Friday, July 21, 2017

Global Shale Law Compendium: Shale Governance in Canada (British Columbia, Northwest Territories, Yukon, and Nunavut)

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series addresses legal development and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. In this article, we will highlight governance actions taken by the Province of British Columbia as well as the Territories of Yukon, Nunavut, and the Northwest Territories to develop policies specific to shale gas development. In our three previous articles, we respectively addressed shale gas development in the Provinces of Alberta, Manitoba, and Saskatchewan, shale gas development in the Provinces of Newfoundland and Labrador, Ontario, and Prince Edward Island as well as shale gas development in the Provinces of New Brunswick, Québec, and Nova Scotia.

British Columbia

The Canadian province of British Columbia (BC), located on the western side of the country, is home to vast quantities of shale gas resources with an estimated 1,238 Tcf of potential resources of which approximately 336 Tcf are deemed technically recoverable, according to the BC Ministry of Energy and Mines. The shale gas resources in BC primarily are located in the Montney Formation, the Horn River Basin, the Cordova Embayment, and the Liard Basin.

According to government resources, the Montney Formation and the Horn River Basin are considered among the most promising shale gas plays in North America. The Montney Formation extends from northeastern BC to the province of Alberta while the Horn River Basin stretches from northern BC to the Yukon and Northwest territories. As for the Liard Basin and the Cordova Embayment, there is believed to be a potential for shale gas exploitation. The Liard Basin is located in northeast BC and extends across the Yukon province and southern Northwest Territories, just as does the Cordova Embayment, which extends from the northeastern corner of BC.

In British Columbia, shale gas exploration using hydraulic fracturing started in 2005 within the Montney formation while shale gas development activities in the Horn River Basin began in 2010. With regard to current activities, however, the provincial government indicates on its website that “as a result of current economic conditions, there has not been any significant new development drilling programs initiated in the past few years.” Even with this reduced activity, the provincial government has declared that “by 2011, the contribution of unconventional sourced gas surpassed gas production from conventional reservoirs … by year-end 2015, BC’s unconventional gas production accounted for about 80 percent of total gas production.”

The BC Ministry of Natural Gas Development has the authority to regulate oil and gas exploration rights, including shale gas exploration, under the provincial Petroleum and Natural Gas Act. Additionally, other regulations such as the Geophysical Exploration Regulation B.C. Reg 280/2010, the Fee, Levy and Security Regulation B.C. Reg 8/2014, and the Consultation and Notification Regulation B.C. Reg 279/2010 also apply to oil and gas operators prior to issuing permits.   

Regulating conventional and unconventional oil and gas production activities is the responsibility of the BC Oil and Gas Commission (OGC) under the provincial Oil and Gas Activities Act. More precisely, OGC is in charge of the permitting process under B.C. Reg 147/2010 and B.C. 274/2010 as well as setting out the environmental protection and management requirements necessary to obtain oil and gas permits pursuant to B.C. Reg 200/2010. In addition, OGC is responsible to provide emergency response management practices under B.C. Reg 204/2013. It also relies on Directive 2011-03, entitled First Nations Consultation on Short Term Use of Water Applications under the Water Sustainability Act, to ensure that all applications for short-term water use related to oil and gas activities potentially affecting Aboriginal rights will be reviewed along with the applicable First Nations authorities. Furthermore, OGC follows Information Letter #OGC 09-07 addressing a set of requirements for the containment, storage and disposal of returned fracture fluids to enhance protection of the environment, wildlife, and groundwater.

Yukon Territory

In a study dated 2012 on unconventional oil and gas potential in the province of Yukon, the Yukon Geological Survey (YGS) identified some shale plays with prospective resources in the Yukon Liard Basin, the Eagle Plain Basin, the Horn River Group in Peel Plain and Plateau, and the Whitehorse Trough. YGS declared, however, that “little is known about the unconventional hydrocarbon potential of Yukon, as there has been a limited amount of petroleum industry activity, and more of a focus on conventional exploration.”

Up until now, there has not been any activity relating to shale gas exploration; though various reports indicate that EFLO Energy Co., a US-based company, has showed an interest in conducting operations for shale gas exploration in the Yukon Liard Basin.

Northwest Territories

According to government reports, there are some prospects for shale gas development in the Canadian Northwest Territories, mainly due to the fact that shale gas resources have already been found in the Liard Basin and the Horn River Basin. The Northwest Territories Geological Survey also has identified the central Mackenzie region as having some potential for shale oil development within the Bluefish Shale and the Canol Shale formations. Exploration activities already have occurred in the Central Mackenzie region and the Liard Basin, but no production has been reported.

Nunavut

The potential for shale gas development in the territory of Nunavut is uncertain and not yet well documented. Territorial authorities have identified the Hudson Bay Platform, Artic Platform, Sverdrup Basin and Baffin Shelf as shale formations.

References:

Yukon’s Shale and Tight Resources, Natural Resources Canada
Nunavut’s Shale and Tight Resources, Natural Resources Canada

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