Natural Resources Committee on Feb. 12th, 2013

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Would you be okay forwarding that information, I guess I'll ask through the chair, to our offices?

[Peter Howard]

Absolutely. Actually, it's available on our website. I can pass—

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

But is it in French as well?

[Peter Howard]

No.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

We may need to work on that, Mr. Chair.

[Peter Howard]

Yes, I can.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

It's interesting listening to all these discussions in the news about fracking. Unlike my colleague here, I didn't work in the oil and gas industry, but I almost did. I was a mining geophysicist. Didn't quite make it there.

[A voice]

It's like being a bit of an accountant.

[Voices]

Oh, oh!

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I was almost over there, Blaine; I just about made the good country. Mining didn't pay as well as oil and gas, unfortunately.

It's interesting to see how the developments have come in the industry. A lot of it has not been the major oil players who have been technologically pushing the edge on this thing.

So to Mr. Dunn and Mr. Howard, if you could answer, why has it been that it often is the smaller players, relatively speaking, that have been the innovators? What can we learn from how fracking has developed? This is effectively a World War II era type of idea that has expanded greatly. Why is it that it's been the smaller players, in places like western Canada, that have driven the innovation on this and not the bigger guys?

[Richard Dunn]

Certainly I'd support your comment that small companies have played a significant role in advancing hydraulic fracturing technology. Principally, maybe not so much on the operating side, I'd suggest, but certainly on the.... Where Canada has a real niche is in the downhole tools, which take a well bore that's 3,000 metres deep and extend it out laterally another 3,000 metres and put the tools in place so that you can put some 25 stimulations along the course of that well bore. It's amazing technology, each stimulation involving the placement of two railcars full of sand—

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

But what caused the small guys to have that innovation? We're looking for ideas to drive innovation here. What drove their innovation?

[Richard Dunn]

I think they saw a market. Some of the small service companies have seen a market, and I guess it's that willingness to take a risk.

I would suggest as well that the major companies that are willing to use this technology have, given the chance.... And I guess finally it's a program that I run at our company, the SR and ED, the scientific research and experimental development program. It does definitely make the use of research and development. It promotes our use of research and development in our corporation, the tax advantage, that nature of it, and I think it's driven some very innovative technological practices.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost.

Go ahead, Mr. Allen, for up to five minutes.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair. And I thank Mr. Trost for his comments about being a bit of a natural gas person. I remember one time he told me about being a bit of an accountant, so right back at you.

Mr. Dunn, I'd like to start with you. You were talking about the fluids used in the fracking and about some of these “greener” fluids, if you will. I would just like to ask you a little bit about that. In one of the environment commissioner's reports, he talks about the analysis it takes to get these chemicals approved and reviewed.

How much development have you seen in these, I guess you call them greener chemicals, in the last five to ten years, and have there been delays in getting some of these licensed for use by the firms?

[Richard Dunn]

I would suggest that a lot of the greening of the chemicals is probably in the last one to two years, as public awareness has really come to the fore. I would suggest that our suppliers, either the major companies like Haliburton or the smaller, Canadian-based suppliers, Calfrac, Trican, the pumping companies—they are very keen. They recognize the need and the public imperative of going to greener chemicals. And I would say the cooperation we've had with those firms has been tremendous. They see where the market is going and they want to participate in that market effectively.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Can you give me an example of a greener chemical?

[Richard Dunn]

Yes. I mentioned the chemicals that we won't use, and really the greener chemicals have seen the elimination of the ones with benzene and certain heavy metals. In the majority of our situations—well, all of our situations company-wide—we've been able to take what we consider unacceptable chemicals and replace them with chemicals that have less difficult or toxic properties.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

You talked a little bit about innovation in that area. Obviously you talked about multiple wells from single pads, and that should increase your capabilities to manage your fracking fluids and things coming back up.

Can you talk a little bit about what advances you've made in the last four or five years with respect to recoverable fluids and groundwater contamination?

[Richard Dunn]

Certainly part of the practice that we've committed to as an industry is to work with the regulators to put programs in place to monitor baseline water in the area around our fracturing operations, so in the unlikely event that there is some contamination of groundwater and near-surface groundwater, we'd be able to understand that right away, recognizing that this has not been an issue experienced in the industry to date.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

One of the challenges that we see—and in New Brunswick we're in this dialogue now, and significant numbers around my riding in that area are involved in this debate right now.

I appreciate your comments about reducing the environmental footprint because of these multi-site.... But what about what you're doing around casing management and that type of thing? There always seems to be the concern about the fracking fluids seeping into the groundwater. What developments and improvements have you made with respect to drill casing work and that type of thing to ensure the safety of the fracking fluids coming back up?

[Richard Dunn]

So much of the protection of groundwater depends on the quality of well-bore construction, which includes both the casing and the cement that's placed behind the casing, or multiple strings of casing, to isolate your production zone and the fluids you're putting in from fracturing, from near-surface groundwater. To that end, the regulations that are being put in place.... Industry practices are extremely strong in Canada. It's world leading, and I believe our regulations are world leading as well. That's the first line of defence—proper practices, proper regulations, in terms of protecting groundwater.

Furthermore, as we continue the dialogue...they're getting better as we speak. For example, in Alberta, we're starting to look at putting in place regulations that manage the interaction between wells that are placed in reasonably close proximity. As Mr. Howard mentioned, we've moved from a model of one well per square mile to a model that involves multiple wells, and the regulator today is working with industry on regulations that manage that interaction and that make sure you can't have any inadvertent communication from one well-bore situation to another while you're stimulating it. So regulations are being put in place to address the new reality.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Allen.

Go ahead, Mr. Nicholls, for up to five minutes.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Thank you, Mr. Chair.

Mr. Dunn, I am going to follow up on questions posed by my colleagues on the other side regarding fracking technology now.

Disclosure of chemicals is great. Was the chemical list that was used for fracking disclosed after it was regulated, so that you had to disclose it, or were you doing that before regulation?

[Richard Dunn]

It was done before. In fact, in British Columbia it was done voluntarily, I believe, two or three months in advance of the regulator mandating that. In Alberta it was done some year and a half before.