Shoal Point Energy CEO Mark Jarvis is not a happy camper these days. In November of 2013, the Vancouver-based junior oil and gas company learned that hydraulic fracturing was no longer kosher in Newfoundland and Labrador. The province’s Natural Resources Minister, Derrick Dalley, had put a fracking moratorium in place while the government conducted an internal review and public consultation of the controversial extraction practice.
For Jarvis and Shoal Point, this is kind of a big deal. The company is working on developing what it calls the Green Point shale oil play in western Newfoundland. It says there are 202 million barrels of potentially recoverable oil on its leases. But to extract them it will have to frack the wells it drills. “This fracking moratorium has hurt us. It’s hurt our ability to raise money,” Jarvis says. “We are just going to have to be patient and let the politics play out. I really hope this jurisdiction will improve, and hopefully sooner rather than later.”
The Rock is the latest province in Atlantic Canada grappling with how to deal with the thorny issue of fracking. The practice, where water mixed with sand and chemicals is injected at high pressure into wells to crack the tight rock and allow oil and natural gas to fl ow to the surface, has been around for decades. But fracking has become something of a dirty word outside the petroleum industry. It’s been blamed for contaminating water and even causing earthquakes, and companies looking to frack have come up against an increasingly hostile public that doesn’t trust industry and government claims that fracking is safe and robustly regulated.
Both Newfoundland and Labrador and Nova Scotia have put fracking moratoriums in place and are holding public reviews on the practice, while there have been calls in P.E.I. to do the same. In New Brunswick, where fracking is taking place, the province rolled out fracking regulations just over a year ago. However, the rules did nothing to stop protests from occurring in Kent County when SWN Resources Canada conducted testing during the summer and fall of 2013 as it mapped shale deposits in this area north of Moncton.
For companies looking to strike it rich in Atlantic Canada by coaxing oil and natural gas out of the region’s tight rocks, and for governments keen on the jobs and revenue this activity could provide, the furor over fracking presents them with a problem that has no easy solution: how to gain a social licence that allows fracking to take place.
Barry Munro, national oil and gas leader for consultancy firm EY Canada, says he has no silver bullet for companies looking to beat back public resistance to fracking. “If I had a formula for how it all would work, I’d be able to bottle and sell it pretty well,” Munro jokes over the phone from his Calgary office. What he does know is that the problem isn’t going away. The low hanging fruit is gone in North America and companies are turning to unconventional resources that were once thought too diffi cult to extract to keep the oil and natural gas flowing.
Doing so often requires fracking. To see the impact the technology has had, one need look no further than the Bakken formation in North Dakota and Montana. In 2007, production in this shale oil basin was below 200,000 barrels per day, according to the U.S. Energy Information Administration. But the widespread use of fracking has transformed the basin. The EIA reported that production in the Bakken was expected to eclipse the 1 million bpd mark in January.
New Brunswick is no Bakken, yet there are approximately 30 operating natural gas wells in the province and all of them have been fracked. And companies like SWN Resources Canada and Halifax-based Corridor Resources Inc. have exploration plans that would see more fracking occur in New Brunswick. The province’s Energy and Mines Minister Craig Leonard says the potential for more fracking in the province caused his government to develop the fracking rules. “What we realized is that to ensure this industry moves forward, it had to be extremely well-regulated,” Leonard says.
Munro says fracking regulations, no matter how stringent they might be, are no longer enough to give oil and gas companies their social licence to operate. That’s certainly the conclusion many would take from the experience of SWN Resources in New Brunswick. Protesters repeatedly disrupted the work SWN Resources did in Kent County in 2013, despite the fact the province had its new fracking regulations in place and no drilling was taking place. Munro says to win the hearts and minds of the public on the issue of fracking, companies have to focus on more than following regulations; they have to provide non-stop education to stakeholders.
“The challenge in Atlantic Canada is the companies who are trying to advance the resource and develop it are mostly junior companies who are capital constrained and don’t have all the resources to take on the task of education,” Munro says.
That means governments have to work with these smaller companies to help do some of the heavy lifting on the education front, Munro says. But that can put governments in a difficult situation, as they have to be careful they aren’t seen by the public as favouring the oil and gas industry.
Despite that danger, Minister Leonard says the New Brunswick government recognizes it needs to do more to educate its residents about fracking and get the message out about how the practice is regulated in the province. “The opposition is using all avenues of social media and it’s very well organized,” Leonard says. “We have to be more active to talk about the benefits this industry can bring and be more fact-based on why the industry is safe and why we should move forward with it.”
Back at the head office of Shoal Point in Vancouver, company CEO Mark Jarvis is waiting for the Newfoundland and Labrador government to show similar resolve amidst growing public awareness, and uneasiness, in that province around the fracking issue. “If you look at the science with the blinkers off, fracking is not a bad thing,” he says. “We’re just hoping the politicians get things figured out.”