Feb 24, 2012

The Great Natural Gas Footrace: Where Have We Seen This Before?

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Several weeks ago, some running buddies of mine – two fine chaps working in the provincial civil service – invited me to speak on a panel at the annual Association of BC Forest Professionals meetings in Victoria. I had the good fortune to be joined by Bruce Fraser, former chair of the BC Forest Practices Board, and now, ahem, “retired” and up to his eyeballs in local land-use and water-use issues and debates in his capacity as an elected director representing the constituents of Shawnigan Lake at the Cowichan Valley Regional District.

The subject of our panel session was: Changing Horses: The Transition Between Two Economies. “There are Two Economies,” the blurb for our talk began, “one fading and one emerging. As our fading economy of exploitation slows and heads us towards environmental collapse, will the emerging sustainable economy take over? Are we ready to take the reins? Are we struggling to make the transition with ‘bridging’ fossil fuels such as natural gas and a questionable carbon credit market?”

In approaching the topic, I concluded that we are still – like it or not – mired in the old economy, especially when one considers our provincial government’s fixation on rushing British Columbia’s finite fossil fuel resources for export to Asian markets. Where have we seen this before? The need to change how we manage our publicly owned natural assets is obvious when you look at the stresses and strains that our northern forests, water resources and water-derived hydroelectricity sources are under as natural gas developments in the northeast of the province accelerate. The most necessary changes lie in ratcheting down how much we extract and paying a lot more attention to our critically important water resources, which are the foundation of a healthy environment and economy.

Bruce echoed some of my thoughts (far more eloquently than me, I may add), while making a strong case for active, community engagement in the management of land and water resources.

The following is the prepared text of my remarks.

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A few weeks ago our Premier and provincial Energy Minister garnered a lot of press for their plans to promote a rapid expansion in the production and exportation of natural gas from British Columbia.

The announcement serves as a useful point for the topic at hand today – whether or not the “old” economy of resource exploitation may be drawing to a close, and an emerging “new” and “sustainable” economy positioning for a take over.

If Premier Clark’s and Energy Minister Coleman’s enthusiasm for pushing our limited fossil fuel riches to China is any indication, I fear the answer is very clearly that we remain mired in the old economy and in a way that could have profoundly negative impacts for our most important, and consistently undervalued natural resource, water.

And it’s through the lens of water management, moving forward, that I want to address my remarks. Water is a fundamental building block that sustains all life on earth and that is vital for the health, vigor and diversity of our forests. Yet too often, it seems, we are content to employ a cookie-cutter approach to managing our forests and other natural resources, with nowhere near enough regard to the ecological and economic impacts that such replication ultimately has.

When this is then married to a manufacturing approach that favors the rapid output of relatively low-grade commodities and is encouraged by politicians hungry for short-term revenues, watch out.

The eerie thing to me about our provincial leaders embrace of fossil fuel exports to Asian markets and in particular China is just how much it parallels, in important respects, the push to move more of our low-value forest products into those markets. “Value” of a kind will be added to our natural gas if and when a gas pipeline linking Summit Lake near Prince George to Kitimat is built, and if and when the first of what could be many “liquefied natural gas” processing plants is also constructed.

But the value added in the process is negligible. All that will be done is to super-cool the gas to the point where it changes from gas form to liquid form, which is essential if you plan to put gas on ocean tankers. On the other side of the Pacific Ocean at whatever port our gas is sent to, the reverse process will occur. The “liquefied” gas will be warmed up and turned back into a gas.

Essentially, liquefied natural gas exports are the forest product equivalent of raw log exports, with a little Houdini-like sleight of hand thrown into the equation. Both represent exports of commodities in pretty much their rawest form.

Our Premier and Energy minister both acknowledge that their so-called “strategy” for our province’s precious, non-renewable fossil fuel resources essentially consists of opening up a new market and rushing as much of our low-value commodities into that market as quickly as we can. Sounds familiar doesn’t it? It’s exactly the kind of objective our Minister of Jobs, Tourism and Innovation, Pat Bell, has pushed for the past few years as he talks up the benefits of increased raw log and commodity lumber exports to China, and how such exports are serving to position BC’s forest industry for a healthy future in the months and years ahead.

Rarely, however, do we hear talk about what all of this means as far as our water resources are concerned. To their credit, the premier and energy minister addressed that issue with their natural gas strategy, but you had to pay close attention to pick it up because it was only an indirect acknowledgment – and halfhearted at that.

As it turns out the lynchpin in the Clark/Coleman energy plan is industrial access to hydropower. And hydropower, as we all know, is nothing without water.

It turns out that to build just one liquefied natural gas terminal in Kitimat somewhere between 8 per cent and 10 per cent of all the hydroelectric power currently produced by BC Hydro would be needed. BC Hydro in an assessment of cumulative future hydro demands in the province’s natural gas sector, believes that somewhere between the equivalent of 2 and 3 times the hydropower at the proposed Site C dam may soon have to be found to “power-up” the extraction of our non-renewable natural gas resources.

And that’s just the half of it. Because in addition to needing enormous amounts of our water-derived hydropower, an expanded commodity gas exports sector will need lots and lots of our water too. And it’s here that the tensions and overlaps with competing resource uses come most sharply into focus.

Over the past two years, I have been lucky to travel into the heart of the southern Peace region as well as 500 kilometres to the north in the Horn River Basin outside of Fort Nelson. Nothing prepared me for what I saw up there, in terms of the significant impacts that the natural gas sector is having on our northern forests and water resources.

Mainline energy industry roads and adjoining pipeline corridors made industrial logging roads look tiny by comparison. They were wider than multiple-lane highways. Along them, for as far as the eye could see, were pyramidal stacks of logged aspen and spruce trees being readied for burning.

Convoys of water trucks ran down such roads 24 hours a day, seven days a week, diverting water out of local rivers, lakes and streams. Not far from gas well pads where up to a dozen wells were drilled and readied for water-intensive hydraulic fracturing operations, giant lined pits dug deep into the earth were set to store tons of toxic wastewater, that could never be returned from whence it came without fear of poisoning resident fish and ungulate populations, to say nothing of human communities downstream.

That the deforestation and water withdrawal associated with such activities has cumulative impacts is undeniable. Our independent Forest Practices Board said as much last year. But to give people just a flavor for some of the impacts consider this:

By the beginning of last year there were more than 2,000 large borrow pits that had been dug or were approved for excavation in the Horn River Basin’s muskeg. Some of those pits were up to 500 metres long, up to 200 metres wide and up to 13 metres deep. Once the thin permeable, water-saturated upper layers were removed at such pit sites, impermeable clay was reached. Each winter, those pits now fill with snow, which under normal circumstances would melt in the spring freshet, feeding the muskeg system; water that is now permanently trapped by the clays and therefore removed from the hydrological cycle.

All of this deforestation and water use is harnessed to produce some of the most energy-intensive and water-intensive natural gas on earth. And much of it, at least for now, is destined for Alberta’s tar sands industry to assist in some of the most energy-intensive and water-intensive oil production on earth.

These are just some of the consequences for our water and northern forest resources as our allegedly “clean” or “transitional” natural gas resources are developed. And it’s important to remember that right now the so-called “footrace” that Energy Minister Coleman says that we are in with other jurisdictions to get our gas to China and other Asian markets has just begun.

There will be consequences for our water and forest resources in such a race, just as there have been for our water and forest resources as a result of the footrace we have been in to clear as much allegedly “dead” forest away as quickly as possible following the most recent and largest pine beetle attack to date and the earlier, not inconsiderable beetle attacks on the forests of the Chilcotin plateau in the 1980s.

Much like Clark and Coleman are doing now with our gas resources, previous premiers and forests ministers have done with our forest resources. Footraces were embraced as the solution to the challenges posed by the mountain pine beetle. The end results were wholesale, quite indiscriminate rushes to “salvage” log as much forest as possible, with little regard for the diversity and complexity of the forests being logged.

And now we confront the fallout. Faced with a growing “timber supply” crisis, there is mounting pressure on government to relax the various “constraints” on the industry imposed by earlier land-use planning processes. The risk, as MLAs in the province’s central interior regions tell me tell me they are hearing from local sawmill and pulp mill owners, is that failure to do so will precipitate a rash of mill closures. But such closures are likely only to be delayed for a few years at best before a “rationalization” must occur. Decades of indiscriminate over-cutting, too few available trees to log in the mid-term, and a growing concern over the true extent of not sufficiently restocked forests, ensures such an outcome.

And perhaps that is where the good news begins, because it may force us to finally address the consequences of policies that encourage footraces but that pay little heed to what happens when such races end, as they inevitably must.

No politician is a particularly big fan of placing limits on the extraction of raw resources, believing erroneously that it is bad for the economy. But the outcome of expedited resource extraction is that markets can – and frequently do – become oversupplied, leading to both environmental and economic collapse. Remember that Chinese market we’re in a footrace to supply British Columbia’s natural gas to? Well, as it turns out, China has a big shale gas supply of its own. But it is only too happy to encourage us to enter a footrace with other competitors to supply it with gas, because gas prices will go down to its ultimate advantage. That is and always has been the brutal downside of commodity markets.

Lowering the boom on how much of our gas resources we extract as well as our forest resources ultimately drives up their value in global markets and provides a much-needed incentive to maximize economic opportunities here at home. It is also imperative if we are to move forward in any kind of credible way with new approaches to our forest resources including measures to store additional carbon in our planted trees or conserved tracts of forest and in the bioeconomy.

It seems to me that it is essential in lowering that boom that the government pays much closer attention to the critical role that water plays both in our ecosystems and in our economy, particularly when one considers – as the National Roundtable on the Environment and Economy has recently – the overwhelming water use within the natural resource sector. And how vital water ultimately is to our energy production. No water, no energy. No energy, no water services.

Significantly, the Ministry of Forests, Lands and Natural Resource Operations now has responsibility for issuing water licences. It could and it should play a critical role in promoting healthy watersheds. But recent decisions by the ministry to turn very large volumes of water over to the energy sector without subjecting such decisions to public review and comment does not inspire confidence that such an approach will be embraced any time soon.

Perhaps, in closing then, the time has come to take stock of the consequences of our resource footraces in a more formal way.

As Harry Drage advocated in a recent letter to The Times Colonist:

“To restore clarity and confidence, we need a full, citizen-led provincial review” on the state of our forests and the roles of government and industry in their management. “Not to address these issues head-on risks sacrificing BC’s forests.” And, I am sure Harry would say, our water resources too.

With a Water Act Modernization process underway, there is no better time than now to twin it with a long-overdue review of other natural resource policies in the province. It’s been 20 years since the last formal review of such policies. Given all that has transpired since, the time has come to take a good hard look once again.

 

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