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University of Guelph: Department of Geography

Geog 3210: Management of the Biophysical Environment, Essay

Student: James Mardall – 0285981
Due Date: 16 November 2004

Understanding and Preventing Conflict in the Extraction of Natural

Resources: The Case of Sour Gas in Alberta

Introduction:

Over the last decade, the Petroleum and Natural Gas industry of Alberta has
become the focus of media attention with regard to conflicts arising from the
extraction of Natural Gas. In particular the high profile arrest and subsequent
incarceration of Wiebo Ludwig in 2000, has raised questions regarding the
nature of the conflict between landowners, the Albertan Government, the
Alberta Energy and Utility Board and Resource Extraction companies.

In order to understand the conflict surrounding Petroleum and Natural Gas

extraction in the Alberta province of Canada, this paper will firstly look at the
science surrounding Sour Gas (Hydrogen Sulphide - H2S) and health.
Secondly by looking at how inclusive the Alberta Energy and Utility Board
(AEUB) is. And thirdly by highlighting the income stream derived from the
Petroleum and Natural Gas industry and its importance to the Albertan
Economy.

By examining these three factors, using Dorcey’s framework to conclude, this

paper aims to highlight the dominance of the energy sector in Alberta and
will attempt to show that this may bias the Alberta government in favour of

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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the energy industry. This may well lead to the marginalization of the
individual landowner, which represents a potential source of conflict.

Health and Sour Gas:

Many of the Natural Gas deposits in Alberta contain a varying Natural Gas /
Sour gas mixture. The Canadian Worker Safety Standards define any Natural
Gas that has 0.001% or greater Hydrogen Sulphide content, as a Sour Gas.
Approximately 40% of the gas wells in Alberta contain Sour Gas; many of
these have Hydrogen Sulphide contents greater than 30%.
http://www.yaleinsider.org/view_supportinfo.jsp?infoId=10
http://www.capp.ca/default.asp

Pressurised Natural Gas deposits containing Hydrogen Sulphide are released

when drilled into from the surface of the Earth. Hydrogen Sulphide is not
considered a viable commercial product and when encountered in strong
concentration, is either burnt off in a flaring process or released into the
atmosphere. It may also enter the atmosphere through leaks, spills, well
maintenance and production. http://www.yaleinsider.org/view_supportinfo.jsp?
infoId=10

Hydrogen Sulphide (H2S) is a heavier than air gas with a rotten egg smell.
Eye irritation occurs at low concentrations of 10mg / 1kg air (0,001%) and
death will occur when H2S concentrations are high, between 700 (0.07%) –
2000 (0.2%) mg / 1kg of air (See table 1 in the Appendices).
http://www.cdc.gov/nasd/docs/d001501-d001600/d001535/d001535.html
http://www.oehha.ca.gov/air/chronic_rels/pdf/7783064.pdf

See also Appendix 2 - Table 1: Physiological Response of Adult

Humans to Hydrogen Sulphide.
http://www.capp.ca/raw.asp?x=1&dt=NTV&e=PDF&dn=56189

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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A study done in 2001 by the North Carolina State University concludes that
even low concentrations over time can lead to adverse physiological and
neurological effects. Though it makes it clear that symptoms are easier to
measure when ambient H2S percentages are high.
http://www.duke.edu/web/tasteandsmell/pdf%20files/309.pdf

The following quote from the Houston Chronicle website mentioned below is
part of a three hundred year human interaction with H2S.

“1925: Yale University Professor Howard Haggard writes in the Journal

of Industrial Hygiene: "Prolonged exposure to low concentrations of
hydrogen sulphide is generally believed to result in a chronic form of
poisoning" particularly damaging to the central nervous system and
the eyes.”
http://www.chron.com/content/chronicle/nation/h2s/index.html

The Alberta Energy and Utility Board (AEUB):

Unfortunately for those living near Sour Gas wells in Alberta, 75 years after
the article mentioned above and numerous studies later. And one year after
Wiebo Ludwig’s arrest, the AEUB are still in a process of deciding what the
health effects of sour Gas actually are.

“Key Findings and Executive Summary of the EUB Report Titled Below,
December 18, 2000
PROVINCIAL ADVISORY COMMITTEE ON PUBLIC SAFETY AND
SOUR GAS RELEASES FINAL REPORT: FINDINGS AND
RECOMMENDATIONS

Some of the key recommendations are:

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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• Develop comprehensive health effects information for sour gas

mixtures and the combustion products of sour gas.
• Identify and support required research respecting the health effects of
sour gas.
• Develop a framework and methodology for standardizing dispersion
modelling and probabilistic risk assessment.”
http://www.eub.gov.ab.ca/bbs/default.htm

The AEUB do not say that there are no ill effects, rather that the science
surrounding Sour Gas and Health is inconclusive and requires further
investigation. In the meantime, those individuals who feel they are suffering
from the deleterious effects of Sour Gas are caught in a similar situation to
the one faced by Wiebo Ludwig.

According to a 1999 CBC news report, “Ludwig and the other families at
Tickle Creek started keeping a daily log of well activity and related heath
problems. It is now over 100 pages long. An appendix to the log contains
over 300 letters written by Ludwig to various oil companies, the EUB, and
several government departments. Ludwig is angry; all of his attempts to be
heard through the official channels have gone unheeded.”
http://www.tv.cbc.ca/newsinreview/sept%2099/sour%20gas/principles.html

Why do the log and letters cataloguing the experience of Ludwig and other
families, (like those in my home town http://www.umich.edu/~snre492/brian.html),
carry so little weight? Why do situations so desperate before meaningful
action occurs? It is highly likely that the escalation of violence and the media
attention surrounding the Ludwig case became the catalyst for prompt AEUB
advisory committee response. Crisis management does not seem to be an
effective management tool however. Attention should be paid to those
individuals who reside on the cusp of environmental tragedy, and yet often
Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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their testimony is considered to be of an inferior quality or non-scientific

value. This is the second major air quality paper the author has written, and
once again, as if it is the affected who are ignorant and need to be educated,
the findings point to a need for them to be educated and informed. Ironically
this is meant to aid those individuals who are suffering from the effects of
Sour Gas, and yet when they do gather information and disseminate it to the
relevant authorities they are often ignored.

Perhaps the fear is that data gathered by those affected by Sour Gas for
instance, may in some way be manipulated. Or perhaps unlike the members
of the AEUB, affected individuals do not have the necessary scientific training
or qualifications. But if one looks at the demographic information below, the
AEUB itself represents a non-objective body of individuals.
Chairman G.J deSorcy - strongly affiliated to the Petroleum Industry
23 Members
18 Graduates (16 – Physical Sciences) (1 - Social Scientist)
1 Environmental Scientist
4 Medical Specialists
10 Members directly employed by the Oil and Gas Industry
20 Members Employed Directly/Indirectly by Government
1 Farmer
See Appendix 1: Biographies and Findings of the EUB Advisory Committee
(Paraphrased)

Although the AEUB conducted numerous public meetings and promised to

offer everyone an opportunity to air their concerns, all of the findings were
mediated through the above body. Naturally the report outlines the necessity
for “a need to review”, “efforts toward”, “the immediate formation of a task
force to investigate” and so on. And in the meantime those folks who are
affected need to just sit tight and trust that the system will protect them.
(See Appendix 1: Biographies and Findings of the EUB Advisory
Committee (Paraphrased))

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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The composition of the AEUB may well be creating an Interlocking Triangle of

mutual cooperation between the Alberta Government, the Energy Industry
and the Regulatory Authority AEUB. This may well be contributing to the
perpetuation or dragging out, of the problems associated with the sour gas
industry. Individuals like Ludwig, who seek fair access to justice in terms of
their right to life, become marginalised and disempowered with regard to the
very real negative impacts, of Sour Gas Extraction.

Thus, not only can it be said that Ludwig had possibly overstepped the
boundaries of normally acceptable behavioural responses. But the AEUB can
be said to be de-legitimising the public position through science and their
more intimate connections with institutions and Industry. In order to more
fully comprehend why this may occur it is necessary to understand how
important the energy industry is to Alberta and Canada as a whole.

The Importance of the Energy Industry to Alberta:

Alberta - Annual Public Offering of Crown Petroleum and Natural Gas Rights
by Calendar Year - Leases and Licences.

$1,200
$1,000 http://www.energy.g
(Billion CDN $)

$800 ov.ab.ca/com/Tenure
/PNG+Sales/PublicSal
$600
es/PublicSales/Calend
$400 arYear1978-
$200 2002.htm
$0
1996 1997 1998 1999 2000 2001 2002 2003

As can be seen from the graph above, the Alberta Government has derived a
substantial portion of its operating revenue from the leasing of mineral rights
(on a ten year system), the royalties from the wells and corporate taxes
from the Energy industry.
Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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Comparison of Gross Domestic Product, Alberta and Canada (In Current Dollars)
http://www.finance.gov.ab.ca/aboutalberta/ 2002_eco_accts_ab_canada_comparison.pdf

Alberta % Canada % Alberta as Alberta Canada

Alberta GPP Canada GDP
Year Change in Change in % of (GDP/Capita) (GDP/Capita)
(Billion) (Billion)
GPP GPP Canada (Thousand) (Thousand)

1996 98,480.00 836,864.00 6.50 3.30 11.80 35,488.00 28,262.00

1997 108,285.00 882,733.00 10.00 5.50 12.30 38,263.00 29,516.00
1998 108,653.00 914,973.00 0.30 3.70 11.90 37,479.00 30,340.00
1999 116,012.00 982,441.00 6.80 7.40 11.80 39,286.00 32,313.00
2000 143,927.00 1,075,566.00 24.10 9.50 13.40 47,896.00 35,047.00
2001 150,638.00 1,107,459.00 4.70 3.00 13.60 49,276.00 35,700.00
2002 150,292.00 1,154,949.00 -0.20 4.30 13.00 48,263.00 36,826.00

As can be seen from the above table, this revenue is not only critical to the
province of Alberta, but to the whole of Canada. (See Appendix 2: Fig 1 – 7
for additional proof)

http://www.energy.gov.ab.c
Alberta Land Rights: 2003-2004
a/com/RLA/Introduction/Res
ource_Land_Access.htm
Freehold and
19%
Federal land
(hectares)

Provincial land for

which Alberta
owns mineral
81%
rights (hectares)

The Albertan Government owns the mineral rights to 81 % of the land. Thus
the Alberta Government is able to extract payment from anyone wanting to
engage in resource extraction. In this way the mineral rights to the Ludwig
farm were sold to a Sour Gas developer, as is the case with most of the Sour
Gas wells in Alberta.

Both the Government of Alberta and Albertan businesses derive immense

revenues from the Energy Sector. (As can be seen in the following graph)

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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Alberta's Revenues from Fossil Fuels

90
80
70 Industry Revenues ($
60 billions)
CDN$
50
Payments to governments
40
($ billions)
30
20
10
0
1996

1999

2001

2003
1997
1998

2000

2002
http://www.energy.gov.ab.ca/

Not only is the energy industry important to Alberta, but the Natural Gas
industry is substantially more profitable than the Oil industry due to the
relative ease of gas extraction versus oil sands extraction (See Appendix 3:
Map 3).

Natural Gas Prices - Nymex Henry Hub (US$/MMBtu)

6
5
4
Natural Gas - Nymex Henry
US$

3
Hub (US$/MMBtu)
2
1
0
1996 1997 1998 1999 2000 2001 2002 2003

Crude oil Prices - WTI @ Cushing on Nymex (US$/bbl)

40
30
Crude oil - WTI @ Cushing on
US $

20
Nymex (US$/bbl)
10
0
1996 1997 1998 1999 2000 2001 2002 2003

http://www.energy.gov.ab.ca/

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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The relative prices and profitability of the sour gas industry over the last six
years 1998 – 2004 (as seen in the previous graphs), led to a substantial
increase in the number of sour gas wells drilled in Canada during that period.
As can be seen in the Graph below.

Wells Drilled / Year (1996 - 2003) Canada

14,000
12,000
10,000
8,000 Oil
6,000 Gas
4,000
2,000
0
1996 1997 1998 1999 2000 2001 2002 2003

http://www.energy.gov.ab.ca/

A substantial number of the sour gas wells drilled during the period covered
by the graph above were drilled in Alberta, as can be seen in the figure
below.

p.ca/raw.asp?
x=1&dt=NTV&e
=PDF&dn=5618
9

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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So to review, less oil wells are being drilled, more natural gas wells are being
drilled, most of the natural gas wells are being drilled in Alberta, the revenue
from natural gas wells is important to Canada and very important to Alberta.
But why is natural gas so important? As can be seen from the graph below,
natural gas is gradually increasing its share of primary energy consumption
relative to oil and coal use in Canada.

Share of Primary Energy Consumption between Fossil Fuels in Canada

45
40
35
30 Crude oil

25 Natural gas
%

Coal
20
15
10
5
0
1996 1997 1998 1999 2000 2001 2002

http://www.energy.gov.ab.ca/

Natural gas is therefore becoming an important strategic energy resource for

not only Alberta, but for Canada too. Whereas farmers and farming like
Wiebo Ludwig and many others, are becoming far less important as a source
of Gross Provincial Product (unless there are Sour Gas wells on their
property). If one looks at Figure 3 in Appendix 2, it is obvious that on a
relative basis, the contribution of agriculture has declined over the 15 year
period from 1985 – 2001.

While it is true that during the same period, the direct contribution of the
Energy sector to the GPP also declined. The indirect contribution of the
Energy Sector to the Finance & Real estate, Business, Transport,

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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Manufacturing and Construction sectors meant that Energy’s total

contribution through the multiplier effect would have been considerably
higher.

Alberta carefully uses the revenue it derives from the energy sector as a
catalyst to fuel further growth. Alberta’s provincial authorities do this by
offering tax breaks to small businesses and Individuals who are in the
highest income brackets (See the figures Below). This is designed to spur
entrepreneurship and thereby overall economic growth for Alberta.

http://www.alberta-canada.com/statpub/pdf/news_Highlights2003.pdf

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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If we go back to the AEUB and consider the composition of its executive

committee it is hard to imagine that the individuals concerned could have
been truly objective. It is more likely, when one considers the affiliations of
many of its members to the oil and gas industry, the government or small
business. That these members would have had very little to gain by strongly
sanctioning the oil and gas industry.

Chairman G.J deSorcy - strongly affiliated to the Petroleum Industry

23 Members
18 Graduates (16 – Physical Sciences) (1 - Social Scientist)
1 Environmental Scientist
4 Medical Specialists
10 Members directly employed by the Oil and Gas Industry
20 Members Employed Directly/Indirectly by Government
1 Farmer
See Appendix 1: Biographies and Findings of the EUB Advisory Committee
(Paraphrased)

Is it any surprise then that the findings of the AEUB merely served to
maintain the status quo and offer a bunch of suggestions.

A Dorceyesque Conclusion - Regarding Causes of Conflict:

Using Dorcey’s framework to sum up, were there differences in the cognitive
understanding of the sour gas situation – yes.

The Alberta Government understand that the sour gas wells are good for
Alberta and that those who stop its progress are seditious, the AEUB
understand that sour gas wells are important for Alberta’s economy, the
energy industry, themselves and the people of Alberta. And the Ludwig’s of

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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Alberta understand that their small patches of earth have changed for the
worse since the sour gas wells were drilled there.
In terms of values, The Alberta Government, the AEUB and the Ludwig’s all
assign different values to the land and sour gas wells. Ranging from an
important source of revenue as natural gas resource, to an important source
of revenue as a farm.

In terms of interests due to the distribution of costs and benefits, it would

seem that Alberta derives the benefits, while the Ludwig’s are left with the
true costs of sour gas extraction. Although it is true that there are fewer
individuals directly affected by sour gas than seem to derive benefit from it.
Although the Question must be raised, is Science overlooked in favour of the
greater good argument? (i.e. dis-ease for some, outweighed by prosperity
for the wealthy in Alberta?).

In terms of behaviours and personalities of the government, the energy

companies and the Ludwig’s. It is evident that the heel dragging authorities
were stonewalling those claiming to be suffering from the effects of sour gas.
It is also evident that the energy companies operate with some lack of
regard for private property as far as mineral rights are concerned. And it is
equally true that the Ludwig’s, once pushed to the point of sabotage, also
began to display a due lack of regard for both the authorities and the sour
gas companies.

In conclusion, the author proposes that it may not be in Alberta’s best

financial interest to curtail the development of the natural gas industry, and
that by using regulatory frameworks and bodies like the EUB. The Industry is
given a form of legitimisation and can be seen to be working in the public
good, while those who oppose it are de-legitimised and publicly vilified.

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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The author also proposes that enough evidence exists to suggest that Sour
Gas is indeed detrimental to Human and Livestock Health. That stricter
measures / stiffer penalties should be put in place to prevent further Sour
Gas impacts. And that the Government of Alberta should be held accountable
for the well being of all its citizens.

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981
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References Cited:
http://www.cdc.gov/nasd/docs/d001501-d001600/d001535/d001535.html, Manure Gas -
Hydrogen Sulphide, Site Accessed Wednesday, October 13, 2004.

http://www.duke.edu/web/tasteandsmell/pdf%20files/309.pdf, Health Effects of Aerial

Emissions from Animal Production Waste Management Systems, Site Accessed Wednesday,
October 13, 2004.

http://www.arc.ab.ca/whatsnew/newsreleases/toxicology981119.html, Field study

investigates the impact of sour gas pipeline leak on cattle, Site Accessed Wednesday,
October 13, 2004.

http://www.cbc.ca/news/national/news/wiebo/, Wiebo Ludwig interview, Site Accessed

Wednesday, October 13, 2004.

http://www.capp.ca/default.asp, Canadian Association of Petroleum Producers, Site

Accessed Wednesday, October 13, 2004.

http://www.capp.ca/raw.asp?x=1&dt=NTV&e=PDF&dn=56189, Canadian Natural Gas

Canadian Natural Gas Overview - April 2003, Site Accessed Wednesday, October 13, 2004.

http://www.tv.cbc.ca/newsinreview/sept%2099/sour%20gas/principles.html, Principles and

Provocation - Sour Gas: Alberta Stand-off, Site Accessed Wednesday, 13 October 2004.

http://www.chron.com/content/chronicle/nation/h2s/index.html, The Brimstone Battles – a

Houston Chronicle Special Report, Site Accessed Wednesday, October 13, 2004.

http://www.energy.gov.ab.ca/cmd/images/GeoMapHydrocarbons.gif, Map of Generalised

Areas of Hydrocarbon Resources in Alberta – From Alberta Energy and Utility Board, Site
Accessed Thursday, 14 October 2004.

http://www.energy.gov.ab.ca/rla/MapProducts/metallic.pdf, Map of - Metallic and Industrial

Minerals Activity – Created October 13 2004, Site Accessed Thursday, October 14, 2004.

http://www.eub.gov.ab.ca/bbs/default.htm, Alberta Energy and Utilities Board, Site

Accessed Wednesday, October 13, 2004.

http://www.ncpa.org/iss/hea/2002/pd012102e.html, Alberta Panel Recommends Reforms

for Canadian Health Care, October 13 2004.

http://www.oehha.ca.gov/air/chronic_rels/pdf/7783064.pdf, CHRONIC TOXICITY SUMMARY

- HYDROGEN SULFIDE, Wednesday, Site Accessed October 13, 2004.

http://www.publicsafetyandsourgas.org/, Advisory Committee on Public Safety and Sour

Gas, Site Accessed Wednesday, October 13, 2004.

http://www.saboteursandbigoil.com/news_reviews.htm, Saboteurs – Wiebo Ludwig’s War

against Big Oil, Site Accessed Wednesday, October 13, 2004.

http://www.yaleinsider.org/view_supportinfo.jsp?infoId=10, Sour Gas and Hydrogen

Sulphide, Site Accessed Wednesday, October 13, 2004.

Geog 3210: Management of the Biophysical Environment, Conflict Paper Student: James Mardall – 0285981