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Woodfibre LNG Ltd. one step closer to receiving project approval in B.C.

Publications mail agreement #40934510

B.C. attains a number of First Nations benefits agreements for pipelines

Enbridge’s Line 3 Replacement Project offers hope for future Canadian economic growth LNG-Buy BC program successfully works with B.C. companies and First Nations businesses


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B.C. Oil & Gas Report 2016

British Columbia

Oil & Gas Report

is published by:

2016

in this issue 8 Message from the Premier of B.C., the Honourable Christy Clark 10 Message from the B.C. Minister of Natural Gas Development, Rich Coleman 14 Message from the Minister of Aboriginal Relations and Reconciliation, John Rustad 15 Doing things the right way: The Canadian way 16 Making the case for getting your company into social media 18 Pipeline investment: An important priority 19 LNG-Buy BC program continues to successfully work with B.C. companies and 20 Let’s stick to the facts: The CAODC 21 B.C. LNG debate continues to provoke frustration for both sides 22 Progress and profitability: The future of B.C., a Q&A with Art Jarvis, executive director of Energy Services BC

24 LNG in Prince Rupert: The cost of waiting for the environmental green light

26 Enbridge’s Line 3 Replacement Project offers hope for future Canadian economic growth

28 Pipelines and First Nations: Partnerships in the making 30 $11 billion Pacific Northwest LNG Project approved 31 NEB approval: Major milestone for Trans Mountain Pipeline 32 One step closer: Woodfibre LNG signs customer agreement 34 Fort St. John will be heard 35 New leadership: Same commitment 36 How the ASA regulation in B.C. can help the oil and gas sector harmonize safety codes and standards

37 Oil and gas pipelines are part of the sustainability equation 38 SPE provides invaluable networking and knowledge sharing through the downturn 40 Let’s take up the challenge of carbon capture 42 Your worksite, our backyard: Coast Mountain Wireless 44 Matrix Service provides top-tier service to Western Canada’s energy companies 46 Van Houtte Coffee Services – Specializing in coffee services for the oil and gas sector

DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, Manitoba Canada R3L 0G5 President David Langstaff Associate Publisher Jason Stefanik Managing Editor Shayna Wiwierski shayna@delcommunications.com Sales Manager Dayna Oulion Account Representatives Brian Gerow | Jennifer Hebert Mic Paterson | Anthony Romeo Contributing writers Desiree Bahr | Brian Cochrane Andrea Danelak | Melanie Franner Jeff Gaulin | Joseph Maloney Leonard Melman | Stewart Muir Robin Rorick | Mark Salkeld Mark A. Scholz | Tammy Schuster Deb Smith | Kylie Williams Gordon Wilson Production services provided by S.G. Bennett Marketing Services www.sgbennett.com art Director Kathy Cable Layout & Design Dana Jensen Advertising art Sheri Kidd

© 2016 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 publisher­in no way guarantees nor warrants­ the 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. Publications Mail Agreement #40934510 Return undeliverable Canadian addresses to: DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, Manitoba R3L 0G5 Email: david@delcommunications.com

46 Index to advertisers 6

B.C. Oil & Gas Report • 2016

Printed in Canada | 10/2016


Message from the B.C. Premier

The Honourable Christy Clark

British Columbia’s opportunity is here

T

here’s never been a better time to invest in British Columbia. We have Canada’s leading economy, growing at twice the national average, and are the only jurisdiction with four consecutive balanced budgets. We’ve achieved that despite challenges in the global market for natural gas. And while low commodity prices have delayed our original plans – we are making progress. Proponents have already invested over $20 billion to further British Columbia’s LNG opportunity. These companies have spent capital to acquire natural gas assets and move development forward, including exploration and production. The provincial government is developing project development agreements with LNG proponents, working with First Nations to strengthen environmental stewardship, and partnering with trades associations to increase skills training – all of which puts B.C. in the best possible position to build a competitive new export industry. We’re working to develop our natural gas sector for export for three main reasons. First, to create and sustain good-paying jobs for British Columbians. Engineers, pipeline fitters, truck drivers, field operators, support services, construction, and more – jobs that people can depend on, and raise a family on. Second, it’s an opportunity to build a new resource industry with First Nations as real partners from day one, giving them the resources to build a brighter future. That’s why we’ve created partnerships in skills training, good jobs, economic growth, and environmental stewardship projects. Throughout the province, 62 pipeline benefits agreements have already been reached for four major pipeline proposals linked to LNG. Finally, B.C.’s LNG can make a real difference in the fight against global climate change. As a transition fuel, natural gas will play a major role in both energy and economic security for several more decades as renewable energy sources continue to evolve. Climate change is an issue with no boundaries, and B.C. has a 150-year supply of the world’s cleanest-burning fossil fuel. B.C.’s natural gas industry isn’t new; we’ve been safely extracting and producing it since the 1960s. We’re in this for the long-term and we are still on a pathway that’s moving in the right direction – forward. So while prices are low today, what really matters is what the price will be 10, 15, and 25 years down the road. Demand for energy will continue to increase around the world; it’s only a matter of time until British Columbia’s natural gas is a global commodity. S For more information about British Columbia’s natural gas and LNG opportunity, visit www.lnginbc.ca.

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B.C. Oil & Gas Report • 2016


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Message from B.C. Minister of Natural Gas Development

The Honourable Rich Coleman

Fundamentals in place for growth & export

D

emand for energy, and more specifically clean-burning natural gas, has created a new opportunity for long-term growth. In a few short years, our natural gas prospects have increased significantly. Once considered a marginal contributor to Canada’s energy supply chain, we have positioned British Columbia to become a North American leader in the global marketplace. This opportunity remains strong, in large part, because we have gained international credibility as a competitive jurisdiction for investment and new infrastructure development. Despite current-day challenges in the global marketplace, progress has been constant in B.C. and the fundamentals to support liquefied natural gas exports are firmly in place. Long-term royalty agreements are now an option for producers operating in British Columbia. This new approach formalizes royalty rates over a period of 15 years or more, providing companies with the details of the returns they must remit to government annually – an advantage for any producer who has long-term plans to supply natural gas to an LNG export project or value-added production facility. In return, producers commit to minimum levels of production and investment, guaranteeing jobs for British Columbians and facilitating the industry’s growth. The first long-term royalty agreement, signed by Progress Energy and their partners, will see billions invested annually, 10 B.C. Oil & Gas Report • 2016

subject to a final investment decision by Pacific Northwest LNG – a prospect that is even more likely now that the federal government has approved the facility. Last year alone, Progress Energy invested over $2 billion and supported 4,000 jobs in exploration and development. British Columbia’s long-standing infrastructure royalty credit program was expanded earlier this year as well, providing companies with a longer timeframe to work new capital expenditures into their plans – another important measure to sustaining development during the current down-time in the marketplace. In addition to our work on royalties, project development agreements were implemented to increase B.C.’s competitive edge for new, long-term investments specifically linked to liquefied natural gas exports. These agreements provide proponents with security because they know the tax and royalty structure they are proposing to operate under will remain stable. The signs of a brighter future are gaining momentum in First Nations communities. The provincial government is reaching agreements with benefits – both immediate and long-term – that facilitate economic opportunities in multiple communities. In the last year, an Aboriginal Skills Training Development Fund was launched and 1,000 Aboriginal people have already received community-based skills training. On a grander scale, B.C.’s Skills for Jobs Blueprint continues to re-engineer the province’s education and skills-train-

ing programs, so the focus remains on in-demand jobs. Skills development and opportunities are province-wide, with the Tilbury LNG expansion providing a microscopic view of the opportunity in front of B.C.’s northern communities. In Delta, FortisBC is expanding their facility to serve domestic needs and potential export. The expansion has already provided $60 million in contract work to over 100 companies; businesses in neighbouring communities such as Vancouver, Langley, Abbotsford, and Coquitlam. So far, more than 470 tradespeople have been registered to work on the project. The benefits of diversifying B.C.’s natural gas sector are materializing. The fundamentals are in place to support development, attract international customers, secure additional investments, and ultimately build a new LNG export industry – the first of its kind in Canada. It’s a long-term endeavour and one with growing potential, as energy needs and the desire for cleaner energy sources continues to increase around the world. In the last few years, B.C. has gained credibility as a marketplace for new energy supply and export. We are optimistic that it is only a matter of time before the world energy market improves and LNG exports are shipped from our province. When the global market supports it, we are ready. S For more information about British Columbia’s natural gas and LNG opportunity, visit www.lnginbc.ca.


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Message from the Minister of Aboriginal Relations and Reconciliation John Rustad

O

ur government is working hard to ensure First Nations can fully participate in liquefied natural gas development – in fact, B.C.’s First Nations communities benefit from the jobs, economic stimulus, and environmental stewardship opportunities the LNG industry is bringing to our province. As we maintain a strong focus on building the cleanest LNG industry in the world, First Nations support for responsible development continues to grow. In fact, the Province now has one or more pipeline benefits agreements with nearly every eligible First Nation in Northern B.C. To date, we have signed 62 pipeline benefits agreements with 30 of 32 eligible First Nations (that is more than 90 per cent) for four proposed natural gas pipeline routes. Indigenous people are a vital part of B.C.’s workforce, and we want to make sure more Indigenous women and men have improved access to jobs and share in the prosperity LNG development is bringing to British Columbia. Last year, we committed up to $30 million over three years for aboriginal skills training projects and partnerships. To date, more than 1,000 First Nations members have received skills training through programs supported by the fund. Over a one-year period, funds have been invested in 23 skills community-driven training projects for more than 45 First Nations, as well as urban/off-reserve Indigenous people. First Nations members are getting job-ready with a variety of skills that are transferable to a broad range of occupations, especially LNG-related jobs. We’ve also allocated additional funding support for environmental stewardship projects to be developed along the

14 B.C. Oil & Gas Report • 2016

LNG corridor in Northern B.C. with First Nations and LNG proponents. The $30 million Liquefied Natural Gas Environmental Stewardship Initiative (LNG ESI) was created to collaboratively address First Nations environmental priorities, create a new way to approach to resource stewardship and incorporate traditional values into resource management decisions. For too long, many First Nations have been marginalized, their communities saddled with managing poverty, not prosperity. Family-supporting jobs and economic opportunities have been elusive or located far from home, and other economic opportunities have been limited or virtually non-existent. We are committed to changing this scenario. We share the goal of First Nations leaders who want new economic and employment opportunities that respect the environment, and Indigenous traditions and values, and have the potential to provide tangible social and economic benefits for their communities. Moving forward, we remain committed to reconciliation with First Nations. We know that reconciliation happens at the community level and can have a different meaning for each community. It must be flexible and requires strong understanding and shared relationships. Our vision is a British Columbia where First Nations communities are healthy, prosperous, sustainable and self-determining. As we continue to grow our partnerships with First Nations in the development of liquefied natural gas, we’re also dedicated to ensuring all British Columbians, Indigenous and non-Indigenous alike, benefit from the tremendous prosperity and economic opportunities that the LNG industry is bringing to our province. S


Doing things the right way: The Canadian way By Jeff Gaulin, Vice-President, Communications, CAPP

T

he world is going to continue to need oil, and lots of it. The International Energy Agency (IEA) forecasts global demand for energy to increase 32 per cent by 2040, more than a quarter of that total energy demand will be from oil. China and India are expected to lead that charge with their combined demand growing by more than 10.8 million barrels per day by 2040, according to the IEA. Combined, they represent almost 84 per cent of global oil demand increase between 2014 and 2040. Yet today Canada does not ship a single barrel to either country. By 2030 Canada’s oil production will increase by 28 per cent from current levels to 4.9 million barrels per day, up from 3.8 million barrels per day in 2015. Supply is the volume of oil after imported diluent is added to production; it is expected to increase 37 per cent over 15 years, growing to 5.5 million barrels of oil per day by 2030. Canadian oil production will continue to increase in the years to come because global demand for oil will continue to increase. This makes for the perfect opportunity to be a global supplier of choice. A 2014 study commissioned by the Canadian Association of Petroleum Producers (CAPP) and produced by WorleyParsons looked at producing regions similar to Alberta in terms of recent lev-

els of oil and natural gas activity, maturity and openness (relative to the region) of government with a focus on stringency, transparency, and compliance during the three stages of a major oil and natural gas project: construction, operations and closure. This study is available on www.capp.ca, under Third-Party Reports. Consistently, Alberta was on par or above the standards of the other producing regions, proving our world-class regulatory system, and that Canadians can be confident that our oil and natural gas is being produced at a standard that meets or exceeds other producing regions. That’s because Canadians believe in doing things the right way, the Canadian way. Almost all the pieces are there for Canada to be the global supplier of choice: an increase in global demand, Canada having the supply the world needs, and a track record of responsible energy development. The challenge is getting it to the people that need it. Currently Canada’s pipelines have the capacity to move about four-million barrels of oil per day, last year’s average supply was 3.981 million barrels of oil per day. That small margin means Canada is in dire need of additional pipeline capacity and access to international markets on Canada’s east and west coasts.

By 2030 Canada’s oil production will increase by 28 per cent from current levels to 4.9 million barrels per day, up from 3.8 million barrels per day in 2015.

If approved, the Trans Mountain Expansion Project would add 590,000 barrels of oil per day of transport capacity from Alberta to Burnaby and access to tidewater on Canada’s West Coast. This is the expansion of a pipeline that has been around for more than 50 years. Northern Gateway would have capacity to carry 525,000 barrels of oil per day from Alberta to Kitimat, again giving access to Canada’s West Coast. Development of these pipelines would mean increased market access and an opportunity to supply North American and Asian markets; markets that will be using increasing amounts of oil in the near-to-medium term. We are at a crossroads with paths leading in different directions. In one scenario we maintain the status quo and continue to limit our access to new markets. Foreign countries will reap the benefits of increased energy demand and Canada will not become a global supplier. In the other scenario, Canada increases pipeline capacity and oil production to ensure the long-term success of our oil industry and the economic benefits that flow to all Canadians. All the while knowing we are providing a product that is produced and transported responsibly at a world-leading standard. The choice is clear. S B.C. Oil & Gas Report • 2016

15


Making the case for getting your company into social media

I

s there a case for smaller energy and energy services companies to engage in social media? There are significant pros and cons to wading in, so it is no wonder this can be a hotly debated topic for management. Nothing is easier than avoiding the question completely. If your expertise lies in a specialized niche of the natural gas value chain, what is to be gained from straying off into the murky world of public communications? Especially at a time when budgets are squeezed to the limit, managers might well ask whether it would be reckless to put limited marketing dollars into Twitter and Facebook. We are at a moment in history when the oil and gas sector is facing unprecedented scrutiny across all levels of society. In

many cases this means it has been tarred with a broad brush, a state of affairs that is often perplexing to those in the industry who understand how totally dependent society today is upon the responsible extraction and production of oil and natural gas. Today, natural gas supplies 34 per cent of Canada’s primary energy. The National Energy Board says that by 2040, as cleaner gas pushes out oil, coal and nuclear, that share will rise to 44 per cent. Today’s high environmental standards have created many jobs in managing the risks and impacts of oil and gas development – in air protection, GHG reduction, and water protection. Clearly, we cannot do without natural gas if we expect to create a greener society. Unless we want to purchase it from

By Stewart Muir

foreign nations, local people must be in place to safely locate, extract, and process natural gas before delivering it to consumers in a variety of forms. It’s a great story. But have you ever heard your social-media-saturated children, grandchildren or nieces and nephews talking about it? Social media platforms like Facebook, Twitter, and LinkedIn give anyone with an opinion a level playing field to reach audiences in ways that only a few years ago were accessible to the information elite. Campaigners against fossil fuels are today following a long tradition of mass activism. Social media represents a natural opportunity for resource opponents to get even better at winning public favour. It is inexpensive, accessible from anywhere, and in the right hands can produce expo-

A NATION TO NATION GATHERING ON STRATEGY AND SOLUTIONS OCTOBER 3RD & 4TH - HYATT REGENCY IN CALGARY, ALBERTA Bringing together Industry, Government and Indigenous Leaders to discuss challenges facing the pipeline industry, as well as opportunities for Indigenous involvement and meaningful participation in determining solutions.

SPEAKERS INVITED: •

The Right Honourable Justin Trudeau, Prime Minister of Canada

National Chief Perry Bellegarde, Assembly of First Nations

Dr. Wilton Littlechild

Honourable Carolyn Bennet, Minister of Indigenous and Northern Affairs

Honourable Catherine McKenna, Minister of Environment and Climate Change

Honourable James Gordan Carr, Minister of Natural Resources

Provincial Leaders who have natural resource development issues and interests

The National Energy board

Canadian Association of Petroleum Producers

Canadian Energy Pipeline Association

National and Regional Indigenous Leaders

For more information Phone: 403.281.8308

16 B.C. Oil & Gas Report • 2016

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nential rewards in the battle for public opinion. We’ve seen the opponents of oil and gas extraction revel in the freedom of social media. Tech-friendly Vancouver has become a global hub of activism focused on limiting resource activities. Meantime, industry has seemed by comparison to be a plodding participant at the best of times. There are many reasons for this. Management may see social media as too risky to be manageable. Or they might simply prefer to pour their energy into operations, red tape and investor relations. It’s not about picking fights or getting drawn into other well-known pitfalls of social media. The industry could do itself a big favour by taking up these new tools to make friends. I regularly encounter social media specialists who work with companies to help them get stories out. Executives who show themselves to be personally willing to attach their own social media identity to interesting content can develop genuine, enthusiastic followings. A few suggestions for starting a management conversation around social media­: 1. What is your company doing to make a positive difference in its local community? 2.  Who are your employees and what do they, themselves, have to say about how your company is striving to be a leader in environmental and social responsibility? 3. Beyond employees, how are you interacting in social media with natural supporter communities (First Nations, local residents who benefit from company operations, other companies and associations) to discuss issues in common? In my opinion, every company, no matter how narrow its niche, would do well to think about how it can be part of quality social media conversations. The cost of acting is small, yet the cost of doing nothing will only rise and rise. Stewart Muir is founder of the Vancouver-based Resource Works Society. S

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17


Pipeline investment: An important priority

N

orth American pipeline capacity is in the spotlight after a decade of surging oil and natural gas production in the United States and Canada. While the most famous pipeline, Keystone XL, is one that hasn’t been constructed, the tens of thousands of miles of pipelines transporting oil and natural gas every day demonstrate the benefits – and impressive safety record – of this crucial infrastructure. More than 199,000 miles of liquid pipelines crisscross the United States. According to the latest data collected as a part of the Pipeline Safety Excellence initiative, pipelines transported about 16.2 billion barrels of crude oil and petroleum products in 2014 at a safety rate of 99.999 percent. Pipeline Safety Excellence, launched in 2014 to ensure continual safety improvements, also reported that pipeline releases along the sensitive areas of the right-of-way dropped 50 per cent from 1999 to 2013. Particularly, two causes that have been excessive in the past have significantly decreased. These are corrosion in18 B.C. Oil & Gas Report • 2016

cidents, which are down 76 per cent, and damage from third-parties, which have declined 78 per cent, in this same time period. While these trends show progress, the industry focus is prevention of all incidents, so operators continue to advance technology that can better detect threats to pipeline integrity. The industry also continues to develop safety standards promoting best practices that achieve the industry-wide goal of zero incidents. This year, the American Petroleum Institute plans to issue a new recommended practice, RP 1176, to strengthen the industry’s capability to predict and prevent crack-related pipeline failures by enhancing the gathering, integration, and analysis of data. RP 1174, issued in December 2015, provides operators with an enhanced framework to enable continual improvement of the pipeline emergency planning and response process. Also issued last December, RP 1175 provides guidance on the development, implementation, and management of a sustainable leak detection program. Finally, RP 1173,

By Robin Rorick Pipeline Safety Management Systems, was published last summer and provides a scalable and flexible framework ensuring companies continually assess their practices to guarantee the appropriate steps are taken to prevent spills. Commitment to continual safety improvements is nothing new, but the 21st century energy resurgence has created new infrastructure needs. Prior to the production advances of the past decade, the priority was to transport imported energy from the coasts to points inland. Now that production is surging in places like North Dakota, Pennsylvania, and the Canadian oil sands, infrastructure priorities have shifted. According to a study from Energy Policy Research Foundation, Inc., shipments of crude oil from the Midwest to the Gulf of Mexico jumped from just 50,000 barrels per day (b/d) in 2008 to over 380,000 b/d in 2013, while shipments from the Gulf to the Midwest decreased 500,000 b/d. For producers, inadequate transportation infrastructure creates bottlenecks that can raise production costs and depress revenue. The lack of efficient access to markets can lead to lower well-head values and reduced revenues for royalty owners, as well as local, state and federal governments. Failure to address these limitations could discourage production investment -- along with the associated employment and economic advantages that greatly benefit consumers. Updating energy infrastructure in the United States could generate up to $1.15 trillion in new private capital investment and support 1.1 million new jobs over a 10-year period, according to a study by IHS. Pipeline investment alone could support up to 830,771 average annual jobs. Pipeline constraints, on the other hand, can be costly to consumers too. According to the U.S. Energy Informa-


tion Administration (EIA), residents of the northeastern U.S. paid up to 68 per cent more for electricity than the national average in the winter of 2014, while industrial users paid up to 105 per cent more for electricity than the national average. Failure to expand natural gas and electricity infrastructure in the northeast could cost the region’s households and businesses an estimated $5.4 billion in higher energy costs and more than 167,000 private-sector and construction

jobs between 2016 and 2020, according to a study from the New England Coalition for Affordable Energy. Some progress is underway. EIA reports that over the past 10 years pipeline operators have invested more than $57 billion to complete more than 400 projects, adding about 15,200 miles of pipeline and approximately 151,300 million cubic feet per day (MMcf/d) of capacity to transport natural gas to consumers and businesses. At the same time, according to EIA, op-

erators have announced plans to invest more than $40 billion on 105 projects to add more than 7,500 miles and more than 72,650 MMcf/d in pipeline capacity. It’s a good start, but more expansion is needed. With a 99.999 per cent safety rate, pipelines are among the safest, most efficient methods for transporting energy. To maintain and build upon the economic benefits of North America’s energy renaissance, additional pipeline investment must be a priority. S

LNG-Buy BC program continues to successfully work with B.C. companies and First Nations-owned businesses By Gordon Wilson

N

atural gas has been a fact of life in B.C. since 1947. Currently, 1.1 million British Columbians living in 135 communities use natural gas every day. With 44,000 direct and 67,000 indirect jobs attached to the natural gas industry generating up to $2.6 billion helping to pay for B.C. hospitals, schools, and community services, British Columbia’s commitment to this industry remains high. Investment in natural gas development rose from $1.1 billion in 1999 to $7.9 billion in 2008. To date, most of British Columbia’s natural gas has been exported to the United States. However, with recent investment in U.S. domestic shale gas reserves, that market is in decline. British Columbia is not immune to global economic forces, and competition within the energy sector is fierce. With huge reserves, a favourable climate, geographic proximity to Asian markets, and a committed government, British Columbia is well positioned to enter new markets. To do so we need to be competitive. In the fall of 2013, Premier Christy Clark announced the LNG-Buy BC program. The mandate of this program was to assist B.C. and First Nations businesses to properly prepare for engagement within the LNG industry. Today, the LNG-Buy BC brand has become well recognized and supported. Recently, LNG-Buy BC worked with Canadian Procurement Services, Fortis, and Bechtel on the first phase of the Tilbury LNG project in Delta, B.C., which highlights how communities can directly benefit communities from LNG projects through local company and employee hires. Compared to the projects planned for the Pacific Northwest, the Tilbury project is small, but provided a good pilot project

to study local procurement and to test the LNG-Buy BC approach. The Fortis Tilbury LNG plant has been in operation without incident since 1971, highlighting the safety of LNG. Since the October 21, 2014 ground-breaking, a modest project spend of just over $100 million on Phase 1 provided direct benefit to 140 B.C. companies in 10 local communities. Most of the 870 tradespeople registered to work on site call Delta or the immediate surrounding region home. These medium- to high-paying jobs, have been filled by skilled B.C. workers who are well positioned to further their careers when the LNG industry expands. Apprenticeships and training opportunities have also flourished as a result of the project. During significant construction activities, 60 apprentices ranging from cement masons, iron workers, scaffolders and pipefitters benefitted. Through FortisBC’s contract with Tsawwassen First Nation (TFN) Construction/Matcon Civil Joint Venture (TMJV) for civil construction and environmental services, TMJV has also provided 25 employment and training programs and more than 625 hours of training for workers in conjunction with the project, including a work experience program to prepare young workers for jobs in the LNG industry. The two most advanced Pacific Northwest projects are estimated to be 30-times larger than Tilbury, providing the same opportunities for B.C. companies, albeit on a much larger scale. Under the direction of Minister Shirley Bond, Ministry of Jobs, Tourism and Skills Training, the LNG-Buy BC program continues to successfully work with B.C. companies and First Nationsowned businesses. They are overwhelmingly embracing the challenge and participating in the growth of this exciting and vital sector. S B.C. Oil & Gas Report • 2016

19


Let’s stick to the facts By Mark A. Scholz, President of the Canadian Association of Oilwell Drilling Contractors

O

il Respect was launched in March 2016 and public support has been overwhelming. One of the campaign’s objectives is to provide regular Canadians with an opportunity to stand up for Canada’s oil and gas industry and the workers who make it run. It’s a goal that has attracted supporters from Victoria to St. John’s, which isn’t surprising. Oil workers and oil families matter. The industry employs over 500,000 people, and everyone in the industry knows people who have lost jobs; a friend, a father, a daughter; more than 100,000 people unemployed because of the recent downturn. But oil workers aren’t just losing their jobs, families are losing their homes. It’s the worst slump since the 1980s, and soft oil prices aren’t the only problem. Radical environmentalists, foreign celebrities, and grandstanding politicians continue to distort the record of Canada’s oil and gas industry, further imperiling job prospects for oil workers. Oil Respect is also about correcting the record against these exaggerations, half-truths and fabrications. If we don’t push back with the facts, bizarre ideas can take root in the media and among people in positions of influence. For instance, many opponents of Canada’s oil and gas industry would have you believe that if Canada quit producing oil, the world’s greenhouse gas emissions would go down. This of course is untrue. Other nations would immediately step in to make up the extra production. In fact the current swoon in oil prices has been caused by increased production from countries like Saudi Arabia, Iran, Russia, and Venezuela. Unfortunately, none of those countries meets the same strict carbon emission standards as Canada, not to mention Canada’s far-higher labour, safety and human rights standards. Despite this, imports of Saudi, Nigerian and U.S. oil are on the rise in Canada. We believe Canada would be better off in every way if eastern refineries were taking oil from Alberta instead of Algeria, but we need pipelines to do that. To put the argument the other way around, the world would be better off in many ways if a bigger share of the world’s oil production came from Canada. Furthermore, the International Energy Agency projects that the world demand for oil will grow in the decades ahead. If so, doesn’t it make sense for that oil to come from a country like Canada? In the meantime, many companies are developing new ways to produce clean and renewable energy. In Canada, the leaders in the production of wind and solar energy are also some of Canada’s largest oil and gas companies, such as Enbridge, Suncor, Shell and Trans Canada. Profits from oil and gas development and transport make that possible. Again, these are facts.

20 B.C. Oil & Gas Report • 2016

Blake Richards, MP from Airdrie Banff. But the revenues from oil and gas development, transport, and processing help in other ways too. Not only do they come back to us in the form of profits in our RRSPs and to the Canada Pension Plan, they also provide billions of dollars in revenues to Canadian governments. On average, $17 billion a year comes from oil and gas to fund nurses, teachers, firefighters, and police officers. These are the facts of life in Canada and if we ignore them we risk basic government services. Finally, it is a fact that the safest and most efficient way to transport oil, or any petroleum liquids, is by pipeline. Building pipelines also ensures that we can move Canadian oil to market, meaning better profits for companies, more revenues for governments and more jobs for workers. The proposed Energy East pipeline would mean a $14 billion shot in the arm for the Canadian economy. Trans Mountain would inject $9 billion, and all of that $23 billion dollars would be private money. Tens of thousands of workers would be employed without asking taxpayers to pony up. The much discussed “middle class” would benefit as soon as approvals were received. Again, these are facts. Oil Respect ensures that regular Canadians, and the hard facts are at the forefront in the sometimes emotional, but entirely legitimate discussion about Canada’s use of our oil and gas resources. Help us get the attention of governments by signing the petitions at www.oilrespect.ca and by liking our Facebook page. Let’s fight together to protect and promote an industry that has done so much to make Canada the best country in the world. S


B.C. LNG debate continues to provoke frustration for both sides By Leonard Melman

S

imply stated, natural gas, specifically liquefied natural gas (LNG), is big business. Some of the strongest reasons have to do with reliability of supply and the simple fact that from an environmental point of view, natural gas burns much cleaner than other forms of fossil fuels, thereby making it preferable in the modern political and regulatory environments. As it happens, Canada’s supply of natural gas has been growing rapidly, thanks in great part to the process known as fracking, which has enabled the industry to substantially increase production in recent years, and which has brought relative prosperity to cities like Dawson Creek and Fort St. John here in B.C. However, serious problems have arisen when it comes to bringing this increased supply of natural gas efficiently into the world’s demand markets. First, there is the difficulty of expanding pipeline capacity, given the evident hostility of the environmental community to any such expansion. And then there is the entire subject of LNG. In terms of worldwide demand for LNG, the simple problem is that many of the largest natural gas demand nations have slight to non-existent domestic natural gas production, meaning they must import natural gas from abroad and the only available means of such importation is to liquefy natural gas. Simply put, LNG is natural gas which has been converted from gaseous to liquid form. However, in terms of British Columbia’s LNG industry, this creates several major regulatory problems. First, these plants tend to be enormous, both in size and expense, and also, according to the environmental community, they tend to be heavy polluters. Next, the LNG they produce must be transported to international markets and this involves the heavy use of complex port facilities in environmentally sensitive coastal waters. Third, the envisioned heavy traffic from shipping vessels within those coastal waters constitutes yet another environmental hazard. Lastly, supplying LNG plants with natural gas suitable for conversion will most likely require the expansion of natural gas pipelines across some of B.C.’s most enchanting scenery – and also across several First Nations territorial lands. At the same time, provincial government economists have calculated the potential revenues to be gained from the LNG industry could become enormous and suggest they could result in a transformation of the provincial economy for the bet-

ter. Based on those calculations, the present Liberal B.C. government made expansion of the LNG industry a centerpiece of their most recent campaign. And yet, the B.C. LNG industry’s problems seem to be intensifying as of late. First, other nations have also calculated the tremendous revenues from successful LNG operations and they have gone ahead and entered actual production far faster and far more effectively than the Canadian industry. Other seacoast nations including Algeria, Malaysia, Indonesia, Qatar, and Australia have actually seen completion of LNG facilities which are now part of the world market. In addition, huge new natural gas fields have been discovered in offshore East Africa and, given the almost total lack of intense regulatory bodies of law, quick completion of new LNG facilities might be anticipated, thereby diminishing potential markets for Canadian LNG. Regrettably from industry advocates’ points of view, attempts to enter LNG production within British Columbia have been frustratingly ineffective. Twenty consortiums have been established through the past several years, but not one project has progressed past the drawing boards, despite the expenditure of vast sums of money. The news continues to be somewhat pessimistic. One potentially promising plan whereby FortisBC would supply LNG after a merger with a Hawaiian utility was recently quashed by the Hawaii Public Utilities Commission, which declared there were concerns “whether the merger was not in the public interest”. The Prince George Citizen newspaper also noted time-consuming LNG approval delays when it wrote, “…Northeast B.C. mayors and the province’s natural gas ministry are looking for alternative markets for B.C. petroleum products after a string of bad news for B.C.’s stalled LNG export industry.” Powerful forces are arrayed on both sides of the question. Environmentalists and their allies, along with several First Nations peoples, are doing everything possible to prevent the construction and operation of LNG facilities, while industry spokespersons, government economists, and some economically-minded First Nations peoples are pressing for quick and effective action to bring some of these money-laden proposals to quick approval. In the meantime, it appears that uncertainty of outcome continues to consume time, money, and intellectual energy on both sides. S B.C. Oil & Gas Report • 2016

21


Progress and profitability: The future of B.C. Q&A with Art Jarvis, Executive Director of Energy Services BC By Tammy Schuster

E

nergy Services BC (ESBC) has been an advocate for the oil, gas, and energy sector in British Columbia for 40 years. In a recent interview, Art Jarvis, executive director of ESBC talks about his recent efforts to regulate out-of-province contractors, thoughts on the upcoming LNG decision, and what he sees as important initiatives to come.

You identified an issue with out-of-province contractors underbidding local companies because of they are not paying provincial taxes in British Columbia. Is this still a problem? Art Jarvis (AJ): The issue is, in the province of British Columbia, it costs a certain amount of money to do business here. We have a higher income tax, higher fuel taxes, higher insurance rates, and so on. Every company must comply with the taxes of the province it is working in, but the issue is that has not been enforced. The true impact is that the local economy suffers. When out-of-province contractors use our roads, hospitals, and services, they are not leaving anything behind to support the province. The cheque crosses over into Alberta, for example, and the stream ends.

How large of a disadvantage are B.C. companies as compared to non-B.C. companies? AJ: If out-of-province contractors work in B.C. and are not paying B.C. tax rates, that could give them a 20 per cent advantage. We are not trying to keep those companies out, but we are at a huge disadvantage if we are paying proper taxes and competing bidders are not.

You have been lobbying and speaking with all levels of government about this issue. Are you seeing progress? AJ: What we’ve been lobbying for — and have been granted — is a locally-based tax inspector to monitor the working areas. We have someone in place and will be based in Fort St. John this fall. 22 B.C. Oil & Gas Report • 2016

He will be available to handle any inquiries and will be monitoring the contractors in the area and where they are from. If there is an instance where a contractor is working in B.C. but not paying the same taxes and levies a B.C. company pays, he can investigate, document, and present information to a tax auditor who will then approach the head office of the company – be it in any province in Canada or any state in the U.S. I think this is going to change the dynamic of out-of-province contractors bidding on work here and that change will happen soon. When facing the possibility of paying back-taxes that can go back as far as four years, it will wake people up so they realize taking the risk isn’t worth it. There are organizations lobbying for consequences that go right back to the producer that hired the company.

What new challenges is the industry facing in the near future? AJ: Doing business certainly has to change in order to stay competitive in this highly regulated world. It’s costing service companies more to do business than it has in the past and rates have been reduced to satisfy the customer. A long-term solution is to consider building communities rather than resource towns. If you just have a fly-in and fly-out town where everything has to come from somewhere else, it gets very costly to bring services in from Red Deer, Grande Prairie, and outlying areas that are far away. That’s a big problem in Fort Nelson. Infrastructure wasn’t built in town to attract growth. If there was, a community could be established with local services that could maintain, repair, and operate the facilities that the oil companies brought in. Families could grow up with great sports complexes, educational facilities, and community structure. Permanent service providers and businesses could prosper and grow, making it cheaper in the long run to operate there because everything is local, and the community would have the opportunity and the time to flourish. If LNG can move forward, it will save places like Fort Nelson, enable B.C. to be more profitable, and benefit the nation as well.


With the federal government set to make their announcement for the environmental certification, what are your concerns? AJ: We have to move forward on LNG within a few years, because it’s going to take a while to gather momentum. That starts with the federal government and their announcement proposed for this fall. We are pulling for a positive decision on the environmental certification. It has been held up for many months and there is worry that investors are losing confidence with the direction that it’s going and the time it’s taking for Canada to make a decision. World market prices have dipped and competition has risen. People here are concerned about the future of LNG with competition continuing to develop on a regular basis. The United States could have several LNG plants before we get one. With oil prices as high as they were, producers had plenty of capital to spend so they were drilling like crazy to get their areas proven up for LNG. Then when oil prices dropped, the money wasn’t in the coffers to do the exploration without the return and some companies couldn’t sustain themselves. There is a large amount of investment here from people who believe this industry is going to go ahead, such as investments in hotels, motels, etc. in anticipation that it will move forward.

If LNG can move forward, it will save places like Fort Nelson. The entire province will benefit from our industry — from the service provider to the individual receiving a knee transplant because medical care is cheaper here simply because of the benefits this industry will provide.

What is big picture goal for the ESBC and what needs to happen? AJ: We would like to see better education for non-industry people who don’t work in oil and gas. Many people are so far removed and don’t realize how big an impact this industry has on their everyday lives. That makes it easier to jump on the ‘no’ bandwagon than it is to learn the facts. Many industries are kept alive from refining that product, bottling it, transporting it, retailing it. It affects many people. A great online resource is resourceworks.com, as they do an excellent job explaining responsible resource development and will walk you through the whole process and how it relates to everyday life. S

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B.C. Oil & Gas Report • 2016

23


LNG in Prince Rupert

The cost of waiting for the environmental green light By Tammy Schuster

W

hile the province waited for the federal government to issue the environmental per-

was originally to have taken one year, but

mit on the Pacific Northwest LNG (PNW

Prince Rupert and District Chamber of

LNG) project proposed for Lelu Island

Commerce, says the chamber welcomes

near Prince Rupert, the attitude in the

the depth of research that was put into

area was very much wait-and-see.

the environmental review process be-

has now taken three. Keith Lambourne, president of the

On September 27, 2016, Federal Envi-

cause the results will be indisputable.

ronment Minister Catherine McKenna,

But shovels won’t go in the ground any

announced the approval of construction

time soon. Due to the delays, all share-

of the $11.4-billion LNG terminal. The

holders will need to re-examine their

approval came with some 190 condi-

business plans and evaluate the current

tions that PNW LNG must meet during

markets.

construction and operation of the export

“We are living in a different universe

terminal on the northern coast of British

than we were three years ago,” says Lam-

Columbia.

bourne. “The shareholders will have to

Under the Canada and British Colum-

put this before their board of directors

bia Environmental Assessment Acts, all

to see whether it still makes sense to do

LNG projects must undergo an indepen-

what they originally planned in 2012.”

dent environmental assessment. In the

Petronas is the majority shareholder of

case of PNW LNG, it was a process that

the PNW LNG project with Sinopec, JA-

PEX, Indian Oil Corporation, and PetroleumBRUNEI as minority shareholders. And another concern has emerged from the delay. Canada’s biggest client — the United States — has begun extracting its own natural gas. “They are in the process of converting their import LNG terminals to export LNG terminals and they are now our competition in the export market,” says Lambourne. “We need to source new customers for our products very quickly, otherwise within five or 10 years, we will have no one to sell this to.” The proposed PNW LNG project is estimated to create up to 4,500 jobs during construction, approximately 330 long-term jobs, and, once in operation, it would contribute up to $1.3 billion annually to federal, provincial, and municipal governments. The Port of Prince Rupert is the thirddeepest natural ice-free harbour in the

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world and is closer to Asia by 38 hours sailing time than any other west coast port on the North American continent, giving Canada an advantage. “Our market is to the east and we have to diversify our dependency away from our neighbours to the south.” Now that environmental permits have been issued, Lambourne would like people to look at the Canadian LNG export industry from a global perspective. “With the export of LNG to China, we are helping that country avoid building a coal-fired reactor at a rate of one ev-

24 B.C. Oil & Gas Report • 2016


Under the Canada and British Columbia Environmental Assessment Acts, all LNG projects must undergo an independent environmental assessment. ery eight days,” he says. “People in Chi-

house gas emissions on a project such as

region I would be delighted to see it. So

na are dying at the rate of 1.1 million

this, Lambourne says that if the Liberal

far, all I can see is a lot of ‘no’ with no

people every year from breathing in the

government chose not to issue the per-

plan for ‘yes’.”

smog that those reactors cause.”

mit based on GHG emissions, not only

The Prince Rupert and District Cham-

He says not only is there an economic

would that have killed this project, but

ber of Commerce is very pleased the

imperative to do this for the Canadian

it would have killed every other subse-

project received the green environmen-

economy and for the future of all Cana-

quent project.

tal light. In a statement released the

dians, but there is also a moral obliga-

“The unintended consequences of

day after the federal government’s an-

tion to the global citizens and the envi-

saying no to this would have been unbe-

nouncement, the chamber says the 190

ronment.

lievable,” he says. “The ripple effect on

conditions attached to the approval is a

Lambourne is also pleased that the

the companies that want to invest would

responsible development decision and it

government considered the big picture

spread rapidly. Companies would think

gives additional assurances that the nat-

when making their decision.

more than twice about doing any busi-

ural environment will be protected and

ness with Canada.”

environmental impacts reduced during

“Getting elected and running a coun-

construction and operation of the facil-

try are two completely different things,”

Lambourne is also frustrated with the

he says referring to the Liberal platform.

positions of the local MLA and MP after

“I’m satisfied that after being in office

both elected representatives publicly op-

“Our city needs this project, our prov-

for a year, the new Liberal federal gov-

posed the PNW LNG project before the

ince needs this project, and the future

ernment balanced their stated concerns

draft environmental report was issued

economic prosperity of Canada is de-

around the environment with a need to

last year. “I think that is putting personal

pendent on both this individual project

ensure that Canadian families have jobs

prejudice and preconceptions before the

going ahead, and us sending a vital mes-

and that the economy prospers.”

good of those that they purport to rep-

sage to the global economy that Canada

resent. If they have a jobs plan for our

is open for business.” S

While there will still be some green-

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ity.

Part of your crew.

B.C. Oil & Gas

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B.C. Oil & Gas Report • 2016

25


Enbridge’s Line 3 Replacement Project offers hope for future Canadian economic growth By Leonard Melman

T

here is a great problem facing the oil and gas industries in both B.C. and Alberta and it is one which could have a negative effect on the Canadian economy as a whole. Both provinces enjoy substantial production of natural gas and crude oil, including great potential for future production increases, but their provincial domestic markets simply cannot absorb all of that production. Therefore, all excess production beyond their domestic provincial demands must be transported to the rest of Canada, to the USA, and also to international markets as well. The stakes for the country are very high. A recent study by the Globe and Mail estimated Canada’s oil sands could add an additional 1.55 million barrels per day (bpd) of crude production by 2030 with commensurate growth in employment, general economic activity and provincial and federal tax revenues. Given the impracticability of petro-

leum truck transportation for vast quantities of fossil fuels and the negative public feelings against transportation by rail tanker cars, particularly after the Lac Megantic tragedy, pipelines appear to be the most reasonable alternative for transporting present and future petroleum production, and one of the most interesting pipeline proposals put forward in recent years is the Enbridge Line 3 Replacement Project, or simply L3RP. The project entails rebuilding an aging 1,660-kilometre pipeline which involves two segments; one from Hardisty, Alberta to Gretna, Manitoba, and the other through North Dakota and Minnesota from Gretna to Superior, Wisconsin. CBC News noted this past spring that Enbridge recently reduced shipments through the existing pipeline to half capacity due to concerns about the aging line’s ability to withstand pressure. Approval of regulatory agencies in both Canada and the USA would be re-

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26 B.C. Oil & Gas Report • 2016

quired for the project to proceed to final construction. In Canada, the National Energy Board has already given its conditional approval as long as 89 defined conditions are met, but American authorities have delayed making any definitive ruling. According to information provided by Enbridge, the Canadian side of the project will replace the existing 34inch pipeline with a new and larger 36inch pipeline from Hardisty eastward through southern Saskatchewan and southwestern Manitoba to Gretna, located just above the U.S. border, at a cost of $4.9 billion. The company notes that, “Under the L3RP, all segments of the line between Hardisty and Superior will be replaced with new pipe using the latest available high-strength steel and coating technology, while the existing segments will be removed from operation.” The U.S. portion of the Line 3 Replacement Program will involve transportation of crude from Neche, North Dakota through Minnesota to Enbridge’s Clearbrook Terminal near Clearbrook, MN and on to their Terminal Facility near Superior, WI. One of the areas of controversy which has developed is over the subject known as “decommissioning”. As the replacement pipeline is built, existing portions of the old pipeline will then be drained of oil and the old pipe will be cleaned and then disconnected with Enbridge continuing to monitor the old line into the future. While “decommissioning” seems to have raised little interest in Canada, it has become an important consideration on the American side of the border. In


Approval of regulatory agencies in both Canada and the USA would be required for the project to proceed to final construction. early June 2016, several representatives from various environmental organizations met to express their concerns regarding decommissioning and abandonment of the old line. Their specific concern was that as the new Line 3 was built, the old line would be abandoned and left to deteriorate, thereby endangering ground water, aboriginal tourist industries, and other Minnesota homeowners and local businesses. In addition, the Anishinaabe Tribe recently published a statement which included the note that, “…For us, on the White Earth reservation in northwestern Minnesota, these pipelines threaten our community and our way of life.” They are gathering signatures on a petition to oppose the L3RP, which will be for-

warded to the Minnesota Public Utilities Commission – which could further delay the approval process in America. In Canada, when the National Energy Board reviewed the Enbridge Line 3 application, they made a point of identifying Canadian First Nations (FN) people’s concerns and suggested measures to mitigate them. High on the list was the possible insufficiency of Enbridge’s consultation with FN people during the present application process and particularly noted insufficiencies which took place during the original pipeline construction several decades ago. They also cited aboriginal concerns that their history and culture, their use of the land and water, and how the project might affect them must

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B.C. Oil & Gas Report • 2016

27


Pipelines and First Nations

Partnerships in the making By Melanie Franner

Reducing barriers and enhancing access to training and jobs is behind a new partnership with the B.C. Association of Aboriginal Friendship Centres that will serve more than 1,000 aboriginal people over the next three years. The B.C. government is investing $2 million over three years in a skills training project to support aboriginal people in urban communities in northern B.C. The project will be administered by the B.C. Association of Aboriginal Friendship Centres.

T

he Federal Court of Appeal’s recent overturning of Enbridge’s federally approved Northern Gateway Pipeline project has highlighted the need to have agreement from First Nations that are potentially impacted by pipeline projects. The ruling pretty much put an end to the almost $8 billion venture. This latest signal is one strongly felt by the B.C. government, which has signed a total of 62 pipeline benefits agreements (as of April 2016) with various First Nations communities. The difference between the B.C. government’s success rate and the Northern Gateway project may lie in the manner in which the government has participated with these communities. “We have tried to engage First Nations with an approach that is very respectful of their territory and traditions,” says the Honourable John Rustad, B.C. Minister of Aboriginal Relations and Reconcilia-

28 B.C. Oil & Gas Report • 2016

tion. “We want to ensure that they can see the benefits to their community and how it hopefully can help change their economic situation.”

The projects The B.C. government has attained a record number of benefits agreements with First Nations to date on four major LNG projects: the Coastal GasLink Pipeline Project, a 670 kilometre natural gas pipeline from the Dawson Creek area to the proposed LNG facility near Kitimat; the Prince Rupert Gas Transmission Project, a proposed 900 kilometre natural gas pipeline to deliver natural gas from the Hudson’s Hope area to the proposed Pacific Northwest LNG facility near Prince Rupert; the Westcoast Connector Gas Transmission Project, a proposed 850 kilometre natural gas pipeline to carry natural gas from production areas in northern B.C. to BG Canada’s proposed LNG export facility on Ridley Island; and

the Pacific Trail Pipeline, a proposed 480 kilometre natural gas pipeline to deliver natural gas from Summit Lake in B.C. to the Kitimat LNG facility site at Bish Cove. “We have the support of all First Nation communities on the Pacific Trail Pipeline project,” explains Minister Rustad. The province of B.C. has an agreement in place with the 16 First Nations located along the proposed Pacific Trail Pipeline route that will provide an estimated $32 million in direct benefits during the construction phases of the project and a further $10 million in annual payments during the operational life of the project. “We have 16 of 19 of the First Nation communities signed on for the Prince Rupert Transmission project,” continues Minister Rustad. “We have 17 of 20 signed on for the Coastal GasLink Pipeline project, and we have 14 of 19 onboard with the Westcoast Connector Gas Transmission project.”


The achievements made to date with the various First Nations, adds the minister, are significant. But he isn’t ready to sit back on his laurels just yet. “Our hope is that we will have 100 per cent agreement,” says Minister Rustad. “That’s what we’re shooting for. At the end of the day, we want to see these projects go forward.” According to the minister, the benefits agreements are fairly uniform in that they address many of the same key issues. That being said, there are subtle differences between them. “The thing to keep in mind,” he says, “is that just as our broad society is different, so too are First Nations. There could even be fractions within a First Nations community or among families. That can sometimes make it very challenging.” For that reason, some of the benefits agreements can take upwards of two or three years, while others can take as little as six months, adds Minister Rustad. “Our job is to make sure that the people involved have the right information and are actively engaged in terms of what the benefits package will look like,” says Minister Rustad. “For those communities that have the capacity to work within their community, the process can be fairly straight forward. It can prove a bit more challenging for those without.” And, just because there is a signed benefits agreement with a particular First Nation community on one project doesn’t mean there is an automatic signature on another. “It’s different in every case,” explains Minister Rustad. “For example, the Haisla Nation has signed onto the Pacific Trail Pipeline project, but not the Coastal GasLink Pipeline project, although they are very supportive of it.” Haisla Nation Chief Ellis Ross speaks positively of the benefits agreement process, specifically the Pacific Trail Pipeline one.

Minister of Aboriginal Relations and Reconciliation John Rustad and Haisla Nation Chief Counsellor Ellis Ross. The Haisla Nation is a strong supporter of responsible LNG development and is a member of the First Nations Group Limited Partnership, a group of 16 First Nations which has a pipeline benefits agreement with B.C. for the proposed Pacific Trail Pipeline. “It was a very good attempt at finding a solution when all parties didn’t know what a solution could look like, given the new world of consultations and accommodation case law,” he states. Chief Ross is quick to point out that the benefit agreement covers many different facets. “What we are looking for in each benefits agreement is evolving, as each agreement is achieved,” he explains. “It’s not just about the economic or environmental components anymore. There are many more issues that have deeper significance or even recognition, like financing and land.” The Haisla First Nation is well aware of the importance of benefits agreements – and how they can impact their community well into the future. “The benefits agreement was about breathing new life into section 35 of the constitution,” explains Chief Ross. “It is not only a symbol of our inclusion, but more importantly, it is a realistic option to the Indian Act or Treaty process. All initiatives are aimed at achieving independence, as well as getting our positions heard and acted upon in a meaningful manner.” As for why the Haisla Nation hasn’t yet signed a benefits agreement for the

Coastal GasLink Pipeline project, Chief Ellis is more than open and honest. “There aren’t any real outstanding issues,” he says. “It’s mostly language concerns at this point. Our council follows case law principles as closely as possible, so any wording outside of these principles makes us a bit uneasy.”

More to come Currently, there are approximately 20 LNG proposals in B.C. involving over 30 project partners. Eighteen of these projects have already attained National Energy Board export licenses. Although the B.C. government has made great headway with only four of these proposed projects, it has clearly demonstrated its path forward to growing the province’s LNG industry. Involving First Nations in an active and engaging way that has proven to be very successful thus far. “We don’t think that there has even been a sector in B.C. that has garnered as much support with First Nations as LNG,” concludes Minister Rustad. “The industry support demonstrated by First Nations has been phenomenal. First Nations see this industry as being a real potential game changer for them – and we do as well.” S B.C. Oil & Gas Report • 2016

29


$11 BILLION PACIFIC NORTHWEST LNG PROJECT APPROVED By Kylie Williams

Lelu Island facility at Low Tide and Flora Bank.

F

ollowing a rigorous, three-year environmental assessment, the fate of British Columbia’s largest liquefied natural gas project, Pacific NorthWest LNG, has been decided. Canada’s Minister of Environment and Climate Change, Catherine McKenna, announced the federal government’s approval of the proposed $11 billion natural gas liquefaction (LNG) facility near Prince Rupert on the northern B.C. coast at a press conference on September 27, 2016. The decision statement from the Canadian Environmental Assessment Agency (CEAA) places 190 environmental protection conditions on the project. The project’s majority owner, Malaysian oil and gas giant PETRONAS, is yet to make a final investment decision. “The only way to get resources to market in the 21st century is if it can be done sustainably and responsibly,” said McKenna during the announcement. The prolonged CEAA review commenced in April 2013 and examined the impact of the proposed LNG facility and shipping terminal on the environment around Lelu Island, off the coast of Port Edward south of Prince Rupert. The facility will receive natural gas produced by Progress Energy Canada (also majority-owned by PETRONAS) from the North Montney region of northeast B.C. The gas will travel via the 900-kilometre Prince Rupert Gas Transmission pipeline, which was approved for construction and operation in October 2015, from Hudson’s Hope to Prince Rupert to be cooled, liquefied, and exported to Pacific Rim markets in Asia. “As the third-deepest natural ice-free harbour in the world, with close proximity to Asian markets and an efficient rail corridor, Prince Rupert’s port is extremely well placed in terms of global shipping of all goods from North America,” explains Veronika Stewart, communications manager for the City of Prince Rupert. Several LNG projects are proposed for the Prince Rupert area, she says, including ExxonMobil Canada and Imperial Oil’s joint West Coast Canada (WCC) LNG project, but Pacific NorthWest LNG is the furthest along. According to the project website, an estimated 4,500 jobs will be created during construction of the facility. Once it is up and running, it will employ 330 people long-term and generate 300

30 B.C. Oil & Gas Report • 2016

spin-off jobs in the local community. The Conference Board of Canada estimates that the fully integrated project, including pipeline construction and all jobs from upstream to the facility, will directly and indirectly employ 18,500 people. The project has the full support of B.C. Premier Christy Clark for the employment and economic benefits it will bring the province. However, LNG prices have fallen dramatically during the time taken by the federal government to carry out the environmental assessment, and could influence the financial viability of the project. While the First Nations directly affected by the project have offered their support, an ongoing anti-LNG blockade on Lelu Island by NGOs and some opposing First Nations members continues to impede the fish and marine mammal studies being carried out in the areas around the island. “We’ve learned from local community members and First Nations that the continued health of salmon, marine life, and their habitat are top priorities,” says a spokesperson for the project via a video on the Pacific NorthWest LNG website. To address the concerns regarding the fish feeding habitats of Flora­ Bank, the large estuary at the mouth of the salmon-bearing Skeena River, the company has proposed a 1.4-kilometre oneof-a-kind suspension bridge and trestle, designed to avoid all contact with Flora Bank. “The two most difficult issues that we now have closure on are First Nations and climate,” explains Stewart Muir, executive director of Resource Works, a B.C.-based not-for-profit research and education group supporting responsible resource development. “We’ve heard from all of the First Nations directly-affected. There’s unanimity along the pipeline and where the pipe ends at the coast, and signed impact benefit agreements to create employment and other benefits.” With respect to the climate issue, Muir adds, “We see a government in Ottawa that has worked very carefully through the controls that can be applied to ensure this is a defensible project and they have concluded that they can make it work. It wasn’t an easy decision, but ultimately found a path to support.” S


NEB approval

Major milestone for Trans Mountain Pipeline By Melanie Franner

O

n May 19, 2016, the National Energy Board (NEB) granted its approval on the Trans Mountain pipeline expansion project. The approval, which is subject to 157 conditions, marked a significant step in what has proven to be one of the most thorough review processes to date. And it also signalled what may be the start of the home stretch for Kinder Morgan Canada. “We’re pleased with the NEB’s recommendations, which is subject to 157 conditions that we believe are rigourous, but achievable,” states Ian Anderson, president of Kinder Morgan Canada. “The recommendation is the culmination of a comprehensive review that began in 2013. The scrutiny and rigour this project has undergone, both inside and outside of the formal review process, is unprecedented. We know, however, there is still more work to do. The importance of public trust and confidence in the process has always been a priority for us.”

New markets The original Trans Mountain pipeline began operation in 1953 and has since undergone numerous expansions. The proposed expansion would see an expansion of the existing 1,150-kilometre pipeline between Strathcona County in Alberta and Burnaby in British Columbia. “If approved, the project would create a twinned pipeline that would increase the nominal capacity of the system from 300,000 barrels per day to 890,000 barrels per day,” explains Anderson. “The project would add approximately 980 kilometres of new pipeline and expanded facilities, including new tanks at our storage terminals and three new berths at the Westridge Marine Terminal.” According to Anderson, 80 per cent of the new pipeline would parallel the existing pipeline system or linear infrastructure in order to minimize environmental and community impacts. “Twinning the Trans Mountain pipeline will increase the value of Canadian oil by unlocking access to world markets where higher prices are paid for oil, resulting in greater tax revenue and years of employment for Canada,” he adds. Anderson cites a Conference Board of Canada report that pegs the combined government revenue impact for construction and the first 20 years of expanded operations at $46.7 billion. “Overall, the project generates more than 800,000 direct, indirect, and induced person-years of employment during project

development, operations and higher netbacks,” he explains. “Alberta’s share is 441,000 person-years, including 15,000 during project development and 13,000 during project operations. British Columbia’s share is 189,000 person-years, including 36,000 during project development and 39,000 during operations.” In addition, the expansion project is anticipated to require approximately $4.5 billion in goods and services – and will result in an estimated $480 million in direct construction workforce spending in communities along the route. “Now, more than ever, our project makes sense for Canada,” states Anderson.

Garnering support Support for the Trans Mountain pipeline expansion project is not unilateral. B.C. Environment Minister Mary Polak had previously spoken of the need for new heavy-oil pipelines in the province to meet the following five conditions: successful completion of the environmental review process; ensuring world-leading marine and land-based spill response, prevention and recovery systems are in place; ensuring legal requirements regarding aboriginal and treaty rights are addressed and First Nations are provided with opportunities to participate in and benefit from a heavy-oil project; and that British Columbia receives a fair share of the fiscal and economic benefits from any proposed heavy-oil project. In a statement issued in response to the NEB’s recommendation, Polak stated: “A significant amount of work has already gone toward establishing and meeting the five conditions, but we are not yet in a position to consider support for any heavy-oil pipeline in B.C.” Anderson admits that some people remain critical of the NEB decision, but he is quick to add that there has also been a lot of positive reaction. “We received emails and calls from individuals looking for jobs and wanting to get back to work,” he says. “We’ve also seen vocal support from business groups, local governments and individuals along the pipeline route, including in the Lower Mainland.” As of April 2016, Kinder Morgan Canada had signed Community Benefits Agreements totalling more than $6.4 million with communities along 91 per cent of the pipeline corridor. To date, 41 aboriginal groups located along the project corridor have provided written letters of support. S B.C. Oil & Gas Report • 2016

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One step closer

Woodfibre LNG signs customer agreement By Melanie Franner

A Byng Giraud, vice-president of corporate affairs, Woodfibre LNG.

32 B.C. Oil & Gas Report • 2016

lthough Woodfibre LNG Limited’s project has not yet received of all the necessary regulatory approvals to proceed, the company has nevertheless managed to stir up interest by recently announcing that it has acquired its very first customer. The company’s Singapore-based affiliate, Woodfibre LNG Export Pte, has signed an agreement with Guangzhou Gas Group Co. Ltd. to deliver liquefied natural gas for 25 years, beginning in 2020. “I think this is extremely significant for Woodfibre LNG’s project,” states Byng Giraud, vice-president of corporate affairs, Woodfibre LNG. “We’re very optimistic that we’re moving toward a positive outcome. This agreement essentially

means that we’ve got half of our product sold.” The Heads of Agreement with the Guangzhou public gas utility – the capital and largest city in the Guangdong Republic of China – would provide a longterm, stable supply of natural gas to meet the city’s rapidly growing demand for clean energy. This one agreement alone would account for one-million tonnes of liquefied natural gas – approximately half of Woodfibre LNG’s proposed 2.1-million tonnes annual total capacity.

The process Woodfibre LNG purchased the former Woodfibre pulp mill brownfield site for its proposed LNG processing and export


facility in February 2015. The pulp mill had been in operation for 100 years. It is zoned for industrial use, has a deepwater port on a waterway that has been used for commercial shipping for decades, and has access to electricity from BC Hydro and a FortisBC natural gas pipeline. The site is located approximately seven kilometres southwest of Squamish, B.C. “At this point, we have obtained the federal environmental assessment certificate, the provincial environmental assessment certificate, and what we like to call the First Nations environmental assessment certificate,” explains Giraud. “The latter is quite possibly the first of its kind in Canada. I like to say that we have the trifecta of approvals. Our colleagues who are building the pipeline have already applied for the requisite oil and gas permits.” On June 22, 2016, the Squamish Nation Council voted to approve the FortisBC Environmental Assessment Agreement. The next step in the process includes the negotiation of an Economic Benefits Agreement between the Squamish Nation and each of FortisBC, Woodfibre LNG, and the province of B.C. If all goes according to plan, Giraud anticipates that early work on the site will begin before the end of 2016, with actual construction of the facility beginning in the second quarter of 2017. Construction of the facility is expected to take two years.

Local support Woodfibre LNG has held more than 320 community meetings, hosted two business information sessions and opened a community office in Squamish since 2013 in order to nurture support for its project. The dialogue has led to meaningful changes to the plant, such as reducing greenhouse gas emissions by about 80 per cent by powering the facility with hydro instead of natural gas. The company’s consultations with the Squa-

mish Nation have also led to the relocation of the compressor station and some re-routing of the pipeline itself. The Squamish Chamber of Commerce conducted a survey in 2014 that included querying members on their support of the Woodfibre LNG project. Results show that 28 per cent of the membership “strongly” agree with the project and 22 per cent “somewhat” agree with it. At the same time, 54 per cent of the membership “strongly” agree and 31 per cent “somewhat” agree that the Squamish community needs more industry. “The chamber members are quite polarized on the LNG project, with almost half being supportive and half being against it,” says Suzanne McCrimmon, executive director, Squamish Chamber of Commerce. According to information from Woodfibre LNG, the proposed export facility will be a boost to the economy of nearby

Squamish and the surrounding region. The company suggests that it will create 100 full-time jobs at the facility during operation and about 650 jobs each year during the estimated two-year construction period. The project is also expected to create an estimated $83.7 million in tax revenue for all three levels of government during the construction phase, and an estimated $86.5 million in tax revenue per year of operation. And, perhaps more important, it will represent an important milestone in the growth of the B.C. LNG industry. “I think this is very significant for B.C.’s LNG industry,” explains Giraud. “We’re very close to being one of the first – if not the first – LNG export facility in the province. That’s a huge step in the right direction for British Columbia and Canada.” S

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33


Fort St. John will be heard By Deb Smith

T

he day Fort St. John No.1 well hit gas in 1951 marked the beginning of the huge oil and gas industry in northeastern B.C. and an economic boom that would carry the small settlement forward to becoming the largest centre north of Prince George. Today, tens of thousands of oil and gas wells tap into the famous Montney formation, estimated at 271 trillion cubic feet with 100 years of production. Over the course of the next 65 years, the residents of Fort St. John rode the roller coaster of oil and gas markets – money and gas flowing in the boom times, belts tightening when the cycle turned down. The erosion of oil and gas prices since 2014 has had a profound effect on the area. Working out of offices headquartered in Vancouver and Calgary, oil and gas exploration and development companies wait out the downturn, cutting capital and operating expenditures, causing widespread layoffs among those in the field. By June 2016, Fort St. John had the highest unemployment rate in B.C. despite new job creation in other industries. Many have had to look for work elsewhere, and local companies struggle to keep their skilled workers employed until the market rises again. "Most of our economy is in servicing the oil and gas sector," explains Fort St. John's mayor Lori Ackerman. "So while there is a downturn for those in new production, the servicing companies remain busy. These smaller, mediumsized enterprises are the backbone of our economy; they employ local residents and contribute significantly to our social infrastructure. However, natural gas is linked to oil prices, so unemployment is rising." Service companies hold fast while current production serves Canadian markets, but that market is already well-sup-

34 B.C. Oil & Gas Report • 2016

plied; an approved LNG project would open access to global markets. The Canadian Association of Petroleum Producers (CAPP) is lobbying the federal government, proposing new and emerging green technology that will grow the industry while meeting environment concerns; lobbyists in Vancouver are working to convince politicians that the majority of voters favour LNG. Meanwhile, Fort St. John is taking action of its own. "We believe in being proactive rather than reactive," says Ackerman. Frustrated with seemingly endless delays, residents are rallying to support the proposed Petrona-backed Pacific NorthWest LNG project, a planned $36 billion export terminal that will source natural gas from the Fort St. John region. Ackerman, along with other B.C. mayors and Alan Yu, founder of FSJ (Fort St. John) for LNG, recently travelled to Ottawa to demonstrate their communities' backing for the project. "It's about time the federal decisionmakers hear the voices of the unemployed here in Fort St. John and North-

eastern B.C.," Yu told Alaska Highway News. Ackerman envisions a decisionmaking process that would include municipalities at the table along with their First Nations neighbours, industry leaders, and senior levels of government. No matter the final outcome, Ackerman knows Fort St. John will survive and prosper. "Natural gas creates a lot of products. We have some processing now, but are looking to take that a step further, create value-added industry." Forestry is gaining momentum with a rising U.S. housing demand; construction is ramping up on the nearby Site C Clean Energy Project; young professionals are drawn to the attractive lifestyle that Fort St. John offers, and the city is eager to welcome them. In 2016, for the second year in a row, Fort St. John was chosen by B.C. Business as the best place to work in B.C. Its people work hard and are willing to get out there in the field or in the boardroom. Strong and visionary, like the oil and gas industry that surrounds it, the city will continue towards its prosperous and successful future. S


New leadership

Same commitment By Melanie Franner

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he recent change in federal government has brought Canada’s LNG industry to the fore, with Prime Minister Justin Trudeau appearing to have a stronger climate change agenda than former Prime Minister Stephen Harper. That being said, with almost a year under the new regime, it would appear that Canada’s commitment to the LNG industry remains strong and steady – for the time being at least.

Industry take The Conference Board of Canada released a report earlier this year, A Changing Tide: British Columbia’s Emerging Liquefied Natural Gas Industry, that estimated B.C.’s LNG industry could grow the country’s economy by $7.4 billion per year over the next 30 years. The report suggested that the increased economic activity would create an annual average of 65,000 jobs. “Although the current downturn in crude oil prices has cast a shadow over LNG markets, developing B.C.’s LNG industry would open up new markets for Canada’s natural gas industry and generate economic benefits and employment opportunities that would not otherwise exist,” stated Len Coad, research director, public policy, Conference Board of Canada. According to David Keane, president, BC LNG Alliance, the current federal government is well aware of the economic significance of the province’s LNG industry and how it fits into the country’s climate-change plan. “B.C.’s LNG industry can play a vital role in the federal government’s climatechange agenda,” he states. “Canada has a world-class energy resource that can play a significant role in lowering GHG

Geoff Morrison, manager of B.C. operations, CAPP. emissions. Future growth will depend on a foundation of environmental sustainability, fiscal and regulatory competitiveness, and enhanced market access. B.C.’s nation-leading carbon tax, combined with the toughest LNG emissions intensity benchmark in the world, are globally unprecedented – guaranteeing Canada’s LNG sector will develop an industry to the highest environmental standards.” The province’s LNG industry, adds Keane, acknowledges the federal government’s commitment to climate change and is committed to working collaboratively to make it a globally competitive industry that protects the environment and jobs.

Future growth will depend on a foundation of environmental sustainability, fiscal and regulatory competitiveness, and enhanced market access. The Canadian Association of Petroleum Producers (CAPP) also anticipates industry support from the current Liberal government. “Generally speaking, those advanced LNG projects are proceeding as they would have under the previous government,” states Geoff Morrison, manager of B.C. operations, CAPP. “Obviously, the government wants Canada to be a world leader on climate change. That’s

David Keane from the BC LNG Alliance.

not exclusive to having a strong natural gas industry. We view those as not being mutually exclusive. We can do both – have a strong LNG-based economy and be a leader on climate change. We believe that development of our natural resources is being done more responsibly than anywhere else in the world.”

A united effort While there is a clear and supportive desire to build the LNG industry in a competitive and sustainable way, industry is quick to note that it will require hard work on the part of both industry and government. “Infrastructure development is always important, as is an effective mechanism to reduce and address methane gas emissions,” states Morrison. “Both the provincial and federal governments have some joint responsibility in that space.” Keane also speaks of the need for “clear and predictable rules” to build the LNG industry. “Building LNG facilities are complex undertakings that require tens of billions of dollars in capital investments, and therefore require certainty with respect to the fiscal, legal, and regulatory framework,” he says, adding that industry is committed to working constructively with all levels of government. The same can be said of CAPP. “Any change in government leadership makes people pay attention more closely,” he concludes. “We feel strongly that the current government supports the LNG industry and that they want to do so in a way that involves building a rapport with the aboriginal community and in a way that is sustainable from an environmental perspective. We’re onboard with both of those.” S B.C. Oil & Gas Report • 2016

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How the ASA regulation in B.C. can help the oil & gas sector harmonize safety codes and standards

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or years, industry has been asking provincial regulators to harmonize technical safety standards and regulations across provincial borders. This can be challenging because, although Canadian codes and standards are established and intended for adoption nationwide, each province adopts them differently. The industrial makeup and legislative priorities in each province drive decisions on how regulations are adopted. As a result, they may be adopted in whole or in part, or with stated exceptions through each province’s individual regulatory framework. This can leave companies with locations in different provinces, looking for ways to harmonize safety standards. In British Columbia, the Alternative Safety Approaches (ASA) regulation offers a solution to standards harmonization. Administered through the BC Safety Authority, the ASA regulation offers instruments to enable full regulatory compliance to the requirements of B.C.’s Safety Standards Act, while providing the flexibility to recognize safety practices adopted in other regulatory jurisdictions. In essence, the ASA regulation enables BCSA to authorize safety programs already in place and functioning within a company’s operations, regardless of jurisdiction, so long as safety outcomes are met. The benefit of an ASA is that it allows the equipment owner to use the most suitable methods for efficient and safe operation of their specific business. Sounds simple? It should. But it doesn’t come without some effort. To have an existing safety management program recognized in B.C., the business owner or operator must propose the program as an alternative to the established standard regulations in the province. To do this, the company must acknowledge the differences between B.C.’s technical safety regulations and those referenced in their existing operating program. If the company can demonstrate that the safety outcome of their practices will meet the intent and objectives of B.C.’s Safety Standards Act, they may not need to alter their established practices. Those who have adopted the ASA regulatory instruments have benefitted from: • alternatives to administrative processes; • alternatives to prescribed worker qualifications; • harmonization of international codes and standards, and/ or of technical standards and proven operating practices in other regulatory jurisdictions; and • equipment certification alternatives.

36 B.C. Oil & Gas Report • 2016

Developing an alternative proposal The following are the steps involved in developing an alternative proposal. 1. Invest some time understanding what the regulations call for, and what their safety objectives are. Seek local advice from licensed contractors, consultants, and even the BCSA. You can also visit www.safetyauthority.ca/regulations. 2. Compare your company’s existing safety management system/program with the requirements of B.C.’s regulations. 3. List the gaps or regulatory “rub points” where current practices may not appear to meet the prescribed method of compliance, or cause impractical obstacles to achieve compliance. This could be the identification of specific codes, standards or regulation clauses referring to a process, equipment certification, or worker qualifications. 4. Articulate how your current practices achieve the intent or safety objective for the identified items above. Submit your information in an alternative proposal application. After the information is received by the BCSA, they will complete a formal assessment.

BCSA acknowledges that some owners may be unfamiliar with the many codes, standards, and regulations in the province. ASA’s are currently being developed with owners and operators in the oil and gas, propane, bioenergy, and institutional sectors. While the above procedure sounds simple, BCSA acknowledges that some owners may be unfamiliar with the many codes, standards, and regulations in the province. Rest assured the BCSA can help! They have recently developed support services to help equipment owners better plan and manage their projects and on-going operations towards full and innovative compliance with B.C.’s Safety Standard Act. The BC Safety Authority is an independent, self-funded organization mandated to oversee the safe installation and operation of technical systems and equipment. For more information about B.C.’s Alternative Safety Approaches regulation, major project support or optional regulatory services, contact Fred Tewfik, BCSA’s leader of regulatory alternatives & major projects at asa@safetyauthority.ca. S


Oil and gas pipelines are part of the sustainability equation By Brian Cochrane, Business Manager IUOE Local 115

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he national unprecedented debate that started several years ago over how we move oil products is still lively and unresolved. However, the statistics don’t lie; energy pipelines are still the safest, fastest and most unobtrusive way to move oil and gas across the country and support Canada’s economy. Recent polling done by Nanos and CTV confirm the majority of people surveyed across the country agree pipelines are the best and safest method to move oil. That survey also shows a new trend emerging: more than half of the people polled strongly believe we can both protect the environment and transport oil and gas resources. Everyone agrees the environment should be a concern, especially the members of IUOE Local 115 who have been building pipelines and infrastructure in B.C. for the past 85 years, and live in the communities where they work. We are able to deliver quality pipelines to transport oil and gas while still protecting the environment. The reality is Canadians are still dependent on oil in our day-to-day lives, and moving oil remains a reality of our economic needs. Oil is used in the plastic products we buy, farm equipment used to harvest our food, the phones we communicate on, even public transit

buses. Pipelines are actually part of the conservation and sustainability equation. The new Canadian Liberal government has set ambitious targets to limit emissions. Using pipelines for oil transport will help reach our country’s carbon reduction goals. The simple fact is trucks or trains transporting oil produce carbon emissions, but pipelines do not. Some of the other environmental fears that continue to surround pipeline projects revolve around safety. Those fears are unfounded and misinformed. One of the most important ways to mitigate environmental and spill risk is to make sure we have pipelines built by skilled workers, like members of IUOE Local 115, in addition to regularly upgrading older pipeline infrastructure. IUOE Local 115 members are well trained, highly skilled tradespeople, and have a solid record of safely building and maintaining efficient pipelines in Canada since 1931. In fact, people walk, drive, and travel over some of the pipelines built by IUOE Local 115 members every day without even noticing. Pipeline spills in Canada are rare and often involve human error, something far more likely to happen with rail and road transport, especially in harsh weather conditions. The Lac Mégantic disaster in 2013 is a prime example of rail transport

being far more dangerous than pipelines. The environmental and safety conversations are not the only topics involved in the national debate on moving energy. Low commodity prices are severely impacting Alberta oil sands production. The inability to move more product out of Alberta has compounded the problem, stalling billion-dollar energy projects and pushing our dollar lower. As a result, thousands of British Columbians and Canadians who work in the oil sector are dealing with layoffs. The state of our economy proves we need to consider the many merits of pipelines as a safe, efficient, and effective solution for transporting oil to our transport hubs and keeping local workers employed. Over 11,500 members of IUOE Local 115 live and work in British Columbia. We believe building pipelines continues to be the safest, most effective and sustainable method to transport the oil we use daily, in addition to helping support the Canadian economy. S

One of the most important ways to mitigate environmental and spill risk is to make sure we have pipelines built by skilled workers, like members of IUOE Local 115, in addition to regularly upgrading older pipeline infrastructure.

B.C. Oil & Gas Report • 2016

37


SPE provides invaluable networking and knowledge sharing through the downturn

Darcy W. Spady, 2018 SPE president (right), with the 2015 SPE Outstanding Young Member recipient Babatunde Yusuf.

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anada is poised to shine in the Society of Petroleum Engineers’ (SPE) global spotlight with the first-ever Canadian president in the organization’s nearly 60-year

history.

Darcy W. Spady, P. Eng., managing director of Broadview Energy Asset Management, has been elected as 2018 SPE president. His term as president begins in September 2017.

from the University of Alberta with a bachelor’s degree in petroleum engineering in 1986. Before being selected as the 2018 SPE president, Spady served a three-year term on the SPE International Board as regional director for Canada; he has also been a member of the Calgary Section, and more recently, the newly formed Vancouver Section. “SPE has provided me with immeasurable professional

Spady says the SPE understands that Canadians have been es-

growth, and I encourage our members to lean on the organi-

pecially hit hard during this current downturn in the oil and gas

zation during this down time,” Spady said. “SPE is working

industry. He encourages members to take full advantage of the

hard in Canada to ensure our members remain on top of their

networking and knowledge-sharing benefits that the SPE offers.

game and are the best prepared to get back to work.”

“Networking is the most productive and proficient tactic to

In Canada and across the globe, SPE offers its members

build relationships that benefit not only the professionals who

proven benefits and tools to succeed in a challenging market.

are out of work, but also the companies they eventually will

Whether on a local, regional or global level, members have

work for,” Spady said. “To succeed, you must connect with new

the advantages of the networking strength that comes from

people and cultivate existing relationships. SPE offers unrivaled

168,000 global members and the knowledge tools available

networking resources.”

through the society’s conferences, workshops, and training

Spady has been an active SPE member since graduating 38 B.C. Oil & Gas Report • 2016

courses.


The upcoming SPE Montney Workshop, being held October 18-19 in Calgary, Alberta, is a great example of how members can get involved with SPE and maximize networking and knowledge-sharing opportunities. The committee, made up of primarily Montney operators, has brought together industry peers from a variety of companies with the common goal of developing a program focusing on the uniqueness of the Montney play. Workshop co-chairs Jared Wynveen of McDaniels and Associates, and Thomas McCarthy of Painted Pony Petroleum, both marvel at the connections that have been made so far. “It’s incredible to see engineers representing most of the key players in the Montney, some meeting for the first time, discussing operational efficiencies and best practices,” McCarthy said. “This is shaping up to be an exceptional workshop.” More information about the workshop can be found at www. spe.org/go/montney. Another prime example of how SPE assists members in their quest for technical knowledge, the SPE Canadian Unconventional Resources Conference is an event dedicated to E&P professionals to share and discuss the latest in technologies, challenges, and solutions to developing and producing these difficult reservoirs. Unconventional reservoir development is mostly respon-

sible for the dramatic growth in energy supplies over the last few years. North America is now essentially self-sufficient in natural gas and liquid hydrocarbons – something that even five years ago would have been difficult to believe possible. While the increase in supply has been a boon for energy consumers and has spurred growth in industries using energy, the reduction in prices has had the opposite effect on the energy industry. This means the industry must seek ways to be more efficient and innovative in order to continue to develop unconventional resources. The Unconventional Resources Conference is scheduled for February 15-16 in Calgary. SPE offers numerous other programs to help members, and new to the portfolio of services is the Members in Transition Toolkit. It provides information, resources, and programs to assist you during the current downturn. Look for the toolkit under the Resources tab on www.spe.org. “This toolkit offers amazing resources to help our members network and gain knowledge,” Spady said. “From joining the League of Volunteers to accumulating professional development hours, this toolkit offers the keys to thrive in this downturn.” S

SPE Montney Workshop 18–19 October 2016 | Hotel Arts | Calgary, Alberta, Canada This workshop, will feature content from some of the Montney’s most active and innovative participants. Engage and be educated through lively panel discussions and case study presentations outlining peers’ successes and failures, evolving operational efficiencies, and emerging concerns. Kakwa River Project, Seven Generations Energy Ltd

Crew Energy Inc.

Register Now!

www.spe.org/go/montney Early Bird Deadline: 5 October 2016

16ACA1_JPT_HH_0816_c.indd 1

8/19/16 9:30 AM

B.C. Oil & Gas Report • 2016

39


Let’s take up the challenge of carbon capture By Joseph Maloney

The Sturgeon Refinery in Alberta, which will use carbon produced by refining the oil to help make existing oilfields 50 per cent more productive.

A

combination of science, courageous business people, and the incredible skills of the members I am proud to represent has given us the opportunity to significantly reduce our carbon footprint while providing employment security for tens of thousands of Canadians. The business people are making carbon-capture technology an integral part of a huge new oil refinery that will produce high-quality diesel fuel for export that is 30 per cent cleaner than the much lighter product from Texas. The coming widespread use of carbon capture represents nothing less than a revolution in the energy industry that will help Canada meet its greenhouse gas targets and make us a world leader in producing clean oil. The $8.5-billion Sturgeon Refinery in Alberta will use carbon produced by refining the oil to help make existing oilfields 50 per cent more productive. It will do this by pumping the captured carbon dioxide into the shale formations in which oil is found, making it easier to extract. The revenue from the extra oil will pay for the operation of the carbon-capture facility, setting up a virtuous cycle from which all Canadians will benefit.

40 B.C. Oil & Gas Report • 2016

Photos courtesy of the International Brotherhood of Boilermakers.

The Sturgeon Refinery is one of three huge carbon-capture projects, two of which are currently operating in Alberta and Saskatchewan, that have come into being in Canada over the last few years. The Saskatchewan project, the world’s first at such a large scale, had some teething problems, but is now operating as designed. Shell’s Quest facility in northern Alberta is already removing the equivalent of the emissions from 400,000 cars. Sturgeon, when its three phases (worth more than $25 billion) are finally finished, will capture carbon on a scale never before attempted. The technology is particularly suited to the huge facilities we build, where carbon dioxide production is concentrated. Carbon capture in these situations is efficient, economically viable and makes huge reductions in our carbon output in one fell swoop. All of this is great news for Canada’s energy industry. So what’s the catch? The main catch, according to the chair of the North West Redwater Partnership, which is building the Sturgeon Refinery, is that almost no one knows about the incredible potential of the carbon-capture technique.


Canadians are justifiably concerned about our environment and global warming. At the moment, however, popular concern is directed at completely replacing fossil fuels with renewable energy. Unfortunately, some in the environmental movement promote this unrealistic approach without looking at the realistic alternatives to completely scrapping an industry that is responsible for sustaining as many as 750,000 Canadian jobs. North West Redwood Chair Ian MacGregor has challenged us in the Boilermakers union to lead the effort to show Canadians the path to both a cleaner environment and a prosperous economy. It’s a challenge we are proud to accept. As boilermakers, we have the specialized skills and experience to build these facilities. We have a can-do relationship with our industry partners. And we have the confidence in our abilities to know with certainty that we can get this done. I’m going to turn Mr. MacGregor’s challenge around. I want to challenge industry to join us in our efforts. My members and I believe in Canada’s future. Now let’s get out there and communicate our vision. S Joseph Maloney is international vice-president for Canada of the International Brotherhood of Boilermakers.

B.C. Oil & Gas Report • 2016

41


Your worksite, our backyard

Coast Mountain Wireless By Desiree Bahr

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ommunication can be quite a challenge on British Columbia’s north coast. The mountainous terrain and elements can take their toll on our infrastructure, however Coast Mountain Wireless (CMW) has entrenched itself as the premier communications experts in northwest B.C. Our ability to adapt to different work environments and keep up to the changing technology ensures that our clients are given the best possible solutions for their correspondence needs; whether it is up on a mountaintop, a remote camp site, or travelling the back roads, we’ve got you covered. Maintenance is always an issue when you are battling the elements. From soaring temperatures, torrential rain, and piles of snow and ice, there is no telling what you can encounter on the north coast. At CMW we are experts at winning the fight against the elements from season to season. Our skilled technicians are at the forefront of innovation and are prepared to face whatever challenges come our way. Since our company’s formation in 1999 we have seen numerous changes to communications technology. Traditionally, mountaintop repeaters were large shelters that took up to three days to install. These repeaters, while es42 B.C. Oil & Gas Report • 2016


sential to extending the working range of two-way radios, were inconvenient to build and relocate for changing jobs. CMW technicians set out to redesign these mountaintop repeaters to make them smaller, lighter, and more efficient. This innovation resulted in the A-Pod repeater. Now armed with the ability to prepare and test the repeaters in the CMW shop, installation takes less than four hours on the customers’ site. One of our recent projects challenged us to grow beyond our boundaries to accomplish what few have done before. Without the use of hydro-electric or diesel generator power, we were asked to build a long-range microwave backhaul communications system for a large, high-grade mining operation under development. This would provide them with high-speed Internet, two-way radio communication, and the potential for cellular coverage. Historically, microwave systems are ideal for short-range areas with a clear line of site between dishes. In this instance however, we were confronted by over 73 kilometres of mountain range to get around. Because microwave signals cannot pass through or around obstacles in the same way lower frequencies can, our 14-metre towers were built atop 1,800-metre mountain peaks with

YOUR WORLD.

OUR SOLUTIONS.

Toll-free 1.855.638.0577 3650 River Drive, Terrace, BC V8G 3N9

Coast Mountain Wireless is the only authorized Motorola™ two-way radio dealer west of Prince George.

www.coastmountainwireless.ca Motorola XPR7550

CMW 4002d (BC Oil & Gas Report).indd 1

up to 49 kilometres distance between our towers with solar panels to provide power. It seemed a daunting task, but after months of careful planning and execution, we were able to create the microwave link and provide the camp with communications coverage, proving that no job is too big or too small for us at Coast Mountain Wireless. As the only authorized Motorola dealer west of Prince George, CMW carries a large selection of mobile and portable radios. Our in-shop technicians are always available to add channels to your radio or to give you advice on the best solution based on your current needs. Our communications options are not just limited to radio either – we supply the top brands in satellite communication, including Iridium, Delorme and Globalstar. So whether you are a foreman setting up a job site, or a hunter wanting to keep in touch while you are out in the wilderness, we are sure to have the right choice for you. Our team at Coast Mountain Wireless looks forward to working with new partners to develop customized correspondence solutions based on their individual needs. Please contact us at 1-855-638-0577 or visit us at coastmountainwireless.ca for more information. S

Motorola and the Stylized M Logo are registered in the US Patent and Trademark Office. © Motorola, Inc. 2005.

11-03-15 2:06 PM

B.C. Oil & Gas Report • 2016

43


Matrix Service provides top-tier service to Western Canada’s energy companies

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onnecting the upstream markets to downstream refineries, aboveground storage terminals serve as a key link in the oil and gas value chain that ultimately transforms crude oil into useable product. Equally important are the cryogenic and other pressure vessels and terminals that store products like LNGs, NGLs and other gases for transportation, power generation, petrochemical, or other uses. In Western Canada – home to the third-largest oil reserves in the world – the need for additional capacity continues to grow and, as new pipelines are added and pipeline expansions approved, the trend is only expected to continue. With nearly a decade of service to energy companies across Western Canada, top-tier contractors like Matrix Service, which has built nearly 10 million barrels of storage in Alberta in just the last seven years, are answering the call. 44 B.C. Oil & Gas Report • 2016

Matrix Service is well-recognized as a leader in the design, construction, repair and maintenance of aboveground storage tanks. But the legacy of the company’s parent, Matrix Service Company (NASDAQ: MTRX), reaches back even further – to 1984, when its founders committed themselves to building a company known for exceptional service, first in aboveground storage solutions. It is this commitment that has resulted in Matrix Service Company and its subsidiaries being recognized among the top 100 contractors in North America for more than eight consecutive years and being twice recognized by Forbes as one of the Top 100 Most Trustworthy Companies in America. Today, Matrix Service Company is parent to a family of companies that include Matrix Service, Matrix NAC and Matrix PDM Engineering. Together, these companies design, build, and

maintain infrastructure critical to North America’s energy, power, and industrial markets. The company’s products division, Matrix Applied Technologies, also offers precision engineered, premier products for aboveground storage tanks that include FlowdomeTM geodesic domes, internal floating roofs, drain systems, suction lines, and skimmers and seals. “We’re proud to be part of the Matrix Service Company family,” said Mark Fritz, division manager for Matrix Service in Western Canada. “It provides our customers with access to complete lifecycle solutions and expertise that might not otherwise be available. Being part of a company with revenues in excess of $1 billion also provides assurance that we’ll be here when they need us.” Energy companies including TransCanada, Enbridge, Canadian Natural Resources and Suncor Energy have all


called on Matrix Service for their depth of resources, safety, and quality project execution. “As is the case elsewhere throughout North America, in Western Canada, we take pride in partnering with our customers to develop solutions that meet or exceed their expectations,” said Fritz. Matrix Service Company’s subsidiaries perform FEED studies, designing, engineering, fabricating, and constructing crude and product terminals, as well as LNG and NGL terminals for export, storage and transportation fuel, process plants, and more. They also provide decontamination, inspection, maintenance and repair, capital construction and complex turnaround services, including Fluid Catalytic Cracking and Coker units, for refineries coast-to-coast. And across the entire oil and gas value chain, the company’s industrial cleaning division provides advanced chemical cleaning, tank cleaning, waste character-

ization, waste minimization, pre-commissioning cleaning, decommissioning cleaning, hydro-excavation for construction and hands-free hydro-blasting. Matrix Service Company is headquartered in Tulsa, Okla. with subsidiary offices throughout the U.S. and Canada, including its Western Canada offices in

Calgary, Edmonton and Leduc, as well as in Sydney, Australia, and Seoul, South Korea. S For more information about Matrix Service, contact division manager Mark Fritz at mfritz@matrixservice.com, or (780) 986-4058.

Complete lifecycle solutions From world-class engineering, procurement and construction to ongoing maintenance and repair, storage tanks to full terminals, there is one name that consistently leads the industry: Matrix.

P R O U D LY B U I L D I N G N O R T H A M E R I C A’ S E N E R G Y I N F R A S T R U C T U R E

780 986 4058

matrixservice.com

B.C. Oil & Gas Report • 2016

45


Van Houtte Coffee Services – Specializing in coffee services for the oil and gas sector

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or over 30 years, Van Houtte Coffee Services has been providing quality coffee solutions to oil and gas businesses operating in the greater areas of Kitimat, Terrace, and Williams Lake. From oil and gas camps, field and site offices to corporate workplaces, we have the right equipment and coffee products to help every business in the oil and gas sector keep their employees satisfied while staying within budget. Our services include brewing equipment servicing and maintenance, portable coffee-brewing equipment solutions, and direct shipping of product and supplies to even the most remote oil and gas sites. Acquired in December 2010, Van Houtte Coffee Services is a wholly owned subsidiary of Keurig Green Mountain, Inc., a leader in specialty coffee, coffeemakers, teas and other beverages with its innovative brewing technologies. Today, Van Houtte Coffee Services employs over 700 staff in 32 branches across Canada and offers the largest national service coverage of any other coffee service company in Canada, thus serving up more than one million cups per day nationally. In terms of product quality, Van Houtte Coffee Service has something to please everyone. Drawing upon almost 100 years of coffee roasting and café bistro experience, we offer a wide selection of premium, gourmet coffees including Van Houtte, Starbucks, Timothy’s, Green Mountain, and Tully’s. As well, we inventory more economical coffee brands for

those seeking a more budget-sensitive employee coffee solution. We also offer an impressive variety of teas, hot chocolate, specialty beverages, cold beverages, and other allied products to complete your employee beverage program. Van Houtte Coffee Services also knows that placing the right brewing equipment in the right staff area is important in establishing a well-functioning employee coffee program. From traditional and high-volume brewing systems to single-cup and specialty coffee systems, we have it all! As part of our Total Coffee Solution hassle-free program, customers are provided with free, on-loan coffee equipment, as well as free equipment servicing and maintenance. This means no upfront costs or capital investment required and no more dealing with fixing broken-down coffee equipment yourself. We realize you have better, more productive things to do to keep your business operating, so leave it up to us. So whether you are looking for a coffee program for your corporate employees or workers in the field, look no further than Van Houtte Coffee Services for your coffee service needs. We offer precisely the right coffee selection, coffee-brewing equipment, and service quality that is best suited for the diverse and fast-moving oil and gas sector. Van Houtte Coffee Services… Canada’s leader in workplace coffee solutions. S

Index to advertisers BK Two-Way Radio Ltd..............................................................................17

Kitimat LNG..................................................................................................26

British Columbia Safety Authority......................................................... 4

Lhi Tutl’it Services Inc................................................................................11

Canadian Western Bank...........................................................................25

Matrix Service..............................................................................................45

Chetwynd & Area Economic Development........................................ 3

Northlands Water & Sewer Supplies Ltd............................................33

Coast Mountain Wireless Communications Ltd..............................43

Northwest Tank Lines Inc.......................................................................... 9

Compass Bending Ltd..............................................................................27

Rosenau Transport Ltd......................................................................... OBC

D & D Insulators Ltd...................................................................................12

Society of Petroleum Engineers............................................................39

D & D Soft Covers Ltd................................................................................13

Specialized Desanders Inc......................................................................27

Dynacorp.......................................................................................................23

TOG Systems.............................................................................................. IBC

Harris Rebar.................................................................................................... 4

Trans Peace Construction (1987) Ltd.................................................... 5

Indian Resource Council..........................................................................16

Van Houtte Coffee Services Inc............................................................... 7

International Brotherhood of Boilermakers.....................................41

WSP Group....................................................................................................17

International Union of Operating Engineers Local 115..............IFC

Zenco Hydrovac Excavation...................................................................24

46 B.C. Oil & Gas Report • 2016


LET’S TURN OBSTACLES INTO OPPORTUNITIES The Oil and Gas Industry is facing difficult challenges. At TOG Systems, we’re helping you face them with a complete inventory of innovative communication tools that make operations in harsh and remote regions more reliable and effective. The result is more uptime and a strong bottom line, even in a weak market. We’ll help you weather the present storm with personal planning and custom communication solutions. And when the climate improves, you’ll be better able than ever to grow our resource industry and profit from it.

TOGSYSTEMS.CA • 844-356-3965 • INFO@TOGSYSTEMS.CA

Cellular Voice & Data

Satellite Voice & Data

Portable Towers

Skilled Technicians

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Two-way Radios


B.C. Oil & Gas Report 2016  

The B.C. Oil & Gas Report magazine covers oil and gas activity in the province of British Columbia. This issue features stories on LNG in Pr...

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