The oil and gas industry’s largest association is willing to negotiate province-wide targets to reduce the oilpatch’s use of freshwater and would consider a fee on such water supplies.
But the Canadian Association of Petroleum Producers (CAPP) also says that all industries – not just the oil and gas sector – should have to pay for using potable groundwater and surface water from lakes and rivers.
“If there is a consideration for a (water-)pricing scheme, it needs to be fair and equitable,” says David Pryce, CAPP’s vice-president of Western Canada operations. “It needs to be applied broadly, not just to our industry.”
After three successive years of drought conditions, water is in short supply in some parts of the province, especially in central Alberta.
Some farmers and ranchers are calling for an end to the petroleum industry’s practice of pumping huge amounts of freshwater and steam underground to squeeze more oil out of reservoirs and to recover bitumen from oilsands.
The Alberta government, in its proposed Water for Life water-management strategy released in March, says charging a fee for freshwater would be an incentive to conserve the precious resource.
Users, including consumers, now pay fees for delivery and treatment of water. Large-volume users pay licence fees. But no one pays for the water itself.
The Pembina Institute for Appropriate Development recommends in a new report that the province immediately start charging the oil and gas industry at least a “modest” fee for freshwater.
“We should just be working for the phasing out of (industry’s use of) freshwater, that’s the bottom line,” says Mary Griffiths, a Pembina Institute environmental policy analyst and co-author with Dan Woynillowicz of the report, Oil and Troubled Waters.
It recommends that government review all industrial water licences and approvals to ensure users receive only the water they need and no more.
Government should also protect Alberta’s wetlands with legislation, and revise regulations to ensure the fledgling coalbed methane industry properly manages water that’s produced from underground coal seams along with the methane gas, the report says.
“We don’t want to be disruptive to the economy,” Griffiths says. “What we want to do is send a message that it’s time to think differently.”
CAPP points out that the oil and gas industry will contribute about $18 billion in taxes, royalties and fees to governments in Canada in 2003. Any water-pricing scheme needs to consider both the costs and benefits of the industry’s use of water, Pryce says.
According to information from Alberta Environment, irrigation received the highest allocation of surface water in Alberta last year – 47 per cent, compared with just four per cent for the oil and gas sector.
The agricultural sector (mainly farm use and livestock watering) received the highest allocation of groundwater – 26 per cent compared with 25 per cent for enhanced oil recovery and oilsands projects.
But Griffiths notes that nearly all the surface water used in irrigation is returned to the water cycle, where it becomes available again for other users.
In contrast, oil and gas companies pump about one-third of their allocated surface water and most of their groundwater into underground formations, where the water is essentially permanently removed from the hydrologic cycle.
The petroleum industry isn’t using all the water that it’s licensed to use, however. Based on figures reported to the Alberta Energy and Utilities Board, oil and gas companies actually used about 32 million cubic metres of freshwater for injection last year – far less than the 183 million cubic metres allocated.
Provincial regulations require companies to investigate the use of non-potable groundwater (such as saline or salty water) and non-water alternatives (such as carbon dioxide gas or solvents) for oilfield injection in Alberta’s White Area, or predominantly agricultural zone.
Last year in the White Area, the industry used only about 15 per cent freshwater compared with the volume of non-potable saline water used.
The Pembina Institute wants the government to impose similar rules in the mostly forested Green Area, where the volume of freshwater used for oilfield injection is three times higher than the volume of saline water. Even in the Green Area, however, the industry now uses less than half the volume of fresh groundwater it used in 1971.
Oil and gas companies typically are required in their water-allocation licences to recycle the water they use, CAPP’s Pryce notes. “We are strongly motivated to be conserving the water and maximizing our use of the water . . .”
Pryce says CAPP supports Pembina’s recommendation that industry sectors report their water usage, and that the government keep a record of the amount of water withdrawn under licences and approvals in a publicly available database.
CAPP also likes Pembina’s suggestion to use a multi-stakeholder advisory process – such as the Clean Air Strategic Alliance model – if government decides to set province-wide targets to reduce industrial freshwater use, Pryce says. The government plans to formulate its final water strategy this fall.
The clean air alliance, which includes industry, government and environmental groups, has successfully reduced oilfield gas flaring in the province by more than 50 per cent since 1996.
Pembina’s report also recommends that water licences for large-scale commercial uses should be issued in phases to meet the actual needs for a particular stage of development, rather than providing for the maximum water requirements throughout the life of a project.
This is necessary because the increasing use of steam-assisted gravity drainage technology by oilsands projects in northern Alberta will mean “using a lot more water, and there are going to be a lot more of these projects,” Griffiths says.
But Pryce says that the government can and does include requirements to conserve the water allocated, while still providing an assured water supply so companies can make long-term investments in the oilsands and other projects.
Pembina’s report also recommends developing water basin management plans for all of Alberta, as well as dramatically enhancing research and monitoring of groundwater resources.
“We don’t know enough about our groundwater to know how or where all the groundwater sources are being replenished,” Griffiths says.
“We shouldn’t be allocating resources when we don’t even know how great that resource is.”
