Panel 5C: Environmental Issues in the Oil and Gas Industry
November 14, 2014
Trade Law Bureau, DFATD
Warner, Norcross & Judd LLP
Cox and Palmer
Blake, Cassels & Graydon LLP
2017 JD/MA Candidate
The first speaker, Sandy MacDonald, presented on the regulatory system of offshore drilling in Canada. He discussed two major differences between the American and the Canadian regulatory systems. First, in the United States, the federal government collects the royalties whereas in Canada, the provinces collect the royalties.
Secondly, the American government administers all issues related to offshore drilling and is the regulator of safety in the industry. As a result, the government has a conflict of interest and there is no benefit to the adjacent populations. In Canada, the local people who are affected by these decisions are the ones who get the final say which means that they can assess the risks in a comprehensive manner. MacDonald argued that Canada’s regulatory structure is robust and could be applied outside of Canada.
The second speaker, Gene Smary, presented on the growth, regulation and challenges of hydraulic fracturing in the United States. Although hydraulic fracturing, or more commonly known as “fracking”, was first tested in 1903, it still remains a highly controversial issue. One of the biggest concerns related to fracking is its impact on the quantity and quality of water.
First, fracking requires approximately 2 to 30 million gallons of water over a period of 2-3 days. Secondly, fracking fluid is composed of 99.5% water and proppant (such as sand and ceramic beads). The remaining 0.5% of these fluids are chemicals. On average, 20%-40% of the water that is injected underground returns to the surface. Many are concerned that this contaminated water could have adverse effects on drinking water and on the environment. Given the seriousness of these concerns, Smary notes that these issues must be carefully addressed.
The third speaker, Dufferin Harper, presented on the environmental issues involving Canada’s oil sands and fracking. Since its first production in 1967, the Canadian oil sands industry has grown exponentially and now produces up to 5 million gallons per day. This growth has been accompanied by major issues such as an increase in GHG emissions. However, efforts are being made to reduce the negative effects of oil sands in Canada. For example, in 2007, Alberta was the first North American regime to develop a GHG emission reduction system. Moreover, Alberta has invested $1.3 billion in two large-scale Carbon Capture and Storage projects. The effects of these initiatives remain to be seen but Harper notes that these initiatives are a step in the right direction.