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Northern British Columbia and Alberta's Oil and Gas Industry Vol. 2 Issue 12 • dist: 18,000

november/december • 2012

h t r No

• Free

in this issue: • energy literacy - what do canadians know about their energy? • bringing it all back home - leveling the INDUSTRY playing field in western canada • on the road again - the ins and outs of a rig move





NOVEMBER 30, 2012

52nd Annual Fort St. John Petroleum Association Oilmen’s Bonspiel Blowout was the name of the game in the championship round of the Fort St. John Petroleum Association’s 52nd Annual Oilmen’s Bonspiel on Saturday, Nov. 17. After fighting off Balon in the E pool semi-final, D&D Insulators 2 ran out of steam and fell to Stimulate Well Optimization by a score of 7-1 in one of the quickest games of the tournament. Similarly, Rogers Trucking defeated Diverse Trucking in the D pool semi-final only to fall 7-0 to Vertical Building Solutions, who beat Peace Country Rentals 2 in their semi-final match. “We were done in three ends,” said Stimulate Well Optimization skip Chad Bordeleau, discussing his team’s lopsided victory. “A bit of a blowout,” he added. Bordeleau explained that the Oilmen’s Bonspiel can see a lot of mismatches because many of the participants are curling for the first time at the event. “Our lead and our second – the first time they threw rocks was this weekend,” he said. The tightest game of the championship round was the battle between Pimm’s Production and Safety Boss for the C pool title. Pimm’s Production was up 5-2 heading into the fifth end, but were trailing 6-5 after that frame, a momentum swing that characterized the back and forth contest that had Pimm’s Production finally squeak out an 8-7 victory in extra ends. “It does get into your head,” said Ted Pimm of Pimm’s Production, discussing those momentum swings. “You feel like, oh, these guys are better than us … or maybe you don’t have the momentum anymore. “It’s a different sport than hockey or something where you just pick it up and skate harder because your adrenaline’s pumping more. You’ve got to control that. It’s like golf,” he added. “If your adrenaline’s pumping too much, you can’t throw a rock. You can’t get your weight right.” Pimm had to tip his hat to Safety Boss after the win. “Great team we just played,” he said. “And we got lucky on the last stone.” The B pool final was another blowout After beating Espcan 1 in the semi-final, Fort Motors rolled over the Ketek team from Fort Nelson, who had defeated Gas Drive to reach the final. “Like every year, it was a great bonspiel and we certainly had a lot of fun,” said Tom Ouellette, the skip for a stacked Fort Motors team that also featured Brian Gentles and Bob Batchelor. “Our opposition, I think they have had a lot of fun all weekend,” Ouellette continued. “They just ran out of gas. So, we got a couple lucky breaks. And things just weren’t going there way. So, that helped out a lot.” The A pool final was also well on its way to being a blowout with D&D Insulators 1 leading Rig Ratz Safety 7-1 going into the sixth end, when Rig Ratz Safety responded with an impressive double takeout of a pair of D&D Insulators 1 stones sitting close to the button. Rig Ratz Safety scored two points in that frame, narrowing the gap to 7-3, but ultimately lost by a 7-5 margin. “We just didn’t have our A Game,” said Rig Ratz Safety skip Kelly Ollenberger, adding that the team was happy to finish second in the toughtest division. “Probably the worst game we curled all weekend,” he continued. “And they put a lot of pressure on us.” “After letting them back into the game up seven and giving them two in the sixth end, it was starting to make us wonder again,” said D&D Insulators 1 skip Victor Peebles, discussing the amazing double takeout that made the A final a close match after the sixth end. “We played very good,” said Peebles. “We actually had them in trouble every end until the sixth. And after that we controlled every end.” That level of domination wasn’t the case for the whole bonspiel, however. “We struggled in the qualifying game to get here,” said Peebles. “And it was a very tough qualifying game. And we squeaked that one out.” Obviously, the Oilmen’s Bonspiel isn’t all about who wins and loses. “Take a couple days and get away from work,” said Ouellette, noting that an old friend who works overseas traveled from Calgary to play for the Fort Motors team. “That was nice to see him and his wife and family for the last few days,” he added. Bonspiel organizing committee chair Curtis Schafer said that the tournament is a great opportunity for the curlers to forget about work for a few days and spend time with friends and family. Of course, the game is always important for the long-time curler. “There’s close games and tight ones and extra ends and all that stuff. There was a lot of that. A lot of good curling,” said Schafer. The curling – that’s always good. That’s the highlight in my books,” he concluded. Bordeleau put it all in perspective. “It’s not the Brier,” he said. “We’re not going to the Brier. “We’re just curling.”


industry news

NOVEMBER 30, 2012

special feature

MR. SCHOLZ GOES TO OTTAWA CAODC pres talks industry issues with feds james waterman Pipeline News North The Canadian Association of Oilwell Drilling Contractors (CAODC) began a new era of government relations with their first visit to Ottawa at the end of October. Led by CAODC president Mark Scholz, a delegation of CAODC member company representatives touched down in the nation’s capital on Tuesday, October 23 to discuss issues concerning the drilling and service rig segment of the oil and gas industry service sector with members of parliament. “We represent an important sector within the upstream oil and gas industry,” said Scholz. “And it’s important for us to ensure that our federal public policymakers are aware of the some of the issues that we’re dealing with in our industry. “But, more importantly, to ensure that when they develop public policy and are making regulations that affect our business that they understand what’s important for industry and how to make it more efficient and more successful within Canada.” If the CAODC is going to accomplish that goal, Scholz added, they must also show government that the industry is available to answer their questions, and not just those asked by the governments of Canada’s westernmost provinces. “This was the first of its kind for our association,” said Scholz, noting that CAODC’s government relations focus has been primarily Alberta and Saskatchewan in the past. “We’ve expanded our government relations,” he continued. “We’re meeting with folks in Manitoba now. In fact, Quebec as well – we’re sitting down and participating with the Quebec Oil and Gas Association (APGQ) and meeting with industry leaders out there. So, we’re really expanding our outreach. 28231

“Because, if you think about the shale gas revolution or the shale gas potential, it’s really now covering many different pockets of Canada that we’ve never really been in.” Scholz admits that the heart of Canada’s oil and gas industry will always be in the West, but he also mentioned that emerging opportunities in places like Manitoba, Quebec and New Brunswick is creating a need to expand the communications work being done by the CAODC, which must now include visits to Ottawa. “What I hope we get out of it is just our members of parliament have a better understanding about the opportunities there are within our industry, but also within the overall upstream oil and gas industry, and that they will look at the drilling community as an extremely integral and critical piece of the oil and gas infrastructure on the service sector [side],” said Scholz. “And I think we accomplished that,” he added. “This is the first of it’s kind. We fully anticipate doing this on a routine basis. At least – on a minimum – an annual basis. “We’ll be doing this again in November in 2013.” Not surprisingly, the much publicized labour shortage in the oil and gas industry was high on the list of topics discussed during the Ottawa trip. “That is a very difficult challenge for us,” said Scholz. Scholz remarked that CAODC is working closely with Minister of Citizenship, Immigration and Multiculturalism Jason Kenney to ensure that immigration and temporary foreign worker policies are helping the service sector to address that labour challenge. “Ensuring that our immigration system looks for … immigrants that are inline with some of the economic issues that we’re faced with,” he explained. “Looking at possibly making it easier to attract and obtain

temporary foreign workers.” The other part of that equation is attracting more Canadians to the oil patch. “How,” said Scholz, “do we bring people from Ontario and Quebec and some of these underemployed areas of the country? How do we get them to where the jobs are? Obviously, right now, we have more jobs than we have people out here in the west. And so how do we get those people out here?” An associated issue is that workers are already traveling from Ontario, Quebec and Newfoundland and Labrador on a regular basis to spend two weeks in the oil patch of western Canada before returning home again until their next tour of duty. “Rig activity spans from British Columbia to Manitoba, but the workforce is drawn from all over the country,” said Scholz. “A driller can make his home anywhere because a rig is always moving to new locations and the work rotation for a rig crew needs to accommodate travel time.” Government representatives took advantage of the opportunity to ask questions about industry standards. “That was something that we were happy to answer,” said Scholz. “An incredible story of achievement and success,” he added. Scholz points to CAODC milestones such as the introduction of recommended practices for overhead equipment that were accepted by Alberta Occupational Health and Safety as industry standards in 1994. “We have our training standards on the rig tech side,” he continued. “We have our journeyman red seal trade for our drillers, which standardizes training measurement tools across the industry. And then on the service rig side we have a similar competency-based program that we mandate our members to establish.”


8 12

On the road again - the ins and outs of a rig move For what it’s worth - the market for CO2

community 23 Shell donates learning lab to local college

industry news 5 Rushford takes reins of Producers Group 20 Assessing Alberta’s shale resources

profiles 10 The amazing tale of George McLeod 18 Bob Trobak - a great hockey man gets rewarded

environment 29 Caring about caribou

careers & training 6

Jobs start here - Fort St. John job fair




NOVEMBER 30, 2012


industry news A MOUNTAIN OUT OF A MOLEHILL Concerns over Coastal GasLink environmental assessment overblown james waterman Pipeline News North

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A high profile provincial newspaper raised doubts about the credibility of the federal environmental assessment process on Sunday, Nov. 25 with an article claiming that TransCanada’s proposed Coastal GasLink project may not receive that level of regulatory scrutiny. The Canadian Environmental Assessment Agency (CEAA) issued a call for public comment on the project on Nov. 13 as part of the process of determining the need for a federal environmental assessment of the pipeline that would connect natural gas resources near Dawson Creek to a liquefied natural gas (LNG) export facility in Kitimat. The article strongly suggested that Coastal GasLink may not undergo a federal environmental assessment as a result, but failed to mention that there is a good chance that an environmental assessment will be completed regardless of the comments the CEAA receives. “This project came in under our new CEAA 2012 Act,” explained Maxine Leger-Haskell, a spokesperson for the agency. That is the legislation enacted on July 6, 2012 and designed to improve the efficiency of the regulatory review process for major energy projects. “This is the first public comment period where, basically, we have… received the project description and we’re looking it over and checking if an environmental assessment is required,” said Leger-Haskell. “This is on our list… of types of projects that would normally require one.” That list is the Regulations Designating Physical Activities list that indicates what types of projects may warrant an environmental assessment by any one of three federal agencies, including the CEAA. The list includes natural gas pipelines to be built and operated within a wildlife area or migratory bird sanctuary and natural gas pipelines longer than 75 kilometres in length on a new right-of-way. The proposed Coastal GasLink is projected to be about 650 kilometres in length, although the exact route is not yet certain. The project description issued by TransCanada also notes that the conceptual route would run by one Important Bird Area (IBA), the Fraser Lake IBA, if not directly through that tract of land.

It is unclear at this point if the IBA in question would also be considered a migratory bird sanctuary, but potentially affected wildlife discussed in the project description include the Canada warbler and olive-sided flycatcher, migratory birds that are listed as threatened species under the Species at Risk Act (SARA), and the rusty blackbird, a migratory species of special concern under SARA. A description of the Fraser Lake IBA found on the IBA Canada website mentions that it is important nesting habitat for migratory waterfowl as well as various songbirds. “That’s the sort of thing that we would be looking at,” said LegerHaskell. TransCanada’s project description notes that construction and operation could adversely affect migratory birds during migration or nesting, but that the company is also developing measures to mitigate those impacts. The conceptual route is also in close proximity to the Burnie River Protected Area, which could be considered a wildlife area in terms of the Regulations Designating Physical Activities list, and crosses the ranges of three caribou herds: Quintette, Hart Ranges and Telkwa. The Hart Ranges herd, a population of 560 individuals as of 2010, is listed as threatened under SARA. Those aspects of the project alone could spur a federal environmental assessment regardless of public comments, but they are also the sorts of issues with the project that concern Craig Orr, executive director of Watershed Watch. “Obviously, crossing water bodies is a big concern,” said Orr. One such water body is the Stuart River, home to the white sturgeon, an endangered species under SARA. Orr said that pipelines create corridors similar to those created by transmission lines, a problem that Watershed Watch examined in their study on run-of-river hydro projects, Tamed Rivers. “We go into quite a bit of detail on transmission line corridor impacts on birds like marbled murrelets and opening up their nests for predation,” said Orr. “You get these linear disturbances that affect both fish and wildlife, and vegetation as well.” That seems to be the kind of input the CEAA is hoping to receive through this initial public comment process.

“It really just helps determine… if we’re thinking of everything, if we’re looking at everything, if we have all the information we need,” said Leger-Haskell. “We want to be transparent and let the public know we’ve got a project description, we’re looking at whether an environmental assessment is required, do you have anything you can contribute to our consideration.” The new CEAA 2012 Act stipulates that there be a twenty day public comment period when the CEAA is determining if a federal environmental assessment is necessary. The agency has until the first week of January, 2013 to decide if an environmental assessment will be conducted in this case. The public can submit their comments until Dec. 3, 2012. “If it’s determined that it’s required, we will have subsequent public comment periods,” said Leger-Haskell. “Once a federal environmental assessment begins… there will be three additional public comment periods.” “We’ve commented as an organization on several major projects… around British Columbia,” said Orr, expressing his distrust of the system. “And it’s nice to say that you want them early, but we haven’t seen a lot of those comments make a difference in terms of project sighting and monitoring. “One of the things that Watershed Watch is pushing for is better planning for all of these projects and not cursory kind of assurances that we get,” he added. “When the Canadian Environmental Assessment Act got revamped, to use a fairly loose term, I did get a legal briefing on it. And what I can say is there’s just so much discretionary power in what actually goes forward now that the safe bet is to say that most major projects aren’t going to get a review.” Even if a federal environmental assessment isn’t conducted, TransCanada would have to successfully complete a similar process in B.C. in addition to receiving permits and approvals from the BC Oil and Gas Commission (OGC) and the Ministry of Forests, Lands and Natural Resource Operations (FLNRO) in order to proceed. Certain aspects of the planning and construction phases would also have to receive approval under the BC Heritage Conservation Act and the federal Fisheries Act and Navigable Waters Protection Act.

NOVEMBER 30, 2012



RUSHFORD TAKES THE REINS Quicksilver exec becomes new Producers Group chair james waterman Pipeline News North Dave Rushford admits he has big shoes to fill. Thirty years into a career in the Canadian energy sector that began with a stint as drilling foreman for Pancanadian Petroleum, the senior vice president and chief operating officer for Quicksilver Resources Canada is now taking over for Rob Spitzer, vice president of exploration with Apache, as the new chair of the Horn River Basin Producers Group, an association of eleven oil and gas companies operating in the shale gas play near Fort Nelson, British Columbia. “Rob’s done a fabulous job,” Rushford said of his predecessor, a man who has built good relationships and a solid reputation in Fort Nelson during his time as chair. Rushford hopes to build on those relationships, but it isn’t as though he is a newcomer to the region. “The Horn River’s extremely important to Quicksilver. It’s by far our largest growth property in Canada. Maybe in the company,” said Rushford. “I’ve had quite a long history, actually, with Fort Nelson,” he continued. “Because, back a number of years ago, I was the business unit vice president for Encana for their Fort Nelson business unit.” That was in the days when Encana was developing the Jean Marie natural gas play in that region, long before everybody was talking about the Horn River Basin. “I’ve known a lot of the players up in Fort Nelson for quite some time, both within the municipality and within the First Nations,” Rushford added. Rushford was given the reins in early November, during a very quiet period in the life of the Horn River Basin, largely due to low natural gas prices. That doesn’t mean the group isn’t relevant, however. “The Horn River [Basin] Producers Group was established originally – and the reasons are still very valid – to create a [venue] for government, local municipalities and First Nations to have a window into the activities in the producer area,” said Rushford. “And I think the

need to have those open communication lines are self-evident. And even though activity levels have slowed down up there, the need for communication hasn’t. I think it’s extremely important for industry to keep the communication lines open. “Given the size and scale of the Horn River, it’s not like a normal play in Canada. When the thing gets kicked off [when] gas prices, hopefully, finally, come back a little bit, you’re going to have to have some coordinated activities in terms of the issues that a play that size brings.” Many of those issues concern longterm planning. “When I look at the municipality, there’s just tremendous draws on resources both within the service sector and the municipality itself,” Rushford said of Fort Nelson, adding that the Producers Group has a role to play in solving those problems. The cumulative effects of natural gas exploration and production in the Horn River Basin is a frequently discussed issue, particularly in terms of what might occur when activity ramps up again because the natural gas price rebounds or the liquefied natural gas (LNG) business takes off. “I have to confess my crystal ball probably isn’t any better than anybody else’s in terms of when those things are going to happen,” said Rushford. “What I can tell you is, certainly, under the current gas prices it’s very difficult to justify large expenditures in the Horn River right now,” he added. That is why much of the activity in the play – and Rushford admits that the activity level is currently quite low – is related to commitments made by the individual companies at the moment. “You’ve got a couple parties that are doing some drilling on joint ventures,” said Rushford. “Those will go ahead. You’ve got a little bit of drilling that’s going on in terms of land commitments. And some drilling that’s going on to meet pipeline contractual commitments. “You could summarize it by saying almost all the drilling that’s going on right now is related to commitments. That big push to have the ramp up in activity really isn’t going to happen until we get some pricing signals.” Due to the economics of the play,

Quicksilver Resources Canada is exploring joint venture opportunities for their operations in the Horn River Basin. QUICKSILVER RESOURCES CANADA PHOTO

Quicksilver Resources Canada’s senior vice president and chief operating officer Dave Rushford took over as chair of the Horn River Basin Producers Group in November. QUICKSILVER RESOURCES CANADA PHOTO

joint ventures are becoming increasingly important for producers in the region, according to Rushford. “When you look at the scale and size of these projects, there’s going to need to be an influx of third party capital,” he explained. “You’ve seen some of that already with Encana and Nexen in particular. But I think there’ll probably be some more joint venture work done up there just because of the amount of capital that’s going to be required to fully develop that play.” Quicksilver is one of those companies exploring joint venture opportunities. “We’re talking to a number of parties right now,” said Rushford. “Hopefully, we’ll have something concluded in the near future. But that’s about all we can say about it right now.” The proposed central corridor road project, which was developed by the Producers Group, could also help spur activity in the Horn River Basin by improving access to the play from Fort Nelson. “It’s about a $100 million project,” said Rushford. The Producers Group has proposed to split that cost evenly with the Province. “Some of the main reasons for [the road] are improved safety and cost efficiencies,” Rushford continued. “Having a direct access from Fort Nelson right into the core areas of the Horn River Basin is going to have a huge impact.” Rushford believes that impact will also be felt in Fort Nelson. “It allows us to start doing more local work out of Fort Nelson,” he said. “We have a significant reduction in travel time, which is going to increase safety

for all of our workers and our contract workers. And, obviously, reduce transportation costs as well, which will help with the profitability of the basin. “There really isn’t an area that that central corridor doesn’t have a positive impact on from a Producers Group perspective.” Rushford has sat on the steering committee of the Producers Group for the last two years, almost as long as he has been with Quicksilver. “Most of our involvement here over the last year has been around communications,” he said, citing their participation in hammering out enhanced benefits and consultation protocol agreements. “We’ve done a lot of work … with the Northern Rockies Regional Municipality on some long range planning and infrastructure needs that we’re going to see as an industry,” he added. The central corridor road is an example of those efforts. During his time with the Producers Group, the most important lesson that Rushford has learned is that the lines of communication must be kept open. “Whether it’s direct dealings with government, First Nations or the municipality, having those personal relationships is extremely important, because it allows you to sit down and have an honest dialogue around issues,” said Rushford. That basically summarizes Rushford’s goals for his tenure as chair of the Producers Group. “I think my professional and personal goals are probably the same,” he said. “And that’s to continue that legacy of communication that Rob has established and carry that going forward.”



NOVEMBER 30, 2012


JOBS START HERE Fort St. John job fair attracts jobseekers from far and wide

james waterman Pipeline News North It likely comes as no surprise to Fort St. John residents that many of the jobseekers attending the BC Jobs Start Here job fair on Friday, November 9 were not born and raised in the Peace. Like Anthony Jackson, a recent arrival from Florida looking for a new opportunity to put his accounting and administrative skills to good use, several of the attendees had traveled from across North America and beyond to find work in the area. “I’m looking for a nice, dynamic corporation I can work with,” Jackson said of his goals for the day. John Poynton was searching for a new career path after two decades in the aviation business and seven years as a social worker. “My daughter lives in Fort St. John and I’ve come here to visit her,” said Poyton, who came to Fort St. John from the United Kingdom about five months ago. “I like the place,” he added. “So, I’d like to stay and seek work.” Christine Shapovalov from Prince Edward Island told

a familiar story of moving to northeast British Columbia because her husband had taken a job in the oil and gas industry. “I have a [Bachelors degree] in biology and I also have a diploma in biotechnology,” said Shapovalov. “My goal today is to have an onsite interview or to have an interview scheduled later on,” she continued. Interestingly, it wasn’t only the jobseekers who were trying to learn more about the local employers during the job fair. “Because I’m relatively new to Fort St. John, for me it’s really helpful to get to know the major employers in this city and who we might be recommending for our clients and what kind of qualifications they need,” said Ursula Kroetsch, a case manager with Employment Connections. The sectors represented at the job fair ranged from retail and hospitality to law enforcement, as well as the natural resource industries, particularly the oil and gas services sector and major energy sector players such as Shell Canada and Spectra Energy. “We have about 23 organizations attending the Fort St. John job fair,” said Hannah Seraphim of the BC Jobs

Plan team. “There’s a good variety of different employers for different industries. There’s BC Hydro, Canfor, Staples, Tim Horton’s, as well as Northern Lights College.” The event was actually part of larger government initiative announced by Premier Christy Clark on September 18. The job fair travelled to 24 communities across the province throughout the fall. “The BC Jobs Plan initiative is to connect employers with employees,” said Seraphim. “So, that’s what we want to do with our job fairs this fall. And it’s really important to get to all the different communities throughout B.C. … just to show people what industries are out there for them and what types of jobs are available right now.” “I think it’s awesome,” said Brittney Beck, a personnel recruiter with Precision Well Servicing. “Lots of people, they always want to go to Alberta,” she continued, “but B.C. [has] got lots of opportunities, too. We have a smaller office here, but it’s great to see lots of guys wanting to come up north and work here.” Beck was hoping to meet people interested in entry level positions at Precision during the job fair, as well as educate attendees about working in that part of the energy sector.



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INSURANCE IS A PART OF YOUR CHILD’S FUTURE As I weigh the pros and cons of buying life insurance for my little girl, I’m thinking about the life insurance policy that my dad bought for me when I was still in diapers. He must have spent considerable time collecting information before making such an important decision that over time proved to be very beneficial to me. I think I had better follow his example and learn all I can about the subject, and in particular, what kind of benefits it can and can’t deliver. This is what I have discovered, and if you’re considering buying life insurance for your child or children, you might want to ask yourself some of these same questions and consider the possible benefits. “Insurability” What is it and why do I need it? Guaranteed insurability allows my child to buy more life insurance at specified times up to her 45th birthday, no matter what her health, occupation or lifestyle may be. This ensures she’ll have access to additional insurance, even though she may become otherwise uninsurable. With some insurance policies, the guaranteed insurability benefit gives her six opportunities to buy $150,000 of additional insurance, and her age or health won’t be a factor. Could my daughter become uninsurable in the future? Sadly, yes. A common obstacle to buying life insurance is a medical condition, such as heart disease, diabetes, or HIV. It’s possible that some day, my child might not be able to get life insurance because of a health condition. Even if she’s accepted, the bigger the risk, the higher the premium she’ll have to pay.


The hobbies and adventures my child chooses to pursue may make her ineligible for insurance. If my daughter decides to race motorcycles or if she takes up skydiving or scuba diving, insurers will consider her as a higher risk. However, if the policy I buy for my child has guaranteed insurability, she won’t be penalized for being adventurous. What’s the financial benefit of buying insurance now? As I’m quickly finding out, babies grow up fast, and one day she may want her own life insurance policy, especially if she has her own family. Insurance advisors will tell you to “buy it now and save.” Buying a permanent insurance policy now means that premiums will be paid over a longer period, but my daughter will pay less if she takes over the policy when she becomes an adult. Any insurance advisor can show you the difference between premium costs at age zero and costs at the age of 25. Another possibility for providing protection for my child is the child term attachment. It insures my daughter under my policy, allowing me to include my entire family when I make my personal insurance decisions. Child term is a good option, since it has built-in guaranteed insurability. It’s also good for people who are uncomfortable having large amounts of insurance on their children. With permanent life insurance policies (whole life and universal life), a cash value can provide a fund to draw on for future opportunities. Premiums paid into a permanent life insurance policy build up equity in the form of cash value. I remember borrowing $1,000 on the policy my dad bought for me. I put the money back into

the policy a little while later. The cash value of the policy is an asset that helped me establish credit, helping me to get a down payment from a bank for my first car. In a way, though he didn’t know it, my dad started my financial program way back in 1960. Just as I did with my policy, my daughter might want to use her policy’s cash value to borrow money to pay for school supplies or cover an emergency expense. The borrowed money would also help her take the important step of establishing credit. The cash value also ensures her policy will remain in force if, at some point in the future, I’m unable to make premium payments. What if the unthinkable happens? As much as my wife and I avoid talking about life insurance for our little girl, realistically we have to admit that if something happens, our family income levels would be seriously affected. One of our first needs would be to take time off work, likely for an extended period. My wife is self-employed and wouldn’t have paid bereavement time from a company. The proceeds from life insurance would help. I’ve weighed the pros and cons and I’m convinced that I’ll buy insurance for my daughter. One last thing to do, though: I must call my financial advisor to find out if I have missed or forgotten something. I want to make sure my decision is based on all the facts, including the benefits and the risks. My dad wasn’t a financial genius (and neither am I), but he made a wise choice that paid benefits. He’d be proud that I’m following in his footsteps!

Submitted by: First Choice Insurance & Investment Services Inc. © Sun Life Assurance Company of Canada, 2011

NOVEMBER 30, 2012

“We like to promote [from] within,” Beck explained. “We don’t generally hire further up in the chain because we want guys to start fresh, get a good foot in the door, and work there way up through the company. “Lots of people assume it’s just working on the rigs,” she continued. “They don’t know what else is up there. Our entire company, we’ve got rentals, we’ve got well servicing, snubbing, drilling. “There’s a plethora of different options out there for everyone, but they’re just not aware of [them].” Education was also an important aspect of the job fair for Lauren IsherwoodBaingo of McElhanney Land Surveys. Northern Lights College (NLC) had to cancel its geomatics program at the Fort St. John campus this year due to lack of interest, despite the fact that geomatics professionals are in high demand, particularly for companies like McElhanney that work closely with natural resource industries. “It’s not just a Northern Lights College problem,” said Isherwood-Baingo. “There are schools across Canada that suffer from low enrollment in geomatics programs. It’s not unusual for them to have to suspend a program or tweak it to hopefully get more interest in it. “The careers in geomatics opportunities are plentiful and we can’t find enough people,” she added. Part of the problem is that young people simply aren’t aware of the profession. “Not a lot of people understand that land surveying is a profession,” said Isherwood-Baingo. “And that it’s a really viable long term career option for someone that likes to work outdoors and likes to do physical work. It pays really well for people who have been in the industry for a few years or more.” Some sectors may suffer from a labour shortage because interested people are unable to overcome the obstacles they face when trying to move into apprenticeship programs, which was why Robert Johnson was attending the job fair in his role as a trades employment specialist with the British Columbia Construction



Christine Shapovalov, a biologist from Prince Edward Island, discussing career opportunities with representatives from Teck Resources during the BC Jobs Starts Here job fair in Fort St. John on Friday, Nov. 9. Shapovalov was just one of several newcomers to the region in attendance at the event. JAMES WATERMAN PHOTO

Association’s (BCCA’s) Skilled Trades Employment Program (STEP). “What we try to do is remove some of the barriers to get people into the skilled trades, both at the apprenticeship level and moving them into the colleges so they can pursue their trade in the college,” said Johnson. “We want to meet new people that we may be able to help into a trade, as well as meet the employers who are looking for particular trades people or particular apprentices so we can link the two together,” he added, discussing his goals for the job fair. Johnson noted that the most significant challenges for young people trying to en-

ter the trades often concern the financial aspects, such as the cost of new steeltoed boots and fire retardant coveralls. “Occassionally, if somebody’s coming from out of town, we can put them up in a motel for a few nights until they actually start their job,” said Johnson. “Those kind of barriers that would stop them from moving into the trade, we can take care of some of those.” Finding a journeyman to match with an apprentice is also a challenge, especially in the Fort St. John area. “The whole northeast of B.C. is short a lot of journeymen, which is problematic because if they don’t have enough journeymen, we can’t put the apprentice in there to

train under the journeyman,” said Johnson. That becomes a significant issue when considering the much discussed skilled labour shortage in western Canada, a problem that is only going to grow as the Baby Boom generation starts retiring. “We’re trying to raise the awareness that in ten or fifteen years, there’s going to be a serious shortfall on tradespeople, especially journeymen, with a lot of people retiring,” said Johnson. “So, we’re trying to get them aware of it so they start taking steps now to alleviate that problem. “There’s definitely a labour shortage,” he continued. “Primarily in the skilled trades, but also for a lot of the apprentice positions. And even labourers.”

Enform launches Wellsite Supervisor Competency Assessment Tool james waterman Pipeline News North Enform is striving to improve working conditions at oil and gas wellsites with their new Wellsite Supervisor Competency Assessment Tool (WSCAT). “The interactive online resource is designed for wellsite supervisors, engineering firms, placement agencies and producers, to enhance competencies within the industry and support continuous improvement among wellsite supervisors,” said Cameron MacGillivray, president and CEO of the safety association for Canada’s upstream oil and gas industry. “It is industry’s first step in ensuring supervisors are competent to safely execute the oil field operations they are contracted to oversee,” he added. Enform began the pilot project phase of the assessment tool in October with the intention of launching it completely in March, 2013. It is accessible through “A joint task force was formed with CAPP (Canadian Association of Petroleum Producers) and CAODC (Canadian Association of Oilwell Drilling Contractors), and

facilitated by Enform, to develop and enhance support for wellsite supervisors,” said MacGillivray, describing the genesis of the WSCAT. “The initial project meeting took place in January, 2012,” he continued. “And a written copy assessment tool was developed by industry and used as the framework to develop a practical tool to gauge a wellsite supervisor’s competency.” Enform hopes that the WSCAT will soon become an energy sector fixture. “We hope will become an invaluable tool for the Canadian petroleum industry by enhancing competencies and supporting continuous improvement among wellsite supervisors,” said MacGillivray, adding that the WSCAT is currently used in prescreening wellsite supervisor candidates as a way to determine their competency level and indentify opportunities for improvement. “The online tool has a public portion designed for wellsite supervisors to share industry news and information,” said MacGillivray, explaining how the system works. “The private portion, MyPipeline, allows wellsite supervisors to create a profile to upload their resume,

experience and training,” he continued. “Supervisors are asked a variety of randomly generated assessment questions based on specific experiences. Answers are scored by an anonymous reviewer, independent of the producers. Supervisors select the producers of their choice to share their profile and receive feedback and identify opportunities to address competency gaps. Producers receive the profile and determine next steps in hiring and continued competency development.” MacGillivray suggested that creating the tool was an important step because of the critical role that wellsite supervisors play in the oil and gas industry. “The tool will assist producers and wellsite supervisors in recognizing training and knowledge gaps and highlight opportunities to improve competency,” he said. “The assessment portion includes a health and safety component that provides supervisors with awareness of experience and suitability of skills for a project. “The tool enhances current hiring practices and contractor relationships by providing a performance path that reduces overlaps in training, offers continuous improvement and confidence in abilities.”



NOVEMBER 30, 2012

special feature


ON THE ROAD AGAIN Encana explains the ins and outs of a rig move

Encana can be moving rigs in the Dawson Creek area every 16 to 20 days. ENCANA PHOTO

james waterman Pipeline News North Relocating a drilling rig is one of the most common occurrences in the natural gas fields of northeast British Columbia. That doesn’t mean that the activity no longer requires any thought, however. Actually, it is something that occupies the minds of men like Mike Forgo, Pat Dies and Dwayne Kelm on a regular basis, particularly when it comes to Encana’s operations in the busy liquids-rich natural gas play of northeast B.C. simply known as the Montney. “Part of the whole communication piece starts right back with the local stakeholder, back when we’re beginning development,” said Forgo, whose portfolio at the Canadian natural gas giant includes stakeholder relations. That communication is now part of a program called Courtesy Matters that Encana established in 2006. “It was instituted to address all the issues around behaviors, communications, and to address nuisance issues that come along with development,” Forgo explained. “It’s a program really that could be adapted to anywhere where you have higher industrial development,” he added. Informing the public of an impending rig move doesn’t stop at talking to the local landowners, but also involves making announcements via local radio, television and newspapers. “Rig moves haven’t been the issue that maybe they were once perceived to be only because there’s other equipment out there today that’s probably in larger numbers than the rig equipment pieces,” said Dies, team lead for Canadian Deep Basin drilling at Encana.

“We’ve actually gotten some kudos from some landowners for the truck drivers,” he continued. “When they see a residential or other type of small vehicle approaching, they’ll typically take that load and pull over and actually stop just to let someone go by. “And they’re generally pretty slow moving operations. The big loads aren’t traveling at very high speeds. The whole idea is to get it there in one piece, do it slow, don’t create a lot of dust and keep all the neighbours happy.” Dust during the dry summer season and the presence of large, slow traffic on the road are usually the most significant impacts of a rig move, said Forgo. However, he noted that although a rig move can potentially be irritating for local traffic because of the size and amount of equipment and the slow speed of travel, they generally aren’t a big public concern these days. “We probably actually hear less about a rig move than we do with respect to our completions operations,” said Forgo. “That’s changed a bit over the last few years,” he added. That shift has largely been due to the advent of horizontal drilling and multi-well pads. “We spend more time on the lease with a fair amount of heavy equipment if we’re doing multi-well pad development,” said Forgo. “We’ll have a lot of equipment on lease completing the wells after drilling for quite a period of time. And seeing that much equipment and the service vehicles that need to support that can be quite overwhelming for some of the landowners.” Encana does their best to address all those questions and concerns, just as they carefully plan their rig moves. “We’ll plan the route out about three

days in advance of the actual [move],” said Kelm, group lead for Canadian Deep Basin drilling. “We’ll pick one of the preferred routes,” he continued. They then drive that route to determine the amount of vehicles and houses they might pass during the move, as well as measure the heights of power and telephone lines and other potential obstacles for the big equipment. It is also decided if they will need to use a grader to fix rough spots on the road or water to keep dust down. If their route is a bus route, that will affect their timeline. “We try to move after nine o’clock to actually be on the road because most of

the local traffic’s gone,” said Kelm. “We’ll start the rig out and, actually, the truck will hit the pavement or high grade road by nine o’clock so we get most of the local traffic gone if they’re commuting to work. Or the bus traffic.” “Dry conditions are the best for us,” said Dies, noting that dust abatement is a priority in those conditions. “The drier the conditions, the less damage we can do to any road,” he added. “So, we’re looking for the firmest, driest conditions.” “Dry or frozen,” said Kelm. Encana is particularly busy in the Farmington and Dawson Creek areas, where they can be moving rigs every 16 to 20 days. If the conditions aren’t right for moving a rig, it just simply isn’t done. “If we’re going to impact any of the county roads, we just don’t move,” said Kelm. “We often grade the road whether or not we impact it or not,” he added. An average rig move in the Farmington area is a distance of ten kilometers or less. “It’s when we move from one side of Dawson [Creek] to the other side, because our development field is so large there, you’ll see that 70-kilometre [to] 110-kilometre move.” Rig moves typically involve 35 to 52 loads and use 14 to 22 trucks. “Depending on the distance,” said Kelm. “Most of the time,” he continued, short distance will be 12 to 14 trucks. Longer distance – it all depends on how many rotations we can get with that truck pulling a separate load. “The greater the distance, the more trucks we’ll have.”

When Encana moves rigs in the Montney play, the distances can range from about 10 kilometres to 110 kilometres. ENCANA PHOTO

NOVEMBER 30, 2012



industry news GETTING THE WORD OUT OGC talks fracking and water at info sessions james waterman Pipeline News North Hydraulic fracturing and water management were the key items on the agenda during a series of information sessions held by the BC Oil and Gas Commission (OGC) during the week of October 22-26. “They provided a good dialogue between the attendees and the Commission,” OGC spokesperson Hardy Friedrich said of the sessions. The OGC visited mayor and council in Chetwynd and Taylor in addition to holding public sessions in Dawson Creek, Fort St. John and Tumbler Ridge. “The point was to provide the public access to our experts in the fields of water use and hydraulic fracturing,” Friedrich added. “And there was some good dialogue there.” During the session in Fort St. John, Friedrich explained that the OGC decided to conduct the information sessions with a focus on hydraulic fracturing and water because those are the subjects that stakeholders ask about most frequently. Consequently, they felt a need to provide the facts. Chief engineer Mayka Kennedy was the first to take the podium, immediately addressing often discussed concerns about potential groundwater contamination due to hydraulic fracturing. Kennedy noted that potable groundwater aquifers in the Fort St. John area tend to be about 100 to 150 metres below the surface of the earth, while the surface casing on natural gas wells go as deep as a minimum of 600 metres. The shale gas is as deep as two to three kilometers underground. Despite those reassurances, some of the handful of attendees still asked questions about the possibility of water contamination due to hydraulic fracturing and the need for a monitoring system to test groundwater for pollutants associ-


ated with the practice. “The potential for material to leak out of [a well casing] is very low,” said OGC hydrologist Allan Chapman. One attendee raised the issue of groundwater aquifer mapping, suggesting that that work should have been completed before any natural gas drilling took place. “That’s a foolish thing to do, to allow them to drill without a map,” said that individual. Chapman responded by remarking that aquifer mapping in the Fort St. John area is actually fairly good, but admitted that there is much work to be done in the Horn River Basin. Chapman’s presentation on water management was done in the context of a summer where the Peace Region experienced a near record drought and the OGC had to suspend oil and gas industry water withdrawals from numerous watercourses throughout the northeast corner of the province. “Pretty extreme drought here this year,” said Chapman, noting that the area received only 10 millimetres of precipitation during the summer months, a far cry from the usual 250 millimetres or more. That is a serious concern when only about 20 per cent of the approximately 500 millimetres of annual precipitation actually becomes stream flow. “I suspect the suspension will stay on over the winter,” he added. The OGC issued an update on November 14 stating that the suspension of water withdrawals had been lifted for all rivers and lakes in the Montney play, but the suspensions would stay in effect for the Horn River Basin and Cordova Embayment, with the exceptions of the Sikanni Chief, Muskwa, Fort Nelson and Fontas rivers. Water can also be withdrawn from the Liard River and its tributaries excluding the Capot Blanc River. “I think we’re actually leading in a lot of areas,” Chapman said of the work being

OGC hydrologist Allan Chapman was back in Fort St. John in late October to discuss water issues with the public. The OGC held a series of information sessions throughout the Peace Region from October 22-26. JAMES WATERMAN PHOTO

done by the OGC. “And I think this is one area.” Attendees still raised concerns about water management, however, particularly around what they see as unregulated and unreported groundwater withdrawals from water wells on their properties, a sticky situation considering the absence of a groundwater licensing system in B.C. Groundwater is expected to be part of the long-awaited modernized Water Act. “They have to report the water use. It is a regulation,” said Chapman. Judging by those sorts of conversations that took place during the information sessions, one lesson that could be taken from the events is that there is a disconnect between the OGC and

the general public. The public appears to expect the OGC and its staff of 18 compliance offers to know when a misdeed has been committed, while the OGC often relied on tips from the public to enforce their regulations, which they don’t always receive. “One of the main points that we were trying to get out there was that we have a 24/7 number that people can call if they notice anything that they don’t think that’s right that’s happening out there in the field,” said Friedrich. “It’s important for people to realize that there’s a number they can call if they don’t think something’s right. “And we’re committed to responding to every complaint or tip that we get.”



NOVEMBER 30, 2012




A life of adventure in the oil patch james waterman Pipeline News North

phoned me and asked me if I’d consider going to Iran instead of Aberdeen. And you were commuting three months over George McLeod can usually be seen there and a month home at that time. So, enjoying a few dances and a few beers at I said, ‘Well, in three months, I don’t think the Fort St. John branch of the Royal Cathey can hurt me much.’ So, I went to nadian Legion on a Friday night. It is one Iran. And I wound up working four and a of the simple pleasures of a small town half years in Iran.” retirement from decades in the oil and Halliburton kept insisting that McLeod gas industry that mostly revolves around move his family to Iran as well, which he card games and playing pool. finally did in 1975. But reflecting on his eighty years “It was quite a thing for the kids,” he shortly after his birthday in early Novemsaid, recalling that the journey included a ber, McLeod told a story far stranger than week stay in London, England awaiting country music and pints of pilsner. visas and another week in Rome, Italy Born the son of a self-taught steam before finally making their way to Iran. locomotive engineer at the Red Cross OutTwo of his children would eventually post Hospital in Grandhaven on November graduate from secondary school in their 3, 1932, McLeod would gradually find his new home. way from the Catholic Mission house of “My wife and my daughter cried for the Old Fort St. John and exotic locales that first two or three days, but they got used few Canadians will likely ever experience. to it,” said McLeod. “It was a good place “Between picking up and delivering to live.” laundry for my mother, I gathered beer That would change, however, when the bottles,” said McLeod, joking about his country began moving toward revolution first moneymaking ventures. in the late seventies. He sat at his kitchen tables, completely “I had been talking to Iranians that I surrounded by memories in the form knew,” said McLeod. “Just one-on-one. of photographs and old furniture, still You couldn’t talk to two of them.” dressed as though he was ready for work. The reason for that was because of the “I started in 1950 for a company called nature of the secret police organization Machinery Depot in Calgary,” he continknown as SAVAK. ued. “My older brother worked there. In “His SAVAK was so strong that they the wintertime, we worked in the shop. didn’t know who was SAVAK and who They manufactured Little Giant sawmills. wasn’t,” McLeod explained. “So, if there We worked on a lot of that. In the sumwas two people, even he wasn’t a SAVAK, mertime, we salvaged casings from old he would be bound to report you because wells with hydraulic jacks. he didn’t know if the other one was. So, if “In 1952, I went to work for Mobil Oil.” he didn’t report it, he’d be in trouble.” That position allowed him to see his share McLeod predicted at that time that of Alberta and Saskatchewan, unaware of there would be a revolution in Iran within the adventures still on the way thanks to his ten years. relationship with “It was less oilfield service than a year,” he “I wound up working four said. “And so giant Halliburton that began in we gathered up 1956. and a half years in Iran.” everything we “Came back couldn’t replace here and bought with dollars and – George McLeod some property,” shipped it home. he said. “It was actually Eventually, the young people McLeod left Halliburton, briefly trying his that incited this,” McLeod recalled. “And hand at other enterprises, including a biI’m certain that a whole lot of them were cycle and motorcycle shop in Fort St. John. really very sorry. Because the Shah was “The spring of 1974 – break-up – Halbringing them into the 20th century. liburton phoned me to come back,” said “There was no middle class, originally, in McLeod. Iran. You were either poor or rich. He was “They needed people to go overseas,” creating blue collar workers and girls were he continued. “They needed multiservice in high heels and sweaters and going to operators. And I was. So, that’s why discos. Of course, when Khomeini came they called me. And I was slated to go to back – no more music, no more dancing.” Aberdeen, Scotland until the night before By early September of 1978, HalliburI was leaving. ton was arranging a charter flight for the “The general manager in Calgary wives and children of their employees to

Oil patch veteran George McLeod looks through mementos from his 80 years in the kitchen of his Fort St. John home. JAMES WATERMAN PHOTO

escape Iran. Men were allowed to leave, too, but McLeod chose to stay. “I worked in the field mostly from then on, suspending wells and whatnot,” he said. McLeod was preparing to go home on December 27 until all international flights leaving Iran were cancelled suddenly. “Then we had to scramble,” he said, adding that he was finally able to find a charter flight to Bahrain on December 31. “Just in time for the Halliburton New Year’s party,” McLeod laughed. McLeod returned to Canada on January 4, 1979 with a full beard that he started growing as soon as the revolution began so that he would be less conspicuous among the Muslim men of Iran. McLeod believes the beard saved him on at least one occasion. One night, he stumbled onto a roadblock of burning tires as he was driving from the oil patch. He didn’t stop, but simply steered his vehicle into the ditch to bypass the obstacles and continue down the road. Looking back through his mirror, he saw a group of men simply standing and staring after him. Nobody tried to stop him. “I wasn’t here very long,” McLeod said of his return to Fort St. John. He had a brief stint in Singapore, but there wasn’t much work to do. His next

stop was Australia, but conditions weren’t quite right there either. “So, I wound up commuting from Fort St. John to Nigeria,” said McLeod. “I was round-tripping Nigeria every 28 days.” That was followed by a stint in the Canadian Arctic before finally settling in Fort St. John for the rest of his working life and his retirement. “There’s a lot of different places I’ve been,” he said. “Switzerland and Germany. We holidayed in Spain. Went to the island of Majorca, Spain, the first holiday we had. They were having a lot of trouble with American workers. When they had time off, they’d go home, they wouldn’t come back. They said if you didn’t go home, they’d pay your round trip tickets to wherever you wanted to go, plus a month’s wages. So, I went to Spain – with the kids and my mother, and friends from here, and my two older sons. There was thirteen of us altogether in Spain. So, we had a good time there. And the next time we went to Malta for a month.” It was the opportunity to travel that McLeod views as the greatest gift of his life in the oil and gas industry. “There’s a lot of people that don’t take advantage of them,” he said. “If I had have known, I would have done it a lot sooner so I could have taken my two older boys, too.”

NOVEMBER 30, 2012



industry news NOT A SLAM DUNK YET LNG industry faces regulatory obstacles james waterman Pipeline News North British Columbia is running a race against time to get its liquefied natural gas (LNG) industry off the ground, but regulatory hurdles could still stand in the way. That was among the key findings published in a Fraser Institute report titled Laying the Groundwork for BC LNG Exports to Asia that was released this October. The report states that B.C. has a tremendous economic opportunity when it comes to exporting some of its massive natural gas supply to Asia, which also includes the benefits of building and operating pipelines to transport the fuel from northeast B.C. to the coast, but the regulatory framework may cause B.C. to lose that opportunity to other natural gas producing jurisdictions such as the United States and Australia. “Of course, there’s other people with [natural] gas around the world,” said Gerry Angevine, senior economist with the Global Resources Centre of the Fraser Institute and one of the authors of the report. Natural gas markets are among Angevine’s specialties, as he was previously a consultant dealing exclusively with natural gas and electricity issues. “The Australians have quite a bit of gas,” he continued. “And a lot of gas in the Middle East. Now the Americans have got gas. So, if we sit back and take too long to get approvals and so on, we may miss some of that opportunity or not get into that market niche that’s so important.” Angevine recalled that the U.S. and Canada were heading toward becoming net importers of natural gas as recently as 2007. There were plans at that time to build LNG import terminals on both coasts for important natural gas from other natural gas producing regions such as the Middle East. That preceded shale gas discoveries across North America and the emergence of multi-well pads where horizontal drilling and hydraulic fracturing are the norm. It has drastically altered the outlook for natural gas in North America.


“We’re finding that there’s a lot of shale gas that’s recoverable,” said Angevine. “It’s almost incomprehensible the amount of gas that seems to be up in northeast B.C.,” he added, noting that those volumes of natural gas can’t be produced simply for North American demand. “For one thing,” Angevine explained, “the U.S., with all of its shale gas plays, is taking less and less Canadian gas. And is projecting that by 2035 there may be no need for Canadian gas at all. “In fact, if there is need for Canadian gas, it might just be to help some of the U.S. exporters of LNG.” That essentially describes the need to secure new markets for the product and the window of opportunity extends to about 2030, according to Angevine. He also said that studies of LNG export initiatives such as the Kitimat LNG project led by Apache, EOG Resources and Encana and the LNG Canada joint venture between Shell Canada, Korea Gas Corporation (KOGAS), Mitsubishi Corporation and PetroChina Company have confirmed that the demand for natural gas in various Asian countries is huge. Angevine suggested that LNG doesn’t face the public opinion battle that Alberta oil export projects such as Enbridge’s Northern Gateway pipeline must face, simply because LNG proponents don’t have the impossible task of trying convince British Columbians that an oil spill will never occur. However, while the federal government has adjusted the regulatory rules in an attempt to expedite the review process for major energy projects along the lines of heavy oil pipelines, Angevine argues that LNG proposals are still suffering from unnecessary regulatory delays that could derail the whole industry. “There’s a lot of overlap and duplication,” said Angevine. “If you and I want to build an LNG facility,” he explained, “and somebody else has already applied to the NEB (National Energy Board) for approval, and it’s been in process, maybe almost approved, we

still have to go through those hoops … and address the same things.” “It highlights a need for an efficient regulatory framework, something that we absolutely support,” CAPP spokesperson Travis Davies said of the Fraser Institute report. “And duplication and undue cost are something that really hit us hard in terms of our investments, especially with natural gas at the price it is,” he added. Davies applauds the B.C. government and the opposition parties for supporting the natural gas industry in the province, particularly considering its importance to remote northern communities that depend on that resource for their local economies. “It’s pretty valuable in terms of sustaining those communities,” said Davies. That underscores the importance of ensuring regulatory processes can be completed in a timely manner that allows B.C. to compete with other natural gas producing regions. The Fraser Institute report suggests that the NEB reduce their responsibilities. “NEB doesn’t need to be involved with determining if there really are markets over there,” said Angevine. “Because if someone is willing to put up billions of dollars to build an LNG export facility, if they’re willing to do that, surely they’ve examined the market and they’re willing to take the risk. “We looked at the NEB requirements,” he continued. “We looked at the changes under the new legislation that was enacted near the end of June. And there are a lot of loopholes and things in there that could cause delays.” LNG is a complex industry compared to simply transporting oil produced in Alberta to the coast for export to foreign markets. LNG requires producing the natural gas in the northeast, building and operating pipelines to move the fuel to the northwest and constructing liquefaction facilities on the coast that will also require new electricity infrastructure to power that operation. Angevine believes that subjecting all of those elements to the regulatory process

individually rather than collectively could cause huge delays. “Maybe we could think in terms of an omnibus proposal in each case,” he suggested. “They talk about a single window for applications,” he continued. “It’s fine if you have a single window, but if you’re going to have to go to that single window for the pipeline and a single window for the terminal and the power facility and so on, you’ve got all those steps that could all be done with one application to that single window.” “That’s something where we’d like to see some of those efficiencies move into the hearing area,” said Davies. “You can cover off multiple points. If you have these same stakeholders, the same people and communities that might be impacted, then cover the ground at the same time. It goes back to the fact that if you can be more efficient, you can have just as robust a process and get to a conclusion much quicker.” The problem with regulatory delays isn’t only that B.C. could lose ground to its competitors, but it could also lose its chance to take advantage of a high global LNG price that is more closely tied to the oil price than is natural gas in North America. “A year ago, people were thinking … that we could price our LNG the same way that LNG from other parts of the world’s being priced,” said Angevine. However, he has heard rumours that an LNG project in the U.S. has negotiated contracts at a price based on the North American natural gas price. That is a concern for LNG proponents in B.C. “The big companies with big volumes can afford to see the price shaved a little bit, but [not] the smaller companies,” said Angevine. “It comes back to cost,” said Davies. “You’re looking at a commodity that’s extremely low value at the moment,” he continued. “And it’s tough to invest those upfront dollars in projects that are very capital intensive, like LNG, in the absence of a strong price.”



NOVEMBER 30, 2012

special feature FOR WHAT IT’S WORTH Innovative technologies creating a market for CO2

The oil sands has become the largest source of carbon dioxide emissions in Alberta due to the burning of natural gas for steam assisted gravity drainage operations such as Suncor Energy’s Firebag project. New carbon capture technologies such as CO2 Solutions’ use of an enzyme to remove carbon dioxide from the air could prove to be efficient and cost effective methods of mitigating the climate impacts of oil sands development. SUNCOR ENERGY PHOTO

james waterman Pipeline News North Eric Newell knows the carbon dioxide issue inside and out. Once the CEO of Syncrude Canada, a major part of an Alberta oil sands industry that is generating the largest amount of CO2 emissions in the province, he is presently the chair of the Climate Change and Emissions Management Corporation (CCEMC). “It’s solely interested in funding projects that reduce greenhouse gas emissions and also adapting to climate change,” Newell said of CCEMC. The company and its operations are closely tied to a piece of legislation enacted by the provincial government in 2007 known as the Specified Gas Emitters Regulation. That regulation focuses on large CO2 emitters that produce over 100,000 tonnes of the greenhouse gas per year and demands that they improve their energy efficiency by twelve per cent relative to a baseline level that was established in 2005. “And that’s actually a very tough target because these are generally new plants where they’ve been working on energy efficiency for some time,” said Newell. That target has to be met on an annual basis. If the company fails to do so, it can buy carbon offsets at auction under a system developed by Alberta Environment and Sustainable Resource Development (ESRD). “Or you can choose to put $15 per tonne of CO2 equivalent that you’re short into a technology fund,” said Newell. “And that was the first time in North America that somebody put a price signal on carbon.” It also provides the funds granted by CCEMC to projects tackling the climate change problem. “They started collecting that in mid-2007 and, by the end of 2011, they’d collected $315 million,” Newell added.

“The interesting part of the model is, by legislation, that money can only be used to reduce greenhouse gas (GHG) emissions or adapt to climate change. It can’t go into government coffers. “That’s very important when you’re doing research and development. Because you need sustainable funding.” CCEMC had completed four rounds of funding grants when they realized that they were only hearing from large companies, not the small and medium enterprises. “And yet that’s where often your entrepreneurial thinkers are,” said Newell. “And we do subscribe to the idea that a good idea can come from anywhere.” Consequently, the most recent competition was exclusively for companies with 250 employees or less. “And we got some really good, innovative ideas,” said Newell. CCEMC had been told by those smaller companies that they didn’t require a great deal of money to move their ideas to the next phase, which meant that they could limit the grants to $500,000 per project and consequently provide funding for thirteen initiatives. Three of those thirteen grant recipients that were announced on October 31 are concerned with capturing CO2. One of those projects is Carbon Engineering’s direct air capture pilot plant where they would process atmospheric air to produce CO2 that can be used for enhanced oil recovery. “You could move this device around wherever you’ve got a good source of air with carbon dioxide in [it],” said Newell. “It would reduce the cost of that capture, which is the key.” Sustainable Energy Solutions has a project involving cryogenic carbon capture and CO2 Solutions takes a page from the human body in its method of catching the GHG.

“They’re using a biological approach using an enzyme to reduce the cost of carbon capture from oil sands production,” said Newell. “I love this example. It shows good lateral thinking,” he added. “They feel they can reduce the cost of carbon capture by up to 40 per cent. And that’s the critical thing in carbon capture and storage, is the cost of the carbon capture. So, that would be very significant if they are successful.” Glenn Kelly, president and CEO of CO2 Solutions, explained that their process simply builds on the “tried and true and pretty mature” method of absorbing the CO2 in a solvent in one column and subsequently stripping the CO2 from that solution in another column. “It’s basically a closed system or a closed loop,” said Kelly. “You’re pretty well just boiling it or heating it quite a bit to release pure CO2 off the top.” Kelly said that that process stems from the decadesold practice of removing CO2 and other impurities from natural gas to bring it to pipeline quality. It is a very effective and efficient method at high pressure, but becomes very costly at regular atmospheric pressure. “The bigger issue is the cost for … regenerating your solvents on the backside of the process,” said Kelly. CO2 Solutions basically uses the same process. “We don’t reinvent the wheel,” said Kelly. “However,” he continued, “we use something called carbonic anhydrase, which is an enzyme. And carbonic anhydrase is present in all living organisms – you and I, bugs, animals, birds – and it manages CO2 in all living organisms.” Carbonic anhydrase converts CO2 that is produced in the digestive tract into bicarbonate, which travels through the bloodstream to the lungs. The enzyme then converts the bicarbonate back into CO2 so it can be exhaled. “Carbonic anhydrase is the most powerful catalyst for CO2 hydration,” said Kelly. “We genetically modify [the enzyme] so we can use it in industrial processes,” he continued. “And then we use it in the solvents that are out there and have been used for solvent-based carbon capture.” That system also utilizes the solvents that require less energy for regeneration. “Efficient capture and a very energy efficient regeneration,” said Kelly. “Net effect of all that is you bring your cost to capture per tonne of CO2 down about 40 per cent compared to conventional technology.” CFO and senior vice president of finance Thom Skinner explained that CO2 Solutions has been in existence for about ten years, but they have only been looking into applying their carbon capture technology to oil sands development over the past year or so, after previously focusing on emissions from coal-fired power plants and aluminum manufacturing facilities, two significant CO2 emitters. The oil sands sector has shown interest in CO2 Solutions because burning natural gas to produce the steam used for steam assisted gravity drainage (SAGD) has made the industry the largest CO2 emitter in Alberta. “It’s a $1.8 million project,” said Skinner. Although the focus now is the oil sands, Skinner said that CO2 solutions is still interested in working with aluminum plants, as well as natural gas producers in the Horn River Basin shale gas play of northeast British Columbia where the resource has a high amount of CO2 that must be removed prior to piping the fuel to the consumer. “It’s one thing to do it in the lab, but to do it in a pilot,

NOVEMBER 30, 2012

you need the funds,” said Skinner. “And when you’re kind of a small cap company that runs with a couple of million bucks in the bank, you need the industrial partners to be able to take this forward. “We’ll never get away from the fact that installing some form of CO2 capture is going to cost money. It won’t be free.” Skinner suggested that there has to be incentives to capture CO2. “If you can get the cost of capturing carbon down below what the carbon tax would be, than, economically, it would be more efficient for companies to invest in carbon capture technology than to pay the fine,” he said. “Europe was very much into carbon credits and … carbon tax before the economy stumbled,” Skinner continued. “Australia has put in some very rigorous carbon legislation. They have a cap and trade system that’s going in. They have a carbon tax that’s in place now. They’re at the forefront. California has put in some of the strictest carbon capture regulations in North America, teaming up with a couple of other states and provinces – Quebec, British Columbia.” Skinner noted that Canada is already topping CO2 emissions that had been forecast for 2020. Additionally, energy demand is growing and fossil fuels continue to be the backbone of that industry. “Wind is great. And nuclear is great,” said Skinner. “But the only way to generate sufficient power to run the factories and to generate the electricity is going to be fossil fuel. And there’s no way around it. Because the demand is just increasing multifold.” “I didn’t go from an energy executive to an environmentalist,” said Kelly. “I just think there’s an additional link in the energy supply chain that we’re going to have to be dealing with and that’s the management of the emissions of the use of fossil fuels. So, be it coal, natural gas or oil, we’re going to have to manage our carbon emissions. And I see that as the next big change in the energy industry. “The management of our emissions.” If the biggest obstacle is the cost of capturing CO2 at point sources such as oil sands operations or coal-fired power plants, one solution could be finding uses for the CO2 that is captured. Those uses already exist. “There’s a couple of different applications that Ferus provides for the use of CO2, one of which is hydraulic fracturing,” said Joe Ladouceur, vice president of external affairs and treasure at Ferus. Liquid carbon dioxide is one of several fluids companies might pump into a natural gas well during fracturing. “There’s different formations where liquid carbon dioxide has more of a beneficial impact,” Ladouceur continued. “Some companies will use it in combination with water or with nitrogen or just on their own. It really is a decision that’s made individually by the oil and gas companies as to which fluid they think is going to be the most effective in bringing up the gas or the oil and in making the well more valuable.” Ferus obtains its CO2 from its production facilities in Alberta. The CO2 is typi-



cally from industrial processes such as the hydrogen sulphide and other impuriPuetter explained. natural gas processing. ties in the gas. “That technology is well known.” “We’ll actually take that CO2 that “The CO2 is emitted in very high conHowever, the common practice as you’re stripping out and, instead of you centrations … into the atmosphere from a performed by companies like Methanex venting it to atmosphere or burning it, we point source.” has been to convert natural gas into will capture it,” Ladouceur explained. A stretch along the foothills between methanol. “We’ll take a little pipeline off of your Hudson’s Hope and the Yukon border is “We also believe the same thing should processing facility, we’ll capture it, we’ll the best wind energy resource in North be in B.C. and we’re working on that as put it through a cooling system, we America, according to Puetter. well,” said Puetter. liquefy it, and then we put it in trucks and The region also boasts two hydroelec“But we’ve now taken [it] a step we take it out tric dams and a further.” and deliver it to third one could Methanol can be used as a transporta“Installing some form of be on the way the oil and gas tion fuel or transformed into gasoline over community.” in the not too another catalyst. A small por“Then you have an ultra-low CO2, low CO2 capture is going to distant future. tion of the CO2 “With the Wilsulphur, low benzene gasoline that you that pumped liston and the can just blend in the gas fuel pool,” said cost money.” into the well Peace Canyon Puetter. will stay in the Dam we’ve got Ethanol derived from corn has been – Thom Skinner, CO2 Solutions close to 4,000 ground, but used to meet low carbon fuel standards, the remainmegawatts of but that depends on having the right der returns to generating caweather to produce a good crop, as well surface and can potentially be reused for pacity,” said Puetter. as be a complex issue in terms of the hydraulic fracturing. Considering all these elements togethfood versus fuel debate. That might not make a significant er, he had the idea to produce a liquid “It’s a very expensive process,” Puetter impact in terms of mitigating climate fuel from renewable energy – methanol. added. “It so far has only worked with change, but Ladouceur suggests that “By using electricity, putting it in the wa- government subsidies. And long-term, in there are other environmental benefits to ter, essentially separating the hydrogen our view, that’s not sustainable. using CO2 in hydraulic fracturing. and oxygen from water, and then taking “The primary alternative to using cryothat hydrogen and combining it with CO2 continued pg 22 genic fluids in a well is to frack with waover a catalyst, you make methanol,” R001113627 ter,” said Ladouceur, noting the immense volumes of water that are being used to fracture natural gas wells in northeast B.C. “You can use as much as 10 million gallons of water on a single well,” he said. “If you use a cryogenic with the water – CO2 or nitrogen – you can reduce that from 10 million gallons to 2 million gallons. So, that’s 8 million gallons of water that doesn’t come out of a stream, that doesn’t have to get disposed of.” There are economic benefits as well. “We have demonstrated to a number of our customers that the cost of CO2 or nitrogen is actually more economically beneficial in the long term … than actually purchasing water, coming up with a disposal system, trucking the water, having to reclaim the water,” said Ladouceur. “Not only do you get the environmental benefit, but you will have cheaper cost in the long run because using cryogenics will actually give you more of your hydrocarbon product at the end of the process. “After six months, you will be better off economically, because you’re going to be producing more gas and you’ll have less Enform is the safety association for Canada’s upstream oil and gas industry. water disposal costs.” Established by industry for industry, Enform helps companies achieve their Juergen Puetter doesn’t want to use safety goals by promoting shared safety practices and by providing: CO2 to extract energy from the ground. » Effective training, including courses on general and operational safety He wants to turn it into energy. programs and petroleum fundamentals The president of Aeolis Wind and Blue » Expert audit services Fuel Energy sees a tremendous future for methanol in a province that has a » Professional advice wealth of all the necessary ingredients: Our vision is no work-related incidents or injuries in the upstream oil and gas renewable energy in the form of hydro industry. Contact Enform today for more information. and wind; water from which hydrogen can be derived via electrolysis; and a huge supply of CO2 coming from natural gas processing plants. That province is B.C. “In the Horn River,” said Puetter, “ten [to] twelve per cent of the gas coming out of the ground is CO2. Companies like Spectra and others have big pipeline netEmail Fort St. John 250.785.6009 Toll-free Toll-free 1.855.436.3676 (855.4ENFORM) works connecting the wells to processing Email Fort St. John 250.785.6009 1.800.667.5557 plants where they remove the CO2 and

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ENERGY LITERACY Academic study takes a look at Canadians’ knowledge of energy sector james waterman Pipeline News North

co-authored the report with Jennifer Winter, his colleague at the School of Public Policy, and Andre Turcotte from Carleton Michal Moore wants a Canadian EnUniversity. ergy Information Organization. The initial answer wasn’t encouraging. The professor of energy economics “We didn’t really know how to know with the University of Calgary’s School that,” Moore continued. “I could talk with of Public Policy first publicly argued in any number of people in industry … and favour of the creation of a CEIO similar the answer was always, ‘Well, people to the Energy Information Administradon’t know anything about energy and so tion (EIA) in the United States in a that’s all we need to know.’ Which is just report that was released by the school not good enough.” last year. Moore noted that energy is a difficult The results of a recent energy literacy issue to understand, but also one that study that surveyed Canadians from inspires a variety of opinions. across the country have done nothing to “We figured, once we knew what those dissuade him. opinions were or what the knowledge “A group like CAPP (Canadian Asbase was, that we could then basically sociation of Petroleum Producers), which start to devise almost public improvement is producing … documents that are programs, whether they were magazine useful, quoted by [Statistics Canada] … articles or videos or [public service anand people just don’t trust those folks,” nouncements] that would improve the said Moore, discussing one of the most connection people had with the energy fascinating revelations to come out of industry,” said Moore. the study, which is that Canadians seem “And also with how they control their to distrust the energy sector, its environown energy demands.” mentalist detractors and their political Even the relatively simple question of leaders equally. the source of the energy the respondents “That was a surprise,” he added. “It use on a regular basis yielded interestwas also a surprise for me that the group ing results in terms of knowledge and that did get the most trust turned out to opinions about energy. be academe.” “Most people interpreted the question It is a significant bit of knowledge. as where does my electricity come from,” After all, the study demonstrated that said Moore. Canadians hold many energy myths “In the world I live in,” he added, “we and misconceptions to be true at a time tend to divide things into liquid fuels – when important decisions need to be that’s transportation – and electricity.” made concerning the energy industry in Electricity production in Canada ranges Canada. from hydroelectric generation to the “It gave us an idea for how to improve,” burning of fossil fuels such as coal and said Moore. natural gas. “Because we can’t do without the “Nuclear tends to dominate as you get political connections we have,” he farther east for base load power,” said added. “We can’t do without the leadMoore. ership that we already have. And that’s “One of the surprises,” he continued, including companies. We have to make “was that people in general, in most of use of that. the country, had a good idea where their “What we’re understanding is that power was coming from if it was based we need to change the model and on natural gas or hydro. When it turned bring in more academic support and out to be based on things like coal or independent analysis of what’s being nuclear, they tended to think their power published.” came from something else. They wanted That is a role to associate their that could be sources with “How aware are people power played by a something that was CEIO. cleaner and perceived “An indepen- of the role of energy in as being more socially dent group to responsible. their lives?” look at analyt“The way we conics in Canada,” nected that was to said Moore. look at what people – Michal Moore “We need … answered and then an arm’s length go back to [Statistics [agency] for the public to get onboard Canada] numbers as far as where genwith some of the very big decisions that eration was coming from in the province. are coming down. That’s a big lesson out Because even though we don’t know of this.” who those individuals were, we know The work on this study began about what province they came from. And so two years ago with a single question. we could go back and say, ‘Well, what’s “How aware are people of the role of really happening in that province? How energy in their lives?” said Moore, who close are you?’”

Energy and economy expert Michal Moore believes Canadians would benefit from energy education. After all, it is a complex subject. For example, Canada’s energy sector is so diverse that Suncor Energy, well known for its oil sands operations, also produces natural gas and operates wind energy projects such as SunBridge Windpower in Saskatchewan. SUNCOR ENERGY PHOTO

Mostly, British Columbians responded correctly by saying that hydro is their main energy source. “In Alberta, they didn’t get it as right,” said Moore. “They wanted to imagine that they were using more natural gas than they were. In reality, they use more coal. “In the Maritimes, where they’re dependent on a lot of tie lines that bring nuclear power as the base load source, they wanted to believe that they were using more renewables – more wind and solar.” Moore noted that those misconceptions are strongly connected to how Canadians view the relationship between energy production and the environment. “In other words, the negatives of energy generation,” he said. “And whether or not they were willing to support measures that would either improve environmental quality or avoid the degradation of the environment. “This ties us into that willingness to pay.” The energy myths and misconceptions are likely tied to the Canadian energy consumption model where we think energy is always available. Essentially, if an individual Canadian doesn’t have to wonder if there will be power or not, that person doesn’t need to think about the source of that power. “The on-demand mode,” said Moore.

“When you walk into a room and you flip a light switch,” he continued, “you expect it to come on, except under extraordinary circumstances. Through most of the world – maybe 70 per cent of the world – they don’t operate on that model. They operate on an as-available model. And they’re very different. “We tend to take things for granted. And that means that … we expect a fair amount of surplus energy to be running so it will be ready when we are. And it means that the design of the system has a lot of redundancy associated with it.” Moore noted that much of that infrastructure, such as pipelines and transmission lines, is now over 50 years old and upgrades will have to occur in a manner that doesn’t upset the on-demand consumption model. “And people are not ready for those kinds of costs,” he said. “They just don’t imagine that they’re going to have to pay those costs. “They don’t think about it.” However, according to the study, Canadians seem to be ready to pay extra to minimize the negative environmental impact of energy generation and consumption, although their concept of that impact is fairly vague. “They associate that very general cost that they pay for energy with environ-

NOVEMBER 30, 2012

mental damage and they’re willing to pay a specific amount to try and mitigate it,” said Moore. Interestingly, while the study revealed that Canadians are willing to pay more for their energy to be more environmentally friendly, it also demonstrated that many Canadians don’t understand how to be more environmentally friendly with their individual energy consumption. “That’s absolutely true,” said Moore, citing a section of the report discussing measures that people have taken to reduce their impact. “Did you put light bulbs in?” he continued, offering an example. “And people like to think that that’s a real commitment – change out all the light bulbs and they’re done – when, in fact, that doesn’t really impact things very much. “It also represents a key characteristic that economists have known about for a while, but we haven’t integrated it into public policy very well. And that is that once people make a change – you buy a new refrigerator, you buy a new stovetop or change all the light bulbs – you forget it. You don’t manage that anymore. You buy a new car that’s energy efficient. Done. And now the only thing you do is

shop for cheaper gas. “Once people identify that they ought to attack the problem, get lower bills or act more responsibly, they don’t tend to do it consistently. “They only do it once.” Moore believes Canada needs a system that better informs Canadians how to adjust their energy use patterns to conserve energy and reduce the impact on the environment. “There is really a lot of room for directed and focused energy education programs that can really make a difference,” he said. Moore suggested that the politicization of energy and environmental issues could be delaying that work. “A little humility. A little less hubris. Where you admit your biases up front,” said Moore, indicating what he wants to see from those parties involved in the energy and environment debate. Moore used Enbridge’s Northern Gateway pipeline as an example of how political rhetoric distracts from the real issues. “Long term, there’s going to be a need for other pipelines,” he said. “More than that,” he continued, “there’s going to be a need for really consistent policies on right-of-ways.”



Oil sands development is just one of the complex energy issues facing Canadians. SUNCOR ENERGY PHOTO

Moore thinks that their should be a national discussion on protected right-of-ways to eliminate future disagreements between landowners and the energy sector when that industry is searching for new pathways for pipelines and transmission lines. “If we always wait until the last minute to debate it,” he said, “than the rhetoric and the contention are just going to increase every single time we have to face this. And it means … that you’ll either defeat things that are really needed in the

public interest or you’ll get the government intervening and imposing things that really aren’t economically efficient or missed the market. “We need an informed dialogue,” he added. Moore also suggested that Canada needs a national energy strategy. “We need a dialogue and we need a strategy of some kind that allows people to discuss this in a rational forum,” he said. “That’s one of our major conclusions.”

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NOVEMBER 30, 2012

industry news BRINGING IT ALL BACK HOME Oil and gas industry dollars could be staying in B.C.

A pair of B.C.’s independent MLAs have suggested that revenues from the province’s oil and gas industry are flowing into Alberta because of unfair residency requirements, but the B.C. and Alberta governments say that is about the change. ENCANA PHOTO

james waterman Pipeline News North British Columbia has been competing on an uneven oil and gas industry playing field with its neighbour to the east and a pair the province’s independent MLAs want that to change now. “All of the spin-off benefits from the oil and gas sector accrue to Alberta, not to British Columbia,” said Vicki Huntington, Delta South MLA. Along with Bob Simpson, Cariboo North MLA, she issued a call to the provincial government on Wednesday, Nov. 14 requesting disclosure of information concerning efforts to address the longstanding issue of oil and gas residency requirements. Alberta has a regulation enforced by their Energy Resources Conservation Board (ERCB) stipulating that the management staff of any explorer and producer company operating in Alberta must reside in Alberta, but B.C. has no such requirement. Huntington and Simpson charge that the result is that economic benefits ranging from fleet vehicle purchases

to personal income taxes are flowing from B.C.’s natural gas fields back to Alberta, while B.C.-based producers, and the province of B.C. by extension, have no ability to benefit from oil and gas activity in the Province of Alberta. “When you’re talking about jobs and taxes and purchases of equipment and insurance and contractors and senior staff especially – although I think basically all the drillers on the wells are paid out of Alberta – you’re losing a lot of the economic drivers of the industry to a local community,” said Huntington. “We found out when we were in the Peace that a lot of the economic benefits associated with developing B.C.’s oil and gas is accruing to Alberta,” added Simpson, discussing a trip he and Huntington had taken to northeast B.C. in March, 2012, which included a long discussion about oil and gas development in the province with the BC Oil and Gas Commission (OGC). “A large proportion of the workforce are residents of Alberta and pay income tax in Alberta,” he continued. “The fleet vehicles for the most part – that goes right from the pick-up trucks up to the heavy duty trucks – are

purchased, insured, serviced in Alberta. The project management expertise, engineering expertise all in Alberta. And then, of course, the inside track for consulting and contractors is in Alberta as well.” Simpson said he heard residents joke during his visit to the Peace Region that all the benefits in terms of health care, education and infrastructure so often discussed by Premier Christy Clark and other BC Liberal MLAs in relation to the oil and gas industry in B.C. are actually being felt in Alberta. “It struck a chord with us,” said Simpson, remarking that the government seems to look at the economic benefits of the oil and gas industry in B.C. simply in terms of royalty revenues, which actually account for a small amount of total government revenues, while ignoring the potential revenues that are being lost to the province to the East. “Alberta has very specific residency requirements,” he continued. “So, if you’re operating in the Alberta oil patch and if you’re operating in the Alberta gas fields, there’s a requirement in Alberta that you have what they call your mind and management of your company in Alberta.” Consequently, Alberta is the home of all the decisionmaking personnel for that company. “And that’s really what the foundational piece is that causes Alberta to be able to benefit from a lot of British Columbia’s oil and gas resources, simply because they have a residency requirement and we don’t,” said Simpson. That imbalance was supposed to be addressed under the tenets of the Trade, Investment and Labour Mobility Agreement (TILMA) between B.C. and Alberta and the New West Partnership Trade Agreement (NWPTA) that also includes Saskatchewan. Not only was the issue not resolved, but Huntington and Simpson were becoming frustrated with the lack of communication on the subject from the government. “The government has been pushing Alberta to change its regulation, but I don’t know what that means, because we’re not entitled to look at it at this stage,” said Huntington. “And so, apparently, they had drafted their regulations, but B.C. wasn’t satisfied with them. So, how it’s going to come to pass, I don’t know, only that the sooner the better. Because I think B.C. has been an enormous loser.” “It’s our understanding that there’s been negotiations ongoing,” said Simpson. “And, unfortunately, in our conversations with the Alberta government, we’ve had more transparency about the nature of some of that dialogue that’s going back and forth than we have from the B.C. government.” Alberta Ministry of International and Intergovernmental 28392

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Relations spokesperson David Sands sions with the Alberta government conconfirmed that the solution is a work in cerning residency requirements. progress. “Negotiations with Alberta have result“We know that British Columbia raised it ed in their agreeing to bring themselves with us initially under the New West Partinto compliance with their trade obliganership agreement in October of 2011,” tions,” the ministry said. Sands said during a Nov. 14 interview. “Alberta will remove their residency “We took a look at what they were talkrequirements that have applied to British ing about and almost immediately agreed Columbia’s companies,” they added. “We that there was a problem there that expect Alberta to introduce new regulawasn’t consistent with what our agreetions within the next few weeks, and that ments were and that we needed to find a this will provide companies with the ability solution for it,” he continued. to establish and expand their operations The Alberta government subsequently while based in British Columbia. developed changes to the regulation. The ministry provided Pipeline News “Neither British Columbia nor SasNorth with additional information on how katchewan had any concerns with our the Province is handling the matter on proposed solution,” said Sands. “So, we Friday, Nov. 23. sent it back to the ERCB. They have to “We understand there are about 35 B.C. look at it. And only today told us that … oil and gas companies running their operathe changes will be made.” tion from Alberta and that some will consider That version of events didn’t corremoving their head office functions back to spond with Huntington’s understanding of B.C. if Alberta’s investment-distorting regulathe situation in the middle of November. tions are removed,” said the ministry. “You hear it a little bit differently from “As a result of Alberta’s trade and B.C. officials,” she said. “They say, ‘Well, investment barriers that require compathe Alberta proposals weren’t really acnies to locate their so-called ‘mind and ceptable. So, we’ve had to go back to fur- management’ there, very few companies ther discussions and now we’re looking at operating in both provinces have been something else that seems a little better.’ willing to bear the additional costs of “And I can’t comment on what the promaintaining two head office functions – posals are one way or another because one in each province,” he added, noting they won’t let us see them,” she added. that about half a dozen producer com“Under TILMA, I think that Alberta has panies operate solely in B.C. from head to remove its residency requirements, offices in B.C. and that has to be made public so that The ministry indicated that the benefits all of the companies and contractors and stemming from B.C.-based producers others know that that requirement no extend beyond those felt by local oil longer exists,” said Simpson. and gas service sector companies, also “And then I think the British Columbia contributing to areas such as accounting, government needs to work with Alberta legal and research and development. to try and figure out what some of the “Well-paying jobs are created, with corpostrategic partnerships are that the Alberta rate and employment taxes accruing for the government has with the oil and gas benefit of British Columbians,” they said. industry and start to replicate some of “Under the New West Partnership, all those strategic partnerships here around provinces agreed to avoid local preshuman resource development, infrastrucence requirements. “British Columbia and ture development, technology developSaskatchewan are honouring our commitment. And start to replicate some of that ments and Alberta appears to be moving so we create a level playing field.” towards honouring its own. Huntington suggested that the resi“The New West Partnership was indency requiretended to increase “It’s easier to build ment in Alberta the competitiveness doesn’t need to of western Canada. be eliminated, community when you If all provinces were but that a similar to adopt local presrequirement requirements, have people doing the ence should be develthe additional costs oped for B.C. on companies, inwork here.” “It’s time we vestors and workers stop being an would make us all energy colony,” less competitive.” – Lori Ackerman, she said. Fort St. John Fort St. John Mayor Huntington mayor Lori Ackerwonders why man looks at the B.C. is looking to problem in terms of Alberta for what should be a homegrown community. solution to a homegrown problem. “It’s easier to build community when “That’s kind of my contention,” she you have the people doing the work here, said. “Obviously, there’s a problem. And living here, hiring locally, purchasing their the companies don’t want to pay their goods locally, rather than buying them management structure twice. But I think in Alberta and bringing them across the we have to find a solution that benefits border,” said Ackerman. B.C. and the companies are just going to “The major players having a presence have to live with it. They owe us that.” isn’t as important as them actually hiring The B.C. Ministry of Jobs, Tourism local companies and promoting the loand Skills Training alleviated some of the cal service sector,” said Dawson Creek confusion around the issue on Thursday, mayor Mike Bernier. Nov. 15 with a statement about discus“We recognize that the major players



Shell Canada’s operations manager for northeast B.C. Rej Tetrault welcomes guests to the grand opening of the company’s new Fort St. John offices this summer. Shell is committed to living, working and hiring locally in the Peace Region. JAMES WATERMAN PHOTO

have their head office in Calgary. I get that. The major players are actually the ones making the decisions on hiring the contractors who actually do the work. The companies don’t do the work; the contractors do the work. So, it’s how do we build those relationships and ensure that we have more guidelines in place where they are continually having to look at hiring in B.C. “They should be… setting up and making this a long term investment and a long term [home] for their people,” he added. “That’s what we need.” “Oil and gas companies are generally aware of the good value associated with local hires,” said the Ministry of Jobs, Tourism and Skills Training. “Once Alberta’s barriers are removed, and companies establish in British Columbia, we can assume that this will result in new business and employment opportunities.” Ackerman admitted that major explorer and producer companies such as Shell Canada and Talisman Energy, which have both recently constructed large new offices in Fort St. John, have earnestly begun hiring local service sector companies when possible. Shell has even endorsed an Energy Services BC (ESBC) initiative known as the BC Based Business Certificate that guarantees that a service sector company is actually located in B.C. “Shell was recognized by Energy Services BC as one of the first supporters fully behind the program,” said Shell spokesperson Patty Richards. “We are motivated to contract and hire in the Dawson Creek and Fort St. John communities,” she added. “Not only in the cities, but the smaller towns as well. The use of local business and suppliers is key to our ongoing operations – and to meet our really important business milestones.” The focus of Shell’s operations in the region is their Groundbirch natural gas project west of Dawson Creek that is now linked a liquefied natural gas (LNG) project known as LNG Canada, which is

a joint venture with Shell, Korea Gas Corporation (KOGAS), Mitsubishi Corporation and PetroChina Company. “Groundbirch is a significant asset for Shell and our growth strategy,” said Richards “It’s important to have the right people and resources close to manage the business with a view to building long-term relationships,” she continued. “Our staff are involved with the municipal government, with our residents and our contractors to ensure we are doing everything we can to be a good operator. “As an example, our operations manager lives in Fort St John, our community relations advisor lives in Dawson Creek and our aboriginal affairs lead is First Nations and is from West Moberly.” Richards noted that Shell is an international company with decision-makers situated across the world, but that key local decisions are made locally. “Our front line staff have to be able to make the decisions which maximize local benefits, protect local interests and keep people safe,” she said. “Our local employees are empowered to do so.” However, as Ackerman explained, there are still gaps to fill. “There’s also SEPAC (Small Explorers and Producers Association of Canada),” she said. “I’ve never met with them to have this conversation.” Hiring locally could be harder to sell to the Alberta-based companies that lack the resources of major producers like Shell. “We have a different tax regime here,” Simpson explained. “So, when our contractors bid to these Alberta companies, they have to bid with carbon tax in mind, they have to bid with sales tax in mind.” “I don’t think we’re asking them to move to British Columbia,” Ackerman said of the producers in the context of residency requirement regulations. “What we’re asking them to do is to provide our service sector companies with the opportunity to bid on continued pg 25



NOVEMBER 30, 2012

profiles A GREAT HOCKEY MAN After years as a hockey coach and NWJHL commissioner, Bob Trobak has been rewarded for his good work james waterman Pipeline News North Bob Trobak is a bit like a superhero. He doesn’t leap over tall buildings or run at the speed of light. He doesn’t even fight crime. But he has been known to pose as a mild-mannered accountant by day, only showing his true identity as a hockey coach after he leaves the office. “I moved to Fort St. John in 1968,” Trobak said from the familiar environs of the North Peace Arena on a crisp Fort St. John winter morning. “I was here for two days,” he continued, “and George Soule conned me into becoming a director for the junior team, which was the Golden Hawks at that time.” That was just the beginning. Now, after over 25 years of coaching little kids just starting their hockey careers, and over ten years as commissioner of the North West Junior Hockey League

(NWJHL), the league has chosen to honour him with their Presidents Award. “I don’t do these things for the possibility of being awarded or rewarded,” said Trobak. “So, it’s always gratifying when your efforts are recognized” The award was presented during Bob Trobak Night at the Fort St. John Huskies game at the North Peace Arena on Saturday, Nov. 24. “Well, that’s what they called it,” Trobak said with a modest laugh. “It was just an award from the league to me for my time as commissioner,” he added. “I’ve known [NWJHL President] Al Spence for years. And, in fact, I coached his son when he was first starting hockey. … And he thought it would be kind of neat to let other organizations I’m connected with know that the league was awarding me. And it just sort of carried on from there.” During his many years in Fort St. John, Trobak has

not only been a hockey coach and commissioner, but also a member of the Kinsmen Club and the Fort St. John Petroleum Association, commonly known as the Oilmen. “Very few people can make a difference on their own,” said Trobak. “But when you join with a group of others,” he continued, “whether it’s Oilmen or Kinsmen or whoever, as a group you can make something positive happen. And that’s what I like about the Oilmen. “They are very community-minded. Every year, they give thousands of dollars back to the community.” One of the rules of the Petroleum Association is that an individual has to earn a significant portion of his income from the oil and gas industry to be a regular member. As an accountant, Trobak didn’t qualify. “I’ve never been a knife-and-forker,” he said. “So, in order to be able to participate in the organization, I have

Dawson Co-op Petroleum




NOVEMBER 30, 2012



Bob Trobak gazes onto the ice of an empty North Peace Arena where he has spent so many hours as a minor hockey coach and comissioner of the North West Junior Hockey League. Trobak was presented with the Presidents Award by the NWJHL during Bob Trobak Night at the Fort St. John Huskies game on Nov. 24 in recognition of his contribution to the game. JAMES WATERMAN PHOTO

volunteered for the various committee.” Trobak has been a fixture on the organizing committee for the annual curling bonspiel for the past dozen years or so. He has also helped organize the golf tournament. “I try and participate that way because I can’t participate through the executive level.” Trobak said coaching minor hockey was a perfect fit for him. “They have most of their ice time from 3:30 to 5:30 in the afternoons,” he explained. “And with my job as an accountant, I was able to take time off and go down to the arena and play with the kids. And if I had to get some work done, I could go back to the office at night and finish that. “My job was not a nine-to-fiver where I couldn’t just hang a sign on the door saying, ‘Back at 5:00.’ “I was able to do it. And I obviously enjoyed working with young kids.” Trobak also enjoys running into his old players as adults. “Just the fact that they recognize me and come over and say hi and thanks for coaching me – you just can’t put it into words,” he said. “I coached Dennis Robertson. And he’s now in his second year down in Brown University.” Trobak usually sees Robertson at the

hockey school that his two grandsons attend every summer in Fort St. John. “Dennis always takes time to come over and say hello and tell me how things are going with his hockey and schooling down east,” he said. “I was over at the other arena on Saturday. And I walked around behind the players’ box. And this guy came out and he said, ‘Hi. You were my first coach when I first started playing hockey.’ And, obviously, I didn’t recognize him because he’s changed a whole bunch from being an ankle-biter to an adult now coaching his own son.” Trobak firmly believes that minor hockey builds character. “Because you’re on a team with other individuals,” he said. “So, you have to learn to get along. And that’s vital throughout life.” It was always all about the fundamentals for Trobak. “There’s no magic to it,” he said. “If you got the basics right and you make the experience fun, they could be playing hockey for sixty years after I get through with them.” The fact that Trobak became so involved in the Fort St. John community is a surely a testament to the quality of not just the man, but the community as well, particularly considering his tale of moving to northeast British Columbia from Prince Alberta, Saskatchewan in 1968.

“They weren’t interested in opening up to outsiders,” Trobak said of Prince Albert. “And we found it a very difficult time,” he continued. “Was a little easier for me because I go to work every day, but it was really hard on my wife. So, when we had the opportunity to move to Fort St. John, we came down here to have a look at the city. “They hosted a party for us the night we got in. And two different people took us for rides around the community to

show us various things about the community. They had a party for us the next night we were in town. ‘We probably met more people in Fort St. John on the weekend we were here than we did in Prince Albert in the year and a half we lived there. It was just such a breath of fresh air.” It is his home now. “It’s tough to leave here,” said Trobak. “I have no plans or intentions of moving away.”

Bob Trobak (left) receiving the Presidents Award from NWJHL president Al Spence at the Fort St. John Huskies game on Nov. 24. KATIE MAXIMICK PHOTO



NOVEMBER 30, 2012

industry news

LAND FOR SHALE Geological study shows tremendous shale hydrocarbon resources available in Alberta james waterman Pipeline News North When talk turns to shale hydrocarbon resources in Canada, the topic is often the northeast corner of British Columbia, where the Montney and Horn River Basin natural gas plays are already well known commodities and producers are licking their lips imagining one day unlocking the vast potential of the Liard Basin. However, the province of Alberta, a land where the oil sands are king, has grown from a bedrock of shale and siltstone that could also hold immense reservoirs of oil and natural gas. The question that the Alberta Geological Survey (AGS) and the Energy Resources Conservation Board (ERCB) set out to answer was what the characteristics of that resource might really be. “Part of the ERCB’s mandate is to provide information to Albertans – and, frankly, to all Canadians – about the resources that reside in Alberta,” said ERCB spokesperson Darin Barter. “It’s part of our mandate to make sure that we understand what resources can be extracted, what resources are in place and provide that information out for Albertans, for industry and for government,” he added. The duty of assessing the shale and siltstone resources in Alberta fell to a group of scientists that included Dean Rokosh, who holds a doctorate in geography and about 25 years of oil and gas industry experience in the Western Canadian Sedimentary Basin (WCSB), and Andrew Beaton, a geochemists with expertise in coal, coal bed methane (CBM) and unconventional shale resources. “We’ve been doing unconventional resource evaluations for the past three to four years,” said Beaton, adding that much of work fell into his areas of expertise, coal and CMB. “When shale started rearing its head four years ago in Alberta, we realized there was not a lot of data to actually do a proper evaluation,” he continued. “There were a lot of numbers out there. Different companies and groups had the big picture [of] what might be in Alberta. But, like everything, there was a lot of information for the conventional oil and gas resources in the province, but very little on shales.”

Previously, shale had just been a rock to drill through in search of oil, not a hydrocarbon reservoir. Rokosh said the first priority was understanding the variables at work in the reservoirs, particularly the porosity of the rock, water saturation, pressure and temperature. Obtaining that information, which is important for determining the quality and quantity of the hydrocarbon resource in the shale as well as the ability to produce it, required considerable analysis. “We knew that from background reading, from talking to people, from going to conventions, that evaluating shale as a reservoir is really something new,” said Rokosh. Rokosh explained that shale can be quite complex, considering that variables such as porosity and water saturation can vary laterally along the shale and vertically through the shale, which isn’t usually the case for conventional resources. Every variable has a range of values for each individual shale play. “And so we set confidence limits on every variable,” said Rokosh. “When we first started our screening, we identified greater than fifteen or so shales that might have potential to be source rock or reservoirs in the province,” said Beaton. Work began with a look at the small amount of data collected by producers where they had started to poke around in the shales. “And we started doing comparisons to analogues in the States,” said Beaton. The next step was the actual geological work. “We started learning the methodology and experimenting to see how we could actually come up with some decent estimates,” said Beaton. The group used the early results from producers that are becoming active in the shales to ensure they were on the right track, “to try to validate our results,” added Beaton. The results must certainly be encouraging for the energy sector. The medium estimate of total Alberta shale and siltstone resources stated in the report released this October is 3,424 trillion cubic feet (tcf) of natural gas,

58.5 billion barrels of natural gas liquids and 423.6 billion barrels of oil. The Duvernay, Muskwa and Montney resources could be the most prolific of the plays. The Duvernay could offer over 500 tcf of natural gas and over 80 billion barrels of oil in the best case scenario. The Muskwa could easily rival those numbers with potential for over 500 tcf of gas and nearly 160 billion barrels of oil. The Montney could be the big prize. The conservative estimate is 2,133 tcf of natural gas, 28.9 billion barrels of natural gas liquids and 136.3 billion barrels of oil. “There were some pretty big numbers being thrown out there before we did our actual work,” said Beaton. “And it was really nice to see the validation that the numbers that we generated were inline with some of those estimates. “The prize out there is very large.” A lingering uncertainty is how much of that resource can actually extracted. “They don’t represent reserves. They purely are total in-place resource,” Beaton said of the numbers in the report. “If nothing else, it represents a huge treasure for Alberta,” he added. “It represents some great future opportunities and maybe some security down the road.” “Everybody’s still learning about this rock as a reservoir. And there’s still a lot of learning to do,” said Rokosh. Another question is how this information could be used now that it is available. “The big companies in industry, they’ve done their work already. They know where this stuff is. This isn’t new to them,” said Rokosh, adding that junior players and investors would likely find the report more useful. “If you take a look at the maps, then you can see that perhaps municipalities, counties could start to use these maps for their own planning,” he continued. The report could also be beneficial to the ERCB and other stakeholders. “Albertans have a right to know this information,” said Barter. “If they’re living near what appears to be a shale formation that could experience significant development,” he continued, “they’re going to have questions for the regulator, they’re going to have questions for the government. We would encourage Albertans to ask those questions.”


NOVEMBER 30, 2012

The government is currently developing a framework for unconventional oil and gas resources that should address many of those questions. The collection of data in the report is a positive step in that direction. “We know that there’s a very substantial volume of gas and oil in shale,” said Barter. “And we need to be ahead of the game here in developing an unconven-

tional resources framework that addresses what could be pretty significant development in the future. “We’re working with stakeholders on that framework.” Barter said that a revised regulatory framework addressing a host of environmental and public health and safety issues should be released in the near future. It will first be made available for comment from stakeholders and appropriate changes will be made accord-



ing to that feedback. “We need to be ahead of the game,” said Barter. “These types of shale estimates, for example,” he continued, “that gives us the ability to do future planning so we are in fact ahead of the game. “We don’t have the technology and the resources that industry does, but we have the intelligence that helps us in our planning.”

The Duvernay Formation is one of the most prolific shales identified in the Alberta Geological Survey study of Alberta’s shale and siltstone hydrocarbon resources. LEFT: Duvernay Formation net shale isopach with thicker net shale identified by darker red to blue map colours. The two main areas of activity focus for Duvernay Formation drilling are circled in red: the Kaybob area west of Edmonton and the Rimbey area southwest of Edmonton. With the gas price being so low, the main focus at present is for natural gas liquids. There are a couple of wells drilled near the eastern edge of the circled area at Kaybob that are more prospective for oil. RIGHT: Distribution of in-place natural gas liquids resources in the Duvernay Formation. The red circles indicate where drilling is primarily occurring. The study does not address whether any portion of these in-place resources are technically or economically recoverable. ALBERTA GEOLOGICAL SURVEY MAPS

Encana offers an education in sensible driving at Devereaux School ALLISON GIBBARD Pipeline News North An industrial speed-reader is on loan to Devereaux Elementary School from Encana so that people in the Peace Region will remember to slow down in the school zone. MLA Blair Lekstrom explained that part of the reason that speeding became a concern was because the road was recently paved this past summer. “What happened is the people where certainly very thankful for it [the paving of the road] but they said it also increased the speed on some of the traffic and with our school zone. is there anyway we could get a speed reader sign out here to make sure people are slowing down for

the school?” explained Lekstrom. Encana had one solution. “We were asked by Blair Lekstrom’s office and ministry of transportation and info-structure because there was concern that individuals were coming over the hill a little bit fast and didn’t realize that there was a school zone down below,” Brian Lieverse, community relations advisor for the company. Blair Lekstrom believes that Encana really went above and beyond to help out the Devereaux elementary school. “They stepped up to the plate. It really talks about their involvement in the community,” said Lekstrom. While Encana typically uses this sign for work, both Lekstrom and Lieverse be-

lieve it will bring awareness of the school zone to drivers. “We use it for advertising things like rig moves, or safety concerns, so we thought this would be a great place to put it and to help the community out for a few weeks,” explained Lieverse. “It gives you that extra little warning – slow down, pay attention and let’s make sure that safety is our primary issue while you are driving,” said Lekstrom. The speed-reader sign that Encana has lent Devereaux has already been in place for three weeks and will be in place at the school for a total of approximately a month-and-half. “If we need a permanent one fixed out there we’ll review that after this, but

I think the sign that Encana’s put up will go a long way to addressing the issue,” he said. However, both Lekstrom and Lieverse believe that having this sign up even for a little while will help with the problem. “It’s interesting. When you look, it really just catches their eye. I think that most people are doing their utmost to make sure they’re not speeding and obey the signs but that currently helps when all of a sudden a sign starts flashing and lets you know you’re a few kilometers over the speed limit,” Lekstrom explained. Lieverse agreed: “I think it does a great job of advertising that and making people realize how fast they are going coming into the different school zones.”



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special feature Carbon dioxide from Horn River Basin shale gas could be used to produce methanol “You can make in B.C. a fuel that has much lower carbon content than ethanol.” The fuel price would also stay low because the energy source would either by hydro or wind. “Over time, the cost will go down,” said Puetter. “Because once you amortize a wind project or a hydro project, then it becomes heritage power. It becomes very cheap. So, over time, the cost of this fuel gets lower and lower, rather than higher.” Puetter is planning to build a methanol plant of this kind in Fort St. John because of the access to renewable energy and CO2 in the region. Also, when water is electrolyzed to produce hydrogen, a byproduct is oxygen that could be used in a conventional methanol plant that converts natural gas into the fuel. According to Puetter, a plant that converts CO2 into methanol could produce 2,500 tonnes of oxygen per day.

“It would make sense to feed that renewable oxygen into an autothermal reformer that is fed by natural gas,” he continued. Puetter said the North American methanol market could grow considerably with the Open Fuel Standard Act in the United States. “There is a bill before congress in the U.S. to mandate that all cars manufactured in the U.S. starting in 2014 be able to burn any combination of ethanol, methanol or gasoline,” said Puetter. Presently, vehicles allow for a small percentage of ethanol, but essentially run on a dedicated fuel. “You can’t just mix and match as you want,” said Puetter. “The Open Fuel Standard would cost about $100 or less per car and then you can put any combination in,” he added. “Of course, the reason why that is so attractive for the US – different from Canada – is that by doing so the U.S. could become, literally overnight,

independent of imports of oil into North America. Because there’s enough gas here and enough oil to basically fuel the entire transportation sector. “We think there’s an incredible opportunity for B.C., because we have … a huge amount of gas.” Methanol is also easy to transport to the consumer. “It flows easily,” said Puetter. “It has very low viscosity. It’s basically like water. “It’s much easier to transport – be it in pipeline or rail or truck – than gasoline or diesel or oil. Because if there’s a spill, it’s biodegradable. It’s not pressurized. It’s not explosive. It’s a really wonderful way forward.” According to Puetter, the plant, if built, would take a 2,500 tonnes of CO2 out of the system every day, but would require almost as much energy as would be produced by BC Hydro’s controversial Site C hydroelectric project to do so. “You would need hydro and wind power,” he reiterated. Regardless, Puetter seems confident that his plan will come to fruition. “We have done all the base engineering,” he said. “The technology review has been done by many outside sources. For example, the world’s largest engineer-

ing firm that builds these type of plants has [said] that what we’re proposing is entirely doable. They can built it and it works.” The only obstacle is finding the right people to get behind the project, which is a bit of a problem considering the preoccupation with the promise of a liquefied natural gas (LNG) export industry rescuing the province’s natural gas industry from low commodity price and poor market access issues. “This may be a much more reliable and actually financially more attractive alternative,” said Puetter, comparing methanol and LNG. Blue Fuel Energy is trying to convince the oil and gas industry and the provincial government of the merits of the plan, suggesting that the government could take advantage of the royalty-in-kind concept to receive royalties in the form of natural gas rather than cash if it was involved in the operation of the plant “If the price of gas goes up, the royalty goes up,” said Puetter. “So, the government is actually protected. “I think it’s an incredible opportunity that’s staring us right in the face.”

Bessborough residents excited about proposed Spectra plant WILLIAM STODALKA Pipeline News North


cont’d from pg 13

For Bessborough resident Charles Walker, a new liquid extraction facility near the Spectra plant near his community is a welcome addition. “I don’t have words for it,” he said. “It’s great – just great.” Approximately 60 members of the public filled the Bessborough Hall approximately 30 kilometres northwest of Dawson Creek, last Thursday, to hear Savona, B.C.-based energy company Spectra Energy discuss a new liquid extraction facility. This facility would produce natural gas product and dry shale gas, the type of gas typically sold to the general public. The new facility would be located 16 kilometres west of Dawson Creek, adjacent to the already existing natural gas processing plant near Bessborough. It would also include a pipeline that would travel 1.5 kilometres from the facility to the Nova Gas Transmission Limited (NGTL) Groundbirch pipeline. The facility would receive “sweet” gas, a type of natural gas that is not known to contain the poisonous hydrogen sulphide, as “sour” gas contains. It is expected to process 400 million cubic feet of natural gas per day. Peter Murchland, a Spectra spokesman, said that his company is expected to get 300 local jobs during the plant’s 18-month construction phase. Construction is expected to begin sometime in 2014. Murchland also said that 20 people are expected to be permanently employed afterwards. Before this is done, the plant must also go through B.C.’s approval process. Currently, Spectra is working on a full project description to B.C.’s Environmental Assessment Office, according to materials present at the meeting. They expected that description to be finished by the end of this month. The materials also state that they expect to submit an application to the B.C. Oil and Gas Commission, who regulate oil and gas within the province, by spring 2013. Once that is done, Spectra expects the facility to begin construction by late 2013/ early 2014 and be in service by 2015. David Come, another Bessborough resident, also said that he thought that the plant continued pg 25

NOVEMBER 30, 2012





Shell donates learning lab to Grande Prairie Regional College

Grande Prairie Regional College students Samantha Bracken, Dannica Karrys, Alanna Starko and Ginelle Smud join Malcom Mayes, general manager of Shell Canada’s in situ oil sands operation, in inaugurating the new Shell Canada Learning Lab at the college’s Fairview campus. Shell donated the facilities comprising the learning lab this fall. grande prairie regional college PHOTO

james waterman Pipeline News North Power engineering students are expected to be the greatest beneficiaries of a Shell Canada donation to Grande Prairie Regional College (GPRC) this fall, but the oil and gas industry stands to benefit as well. The new Shell Canada Learning Lab at GPRC’s Fairview campus consists of a flare separation building, a multistage oil and gas separator building, a compressor building, a glycol heat pumping unit and an aerial cooler that were all most recently employed in a pilot project at Shell’s Peace River oil sands operations. At an estimated value of $500,000, which doesn’t include the transportation costs that were also covered by the oil company, it is among the largest donations in kind ever given to that campus. “The purpose of the pilot project was to test a Shell patented technology,” said Shell spokesperson Adrienne Lamb. “And so the pilot program was only meant to run for a certain length of time. And once it was successfully completed, we didn’t have a need for the equipment anymore. “Our investment in the communities can take a number of forms,” she continued. “So, we can invest through dollars. We also provide in kind donations, which is essentially what this one was. So, it was kind of a win-win for everyone – that we could find a home for this equipment [and] the school could use it. There’s a benefit for us to support programs like this educational program because ultimately we can also benefit from the graduates that come out of these programs as well.” Shell had the power engineer program in mind when they made the donation, largely because of the close proximity between Fairview and the Peace River oil sands project. “We’ve been producing bitumen from that area for a number of years,” said Lamb. “And so, potentially, some

of the graduates from that program could end up ultimately working at one of our Peace River operations.” Shell also has an application to expand those operations under regulatory review. “We’re sort of looking to the future as well and see that there’s going to be a need for trained people,” she added. The college thought the equipment might be useful for a number of their programs, not just power engineering, according to Chris Laue, dean of trades, agriculture and environment at GPRC. “They were actually very, very good with us, making sure that we didn’t get stuck with things that were not useful,” said Laue, discussing the relationship with Shell. “The glycol is a couple years old and it wouldn’t have lasted much longer,” he continued, discussing an example. “And we would have been stuck with maybe 400 barrels of glycol that we would have to get rid of. And getting rid of [that] meant, environmentally, we have to go through the process of getting somebody in there to dispose of it properly. That becomes a liability. “They were very, very diligent in making sure that there wasn’t things there that were going to be liabilities for us in the short-term.” Presently, the lab is simply a visual aid, but the college has bigger plans. “One of the long-term goals would be, if it’s feasible, to actually run simulated fluids,” said Laue. “What was going through there before was condensate, sour gas, those kinds of things. And we’re not going to run that through in a training situation. But, ideally, in the longterm, we would like to … get that at least to a level of being a simulated process plant. “And then tie that also in with our existing power engineering lab so that now we’ve got an opportunity for our power engineering students to look at the gas process side of it and some of the controlling that goes on relative to the process side.

“And we’d also have our instrumentation students be able to be exposed to some very current, very applicable … models that they would experience out in industry. So, they would have a real hands-on look at what was happening out in industry.” Laue admitted that the possibility of expanding their programming to include oil and gas processing is only speculation at this point, but the college isn’t ruling it out, even though nearby schools such as Northern Lights College already run similar programs. “We’re all working towards addressing the needs of training in the north,” said Laue. “And I don’t think we would be getting into competition when you consider how much demand there is out there.” Laue also insisted that oil and gas industry involvement in training and education is “absolutely critical” for colleges like GPRC to be successful. “In order to get good quality, current material, you need to work with industry in order to establish legitimate, current training aids,” he said. “And those are fairly costly. It’s not difficult to spend millions of dollars. And if we have the access to industry support from that perspective, it works out extremely well. “Industry can also guide us as to what is the most relevant information that is necessary for students so that they come out of our training programs and they have the skills that are necessary to step into industry. “It doesn’t do a student any good to be taught on something that’s either outdated or something that isn’t relevant to industry.” “We actually provide funding through a number of ways to education,” said Lamb. “We provide scholarships. We help support training programs. It’s a big area of focus for us. And so, as part of that, there’s a recognition that, as a company and as an industry, we’re going to need people with education and certain skill sets for our operations. “We believe it’s an area that’s important to support.”

Intallation of the Shell Canada Learning Lab at the Fairview campus of Grande Prairie Regional College. grande prairie regional college PHOTO



NOVEMBER 30, 2012

Encana: Kitimat LNG looking at alternative pricing models


Daily Oil Bulletin While the proponents for the Kitimat LNG project have been aiming to ink a long-term supply agreement with customers in Asia that’s linked to oil, the operator, Apache Corporation, could be looking at other pricing models, according to an Encana Corporation executive. “Apache has been working hard [on an offtake agreement],” Jeff Wojahn, executive vice-president, U.S. division, told a recent Bank of America Merrill Lynch 2012 Global Energy Conference. “I think the original thought on the offtake agreement was that it would be primarily comprised of JCC [Japanese Crude Cocktail] type pricing, that has historically been the benchmark globally for these kinds of projects. “I think Apache is looking at that as well as potential alternative pricing models that we see in the Gulf Coast today,” he added. “At the end of the day, from what I understand, and from what Apache’s telling us, we’re looking at a final investment decision target for the first quarter of next year.” Proponents for the Kitimat LNG project proposed by operator Apache and its partners Encana and EOG Resources Inc. have been seeking an oil-indexed price but potential buyers of LNG may instead be aiming to index prices to lower North American prices, according to LNG analysts. The proposed Cheniere plant in the Gulf Coast, for example, reportedly has made deals priced off U.S. gas, which is much cheaper. Also, certainty of LNG delivery may be a concern for the buyers, which may partly explain why a long-term offtake agreement still hasn’t been announced. Earlier this year, EOG’s chief executive said that securing an oil-indexed contract with an Asian buyer has gone slower “than any of us expected” and didn’t give a timeline on when a deal would be reached.


industry news

NOVEMBER 30, 2012



Peace Region mayors want to level the oil and gas playing field with Alberta cont’d from pg 17 contracts in a level playing field. “And so that’s where TILMA comes into place. TILMA needed to level the playing field. The HST was going to level the playing field because the companies could recoup all of their GST/PST, whereas now they’re not going to be able to, on large equipment [purchases].” “There’s still a lot of Alberta companies coming in and doing the work,” said Bernier, admitting that northeast B.C. still lags behind Alberta in terms of expertise, equipment and workforce in some areas of the service sector. “But at what point do we say, ‘Okay, it’s gone on long enough,’” he continued. “I think a lot of that comes down to the relationships. We just need to keep knocking on the doors of these big companies – the Shells, the Encanas, the Talismans – and saying, you know, you’ve got the license to extract, now we need you to ensure that at every opportunity, when you’re hiring, there should be [an emphasis on] how do we make sure that the local people have an opportunity. “But it also has to come down to the local people have to be competitive as well. There’s a business involved. I understand that.” Bernier noted that the producers can play a capacity building role by hiring local contractors, which constitutes an investment in local service sector training and equipment that can save the producers money in the long run because they don’t need to import service sector crews from Alberta. “We’re starting to see that,” he said. “Ferus is a perfect example of that. A liquid nitrogen company that was driving from Red Deer to Dawson Creek a couple times a day with their trucks.”

Ferus has since set up shop in Dawson Creek. “The benefit to that now is smaller companies can come in and set up … because they know they can get contracts under Ferus,” said Bernier. “Trucking companies. Service companies. Mechanics. It’s a snowball effect. But we need to have these larger companies [making] commitments. And I don’t want to say we don’t see that. We definitely do. But it’s not to the magnitude that a lot of people would like to have here.” “We believe supporting and developing local contractors, businesses and residents helps us achieve our objectives and is good for business,” said Richards. “We provide guidance and assistance to local business to help them meet our standards and strengthen their capabilities so they can compete for contracts,” she continued. “We contribute to education and training programs, like the new drilling program at Northern Lights [College], to attract and train local staff who are interested, qualified and can meet our fitness for duty requirements. “We are really encouraged by the quality and number of people we are able to hire in the local area.” Still, the solution to this problem could be hard to find because of the isolated geographical and cultural position of the northeast that could be inhibiting B.C.’s ability to produce oil and gas industry decision-makers with a strong connection to the province. For example, neither the University of British Columbia nor the University of Victoria offer petroleum engineering, programs that are popular in Alberta, where the oil and gas industry also enjoys a long and proud history. “If you think about our history with

forestry,” said Simpson, “we had one of the best forestry schools in the world bar none. We’re beginning to move in that direction a little bit around mining because we have more and more mining resources available to us. So, schools are beginning to orient themselves toward that. “Quite frankly, we haven’t [had] that orientation necessarily for oil and gas, even though we’ve had some of that going on for some time. And a big reason for that is because the companies [are] being forced to be resident in Alberta. And so that’s where they do a lot of their development work and a lot of their strategic partnerships around human resource and workforce development with the Alberta government.” “The interesting thing is that we have been so culturally, economically and geographically attached to Alberta for so long,” said Ackerman, recalling that she frequently heard Albertans say that Fort St. John was in their province when she lived in Calgary years ago. “If you’re not crossing the Rockies, and if you’ve missed the border, then how would you know that you’ve left Alberta?” she continued. “And it’s so easy to cross the border here. And we don’t have the provincial watchdogs… to say to these companies who are coming across the border, ‘You need to be contributing to British Columbia because this is our resource.’ And until we get the recognition for this industry and what we’re going through, this will just perpetuate itself if the industry moves further into British Columbia. “Unfortunately, trees don’t vote. We have a very small population up here compared to other regions and so it’s very difficult to get the recognition on this issue that it needs.”

LNG could be a game changer. By linking the natural gas plays of the northeast to export facilities in the northwest and the business sector in the lower mainland, LNG could turn a regional industry into a provincial industry. “In a short amount of time, B.C. has established itself as a leader in natural gas extraction and unconventional resource prospects,” said the Ministry of Jobs, Tourism and Skills Training. “We have pioneered the use of new technology, unlocked access to North America’s premier unconventional gas plays and continue to implement leading, sustainable natural gas practices that are highly regarded around the world. “We are also increasing Canada’s trade opportunities with the prospect of exporting natural gas to new markets like Asia.” That is the plan for LNG. “It’s an entirely new industry for Canada,” the ministry said. “It is helping our natural gas sector grow and will make us a globally competitive natural gas producing province for a very long time. The expertise will develop here. Major industry players with global experience will work with our province to develop the industry. Our skills training plans and workforce strategy will ensure British Columbia’s students and businesses have the expertise to take advantage of new jobs. “The economic prospects of B.C.’s natural gas sector will be increasingly tied to the success of operations across all areas of the province – in the northeast where gas is extracted, on the coast where the liquefaction process and shipments will occur and in the lower mainland where many legal, corporate and financial operations will be conducted.”

Spectra committed to working with community to ensure concerns over new liquids extraction plant are addressed cont’d from pg 22 was good for the community moving forward. “The jobs are the biggest thing in the development of the area, as long as we can get the work locally instead of the work going outside,” he added. Another Bessborough resident, Phil Haight, said that the oil industry employs many of his and other Bessborough resident’s children. However, he said that he felt the existing Spectra natural gas facility has negatively impacted the surrounding environment, and he expected that this new facility would add to these problems. He pointed to problems such as noise,

traffic, “a certain amount of smell”, and increased light pollution, which he has already seen in the area since the plant officially opened last July. “Traffic is the big thing,” he said. “It bothers me more than anyone.” He said that the area has changed from the quiet, rural area he found when he first moved to the area years ago. “Industry is here so we pretty well have to accept some habitat loss.” As well, while Haight admits the plant will benefit most people, he feels that he is being encroached upon. “The benefits will outweigh the disadvantages for 95 per cent of the population,” he said. “But for myself, I’m not employed in the oil and gas industry.”

But for now, he has accepted the oil and gas industry’s presence in the area. “We have to accept it,” he said. “We all need the oil and gas.” He also said that Spectra has been good in their relations with local residents. “They don’t just shove their way in,” he said. “They know better than to shove their way in.” Materials present from Spectra also stated that results from an expected noise impact assessment will be used to ensure that the project meets OGC guidelines for the project. The project materials also stated that the only air by-products produced by the plant will be from clean-burning natural

gas, which gas advocates state produce less greenhouse gases than other forms of combustion. “Spectra energy takes significant amount of energy to reduce impact to the community,” said Murchland. “We’re here... to be transparent about our project and really enthused that the local residents are encouraged to support the project.” This move is somewhat different from the opinions expressed publicly in 2010, when Spectra’s facility was first announced in Bessborough. At the time, 39 nearby residents reportedly signed a petition against the facility because of the impact they felt that the plant would have on their community.



NOVEMBER 30, 2012


work on the web

Online career fair brings jobs to jobseekers james waterman Pipeline News North Rarely would people be successful hunting for a job in their pajamas, but that is exactly what the Petroleum Human Resources Council of Canada was encouraging when they announced their first Oil and Gas Services Online Career Fair that took place this October. “We actually were approached by the government of Alberta,” said council spokesperson Rowena Sampang, adding that the Province provided the funding. “They actually did their own online career fair in November of last year,” Sampang continued. “And so they approached us because they knew that we had strong ties to industry.” The government was also aware that the Council had established a strong online job search presence with their Careers in Oil and Gas website. 32433

“They approached us about managing this event and so we did that with their support,” said Sampang. The official dates of the career fair were October 16-17, but the site will be available until December 31. The Council used the labour market information that they gather on a regular basis to target the career fair to where the biggest demand for labour exists, which is the service sector. So, they worked closely with three industry organizations, the Canadian Association of Oilwell Drilling Contractors (CAODC), the Canadian Association of Geophysical Contractors (CAGC) and the Petroleum Services Association of Canada (PASC), when planning the event. “The three main industry associations for the service sector,” said Sampang. “And [we] leveraged that partnership to help secure employers for the event and promote it amongst their members.”

The partnership with the Alberta government also allowed the Council to market the career fair to unemployed individuals who might best meet the needs of the service sector. “With the list of in-demand jobs,” Sampang explained, “they were able to market directly to those who are unemployed within those high demand occupations. So, it was a direct connection. “And then we were also able to work with the career counselors and go to career fairs and that sort of thing to really market on the ground as well.” The career featured fourteen employers and six industry associations. “We really wanted to… drill home the education piece and building awareness about the sector itself because… it’s quite distinct,” said Sampang, noting that the skills and experience necessary for success in the service sector differ from those seen in other sectors such as the pipeline industry. “We wanted to make sure that there was some education about the sector itself, what kind of jobs you could find there,” she continued, adding that the event included live chats where jobseekers were able to ask questions of those already working in the sector. Sampang suggested that online career fairs can make job hunting a more efficient process for both jobseekers and employers. “It helps employers reduce their recruitment costs,” said Sampang. “They’re also able to access a labour supply pool right across Canada without having to go anywhere physically,” she added. It was also a good way to reach young people who prefer to search and apply for jobs online, said Sampang, but there was also an in-person component to ensure that all interested jobseekers had the skills required to take advantage of the opportunity. “We did boot camps – jobseeker boot camps – with the government,” said Sampang. “We knew going in that not everyone’s going to be [technologically] savvy,” she continued. “And, again, different ages will have different levels of experience.” The council felt it was important to teach appropriate online skills, not only because of the job fair, but because companies are increasingly using websites and social media to attract and recruit potential employees. “We definitely could not have had this event be successful without that in-person component and having those career counselors training those people inperson on how to use the internet … and how to access the fair,” said Sampang. Similarly, the online fair was a tool to encourage the industry to embrace the internet as a recruiting tool. “I think the oil and gas industry … still has a ways to go in terms of really adopting social media,” Sampang explained. Effective use of social media also ap-

plies to companies earning their social license to operate, according to Sampang. “It’s getting more and more difficult in getting that social license to operate,” she said. “And part of that is addressing perception issues about the industry. And social media is really such a great platform for that, because if you’re not on social media, either way, people are having conversations about you and your industry. “So many people are congregating online. And there’s so much potential there even to reach people within certain demographics. It’s quite a measurable channel compared to traditional means like print. For example, you post an ad in a print paper, you don’t really know if it’s effective, whereas online you can really track that information in a number of ways.” Sampang admitted that using social media may be more difficult for smaller companies without the ability to have an employee continually monitoring and updating social media sites. “I think the industry has a long way to go,” she said. “I think they’re recognizing that it’s a tool, but … how to do it is the next step.” Putting the career fair together was a bit of a whirlwind experience for Sampang and her colleagues because the planning only began in August. “Our timelines were very, very tight just because of all of the logistics and planning,” she said, adding that an online career fair isn’t quite the same as traditional career fairs. “A little bit more complex because you have to train people on the technology,” she explained. “And so leading up to the event we had to training with the employers. We had to really enforce the message with jobseekers that this is completely online, you can do this from home. “Funnily enough, some people were asking, ‘Where do I go? Where do I go?’” The Council is still waiting on surveys to be completed by jobseekers and employers to really evaluate the success of the event, but the early results have been positive “When we first put our proposal forth, we did have some standard measurables of how many jobseekers we’d want to attend,” said Sampang. The target was 1,500 people, but the number of visitors actually reached 2,100 people over two days. “We weren’t even expecting that we would be able to exceed those numbers and we did,” said Sampang. “And even just the anecdotal feedback from the career counselors and what we’ve been hearing from employers, they thought it was a really unique event. “So far, so good, but we’ll have to see the direct results afterwards [in terms of job] placements,” she added. There is already interest in running a second online career fair, but that will depend on the availability of funding. “It’s a great resource,” said Sampang, “and a great solution for employers and jobseekers.”


NOVEMBER 30, 2012



better safe than sorry Frac Shack a welcome addition to the oil patch

Frac Shack is making well pads safer worksites for those who refuel the equipment that pumps fracturing fluid into the well during hydraulic fracturing. Refuelling that equipment is one of the most dangerous jobs on the well pad without Frac Shack. ENVIRONMENTAL REFUELLING SYSTEMS PHOTO

james waterman Pipeline News North A few years ago, Todd Van Vliet paid a visit to a well pad in the far northeast corner of British Columbia, almost at the Northwest Territories border. The co-president of Environmental Refuelling Systems had traveled so far north to witness a hydraulic fracturing operation in process, but he wasn’t entirely happy with what he saw. “They were standing in a corner of the pad waiting for the frack to begin,” Van Vliet said of the crew waiting to refuel the pumps that push the fracturing fluids into the well. “And they said quite proudly that they were told that they had the second most dangerous job on the pad,” he continued. “And I was rather dumbfounded by that. And I asked them to explain. And they said, ‘Well, what we have to do in order to fuel these pumpers is we have to go in there.’ And they pointed down between a line of pumpers where the fuel tanks are for these frack pumpers. “And when I learned that those things were operating at 15,000 pounds per square inch, about 250 decibels in between the pumpers while they’re running, at 300 degrees Celsius, and that they often had to do the fueling job in the black of midnight, I realized that we had to find a better way for the guys to do that job.” That set the wheels in motion for a plan to develop a safe and efficient refueling system that would eventually be known

as Frac Shack. one, where you throw the hose under“The old system,” Van Vliet explained, neath the truck and walk around it, trying “is you pull up with a truck, some poor not to get too much sand and gravel and sod gets out his fuel house, turns on his dirt in the next fuel tank. pump, and then with that pump fully en“And then you do that again and again gaged and the hose full of fuel, he turns and again for twelve hours. Because sideways and he sidles down between when you get to the end of the line, you these pumpers. Because they’re parked have to start all over again because the so close together that you can’t get down first pumper’s already just about out of by walking. You have to slide sideways.” fuel.” One hand occupied with the fuel hose After that twelve-hour shift, that worker and one hand unscrewing the cap on the passes the hose to the next worker startfuel tank, the worker must tuck his flashing his twelve-hour shift. light under his chin just to see what he is Frac Shack changes that process doing with those hands. considerably. “And then you “The operaquickly put the tor sits inside a “There are a number fuel hose into the heated or air tank… so that it of companies that will conditioned… doesn’t splash shack and he out on you,” Van watches a screen not even allow a frack and he makes Vliet continued. “And then you sure all the tanks to happen without Frac get filled on time,” hope that the fuel kicks off before said Van Vliet. the thing overfills The technolShack.” and splashes you ogy, which took in your face, which about a year to – Todd Van Vliet, ERS doesn’t happen all perfect, has really the time. And you caught on with hope that nothing the service sector happens where any of those pipes that during its two and a half year history, but are coming out the back of the pumper there is still work to be done to convince overpressure and the pipes blow off, the natural gas producers. which does happen from time to time. “It’s like asking people to give up the “And then when the tank is full – and horse and buggy,” Van Vliet quipped. you hope you’ve filled it up because you “When the automobile came along,” can’t see whether it’s full or not – you put he continued, “a lot of the people who the cap back on and you go to the next really liked their horse and really liked

their buggy were reluctant to give up the horse and buggy. And some people clung to that for a long time after the automobile was proven to be much more dependable. “It’s new. And it’s different technology. And it’s unfamiliar to some people. But once they see it and they work with it, we just had nothing but good reports coming back.” Environmental Refuelling Systems’ first Frac Shack customer was a major producer operating in the Horn River Basin shale gas play of northeast B.C. “[They] sent out a safety inspector before they would allow it to be mobilized into the field,” Van Vliet recalled. “And after the inspector did the inspection, he turned to me and he said, ‘Well, congratulations, you now have the best available practice in the industry.’ “So, people who have seen it and worked with it absolutely love it.” Still, the Horn River Basin has been a small market for Frac Shack so far, as has the Cardium play in central Alberta. Their biggest market has been the Duvernay shale gas play, which is also in Alberta. “There are a number of companies that will not even allow a frack to happen on their property without having the Frac Shack there now,” said Van Vliet. “They absolutely love it,” he added, discussing the response from the service sector. “One of the crews from one of the service providers, they used to draw straws. Whoever got the short straw had to do the fueling. And one of our guys called me one day and he said, ‘You should have seen the faces of these guys when we pulled onto site.’ They all said, ‘Thank god! Frac Shack is here.’” Statistically, it is difficult to determine Frac Shack’s impact in terms of lost time injuries, but Van Vliet said that health and safety professionals at the well sites are happy with the results to date. However, the cost of this new technology might not fit every situation. “The cost is an issue depending on how they currently do their fuelling,” said Van Vliet. “For example, in some sites they currently do their fueling with a single truck and a driver. And we would cost more than having just a single truck and a driver onsite. But some sites have been doing their fueling with two trucks, two drivers and four hose handlers, because they have to maintain line of sight. “There have been a number of overpressure issues where they had to pull the refueling guy out of the frack array because of danger on overpressure. So, they have six people and two trucks doing refueling. And we are way cheaper than that. “So, it depends on the size of the frack and the type of refueling practices they currently do.”



NOVEMBER 30, 2012

industry news SOMETHING IN THE AIR Liquid nitrogen company opens new facility in Dawson Creek WILLIAM STODALKA Pipeline News North A Montreal-based company unveiled a new facility to create liquid nitrogen for the oil and gas industry on Tuesday, Oct. 30 in Dawson Creek. Air Liquide Canada, which provides nitrogen, hydrogen and rare gases to industrial businesses around the country, unveiled the unit at a news conference attended by company president Adam Peters, MLA Blair Lekstrom, and Mayor Mike Bernier. While the plant, located along the dangerous good route in town, has been selling liquid nitrogen since last weekend, the occasion marked the grand opening of the facility. The plant uses regular atmospheric air to produce liquid nitrogen. While the atmosphere has oxygen, a high percentage of the atmosphere is nitrogen, with some other rare gases mixed in. “We basically take air in through compression, we purify the air, and then we run it through cryogenic distillation which takes the nitrogen out of the air,” said Air Liquide CEO Adam Peters. “Then we take the nitrogen and liquefy it.” The unit, which cost approximately $60 million and took two years from start until now, will employ three fulltime operators and 10 permanent employees. The facility is currently in its first phase. In its first phase, the plant is expected to produce approximately 200 tons per day of liquid nitrogen. In its second phase scheduled to be completed by next September, that amount will increase to another 250 tons per day. Peters said that it was too early to say how many of those tons they would sell over a year. In hydraulic fracturing, water is injected into fractured portions of the ground underneath, then recovered with natural gas inside. Liquid nitrogen is commonly used in natural gas wells to enhance the recovery of natural gas, and Air Liquide Canada delivers this liquid nitrogen with their own specially fitted trucks. Peters said that using liquid nitrogen in these wells can reduce water consumption by as much as 50 per cent. “It reduces the need to process that water,” he said. Air Liquide Canada Vice-President Pierre Drolet said that it is a “clean and sustainable” substance to help with recovery. “We’re a responsible and very safety conscious company,” said Peters. As well, using liquid nitrogen means less water and liquids can be used. Drolet said that Air Liquide Canada choose to put this unit in Dawson Creek because his company considered it to be the “hub” of oil and gas activity in the area. “What we really see in this area is put a production

Air Liquide Canada western basin manager Abraham Mathew tours the new liquid nitrogen plant in Dawson Creek along with BC Hydro employees. William Stodalka PHOTO

facility to support the oil and gas industry,” Peters added. “Having a production facility here closer to the customers and their immediate needs will greatly benefit the communities here.” While not the first liquid nitrogen plant in the Dawson Creek area, it is the first such plant created by Air Liquide in B.C. It is one of approximately eight major facilities that the company has across Canada. Some oil well servicing companies have already expressed interest in the facility, added Peters. Peters said that in addition to its current employees, many other contractors in the area would be employed to maintain it over the years. Local government officials who attended the opening

event were pleased by the project. “Thank you on behalf of the entire province,” said MLA Blair Lekstrom. “We look forward to working with you for decades to come,” said Mayor Mike Bernier. “This is one of the single largest investments in the community in decades that we have,” he added. Bernier said that another reason that he and council support the project is the effect it would have on the area’s water supply. “[Another reason] why we’re really excited about this plant is to continually promote the idea of liquid nitrogen for fracking and lessen the amount of water used,” he said. “That’s important from a council perspective.”

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NOVEMBER 30, 2012




Researchers putting caribou fund to work this winter

Scientists are starting to put a $2 million oil and gas industry sponsored caribou research fund to good use by launching a monitoring program this winter. BC GOVERNMent PHOTO

james waterman Pipeline News North Scientists in British Columbia are starting to move forward on boreal caribou research sponsored by the province’s oil and gas industry this winter. Since it was announced by the BC Oil and Gas Commission (OGC) on January 9, 2012 that new fees and production levies would be contributing to a caribou research fund of $2 million per year, biologists have been planning research projects to address the issue of declining caribou populations in northern B.C. under the guidance of the new Research Effectiveness Monitoring Board (REMB). “We just started collecting money from industry in late 2011,” said Steven Wilson of EcoLogic Research and the coordinator of the REMB. The caribou research fund falls under the Science and Community Environmental Knowledge Fund (SCEK) program, which also draws its funding from the oil and gas industry and is managed by a steering committee of representatives from the OGC, the Canadian Association of Petroleum Producers (CAPP) and the Small Explorers and Producers Association of Canada (SEPAC). “We have a pot that’s accumulating,” Wilson continued. “And we started getting underway in the spring of this year in identifying projects for … this year and for the subsequent year.” The main focus for 2012 and 2013 is monitoring. “Because there’s a lot of uncertainty on what actually the population size of caribou is in the Northeast … and what their trends are,” said Wilson, adding that population sizes and trends have been inferred from models to date. “We don’t have the field data to support whether or not the populations are actually following what our projections are,” he noted.

The timing of this work is interesting considering that the Province released their Implementation Plan for the Ongoing Management of Boreal Caribou in the summer of 2011, but the federal government just issued their Recovery Strategy for the Woodland Caribou in October of this year. “It’s not the first time it’s happened,” Wilson said of that timing. “And so when the province comes out with an implementation plan before the federal government, then the federal government has the option of simply adopting that plan as meeting their requirements under the recovery strategy. And that has happened in a couple of other instances. I think that happened with spotted owl, actually. “The federal recovery strategy sets out the requirements for recovery and then the provinces are actually responsible for developing what they call action plans,” he continued. The provincial action plans must meet the requirements of the federal recovery strategy, as stipulated by the National Accord for the Protection of Species at Risk signed by the federal, provincial and territorial governments. “The federal strategy is setting these high level, broad recovery goals,” said Wilson. “And then over the next few years … the provinces have to come up with action plans that the federal government either approves or doesn’t, that actually implement action to meet the recovery goals.” B.C. has been moving forward with its caribou conservation plans in recent weeks. It was announced on Nov. 8 that the government will be protecting 90 per cent of the cariou’s high elevation winter habitat in the South Peace. Subsequently, the provincial government released a draft wolf management for public comment on Nov. 14. Predation by growing wolf populations

has been identified as a cause of declinB.C. have a great deal of linear land ing caribou numbers in association with disturbance from oil and gas industry aclinear land disturbances that improve tivity in those provinces, one of the most access to caribou and the abundance significant of those being seismic lines. of alternate prey species such as deer, “There are no seismic lines in Newmoose and beaver within caribou ranges. foundland or in northern Quebec or in Comments on the wolf management Ontario,” he said. “So, to some extent, plan are being accepted until Dec. 5. they made kind of an apples and oranges The federal strategy points out that comparison. And they’re aware of that. caribou range is the level at which con“It’s important to have a broad level, servation efforts should take place benational analysis, but they fully expect cause their ranges often cross provincial that more detailed mapping and more and territorial borders and because those detailed analyses will be rolling out as habitats are impacted by the cumulative part of the implementation of this strategy effects of human development, particuas time goes on. And that’s exactly what larly in the natural resource industries. we’re going to be focused on in B.C.” The plan underscores the need for colThe first step is fitting 150 caribou with laboration between jurisdictions. radio collars this winter. “There’s already collaborative work that “So we can start doing the proper goes on between industries,” said CAPP field monitoring to establish the size of spokesperson Travis Davies. these populations and their trends,” said “You’ve got the oil and gas sector and Wilson. you’ve got forestry and you’ve got mining Mapping caribou habitat in the provor hydro or whatever it might be,” he ince will come next. continued, emphasizing the need for a “Looking at the location of the industrial holistic approach. development,” said Wilson. “Relating “Do you look at it on a herd-by-herd those to the caribou and also the broader basis? Or do you look at sustaining the predator-prey system to see how they’re species across Canada? Obviously, there interacting, to see what opportunities are tipping points and a limited amount there are to either test whether or not the of resources. And the degree to where operating practices that are in place now we can deploy those resources and have for industry are adequate or whether they that impact is where we’d like to see the need to be changed.” effort made.” They will also examine if provincial The federal recovery strategy indigovernment recovery goals are being cates that any range management plan satisfied by areas where natural resource must demonstrate how a minimum of industry activity is restricted. 65 per cent of caribou habitat in that “Or where special operating practices range will be left are required,” undisturbed, as said Wilson. “There’s a lot of that number is Since there the threshold for is an interface uncertainty on what declining caribou between caribou population. and the oil and actually the population gas industry in If greater than 35 per cent of western Canada, the habitat in size of caribou is in the the sector may be that range is able contribute to disturbed, caribou their recovery in Northeast.” numbers are likeways other than ly to decline, but following regula– Steven Wilson, REMB they can remain tions and sponstable otherwise. soring the caribou However, Wilson has a few problems research fund, but Wilson believes the with that concept. industry is still trying to determine the ac“The federal recovery strategy is based tions they can take that will actually yield on a relationship that they developed significantly positive results. between landscape disturbance and cari“They have a history on the Alberta bou population trends,” said Wilson. side on attempting a lot of different “The issue with that,” he continued, “is mitigation measures and the outcomes of that it’s an analysis that they conducted those have not been particularly useful,” on all the ranges across Canada, from said Wilson. Newfoundland to the Beaufort Sea in the “They put all these various actions in Northwest Territories. place that turned out to be very expen“That’s a very broad scale relationship. sive, but didn’t generate any noticeable And it’s going to require a lot of more benefit to caribou,” he continued. “So, finer scale analysis within each of the that was part of the motivation here, jurisdictions to understand whether that where we want to put the studies in relationship is valid and whether there place specifically to test whether or not are other things that can be done.” what they’re doing is adequate and, Wilson explained that the differences if not, what additional actions can be between jurisdictions are quite important taken. when you just consider that Alberta and “They’re looking for answers as well.”



NOVEMBER 30, 2012


CAPP announces sponsorship for Skills Canada National Competition james waterman Pipeline News North Skills Canada has been given a vote of confidence from the oil and gas industry. The not-for-profit promoter of careers in skilled trades and technologies announced on November 13 that the Canadian Association of Petroleum Producers (CAPP) has agreed to be a presenting sponsor for the 2013 Skills Canada National Competition to be hold in Vancouver, British Columbia from June 5-8, 2013. “I think it validates the work that we’re doing,” said Shaun Thorson, CEO of Skills Canada. “CAPP … sees that our event is really helping them solve some of the issues and helping them raise the awareness of skilled trades in their sector,” he added. The obvious issue in need of a solution is the muchpublicized skilled worker shortage facing the oil and gas industry. “Our member companies are facing new and emerging challenges resulting from the growing shortage of skilled workers,” said CAPP spokesperson Travis Davies. “We need to work with other industry leaders and organizations such as Skills Canada to attract more young Canadians into the skilled trades and provide more employment-based training opportunities,” he added. “Supporting the 2013 Skills Canada National Competition is an important event to help bring this critical issue to the forefront.” Many of those shortages are in fields that Cana-

CAPP is helping young tradespeople realize their career goals as presenting sponsor of the 2013 Skills Canada National Competition to take place in Vancouver in June. SKILLS CANADA PHOTO

dians may not generally associate with the oil and gas industry, such as electricians, mechanics and welders. “The other aspect that they bring to it is that they

do have a large membership,” Thorson said of CAPP. “And that will be beneficial for us as well because there’s an opportunity to create some dialogue with some of their membership. And talk about some of the issues that they’re facing so we can get a better sense of what they are facing out in industry, which would allow us to adapt or adjust or maybe even create some new programs to help them address those issues. “And then you’re looking at trying to address those issues by sector as [opposed to] maybe one specific company’s challenge.” The event features about 500 competitors representing all thirteen provinces and territories in Canada, and trades and technology careers that range from baking to plumbing to computer software applications. “Those young people that are competing in different areas of expertise … will have an opportunity to network with representatives from business and industry,” said Thorson, discussing how the event can show young people the opportunities that exist in the energy sector. “Those visiting students that will come to the competition site, that may have never had any exposure or visibility around skilled trades careers, they will have a chance to participate in Try-A-Trade and Technology activities,” he continued. “They can try some of those occupations at a very … introductory level. “And many of those Try-A-Trade and Technology activities will be driven by [our] partners. [They] will have an opportunity to directly connect with young people and talk about their specific industry.”

Alberta launching arm’s-length environmental monitoring agency james waterman Pipeline News North The Province of Alberta announced on October 17 that they are moving forward on recommendations from the Working Group on Environmental Monitoring, Evaluation and Reporting to create an arm’s-length environmental monitoring agency for the province. The recommendations were part of a report issued by the Working Group in June and the Alberta government expects to have the agency in place within a year. “It’s a pretty significant shift. We want to ensure that it’s being done correctly,” said Alberta Environment and Sustainable Resource Development (ESRD) spokesperson Jessica Potter. “One of the most important things is to have a scientifically rigorous and credible oversight,” she added. “It’s one of the foundational pieces for an integrated resource management system that’s effective and sustainable. You need to have that monitoring foundation in place so you know what’s happening. It’s going to ensure that we know if we’re achieving our environmental outcomes. “You’ve got monitoring, scientific evaluation and transparent reporting.” The development of the agency is now in the hands of a six-member management board led by Dr. Howard Tennant,

who was also part of the Working Group. “Arm’s-length oversight is an essential component of comprehensive, adaptive and effective environmental monitoring,” Tennant said in an Alberta Government news release. The primary focus of the management board is around funding and operations, as well as building a Science Advisory Board to help guide environmental monitoring efforts. Initially, the work of the monitoring agency will be concentrated on the Lower Athabasca area, which is central to oil sands development and the Lower Athabasca Regional Plan that was released in August. That plan protects 1.6 million hectares of land in northern Alberta, including 341,000 hectares previously slated for development by oil companies that had acquired access to those potential oil reserves for a total of $29 million. Potter explained that the environmental monitoring agency will be integrated with the Lower Athabasca Regional Plan and the hotly debated Responsible Energy Development Act – also known as Bill 2 – that would create a single window regulator for the oil and gas industry in the province. “It’s going to take all the regulatory agencies and put them under one umbrella,” said Potter. “So, now it’s not a matter of looking at

things sector by sector,” she added. “It’s a much more holistic approach to looking at how we manage all the resources.” However, Bill 2 isn’t particularly popular among lawyers, landowners and members of the Wildrose Party in Alberta who believe that the legislation would put too much power in the hands of the regulator and compromise landowners’ ability to exercise their rights as property owners when resource development is involved. That is why Alberta Energy Minister Ken Hughes began a speaking tour in the middle of November to discuss Bill 2 and recent amendments to the legislation with farmers and ranchers. It is also why as many as thirty MLAs were still debating those amendments at 4:00 a.m. on Wednesday, Nov. 21 after an all night session. The bill and its amendments passed third reading that afternoon, but it remains a bone of contention for the Wildrose. “This is sloppy lawmaking and is a piece of legislation that may result in widespread backlash to this government,” said Wildrose leader Danielle Smith. “The Responsible Energy Development Act achieves the right balance -- it improves the participation rights of landowners, it provides regulatory certainty for energy companies and it upholds our

longstanding commitment to the environment,” said Hughes. Regardless, feedback about the monitoring agency has been positive. “We’ve had support from everyone. That includes some of our critics,” said Potter. “Some of the people … who have pointed out deficiencies or room for improvement, they’ve been very supportive of this move. They’ve been asking for an arm’s-length agency for a while,” she added. “Providing scientifically-credible information through an independent body is fundamentally important to excellence in resource management,” said Kirk Andries, executive director of the Alberta Biodiversity Monitoring Institute. “We are looking forward to working with the Management Board to contribute to the development a fully integrated, multi-media based environmental monitoring system.” The energy sector is also onboard. “CAPP (Canadian Association of Petroleum Producers) supports the establishment of the provincial monitoring agency,” said CAPP vice-president David Pryce. “This is an important mechanism to further the implementation of scientifically credible monitoring which can be used to confirm and assure responsible development.”

NOVEMBER 30, 2012

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NOVEMBER 30, 2012

November/December 2012 Edition  

Pipeline News North

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