Tag Archives: hydraulic fracturing

Oct 08 2014
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Economy, Energy, Environment, Politics

Fracking’s other, hidden challenge

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New Brunswick Premier Brian Gallant did himself an enormous political favour during his recent election campaign by sticking to his guns, insisting that he would follow through with a temporary ban on hydraulic fracturing in the province until experts convinced him that the drilling practice is broadly benign.

After all, the one thing a lightly informed voter can get behind is a candidate for elected office who successfully appeals to the public’s expectation of clean water, air and soil.

But whether or not you believe fellows like Gywn Morgan, a former Canadian energy executive, who recently argued in a Globe an Mail commentary that the “technology. . .has one of the most impressive industrial safety records ever compiled,” that “in the United States, where some 1.2 million wells have been hydraulically fractured over the past 60 years, the Bureau of Land Management and the Environmental Protection Agency have found no supportable evidence of fracture-induced water contamination,” and that, “here in Canada, more than 200,000 wells have been fractured in Alberta, British Columbia and Saskatchewan with a similarly sterling record,” another problem emerges – one that’s not so cut and dry.

The chief argument for permitting the development of tight, onshore oil and gas plays in New Brunswick is economic. In fact, proponents routinely insist, it’s a no-braine:  the province needs jobs and the government needs new sources of money (i.e., taxes and/or royalties from production companies) to balance its books and pay down its accumulated debt. If fracking, girded by effective regulations, is safe, then what are we waiting for? Drill, baby, drill!

But what if the economics of shale gas extraction – at least to the host jurisdictions – are not always as attractive or predictable as they appear?

Jeremy Scott of Forbes magazine recently examined various U.S. state budgets, noting that, for the third consecutive year, overall tax revenues have risen. Referencing some enlightening numbers-crunching by Todd Haggerty, a policy specialist in the fiscal affairs department of the National Conference of State Legislatures (NCSL), Mr. Scott reported “state tax revenues went up 6.1 per cent in fiscal 2013 to a total of $846 billion, says the NCSL. Personal income tax revenues were up 10.3 per cent, while corporate collections surged 7.9 per cent.”

In fact, those states that opened their doors to frackers some years ago, have been leading the boom in tax dollars. Says the Forbes piece: “In 2004 North Dakota’s severance tax (a levy imposed on producers in the United States for mining or otherwise extracting non-renewable resources) raised $175 million a year. In 2013, it raised $2.46 billion. West Virginia’s boom hasn’t been as dramatic as North Dakota’s, but its severance tax revenue increased from $204 million in 2004 to $608 million in 2013.”

On the other hand, “in Kentucky, severance taxes raised $172 million in 2003, rose to $346 million in 2012, but then dropped back to $269 million in 2013.”

And herein lies the problem. The oil and gas industry is notoriously fickle and subject to its own pricing, supply and demand cycles. The industry can reliably guarantee a certain amount of economic activity accruing from its ministrations, especially at the outset of full, commercial production, but those assurances become less dependable as time goes on.    

“Kentucky illustrates the problem with relying on severance taxes and the fracking boom for revenue stability,” Mr. Scott writes. “As traditional energy states like Texas have shown, taxes on the extraction of natural gas can fluctuate wildly. Texas raised $974 million from severance taxes in 2004, $4.1 billion in 2008, $1.9 billion in 2010, and then $4.6 billion. That’s healthy growth, but it’s hardly consistent. Colorado is an even better example. Its severance tax revenue rose from $37 million in 2003 to $285 million in 2009, before falling back to $71 million in 2010.”

Of course, to fracking’s true believers in New Brunswick (and there are still a few), such revenue instability is better than no revenue at all.

But it could become a nightmare for any premier who, once convinced of fracking’s safety, relies too heavily on its proceeds to balance the public accounts.

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Sep 30 2014
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Government, Politics

The fault is not in our “stars”; it’s in ourselves

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The mind of a Canadian premier is a terrible thing to waste.

Its life can be as short as four years, but never longer than 12. And during that midge-like span, it must muster all the mental and physical resources – intellectual flexibility, empathy, focus, judgement, courage, energy – necessary to the task of not utterly failing the electorate that enshrined it.

The voters (it goes without saying) expect nothing of their government leaders, if “nothing” means everything.

As balloteers grudgingly mark their election-day cards, they flee back into their workaday lives, sure of the disappointments that are about to mount, insensate to the absurdity of their standards for political representation.

We, the people, demand that our roads be paved, our potholes be filled, our educational facilities be matchless, our health care system be the best in the world. But when a government flies the rare kite, suggesting tentatively that to pay for these things, it might actually have to raise a highway toll, or increase a sales tax, or (gasp!) actually tighten its belt, out come the placards and the picket lines.

It’s worse in the United States, where they, the people, have managed to transform the poor slobs who run for public office into mewling supplicants of populous fashion. That’s the leadership they’ve come to expect; the leadership they ultimately deserve: unfocused, apologetic, tremulous, and, ultimately, ineffective.

Still, there there was a time in this fair land when democratic imperatives intersected neatly with political ambitions. It didn’t last long, but for as long as it did, women got the vote and all Canadians got a minimum standard of universal health care.

Since then, however, women have served in our parliaments and assemblies with decreasing frequency and increasingly shorter duration. Meanwhile, our health care system has devolved into a multi-jurisdictional hodgepodge that serves some people superbly well, but most of us poorly and without even the semblance of discernment.

All of which may only lend credence to the notion that true democracies are extraordinarily fragile, as likely to wither from neglect as crumble from abuse. And those who we authorize to guard them, for however long a period, should be given every opportunity to muster their resources, especially at the beginning of their mandates.

New Brunswick’s incoming Liberal Premier Brian Gallant faces a terrifically challenging four years. And that’s to say nothing of the several hundred wish lists voters and their organizational proxies will dispense with nauseating regularity.

The most monumental of his tasks, however, will not be grappling with one particular issue or another. It will be applying the considerable faculties of his nimble and educated mind to urgent questions of the common good, even as broad swaths of New Brunswickers stubbornly refuse to recognize those matters that constitute their shared cause.

Surely, chief among these must be resuscitating an economy that’s been beached for some time.

Does Mr. Gallant soften his position on hydraulic fracturing in the nascent shale gas industry and clear the way for commercial exploitation of the resource, a move that could one day generate tens-of-millions-of-dollars in taxes and royalties for this fiscally bereft province?

Or does he stick to his guns and slap a moratorium on the controversial practice, as he has vowed to do, until such time as he believes it sufficiently safe and manageable? And then what?

If he is, as he has intimated, the “education premier”, will he make literacy, numeracy and higher learning tools for economic development now and in the future? Does the road to prosperity wind its way through vistas of human capital, as yet unexplored, or the all too familiar terrain of natural resources and the raw labour they require, often only seasonally?

Campaign rhetoric aside, what, in fact, is Mr. Gallant’s endgame for New Brunswick, and will he be permitted to pursue it in relative calm, free of the cacophony the vested, the specially interested, the lightly knowledgeable, and the constitutionally loud-mouthed among us are so good at raising?

Or, perhaps, knowing that there is no time to waste in New Brunswick, he will let none of it stand in his way.

That, in itself, would be an achievement worthy of note.

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Sep 18 2014
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Economy, Energy

Boning up on fracking 101

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The spectacle of an energy company’s CEO teaching the abecedarian facts about a drilling technology that’s been around for at least ten years to candidates for the highest elected office in the province is undeniably amusing.

Still, one or two of our premier wannabes might have cracked a book before showing up for class.

One can only imagine what crossed the mind of Corridor Resources’ Phil Knoll when he decided to pen a lengthy letter to the heads of New Brunswick’s five political parties essentially explaining that, no, gentlemen, it is not possible to extract gas from shale formations in this part of the Maritimes without fracturing the rock.

According to the letter, acquired by the Saint John Telegraph-Journal, Mr. Knoll is categorical: “There is no other method to release the natural gas from tight sandstone or shale other than through fracturing the rock. That is the reality.”

And if any political hopeful thinks that fracking (industry slang for hydraulic fracturing, the process by which water and chemicals, or, less commonly, gas, are injected under pressure into sedimentary rock to liberate the fossil fuel trapped there) can be restricted only to the production phase of development, he should think again.

“During the exploration phase, the only way to accurately determine the size of the resource and whether it can be produced economically is through the use of fracture stimulation,” Mr. Knoll explains. “Seismic research and the drilling of stratigraphic core holes can help evaluate the geological formations and their composition at different depths.”

What’s more, he writes, the debate in New Brunswick about hydraulic fracturing – whether, as its opponents claim, it will release vast quantities of methane into the drinking supply, enabling local farmers to literally light their water on fire – is largely misguided if not entirely moot.

In fact, over the past 10 years Corridor has used fracture stimulation to drill 43 wells with, as Mr. Knoll confirms, “no adverse impacts on potable water aquifers. . .Corridor operates some wells that were fractured 10 years ago and still produce natural gas without additional fracturing. Across North America, it is common to have wells producing more than 20 years after initial fracture stimulation.”

All of which suggests that fracking can, at least in this instance, be done safely. But that’s never really been at issue. The underlying quandry in the debate has always been: Will it?

That’s the question an article in Scientific American posed last year, to wit: “A new review article funded by the National Science Foundation and published in Science on May 16 examines what fracking may be doing to the water supply. ‘This is an industry that’s in its infancy, so we don’t really know a lot of things,’ explains environmental engineer Radisav Vidic of the University of Pittsburgh, who led this review. ‘Is it or isn’t it bad for the environment? Is New York State right to ban fracking, and is Pennsylvania stupid for [allowing it]?’ According to the review, the answer is no. ‘There is no irrefutable impact of this industry on surface or groundwater quality in Pennsylvania,’ Vidic says.”

Still, the article continues, “That’s not to say there haven’t been problems. That’s because there are many ways for things to go wrong with a natural gas well during the fracking process. A new well – or the 100,000 or so existing but forgotten wells – can allow natural gas from. . .deposits to migrate up and out of the rock and into water or basements. Leaking methane, in addition to being a potential safety hazard, is also a potent greenhouse gas that exacerbates climate change, although that environmental impact was not examined in this study.”

However New Brunswickers choose to chart their collective energy future, the wisest course will always begin with the self determination to obtain the best of all possible facts.

After all, to avert a risk, you must first understand it.

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Aug 22 2014
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Energy, Environment

Water, water everywhere and not a drop to protect

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It seems that the Alward government is bound and determined to pitch itself over the gunnels of the ship of state and drown contentedly in the political equivalent of Davy Jones’s locker.

For the second time in as many weeks, the ruling Tories (for now) are having to answer tough and humiliating questions related to their administration of shale gas development in the province.

The first controversy, indirectly but not tangentially related to water, involved its decision to proceed with an RCMP investigation of Calgary-based Windsor Energy in 2011. The Province claimed in a public statement that the exploration company had violated the Oil and Natural Gas Act by failing to obtain permission from the Town of Sussex before conducting seismic testing within its municipal borders.

The Mounties said the allegation was baseless and refused to lay charges. Emails obtained by this newspaper organization this month confirmed that a lawyer working for Communications New Brunswick at the time strongly urged the Department of a Natural Resources to back off days before government officials ultimately ignored the advice and decided to go public with its probe.

Guess who’s suing whom for libel, and to the tune of 100-million bucks? Hint: The grin on the face of Windsor’s CEO has achieved Cheshire Cat-like dimensions, of late.

It’s all priceless, given that the central worry among those who oppose tight oil and gas plays in the province is the degree to which the key extraction technology, hydraulic fracturing, might poison the water tables of largely rural communities, which still depend on wells.

To wit: If legislators don’t understand the scope of their own regulations, how can they be trusted to protect the public’s drinking water?

Now, the very same lawyer, Charles Murray, who told the government it didn’t have a legal leg to stand on three years ago, has issued a stinging indictment of the Province’s waterway protection policies. This time, though, he’s not a consulting factotum; he’s New Brunswick’s ombudsman.

Payback really is, well, a bummer.

According to Telegraph-Journal legislative reporter Chris Morris, in a piece this week, “Charles Murray states in the report of his investigation into a complaint filed last year by the Nashwaak Watershed Association that the existing regulation governing waterway classifications ‘is in some respects worse than having no regulation at all.’”

He continued: “Over 12 years have passed, and the Clean Water Act has been amended, yet (the water classification) regulation exists primarily as a mirage, misleading observers to their detriment. The history of this file leads us to conclude that the Legislative Assembly must take a more direct interest if it wishes the province of New Brunswick to have an effective Water Classification Program rather than an illusory one. . .(This is) like a smoke detector without batteries. It provides no protection.”

In its absurdly lame defence, the T-J reports, the provincial Department of the Environment (which is, by every observable standard, merely a bedroom community of the Department of Natural Resources), stipulates that it has “initiated a process to develop a provincial water strategy. This will include a public engagement component, and will include discussion concerning the existing Water Classification Regulation, and whether it is the right tool to achieve our water management objectives.”

It must be joking. What water management objectives? For more than a decade, we now know, the Province has had a law on the books that its various governments – both Tory and Grit – have repeatedly refused to parse, let alone enforce.

And not just any law. It deals with water, people. . .water! Ninety-per-cent of the stuff comprises our human body weight. If we stop drinking good, old H20, we die within seven days. No other consideration in economic development – especially of natural resources – occupies a position of primacy more than does this.

Indeed, it’s bewildering – in fact, it boggles the mind – that this government expects to create a shale-gas industry, expand mining and forestry operations across the province, track in a pipeline from the west whilst winning the hearts and minds of New Brunswickers for its intentions without a sound, responsible water protection regime.

Perhaps this government is weary of public office.

Perhaps it does, in fact, prefer to commit suicide by droning and then, finally, by drowning.

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Oct 29 2013
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Energy, Oil and Gas, Politics

Taking our lumps of coal

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New Brunswick stands poised between its very own imaginary rock and theoretical hard place as hundreds of people routinely gather to protest not the actual operations of a shale gas industry, but the very idea of one.

Such is the extraordinary depth of emotion this particular fossil fuel has plumbed in this province and many other jurisdictions around the world: There need not actually exist a wellbore pumping gas from the fracked ground to spark mass hysteria; just the threat of one.

Much of this has to do with the industry’s early record of public consultation, technical disclosure and environmental stewardship – which was not good. Some of it is related to organized information campaigns of various eco-warriors who are determined to drive the western world’s petro-chemical-industrial complex underground any way they can.

But as Premier David Alward juggles the oddly twinned priorities for shale gas development of forging ahead with supporters and stooping to chat with opponents, everyone on both sides of the issue seems blinkered to a far more tangible and existential evil.

Consider a recent Reuters report out of South Korea:

“Coal will surpass oil as the key fuel for the global economy by 2020 despite government efforts to reduce carbon emissions, energy consultancy firm Wood Mackenzie said on Monday (October 14). Rising demand in China and India will push coal past oil as the two Asian powerhouses will need to rely on the comparatively cheaper fuel to power their economies. Coal demand in the United States, Europe and the rest of Asia will hold steady.”

In fact, according to the news item, “Global coal consumption is expected to rise by 25 per cent by the end of the decade to 4,500 million tonnes of oil equivalent, overtaking oil at 4,400 million tonnes, according to Woodmac in a presentation on Monday at the World Energy Congress.”

As a source of energy, coal is both the cheapest and the dirtiest. Burning it produces a plethora of toxins, including nitrous oxides, sulfur dioxide, hydrogen chloride, arsenic, hydrogen fluoride  chromium, mercury and cadmium. What’s more, coal’s contribution to global warming surpasses those of all other fossil fuels.

Green America, a not-for-profit environmental group that is calling for a moratorium on the stuff, lists a few other choice facts: “Coal is the largest single source of fuel for electricity generation in the world; coal is the most widely distributed fossil fuel, and is mined on all continents except Antarctica; the three of the most affected coal-mining states are Wyoming, West Virginia, and Kentucky; there is enough coal left to last about 200 more years at current rates of production.”

At which time, presumably, old fears about climate change will have become a distant memory for denizens of Planet Hothouse.

Citizens in the developed world have known about coal’s eminent dangers far better and for far longer, than they have about shale gas’s comparatively manageable environmental challenges. And yet, the filthy bitumen continues to drive energy development wherever it’s mined.

“Coal hurts communities, destroys wildlife and countryside and contributes massively to climate change,” the U.K.-based Coal Action network reports. “But coal has also been on the up in the UK over the past five years – some 50 opencast related applications have been approved in that time, and currently there are around 40 at various stages of the planning system.”

We may agree to disagree about hydraulically fracturing shale gas. But the indisputable fact is that this resource is much cleaner than coal and is, for this reason alone, an attractive energy solution.

One’s ideal world may include astonishing breakthroughs in safe, pristine, endlessly renewable power systems and storage cells. We may, some day, pilot our solar-driven airships to our local, organic green grocers.

But we won’t get there from here without deploying some form of fossil fuel to keep the lights of innovation burning into the small hours of the morning.

In this regard, it makes no sense to expand production of coal, the dirtiest form, as the means through which we finally clean up our collective act.

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Jun 23 2013
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Economy, Energy, Environment, Politics

Denial and deflection on shale gas

Too much official hot air as shale gas in New Brunswick bloats expectations

Too much official hot air as shale gas in New Brunswick bloats expectations

Into each political life, a little denial must fall. But the New Brunswick government’s contention that the tide of opinion in the province is turning in favor of shale gas development seems particularly delusional.

Survey after survey have clearly established that more people than not believe tight petroleum drilling – which employs the controversial method of hydraulic fracturing – poses a threat to the environment and, by extension, to communities in rural areas. A recent Corporate Research Associates (CRA) poll merely confirms what we have known for months.

“New Brunswick residents are concerned about the safety of shale gas exploration and are split on whether the process is important to the economic future of the province,” the Halifax-based opinion-taker announced this week. “One-half (48 per cent) of residents believe shale gas to be critically important or important but not critical to New Brunswick’s economic future, while a similar number (44 per cent) believe it to be not very important or not at all important to the economy of the province.”

Meanwhile, “when asked (about) the safety of shale gas exploration, on a scale of ‘1’ to ‘10’ where ‘1’ is not safe at all and ’10’ is extremely safe, the average rating was 3.9 indicating many residents perceive shale gas exploration to be unsafe. Those in the Northern Region (3.3) and Moncton area (3.5) are more likely to consider the exploration of shale gas unsafe compared with those in the Southern region (4.6).”

All of which moved CRA’s chairman Don Mills to observe, “it is clear that there will be significant and continuing challenges to government and industry in the development of shale gas resources in the province of New Brunswick.”

In an interview with the Telegraph-Journal this week, he went further: “The results say to me that the provincial government and the industry are both in a tough corner right now. . .There are so many people who believe that fracking is unsafe, I think the opponents of shale gas have won the day on that argument, at least at this point.”

What, then, justifies Energy Minister Craig Leonard’s sunny disposition? He also told the TJ this week, “(People) need to understand that we have the strictest rules in North America in place. But the support is growing and from what we are hearing on the ground, most people we are discussing this with say that even if they have concerns with the process, they want us to see what kind of resource we do have through the exploration phase.”

That’s hardly a ringing public endorsement. People are always willing to consider the necessary evils of their circumstances as long as those evils remain hypothetical. The moment the drills go into the ground and the gas starts flowing in earnest, it’s a whole new ball game. For the provincial Tories, the game may already be over.

CRA’s early June survey found that support for the government, among decided voters in New Brunswick, had slipped to just 29 per cent, down from 32 per cent in March. The Liberals commanded a 41 per cent approval rating, up from 35 per cent in the earlier three-month period. These shifts in electoral preferences neatly coincide with Grit calls for a moratorium on further shale gas development.

Now, in a tactical tour de force (though farce may be a more accurate word), the provincial government is hoping to secure acquiescence to onshore exploration by conflating the effort with a potential eastern pipeline into Saint John – a project for which there is broad, if not unanimous, support. This sort of deflection, though common enough among politicians, almost never works. Worse, in most cases, it backfires.

The plain, hard truth is that leadership in public office inevitably entails disappointing and angering many of those who put you there.

If shale gas is, in the opinion of this government, worth pursuing, then get on with it – safely, responsibly and openly, of course. But leave out the sugarcoating and magic tricks. No one’s buying any of it.

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Jun 11 2013
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Business, Economy, Environment, Politics

New Brunswick’s biggest natural resource is fury

Seeing the forest for the trees in hydraulic fracturing

Seeing the forest for the trees in hydraulic fracturing

Those who believe that New Brunswickers are apathetic about their futures need only survey the province for visible signs of outrage, which are everywhere. Apparently, we are mad as hell and we’re not going to take it anymore.

The question is: What is the “it” we refuse to “take”?

Once upon a time, it was the sale of NB Power to Hydro-Quebec. The contretemps over that issue brought down a government already reeling from the outcry over its proposals to establish a network of polytechnics in the province and reform French language instruction for Anglophones.

These days, it’s cuts to the public service, education and health care that have ignited the pyres of dissent from Sackville to Edmundston.

No issue, however, is as incendiary as hydraulic fracturing, with its dark promise to pollute and sunder communities wherever the shale gas industry sinks its wells.

Last week, the RCMP arrested three people – about 120 kilometers north of Moncton – who were protesting SWN Resources seismic testing (advance work in the exploration of tight petroleum plays). The cops said the trio refused to make way for trucks. Other observers at the scene said the authorities overreacted.

For his part, Brad Walters a professor of environmental studies professor at Mount A, called it a sign of the times, to which we should grow accustomed. He told  CTV it reflects “a combination of things coming together here. . .There is this network of over 30 groups across the province who are talking to each other and are very strongly opposed to shale gas development.”

Call it the immoveable object that meets an unstoppable force, but opposition to shale gas in this province has become a permanent feature of the landscape. No careful ministrations by the provincial government, promising to enforce the “toughest” regulations in North America – no vows by industry representatives to adhere to only the highest standards of environmental stewardship – are likely to placate the critics.

This worries people like Susan Holt, president and CEO of the New Brunswick Business Council, which commissioned a report, released recently, on the economic potential of shale gas in the province. “Some of the opposition is a little bit disconcerting to industry because it appears to be general industry opposition rather than specific,” she told the Telegraph-Journal’s Chris Morris. “When New Brunswickers resist general industrial activity, that is more nerve-racking for our folks because it begs the question, how do we develop our economy?”

How, indeed?

Legitimate concerns about water and soil degradation and principled stands against fossil fuels warming the planetary orb only partially explain the current antagonism. At the heart of the hostility to shale gas is a position against which there is no defence: People simply detest the idea of it. Onshore petroleum development somehow cuts against the weave of the province’s social fabric.

The identical mental dynamic was at work when potash was first developed. It was in even planer view when wind turbines began dotting the countryside. Lest we forget uranium?

Logic is a blunt instrument of persuasion when passions are running high, as they tend to do when statements from the provincial Department of Energy and Mine declare that “Nine companies hold a Crown license to search and/or lease within New Brunswick. These include a total of 71 rights agreements, covering over 1.4 million hectares, for the exploration and production of oil and natural gas.”

In fact, the Province has spent a good deal of time touting New Brunswick as the undisputed nexus of the emerging tight oil and gas industry in Atlantic Canada. Estimates, it likes to say, peg the volume of natural gas trapped between layers of sedimentary rock hundreds, or even thousands, of meters beneath the soil’s surface at close to 77 trillion cubic feet.

What it – and industry, itself – hasn’t spent much effort doing is reminding New Brunswickers that no one yet knows whether the resource is even commercially viable. Nor have they attempted to explain (until very recently) the safeguards that must attend its extraction and development.

Now, it may be too late to expect a sea change of attitude.

It’s a shame we can’t harness the energy from all the outrage we generate.

If we could, we’d never again worry about the future of our province.

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