Tag Archives: fracking

Blackstone, Goldman and Other Wall Street Hedge Fund, Investment Banks Fueling Fracking Boom

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Read this preview story from Forbes.com on the Wall Street firm behind much of the controversial shale gas boom in the United States – Goldman-Sachs, the same investment bank credited with driving the housing and derivatives bubble that precipitated the collapse of the US and global economy in recent years. (Oct., 2012)

Heavy capital needs, steady cash flows and rising asset values are the stuff leveraged buyout artists dream of. That’s one reason the private equity gang has recently been piling into oil and gas deals, specifically those associated with the hydraulic-fracturing boom now in full swing in North America.

One deal that opened up the floodgate of big money interest in fracking was KKR’s $312 million investment in June 2009 for 33% of East Resources, a Pennsylvania oil and gas exploration firm founded by Terrence Pegula. Pegula’s company had accumulated more than 650,000 acres in the Marcellus Shale formation in Appalachia. The KKR cash infusion helped East Resources increase the pace of horizontal wells being drilled, and in May 2010 KKR and Pegula were able to flip East Resources to Royal Dutch Shell for $4.7 billion. The deal made Pegula a multibillionaire and netted KKR over $1 billion, for a 371% return in under a year.

Up until this deal KKR had concentrated mostly on financing electric utilities. However, rising energy prices and the viability of fracking for natural gas changed the deal metrics. A conventional vertical well might cost $1 million to build; wells to tap into shale horizontally cost $8 million to build, a steep price for an oil and gas entrepreneur. Enter private equity.

 

Soon after East Resources, KKR invested $400 million in June 2010 for a 40% stake in Houston‘s Hilcorp Resources, which was drilling in the Eagle Ford Shale formation in South Texas. The KKR money prompted Hilcorp to add four more horizontal rigs, bringing its total to six and allowing it to drill over 40 horizontal wells. A year later Hilcorp was sold to Marathon Oil for $3.5 billion. KKR collected $1.4 billion of the proceeds.

 

These energy deals, plus others, have catapulted KKR’s Marc Lipschultz, 43, to near the top of FORBES’ ranking. They may have also set him up as the heir apparent at mighty KKR. Lipschultz joined KKR in 1995 after a stint in M&A at Goldman Sachs. “Energy is an extremely complex industry, and it is always consuming capital,” Lipschultz says. “So there’s a natural marriage between what it does and the thing that we ultimately provide.”

 

In June the Lipschultz team closed KKR’s first-ever natural resources fund at $1.25 billion, bringing the fund’s total capital for natural resources to $1.6 billion. Rival Blackstone Group recently raised $2.5 billion for energy investments, and Goldman Sachs is currently raising a $2 billion fund.

“The shale revolution is to energy what the Internet was to technology,” says Lipschultz. “It was significant, fast and disruptive.”

Read original online preview story (full story in October print edition of Forbes): http://www.forbes.com/sites/halahtouryalai/2012/10/03/guess-whos-fueling-the-fracking-boom/

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Why the New ‘Golden Age of Oil’ Has Been a Bust

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Read this story from alternet.org on the various environmental and economic factors restricting the development of “extreme energy” – from fracking to shale oil and bitumen. (Oct. 4, 2012)

To reach their ambitious targets, energy firms will have to overcome severe geological and environmental barriers — and recent developments suggest that they are going to have a tough time doing so.

Last winter, fossil-fuel enthusiasts began trumpeting the dawn of a new “golden age of oil” that would kick-start the American economy, generate millions of new jobs, and free this country from its dependence on imported petroleum. Ed Morse, head commodities analyst at Citibank, was typical.  In the Wall Street Journal he crowed, “The United States has become the fastest-growing oil and gas producer in the world, and is likely to remain so for the rest of this decade and into the 2020s.”

Once this surge in U.S. energy production was linked to a predicted boom in energy from Canada’s tar sands reserves, the results seemed obvious and uncontestable.  “North America,” he announced, “is becoming the new Middle East.”  Many other analysts have elaborated similarly on this rosy scenario, which now provides the foundation for Mitt Romney’s plan to achieve “ energy independence ” by 2020.

By employing impressive new technologies — notably deepwater drilling and hydraulic fracturing (or hydro-fracking) — energy companies were said to be on the verge of unlocking vast new stores of oil in Alaska, the Gulf of Mexico, and shale formations across the United States.  “A ‘Great Revival’ in U.S. oil production is taking shape — a major break from the near 40-year trend of falling output,” James Burkhard of IHS Cambridge Energy Research Associates (CERA) told the Senate Committee on Energy and Natural Resources in January 2012.

Increased output was also predicted elsewhere in the Western Hemisphere, especially Canada and Brazil.  “The outline of a new world oil map is emerging, and it is centered not on the Middle East but on the Western Hemisphere,” Daniel Yergin, chairman of CERA, wrote in the Washington Post .  “The new energy axis runs from Alberta, Canada, down through North Dakota and South Texas… to huge offshore oil deposits found near Brazil.”

Extreme Oil

It turns out, however, that the future may prove far more recalcitrant than these prophets of an American energy cornucopia imagine.  To reach their ambitious targets, energy firms will have to overcome severe geological and environmental barriers — and recent developments suggest that they are going to have a tough time doing so.

Consider this: while many analysts and pundits joined in the premature celebration of the new “golden age,” few emphasized that it would rest almost entirely on the exploitation of “unconventional” petroleum resources — shale oil, oil shale, Arctic oil, deep offshore oil, and tar sands (bitumen).  As for conventional oil (petroleum substances that emerge from the ground in liquid form and can be extracted using familiar, standardized technology), no one doubts that it will continue its historic decline in North America.

The “unconventional” oil that is to liberate the U.S. and its neighbors from the unreliable producers of the Middle East involves substances too hard or viscous to be extracted using standard technology or embedded in forbidding locations that require highly specialized equipment for extraction.  Think of it as “ tough oil .”

Read more: http://www.alternet.org/environment/why-new-golden-age-oil-has-been-bust

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Audio: Damien Gillis Discusses ‘Keepers of the Water’, Carbon Corridor on SFU Radio

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Damien Gillis discusses the resistance to the Enbridge pipeline, the recent “Keepers of the Water” conference in Fort Nelson, BC, and the increasing impacts on water, human and animal health from natural gas hydraulic fracking with CJSF’s Sylvia Richardson. The pair also touch on Damien’s documentary film project Fractured Land, currently in production, which examines these issues and the concept of “Canada’s Carbon Corridor” – an interconnected web of fossil fuel and mining projects throughout northern Alberta and BC, designed to open up new markets in Asia – told through the eyes of a young First Nations law student. (Oct. 6 – 20 min)

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US Discount LNG Deal with Asian Buyers Shocks Canadian Industry, Undermines Plans for Bigger Profits Abroad

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Read this story from the Vancouver Sun on a recent deal by American company Cheniere Energy Inc. to sell Liquified Natural Gas (LNG) to Asian buyers at heavily discounted North American rates. The deal alarmed the Canadian natural gas industry, which is currently pursuing LNG exports to Asia on the premise of fetching the considerably higher prices Asian markets currently pay for the product. (Oct. 4, 2012)

British Columbia’s first major liquefied natural gas export terminal is facing a significant new challenge after a rival U.S. exporter signed a deal undercutting the hoped-for price for selling gas into Asian markets.

David Calvert, an Apache Corp. vice-president and manager of the Kitimat LNG terminal said U.S.-based Cheniere Energy Inc. set a dangerous precedent by agreeing to sell gas from its proposed Louisiana export terminal based on heavily discounted North American gas prices.

“Cheniere did a deal … that created quite a ripple through the marketplace,” Calvert said Tuesday, adding the deal has created “unrealistic” expectations for products from Kiti-mat LNG.

Speaking to an Energy Roundtable audience in Calgary on Tuesday, Calvert said the Kitimat site is cleared for a new terminal and work is starting on the pipeline route.

But, he added, final sanctioning of the terminal hinges on winning long-term sales contracts, which is not a done deal.

Calvert’s comments are significant, given Premier Christy Clark has founded much of her BC Jobs Plan on the development of as many as five plants exporting LNG into Asian markets.

Last year, Clark promised the first plant would be fully operational by 2015.

“Today, we’re looking at perhaps five big liquefied natural gas proposals that, if built, could add over a trillion dollars to our GDP in direct upstream and downstream benefits over the course of 30 years,” Clark said Tuesday in an address to the University of Calgary.

“That’s the potential of producing four trillion cubic feet per year of exports by 2020,” she continued, adding the land is already being cleared for Apache’s plant in Kitimat.

Apache needs contracts based on oil prices to justify the cost of the planned $4.5-billion LNG export plant and pipeline in British Columbia, Calvert said. The plant is a joint venture of Apache, EOG Resources Inc. and Encana Corp.

“The bottom line is for LNG producers to provide the stability buyers are looking for and for us to make the significant capital investments required for greenfield LNG projects, we must have long-term contracts with prices that reflect these critical consideration and realities,” said Calvert.

“We remain convinced that oil-linked pricing is critical to the viability of our Canadian LNG industry.”

North American natural gas prices have plunged amid a glut caused by rising shale output, increasing the interest in exports to Asia. Japan paid $17.58 per million British thermal units to import gas from the U.S. in July, according to LNG Japan Corp. Natural gas for November delivery settled at $3.531 per million Btu on Tuesday on the New York Mercantile Exchange.

Energy, Mines and Natural Gas Minister Rich Coleman said Wednesday he is not concerned about the pricing issue.

“Today we have three of the major players on liquefied natural gas in the world who have all taken up positions in British Columbia, that’s Shell, Petro-nas and British Gas. They’re all pretty aggressive.”

New Democratic Party energy critic John Horgan was more cautious about the outlook.

“I’ve said all along that this is a challenge and that the markets will determine if this is successful or not,” Horgan said Wednesday.

Read more: http://www.vancouversun.com/business/price+deal+alarms+firm/7342196/story.html

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US Geological Survey Confirms Fracking Contaminated Groundwater

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Read this story from Reuters on a new study from the US Geological Survey confirming earlier tests results that showed natural gas fracking operations contaminated groundwater in Wyoming. (Sept. 28, 2012)

SALMON, Idaho, Sept 28 (Reuters) – Government testing of a drinking water aquifer near a tiny Wyoming town has shown concentrations of gases like ethane and propane and diesel compounds, but a natural gas company said it did not cause the contamination.

A report by the U.S. Geological Survey showed petroleum-based pollutants in samples from a monitoring well in the aquifer adjacent to Pavillion, Wyoming, which is at the center of a national debate over hydraulic fracturing, or fracking.

A draft study released in December by the Environmental Protection Agency linked fluids used in fracking, a drilling method that has unlocked vast shale gas deposits across the nation, to pollution in the underground formation that supplies drinking water to residents near Encana Corp’s gas production wells east of Pavillion.

The findings contradicted claims by gas drillers that fluids from fracking, which injects water, sand and chemicals underground to boost extraction of fuel, have never contaminated drinking water.

Criticism by the oil and gas industry and Wyoming officials of the methods the EPA employed to collect water quality data and regulators’ interpretation of the findings prompted recent retesting under a monitoring plan designed by the state, the USGS and the EPA.

Compared to the 2011 EPA study, the USGS results from testing of one of two monitoring wells in the aquifer indicated higher levels of gases like methane, lower levels of diesel-range organics and the absence of such solvents as toluene, an Encana analysis showed.

The EPA is expected in coming days to release its testing of water from two groundwater monitoring wells, several domestic wells and a public well. The data sets are to be submitted for peer review.

The EPA said the groundwater monitoring data in its 2011 report and USGS findings were “generally consistent.”

But Encana spokesman Doug Hock said the findings are not equal and singled out USGS for providing “credible data” in research whose “implications are not just for Encana but for the whole industry.”

Hock and Simon Lomax, research director of an arm of the Independent Petroleum Association of America, underscored a decision by USGS to discount samples from the second of two monitoring wells because of concerns that low water quantity and other factors might skew results.

“The USGS effectively disqualified one of the EPA’s two monitoring wells,” Lomax said in a statement.

He pointed to a March 1 letter by Donald Simpson, director of the Bureau of Land Management office in Wyoming, that recommended the installation of additional monitoring wells for a “larger and much more robust study effort and investment prior to drawing any conclusions, particularly in the case about the role of hydraulic fracturing use in development of the oil and gas resource.”

Encana’s Hock said the Canadian company denies the pollution in Pavillion is related to its operations.

But Rob Jackson, professor of environmental sciences at Duke University, said his review of USGS data shows it is consistent with EPA’s initial results, “which suggested the contamination at the site from fracking is a real possibility.”

Jackson, co-author of a peer-reviewed paper that showed fracking in the Marcellus shale in Pennsylvania did not pollute adjacent drinking water wells with brine, said the report by the USGS should quiet criticism of the EPA.

“You can’t say that EPA botched the job if USGS goes on and gets similar numbers,” he said.

Read more: http://www.huffingtonpost.com/2012/09/29/usgs-aquifer-tests-pavillion-wyoming_n_1924604.html

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Caleb Behn, the subject of the forthcoming film

Canada’s Carbon Corridor Part 2: From the Sacred Headwaters to Kitimat LNG

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The following is the second half of the introduction to Damien Gillis’ multi-part series, “Canada’s Carbon Corridor”read part 1 here.

In part 1 of this introduction to what my colleagues and I have termed “Canada’s Carbon Corridor” – an interconnected web of major oil, gas, coal, mining and hydroelectric projects across northern BC and Alberta – I traced the first half of a recent journey by the team producing the documentary Fractured Land, of which I am the co-director. We began our trip amidst proposed coal mines and Site C Dam on the Peace River and through the heart of natural gas “fracking” operations in northeast BC, winding up at Liard Hot Springs.

From there, after passing briefly into the Yukon via the Alaska Highway, we turned south and headed for Tahltan country in northwest BC. There, we spent four days investigating proposed mining projects and more unconventional gas – this time Shell’s plans to develop coal bed methane in the Sacred Headwaters, the birthplace of three vital arteries for the province, the Skeena, Nass and Stikine Rivers.

We spent one day with Wade Davis, National Geogrpahic Explorer-in-Residence and recent author of the book Sacred Headwaters, and the rest of our time with a number of First Nations who have put themselves on the line to block coal bed methane and mines like Imperial Metals’ proposed Red Chris.

This particular project would involve a massive mountaintop removal mine for gold and copper, amid the continent’s largest population of Stone’s Sheep. As such, it has ignited much local opposition. But we also learned that there are many members of the various Tahltan communities who are in favour of this and other mines for the jobs and economic opportunities they promise. This conflict will likely play out for some time to come in these communities, though the tide may be turning against Red Chris for a number of reasons, which I’ll get into in a future chapter of this series.

From the Sacred Headwaters, we travelled south to Kitimat, documenting along the way the construction of the Northwest Transmission Line. This $400 million project is designed to plug BC’s electrical grid into the region in order to power these mining projects – of which Red Chris is but one of many. (Which is why it’s odd that a significant portion of the line’s funding came by way of a federal “green energy” fund!). The transmission line is yet another connection between northwest BC and the proposed Site C Dam in the territory of our central character Caleb Behn – which our provincial government justifies with the contention it is needed to provide power to gas and mining operations.

We were all alarmed at the pace of development of the transmission corridor, with upwards of ten different crews working simultaneously to clear sections of the line – carving a 100 or so meter-wide swath through spectacular mountain valleys. Fifty-foot tall teepees of logged trees rim the highway for long stretches, waiting to be burned.

In Kitimat, we met with former Haisla elected chief and recent president of the Coastal First Nations, Gerald Amos, to get a look at the LNG plants proposed and under construction in his territory, along the Douglas Channel. Gerald and his wife graciously took us out on their boat to show us the three main proposed projects – one led by Shell, with partners Korea Gas Corporation, Mitsubishi Corporation and PetroChina Company Limited; another by a consortium of Encana, Apache Canada and Enron Oil and Gas (known as Kitimat LNG); and the third a joint venture in which the Haisla Nation itself is a partner. (It should be noted there are as many as eight LNG plans for Kitimat, but these three would appear to be the most serious and viable).

Only the Kitimat LNG project is under initial construction – clearing the banks of the channel of trees and brush – though its completion has been pushed back by a year, as the consortium has yet to sign any contracts for the product.

Meanwhile, the Haisla just signed a deal with the province to expedite their plant. While his elected leadership is moving quickly forward with its plans to welcome LNG into their territory, Gerald was eager to hear from Caleb about how these decisions will affect his people at the other end of the pipeline. This is some of the much-needed dialogue currently missing around these issues, which we hope our project will continue to foster.

While the Haisla have led the battle against the proposed Enbridge pipeline on their lands and supertankers in their waters, natural gas has proven a different story. Deals signed by the Haisla and the Carrier-Sekani Tribal Council, which provides political and technical support to eight member First Nations in the northern BC interior, appear to have been done with far less communication with other First Nations and the public than that which surrounded Enbridge.

We learned the Carrier-Sekani signed last year a 25-year deal estimated to be worth over $500 million in shared revenue and job training benefits with the proponents of the Pacific Trails Pipeline, which would carry fracked northeast BC gas from a junction point at Summit Lake, north of Prince George, to Kitimat, along virtually the identical right-of-way as the proposed Enbridge Pipeline.

On that note, during one of our final stops on the trip, we visited the grassroots resistance camp on the Morice River, southwest of Houston, where members of one clan of the Wetsu’et’en First Nations, the Unist’ot’en, have constructed and are occupying a cabin directly in the path of the proposed Pacific Trails Pipeline. But as they pointed out to us, they’re not opposed to just one pipeline, rather as many as eight different ones, each proposed to pass through essentially the same energy corridor:

  • Enbridge’s twin lines – one for diluted bitumen, the other for condensate
  • Kinder Morgan’s “Rearguard” bitumen pipeline to Kitimat – introduced last year to shareholders as a backup plan to the controversial Enbridge Northern Gateway line and to Kinder’s own plans to twin its existing Trans Mountain Pipeline to Vancouver (the Unist’ot’en camp is prepared for this line to include a twin condensate line as Enbridge is proposing)
  • Pembina Pipelines has a plan – temporarily shelved for “commercial uncertainties” – to run a condensate line from Kitimat to Summit Lake (the Unist’ot’en camp is bracing for this plan to come to the fore again should Enbridge be rejected, and for the possibility it too will include a bitumen line) 
  • The Pacific Trails gas pipeline (already approved by the province, along with the related LNG plant in Kitimat)
  • Shell Canada and its Asian partners’ gas pipeline from northeast BC to their proposed LNG facility in Kitimat (Shell has already selected TransCanada Pipelines to build this line)

Moreover, Spectra Energy recently announced plans to run a gas line to Prince Rupert, north of Kitimat, to connect to their own proposed LNG plant and tankers there.

Is this somehow a conspiracy theory? Hardly. I reported in The Common Sense Canadian over a year ago that Enbridge CEO Pat Daniel has publicly expressed interest in exploiting pipeline “right-of-way synergies”, in building both its twin pipelines and the Pacific Trails gas line together. Enbridge also bought Encana’s controlling stake in the Cabin Gas Plant in Northeast BC last year. And the proposed routes of the above pipelines essentially stack on top of each other for long stretches.

My concern is that while all this attention is being payed to Enbridge, virtually no one – amongst First Nations, the conservation community, or the political opposition (the NDP has publicly supported fracking, the Pacific Trails Pipeline and LNG projects in Kitimat and is at best on the fence about Site C Dam) – is talking about this larger energy corridor, of which Enbridge is merely one small piece.

The Pacific Trails line is approved and the companies are into pre-construction work already. Once the corridor is logged and cleared, it will be far more difficult to stop any one, let alone all of these pipelines and the development to which they connect.

From Site C Dam, powering gas and mining operations, to expanded fracking, which connects to the Alberta Tar Sands through natural gas and condensate, to oil and gas pipelines to our coast and the tankers that would transit our waters carrying these fossil fuels – bitumen, LNG, coal – to new markets in Asia, this is a big deal. The biggest, by far, that this province has ever seen in 150 years of colonial establishment.

It’s time we expand our horizons and broaden our discussion beyond Enbridge – and our team hopes our Fractured Land film project and subsequent columns in this series will act as a catalyst for that much-needed dialogue.

Thanks to Rivers Without Borders for their support with this portion of our recent filming tour for Fractured Land.

Watch for part 3 of the “Canada’s Carbon Corridor” series on this past week’s “Keepers of the Water” conference in Fort Nelson.

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Caleb Behn, the subject of the film

‘Canada’s Carbon Corridor’ Part 1: Connecting the Dots Across Northern BC

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I recently returned from a whirlwind tour across northern BC, one of many legs of filming for a documentary and multi-media project I’ve been co-directing for the past year and a half, called Fractured Land. The people we spoke to along the way, the sights we witnessed and documented finally brought into focus the real story about energy development in BC.

It is clear to me that the proposed Enbridge Pipeline, which has been the target of so much activism and media attention of late, is merely one piece of a much bigger puzzle that promises to transform this province like nothing since the days of colonial, railroad-driven “nation building.”

Our film and the multi-media series that will accompany it through our website, FracturedLand.com, and various social media tools, is the story the industrialization of northern BC – told through the eyes of a talented, eloquent young First Nations law student named Caleb Behn.

The two sides of Caleb’s family are rooted in the epicentres of both major natural gas hydraulic fracturing (or “fracking”) plays in northeast BC – West Moberly Territory near Hudson’s Hope, under which the Montney shale gas field extends; and Echo Dene Territory around Fort Nelson, home of the Horn River shale gas field. Taken together – along with the recently discovered neighbouring Liard Basin play – form one of the world’s meccas for “unconventional” gas (read: highly experimental and dangerous).

We began our film by focusing on fracking – a relatively new method of natural gas extraction that involves burrowing deep into shale formations and blasting them with a toxic mixture of high-pressure water, chemicals and sand to crack open the shale and release the gas. But throughout our adventure, we’ve come to see that fracking doesn’t exist in isolation. Neither does the proposed Site C Dam on the Peace River in the same region, nor gas and bitumen pipelines proposed to cut across BC’s wilderness en route to Kitimat and Prince Rupert, nor myriad, massive proposed Liquified Natural Gas (LNG) plants on BC’s coast, nor the dozen or more serious coal and metals mines proposed throughout the north, nor the Alberta Tar Sands.

It is a serious mistake to put any of these projects in a silo. They are all, in fact, systemically interconnected in what my colleagues and I have come to think of – at least until a more apt description emerges – as “Canada’s Carbon Corridor”. Before this article and its second part conclude, I will briefly illustrate this interconnected web of energy projects that extend from BC’s coast to the Alberta Tar Sands – covering virtually the entire top half of the two provinces. However, the real work of fleshing out the components of this carbon corridor and how each piece relates to the next will be accomplished through a subsequent series of stories over the next two months – each exploding a different piece of the big puzzle – all cross-published through The Common Sense Canadian and the blog for Fractured Land.

Both this film project and my colleagues at The Common Sense Canadian – which has made its mission to inform the public about the energy, environmental and public policies reshaping BC and Canada – will seek to lodge this big picture view, with all its socioeconomic and cultural implications, on the agenda of the public and media in the lead-up to a pivotal provincial election next May. This is a sorely needed conversation that so far has been lost in the simplistic rhetoric championing the project of opening Western Canadian oil and gas resources to new markets in Asia and the one-track chorus of opposition to the Enbridge proposal.

If that seems unfair, allow me to state my case herewith.

We began our recent two and a half week journey in northeast BC, before traveling along the Alaska Highway through Fort Nelson, Liard Hot Springs, Watson Lake just over the Yukon Border, then down Highway 37 through the Sacred Headwaters and Tahltan First Nations country, southwest to Kitimat, east to the Morice River near Houston, and finally to Prince George to deliver a presentation to faculty and students at UNBC, before heading home to Vancouver (an approximately 5,000 km journey, all told).

Over the past several years, I’ve made seven trips to northeast BC (I’m currently here again for the “Keepers of the Water” conference in Fort Nelson) and more than that to northwest BC and its coast, but this trip – as it tied together both sides and centres of development in the province – felt like the quintessential journey through BC’s proposed economic future. Through it, we traced the interconnections of this carbon corridor and met people on both sides of the arguments around these individual projects.

If there’s one thing that has become abundantly clear to our production team, it’s that this is a conversation which defies easy polarities. The fracturing we reference in our title, taken literally from the process of fracking, serves as a metaphor for the conflict within individuals, families and communities torn between developing economic opportunities and protecting their core values  and ancestral practices on the land.

Far from shying away from this tension, we are drilling deep into it.

After driving 15 hours north from Vancouver, we began our experience at Carbon Lake, near Hudson’s Hope – at a camp once owned by my great uncle, Penn Powell, who operated it as a fly-in fishing lodge for years. Today, it is owned and operated by the Saulteau First Nation – the people of our central character Caleb’s grandmother.

Caleb comes here in the summer to hunt moose and reconnect with his land. Unfortunately, the moose are slim pickings these days – likely partly related to all the roads for logging that bisect the onetime wilderness surrounding the lake. Now, a large open pit coal mine threatens to finish the job. Carbon Lake gets its name for a reason. One can pick up large blocks of metallurgical-grade coal from the bed of nearby Carbon Creek, the site of one of a number of proposed new coal mines throughout the Peace River Coalfield.

To get to the lake, we had to drive over Williston Reservoir and WAC Bennett Dam – the first major dam in the region, which helped set the stage for the resource boom that followed. Caleb and my families have much in common beyond this camp at Carbon Lake, as we’ve learned throughout the making of our film. Another thing we share is that both our families lost our land in the flooding of Williston Reservoir in 1968. My family’s land, upon which it settled in 1914, was known as Goldbar Ranch at 20 Mile. Today, many of my uncles who remain in the region work in the gas patch. As do many of Caleb’s relatives. Such are the complexities inherent in the sort of large-scale resource decisions being made today – mostly without the broad-based knowledge and will of the public.

That said, Bennett Dam was built to provide affordable, “clean” (or so we thought at the time) electricity and new economic opportunities for all British Columbians. I believe my family understood that, even as we watched our barns and hand-crafted cabins and grand old log home burned to the ground and drowned forevermore.

Today, two fracking companies – Talisman Energy and Canbriam Energy – have a 20-year license to suck 10 million litres a day of water from that same reservoir (before it’s converted to power for British Columbians!) for their nearby fracking operations.

Moreover, Site C – which would be the third dam in the Peace Valley, stretching 80 km east from Hudson’s Hope to Fort St. John and flooding some 13,000 acres of agricultural land and a comparable amount of Boreal Forest wildlife habitat – is not being proposed to power BC’s homes and businesses. We have access to plenty of electricity for those purposes. Rather, this power will go to the myriad proposed mining operations across the north and, according to Premier Christy Clark, compressing natural gas into liquid to sell to Asia. All of these industrial operations are enormously energy dependent – to the point we would need multiple Site C Dams to even begin powering them.

From Carbon Lake, our team traveled north to Fort Nelson, where we visited with the other side of Caleb’s family. Fort Nelson is the jumping off point for the Horn River shale gas operations, which have been slowing down of late, due to the cratering price of natural gas, but contain enormous development potential and have been wildly active in recent years. The Cabin Gas Plant, North America’s largest, is just nearing completion after several years of furious construction. The adjacent Liard Basin formation was recently touted by Apache Canada as “the best reservoir in North America” for gas fracking.

Yet little of this development will occur unless a higher price can be obtained for the resource. This relatively new method of fracking has flooded the North American market with supply, driving down the price for gas, which is why new markets are being sought in Asia, where gas prices are currently much higher.

Unlike the gas plays around Fort Nelson, the Montney play – in Caleb’s mother’s territory, where we began our journey – often produces what is considered as “wet gas”, meaning it contains other products, such as sulfur and condensate, both of which have considerable value on their own. Condensate is used to dilute bitumen from the Alberta Tar Sands, which is too viscous to pump through a pipeline on its own.

This is another way in which Canada’s Carbon Corridor is interconnected – both natural gas and condensate go from BC to Alberta to melt and extract bitumen and to dilute it for transport.

But the big idea, for now, is to open up new markets for northeast BC gas. If these LNG plants and the pipelines connecting northeast BC gas to northwest BC refineries proceed, you can bet Horn River activity will ramp up to new heights and the Liard Basin will be cracked wide open.

We drove near these proposed Liard operations en route to the northwest corner of the province and it is some of the most exquisite country any of us has seen. We passed through pristine valleys coursing with crystal-clear water from the Northern Rockies and by herds of majestic wild bison and various ungulate species. Our soak in the Liard Hot Springs was one the trip’s big highlights – I would highly recommend it to anyone who finds themselves in that neck of the woods.

Watch for Part 2 of this introduction to Damien Gillis’ “Canada’s Carbon Corridor” series Saturday – completing the journey across northern BC to the northwest, examining everything from mining and unconventional gas proposals in the Sacred Headwaters to the construction of the Northwest Transmission Line, the Pacific Trails gas pipeline to Kitimat and proposed LNG facilities there.

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Canada Eyes 9 Billion Cubic ft/day of Natural Gas Exports to Asian Market, Tokyo Conference Hears

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Read this story from CBC.ca on plans promoted at an energy conference in Tokyo this week for Canada to export up to 9 Billion cubic ft/day of natural gas to Asian markets. Natural Resources Minister Joe Oliver traveled to Asia this week to build support for Canadian gas exports. (Sept. 20, 2012)

Canada could some day export nine billion cubic feet per day of liquefied natural gas to Asia through five proposed plants on the West Coast, Natural Resources Minister Joe Oliver told a Japanese audience this week.

Those major energy projects come with little of the opposition from politicians and native groups that threaten the proposed Northern Gateway oilsands pipeline.

In a speech to the Liquefied Natural Gas Producer-Consumer Conference in Tokyo this week, Oliver trumpeted Canada’s status as a rising “global energy leader.”

“[Canada is] already the third-largest producer of natural gas in the world,” Oliver told an audience that included Japan’s Economy, Trade and Industry Minister Yukio Edano.

Oliver is visiting Japan and South Korea on a mission to drum up business for Canada’s fledgling liquefied natural gas (LNG)industry and is travelling with business executives from AltaGas, Encana, TransCanada Corporation, Shell Canada and Nexen.

There is a global race to get LNG into the Asian market because demand — and therefore prices — are considerably higher there than in North America. In May of this year, its price was 10 times higher on the Asian market.

Adding five new LNG plants represents tens of billions of dollars in potential industrial development on B.C.’s north coast.

One plant is planned for Prince Rupert. Four would be in Kitimat, which is also the proposed terminus for Enbridge’s Northern Gateway oilsands pipeline. Two of the LNG projects in Kitimat already have National Energy Board-approved export licences.

By comparison, Gateway is a $6-billion project.

So, why all the fuss over Northern Gateway, which is tiny in comparison to all the LNG projects?

The difference is in the product each project brings to market.

Environment and Economic Arguments

“LNG is non-toxic, odourless, non-corrosive and less dense than water. It is a stable, low risk fuel. If it spills, LNG will warm, rise and dissipate,” said Rich Coleman, B.C.’s energy minister, in an interview.

“The risk to the natural environment is greater with [oilsands] bitumen than it is with natural gas,” said John Horgan, the B.C. NDP’s energy critic.

B.C. politicians of all stripes also see enormous economic potential in LNG.

Natural gas is a mature industry in B.C. and a major natural resource for the province. Horgan and Coleman both foresee jobs being created and royalty revenues pouring in, with the added bonus of minimal ecological hazard with LNG.

“No reward, high risk with one. And more reward, less risk with the other,” Horgan said.

B.C. native groups are also much less skeptical of LNG compared to oilsands projects.

The Haisla First Nation in Kitimat is equal partners in one of the NEB-approved projects and landlords for the other.

“It was one of our requests to Joe Oliver himself to actually start supporting natural gas at the higher levels and over in Asia. So we actually appreciate this initiative,” said Haisla Chief Councillor Ellis Ross.

The Haisla story, when it comes to natural gas, is similar to the rest of the province’s: they know the product, they’ve had experience with it, they’ve weighed the risks and benefits and they believe natural gas is the way to go.

“The safety record of natural gas overall over the last 30, 40 years is actually in direct contrast to the safety record of the crude oil industry,” argues Ross.

He adds that in the case of a spill, natural gas would evaporate into the air.

“Crude oil or diluant or bitumen stays in the environment for … I think the jury’s out on how long that actually crude oil or bitumen stays in the environment,” he said.

Read original story: http://www.cbc.ca/news/politics/story/2012/09/19/pol-natural-gas-exports-asia.html

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Haisla First Nation Sign Deal with BC Government to Fast-Track LNG Plant in Kitimat

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Read this story from CBC.ca on the deal recently signed by the Haisla First Nation of Kitimat with the BC Government to fast-track a proposed Liquified Natural Gas plant in the Douglas Channel near their community. The gas would largely come from “fracking” operations in northeast BC and would be converted to liquid in order to be shipped by tanker to new markets in Asia. (Sept. 14, 2012)

The B.C. government has signed an agreement with the Haisla Nation to help fast-track another major liquefied natural gas (LNG) port facility near Kitimat.

The deal allows the Haisla to either lease or buy 700 hectares of land on the west side of the Douglas Channel in the areas around Haisla Reserve #6 and to work independently with the industry to develop a LNG marine export terminal on the site.

“If we are able to do this, the Haisla people will benefit, as will all British Columbians and Canadians,” said Ellis Ross, the Chief Councillor of the Haisla Nation.

The agreement comes as the B.C. government moves to slash spending to make up for a $1-billion budget deficit brought on by plunging North American natural gas prices.

But in Asia, natural gas fetches four to five times more than it does on the North American market, and that’s why the government is aiming to have three LNG export operations up and running by 2020, according to the Minister of Aboriginal Relations and Reconciliation Ida Chong.

“Currently British Columbia can only sell its natural gas on the North American market where there is ample supply and the commodity price is low, but by opening up new Asian markets where there is greater demand, British Columbian natural gas producers will be able to get up to four times the value,” said Chong.

The terminals would allow the province to export natural gas to emerging Asian markets, particularly Japan, China, South Korea, and India. Already two terminals have received export licences from the National Energy Board – Kitimat LNG and BC LNG Douglas Channel.

Spectra Energy and BG Group also announced plans Monday to build a LNG pipeline across northern B.C.

Read original story and watch video of the announcement: http://www.cbc.ca/news/canada/british-columbia/story/2012/09/14/bc-natural-gas-haisla.html

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Fracking Wastewater Used in Ohio Full of Radium

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Read this story from the Columbus Dispatch on the discovery of radiation in water trucked from the Marcellus Shale in Pennsylvania to Ohio for hydraulic fracturing operations. (Sept. 3, 2012)

Millions of barrels of wastewater trucked into Ohio from shale-gas wells in Pennsylvania might be highly radioactive, according to a government study.

Radium in one sample of Marcellus shale wastewater, also called brine, that Pennsylvania officials collected in 2009 was 3,609 times more radioactive than a federal safety limit for drinking water. It was 300 times higher than a Nuclear Regulatory Commission limit for industrial discharges to water.

The December 2011 study, compiled by the U.S. Geological Survey, also found that the median levels of radium in brine from Marcellus shale wells was more than three times higher than brine collected from conventional oil and gas wells.

“These are very, very high concentrations of radium compared to other oil and gas brines,” said Mark Engle, a U.S. Geological Survey research geologist and co-author of the report.

State law bans radioactive shale-well sand and sludge from Ohio landfills. However, brine can be sent down any of Ohio’s 171 active disposal wells regardless of how much radium it contains. Michael Snee, the Ohio Department of Health’s radiation-protection chief, said that’s the safest place for brine.“Injection wells are almost the perfect solution for that disposal issue,” Snee said.

However, environmental advocates say the Geological Survey’s report intensifies their fears of surface spills and leaks to groundwater.

“It’s an alarm bell in the night that we better get serious about testing the material in the Utica shale right here in Ohio,” said Jack Shaner, an Ohio Environmental Council lobbyist.

Shaner and others said the study shows that state officials should look at what’s bubbling out of Ohio’s shale wells.

Radiation is yet another wrinkle in the ongoing debate over “fracking,” a process that sends millions of gallons of water, sand and chemicals down wells to shatter shale and free trapped oil and gas. Thousands of Marcellus shale wells have been drilled in Pennsylvania. Of the 12.2 million barrels of brine injected into Ohio disposal wells last year, 53 percent came from Pennsylvania and West Virginia.

Read more: http://www.dispatch.com/content/stories/local/2012/09/03/gas-well-waste-full-of-radium.html

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