NB proposes to fine companies up to $1M if they break energy rules

New Brunswick is proposing to fine energy companies up to $1 million if they violate new rules governing the province’s oil and natural gas industry.

The maximum existing fine is $10,400.

That is one of 116 recommendations contained in a discussion paper, Responsible Environmental Management of Oil and Gas Activities in New Brunswick, released today by the provincial government.

The recommendations address a number of issues including well design, royalties and protection of water supplies.

The new rules related to oil and gas include:

● enhanced casing and cementing standards for oil and gas wells;

● assessment of geological containment prior to hydraulic fracturing;

● pressure testing of equipment prior to hydraulic fracturing;

● mandatory waste management plans that will require the chemical analysis of all wastes and approval of
disposal locations before wastes leave the site;

● requiring the use of closed-loop—no open pits—systems for handling drill fluid, and the use of closed
containers for receiving backflow water;

● requiring petroleum operators to follow waste management guidelines that address such issues as
flowback water and naturally occurring radioactive materials;

● requiring petroleum operators to implement measures to prevent spills and leaks, and ensure notification
and response protocols are in place should spills and leaks occur;

● imposing chemical management requirements for fracture fluids and other chemicals; and

● setting standards for storage tanks and containers, including mandatory leak detection systems and
secondary containment.

The paper comes as a number of companies are exploring for shale gas in the province despite a public backlash to fracking.

That process involves the use of high volumes of water and chemicals pumped into a well to fracture layers of rock to release pockets of shale gas.

The recommendations call for a greater share of royalties for the province and landowners where natural gas and oil wells would be located. The government’s current royalties of 10 per cent would be maintained for natural gas but a 40 per cent economic profit royalty would be introduced from a resource investment.

“The current 10 per cent royalty value ensures a minimum payment to the province but, on its own, does not capture the true value of the resource as prices increase,” N.B.’s Natural Resources Minister, Bruce Northrup, said.

The recommendations will be put out for 60 days of public input before coming back to the legislature this fall.