Sleeping with the fossils

By David Broadland, October 2014

An FOI request for the record of how environmental assessments for gas plants were axed last spring catches government and industry in flagrante.

Perhaps you already know that fossil fuel corporations get the satisfaction they desire in BC when it comes to regulations affecting their industry. But have you ever wondered how, precisely, that business takes place? Is it done behind closed doors? Over the telephone? In a back alley behind the convention centre?

BC’s Environmental Assessment Office (EAO) carries out extensive reviews of proposed major projects in the province before they’re permitted to proceed. For example, in 2009 when Encana proposed to build the $900-million Cabin Gas Plant project in the Horn River Basin, the Environmental Assessment Act required the EAO to consider the potential environmental, economic, social, heritage and health impacts posed by the project. As well, the assessment process provided a structure for participation in the review by the project proponent, First Nations and the public. There are, after all, a lot of legitimate concerns about such large-scale industrial projects.

Last April, Environment Minister Mary Polak announced essentially all gas plant projects like Encana’s Cabin project would be exempted from environmental assessments. Recently, the record of how the government made that decision was revealed following an FOI request filed by Canadian Press reporter Dene Moore. The documents obtained show the process leading to the elimination of environmental assessments for gas plants was heavily influenced by a registered lobbyist in the employ of Encana. Although the group of civil servants considering how to reform the environmental assessment process for gas plants recommended transferring responsibility for environmental assessments to the BC Oil and Gas Commission, their recommendation was ignored. Instead, the Provincial cabinet decided to accept industry’s request to eliminate environmental assessments altogether, and issued two Orders in Council amending the Environmental Assessment Act and the Reviewable Projects Regulation.

I will go into more detail later about how the reform process was influenced by industry, but first let me provide you with some details about gas processing plant projects that puts the cabinet’s decision—and what motivated it—in some perspective.

The EAO’s 2009 review of Encana’s proposed Cabin project concluded it would have “significant adverse environmental effects.” The EAO came to that conclusion because the Cabin project would process 800 million cubic feet of gas daily from the Horn River Basin. Shale gas from that basin happens to contain a lot of carbon dioxide—12 percent by volume. Carbon dioxide is the main greenhouse gas implicated in climate change.

Numbers provided to the EAO by Encana back in 2009 indicated the plant, when completed, would emit 2.2 million tonnes of carbon dioxide per year. To put that figure in perspective, that’s just a little less than the 2.8-million-tonne annual drop in emissions the Province says has occurred since 2008. The EAO concluded that there was no available reservoir for carbon sequestration and, in any case, that would be “prohibitively expensive.” The carbon dioxide, separated from the natural gas as it is prepared for sale, would simply be vented to the atmosphere. The assessment report concluded the Cabin plant would increase BC’s overall emissions by 3.3 percent. Thus the conclusion of “significant adverse environmental effects.”

In spite of that, Encana was granted a permit to build the plant. The first phase has now been built, but Encana and their partner in the project, Spectra Energy, decided to delay making the project operational until market conditions improve. The emissions the Cabin plant will add do not yet show up on the Province’s inventory of emissions, but as sure as summer follows spring, they’re coming.

On the heels of the Cabin project, a 2013 environmental assessment of Quicksilver Resources’ proposal for a gas processing plant at Fortune Creek in the Horn River Basin came to the same conclusions: “Emissions from the proposed project are at a level that will make it more challenging for the Province to achieve its legislated greenhouse gas emission reduction targets.”

“More challenging” is a bit of an understatement. Once all three phases of the Fortune Creek plant are in operation, according to the EAO, the plant will process 600 million cubic feet of gas each day, and, as a consequence, will emit 2.436 million tonnes of carbon dioxide annually. 

The Fortune Creek environmental assessment also noted, again, that there was no available reservoir for sequestering that carbon dioxide. Again, it would have to be vented to the atmosphere. The assessment calculated that this one plant would increase BC’s overall emissions by 3.9 percent. As with the Cabin project, the assessment concluded there would be “significant adverse environmental effects.” The cabinet approved the project and construction of the first phase has been completed. Its emissions have not yet appeared in the provincial tally.

So when Environment Minister Mary Polak announced last April that environmental assessments for such plants would be eliminated, she was getting rid of the process that quantified and made public the significant greenhouse gas emissions associated with such projects, and that allowed the public and First Nations to express their concerns on this and other potential impacts.

One political rationale for eliminating assessments is this: The Province is trying to create favourable conditions to attract investment for a liquefied natural gas (LNG) industry here. But to feed even two LNG plants on the coast there would need to be dozens of projects like the Cabin and Fortune Creek plants preparing Horn River Basin shale gas for transmission to the coast, where it would be liquefied and shipped to Asia. Imagine the unfortunate optics of the cabinet ignoring report after report from the EAO, each one coming to the same conclusion that it did for Cabin and Fortune Creek: significant adverse environmental effects, another challenge to emission reduction targets.

The Liberals are stuck with at least appearing to meet their own legislated emission reduction targets stipulated in the Greenhouse Gas Reduction Targets Act. The Province currently claims it met its 2012 reduction target, but either Cabin or Fortune Creek coming fully on line would effectively cancel out that reduction.

With these two conflicting objectives—LNG development on the one hand and emission reductions on the other—pulling the Liberals in opposite directions, which one will prevail, and why?

The best possible data for answering that question is contained in the documents obtained recently by Moore, which consist of a series of emails and attached documents.

Eliminating environmental assessments, it turns out, began with a directive in June, 2013, from Premier Christy Clark. It’s unknown what, exactly, Clark commanded, but by August 28, 2013, a “Natural Gas Plant Proliferation Project Charter” (the Charter) had been created, along with a “Natural Gas Processing Plant Working Group”—a joint undertaking of the Ministry of Natural Gas Development, the Ministry of Environment, the Environmental Assessment Office, and the Oil and Gas Commission. The project, essentially, was to determine how to reform the environmental assessment process in light of expected “proliferation” of gas processing plants needed for LNG development.

The impetus for reviewing the environmental assessment process for gas plants, according to the Charter, originated with a complaint by Encana. The Charter noted that: “Encana representatives have stated that the environmental assessment timeline of 18 months is a barrier to industry and creates an incentive to build plants [with a capacity of less than] 200 million cubic feet of gas each day.” Under BC’s Reviewable Projects Regulation, only plants that process more than 200 million cubic feet per day, or emit more than 2 tonnes of sulphur per day, have to undergo an environmental assessment.

Whoever wrote the Charter didn’t seem aware that Encana’s initial Cabin project proposal to EAO was dated January 26, 2009, and that by January 28, 2010—only 13 months later—the project had been approved by the cabinet. But I digress.

The Charter went on to state: “Encana has asked that the regulation be changed to exempt sweet gas processing facilities from the environmental assessment process.” “Sweet gas” is natural gas that is lower in sulphur content. According to the Oil and Gas Commission, ninety-nine percent of gas in BC is processed as sweet gas.

The Charter noted that the Ministry of Natural Gas Development was forecasting that 26 to 40 new gas plants—depending on whether they had capacities of 200 or 400 million cubic feet per day—would be needed in the Montney Basin “to supply LNG export needs for government targets of 82 megatonnes” per year.

The Charter observed: “EAO and the Oil and Gas Commission anticipate that cumulative effects concerns will arise when a multitude of new wells and gas processing facilities are proposed.” What seems to be the issue here is not so much the cumulative effects, but the concerns about those cumulative effects.

The Charter’s “Project Scope” stated: “Policy review is confined to developing options for managing sweet natural gas plant development in the Montney Basin.” It went on to declare that the interests of “stakeholders,” including “Montney Basin First Nations” and “communities” “must be considered throughout the project.”

The original direction, then, was to leave EAO assessments in place for the other major shale gas basins in BC: the Horn River Basin, the Cordova Embayment, the Liard Basin and the Doig formation. The Montney Basin lies to the south of the Horn River Basin and contains far less—2.0 to 2.5 percent—carbon dioxide.

What we know happened subsequently, though, is that the reform process snowballed to include environmental assessments for gas processing plants for all basins, including the carbon-dioxide-rich Horn River Basin. This would have been of special interest to Encana, which spent hundreds of millions acquiring drilling rights on over 116,000 hectares of Crown land in the Horn River Basin, where prices reached nearly $4000 per hectare in 2008 before natural gas prices plummeted in North America. How did that scope growth happen?

The email record obtained by Moore shows the process immediately started to go off the track. Or get on track, depending on your perspective. On September 6, 2013, Trish Balcean, lead for the EAO on the Working Group, notified her fellow members that she “had a good discussion with Encana this AM,” and reminded them of the first meeting that afternoon of the Working Group. Following that meeting, the Ministry of Natural Gas Development’s Michelle Schwabe emailed the Working Group members an outline of “next steps,” which included, “change scope from Montney focus to all sweet gas plants irrespective of Basin.” Suddenly, environmental assessments for the Horn River Basin were also in play.

The email record shows that Encana was ready with a draft proposal “to address the environmental assessment process for sweet gas plants” only three business days after the Working Group first met. The lead for Encana on the project was Nadia Monaghan, a registered lobbyist for that company. Although the documents provided by the Province show Monaghan’s “co-lead” was Sherry Sian, representing the Canadian Association of Petroleum Producers (CAPP), the BC Office of the Registrar of Lobbyists shows Sian was not, at the time of her involvement with the process, a registered lobbyist. 

Remarkably, Encana’s Monaghan seems to have been given the job of designing the process by which environmental assessments would be reviewed. That was decided at a September 19 meeting between Monaghan and members of the Working Group. Shortly thereafter, Monaghan sent the Working Group a draft “Industry Plan for Gas Plant Environmental Assessment Process Review.” Commenting on Monaghan’s plan, the Ministry of Natural Gas Development’s Michelle Schwabe wrote, “I am not sure we want to be reviewing early drafts unless this is meant to be a more iterative and collaborative process, which personally, I don’t think it needs to be. As we have already done our background work and analysis, I would like to see what CAPP has to bring forward based on their assessment. They just need to get it done.”

A week later, the document was returned to Monaghan with minor style changes and a request to her to send back an “updated (polished) version.” The resultant “Environmental Assessment Reform for Natural Gas Processing Plants Joint (Government & Industry) Work Plan” mapped out how the process would proceed. The main steps of the plan were that, first, the gas industry would frame the problem. Next, Monaghan and Sian would give the Working Group a tour of a gas processing plant and a presentation. Thirdly, the gas industry would recommend its preferred solution. Finally, government would weigh in, provide feedback, and then reform options would be recommended to decision makers. Even though the Project Charter had indicated First Nations and “communities” “must be considered throughout the project,” there was no consideration given in Monaghan’s plan for including input from either First Nations or the public, and the record provided by the Province gives no indication anyone in the Working Group expressed qualms about that.

As part of the internal discussion between the Province’s participants in the Working Group, they produced a “Decision Note” in October, 2013 for Ministry of Natural Gas Development Deputy Minister Steve Carr, Oil and Gas Commission Commissioner Paul Jeakins, and the Environmental Assessment Office’s Doug Caul.

The Decision Note observed that with increased demand for gas resulting from the three LNG projects already in the Environmental Assessment Office’s queue at the time, provincial natural gas production would nearly quadruple.

With “26 to 45” new gas processing plants needed to meet that demand, the Working Group foresaw an “80 percent” increase in projects going through environmental assessments.

Other reasons for reforming the assessment process, the decision note observed, included shortening the duration of the process, providing greater certainty and transparency for project proponents, and reducing or eliminating duplication between the EAO and the Oil and Gas Commission. 

The six signatories to the Decision Note recommended “Environmental Assessment change and enhanced Oil and Gas Commission process.” The fine print below that recommendation expanded on what that would mean, but also provided plenty of wiggle room for decision-makers, noting that regulations “could be amended to increase the trigger for sweet gas natural processing facilities from 200 to 400 million cubic feet per day, or removed entirely.” Even so, the main thrust of the recommendation seemed to be that environmental assessments for gas processing plants be shifted to the Oil and Gas Commission.

By January, 2014, as laid out in Monaghan’s “Government & Industry” work plan, the industry presented its “preferred solution”: elimination of the volume threshold for natural gas processing plants, exempting all gas plants that fall below the sulphur emissions threshold of two tonnes per day. This would have eliminated assessments for 99 percent of future gas processing plant projects and that’s exactly what Minister Polak announced last April, apparently ignoring the recommendation of the Working Group.

You may recall that Polak quickly rescinded the Orders in Council under pressure from First Nations. Fort Nelson First Nation Chief Sharleen Gale famously expelled BC government officials from an LNG conference two days after Polak’s announcement. Gale said, at the time, “No shale gas development will proceed in Fort Nelson First Nation territory until our Nation and our treaty are respected and our concerns about our land and our waters are addressed.” Polak rescinded the Cabinet Orders but made it clear the cabinet’s retreat was only temporary—“until we have undertaken discussions with First Nations.”

So the question of whether the Liberal’s legislated requirement to reduce emissions could compete with the fossil-fuel industry’s desire to sell LNG to Asians seems answered: it can’t. It can’t, and not just because Encana gave $891,995 to the Liberal Party between 2005 and 2013. Or because during that same time Encana’s founding CEO Gwyn Morgan gave the Liberals $153,510. Or even because Morgan served as a close adviser to Premier Clark when she took over from former Premier Gordon Campbell. Sure, those factor in, but it runs much deeper than that.The fossil-fuel industry has extended its lobbying tentacles deep into the operational grooves of the Provincial civil service. In those intimate circumstances the industry’s desires become the desires of the government and it becomes increasingly difficult to differentiate one from the other.

David Broadland is the publisher of Focus Magazine.

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