Who should have the final say on how and when to develop BC’s energy resources—the BC government, or the communities whose environment and livelihoods stand to be most affected?

In the Bulkley Valley, this question is driving an impassioned, prolonged debate and a well-organized citizens’ movement—sparked by a Calgary-based company’s intent to explore, and ultimately develop, natural gas resources in the vicinity of Telkwa.

Only a year ago, most of Telkwa’s 1,400 residents were aware that coalbed methane (CBM), a natural gas, resides deep in the underground coal seams which lace the Bulkley Valley. But it wasn’t widely discussed—because although the Telkwa area is thought to contain 130 billion cubic feet of CBM, it’s not yet produced commercially anywhere in BC.

CBM hits public agenda

Six months ago, a proposal by Outrider Energy Ltd. of Calgary inched onto the public agenda—where it’s been ever since.

Lori Knorr and her partner Jon Goalder live with their four-year-old daughter in rural Telkwa. “Back in June, I heard that Telkwa town council was having a meeting about coalbed methane,” Lori says.

They looked into it, and learned that Outrider had acquired an exclusive right to negotiate a 268 square-kilometre tenure just outside Telkwa.

They discovered that a 60-day tenure referral process, managed by the Ministry of Energy, Mines and Petroleum Resources, was already underway. It would involve public information sessions, local government input, and stakeholders becoming “engaged” to express their concerns. Following this, a “community engagement” summary would be submitted to government. Soon afterward, a Cabinet decision would determine whether to grant the tenure to Outrider and which concerns, if any, might be attached as caveats to that tenure.

So Lori and Jon started reading up on coalbed methane.

Investigating CBM

They learned that CBM is regarded as a cleaner-burning fuel. The industry is in its infancy in Canada, where it operates in a regulatory environment that even industry sources describe as “constantly changing.” To stimulate CBM development, the BC Liberals have offered $50,000 royalty holidays for every CBM well drilled by December 2008; regulations allow drilling to any density, and CBM projects are not automatically subject to BC’s Environmental Assessment Act.

More disturbing facts emerged as Jon and Lori dug deeper.

CBM development, barely two decades underway in the US, has been fraught with problems. In Wyoming’s Powder River Basin, impacts of concentrated CBM development have given it a bad name: drinking water contaminated by underground migration of methane and the chemicals used underground in its extraction. Farmers’ fields rendered useless by huge volumes of polluting water, produced during the extraction process. Rural landscapes transformed into unsightly networks of roads, pipelines, flaring gas wells and compressor stations whose ceaseless noise has been compared to that of a large tractor. Plummeting values of adjacent real estate. Conservative, multi-generation farmers transformed into activists when the promise of land rental fees became overshadowed by ballooning industrial development rolling unchecked over private land.

Recent media reports suggest that Wyoming’s mistakes are by no means a thing of the past, or restricted to the US.

Lori and Jon watched a CBC TV News documentary, produced in 2003, about Alberta, where more than 6,000 experimental wells have been drilled. It told the story of farmers near Strathmore struggling with impacts of the burgeoning industry, and more than 40 landowners’ groups which had formed throughout the province as a result.

In May 2006, the Edmonton Journal and Vue Weekly magazine described farmers in Wetaskawin who were having to haul water after their wells became contaminated by methane, and their cattle bloated and sick. In September 2006, Canadian Business Magazine reported that residents near Rosebud, Alberta found their water undrinkable, contaminated to the point where it could be lit on fire, after a comprehensive coalbed methane drilling program began nearby.

Most worrying of all: under BC law, Lori, Jon and the other owners of the 45 properties which lie within Outrider’s tenure area have no legal basis to refuse drilling or construction of roads, pipelines or compressor stations on their private land.

“I was surprised to hear Telkwa Mayor Sharon Hartwell say that Telkwa residents supported this,” remembers Lori. “I wanted to find out if that was true.”

Birth of a Citizens’ Movement

She and a group of residents, calling themselves Citizens Concerned About Coalbed Methane (CCCBM), began knocking on doors in Telkwa—and found that general awareness about CBM generally, and the Outrider proposal specifically, was scant.

At first they focused on getting the tenure referral process extended to 120 days, to allow time for the community to educate itself about CBM development.

What’s the rush?, they reasoned. Well-established industries, such as wild fisheries, nature-based tourism and agriculture stand at risk if things go awry. With energy needs projected to increase, its value to the people of BC wouldn’t decrease any time soon. And no one was promising an imminent windfall of local jobs.

Wrestle for an extension

Citing fear of appearing “unfriendly” to business, most local politicians voted down the group’s request for an extension. Richard Neufeld, Minister of Energy, Mines and Petroleum Resources, assured local media that 60 days offered “plenty of time for people to make their viewpoints known.”

That changed when the Wet’suwet’en First Nation, which is negotiating a treaty in the area, formally requested an extension.

Was this because of the still-recent skirmishes between the energy ministry and the Tahltan, who claimed last year that they were not adequately consulted about Shell’s CBM development plans on their traditional territory? On Sept. 16, 2005 their months-long protest culminated in the ugly spectacle of RCMP officers arresting Tahltan elders blockading a remote northern BC road. Charges were ultimately dropped, but Shell pulled out.

In any case, the CCCBM got their wish: the referral process was extended to November 1.

“Engagement” unprecedented

Meanwhile, staff from the energy ministry and the Oil & Gas commission intensified its “engagement”. Its scope is described by all parties as unprecedented by any CBM-related process in BC to date. They knocked on the doors of landowners like Lori and Jon, hosted two public open houses in the summer, and two days of workshops in Telkwa and Smithers in September.

Lori went to most of the government-hosted meetings, asked questions, took notes and went to lunch with Outrider President Burns Cheadle. But she was left with the impression that “engagement” means something different than “consultation.”

In her view, the workshops and openhouses offered a one-sided view of CBM. She also feels she received conflicting information. For example, she reports that one person told her that petroleum-based chemicals are rarely used during the CBM extraction process (a concern because these have been known to contaminate water sources), while another told her that these are used 90% of the time.

She recalls the reaction when she asked everyone present at the landowners’ information workshop, including representatives from the Oil & Gas Commission and the Canadian Society for Unconventional Gas, to raise their hands if they would want coalbed methane in their own backyard. “No one did,” says Lori.

Merran Smith, a resident of rural Smithers who speaks for the CCCBM, is similarly critical. “We feel the government has done a very poor job of outreach to the public,” she says. “The turn-out at their events has been very low.”

Lori Knorr notes that a lot of people who wanted to attend couldn’t because most of the meetings were held during business hours when many people are working.

Information needed

Without a complete, objective record of communication at the government-hosted events, it’s impossible to evaluate the quality of information dispensed or hold anyone accountable for promises made. But the evidence suggests there is a continuing need for balanced information from government.

A month later, Lori is still waiting for promised answers to her questions. She’s fielding about 25 CBM-related calls per day. The Citizens’ group has hundreds on their mailing list and has knocked on just about every door in Telkwa.

“Mostly, we get a warm reception,” reports Lori.

Misinformation persists

And misinformation persists in surprising quarters. Speaking from his Smithers constituency office on Oct. 18, Liberal MLA Dennis MacKay displayed his belief that CBM exploration and development cannot proceed on private property over landowners’ objections.

“I thought that when I bought my property and pay tax, I should have rights to it,” he said. After opining that developers may be able to legally access subsurface resources under his property by drilling diagonally through neighbouring land, he stated, “but I should have the right to refuse drilling on my property.”

When presented with the reality that BC landowners do not own subsurface rights—and therefore cannot legally prevent drilling on their property—and in fact have recently found themselves in bitter conflicts with those who have acquired these rights (in Kamloops and Vernon, for example)—he expressed doubts about “arguing with the minister” about this.

“I’m only one voice in 79,” he said, referring to his majority government.

Growing Opposition

But interest in, and opposition to, the Outrider proposal is clearly snowballing.

On Sept. 27, about 375 people crowded an information forum organized by the Citizens group. Unlike the government-hosted “engagement” sessions, it featured a diversity of views on CBM, including the Mayor of Fernie, an oil and gas regulation expert (and lawyer) from the Pembina Institute, a farmer from Hudson’s Hope who is experiencing CBM development in his community, Outrider president Burns Cheadle, and guests who took some convincing to attend: staff from BC’s energy and environment ministries and the Oil & Gas Commission.

After each of these guests delivered a brief presentation, a question period followed. It quickly became obvious that the 2.5-hour event could not begin to address all the questions, such as: Why are downstream communities such as the Hazeltons not also being consulted when the project may threaten their water, too? Given the risks involved, why would CBM exploration not require an environmental performance bond comparable to those posted by other industries? Why should citizens trust government when the request for an extension of the referral process was initially denied?

In one exchange, a fourth-generation rancher asked Yvette Wells, an Assistant Deputy Minister in the energy ministry managing “community engagement”: Do people in the Bulkley Valley have the right not just to communicate concerns about coalbed methane development, but to refuse it altogether?

Wells sidestepped the question. “We will take the information to the decision-makers, and a decision will be made,” she answered repeatedly, evoking a chorus of outraged howls.

On October 22, close to 400 people filled Smithers’ Main Street in a noisy demonstration against the Outrider proposal.

And according to a report released by the Citizens’ group Nov. 3, 1,392 people had completed the Citizens’ survey about CBM. Seventy per cent of respondents identified themselves as residents of the Smithers, and Telkwa area, and 96% said “no CBM.” Although the Citizens’ survey is not a scientific poll, it does confirm that there is substantial, informed opposition in the Bulkley Valley to the proposed Telkwa CBM development.

Landowners within the proposed tenure area are also saying no. The Citizens’ report shows that 31 of 38 households within the tenure area were opposed to the project (one was undecided, and six could not be contacted).

On November 6 the Globe & Mail reported a survey conducted by Synovate, a global market-research firm. It found that almost 70% of residents “agree that the potential benefits of coalbed methane are not worth the potential risks to wild salmon and steelhead and 60% agree that the proposal poses an unacceptable risk to drinking water. Some 87% felt the government should not sell development rights for coalbed methane drilling and only 32% thought government efforts to consult with residents were adequate.”

The poll, based on a random sample of 300 residents, has a margin of error of plus or minus 6 percent.

A diversity of people are opposing CBM development in Telkwa. Vocal opponents include highly successful lawyers, physicians, biologists, foresters, the former chair of BC’s human rights commission, hunting and fishing guide-outfitters, eco-tourism business operators, filmmakers, artists, trophy-hunters, fishermen, social workers, multi-generation ranchers and farmers, authors, high school and college instructors, accountants, child-care workers, Main Street business owners and more.

Spot the expert

These voices are being dismissed by Dennis MacKay as an ill-informed, vocal minority against any form of development.

“The people that had come to [public meetings] with information on what is being proposed [by Outrider]… all had PhDs behind their names,” claimed MacKay. “They’re not people who don’t understand the industry. I wish people would sit back and listen to what these people are saying so we can do what’s necessary.”

CBM skeptics don’t seem prepared to sit back and trust CBM proponents with PhDs, much less an Alberta-based company with no experience in CBM extraction.

They point out that decades of experience as a world leader in the considerably more established industries of conventional oil and gas development did not prevent Koch Industries, the US-based parent company of Burns Cheadle’s former employer, from contaminating lakes and streams in six states and paying $35 million in fines for that in 2000. Nor did it prevent Koch Petroleum Group from settling criminal charges of conspiring to violate the Clean Air Act at its Texas refinery in 1995 and 1996—without admitting any wrongdoing—by paying $4.5 million.

“There are people with letters behind their names on both sides of the spectrum,” counters Merran Smith. She cites people like the Pembina Institute’s Karen Campbell, a BA, LLB, and LLM, whose expertise on this and related subjects is regularly sought by governments—and who is highly critical of CBM.

In any case, Smith insists, PhDs aren’t the point.

“You don’t need a doctorate to be an expert on what kind of community you want to live in,” she says. “Our elected representatives should be listening to their citizens, whether they have letters behind their name or not.”

Reassurance offered

The Ministry of Energy, the Oil and Gas Commission, and Outrider counters with reassuring messages.

“We have a very good regulatory regime in place to avoid negative outcomes,” says Yvette Wells. According to her, the Oil and Gas Commission is well equipped to enforce its regulations on CBM, with 17 compliance inspectors and two enforcement officers.

Outrider president Burns Cheadle says he can’t yet predict how many long-term jobs could appear, but emphasizes that the community of Telkwa stands to benefit regardless.

During its first five-year exploratory phase, Outrider plans to spend $10- to 20 million. Most of this, says Cheadle, will go to locals, hired to help with anything from baseline research to road construction, and for support services. And even if CBM extraction is not proven viable, Telkwa will walk away with more data about their underground resources.

Cheadle has repeatedly promised citizens and local government that Outrider will not just meet, but exceed, BC government regulations—particularly those around water produced by the CBM extraction process which, if poorly disposed, could dramatically impact agricultural land, water quality and fish stocks.

Reasons for caution

Not everyone is reassured, least of all Karen Campbell of the Pembina Institute, an independent, non-profit environmental policy research organization. She has co-authored exhaustive critiques on CBM-related regulations and enforcement for Pembina and for the West Coast Environmental Law Association.

She points out that any corporate accountability commitments made by Outrider to the village of Telkwa would not necessarily bind a new owner, unless they were attached, by the BC government, as caveats to the tenure.

“The bottom line is, companies come and go. And the commitments of the best company in the world will not be sufficient if the regulatory regime isn’t there to back it up.”

In Campbell’s view, a strong regulatory regime isn’t there. She says BC’s coalbed methane regulations bear many serious flaws, including the fact that CBM development does not require environmental assessments or a site-specific permit for disposal of produced water. Nor do regulations hold corporations sufficiently accountable for cumulative ecosystem impacts.

She’s particularly concerned about the ministry’s move towards a results-based approach to monitoring CBM extraction. In certain cases, Campbell says, there is a rationale for this type of approach—assuming government sets the standard and routinely inspects results. But where irreparable harm to the environment or people is a possible result, “you’re not going to know there is a problem until it’s too late.”

In any case, the best regulations have little value if they aren’t enforced. Campbell points out that this is a well-documented problem in BC’s oil and gas industry. She cites Vancouver Sun research which concluded that 62% of field inspections in 2003 identified infractions. 49 tickets were issued in spring 2003, ranging from $230 to $575—little more than the cost of a speeding ticket. The sun further reported that this non-compliance rate rose to 64% in 2004.

An audit by the Oil and Gas Commission released in June confirms that while the number of wells drilled annually in BC has more than doubled between 2002 and 2005, the number of inspections substantially decreased. It also shows a significant increase in non-compliance this year compared to 2005, as well as a 66% increase in “major/serious” regulatory infractions in the same period.

Campbell cautions communities who believe that multi-million dollar investments in exploration by corporations don’t come with a cost.

“Once the company has invested in exploration, it will be that much harder to get them out if, down the road, you decide you don’t want them there.” She cites examples in BC where, under provisions of the North American Free Trade Agreement, companies have sued governments whose priorities changed to protect health or environment.

Exploration, concludes Campbell, is not at all a bad thing, if risks and benefits have been carefully weighed by a community that “has bought into it.”

A place for democracy?

As the Ministry of Mines’ “community engagement” process drew to a close on November 1, ADM Yvette Wells said it has been successful in gathering local concerns, with a view to addressing them. “That’s the goal of the community engagement, and I think we’ve achieved that,” she said in a telephone interview October 20.

She refused to offer any impression of what the majority opinion encountered during that period was, and insisted that it is not a PR exercise with a foregone conclusion.

She was asked again whether communities can actually choose to halt CBM development locally, even if government believes it to be safe and desirable.

“Lots of times people want to talk about not developing the resources, and that is not something we can deal with through a community engagement process.”

Speaking from his Calgary office, Outrider president Burns Cheadle said October 18 that he applauds the Citizens’ group for “exercising their democratic rights.”

But he also expressed surprise that “a lot of [people] feel that the community has the right to accept or reject a project … I know the government sees that very differently.”

“We may have been involved in stirring up a very important public debate as far as resource development and community participation is concerned,” he continued. “It’s not really my place to express an opinion on that.”

Lori Knorr feels it is her place—in both a literal and figurative sense.

“I wouldn’t call this ‘community engagement’,” she concludes. “I’d call it: ‘the Ministry of Energy and Mines working on behalf of the corporation, to sell us coalbed methane.’”

PostScript

Telkwa’s local government has prepared a detailed submission on the Outrider proposal for consideration by the Ministry of Energy. Although the document may not reflect the rigour and specific regulatory approaches recommended by West Coast Environmental Law’s publication, Coalbed Methane: A BC Local Government Guide, it does suggest Telkwa is listening to the Citizens’ concerns.

Telkwa’s submission includes requests for mechanisms for ongoing community input into any CBM project, pre-set standards, access to all baseline data, regular monitoring and mechanisms of enforcement to ensure proponents meet those standards, NO drilling on private land without permission of the landowner, a reclamation account which would cover the costs of damages to the environment if the development proceeds, and a full environmental assessment process prior to approval of the tenure.

It remains to be seen if government will attach these conditions to the tenure, if it is granted.

Resources

For more information, Google:
-Concerned Citizens About CBM
-Coalbed Methane: A BC Local Government Guide
-When the Landman Comes Knocking: A Toolkit for BC Landowners Living with Oil and Gas
-Comments on the BC Ministry of Water, Land and Air Protection’s Coalbed Methane Produced Water Code of Practice Intentions Paper
-Oil and Gas in British Columbia : 10 Steps to Responsible Development: 16-page report

© Larissa Ardis 2006