The oil and gas industry could lose its public 'licence' to operate in Alberta unless the escalating conflict between the sector and other land users is resolved, experts say.
Unprecedented industry activity, an expanding population and growing environmental and social concerns have created a storm of confrontation over land use that threatens the very resource fuelling Alberta's economy, speakers told last week's Canadian Energy Research Institute (CERI) conference held in Calgary.
"If this (situation) continues to escalate and polarize, it's going to be hard to put things back together again," said Doug Bruchet, CERI senior vice-president of environmental-energy research.
CERI organized the conference after its interviews with officials at more than 60 oil and gas exploration and production companies revealed that gaining access to the land base to develop the resource has become their No. 1 concern, Bruchet said in an interview.
Some company officials say getting onto the land has become so difficult in some areas, "they are just walking away from the resource," he said.
"If you can't access the land, then you can't harvest the resource," Bruchet said. "It has direct implications for employment, investment activity and use of the land."
The oil and gas industry, which made a capital investment of $31 billion in Canada last year, is the country's largest private-sector investor, says David Pryce, vice-president, Western Canada operations for the Canadian Association of Petroleum Producers (CAPP).
The industry supports a half-million jobs - including one out of every six in Alberta - and it generated about $18 billion in payments for governments last year, Pryce noted.
One thing driving the increasing conflict in Alberta is that most of the oil and gas in the geological basin underlying the province has been discovered, conference speakers said.
This means companies are using strong investment in the industry to step up production of known conventional oil and gas deposits, or to expand into unconventional oil and gas such as coalbed methane (CBM) and the oilsands.
Given Alberta's burgeoning population and more people moving onto rural acreages, the industry is continually bumping up against property owners either in rural areas or near cities and towns, Pryce said.
Ensuring good relations with other land users and the industry's continued access to the land base "is a potentially serious issue and we need to get in front of it," he said.
"We need to make sure that the (land-use) policies are relevant to the changing nature of the business and the changing nature of the use of the landscape," Pryce added.
Bill Sutherland, chief commissioner for Strathcona County east of Edmonton, said in a keynote talk that there is "tension, conflict and uncertainty around land issues."
In Strathcona County - Alberta's third-largest municipality - the perceived or actual threats that residents feel from oil and gas development, coupled with feeling powerless to do anything about it, are turning people against the industry like never before, he said.
In addition, Albertans who face ever-climbing energy bills and can't afford post-secondary education for their kids are becoming cynical about the oft-touted "Alberta Advantage" gained by oil and gas wealth, Sutherland said. "People are increasingly asking: 'What benefit?' " There is no co-ordination of land use between municipalities and provincial oil and gas regulators such as the Energy and Utilities Board (EUB), he said.
Jessica Ernst, who owns an environmental consulting firm and is also a landowner near Rosebud, northeast of Calgary, says the rush to pump as much oil and gas out of the ground as possible threatens to tear apart rural communities.
"I'm afraid violence will begin, tempers will flare, small communities will begin separating and having a lot of violence within communities," she said, adding the pace of development is so intense that "nobody really has a chance to find solutions."
Michael Bruni, executive manager of the EUB's energy team, told the conference that the regulator is the "centre of a storm" of conflicting demands by industry, government departments, landowners and others.
There are now more than 1,600 energy companies operating in Alberta, compared with just 70 in the 1970s, he noted.
From 1913 to 1970, the oil and gas industry drilled about 37,000 wells in the province. Last year alone, the EUB licensed 21,600 wells and a further increase is expected this year. In the oilsands, the Alberta government has set a target to more than double production to 2.6 million barrels per day (b/d) by 2015 from current production of just over one million b/d.
New development of CBM - natural gas trapped within coal seams - is also coming on strong, said Michael Gatens, Canadian Society for Unconventional Gas chairman.
More than 3,500 CBM wells are expected to be drilled in Alberta this year, with production of the gas doubling by year's end to 300 million cu. ft. per day from the current 150 million cu. ft., he said.
The potential for CBM development is enormous, with estimates of as much as 75 trillion cu. ft. of recoverable gas in Western Canada, Gatens said. But if industry is going to be able to access the land to develop the resource, engaging with other stakeholders and sharing information openly and honestly "is critical," Gatens added.
That is not happening now, said Calgary journalist, Governor-General's Award-winning author and rural landowner Andrew Nikiforuk.
"As a landowner, I'm not happy and most landowners I talk to aren't happy," said Nikiforuk, who owns a quarter-section in the Porcupine Hills in southwest Alberta and publishes the Land Advocate newsletter.
"We feel we're getting hammered by development that we can't do anything about," he told the conference.
The EUB needs publicly elected board members - rather than those who are appointed by government - to make decisions about development, Nikiforuk said. He added there should also be an independent provincial ombudsman for landowners who has the power to fine companies that don't follow the regulations.
Nikiforuk said landowner groups are calling for a moratorium on all CMB development that produces water along with the gas until extensive groundwater studies are done, a ban on using freshwater to extract more oil and gas, and a phase-out of sour gas production near populated areas over the next decade.
CERI's Bruchet said recommendations from the conference's break-out discussion groups, which focused on possible solutions for industry, government, landowners and other stakeholders, will be sent directly to the EUB, Alberta Energy and other government regulators.
(Mark Lowey can be reached at mark@businessedge.ca)
