British Columbia’s fast-growing oil and gas industry is already well regulated and doesn’t need the sweeping reforms called for by a broad-based coalition, says the head of B.C.’s Oil and Gas Commission (OGC).
Commissioner Derek Doyle said that either the OGC, which regulates the industry, or a provincial government ministry has already taken action on measures recommended in a recent 10-point report by the coalition, which includes rural landowners, First Nations, environmental groups and energy workers.
“We think we’ve got a lot of things under way . . . there’s very positive action in all 10 areas,” Doyle said in an interview last week in Calgary, where he met with senior officials from several oil companies.
The coalition’s report, 10 Steps to Responsible Development, calls for a new energy policy in B.C. that balances oil and gas development with promotion of renewable energy.
The recommendations include:
* Set up a heritage fund generated by oil and gas royalties to support transition to sustainable industries.
* Suspend coalbed methane development until safeguards are established.
* Give landowners more say over oil and gas development.
* Create jobs for residents in British Columbia – not just Albertans – in the oilpatch.
The B.C. government’s approach to exploiting oil and gas resources is short-sighted and out of step with the need to reduce reliance on fossil fuels, the report said.
“This will not result in responsible development,” said Karen Campbell, a staff lawyer with the West Coast Environmental Law group in Vancouver.
Alberta has better regulations, gives landowners more say over oil and gas development, and has a heritage fund of some $12 billion, she said.
“These 10 steps must be implemented if B.C. is to choose the responsible pathway,” she said.
For the next three years, the B.C. government is forecasting a 31-per-cent increase in the number of natural gas and oil wells drilled, with annual production increases of 8.7 per cent, 5.7 per cent and five per cent.
But Doyle said that B.C. has already implemented a provincial energy plan to accommodate, as well as regulate, the industry’s expanding activities.
The plan includes a strategy to create oil and gas jobs for B.C. residents, help service companies grow their businesses and assist communities in attracting these firms, he said.
EnCana Corp. of Calgary, one of the companies most active in B.C., has created opportunities for First Nations businesses and other local entrepreneurs, president and CEO Gwyn Morgan said in a talk earlier this month to the Vancouver Board of Trade.
He pointed to Eh-Cho Dene, a road and wellsite construction company with a fleet of 40 to 50 pieces of heavy equipment servicing EnCana and other companies.
In another initiative, the Fort Nelson First Nation, in a partnership with EnCana and Ensign Drilling, last year became the first aboriginal community to own and operate a drilling rig that EnCana has given priority to using.
EnCana has also expanded to year-round drilling in B.C., using wooden support mats for roadways and drill sites. The mats are built with locally-supplied lumber, “creating a new niche industry,” Morgan said.
EnCana is a founding sponsor of the Petroleum Education and Training initiative, which includes a program in Fort Nelson that introduces students to opportunities in the industry and sponsors various practicum placements.
The coalition’s report, however, said a government study found that four out of five oil and gas industry jobs in B.C. have been filled by Albertans.
Dave Coles, western region vice-president for the Communication, Energy and Paperworkers Union, said as drilling activity increases, his union members’ jobs are declining. “As well, we’re deeply concerned that our members’ jobs in the pulp and paper sector are at risk as oil and gas development cuts deeper and deeper into B.C.’s forests,” Coles said.
Chief Garry Oker, of Treaty 8’s Doig River First Nation in northeast B.C., says native hunting and fishing grounds are being disrupted by oil and gas development. “Our people can no longer hunt and fish in many places as our territory becomes more and more fragmented.”
Aboriginal communities are seeking a resource revenue-sharing agreement with the province as well as a say in how development occurs, Oker said.
Doyle, however, said the OGC and Premier Gordon Campbell’s Liberal government have already signed agreements to consult with Treaty 8 First Nations in northeast B.C. – where the bulk of oil and gas development is occurring.
He also disagreed with the coalition’s recommendation that the number of provincial monitoring and enforcement staff overseeing B.C.’s oil and gas industry should be restored to pre-2001 levels.
The OGC now has 140 employees compared with just 88 prior to 2001, and the number of compliance and enforcement staff has risen by about 40 per cent, he said. “We’ve really beefed up our compliance and enforcement area in the last two years.”
As of March 1 this year, the OGC had also cut by 36 per cent the nearly 7,340 rules and regulations that once governed the oil and gas industry.
The commission is moving to a “results-based” regulatory system rather than a prescriptive system based on setting dozens of often outmoded or redundant rules, Doyle said.
He said that as long as companies meet the objectives of safeguarding public and employee health and protecting the environment, how they do this in the field is largely up to them.
OGC audits in the field found that the industry’s compliance with rules on construction activity (such as building wellsites and pipelines) increased to more than 86 per cent in 2003, compared with a 79-per-cent compliance rate in 2001, Doyle said.
When it comes to coalbed methane (CBM), Doyle said the OGC has a rigorous process for regulating all three stages of CBM development, which are evaluating the resource through test wells, multiple-well pilot projects and full-scale commercial production of the methane coal gas.
Currently, there is no commercial CBM production operating in B.C. When CBM does become commercial, Doyle said, there are rules that require companies to inject any contaminated water produced along with the coal gas into approved deep-disposal wells.
Landowners are also worried about the high density of wells typically drilled for CBM development. But Doyle noted that B.C. allows no more than one CBM well on each quarter-section of agricultural land or on Crown land leased for agricultural use.
Unlike Alberta, where landowners can oppose oil and gas projects at a public hearing held by the Energy and Utilities Board, B.C. relies on companies reaching an agreement with a landowner before submitting their applications to the OGC.
More than 97 per cent of new applications are dealt with in this way, Doyle said. “That, to me, gives the landowner a lot of clout.”
Landowners who aren’t able to reach a deal with a company can appeal to a provincial mediation and arbitration board. “The checks and balances are there,” Doyle said.
The coalition also recommends that the province address the cumulative or overall long-term impacts of oil and gas development on the landscape.
But Doyle said that B.C.’s regional land resource management plans, which include extensive community involvement, essentially do this now by establishing zones where development is and isn’t allowed.
In response to the coalition’s call for more health-related research on oil and gas activities, he said the OGC collects, through fees charged to industry, about $1 million a year for a special fund that supports publicly reported research on industry-related issues – such as the health effects of sour gas emissions.
Along with West Coast Environmental Law, the Communications, Energy and Paperworkers Union, and Treaty 8 First Nations, other coalition members calling for industry reforms include: The Canadian Parks and Wilderness Society; the Chetwynd Environmental Society; David Suzuki Foundation; Dogwood Initiative; B.C. Government and Service Employees Union; Hudson’s Hope Landowners Association; Pembina Institute; Sierra Club of Canada, B.C. Chapter; and the Sierra Legal Defence Fund.
