FOCUS: UNCONVENTIONAL OIL & GAS — Canadian provinces follow US states in hydraulic fracing guidelines, rules

Canadian provinces, like some US states, are forming hydraulic fracturing guidelines and regulations in an ongoing attempt to avoid controversy regarding groundwater and surface water safety. Industry suggests contamination likely stems from poor wellbore construction and surface spills than fracing.

British Columbia implemented mandatory public disclosure of chemicals used in hydraulic fracturing fluids, similar to what some US states already have done. Other Canadian provinces are expected to follow.

The Canadian Association of Petroleum Producers (CAPP) recently announced Canada-wide operating practices for its members regarding shale and tight gas hydraulic fracturing. CAPP supports public disclosure of frac fluid ingredients.

Effective Jan. 1, British Columbia's mandatory disclosure rule requires companies to publicly disclose frac fluid ingredients via a web site called FracFocus.ca. The online registry resembles a US version called FracFocus.

"British Columbia is committed to the development of a more open and transparent natural gas sector and the disclosure of hydraulic fracturing practices," BC Premier Christy Clark said.

By law, companies must upload a list of frac fluid ingredients to the registry within 30 days of finishing completion operations, reports the British Columbia Oil and Gas Commission. The law provides some protection for trade secrets, similar to disclosure rules enacted by some US states.

Industry executives in both US and Canada said many companies voluntarily disclosed frac fluid chemicals via their own corporate web sites before the mandatory disclosures took effect.

CAPP Pres. Dave Collyer said gas producers developed CAPP's frac operating practices to ensure safe development of Canada's shale gas and to protect Canada's water. He estimates fracing was used on nearly 200,000 wells in Western Canada during the past 60 years.

"Applying these new operating practices will contribute to improving our environmental performance and transparency over time," Collyer said. The operating practices apply to all CAPP member companies, which produce more than 90% of Canada's gas and crude oil.

Tom Huffaker, vice-president for policy and environment, said the CAPP operating practices in many cases go beyond what is regulated by the various provinces in Canada.

CAPP outlined six practices involving frac fluid additive disclosure, frac fluid risk assessment and management, baseline groundwater testing, wellbore construction and quality assurance, water source assessment and measurement and water reuse, and fluid transport, handling, storage, and disposal.

The rest of this story is a discussion of frac and water issues in several Canadian provinces.

Alberta

The Alberta Energy Resources Conservation Board (ERCB) already has various directives in place that cover industry operating practices as outlined by CAPP, said ERCB spokesman Bob Curran.

ERCB has collected information on frac fluid ingredients from companies for decades, he said. Although currently not posted on a web site, the information is available to the public upon request.

ERCB is formulating rules to require public disclosure of frac fluid ingredients via a web site, and Curran expects the agency will have such a provision ready by yearend.

Cal Hill, ERCB executive manager of regulatory development, explains that frac fluid disclosure has not been a major issue in Alberta because companies concentrated more on oil or liquids than on dry gas plays.

Liquids-rich plays require less frac fluid than some shale gas plays such as British Columbia's Horn River or Appalachia's Marcellus, he said.

"It's those high volumes that have been used for shale gas fracs in the US that have stimulated discussion around disclosing what those fluids are," Hill told reporters during a February briefing. "Our focus has been on ensuring—regardless of what the fluid is—that the fluid does not have an opportunity to come in contact with surface or groundwater."

Since 2008, companies have completed 3,300 horizontal wells using multistage fracs in Alberta.

Kaiser Exploration Ltd. suspended its plans to drill an oil well in northwestern Calgary while ERCB reviews residents' concerns about drinking water. The well would be drilled 390 m from the nearest homes in the Royal Oak and Rocky Ridge neighborhoods.

ERCB previously approved the well, but community groups objected. Kaiser announced in February that it would not begin drillsite construction until completion of ERCB's review or the end of June, whichever comes later.

Kaiser said its operations are safe to the public and the environment.

ERCB is investigating wellbore communication involving two companies near Innisfail in southern Alberta. On Jan. 13, fracing operations by Midway Energy Ltd. apparently affected an oil well 1 km away operated by Wild Stream Exploration Inc. resulting in an estimated release of 50 cu m of oil, frac fluids, nitrogen, and sand onto a farmer's field.

Quebec

The province of Quebec in March 2011 imposed a moratorium on fracing activity pending completion of a detailed independent environmental assessment by an 11-expert panel that included representatives from ministries of municipal affairs, natural resources, the education and research sector, sustainable development and environment, and industry.

The panel is chaired by the Ministry of Sustainable Development, Environment, and Parks. The moratorium came after Bureau d'audiences publiques sur l'environnement (BAPE) released a report calling for an assessment.

Although BAPE did not call for a moratorium, Pierre Arcand, Minister of Sustainable Development, Environment, and Parks, ordered a halt to any fracing for 18-30 months.

Consequently, the Quebec Oil & Gas Association hired Lucien Bouchard, former Quebec premier, as its spokesperson to help educate the public about fracing practices.

Exploration companies whose shale development is now on hold include Talisman Energy Inc. and its partner, Questerre Energy Corp. The partners hold development rights to more than 1 million gross acres along the St. Lawrence River in Quebec.

Michael Binnion, Questerre Energy chief executive officer, said he travels regularly to Quebec to meet with residents and businesses of the St. Lawrence Lowlands, which is where Questerre and Talisman want to develop gas in the Utica shale.

Binnion has said he hopes Quebec draws on the expertise and best practices of shale development already outlined by other jurisdictions. He also writes a blog about shale gas development. In 2010, Questerre became the first company in Quebec to publicly disclose fracing additives. It also released a video in French that explains horizontal drilling and the fracing process.

A poll showed popular support for fracing is the lowest in Quebec of all Canadian provinces.

Polling firm Angus Reid reported 22% of Quebec residents said they favored fracing during a June 2011 survey of 1,007 Canadians. The national average was 31% supportive of fracing. Alberta residents reported the highest level of support with 46%, Angus Reid said.

Saskatchewan, New Brunswick

Like Alberta, Saskatchewan has had guidelines on fracing fluids along with flowback fluid and frac sand disposal for decades. Those guidelines were developed by Saskatchewan Energy & Mines.

CAPP is working with the New Brunswick Oil & Natural Gas Association to advance onshore oil and gas development. The two organizations formed a taskforce of which Phillip Knoll, Corridor Resources president and chief executive officer, is co-chairman.

The taskforce is communicating with New Brunswick residents and business leaders to answer questions about how industry operates, said a CAPP Jan. 18 news release. The taskforce hired Angie Leonard, a New Brunswick accountant familiar with industry, to serve as a spokesperson and to engage with the public. Leonard also represents the industry in Nova Scotia, CAPP said.

Knoll said New Brunswick residents want "constructive discussion about what onshore natural gas development in the province means from an environmental, economic, and energy supply standpoint."

Industry is developing gas safely in other provinces, Knoll said.

"We have a good track record of responsible development, but it is important that we listen to other voices and respond to the legitimate concerns of the public," Knoll said.

Nova Scotia

The Nova Scotia Department of Energy received no applications for the use of fracing in the province during 2011. During 2007-08, fracing was used on three wells in the Kennetcook area without incident.

"Nova Scotia will never be an Alberta or Oklahoma. The resource does not exist here to support an industry of that magnitude," a provincial government web site noted. "Nova Scotia has rules and regulations designed to protect against poor drilling practices."

The Nova Scotia Department of Energy's web site said the province is monitoring what British Columbia, Alberta, and Saskatchewan are doing regarding fracing regulations.

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