Canadian governments, like many around the globe, face a conundrum. Canadians consume energy conspicuously, but many oppose energy development passionately. The public disclosure of chemicals used in hydraulic fracturing, coupled with the desire to foster innovation by protecting trade secrets, is a recent example of the dilemma.
Hydraulic fracturing involves pumping a fluid (usually water) at high pressure through a wellbore into a rock formation. The pressurized fluid opens up fractures in the rock and sand is used to keep the fractures open, resulting in increased oil and gas production. While they constitute only a small percentage of the total fracturing fluid, chemical additives play special roles in solving particular problems, such as keeping the sand in the water long enough to make it to the back of the fractures instead of dropping out and clogging the bottom of the well, making the operation a failure. Other chemicals make the fluids slippery to aid pumping by reducing friction. Also used are corrosion and scale inhibitors, crosslinkers and biocides.
The chemistry is often adjusted for each well, and there is constant innovation and learning. Operators look for improvements that expand the reach of the fracturing network and reduce environmental impacts. Many millions of dollars are spent annually researching new fracturing chemistry, and the results are often closely guarded trade secrets.
In many jurisdictions the public is concerned with groundwater contamination from fracturing. While many of the chemicals used are ones Canadians encounter in everyday life, there is no doubt that some may pose a risk to human health or the environment. Consequently, occupational safety and health laws require companies to disclose hazardous chemicals on a Material Safety Data Sheet (MSDS).
Material Safety Data Sheet reports had been required in the United States, Canada and elsewhere for decades. Therefore, energy companies in the U.S. had difficulty understanding why the public was demanding greater disclosure about fracturing chemicals than disclosed on an MSDS. If an MSDS was sufficient to protect workers, why was more disclosure required for landowners who faced far less risk? Opponents argued that MSDSs were hard to access and difficult to understand, and environmental organizations pointed to claims that fracturing operations had contaminated water wells. By 2010, it became clear that no widespread social consensus supporting hydraulic fracturing would be achieved on the disclosure of chemicals by MSDSs alone.
These concerns led U.S. regulators to launch the “FracFocus Chemical Disclosure Registry” (FracFocus.org), a website where operators post information on the fracturing chemicals used at each well drilled. FracFocus.org contains records of the chemicals pumped into tens of thousands of U.S. wells.
Regulators in Alberta and B.C. have followed some U.S. states in requiring public disclosure through the Canadian version at FracFocus.ca.
Canadian occupational health and safety laws require the disclosure of any hazardous products on an MSDS. Specifically, the federal Hazardous Products Act and the Controlled Products Regulations require suppliers of hazardous products to provide health and safety information on container labels and in MSDSs, including the chemical identity of the ingredients if it is over a specified minimum concentration.
However, under the Hazardous Materials Information Review Act (HMIRA), trade secrets may be protected from disclosure on labels and MSDSs. Under the legislation, an applicant may file a claim with Health Canada for exemption of providing the chemical ingredient, its concentration and the name of any toxicological study that identifies the ingredient. An HMIRA registry number may then be used on the MSDS and label instead of disclosing the actual chemical or its concentration. In emergency situations, medical and emergency personnel may contact Health Canada to obtain the identity of the chemical.
British Columbia was the first Canadian jurisdiction to regulate the disclosure of fracturing chemicals. Under B.C.’s Oil and Gas Activities Act, a well permit holder must maintain detailed records of all fracturing fluids and post them to FracFocus.ca. For any ingredient that is the subject of a claim for exemption through the HMIRA, the HMIRA registry number may be provided instead of the name of the actual ingredient.
In Alberta, the Alberta Energy Regulator has requirements for well licensees to provide well completion data in order to maintain an accurate record of each well drilled in the province, including the chemicals used in fracturing. The regulator uploads some of the information to Fracfocus.ca and also allows for the protection of trade secrets through the provisions of HMIRA registry numbers.
Although B.C. and Alberta’s adoption of HMIRA registrations for the protection of trade secrets for hazardous substances is efficient, difficulties remain for the protection of trade secret formulas for non-hazardous ingredients for which HMIRA registrations are unavailable. Today many oil and gas companies purchasing fracturing chemicals and services want “green” chemicals. This has led to significant research dollars being spent on green chemistry. One supplier has developed fracturing chemicals sourced solely from the food industry. Commonly, these non-hazardous formulations are the most valuable of all trade secrets. Alberta and B.C. regulators have therefore allowed non-hazardous chemicals to not be disclosed if a trade secret. Therefore, it is expected that numerous trade secret claims will be made for non-hazardous ingredients. When coupled with HMIRA registrations, the public may receive little useful information about the chemicals pumped beneath their land due to trade secret claims. It is expected that this dilemma of providing the public with information about fracturing chemicals and protecting trade secrets will not be easily solved.