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PURPOSE: The liabilities involved in investing in Summit Fracturing, a Canadian hydraulic

fracturing company.
AUTHOR: Rebeca Deslauriers
EMAIL: deslaur3@myumanitoba.ca
PROJECT BACKGROUND:
Summit Fracturing is a hydraulic fracturing company based out of Calgary, Alberta,
Canada. Summit Fracturing is contracted out, throughout Canada and the United States, and is
looking to start hydraulic fracturing in the Duvernay Lands. The land Summit Fracturing is
looking to buy has a river flowing on the Eastern perimeter, and has several farms on it. Summit
Fracturing has made contact with the farmers about the development.
Hydraulic fracturing is a process of injecting a mixture of water, chemicals, and particles
underground at high pressure to create fractures in the ground through which natural gas flows for
collection. Most of the fracturing mixture remains underground, but the waste-fluids that return to
the surface, often referred to as flowback, are typically stored in open pits or tanks at the well site
prior to disposal or re-use (Shedletzky, 2012).
Natural gas is often viewed as a favored energy option to coal or oil and as a source of jobs
and economic development to rural communities, but regulators and communities are growing
increasingly concerned about the environmental and health impacts of this process (Liroff, Fugere,
von Reusner, & Samuelrich, 2013). Liabilities associated with hydraulic fracturing include surface
and ground water pollution, release of methane- a potent global warming pollutant, and the health
and social impact to humans (Bigham, 2013).
LIABILITIES:
The development and regulation of oil and gas resources within a provinces boundaries
are under provincial jurisdiction.
1.0 The Potential for Surface and Groundwater Pollution
The actual fracturing process in shale formations typically occurs considerably below
potable water sources (Bigham, 2013). Nonetheless, a potential opportunity for leakage is
presented, as wells are generally drilled through or near drinking water aquifers and groundwater
sources (Liroff, Fugere, von Reusner, & Samuelrich, 2013). If the internal well barriers fail or
channels are created for migration of methane and other pollutants, leakage can occur (Liroff,
Fugere, von Reusner, & Samuelrich, 2013). Albertas Environmental Protection and
Enhancement Act (EPEA), under S.109(2), prevents a person from releasing into the environment
a substance that causes or may cause a significant adverse effect, and is subject to monetary
penalty (EPEA, R.S.A 2000, cE-12, S.109(2)).
After the fracturing process is completed, water mixed with chemicals and contaminants
return to the surface for storage, treatment, reuse, and disposal (Oza, 2011). Some contaminants
were added intentionally to aid the fracturing process and others are picked up along the way
from the geologic formation, such as minerals and naturally occurring radioactive materials (Oza,
2011). The high volume of water used combined with the toxic nature of some chemicals used in
the fracturing fluid, have raised numerous concerns surrounding the industrys impact on both
water availability and water quality (Oza, 2011).
Management of water risks at each stage of drilling and completion, encompassing access
to adequate supply of water, potential contamination of groundwater during the drilling process,
and the treatment and disposal of wastewater, is an increasingly controversial aspect of hydraulic
fracturing that is core for risk management concern at Summit Fracturing.
2.0 The Potential for Air Pollution
Natural gas leakage from improperly formed, damaged, or deteriorated cement seals is a
long-recognized yet unresolved problem that continues to challenge engineers (Liroff, Fugere,

Heim, Von Resuner & Samuelrich, 2013). There is potential to create pathways of contamination
that lead to an increase in greenhouse gas emissions. Fracking wells leak 40 to 60 percent more
methane than conventional natural gas wells (Fischetti, 2012). The methane flows up the well after
the rock formation first fractures, and some is released into the atmosphere before it can be
captured (Fischetti, 2012).
The Oil and Gas Conservation Act (OGCA) gives the Energy Resources Conservation
Board the ability to order an injunction to prevent further escapes of natural gas (Oil and Gas
Conservation Act. R.S.A. 2000, cO-6 s104), with the maximum penalty for an infringement being
$1,000 per day (Oil and Gas Conservation Act. R.S.A. 2000, cO-6 s.110). There is no override
clause in the OGCA, and it appears that a single act or omission can result in simultaneous
charges under several acts (Shedletzky, 2012); such as including a fine under s.109 of the EPEA, a
maximum penalty of $500,000 per day can be awarded if a substance with adverse effects is
unknowingly released into the environment (Environmental Protection and Enhancement Act,
R.S.A 2000 cE-12 s109). Section 41(1) of the OGCA states that if oil, gas, water or a substance
escapes from a well or any underground formation, the Regulator may take any means to prevent
or control the flow or escape (EPEA, R.S.A. 2000 cO-6 s41(1)).
3.0 Human Health and Social Impacts
The health and social impacts of hydraulic fracturing have not been well studied. As a
result of the rapid growth of the fracking industry, there are economic benefits but it may also
adversely affect community well-being (Boudet, Clarke, Bugden, Maibach, Roser-Renouf, &
Leiserowitz, 2013). Potential community impacts include health and safety issues related to truck
traffic and the sudden influx of a large temporary workforce (Liroff, Fugere, Heim, Von Resuner
& Samuelrich, 2013). Psychosocial impacts are related to physical stressors and the perceived
lack of trustworthiness of the industry and government (Boudet, Clarke, Bugden, Maibach, RoserRenouf, & Leiserowitz, 2013). Risks to quality of life may become significant due to land use,
water quality, air quality, and loss of rural serenity, leading to an injunction or fine under Common
Law, EPEA, and/or OGCA.
3.1 Reputational Risk
Social media videos of water from kitchen faucets on fire and contaminated, discolored
water containing methane and other chemicals attributed to fracturing operations are iconic
representations of public concern about water contamination (Boudet, Clarke, Bugden, Maibach,
Roser-Renouf, & Leiserowitz, 2013). This can lead to a bad reputation for the industry and
company, making it difficult to obtain both legal and social license to operate in some regions
(Boudet, Clarke, Bugden, Maibach, Roser-Renouf, & Leiserowitz, 2013).
CONCLUSION:
The risk of litigation is generally related to health effects and pollution. The Crown can
choose whether to prosecute a polluting company or give it a free pass, with little remedy or
compensation for concerned citizens, as long as a company takes all reasonable
precautions.(Shedletzky, 2012). If all protocols and procedures are followed then a due diligence
defense is open (EPEA, R.S.A 2000, cE-12, S.229). Although s.88.2(1) and s.135(1), requires a
security be provided or insurance be held, there is no specific regulation requiring that fracking
operators be capable of repaying significant environmental penalties (EPEA, R.S.A 2000, cE-12,
s.88.2(1), s.135(1)). Investors of a company responsible for an environmental contamination
event, are at risk of losing up to the full amount of their investment in the company if insurance
coverage is inadequate (Kamarshi, Kurtz, & Soulsby, 2012). Safety of humans and the
environment is a huge priority at Summit Fracturing.

REFERENCES
Bigham, R. Fracking features. Pollution Engineering, 45(6), 39-40. 2013. Web. 14 Sept. 2014.
<Http://search.proquest.com/docview/1372489198?accountid=14569>.
Boudet, H., Clarke, C., Bugden, D., Maibach, E., Roser-Renouf, C., and Leiserowitz, A.
"Fracking Controversy and Communication: Using National Survey Data to Understand
Public Perceptions of Hydraulic Fracturing." Science Direct. Energy Policy, 15 Nov. 2013.
Web. 14 Sept. 2014.
Fischetti, M. (2012). Fracking Would Emit Large Quantities of Greenhouse Gases. Scientific
American.
Government of Alberta. Environmental Protection and Enhancement Act. R.S.A 2000, cE-12.
Alberta Queens Printer. Edmonton.
Government of Alberta. Oil and Gas Conservation Act. R.S.A. 2000, cO-6. Alberta Queens
Printer. Edmonton.
Liroff, R., Fugere, D., Heim, S., Von Reusner, L., and Samuelrich, L. "The Transparency and Risk
in Hydraulic Fracturing Operations." Disclosing the Facts. As You Sow, 2013. Web. 14
Sept. 2014. <http://disclosingthefacts.org>.
Kamarshi, B., Kurtz, J., & Soulsby, R. (2012, June 21). Fracking: Considerations for risk
management and financing. Retrieved September 26, 2014, from
<http://www.milliman.com/insight/insurance/Fracking-Considerations-for-riskmanagement-and-financing/>.
Oza, M. "Shale Gas in Canada: An Overview." Environment Probe. Environment Probe, 1 Aug.
2011. Web. 14 Sept. 2014. <http://environment.probeinternational.org/2011/08/31/shalegas-in-canada-an-overview/>.
Shedletzky, A. "Holding Frackers Accountable for Groundwater Pollution: An Analysis of
Canadas Liability Regimes for Hydraulic Fracturing." Environment Probe. Environment
Probe, July 2012. Web. 14 Sept. 2014.
< http://environment.probeinternational.org/2012/07/30/holding-frackers-accountable-forgroundwater-pollution-an-analysis-of-canadas-liability-regimes-for-hydraulic-fracturing/>.

Briefing Note

Rebeca Deslauriers
7724921
ENVR 3160
Date Submitted: October 8, 2014
Submitted to: Leanne Shewchuk