May 10, 2013
A worker switches well heads at a natural gas hydraulic fracturing operation. Communities have a responsibility to protect themselves and a right to say no to fracking, says the Council of Canadians. Photograph by: Brennan Linsley , AP
The annual meeting of a small, local oil and gas company is probably not front-page news in a global energy hub like Alberta. It might get close if the firm has done something exceptional in the past year, something that distinguishes it from the pack — for better or worse.
Lone Pine Resources, which meets with shareholders in Calgary this week, surely meets that standard. Spoiler alert: it’s for the worse.
Lone Pine is one of many energy companies charging into Canada’s growing but controversial hydraulic fracturing (or fracking) business. It’s also one of several companies that were hoping to extract shale gas in Quebec before the province passed a moratorium on fracking so that the environmental and health impacts can be studied.
For example, fracking uses massive amounts of water, thousands of litres of chemicals and thousands of pounds of sand. This toxic stew is forced into the ground at high pressure in order to fracture the rock, allowing gas to flow up the well. The even messier stew that results can contaminate groundwater and is extremely difficult to treat effectively.
With the scientific record of these impacts getting longer and more detailed all the time, it’s not surprising that Quebec and many other communities, including many European nations, want to go slow or ban the process outright.
End the story there and we’re maybe into the business section.
But — and here’s where it gets interesting — of all the companies affected by Quebec’s restrictions on fracking, only one firm had the guts to threaten to file a NAFTA (North American Free Trade Agreement) lawsuit against Canada unless the province backed down. Only one is pretending to be a U.S. firm in order to skirt Canadian courts and access NAFTA’s strange and excessive investor protections. Only this one firm is asking Canada to pay it $250 million in compensation for being deprived of its “right” to frack.
Yes, we’re talking about Lone Pine. The company’s NAFTA lawsuit is not just big news in Canada but it has sparked international outrage.
Lone Pine states in its notice of intent to file a NAFTA investment claim that the Quebec fracking moratorium is an “arbitrary, capricious, and illegal revocation of (its) valuable right to mine for oil and gas.” The company says Canada violated its right to “fair and equitable treatment” and that the moratorium indirectly expropriates its investment opportunities.
It may seem unbelievable that a company’s “right” to frack where, when and how it wants could overpower the government’s responsibility to protect its citizens from harm. It’s equally alarming that investment treaties could obstruct a community’s right to say no to fracking or other megaprojects that tax the land and water for the sake of profit — and not the public good.
Unfortunately, the paid and largely unaccountable tribunals that hear NAFTA and other corporate disputes under similar investment treaties frequently side with the companies. It’s why energy and resource firms are increasingly turning to investment arbitration instead of national courts to force governments to either back down or pay them hundreds of millions not to frack, mine or build a pipeline.
If Lone Pine decides to graduate its threat to an actual NAFTA arbitration, and if Canada either settles with the firm before it reaches arbitration or loses the case, it will crack the world open to fracking. At home and globally people want to move in the opposite direction.
Inverness County in Nova Scotia last week banned fracking within county limits. Just before that, the appellate panel of the New York Supreme Court upheld the state’s own municipal fracking bans. As more people find out about this dirty extraction method, more communities are standing up to resource companies and asserting their right to say no.
The Lone Pine lawsuit also has Europeans agitating against the proposed Canada-EU trade deal, which Canada wants to conclude by the summer. It’s mostly because the Comprehensive Economic and Trade Agreement (CETA) will include NAFTA-like investment rules. Pia Eberhardt with the group Corporate Europe Observatory told online news source EurActiv last week that CETA would make European fracking moratoria and regulations vulnerable to challenges by Canadian energy firms. The Lone Pine case proves it.
Lone Pine shareholders will surely get an update on the company’s NAFTA case when they meet on Wednesday. We think the company should announce it is dropping its suit. That would be big news, and good news, too.
There can be no “right” to frack. On the contrary, communities have a responsibility to protect themselves from harmful resource projects and shouldn’t have to pay for their right to say no.
Emma Lui and Stuart Trew are water and trade campaigners with the Council of Canadians.