Burman University’s Herr Lecture Series returned on Oct. 8 with a talk by Andrew Nikiforuk, an investigative journalist who has won seven National Magazine Awards and the Governor General’s Award For Non-Fiction.
Since 2004, Nikiforuk has been investigating the fracking industry in Canada — particularly in Alberta and British Columbia.
Nikiforuk, who is an Albertan landowner, said his talk focuses on two primary messages: One being that the oil and gas fracking industry has created a financial mess, particularly in Alberta, and the second issue being that fluid-injection technology like fracking has created an environmental mess which includes increasing seismic activity and other environmental impacts.
Nikiforuk said that fracking has created a financial mess for the oil and gas industry.
“It has driven down the price of both oil and gas; and at the same time the technology is high cost,” he said.
“Most companies that have gone into fracking are short of cash, highly indebted and barely making a go of it.”
Nikiforuk says indebted fracking companies are a problem for municipalities and the province because they don’t pay the taxes they owe, they do not reclaim aging oil and gas wells and they do not pay their service leases to landowners. This has resulted in over $260 billion in liability for the province of Alberta.
“They are a drain on rural communities,” he said.
Nikiforuk said that no Albertan government, including the PC, NDP and UCP governments of the past have had or have a strategy for this issue and the current government has chosen to blame the issue of commodity prices on the federal government and environmental groups.
Nikiforuk said it is human nature to find a scapegoat, but the liability issue will affect everyone.
“$260 billion worth of liabilities is going to be dumped on taxpayers and that should not be happening. The regulator said that wouldn’t happen, well I am sorry guys — it is happening big time. The regulator didn’t do its job,” he said.
Nikiforuk’s second message was on the relationship between fracking technology and the creation of earthquakes — which is extensive.
”About 80 per cent of the earthquakes in Alberta today are the product of fluid-injection in one form or another, whether that is wastewater disposal, acid gas injection or hydraulic fracturing,” Nikiforuk said.
The Province has recently instituted a traffic light system, which is supposed to prevent large-scale earthquakes and hold companies responsible, but Nikiforuk said this not enough due to the unpredictable nature of seismic activity.
”You can’t control the timing of these things and no one has a clue where all the faults are. This is a high-risk activity,” he said.
Ultimately, Nikiforuk said the health, environmental and community costs of fracking are not worth subsidizing an industry.
“It is more expensive to extract this resource than the market is paying for it and that is a problem. In a rational market place, you would stop producing but nobody stopped because they need to generate cash to keep themselves going,” he said.
Nikiforuk said the industry generally pays very little in royalties, gets their water for free and are heavily subsidized. He said the province needs to recognize that this is a symptom of a new volatile era of oil and gas.
“We need to recognize we have a massive problem with suspended and orphaned wells. We need to put people back to work addressing that liability rather than digging the hole bigger financially and environmentally,” he said.
Nikiforuk added that the liability of this issue affects us all, but is particularly being imposed on landowners.
“They are saying this system sucks, the regulator doesn’t represent us, we aren’t being paid for service leases; water is being drained from our community and municipal taxes aren’t being paid,” he said.
“This industry is a liability for rural communities in this province and the Province needs to respond and see that the big picture does not look good.”
Nikiforuk said there are still things Albertans can do, including applying pressure on their municipal and provincial representatives.
“They need to stop being in a state of denial about where the industry is,” he said. “The industry is mature in this province, it is highly indebted and it is becoming increasingly unprofitable.
“You will not change that by subsidizing the industry. You will create a disaster for the province.”