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Industry demands trump public interest, says report on Oil and Gas Commission

Ben Parfitt, resource analyst with the Canadian Centre for Policy Alternatives

The Oil and Gas Commission should not be in the business of approving development applications while it is also policing the industry, according to a report released today.

The Canadian Centre for Policy Alternatives report, entitled Captured: British Columbia’s Oil and Gas Commission, makes several recommendations to reform the commission, which was established more than 20 years ago.

“Over the last few years I have been tracking and become increasingly troubled by a number of incidents that really seem to underscore that the Oil and Gas Commission is not holding the companies that it regulates, to account,” said Ben Parfitt, the report’s author.

Those incidents including the revelation, a couple of years ago, that several rivers and waterways have been dammed in northern B.C. by oil and gas companies.

“Dams that no permits were issued for, dams that were built in violation of the Dams and Water Act in the province, dams that were all built to trap freshwater for use in fracking operations,” he said.

Nearly 100 structures were built and one, says Parfitt, was seven storeys tall another was five storeys tall.

Another incident involved an Oil and Gas Commission document leaked to an investigative reporter that showed there were problems with methane gas leaking out of gas wells and potentially contaminating groundwater.

“We now know that years after they were discovered, many of these will have not be repaired,” said Parfitt. “The regulator is not only aware there are problems but, in this case, keeping information from the public.”

The report released today documents offences including the construction of those unlicensed dams and repeated violations of rules to protect endangered species and shows how the Commission has consistently failed to penalize companies to the extent it can when serious violations come to light, says Parfitt.

“The Oil and Gas Commission is a captured regulator, meaning it serves the interests of its industry clients and governments that promote fossil fuel developments ahead of the interests of the public,” he said. “The commission cannot continue to be both responsible for reviewing and approving industry development applications and policing the industry. Clearly, the time has come to separate those responsibilities and to put someone else in charge of enforcing the rules.”

He says much of the information contained in the report, comes from the Oil and Gas Commission’s own website, detailing infractions. However, the penalties for companies breaking the rules are far from severe. In many of the cases, the commission would issue an order to the company.

“It’s good that these things are caught,” he said. “It’s good that orders are issued. But the orders are no formal finding of fault and there are no penalties assessed. The only penalties that exist are that companies are forced to clean up or do something that they should have done in the first place.”

He said there were penalties assessed in rare cases and, of 99 cases he examined, the commission levied a total of $92,750 of a possible $5 million it could have levied.

“It sends a very strong message that companies are able to pay very little for, and are penalized in the most modest ways for infractions of significant laws and regulations,” he said.

In the mining industry, following the disaster at Mount Polley, Auditor General Carol Bellringer said the agency overseeing the industry in an “inherent conflict” because it was also promoting and policing the industry called for a separation, so there is precedent for removing the policing duties from the commission.

The report shows how the provincial government bowed to a key demand of the Canadian Association of Petroleum Producers (CAPP) when it set up the new Commission in 1998. That key demand was for a “single-window” agency that would “streamline” the review and approval of industry development applications. CAPP warned the government that failing to make that change would result in the industry pulling investments out of the province. 

“The commission was created and the previous practice of multiple ministries reviewing applications was ended. Almost immediately there was a surge in development approvals,” Parfitt says. “Unfortunately, what also happened was an increase in environmental infractions.”

The report concludes that the need to reform the commission is pressing because today’s industry practices bear no resemblance to practices in place 21 years ago. At the time the commission was formed, natural gas wells were not drilled to the depths they are today and horizontal wells were not the feature that they are today. The immense volumes of water that are pumped in today’s fracking operations were also unheard of.

“We are seeing troubling increases in earthquakes as a result of today’s fracking operations and a wholesale industry rush to find enough water to complete those operations. That alone is reason to review how the Commission regulates the industry, let alone what lies ahead should a liquefied natural gas industry materialize and the need to drill and frack more gas wells skyrockets,” Parfitt says.

In addition, the oil and gas sector is rapidly expanding in northern B.C. as the liquefied natural gas industry expands, making the need for better enforcement of rules and regulations paramount.

The report’s key recommendations include:

  • Create a new, arm’s-length agency to oversee compliance and enforcement efforts.
  • Restructure the commission board and remove its powers to change regulations.
  • Reinstate a single water authority to regulate all water users in B.C. (Currently only the oil and gas industry can apply for water rights from its own dedicated regulator).
  • Compel the commission to release all information that is in the public interest.