The Fracking BC Liberals are Sucking Us Dry

From the Tyee article:

2920 olympic swimming pools? 7.3 billion litres annually? Exactly how much water is that, for hyperbole challenged wonks like Roscoe who prefer more explicit terms like m/3 per second to "olympic swimming pools annually". Lemmee see here: The Environmental Protection Division of the BC Ministry of Environment gives a handy report called: Ambient Water Quality Objectives for the Peace River Mainstem. Since the Williston Reservoir in question outflows into said river, the report should be relevant. http://www.elp.gov.bc.ca/wat/wq/objectives/peacemain/peace.html From the report:

 

Water license minimum outflow for the mainstem of the Peace River is 283m3/sec. 283m3 = 283 x 1000 = 283,000 litres per second. 7.3 billion litres/ 283,000 l/sec = 25,795 seconds/60 = 429.91755 minutes/60 = 7.1652925 hours.

 

So, this 7.3 billion litres equals ~7 hours of MINIMUM discharge from the Williston reservoir.

 

Hmmm.... 365 days x 24 hours per day = 8760 hours per year into 7 hours = .0799086 % of the MINIMUM allowable annual discharge from the Williston Reservoir.

 

Rather miniscule, what? 2920 Olympic swimming pools sounds so much grander.

 

 

I'm not making any judgement whether it is good or bad, merely pointing out that the use of misleading optics does not lend legitimacy to criticism of the issue.

Its all relative. The total water useage drawdown may be different than the permitted drawdown, the ability of the drainage area of the reservoir to rebuild capacity, the snowpack level year to year and the impact of climate change on sustainability all come into the equation.

Don't kid yourself that anything in BC is 'free'. When one extracts sand and gravel from one's own land, the province charges a royalty. In this case, however, the netback to government from industry in the form of taxation, royalties, drilling rights sales and economic growth measures in the billions.

This is the economic engine that pays for government services like health and education. Considering the exponential growth in funding future services, BC should be thankful for the bounty in natural resources we have and our proximity to markets.

Any politico that attempts to interfere with the northeast BC natural gas sector will be committing political suicide based up the potential $trillions$ in value and the future revenue stream to government coffers IMHO:

 

http://www.vancouversun.com/technology/Shale+could+herald+unparalled+wealth/4435487/story.html#ixzz1GmvHdyNc

There are plenty of boosters around.

But while they do mention the events in question, they fail to mention what brings forth the buying in of PetroChina and SASOL: Encana and Talisman, plus CoonocoPhillips not mentioned, are backing away from being so gung ho about shale gas. They'll still be after it, no question.... but the 'trillions to be made' is spin meant to blow people over.

What they are after, is for people to not get in the way, AT ALL.

So marshalling up the straw men is in order.

Of course environmental controls must be in place. That said, if natural gas reserves are in the 1,000 trillion cubic feet range in the region and the price eventually increases to, let's say, $10/1,000 cu ft. one is looking at $10 trillion in value leaving BC with the largest natural gas deposit, by far, in Canada.

Compare that to the Utica shale gas play in Quebec where there is only a relatively puny 40 billion cubic feet of natural gas, which still would supply all of Quebec's energy needs for 200 years. Quebec has no history in petroleum/gas production and does not have any regulatory/statutory regimes in place. Furthermore, the Utica is situate in a relatively highly populated area.

Petro China's $5.4 billion, 50% equity investment was in Encana's Cutbank Ridge play in the Montney basin. SASOL's $2 billion, 50% equity investment was in Talisman's Farrell Creek play also in the Montney basin. Remember that the Montney basin is comparatively small as opposed to the much larger Horn River basin.

The major players are actually going gung ho in north east BC. A major LNG port in Kitimat is on the drawing board - The Mitsubishi's, Korea Gas, Petro China's et al have all signed long term contracts at much higher and stable prices than garnered in the NA market. Major pipelines have also been approved for Trans-Canada pipelines as well as new large gas processing facilities.

The major players include Apache, Canadian Natural Resources Ltd., Conoco Phillips, Delphi Energy, Devon Energy, Encana, EOG Resources, ExxonMobil, Kodiak Petroleum, Nexen, Pengrowth, Petro-Can/Suncor, PetroBakken Energy, Quicksilver Resources, Talisman Energy, etc.

Have to give credit to former premier Dan Miller, during the 1990's, when the NDP government brought in the new royalty regime and the tax credit regime for natural gas prodiuction. That stoked the industry. Still, the shale/tight gas deposits will bring BC into a whole new world of energy production eventually rivalling Alberta and of course, what comes with it is the extra revenue stream.  

 

     

 

 

Calculations of reserves are more than 'not an exact science'- they are fundamentally predicated on economic feasability.

There is a huge sea of oil under the deep waters of the Gulf of Mexico. This was to be the silver bullet for the US being less dependent on imports. Then there wa Katrina and more hurricanes. this was a 'problem'. Then we have the blowout disaster. All of a sudden those reserves on paper are just that.

The improvements in shale gas drilling and extraction turned notional reserves of gas into 'real reserves'. But that is all predicated on shale gas extraction being cheaper than the untapped production that was available before the change in drilling technology opened up all those notional gas reserves.

But those becoming 'real reserves' is predicated on this comparatively low cost exploration and production technology as the industry is using it now.

But like so much industrial activity, the oil and gas industry is not paying the costs of what shale gas production does. In fact, the jury is still out on what the costs are. The industry is going ahead as if there are no such costs. There cant be costs when the critics are just fanasizing the 'problems'.

A.] This is all too new for us to know what the effects are. The industry is treating it as a foregone conclusion that there are no effects, and hence no costs other than their production costs which they have to incude. B.] The latter remains to be seen. even in Pennsylvania where the industry got carte blanche, there is a stepping back to say wait a minute.

Remember the lesson of the Gulf of Mexico. The jury is out on how much economically viable gas is out there. The industry always proceeds as if the potential obstacles identified are non existant or of no serious matter. The rest of us are fools for following them in their boosterism.

Yes, in their haste to paint the "fracking BC Liberals" as the perpetrators of the "bleeding us dry" smear, the ideologically biased tend to forget it was the former BC NDP government that got the natural gas ball rolling.

No government can ignore the potential revenue stream that this industry will provide. A future NDP government will be between a rock and a hard place attempting to reconcile program spending with budgetary realities even with gas revenue. The Tyee had an article that stated 34,000 jobs will be created in NE BC in the next 25 years.

Of course there is lots in it for the foreign companies buying in.

And you neglect to mention the argument in your favour that the big players are always changing the sector composition of their properties. So you can legitimately view this as a correction from the overheated crazy rush to snap up leases 3 to 5 years ago.

The other correction going on is that the companies are finding that even if the overall profitability has not changed, it is taking deeper pockest before the revenue streams from shale gas production roll in. Essentially a long term cash flow issue. That is true even for the US companies that have been in this in a big way for the longest. [For example Cheseapeake re-investing asset sale proceeds in oil.]

How much drilling is going on in BC, and whether it is still increasing, is beyond what I follow. But hpw much there is does not say one way or the other about shifts in the industry.

And the oil and gas industry has a sorry history of both micro/local and macro level boosterism- especially around what is cutting edge at the time.

I'm not saying the gas boom in BC is some kind of paper tiger. I'm just pointing out that buying into the promotional hype about the level and value of what this is about  has no more basis than the exagerations of the opening post.

You can make the case that is itself an overstated point. But since we dont yet know what the effects of shale gas drilling are, nor how much regulation may be pushed onto the industry against its obvious expectations.... it remains to be seen what this developing industry is worth, even in strict monetary terms.

Ok, if you will spare me the cranky attitude.

NE BC, east of the Rockies (the oil patch) is over twice a big as Nova Scotia and contains ~ 70,000 residents. 63,000 of those residents live in the southern 25% -the 'Peace River country'.

To the rest of BC, the 75% that is west of the rockies, its 'out of sight, out of mind'.

How does this compare with Nova Scotia's population and proximity to shale gas exposure? How do you think it would compare if Nova Scotia had only 35,000 residents and every one who wanted to work could make $100k in 6 months?

 

I see that NS Premier Dexter was in Houston recently trying to drum up support for bids on NS offshore natural gas drilling, which cost is prohibitive considering the current glut and price on the NA market. FWIW, NS is still a relatively very small player compared to BC, AB, and SK.

Conventional on-land drilling is also somewhat uneconomic at the current NA price and many producing wells in AB are capped due to that factor.

Encana, in the Horn River basin, has achieved its lowest cost drilling/well in the tight shale plays and they are apparently economic even at current market prices. 

Wells in the Horn River basin are currently also capped as much infrastructure needs to be built/is under construction including Spectra/Encana ng processing plants and the Trans-Canada pipeline tie-in to the AB network.

But the future key is the Asian market, not the NA market. Mitsubishi, Korea Gas, Petro China, Spain Gas Natural et al have all signed MOU's for high volume, long-term supplies at considerably higher prices than the current NA price. That's the reason why a major player looks at the NE BC shale basins as rich "oil plays" as opposed to simply ng plays.

BC currently produces roughly 17% of Canada's natural gas production, which will potentially increase to ~50% over the next decade once the Montney/Horn River basins go into full production. And likely much of that ng will flow to Asia via one, two, or perhaps even three lng ports on the west coast.

I follow the industry relatively closely and NE BC shale/tight gas plays are the real McCoy IMHO. 

That's the first one. I'm also hearing that Encana and Mitsubishi are looking at another lng port locale, among others. You do seem to know your stuff!

Peripheral issue really, but take a look at the history of proposals for building LNG plants on this continent. Right through to the stage of buying and expropriating land and even early site work- let alone the talk level we are talking about now- it is all driven not by how much ecomically feasible gas there IS. Rather it is driven by how much the industry THINKS there is.

They keep getting it wrong. But I know, this is different. Again.

I'm not saying it isnt going to happen. But these arent reliable indicators of the depth of the bonanza, they are indicators of the circulated hype that might become real. 

You are making an assertion that I am wrong, rather than backing it up.

The continent is litterrred with LNG projects that cleared all the regulatory hurdles, then did not go ahead. One of the two in Nova Scotia got as far as site work.

Would you like to refute the truth or relevance of that rather than make unsupported assertions?

And because you are apparently surrounded by and work in an industry whose claims of level of activity are coming to pass, do you think that is a general argument that this is an industry absolutely rife with boosterism on a larger as well as per-project basis? And that these assumptions about what there is to extract are based on other assumptions that the problems being ointed out either do not exist or will have simple engineered solutions? The Gulf of Mexico being the best known example of the latter.

First, you are sadly deluded in your presumption that some partisan NDPer posted the somewhat gassy first post--as the many partisan NDPers here will readily tell you.

Second, you are deluded it is an "ideological" position that leads one to conclude that the BC Liberal party is irredeemably corrupt and destructive to the public and environmental good of BC --it is a matter of observation and history (Hint# 1, of many, :BC Rail and coverup).

As to the story itself, and your pooh-poohing the relatively small amount of water currently taken from the Williston reservoir--these withdrawals are a drop in the bucket when expected expansion goes ahead. And If one includes the potential contamination of ground water, the numbers for water use/abuse would skyrocket.
 
Even at these early stages of fracking development in BC, your alleged "sucking us dry smear" is currently not hyperbole for farmers who could attest to that reality (if the BC Libs allowed public input into their corporate giveaways). See  Ben Parfait's reply in the comments section of his article:

But for a more comprehensive documented paper on the diverse issues by Parfitt,
see his paper delivered to Munk School of Global Affairs at the University of Toronto:
Fracture Lines: In the Rush to Develop Shale Gas Will Canada's Water Be Protected?
http://www.powi.ca/pdfs/groundwater/Fracture%20Lines_English_Oct14Releas...