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Vol. 19, No. 2 Week of January 12, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

BC fracking challenge

Threat to LNG from Fort Nelson First Nation application to cancel water license

Gary Park

For Petroleum News

Existing in an almost tranquil atmosphere compared with the uproar surrounding plans to build crude bitumen pipelines to the Pacific Coast, British Columbia’s LNG sector may be in for a jolt.

A small aboriginal community, with only 800 residents, is locking horns with the British Columbia government and the industry over the use of water for hydraulic fracturing.

The issue has moved from low-level muttering to the British Columbia Environmental Appeal Board which has started hearing an application by the Fort Nelson First Nation to cancel a water license issued to Nexen (now wholly owned by the China National Offshore Oil Corp.), which leads the Aurora LNG partnership.

Fort Nelson is in the heart of British Columbia’s shale gas region, which holds the key to supplying gas for LNG exports, with Nexen a leading player in the Horn River Basin.

Legislation being prepared

While the appeal is under way, British Columbia Environment Minister Mary Polak is trying to get ahead of fracking opponents by preparing new legislation on the allocation of water rights.

With Japan’s Inpex and JGC Corp. as minority joint-venture partners, Aurora has applied to export 24 million metric tons a year of LNG, representing a peak 30.5 trillion cubic feet of natural gas over 25 years.

The British Columbia government has estimated that the use of fracking currently requires 7 billion liters a year of water and if the LNG sector matches its expectations that demand will grow by 500 percent.

Polak said her planned Water Sustainability Act would see British Columbia impose its first fees on the use of groundwater and allow the province to limit water use in times of scarcity.

Concern with water removal

But Lana Lowe, director of the Fort Nelson First Nation’s land and resources department, told reporters she doubts the legislation will affect the use of fracking.

She said water removed from her community’s territory has multiplied 12-fold in the last two years.

“There is a gold rush on our water,” she said, estimating that Nexen’s water license will see an additional 2.5 billion liters a year removed from a lake north of the City of Fort Nelson in the midst of the First Nation’s traditional land.

Water removal infringes on treaty rights allowing the aboriginal community to hunt and fish as it did before the treaty was signed in 1899, she said..

Lowe claimed changes in the water table have residents concerned about the possibility of contamination from fracking methods.

Polak told a news conference that the legislation she expects to introduce will require government regulators to assess water flows before issuing withdrawal permits.

“The act will give us tighter control because we will have a better understanding, better monitoring, better reporting and the ability to step in where there is a risk to flows,” she said.

Polak said the increasing transparency will “build trust in our regulatory regime.”

Fracking study under way

The British Columbia Ministry of Health is also expected to complete a study this spring on whether fracking fluids contaminate drinking water, although Premier Christy Clark has insisted there has not been a confirmed case of contamination from industry activities in 50 years.

Lowe argued that the legislation is more likely to “make it easier for companies to get what they want for shale gas. We’re trying to get out in front of that activity, which is a really tough position to be in. There is so much pressure on the government to get LNG moving.”

Maude Barlow, chair of the Council of Canadians, a citizens’ advocacy organization, said in a December report that Canadian policies at the provincial and federal levels are putting “our water supplies at risk,” forecasting that global demand for water in 2030 will outstrip supply by 40 percent.

She said the North American Free Trade Agreement poses one of the biggest threats to Canada’s “freshwater heritage” by allowing U.S. corporations operating in Canada “to sue for financial compensation if any changes are made to the policies or practises under which they first invested.”

Barlow cited a report by the Canadian Center for Policy Alternatives which said the “inappropriate” use of water for fracking in British Columbia will contribute to “greenhouse gas emissions equivalent to 24 million cars on the road.”

She called for more grassroots democracy to protect the “birthright of all people” and challenge the established “rules for trade (for which) the only motivation is corporate profit.”

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