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Cracking down on fracking Canadian petroleum industry introduces hydraulic fracturing ‘operating practices’ for gas wells to satisfy stakeholders on safety Gary Park For Petroleum News
The Canadian Association of Petroleum Producers, CAPP, is attempting to get one jump ahead of public opinion by introducing six new “operating practices” for its member companies to protect multi-stage fracturing wells, now viewed as the drilling technology that is most crucial to the industry’s future.
CAPP, whose member companies account for more than 90 percent of Canada’s oil and natural gas production, announced Jan. 30 it is tackling the concerns raised by community groups and environmentalists over the threat posed by fracking to water supplies.
The new guidelines will apply to all of those companies which explore for and produce gas in shale and tight reservoirs.
Although CAPP has no powers of enforcement, CAPP President Dave Collyer said he expects provincial governments will bring in new fracking regulations, noting Alberta is reviewing unconventional well drilling and completion rules.
The Quebec government has already imposed a three-year moratorium on fracking while it probes the use of the technology, while British Columbia has passed legislation requiring the industry to disclose fracturing chemicals on a well-by-well basis.
Satisfying stakeholders “We’ve got a job to do to satisfy the stakeholders we can do this safely,” said Collyer. “With increased focus on fracturing from coast-to-coast, the Canadian industry wants to be at the forefront of transparency and to establish clear and consistent practices across the country.”
He said the industry has come a “long way” in the five years since fracking gained the public spotlight, although he noted that almost 200,000 wells have been fractured in Western Canada over the past 60 years without any adverse impacts.
However, a well being fracked in central Alberta in January is reported to have released pressure into an adjacent vertical well, resulting in a surface blowout and liquids spill.
Collyer said CAPP is waiting for result of an investigation into the blowout before taking any action of its own.
He said the industry is aware its “social license” to operate could be at risk now that fracking is applied to about 80 percent of wells drilled in Canada and public worries have increased over the prospect of fracking fluids seeping into aquifers.
“There is a perception that we’re not open enough as an industry,” Collyer said, referring indirectly to criticism heaped on CAPP for its failure to respond quickly and thoroughly to mounting public attacks on the oil sands sector.
Investment bank Desjardins Securities said in a research note the initiative is a “pre-emptive stance” that matches similar moves in the United States.
“We believe the industry will adapt to the heightened environmental concerns,” the firm said.
Operating practices The list of “operating practices” includes a baseline groundwater sampling of residential wells within 250 meters of shale or tight gas development before drilling commences, along with ongoing testing and monitoring of groundwater on a regional basis in conjunction with the affected provincial government.
Companies are also expected to disclose the chemical ingredients used in their fracking fluid additives, the handling and disposal of fracking fluids and details on well-bore construction and quality.
CAPP said it expects companies to “better identify and manage the potential health and environmental risks associated with fracturing fluid additives and ultimately increase the demand for more environmentally sound fracturing fluids.”
There is no immediate estimate of the added cost of meeting these conditions, which have been announced with the Canadian gas sector at its lowest point in at least a decade. In late January, spot prices at the AECO trading hub in Alberta fleetingly dropped below C$2 per gigajoule for the first time since summer 2002.
Encana committed But producers have indicated they agree the additional spending is necessary.
Richard Dunn, a vice president at Encana, North America’s second largest gas producer, said his company is committed to implementing the practices, noting it uses fracking on 100-125 wells a year in British Columbia and Alberta, including as many as 20 fracture intervals on each horizontal leg.
He said there will be some increased costs, although some of the processes, procedures and regulations are already in place.
Michael Binnion, president of Questerre Energy, which is affected by the ban in Quebec, said his company is seeking that the “long-term cost of not doing baseline monitoring is greater than the cost of doing it.”
Don Bester, president of the Alberta Surface Rights Group, criticized CAPP for not requiring disclosure of data from wells that have already been drilled or pre-drilled and abandoned.
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