Natural gas giant Encana Corp. is stepping up an unusually public battle with the U.S. Environmental Protection Agency over water-contamination findings that threaten to fuel opposition to the industry's controversial drilling methods.
The Calgary-based natural gas giant hosted an hour-long presentation Tuesday, detailing errors it believes the EPA made in its study concluding natural gas wells in Wyoming controlled by Encana contaminated the area's water. Encana's criticism ranged from EPA lab results to methodology and the agency's understanding of geology and hydrology.
"It is our belief the EPA made critical mistakes and misjudgments in almost every step in the process – from the way it designed the study, to the way it drilled and completed its wells, to the way it collected and interpreted the data, and to its decision to release a preliminary draft report without independent third-party review," said David Stewart, the environment, health and safety head for Encana's Wyoming operations.
Canadian oil and gas companies rarely voice their opposition to regulators so openly and bluntly, given the power the agencies wield over their operations. But experts say Encana is making a worthwhile gamble, given what's at stake.
The fight centres on an environmental issue increasingly facing the natural gas industry. The EPA is critical of hydraulic fracturing, or fracking, techniques used to extract natural gas from tight geological formations in its Wyoming gas fields. The method involves blasting water, sand, and chemicals into wells in order to allow gas to escape. Fracking has made it possible for energy companies to access vast resources of oil and gas that were previously beyond reach.
Critics argue groundwater can be contaminated by the process, and the EPA on Dec. 8 said its research determined wells near Pavillion, Wyo., have been dirtied by drilling activity. The regulator drilled its own wells for the study. The problems, however, may have predated Encana's ownership of the natural gas field, exist naturally, or were caused by the EPA's own work, Encana says.
Encana discussed its concerns with the EPA prior to the report's release, but the gas company's perspective was not included, according to executives on the media call. Encana is no longer discussing the report with the EPA, and will instead further refute the report's claims as part of the public comment process, the executives said.
The EPA is not backing down from its analysis. Catherine Milbourn, a spokesperson for the EPA, in an e-mail said the "EPA and its contractor used stringent standards for the installation and development of the two monitoring wells, practices that addressed the possibility of influencing sampling results." The EPA also defended its decision to release its draft findings. "To ensure we have the best science in place, we released the draft analysis for public review and for review by independent scientists and experts before it is finalized." The EPA is also planning a broader, national study on fracking and water.
Encana, North America's second-largest natural gas company, has more leeway to speak out against the regulator because the battle is taking place south of the border, experts said.
"It is less unusual in the U.S. than it is in Canada to air your differences of opinion [publicly on]a very important issue for the industry," said Dennis Mahony, head of Torys LLP's environmental, health and safety practice. "It is more the culture in the U.S."
Because the EPA chose to release its report on such a sensitive topic in such a high-profile way, Encana is wise to debate the regulator publicly, Mr. Mahony said. "From Encana's perspective, this is a legitimate effort to balance the debate."
Michal Moore, a professor of energy economics at The School of Public Policy at the University of Calgary, and also a visiting fellow at New York's Cornell University, said now that the Republicans wield a great deal of power in Washington, the EPA is weak. Now is the time for its opponents to strike, he said.
"They [the EPA]don't have a champion right now, and so people can yell at them right now because they can, and not worry about repercussions," he said.