Evidence of meeting #32 for Natural Resources in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was quebec.
A recording is available from Parliament.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
So we don’t have concerns over it, but since we have so much and since the U.S. needs so much, we’re a supplier, obviously, and that's our role in an energy security conversation, from your point of view.
President and Chief Executive Officer, Questerre Energy Corporation
I think North America has an energy security issue, which is really to say that America does, and I think Canada has a role to play as a solution.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Because we have talked about it in your answers so far, do considerations of environmental security come into it as well?
The word “liabilities” keeps coming to mind. You as a company deal with liability all the time, and you carry insurance for certain liabilities. The concerns that have been raised in relation to unconventional sources of oil and gas, particularly in the Quebec case, are around liabilities that are held not by the company but by the public. When you stake a claim and you withdraw a resource and then sell it on the market, what’s left behind is often not....
For example, when you set up an operation and do a series of wells, are you bonded in that operation? Do you have to set up a bond in case your company falls on hard times and is unable to complete the process of cleanup?
President and Chief Executive Officer, Questerre Energy Corporation
On the bigger question of environmental security, I think that is true now for every industry. Some days I feel as though it's specific only to oil and gas, but it's true of every industry. If we're going to have a sustainable economy and sustainable development, we need industries that are going to mitigate their impacts, and no industry has no impact. I think that's true. When we're looking at oil, gas, and energy, we need to look at what are reasonable impacts and what's reasonable to mitigate them.
With specific reference to corporate liability for environmental issues, first of all, there's no jurisdiction that I know of in Canada that limits any company's liabilities. We have full liability, corporately, for any potential issues, whether it's loss of well control, environmental spills, or so on and so forth. We carry insurance, and regulations generally require us to carry insurance.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Specifically in relation to the bonding, I'm trying to compare you a bit to the mining industry. We've learned through past experience that companies may start off with the best of intentions and all the rest of it, but things happen, so when a mine starts up now, we require bonds for most major mining operations in the country in order to carry off unforeseen.... They can be quite significant, but I don't think oil and gas operations have that--
President and Chief Executive Officer, Questerre Energy Corporation
But we are required to carry insurance, and we also post drilling deposits. We post drilling deposits and we are also required to carry insurance. Saskatchewan, Alberta, and B.C. have also developed an orphan well program, which is funded by industry. In effect, it's an industry-funded blanket insurance program. If some company is not financially able to meet its obligations, then there's an orphan well program to do so.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
That's helpful.
Around the question of fracking, you talked about conventional methane gas drilling that uses somewhere north of 500 or 560 chemicals in the fracking fluid itself--
President and Chief Executive Officer, Questerre Energy Corporation
Those are available chemicals. They are not necessarily all being used, but they are available to be used.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Some of them are quite bad chemicals. You certainly wouldn't want to have them in your drinking water. They're carcinogenic. They have all sorts of things. You said you use a considerably smaller number of them.
The question has two parts. First, what is the number of chemicals you use in your fracking fluid right now? Are any of them carcinogenic, and do you make them public? Do you put the list out into the public?
This has been a challenge, because some companies have simply not been releasing the names of the chemicals being used, thereby causing public concern.
President and Chief Executive Officer, Questerre Energy Corporation
The number of chemicals we generally use is about 12. They're published on our website. Other companies have published them publicly as well. They're disclosed on our regulations sheets to MNRF in Quebec, for example. They are disclosed to the regulators. If you look at the Ground Water Protection Council's report, they have published them from state records, so these chemicals are not....
While some companies may not want to publish them to the general public for trade secret reasons, they are known to regulators, and some companies, like ourselves, don't even think it's a trade secret, so we've published them.
As for carcinogens, I don't know about being carcinogenic. I know some people talked about acrylamide, although we actually use polyacrylamide. All of them are in things in your household, though, whether they're cleaners, disinfectants....
I'm not trying to say that doesn't mean they're not toxic--we handle things like disinfectants carefully in our homes to make sure children don't get at them, and so on and so forth--but what I am saying is that they are chemicals that the general public is capable of dealing with safely in their own homes.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
I would say yes and no. The question and the concern around fracking fluids is that in the process you don't recover anywhere near 100% of the fluid that goes down the well. It's impossible.
President and Chief Executive Officer, Questerre Energy Corporation
Well, it's 50%, let's say.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Yes. So half of it remains down the well, and it can be a significant amount of chemicals. I think it's an unfair comparison to say that they're in your home and they're in your disinfectant, simply because we don't take those chemicals under the sink and pour them into our drinking water. The concern that people have is that 50% of the chemicals are left underground, and sometimes in sources of drinking water. The concern around contamination is real, and I think you acknowledge it.
Is it not fair to say that contamination of drinking water is a concern for the industry? It's certainly a focal point of the public conversation.
President and Chief Executive Officer, Questerre Energy Corporation
But not in the way you say it. I'd actually say it's quite the opposite of what you just said on this narrow issue. I'm happy to talk about where there are risks, but you're talking about an area in which there really aren't any risks.
First of all, we're fracking one or two kilometres under the ground. We're taking gas that's been there for a few hundred million years without being able to get out because of the impermeable rock layers above it. Yes, that water is down, and yes, it stays there, but it's staying in a place that has been able to contain natural gas, a far more buoyant thing than water. I think the Ground Water Protection Council has published a report saying that the potential for that kind of water to reach the surface is less than one in 200,000,000, or something along those lines.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
But casings break. Not all of the chemicals make it all the way down. Some of them break along the way and accidents happen.
President and Chief Executive Officer, Questerre Energy Corporation
Just to finish the point, though, in terms of the chemicals in your home, you actually do literally pour them down the drain into the water supply. So in terms of a comparison, we're putting it somewhere where it doesn't get out, while people in their homes are putting it down drains into the water treatment facilities.
With respect to where the risks really are, the risks are really in terms of surface spills. Typically, when it comes back up to the surface, the risks are that ponds or tanks in different jurisdictions have leaks. The other risk is in the handling and transportation of the water, either the water coming or the water going. There have been issues in terms of potential groundwater contamination through the spilling of this frac water.
In terms of the system itself, when you're fracking down the pipe, if the pipe is not holding the pressure you stop fracking. It's tested before you frac, and it's a self-checking system, because if the pipe is in a contained system under high pressure when you're pumping down, then when you're coming up at much lower pressure, you know you're not leaking anything through the pipe itself.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Cullen. Your time is up.
Mr. Allen, you have up to seven minutes.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Thank you, Mr. Chair.
Thank you, Mr. Binnion, for being here today and for your presentation.
Just picking up on a little bit of where Nathan was going with this, are there any regulations in place, or any rules of thumb, in terms of separation from where you're drilling and fracking, as opposed to the proximity to any aquifers?
President and Chief Executive Officer, Questerre Energy Corporation
Yes. In Alberta, regulations were put in place after an incident in Rosebud, Alberta. It was believed that some shallow fracs in coal bed methane had interfered with groundwater. Since then there have been limitations on how shallow you can carry out fracs in that jurisdiction.
In terms of good oil field practice, there are also a lot of different calculations around the planning of the frac inside good engineering practices to make sure it's contained where you want it to be.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Over the last number of years, when you look at the fracking process and the technology and the use of chemicals, how has that changed? It seems to me there have been quite a number of changes over the last number of years in the use of chemicals. In your view, how has the technology improved? Have you seen a reduction in the amount of chemicals used for vertical and horizontal fracking?
President and Chief Executive Officer, Questerre Energy Corporation
The first thing that happened in the Barnett Shale, which was the very first successful commercial shale play, was that Mitchell Oil tried and experimented for years and years with different types of fracking technology, trying to find something that would work. The amazing thing was that in the end the successful answer was basically just water and essentially no additives. That coincidentally means it's also less expensive and makes it more competitive.
When we say no chemicals, we still put in the prime chemicals—and we've listed them all on our web page again. We use something to break the surface tension of the water so that the water will slick, and then something—it's actually a food additive, a gel—to help hold the sand. Those are the two prime things that we use. On top of that, there will be small amounts of iron control, and biocides to make sure that we don't get bacteria growth--those types of things.
President and Chief Executive Officer, Questerre Energy Corporation
The rest of your question was about what has changed on the other side. We are carrying out larger and larger fracs. It has been a steady progression. Ten or twenty years ago we might have been doing 30-tonne fracs. Now we're doing 100-tonne and 200-tonne fracs. So we've increased the size of individual fracs.
Then we've put more than one frac into one well in these horizontal wells. Those have been the advancements.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Okay.
You talked a little bit about the service sector being mainly in the west. In New Brunswick, we're just starting to go down this road as well, and there are some companies that are exploring—and I see a couple of ridges in the document the Library of Parliament gave us here.
If the shale gas was exploited to its full capability, is there a rule of thumb with respect to the impact from a well on the GDP of the provinces or the revenue of the provinces, for example, Quebec and Atlantic Canada?
President and Chief Executive Officer, Questerre Energy Corporation
I would have to say no. We have done an impact study in Quebec, by SECOR. The main problem with that study, though, because there's no economic data in Quebec, was that it really didn't take into account the impact of development of a local service sector. In my view, this means that it more or less missed the whole point, because that's where most of the capital is spent--through the service sector in the oil and gas business, with all the people in Calgary being the tip of an iceberg, having outsourced in almost the entire business.