Natural gas is burned off in North Dakota. The recovery of solution gas, which is gas separated from oil or bitumen production, fell to 94.5 per cent in 2011 from a high of 96.3 per cent in 2005.Nathan VanderKlippe/The Globe and Mail
Canada's oil and gas industry is burning off an increasing amount of natural gas into the atmosphere, a controversial practice known as flaring, driven by a drop in natural gas prices and an increase in unconventional and remote drilling.
After years of making progress to reduce flaring, the oil and gas industry acknowledges it has been backsliding and needs to capture more of the gas for both economic and environmental reasons.
The recognition comes as environmental groups and people living near flaring sites are calling on the industry, government and regulators to take more action, given the potential health and environmental affects of releasing chemicals, greenhouse gases and particles during open-flame burning.
"We've seen some migration back to additional flaring," says David Pryce, vice-president of operations at the Canadian Association of Petroleum Producers.
"We know we have a performance expectation we have to meet … Industry is trying to strike the balance of enabling the site to be produced and addressing the concerns that might be there, as well."
Flaring during oil and gas extraction is done to dispose of natural gas released with crude oil and bitumen that can't be processed or sold. Unlike oil, which can be stored in tanks, natural gas has to be piped immediately to a processing facility.
Companies prefer to conserve the gas and sell it, unless it's considered uneconomic. Lower gas prices, as well as an increase in drilling in remote areas that don't have connections to pipelines, are fuelling an increase in flaring in Alberta, the heart of Canada's oil and gas industry.
The recovery of solution gas, which is gas separated from oil or bitumen production, fell to 94.5 per cent in 2011 from a high of 96.3 per cent in 2005, according to the most recent data from the Alberta Energy Regulator (AER). That's a reversal in the trend between 1996 until 2005, when recovery rates grew from 92 per cent.
"In time of high labour and service costs and relatively low gas prices, the economic viability of conservation is more challenging," the AER said in its report.
Gas prices have fallen to about $3.50 (U.S) per one million British thermal units from more than $10 in 2008, alongside a rise in new production areas without existing pipeline networks.
B.C.'s solution gas recovery rates are increasing, but the overall volumes are significantly lower than in Alberta. Saskatchewan did not provide numbers.
The rise in flaring in Alberta comes despite industry efforts, through a group known as the Clean Air Strategic Alliance (CASA), to cut back on flaring as well as venting, which is the direct release of natural gas into the atmosphere. CASA, which includes industry, environmental groups, government and other stakeholders, came up with a flaring management framework and recommendations to address the impact of flaring and venting.
Chris Severson-Baker, managing director of the Pembina Institute, which was part of the CASA process, says new bitumen production, as well as hydraulic fracturing techniques known as "fracking," are to blame for the rise in flaring.
He points to a cluster of flaring and venting to the north and west of Calgary, where dozens of wells have sprung up in recent years, alongside public concerns.
"The technology exists to conserve all of the solution gas that we are talking about there. We need a regulation that requires companies to use that technology in all but maybe a handful of cases," Mr. Severson-Baker says.
What is more, he says, the economic tests used to measure viability need to take into consideration not just the price of gas, but also the full economics of the well.
"In either case, the result would virtually eliminate flaring and venting from the oil and gas industry," Mr. Severson-Baker says.
"Not only has Alberta lost ground – but it is leading to public outcry in various corners of the province. One situation has led to an Alberta Energy Regulator public inquiry into emissions in the Three Creeks area of [northwest] Alberta. The health concerns near Calgary and Cochrane are growing rapidly," he says.
That includes a group of citizens near Lochend, Alta., 15 kilometres north of Cochrane, who have come together to raise awareness about what they say are health concerns resulting from the increase in flaring over the past couple of years.
Local residents are reporting an increase in hair loss, skin rashes and respiratory issues such as coughing. They are also concerned about the potential impact on their water.
"The health impacts started when the flaring started," says Dan Thomas, a Lochend resident, former engineer with such companies as Shell, and a member of the group called Cochrane Area Under Siege – Coalition (CAUS-C).
"From our perspective, it has been totally out of control … the increased density of wells is completely unacceptable."
The group includes doctors, lawyers, dentists and ranchers who are pressing local oil and gas companies to monitor air quality and pressing government and regulators to address their concerns.
Mr. Thomas said the group is using the regulatory process to try to slow down the growth in well development as it tries to gain attention to what is says are the negative impacts of flaring as a result of increased drilling.