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Vol. 2 Issue 8 • dist: 20,325

JULY/AUGUST • 2012

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in this issue: • A Big leap forward spectra’s new gas plant • weeding the garden - weed free straw program • every drop counts flowback water reuse study wraps up

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OIL AND CANOLA NEAR WEMBLEY, ALBERTA - JAMES WATERMAN PHOTO


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• PIPELINE NEWS NORTH

JULY 27 2012

KATIE MAXIMICK STAFF WRITER If you thought Fort St. John was unusually quiet on Sunday, June 10, that’s probably because a good portion of the city’s population spent the day recovering from the four-day long 50th Annual Oilmen’s Golf Tournament that wrapped up the previous night. To mark the tournament’s fiftieth anniversary, the Fort St. John Petroleum Association went all out this year to put on an event to remember. “It was the biggest budget that we’ve ever ran for the event for sure,” said the Oilmen’s golf tournament chairman Lee Hartman, who added that the committee began organizing the major event last fall.

liked him and the band [on Saturday] was crazy. It went until 2 o’clock in the morning, and people were still dancing. Over the last 20 years the dance has always been done by 10:30, so everything went well that way.” The difference this year was that the committee brought in an award-winning cover band from San Diego called Liquid Blue. Their range of music varied from Fifties hits to popular modern music that had people dancing Saturday night into the early morning hours on Sunday. After months of planning, the 50th Annual Oilmen’s Golf Tournament was a four-day event that many people will remember for the rest of their lives.

“Giving away a driver for entering this year got nothing but good comments from all the golfers, and the amount and quality of prizes were phenomenal.”

“A big thank you to the local sponsors and people who helped put it on, and the committee for doing a good job,” Hartman said.

Aside from the Nike drivers given to each golfer, other prizes ranged from trips to Hawaii, golf clubs, cash and even chances to win a 2012 Chevrolet Corvette and a 2012 Ford Mustang if you managed to get a hole-in-one (which, unfortunately, no one did).

“We got nothing but good comments.” The Fort St. John Petroleum Association congratulates 2012 Oilman of the Year Darwin Pimm and 2012 Ivor Miller Award recipient Mike Kosick. Thank you for your contributions to the club and the community over the years.

The torrential rain the region had seen on the preceding Tuesday and Wednesday managed to leave the area for the start of the tournament on Thursday, June 7, although the practice day on Wednesday, June 6 had to be cancelled. “It was as good as we could’ve hoped for,” Hartman said about the weather. “The forecast going into it wasn’t looking good at all. Wednesday practice we lost out and the course was closed, but we didn’t interrupt any of the play.” Except for a few scattered showers on Friday and Saturday, the weather at Lakepoint Golf & Country Club was ideal for the golfers. Light winds and sunshine dominated the tournament and despite a few leftover puddles on some of the fairways, participants overall said the conditions were good, especially since last year there was snow on the golf course. From Thursday to Saturday morning, Lakepoint saw 304 golfers in 18 different sponsored flights vying for winners from 5:30 a.m. until 5:30 p.m., followed by a fun best-ball tournament Saturday afternoon to complete the tournament portion of the event. There were plenty of jovial golfers each day, who enjoyed the light-hearted competition and the socializing that came with the tournament. “A lot of the guys come to visit and socialize,” Hartman said. “It’s not about winning or losing the golf game. It’s a pretty laid back, social event.” Other big hits for the event was the entertainment, which the Petroleum Association ensured was some of the best on the continent. “It was very good,” Hartman said. “Our comedian on Thursday, they really

Petroleum Association President Tyler Kosick (middle) presented the Ivor Miller Award to Mike Kosick (left) and the Oilman of the Year Award to Darwin Pimm (right) on Saturday, June 9.

PETROLEUM ASSOCIATION - HAPPENINGS


JULY 27 2012

industry news MAKING PROGRESS LNG giant Petronas buying into the Montney james waterman Pipeline News North Malaysia’s state oil company Petronas announced at the end of the June that they intend to acquire Progress Energy Resources for C$5.5 billion. The purpose of the move is to push forward at a faster pace with joint venture plans to transport natural gas from Progress’ Montney tight gas basin holdings to a liquefied natural gas (LNG) export facility on the coast. Petronas has long been one of the biggest international players in LNG. “They spent a year just testing it out,” said Richard Dixon. Dixon is the executive director of the Centre for Applied Business Research in Energy and the Environment (CABREE) at the University of Alberta’s Alberta School of Business. “They’re going to step in carefully,” he added. Dixon also suggested that Petronas has a need to bolster waning resources for its LNG business, a need that Progress’ holdings are likely able to satisfy. “[Petronas is] buying into the market here in the case that they’re not as assured of their supply for their customers,” he said, noting that Petronas was the primary natural gas provider for nuclear Japan. Progress, Dixon remarked, is the largest of the junior companies operating in the Montney. “Some question about the amount of Petronas’ reserves,” he said. “They’re probably a little weaker than what the market thinks they are.” News of the acquisition had analysts gossiping about other Canadian companies that might be ripe for takeover, Encana being a popular choice. The Canadian energy icon has had its troubles lately because of the low price of dry gas, which comprises the bulk of its resources. Recent decisions, such as increasing capital spending while other companies have been cutting back, have also raised a few eyebrows. 28231

The company is currently involved in partnerships with two Japanese companies: Mitsubishi and Toyota Tsusho. “Encana’s moves lately have certainly left them open for discussion, I would agree,” said Dixon. “Given Encana’s history, and the spin-off from Cenovus, is it possible? Oh, yeah. I think that would have to come up for hearing at that point.” Encana was one of a handful of Canadian companies that saw their share price jump upon news of the Petronas-Progress deal. Analysts also whispered about the likes of Nexen, Talisman Energy and Penn West Petroleum prior to the July 23 announcement that Nexen is set to be acquired by China National Offshore Oil Company (CNOOC) for US$15.1 billion. Nexen’s struggles over the past year have been well documented, a story that includes the numerous problems plaguing its Long Lake oil sands operation in Alberta. A pair of top executives, former CEO Marvin Romanow and former executive vice president of Canadian operations Gary Nieuwenberg, left the company in January. The transaction will likely require federal government approval, as would be the case if the deal involved any hallmark Canadian energy firm, such as Encana. “And think in terms of BHP [Billiton] and Potash [Corporation of Saskatchewan],” said Dixon. “And so you’re going to have that. Here’s where I disagree with a lot of economists. “The argument was that, well, we should be open for business and more international. But I think they made the right decision around BHP, because there was also the market rumours going that BHP wanted to close on the market and shut down or limit production out of Saskatchewan to increase its value of its holdings in other places in the world.” That wouldn’t be the case with Petronas’ acquisition of Progress because of the Malaysian company’s

need for the resource. It wouldn’t be the case with the foreign acquisition of a Canadian giant like Encana either, according to Dixon. “But you have that same visual effect,” he said, adding that the “bigger picture” problem is that Canada has few large companies with their head offices in this country. “I think we’re down to less than 100,” said Dixon. The issue is that Canada is becoming a branch plant for obtaining natural resources for value-added operations that take place in other countries. “That’s what I would be worried about,” he added. Dixon noted that other junior companies working in the Montney could be interesting to foreign buyers. However, he is really interested in the implications in terms of that branch plant idea. “Where are the [natural gas] liquids (NGL) going to go?” he asked. “This is an issue that I think we need to look at from a regulatory perspective,” said Dixon. “If the liquids are going to head out of here, then it’s like what the Alliance [pipeline] did for Alberta.” Alliance ships NGL to the United States. “Alliance would not be built unless they got the liquids as well,” said Dixon. “And so we shipped out methane and liquids. And the liquids went down to Chicago. So, we exported jobs. And we ended up basically gutting our [petrochemical] business.” Dixon explained that when former Alberta premier Ed Stelmach took the reins he was adamant that Alberta would upgrade its oil at home. “And the reason why was just because of the fiasco with what occurred with Alliance,” said Dixon. “We should not have buckled under there. All we did was end up hurting ourselves. And here we’ve got the same problem. “Japan wants rich gas. China wants rich gas. And so the implications for Petronas is they’re going after the rich gas as much as anything.”

PIPELINE NEWS NORTH •

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special feature 12 A positive impact - Tarpon and West Moberly joint venture 18 Two years latler - New West Partnership celebrates anniversary

industry news 4 Pumping up the volumes - 5 6 10 15

liquids supplies growing A big leap forward - Spectra opens new gas plant B.C. wildfires affecting oil and gas operations Canadian LNG and post- nuclear Japan Riding the rails - CN expanding freight capacity through northern B.C.

environment 10 Weed-free straw program 16 Reforestation study 23 Where the buffalo roam - conservation concerns

careers & training 29 The great crew change - industry labour trends


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• PIPELINE NEWS NORTH

JULY 27 2012

North

industry news

PUMPING UP THE VOLUMES The quest for liquids-rich gas has produced a massive supply of NGL

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Published Monthly by Glacier Ventures International Corp. The Pipeline News North is politically independent and a member of the B.C. Press Council. The Pipeline News North retains sole copyright of advertising, news stories and photography produced by staff. Reproduction is prohibited without written consent of the editor.

james waterman Pipeline News North Natural gas liquids (NGL) have been a godsend for many oil and gas companies as the industry has been trying to cope with record low natural gas prices resulting from a glut of shale gas, the product of technological advances in horizontal drilling and hydraulic fracturing. Just look at the recent success of companies operating in the liquids-rich Montney tight gas play of northeastern British Columbia. However, those companies may not be enjoying the benefits of NGL for very long. It was reported in early July that companies operating in similarly liquids-rich plays in the United States could be forced to cut spending and sell assets because of a growing glut of the very resource that has been saving them from the impacts of the dry gas glut. The price of NGL is dropping, too. “Since 2005, U.S. [natural gas] production has risen from, I’m going to say, just slightly under 50 bcf (billion cubic feet) per day to maybe about 65 bcf a day in January of this year,” said Bill Gwozd, Vice President of Gas Services with Ziff Energy Group. “Over that seven year period, the U.S. has added approximately 2.0 bcf per year for seven years.” The growth in liquids production hasn’t corresponded to a growth in the markets for propane and butane. “Compounding that is that propane and butane are linked to the price of oil,” added Gwozd. “And the price of oil has come down a shade. So, that’s going to compound the problem for the producers going after propane [and] butane.” Richard Dixon, executive director of the Centre for Applied Business Research in Energy and the Environment at the University of Alberta’s Alberta School of Business, noted that never before seen volumes of liquids are traveling south from Alberta into the U.S. via the Alliance pipeline. “It’s a transportation bottleneck,” he said. North America has a handful of liquids-rich plays contributing to the growing supply. “I would say the Granite Wash

would be probably the best all around liquid play in North America,” said Gwozd. “Another top five liquid player would be the Eagle Ford.” Liquids production has inspired some poor industry decisions, according to Gwozd. “Some of those liquid guys,” he said, “they built more liquid processing facilities, new liquid pipelines. And it’s almost reminiscent of the non-logical or the incoherent energy policy of the U.S. government where they allow proliferation of equipment on the whim of the day versus standing back and taking a holistic approach of what do we really need to do.” It reminds Gwozd of the American approach to liquefied natural gas (LNG). “A few years ago, the U.S. government allowed operators to build LNG receiving terminals,” Gwozd explained. “And so the U.S. has more than 20 bcf per day of LNG receiving terminals. They’re using less than 1.0 [bcf]. “Individual operators on individual projects [saw] it as a goldmine to import LNG a few years ago,” he continued. “But the U.S. government should have stood up and said, ‘You know, we may not need all these things. And this is our long term vision. And, therefore, collectively, we’ll need to install two or three, and not duplicate capital. Spend the money elsewhere.’ “Because they had all this redundant capital that was spent that didn’t do anything. It’s like spending money, but you get no value.” Gwozd can see the same happening with NGL now. “You may be building all these extra facilities because everybody thinks it’s going to grow and grow and grow all the way to the moon,” he said. “But, at the end of the day, you don’t need it all. It never gets produced. And maybe it gets shut-in. “I think a broader plan where you look at it as if one company owns everything and, if one company owns everything, what would they do to operate this based on a proper production forecast and look at existing facilities? How would you operate it overall?” Still, there are ways to profit from NGL.

The Montney formation is another quality liquids-rich basin, where the Hythe field is producing over 100 barrels per million of C2+ hydrocarbons (ethane is C2H6) and over 50 barrels per million of C3+ (propane is C3H8). “Those guys still get 60 per cent [to] 70 per cent of the oil price for their liquids, which is a whole bunch more than they get for the equivalent gas,” said Gwozd. “So, even though there’s extra, it’s still much better.” Exporting those NGL to Asia is another option. “That may create what I call a pseudo market for propane and butane,” said Gwozd. “If so, when we liquefy the natural gas, would we liquefy the ethane, propane and butane so that when it arrives in certain select countries in Asia – very important to certain select countries in Asia – that the liquids also arrive. And if so, could you install or build a petrochemical industry or use this extra liquid for a petrochemical industry in Asia.” Dixon views the situation differently. “It would be actually in our best interest to actually… renegotiate with Alliance to have those liquids kept here in Alberta and add value to our [petrochemical] industry,” he suggested. “You’ve got to go for value added on those,” Dixon continued. “It’s going to be farther up the value chain [where] you’re going to start to get your margins. “Probably, what you’re going to see is some joint ventures going on. And a little bit more in this industry than we’ve seen in the past.” Industry has been slow to move that direction, according to Dixon, because NGLs are too often seen as a stopgap until a profitable liquefied natural gas (LNG) industry really takes off. “But there you’ve got a branch mentality, right?” he said, suggesting that Canadian companies fail to explore the value added opportunities that would enhance their businesses, preferring to export that work to other countries. “That’s why I’m saying I’d like to see some joint venture stuff,” he said. “But we’ll see what goes on.”


JULY 27 2012

PIPELINE NEWS NORTH •

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A BIG LEAP FORWARD Spectra’s new gas processing plant could be vital to growing LNG industry

Spectra Energy’s new Dawson Processing Plant in the Montney tight gas play of northeast British Columbia had its grand opening on Friday, July 13. photO COURTESY OF SPECTRA ENERGY

james waterman Pipeline News North Spectra Energy must not be a superstitious company. After all, they chose Friday, July 13 for the official grand opening for their new Dawson Processing Plant, even though the facility actually began processing northeast British Columbia’s natural gas resources at the beginning of June. “In northeast B.C., we have a massive, massive gas reserve,” said Doug Bloom, president of Spectra Energy Transmission West, discussing the need for the new plant. “So, we’re going to need a lot of gas processing plants. This is a very large plant.” The daily capacity of the completed first phase of the project is 100 million cubic feet (mcf) of sales gas, but that will increase to 200 mcf after the completion of phase two, which is expected to be ready for the first quarter of 2013. The facility is also equipped to capture natural gas liquids to sell to their customers. Carbon dioxide (CO2) and hydrogen sulphide (H2S) is extracted from the raw natural gas produced in that area of Montney tight gas play and subsequently transported to Spectra’s McMahon Gas Plant via the South Peace Pipeline. Sales gas is distributed by the NGTL Groundbirch Pipeline. Currently, only Spectra’s own Bissette Pipeline supplies the processing plant with raw natural gas. “We see it fitting well into the British Columbia grid,” Bloom continued. “Our company collects gas in our downstream

pipeline system, which is a very good jumping off point, if you will, for serving markets, certainly in British Columbia. “Our pipeline serves most of British Columbia. On any given day it serves 50 per cent of the [United States] Pacific Northwest market. We also have connections into Alberta that this plant is connected into. A pipeline that will serve the Alberta market and beyond. “And, long-term, it certainly can connect into pipelines that can serve LNG (liquefied natural gas).” LNG was a hot topic of discussion during the grand opening, thanks largely to the presence of Premier Christy Clark, who was eager to talk about Spectra’s role in achieving the LNG industry goals set out in her government’s Natural Gas Strategy that was launched this past winter. “The future of natural gas in British Columbia is almost unlimited,” said Clark. “As we move to start shipping it overseas – liquefying it and shipping it overseas – it could become a trillion dollar industry.” Clark discussed the LNG opportunity in terms of the relatively high Asian LNG price, which has been over $16 per million British thermal units (mmBtu) while the North American natural gas price has hovered around $2 per mmBtu because the former is more closely tied to oil price. Although that Asian price fell from a high of $18 per mmBtu to just over $15 per mmBtu in late June thanks to strong supply, which is a possible signal of things to come as energy companies and resource-rich nations ramp up their LNG plans, Clark remains optimistic that B.C.’s

natural gas sector will be able to seize the opportunity and turn a profit. “In the longer term, you might see the price go down,” Clark admitted. “But that’s why we need to move on this opportunity as quickly as we can and lock up those long-term contracts. Because these contracts are done over decades. “And the Japanese will sometimes do contracts that are 25 years. Will lock them in. Will lock in the price. And we need to do that quickly. And that’s part of the urgency on this.” Clark saw the potential for LNG sales to Japan firsthand during a trade mission to Asia, when she saw government offices with all the lights off to conserve energy. Japan is presently experiencing an energy deficit of 30 per cent because the nuclear power plants were shut down following the Fukushima disaster of last year. “We’re not putting all our eggs in one basket [with LNG],” she continued. “We’re focusing on forestry, we’re focusing on agriculture, and other industries as well. You go look at our Jobs Plan. There’s more than just the natural gas sector in that. “But this is a sector in which there’s real urgency for us to move. We’ve got to get on this or we’re going to miss the boat. And the Americans will get ahead of us. So, we want to make this happen. It could be huge for our province.” Canadian energy sector representatives, including Bloom, accompanied Clark on her latest trade mission to Asia with that goal in mind. “Asian countries do business a little bit

differently,” said Clark. “Government is intimately involved in lots of private sector decisions in a way that it isn’t here. So, what I do when I go on trade missions is I take private sector companies and I help them open doors for investment in our province.” “There are a lot of things that the private sector can do on its own,” said Bloom, “but developing new markets in Asia is something we absolutely have to work with government on. And, frankly, it’s been critical. “We’ve been on the two missions that Premier Clark led,” he continued. “I can tell you, we have had immense amount of follow-up with Asian companies coming here to Canada and meeting with us to talk about how we capitalize on the opportunity. So, they expect to see government working hand in hand with business. “And it’s really vital what the premier and her team are doing. And we think it’s going to pay strong dividends for this province. So, it’s absolutely critical.” Bloom can see Asia’s interest in Canadian LNG right in the backyard of the new processing plant. “Encana’s a major producer and a major customer of ours at this gas processing plant,” he said. “Their joint venture partner, Mitsubishi, is going to be a very large player in this region. A great example of what the premier was just describing, the importance of developing the business connections with Asia. And Encana has done it with Mitsubishi. And this is going to be a vital area for them.” continued pg 27


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industry news

running wild

Northeast B.C. wildfires impacting Horn River natural gas producers james waterman Pipeline News North A pair of wildfires discovered in northeast British Columbia early this July haven’t been much trouble for the nearby community of Fort Nelson, but they have been an issue for those working in the oil and gas industry in that region. The Pesh Fire, which was discovered near Suhm Creek on July 5, measured 4856 hectares as of July 17, an area similar to its original size. It had grown to an estimated 5500 hectares by July 22. Another fire located about twenty kilometres southwest of Kotcho Lake was found on July 11. It was estimated at about 1800 hectares on July 21 after a few days of rain. Lightning is thought to be the cause of both fires.

“The wind’s been really light in the area,” said Jillian Chimko, fire information officer with the Prince George Fire Centre, during a July 17 interview. That explained the slow growth of the fires. “It looks like things have been a little bit more slow moving up there than they were in the initial stages,” she added. As of July 22, neither wildfire was being suppressed, but they were being monitored on a daily basis by a fire behavior specialist. Although neither fire posed a threat to the local communities, concerns over the potential impacts on oil and gas industry workers prompted the BC Oil and Gas Commission (OGC) to release a safety bulletin concerning the wildfires on July 13. “The objective is to keep industry apprised of what the status of the fires are and whether or not they directly

or indirectly impact them,” said Mike Burzek, director of emergency response and safety at the OGC. “And then, as far as some of the mitigation, really, a lot of things like ensuring that combustible materials or anything that’s absolutely not necessary [is] removed. In some cases, they might have to water down the area around their activities. And really it’s all about the preplanning for emergency evacuations of their personnel in case fires do flare up.” OGC was participating in daily conference calls involving the Prince George Fire Centre and other stakeholders such as oil and gas companies operating in the area. “We just basically talk to their supervisors and they pass [the information] along,” said Chimko. “Every day, we send them maps, outlines. We have a fire behaviour specialist up there who maps the fire and where he thinks it’s going to go based on forecasts. And

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Wildfires in northeast B.C. can pose problems for oil and gas industry workers. Poor air quality due to smoke is one of the biggest concerns. KATELIN DEAN photO

they’ll send them those maps. “And they have an evacuation plan made, if ever needed. If a fire reaches a certain trigger point, they say, ‘Okay, it’s time to pull out.’” Burzek explained that companies were constantly assessing the situation if they did have facilities such as well sites or compressor stations near the path of the wildfire.

“They’ll take the necessary measures such as shutting in their wells and compressor stations,” he said. “If it gets really bad,” he continued, “then they would have to shut in things like a gas plant. Typically, they don’t need to because they’ve already done hazard abatements in and around their facilities. “Some of the things that we’re con-

PIPELINE NEWS NORTH •

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cerned more about are the traffic up and we probably have approximately 150 personnel between those two areas that down the roads and the potential for other fires to be started from their activiare potentially impacted.” The biggest issue was poor air quality. ties. So, really looking at restricting work activities to the bare minimum.” “The smoke is definitely a health imBurzek noted on July 17 that there pact and a concern,” said Burzek. At the time, there was no way of knowwas a pair of natural gas processing ing how long plants in the vithose two wildcinity of the fires, fires could be an but neither was closer than about “The smoke is definitely issue for energy five kilometers. sector activities. fire haz“There’s no ima health impact and a ard“The is extreme,” mediate threat,” said Burzek, he said, “but if concern.” discussing the the winds were to change directions hot, dry conditions that had from the north – – Mike Burzek, OGC right now, we’re prevailed in the northeast during predominantly the early part of the summer. getting southwesterlies – but if we were to get some northeast winds, that would “It’s some of the driest conditions they’ve had on record,” he added. shift the head of the fires to the south, then we could be potentially looking at So, the possibility of additional fires has been a lingering concern. more serious impacts.” “Be diligent out there,” Burzek cauBurzek also said that the operations of eight permit holders were slightly tioned. “If you’re working in the field and you see a wildfire, lightning strike, anyimpacted by the wildfires. thing like that, you see smoke, please “There is a drilling rig that’s active in phone it in to the fire centre.” one of those areas,” he said. “And so

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industry news THE POLITICS OF PIPELINES Clark lays out her conditions for heavy oil projects in B.C. james waterman Pipeline News North Premier Christy Clark and her government were met with a mix of faint praise and harsh criticism after finally announcing their position on the construction and operation of heavy oil pipelines within British Columbia on Monday, July 23. The announcement – the content of which is also included in a new government policy paper titled Requirements for British Columbia to Consider Support for Heavy Oil Pipelines – laid out the five conditions under which the B.C. government would lend their support to projects such as Enbridge’s Northern Gateway Pipeline to transport oil sands bitumen from Alberta to an export point in B.C. “Our government is committed to economic development that is balanced with environmental protection,” said Clark. “In light of the ongoing environmental review by the Joint Review Panel (JRP) on the Enbridge pipeline project proposal, our government has identified and developed minimum requirements that must be met before we will consider support for any heavy oil pipeline projects in our province.” Firstly, the government would require that the JRP approve of the project, signaling that the proposal has passed the environmental review process. The project would also have to feature “world-leading practices” in terms of prevention, response and recovery of marine and terrestrial oil spills. Not only must Aboriginal and treaty rights be considered, as required by law, but First Nations must also be given the opportunity to benefit economically from the project. Lastly, the government has stipulated that the province as a whole must share in the economic benefits of any heavy oil project in a manner that adequately reflects the potential hazards. “We need to combine environmental safety with our fair share of fiscal and economic benefits,” said Clark. The announcement came less than two weeks after Clark dealt out a bit of harsh criticism of her own, following the United States National Transportation Safety Board’s (NTSB) report on the 2010 Enbridge pipeline spill into Michigan’s Kalamazoo River, which characterized the company as a bunch of “Keystone Kops” for their handling of the incident. The clean-up of that spill is still ongoing. “I think the company should be deeply embarrassed about what unfolded,” Clark told reporters in Kamloops on Wednesday, July 11. “If they think they’re going to operate like that in British Columbia, forget it,” she added. Clark subsequently met with the premiers of Alberta and Saskatchewan on Thursday, July 19 to inform them that her government would be stating their position on Northern Gateway the following week. She had a similar conversation with Prime Minister Stephen Harper that day as well. “I was giving them the heads up on what we’re going to be talking about next week, because I don’t want my colleagues, particularly our neighbours in Alberta and Saskatchewan, to be surprised,” Clark said on Friday, July 20. “British Columbians want to have our environment protected and they want to know that we’re going to be looking out for their best interests when it comes to jobs and economic benefits,” she added. “I understand there are other politicians in this country that would rather that I put those things aside. I’m not going to. That was not what I was elected to do.”

Environment Minister Terry Lake (left) and Aboriginal Relations and Reconciliation Minister Mary Polak outline the five requirements that must be met for their government to consider supporting the construction and operation of heavy oil pipelines in British Columbia during a Monday, July 23 announcement. It is the first time the provincial government has stated a position concerning the Enbridge Northern Gateway Pipeline proposal. photO COURTESY OF BC GOVERNMENT

Following those comments, NDP environment critic Rob Fleming was anticipating a significant message from the government. “I think British Columbians were expecting something more substantial given the hype that Christy Clark directed to it last week,” Fleming told Pipeline News North following the announcement. “It was hinted by the Liberals that they would finally get off the fence and take a position standing up for British Columbia’s interests,” he continued. “And what we ended up getting was two of her ministers (Minister of Environment Terry Lake and Minister of Aboriginal Relations and Reconciliation Mary Polak) outlining the reasons… that B.C. could support this pipeline.” Fleming felt the conditions were largely non-issues since the JRP assessment and consultation with First Nations are legal requirements. Additionally, Enbridge has been discussing the details of their marine safety initiatives for quite some time. They also promised $500 million of new upgrades – stronger steel and additional remote shut-off valves – in response to the NTSB report. “British Columbia, under the Liberals, have already signed away their ability to do their own environmental assessment,” he added. “They agreed to that a long time ago.” Eric Swanson, No Tankers Campaign Director for the Dogwood Initiative, had a similar reaction. “I’m more confused than before the announcement,” Swanson said on July 24. “There was a lot of speculation leading up to yesterday that there would be more clarity of position,” he continued. “The conditions that were announced include ones that are kind of no-brainers. “Everybody will try their best to clean up spills. That’s a given – I hope. First Nations will be meaningfully con-

sulted. Another given – I hope. Where I’m most uncertain is the topic of getting more money from Alberta or from the federal government.” That condition concerning sharing the fiscal and economic benefits has been one of the hottest topics of discussion since the announcement. “Revenue sharing between governments will require discussion between said governments,” suggested Travis Davies, a spokesperson for the Canadian Association of Petroleum Producers. “Much of the cost associated with spill prevention and recovery are borne by industry.” Jamie Ellerton, executive director of ethicaloil.org, saw that condition as an attempt to “extort more money from the Alberta government” in exchange support for the pipeline. “It’s borderline – one could say – un-Canadian,” added Ellerton. “It’s unfortunate,” he continued. “I think Premier Clark could demonstrate some leadership and get behind the project ,and projects like it, in recognizing what a tremendous asset Canada’s oil and gas industry is to the country.” Ellerton proceeded to call that requirement “less than desirable” and “highly political.” His comments closely resembled the statement released by Alberta Premier Alison Redford on July 23. “Every Canadian, no matter what province they call home, expects that energy development is done with a high degree of environmental safeguards,” said Redford. “This is why a rigorous environmental review is underway by the National Energy Board (NEB). It is why the company involved has committed an additional $500 million for increased monitoring and safety measures. These efforts, combined with the fact that pipelines are


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The B.C. government detailed their views on the economic benefits and environmental risks to be incurred by B.C., Alberta and the rest of Canada in their Requirements for British Columbia to Consider Support for Heavy Oil Pipelines policy paper. That appears to be basis for the demand that B.C. must share in the economic and fiscal benefits of pipeline projects such as Northern Gateway in a manner that reflects the degree of environmental risk, which has prompted Alberta Premier Alison Redford to suggest B.C. Premier Christy Clark is trying to pit provinces against one another and has led ethicaloil.org executive director Jamie Ellerton to accuse Clark of attempting to extort money from Alberta. IMAGES COURTESY OF BC GOVERNMENT

still by far the safest means by which to transport oil, significantly mitigate the environmental risk and weaken the BC government’s argument for compensation based on potential risk.” Redford continued to cite a recent report by the Senate’s Energy, Environment and Natural Resources Committee to reiterate what is thought to be the national importance of exporting oil and gas to new markets beyond the United States. “It is essential for the economic benefit of Canada,” she said. “Our confederation works as well as it does because of the free flow of goods and products through provinces and territories – including forest products, oil, liquefied natural gas, potash, uranium, grain and manufactured goods.” Redford then said the New West Partnership between Saskatchewan, Alberta and B.C. was established in part with interprovincial trade in mind.

“Leadership is not about dividing Cament would use this opportunity to call a nadians and pitting one province against spade a spade and move on to different another, “ Redford concluded. and better projects. More locally appro“Leadership is about working together. priate projects.” That’s when our country benefits – that’s “The salmon fishery is still important,” when Canada leads. Through a Canahe continued. “The halibut fishery. Coast dian Energy Strategy, the provinces and tourism is on the rise as the brand of territories together the Great Bear “Leadership is will reach their full Rainforest energy potential spreads around not about dividing and contribute the world a little to increased bit with National prosperity and a Geographic Canadians.” higher standard coverage and of living for all that kind of thing. – Premier Alison Redford Canadians.” There’s a local Swanson raised fish processing similar points surrounding economy and plant going up.” ecology. Swanson noted that the Haisla First “It’s not just the risk to the enviNation have also been working with the ronment.,” he said. “It’s a risk to the natural gas industry to develop liquefied economy, especially coastal economies natural gas (LNG) export projects. in seafood and marine recreation. “Our principle is get on the ground, “We were hoping the Clark governtalk to the communities, figure out what

resource developments they want, that meet their local needs, and then help put those in,” he said. “You get jobs. You get revenue. And you get more sustainability.” Despite the flaws of the announcement, as described by its critics, oil industry proponents do see a measure of hope. “Good to have clarity from [the] B.C. government on expectations around projects like this,” said Davies. “This is kind of the first real step by the B.C. government in demonstrating that they value the merits of projects and pipelines going through British Columbia to access the Pacific Coast,” added Ellerton. “And this is… a step in the right direction for developing those new markets.” Still, Ellerton is disappointed with the rhetoric. “Obviously,” he said, “this is highly political.”


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environment WEEDING THE GARDEN

Weed-free straw program tries to take root in the oil and gas industry james waterman Pipeline News North Ken Siemens knows a thing or two about pipelines. The organic farmer and buffalo rancher has had a few of them built through his property near Cecil Lake, British Columbia over the years. And it seems that no matter how hard the pipeliners try to keep from dragging weeds onto his land, a few of them sneak their way into his crops of hay and straw. It is a significant challenge shared by the oil and gas industry and the agricultural community. “The oil patch does have a tendency, over the last number of years, of spreading quite a bit of weeds,” said Siemens, taking a moment to relax on his porch alongside his old friend and fellow farmer Fern Mertens on a hot summer morning. “Every pipeliner that comes across your property drags in weeds,” he continued. “They’re doing more due diligence now, trying to clean up as they come, but that doesn’t always mean that’s really what happens.” Siemens has actually seen companies be very careful about how they treat his land, but he also knows that it isn’t easy to stop the spread of weeds. “You’re not going to get rid of the weeds,” he said. “I mean, dandelions are a weed. We’re talking noxious weeds. We’re talking quack grass, thistle, chamomile.” That is why Siemens got involved in a pilot project that began in early 2011 with a plan to provide certified weed-free forage for individuals such as guide outfitters who take their horses into the pristine backcountry of northern B.C. “Initially, the program started because we wanted to make sure that that backcountry horse people were using certified weed-free hay, especially out in the Muskwa-Kechika Management Area and all of our provincial parks up here,” said Sonja Leverkus of the Fort Nelson Invasive Plant Steering Committee. During a discussion with oil and gas company representatives in Fort Nelson

Fern Mertens (left) and Ken Siemens show off the supply of weed-free straw produced on Siemens’ farm near Cecil Lake, British Columbia. The pair is growing the straw as part of a weed-free straw program aiming to limit the spread of noxious weeds through oil and gas industry activities. JAMES WATERMAN photO

almost two years ago, Leverkus and her colleagues were asked if it would be possible to provide certified weed-free straw for industry use as well. Leverkus immediately agreed to expand the program. “In oil and gas development and road development and lease sites and pipelines going in,” said Leverkus, “what we notice from an invasive plant perspective is that those are the areas that invasive plants are getting introduced in northeast B.C. from a result of machinery and equipment not being steam cleaned prior to going out to those places, as a result of seed that is used for re-vegetation being contaminated with invasive plants, as a result of rig matting … that comes up from Fort St. John to Fort Nelson. “We are so weed-free up here,” she continued, “but Fort St. John is a little bit different. So, that stuff comes up from Fort St. John to Fort Nelson on rig mats, gets laid down out in the bush, and then

all of a sudden we have an invasive plant infestation.” Another big issue is the use of straw bales for purposes such as erosion prevention when building roads. The bales can contain the seeds of noxious weeds, which consequently take control of the roadside and spread into the forest. “Initially, when the project first kicked off, I was working for the Invasive Species Council of B.C.,” said Elaine Armagost, now the Invasive Plant Program Manager for the Peace River Regional District (PRRD). Armagost was visiting Siemens at his farm that hot summer morning to take a peek at the fruits of his labour. “They were very interested in the weed-free forage program because they are all about prevention,” she continued. “And prevention is the cheapest way to keep invasive plants out of our pristine backcountry. And so that’s kind of how it started. And I worked with them. And

I was working on more of the marketing side, public relations side. And then I left them and I came to work here for the Peace River Regional District.” The PRRD was one of the sponsors of the launch of the pilot project. “Just about a year ago, I think, we met here on Ken’s farm and we talked about the North American Weed Management Association (NAWMA) standards for weed-free forage,” said Armagost. “And we had a big walk around here. And we went and looked at some of Ken’s fields. And decided that he would make a good pilot because he’s an organic producer and very interested in the program. And understands what invasive plants in the outback mean.” Funding from the Northeast Invasive Plant Council and the Northwest Invasive Plant Council – which collectively cover all of B.C. north of Quesnel – got the program off the ground. “We have, provincially, the most pristine land in the province in the north, that’s not invaded by invasive plants at this point,” said Armagost. “So, we felt it was a really important initiative to kick-off. So, we inspected some of Ken’s fields. And we certified them as weed-free according to the NAWMA standards. And he put up the hay. And we’ve been trying to promote it in the oil and gas sector and for outback users who bring horses and go into the outback.” Maintaining the certified weed-free status of his hay and straw is an arduous process for Siemens. It isn’t cheap either. “We’re organic,” he explained. “So, we don’t use sprays. No pesticides. No fertilizers. None of that stuff. So, we work at being weed free year-round, whether we’re doing it for this weed-free project or not. “The cost of having it inspected, it brings up the cost. The cost of keeping it separated from your other feeds brings up the cost. The handling. And it does bring up the cost of the feed. I mean, it’s just a fact of life if you’re trying to fill a small niche.

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“It’s going to cost more.” If weeds are discovered on his land, Siemens has to remove them manually. “It would be real simple if you could just go ahead and spray it,” he said, “but what happens if you want to sell your product to somebody that doesn’t do the spraying the same as we do?” Staying certified weed-free is also hard work for the individual who has to inspect his fields. “The inspection process is something that takes a lot of foot-miles,” said Siemens. “The inspector walks your whole field. I mean, he’s pretty thorough. And if he does find anything, he marks it with a flag and a stake. “It costs us money to have it inspected,” he added. “And once we’re done with the pilot project, it’s probably going to cost us a little more.” “Every year, he’ll have his field inspected by a certified weed-free inspector,” said Leverkus. “We have a methodology that we follow,” she continued. “So, transect lines. And we have three weed lists that we follow. One of them is the weed list under the Weed Control Act, the weed list as listed in the Forest and Range Practices Act, and then the weed list as listed under the North American Weed Management Association. So, the inspector has in their mind all of those weeds. “At the end of that, they will go through with the producer and talk about the fields. If there are invasive plants found in the field, we’ll flag that area off and make a buffer around it. And then the rest of the field could still be certified. “And then we have special tags that get put on each bale.” The buffer around those invasive plants is twenty feet. “And we ourselves usually make it a little bigger,” said Siemens. The fight against noxious weeds is starting to gain traction thanks to a few recent incidents with invasive species of both plants and animals. “It’s actually been the last year that there’s been a lot of media coverage,” said Armagost. “It started about a year ago,” she continued, “with the giant hogweed out of Vancouver, where it was found on a

schoolyard, and a little boy in school actually got some of the sap, and it caused a burn. That kind of started some awareness around invasive species.” Recently, a snakehead fish, a voracious predator not native to Canadian waters, was caught in the Burnaby Central Park lagoon. “They tried to catch the fish,” said Armagost. “They couldn’t catch it.” Fortunately, it was a manmade lake that was fairly easy to drain in order to catch the fish. “They take over ecosystems,” Armagost said of these invasive species. “And they upset the natural balance.” Armagost also discussed growing concerns about a plant known as Japanese knotweed. “It’s an invasive plant that will grow through concrete,” she explained. “It will grow underneath a four lane highway and come up on the other side. It will come up through all the fill. “It was actually introduced as a slopestabilizer,” she continued, “but it’s actually found to actually cause erosion because the roots are not fibrous roots.” They basically just have a large taproot. “So, when they grow, they expand, and they actually loosen the horizons in the soil and cause erosion,” said Armagost. There was an unconfirmed sighting of Japanese knotweed in Grande Prairie early this July. “That’s really frightening,” said Armagost.”Once you get it, it’ super, super hard to kill.” Another weed of concern, leafy spurge, was also seen near Grande Prairie recently. “If that comes here, then we could be in big trouble,” said Armagost. “Because that one, you treat it twice a year with herbicide, and all you do is make it sick. You can’t get rid of it. Once you get it, you can’t get rid of it. “So, those are two that are kind of close and they’re of concern.” However, the biggest local concern, according to Armagost, is actually the common tansy. “A lot of people have it in their gardens,” she said. “We see it all over the place. It was brought here, traditionally, by homesteaders and planted outside of doorways because it has an odour that

keeps bugs away. But then when those homesteads have been abandoned as we make bigger and bigger farms, the common tansy just spreads from there. “We don’t have a lot of it, but we need to be on top of it.” Canada thistle and scentless chamomile are two of the most common and abundant invasive plants in the region. Despite the growing public awareness of the invasive species issue, not to mention the fact that the oil and gas companies requested that weed-free straw be made available, the industry has been slow to use the product. “We are waiting to see this product really get moving with the oil and gas companies,” said Leverkus. “There’s only been a few companies who’ve bought some straw. So, it’s all in process.” “It’s a pilot project and we’re trying to get the marketing going,” said Siemens. “And we’re farmers, ranchers. We’re not marketing people. We have had some interest from the oil people. But, as of yet, I think the only people that have really bought any amount was Shell [Canada].” Siemens has a simple explanation for the slow response from industry. “Price of gas is two dollars. Enough said.” That isn’t to suggest companies are trading environmental protection for cost savings. “Everything has slowed down,” explained Siemens. “So, if their amount of work has slowed down, the amount of clean-ups slowed down. I mean, it’s all rolled together. “And who knows? They might come tomorrow.” The other explanation is that, even though the pilot project has been ongoing for over a year, the marketing side of the program is still quite young. “Recently, we’ve hired a marketing specialist out of Prince George to put together really a marketing campaign,” said Armagost, noting that Leverkus has already done considerable work to promote the program to industry. “We are focusing on a marketing campaign now that we’ve got the product available,” said Leverkus. “We’ve got all sorts of education and awareness tools like bumper stickers and key chains. “And our original intent was to run this as

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a pilot project in northern B.C. And so that could be then rolled out across the province of British Columbia. And that there would be a provincial government agency who took us on, housed it in their agency.” That is yet to happen. “And we want that to happen,” she continued. “And we’ve just been talking with some higher level potential partners provincially to help us push that.” The program has received a commitment from the Ministry of Transportation and Infrastructure to encourage the use of weed-free straw. “They usually put up different types of structures to control erosion on slopes where there is water running,” said Armagost. “And so the Ministry of Transportation [and Infrastructure] has written it into all their contracts that, where it is available, the contractor must use weed-free products for those rehabilitation projects. “Sometimes you’ll see square bales sitting in a ditch. That’s erosion control measures. They didn’t ever have to use weed-free before, but now they do, if it’s available.” Minister of Transportation and Infrastructure Blair Lekstrom, also the MLA for Peace River South, is well aware of the negative impact invasive plants can have on farms, just as he is aware of how oil and gas industry operations and highway work can contribute to the spread of those weeds. “Weeds are a major issue in the [agriculture] sector,” said Lekstrom. “So, everybody’s coming together to try and do their part. “We’ll use straw in our ditches,” he continued. “And what we’ve done is said, ‘Look, we’ll make a commitment to using the weed free straw so that we do our part so that you don’t have weeds creeping from our ditches into your fields.’ Which is a key part. And we made that commitment to our [agricultural] community as well.” Lekstrom suggested that the general public actually knows fairly little about the effect invasive species can have on the environment. “It is significant,” he said. “And this program that we’re talking about goes a continued pg 27

A pipeline right-of-way on Ken Siemens farm. Employing best practices - including using weed-free straw and thoroughly cleaning equipment - can limit the potential for spreading noxious weeds during pipeline construction on farmland. Introducing noxious weeds to farmland can result in quarrels with the landowner and fines from the Oil and Gas Commission. JAMES WATERMAN photO


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special feature

A POSITIVE IMPACT Tarpon Energy joint venture with West Moberly First Nations all about building a strong community

West Moberly First Nations children were among the Moberly Lake Elementary School students who assisted the Ministry of Forests, Lands and Natural Resource Operations restock Moberly Lake with 14,000 trout in May. West Moberly First Nation’s new joint venture with Tarpon Energy features a community enrichment plan that is partly aimed at keeping these kids in school through high school and beyond. katelin deAN photO

james waterman Pipeline News North A unique new joint venture partnership between Tarpon Energy Services and West Moberly First Nations is aiming at building a better community, not just creating jobs for the northeast British Columbia band. The agreement that has created Tarpon WestMo Services, which will offer electrical, instrumentation and control systems services and steel building solutions to oil and gas companies operating in the Montney tight gas play, also features a collaboration with an organization known as Impact Society to develop a community enrichment plan for West Moberly. Impact Society is best known for its HEROES program, which helps teenagers recognize their strengths, attempting to make adolescence a positive experience. “That was a bonus of meeting up with Tarpon,” said Chief Roland Willson of West Moberly First Nations. Willson first met John Henry, president and CEO at Tarpon, about two years ago, when a mutual friend introduced the two parties to one another. “Our relationship with the West Moberly came about because of our interest in doing some sort of an agreement with the West Moberly, and their interest as well with respect to doing joint ventures with industry partners,” said Henry. “With the amount of resource development that’s taking place on their traditional lands, and the rights that they have because they are their traditional lands, they have developed relationships with a number of the companies exploiting the resources in their area. “And part of the relationship is the recognition by those companies that they would be willing to utilize businesses owned or joint ventured by the West Moberly in developing the resources. And thereby conveying some benefit to the Nation from the development of

these resources on their traditional lands. “We spent almost two years getting to know each other and discussing how we could do business together,” he added. “We took a look at their structure and who they are as a company and saw that there was a good fit between Tarpon and West Moberly,” said Willson. “Lots of opportunities in northeastern B.C. that we could support each other on.” Tarpon has offices in Dawson Creek and Fort St. John that cover the area of northeast B.C. to be served by Tarpon WestMo. “This will help develop business capacity in the West Moberly community, as well as funding for the community,” said Henry. “It will also provide job opportunities for any members of the West Moberly First Nations that wish to work with Tarpon and the Tarpon-West Moberly joint venture. “I have to tell you, though,” he added. “West Moberly’s already a very well employed Nation.” That is partly due to the oil and gas activity in the region already, but also thanks to mining and wind farm operations that employ individuals from West Moberly. Additionally, the band leadership has worked hard to ensure that the community members have access to skills training, particularly through the Aboriginal Skills and Employment Partnership program (ASEP) that allowed them to run a Bridges to Trades program in cooperation with the neighbouring Saulteau First Nations. “Part of that training program was [that] you identified a person that wants to be trained, you find the trainer, and then a company is willing to put them to work,” explained Willson. “And they actually go from training to the job, and go to work. A lot of times, you just train people and then they go out and find work. “Part of the commitment of ASEP,” he continued, “was

that the proponent actually had to hire them. So, when we looked at Tarpon and looked at the Bridges to Trades program, that was an immediate fit, because they need lots of skilled labourers. Welders, electricians – the whole gamut of the trades programs. Carpentry, even.” However, ASEP no longer exists as of March 31, 2012, as the federal government has cancelled the program and replaced it with the Aboriginal Skills and Employment Training Strategy and the Skills and Partnership Fund. Willson is troubled by that move. “[They] came out and said their priority for Aboriginals were education, training and employment,” he said of the Conservatives, recalling their comments after they won the most recent federal election. “One of the first things that happened was they cancelled the ASEP program, which was a training and employment program,” he added, suggesting that the decision was hypocritical. “We’re actively working right now with a bunch of the other industries, the mining and oil and gas guys, Encana and Shell [Canada], Peace River Coal. We’ve got kind of a committee working together on [finding] a new pot of money for this training program.” Tarpon is certainly among the companies interested in contributing to education and training in West Moberly, a commitment that Henry admits could help his business just as much as it could help their community. “Really,” said Henry, “I see our focus more long-term on the job side where it starts with keeping kids in school so they qualify for the apprenticeship programs. And getting them through the apprenticeship programs and providing work for them during the work periods of those apprenticeship programs so that they develop into tradesmen and into long-term employees. “We employ over 1000 apprentices and journeymen in our company already,” he continued. “And so this is one of our big focuses, is working with communities to keep… kids in school so that they have more options. “And we hope that one of the options they will choose – or that many of them will choose – is to apprentice in either the electrical or instrumentation career path out in the field. And then here in Calgary, in our structures division, we also offer career paths in welding and steelfitting, and in construction.” After being introduced to Henry and Tarpon, Willson quickly learned that the service company is a sponsor of Impact Society, as they have been since the organization’s inception, and subsequently arranged a meeting with Impact Society founder and CEO Jack Toth. The Chief of the West Moberly was impressed with their youth programs. “A lot of programs out there identify what’s wrong with people and then they focus on trying to fix what’s wrong,” said Willson. “With the HEROES program, they look at what’s good with the kids, and they expand on that, and they promote the good side. They don’t focus on the negative parts of the kids. If you focus on the positive, then it will hopefully outweigh the negative parts of their lives.” Willson was drawn to the program by its emphasis on promoting healthy choices for young people. “The HEROES program was perfect,” he said. Toth well remembers his first conversation with Willson. “How I was being introduced to him was as leader


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of an organization that could really help them with the educational foundation of their youth,” said Toth. “I actually said, ‘Chief, here’s what I want to ask you. When you’re sitting beside a young person, on a rock, looking at the lake, what do you want them to know?’ And you could just feel his heart for the kids. “He really wants them to have a capacity. Really wants them to have a future. Really wants them to be proud.” Toth insists that educational goals for First Nations shouldn’t simply be about graduation rates, but also about gaining a sense of pride that is strongly linked to their culture. “First Nations people have a real innate understanding… of what culture is, what community is, and what environment [is],” he said, adding that they should be proud of what the rest of the world can learn from that understanding. “What the hope and dream of it is,” he continued, “is that Tarpon and West Moberly, as they’re working together, there’s going to be a strengthening of the whole community through education resulting in young people, who, down the road, will be recognizing the strengths that they have as First Nations people. Because they’ve got some cultural strengths that myself, as a descendent of Europeans, don’t have.” Toth is hoping to focus on those strengths rather than just do another education program. “Because there’s been lots of those,” he said. “It’s how do you have a whole community come to life around their strengths and be able to utilize those strengths in a genuine partnership with a company like a Tarpon. So, you can utilize the resources of the land in environmentally sustainable ways that also build a culture and the community.” Toth can see a lot of positives in the West Moberly band, including its leadership, and he also recognizes the issues they must address to reach their full potential as a community. “They’re concerned about education,” said Toth. “That their young people do well in school and do well in life. I believe there is concern about losing culture. That they want to be able to keep culture and build pride in who they are as First Nations. And concern for youth because, as the resources are developed, there’s more money in the community, and how do you have your youth living with purpose instead of just living for the things that money can buy, which can really take you off track.” Additionally, Henry also noted concerns around First Nations youth being unable to attend high school in their communities. “Most First Nations kids going to high school,” he said, “they don’t go to high school in a local school. They’re bussed into the larger centres in the area. In the case of West Moberly, it’s Chetwynd.” The program that has been designed specifically for West Moberly includes a component for parents of young children with those concerns in mind. Obviously, the partnership isn’t all about nurturing the future workforce, but also about providing opportunities for those people already in the workforce. Those are plentiful, too. “Spectra has a number of facilities that they are going to be doing expansion on,” said Willson, discussing the possibilities, which could also include the Coastal GasLink pipelines that TransCanada will be building to supply Shell’s liquefied natural gas project, if that project moves forward. “Also,” Willson continued, “the one thing that we’ve brought to the table that they can participate [in], but never really have focused on, is mining. So, we’ve opened the door for them on that. And there is a good fit with mining. Lots of electrical and facility development going on with mining around here.” “They have some leverage with the resource developers,” Henry added. “And so they bring to the table… the relationships and leverage that they have with the resource developers,” he continued. “And we bring to the table the fact that

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Impact Society founder and CEO Jack Toth delivering the HEROES program to a junior high school class in Calgary. The organization, which has a long relationship with Tarpon Energy, has been developing a modified version of the HEROES program for the West Moberly First Nations as part of their involvement in the Tarpon-West Moberly joint venture. photO COURTESY OF IMPACT SOCIETY

we’re already a high performing, high quality business. And that we have a way of doing business that resonates with the resource developers. And so together we should be able to leverage what we both bring to the table and grow a very, very strong business in the area that lasts a long, long time.” The trick for West Moberly is developing that business while holding onto their traditions. Henry recalls a discussion around that very issue during a meeting with Chief and Council last year. “I mentioned that they were blessed with great geology under their lands,” said Henry. “And one of the councilors said to me, something along the lines of: ‘Actually, I’m not sure it’s not a curse.’ “When you talk about maintaining their culture and maintaining their community philosophy and their history,” he continued, “this is going to be very challenging for the West Moberly going forward, because of the geology under their lands. “Just the physical amount of oil and gas development that’s taking place in the Montney play and then other plays that are going to go on because of horizontal drilling and multistage fracking (hydraulic fracturing), all of the mining projects that are being proposed for their area. I believe Site C impacts their area. “They’re under a lot of challenges and a lot of threats to their way of life and to their culture because of the geology under their lands. And to the extent we can, we want to help them maintain their values, their culture, their communities, the vision they have for their community.” “There’s a balance that happens, right?” offered Willson, noting that much of the work in which Tarpon WestMo will likely be participating in the near future has already gone through consultation with the band and has received regulatory approval. Willson also indicated the value of gainful employment in the oil patch as far as allowing his community members the opportunity to continue practicing their traditions without worrying about their financial health. “Each individual has to find that balance on that,” he suggested. “I spend a lot of time working on developing relationships like this and looking for opportunities, but in my spare time I come home and I take my kids out fishing and stuff like that, and enjoy what the treaty promises.”

Toth appears confident that First Nations communities like First Moberly will be able to achieve that balance, largely thanks to a shift in their approach to benefiting from natural resources on their lands. “Education is important,” said Toth, “but it has to be lead to genuine partnerships. And what I’m finding on an increasing basis – and West Moberly is a prime example – the community is wanting to move beyond the thought of money exchanged for resources given. That’s not a partnership anymore. “I believe that’s being looked at as a pay-off.” It is all about that idea of a genuine partnership. “A genuine partnership,” said Toth, “where, yes, we need resource companies to develop the resources, but it will be able to be done in ways that build communities… and encourage culture, and at the same time are environmentally sustainable. And that’s something that First Nations people understand.” Toth suggested that the industry must also understand that First Nations have a very personal relationship with the environment. “A First Nations leader,” he said, “if you say to them: ‘Well, we’re putting this pipeline through, we’re going to have a contingency plan, we’ll have money set aside in case it leaks.’ Right away, in their spirit, they go: ‘You just said to me you don’t care.’ “Because they see themselves as the guardians of the spirit of the land,” Toth continued. “And everything in the land has a spirit. So, you just said to them, ‘This pipeline’s going to leak, but we’re going to care for it as good as we can.’ So, it’s being able to really understand with them as things are being developed. “They really want to know that this environment they really feel that they’re responsible for is cared for.” It sounds as though Tarpon and West Moberly are on the same page in that respect. “We’re really excited about this opportunity,” said Henry. “And I personally very much enjoy working with Chief Roland Willson, his council, his elders, and the Nation, as do all of our employees that are involved in the joint venture as well. “This is really exciting stuff.” “Just looking forward to a great relationship with Tarpon,” added Willson. “I think they’re an excellent company. They’ve got a good reputation. And I like their vision.”


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environment

every drop counts

Industry study explores the limits of reusing water for fracking james waterman Pipeline News North There are a lot of reasons why the oil and gas industry would want to reduce the use of freshwater resources in its hydraulic fracturing operations. Just ask Keith Minnich. The water sustainability advisor with Talisman Energy has been concerned with water management issues for almost thirty years, ever since he first involved himself with the idea of recycling and reusing produced water from oil wells in 1985. “I worked on projects in the Middle East and then heavy oil in Alberta,” said the engineer. “And got involved in the gas industry in 2010.” Most recently, he has been the coordinator of an initiative known as the Fracturing Fluid Flowback Reuse Project, the results of which have recently been through the peer review process and should soon be publicly accessible on the Petroleum Technology Alliance Canada (PTAC) website. M-I SWACO and Schlumberger, which work on drilling optimization, completed the project work, which was funded by the industry-sponsored Science and Community Environmental Knowledge Fund (SCEK) and Alberta Upstream Petroleum Research Fund (AUPRF). “M-I SWACO brought the water treatment expertise and Schlumberger brought the hydraulic fracturing expertise,” said Minnich. It all began with various concerns around reducing waste. “There’s a general recognition that, if water can be reused, that reduces the demand for freshwater and reduces disposal costs,” explained Minnich. Produced water is commonly injected into wells deep underground, but those disposal sites are rarely close to natural

Freshwater resources are plentiful in the natural gas producing regions of northern British Columbia, but disposal sites for produced fluids from hydraulic fracturing operations are hard to find. That was a key reason the industry undertook a Fracturing Fluid Flowback Reuse Study. james waterman photO

gas drilling pads in western Canada. “The trucking cost is significant,” said Minnich. “Now that doesn’t apply in every location,” he admitted. “For example, Texas has lots of deep wells and they’re inexpensive. Disposal costs aren’t the driver. In Texas, it would be more freshwater reduction. “In other parts of North America – and Canada in particular – there’s freshwater available, but disposal’s not. The driver becomes eliminating or reducing disposal costs and all the truck traffic associated with that disposal.” Although it may not seem to be a significant environmental issue along the lines of freshwater consumption, landowners living near oil and gas industry operations, according to Minnich, most commonly raise concerns about truck

traffic. “And I think that’s a very local concern [and] the water consumption is more of a regional concern,” he said. “I’m not sure to what extent the public at this point really understands the whole concept of the reuse,” Minnich added. “But anything that reduces truck traffic is viewed quite favourably. That’s the feedback that we have. And if it’s putting in a pipeline, if it’s eliminating disposal – I don’t think they necessarily care how we do it just as long as it’s done.” Reusing flowback water isn’t exactly a new idea, but determining the quality of recycled water suitable for hydraulic fracturing was a subject that was addressed thoroughly for the first time with this study. “That’s one of the main reasons this project was initiated,” said Minnich.

“The generally accepted belief several years ago was that water for hydraulic fracturing had to be close to freshwater quality,” he continued. “Over the past several years, the companies have done some experimentation with minimizing treatment and had good results. And the service providers and additive suppliers have developed additives that are tolerant to high salinity.” Additives known as friction reducers were particularly affected by salinity prior to those advances. Friction reducers are necessary for pumping water into the well at a velocity that creates adequate pressure to fracture the rock that holds the natural gas. Without friction reducers, it is very difficult to fracture that rock and produce any gas. “Their performance was inhibited by salinity,” Minnich said of the old additives. “That was one of the big breakthroughs, that saline tolerant friction reducers were developed.” The result of those early experiments with water treatment and technological advances such as saline tolerant additives was that the industry began to seriously ask questions about the water quality necessary for hydraulic fracturing. “And what we found was there was no consistent answer to that question,” said Minnich. “And it has a lot to do with how quickly the technology is developing. So, what we wanted to do was to provide a framework for answering the question: what water quality do I need? And once that was determined, then the companies can select the water treatment that’s appropriate. “In the past,” he continued, “things were addressed the other way around. It was water treatment providers saying, ‘Here’s what we can do.’ And [saying], ‘We can remove all the suspended solids. We can remove all the colour. We can continued pg 28 28392


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RIDING THE RAILS CN’s expansion plan for northern B.C. has industry expert talking about shipping oil by rail

Northern British Columbia’s moose could be seeing a lot more trains after CN builds new sidings on its Edmonton to Prince Rupert route. Although CN denies any intention of shipping oil with this new freight capacity, petroluem sector expert Bill Gwozd of Ziff Energy believes such a plan could be in the cards.

Columbia.” Gwozd suggested that oil companies shouldn’t be too concerned about the additional cost of rail transport, but should only really be concerned about moving the oil to market. “Oil prices can change five or ten dollars a barrel within a week,” he said. “If you can get your oil to certain places and park it, and then market it, you can probably play the game just as effectively, even though you have a little higher transportation cost.” Earning less money for a barrel of oil not transported by pipeline, said Gwozd, is better than not selling that barrel of oil at all. “I think this is where people that wonder why it’s taking so long or watching what’s happening are going to miss

the boat against these up and comer rail companies that are simply making things happen because there’s an opportunity,” he continued. “They’re aggressive. They want the business. They want to earn that money. And they’re doing it.” Also, there is the opportunity to ship additional volumes of oil if problems such as corrosion cause a pipeline to be shutdown for any length of time. “The rail system is sitting there already in place, the tank car systems are already built [and] they can pick up the slack,” said Gwozd. “Here’s a chance for pipeliners and governments to allow other competitors into the game because of the opportunity that arose,” he added. “I think it’s very astute of the rail guys to do that.”

It would be hard to fault anyone for trying to connect the dots that are Alberta’s oil sands and the Asian market for energy with a line of train cars, especially now that CN is announcing plans to add five extended sidings to its British Columbia North Line this year. It is one element of the rail company’s ongoing efforts to increase freight capacity through the corridor between Edmonton, Alberta and Prince Rupert, British Columbia that could double traffic along that route over 2011 levels by 2015. “CN’s sizable investments in rail infrastructure in northern B.C. and western Alberta are helping us accommodate growing import-export traffic moving between the Port of Prince Rupert, the B.C. interior and major centres across CN’s network in Canada and the United States,” said Keith Creel, executive vice president and chief operating officer at CN. “Our infrastructure investments are critical parts of our B.C. North Gateway strategy to handle increased volumes of containers, coal and other commodities to and from the Port of Prince Rupert,” he added. “This strategy aims to help CN tap new opportunities efficiently and productively while helping our customers to expand their businesses and compete more effectively in their end markets.” Although CN denied any intention of transporting oil sands bitumen along that line, the growing freight capacity, not to mention the similarity between that route and the proposed route of the beleaguered Enbridge Northern Gateway Pipeline, has Bill Gwozd, vice president of gas services with energy sector consulting firm Ziff Energy, excited about the possibilities.

“When you talk about expansions,” said Gwozd, “producers expand by drilling more wells, plant operators expand by building more plants, storage operators expand by adding compression. Railroads expand by adding incremental small spurs – loops – on their major railways lines.” That has been CN’s plan for the British Columbia North Line since they began expanding or constructing sidings in 2004. “You don’t have to twin the whole thing to expand it,” Gwozd explained. “All you got to do is add ten miles of new rail in the middle of nowhere so when a train’s coming at you, you can just pull over and park it. Add two or three of these places to pull over and park, you can send trains both directions almost every hour.” Gwozd admitted that rail transport comes at a greater cost, but it is a viable option when traditional transmission infrastructure does not exist. “They’re actually making something happen,” Gwozd said of CN, suggesting that isn’t the case with the pipeline companies and provincial governments. “These rail guys [are] out there on the limb, jumping the gun, just doing things properly to find a way to make something happen,” he continued. “There’s an opportunity there. And, you know, when you get an opportunity, many times you grind out cost. By practicing, figuring it out, doing it right, you can find ways to reduce your cost. “These rail guys are ahead of the game. They’re the A Team. And the pipeliners and the provincial governments are still sleeping at the switch, trying to figure out how to get their pipes built through the regulatory process while intervenors in Brazil complain about the trees in Brazil dying, and then try to link that back to oil matters in Alberta and British

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james waterman Pipeline News North


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environment UNINTENDED CONSEQUENCES Early results of wetland reforestation study inspires new research ideas for government and industry partners

Coloured ribbons indicate the depth at which white spruce saplings were planted for a wet site reforestation study being conducted at the Evergreen Centre for Resource Excellence and Innovation in Grande Prairie, Alberta. The trees were planted during the winter of 2010-2011. james waterman photO

james waterman Pipeline News North Tim Vinge often talks about unintended consequences. As a landscape ecologist with Alberta Environment and Sustainable Resource Development (ESRD), he is presently participating in a study that was bound to experience one or two. The study, which began on a patch of wetland at the Evergreen Centre for Resource Excellence and Innovation in Grande Prairie, Alberta in the winter of 2011, revolves around determining the viability of reforesting wet sites that have

been disturbed by oil and gas industry activity by planting black spruce saplings at those locations during the winter months. “It’s too hard to do that in the summertime when the muskeg’s not frozen,” Vinge said of the decision to try planting the trees in the winter. “A lot of our wetland – our bog and fen sites – are essentially inaccessible on the ground in the summer because they’re just too wet,” added Jeremy Reid, an environmental specialist with Nexen and project manager for the Land Stewardship Working Group of the Oil Sands Leadership Initiative (OSLI), the industry

group participating in the study. “Logistically, it’s extremely hard to access them,” he said. Energy sector companies such as Nexen have other reasons for conducting this research, not the least of which is simply that they want to help disturbed sites return to their natural state. “The regulation around reclamation has been to let it naturally regenerate,” said Reid. “By planting trees and by using these sorts of techniques like winter planting, we’re looking to accelerate the reclamation or re-vegetation of these areas,” he continued. “That will result in these clearings having less negative impact to biodiversity. Because, sometimes, if you leave a disturbance for a long period time, then you’ve affected habitat and you’ve affected biodiversity, and it may not be reversible. “We’re looking at rehabilitating these disturbances as quickly as possible to have as little negative impact to biodiversity.” The reforestation technique being tested involves a process known as mounding, whereby an excavator is used to dig a hole in the only partially frozen ground and flip that pile of soil over to create an elevated site in which to plant the trees. “So, you have a sandwich underneath it of organic matter,” added Vinge. “And the reason we’re doing all of that is because there’s a desire to do restoration work of linear features, which would include seismic lines, but also probably pipelines and maybe even well sites that are located on organic material,” he continued, drawing attention to the difference between mineral soils consisting of sand, silt and clay and organic soils such as muskeg. “And do that all in one pass in the wintertime. So, rather than mounding it in the winter and then flying a bunch of planters out there in the summer, we decided to see if we could do it in concert.” The saplings performed fairly well after their first dose of winter in 2011, despite one of Vinge’s unintended consequences. “Planting the trees in the wintertime, they survive just fine,” he said, noting that

the researchers achieved a nearly 100 per cent success rate. “And we found that planting them deeper gave us somewhat better results than planting them shallow,” he continued. Temperatures that fell below twenty degrees Celsius were an issue, particularly during an unanticipated cold snap late in the season. “We lost a few of the lateral buds,” said Vinge. “But the bigger buds seemed to survive quite well,” he added. “So, if the buds were too small, they got frozen. And if they were bigger, they didn’t. But we didn’t baby them.” Vinge remarked that trees usually survive the winter thanks to a covering of snow. “Potentially, if we covered them with snow as soon as we planted them, the snow would have moderated the temperature somewhat,” he suggested. “We didn’t get a lot of snow back then.” Vinge explained that the surviving saplings lived normally through the summer and fall, but experienced another of his unintended consequences this past winter, when temperatures in Grande Prairie climbed as high as ten degrees Celsius around late January and early February. “I think black spruce is probably the worst for this, but it’s called red belt,” said Vinge, describing that unintended consequence. “Red belting or desiccation,” he continued. “And what happens is the trees get exposed to some hot weather. And because they’re grown in a nursery, the needles… don’t have a lot of cuticle waxes on them yet… They’re still a little pampered from the nursery. “And so along comes this nice weather … and the trees think it’s time to start growing. So, they open up their stomata and they release their moisture, because they’re going to start growing.” The problem is that the roots are still stuck in the frozen ground, unable to draw the water from the soil necessary to replace the moisture that has been released from the needles. “So, what happens is the needles turn red and they die,” said Vinge. “This happens to trees everywhere,”

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The trees with red needles suffered a phenomenon known as red belting during the winter of 2011-2012. Red belting occurs when warm winter weather causes the tree to try to grow even though its roots are still frozen in the cold ground. The needles release moisture in prepartion for a growth spurt, but the roots are unable to replace that moisture with water from the soil. Consequently, the needles die and turn red. The research team is conducting further experiments to address this issue. james waterman photOS

he explained. “People were saying in Grande Prairie that even their larger trees got red belted because they got fooled into thinking that it’s time to grow. So, as the climate gets a little hotter or we get less snow, this becomes a real problem with first year plantations.” The saplings on the north side of the experimental plot suffered the most from the red belting because they received direct sunlight. “But the ones on the south side, where there’s a little more shade and snow, and it took the snow a little longer to melt, were okay,” said Vinge. “Perfectly okay. So, the winter planting didn’t have anything to do with the red belting. This phenomenon does occur [regardless]. “But it does point out a serious problem,” he continued. “Because it doesn’t matter where you put the trees, in a cut block or in a pipeline or in an oil site, if you don’t have any snow, then it becomes a serious problem, especially if you elevate them on a mound. Now they’re sticking up there, right?” Judging by the response from both Vinge and Reid, this setback has only inspired further experimentation. “Something we’d like to try out is different tree stocks,” said Reid. “Different sizes of trees. And maybe change the way they’re grown initially in the greenhouse. And investigate changes we can make at that stage of the process to essentially get a hardier tree in the bush to plant. “We need as hardy a tree as possible to plant in the winter,” he added, suggesting that trees typically cultivated in a greenhouse aren’t actually well suited to winter planting because it isn’t a technique that has been used in the past. “We’d like to follow up now with these trees,” said Vinge. “The ones that didn’t get hit – red belted – are growing just fine. They’re growing great. “We want to do what’s called a stock trial,” he continued, echoing Reid. “So, we want to take some different trees grown in a nursery and expose them to these conditions artificially and see how they tough [it] out. So, I’m looking for

some partners that would be interested in looking at how to grow a quite a bit more drought tolerant seedling.” Vinge also plans to experiment with different ways of building the mounds. “Whether we would have planted the trees last summer or put them in this spring, they have the potential to get red belted, unless they get a good snow cover on them,” he said. “That’s really important. “So, what do we learn from that? We decided what we needed to do was to make the mounds somewhat lower so they’re not so high. We decided that we maybe need to make little bit of a divot in one side of the mound so that we can put our trees a little bit lower, so they’ve got the mound protecting them. Kind of like a little bit of natural shade.” There is also potential for using different species of trees, although one possible candidate, white spruce, does tend to suffer from red belting as readily as black spruce. “Pine, not so bad,” said Vinge. “Maybe what we need to do is we need to hedge our bets and plant maybe some tamarack, which loses its needles, and black spruce,” he added. Tamarack tend to occur in fens, where the water is moving, while black spruce tend to occur in bogs, where the water is stagnant. Both types of wetlands are common in areas of oil and gas industry activity in the province. The possible solutions to the unintended consequences have seemingly given Vinge confidence in the inevitable success of the project. “We can look at this and go, ‘This is a failure.’ It’s not a failure,” he said. “We’ve learned some really important things about snow and trees and temperature.” Reid appears confident, too. “We’re very happy with how the trial went in Grande Prairie,” he said. “And we operationalized the technique this past winter. We planted about between 30 and 40 thousand trees with that technique.” Those trees were planted just southwest of Fort McMurray. “We have a monitoring program that we’re initiating this summer.”

ABOVE: Doug Kulba of Alberta Environment and Sustainable Resource Development surveys the scene of recently planted saplings in June, 2011. BELOW: One of those saplings during its first spring. The trees were planted during the winter of 2011-2012 to determine the viability of conducting reforestation projects during that season. james waterman photOS


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special feature

TWO YEARS LATER The New West Partnership celebrates its second anniversary james waterman Pipeline News North It was two years ago that Saskatchewan, Alberta and British Columbia put together an agreement to address issues surrounding business regulations and obstacles to interprovincial trade. The New West Partnership – put into effect on July 1, 2010 – was said to be an important part of building the increasingly integrated natural resource industries of the three western provinces, their sights set on improving labour mobility from province to province in the face of a skilled labour shortage and exporting their products to Asia and beyond to end their ages old dependence on the American market. “Signing the New West Partnership really cemented the strong relationship between our three provinces and highlighted our region’s growth-friendly policies,” said Saskatchewan Premier Brad Wall, celebrating the two year anniversary of its implementation. “I’m proud of our accomplishments and excited about the potential we’re unlocking in the New West,” he added. “The New West Partnership is the gold standard across Canada in removing inter-provincial trade barriers,” said B.C. Premier Christy Clark. “It proves that the best way to create jobs and lasting prosperity is by working together to make our economies more competitive by reducing red-tape, streamlining regulation and creating a common business market. “Not only has the New West Partnership helped to set the three provinces as economic leaders in Canada, but we are also better positioned to access important Asia-Pacific markets.” “More than ever, Alberta’s economy is tied to events outside our borders,” added Alberta Premier Alison Redford. “Promoting ourselves internationally and continually improving our competitiveness are the keys to growing Alberta’s prosperity. Through the New West Partnership, we’re

building on our regional strength as an little in the way of economic rewards. economic engine of Canada.” Her comments were made a few days The Canadian Association of Petroleum after a U.S. National Transportation Producers (CAPP) has been encouraged Safety Board (NTSB) report on the 2010 by the New West Partnership. Enbridge pipeline rupture that poured oil “An important and timely initiative that into Michigan’s Kalamazoo River characwill position both industry and governterized the company as Keystone Kops. ments to ensure competitiveness and the “To cast doubt on the operational casocial license necessary to develop… pability of a company that’s considered to hydrocarbon resources,” said CAPP be best in the world does create additionspokesperson Travis Davies, emphasizal challenges for us,” said Enbridge CEO ing that the competitiveness and social Pat Daniel in response to the report. license to operate pieces were the most “We just have to ensure that we explain important elements of the deal from their fully to [British Columbia] residents that perspective. that was not representative of the culture Davies added that the flow of labour and outline... the changes that we have and the exchange of regulatory ideas and made,” he added. technological advances are important Following the NTSB report, Enbridge parts of achieving those goals. He noted announced a $500 million plan to upthat harmonizing industry regulations and grade Northern Gateway that includes sharing best practices are also critical. thicker steel for the over 100 river cross“There is significant opportunity to ings, many of which are important salmon strengthen the region’s energy sector, habitat, and 50 new valves that can be which will result in operated remotely new investments, to stop the flow of job stimulaoil in an emertion and wealth “I still see individual gency. creation,” said The B.C. govDavies. ernment finally offiefdoms.” “Any actions ficially addressed taken to strengththe matter on July – Bill Gwozd, en and grow the 23 when they energy sector outlined the five Ziff Energy Group must promote requirements that responsible develmust be met if opment and we heavy oil pipelines are committed to that,” he added. along the lines of Northern Gateway are However, certain oil and gas industry going to be operating in the province. experts aren’t quite so impressed. “Our government is committed to eco“I still see individual fiefdoms,” said Bill nomic development that is balanced with Gwozd, vice president of gas services environmental protection,” said Clark. with energy sector consultants Ziff Energy “In light of the ongoing environmental Group. review by the Joint Review Panel (JRP) Gwozd points to the Enbridge Northern on the Enbridge pipeline project proposal, Gateway project debate as evidence. our government has identified and develClark had refused to take any stance oped minimum requirements that must on the controversial pipeline that would be met before we will consider support move oil sands bitumen across the B.C. for any heavy oil pipeline projects in our to an export hub in Kitimat until her statprovince. We need to combine environing that the project is fraught with envimental safety with our fair share of fiscal ronmental risk for her province, but offers and economic benefits.”

The five requirements were listed in a new heavy oil policy paper appropriately titled Requirements for British Columbia to Consider Support for Heavy Oil Pipelines. The requirements include: the successful completion of the environment review being conducted by the JRP; world class marine oil spill response, prevention and recovery systems; similar oil spill prevention, response and recovery procedures; and opportunities for First Nations to benefit from the project in addition to proper respect for their Aboriginal and treaty rights. The final requirement is that the economic benefits coming to B.C. match the level of risk to the environment. Gwozd views Redfords position much differently. “She’s probably kind of voting that we want to move oil out that way,” he said. “We don’t want to have any noise from any premier out in British Columbia. So, this seems like they have their own fiefdoms. Rather than get their stories straight, they sort of … just shoot from their hips, rather than have a collective speech. “And so that’s not positive in the sense that you’re trying to do work together. They should have the same story. They should be both singing from the same choir sheet. And they seem to be singing their own tunes. Some in tune. Some out of tune. “And the young fellow over in Saskatchewan,” he continued, referring to Wall, “he’s more interested in the low price of natural gas because it’s going to help spur some of the industrial facilities over there. So, his choir sheet says keep the price low for a long time, and don’t export anything, because exports might push the prices up. So, I don’t see any coordination.” Richard Dixon, executive director of the Centre for Applied Business Research in Energy and the Environment (CABREE) at the University of Alberta’s Alberta School of Business, points to B.C.’s position in the New West Partnership as


JULY 27 2012

a reason for the inconsistent approach to major projects such as Northern Gateway. “B.C. is in the corridor business,” he explained. “And they’ve been in the corridor business – among other businesses – for the last 120 years. That’s the whole reason that they got into Confederation.” Dixon suggested that B.C. has to be careful about any decision to step out of the corridor business, even if it is just in terms of Northern Gateway, because piping oil to Texas is probably the better option regardless. “Then what does that say about that partnership?” he quipped. The problem, according to Dixon, is that B.C. is unable of becoming a full, equal partner in the New West Partnership because Saskatchewan and Alberta are almost entirely natural resource economies, at least in terms of land area devoted to that sector, while a relatively small portion of B.C. is devoted to natural resource operations. The rest of the province is simply the transportation route. CAPP refutes that theory. “B.C. is a full partner… and a significant natural resource player,” said Davies. “As with other jurisdictions,” he continued, “there remains a challenge around the disconnect in understanding between how energy is produced and how it is consumed. [The New West Partnership] has a vital role to play in improving energy literacy, but that is not a short-term project. It will take time and focus.” Dixon also suggests that a lack of consistency over the course of the two years of the partnership has hurt its chances of

B.C. Premier Christy Clark during a visit to Spectra Energy’s new Dawson Processing Plant. Clark has described the New West Partnership as the “gold standard” for removing trade barriers between provinces, but some energy industry experts don’t agree with her glowing review of the pact. james waterman photO

becoming a fruitful initiative. After all, during that time, B.C. has seen two premiers and two energy ministers, while Alberta has had two premiers and three energy ministers. “How are you going to get anything on the go?” he said. “Which is the nature of the agreement.” Dixon isn’t encouraged by what he has seen in terms of encouraging innovation, which is supposed to be an element of this collaborative approach. “I think there’s a real challenge to rethinking innovation,” he said. “I think we haven’t figured that one out as well for the kind of society we live in nowadays.”

Gwozd also pointed to the amount of change in the provincial governments as causes for what he perceives as a lack of success. “Turnover’s a big thing,” he said. “But I also think that British Columbia natural gas is going to grow quite a bit,” Gwozd continued. “And I think Alberta’s natural gas is going to shrink quite a bit. And I really thought that partnership was to help transfer staff from the Alberta department of energy, who have less to do, over to the department of energy in Victoria, where they have lots to do. “And I get into these funny squabbles with [human resources] directors in Brit-

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ish Columbia, saying, ‘Well, you know, Bill, we’ve been monitoring our wells and we’ve been getting our permits out in X number of days and our plans out in X number of days.’ They’ve missed the boat. “I’m not talking about things like that. I’m talking about blunders by the B.C. government where they slashed royalties in all areas of British Columbia. Some of the areas where the full cycle cost is double digit, why slash the royalty at all? Slashing it from $2.00 to $0.50 is only going to make the full cycle cost come down from a higher double digit to a lower double digit. They’re still not going to add any additional boom to spend more money and drill more. So, things like that, that’s a direct indicator of simply lack of resources, lack of staff doing proper analyses for royalty strategies.” Davies doesn’t believe that a transfer of government staff was ever part of the plan. “Sharing regulatory expertise and frameworks certainly was,” he said. Davies doesn’t agree with Gwozd’s assessment of the changes to oil and gas royalties either. “It has been effective in a time of very low gas prices,” he said, citing the growth in land sales as proof. Ultimately, Dixon still has more questions than answers. “What are the announcements? And what’s out there that’s happening?” he said. “It would be nice to see them just bringing down barriers between… the three provinces,” he added. “So, whether they’ve really put their heart into this one or not, I’m not sure.”

Senate committee wants western Canadian oil to displace imports Daily Oil Bulletin A Canadian Senate committee supports construction of increased pipeline capacity to ship more western Canadian oil to Eastern Canada to displace imports. In a report titled Now or Never, the Senate committee on energy, the environment and natural resources listed 13 “priorities for action” needed to secure Canada’s energy future. Canada is a major net exporter of oil, but Eastern Canada imports substantial volumes from other countries because it can’t get enough western Canadian crude due to inadequate economic transportation capacity. “Some have argued that building and enhancing East-West pipeline infrastructure would increase domestic energy security, but others question whether it makes economic sense,” the committee notes. But its report states: “We believe that now is the time for such infrastructure projects to be undertaken in the spirit of nation building.” Responding to criticism of the energy sector’s boom-and-bust cycles, and the claim that Canada’s strong petro-dollar hurts the non-energy manufacturing sector, the report says: “The traditional method of dividing the economy into sec-

tors is losing its relevance as the natural resource sector becomes increasingly complex, knowledge intensive and service oriented.” “Moreover, energy projects -- whether in hydrocarbon extraction, hydro-power, nuclear research or clean tech development -- generate supply-chain and tax-revenue effects which ripple positively throughout the entire national economy,” Conspicuously absent from the committee’s list of 13 energy priorities, however, is the word oilsands. The list of priorities includes natural gas, hydroelectric power, renewable energy and nuclear power. But the 13 items -- but not Canada’s biggest single source of oil production and one of the world’s largest oil deposits -- the Alberta oilsands. A voice message for the committee’s media relations contact to ask about the omission wasn’t immediately returned. The committee is chaired by Senator David Angus, a Quebec Conservative. As its first priority, the committee says Canada must strive for “collaborative energy leadership. Federal, provincial, territorial and municipal governments, industry, environmental groups and aboriginal leaders need to come together to chart a course for responsible development and marketing of our energy resources.”

The second priority for action is to “advance nation-building through energy infrastructure. Modernize and expand electricity systems and oil and gas pipelines to connect regions and diversify export markets to further strengthen the national economy.” The third listed priority, which describes natural gas as “a game-changing fuel,” says expanded use of the “reliable, versatile and efficient” fuel should be encouraged. The report acknowledges gas has become “extremely abundant which has made it very affordable.” It says there is increasing demand for gas as a transportation fuel in urban fleets, in heavyduty trucks and even in rail and marine transportation. The trucking industry is beginning to transition to liquid natural gas (LNG)powered vehicles, but this is tempered by high costs, it says. The report acknowledges that trucking companies are reluctant to invest in gaspowered trucks until there are enough fuelling stationss and gas companies are reluctant to build the refuelling network until there is adequate demand. “Infrastructure investment could be minimized and benefit maximized by focusing on the three provincial transportation corridors of Edmonton/Calgary/

Vancouver, Windsor/Quebec and the Atlantic provinces, which collectively account for Canada’s core truck transportation routes,” the report says. Among the 13 priorities the report lists are: encouraging energy efficiency and conservation; urging governments to ensure enough workers are recruited and trained for the energy sector; strengthening energy research and development; and continuing to improve the environmental performance of the non-renewable energy sector. As its No. 8 priority, the committee lists “hydropower superpower.” In a press release announcing the report’s release, it says hydroelectric power “is a key priority for the country and every opportunity for its responsible expansion must be undertaken.” It says Canada “must” continue to “foster” its “substantial emerging renewable energy resources” -- including “massive supplies of water, wind, solar, geothermal, biomass and marine energy” -- due to its vast and diverse geography. On the regulatory reform front, the committee backs the ongoing commitment of the federal, provincial and territorial governments to streamline environment reviews while ensuring rigorous environmental oversight, especially for major projects.


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profiles POWERING THE PATCH Ensol’s methanol fuel cells bring electricity to remote work sites james waterman Pipeline News North Methanol fuel cells aren’t exactly new, but their use in the oil patch of western Canada only dates back to a few years ago. Their presence in the patch today is largely due to a company that is just slightly older than their use in that industry. That company is Ensol Systems. “Ensol’s been around for about four years,” account manager Jas Basi said from his Vancouver office. “We build metering skids, we build chemical injection skids, we build communication towers,” he added, describing the business that also includes a field services team that helps companies with electrical and instrumentation work from the heart of British Columbia’s energy sector in Fort St. John. Essentially, they supply the very facilities their methanol fuel cells are built to power. “They’re fairly simple,” Basi said of the technology. Ensol’s methanol fuel cells, which emit less carbon dioxide “The methanol’s injected into the fuel cell using a than a breathing person, have been tested in the harsh pump,” he continued. “There’s a chemical reaction. And winter conditions of northeast British Columbia and Alaska. the chemical reaction creates electricity.” They are gaining popularity in the oil and gas industry for powering equipment such as metres and communication The only byproducts of that chemical reaction are towers. water and carbon dioxide (CO2). photOs courtesy of ensol systems “But the CO2 [output is] less than what a human being breathes,” Basi added. option: solar energy. The green element of the technology is just as “The advantage of solar is great, but this is a hybrid,” much a part of its growing popularity as its ability Basi explained. to provide power in remote locations and adverse “It’s going to enhance your solar systems. … The weather conditions. winter months in northern B.C., you may not get enough “The fuel cells were developed solar to operate your communiin Germany several years ago,” cation towers or your computersaid Basi. aided dispatch or your compres“It’s going to enhance sors, because there’s just not “And there’s about 25,000 of them employed around the world enough solar. So, this is your in numerous applications from your solar systems.” back-up system to that solar.” the oil and gas industry to within Ensol has tested the technolthe law enforcement industry ogy in the cold winter weather – Jas Basi, for security cameras, for surveilof northeast British Columbia lance cameras. The military’s and Alaska over the past two Ensol Systems been using them to power up years. their equipment. “They meet our criteria,” said “Anywhere that there’s remote Basi. power needed, these fuel cells have been used.” “They haven’t had the failures that they used to have It can also work in concert with another green power with strictly solar.”

The cost is also less than using fuels such as propane or diesel for these sorts of applications, but the technology still isn’t used widely in Canada. “I think it’s like any item that’s new,” said Basi. “People have to feel it, taste it, try it. “And that’s what we’ve been successfully doing over the last winter, is having big companies … use it in their most adverse conditions to ensure that it is a product that is worthy of using out there in a regular basis.”

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industry news

HEAD OF THE CLASS Manitoba ranks best in Canada in Fraser Institute study

james waterman Pipeline News North Even though Alberta has its oil sands and British Columbia is moving quickly to turn its natural gas resources into a lucrative liquefied natural gas (LNG) industry, Manitoba is the best jurisdiction in Canada for oil and gas industry investment. That is one of the conclusions of the Fraser Institute’s Global Petroleum Survey 2012 that assesses and ranks provinces, states and countries based on barriers to investment in oil and gas exploration and production. Manitoba was the only Canadian jurisdiction to make the top ten, ranking fifth out of 147 jurisdictions, right behind Oklahoma, Mississippi, Texas and North Dakota, respectively. Saskatchewan (13) is the second best Canadian jurisdiction. Alberta is 21 and B.C. is 39. Interestingly, Nova Scotia is 35.

“The Fraser report is a snapshot in time,” said Travis Davies, spokesperson for the Canadian Association of Petroleum Producers (CAPP). “You need to consider that things change over time,” he added, suggesting, for example, that the B.C. government’s commitment to building an LNG industry in that province hasn’t been considered in the study. B.C. has suffered recently in terms of attracting investment because of the North American shale gas glut and the correspondingly low North American natural gas price. That could easily change if the LNG industry takes off as both industry and government hope. “Overall, I think you go back to the basis that the oil and gas industry looks for a competitive environment to invest money and they also look at resources,” said Davies. “Manitoba is on… a considerably dif-

ferent level than the rest of the western provinces in terms of resource. But they did have a fairly major [light oil] discovery in 2006, which did attract the attention of the oil and gas sector. “In terms of the resource base,” he continued, “they’re playing in a little different space. So, they have had a significant eye to fiscal and regulatory competitiveness.” Davies noted that Manitoba went from approximately 10,000 barrels per day of light oil production in 2003 to about 40,000 barrels per day in 2011. That still doesn’t compare to Alberta. “The oil sands alone are 1.7 million [barrels of oil] a day,” said Davies. “So, it’s a fairly different environment. But, again, you go back to the fact, if there is a resource base and there’s a competitive and stable fiscal and regulatory regime, you’ll attract investment.” Davies’ assessment corresponds well to the results of the Fraser Institute study. When it comes to fiscal frameworks, Saskatchewan is the most attractive Canadian province, just ahead of Manitoba. This puts them in the company of Oklahoma and Texas, second and third on the list. Manitoba is also among the jurisdictions that suffer least from uncertainty about environmental regulations. Davies said that the oil and gas industry in Manitoba is fairly young, but it still ranks far ahead of other provinces with young industries, Quebec and New Brunswick. They rank 101 and 102 out of 147,

respectively. New Brunswick fell to that position from 59 of 135 in 2011. During the first half of that year, Apache was exploring developing shale gas with Corridor Resources of Halifax, Nova Scotia. They also facilitated a visit to B.C. by a government delegation from New Brunswick so that they could see shale gas development firsthand and discuss regulations with the BC Oil and Gas Commission (OGC). However, two test wells yielded disappointing results and Apache abandoned those plans. Those events likely play a role in creating the disparity between last year and this year. “Quebec and New Brunswick,” said Davies, “neither have set their regulations, either fiscal or regulatory, in stone yet. So, people are holding off on those decisions.” The resource base in those provinces is also quite different from that of Manitoba. “Manitoba’s all oil,” Davies explained. “They don’t have any gas.” Quebec and New Brunswick only have natural gas. “So, very different resource base,” Davies continued, “especially with natural gas priced the way it is at the moment. That’s the primary difference. “Manitoba understands they are not operating at the same resource base level as the other western provinces,” he reiterated. “So, they need to attract investment. That means they go out aggressively and have a regime that looks very appealing to investors.”

CNOOC’s Nexen bid to be well scrutinized Daily Oil Bulletin Canada will study Chinese oil company CNOOC Ltd.’s bid for Nexen Inc. carefully and no one should make assumptions about whether the proposed takeover will be approved, Prime Minister Stephen Harper said on July 24. CNOOC announced on July 23 it was launching a $15.1 billion friendly bid for Canadian oil company Nexen. The government must now decide under the terms of the Investment Canada Act whether the takeover would be of net benefit to Canada. “I’m not going to make comments on this policy either generally or on this specific transaction that would in any way prejudice the government’s position,” Harper said. “Nobody should prejudge the government’s position. This investment will be thoroughly scrutinized before it is either accepted or rejected,” he added. Ottawa is actively seeking Chinese investment to help develop the oilsands but some domestic critics are already unhappy that a state-owned company from China might be allowed to buy a Canadian firm. The Investment Canada Act places tight restrictions on what officials can say about a takeover bid that is being considered. In 2010, Harper and other officials commented publicly about a hostile takeover bid by Australia’s BHP Billiton bid for Canadian fertilizer producer Potash Corp., prompting critics to say the government had gone too far. Ottawa eventually rejected the takeover.


JULY 27 2012

environment

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WHERE THE BUFFALO ROAM Bison raising interesing conservation questions in gas country james waterman Pipeline News North The area around Muncho Lake Provincial Park and Liard River Corridor Provincial Park west of Fort Nelson is well known to residents of northeast British Columbia who enjoy traveling up and down the Alaska Highway to their favourite campsites. It is also well known to a small herd of wood bison that are as commonly seen by those travelers as the crows that dart back and forth across the road. “That’s actually called the Nordquist Herd,” explained Sonja Leverkus. Leverkus is a doctoral candidate at Oklahoma State University specializing in pyric herbivory and landscape ecology. She is also a professional agrologist and registered professional biologist who has previously worked for the BC Forest Service in Fort Nelson. Wood bison are one of her special interests. “In 2009, I was involved in a project with the Ministry of Environment whereby we collared five cows in the Nordquist herd with GPS collars,” said Leverkus, discussing her interest in the threatened species. “And at the same time, there was also five collars put on the

herd at Fontas. So, up the Fontas Road.” That herd is known as the Etthithun Lake herd. “Soon thereafter,” she continued, “I started doing graduate research while working for the Forest Service. And incorporated the bison into my thesis. By that I mean I have been analyzing their movements across the landscape through using the GPS collars.” The collars register a location every hour. Eventually, the collared animals were tranquilized again so that the collars could be removed, and Leverkus analyzed the data to determine the movements of the Nordquist Herd, which numbers about 120 to 150 individuals. “The herd at Nordquist was introduced in 1995 by the Ministry of Environment,” said Leverkus. “In the early 1900’s, all wood bison in British Columbia were killed out. And so there were no more wood bison in B.C. until 1995 when the Ministry of Environment released – reintroduced – this herd… up at Nordquist Lake. “There is a Canadian wood bison recovery strategy,” she added, explaining that that plan involves reintroducing disease-free and free-roaming animals to segments of their historical range throughout the country. The Nordquist Herd was reintroduced with 49 head in

1995. “It is really an important herd,” said Leverkus, “because it’s one of only two herds in B.C. and it contributes to that wood bison recovery strategy.” The successful reintroduction of wood bison in that area faces a significant challenge. “Around the same time that the bison got released, the right-of-way of the Alaska Highway got seeded with domestic seeds,” Leverkus explained. “The theory was supposed to be that the bison would stay out at Nordquist Lake and they would spread and roam across this giant landscape like they used to do. “But what we are able to show now from the GPS collars is that the bison stay on the right-of-way of the Alaska Highway pretty much 72 per cent of their entire life. And so that’s a problem because the right-of-way in some places is only 100 metres wide. And it’s nice for tourists to see the wood bison, but it means that a lot of bison die every year from motor vehicle accidents. “We have anywhere from 10 to 15 head in some years get killed on the highway because people hit them,” she added. That is especially problematic for a species that is continued pg 26

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B.C. puts LNG power commitment into regulation Daily Oil Bulletin British Columbia’s Clean Energy Act has been updated to enable the use of natural gas to power liquefied natural gas plants, announced the Minister of Energy and Mines Rich Coleman. Effective immediately, LNG export facilities, and the electricity generation used to power them, are excluded from the Clean Energy Act’s 93 per cent clean and renewable energy requirement. Premier Christy Clark announced the government’s intention to clarify its clean energy policy to include natural gas last month during a meeting with the Business Council of British Columbia. The province said this change will ensure the LNG industry can access a reliable, timely and cost-competitive mix of gas-fired and renewable power generation to meet its large electrical demand. The 93 per cent clean energy target will continue to apply to non-LNG load and will ensure the majority of B.C.’s power requirements will be met with renewable resources. B.C. will have world-class air emissions standards for gas-fired power generation to support LNG plants, the province said. This will apply to both high-efficiency combined cycle gas generation and simple single cycle peaker plants, where they may be required, by developing policy to guide both BC Hydro procurement and environmental reviews. All infrastructure built will be subject to B.C.’s environmental assessment process. As part of the B.C. Jobs Plan, British Columbia has a goal of three LNG facilities in operation by 2020. The construction of three large LNG and connecting pipelines could result in up to 1,400 ongoing jobs and $600 billion in gross domestic product over a 30-year time frame.

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as good as new

Pipeline industry confident about reliability of Alberta’s oil transportation network james waterman Pipeline News North Alberta Energy has responded to public calls for a widespread safety review of Alberta’s pipeline infrastructure with an announcement on Friday, July 20 that they are instructing the Energy Services Conservation Board (ERCB) to conduct an audit of the network alongside an independent third party. This follows three pipeline spills that occurred in the province in less than a month this spring. “They’re asking for third party expertise and an additional set of eyes on three key aspects of pipeline safety,” said Brenda Kenny, president and CEO of the Canadian Energy Pipeline Association (CEPA). The review will examine pipeline integrity management, waterway crossings and response to incidents. “This is over and above the ongoing reviews of any particular incidents,” added Kenny. “[Energy Minister Ken Hughes] had indicated that he’s looking for some early stage results fairly quickly,” she continued. “And I think that will give a good indication on what [comes] next. “We’re certainly very pleased to see this go ahead because, if there’s anything at all that we can learn further to our own programs, that’s great. And if it helps the public be even more confident in pipeline safety, that’s great too.” However, this may not satisfy the expectations of landowner and environmental groups calling for changes to the process for ensuring the safe operation of pipelines in Alberta, including the Alberta Surface Rights Group, which ran an ad in several newspapers on Monday, June 25 demanding an independent third party review of pipeline safety. “We’re asking for an independent 34550

review – away from government, away from the [ERCB], away from the National Energy Board (NEB),” said Don Bester of the Alberta Surface Rights Group at that time. His group was joined by 16 other organizations in signing the request, including the Alberta Union of Provincial Employees. “We used to have a lot more hands-on monitoring of those pipelines,” said union president Guy Smith. The Pembina Institute was one of the 54 groups that signed a letter that was released to Alberta Premier Alison Redford in early July also asking for a greater level of scrutiny of the pipeline industry. “One would be around the regulatory oversight,” said Nathan Lemphers, a senior policy analyst with Pembina whose area of interest is the oil sands, outlining the concerns of the signatories to that letter. The age of the pipelines is often noted as a concern, but, as ERCB spokesperson Cara Tobin explained, just over half of the pipelines in Alberta were built in the last twelve years. “In 2011, Alberta experienced 1.5 failures per 1000 kilometres of pipeline regulated by the ERCB,” said Tobin. That amounts to 641 incidents. “This is compared to a failure rate in 2008 of 2.1 per 1000 kilometres,” she added. That amounts to 885 incidents. “As you can see,” Tobin concluded, “the rate of failures has significantly decreased over time.” “The one thing people have to remember is whether a pipeline was built two days ago or twenty years ago, it has to meet the standards of today,” said Alberta Energy spokesperson Mike Deising. “And those standards are CSA (Cana-

dian Standards Association) standards. They’re a national standard. And in Alberta, through the Energy Resources Conservation Board, we actually add additional standards on top of that. “The analogy that we kind of compare it to is a house,” he continued. “Sure, there’s a house that may be 50 years old, but over time you have to do upgrades to that house to keep it current. And instead of it being voluntary, it’s mandatory. “So, there is infrastructure that has been in the ground for several years in Alberta, but that infrastructure still has to meet today’s standards. And the ERCB enforces those standards.” CEPA has confidence in the safety performance of its member companies, although she admits that there is room for improvement. “The pipeline safety record in Canada is extremely good,” said Kenny. “And among the very best in the world. But until we get to zero incidents, we never stop working on trying to make it even better.” The first line of defense for preventing incidents are the integrity management programs of the pipeline operators. “So, you look at all of the things that could happen to a pipeline asset and make sure that you can inspect it thoroughly,” Kenny explained. “Of course, it starts with good design, but once it’s operating, keep an eye on it, do internal inspections with sophisticated computers and special sensors that can tell if the thickness of the steel is not what it should be or if it’s moved a little bit or maybe it’s bent a little bit. Those sort of things we can detect. “It’s natural to think that, automatically, if a pipeline is older, than it must be prone to problems,” she continued. “What we find is that, if it’s properly maintained, it’s just as safe or safer than it was when it

was new, because we’re able to retrofit it over time and keep monitoring for safety.” Although pipeline construction hasn’t changed greatly over the years, advances have taken place in terms of steel strength and protective external coatings that prevent problems such as corrosion. “We know that there’s some types of steel that are better than others and some types of coating that are better than others,” said Kenny. “And so we keep an eye on where those are located and match the maintenance and the inspection to that.” The price tag associated with integrity management plans, selective replacements of pipeline sections and monitoring programs suggests that the industry is serious about safety. “We spend over $600 million every year,” said Kenny. It is still possible that provincial government will call for a review with a scope that goes beyond the one announced on July 20. That depends on the outcome of the ERCB investigations into the three recent oil spills, as Redford has directed Hughes and Minister of Environment and Sustainable Resource Development (ESRD) Diana McQueen to review those investigations and determine the appropriate next steps. “We’re going to see what these three investigations come up with and determine what needs to be done,” said Deising. Bester has concerns with how such investigations are performed. “We looked at the average length of time it takes to do a pipeline or a major oil spill [investigation],” he said. “For them to actually finalize an investigation, the average was two years.” continued pg 28


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environment Bison and caribou have conflicting habitat needs cont’d from pg 23 threatened and a population that has only managed to triple its size from a modest 49 individuals in 17 years. “I would say that the part of the reintroduction that was not successful is the lack of habitat enhancement,” said Leverkus, counting the population growth that has occurred and the increased awareness of the animal as successes. “It is completely, totally unsuccessful because of the lack of government support for the habitat enhancement,” she reiterated. “Actually, that means the appropriate ecological restoration of the wood bison has not happened.” Leverkus established a partnership with the Fort Nelson First Nation during the past year to launch a project to “document the historical and traditional use of fire by the Dene.” The partners received a grant from Environment Canada for the project. “We had the plan in place this year to do a really large scale proscribed fire,” said Leverkus. “Everybody is really keen to keep fire on the landscape,” she continued, “because the bison are attracted to open areas as well as good forage. So, we had a whole project set. We had done all the work, all of the logistics. We just needed the government to come onboard and support it, and they wouldn’t. So, that is a significant impact, not only to bison habitat, but also to our research project.” There is recent evidence that the bison in the region do prefer areas impacted by fire. “I said 72 per cent of their time was spent within 100 metres of the Alaska Highway,” Leverkus explained. “The rest of that time we do see them go to where there were some smaller proscribed burns that have been conducted by the guide outfitter in the area. Ee do see that they are attracted to fire.” Leverkus can see why the bison prefer the highway right-of-way in the absence of lands impacted by fire. “In the Nordquist example,” she said, “it’s because the canopy is closing in and there’s not enough open area in the forest for them to roam.” A spokesperson for the Ministry of Forests, Lands and Natural Resource Operations (FLNRO) said the Province doesn’t rule out proscribed fires to improve bison habitat, but would have to adequately consult with Treaty 8 First Nations in order approve such action. That consultation didn’t occur this summer. However, it has also been suggested that the Province is reluctant to approve proscribed fires because, although it would create good habitat for bison, it could create further problems for the dwindling caribou herds in the Northeast. Open areas produced by fire could also attract deer and moose feeding on young vegetation that sprouts after the burn. Deer and moose subsequently attract wolves, which prey on caribou as well, particularly when caribou are removed from the relative safety of the forest. That is a conservation problem that oil and gas industry companies operating in the Horn River Basin shale gas play are attempting to solve. Presently, the industry-sponsored Science and Community Environmental Knowledge Fund (SCEK) is funding a project led by Craig DeMars of the University of Alberta to study predation risks for caribou and the associated management implications. The industry has also tried to reduce their impact on

Mother and child graze together along the Alaska Highway. Road mortality is a significant conservation issue for wood bison, partially because they presently lack suitable habitat away from traffic.. james waterman photO

the caribou through initiatives such as low impact seismic that limit the corridors of open space where wolves can easily spot and track caribou. “The Province is interested in actively supporting habitat management for both caribou and bison,” said the FLNRO spokesperson, “but given their differing needs this is sometimes a complicated process. Ideally, we need to find ecological solutions that allow both animals to thrive. “Addressing conflicting species requirements is an ongoing challenge. Both caribou and bison are native species to B.C. and we have a responsibility to manage them both. “The Etthithun Lake herd creates a greater challenge, because of its proximity to boreal caribou, which are at much greater risk than the caribou near the Nordquist buffalo herd.” The Etthitun Lake herd is also closer to oil and gas industry activity. Leverkus noted that the herd has actually benefited from the network of energy sector access roads in that area, as they offer land to roam where the traffic isn’t as intense – or as fast – as along the Alaska Highway. “Those roads actually help facilitate bison moving across the landscape,” she said. “That’s a pro for the oil and gas,” she continued. “An impingement is the fact that there are pipelines and wellheads, and there have been bison caught and trapped under some of those pipelines... That’s a con for the bison up there.” Leverkus cringes at the suggestion that caribou management considerations should take precedence over bison management. “Bison were already extirpated out of B.C. in the early 1900’s,” she said. “Boreal caribou have not yet met that fate. “The B.C. government made a decision to re-introduce

the bison,” she continued. “When a Species At Risk gets reintroduced to an area, it is not enough to just leave them there. Their habitat is critically important for them. And furthermore, the ecologically appropriate habitat is incredibly important.” Leverkus isn’t promoting the widespread transformation of northeast B.C. into bison habitat. “There must be a mosaic across the landscape in order to support and conserve the biodiversity,” she said. Additionally, Leverkus suggests that the idea that what is good for bison could be bad for caribou indicates a high level of need for appropriate “ecological planning” to preserve habitat suitable for all species that call that region their home. According to FLNRO, the Province is interested in including the oil and gas industry in bison conservation efforts. “We would be very interested in a dialogue about opportunities for managing caribou and bison on the same landscape, particularly within the Etthithun Lake group,” said a FLNRO spokesperson. “We’re currently within our management objectives for that herd, but we’re interested for instance in how we can influence behaviour to reduce conflict between them and neighbouring caribou.” Leverkus hopes the necessary work can be done. “I think that bison are really important animals to have on the landscape because they are a keystone species of the boreal,” she said. “I think that bison have always been part of the landscape and the ecosystem in northeast B.C. and I think that they deserve to continue being part of that. I think they’re another species that adds to the biodiversity throughout the boreal forest. And even more than ecologically, there are a lot of people who traditionally and culturally and spiritually associate with bison. “They’re a pretty amazing animal.”


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Spectra expects new plant to be a fixture in northeast B.C. cont’d from pg 5 Although not necessarily customers for the new plant, Bloom noted that Shell Canada and Progress Energy are also major players in the Montney play that are building strong ties with Asian companies. “Shell has a huge landholding in this area,” he added. “And they’re going to be a very big player in British Columbia and likely in LNG as well. Progress is also in northeast B.C. They’re a little bit farther north of where we are now, but they have vast landholdings. Over 800,000 acres of land in the Montney play. And an enormous opportunity. And working with their partner, Petronas, as they’re going through the closing of the sale. Petronas is a massive player in the LNG market. So, again, another comment on the premier’s point about the criticality of developing new export markets.” Still, observers might question the timing of the new facility considering the low natural gas prices and the recently falling price of natural gas liquids that have been so important to the recent success of companies such as Shell and Progress that have staked out solid positions in the liquids-rich Montney. Indeed, the plant is only processing about 65 mcf of its 100 mcf capacity, while only moving one truck of liquids per day. “You can’t time things to the month or the year where the market may be low or the market may be high or maybe somewhere in between,” said Bloom. “We’ve been in this province for 55 years,” he continued. “This asset, we expect, will operate indefinitely. Our McMahon gas processing plant is now 55 years old and going strong. So, we’re not worried about whether gas prices are low or high or somewhere in between in any given year. We plan to be here for the long, long haul.” Bloom noted that the long-term operation of the facility will require addressing workforce issues that plague the oil and gas industry as a whole. “Because our company has been growing so rapidly the last number of years, we’ve had to continue increas-

B.C. Premier Christy Clark receives a control room tutorial from control board operator Trent McGarry during the grand opening of Spectra Energy’s Dawson Processing Plant on Friday, July 13. Clark attended the event alongside dignitaries such as Peace River South MLA Blair Lekstrom and Prince George-Peace River MP Bob Zimmer. james waterman photO

ing our employment and hiring people into the sector from other companies,” he explained. “In fact, even from other sectors, like forestry in British Columbia, where there’s a lot of very well trained technical and trades people.” Spectra has given employees the opportunity to move from other facilities to the Dawson processing plant, but Bloom admitted that that isn’t sufficient to meet the workforce needs of the facility. “The need for workers in northern British Columbia is

really critical,” said Bloom. “And, frankly, we’re building another gas processing plant up in the Fort Nelson area where we have really been short of workers. And we’ve had to bring in about 150 foreign workers to supplement the workforce in the construction camp. So, getting skilled workers up to the areas like northeast B.C. where the economy is just booming is key. “And we’re going to have to really put our thinking caps on [to address] how we attract more people to this beautiful part of British Columbia.”

Prevention is the key to stopping noxious weed infestations have contributed to a project to create a best practices guidebook,” she continued. long way to helping prevent the spread “We’re working to change legislation, too. of weeds into our fields. So, the more But legislation is very slow to change. companies that will use it, I think the So, what we’re trying to do is promote more benefit it brings to our agriculture best practices – using weed-free forage, community. cleaning your “I think it’s just a equipment when responsible thing you go from one to do.” site to another. “We’re working to Working to “You pick up avoid spreading weed seeds in change legislation.” noxious weeds your pants, your onto farmland can shoelaces, your also be good for pets. Every time – Elaine Armagost, PRRD business. you kind of go off “You’re buying a trail you can run yourself a very exthrough a patch pensive problem,” of weeds and said Armagost, indicating that bringing spread the seeds. So, we’re really focusweeds onto farmland can lead to battles ing on prevention because those little with the landowner and fines from the BC things, they might be time consuming and Oil and Gas Commission (OGC) they might cost you a little bit, but they’re “Some of the oil and gas companies going to be way less than the price to the

“Because, really, at Pink Mountain, industry when an irate farmer finds that that’s kind of like the bottleneck on the they’ve spread scentless chamomile all down where they put a pipeline across Alaska Highway to get anywhere up in the northeast of B.C.” his land.” It is all about prevention. That is why Leverkus would like to see a “Preventative ways so that we don’t giant carwash installed at Pink Mountain. have these large scale infestations,” said “We feel like we’re the first line of defense here in Fort Nelson for the Yukon, Leverkus. “We’re just trying to be able to offer the Northwest Territories and Alaska,” she people with options and prevention tools said. “And so if we can prevent invasive plants from coming up here, that prevents so that they have the least amount of impact – environmental impact – up here.” them from going up to our northern partners. And so just the idea of having a giant carwash where people’s vehicles and the undercarriage would get sprayed with water, not herbicide, and then that stuff Dark Side Drilling Direct Push, Auger, Core, Air Rotary Drilling be captured and somehow dealt with afterwards would Geotechnical, Exploration, Aggregate just be a really good thing Rigs under 1000 lbs. Year-round operations for vehicles, for trucks, for Snowmobile, ATV, Man, Heli-portable quads, and other ATV type Permafrost and remote location specialists machinery.

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environment Scaling among issues addressed by flowback water reuse study cont’d from pg 14 remove all the dissolved solids.’ “But it occurred to us that that was actually looking at the problem from a different perspective than what would minimize the treatment. So, instead of going at it [from the perspective of] what can we do or what can be done, we said, ‘What do we need?’ And so that framework is intended to provide a method to answer that question: What do we need as water quality?” That quality can vary from well to well because the injected water has to be compatible with the particular formation. One of the related issues is the potential for the water to react with the formation to cause scaling in the well. “Then another is the compatibility of the fracture fluid with the additives,” said Minnich. “We might find that we can inject water of a certain quality and it doesn’t react poorly with a formation, but that water quality might not be sufficient for the additives to perform.” There have been advances in terms of the scaling problem. “Traditionally, it’s been considered risky to inject water with high levels of hardness, and the immediate reaction several years ago was that the hardness should be removed,” Minnich explained. “There’s anecdotal evidence of high-hardness waters used successfully,” he continued. Hard water contributes to the creation of scale compounds such as calcite and barite.

the hydraulic fracture fluid will have an impact on the “Calcium will react with carbonate and form calcite,” said Minnich. “That’s the same material that you’ll see in performance of different additives and give suggested acceptable ranges,” he explained. the bottom of a tea kettle or in a water heater. Barite is barium and sulfate. And the flowback water typically has “Salinity is one. Another is hardness. Iron is another, because iron can interfere depending on the fracture high barium concentrations. fluid. That was another set of questions that people had “But one thing we observed is there’s very little sulfate in these waters. That’s one of the in the past and the intent here is to provide some answers to things that came out of the study that suggested it’s not necessary that.” Minnich is hopeful that the to remove barium in all cases. If “There’s anecdotal project will encourage reuse there’s not sulfate, barium sulfate precipitation isn’t an issue.” of flowback water across the evidence of highindustry as well as improve Calcite and barite commonly the work of water treatment form where there is a loss of preshardness waters used providers. sure in the well. “One of the challenges that “And, in extreme cases, those scales can reduce the flow of hythey face is that they can successfully.” drocarbon out of the well,” added describe what their technology can do to the water and, as I Minnich. – Keith Minnich, Talisman said, that’s a solution looking for An important aim of the study a problem,” he said. “So, if this was providing producers with a study better communicates to way to determine a level of acceptable hardness of the injected water treatment suppliers what water so as not to cause scaling, are the important parameters for fracture fluid, they can tune their offerings to the market as well as ensure that the water quality would allow the in a better way.” additives to perform properly. Despite those advances, this project is probably still a That information is offered in “sensitivity tables” work in progress. that Minnich calls “a significant step forward” for the “Because the technology changes,” said Minnich, “this industry. work will hopefully be obsolete in a year or so.” “The sensitivity tables indicate what parameters in

CEPA: Canadian pipelines among the best in the world cont’d from pg 25 Pembina is willing to cut the regulator some slack in that area. “Certainly, these investigations do take a long time,” said Lemphers. “The average ERCB investigation takes nine months to complete. And some investigations take years.” The ERCB couldn’t offer a concrete timeline for the ongoing investigations into the three recent spills, but assured that the work is being done. “There is no estimated release date at this time,” said Tobin. “ERCB investigations are comprehensive and technical and take time to complete,” she added. “We rely on detailed technical analysis that may involve third party consultants and numerous requests for information from each company.” Tobin also discussed the regulations that are presently in place to ensure, as much as possible, that incidents don’t occur. “Licensees are required to monitor pipelines for corrosion or other deterioration and make any necessary repairs or replacements to ensure pipeline integrity,” she said.“Over time, various segments or

the entire line can be replaced. “Pipeline integrity, not age, determines when and if repairs are required or if there is a need to replace affected segments,” she added. However, Lemphers noted that solid

need to maintain the highest pipeline standards possible, whether that comes through the carrot or the stick,” he continued. “I think you need both,” he said. “You need both incentives to encourage better

“When we’re moving large quantities of energy, whether that’s natural gas or liquid products like crude oil, there’s absolutely no safer way to move them than a pipeline.” – Brenda Kenny, President and CEO, CEPA regulations aren’t always sufficient, citing the case of the Enbridge pipeline spill into Michigan’s Kalamazoo River in 2010 as evidence. “So, it’s a matter of having the right signals to pipelines operators that they

behaviour and penalties to say illegal activity is unacceptable.” Along those lines, the NEB is proposing fines of up to $100,000 per incident when companies fail to abide by safety and environmental regulations.

That would apply to NEB-regulated pipelines in Alberta. An interesting facet of this whole matter is the possible ramifications for Enbridge and its Northern Gateway pipeline project, at least in the court of public opinion. “We feel that the Gateway pipeline is just going through without any kind of enforcement or regulations whatsoever,” said Bester. “And Alberta has to prove to B.C. that: ‘Hey, we’ve got the best regulations in the world. We keep harping on it. Why don’t you believe us?’ he added. Kenny suggests that it all has to be put into proper perspective. “It’s important to look at the scale of the operations of pipelines across Canada,” she said. “And to recognize that, when we’re moving large quantities of energy, whether that’s natural gas or liquid products like crude oil, there’s absolutely no safer way to move them than a pipeline. “We need to continue to make sure that they are safe, but rest assured that they are among the best in the world. “And continuing to get better.”


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THE GREAT CREW CHANGE Retirement a huge part of complex energy sector labour picture The mass retirement of an experienced workforce and the uncertainty surrounding major projects are turning the energy sector labour picture into a complex puzzle. The Petroleum Human Resources Council’s latest HR Trends and Insights report – which was conducted during the first two quarters of 2012 to provide a snapshot of workforce trends in the oil and gas industry at the present time – indicates that economic obstacles such as low natural gas prices, the pace of economic recovery in the United States and economic turmoil in Europe hasn’t kept energy sector companies for hiring new workers. The key factors driving the growth of the workforce include: the popularity of unconventional oil resources such as Alberta’s oil sands during a period of high oil prices; the push to produce natural gas liquids (NGL) in place of natural gas during a period of low natural gas prices; and the prospect of major energy projects such as TransCanada’s Keystone XL and Enbridge’s Northern Gateway pipelines, as well as the pipelines and facilities required for British Columbia’s emerging liquefied natural gas (LNG) industry. A phenomenon known as the Great Crew Change – a large percentage of the energy sector workforce could be retiring in the near future, causing a knowledge and expertise gap that is very difficult to replace with new hires – is intertwined with those issues. “If you no longer have time to train people up through the ranks to replace retiring people, you need to figure out ways to train people more quickly, to sort of get them to a level of experience more quickly,” said Cheryl Knight, executive director and CEO of the Petroleum HR Council. “Industry has seen both training challenges and productivity challenges in that it’s just not a one-to-one replacement, a person with over 30 years experience to somebody with five years,” she continued. “They’re investing more in training. They’re looking for more efficient ways to train people to sort of manage productivity. And I would say there’s concerns that productivity is declining.” Companies are also making efforts to retain those workers who can retire. “What does it take for a person to stay another couple of years?” said Knight. “Is it flexible work arrangements? Is it more money? What is it? “But the long-term challenge is transferring that knowledge. It’s about, okay, how can you use that time you have with that seasoned person to get people up to speed and ensure that those people are engaged in the company in the long run. Although the oil sands are one of the factors driving the demand for new workers, Knight emphasized that it is not a huge segment of the oil and gas industry overall. “The oil sands represents about 11 per

cent of the oil and gas operations workforce,” said Knight. “But when you look at the growth in our industry, the growth is primarily coming from the oil sands,” she added. “They’re going to more than double in size between now and 2015. And so they’re not only growing in size, but the oil sands has the same challenges that the rest of the industry has, and that’s that there’s turnover and we’re losing people to retirements.” Demand for workers driven by NGL production could be a short-term phenomenon because a growing North American glut of that resource, similar to the glut of shale gas that has sent the dry natural gas price into the basement, could make that part of the industry less profitable as well, particularly when production is already outstripping demand. However, that is still in the future. “In B.C. in particular you see a difference in the Horn River area versus the Montney area,” said Knight. The Horn River Basin is dry gas while the Montney formation contains liquids-rich gas. “With the price differentials between dry gas and natural gas liquids, we are seeing an effect on activity,” she continued. “And I think there was a fair amount of press on the reductions in revenue due to royalties in B.C. That is very much a concern in terms of consistent employment projects for B.C. “Now, really, the focus that industry has with respect to natural gas is on pipelines to LNG plants. Because that obviously will allow us to bring our gas out of the North American pricing environment to different markets.” Although LNG exports are at least three years away, Knight suggested that there is a high level of urgency in moving forward with those projects that is being reflected by workforce demand. “We are competing globally with Australia, for example,” she explained. “The west coast of B.C. is relatively close to Asian markets. Japan. So, it is important that we get into that international market and that we do that in short order.” Construction of the Pacific Trail Pipeline to supply the Kitimat LNG project led by Apache, Encana and EOG Resources with natural and construction of the Coastal GasLink Pipeline to feed Shell Canada’s LNG joint venture with Mitsubishi, PetroChina and Korean Gas (KOGAS), known as LNG Canada, are also part of workforce demand, if those projects move forward. That is the uncertainty surrounding major energy projects. “We’re doing some work with the B.C. government looking at three LNG plants and doing estimates and planning around each,” said Knight, discussing workforce projections. “And they don’t all go at the same time. I think the earliest one would be in production about 2015. So, certainly, that’s enough to give us a connection with the Asian market.

“Obviously, because of the supply of natural gas that we have, we’re thinking of growing that. That’s why other companies are looking at the economics of liquefied natural gas. “As they look at other plants getting approved and being developed, they’re going to look at the competitive environment and the cost as well. “This focus on three projects is quite conservative,” Knight concluded. The futures of oil pipelines Keystone XL and Northern Gateway are also uncertain, which muddies the labour picture further, but it could be a huge strain on the workforce if all these projects go ahead simultaneously. “If you’ve got projects that require the same types of people at the same time, in the same region in this case, it’s going to create challenges,” said Knight. “And there really isn’t any difference in pipeline construction. A pipeline is a pipeline is a pipeline for the most part.

It’s the terrain that you’re going through and the distance. So, certainly there are specialized construction workers needed for the pipeline. “From an operational perspective,” she continued, “when you build a pipeline, and even a plant, it’s not huge numbers of labour. So, it’s the construction phase which is the most challenging.” The timelines of these projects does allow the industry to recruit and train the new workers they require. “In terms of operating a pipeline, [2015] is certainly far enough out to train people,” said Knight, adding that there are transferable skills from other industries that are applicable to the pipeline business. “The construction workforce tends to be a mobile workforce anyway,” Knight continued. “Are there going to be challenges with competing projects? Yes. And it’s not just within our own industry. continued pg 30 R001243767

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careers Workforce turnover a major issue for energy sector cont’d from pg 29 “It’s the shipbuilding. It’s… projects on the east coast that would reduce some migration of workers from the east to the west. There is a whole myriad of things. “And we have to compete globally, too,” she concluded, noting efforts by Australian companies to recruit workers from other countries, including Canada. Indeed, there is a now an international competition for workers. “People will make the best choices for themselves,” said Knight. “The best thing we can do is be outwardly educating, promoting, providing information to enable people to make decisions for themselves. So, where are these locations where there are demands? What jobs? What’s the work environment? “And the companies’ side, encouraging companies again to do more than advertising for a job. It’s almost that we’re encouraging companies to go further and actually educate and engage people, because we can’t assume people know

and understand. People in Canada don’t even know and understand. “It’s fraught with complexity compared to what it was.” Despite recent changes to legislation that have made it easier for Canadian companies to attract foreign workers, there are lingering concerns. “The big problem that the federal government had, that they’re addressing, is the backlogs,” said Knight. “So, by eliminating the backlogs, it’s an exercise of focusing on people with skills as opposed to who’s next in line. So, it’s… an approach that’s much more focused on labour demands. That’s positive.” Creating better opportunities for trades people to immigrate is also a positive step, according to knight. “Despite the fact that engineers are very important, you need far fewer engineers than you do trades people,” she explained. “The concern is,” she continued, “when you look at our list of jobs anywhere, it’s not just trades people and professionals. There’s a lot of people needed by the oil

and gas industry that aren’t in occupations that are recognized as skilled occupations by government definition. “The government definition of skilled worker is very much an education driven definition. But you and I both know that we have skills, and there are people out there who are skilled, and it didn’t come from education. “And our industry relies a lot on people that have learned their skills through experience on the job. The government does not recognize that.” Business owners have expressed concerns about investing in training foreign workers only to see them jump ship to another company or industry, but Knight said that is simply one part of the bigger issue of turnover. “Turnover has gone up for all sectors,” she explained. “It is a more competitive environment. Every company is facing increased turnover. And I hope every company is shifting their attention to retention. So, understanding why people leave and really focusing on what it takes to keep them. And it goes beyond compensation.” 32433

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Previously, the oil and gas industry has had trouble recruiting workers from Ontario and Quebec, but Knight indicated that that is changing. “Time tends to help to solve problems,” she said. “And I would say, as the economy in certain parts of the east remains fairly flat, people start to look at their options a little bit differently.” Changes to Employment Insurance rules in the last benefit have encouraged people to relocate for work. “Jim Flaherty had a quote that was something like: ‘Any job is a good job.’ Which is kind of to say shake yourself up and look outside of your immediate vicinity or be a little more flexible. So, we are seeing some shifts,” said Knight. “We are seeing more interest from the east,” she continued. “At the same time, our industry still has to do a better and better job of educating and promoting and explaining to people what to expect. “We don’t want people to come into a job, work it for two weeks or a month, and say, ‘Boy, this is not for me. I didn’t realize what I was getting into.’”


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