Pembina Institute Report on Shale gas in British Columbia

(BY HUGO)

The Pembina Institute has published a report authored by Karen Campbell and Matt Horne, and titled: Shale Gas in British Columbia: Risks to B.C.’s water resources.

The report, which refers to developments in Québec on a number of issues, makes a series of recommendations that can be summarized as follows:

1. Integrate water withdrawals for energy production in basin plans that include all other uses;

2. Provide timely, regularly updated and easily accessed public information on all water allocations, actual water withdrawals under permits, licences or other means, actual water uses and flowback water;

3. Require water licences for all ground water withdrawals;

4. Place licensing powers and oversight for all water takings within a single B.C. ministry;

5. Require companies to publicly disclose chemicals and additives used in hydraulic fracturing;

6. Undertake an independent audit of oil and gas water use in B.C. to assess the accuracy of company reporting;

7. Undertake improved public mapping of groundwater to allow for informed environmental assessment of oil and gas exploration and production;

8. Ensure transparent and comprehensive compliance and enforcement including automatic prosecution for serious overdue deficiencies;

9. Review and strengthen requirements for drilling, hydraulic fracturing and water storage and disposal as well as the liability of producers in case of contamination.

Financial risks in water utilities: Report from Ceres

(BY HUGO)

A new report authored by Sharlene Leurig and titled «The Ripple Effect: Water Risk in the Municipal Bond Market» was published by Ceres last week.

The report studies water scarcity risks for public water and power utilities in the U.S.A and details the related financial risks. This is a very interesting read. Particularly refreshing is the section on why the model for assessing risks related to power utilities may be wrong (see p.41-42 and Annex C). You don't see such an admission often, but it is entierly consistent with the original intent: obtain the most accurate risk assessment possible rather than portray an abstract model as infallible.

Québec water case law 12: The «sleeping giant» v. hydroelectric development?

(BY HUGO)

Uashaunnuat (Innus de Uashat et de Mani-Utenam) v. Québec (General Attorney) (in French) is an interlocutory judgement rejecting demands for third party intervention in an action by First Nation Communities against Hydro-Québec as well as the provincial and federal governments.

The interlocutory jugement is mostly irrelevant from a water management perspective. However, the merits of the case could shed an interesting light on the impact of natives rights, which have often been collectively described as the «sleeping giant» of Canadian water law, on a major river derivation project for hydropower generation (La Romaine River near Havre-Saint Pierre in Minganie).

Further to the authorisation of the hydropower development project, the Plaintiffs globally argue on the merits that they possess native titles and ancestral rights on the relevant territory, that the provincial and federal governments have failed to respect their fiduciary duties towards the First Nations, and that the various authorisations for the project under federal and provincial legislations for environment protection are null and void.

This is one to follow...

Conference: Shale gas development and water protection in Canada

(BY HUGO)

The Munk School of Global Affairs convenes a conference on water protection in the context of shale gas development.

The conference, titled «Fracture Lines: Will Canada's Water be Protected in the Rush to Develop Shale Gas?», will be held on 14 October 2010 at the University of Toronto. A draft programme is available here.

This is very interesting and timely given the current rush to develop shale gas in Canada. In particular, such developments raise concerns in Québec, where private interests and the government appear to have decided that shale gas exploitation is urgent and necessary. A recent opinion letter in Le Devoir (in French) identifies the social and environmental issues related to this subject in Québec.

Interestingly, a representative of the Québec ministry for Sustainable Development and the Environment will be among the plethora of industry representatives speaking at the Munk Conference.

UPDATE: As possible points of discussion for the conference panels on «statutory authority and regulatory preparedness» and «legal and liability issues», Byard Duncan reports on Alternet that gas companies drilling in Pennsylvania have committed nearly 1,500 environmental violations in just two years, while the Environmental Working Group reports that fracking companies might illegally inject diesel underground.

Deluge of reports on water management issues in Canada

(BY HUGO)

Three significant reports have been published last week on water management issues in Canada.

Firstly, the National Round Table on the Environment and the Economy released «Changing Currents: Water Sustainability and the Future of Canada’s Natural Resource Sectors» (NRTEE Report). The NRTEE Report is one of the outputs of a two year research program designed to address the following questions: With development of the natural resource sectors on the rise, does Canada have enough water to support economic growth while maintaining the health of the country’s ecosystems? And is Canada in a position to sustainably manage its water resources for future generations?

The NRTEE Report aims at giving an overview of water resources status in Canada as well as identifying the key water issues for natural resources exploitation. The Report identifies four water sustainability issues of national importance: 1) water governance and management; 2) the impact of climate change; 3) the water-energy nexus; 4) public participation.

The NRTEE Report recognises that watersheds deliver ecosystem services to society that, when valued economically, often far exceed the value of water allocated for direct anthropogenic uses. Conventional financial markets do not capture the value of ecosystem services, yet the value provided to society by freshwater cannot be underestimated. In regions where ecosystems are severely degraded, the economic costs associated with lost ecosystem services and efforts to restore them are considerable and can far outweigh benefits of other water uses. The Report then determines that the attempts to value ecosystem benefits are generally at the experimental stage and necessarily imperfect and site-specific. Although this is not stated in the Report, these considerations could be argued to favour prevention and precaution in approaching any projects altering water resources status.

With respect to water governance and management, the NRTEE Report finds that water policies and regulations in Canada are burdensome and complex due to the jurisdictional division of powers between the federal and provincial governments and due to the fact that provinces also delegate some of their authority to municipalities. The Report recognises that water management in Canada has traditionally been achieved through regulatory and legislative tools, but a move toward a broader suite of policy tools for water management is needed in order to enable a more flexible and adaptive policy approach acknowledging regional and local particularities. The fragmentation of water management will require collaborative water governance models which will succeed only if a number of conditions are met:

«• they focus on a clear scope and clear outcomes;
• the right people are brought together, with the right convener;
• participants agree to fully get engaged and there is real commitment to the process;
• clear roles are identified for participants;
• the processes foster shared ownership and accountability; and
• an ongoing dialogue is built.»

Finally, the NRTEE Report stresses in various occasions the importance of alternatives to regulation for water management. The potential of markets appears to attract most of the interest in this respect. This is a notable confusion in an otherwise impressively researched and balanced report. Indeed, markets exist only through regulation. Property rights that are generally considered the essential building blocks of markets have often materialised through expansive frameworks constituting the foundations of legal regimes in Western jurisdictions. In other words, markets cannot be presented as an alternative to regulatory approaches, their very existence depends on regulation.

Secondly, the International Joint Commission Great Lakes Science Advisory Board released «Groundwater in the Great Lakes Basin» (IJC Report). The IJC Report is a fantastic source of data regarding groundwater in the Great Lakes basin. It conveys the enormous importance of groundwater to the Great Lakes Basin:

«It is estimated that there is as much groundwater in the Great Lakes Basin as there is surface water in Lake Michigan. The groundwater contribution to the Great Lakes tributaries ranges from 48% in the Lake Erie basin to 79% in the Lake Michigan basin. Groundwater maintains stream flows and wetlands during dry periods, supporting significant ecosystem functions. Groundwater is an important source of drinking water in the Great Lakes Basin. 8.2 million people, 82% of the rural population, rely on groundwater for their drinking water. Groundwater also provides 43% of agricultural water and 14% (and increasing) of industrial water in the basin.» (p.1)

The IJC Report consists in a short summary of findings and recommendations complemented by a series of 13 appendices on the most pressing issues regarding groundwater, ranging from the impact of chemical contaminants and pathogens to conveyance losses and applicable laws. Among the many points made in the Report are the following:

- the Great Lakes cannot be protected without protecting the groundwater resources in the basin, both at the quantitative and qualitative levels.

- with respect to volumes, even relatively small groundwater withdrawals have important repercussions. For example, withdrawals in the Chicago area shift the Great Lakes drainage divide as groundwater pumped from the basin is released in the Mississippi watershed after usage.

- with respect to quality, fecal pollution and microbial contamination is one of the most frequently identified threats to Great Lakes groundwaters. Pathogens enter the basin ecosystem from sludge, manure and biosolids land spreading, leaking sewer infrastructure and on-site waste water systems, landfills, cemeteries, injection wells, and waste and stormwater lagoons, all of which can impact groundwater quality.

- An impressive 440 273 229 m³/year of water is lost underground every year in conveyance through outdated and broken sewers and main water lines, notably resulting in severe groundwater contamination. This corresponds to economic losses amounting to US $218 306 566 per year. Montréal loses approximately 40% of its total produced water output, which equals 119 858 800 m³ per year at a cost of approximately $ 44 347 756.

Thirdly, the Fraser Institute has released a new report, «Making Waves: Examining the Case for Sustainable Water Exports from Canada» (Fraser Report). The Fraser Institute emulates the right-wing Montréal Economic Institute and argues in favour of water exports. The Fraser Report posits that Canada has so much water that it can be exported. It considers that unallocated environmental water is lost because it is left unused (p.35). Also, water should notably be explored based on the fact that «History is replete with examples of the superiority of trade to optimize resource allocation. Indeed, market pricing is the most powerful means of equalizing demand and supply.» (p.12; see also 36-37)

The central assertions to the Fraser Report are of dubious value. With respect to the over-abundance of water in Canada, both the NRTEE and IJC Reports reflect the fact that there is a looming water crisis in Canada. With respect to the water supposedly lost because left unused in the environment, the Fraser Report contradicts a very strong consensus in the scientific community to the effect that all characteristics of natural hydrological regimes are essential to preserve freshwater ecosystems (the natural flow paradigm). There is no such thing as lost or excess water. The myth of market efficiency is also easily dispelled following the reasoning of Ronald Coase: in situations of imperfect information, as is obviously the case with respect to water resources in Canada, markets fail.

It is interesting to see that Circle of Blue has decided to give air time to the Fraser Report rather than to the other two reports. This is the type of choice in news coverage that sets the terms for public and political debate.

Water Energy Nexus: Spectrum IEEE's take

(BY HUGO)

Thanks to collegue BO, here is a link to a Spectrum IEEE special report on the water energy nexus. It provides a nice summary overview of various aspects of the clash between increases in water demand and energy demand given that each is a production input for the other.

Water Energy Nexus: Water and Mining Conference

(BY HUGO)

On 9-11 June 2010, the second International Congress on Water Management in the Mining Industry will take place in Santiago, Chile. The focus will be on water supply, efficient water use and effluent management in the mining industry:

«In the last few years due to increasing scarcity, on one hand, and the ever growing demand, on the other, important efforts have been undertaken by the mining industry to improve the efficient use of this valuable resource.

Between 2000 and 2008 the average water consumption in the Chilean copper industry decreased from 1.1 m3 to 0.79 m3 of fresh water for each ton of ore processed by flotation, and from 0.3 m3/t to around 0.13 m3/t of ore used in hydrometallurgical processes.»

The programme is available here.

The good side of the water energy nexus: Viruses produce hydrogene from water?

(BY HUGO)

A scientifc news flash on a new way to produce energy with viruses and water:

«A team of MIT researchers has found a novel way to mimic the process by which plants use the power of sunlight to split water and make chemical fuel to power their growth. In this case, the team used a modified virus as a kind of biological scaffold that can assemble the nanoscale components needed to split a water molecule into hydrogen and oxygen atoms. Splitting water is one way to solve the basic problem of solar energy: It's only available when the sun shines. By using sunlight to make hydrogen from water, the hydrogen can then be stored and used at any time to generate electricity using a fuel cell, or to make liquid fuels (or be used directly) for cars and trucks.»

The process is not operational yet, as hydrogen atoms are split into constituent protons and electrons. The team still has to find a way to reassemble them into a hydrogen atom.

Construction of the Roghun power station in Tajikistan: The Water-Energy Nexus in Central Asia

(BY HUGO)

A recent article by Murodbek Laldjebaev in the International Journal of Water Resources Development under the title «The Water-Energy Puzzle in Central Asia: The Tajikistan Perspective», explores the issues related to water scarcity and energy shortages from a Tajikistan perspective.

The problem stems in part from extensive irrigation in the summer which requires dam releases to sustain low flows and agriculture during the water scarce season. In turn, this prevents water saving in hydropower reservoirs to produce energy when needed during the cold winter.

Interestingly according to the article, unilateral action from upstream Tajikistan to start building the Roghun power station appears to pave the way for cooperation between basin countries in Central Asia. Laldjebaev concludes that:

«The short-term recommendation for this option, therefore, is to maintain an emphasis on the construction of Roghun HPS. In the long-term, however, Tajikistan should not place high stakes on the construction and in fact it should be prepared to abandon the project in case the social, environmental, and financial costs outweigh the potential benefits.»

Water rights as constraint on nuclear plant project in Utah

(BY HUGO)

An article by Rachel Waldholz from High Coutry News, «Water fallout: Utah's first nuclear plant won't float without water rights», illustrates the growing competition for scarce water resources resulting from growing energy demand.

Contrary to the water quality challenges raised by hydraulic fracturing on the East Coast, the issue in this instance is quantitative apportionment between users.

The developers of a projected nuclear power plant need to secure the water rights for the use of 50,000 acre-feet/year - enough water to supply up to 100,000 homes - to cool the reactors of the proposed 3,000 megawatt plant, which would produce enough electricity to power nearly 3 million households.

As Rachel Waldholz writes, securing these water rights in a prior appropriation jurisdiction for nuclear energy production would result in the following situation:

«If more water is taken from the river, the agencies may not be able to keep stream flow high enough to protect several species of rare and endangered fish, says Wayne Pullan of BuRec's Provo office.

And if the Green River drops, Blue Castle [the project developer] would have early rights to what remains: While San Juan's rights are junior (2001), Kane County has 1964 rights to 29,600 acre-feet. That places it ahead of many rights holders, including the BuRec's Central Utah Project, which supplies water to much of the Wasatch Front. Pullan says that in a drought, calls from such senior rights could short the project's users -- including Salt Lake City.

This is part of a much larger tangle. If Utah develops just 360,000 more acre-feet of Colorado Basin water, it will hit its limit (1.4 million acre-feet) under the Colorado River Compact. But it has handed out paper rights to an additional 1.1 million acre-feet. All those rights holders, like Kane County, still have the right to develop. But Utah will have no excess water to supply them, and so water will be rationed by priority date across the state. In that context, Blue Castle's request is nothing to sniff at -- it's a seventh of the water Utah has left.

At times, the Blue Castle proposal looks like a water right in search of a project. Kane County has five more years to prove it is putting its water rights to "beneficial use," or risk forfeiting them, according to Mike Noel, executive director of the Kane County Water Conservancy District.»

This situation provides an illustration for many prominent legal issues in current water management:

- How to make more flexible legal frameworks for apportionment between users that require stable and secure access to water in the context of growing hydrological variability and uncertainty due to drought or climate change? In this context, the inter-state allocation of fixed quantities of water through Compacts or Supreme Court adjudications appears very rigid and difficult to adapt to a constantly changing environment. Another related question is the chronological hierarchy of water rights under prior appropriation: is it really appropriate to favour energy production over drinking water provision in case of drought simply because the water right used for energy production was created before? Regulated riparianism offers an alternative whereby water rights can be prioritised in statutory provisions according to the type of use regardless of the moment the rights were created;

- How to protect environmental flows and the components of aquatic ecosystems in hydrological systems characterised by scarcity and «full or close to full» water allocation? In this respect, prior appropriation has been abundantly described in legal doctrine as a disincentive to environmental protection due to the beneficial use requirement which can be seen at work here.

Environmental flows in Alberta (Canada) and tar sands exploitation

(BY HUGO)

In the last 10 years, Alberta has experienced an economic boom based on tar sand exploitation. The main tar sand deposits currently exploited are situated in Northern Alberta, in the Athabaska river basin, which is tributary to the Mackenzie river, one of the last great North American rivers left in a relatively pristine state (here is a map of the North American watersheds).

Tar sand exploitation consumes large volumes of water. To extract 1 oil barrel from the sands, a water input of 2 to 4.5 barrels is required depending on the method. The used water is loaded with toxic contaminants and almost all of it ends up in tailing ponds.

Alberta has defined a framework that indicates how much water tar sand companies can remove from the Athabasca River in order to foster economic development while ensuring healthy aquatic ecosystems in conformity with the provincial water strategy (see p.10-11).

Recently, the Cumulative Environmental Management Association (CEMA) has released a report developing recommendations for a Phase 2 Water Management Framework that will prescribe when and how much water can be withdrawn from the lower Athabasca river for cumulative tar sand exploitation. According to the report summary:

«Key lessons and principles that emerged from this exploration, and are strongly recommended to form the basis of the final water management framework, include:

• Water withdrawal rules should generally be more restrictive as flows decrease.

• Although there is a need to provide instream flow protection throughout the entire year, there should be a hierarchy of protection across seasonal time periods: 1)midwinter, 2) late winter/early spring, 3) fall/early winter, and 4) summer.

• A specified EBF threshold is a means of providing increased protection during low flow events and refinements to its application on the Lower Athabasca River should continue to be explored.

• Mitigation using off-stream storage (or other equivalent approach to mitigation) is a necessary means of facilitating an effective water management framework.»

This report has been received with some reservations. The Prairie Chapter of the Sierra Club of Canada has set up the Got Thirst? Campaign that warns of the perils of water resources over-exploitation.

Water Energy regulation by international law in offshore operations

(BY HUGO)

This link is to a conference held in Edinburgh on the global challenges of effective water management in the oil field.

The role of the regulator was stressed in reservoir preparation to maximize economic recovery factors and in compliance with environmental laws.

With respect to the regulation of marine discharges of produced water, Michael Hannan of the UK department of Energy and Climate Change «encouraged operators to keep abreast of future risk-based discharges limits being proposed by OSPAR - the Northeast Atlantic Convention that sets limits for marine discharges.»

This appears to constitute another example of regulation translating environmental externality from water use into internalised business costs for energy operators.

The CEPMLP could be interested in this.

Article on Water Energy Nexus

(BY HUGO)

A recent article by Professors Robert Abrams and Noah Hall to be published in the Natural Resources Journal and available online here, gives an overview of issues related to the Water Energy Nexus in the USA.

Whereas most peer-reviewed articles in law on the water energy nexus up to now seem to examine only particular issues such as desalination or coal bed methane extraction, this article provides a very thorough study of (and an excellent source of references on) most of the issues related to increased competion for water resources in a context where energy demand increase requires more water as a productive input.

Particularly interesting from a legal perspective is the example of oil shale exploitation in the Colorado basin (p.40-45).

It also provides reflections on the emerging concept of water security (see p.16-29) which ties to current research by Professors Patricia Wouters and Sergueï Vinogradov as well as Bjorn-Oliver Magsig to be published in the Yearbook of International Environmental Law.

Water rights 101 for gas producers

(BY HUGO)

Using the focus on hydraulic fracturing to expand on the idea of water as a limiting constraint in energy production...

According to the Congress & Law Blog, "gas producers must arrange to procure the large volumes of water required for hydraulic fracturing in advance of their drilling and development activity". Congress & Law then proceeds to detail the law applicable for the acquisition of water rights in the Eastern USA (globally riparian - Professor Tarlock is even referenced!).

This is a clear example of the issues gathered under the idea of Water Energy Nexus, where increases in demand for energy increase demand for water, and increases in demand for water increase demand for energy, thereby doubling the acceleration towards unsustainable levels of natural resources exploitation.

Interestingly, water scarcity does not seem to be a physical constraint on energy production in the relatively water abundant Eastern USA. However, the legal framework determining access to water acts as the constraint on productive inputs.

The water energy nexus is still under the spotlight

(BY HUGO)

Just a quick post on the issue of hydraulic fracturing and contamination of underground drinking water already explored in a previous post. This article shows the potential repercussions of the internalisation of pollution costs on energy and gas producers. If the Amercian Congress regulates to protect groundwater, a merger between energy producers might be threathened. However, Congress is unlikely to act, as quoted analysts report...

HRBA to gas?

(BY HUGO)

Access to water or access to gas. Which one do you choose?

In other words, is it better to protect access to water for domestic use or to allow gas extraction companies to proceed with hydraulic fracturing?

The choice is not binary, but hydraulic fracturing raises mainy issues in water management because of the water pollution it creates. Peter Gleick defines hydraulic fracturing as follows:

«Hydraulic fracturing, or fracking, is a technique that releases natural gas trapped in undergound shale formations by injecting water, chemicals, and so "frack" the rock structures and release the gas.»

This extraction technique is currently under the spotlight because it pollutes groundwater. The New York Time reports that pollution from gas companies exploiting America's biggest shale deposit (the Marcellus shale which stretches from Virginia to New York in Eastern U.S.A.) could critically damage supplies of water used for drinking and for agriculture.

This example is interesting to keep in mind when discussing the Human Rights-Based Approach (HRBA) to water. This management approach purports that access to water for domestic uses must be prioritised over other water uses.

Hydraulic fracturing appears to run contrary to the aims of the HRBA: the gas companies' use of water for extraction is prioritised over domestic and agricultural uses. This is the result of a political choice made by the American Congress. The New York Time reports that:

«In a 2004 study, the E.P.A. decided that hydraulic fracturing was essentially harmless. Critics said the analysis was politically motivated, but it was cited the following year when the Republican-led Congress removed hydraulic fracturing from any regulation under the Safe Drinking Water Act.»

Hydrogeological complexity of groundwater dynamics blur causality between pollution by gas extraction and contamination of domestic water supply. Can a plaintiff with a contaminated well file an action with any chance of success?

If yes, is reparation sufficient or prevention through tighter regulatory controls better? But then, is preventive regulation adequate or useful at all to protect water resources? Another article from the New York Time raises worrying issues on this subject...

Finally, could the user-pays principle inform the situation? Legal frameworks for drinking water usually hold water providers responsible for ensuring water quality to required standards. Should municipalities bear the costs of decontamination from gas extraction chemical contaminants? Or should the polluters pay for decontamination of the groundwater sources?