BC Oil & Gas Report 2019/2020

Page 1

Publications mail agreement #40934510

2019-2020

Leveraging the low-carbon advantage the balance between regulation and new investment

The Ridley Island Propane Export Terminal silently moves ahead B.C. imposes timelines for the restoration of oil and gas wells


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In this issue Message from the editor........................................................................ 8 Message from the Honourable John Horgan, Premier of British Columbia................................................................. 10 Message from the Minister of Mines, Energy, and Petroleum Resources...................................................... 11 Shared future: Energy for Canada and the world............................. 12 British Columbia addressing global issues........................................14 Making a case for Canadian-branded energy.................................... 15 B.C. imposes timelines for the restoration of oil and gas wells; the first province in Western Canada............................... 16 Cathodic protection shielding............................................................. 18 The Ridley Island Propane Export Terminal: Connecting Canadian energy with global markets.......................... 20

B.C. Oil & Gas Report is published by DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, Manitoba Canada R3L 0G5 President David Langstaff Associate Publisher Shayna Wiwierski shayna@delcommunications.com Managing Editor Tammy Schuster tammy@delcommunications.com Sales Manager Dayna Oulion dayna@delcommunications.com Account Representatives Brian Gerow | Jennifer Hebert Mic Paterson | Anthony Romeo

Collaboration and community move Coastal Gaslink forward........ 22

Contributing writers Chris Bloomer | Gary G. Mar, Q.C. Geoff Morrison | Stewart Muir

Why ministerial discretion does not belong in Bill C-69, by Gary G. Mar, Q.C............................................................ 24

Production services provided by S.G. Bennett Marketing Services www.sgbennett.com

The important role oil and gas experts have in setting a realistic energy future............................................ 26

art Director / design Kathy Cable

Index to advertisers.............................................................................. 27

Advertising art David Bamburak | Dana Jensen © 2019 DEL Communications Inc. All rights reserved. Contents may not be reproduced­by any means, in whole or in part, without the prior written permission of the publisher. While every effort has been made to ensure the accuracy­of the information contained herein and the reliability of the source, the publisher­ in no way guarantees nor warrants­the information­and is not responsible­for errors, omissions or statements­made by advertisers. Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher, its directors, officers or employees.

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Cover Photo: Ridley Island Propane Export Terminal 6

B.C. Oil & Gas Report • 2019-2020

Printed in Canada | 09/2019


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Message from the

editor

B.C.’s oil and gas resources put the province in a unique position

“W

e know B.C. and Canada can make a significant contribution to global GHG reductions if we expand the export of our resources to global markets.” An excerpt from an editorial piece written by Geoff Morrison of the Canadian Association

of Petroleum Producers for this issue of the B.C. Oil and Gas Report is echoed throughout the industry. In the 2019/2020 BC Oil and Gas Report magazine, we explore how B.C.’s oil and gas resources put the province in the unique position of helping lower global GHG emissions by providing our products to countries that are still heavily dependent on high-emission energy sources. We discuss the fine balance between the need for rigorous regulatory systems and the need to speed up processes that will allow Canada to capitalize on the demand for cleaner energy products around the world. This issue also provides updates on the Ridley Island Propane Export Terminal and the Coastal Gaslink Pipeline Project about the safest and most responsible approach to transporting our natural resources. I hope you enjoy this issue of the B.C. Oil and Gas Report magazine, and please get in touch if you have any questions, comments, or ideas.

Tammy

8

B.C. Oil & Gas Report • 2019-2020

@DELCommInc. n


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Message from the Premier of British Columbia

the honourable john horgan

Natural gas development and the path forward

T

he natural gas sector is the livelihood of thousands of British Columbians. It helps us build a strong economy and provides jobs to hard-working people. Natural gas can keep your home warm in the winter and help grow the produce you buy to feed your family. It is a versatile product with an

important role to play in our province’s future. LNG Canada’s $40-billion commitment to build an export facility in Kitimat is the largest private-sector investment in Canadian history. It is proof that B.C. is attracting investment, providing security to industry and British Columbians as we continue to move our province toward a cleaner and brighter future. Direct benefits of the LNG Canada project include up to 10,000 jobs for people during construction and 950 permanent jobs once operations are underway, as well as approximately $23 billion in new provincial government revenues – new resources for services such as health care, schools, and child care. Our government set four conditions for natural gas development: guarantee a fair return for our natural resources, create jobs and provide training, respect and partner with First Nations communities, and protect our air, land, and water. The LNG Canada project fits into our CleanBC plan and allows us to build a strong economy for future generations, while protecting our environment. We continue on the path toward meaningful reconciliation with Indigenous peoples. We are working government to government with First Nations, forming partnerships that benefit communities and create jobs and shared prosperity for people and communities. We look forward to seeing more good jobs for British Columbians in the natural gas sector. We want families and communities to see the benefits from our province’s resource-based investments and share in its success. Not only will this help make life more affordable, but it will also support services such as improved healthcare and other community-support initiatives. We continue to see growth in our valuable natural gas sector and I am excited for the opportunities ahead. n

10 B.C. Oil & Gas Report • 2019-2020


Message from the Minister of Energy, Mines, and Petroleum Resources

Michelle mungall

Environmentally sustainable – possible and plausible

I

n an era of climate change, we are all faced with the necessity to develop our economies in an environmentally sustainable way. In British Columbia, we believe it is possible and plausible to meet this challenge, and we are showing how it can be done.

B.C. is the leader in Canada for climate action. This year, we launched our CleanBC plan which puts us on a path to a cleaner, better future, where we can continue to balance environmental protection with economic competitiveness and job creation. We have made major investments to help electrify upstream oil and gas production, allowing extraction and processing to be powered by clean energy. Thanks to our abundant supply of hydro-electricity, we have a clear advantage in terms of carbon intensity and can support growth within our climate action plan and targets. Industry development and investor confidence is supported by our government’s natural gas development framework that recognizes current market, resource and climate realities and what is needed for success. This framework, built upon our four conditions for LNG, resulted in the largest private sector investment in Canadian history, LNG Canada’s $40B investment in B.C., and put LNG on a level playing field with other industries. This investment demonstrates that we can build economic opportunities for British Columbians, while also taking action to address climate change and advance reconciliation with Indigenous peoples. We are committed to ensuring our resource sectors provide good, familysupporting jobs for people throughout B.C., meaningful partnerships with First Nations, while also delivering the revenues to fund the services we rely on. I look forward to our continued work to build a clean and vibrant natural gas sector in British Columbia that benefits everyone. n

B.C. Oil & Gas Report • 2019-2020

11


Shared future: Energy for Canada and the world by Chris Bloomer, President and CEO, Canadian Energy Pipeline Association

A

s Canada’s energy future

still reliant on higher-emission energy

evolves, pipelines are playing an

sources. But we need to move faster to

increasingly important role here

capitalize on the growing demand for

and around the world. Members

cleaner energy products such as LNG.

of the Canadian Energy Pipeline Association (CEPA), the 11 companies that operate nearly 120,000 kilometres of pipelines in Canada, are embracing this new role by continuously improving how Canada’s oil and gas is transported to markets in the safest, most

Right now, Canada is missing out on many of these opportunities due to a lack of pipeline capacity and limited access to tidewater. While the approval and construction kick off of the Trans Mountain Expansion Project, and the development of LNG Canada and the

and certainty around our regulatory

Coastal GasLink pipeline are steps in

processes. It’s essential we do so for the

While Canada’s energy future will

the right direction, these projects are

long-term livelihood and prosperity of

increasingly include more low-carbon

only part of the solution. We need to be

all Canadians.

energy sources such as wind, solar and

more competitive to attract investment

hydro, oil and natural gas will continue

and we need new pipelines. However,

to be fundamental in the energy mix

new rules around the way major

for decades to come. Not only do

infrastructure projects are reviewed and

transmission pipelines make up 10 per

approved are sending mixed messages

cent of Canada’s GDP, providing billions

that threaten to send critical energy

of dollars to fund vital social services

investment elsewhere. Regulatory

such as health and education, they will

processes are becoming increasingly

also help provide the necessary capital

complex and challenging, and this is

to continue investing in alternative

having a serious effect on Canada’s

energy sources.

business competitiveness.

Canada’s oil and gas resources are

CEPA and its members continue to

11 transmission pipeline companies

developed, produced and transported

advocate for a balanced approach to

that transport virtually all of Canada’s

under the highest environmental,

environmental, social, and economic

natural gas and crude oil to markets

operational, regulatory, and social

considerations to ensure Canada can

across North America. CEPA members

standards globally. With a resource

attract the capital needed to develop,

are global leaders in the safe and

base that is the envy of the globe,

produce, and transport our abundant

responsible delivery of energy products

Canada is in a unique position to help

natural resources in the safest, most

that fuel life in Canada and around the

lower global greenhouse gas (GHG)

responsible way. We can revitalize

world. For more information, visit

emissions by providing our responsibly

our reputation as a great place to do

www.cepa.com or

produced products to countries that are

business by providing predictability

www.aboutpipelines.com. n

responsible way.

12 B.C. Oil & Gas Report • 2019-2020

Oil and natural gas will continue to be part of a shared energy future for Canada. Now is the time for this country to take ownership of its vast natural resources and the opportunities they provide for the people who live here and around the world.

About CEPA The Canadian Energy Pipeline Association (CEPA) consists of the


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British Columbia addressing global issues by Geoff Morrison, Manager, British Columbia Canadian Association of Petroleum Producers

N

atural gas is a major driver of British Columbia’s economy, including offering economic potential for Indigenous communities.

B.C. is uniquely positioned to address a number of global issues. This province’s abundant natural gas resources can help meet growing energy demand — specifically in the Asia-Pacific region, help address energy poverty to elevate health and quality of life, and contribute to the net reduction of greenhouse gas (GHG) emissions worldwide. This may sound like magical thinking, but it’s real and it’s based on innovation, technology, and Canada’s commitment to responsible development. The confluence of a number of factors have created a tremendous opportunity for Canadian energy exports, specifically liquefied natural gas (LNG) from the West Coast. First, let’s look at global energy demand. In November 2018, the International Energy Agency projected demand would continue to rise as China, India, Southeast Asia, and other regions seeking to grow their economies. Canada has more than a 300-year-supply of natural gas, much of it found in northeastern B.C. – a resource poised to meet this demand. Secondly, LNG can help people around the world who are living in energy poverty. Growing energy demand is partly about providing people with access to reliable, affordable energy. Addressing energy poverty can increase life expectancy, access to education, and improve living and working conditions. Thirdly, natural gas from Canadian LNG has lower life-cycle emissions than coal. With upstream electrification, Canadian LNG facilities will have the world’s lowest emissions intensity. The Canadian Association of Petroleum Producers (CAPP) estimates emissions from Canadian LNG facilities can range from 0.035 to 0.13 tonnes of carbon dioxide equivalent per tonne of LNG produced (tCO2e / tLNG) for electrified LNG facilities (non-electrified facilities typically range from 0.255 to 0.398 tCO2e / tLNG). This means that the LNG facilities built in Canada could each help reduce global GHG emissions by up to 100 million tonnes annually if new power plants in China, India, and Southeast Asia are fuelled by natural gas derived from LNG instead of coal. 14 B.C. Oil & Gas Report • 2019-2020

CAPP’s analysis of how growing future Canadian LNG can address net global GHG emissions is corroborated by the Business Council of B.C., which compared B.C.’s current mining and energy resource production to global competitors’ commodities. Currently, resources produced by B.C.’s energy and mining sectors saves up to 18 million tonnes of GHG emissions annually – nearly one-third of B.C.’s total annual emissions. This means B.C.’s resources have a carbon advantage, and if B.C. can export more energy to help meet world demand, global emissions would be lower than if the same products are sourced from other global suppliers. And of course, growing B.C.’s energy industry has positive benefits here at home. The industry generates billions of dollars in revenues for all levels of government, which help support programs valuable to British Columbians such as health care, education, infrastructure, and social services. The industry currently supports some 10,000 direct and indirect jobs in the province, a number expected to increase as construction of LNG projects expands. Industry also offers tremendous potential for Indigenous participation and prosperity, which in turn contributes to reconciliation. B.C. does face competitiveness challenges. Most competing jurisdictions now have either no carbon tax or energyintensive, trade-exposed (EITE) industry protection, which currently does not exist in B.C. This province must be competitive with regulation and infrastructure, and it must have fiscal tools in place to stimulate new investment and leverage our low-carbon advantage. In B.C. we have a tremendous natural gas resource base, a highly skilled workforce, a stringent regulatory system, and a commitment to environmental performance. We know B.C. and Canada can make a significant contribution to global GHG reductions if we expand the export of our resources to global markets. CAPP is pleased to see the $41-billion LNG Canada project underway, a bold step toward realizing this vision for Canadian energy exports. We also note the ongoing work at Woodfibre LNG and Kitimat LNG receiving regulatory approvals. More Canadian energy will mean a better global environment and ultimately, a better Canada. n


Making a case for Canadian-branded energy by Gary G. Mar, Q.C., President and CEO, Petroleum Services Association of Canada (PSAC) In Canada’s history, it has taken the efforts of many to build an economic legacy that benefits all Canadians. But, under our current rules, only the efforts of a few are required to stop it. One consequence of this condition is the paucity of investors in the Canadian energy sector. All that remains of investors are governments and all of their investment is with borrowed money. CEOs, such as Encana’s, have left the country. An accretion of regulations and legislation by federal and provincial governments and tax policy are further driving a flight of capital, both financial and human, away from Canada. Calgary was once a head-office centre that is now relegated to a branch-office town. Canada may return to the status of being a colony, albeit one where corporations, not a sovereign government, call the shots and extract our resources at colonial prices. While Sir Wilfred Laurier may have predicted the greatness of Canada at the dawn of the 20th century, he was unable to see far enough to accurately assess the current century. Canada, as a nation, has a poverty of ambition. We no longer aspire that achievement must be done, only that it might be done. Even the humble mom-and-pop grocery store aspires to have more than one customer. Canada should, too. How? Build a pipeline to West Coast tidewater and supply China and India. Concerned about Russia? Displace the buyers of Russian oil with Canadian oil. Vladimir Putin needs money to run his kleptocracy. Should Canada want to help mitigate GHG emissions into the global atmosphere? Yes! Then build a natural gas pipeline that contributes to the efforts to convert China from coal to gas-fired power plants. Should Canada be consistent in its human rights stand with the Kingdom of Saudi Arabia? Yes!

Then build a pipeline to tidewater in Canada and end our $2-billion-a-year reliance on oil from a repressive regime and provide the world with a Canadian option. Concerned about Americans treating the Northwest Passage as international waters? You should be. Then buy a fleet of icebreakers and move energy supply out of Churchill and take it to Rotterdam or to Shandong. If you think the Arctic is environmentally sensitive, you are right. So, establish the right rules to govern our territory and don’t let others use it with impunity. Should Canada help developing nations rise out of energy poverty? Yes! Then build a pipeline to tidewater so we can provide them with reliable, affordable, and safe energy to replace coal, wood, and dung. These ideas may be considered right or wrong, but there is an absence of voices of value talking about how Canada can become a great middle power. Canadians need voices that speak up as Canadians first and British Columbians second. Canadians should ask, “What’s in it for us?” and not, “What’s in it for me?” We should want a Canada that lives up to our potential as a great nation that competes with the world, and not one of squabbling duchies.

Association Profile The Petroleum Services Association of Canada (PSAC) is the national trade association representing the service, supply and manufacturing sectors within the upstream petroleum industry. PSAC is Working Energy and as the voice of this sector, advocates for its members to enable the continued innovation, technological advancement and in-the-field experience they supply to energy explorers and producers in Canada and internationally, helping to increase efficiency, ensure safety and protect the environment. n B.C. Oil & Gas Report • 2019-2020

15


B.C. imposes timelines for the restoration of oil and gas wells

R

ising rates of insolvency and an increase in the number of inactive and orphan sites is a concern shared among regulators of the oil and gas industry. British Columbia worked collaboratively with Indigenous and

non-Indigenous communities and industry to create a new regulatory framework, which was introduced by the BC Oil and Gas Commission (Commission) on May 31, 2019. The Dormancy Regulation makes B.C. the first province in western Canada to impose, in law, timelines for the restoration of oil and gas wells. It establishes prescribed timelines for decommissioning and reclamation of inactive wells to speed up site restoration and to reduce the potential for orphaned wells.

“After significant work by our dedicated staff, I’m pleased to be delivering on the commitment made last year to have hard timelines in place to ensure the timely cleanup of dormant oil and gas sites in B.C.,” says Paul Jeakins, the Commission’s CEO and Commissioner. “We are working together with both industry and Indigenous people to ensure the required clean up of dormant and orphan sites is completed in the most efficient manner.” The Dormancy Regulation will improve the rate of inactive site restoration and return land to its pre-activity state. The regulation gives each dormant well site a prescribed cleanup

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timeline and imposes requirements for decommissioning, site assessment, remediation, reclamation/restoration, notification, and reporting. The Dormancy Regulation is a fundamental part of the Commission’s Comprehensive Liability Management Plan (CLMP), which will ensure 100 per cent of the cost of

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industry. The CLMP will hold industry accountable for all costs

to collaborate with Indigenous communities. It will achieve this through three primary components: liability management, improving the rate of inactive site restoration, and addressing orphan sites. Looking at liability management, the Commission is enhancing stringent checks of each company’s financial health and history with the continued goal to mitigate liability risk and minimize pressure on the Orphan Site Reclamation Fund.


Basically, the Commission is evaluating each transaction to make sure companies have the means to manage assets through to closure. For addressing orphan sites, a new liability levy was introduced to provide funding for the Orphan Site Reclamation Fund. The levy is being phased in over the next three years, which will replace a previous fixed tax on marketable gas and petroleum and will ensure the Commission has adequate funds to restore all orphan sites in the province in a timely manner and at no cost to the residents of B.C. Work on dormant sites has already begun with approximately 10,000 - 11,000 wells set to be restored by 2036. For more information, please visit: https://bcogc.ca/industry-zone/dormant-sites. n

Restored site in the Milligan Creek area, located 90 kilometres north of Fort St. John.


Cathodic protection shielding

T

he industry definition of cathordic protection (“CP”) shielding is preventing or diverting the cathodic protection current from its intended path. It is widely known that most external corrosion on pipelines is

caused by disbonded coating that shields CP, not lack of CP. Industry standards state that the pipe should be protected against external corrosion by non-shielding coatings that allow the CP current to effectively protect the pipe’s external surfaces if disbondment occurs and water penetrates between the coating and the pipe. Most coating types have potential to shield the CP current from protecting the pipe’s external surfaces, since coatings are usually designed to be good insulators with high-dielectric strength and low permeability in the absence of defects. Therefore, the CP current shielding of pipeline coatings should be considered in conjunction with their adhesion to the pipe steel substrate. It has been demonstrated that corrosion does not occur on pipelines when the coating maintains proper adhesion to the steel substrate, whether the coating is shielding or non-shielding the CP current. Therefore, CP shielding becomes a matter only when the coating is disbonded. The protectiveness of shielding coating is dependent on whether a strong adhesion to the steel substrate is achieved. The coating property is not the only contributing factor to CP

the rocky soils, seasonal change of soil conductivity in wet and dry seasons, interference of stray current in soil, foreign metallic structures in the path or shorted casings could result in CP shielding. Therefore, pipeline coatings should be carefully selected to ensure they are truly compatible with CP when coating failure or disbondment occurs. However, the most important criteria for the safety of the pipeline is good adhesion of the protective coating to the steel substrate. Proper coating selection, application, insulation, inspection and careful CP monitoring are the best practices to eliminate the CP shielding effect of pipeline coatings. CP shielding is one of the most interesting aspects of the work Charter Coating Service (2000) Ltd. undertakes. Currently, there are no standard test methods so Charter’s laboratory has designed test methods which simulate field conditions as closely as possible to investigate the CP current shielding of different types of coating. n

shielding. If a defect appears in the disbonded coating, the geometry of the defect and disbondment also affects the flow of CP current toward the damaged areas and the local corrosion protection of the exposed steel substrate. Moreover, for underground pipelines, the properties of soil also play important roles in CP shielding. Even if the CP current can permeate through a coating to polarize the pipeline steel cathodicaly,

Impressed Current Cathodic Protection System 18 B.C. Oil & Gas Report • 2019-2020

Loss of adhesion due to soil stress allowing corrosion and pitting to develop under disbonded coatings where water penetrates but CP is shielded


B.C. Oil & Gas Report • 2019-2020

19


Connecting Canadian energy with global markets

O

ver the last three years, as

stored and shipped at atmospheric

option, opening up access to premium

many proposed energy projects

pressure. Chilled propane is then loaded

export markets and delivering stronger

in B.C. were challenged to

onto Very Large Gas Carriers (VLGC)

netbacks for every molecule that moves

move forward, AltaGas Ltd.

and delivered to global markets through

through the company’s value chain.

quietly advanced its Ridley Island

approximately 20 to 30 marine transport

Propane Export Terminal (RIPET).

shipments per year.

Through ongoing discussions with

The facility not only opens up new

local Indigenous communities, business

Cleaner Energy for Asian Markets

markets for Canadian energy, but

Global environmental concerns

leaders, emergency responders, and

benefits from a significant shipping

around greenhouse gas emissions

municipal, provincial, and federal

advantage, taking only 10 days to

from activities such as burning coal,

governments, the company was able

transport product to Asia compared to

are driving an increased demand for

to work closely with its key partners to

25 days from the U.S. Gulf Coast.

create broad support for the project and across Alberta and British Columbia to

Greater Value for Canadian Natural Gas Producers

Canada’s first propane export terminal.

AltaGas offers producers a uniquely

Located along British Columbia’s

complete solution for their propane. The

northwest coast, approximately 10

company has developed an integrated

kilometres south of Prince Rupert,

footprint in the Western Canadian

RIPET is capable of storing 600,000

Sedimentary Basin in northeast B.C.

bbls and exporting 1.2 million tonnes

and Alberta that offers producers gas

of propane per year. The terminal,

gathering and processing, liquids

now into its fifth month of operations,

handling, fractionation, and export

offloads approximately 50 to 60 railcars

services.

of liquid propane from B.C. and Alberta

Through RIPET and its unique

each day, transfers the propane to

structural advantage, AltaGas provides

storage, and cools it so that it can be

upstream producers with a high-value

readiness for propane to begin travelling

20 B.C. Oil & Gas Report • 2019-2020


propane – a cleaner burning fuel that is easily and safely transported. Currently, Asia is the world’s largest importer of LPG, with as many as 24 million households using propane for heating and cooking in Japan alone. To meet Asia’s growing demand for propane, AltaGas entered a multi-year agreement with Astomos Energy Corporation, a Japanese propane importer and distributor, to purchase at least 50 per cent of the propane shipped from RIPET annually. The ability to import Canadian propane is a significant advantage for Asian markets, as it provides greater energy security and supply diversification, while also enabling Canada to maximize the value of its natural resources.

More Opportunity for Local Residents Throughout the design and construction of RIPET, AltaGas worked closely with local Indigenous peoples, communities, and all levels of government to develop opportunities for economic and social development and skills training. In consultation

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with the Coast Tsimshian Nation communities and Coast Mountain College, AltaGas developed an Operator Training Program to provide First Nations and local residents with the technical skills needed for a rewarding career at RIPET. The program was a tremendous success, with 100 per cent of program graduates offered full-time roles at the Terminal. RIPET is charting a new course for Canadian energy and signaling to the world that, through strong partnerships, Canada can deliver on energy exports. n B.C. Oil & Gas Report • 2019-2020

21


Collaboration and community move Coastal GasLink forward

C

oastal GasLink Pipeline Project

activities to their communities. The

completed. That open, relationship-

has launched a Construction

program will continue throughout

based approach is something that

Monitoring and Community

construction of the 670-kilometre

Coastal GasLink believes is integral to

Liaison Program (CMCL) to

pipeline project designed to transport

the success of the project.

protect Indigenous culture and values

natural gas from the Dawson Creek

Harry Bodewitz, who works closely

along with the environment during

region to the LNG Canada liquefaction

with CMCL advisors from several

construction of the project.

facility in Kitimat. The project is planned

Indigenous communities located along

The program provides opportunities

for in-service in 2023.

the project corridor, has witnessed the

for Indigenous community members to

Transparency with Indigenous

value of the program. As construction

participate in construction within their

communities is core to the CMCL

ramps up, additional CMCL advisors

traditional territory for the purposes

program by promoting meaningfully

will be brought on to be involved in the

of observing, recording, and reporting

participation in the project and

program.

on implementation of construction

monitoring the work that is being

“Something might have been planned

22 B.C. Oil & Gas Report • 2019-2020


CMCL coordinators Harry Bodewitz, Rocky Desjarlais, and Mike Gouchie with current and former CMCL advisors from the Witset First Nation and Wet’suwet’ en First Nation.

initially, but once we actually get to

in 2012, the Coastal GasLink project

B.C. communities to ensure questions

the field, that plan may change or be

team has ensured Indigenous groups

are answered, concerns are addressed,

modified to make sure it’s done right,�

along the pipeline route have access

and feedback is gathered as the project

says Bodewitz. “In the CMCL program,

to meaningful opportunities to be

continues to move forward.

we have an opportunity to observe

part of project planning, jobs, and

Stay up to date on Coastal GasLink and

local contracting prospects for their

learn more about the project by visiting

businesses and their communities.

CoastalGasLink.com and following

For Mike Gouchie, a CMCL coordinator

The project team will continue to work

along on Facebook and Twitter @

from Lheidli T’enneh First Nation,

with all Indigenous groups and local

CoastalGasLink. n

what’s going on, discuss it and share that with our communities.�

the program provides a chance to be out in the field ensuring that matters important to his community are at the forefront of the construction program.

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“As a CMCL coordinator, I’m able to assist the CMCL advisors understand the scope of the project in our territories and make sure environmental issues are identified,� he says. To date, approximately $720-million in contract work has been awarded to Indigenous and local businesses for this project, including right-of-way clearing, medical services, security, and camp management needs. Since the project was announced

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B.C. Oil & Gas Report • 2019-2020

23


Why ministerial discretion does not belong in Bill C-69 by Gary G. Mar, Q.C., President and CEO, Petroleum Services Association of Canada (PSAC)

O

n March 22, 2019, my Board Chairman and I represented the Petroleum Services Association of Canada (PSAC) before the Standing Senate Committee on Energy, the Environment, and Natural Resources. We were

testifying on behalf of PSAC member companies, offering their views and perspectives on Bill C-69, which would enact the Impact Assessment Act and the Canadian Energy Regulator Act, as well as amend the Navigation Protection Act and a number of other acts. In short, Bill C-69 is the federal government’s attempt to impose new “environmental assessment” measures on Canada’s resource sector. It has been widely criticized as likely to further delay and discourage investment in Canadian pipelines, mines, and other resource infrastructure. Its “green agenda” threatens to trump economic considerations while adding new layers of bureaucracy, higher costs, longer delays, and more uncertainty on Canada’s resource sector. In preparing to appear before the Committee, we struggled with what we could present that hadn’t already been said many times before by other parties as deeply distressed as we are with the

In preparing to appear before the Committee, we struggled with what we could present that hadn’t already been said many times before by other parties as deeply distressed as we are with the disastrous consequences this bill portends.

disastrous consequences this bill portends. Nevertheless, we felt it necessary to reiterate the issues of deep concern that had also come to the fore in our own assessment of the bill’s likely impact. We pointed out that what began in 2014 as a downturn due to low commodity prices, a situation outside of the control of a federal or provincial government, has escalated into a dramatic flight of capital from Canada in response to factors that are within the control of governments. These include competitiveness, regulatory uncertainty, the tanker moratorium, the clean fuel standard, methane emissions reduction regulations, carbon taxes and, finally, Bill C-69. At a time when investors are looking for regulatory certainty and firm timelines,

24 B.C. Oil & Gas Report • 2019-2020


override is that you will invariably have other ministers, MPs and others with agendas lobbying the minister in question to exercise his or her discretion in a certain way. The clear danger is that issues of national interest may be forced to take a back seat to those of political interest. Our advice to the Committee? If you don’t want the PMO, ministers or others exercising undue pressure upon an Bill C-69 in its current form threatens the opposite. Canada will continue to sacrifice billions of dollars of economic

individual minister, then take away that possibility. The process must not be politicized.

prosperity and growth even as jobs continue their flight to

Let’s take to heart what the PM himself said about the SNC-

other countries.

Lavalin affair, “We will stand up and defend and create jobs,

One of the biggest problems with Bill C-69 is that it would give the federal environment minister added discretionary power on deciding whether a project goes ahead or not. This politicization of the process has been roundly criticized by numerous thoughtful commentators, including the four Atlantic premiers who told the Prime Minister

and we will always defend our institutions and rule of law.” By all means, create new and better institutions and laws as they deal with resource development, but then stand out of the way and let them work with certainty, objectivity and timeliness to restore investor confidence and bring back those jobs for Canadians. n

that Bill C-69 in its current form “will not meet the dual objectives of environmental protection and economic growth”. They went on to say that a particular concern

Two is stronger than one.

is that the bill “places final decision-making power in the hands of the Minister or Governor in Council and provides the opportunity to veto the results of thorough scientific assessment and review of evidence”. Telling the Committee that PSAC shares this concern added nothing new to the debate. What is new is a key lesson coming out of the ongoing SNC-Lavalin saga. In that regard, we reminded the Committee that one of the purposes of administrative law is to take political decisions out of the hands of politicians and place it in the hands of subject experts. That’s what we seek: subject experts able to move the process forward in an objective manner. Legislators have the key responsibility of establishing the

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parameters within which such quasi-judicial administrative bodies exercise their authority. They then need to stand out of the way and let their handiwork prove itself. The problem with politicizing the process by adding a ministerial

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B.C. Oil & Gas Report • 2019-2020

25


Oil and gas experts have an important role in setting a realistic energy future By Stewart Muir

I

ntolerance for the development and use of hydrocarbons is one of the defining factors of the current time. Much of this is channeled through pressures on industry and government to adopt climate-related policies making

it ever more difficult to work with the most reliable and abundant energy solutions available to us – hydrocarbons. For many professionals in energy-supporting fields such as geophysics, engineering, law, and finance, the rapid politicization of these issues is not just about the challenges they face at work. It is a cultural thing that translates to the kitchen table where children return home from school demanding to know why mommy or daddy are drawing their livelihood from a horrible, planet-killing industry that a Swedish teenager says has to go away. Broadly speaking, it’s difficult to disagree that it’s desirable to never stop improving our energy systems and thinking. I’ve yet to meet a professional in the oil and gas fields who says otherwise. Willingness to try new things is the dominant characteristic of the Canadian energy people. If it wasn’t, there wouldn’t be an oil sands and shale revolution. Renewables evangelists talk about a “moonshot” to rapidly disrupt conventional energy systems. As the Manhattan Institute points out in a recent paper, “transforming the energy economy is not like putting a few people on the moon a few times. It is like putting all of humanity on the moon— permanently.” The “new energy economy” is an exercise in magical thinking, argues author Mark Mills. For the cost to drill a single shale well, one can build two 500-foot-high, two-megawatt (MW) wind turbines. Those two wind turbines produce a combined output averaging out over the years to the energy equivalent of 0.7 barrels of oil per hour. The same money spent on a single shale rig produces 10 barrels of oil per hour, or its energy equivalent in natural gas, averaged over the decades. 26 B.C. Oil & Gas Report • 2019-2020

Mills concludes, “Hydrocarbons — oil, natural gas, and coal — are the world’s principal energy resource today and will continue to be so in the foreseeable future.” Stating this simple reality, one determined by the laws of physics, has become taboo. We are all supposed to politely go along with the messianic idea that windmills, solar panels and batteries are about to save humanity. A false sense of confidence is leading politicians at all levels of government to drive policies that ignore the laws of physics. They do this out of fear of angering a renewables lobby that has been extremely successful in constructing an ecosystem of cultural, social, and political support buttressed by strategies such as climate lawsuits and elaborate public affairs campaigns. As the best-endowed energy nation of all the world’s countries, Canada should be on a path to increased economic competitiveness, enhanced environmental performance and long-term social success. Running away from innovation in hydrocarbons will not help us to accomplish any of that. Leave it to others to evangelize for an energy miracle that will provide consequence-free energy for all (if such a thing can exist). Those who understand the fundamentals, and can realistically define what’s required to meet the challenges, should not feel restrained from speaking up about what they know and believe. Stewart Muir is executive director of the Resource Works Society, based in Vancouver. Follow him on Twitter at @sjmuir or contact him directly at stewart@resourceworks.com. n


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