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NEWS
Daily business news at www.biv.com
June 14–20, 2011
FULL DISCLOSURE
Domestic market needed to exploit B.C.’s gas riches Industry leaders say natural gas vehicles and power generation are the two best options for driving local resource consumption By Joel McKay
D
oug Stout has a tough job on his hands. The Vancouver-based executive needs to figure out how to get more people in B.C. to use natural gas. That’s no easy feat in a
province where people have enjoyed cheap hydroelectricity for decades and, like the rest of North America, are addicted to ample supplies of gasoline and diesel. On top of that, the province has turned away from natural gas as a power source, and past
attempts to install natural gas fuelling stations have met with little success. But Stout, vice-president energy solutions and external relations at FortisBC (formerly Terasen), believes abundant gas resources in northeast B.C.’s Horn River and Mont-
ney basins could be coupled with other existing resources to create a more balanced energy grid. “If you don’t want transmission lines built through your backyard, then how do we better use all the other resources we have on a more
Ed Mansfield, Ph D — Partner, Consulting (Economics & Analytics Leader)
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SFU professor Mark Jaccard: “there is no environmental or save-the-planet case for burning natural gas in British Columbia”
system-integrated approach?” said Stout. FortisBC is just one of many companies looking to sell more gas to more customers in B.C. A decade ago, the province’s gas industry was virtually non-existent. But advancements in horizontal drilling techniques, more commonly known as fracking, have allowed companies to tap gargantuan shale gas reserves in northern B.C. Almost overnight, the province has created a $6 billion fossil fuel industry, generating jobs and attracting investment from energy giants the world over. Last month, the province and the National Energy Board published a joint report that more than doubled a previous assessment of gas resources in B.C. The province believes there is 78 trillion cubic feet of shale gas in the Horn River Basin alone, enough energy to fuel the country’s needs for 26 years. At the same time, massive gas reserves have also been discovered in the U.S., meaning that country is unlikely to look north of its border for supply any time soon. That leaves B.C. gas companies with two options: •export the resources to Asian markets; and •create demand at home. Plans are already underway for a $3 billion liquefied natural gas (LNG) export terminal near Kitimat. But t hat faci lit y, if approved, is still years away from being built. Until then, B.C.’s gas resources are land-locked. “There is more opportunity here for B.C. to be its own best customer,” said Gary Weilinger, vice-president strategic development and external affairs at Spectra Energy. Despite an immediate lack of demand, Spectra is bullish about B.C.’s prospects.
Spectra Energy vice-president Gary Weilinger: “there is more opportunity here for B.C. to be its own best customer”
Between 2009 and 2011 it will invest about $1.5 billion in natural gas infrastructure in this province. Still, the only realistic markets for gas consumption in B.C. are transportation and heat and power generation. “What we think is the biggest opportunity, and we’re aligned with Fortis on this, is … large fleet natural gas vehicles where there’s return-to-base or point-to-point [movements],” Weilenger said. The idea is simple. Focus on truck companies that have hauling routes restricted to the Lower Mainland and Fraser Valley. That way natural gas fuelling stations don’t need to be installed on every corner, but could be built at fleet headquarters and topped up as needed for the day’s operations. “The operating cost savings for the end user is probably 30% to 50%,” Stout said of natural gas vehicles. FortisBC already built a gas refuelling station for Waste Management in Coquitlam. The company has 20 compressed natural gas trucks picking up garbage and recyclables throughout the Lower Mainland. In Abbotsford, Vedder Transport has invested in 50 LNG-powered vehicles that it says are cost-efficient and
SPECTRA ENERGY CORP. (NYSE:SE) $40 $30 $20 $10 $0
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Houston, TX CEO: Gregory Ebel Employees: N/A Market cap: $17.6b P/E ratio: 16.81 EPS: $1.62 SOURCES: STOCKWATCH, NYSE, GLOBE INVESTOR