proposed private member’s bill as a good first step.

Bill C-362 would amend the Income Tax Act to deny tax breaks to financial transactions that “lack real economic substance.” That would ensure that earnings are taxed properly in the jurisdiction in which they’re made.

The report made several other recommendations. Those include requiring the Canada Revenue Agency to compile actual information and data on tax havens, renegotiating tax treaties to set a minimum threshold for tax rates, and taking a much stronger international leadership role.

Such conversations may take on additional urgency in coming years as costs of environmental and climate liabilities continue to mount for various levels of government, although Acuña expressed some skepticism about the federal government acting given Finance Minister Bill Morneau’s recent run-ins with similar issues.

“It sure looks like oil and gas companies are raking in the profits and stashing them away in tax havens, while Canadians are stuck with the mess they leave behind, including toxic tailings ponds, oil spills, and climate damages,” Patrick DeRochie, climate and energy program manager at Environmental Defence, told DeSmog Canada.

“Once you take away all the oil and gas subsidies and the money stowed away in tax havens, and start accounting for the massive costs to the environment and public health, you get an industry that is no longer economical.”

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The days of infinite growth in Alberta’s oilsands are over with the Alberta government’s blockbuster climate change announcement on Sunday, which attracted broad support from industry and civil society.

“This is the day that we start to mobilize capital and resources to create green jobs, green energy, green infrastructure and a strong, environmentally responsible, sustainable and visionary Alberta energy industry with a great future,” Premier Rachel Notley said. “This is the day we stop denying there is an issue, and this is the day we do our part.”

Notley and Environment & Parks Minister Shannon Phillips released a 97-page climate change policy plan, which includes five key pillars.

1) Carbon will be priced economy-wide at $30/tonne by 2018.

2) Coal-fired power plants will be phased out by 2030.

3) Oilsands emissions will be capped at 100 megatonnes (Mt) per year (recent Environment Canada figures predicted a 2020 output of 103 Mt from the sector), which amounts to allowing current construction to go ahead, but that’s it. That means to expand production beyond current projects, per barrel emissions will need to be reduced.

4) Methane emissions from oil and gas operations will be cut by 45 per cent in 2025.

5) 30 per cent of all electricity will be generated by renewables by 2030.

It is a staggeringly significant proposal, one that far surpasses anything the former Progressive Conservative government imagined in the course of its 43-year reign. The announcement — delivered at Edmonton’s Telus World of Science — was benefitted by appearances from CEOs of Suncor, Canadian Natural Resource Ltd. (CNRL), Shell and Cenovus, something far-right activist Ezra Levant dismissed by alleging the massive energy companies “don't represent the industry.”

Environmental groups such as the Pembina Institute and Clean Energy Canada were also on stage. Getting all of those players in support of one climate strategy is a huge testament to the leadership of University of Alberta energy economist Andrew Leach, who chaired the climate change panel.

Climate Change Policy Plan Garners Broad Support

With the exception of the rabidly conservative Wildrose Party and former deputy premier Thomas Lukaszuk, it seemed every serious player in politics and industry celebrated the announcement. The NDP-affiliated Broadbent Institute, headquartered in Toronto, concluded: “On a public policy Richter scale, Alberta’s new Climate Leadership Plan is an 11.”

Shell Canada announced that “these measures provide predictability and certainty and will help ensure that producers can responsibly develop and grow this significant Canadian resource while also addressing global concerns about climate change.”

Prime Minister Justin Trudeau congratulated Notley in a tweet now favourited over 1,300 times as “a very positive step in the fight against climate change.”  Political blogger Dave Cournoyer accurately dubbed it a “pigs fly” situation.

All of this means a whole lot given the impending Paris Climate Change Conference (COP 21).

Canada ranks 15th out of 17th countries for greenhouse gas emissions according to the Conference Board of Canada, with Alberta contributing 36 per cent of national emissions in 2013 despite only accounting for 11 per cent of the country’s population.

The expected spike in oilsands expansion was widely expected to nullify all other sources of emissions reductions in the Canada. The fact that Alberta, and by extension Canada, is now going into COP 21 with a detailed plan to address the province’s largest source of emissions – oilsands development and coal-fired power plants – speaks volumes about the desire to be taken seriously on the world stage.

Climate Plan May Increase Social Licence for Oilsands Operations

Another component that ostensibly drove oil execs to hop on the green bandwagon was the need to accrue “social licence,” or the support required to build pipelines to export its products. The veto of TransCanada’s Keystone XL pipeline represents what happens when such social licence isn’t secured.

By addressing runaway emissions, Alberta-based companies might actually stand a chance to build infrastructure like the Energy East pipeline, which would transport 1.1 million barrels of diluted bitumen from Alberta to Quebec and New Brunswick every day.

“The province’s climate strategy may allow our sector to invest more aggressively in technologies to further reduce per barrel emissions in our sector and do our part to tackle climate change,” said Tim McMillan, Canadian Association of Petroleum Producers’ president and chief executive officer, in a statement.

“We encourage the province to follow a balanced approach, recognizing that our sector can only become a global supplier of responsibly produced oil and natural gas if we are competitive on the world stage.”

The fight over pipelines is unlikely to dissipate. While Sunday’s announcement was a giant step in the right direction, it’s still not enough to avoid catastrophic global warming, according to a statement from Greenpeace.

“These policies are important first steps, but much bigger emission reductions will be needed for Alberta to do its part to keep global warming below 2 degrees Celsius,” Alberta climate and energy campaigner Mike Hudema said.

Hudema also noted that the province still has no short or long-term emission reduction targets.

“Targets give an important signal to business, let the world know where Alberta is headed, and help ensure that direction leads to the reductions that science and equity demand,” he said.

The Pembina Institute has historically supported a higher carbon tax than what was proposed on Sunday – with $40/tonne in 2016, $50/tonne in 2017 and $60/tonne in 2018 — but the plan is an indisputably major upgrade from the Specified Gas Emitters Regulation (SGER), which taxed Alberta’s largest emitters (103 at last count) at the equivalent of $1.80/tonne.

George Hoberg, professor in the forest department at the University of British Columbia, notes there’s still plenty of work to be done but that: “Today is a day for celebration. Alberta has bent its carbon emissions curve, and provided a lever to Canada to show real climate leadership.”

Ultimately, the future of Canada’s environmental reputation may rely on the work that Trudeau and Environment and Climate Change Minister Catherine McKenna complete during and after the Paris conference. But Sunday’s announcement out of Alberta sets quite the standard.

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After a rough year of collapsing oil prices and the embarrassing dethroning of Alberta’s longtime Progressive Conservative government, the oil and gas industry could use a win. The latest campaign from the Canadian Association of Petroleum Producers (CAPP) was probably designed to be one.

Alas.

Developed as part of CAPP's ‘Energy Citizens’ movement, the ‘Raise your Hand’ campaign is well-designed and clearly expensive. Online and off, it features smiling multiracial faces with hands raised — overlayed with hand-drawn outlines of patriotic maple leaves. There are cheerful videos, interactive bus shelter ads and an online submission form to stay connected. It even has a hashtag (#ryhcanada), the extremely limited Twitter impact of which must be giving at least one advertising executive an ulcer right now.

As Mark Hume noted in the Globe and Mail this weekend, an ad campaign that attempts to co-opt patriotism for its own ends is hardly something new. NGOs have done it for years. So have McDonalds, Molson's beer and Roots. And yet, as Hume says, “CAPP’s slogan — 'Raise your hand because you are proud of Canada’s oil and natural gas' — doesn’t quite have the same ring as one that urges you to raise your hand against racism, ignorance or disease.”

Hume writes that the campaign could have been more successful, had it not been launched in the same week as a massive oil spill in Santa Barbara, which reminded “Canadians — and especially British Columbians where two new oil pipelines are proposed — what happens when one of those .001-per-cent accidents happen.”

I’m not so sure.

While the campaign is not a failure on par with the spectacular collapse of BC Ferries ‘#NameAFerry’ contest, its inability to spark public enthusiasm is not surprising. Even without the Santa Barbara oil spill, it’s reasonable to wonder if pipelines and patriotism fit together as naturally as the industry would have us believe. After all, it’s hard to raise our hands in blind allegiance when the failures and questionable behaviour of industry executives are so hard to ignore.

• Raise your hand if you remember that two years after it became public, CNRL is still unable to stop a slow leak at its Cold Lake in-situ drill site.
• Raise your hand if you recall how Plains Midstream — the Canadian analogue of Plains All American (the company whose failed pipeline spilled all that oil in Santa Barbara) — was fined $1.3 million for two giant pipeline spills in Alberta and was recently ordered to undergo an independent review of their safety procedures?
• Raise your hand if you remember how the industry leaders in oil and gas fought hard to keep employing temporary foreign workers, limiting opportunities for those smiley Canadians featured so prominently in their advertising?
• Raise your hand if you’re doubtful of the capabilities of Western Canada Marine Response Corporation touted by CAPP in the campaign after its slow response to Vancouver's relatively minor English Bay oil spill?
• Raise your hand if you saw the news this week that federal Industry Minister Greg Rickford spoke to an October 21, 2014 closed-door meeting of CAPP executives encouraging them to "work harder and spread the message of the oil industry?"

I could go on.

If recent polling is correct, 72 per cent of Canadians want to see more jobs created in the renewable energy industry. Fifty-eight per cent of Canadians go even further, wanting to see oil and gas use phased out in favour of renewable solutions. And even the Harper government has publicly acknowledged that climate change demands at least a little immediate attention.

So to the folks at CAPP and their marketing agency of record, may I humbly suggest an edit to your ask? Something a little more measured, a little more Canadian.

Raise your hand if you acknowledge that while oil and gas and other extractive industries are a big part of the Canadian energy mix now, they don’t have to be forever. That pipelines fail and transporting oil and gas is inherently dangerous. That if Canadians want to meet our climate goals without having to buy carbon credits from other countries, we need to start investing more in renewables.

Raise your hand if you agree we all deserve a more nuanced conversation about Canada's energy future.

Image Credit: CAPP

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The Alberta Energy Regulator (AER) has released new figures tallying the total volume of bitumen emulsion recovered at the Canadian Natural Resources Ltd. (CNRL) Primrose site in Cold Lake, Alta. The new total — 1,177 cubic metres or 1.1 million litres — is more than a third lower than previously reported amounts.

An earlier incident report from November 14, 2013, states more than 1,878 cubic metres of emulsion was recovered at the four separate release sites, where the mixture of bitumen and water had been leaking uncontrollably into the surrounding environment for several months without explanation. That's enough liquid to fill an Olympic-sized swimming pool three-quarters of the way full.

CNRL's July 31, 2013, statement (pdf), released to investors just over one month after the leaks were reported to the AER, said that within the first month of cleanup, 1,000 cubic metres of bitumen emulsion had been collected.

Scientist Kevin Timoney, who's authored several reports on the CNRL leaks, said the reported figures just don't add up.

“The bottom line is, how do you go from essentially 1,900 cubic metres, which is what you get if you listen to the president of CNRL when he was talking in January, down to 1,177 cubic metres. How does that happen?" Timoney said. "And nobody has answered that."

Bob Curran, spokesperson for the AER, told DeSmog Canada the provincial regulator has no ownership of the volume amounts they report to the public and publishes figures given to them by CNRL without verification.

“Those numbers on that site are estimates. They are provided by the company. They are not confirmed AER numbers, nor have they ever been,” he said. “So if the company changes the estimate then we would change a number on the site, until such a time that we arrive at a final number. We haven’t done that in this case so those numbers continue to be estimates supplied by the company.”

Timoney said the U.S. regulator, the Environmental Protection Agency, would never rely on industry for that type of data. "They’d be out there gathering data and determining how much had been spilled and how much had been cleaned up," he said.

When pressed on the disparity between current reported figures and previously reported figures, CNRL spokesperson Zoe Addington said the difference was a matter of “reconciliation.”

CNRL has removed oil, processed water, fresh water, vegetation and soil from the site. Addington was unable to clarify if the decrease in recovered bitumen emulsion volumes was due to an increase in reports of removal of other materials, such as fresh water and vegetation.

A CNRL report states, “Numbers have changed since the last reporting period based on a reconciliation of volumes with the receiving facility.”

Timoney, an ecologist with Treeline Ecological Services who just released a new report this month called CNRL’s Persistent 2013-2014 Bitumen Releases near Cold Lake, Alberta: Facts, Unanswered Questions, and Implications (pdf), said he'd like to see the data.

"Reconciliation is a nice word, but show me the numbers," he said. "I’m a scientist so I really want to see how this comes about."

He said even the AER and CNRL's own figures at times don't match. In mid-January AER published the 1,177 cubic metre volume while CNRL was still posting 1,864 cubic metres.

"Since I can’t get on site and they won’t give me the raw data, I just really have to report what they say and point out when it doesn’t agree," Timoney said.

Canadian Natural Resources Ltd. images show the continued seepage of bitumen to the surface at location 9-21, the site of a water body now partially drained.

As a scientist, Timoney finds the lack of transparency dangerous, especially to the regulatory process. 

"This is one of the problems with the whole regulatory system, because … AER just simply reports, apparently reports, what industry tells them. They don’t do any checking."

Reproducing industry figures in the name of public disclosure isn't much of a solution, he said. 

"I think the regulator has a responsibility to provide an accurate assessment of the company’s activities. So if the regulator is not verifying information, it’s just simply acting as a clearing house for information industry gives it, it’s not doing its job. It’s not acceptable."

He added: "It’s a problem that’s only gotten worse over the years, in the sense that now AER is basically a non-governmental entity. It’s funded by industry. It’s not an agent of the crown so we don’t have the same sort of access to information we would if they were a government agency. So the AER can basically do whatever it wants to do and the public doesn’t have any recourse. It’s unbelievable, really, when you think about it."

CNRL says cleanup is now complete at three of the terrestrial seepage sites. The final site, 9-21, located beneath a body of water that has since been partially drained, continues to seep bitumen.

According to Addington: “Seepage from the fissures has slowed to an almost imperceptible rate.” CNRL currently reports the rate of seepage for all sites at less than one cubic metre (1,000 litres) per month.

All images courtesy of CNRL.

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A draft version of a new investigative report released this week by Global Forest Watch and Treeline Ecological Research argues the series of underground leaks currently releasing a mixture of tar sands bitumen and water into a surrounding wetland and forest on the Cold Lake Air Weapons Range is related to a similar set of spills caused by Canadian Natural Resources Ltd. (CNRL) in-situ operations in 2009.

The cause of the 2009 seepage was never determined and details of an investigation by the Alberta Energy Regulator (AER), then called the Energy Resources Conservation Board (ERCB), weren’t made public until last year, four years after the initial incident.

The new report, called “CNRL’s Persistent 2013 Bitumen Releases Near Cold Lake, Alberta: Facts, Unanswered Questions, and Implications,” takes aim at the AER for allowing certain in-situ, or underground, tar sands extraction technologies to continue without adequately addressing “major unknowns.” The independent investigation reveals the AER continually fails to protect the public interest in relation to these spills and that both industry and government demonstrate 'dysfunction' in their lack of transparency with the public.

CNRL, the company responsible for both the 2009 and current leaks, uses a process called High Pressure Cyclic Steam Stimulation (HPCSS) to fracture underlying bedrock in order to extract bitumen under pressure. HPCSS uses extremely high pressures and temperatures to create underground fractures allowing for the migration of bitumen. According to the ERCB’s investigation of the 2009 incident, these underground fractures were offered as a potential explanation for the uncontrolled release of bitumen above ground.

Despite multiple investigations, regulators and industry were unable to definitively identify the cause of the 2009 incident. The new report’s two authors, Peter Lee and Dr. Kevin Timoney, suggest this lack of certainty makes the company’s continued operation in the area, and use of HPCSS technology, inexplicable.

“In light of the unquantified risks to the bitumen reservoir, groundwater, and the adjacent ecosystems, the decision by the ERCB to allow HPCSS to continue during and after the [2009] incident was unjustified by the available evidence,” the report states.

There are “spatial and temporal” reasons for believing the two incidents are related, claim the authors. An analysis of the time and locations of the seepage shows a consistent pattern of leaks, each migrating outwards from a central location where the 2009 incident occurred.

Although the causes of the incidents remain “unclear,” they write the seepage is “known to involve migration of bitumen emulsion through a network of vertical and horizontal fissures.”

A map of the affected areas in 2013 from the Global Forest Watch report.

“Due diligence dictates that all HPCSS operations should be suspended until major unknowns are addressed. If not, continued use of HPCSS may result in large and unpredictable costs, and those costs will not be borne by the energy companies but by future generations,” the report states.

Crystal Lameman, member of the Beaver Lake Cree Nation whose traditional territory the seepage is within, says the ongoing situation calls into question the role and ultimate purpose of the AER. “What is their job, really?” Lameman asks. “What is their job and what is their agenda?”

The AER’s role depends upon their ability to regulate industry, she says. “They are supposed to be monitoring them and ensuring they are following through with the proper protocols, policies and procedures,” she said.

Crystal Lameman of the Beaver Lake Cree Nation. Credit Emma Pullman.

Lameman says the AER’s inability to prevent multiple releases of bitumen into the environment is difficult to understand.

“Are they becoming deliberately ignorant to what industry is doing? Are they turning a blind eye? I guess I’m asking these questions because I can’t think of any other reason these thing like the CNRL spill can happen, or not be stopped, or reported at a quicker rate. It causes concern for me as someone who lives in a tar sands impacted community.”

For Lameman, the ongoing incident in Cold Lake is a part of a longer-running pattern.

“Since they’ve changed their name from the ERCB to the AER, I’ve seen nothing but a bad track record in the way they report, in the way they provide comment, the lack of expediting information to local First Nations people. What I’ve found is that we’re often the last ones to find out about these spills.”

The Global Forest Watch report also criticizes both the AER and CNRL for failing to communicate adequately with the media and the general public. The lack of information, says Lameman, leaves impacted communities guessing.

“What next? Are we going to find out that the spill from ’09 has been ongoing since ’09? And the AER, at that time the ERCB, didn’t tell us? Are we going to find out next that CNRL was pumping at higher pressures than they were supposed to?” she asked. The question of dangerously high injection pressures is a concern also raised by Timoney and Lee in the investigative report.

For Lameman, the events on CNRL’s site bring to light the inherent dangers of extracting bitumen deposits with in-situ technologies. “We’re putting our guards down when we believe the AER when it says that in-situ and SAGD are safer methods. How? How are these safe?” she asked. “The more spills that happen, [the AER] is proven otherwise.”

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According to new figures released by the Alberta Energy Regulator (AER) the total amount of bitumen emulsion – a mixture of tar sands heavy crude and water – released on Canadian Natural Resources Ltd.’s (CNRL) Cold Lake Site is now more than 1.5 million litres, or the equivalent to more than 9600 barrels of oil.

The reported amount has grow from an initially estimated 4,450 litres or 28 cubic metres in late June, according the AER’s website.

The figures, made public by the AER, are reported to the regulator from CNRL, prompting onlookers to raise concerns about industry self-reporting.

Bob Curran from the Alberta Energy Regulator says that it is normal for companies to report spill volumes and rates in incidents like these. Although, he adds, “these aren’t numbers that we’re saying we’ve 100 per cent verified but these are numbers that are being reported to us. I think there’s an important caveat on that.”

The seepage, which reportedly began in early 2013, although wasn’t officially reported to the public until late May, is occurring on sites where CNRL uses High Pressure Cyclic Steam Stimulation (HPCSS) to recover bitumen from deep reservoirs. The process uses a combination of high pressures and temperatures to fracture the rock surrounding bitumen deposits. Super hot steam melts and pressurizes the bitumen, allowing it to surface up a wellbore.

Currently, on at least 4 CNRL sites, pressurized bitumen is leaking to the surface through uncontrolled fissures in the ground. Both the AER and CNRL are unable to explain the cause of the spill or say when it might stop.

The AER didn't immediately announce the incidents to the public. The AER's Bob Curran told Postmedia News, “The first three incidents were quite small compared to this last one. There were no public impacts, there were negligible environmental impacts. No real trigger to put out a news release.”

Crystal Lameman, member of the Beaver Lake Cree Nation whose territory includes the Cold Lake spill site, says she's frustrated with the AER's tendency to minimize the incident and its impact.

"The mere fact that they are the ones that determine what is minimal when it doesn’t directly impact them – that concerns me. I’ll be the judge of what is deemed minimal when toxic water is spilling out on the land in our traditional territory. So just because it may at that time have not affected a human being, it affects those beings that cannot speak for themselves and those beings that we have the constitutionally protected right to fish and hunt. But if they’re drinking toxic water and breathing toxic air how can they guarantee to us that those animals are in their purest form?" she said.

"I have a real issue with the way that they determine what is minimal, what is of concern, what is a lot, what it a little. That concerns me because thus far, since they’ve changed their name from the ERCB to the AER, I’ve seen nothing but a bad track record in the way they report, in the way they provide comment, the lack of expediting information to local First Nations people. What I’ve found is that we’re often the last ones to find out about these spills."

The released caused the death of 2 beavers, 49 birds, 105 amphibians, and 46 small mammals, the AER reports. Clean up and containment efforts are still ongoing and the early stages of a subsurface investigation are underway.

The AER and Alberta’s Energy and Sustainable Resource Development have launched provincial investigations and recently Environment Canada announced a federal investigation is also being undertaken.

Image Credit: Emma Pullman/CNRL

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The ongoing seepage of bitumen emulsion – a mixture of heavy tar sands oil and water – on Canadian Natural Resources Ltd.’s (CNRL) Cold Lake operations is now reportedly occurring on six sites, up from a previously reported four.

The two new sites were identified by the Cold Lake First Nation, according to a press statement released early Monday.

“Our people want answers and factual information on the contamination of now, six surface releases of bitumen oil,” said Cecil Janvier, Council Member and Media Spokesperson for the Cold Lake First Nation.

The Cold Lake First Nation says they want greater involvement in the ongoing release of oil on their traditional Treaty 6 territory and suggest that they have been left in the dark by CNRL.

High-pressure cyclic steam stimulation or HPCSS is used by CNRL to fracture underground rock and heat up deep reservoirs of bitumen, allowing a resulting mixture of bitumen and water to surface up a wellbore. In CNRL’s current operations several uncontrolled fissures are leaking bitumen above ground, possibly due to unintended fractures below. The company claims the mechanical failure of a wellbore is to blame, although the Alberta Energy Regulator (AER) states there is no known cause for the ongoing leakage at this time.

Multiple investigations into the cause of a similar 2009 underground release were inconclusive, although the Energy Resources Conservation Board (now AER) stated “a contributing factor in the release may have been geological weaknesses in combination with stresses induced by high-pressure steam injection.”

The current series of underground leaks have forced more than 1.4 million litres of bitumen emulsion to surface on the ground and in a body of water near the company’s operations. The leaks are still uncontrolled at this time.

“I'm really distressed about the safety of our drinking water, animals, vegetation and how this is affecting the aquifers underneath our Dene lands. Our future generations will not be able to enjoy what once was pristine Denesuline territory. Animals such as wolves and bears are now migrating through our community, which is a safety risk and precaution. The environment is changing and definitely not for the positive,” stated Chief Bernice Martial in the press release.

CNRL investor relations spokesperson Zoe Addington contradicts the Cold Lake First Nation’s claims, saying “there have been no further discoveries of bitumen to surface.”

“Canadian Natural Resources Limited reported that bitumen emulsion was discovered at surface at four separate locations. The discoveries were immediately reported to the Alberta Energy Regulator and concurrently crews were dispatched to initiate necessary action. Each location has been secured and clean-up, recovery and reclamation activities are progressing well. Regular updates can be found on our website at: www.cnrl.com,” she told DeSmog Canada in an email statement.

Currently CNRL is the only body reporting on the rate and volume of the release. The AER, the province’s main oil and gas industry regulator, is reporting CNRL’s figures on its website.

“These numbers are not absolute, they’re not final,” says Bob Curran from the AER, “they may be adjusted as new information comes to light.”

“They’re not indicative of anything except the fact that they’re being updated at this point. I don’t know how much stock you can put into them other than we’re updating information with the information that we’re given as quickly as we can.”

“These aren’t numbers that we’re saying we’ve 100 per cent verified but these are number that are being reported to us. I think there’s an important caveat on that,” he said.

Curran says that it is normal for industry to report its own figures in an instance like this. “We certainly try to verify those figures but yes it’s their facility, it’s their issue that they have to deal with. Our role is to ensure they are responding appropriately.”

The AER has released several updated incident reports on the leakage as part of its larger effort to provide information on “energy-related incidents that may impact the public,” their website states.

The AER first reported on the incident on June 24th, claiming 28 cubic metres of bitumen were released. The most up-to-date figures, released September 6, 2013, claim that more than 1444 cubic metres, or more than 1.4 million litres, of bitumen emulsion have been recovered so far from the uncontrolled seepage. 

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New figures released yesterday from the Alberta Energy Regulator (AER) show a concerted effort is still underway to clean up the growing amount of bitumen emulsion – a mixture of tar sands oil and water – that is pooling in a forested area surrounding Canada Natural Resource Ltd.’s Cold Lake project.

The cause of the seepage, which shows no sign of subsiding, has yet to be determined.

AER’s updated volumes show that the total amount of bitumen emulsion recovered on four separate spill sites amounts to 1444.4 cubic metres, a volume equivalent to 1.4 million litres of oil.

In addition, cleanup crews have removed 494 cubic metres of oily vegetation from the forested landscape and an additional 1049.62 metric tonnes – equivalent to 2.3 million pounds – of “impacted soils.”

The AER’s previous figures, released August 29th, stated 1275.7 cubic metres of bitumen emulsion had been recovered to date, the equivalent of 1.2 million litres.

Between the dates of August 29th and September 6th roughly 168,800 litres of bitumen emulsion were recovered, equaling around 1062 barrels of oil equivalent, or an average of 150 barrels per day.

CNRL, the company responsible for the in-situ operations that led to the seepage, put out a release dated August 25-31 that claims the rate of bitumen emulsion release amounts to less than 20 barrels of bitumen emulsion per day.

The disparity between CNRL’s figures – a release of 20 barrels per day – and the AER recovery figures – of 150 barrels per day – is due to unrecovered bitumen emulsion on site, according to CNRL public affairs advisor Zoe Addington. CNRL is cleaning up more per day than is currently leaking, she said.

Original CNRL images released to reporter Emma Pullman show oil pooled high in a forested area, presenting both the company and provincial regulators with an extraordinarily difficult cleanup.

The CNRL statement also claims the company is “focusing on a reduced impact area of 13.5 hectares, a 35% reduction” since original reporting.

The AER report states 20.7 hectares have been impacted from the ongoing release.

CNRL is still working to recover bitumen, remove soil, manage contaminated water and expose fissures where bitumen emulsion is migrating to the surface on three of the leakage sites, says the AER. The company is also recovering bitumen, agitating and skimming oil from the surface of a water body and removing vegetation from the fourth site.

The AER also reports that to date 2 beavers, 43 birds, 104 amphibians and 40 small mammals are deceased as a result of the release.

CNRL’s latest statement reads, “unfortunately some animal fatalities have occurred and three beavers, seventeen birds and two small mammals are being cared for at a Wildlife Rehabilitation Centre…”

As part of an ongoing subsurface investigation CNRL is drilling hydrogeological and delineation wells around the affected locations and has cited “mechanical failures” as the presumed cause of the continuous leaks, although the AER recently told DeSmog Canada the cause remains unknown.

CNRL was responsible for a similar release in 2009 that was likely caused by underground fractures, according to a report by the Energy Resources Conservation Board, the former AER.

According to Cara Tobin, spokesperson for the AER, the current spill “is in the same operational area” as the 2009 release. “These are releases coming up from basically cracks in the ground, not from the well pad,” she said. Although, she adds, it is too early to say what might be the cause of this particular series of underground leaks.

“We do not have the technical data or evidence to verify what that cause might be…We will determine that through our investigation process,” she said.

Last week Environment Canada announced a federal investigation into the seepage is underway alongside two separate investigations at the provincial level.

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The ongoing trouble on the Cold Lake Air Weapons Range in North Eastern Alberta, where oil company Canadian Natural Resources Ltd. (CNRL) has numerous in situ oil recovery sites, has yet to show signs of abatement.

Underground oil spills on CNRL’s Primrose facility have been leaking bitumen emulsion into the muskeg, waterways and forest that surround the site for nearly three months.

The Alberta Energy Regulator (AER) says the total volume of bitumen emulsion recovered from four separate sites where the seepage is ongoing is now 1275.7 cubic metres, the equivalent of 8024 barrels of oil or 1.27 million litres.

The original volume of the spill was reported as 28 cubic metres.

In addition, 397 cubic metres of “oily vegetation” has been removed from one of the sites numbered 09-21, and 5096.66 metric tones of “impacted soils” have been removed from the other three.

“Clean up continues on all four sites,” says the AER in an updated incident report released yesterday.

“Bitumen recovery at the source, skimming of other areas within water body and vegetation cutting continues” at site 09-21.

“Bitumen recovery, soil removal, fissure exposure, surface water management and containment efforts continue” on the three additional sites.

CNRL, the company responsible for the spill, released a press statement on July 31 stating “each location has been secured and clean-up, recovery and reclamation activities are well underway.”

Last week Cara Tobin from the Alberta Energy Regulator said, “the spill is still ongoing. There is still bitumen coming up from the ground…it is not under control [because] bitumen is still coming up…”

She provided no comment Wednesday, indicating a revised incident report would be published Friday, August 15.

That report states “2 beavers, 31 birds, 82 amphibians, and 31 small mammals” have died as a result of the spill.

“Wildlife fencing and deterrents are installed and CNRL continues to monitor all four sites for wildlife and impacted wildlife.”

The exact cause of the uncontrolled spill has yet to be determined. CNRL cited mechanical failures at the well as a potential cause in its press statement, although Tobin from the AER said “we do not have the technical data or evidence to verify what that cause might be – what the cause or causes might be. We will determine that through our investigation process.”

According to the revised incident report a “subsurface investigation has been initiated and is ongoing.”

CNRL experienced a similar incident in 2009 on their Primrose site. According to Tobin that incident “was the same sort of thing where pressure pushed bitumen to surface and until that pressure was naturally able to recede underground the product continued to – very slowly – come to surface.”

Multiple investigations into the cause of the 2009 underground spill were inconclusive, although the Energy Resources Conservation Board (now the AER) stated “a contributing factor in the release may have been geological weaknesses in combination with stresses induced by high-pressure steam injection.”

CNRL uses a process called High Pressure Cyclic Steam Stimulation (HPCSS) in the region to release bitumen from underground rock formations. The process uses extremely high-pressure steam injection to fracture the underlying reservoir to “create cracks and openings through which the bitumen can flow back into the steam-injector wells,” according to the AER.

Roughly 80 percent of Alberta’s bitumen deposits will be extracted using this and other in situ methods.

Last week more than 20 groups called on the AER to conduct a public inquiry into the safety of in situ operations.

“While the AER has suspended and restricted steam injection operations at the CNRL Primrose operations in response to the most recent events, it is unacceptable to have long fissures in the ground that will continue to spill toxic heated bitumen to surface, and to further risk our water and groundwater resources from these activities,” said Carolyn Campbell, Conservation Specialist with the Alberta Wilderness Association.

“The time has come for a broader inquiry into CSS and SAGD [steam assisted gravity drainage] steam injection operations,” she said.

Image Credit: Emma Pullman

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Last week, after a frenzy of press coverage of the ongoing underground bitumen seepage* at the Cold Lake Air Weapons Range, CNRL, the company responsible for the spill, released a press statement suggesting the incident was contained.

“Each location has been secured and clean-up, recovery and reclamation activities are well underway,” the press release reads.

Cara Tobin from the Alberta Energy Regulator (AER) says the spill is still ongoing and has yet to be brought under control.

“It’s ongoing. The spill is still ongoing. There is still bitumen coming up from the ground. With my language I would say it is not under control [because] bitumen is still coming up from the ground.”

The AER website has the incident officially listed as “ongoing” on its website.

“However,” says Tobin, “from a containment point of view CNRL has put up a perimeter around the extent of the impact on the surface and that surface impact is not getting any bigger. They have contained the extent of the spill.”

But beyond cordoning off the spill site, Tobin says, “it’s a release that is still ongoing. It is a very slow release but it is still ongoing.”

AER updated the total volume released on Friday to 1060 cubic metres – just over 6600 barrels of oil or more than 1 million litres. The volume of the Kalamazoo tar sands disaster, the largest and most expensive on shore oil spill in US history, was around 3 million litres.

The original incident report claimed only 28 cubic metres of oil were released.

Cold Lake bitumen release on CNRL's Primrose site. Courtesy of Emma Pullman.

“That volume grows every day, so it changes every day,” said Tobin.

A recent Alberta Primetime exclusive shows a large body of water affected by subsurface seepage of bitumen. CNRL incident commander Kirk Skocylas says one area of the spill is emerging from "a subsurface source" and "because it is within the water body we physically can't see where it is coming up." 

“Clean up is ongoing,” she added. “CNRL is working diligently to clean up the release.”

This spill, says Tobin, “is in the same operational area” as a similar release CNRL experienced in 2009. “These are releases coming up from basically cracks in the ground, not from the well pad.” CNRL told DeSmog Canada there is "absolutely no connection" between the 2009 incident and the ongoing release.

The Alberta Energy Resources Conservation Board, now the AER, released a report in 2011, which found numerous investigations into the 2009 spill inconclusive, although several causes, such as underground fractures, were cited as possible explanations for the release.

As for the cause of CNRL’s current ongoing bitumen release, Tobin says it is too early to say what may be the cause.

Last week CNRL stated “mechanical failures of wellbores" were to blame for the spill although Tobin says “we do not have the technical data or evidence to verify what that cause might be – what that cause or causes might be. We will determine that through our investigation process.”

Image Credit: Emma Pullman

* An earlier version of this post described the underground bitumen release as a "geyser." Thanks to comments from our readers and members of the scientific community we've changed the wording to more accurately reflect the nature of the spill. We originally used the term geyser to denote the underground surfacing of liquid from a subsurface source, but now realise the term is technically inaccurate. 

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Canadian Natural Resource Limited (CNRL), the company responsible for a massive ongoing spill on the Cold Lake Air Weapons Range southeast of Fort McMurray released a public notice last week claiming the release was “secured” and that “clean-up, recovery and reclamation activities are well under way.”

Cara Tobin, Office of Public Affairs spokesperson for the Alberta Energy Regulator, said that CNRL has yet to bring the release under control. 

The spill, caused by a rare underground spring of bitumen emulsion, is the result of High-Pressure Cyclic Steam Stimulation (HPCSS) technology that forces steam into underlying bitumen reservoirs at temperatures and pressures high enough to fracture underlying formations.

“I don’t want to presume what they mean by [secure] but I can tell you a few things that might help clarify,” she said.

Under usual circumstances with HPCSS heavy bitumen is softened by steam injected under the surface, allowing the resulting water and oil mixture – called bitumen emulsion – to surface up a wellbore. In this instance the high pressures underground are creating multiple bitumen springs, forcing the oil mixture to the surface in numerous locations including under a body of water.

“With any incident the company would go to the site and identify the outer boundaries of the affected area,” Tobin said.

“There’s two things – one is control and one is containment. What they have done, to the best of my knowledge, is that they have identified the outer extent of the impacted area, which is generally called delineation. I think they were finishing that process [Friday]. And so they are getting to know and rope off the outer extent of the impacted area.”

“So that’s one thing. And that’s basically containment…In this case, this is still an ongoing incident. There is no control on this incident.”

According to CNRL the area of initial impact is 20.7 hectares, or just over 51 acres. The spill volume to date, initially reported at 28 cubic metres, was updated to 950 cubic metres, or nearly 6000 barrels of oil, over the weekend.

“In this case because the incident is ongoing there will continue to be more volume of product coming up to the surface but it’s not going to be impacting any vegetation [other] than what’s already impacted…There will still be more volume of product but it’s not going to be spreading further,” she said.

She added that although this spill is “relatively unique,” an incident of its kind occurred previously on the same CNRL site.

“It’s not like it hasn’t happened before though. We have information on our website, about a similar incident that happened in 2009 and it was the same sort of thing where pressure pushed bitumen to surface and until that pressure was naturally able to recede underground the product continued to – very slowly – come to surface.”

Much like the 2009 incident, the cause of the current spill remains unknown and it is not expected to stop until underground pressure subsides.

“What we’re seeing in this one is that pressure has built up underground and is finding ways to come to surface and we don’t know what the cause of that might be. That will come out in our investigation report. But regardless, it is coming to the surface, very slowly, and it won’t stop until that pressure has gone down underground,” Tobin said.

The rate of the spill remains unreported at this time.

According to documents from the former Alberta Energy Conservation Board (ERCB), now the Alberta Energy Regulator (AER), the 2009 release prompted the shut down of the site after bitumen emulsion was seen flowing out from the ground and pooling on the company’s Primrose East site.

A report on the incident says the bitumen emulsion could be observed seeping out of the ground to the south and the east of the well pad, as well as from surface fissures in the area.

The company initiated “emergency flowback to depressurize the formation” in an attempt to stem the release.

“Approximately 11,380 tonnes of solids (including snow, organic material, soil, and bitumen) was ultimately removed from the site for landfill disposal, and 904 cubic metres of bitumen was recovered from the surface of Pad 74 and transported to CNRL’s Wolf Lake Plant,” states the report.

Multiple investigations into the incident over the span of one year were inconclusive and could not ultimately determine how the bitumen emulsion made its way to the surface. The ERCB cited pre-existing unground fractures or a wellbore breach as possible explanations.

In its final summary the ERCB stated “a contributing factor in the release may have been geological weaknesses in combination with stresses induced by high-pressure steam injection.”

HPCSS creates fractures in underground formations to separate bitumen from sand. An AER incident report on the current CNRL release in Cold Lake describes HPCSS as a high-pressure steam injection method that fractures the reservoir to “create cracks and openings through which the bitumen can flow back into the steam-injector wells.”

Image Credit: Emma Pullman/CNRL

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