MARKETS

Canadian provinces extend frac bans

EASTERN Canada's hydraulic fracturing ban will remain in place indefinitely until the governments...

Haydn Black

They will be joining the provinces of Quebec and Nova Scotia in banning it.

Fraccing bans are not new. France has one, as does Ireland, and Victoria, New South Wales and Tasmania have moratoria in place.

New Brunswick decided to extend its year-long ban on the practice in last week, and Newfoundland & Labrador’s own panel on fraccing reported on Monday, finding there could be a way forward for unconventional oil and gas in the province, but it will not be a quick process to lay the groundwork, by evaluating the risks and rewards, and basic geoscience to understand the Green Point shale resource and the technical risks of full-scale development.

Appointed in October 2014, the panel was to decide if fraccing should be undertaken in the Port aux Port/Bay St George area, particularly around Western Newfoundland.

After some 18 months the panel said there are numerous gaps and deficiencies that must be addressed before the necessary conditions could exist that would allow for fraccing in the west of the province.

It outlined a series of staged, cautious and evidence-based steps that would need to be completed before any decision could be taken, a process that could take years.

The panel has recommended that the moratorium be left in place during the “red stage”, until data can be collected, policies and regulations examined and the risks to human health, the environment, and seismicity can be quantified.

Crucially, the industry needs to prove it has a social licence to operate, something that will be an uphill battle. Some 95% of the 500 submissions to the panel expressed dissatisfaction with fraccing.

The panel said it was important to safeguard Gros Morne National Park from development, and initiate the process to establish a buffer zone, that could protect the park.

Once it has come to grips with all of that, and participated in national and international research programs related to well integrity and developed an appropriate regulatory framework, the panel suggested the government could move to the second of the three stages.

The “yellow stage” offers a cautious approach, and building on the earlier “red stage”, with modelling to understand the impact of full-scale development, including a plan for use of excess associated gas, proof that health and emergency services are capable of dealing with and a requirement for substantial local benefits, and even more studies into how the Green Point Shale will respond to hydraulic fracturing operations, and how the water will be disposed.

The panel said it was possible that during this stage the provincial government could allow exploration to commence, although it said those would be no guarantee that any approval to frac would eventuate.

The “green stage” recommendations would allow fraccing unconventional oil and gas development in Western Newfoundland, but would require best practise operations, strict monitoring and greenhouse gas minimisation, and regular testing of oil and water.

Oilers would also need to disclose their fraccing fluids in a public database, and would need to be licenced by the province.

“Implementing these staged recommendations constitutes a cautious way forward without pre-judging the impact and potential of unconventional oil and gas development in Western Newfoundland,” the panel found.

Newfoundland & Labrador’s decision to extend its ban follows on from New Brunswick.

In February the New Brunswick Commission on Hydraulic Fracturing delivered its comprehensive report to government, which resulted in SWN Resources cancelling its plans to explore for shale gas, and last week the government decided to accepts its recommendation.

In March 2010, the province accepted a bid for a licence to search some one million hectares, with SWN pledged to invest more than $45 million, but after four years and several seismic programs, the company has run up the white flag.

New Brunswick's Liberal government imposed its ban in December 2014, and has said it will remain in place indefinitely.

The province's energy minister, Donald Arseneault, said fraccing won’t be allowed until more is known the effects the technology will have on local residents and the environment.

At the time he said the province wanted to see jobs, “but not at any cost. It is clear that our conditions cannot be satisfied in the foreseeable future”

The province set five conditions, including a plan for regulations and waste-water disposal, a process for consultation with First Nations, a royalty structure, and a social licence to operate, and said industry was falling short of reaching those coals.

The commission’s three-volume report also recommended an independent regulator.

The Progressive Conservative government of premier David Alward embraced the shale gas industry, as David Cameron has in the UK to the chagrin of some English communities, and the former government’s position resulted in a violent demonstration in 2013 that saw 40 people arrested and six police vehicles burned.

Arseneault said the tensions were so high that the government had no choice but to put a moratorium in place in the province of New Brunswick until such a time as relationships with fist nations could be repaired and fraccing could be proven safe.

The PC Party has pledged to lift the ban if it is returned to power, and the Canadian Association of Petroleum Producers expressed disappointment, saying that it had worked with the provincial government to ensure “world-class regulations and environmental protection is in place”

"The decision to extend the moratorium is a step in the wrong direction and sends a negative message about attracting investment to grow the economy,” the lobby group said.

Despite all this fluster, with a global gas glut and none of the Canadian LNG projects going forward, there is little desire to pursue shale gas plays in the province.

Quebec was the first of the eastern provinces to ban fraccing, and it was almost immediately threatened with legal action by Lone Pine Resources which is seeking almost $C120 million in alleged damages for the 2011 decision to revoke oil and gas exploration licenses located beneath the St. Lawrence River.

It is pursuing the claim under the North American Free Trade Agreement, claiming “arbitrary, capricious, and illegal revocation” to frac under the St Lawrence River “without due process, without compensation, and with no cognisable public purpose.”

In its rebuttal, the Canadian government says the province was exercising its fundamental democratic rights to protect the river after numerous studies warned of the potential negative impacts of fraccing of the health of the river.

Lone Pine, which is headed up by former Molopo Energy CEO Tim Granger, is seeking a settlement because of its dire financial state.

Molopo also had some long-standing leases with Utica Shale potential in Quebec that it has not been able to chase because of the ban.

Last month, Quebec premier Phillippe Couillard expressed his displeasure with the controversial method of oil and gas extraction and said that province will concentrate on clean energy and investing in renewables.

In 2014, following the release of the Wheeler Report on hydraulic fracturing in Nova Scotia in August 2014, that province’s Natural Resources minister announced a moratorium on hydraulic fracturing.

In December 2014, New York’s governor followed the advice of his chief medical officer and brought in a ban on hydraulic fracturing in that state.

There have been a number if earthquakes in recent years, in Alberta and British Columbia, that have been linked with fraccing.

Fraccing is, however, allowed in the Western Sedimentary Basin provinces. It has been used in Alberta since the 1950s, and more recently has been used on the Cardium, Duvernay, and Viking formations in Alberta, Bakken formation in Saskatchewan, and the Montney and Horn River formations in British Columbia.

TOPICS:

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

editions

ESG Mining Company Index: Benchmarking the Future of Sustainable Mining

The ESG Mining Company Index report provides an in-depth evaluation of ESG performance of 61 of the world's largest mining companies. Using a robust framework, it assesses each company across 9 meticulously weighted indicators within 6 essential pillars.

editions

Mining Magazine Intelligence Exploration Report 2024 (feat. Opaxe data)

A comprehensive review of exploration trends and technologies, highlighting the best intercepts and discoveries and the latest initial resource estimates.

editions

Mining Magazine Intelligence Future Fleets Report 2024

The report paints a picture of the equipment landscape and includes detailed profiles of mines that are employing these fleets

editions

Mining Magazine Intelligence Digitalisation Report 2023

An in-depth review of operations that use digitalisation technology to drive improvements across all areas of mining production