Nov 10, 2017

Drain it: Petronas subsidiary ordered to take action at two controversial fracking dams

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BC's Environmental Assessment Office has ordered Progress Energy to drain almost all of the water from this unauthorized dam. Photo: Ben Parfitt

The provincial government has ordered Progress Energy to drain virtually all of the water trapped behind two massive dams that the company built in violation of key provincial regulations.

The company was told on October 31 to drain all but 10% of the water stored behind its Town and Lily dams near the Alaska Highway north of Fort St. John by Chris Parks, assistant director of compliance and enforcement with BC’s Environmental Assessment Office (EAO).

The order comes after Progress Energy filed an extraordinary application this summer with the EAO asking the provincial environmental regulator to retroactively “exempt” the two dams from required environmental assessments. Both dams are higher than five-storey buildings.

By law, Progress should have filed its exemption applications well before the projects were built, not after. Progress built its Town dam in 2012 and its Lily dam in 2014. Both are part of a vast network of unlicensed dams that the Canadian Centre for Policy Alternatives first reported in early May have been built across northeast BC by fossil fuel companies to trap massive amounts of freshwater used in gas drilling and fracking operations.

Numerous organizations, including the Blueberry River First Nation (BRFN), on whose traditional territory the dams were built, have written to the EAO objecting to Progress’s exemption request.

By law, Progress should have filed its exemption applications well before the projects were built, not after.

“BRFN has been repeatedly sounding alarm bells to the Crown (including through affidavits filed in court) about the diminished water quantity in our territory,” wrote BRFN lands manager Norma Pyle. “We have been watching lake levels drop, muskeg disappear, mineral licks dry up and streams reduce to small versions of their former selves.”

“Blueberry’s concern goes beyond these two dams to the failure of regulatory oversight in their territory—it’s not just these two dams, but dozens of them,” BRFN’s legal counsel Maegan Giltrow added in a separate email statement. “This is in the face of Blueberry’s repeated concerns to the Crown about the diminishing water quality and quantity they are seeing. This September the Blueberry River itself ran dry—Blueberry members haven’t seen that before. Meanwhile, hundreds of thousands of cubic meters of freshwater in their territory is being illegally impounded for oil and gas operations. And Blueberry had to learn about the problem from media reports—where was the regulator? The Nation still doesn’t have answers to the questions it has put to the Oil and Gas Commission about all the illegal dams and water use.”

Public inquiry into fracking needed

The presence of the dams—and a host of additional issues relating to how Progress Energy and other fossil fuel companies use the water stored in them for their fracking operations—are among the concerns that triggered a call this week by 17 organizations (including the CCPA) for a full public inquiry into natural gas industry fracking operations in BC.

In addition to the proliferation of unlicensed dams, the call for an inquiry was prompted by troubling events in the northeast of the province, including evidence of powerful earthquakes triggered by fracking, escalating water usage at BC fracking operations, rapidly increasing methane releases at gas well sites, local health impacts, and ongoing impacts to First Nation lands.

The groups encouraged the government to examine the impacts of fracking and related operations on First Nation lands and resources in particular.

Seventeen organizations (including the CCPA) have called for a full public inquiry into natural gas industry fracking operations in BC.

“We are deeply troubled that this dam-building free-for-all occurred on First Nation lands, that First Nations were not fully consulted about the true size and extent of these dams, and that our Indigenous Title, Rights and Treaty rights are still completely ignored or denied. There are still no substantive or meaningful opportunities to fully participate in decisions around how water resources are managed in our respective territories,” said Grand Chief Stewart Phillip, President of the Union of BC Indian Chiefs. “We need a credible, strong, Independent Inquiry to get to the bottom of this.”

The Environmental Assessment Office has yet to say how it will respond to the Blueberry River First Nation’s letter and those of many other organizations urging the government to reject Progress’s application for exemptions. David Karn, a senior public affairs officer with the Ministry of Environment and Climate Change Strategy, said in an email that he expects the EAO to make a decision about Progress’s exemption request “in early 2018.”

Both dams are considered “major projects” under BC’s Environmental Assessment Act because they exceed a critical height threshold of 15 metres. The Lily dam dramatically exceeds that threshold. It is 23 metres high or as tall as a seven-storey apartment building.

Build first, ask for permission later

Both dams are among more than 50 large earthen structures built by energy companies on Crown (public lands) in northeast BC that are also subject to Treaty 8, the 1899 agreement reached between the Crown and the region’s First Nations. Most or all of the dams were built without the companies first obtaining key provincial authorizations such as water licences. In addition, engineering specifications appear to never have been submitted to and approved by provincial authorities before the dams were constructed.

Dam safety and water licensing officials with the provincial Ministry of Forests, Lands and Natural Resource Operations are also investigating additional fracking dams that have been built on private lands, including farmlands within the provincial Agricultural Land Reserve. BC’s ALR was created in 1973 to preserve farmland.

It now falls to BC’s Oil and Gas Commission (OGC), which allowed the dams to be built without the proper permits first being obtained, to retroactively review dozens of pending water licence applications, and to assess the health, safety and environmental risks posed by dams that may not have been built to proper engineering standards.

The first batch of retroactive water licence applications came in late December last year when Progress Energy on a single day applied for 13 such licences. Each application was for water rights at dams that had already been built and that were already impounding water. The applications did not include the water licence requests at the two dams currently under review by the EAO.

Most or all of the dams were built without the companies first obtaining key provincial authorizations such as water licences.

Recently, investigative journalist and author Andrew Nikiforuk reported that following publication of the CCPA’s initial research in May, the OGC sent staff on a flyover of 51 unlicensed dams. The inspections revealed serious problems at seven dams or 14% of those visited. Progress Energy built five of the seven problematic dams (these five do not include the two before the EAO) and ConocoPhillips built the other two. Noted problems included erosion, slumping and water overflowing the top of some dams.

According to documents obtained through numerous Freedom of Information requests filed by the CCPA, all of the unauthorized dams were purpose-built to trap freshwater used in fracking operations, where huge quantities of water are pumped under intense pressure to fracture or crack open deep rock formations so that trapped methane gas is released.

During a Progress Energy fracking operation north of Fort St. John in 2015, 160,000 cubic metres of water—the equivalent of 64 Olympic swimming pools—was pressure pumped underground at a fracking operation, triggering a 4.6 magnitude earthquake.

Dam safety at issue

The EAO’s order to Progress requiring it to drain its Town and Lily dams does not speak directly to the issue of how safe or unsafe those structures may be. Nor does it speak to the broader question of how the dams came to be built under the OGC’s watch or whether or not the dams may be at risk because of ground motions triggered by nearby fracking operations.

The order notes, however, that “an environmental assessment certificate has not been issued for the Dams” and because a certificate has not been issued, the Environment Minister “may order that the construction, operation, modification, dismantling, or abandonment of the project cease, either altogether or to the extent specified by the Minister, until the proponent obtains an environmental assessment certificate.”

Progress is then ordered to:

  1. Maintain water volumes stored by the dams at no more than 10% of live storage capacity unless otherwise directed by the EAO’s compliance and enforcement division.
  2. Monitor and record water volumes on a weekly basis during frozen conditions and on a daily basis during conditions where flowing surface water is present, and provide that information to EAO compliance and enforcement upon request.

160,000 cubic metres of water—the equivalent of 64 Olympic swimming pools—was pressure pumped underground at a fracking operation, triggering a 4.6 magnitude earthquake.

Following this order, Progress Energy’s president and CEO Mark Fitzgerald issued a statement to the Globe and Mail claiming “that it was his own company that identified problems with some of its dams—including the failure to obtain proper authorizations—and brought the findings to the attention of the provincial government.”

“He said an engineering review of the company’s water-holding facilities found no structural issues, but noted that some were larger than permits allowed,” the article continued.

“We own those mistakes, and are working with the [Oil and Gas Commission] to correct them. What’s important to me is that we will not make these mistakes again,” Fitzgerald said to the Globe and Mail. “We’re committed to working closely with the regulators and to managing our operations in an environmentally responsible manner.”

Self-reporting doubts

But records obtained from the Oil and Gas Commission through the CCPA’s various Freedom of Information requests paint a different picture.

Progress Energy did not suddenly arrive at the conclusion that some of its dams were built without the required authorizations. Rather, the company—along with all its competitors operating in northeast BC—was told by the OGC in May 2016 to submit lists of all dams that it had built. Why the OGC apparently didn’t know this and had to ask in the first place is not clear.

Two months later, after the companies had reported back to the Commission, then OGC chief hydrologist, Allan Chapman, wrote an email to the Commission’s vice-president of applications (James O’Hanley) and its vice-president of operations (Lance Ollenberger), stating:

“Hi James and Lance. Progress Energy has confirmed that they built two Freshwater Storage Sites that exceed the EA Reviewable Projects Regulation of 15 metres. In their submission from Wednesday, they indicate that one is 23 metres, which is quite breath-taking. I have advised them they need to contact the EAO.”

So clearly, the company did not voluntarily approach the Environmental Assessment Office. It was compelled to do so by the regulator, which should have prevented the dam from being built in the first place.

This case drives home why BC needs a full public inquiry into fracking activities.

Several problems with the Lily dam were also subsequently noted by Progress Energy in its own commissioned engineering report submitted to the EAO. The Lily Dam Project Description document noted signs of seepage, or water leaking from behind the dam’s walls, and improperly graded water outlets for the dam. According to the engineering report, both issues had the potential to cause severe damage to—or failure of—the dam, if left unaddressed.

Whether those troubling words of warning influenced the Environmental Assessment Office’s decision to order Progress to drain most of the water from its two largest dams is unknown.

If the company’s application for exemption is ultimately denied and the two dams are finally subjected to a full provincial environmental assessment, the answer to that question and more may finally see the light of day.

Even so, this case drives home why BC needs a full public inquiry into fracking activities.


This investigation was undertaken as part of the Corporate Mapping Project (CMP). The CMP is a six-year research and public engagement initiative jointly led by the University of Victoria, the Canadian Centre for Policy Alternatives’ BC and Saskatchewan Offices, and the Alberta-based Parkland Institute. This research was supported by the Social Science and Humanities Research Council of Canada (SSHRC). 

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