Now in Your Backyard

In a province long defined by forestry and mining -- and their many accompanying controversies -- energy is the next big sector. Coal-fired electricity plants and coalbed methane wells are popping up in communities around B.C.

Scott Simpson
Vancouver Sun
Saturday, December 23, 2006

Sometime next month, the Liberal government of B.C. is expected to introduce a new package of policies dealing with B.C.'s future in the realm of energy.

Expect controversy.

Since the previous version of the B.C. Energy Plan was introduced a little over four years ago, the sector encompassing everything from a $5-billiona- year natural gas exploration industry to a wish list of wind-generated electricity projects has emerged as the most dynamic of all of the province's resource-based sectors.

Corporate tax incentives and hungry market forces are opening new frontiers for exploration of fossil fuels such as natural gas and coalbed methane.

Dozens of small "green" electricity projects are in development as BC Hydro scrambles to free the province from its growing dependence on electricity providers in the United States -- by attracting independent power producers to invest in projects feeding the B.C. grid.

Public debate has grown increasingly vigorous, particularly as the Liberals' vision for B.C.'s energy future takes shape on the province's land base.

Gas-drilling rigs are showing up in communities that are accustomed only to the wail of chainsaws or the rumble of mining trucks.

In yet other areas, residents confronted with proposals for coal-fired electricity-generating plants are scrambling to get up to speed on issues around the airborne toxins and greenhouse gases that coalfired plants produce.

Some observers believe the new plan won't include as many dramatic changes as those introduced by Energy Minister Richard Neufeld at a three-hour press conference in Victoria on Nov. 25, 2002.

His plan was a broad package of reforms and innovations that both overhauled and energized the province's energy sector.

BC Hydro was split in two, and in defiance of severe criticism from the province's labour movement, back-office operations of the Crown corporation were privatized.

The doors were thrown open to private-sector development of new electricity production -- BC Hydro accepted 40 independent projects for development this past summer. Portions of B.C.'s aging electricity transmission system are getting a major overhaul.

Regulatory changes opened up new vistas in the natural gas industry, which has overtaken forestry as B.C.'s single largest generator of resource royalty revenue.

One legacy of the 2002 plan, anticipated or not, reflects that shift. The most pitched controversies in B.C. are no longer focused on the impact of forestry upon the province's landscape.

Even here, energy is taking over.

Neufeld must be doing something right because he's the only minister in the provincial government, other than the premier, who had occupied the same cabinet post since the Liberals first took power in May 2001.

But he isn't providing details on the government's new plan.

The buzz around Victoria, where there have been some non-specific briefings for stakeholder groups, is that it will be more of a long-term vision than a blueprint for immediate change, as was the case in 2002.

However, non-government organizations such as the Pembina Institute, a Calgary-based energy watchdog group that added a high-profile B.C. campaigner nine months ago, say the die has already been cast.

Karen Campbell, who joined Pembina from West Coast Environmental Law in March 2006, noted that production has peaked at Canada's primary source of conventional natural gas, the Western Canada Sedimentary Basin, and a long-term decline in production is underway.

That basin is centred in Alberta, but it reaches into northeast B.C. where drilling activity and production remain on an upswing, and opportunities for growth are stronger.

Alberta has been shifting exploration efforts to unconventional gas such as coalbed methane. And here again, like conventional natural gas, B.C. is bristling with potential.

"So we've seen increasing pressure in B.C. over the past five years, through things like coalbed methane development.

I'm sure efforts to open up new basins will be coming as some of the unconventional gasses come on line," Campbell said.

"As gas prices go up, the stuff that was uneconomic and inaccessible before will become economic and accessible, and marketable. There will be increasing pressure on British Columbia to pull more fossil fuel out of the ground, whether it's coal, coalbed methane, gas, shale gas, tight gas or oil.

"There are coal and coalbed methane on Vancouver Island. There's coal and coalbed methane three hours into the Interior -- in Princeton, the Kootenays, and around Smithers.

"We are going to see the Bowser and Nechako basins opened up before too long. It's untapped potential. There are hot spots all over the province, and it's in the more populated areas as well as the more remote areas.

"I think in the next few years we are going to see more and more people becoming concerned about what's being proposed in their communities and what it's going to look like." According to Mike Dawson, president of the Canadian Society for Unconventional Gas, coalbed methane exploration is still in its infancy in B.C., with "no commercial projects to date" and many of the resources situated in areas "that have not had a history of oil and gas development." It's expensive to explore here because equipment must be brought in from outside the province, and many potential areas are "geographically isolated." Even major companies such as EnCana, Shell and BP have come in, nosed around a few places, and left.

If recent events in Smithers and a prior surge of public opposition in the East Kootenays are indicative of community concern, the worst is yet to come.

The coalbed methane industry has an abysmal track record in Wyoming, where water escaping from gas deposits -- in some instances, the gas itself -- has leaked into household water supplies.

It has contaminated many farmers' and ranchers' drinking water sources in the Powder River Basin, as well as stock watering ponds.

As with British Columbia, the development of new coalbed gas deposit must be preceded by pumping enormous volumes of saline and potentially toxic water from deep underground.

Once the water is removed, the gas begins to flow.

The state of Wyoming allowed the water to be pumped into surface pools that have despoiled the landscape all over the open range of the basin.

Consequently, even though Neufeld insists that the overwhelming majority of coalbed gas projects in B.C. will be obliged to reinject their water into the ground, the mere consideration by a small exploration company of such developments near Telkwa, Smithers, and other communities along the Skeena River watershed, has touched off something close to a panic.

There are some 20 salmon-bearing rivers feeding into the Skeena system, and tourism related to salmon and steelhead fishing generates more than $100 million a year for the region.

A community protest last month drew 400 people in Smithers, from a population of 5,500. That's comparable to 40,000 Vancouverites taking to the streets on a single issue.

Only two weeks ago, representatives of the Wet'suwet'en First Nation took the issue to the heart of Canada's oil and gas sector when a group of hereditary chiefs staged a protest at the downtown Calgary office of one of the project's proponents.

"This is the largest wild salmon fishery left in North America," notes Merran Smith, a representative of a forestry-focused environmental group that has been active in publicizing the coalbed methane row in Smithers.

"Who would propose putting an unproven and potentially toxic project at the headwaters of those river systems?" Smith asks. "It's unacceptable to anyone. We're hoping that both the company and the government will wake up and realize this is not the place to be a guinea pig for an unproven toxic oil and gas project. Figure it out somewhere else.

"Wild salmon are sustainable over decades and decades. Coalbed methane is a potential 20-year project, maximum, and it can potentially leave behind watersheds whose water quality has been ruined. The government needs to shift away from looking at old, traditional types of energy. Coalbed methane is really scraping the bottom of the barrel." Alphonse Gagnon, a Wet'suwet'en hereditary chief, worries that many of the areas targeted for coalbed methane exploration are in traditional First Nations territories that may be overridden before land claims issues are settled.

"We sent a delegation down to Wyoming and they took a look at a coalbed methane development gone bad," says Gagnon.

"They talked with farmers. They took a look at land where they had the development going. They had dead soil all over the place, they had water problems, sick animals, people getting sick." Subsequently, a delegation from the Treaty Eight First Nations in northeast B.C. came west to give the Wet'- suwet'en a presentation on the provincial regulations that authorize gas exploration companies to come onto private land and traditional aboriginal territory and drill for gas.

"I'm having difficulty with our provincial aboriginal leaders and the relationship they've got going with the provincial Liberal government. When you go north of Prince George into the resource areas, we are finding heavy pressure from all of the exploration that's going on in coalbed methane and also in mining," Gagnon says.

"We've got all kinds of explorations going on right now, and it doesn't seem to be keeping pace with the attention we're getting at the treaty table.

"When we went to Calgary, I pointed out that it's tough to hear Premier Campbell stand up and say B.C. is open for business. We haven't settled any of our land claims. It's one of the big things we have to think about, and we have to be a little more serious about land claims and not using up all of the lands before we get a settlement." Telkwa Valley rancher Lori Knorr says she wouldn't oppose coalbed methane development if it could be demonstrated that there's no possible risk of harm to local drinking water aquifers, or the Skeena watershed.

But as she researched the topic, she came to recognize that bigger issues are also at stake about the long-term integrity of water supplies if the B.C. cllimate changes, as expected, to become warmer and drier in future.

"To me, global concerns about water are a lot more important than methane at this point, anywhere. The glaciers are melting and it seems like it's too big a risk, honestly," Knorr said.

"In another 10 years, if they improve the technology, I'm all for it. But as the technology stands, I don't think it's a viable option at all. I think it's foolish, actually.

"If it impacts the groundwater, then everybody is impacted, as well as the salmon. It's just a really poor choice.

"B.C. needs to know about it, they need to know what's happening to this resource. It's not just the government's, it's British Columbia's, the people's. If they manage to pollute the Bulkley and the Skeena, the world will lose." Merran Smith believes that emerging global climate issues could overtake the B.C. government's ambitions -- as a fossil fuel, coalbed methane would contribute to greenhouse gas accumulations that are believed to be driving climactic changes around the world.

[sic] as Smithers, where a lack of freezing cold weather over the past several years has facilitated the advance of the mountain pine beetle.

"It's affecting our economy already.

We can see it. Here in the north, the pine beetle is just down the road. You drive through dead forests. I'm concerned that to an urban audience this is still too theoretical, but up in our northern communities we see what global warming means, and this community has taken a strong stand against coalbed methane." Not every B.C. community shares that anxiety.

Hudson's Hope Mayor Lenore Harwood said that although some local landowners have voiced opposition, coalbed methane exploration is providing a welcome diversification for the northeast B.C. community's economy.

Hudson's Hope, one of B.C.'s original pioneer communities, is largely dependent on BC Hydro's Peace River hydroelectric system for employment, and until coalbed methane exploration companies arrived two years ago, the community had few prospects for economic growth.

"I think we've got better regulations here than Powder River and we've got a whole different situation here," Harwood says. "I was on a field trip last week to look at one of the sites and I was quite impressed with the work that was done there, to be honest with you.

"Our air quality hasn't been damaged.

Our water quality hasn't been damaged. They are actually hauling the water they take out from here to Fort St. John because it can't be dispersed here.

"I think that until we come up with an alternative energy source that doesn't rely on oil and gas, fossil fuels are the way it is right now. There's opposition to windmills too, in our neck of the woods." Mike Dawson of the Canadian Society for Unconventional Gas says there is "significant resistance" to development of the Telkwa coalfield near Smithers, but says it is at least in part because "local residents are not familiar with any historical oil and gas development in the region and thus, in many cases, are not comfortable with this type of development." Consultation with those groups, Dawson says, will take time.

"Stakeholder engagement and First Nations consultation could add significantly to the timeframe for any commercial development," he says.

Dawson said it appears most of B.C.'s coalbed gas projects will be comparatively small scale -- developed by smaller companies on a much lesser scale than Alberta or Wyoming.

"In British Columbia, because the size of many of the coal-bearing basins and ultimately the size of the recoverable resource is relatively small, oil and gas companies that are attracted to these resources tend to be smaller as well." Meanwhile, Neufeld says he's confident that the industry can be a success in B.C. from both an economic and an environmental standpoint.

"Coalbed gas is not without its controversy, and the controversy surrounds water," Neufeld said.

"That's why we brought in a code of practice. It's mostly highly saline and it goes back in the earth where it came from.

"Probably 98 to 99 per cent of the time, the water is sent back down to aquifers way below any freshwater aquifers that anyone is using. It isn't released and probably wouldn't be.

"If a company asked for permission to release it into a stream, there are stringent rules about when you can release it and how much you can release because of course you don't want to screw up the fish habitat.

"I'm not that kind of person. What possible benefit would it be to a government to do that?"

ssimpson@png.canwest.com

© The Vancouver Sun 2006