Canadian Lawyer

LEGAL REPORT/ENERGY LAW What the E ver since European col- onists first arrived, Can- ada's economy has been built upon the extrac- tion of natural resources. From the fish and beaver pelt trade of the Hudson's Bay Co. of yesteryear to today's massive oilsands Canadians are well aware of our status as commodities supplier to the world. However, the recent combination of two long-utilized oil and gas drilling technologies, hydraulic fracturing and horizontal drilling, into a new process which has been dubbed "fracking," have created controversy and community opposition. Over the past few years, the advent of fracking has revolutionized oil and gas exploration in the United States, allowing for the extraction of previously inaccessible gas and oil trapped in shale deposits. Opponents of fracking say its downsides far outweigh the positives of lower energy prices. Critics of fracking object to gas and the mix of chemicals used in the process that could leak and contaminate groundwater, the large footprint required by fracking oper- ations, and even earthquakes linked to the process. Fracking also consumes huge amounts of water and poses the problem of disposal of wastewater con- taining a cocktail of often toxic chem- icals. Large-scale commercial exploitation of shale gas has not yet occurred in Canada, though large shale gas deposits have been identified in the provinces of Alberta, British Columbia, Quebec, New Brunswick, and Nova Scotia and regulators and the energy industry are now grappling with how best to balance environmental concerns with society's need for plentiful energy. "There's a lot of talk about [frack- ing] in Canada right now, Quebec has a moratorium on it right now," said Bradley Grant, a partner in Stikeman Elliott LLP's commercial energy group in Calgary. In the U.S., where fracking exploitation is more developed, states such as Texas and Pennsylvania have regulations in place requiring drilling companies to disclose what chemicals they are incorporating in the highly pressurized water and sand that is used to fracture rock and release the gas and oil trapped in the shale formations. Last fall, the federal Conservative government said it had initiated two separate reviews on the science and use of hydraulic fracturing by the energy industry in Canada and its impact on the environment. It also noted that it has been monitoring shale gas extraction www.CANADIAN Lawyermag.com A PRIL 2012 51 investments, It's still early days in Canada, but regulation of the process for extracting oil and gas from shale are not, or shouldn't be, far off. BY PAUL BRENT JUAN CARLOS SOLON fr ack?

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