This investigation also appears on Policy Note.

In a decision without precedent in its 25 years of existence, British Columbia’s Environmental Assessment Office has told Progress Energy that two massive unauthorized dams that it built will not have to undergo environmental assessments.

The decision comes after the company made an audacious request to the Environmental Assessment Office to have the two dams declared retroactively exempt from review — a request that was quietly granted by the province’s self-described neutral environmental regulator on July 17.

The exemption means Progress Energy is spared having the controversial dams subject to costly, public and potentially embarrassing reviews. The dams are described as “illegal works” in documents released by the Environmental Assessment Office in response to a Freedom of Information request from the Canadian Centre for Policy Alternatives (CCPA).

The office’s decision is the latest development in a saga that came to light in May 2017, when the CCPA first reported on the existence of “dozens” of unlicensed dams. Many of the dams had been built by Progress Energy Canada Ltd., the Calgary-based subsidiary of Malaysian state-owned petro giant Petronas, a major player in B.C.’s fracking industry.

Had the Environmental Assessment Office rejected Progress’s request, the company would almost certainly have faced questions about the numerous other dams that it built without permits and that were later found to have serious structural problems.

Full environmental assessments would also have likely shone a critical light on how B.C.’s energy industry regulator, the Oil and Gas Commission, allowed all the dams to be built in the first place.

Exemption ‘fuels public distrust’

Green Party MLA Sonia Furstenau says the Environmental Assessment Office’s decision to grant Progress’s extraordinary request fuels public distrust of the relationship between government and the powerful industries it regulates.

“Progress Energy being granted retroactive exemption is an example of how trust gets eroded,” Furstenau said. “People want to see companies and industry being held to account and to see rules being followed and enforced.”

“We have a long way to go to resolve this,” Furstenau said, adding:

“A revised EA [environmental assessment process] will help, reform of professional reliance will help, but we also need enforcement and monitoring, and we need far more transparency and accountability.”

In granting the exemptions — albeit with some conditions attached — the Environmental Assessment Office partially closes the file on one of the most extraordinary applications ever brought before it.

Progress Energy responsible for two violations of B.C. environmental rules

Since the Environmental Assessment Office’s inception 25 years ago, there has never been a case where a company built not one, but two major projects in violation of the Environmental Assessment Act and then asked the agency to rule retroactively that the projects did not have to be assessed.

Among hundreds of pages of documents released by the office in response to a Freedom of Information request, is an e-mail suggesting the agency initially hoped to fast-track the process, with an extremely short turnaround that would have given members of the public virtually no time to respond.

The same e-mail also suggests that the Environmental Assessment Office from the outset leaned toward granting Progress’s request rather than making an example of the company by ordering it to completely dismantle the illegal structures and restore the lands it had so dramatically altered.

“We are expecting the Request for Exemption to come this week, and then we will likely issue an exemption in March,” Environmental Assessment Office project assessment officer, Amy Thede, wrote in the e-mail, dated January 25, 2017.

But the Environmental Assessment Office’s hopes of putting a quiet end to the matter were undone when the CCPA published its first investigation in May 2017 on the existence of the two dams, which were part of a sprawling network of unlicensed dams that had been built by Progress Energy and its competitors across northeast B.C.

(All of the unlicensed dams were built to trap large volumes of freshwater used in brute-force natural gas industry fracking operations that have triggered numerous earthquakes in northeast B.C. Water use is up spectacularly at such operations, as documented recently by investigative journalist Andrew Nikiforuk.)

The CCPA investigation was widely covered by media outlets, and resulted in numerous e-mails and calls between government ministries and agencies including the Environmental Assessment Office and Oil and Gas Commission.

By this point, Progress was embroiled in a regulatory mess, having invested millions in dams it built without first obtaining the required permits and without the Oil and Gas Commission once intervening to stop it.

Numerous unpermitted water impoundments and dams have been built in northeast B.C. to service the oil and gas industry, in particular water-intensive fracking operations. Photo: Garth Lenz / The Narwhal

Structural problems with unregulated dams a danger

The company was responsible for roughly half of more than 50 unlicensed dams on public or Crown lands in the province, including the two structures for which it sought retroactive exemption from environmental review.

The largest of these two, the Lily Dam, topped out at the height of a seven-storey apartment building. The dam cost $3.42 million to build, according to documents released by the Environmental Assessment Office in response to the CCPA’s Freedom of Information request.

The second, the Town Dam, was as high as a five-storey building and cost $1.73 million. Just one year after that dam’s construction, however, serious structural problems surfaced.

“In 2013, sloughing had begun to occur along the west berm [an earthen wall of the dam] and Progress initiated a series of upgrades and repairs including the installation of lined concrete inlet pads. This required an additional $587,000 and was completed from June to September,” reads one document submitted by Progress to the Environmental Assessment Office in March of last year.

By then, numerous problems had surfaced at other Progress dams. So extensive were the problems that senior company personnel began holding regularly scheduled weekly meetings on the dams and the numerous water licences that the company had to apply for — also retroactively.

The most serious design flaws included either a complete lack of spillways or improperly built spillways. Spillways are critical components of properly built dams.

Their absence can result in reservoirs overtopping and dam walls collapsing, as occurred with horrific consequences in 2010, when a small earthen dam near the Okanagan community of Oliver burst, triggering a mudslide. That dam was much smaller than some of the unlicensed dams built by Progress and its competitors.

Testalinden creek mudslide south of Oliver, B.C., 2010. Photo: Darren Kirby via Flickr

Dams hold water for fracking operations

Progress’s dams are part of a vast network of infrastructure that includes natural gas well pads, wastewater pits, compressor stations and pipelines that the company built in anticipation of Petronas proceeding with plans to invest in a large liquefied natural gas (LNG) plant in Prince Rupert, the Pacific Northwest LNG project.

At the time many of the dams were built, the provincial government, then headed by Premier Christy Clark, had staked a lot of political capital on the Petronas project. Shortly after the 2017 provincial election, Petronas announced it would not proceed with the project.

Petronas subsequently announced, however, that it was a 25 per cent partner in another project, LNG Canada, led by Royal Dutch Shell.

That project officially got the green light at a signing ceremony in Vancouver on October 2 attended by company representatives, B.C. Premier John Horgan and Prime Minister Justin Trudeau.

Horgan had enthusiastically courted the consortium saying his government would provide up to $6 billion in tax credits to Shell and its partners over a 40-year period should they proceed.

While LNG is not explicitly mentioned in the Freedom of Information documents, it is clear that the Oil and Gas Commission flagged to the Environmental Assessment Office how important the broader context of the dams was.

Dams should not be ‘papered over’ with exemptions, commission hears

In one e-mail the Environmental Assessment Office noted how the Oil and Gas Commission had contacted it in the summer of 2016 to say that it knew of two dams that were “well over the trigger” for environmental assessments.

“Both belong to Progress Energy,” the e-mail reads, “so OGC has communicated that this is a high priority.”

In another e-mail the Environmental Assessment Office notes how the Oil and Gas Commission again stressed the importance of the company involved saying: “Progress is a significant proponent in oil and gas production and these two dams are part of large operations.”

Eventually after much delay, Progress submitted its formal exemption application to the Environmental Assessment Office on July 20, 2017. A discussion then ensued about how much — or little — time to give the public to respond.

Journalist Ben Parfitt visits an Encana dam and reservoir near Farmington, B.C. Photo: Garth Lenz / The Narwhal

“It needs to be long enough for the public to have sufficient opportunity to comment/participate, amplified by end of summer/early fall timeline,” Alex Denis, a project assessment officer, noted in an e-mail to Monica Perry, an Environmental Assessment Office executive project director. Denis’ e-mail also noted that the office could order a consultation period of up to 75 days.

But that did not happen.

The Environmental Assessment Office eventually settled on just a 29-day public comment period and issued no press release notifying the media or the public about the process. The consultation clock was set ticking on August 24, 2017, when most British Columbians were predictably turning their thoughts to the Labour Day weekend holiday and the busy start-of-school season to follow.

A number of organizations eventually learned of the Environmental Assessment Office’s move, and filed responses. Lengthy submissions were received from the Blueberry River First Nation, a Treaty 8 First Nation whose lands and waters were impacted by the dams; the environmental law firm Ecojustice, on behalf of its client Sierra Club BC; West Coast Environmental Law Association and the CCPA.

The Ecojustice letter noted that the Lily and Town Dams had been built and were operating in contravention of the Environmental Assessment Act and that the Sierra Club was also concerned that by allowing the dams to proceed, the Oil and Gas Commission itself may have contravened the Act as well.

“This is a serious situation that should not simply be ‘papered over’ by the retroactive, unlawful issuance of exemptions. This should be addressed by the EAO through the referral of these projects to the Minister [George Heyman, Minister of Environment and Climate Change Strategy] for environmental assessments by commissions or panels,” the Ecojustice/Sierra Club submission read in part.

Dams retroactively determined to have no significant impact

A little more than one month after public comments closed, the Environmental Assessment Office’s senior compliance and enforcement officer, Chris Parks, issued two orders to Progress Energy. The orders clearly noted that the company had violated the Environmental Assessment Act, which states that a company must not “construct, operate, modify, dismantle, or abandon” a major project, including tall dams, unless the company had first applied for and received a certificate.

Parks then ordered Progress to drain virtually all of the water impounded by both dams.

According to the Environmental Assessment Office itself, “when a major project is proposed in British Columbia, it must undergo an environmental assessment. This process ensures that any potential environmental, economic, social, heritage and health effects that may occur during the lifetime of a major project are thoroughly assessed.”

The Act allows companies to request that major projects they wish to build be exempted from undergoing such assessments. But the clear intent is that such applications are made well before projects are built, not years after the fact.

In the ensuing months after Progress’s application was received, members of a large “working” group appointed by the Environmental Assessment Office to evaluate Progress’s proposal met to consider the application. Group members included representatives from several Treaty 8 First Nations, the Ministry of Energy, whose deputy minister is a director on the Oil and Gas Commission’s board, the Oil and Gas Commission itself and the City of Fort St. John, which is home to several energy company branch offices, including Progress Energy.

On July 17 of this year, the Environmental Assessment Office issued its final decision and posted it online.

“I have determined that the project will not have any significant adverse environmental, economic, social, heritage or health effects and that therefore an environmental assessment certificate is not required,” Kevin Jardine, associate deputy minister in the Environmental Assessment Office wrote in two letters to Jarred Anstett, Progress Energy’s regulatory advisor.

But the company had to meet a number of conditions before resuming operations at the dams.

Among other things, it had to hire a “qualified professional” to come up with plans that the company would then have to implement, including plans to minimize erosion and to ensure that to the full extent possible the dam’s reservoirs were not allowed to overfill.

(By then it was known that at another Progress Energy dam the company’s jerry-rigged efforts to drain an overfilled reservoir — by pumping water onto the open ground below — had almost triggered an environmental disaster at a nearby fish-bearing stream.)

The company was also required to file detailed water use reports once it resumed operation of the dams and to fully decommission the dams and rehabilitate lands when operations eventually ceased.

All of this was to be coordinated between the company and the Oil and Gas Commission, the same agency that had allowed the dams to be built in the first place.

Following the decision, the CCPA spoke with Environmental Assessment Office officials, including Teresa Morris, who was the lead official on the Progress file, Alex Denis, a project assessment officer, and Michael Shepard, an Environmental Assessment Office executive project director.

Although the Environmental Assessment Office received Progress’s request under the extraordinary circumstances of the dams already being built, the office insists that the same evaluation process was followed as if the dams had not yet been built.

Progress Energy Lily Dam. Photo: Ben Parfitt

On only two previous occasions has the Environmental Assessment Office dealt with major projects being built or partially built without an environmental certificate first being received or an exemption being sought.

In one case — a municipal water supply dam expansion in Campbell River — the project was only partially built before coming to the office’s attention. An exemption was subsequently granted.

In the other, a forest company in the Quesnel region, Dunkley Lumber, fully completed a new sawmill expansion without first notifying the Environmental Assessment Office. It too later received an exemption.

Progress Energy could face fines, jail terms

The Progress file, however, is unique, not only because it involved two fully built structures, but because of the wider network of unlicensed dams built by the company. Had the Environmental Assessment Office chosen to, it could have ordered the company to not only undergo full environmental assessments of both dams, but all the other “related” unlicensed dams that the company had also built.

Asked whether it had powers to require Progress Energy to post bonds to fully cover all dam decommissioning and reclamation costs, the Environmental Assessment Office said it did not and that it would fall to the Oil and Gas Commission to make that call.

As for the dams being built in violation of the Act, it now falls to the office’s compliance and enforcement staff to decide whether to recommend to Crown Counsel that fines and/or jail terms be sought. Under current regulations, the Environmental Assessment Office has up to three years to recommend to Crown counsel that penalties be sought.

Under the regulations, a company found guilty of violating the act by building major projects without approval is liable to pay a fine of up to $100,000 for a first offence and $200,000 for a second. Jail terms for company personnel of up to six months can also be sought.

The regulations stipulate that such penalties must be sought within three years of the Environmental Assessment Office learning that possible offences had occurred.

Since the Environmental Assessment Office learned of the dams’ existence in the summer of 2016, less than one year remains to initiate such charges.

In the past decade, according to a compliance and enforcement database maintained by the provincial Ministry of Environment, there have been 19 instances in which the Environmental Assessment Office has ordered companies to take corrective action at projects where the agency has jurisdiction.

None of those orders were accompanied by fines and no company personnel were charged with wrongdoing as a result of violating the act — an outcome that almost certainly has not gone unnoticed by Progress Energy and others.

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.

Early last spring, provincial civil servants cut off virtually all communication about what the government knew about a sprawling network of potentially dangerous and unregulated dams in northeast B.C. on the pretext they could not comment because of the impending election.

The coordinated effort meant there was virtually no comment until months after voting day from front-line agencies on how 92 unlicensed dams were built on the then BC Liberal government’s watch.

Details about muzzling government communication on the dams — which were built to trap freshwater used in natural gas industry fracking operations — are contained in some of the 8,000 pages of documents released by B.C.’s Oil and Gas Commission (OGC) in response to Freedom of Information (FOI) requests by the Canadian Centre for Policy Alternatives (CCPA), which was the first to report on the dams early last May.

The initial CCPA report, published one week before the election and widely covered by media outlets, exposed how fossil fuel companies had built “dozens” of unlicensed fracking dams.

The FOI documents include internal emails between senior OGC staff and the Ministry of Natural Gas Development, in which the two organizations agree to refuse to release information on the dams on the grounds that doing so would violate rules on managing government records during the “interregnum” (the time between governments).

But this assertion is flatly rejected by an expert on privacy policy.

“Guidelines on ‘managing records during an election’ cannot trump the law,” said Colin Bennett, a University of Victoria political scientist. “If there is a public interest in disclosure, then the election period is irrelevant.”

Bennett added that B.C.’s Freedom of Information and Privacy Act clearly states that government officials should proactively release information that is in the public interest without delay. That did not happen in this case.

Not only did it not happen, but the OGC insisted on formal FOI requests being filed to obtain the information. By doing so, the Commission — with the full knowledge of the Ministry of Natural Gas Development — ensured that documents on the troubling dams would not be released until long after the election.

The suppressed information included documents about unlicensed dams built by Progress Energy, a subsidiary of the giant Malaysian state-owned company Petronas. At the time of last spring’s election, Petronas was still weighing whether or not to invest in a proposed liquefied natural gas plant at the mouth of the Skeen River near Prince Rupert.

The project was enthusiastically backed by then-Premier Christy Clark and Minister of Natural Gas Development, Rich Coleman. The premier went so far as to call opponents of the project “the forces of no.”

Averting a potential disaster

Early in our investigation, the CCPA learned that at least one unauthorized Progress Energy dam was so poorly built that the OGC had quietly ordered the company in spring 2016 to dewater the dam’s reservoir in order to avert a potential disaster. (A gas compressor station was downhill of the dam.)

The OGC even posted a very short summary of the order on one of its webpages, a low-key public acknowledgement that a more comprehensive document existed. The CCPA’s request for a copy of the full order was initially denied.

An April 18, 2017 email exchange between the OGC’s executive director of corporate affairs, Graham Currie, and the Ministry of Natural Gas Development’s communications director, Paul Woolley, refers to the full order and related documents as materials that both organizations agree not to release or to answer questions about:

“FYI – spoke with [CCPA policy analyst] Ben Parfitt today and advised him we could not release the order he was asking for and that he should submit an FOI. He said he has to report on this – and will put a line in to the effect:

‘I asked to receive a copy of the order and Graham Currie told me, due to the interregnum, it was not available and I should submit an FOI.’

I suspect we’ll see his editorial coming in the next day or two, based on this conversation.”

A half hour later, Woolley responded saying:

“Thx. This is [sic] the lines we are working with:

• During the interregnum period, it is public service’s duty to remain impartial during this time both in action and perception.
• Government communication practices are the same as they have always been for this election which is to not offer media relations support beyond pointing to already publicly available data or information.
• There are exceptions to these practices which are immediate public health matters, environmental health and emergencies.
• Further, during this time government staff do not provide analysis or comment on campaign promises of any political party, or any general comments they may make about government programs, policies and services.

Release of the order would not be an immediate concern related to public health and safety or an emergency in my opinion.”

Vincent Gogolek, former executive director of the B.C. Freedom of Information and Privacy Association, said the email exchange is troubling, particularly in light of a complaint made by the University of Victoria’s Environmental Law Centre on behalf of the Association in 2012.

Gov failed to alert public to dam hazard in 2010

That complaint, to B.C.’s Freedom of Information and Privacy Commissioner, outlined several instances where the Association felt that government officials had acted incorrectly by withholding information that should have been released because it was clearly in the public interest.

One notable example was the government’s failure to notify the public about possible safety concerns at the small Testalinden dam in southern B.C. near the community of Oliver. A portion of the dam’s wall gave way in 2010, releasing 20,000 cubic metres of water.

Miraculously, no one was killed when the dam’s reservoir triggered a mudslide that wiped out five houses and blocked a portion of Highway 97 for five days.

After reviewing the law centre’s complaint, then-Information and Privacy Commissioner Elizabeth Denham wrote a report in response in which she found that provincial civil servants knew from government inspection reports that the Testalinden dam was near the end of its lifespan and that it posed “a hazard.”

Denham concluded that the government “failed to meet its obligation” by not alerting the public to the “compromised state of the dam.”

Testalinden creek mudslide south of Oliver, B.C., 2010. Photo: Darren Kirby via Flickr

Denham was particularly concerned that when it came to the troubled dam, civil servants appeared to ignore one of the Freedom of Information and Privacy Act’s most important provisions, Section 25, which stipulates that the head of any public body “must, without delay” disclose any information “about a risk of significant harm to the environment or to the health or safety of the public or a group of people.”

In light of Denham’s report, Gogolek wonders how the OGC and Ministry of Natural Gas Development concluded four years later that it was not in the public interest to proactively release information on the dozens of unauthorized earthen dams built by fossil fuel companies. Some of those earthen dams held back seven times more water than what escaped during the catastrophic Testalinden failure.

And in each case, those dams were not vetted by provincial dam safety officials before they were built, meaning it was anybody’s guess whether or not the structures were designed and built to even minimally acceptable engineering specifications.

“How did they interpret that these dams were so radically different than the Testalinden dam? That’s the critical question in my mind,” Gogolek said.

Gogolek’s concern has added significance in light of other documents released in response to the CCPA’s FOI requests. Those documents show that OGC personnel knew as far back as June 2015 that there was a significant problem at another unauthorized Progress Energy dam, yet the OGC took no significant action until May 2016.

And the commission remained virtually silent on the matter for almost another year until it was forced to respond because of the CCPA investigation.

‘I cannot determine the mode of failure’

The scant details on the June 2015 incident — a failure of some kind — at a Progress Energy dam site are contained in an “assessment report” written 11 months later (on May 26, 2016) by the OGC’s then-chief hydrologist Allan Chapman.

According to the assessment report, the chief hydrologist was not happy with what he found. Chapman discovered during his field visit that Progress had built the dam to capture freshwater from two streams.

Under provincial water laws, the company had to apply for a licence before diverting water from streams.

That had not happened.

The dam was 10 metres high and stored roughly five times more water than what spilled during the Testalinden disaster. That made the dam a fully regulated structure under provincial laws, meaning that before it was built engineering plans should have been submitted to provincial dam safety officials.

That didn’t happen either.

Then, in spring or early summer 2015 — Chapman was uncertain when — the dam experienced some kind of failure.

“I cannot determine the mode of failure,” Chapman wrote in his report, noting that the dam’s reservoir could possibly have overfilled and the water overtopped the structure.

“There is evidence of substantial water and sediment movement into the forest downslope of the dam,” Chapman wrote, noting that there were “mud and splash lines on trees” about one metre above ground level, and that those splash lines extended 100 metres or more into the forest “approximately 100 metres downslope” of the dam.

For any oil and gas industry workers in the immediate vicinity downhill of the dam that day, the mudflow could have had deadly consequences.

More than a year after Chapman’s visit, in response to questions emailed to Progress Energy by the CCPA, the company acknowledged that an event had, indeed, occurred at the site — but not a failure of the dam per se.

In the email, Progress’s vice-president of external affairs and communications, Liz Hannah, said that during construction of the dam “frozen material had been excavated from the pond area and stored in the northwest corner of the site. During melting conditions, a portion of this frozen saturated material had mobilized and run offsite onto a Progress right of way and into the adjacent forested crown land.”

Copies of photos included in Hannah’s email show a very large stream of dried and caked mud that she said had been carried away from the dam site.

“It is correct that a portion of the excavated soil pile failed,” Hannah concluded in her email, “but the dam itself did not.”

By the time of Chapman’s spring 2016 report, the OGC knew it had allowed a big problem to develop on its watch.

Progress Energy and other companies had clearly built many unlicensed dams on Crown or public lands — dams that the OGC could have, and should have, stopped. It was also clear that many more such dams had been built on private lands, dams that the Ministry of Forests, Lands and Natural Resource Operations (FLNRO) also could, and should, have stopped.

At the time, provincial regulators didn’t know how many dams there were. They also didn’t know where the dams were located, what waters they impounded or how safe or unsafe they might be.

Scrambling to quantify just how many such dams there were, the OGC sent a letter on May 13, 2016 to companies drilling and fracking for gas in B.C.

The companies were instructed to report back on all “fresh water storage” structures they had built including information on dam heights, water sources, and the amounts of water stored behind the dams.

The letters also instructed the companies to supply “produced, signed and sealed” documents from professional engineers on the “structural integrity” of the dams. The companies were also told that their engineers must report on any “risk to public safety, the environment, or other property” that the dams posed.

Once the responses came in, the OGC concluded that Progress Energy had built roughly half of 51 unauthorized dams, all but three of which are located on Crown lands.

It is now up to the OGC to approve or disapprove the dams retroactively.

Progress Energy’s Lily dam is roughly as high as a five-storey building and was buit without government approval under the B.C. Environmental Assessment Act. Photo: Ben Parfitt

Evidence massive dam is ‘moving’

Subsequent work by FLRNO revealed that in addition to those 51 unregulated dams, another 41 were built without the required permits and that the bulk of those dams are on private lands, including farmlands in B.C.’s Agricultural Land Reserve.

Two unregulated dams built by Progress Energy in 2012 and 2014 are particularly problematic because they are so big. One is nearly 23 metres high or roughly as tall as a seven-storey apartment building and the other is roughly as high as a five-storey building. The taller of the two earthen structures is referred to in various documents as the “d-42-k” or Lily dam.

Both dams qualified as “reviewable projects” under B.C.’s Environmental Assessment Act, meaning that each of them should have undergone separate provincial environmental assessments first to determine whether Progress would be allowed to build them at all.

But the company never alerted the Environmental Assessment Office (EAO) of its intentions to build the dams and Progress subsequently took the extraordinary step of asking the EAO after the fact to exempt the dams from review.

The EAO eventually ordered the company to drain virtually all of the water behind the massive structures and is expected to soon issue its decision on the company’s request. Several organizations, including the Blueberry River First Nation and the CCPA, filed documents with the EAO urging that the company’s application be rejected.

A photocopied photo included in the FOI documents obtained by the CCPA shows a tension crack at the top of one sloped wall of the towering Lily dam near Mile 156 of the Alaska Highway. The 23-metre-high structure’s “live storage” volume — meaning the amount of water that could be unleashed should the dam fail — is more than 20 million gallons or enough to fill 30 Olympic-size swimming pools.

Another email in the FOI package quotes an OGC official saying there was evidence the massive structure was “moving,” a sign that the dam’s earthen walls or berms were slowly shifting, potentially causing the dam to become unstable.

Since the first stories on the sprawling network of unauthorized dams were published by the CCPA on May 3, 2017, belated inspections by compliance and enforcement personnel with the OGC and EAO uncovered significant problems at 16 unlicensed dams on Crown lands. Companies were ordered to take corrective action, including draining much of the water behind many of the dams to lower the risk of catastrophic failures.

Further problems were identified at another dozen unlicensed dams built on Crown lands, for which the Province could still issue more orders. And, more problems may yet come to light at other unlicensed dams, in particular at the 41 built on private lands and recently identified by the FLNRO.

All of this makes the government’s pre-election strategy to suppress the release of information on the problematic dams more vexing. No environmental concerns? No risks to human health and safety? How did the government possibly draw such conclusions when documents in its possession clearly said otherwise?

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.

This piece originally appeared on Policy Note, by the Canadian Centre for Policy Alternatives.

The number of unlicensed and potentially dangerous dams built in recent years in northeast British Columbia is nearly double what has been reported, according to one of the province’s top water officials.

At least 92 unauthorized dams have been built in the region, where natural gas industry fracking operations consume more water than just about anywhere on earth. That’s far more than the 51 dams previously identified in documents obtained through Freedom of Information (FOI) requests by the Canadian Centre for Policy Alternatives (CCPA).

With the number of unlicensed dams built to impound freshwater used in fracking operations approaching 100, more questions are being raised about how so many structures were built without provincial agencies halting their construction.

Ted White, director and comptroller of water rights in B.C.’s Water Management Branch, confirmed the higher number, which includes an additional 41 dams to those originally documented by the CCPA, all built on private lands, most if not all, on rural farm lots in the provincial Agricultural Land Reserve.

White’s confirmation came after his ministry — the Ministry of Forests, Lands, Natural Resource Operations and Rural Development (FLNRO) quietly posted a consultant’s report on its website early in the new year.

The report, posted without an accompanying press release, called some of the unauthorized dams potential “time bombs” and said a top priority must be “to find the high consequence dams and make sure they are properly constructed and operated and maintained in an appropriate manner before any of them fail.”

Jim Mattison, who wrote the report, was also once B.C.’s water comptroller.

Mattison based his conclusions on satellite imagery analyzed by FLRNO staff who looked at the vast network of artificial water bodies in the northeast where B.C.’s largest natural gas reserves are found. The analysis revealed nearly 8,000 water bodies have been constructed in the region, more than half of which are relatively small holes or “dugouts” in the ground that capture and store water used by farmers and/or natural gas companies.

Additionally, the report identified 268 “large” or “very large” artificial water bodies that could be dam reservoirs. These water bodies, all at least a half hectare in size and many much larger, became a top priority for further study.

After Mattison submitted a first draft of his report in March 2017, dam safety officials with FLNRO flew by helicopter to 80 suspected dams.

Those inspections, White said, identified 41 previously undocumented dams that were built without the proper licenses and authorizations. In an emailed response to questions, White said “the 41 dams identified by the Ministry are in addition to the 50 or so that the OGC [Oil and Gas Commission] had identified previously.”

In contrast to previous reports that identified dozens of unauthorized dams built on public lands, the recently identified 41 dams are all on private lands, including farmlands, White said, adding that “the Ministry and OGC have been working closely together to identify dams that require regulation.”

B.C. fracking consumes between 20 and 100 times more water than a decade ago

The unprecedented scale of problematic dams built in the region coincided with a rapid expansion in the amount of water that fossil fuel companies use in their fracking operations, particularly in the Montney Basin, the more southern of the two largest natural gas plays in northeast B.C.

According to a 2016 analysis by consulting firm Foundry Spatial, fracking operations in the region now consume between 20 and 100 times more water than they did just over a decade ago.

Around the time Mattison submitted his draft report last March, the CCPA received a tip that many unauthorized dams had been built by fossil fuel companies without the companies first obtaining required water licences or submitting engineering and construction plans to provincial dam safety officials.

The CCPA subsequently flew to Fort St. John, identified unlicensed dams in the field and published findings showing how “dozens” of such structures had been built in apparent violation of provincial acts and regulations including the Water Act, the Environmental Assessment Act and the provincial Dam Safety Regulation.

B.C. Oil and Gas Commission responsible for regulating problematic dams

FOI requests later confirmed that 51 such dams had been built. All but three were on Crown or public lands shared with First Nations.

B.C.’s Oil and Gas Commission (OGC), which regulates fossil fuel companies, is now responsible for regulating those dams.

Nearly one third of the dams first identified as unauthorized were later found to have structural problems that posed serious enough risks to human health and safety and the environment that the companies were ordered to take corrective actions.

Among the most significant design flaws were dams built without spillways, which are essential to divert water safely away from dam reservoirs in the event that reservoirs overfill. Without spillways, dams are at heightened risk of catastrophic failures.

The 41 dams on private land are FLNRO’s responsibility to regulate not than the OGC’s, and White said dams on private lands are nevertheless subject to the same laws and regulations as those on public lands.

Once dams exceed a certain height and/or impound enough water, they become regulated structures. The 41 identified dams on private lands and the 51 on Crown lands meet the criteria for regulated dams.

The story of one of the dams on private land sheds light on the challenges ahead for FLNRO’s dam safety and water officials.

The frack water gambit on private lands

Old Faithful Water Inc. is an offshoot of Swamp Donkey Oilfield Services, a Dawson Creek-based company owned by Trent Lindberg. The company is in the business of selling water to natural gas industry clients.

Like the famed geyser that spews forth water with regularity in distant Yellowstone Park and that the company named itself after, Old Faithful’s owners boast on the company’s website that they can sell water to the fracking industry winter, spring, summer and fall. Each of the company’s four “all season” facilities in the Peace River region straddle the B.C.-Alberta border and are near major hauling routes like the Alaska Highway.

Each facility has ample room for incoming trucks to hook up to pumps that can fill the average tanker with 32 cubic metres of water in just eight minutes. Then the trucks can rumble off to nearby gas drilling pads where the water is pumped underground during some of the most water-intense methane gas industry fracking operations on earth.

Much of that information is on the Dawson Creek company’s website, which features a somewhat bucolic photograph of grasses and flowers in front of what appears to be a small lake except the lake’s far banks look like they’ve been bulldozed into place.

“When it comes to easy water,” Old Faithful’s website gushes, “we have it for you.”

But the “easy water” story has an edgier, uneasy narrative.

A large, earthen dam operated by Old Faithful on private lands. Photo: Vicky Husband

At least some of what the company sells to its industry clients comes from a reservoir impounded by a large earthen dam on private land owned by Trent and Twyla Lindberg. (The Lindbergs could not be reached for comment.)

According to a document filed with the Peace River Regional District, when the dam’s reservoir is at “full capacity” the impounded water is six metres “above grade.” In other words, a wall of water roughly as high as a two-storey house is at risk of spilling in the event the dam failed.

The company built the dam in violation of key provincial regulations, including obtaining a water licence before building the dam. According to documents filed with the Peace River Regional District by a surveyor working for the company, the dam was built in mid-2013, long before the provincial government issued the water licence.

Old Faithful’s dam and reservoir are also on farmland in B.C.’s Agricultural Land Reserve, land that can no longer produce crops because it is either covered by the dam and reservoir, or by the road leading to and from the facility, or the by the large clearing constructed for the tanks and pumps used to fill the incoming trucks with their frack water.

And the water used to fill the unlicensed dam’s reservoir was pumped without permission from nearby Six Mile Creek. The surveyor’s report incorrectly claims that the creek is a “non-fish-bearing” stream when in fact the creek is home to spawning and rearing fish.

‘It’s the Wild West up here’

Last April — four years after the unlicensed dam was built — FLRNO retroactively issued Old Faithful’s owners a water licence, allowing the dam to continue operation. White said the government elected not to fine or charge the company for violating the rules.

“When instances of non-compliance are discovered related to a dam, the goal of the Ministry is to bring owners into compliance with the WSA and its regulations through application of the Dam Safety Compliance and Enforcement Policy. By applying for and being granted a water licence, the owner is demonstrating progress toward coming fully into compliance with the WSA and regulations,” White said in an emailed response to questions.

“There are currently no outstanding orders or fines related to this file.”

The lack of fines for building a dam without the required pre-approvals does not surprise Arthur Hadland, a longtime area resident, farmer and former elected director for the Peace River Regional District.

“It’s the Wild West up here,” says Hadland, who while a regional district director between 2008 and 2014 represented about 7,000 rural residents living in the outlying region around Fort St. John.

“There’s no sense of stewardship anymore,” Hadland laments. “We’ve lost that.”

Most people living in the region may have never heard of Old Faithful Water Inc.

Shell Canada, a subsidiary of the global fossil fuel behemoth Royal Dutch Shell, is another matter. The company’s sign can be seen at Shell gas stations in just about every community in the province and the company also has subsurface rights to oil and gas over an area totalling more than 88,200 hectares in northeast B.C.

In 2016, Shell had drilling rights on an even greater area of land before selling those rights on nearly 24,700 hectares to Tourmaline Oil Corporation as part of a $1.03 billion cash and stock transaction. The subsurface rights that Shell sold were in the Gundy area (generally north of Fort St. John) and included farmland where Shell, like Old Faithful, had a role in constructing two dams that violated key provincial laws.

Documents obtained by the CCPA through FOI requests filed with the OGC indicate that Commission personnel were aware of the two Shell dams that contravened key pieces of provincial legislation.

‘Long saga’ with dams: hydrologist

In an October 2016 email with the subject line “Shell Canada – Gundy – dams,” the issue of the two dams is addressed by Allan Chapman, the OGC’s then chief hydrologist, in a note to numerous FLNRO personnel.

Chapman notes that Shell had recently retroactively applied for water licences for two dams “and related stream diversions” on a rural property north of Fort St. John. He went on to write in the email that because Shell subsequently sold its leases, it was expected the company would withdraw its water licence applications and leave it to the new lease owner to come into compliance with all relevant provincial laws.

“There is a long saga with these dams and stream diversion. Everything was done 3-4 years ago without authorization,” Chapman wrote.

FOI documents also reveal that both dams are located on a “district lot” within B.C.’s Agricultural Land Reserve.

A provincial land title search shows the property – District Lot 2615 – is in the Peace River District and owned by Joleen Meservy whose mailing address is listed in La Glace, Alberta. On her Linkedin page Messervy describes herself as an owner and manager of the Bar 4A Cattle Company and as a “civil consultant” for Meservy Holdings Ltd. The word Shell and the corporation’s distinct bright yellow seashell logo outlined in red is prominently displayed beside the Meservy Holdings name.

According to the land title document, Shell holds three registered leases on the Meservy property. The document does not indicate how much Meservy paid to purchase the property, or how much she may have received from Shell in return either as a one-time up-front payment or through annual lease payments, or what arrangements may have been made between the Shell consultant and the company to access the land and take water away.

Meservey could not be reached for comment.

One of the Shell dams is identified in the document as “Water Pit #3” and was built in the middle of a wetland on the property. B.C.’s Ministry of Environment notes that wetland losses have accelerated in many parts of the province, that they are “one of the most important life support systems on earth,” and that they provide “critical habitat” for fish, birds and other wildlife, including threatened and endangered species.

There is no information in the documents about whether the two dams were built to an acceptable engineering standard.

In an emailed response to questions, Graham Currie, the OGC’s director of public and corporate relations, said the OGC “intends to issue and enforce” orders at the dams and that the Commission holds Shell responsible for the structures.

Like the dams built on public land, those on private land were all built for one express purpose: to supply water to natural gas companies for use in their hydraulic fracturing or fracking operations.

Western Canadian shale plays. Source: Rystad Energy

Accelerating gas production means more water use

While prospects appear dim for a much-hyped liquefied natural gas industry in B.C., natural gas drilling and fracking operations are intensifying in the Montney region, thanks to an abundance of naturally occurring liquids or “wet gases” that flow to the surface following fracking operations. The liquids include pentane, butane and condensates, prized commodities in the Alberta tar sands.

High-volume fracking — a process where immense volumes of water are pressure-pumped deep underground to create cracks or fractures in gas-bearing rock — is now essential to coax gas liquids and methane gas to the surface because the best, easiest to access gas resources are long gone.

Methane — a gas, not a liquid — was long the mainstay of B.C.’s oil and gas industry.

But with gas prices remaining stubbornly low, profits in the Montney now derive almost entirely from naturally occurring “wet” gases that flow to the surface along with the gas following fracking.

The drive to coax as many wet gases from the ground as possible has triggered a sharp increase in the amount of water used at fracking operations.

Encana, one of the region’s largest holders of wet gas deposits, predicts it will double its methane gas production in the Montney by 2019 while at the same time its gas liquids output will soar fivefold to reach 70,000 barrels per day.

That accelerating production means a need for more and more water.

In August 2015, a Progress Energy fracking operation in the Montney Basin consumed 160,000 cubic metres of water — the equivalent of 64 Olympic swimming pools — at just one well, according to award-winning investigative reporter and author Andrew Nikiforuk.

The fracking operation triggered a 4.6 magnitude earthquake, a tremor far more powerful than the two 2.7 magnitude earthquakes that may have contributed to the recent failure of a tailings pond dam at an Australian gold mine in New South Wales.

The water pumped during the Progress Energy fracking operation was eight times more than the amount used in an average fracking procedure in the continental United States.

Small dam failure destroyed 5 houses in 2010

Just as the OGC must now rule retroactively on whether companies that built dozens of dams without permits on Crown lands should be allowed to continue to operate those facilities, it now falls to FLNRO personnel to decide the fate of at least 41 frack-water dams built on private land.

The dams in question are tiny compared to the region’s nearby hydroelectric dams or to larger tailings pond dams operated by mining companies, however, the Mattison report is clear that plenty of damage could occur in the event one of the unlicensed fracking dams were to fail.

Some fracking dams dwarf other earthen structures that have given way in other parts of the province causing great damage, Mattison said.

“Testalinden Lake was a small reservoir in the Okanagan holding about 55,000 m3 of water, artificially created by a small dam less than 10 m high. In mid June 2010, the dam failed. Only about 20,000 m3 of water escaped and ran down a gully for 8 km, by which time it was a debris flow of about 200,000 m3. It destroyed five houses, blocked Highway 97 for five days, covered a four hectare orchard and a vineyard with one and a half metres of mud, and resulted in nine million in damages. Fortunately, there was no loss of life,” Mattison noted.

FOI documents reveal that some of the unauthorized fracking dams impound 150,000 cubic metres of water, roughly three times what the Testalinden dam held back.

The potential damage from the failure of even modest dams is one reason why the penalties for building dams without permits can be significant. If charged and convicted for violating the Water Sustainability Act or B.C.’s Dam Safety Regulation, fines can run to $200,000 and in the most extreme cases $1 million.

The worst offences can also result in jail terms.

To date, however, neither the OGC nor FLNRO have laid charges against any companies for violating provincial laws by building unlicensed fracking dams. Instead, government has taken the softer approach of coaxing companies to “come into compliance” after-the-fact.

Time will tell whether or not that approach safeguards the public interest and proves a sufficient deterrent.

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.