Page 1

Issue 12 I Sept/oct I 2010

Upstream Dialogue

Employee Perspectives:

Lyle Koch is the man on-site at BP’s natural gas operation in northeastern B.C. He is responsible for running the company’s ground-breaking, near-zero emission well site. u Learn more about Lyle and the BP Noel project.

Inside Industry in the News PAGE TWO

Nominate your company

Employee Perspectives

The Responsible Canadian Energy Awards recognize CAPP members who have demonstrated exceptional performance in the responsible development of Canada’s petroleum resources. Deadline for submissions is Dec. 1, 2010.

u Meet Lyle Koch from BP’s Noel project. PAGE four

Innovation and Technology u Find out how Williams Energy is turning waste gas from an oil sands

facility into valuable products while reducing CO2 emissions. PAGE five

Relationships Behind the Resource

u Access the nomination package.

u Upstream Scene: The World Energy Congress PAGE six u B.C. Energy Expos PAGE SEVEN

Offshore Production

u Learn how Imperial Oil is “turning the lights off” for neighbours. PAGE SEVEN

Canadian offshore production represents about 10 per cent of Canada’s crude oil production and 2.5 per cent of natural gas production. u Find out more about

Canada’s offshore

Industry Practice and Regulations PAGE EIGHT Now Available ustry Offshore ind fact sheets ct sheets.

Access the fa


Keeping employees informed about Canada’s oil and gas industry I

Industry in the News

Canada is the world’s third largest

$386 billion

producer of natural gas with average

Over the next 25 years natural gas

34,000 jobs

annual production of 6.4 trillion cubic

activity in BC will contribute $386

The oil and gas industry invested

feet (tcf). British Columbia is Canada’s

billion to Canada’s GDP, with more

about $45 billion in BC over the last

second largest producer of natural gas.

than 90 per cent flowing to BC.

10 years, producing 34,000 direct

u  Source: Centre for

u  Source: Canadian Energy

and indirect jobs (cumulative).

BC Gas

Research Institute 2009

Energy Information

u  Source: CAPP and B.C. Liberals

News highlights Natural gas development is a critical element of a low-carbon future in BC August 18, 2010, The Vancouver Sun u Read this article by CAPP President, Dave Collyer, that was prompted by a story in the Vancouver Sun by Mark Jaccard and Brad

Griffin, B.C.'s dishonesty on climate change. Oil, gas industry is making environmental progress

Social media

August 11, 2010, The Edmonton Journal u Read this article by CAPP President, Dave Collyer, commenting on Canada’s

unique opportunity to address growing global energy demand in face of activist agendas promoting unrealistic transition to renewable energy supply. New NPRI Tailings Reporting Provides Greater Transparency for Oil Sands Mining August 9, 2010, CAPP news release u Read CAPP’s response to the 2009 National Pollutant Release Inventory (NPRI)

report that now includes new data on the mining industry’s waste rock and tailings.

Activist fail: For environment or against anything?

u Access the NPRI report.

This video, posted to YouTube about six

u Read Calgary Herald article by Shaun Polczer, CAPP sees benefit in reporting

months ago, has seen renewed interest. The video investigates the motivation behind environmental activism and features Patrick Moore, a Greenpeace founder and past president who left the organization due to its evolving political agenda.

oilsands tailings. Tarred with the same brush August 5, 2010, The Economist u Read this article that comments on the Canada and U.S energy relationship. u Read CAPP’s response (scroll down to Crude Arguments) that highlights

misleading information presented in the article.

CAPP is on Twitter. Follow us @OilGasCanada.



CAPP is on Facebook.

Industry in the News (continued)

Oil sands boycott On August 26, 2010, activist group Forest Ethics positioned a media story with Canadian Press

This is what they told us: “Levi Strauss has not told contractors it will give preference to those who avoid oil sands oil. We will be meeting with the Canadian Consulate in San Francisco later this week to get a better understanding of how the oil sands are operated.” - Levi Strauss & Co. spokesperson

indicating four U.S. retailers – Gap, Timberland, Levi-Strauss and Walgreens – will boycott oil

“We have asked potential transportation providers in Canada to tell us if they are using fuels that have been identified as being carbon-intensive.”

sands crude oil products. The

- Gap spokesperson

alleged boycott is part of Forest Ethics’ and the Rainforest Action Network’s broader Fortune 500

“We do not boycott fuels… we don’t have enough visibility

campaign pressuring transportation companies and retailers to

into the fuel sources our carriers use to do so intelligently.”

cease use of oil sands-derived fuels.

- Timberland spokesperson

Levi-Strauss, Timberland and the Gap have since issued clarifications of their corporate positions indicating they are not boycotting oil sands crudes, but are asking carriers in their supply chains how they are moving towards less-carbon intensive fuels – a position which fits with oil sands producers’ efforts to lower CO2 per barrel.

myth VS


u  Read Calgary Herald article, Oilsands boycott: Where are

the ethics? u Read Levi’s recent blog post, Setting the Record Straight. u  Read Timberland’s recent blog post, Reducing Emissions

– Not Boycotting Fuel.

Myth Forest Ethics and the Rainforest Action Network are urging Fortune 500 companies to eliminate oil sands fuels from their supply chain. They say oil sands can not compete with fuels from other source and oil sands is the “dirtiest oil on the planet”.

Fact It is extremely difficult or impossible to eliminate oil sands from the American fuel supply chain. Western Canadian crude comprises about one-third of all U.S. mid-west supply – about half of that crude comes from oil sands. Oil sands crude mixes with conventional sources – all of which is refined into liquid transportation fuels such as gasoline and diesel fuel. By the time it gets to the pump, separating the molecules is impossible.

“Consumers, especially those serving diverse locations in western Canada, cannot avoid oil sands crude unless they have non-oil fuel sources.” - Tim Shipton, President of Alberta Enterprise Group Oil sands CAN compete with crude oil from other sources. Other large suppliers of crude oil to the US include Nigeria, Venezuela and Saudi Arabia. Canada is politically stable, infrastructure is robust and environmental standards are high. Greenhouse gas emissions intensity from oil sands is similar to other import options and is continuously improving – since 1990, oil sands GHG emissions have been reduced by 39 per cent per barrel. u  Read Alberta Enterprise Group’s news release, Oil sands boycott unfair and impossible to implement.



Wells-to-Wheels CO2 emissions from various sources of crude Saudi Medium (ave)

Production, refining and oil transportation

Mexico – Maya

End-use combustion

Venezuela – Bachaquero Oil Sands – In situ

Source: CERA 2010

Oil Sands – Mining Upgraded Nigeria Light California Heavy 0






kg Co2e per barrel of Refined Products


Employee Perspectives

Operating at near-zero Name: Lyle Koch Title: Operations Team Lead Company: BP Years of Experience: 10 Location: Dawson Creek, B.C. (Noel project) Best part of job: Developing an environmentally friendly project. Success story: Running a well site that has a significantly reduced carbon and ecological footprint.

Compared to conventional natural gas developments, BP’s new project near Dawson Creek in northeastern BC produces 85 per cent less greenhouse gas emissions and has used 70 per cent less surface land.

Powering production facilities from the BC Hydro power grid

Lyle Koch is BP’s man on-site who is responsible for running the

land footprint, drilling 111 wells instead of 592 wells required with

ground-breaking operation – the first full-field gas development in Canada to use a solar photo-voltaic system [ sidebar].

further reduces BP’s emissions at Noel. Eighty-four per cent of BC Hydro’s power is hydro-generated. BP also uses long-reach horizontal well technology to reduce its conventional drilling. Furthermore, drilling multiple wells from one site means only 85 well pads are required. Koch says he and his colleagues are proud of being

“The company wanted to have a ‘green’ well site and that’s what we heard from local stakeholders too,” says Koch, Operations Team Lead. “People are amazed at the amount of technology and equipment we’re using to make zero-emission well sites. When they drive by our site they can tell it’s different.”

The annual GHG emissions reduction at the BP Noel project is equivalent to taking 24,000 cars off the road.

While traditional well sites use natural gas to run the necessary valves and pumps, BP uses solar

part of an award-winning project. BP has won both the Best Practice Award at the 2009 World Gas Conference and CAPP’s 2010 Stewardship of Excellence President’s Award. “One of the advantages of a field like Noel, where it’s a new development, is we didn’t have a lot of resistance from anyone who was used to doing it a particular way.” says Koch.

power. When the sun doesn’t shine for a week or so,

“And it’s nice to be a part of a company willing to take the extra step.”

BP uses supplementary power from a thermal electric generator.

u Learn more about the BP Noel Project.

Each of Noel’s wells is equipped with 12 solar panels to keep them

u Read about the CAPP Steward of

running and Koch says initially it was a bit of a challenge getting

Excellence Awards.

everything to work effectively. “We didn’t get it right the first time,” says Koch. “We had to do a few different tries to get it to where it was a sustainable site.”



Solar photo-voltaic Solar photo-voltaic panels consist of cells that contain a photo-voltaic material that converts energy from the sun – solar radiation – into direct current electricity.

Innovation and Technology

Off-gas to less gas

300,000 tonnes Every year, HLCP reduces Suncor’s CO2 emissions by about 300,000

What if you could convert a waste stream

to manufacture them,” he says. “Suncor

from an oil sands operation and convert it

and some other operators create them

into a valuable product that you could sell

as a byproduct.”

a day.

Until now oil sands companies would

u Source: Williams Energy

at market? Williams Energy is taking off-gas from Suncor’s oil sands operations, turning it into valuable petrochemical products and reducing Suncor’s carbon dioxide and sulphur emissions in the process. William’s ‘Hydrocarbon Liquids Conservation Project’ (HLCP) started in 2002 to recover higher-value natural gas liquids (NGLs) [ sidebar] and olefins that

sweeten the off-gas (remove some sulphur) and burn it as fuel for their operations. 40 per cent it can separate into NGLs and

Edmonton for fractionation and use by

petrochemicals and sends the rest back to

petrochemical producers.

Suncor along with natural gas bought to replace the 40 per cent it took out.

upgrading bitumen.

natural gas produces fewer emissions

be converted into valuable petrochemical products, says David Chappell, Regional Vice President of Williams Energy Canada. “Ethylene, propylene and butylenes are not naturally occurring. They’re manufactured and most companies spend a lot of money


NGLs and olefins are then piped to Williams’ Redwater facility near

The value to Suncor comes because

of natural gas liquids and olefins that can

Suncor’s SO2 emissions by 11 tonnes

Williams takes the off-gas, removes the

are produced from off-gas, a byproduct of About 40 per cent of the off-gas consists

tonnes. In 2008, HLCP reduced

when burned than the original off-gas.

u Find out more about Williams HLCP.

N  GLs

“They’re getting the same amount of

Natural gas liquids include ethane,

energy back but because they’re burning

propane and butane, substances

natural gas, they’re reducing emissions,”

that can be converted into

says Chappell.

valuable products that help make

Williams recovers the NGLs and olefins at a cryogenic liquids extraction plant near the Suncor facilities at Fort McMurray. The


petrochemical products such as plastics and gasoline. u Source: Williams Energy







1. CAPP’s booth at the World Energy Congress 2. Greg Stringham, CAPP (left), Ursula Oltman, Northern Communities Sustainable Energy Initiative, Scott Widmeyer 3. Greg Stringham, CAPP (right), Yoshio Maeda and Yusuke Sogawa both of Honda R&D Co. Ltd. 4. Julie Woo, Canadian Natural and Michel Scot, Devon 5. Kerry Guy, CAPP (left) Event attendee (centre), Paul Barnes, CAPP 6. Event attendee (left), Stephen Rodrigues, CAPP

Relationships Behind the Resource

Canada welcomes the world From September 12 – 16, delegates from over 100 countries met in Montreal at the World Energy Congress (WEC) to discuss challenges


is one of the world’s premier energy events.

200 speakers included CEOs, senior executives,

The theme of the 21st

energy ministers, academics and world energy

World Energy Congress was:

industry leaders. 300 exhibitors gathered at the


Palais des Congres to present technology, know-


how and showcase solutions being developed

Energy in transition for a living

to secure future energy supply.

planet®, provides an important

CAPP and CAPP member companies were a key

framework for addressing the

2000 square foot interactive oil sands exhibit. The display addressed key areas of development

main challenges facing the energy sector: accessibility, availability, acceptability and

including air, water, land and people and


showcased industry technology and innovation.

uL  earn more about the World

u  Review CAPP President, Dave Collyer’s WEC presentation, Responsible Development of Canada’s Unconventional Resources.


The World Energy Congress

the energy sector is facing. The list of over

sponsor of this event showcasing an impressive


World Energy Congress


Energy Congress.

Relationships behind the Resource

B.C. Energy Expos In April and May, CAPP partnered with Energy Services B.C. and the B.C. Government to host Energy Expos in Dawson Creek and Fort St. John. CAPP also participated in the annual Horn River Producers Group Energy Expo in Fort Nelson in September. The Energy Expos were designed to bring together oil and gas producers, supply companies and other related services to provide information to the community on industry pre-qualification requirements, future supply opportunities and explore training and career opportunities.

Upcoming Events

CAPP and CAPP member

October 12 – 13, Fort St. John, B.C.

companies recognize that

CAPP is hosting: Learn How to Contract to Oil and Gas Companies in

a qualified and competitive

Fort St. John. The workshop’s objective is to offer insight and practical

local service sector

tools to local contractors in north east B.C. to better position them for

benefits industry and

contracting opportunities.

the communities where

u Learn more about the CAPP workshop in Fort St. John.

operations occur.

Truck lights, rather than large pad lighting, help this Imperial Oil employee work at night without disturbing the neighbours.

Turning the lights off The breathtaking night sky is a big reason people love living in northern Alberta. But oil sands production facilities operate on a 24/7 basis and typically use extensive night lighting. After hearing concerns from local residents about their facility’s lighting, Imperial Oil's Cold Lake Operations, the largest drilling (in situ) oil sands project in Canada, introduced a new on demand lighting initiative in 2009.

"Crane Lake is now in a more natural state for wildlife and for residents and visitors who are drawn to this area because of its natural beauty, including the spectacular night sky."

Saving electricity

~ Gord Coulman, President of the Crane Lake Advisory and Stewardship Society (CLASS)

reducing artificial nighttime

Jennifer Haverhals, Environmental Team Leader at Imperial Oil Resources in Bonnyville, Alberta says, "Our neighbours spoke and we listened. We brainstormed and were able to identify a solution that worked for our operations and that we could quickly implement." As a first step, globe lighting was replaced with more directional focused spot lighting in the design for well pads. After testing, Imperial then implemented truck-mounted external lighting, where only the wells being worked on are lit and overhead light standards remain off.



In addition to dramatically light, Imperial has reduced electricity consumption by approximately 1,855,000 kWh, saving about 1,800 tonnes of greenhouse gas emissions.

NL and NS fact sheets


Updated offshore industry fact sheets for Newfoundland and Labrador and

In 2009, 3,000 people were directly employed in the

Nova Scotia highlight economic benefits, current and potential activity, and the industry’s commitment to environment, health and safety. u Access the CAPP Newfoundland and Labrador fact sheet. u Access the CAPP Nova Scotia fact sheet.

$17 billion in developing Newfoundland and Labrador’s offshore resources.


– 2009 stry from 1995

indu oil and gas ding by the a Scotia capital spen spent in Nov billion was of which $2 Scotia ent of Nova the Governm to paid royalties $1.5 billion 2009 – from 1995 stry in indu gas oil and king in the ent) people wor ct employm Over 850 in 2009 (dire Nova Scotia development, research and spending on and on oil milli the Over $70 training by education and ia in Nova Scot gas industry

oil and gas industry in Newfoundland and Labrador.

Since 1995, the industry has invested $17 billion

ustry tural Gas Ind ’s Oil and Na Economy Nova Scotia g Provincial g to a Stron tin ibu ntr Co $7.5 billion


Newfoun dland an d Labrad Oil and Nat or Contribut ural Gas Explor ’s Offshore at ing to a Strong Pr ion and Productio uce? ct, Scotia prod natural gas proje $1.8 billi ov does Nova gas In r incial Ec How much oil and n only producing on dust ), Nova Scotia’s proje ke — is unde oil royalti onSable ct — Deep Panu es y Project (SOEPry omOffsh al gas ated to in the 200 paid to the Gov y ore Energ A second natur Panuke is estim The ernmen 9-10 fisc MMcf a day. t in 2011. Deep taking place $5.5

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In addition, oil t social and taxes the First oil expected and gas ction indu other pro before the Productio activity lead stries. n Facility end of 2017 s to spin-off grams – GBS benefits for al year

of Newfou




Photo credit:

New CAPP publicationS

Industry Practice and Regulations

34 per cent of Newfoundland and Labrador’s nominal GDP came from the oil and gas industry between 2005 and 2009.

$7.5 billion Since 1995, the industry has invested $7.5 billion in developing Nova Scotia’s offshore resources.

$70 million + To date, the offshore oil and gas industry has spent

Offshore regulatory structure In a written submission to the Helicopter

The inquiry was established by the

Safety Inquiry stemming from the

Canada-Newfoundland and Labrador

crash off Newfoundland and Labrador

Offshore Petroleum Board in October

in March 2009, CAPP verified the

2009 to examine the safety of

regulatory structure for offshore

helicopter travel for offshore workers.

Newfoundland and Labrador oil and gas

Phase One concluded in September.

regulation is fundamentally sound. The submission states any recommendations to enhance helicopter safety offshore should be made within the existing

u Read CAPP’s and other

submissions to the inquiry. u Learn more about the Offshore

Helicopter Safety Inquiry.

regulatory structure.



$70 million on research and development, education and training in Nova Scotia.

Industry Practice and Regulations (continued)

Draft scope for NEB review The National Energy Board (NEB) has released the draft scope for its Arctic Offshore Drilling Review. The NEB will engage the industry and public in reviewing the requirements for drilling safely while protecting the environment, responding effectively if things go wrong and considering lessons learned from the recent Deepwater Horizon leak in the Gulf Coast. Interested parties can apply to the NEB to participate in the review. CAPP is already a registered participant in the review and supports it as a forum for thoughtful dialogue on offshore practices. A working group of interested CAPP members will share information and help coordinate industry input.

Offshore ban not justified: report

The NEB is finalizing the scope and

A Senate committee has determined that

The Senate report says while spending

u Read more about the Arctic Offshore

Canada’s offshore regulatory regime is

on research and development is

modern, up-to-date and among the most

significant, oil and gas companies should

efficient and stringent in the world.

increase spending, into “new and better

have further details in the fall. Drilling Review.

technology for dealing with deepwater

The Standing Senate Committee on

blow-outs and responding

Energy, the Environment and Natural

to catastrophic spills.”

Resources has reviewed Canada’s offshore drilling in the wake of BP's

The committee also expressed concern

Deepwater Horizon incident in the Gulf of

about Canadian laws governing the

Mexico and written a report entitled, Facts

liability and responsibility for loss and

do not justify banning Canada's current

damage (including economic loss

offshore drilling operations.

and environmental cleanup expenses) following a major oil spill offshore. The

While the report identified some areas

report says Canadian rules are somewhat

of improvement, it concluded there is no justification for a ban or moratorium on current offshore operations. It says Canada’s regulatory regime is continually

confused and conflicting, and require a careful review. u Read the full Senate committee report.

upgraded and improved based on lessons and experiences from incidents and other jurisdictions, such as the United States.


schedule for the review and is expected to


694 wells 694 wells have been drilled offshore Canada. u Find out more about Canada’s

offshore industry.

Greenpeace protest at oilsands facilities in Alberta.

Industry Practice and Regulations (continued)

Unauthorized Trespass: new protocol Oil and gas operators have a new tool to use in situations where activists gain unauthorized access to energy facilities and sites. The Energy Sector Response to Security Breaches Protocol standardizes industry, government and police response to incidents where activists disrupt operations and place themselves – and others – in danger. The protocol provides direction that is specific to breaches of operating sites (it doesn’t apply to terrorist, labour or criminal actions). Individual producers may develop additional detailed procedures, facility-specific plans or emergency response procedures. The protocol was developed collectively by industry, the federal and Alberta governments and law enforcement agencies.

u The protocol is available only to CAPP members on MemberNet

(Document # 169091). u For more information, please contact Rick Laursen at CAPP.

CAPP will review the protocol regularly to ensure it stays current.

Deep fracturing: ERCB CAPP’s Deep Fracturing Committee is liaising with Alberta’s Energy Resources Conservation Board about the science and technology around deep fracturing [ sidebar].

Deep Fracturing Deep fracturing is a process that opens new channels in the rock surrounding a production well. Under extremely high hydraulic pressure,

As part of the Unconventional Gas Regulatory Framework Project (reviewing deep

special fluids are pumped down the

shale gas, deep coals and tight gas in Alberta), the ERCB asked for a more technical

well. The pressure causes cracks to

understanding of deep fracturing in unconventional gas plays.

open in the formation allowing more

The Deep Fracturing Committee has completed a detailed ERCB survey and is continuing dialogue into the fall. The finding from this review will also be relevant to other jurisdictions.

Canadian Association of Petroleum Producers (CAPP) The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small, that explore for, develop and produce natural gas and crude oil throughout Canada. CAPP’s member companies produce about 90 per cent of Canada’s natural gas and crude oil. CAPP’s associate members provide a wide range of services that support the upstream crude oil and natural gas industry. Together CAPP’s members and associate members are an important part of a $110-billion-a-year national industry that provides essential energy products. CAPP’s mission is to enhance the economic sustainability of the Canadian upstream petroleum industry in a safe and environmentally and socially responsible manner, through constructive engagement and communication with governments, the public and stakeholders in the communities in which we operate.

oil and gas to flow to the surface. u Source:

2100, 350 – 7 Avenue SW Calgary, Alberta Canada T2P 3N9 Telephone: 403.267.1100 Fax: 403.261.4622 403, 235 Water Street St. John’s, Newfoundland and Labrador Canada A1C 1B6 Telephone: 709.724.4200 Fax: 709.724.4225 CAPP is on Twitter. Follow us @OilGasCanada.

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Upstream Dialogue v.12 September October 2010  
Upstream Dialogue v.12 September October 2010  

Upstream Dialogue is a newsletter targeted at CAPP member employees. It provides up-to-date information and CAPP's perspective on industry r...