A version of this article also appears on the Canadian Centre for Policy Alternatives’ Policy Note. This is the second in a two-part series. Read the first part here. 

BC Hydro was so worried that its Peace Canyon dam could be badly damaged if an earthquake was triggered at a nearby natural gas industry disposal well that it briefly considered buying the facility for $5 million to make the problem go away.

But the buyout idea was quickly rejected because of the precedent it would set. Virtually all the fossil fuel resources near the dam and for hundreds of miles in every direction had been sold by the provincial government to companies hungry to drill and frack for natural gas.

That placed the publicly owned hydro provider — and its sole shareholder, the provincial government — in a bind. What was to stop another company from drilling a similar well nearby? Would that well owner need to be compensated to eliminate the threat to the dam. And if so, who would foot the bill? 

Details on the conundrum facing BC Hydro are contained in hundreds of pages of emails, letters, internal memos, and handwritten meeting notes obtained in response to a freedom of information (FOI) request.

The documents show that dam safety officials and engineers at BC Hydro knew for 40 years that the Peace Canyon dam was built on top of layers of weak shale rock that could shear or break far more easily than previously thought. They also knew the dam was at risk of significant damage and potential failure in the face of earthquakes induced by the natural gas industry.

The documents show that BC Hydro officials became particularly concerned about the disposal well in early March 2017 after Scott Gilliss, the utility’s point person on dam safety in the Peace region, discovered that three to four tanker trucks at a time were delivering liquid waste to the well site. The well site was owned by Canada Energy Partners and was only 3.3 kilometres away from the dam.

Investigative reporter and award-winning author Andrew Nikiforuk reported the company “spent $3 million drilling, upgrading and operating the well and pumped about 16 million litres of waste water” down the wellbore in the first three months of 2017.

On March 14, 2017, Stephen Rigbey, BC Hydro’s director of dam safety, emailed the provincial Oil and Gas Commission, which had approved the well operation, warning that the Peace Canyon dam had “foundational problems” and that even a magnitude 4 to 4.5 earthquake could cause damage to the structure.

The commission called Rigbey’s revelations a matter of “high concern.”

Two days later, the commission’s vice-president of compliance, Lance Ollenberger, formally notified the disposal company’s CEO, Benjamin Jones, that he had suspended the disposal permit.

An ‘increased likelihood’ of earthquakes

Ollenberger told Jones there was a chance an earthquake triggered at the well site could cause ground motions that were stronger than the dam could withstand. He went on to note that ground motions as strong or stronger had already been caused at other natural gas industry operations in the province.

“If such an event were to occur [near Peace Canyon dam] the consequences would be severe,” Ollenberger said.

A message from B.C. Oil and Gas Commission’s vice-president of compliance, Lance Ollenberger, to the CEO of Canada Energy Partners, warning about the severe consequence of a fracking-induced earthquake near the Peace Canyon dam.

But if BC Hydro thought that was the end of the matter, it was mistaken.

Two weeks later, Jones formally appealed to the Oil and Gas Appeal Board, a body that typically adjudicates disputes between landowners (usually farmers) and the commission.

Jones told the board the permit cancelation was not justified because there had been no earthquakes generated at either the disposal well or the nearby dam.

He also warned that if the decision to cancel the permit was not overturned he would seek financial compensation — either $5 million in cash split between the commission and BC Hydro, or “$625,000 cash plus a transferable royalty credit of $2.34 million” from the commission and “$625,000 cash plus a transferable electricity credit of $2.34 million from BC Hydro.”

But the appeal board was unmoved.

While the board concluded there was “a low likelihood” the disposal well could induce an earthquake strong enough to “destabilize” the Peace Canyon dam, such a horrific outcome could not be dismissed.

Disposal wells and fracking operations “increase the likelihood” of earthquakes, the board said, siding with the commission’s original decision to cancel the permit.

Running out of options

The ruling gave the commission all the justification it needed to shut the well down for good. 

But much to BC Hydro’s dismay, the commission did not do that.

Instead, on Dec. 4, 2017, the commission told the company it could potentially resume disposal operations again — just so long as numerous conditions were met.

The conditions included: installing new equipment to record seismic events within five kilometres of the well site; installing other equipment to record the ground motions associated with nearby earthquakes; and reporting the “date, time, location, magnitude, ground acceleration and depth” of any localized earthquakes in regular, one-month intervals to the commission.

That decision, according to the FOI documents, meant that BC Hydro was rapidly running out of options to protect the dam from the disposal well or any other encroaching oil and gas industry operations for that matter.

In an email to six BC Hydro colleagues on Dec. 22, Rigbey said it would be “much easier said than done” to get the disposal well permit permanently cancelled:

“We only have a few options. 

Make another appeal to the OGC tribunal (destined to fail), followed by

Initiate a court challenge, outside of the OGC tribunal (ie a crown corporation taking its sole shareholder to court!)

Buying out the well (already been discussed, with an asking price of $5M), and then being saddled as a well owner with all responsibilities for well closure and all the ongoing residual risks, as well as making a precedent that BCH [BC Hydro] will buy out anyone who gets a legal permit to drill a well…

We cannot come up with any other alternatives, other than ensuring we have strict protocols in place,” Rigbey wrote.

The buyout option’s $5-million price tag was particularly noteworthy because it signalled that BC Hydro knew that it was effectively on the hook for the entire cost that Jones had said he would seek on a cost-shared basis from both the commission and BC Hydro earlier.

By offering Canada Energy Partners a “conditional” way forward, the commission could not be accused of taking away or expropriating the company’s “subsurface rights,” and thereby side-step any question of having to compensate the company for those lost rights.

Province earned a record $1.2 billion for drilling rights in 2007

BC Hydro first became aware of disturbing ground motions or tremors at its Peace Canyon dam in 2007. Coincidentally, that turned out to also be a momentous year for the oil and gas industry and its biggest booster, the B.C. government.

Provincial statistics show that fossil fuel companies paid the provincial government a record $1.2 billion in 2007 for the rights to drill and frack for natural gas and oil in northeast B.C. It was the beginning of an unprecedented four years of so-called “land sales,” that would see more than $5.3 billion channeled into the provincial treasury.

Between 2007 and 2010, fossil fuel companies gained rights to drill and frack for natural gas under an additional 2 million hectares of land in northeast B.C. — an area larger than 5,000 Stanley Parks.

Fracking pad in northeast B.C. near Farmington. Photo: Garth Lenz / The Narwhal

What drove the unprecedented spike in land sales was the realization that fracking (pressure-pumping vast amounts of water, sand and chemicals) into shale rock formations deep below the ground could liberate immense quantities of natural gas and oil.

Even the provincial government, which had encouraged a bidding war between companies anxious to exploit those resources, was taken aback at the sharp climb in sales prices during that time.

In a financial review released in September 2009, the provincial finance ministry noted:

“At $3,710/hectare, the average bid price was $3,000 higher than assumed and 99 per cent higher than 2007/08 indicating industry’s continued interest in exploring and developing B.C. resources — especially deep and shale natural gas reserves.”

All that sales activity signalled that fracking was poised to explode in northeast B.C. This included shale rock formations that extended under or near the Peace Canyon and WAC Bennett dams, as well as the planned Site C dam — BC Hydro’s third hydroelectric dam on the Peace river. Today the dam is under construction about 70 kilometres as the crow flies downstream from Peace Canyon.

The government’s fire sale of subsurface rights had brought fracking to the doorstep of some of the most critical — and potentially vulnerable — hydroelectric dams in the province. In an email sent to several of his BC Hydro colleagues in April 2012, Rigbey warned that what lay ahead was akin to “carpet bombing.” And he hazarded a guess that the bombing campaign might last 50 years.

Email from Stephen Rigby

Another well from hell

In BC Hydro’s eyes, the disposal well near the Peace Canyon dam was something of a well from hell — a facility troublingly close to a dam that was both situated on top of weak shale rock and known to be near existing faults that could be reactivated during an earthquake.

Another well site that might fit that bill for BC Hydro is a massive “multi-well” natural gas pad situated just 20 kilometres south of Site C.

The roughly eight-hectare well pad was carved out of farmland by Canadian Natural Resources Ltd. on a bench of land between the Peace and Kistkatinaw rivers.

On Nov. 29, 2018, the company was in the process of fracking its eighth and ninth gas wells on the pad when it touched off the second-largest earthquake yet caused by a natural gas industry fracking operation in the province.

Author Ben Parfitt at the CNRL gas well where a 4.5 magnitude earthquake was triggered in November 2018, resulting in a “strong jolt” at the Site C dam construction site. Photo: Garth Lenz / The Narwhal

According to the FOI documents, the 4.5 magnitude earthquake caused a “strong jolt” at the Site C dam site. All construction work was immediately suspended and workers evacuated from the site.

The commission quickly identified the fracking operation as the cause of the earthquake and the company immediately suspended its operations. The commission then alerted the public that fracking operations would remain suspended at the site and would not be allowed to resume unless the commission explicitly gave its written consent.

Canadian Natural Resources Ltd., or CNRL, is just one of many companies operating in an area the commission has dubbed the “Kiskatinaw seismic monitoring and mitigation area.” The area consists of expansive grain fields and wooded areas between Dawson Creek in the south and Fort St. John and the Site C dam to the north. The rural enclave of Farmington has been particularly affected by developments in the zone.

The commission put new rules in place in the area in May 2018, recognizing that increased gas-drilling and fracking in the Farmington area was causing earthquakes.

The new rules included a requirement that industrial activity be immediately suspended if either a company or the commission concluded that a magnitude 3 earthquake or greater had been triggered by a fracking operation.

Other rules required companies to “take action” and have “mitigation plans” in place should earthquakes of magnitude 2 or greater be triggered by fracking. And, if any earthquakes of 1.5 magnitude or greater were triggered during fracking, companies were required to report such tremors to the commission within a day of them occurring.

But as the events of Nov. 29, 2018 underscored spectacularly, the new rules failed to prevent an earthquake strong enough to be felt in households throughout the region and in communities 100 kilometres apart.

Fracked gas development in northeast B.C. near Farmington. Photo: Garth Lenz / The Narwhal

Significantly, that earthquake is nowhere near the strongest to date to be associated with natural gas industry operations worldwide.

A 5.7 magnitude earthquake in Oklahoma in 2011, later linked to a disposal well operation, released 53 times the energy of the Nov. 29 event. The earthquake is considered the most powerful yet to be triggered by a fossil fuel industry operation. It was felt in at least 17 U.S. states, buckled a local highway in three places and caused injuries. More recently, a 4.9 magnitude earthquake in China’s Sichuan province was suspected of being triggered by fracking. Two people were killed by the tremors and county officials ordered the suspension of the fracking operation.

In early June of this year, the commission received an independent analysis of the Kiskatinaw area, done by two geoscientists with Enlighten Geoscience Ltd.

The scientists noted that much of the rock formations underlying the Kiskatinaw region were riddled with faults, and that it would take only small increases in the pressure at which fracking operators pushed water, sand and chemicals underground to cause those stressed faults to slip.

“Only small fluid pressure increases are sufficient to cause specific sets of fractures and faults to become critically stressed,” the report’s authors, Amy Fox and Neil Watson, warned.

The report gave the commission plenty of ammunition should it wish to extend the suspension of CNRL’s fracking operations at the well site indefinitely or to make the suspension permanent. But a little more than four months after receiving the report, in a move eerily similar to its earlier about-face at the disposal well near Peace Canyon, the commission decided to lift the suspension order and allow CNRL “to resume operations.”

A map showing oil and gas leases surrounding the location of the Site C dam, currently under construction.

Site C dam construction on the banks of the Peace River in the summer of 2018. Photo: Garth Lenz / The Narwhal

Under new permit conditions — which included “a lower threshold” provision — the company had to “take action” when an earthquake of magnitude 1.5 was triggered, versus the earlier threshold of magnitude 2. The company was also required to report to the commission any earthquakes of magnitude 1 or greater within 24 hours, versus the previous threshold of 1.5.

The commission’s decision to lift the suspension was issued in an “industry bulletin” that ran to less than one page. Nothing in the short document indicated how any of the amendments would actually reduce the likelihood of future earthquakes. The document also remained silent on the issue of what had prompted the commission to lift the ban.

Once again, the commission opted not to cancel a permit in its entirety — an action that almost certainly would have resulted in CNRL seeking financial compensation, along the lines of what Canada Energy Partners had threatened at its Peace Canyon disposal well operation.

A shaky Peace

Less than one month after the ground shook with force at Site C in November 2018, Terry Oswell, a dam safety engineer at BC Hydro, was on a phone call with eight commission personnel. The subject of the call was to discuss proposed fracking activities by Crew Energy, scheduled to take place near the Site C construction project in January 2019.

Details of what was discussed on the call that day are contained in a subsequent email sent by Oswell on Dec. 11 to two BC Hydro colleagues as well as at least two other individuals whose names are redacted from the FOI record.

The email noted the commission had “a shake map” for the earthquake that had been triggered just two weeks earlier by CNRL and that the commission “would share it” with BC Hydro. Oswell went on to say:

“The OGC has asked operators in the area to provide information on the type and length of faults in their areas. They said the event on Nov 29th was in the graben area [a reference to depressed area of the earth’s crust bordered by parallel faults] which may be conducive to larger events but that the … [area] where Crew is working may also have the same type of faulting.”

By then, BC Hydro also knew that there were numerous faults in close proximity to the Site C dam, including two parallel faults that pointed like fingers toward the dam site and that came very close to reaching it — faults that if reactivated, could have significant consequences in the event of a strong earthquake.

In the same email, Oswell recalled some of the questions commission personnel on the call asked. The questions indicated that commission personnel knew that a strong earthquake was at least a possibility, and that if it was strong enough, it could have significant implications for at least a portion of the workers at the Site C dam.

According to Oswell’s recollection of the call:

“Some of the questions the OGC asked:

Have we considered shutting down construction activity because of the work Crew is doing in the area? I think we clarified that they were talking about after they trigger a shake in which case we would follow the response plans and only if it was unsafe to resume work, would we not continue until it was made safe. And that we are not expecting the cofferdams to fail because of a fracking event but that it’s prudent to evacuate people until they are inspected.

How many people are working below the water level? Several hundred

What would we do if Crew caused a shake? Same response as per the 29th event and we would be asking the OGC for the information about the event.

How was the Nov 29th event felt on site? Initial jolt felt strongly and widely followed by several smaller shakes and then a final larger jolt felt widely.”

Less than a month after that December 2018 phone call, a letter arrived at the commission’s headquarters in Victoria’s inner harbour, which is only a short distance from the provincial Legislative buildings.

The letter was written by Jeff Christian, a seasoned lawyer who has represented BC Hydro on several high-profile files, and was written primarily to address BC Hydro’s opposition to any resumption of operations at the disposal well at Peace Canyon. But it applied equally to all of the Crown corporation’s Peace River dams.

A letter from lawyer Jeff Christian, stating BC Hydro’s opposition to fracking or waste water injection near the Peace Canyon dam.

“BC Hydro remains opposed to any waste water injection or fracking in close proximity to the Peace Canyon Dam and any such critical infrastructure, due to the large uncertainties in the hazard, the likelihood of occurrence and the potential consequences,” Christian said.

Christian’s letter reiterated what senior dam safety and engineering officials at BC Hydro have said for years: encroaching fracking operations pose significant risks to some of the Crown corporation’s most important dams. The most efficient way to control such risks, those officials have said repeatedly, is to eliminate the prospect for them happening at all, at least anywhere near such critical infrastructure.

But that is not happening. 

In the place of restrictions on fracking industry operations in areas of high concern are modestly tougher but completely untested permit conditions that the provincial government has no way of knowing will prevent a future catastrophe.

As a report to the provincial government noted earlier this year, one of the great scientific unknowns with fracking is just how powerful an earthquake operations might trigger.

No amount of permit conditions attached to a fracking or disposal well permit gets around the fact that predicting when an induced earthquake may occur, where it will occur and how strong it will be is an impossibility — an unsettling conclusion that the provincial government has yet to act on.

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Fast-tracking Site C dam construction before May’s provincial election is an unusual decision driven more by politics than need, according to a Canadian expert in Crown corporations who suggests the relationship between BC Hydro and the Premier’s office may be “too close for comfort.”

Luc Bernier, the former head of the Institute of Public Administration of Canada, said Premier Christy Clark’s vow to push Site C past the “point of no return,” when B.C. has a surplus of electricity and Clark is still searching for a buyer for Site C’s power, leads him to believe that that “there’s too much politics around BC Hydro.”

“What seems unusual to me is the idea of locking up this project before the provincial election,” said Bernier, who holds the Jarislowsky Chair in Public Sector Management at the University of Ottawa.

“If B.C. doesn’t need the electricity for the next decade or so there’s no emergency to build it…The only emergency in this project is the coming election.”

BC Hydro’s Site C spokesperson Dave Conway has said Site C’s power may not be needed for up to 40 years.

Flat Demand Could Make Site C ‘Nightmarish Project’

Demand for electricity has been falling in B.C. since 2008, and the B.C. government now says it wants to sell Site C’s power to Alberta to electrify the oilsands, a move that Harry Swain, chair of the Joint Review Panel that examined Site C for the federal and provincial governments, called an “act of desperation.”

Swain pointed out that BC Hydro never mentioned Alberta as a potential market for Site C’s power in its application for an environmental assessment certificate for the project.

Earlier, high electricity demand from anticipated Liquefied Natural Gas (LNG) production was one of the reasons the B.C. government gave for building Site C. That demand has never materialized.

Given that B.C. has so much power that BC Hydro is paying independent power producers millions of dollars a year not to produce electricity, Clark is now counting on federal taxpayers to share the cost of a proposed $1 billion transmission line to send Site C’s power to Alberta, although Alberta has not yet committed to buying the electricity.

“If you don’t need the electricity you’re going to have a bill for nine billion dollars for a dam you don’t need,” Bernier said in an interview, pointing out that another large hydroelectricity project, the Muskrat Falls dam in Labrador, has become a financial boondoggle, in part because its power is not required.

“It’s not going to be a profitable project, it’s going to be a nightmarish project,” Bernier said of Muskrat Falls, which will add an average of $1,800 to the annual hydro bill of every customer in Newfoundland and Labrador.

Economist Jim Brander, a professor at UBC’s Sauders School of Business, said BC Hydro’s technical staff, not politicians, should make the decision about the need to push Site C past the point of no return, based on questions such as electricity demand and the dam’s projected rate of return.

A Crown corporation’s senior management should be arms-length from political issues, so that decisions can be made on a technical basis and not for political reasons, Brander said in an interview.

“We think that it leads to better management when the managers are able to be managers and not politicians.”

Like Bernier, Brander has concerns about the connections between BC Hydro and the Premier’s office, saying it is too close for the appearance of good governance and integrity.

Premier’s Office Involvement in BC Hydro Media Relations ‘Very Rare’

While both experts said any government would want oversight of a project as large as Site C, the Premier’s office’s direct involvement in BC Hydro’s media relations is “very rare” and the close connection between BC Hydro and the Premier’s office “makes me uncomfortable,” said Brander, who personally believes Site C’s power will eventually be needed.

“Even if there is nothing wrong, it doesn’t look good if the managers of the Crown corporation are too close to members of the government, just for the sake of appearances. And appearances are important, because it’s very important that people believe that these governance purposes are honest and legitimate.”

Besties? @BCHydro and Premier’s Office Too Close for Comfort, Experts Suggest https://t.co/EE3uNaJwC1 #bcpoli #bcelxn17 #SiteC

— DeSmog Canada (@DeSmogCanada) January 31, 2017

BC Hydro Directors Closely Linked to BC Liberals

Brad Bennett, the Kelowna businessman Clark appointed in September 2015 to chair BC Hydro’s board of directors, was a chief advisor to Clark during her 2013 election campaign and toured the province with the premier.

In September, the BC Hydro board chair nominated Clark to run for the B.C. Liberals in the premier’s riding of West Kelowna. He spoke in Clark’s support as she was acclaimed and posed with the premier behind a “Re-elect Christy Clark” banner.

“We’re going to be heading into a [election] campaign in April,” Bennett told members of the B.C. Liberal Party and the community. “Our biggest enemy when things are feeling good isn’t the NDP necessarily, it’s apathy within our own ranks.”

Bennett is the president of McIntosh Properties Ltd., a real estate investment and private equity investment company that donated more than $30,000 to the B.C. Liberal Party from 2005 to August 2015, according to Elections BC.

He is the son of former B.C. Premier Bill Bennett, whose plans to build Site C in the early 80s were turned down by the quasi-judicial B.C. Utilities Commission, saying that B.C. did not need the power at the time.

It was at the former premier’s funeral last January that Clark made her vow to finish what Bill Bennett had started and hustle Site C past the “point of no return.”

Brad Bennett is also the grandson of W.A.C. Bennett, who built the first dam on the Peace River and named it after himself. W.A.C. Bennett planned the Peace Canyon Dam that, along with his namesake’s larger dam, supplies about one-third of BC Hydro electricity, and he also proposed to build Site C, the third dam on the Peace River, a designated B.C. heritage river.

The connections between BC Hydro and the Premier’s office extend further than the Bennett family.

Six of 10 members of BC Hydro’s board or directors appear as donors to the BC Liberal party in the province’s online political donations database — although it is possible the donations were made by other people with the exact same names.

The name of a seventh Hydro board member is listed as the principal officer for a company that donated to the Liberals. An eighth Hydro board member, Jack Weisgerber, is a former Liberal MLA who was the Minister of Energy and Mines in the Campbell administration and also worked as a BC Hydro consultant on Site C from 2007 to 2014.

BC Hydro’s CEO is Jessica McDonald, who served as deputy minister to former B.C. Premier Gordon Campbell — the person responsible for resurrecting Site C after BC Hydro’s board of directors announced in 1993 that the project would be shelved permanently because it was too expensive, too environmentally destructive and too damaging for First Nations.

Campbell’s government changed the law to exempt Site C from review by the watchdog B.C. Utilities Commission, which traditionally has examined power projects to ensure they are in the public interest.

While McDonald had no experience in the energy sector, she previously headed B.C.’s public service, managing 36,000 employees and overseeing an annual budget of $40 billion.

McDonald’s ex-husband Mike McDonald is Clark’s former chief of staff. He is heading the B.C. Liberal’s re-election campaign this spring, after leading their 2013 election campaign and Clark’s bid for leadership of the B.C. Liberal Party.

Mike McDonald is a senior associate at Kirk & Co., one of B.C.’s top communications firms, which received a six-year Site C contract for communications, consultation and community relations. (The contract ended in 2013, the same year that Mike McDonald joined the firm after working closely with them for the previous decade, according to the Kirk & Co. website, and prior to Jessica McDonald’s 2014 appointment as head of BC Hydro).

“I’m not sure if it’s not too close for comfort,” said Bernier, who directs the Centre for Research on Governance at Quebec’s National School of Public Administration.

“If we were talking about Prince Edward Island with 240,000 people living there, everyone is related to everyone. Is it necessary in 2017 in B.C. to be that close?”

In the absence of a demonstrated need for Site C’s power, Clark’s team talks mainly about the jobs that will be created by the $8.8 billion dam, which as the largest publicly funded project in B.C.’s history will be paid for with money out of British Columbians’ own pockets.

Clark’s Jobs Promises Coming Up Empty

Job creation has become an issue of paramount importance heading into the B.C. election campaign. Virtually none of the 100,000 jobs Clark promised in the Liquefied Natural Gas (LNG) industry have materialized and the premier’s much-touted jobs plan has failed to produce employment gains outside the Lower Mainland and Capital Regional District.

When Clark announced provincial Cabinet approval of Site C in December 2014, she promised, to little scrutiny, that the project would create 10,000 direct construction jobs.

By the end of November, according to BC Hydro, Site C employed close to 1,800 people, including in service jobs such as housing and kitchen work at the $470 million Site C workers accommodation facility in Fort St. John. About 650 of the workers were from the Peace River area.

Site C’s November employment tally includes more than 400 jobs in engineering and on Site C’s Project Team, including at BC Hydro’s head office in Vancouver, and more than 50 contract professional and office managers and supervisors.

BC Hydro said Site C will create “many more jobs” in the coming months and years, but how many of those will be construction jobs remains to be seen.

Clark has repeatedly said Site C will be delivered on budget, a statement questioned by former BC Hydro CEO Marc Eliesen, who called the project a “white elephant” and said it could have disastrous consequences for B.C. hydro rates, already in the middle of a scheduled 28 per cent increase over five years.

BC Hydro points out that B.C.’s electricity rates are still among the lowest in North America, saying that the planned rate increases are needed to replace aging infrastructure and invest in new projects to meet what the Crown corporation calls a “growing demand for power” in its communications materials.

The Joint Review Panel that examined Site C concluded that BC Hydro had not demonstrated the need for the dam’s power in the timeframe it presented, and recommended the project be referred to the B.C. Utilities Commission for an independent review of the need for Site C’s electricity and the project’s cost.

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Fifty-five years ago, construction crews started one of the tallest earth dams in the world 22 kilometres west of Hudson’s Hope, B.C. It was to flood a valley shaped by the Parsnip and Finlay Rivers.

This secluded paradise had been home to the Tsay Keh Dene for millennia. It was where they derived their livelihoods, established their identity, honoured their ancestors and envisioned their future. The band was not consulted about the project. No plans were drawn up to help them move ancestors to new burial sites or establish a new village.

W.A.C. Bennett, B.C.’s premier at the time, was consumed with his “two rivers” plan, developing hydro power both on the Upper Columbia and the Peace rivers.

The project managers of the W.A.C. Bennett Dam were in such a hurry they did not harvest the timber in the valley but crushed it under giant rollers now on display in Mackenzie. They also obliterated the rights of the Tsay Keh Dene. The project took seven years to complete, and employed more than 4,800 workers during construction. Today, a quarter of all electricity used in B.C. comes from the W.A.C. Bennett Dam, but far too few realize that their electricity comes at such a high cost to Tsay Keh Dene.

The tense relationship between BC Hydro and the Tsay Keh Dene is difficult, if not impossible, to put into words. Having been displaced from their original village, the Tsay Keh Dene have chosen the most northerly point of Williston Reservoir as the place to re-establish their village.

Here, they deal with high winds and dust storms — a consequence of living at one end of a 150 kilometre canyon. Here, they are ten hours away from Prince George and pay exorbitant prices for their most basic needs. Here, more than three decades after establishing their village, the federal government has yet to recognize the reserve. Here, they rely on projects, almost like handouts, from BC Hydro for their livelihoods.

For the past few years, this has involved collecting and burning the logs that were left unharvested and now float to the surface of the reservoir, endangering boats and barges. But this “contract award” is coming to an end in 2017.

An analysis of over 100 inspections by B.C.’s Environmental Assessment Office over the past five years reveals BC Hydro as the most frequent violator of the terms of their development licence — far worse than the much maligned pipeline companies developing similar sized projects.

Though next to a massive hydropower project, for the past half century the village has had to rely on diesel for electricity. In response to the Remote Community Electrification initiative of 2007, the Tsay Keh Dene proposed to build a biomass cogeneration system to supply their electricity and meet their heating needs. This would be fuelled using the waste timber collected from the reservoir or harvested from vast areas of beetle-kill forests.

The fuel collection and operation of the cogeneration plant would have created over a dozen sustainable jobs while providing the village with inexpensive, renewable heat and power. The available heat would have allowed the establishment of a greenhouse, creating yet more jobs and providing locally grown food for an affordable balanced diet.  

The biomass cogeneration plan won a $1.1 million Award from B.C.’s Innovative Clean Energy competition. Tsay Keh Dene needed funding to complete the project. They appealed to the federal government for a capital grant. They tried to sign a power purchase agreement with BC Hydro to secure debt financing.

But Indigenous and Northern Affairs Canada said they would not provide a capital grant for the village to develop the project. BC Hydro said Tsay Keh Dene’s demographic and electricity usage forecasts were too high and that the village will never need that much power.  

BC Hydro’s narrow vision has led to continued reliance on diesel power, rather than re-directing federal energy subsidies toward bootstrapping economic development in the village.

Rubbing salt into this wound, BC Hydro declared that the diesel generators serving the community were old and unreliable. They used their technical authority to force Indigenous and Northern Affairs Canada into paying more than $3 million for diesel generators that mining companies in the same region install at one-third the cost. This funding could have helped Tsay Keh build their cogeneration plant — instead they are still saddled with a foul-smelling, noisy technology that drains away community resources to some oil company’s profit margin.

Moreover, the community’s electricity demand is already exceeding BC Hydro’s long-term forecast and installed capacity. Now, blackouts and flickering lights are regular reminders of that.

Last year, a 2,700-litre spill of bunker oil in English Bay, from the cargo ship MV Marathassa, had all levels of government in a tizzy. The fuel for Tsay Keh Dene’s generators are delivered by articulated tanker trucks travelling on forestry roads. They have repeatedly spilled far greater quantities of diesel oil in the Willison Reservoir watershed — without a whisper from anyone in power.

Inadequate consultation and disrespect for First Nations was not excusable half a century ago when the W.A.C. Bennett Dam was built; it should be criminal now.  

The Tsay Keh Dene and other First Nations continue to be treated as if they are minors. This power imbalance forces the band to acquiesce on matters they should have control of. In spite of overwhelming scientific evidence about environmental and social harm from high dams, in spite of a sufficient supply of electricity for at least two decades, in spite of rapid progress in other low-cost and low-impact renewable power, BC Hydro continues to promote the Site C dam, the third dam the Peace River. And with that, they are repeating their pattern of violations of rights 70 kilometres to the west.

This is a guest post by Chief Dennis Izony of Tsay Keh Dene First Nation and Hadi Dowlatabadi, a professor and Canada Research Chair at the Institute for Resources and Environmental Sustainability, UBC.

Photo: Construction on the Site C dam by Garth Lenz.

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By Ben Parfitt for the Canadian Centre for Policy Alternatives.

Senior BC Hydro officials have quietly feared for years that earthquakes triggered by natural gas industry fracking operations could damage its Peace River dams, putting hundreds if not thousands of people at risk should the dams fail.

Yet the Crown corporation has said nothing publicly about its concerns, opting instead to negotiate behind the scenes with the provincial energy industry regulator, the BC Oil and Gas Commission (OGC).

To date, those discussions have resulted in only modest “understandings” between the hydro provider and the OGC that would see a halt in the issuance of any new “subsurface rights” allowing companies to drill and frack for natural gas within five kilometres of the Peace River’s two existing dams or an approved third dam on the river, the controversial $9-billion Site C project. Companies already holding such rights, however, would not be subject to the ban.

But once again, none of this is public knowledge. Only after the Canadian Centre for Policy Alternatives filed a Freedom of Information request with BC Hydro did the Crown corporation disclose its concerns, which focus on the possibility that fracking could trigger earthquakes more powerful than some of its dams are designed to withstand.

Documents released by the Crown corporation under the FOI show that in December 2009 senior officials at BC Hydro became alarmed at oil and gas industry operations on lands near its Peace Canyon Dam. The dam is 23 kilometres downstream from the W.A.C. Bennett Dam, a 49-year-old structure that impounds the world’s seventh-largest hydro reservoir by water volume.

Of concern was an experiment underway to extract methane gas from coal seams in proximity to the Peace River. Coal bed methane extraction had never before been tried in B.C., although it had been done extensively in several U.S. states and in Alberta with sometimes disastrous results, including instances of water so badly contaminated with gas that people could set their household tap water on fire.

To extract such gas, companies drill into relatively shallow coal seams and then pressure-pump immense amounts of water into wellbores in fracking operations. Fracking creates cracks or fractures in the coal seams that allow trapped gas to be released. Typically, companies then “de-saturate” or de-water the sites by pumping water out so the gas can flow.

At the time, Hudson’s Hope Gas, a subsidiary of Canada Energy Partners and GeoMet Inc., had drilled at least eight coal bed methane wells near the community of Hudson’s Hope, which lies about nine kilometres downstream of the Peace Canyon Dam and is home to more than 1,000 people.

The company had plans to drill and frack up to 300 more wells, with at least three of those wells situated close to the Peace Canyon Dam. The plans clearly alarmed BC Hydro’s then chief safety, health and environment officer, Ray Stewart, who called them an “immediate” threat to the region’s hydro facilities.

“The production of coal bed methane from these wells involves hydro-fracturing [fracking] to increase permeability of the coal seams, followed by extraction of groundwater to de-saturate coal seams and allow methane gas to be released,” Stewart noted in a letter to the provincial Ministry of Environment’s Glen Davidson, then British Columbia’s comptroller of water rights.

“BC Hydro believes that there are immediate and future potential risks to BC Hydro’s reservoir, dam and power generation infrastructure as a result of this.”

Stewart went on to warn that the “potential effects” of such actions could be natural gas industry-induced earthquakes that were greater in magnitude “than the original design criteria for the dam.” What risks this posed to people and communities immediately downstream of the dam, he did not say.

Stewart also warned that fracking could “reactivate” ancient faults in the region, which could potentially set the stage for earthquakes. He also warned of unspecified “hydrogeologic impacts” on hydro reservoirs from fracking and the potential for site-specific areas of land to subside or sink as a result of immense amounts of water being pumped out of the earth or in the event that de-watered coal seams somehow ignited.

There are no further such letters from Stewart in the documents supplied by BC Hydro. Part of the reason for that may be that coal bed methane extraction was a short-lived phenomenon in B.C. No company in the Peace region or anywhere else in the province for that matter is currently drilling or fracking for such gas.

However, no sooner had natural gas companies dropped their pursuit of coal bed methane than they turned to another so-called “unconventional” fossil fuel — shale gas. The Montney Basin, which underlies much of the Peace River region, is rich in shale gas. But extracting shale gas, which is tightly bound up in rock formations, requires the use of even greater brute force fracking technology. More water must be pumped at even higher pressure to fracture the rock and extract the trapped gas than is the case with coal bed methane, which is typically found closer to the earth’s surface.

Big Dams & a Big Fracking Problem in BC’s Energy-rich #PeaceRiver Region https://t.co/6JslA7kIPj @christyclarkbc @maryforbc #bcpoli #SiteC

— DeSmog Canada (@DeSmogCanada) August 16, 2016

As fracking for shale gas became more common, senior officials at BC Hydro began to see a pattern. Earthquakes started occurring in lockstep with fracking operations. One of the most pronounced examples occurred in the Farrell Creek fracking zone, near BC Hydro’s Peace River dams. Between July 2010 and March 2013, a dozen earthquakes were recorded in the region, ranging from a low of 1.6 magnitude on the Richter scale to a high of 3.4.

The cluster of earthquakes, all in roughly the same confined region where one company, Talisman Energy, was involved in extensive fracking operations, caught the attention of Scott Gilliss, BC Hydro’s dam safety engineer in the Peace River region.

Gilliss made his concerns known to senior officials at head office. Shortly after that, he received an email from Des Hartford, Hydro’s principal engineering scientist, who reported directly to Stephen Rigbey, the corporation’s director of dam safety.

“Scott,” Hartford’s email began: “As was discussed at the Department Meeting yesterday, this is to confirm that having brought forward your concerns about hydraulic fracturing (‘fracking’) activities in proximity of dams and reservoirs, you have discharged your responsibilities with respect to reporting and management of this matter. It is now up to Stephen as advised by me to determine what if any action should be taken by Dam Safety with respect to this matter.”

“Fundamentally,” Hartford’s email continued, “hydraulic fracturing (‘fracking’) is one of these ‘new and emergent’ threats that require examination in the context of scientific and policy considerations in order that any meaningful management actions can be initiated if required.”

Hartford instructed Gilliss to document his concerns so that others at BC Hydro could “take them forward.”

Gilliss did so, pointing out in a subsequent email released by BC Hydro that “oil and gas production may have contributed to a dam breach” at the Baldwin Hill Dam in Los Angeles in 1963.

The Baldwin Hill breach, as described by award-winning investigative reporter and writer Andrew Nikiforuk in his most recent book Slick Water: Fracking and One Insider’s Stand Against the World’s Most Powerful Industry, occurred at a then new dam, and resulted in a “colossal rupture that sent 292 million gallons of water spilling into a residential community, destroying hundreds of homes and killing five people.”

A subsequent review of the catastrophe by Richard Meehan, a leading expert on fluid migration at Stanford University, and Douglas Hamilton, a prominent civil engineer, concluded that “fluid injection” by the oil and gas industry, combined with sinking ground around the dam had led to the structure’s sudden and ultimately deadly failure.

“This is the case study that triggered my concern over hydraulic fracturing in the Peace,” Gilliss wrote in an email to Hartford on March 17, 2013. “The Baldwin hills case appeared to have occurred following very intense [oil and gas industry] exploration and development, the likes of which we don’t have here yet. The geology of their site was also quite complex and riddled with faults. A similarity does exist in that there are two small thrust faults downstream of PCN [the Peace Canyon Dam] which dip beneath the dam. Reactivation of these small faults could be problematic for PCN. There are other north south trending fault[s] in the area.”

Gilliss ended his letter on a note of exasperation.

“In my view, which I have already shared, the province should simply add buffer zones around any very Extreme and Very High Consequence Dams, where hydraulic fracturing cannot be undertaken without a prior full investigation into the risks, and an implemented risk management plan. Why is this so difficult?”

Gilliss’s buffer zone idea was by no means new. Two years earlier, after conducting research for the Canadian Centre for Policy Alternatives, I had authored a report calling for “no-go zones” where fracking was prohibited to protect other important resources such as water. By then, there were also de facto bans on fracking in Quebec and New York State.

After writing his email, Gilliss and other top BC Hydro officials had even more reason to think that no-go zones made sense. More and more earthquakes in northeast B.C. were being triggered by fracking, including a magnitude 4.6 tremor that occurred to the north of Fort St. John last year. It was in an area then being actively fracked by Progress Energy, a subsidiary of Malaysian state-owned Petronas. The strength of that induced earthquake was the largest to date anywhere in the world associated with fracking operations.

Petronas is behind a controversial proposal to build a massive Liquefied Natural Gas or LNG terminal at Lelu Island near Prince Rupert. The raw gas for the plant would come almost entirely from northeast B.C., including the Peace River area, and would have to be fracked to be produced. This fact has led some people who oppose the project to refer to it not as an LNG project but an LFG or Liquefied Fracked Gas project.

At least some of that gas would come from lands adjacent to what could one day be a new 83-kilometre-long reservoir impounded by the Site C Dam. Like the upstream Bennett Dam, Site C would be an earth-filled dam.

This image from the BC Hydro documents shows a no-frack zone surrounding the Site C dam on the Peace River.

The Bennett dam, completed in 1967, is now almost exactly halfway through its projected 100-year operating life. At nearly two kilometres across and the height of a 60-storey building, it is one of the largest earth-filled dams in North America. In 1996, it became the subject of intense engineering and safety scrutiny when two sinkholes suddenly opened at the crest of the dam.

In an investigative magazine article written a few years after that discovery, writer Anne Mullens noted that were the dam to fail, it would unleash a torrent of water so powerful that it would wipe out the Peace Canyon dam downstream, sending an “unstoppable burst of water 135 metres high,” down on the residents of Hudson’s Hope and communities much farther downstream.

“Unlike a tsunami, the destruction wouldn’t simply peak and stop,” Mullens wrote in BC Business Magazine. “The pent-up waters of Williston Lake would just keep coming, seeking to return to its natural elevation. The waters would flow for weeks, scouring away communities like Old Fort, Taylor, Peace River, Fort Smith and beyond. The onslaught would back up tributaries and inundate the entire Peace River Basin, flooding Lake Athabasca and Great Slave Lake. The floods could devastate northern Alberta, portions of Saskatchewan and the Northwest Territories all the way to the Arctic Ocean. The death toll could be high; the environmental and structural damage astronomical. Combined with the loss of generating power of the dam, the unprecedented disaster would cost billions of dollars and throw B.C.’s economy into turmoil.”

Stephen Rigbey, BC Hydro’s director of dam safety, says that in the aftermath of the discovery and repair of those sinkholes the Bennett dam has become “one of the world’s most studied and instrumented dams.” There are a number of upgrades underway at the dam, including the replacement of “large rocks on the upstream face of the dam that protect the dam from wind and wave action.”

In an interview following the release of the FOI materials, Rigbey said that Gilliss and other dam safety officials operating in the field are paid to worry, but that he himself has no concerns that fracking operations would trigger any catastrophic failure at BC Hydro’s Peace River dams.

Rigbey did say, however, that ground motions from fracking operations could cause slight alterations to “weak bedrock” near the dams and that in turn could change the way that water naturally seeps through earth-filled dams. Ground motions could also potentially knock some electrical control equipment off-line, Rigbey added. In the event that one or both happened, BC Hydro would be faced with high repair and maintenance costs.

“Would it [fracking] bring the dam down? Not a hope. Would it do damage and cost me a lot of money? Absolutely. It would cost me a lot of time and a lot of money and that’s what I don’t want to occur,” Rigbey said.

Rigbey said that for these reasons BC Hydro has sought to exclude fracking from zones nearby the Bennett and Peace Canyon dams and around the construction zone of the Site C dam.

At this point in time, the unwritten “understanding” between the OGC and Hydro is that no new tenures will be awarded to companies allowing them access to natural gas deposits in a zone within five kilometres of the three dam sites. Companies already holding such rights will, however, be allowed to drill and frack for gas. In the event that happens, BC Hydro says it will work with the OGC “to effectively manage any risk.”

“This is a work in progress,” Rigbey said. “We are working toward strengthening the current understanding.”

Graham Currie, the OGC’s executive director of corporate affairs, confirmed in an email response to questions that five-kilometre buffers are in place around the two existing dams and the proposed Site C dam. He said that the buffer zone around Site C will “prevent the sale of oil and gas rights within the buffer area.”

Currie added that the proposed Site C dam falls within the Montney shale gas zone, one of the most actively drilled and fracked zones in the province.

“Site C falls within the Montney play and will be built to a high seismic safety standard,” Currie said in an email response to questions filed with the OGC. “During construction, permit conditions on a [natural gas] well in the Montney may be used to control the timing of hydraulic fracturing operations. All wells in the Montney are double-lined with cement and steel to a depth of 600 meters for further protection.”

The email fails to mention that such protective measures do not prevent fracking-induced earthquakes. Cement casings, which are often imperfectly poured and prone to fail, are intended to prevent groundwater from being contaminated — an entirely different issue.

The “understanding” between Hydro and the OGC does not extend to the lands around the reservoirs themselves, Currie said. That includes lands around what could one day be the Site C reservoir; lands that according to a document prepared for BC Hydro could experience as many as 4,000 landslides during and after the reservoir fills. Whether or not fracking could further destabilize those lands damaging the reservoir and dam itself remains unknown.

What is known, however, is that earthquakes induced by fracking behave entirely differently than do naturally-occurring earthquakes.

Gail Atkinson is a professor in Earth Sciences, a leading expert on the effects of induced earthquakes, and holds the Industrial Chair in Hazards from Induced Seismicity at the University of Western Ontario. The chair is funded, in part, by TransAlta, a privately owned hydro provider in Alberta.

In response to written questions, Atkinson said most people would agree with the proposition that “precluding oil and gas activity such as fracking…within some radius of dams and reservoirs would prevent the possibility of induced seismicity that could damage such facilities.”

Atkinson said the big concern with earthquakes triggered by events such as fracking is that they occur much closer to the earth’s surface than do natural earthquakes. A fracking-induced tremor might be as close to the surface as two kilometres, while a natural earthquake might occur 10 kilometres down. The shaking caused by a fracking-induced earthquake may be of only short duration, but it is a stronger and different kind of shaking. The potentially “strong ground motions” generated by such shaking occur “closer to infrastructure on the surface.”

“The concern is that the potential for induced earthquakes to generate strong motions makes it difficult to satisfy the high safety requirements for critical infrastructure, if earthquakes can be induced by operations in very close proximity [to dams and reservoirs],” Atkinson said.

While there is presently “no consensus” over what constitutes a reasonable size for no-frack zones, buffer zones do make sense, Atkinson said. “A zone of monitoring beyond the buffer zone is also a good precautionary measure in my view, as it would allow low-level induced seismicity from disposal or fracking beyond the buffer to be detected quickly and any necessary measures to be taken. Enhanced monitoring would also provide valuable research data to improve our understanding of the issue.”

In a telephone interview, Rigbey said he agreed with Atkinson’s thinking that both firm no-fracking buffer zones and special management zones beyond that made sense.

Atkinson’s thinking is in keeping with ongoing efforts by TransAlta to protect some of its hydro facilities in Alberta from natural gas industry fracking operations. Those efforts appear to have effectively shut down fracking in a buffer zone around one of TransAlta’s dams and the dam’s reservoir as well. Special operating guidelines are also in place beyond the buffer zones that can force companies to cease fracking.

But, as is the case in B.C., negotiations between TransAlta and Alberta’s energy industry regulator have happened behind closed doors.

Members of the public who are at direct risk should a catastrophic dam failure occur are kept in the dark when it comes to negotiations that could have a direct impact on their lives.

Tomorrow: Alberta’s advances and questions about why B.C. may be lagging behind.

Ben Parfitt is a resource policy analyst with the Canadian Centre for Policy Alternatives – BC Office and author of Fracking Up Our Water, Hydro Power and Climate: BC’s Reckless Pursuit of Shale Gas, a research report published in 2011 that called for frack-free zones.

BC Hydro Fracking Radius Images Select FOI

BC Hydro Fracking Radius Select FOI Materials

Image: Fracking operations in Northeast B.C. Photo: Damien Gillis/Commonsense Canadian

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.