Context Magazine Issue 2 by The Canadian Association of Petroleum Producers

CAPPâ&#x20AC;&#x2122;s member magazine

Q2 Message Presidentâ&#x20AC;&#x2122;s

Volume 1 . Issue 2

O&G101:

Pipeline Monitoring

First Nations:

Partnering for Success

Publication Number: 2013-9202

Page 23

Table of

On the Cover

Contents

Volume 1 Issue 2 The Social Licence Issue Features 20

Energy Activists Young oil and gas professionals gather to solve the world’s problems — and they really mean to do it.

Social Licence Catch phrase or key concept: What is social licence and why should we care?

Partners in Success First Nations show off their entrepreneurial spirit in a new form of collaboration with industry. By Ian Doig

The official member magazine for the Canadian Association of Petroleum Producers (CAPP) context@capp.ca | www.capp.ca/context

A few ways industry is realizing the promise of innovation to deliver environmental, social and economic performance.

Publisher Janet Annesley, Vice President Communication Janet.Annesley@capp.ca Managing Editor Brenda Jones, Manager Member Communication and Special Events, Brenda.Jones@capp.ca Editor Andrew Mah, Member Communication Advisor Andrew.Mah@capp.ca

Responsible Innovations

By Melanie Collison

Departments 4

Stats Quarterly

In This Issue

President’s Message

Contributors Melanie Collison, Curtis Comeau, Mark Cromwell, Ian Doig, Jason Dziver, Scott Simpson, Zoltan Varadi

Industry News

What’s Up at CAPP?

Digital Communications Courtenay Davidson, Digital Communication Advisor Courtenay.Davidson@capp.ca

O&G 101

Ask an Expert

Distribution and Member Updates Janine Vandenberghe, Administrative Assistant Janine.Vandenberghe@capp.ca Please contact for changes in contact names and delivery addresses.

Community

Events

What’s Online at CAPP / Safety 101

In Closing

Art Director Susie Wong, Blunt Strategic in cooperation with Radfactory

Publication Number: 2013-9202

What is Pigging? find out on Page 18

Stats Quarterly For the January to June period, oil production in the WCSB is up 6% from a year ago to 3.2 MM b/d. Bitumen from in situ and the Kearl mining project is up by almost 100 mb/d (10%) while synthetic is up by 5%. Conventional light and heavy oil production is up by 4%. Natural gas production in Western Canada for the first six months of 2013 is down 0.6 bcf/d from the same period a year ago. Alberta is down 0.2 bcf/d and British Columbia is down 0.35 bcf/d. Total well permits for the January to June 2013 period reached 7,194 wells, up 1.5% from 7,091 wells during the same period a year ago. Alberta is down about 1%, while Saskatchewan permits are up 4.1% to 1,785 wells so far this year. British Columbia is up 52%, to 468 licences. A record 3,385 horizontal wells were drilled in the first half of this year, a 6.4% increase from the same period last year. Records were set in Alberta, Saskatchewan and Manitoba. British Columbia is ahead of last year, but below the record set in 2004. Land sales in Western Canada Land sales for the first half of this year are down 30% compared to 2011. Alberta accounted for the largest share of sales, but is off 36% from the same period a year ago. In Alberta, industry is focused on testing previously acquired high price land in the Duvernay. British Columbia has rebounded due to renewed focus on liquid rich, oil rich plays. The focus in Saskatchewan continues to be on the Bakken, but it appears that industry is focusing on monetizing land acquired in recording‑breaking 2008. Industry spent $569 MM in land sales in the first half of 2012, 72% going to Alberta. Saskatchewan

-47

$MM Hectares 2013 $411 1239858 2012 $647 1450523

Canada are up

1.5%

Saskatchewan

2013 1785 2012 1714

from a year ago.

Alberta

2013 4700 2012 4751 Manitoba 2013 219 2012 302

26.2%

-50

$MM Hectares 2013 $29 49593 2012 $55 99545

Well Licences Issued: British Columbia 2013 468 % +52 2012 307

Well licences across

-1

Wells completed in Canada for Jan-June 2013 were down 9% relative to last year. Both oil and gas drilling were down due to continued soft natural gas prices and a shift of focus of oil wells to deeper, more expensive oil wells. Also, wet weather affected drilling levels in May/June 2013.

Oil Gas +4.0% -27.4% British Columbia — -14% Saskatchewan -17% — Manitoba +3.5% — Alberta

-27

Prices: Towards the end of the second quarter 2013, Canadian crude oil price differentials improved from earlier in the year due to refineries in PADD II being brought back on stream and more Canadian crude being moved by rail. Commodity Price 2013 2012

WTI US$/b WCS C$/b Cdn Par C$/b AECO C$/Mcf 94.30 68.71 88.92 3.36 98.21 76.03 87.62 2.02 -4.0% -9.6% +1.5% +66%

16,000 14,000 12,000 7,651

8,000

140

4,793

4,000

Ju l

0 Ma

Cdn Lt Swt

2,000 Fe b

WTI

2013

Brent

100

2011 2010 2012

6,000

120

US$/bbl

18,000

10,000

Crude Oil Prices

WCS

WTI Premium to WCS

40 20

WTI = West Texas Intermediate; WCS = Western Canadian Select; Cdn Par = Canadian Par; M = thousand; MM = million; /b = per barrel; /Mcf = per thousand cubic feet; bcf/d = billion cubic feet per day

M M

J S N 20 12

M M

J S N 20 11

10 M M

context . volume 1 . issue 2

M M J S N 20 13

WTI premium to WCS

0 4

Wells Drilled in Western Canada

No v

$MM Hectares 2013 $127 68248 2012 $83 66934

-15

De c

-36

while gas continued the recent trend down

Alberta

3.6%

Oil wells were down by

Au g

British Columbia

Wells Drilled:

capp.ca/context

In this Issue

Context,

Welcome to CAPP’s new quarterly members’ magazine. The theme for this issue is social licence. In our cover story, we attempt to explain what social licence is and why it is important to Canadian oil and gas producers (page 23). It’s a complex subject, and more than that, the term is one that means different things to different people — for some it’s corporate social responsibility, for others it’s “shared value,” and for others yet it’s simply as Friedman said, “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” Whatever your view, social licence is worth talking about because the topic is one that’s important to Canada’s oil and gas companies, and therefore to CAPP. Social licence is so important that it is one of our two priority strategic outcomes — the other being competitiveness, which goes with social licence hand-in-hand. With our other feature stories, we explore some practical examples of how social licence is earned and what that looks like. “Partners in Success” (page 26) describes three case studies of how the oil and gas industry is successfully engaging First Nations through collaborations that emphasize opportunities and selfdetermination. In “Responsible Innovations,” (page 30) we highlight a few instances of how industry is using technology and innovation to improve environmental and safety performance. There’s also our profile of three sharp young oil and gas professionals who are helping to organize the World Petroleum Council’s Youth

capp.ca/context

Forum (held in Calgary this October 22 to 25 — mark your calendars). The story, called “Energy Activists,” (page 20) shows how our industry’s next generation consists of individuals who are extremely bright, positive and unafraid to take on the social licence challenges of the future. Of course, social licence and competitiveness issues are the bread and butter of what we do at CAPP on behalf of our members, and you’ll find updates on some of our key activities and results over the last quarter in “What’s Up at CAPP” (page 10). Finally, for this, our second issue of Context, we’ve added a couple of new departments we believe you’ll enjoy. “What’s Online at CAPP” (page 37) highlights links to timely content and resources available on the Web and via your mobile devices, while on the same page, “Safety 101: What’s Wrong with this Picture,” is a fun way to test your workplace safety I.Q. Enjoy your reading, share Context with your colleagues, and as always, let us know how we’re doing.

Janet Annesley Vice President Communication Canadian Association of Petroleum Producers

context . volume 1 . issue 2

President’s Message

Performance + Communication and Outreach =

Social Licence The theme of this issue of Context is “Social Licence”: And if you’ve opened the newspaper or your favourite business social media feed recently, you’ll understand why. In the context of our industry, we are increasingly impacted by the reality that governments and regulators grant permits, but the public ultimately grants permission. It is essential that we secure social licence (and broad public policy support) in order to continue to develop and operate crude oil and natural gas resources. Social licence is often defined as broad and ongoing public acceptance of industry activity, grounded in legitimacy, credibility and trust. Our industry must be accepted by the society in which it operates, which requires that our objectives be broadly aligned with prevailing societal values and norms. If there is tension between the objectives of our industry and broader societal trends, it is the projects that can be positioned at the margin of societal values (i.e., those that can be “made controversial”), that have the greatest risk from a social licence perspective. For the Canadian oil and gas industry, social licence has always been a priority, consistent with the high standards required of industry both by government regulatory authorities and each member company’s corporate governance. The upstream industry has a long track record of successful engagement with key stakeholders and the communities where we operate. Successful resolution of issues related to sour gas development in Alberta is but one example of our industry obtaining the necessary social licence for our activities. However, the external environment in which we operate has changed, and continues to change. Factors such as the increasingly polarized public dialogue regarding energy and the environment, differing views as to the future energy mix and how it may influence greenhouse gas emissions, NIMBYism, attacks on trusted public institutions and the advent of the Internet 6

context . volume 1 . issue 2

and social media have had significant impacts, not only on our business, but on governments, regulators and the broader business community. Responsible development of Canada’s oil and gas resources is supported by a large majority of Canadians (and Americans). However, that support is not unqualified and it is our job to maintain and enhance social licence for our industry. This will be accomplished by doing what we do best — delivering valued products and services, providing safe and well-paying jobs and other benefits, providing reasonable returns to our shareholders, continuously improving our environmental and social performance, and being a responsible member of the communities in which we operate. Social licence is a cornerstone of CAPP’s strategic framework. Competitiveness and Social Licence for the upstream oil and gas industry are the key strategic outcomes we are seeking to deliver on an ongoing basis on behalf of our members. Industry competitiveness is required to attract capital investment and grow our industry. Maintaining and enhancing social licence ensures we have the support of the public our key stakeholders, communities where we operate and governments at all levels for our ongoing activities. CAPP’s strategic framework, which has been endorsed by the CAPP Board of Governors — the Board consisting of representatives from a wide cross-section of our member producers — guides all of our activities. It is the framework within which we assess our priorities on an annual basis and measure our performance. It is the primary tool we use to ensure we remain focused on the priorities established by our members. capp.ca/context

CAPP has framed social licence as being based both on performance and communication / outreach. Our industry performance must enhance our legitimacy, trust and credibility in the eyes of the public. This means: Brian Schmidt • Demonstrating improvement in environmental and Incoming social Chair (effective April 2013) performance, relative to historical performance and / or “best in class” benchmarks; • Developing best practices and other tools to enable industry performance improvement; • Providing a clear line of sight to the jobs, economic benefits and positive impacts on quality of life arising from the activities of our industry; • Ensuring that we have a robust, balanced policy and regulatory system in place for our industry; and, • Ensuring that as an industry we are a constructive and solutions-oriented participant in the public policy process. One of CAPP’s key performance initiatives is the Responsible Canadian Energy (RCE) Program. We are currently reviewing Page 1 this program, with the objective of taking it to the next level. The program’s objectives and metrics will be reviewed at the upcoming Board of Governors meeting in late October, so as to ensure that we are clearly articulating the value of our industry to Canadians — from the people we employ and capital we invest, to the communities and customers we serve, and to the innovation and technology we are deploying to improve environmental performance. Thanks to the strong commitment of our members to the program, the 2012 RCE data has all been collected and is being analyzed for inclusion in our 2013 Responsible Canadian Energy progress report. This report will be available online at www. capp.ca/rce in early November. Along with improving our industry performance, we must enhance our communication and outreach with the public, governments, stakeholders and communities where we operate. This means: • Ensuring our messaging is fact-based, performance-based and responsive to the issues and concerns of Canadians; • Delivering a broad-based communication program that connects with Canadians through a diversity of communication channels; • Engaging with the public and key stakeholders “on the ground,” both in communities where we operate and in communities downstream with an interest in issues and opportunities pertinent to the upstream oil and gas sector; and, • Being visible as an industry, both to maintain public support and encourage other aligned interests to step forward.

President’s Message

CAPP’s Strategic Framework CAPP’s Key Interfaces

Strategic Priorities

Key Focus Areas

Competitiveness • Fiscal

Education Governments

The 3Es:

Communications and Outreach

Regulators

Environmental Performance

Policy and Regulatory Advocacy

Aboriginals Local Communities Public

Economic Growth Energy Security and Reliability

• Environmental and Social • Economic/Fiscal • Markets • Health and Safety

Media Stakeholders

Industry Performance Improvement

• Environmental Policy and Regulations • Market Access and Growth • Pipeline Tolls • Aboriginal Consultation • Workforce • Safety

Other Industries

• Canadian Energy Framework

Other Associations Key Influencers • Academia • Think Tanks • NGOs

Delivering Results

Allen Knight Chair

CAPP’S Strategic Framework provides the context to position CAPP’s key interfaces, strategic priorities, focus areas and overall results delivery. It assists in both internal alignment and external communications. Note that the strategic framework continues to evolve and has been modified slightly.

Scope Upstream Oil and Gas Sector Canada (Primary), U.S. (Secondary), International (Some)

Social License to Develop and Operate • Performance Communication and Outreach

CAPP has launched a comprehensive British Columbia communication and outreach campaign. This campaign is complementary to the national campaign and separately addresses the importance of West Coast oil market access and the value chain 2013-0006 attributes of LNG development. The campaign was initiated in June and stresses on-the-ground outreach initiatives that will inform public and stakeholders in key regions of B.C. of industry’s strong safety record, the economic benefits of oil and gas development, and the initiatives being undertaken to ensure world-class spill prevention and mitigation measures are in place. CAPP is also supporting U.S. market access, both through extensive outreach and collaboration with API on communication initiatives. Similarly, CAPP will work at the industry level to ensure social licence for new pipeline proposals to Eastern and Atlantic Canada. In summary, the external context in which growth of the oil and gas industry is being advanced requires that there be broad “social licence” for our activities, or at least for those that are perceived to be non-routine. Project regulatory approvals remain an important and necessary condition. However, many of the issues related to upstream oil and gas development and market access are broader than can be dealt with in a regulatory proceeding for a specific project, and it is unreasonable to burden the regulatory process with resolution of issues of this nature. Broader social licence must largely be addressed at the industry level, through performance and communication / outreach. This has become a much larger focus for CAPP and our members over the past few years. I am confident we will be successful over the longer term, but we must remain committed as an industry to delivering performance and communicating / engaging effectively. We must also frequently remind ourselves to anticipate an ever-changing external environment, to remain aligned as an industry, and that this is a marathon not a sprint. Sincerely,

CAPP continues to deliver the very successful national oil sands communication campaign. This campaign is most visible in the form of television advertising, but has many other important elements. While focused on oil sands, this campaign more broadly supports the interests of the entire upstream oil and gas sector. capp.ca/context

Dave Collyer, President, Canadian Association of Petroleum Producers context . volume 1 . issue 2

In the news

Industry News

alaysian national oil firm Petronas announced an intention to invest $16-billion in B.C. that would go towards pipelines, LNG plants and an export terminal near Prince Rupert. The Pacific Northwest LNG project would liquefy and export natural gas produced in northeastern B.C. by Progress Energy Canada (which is owned by Petronas).

he U.S. National Academy of Sciences (NAS) recently released a report stating that the transportation of diluted bitumen is no more corrosive than conventional crude. For a copy of the report, visit national‑academies.org and search for “bitumen” using the site search tool.

ccording to the Energy Information Administration (EIA), the statistical arm of the U.S. Energy Department, fossil fuels will still account for 80 per cent of all energy supply by 2040, even with anticipated increases in renewable and other forms of energy. At the same time, world energy consumption is expected to rise by 56 per cent, primarily due to increasing prosperity in China and India.

lberta has changed rules to make it easier for temporary foreign workers to stay in Canada permanently. Under the new rules, workers in Alberta will no longer need to get permission from their employer before they can apply for immigration. The decision on the application itself, however, still rests with the federal government which announced a temporary tightening of the rules on its Temporary Foreign Worker (TFW) Program at the end of July. The new rules are intended to ensure Canadians are able to take advantage of employment opportunities first.

New Air Service Between Colorado and Fort Mac On June 9, 2014, Fort McMurray Airport (YMM) will open a new, $258 million terminal just south of the existing runway. The new building will provide much needed airport capacity. Which is good, because United Airlines recently announced the commencement of direct flights between Denver International Airport and Fort Mac. It is the only non-stop service offered between Fort McMurray and a U.S. destination. SkyWest Airlines will operate the daily flights using 66-seat Canadair CRJ-700 regional jets.

Fort McMurray Airport is Canada’s 15th busiest airport and the fastest growing airport in Canada.

Quebecers Want Western Oil

A new poll from Quebec’s Federation of Chambers of Commerce found 73 per cent of Quebecers would prefer that the province’s refineries use western crude compared to imports from international sources such as Africa and the Middle East. The same poll found 60 per cent overall support among Quebecers for Line 9B reversal. In cities along the route, 58 per cent support it. Line 9 at present carries imported crude as far west as Sarnia, Ontario, from a Montreal import tanker terminal. Enbridge in 2012 received National Energy Board approval to reverse the A section of Line 9 in Ontario and has proposed a reversal and expansion

context . volume 1 . issue 2

of the remaining 639-kilometre section running between Westover Terminal near Hamilton and Montreal Terminal. Quebec had three refineries close in recent years and the Federation of Chambers of Commerce wants two remaining refineries, representing 2,000 direct jobs plus spinoff jobs in the petrochemical industry, to remain in production.

“But as you well know, the opponents will keep taking stands in order to try to convince the media and the people (of Quebec) that it’s a bad thing. So we are repeating the message — we need it.”

Photo: Canadian Press/Kevin Van Paassen

A leading voice in Quebec’s business community supports the Enbridge Line 9B pipeline reversal, and a majority of Quebecers favour bringing in oil from Western Canada.

“Those are high tech jobs and very well paid,” Françoise Bertrand, Federation President and CEO, said. The Federation represents 60,000 businesses in Quebec. Bertrand said Quebec imports about $15 billion of oil every year, “mainly from the Middle East and Africa.” “Having the oil from out West would be really much better.” Bertrand noted that Quebec Premier Pauline Marois has “strongly taken a position to defend the project.”

Françoise Bertrand of the Quebec Federation of Chambers of Commerce speaks out on behalf of Enbridge Line 9B reversal and western oil.

capp.ca/context

Industry News

Member Movie Review: FrackNation

By the Numbers

FrackNation was created by filmmaker and investigative journalist Phelim McAleer in response to Josh Fox’s GASLAND, the 2010 documentary on hydraulic fracturing that helped spark public fears regarding the practice. FrackNation attempts to set the record straight, correcting some of the misperceptions that have been spread about hydraulic fracturing, while telling the side of the landowners who have been hurt by bans on hydraulic fracturing.

TransCanada Corporation announced it will proceed with its Energy East pipeline which would transport crude oil from Alberta and Saskatchewan east to refineries in Quebec and New Brunswick, and a to-be-built marine terminal at the deep-water port in Saint John, New Brunswick. The decision has been hailed as a nation‑building opportunity.

CAPP asked Jay Averill, Media and Public Relations Team Lead at Encana Corporation, to share his views about FrackNation.

Photo: courtesy Hard Boiled Films

I was pleasantly surprised with how entertaining it is. The director Phelim McAleer tells a very compelling story. He’s a good interviewer and storyteller. Plus, unlike some of the other movies on this subject, he manages to keep things light-hearted and even injects a bit of humour. Even if you’re not directly involved in the industry, it’s a story you can really understand and find interesting to watch. It’s a well-done documentary that can appeal to a very wide audience.

One thing I learned from the movie is the side of the landowners’ story — those that have been impacted by these bans on hydraulic fracturing. You are often led to believe that those areas are happy about the bans. But the movie does a good job of contrasting farmers and landowners who benefit from drilling and are happy with it, versus those who are really struggling, where the bans have really hurt them. The fact is there are people who have been negatively impacted, and not just the oil and gas companies. That’s a side of the story I wasn’t aware of. - Jay Averill

$12 billion cost

FrackNation can be ordered at FrackNation.com.

From an industry perspective, he’s taken the next step of telling the industry’s story. Up until recently, we in the industry have been in this game of myth-busting and reacting to the claims that are being made out there about hydraulic fracturing. That can only get you so far in terms of winning that battle of perception. What this film does is takes it a step further — yes, here’s the mythbusting, but also, here’s what the industry can offer the regular person.

900,000 barrels

per day in 20‑year shipping commitments with a total pipeline capacity of 1.1 million barrels per day.

3,400 km

of existing natural gas pipeline converted to ship oil

1,400 km

of new 42-inch crude oil pipeline to be built from Quebec to Saint John, New Brunswick

According to the latest data from the Petroleum Human Resources Council, Canada’s oil and gas industry will need to

hire between

125,100 to 149,800

new employees in the next decade. capp.ca/context

context . volume 1 . issue 2

What’s Up at CAPP?

CAPP’s Strategic Outcomes CAPP strives to deliver for our members Improved Competitiveness In:

What’s Up at CAPP

Fiscal

Environmental Policy and Regulations

Market Access and Growth

Pipeline Tolls

Aboriginal Consultation

Workforce Safety

Updates on some of the activities and

milestones we’ve been working on for

Enhanced Social Licence to Develop and

members, through the second quarter of 2013.

Canadian Energy Framework

Operate Through: Performance

Communication and Outreach

Communication British Columbia Campaign Seeks to Find a Balance Earlier this year CAPP undertook detailed public opinion research in British Columbia on attitudes towards natural gas and oil / oil sands, including transportation methods, and which specific assurances increase support for hydrocarbon production and transportation. The research also included specific message testing relevant to CAPP’s B.C. campaign, which broadly supports West Coast access. “The research both informs CAPP’s program and provides benchmarks against which to evaluate the success of CAPP’s communications program at year-end and over the longer term,” said Janet Annesley, CAPP’s Vice President of Communication. “The research’s key findings indicate the most significant risk to B.C. is oil tankers but that if the right assurances around safety can be provided, more than 60 per cent of citizens could support it while 39 per cent could not.”

context . volume 1 . issue 2

On benefits versus risks, the survey explored the impact of informing people about the potential for Canada to earn significantly higher revenues from its oil, if additional markets in Asia were to be served. The results show that informing people of the billions of dollars of upside can do quite a bit to improve support levels for the use of pipelines across British Columbia and tankers along the coast.

Given the right assurances, 60% of British Columbians would support tankers.

Similar results are seen when the question is about whether an individual could support movement of oil by pipeline across the province. Sixty-three per cent say they could support this under some circumstances, including majorities in all regions, age and income groups, and among both Liberal and Conservative supporters. NDP and Green supporters are far from unified on this question, with opinion almost evenly split. Finally, the research indicates that the risk of an environmentally damaging spill is a far bigger concern than greenhouse gases. 10

“These results suggest support for access to Asian markets requires, above all, a higher degree of assurance that measures will be in place to limit the risks of a tanker accident and to respond effectively should a spill ever occur,” said Annesley. “Our industry has been focused on upstream and pipeline performance to earn social licence, providing assurance about reducing GHGs, and addressing pipeline safety. While these will continue to be important, they are likely to be insufficient on their own to ensure a robust social licence for exports of Canada’s oil off the West Coast.”

Annesley cautions, “While informing people about the economic upsides is important to building a stronger social license for market access, just as much importance must be attached to reducing anxieties. For example, a significant number, roughly 60-65 per cent say knowing about increased efforts to avoid spills, respond to spills and provide strong government oversight would do a great deal or a fair bit to increase their support.” capp.ca/context

What’s Up at CAPP? CAPP has a comprehensive communication program linked to various value-chain performance initiatives under way in B.C. CAPP’s objectives are to support a reasonable and informed discussion of current and potential benefits to British Columbia, and to enhance the discussion about environmental and social impacts of production and transportation of oil and gas.

to the energy conversation around the province, as CAPP and its members and partners engage in Comox, Fort St. John, Port Edward, Kamloops, and Burnaby. CAPP’s new partnership with Canadian Geographic (see sidebar) to increase energy and geographic literacy will also be marketed strongly in British Columbia.

Initiatives include leveraging various marine and shipping reports, dilbit density and corrosivity research, and working with collaboratively B.C.-based groups.

ReCAPP Gets a Facelift

In British Columbia only, CAPP has partnered with Shaw Media / Global TV to present a series (9) of two-minute news-style reports on B.C. businesses and groups — from SeaSpan and the Chamber of Shipping to Northern Lights College — currently involved in the energy economy. Global TV also showcases the various dimensions

CAPP’s weekly electronic newsletter that goes out to members is undergoing a transformation. As of October, its name is changing from ReCAPP to Context Weekly and the format has been updated from the simple text format to a more visually appealing and user-friendly rich HTML layout.

Partnership with Canadian Geographic Promotes Energy Literacy Canadian Geographic is published by the Royal Canadian Geographical Society, who have formed an extensive energy literacy and education partnership with CAPP. The partnership launched with the publication in June of a special “Energy Matters” edition of Canadian Geographic featuring a pull‑out poster-sized map of Canada highlighting how energy is produced and transmitted across the nation. The Royal Geographical Society is also one of Canada’s largest non‑profit educational organizations and has an educational network of approximately 11,000 schools across Canada. CAPP’s partnership with the society reaches out to these schools with a series of energy classroom and community engagement materials including: • A gymnasium-sized energy map. Maps are booked by schools for use and can be customized for any school grade curriculum; • Hardcopy and online energy teaching packs for all grade levels that are tied to approved curriculum in all provinces; • An interactive Canadian energy website called: energyiq. canadiangeographic.ca featuring videos, infographics, teachers’ resources , news articles and interactive quizzes. For more information, or to order copies of the poster map for your CAPP member organization, contact Christina.Pilarski@capp.ca.

capp.ca/context

“The name change reflects the synergies in branding and shared content with our member magazine Context, and our online companion at www.capp.ca/context,” notes Brenda Jones, Manager Member Communication and Special Events at CAPP. “We hope members enjoy the new look.” Content continues to focus on oil and gas events and regular updates of CAPP-related news and activities. If you’re not already a subscriber to Context Weekly and would like to join, please contact Cynthia Simeon Cynthia.Simeon@capp.ca (note: only staff of CAPP member companies can subscribe).

RCE Progress Report 2013 Coming Soon The metrics on social, environmental and economic performance that underlie CAPP’s Responsible Canadian Energy (RCE) Program have been collected. “The data collection this year went very smoothly,” notes Giles Ody, Environment and Operations Advisor at CAPP. “We’d like to thank all the members getting their performance data to us in a timely fashion.” The RCE data is being analyzed and a summary of the industry’s overall performance and performance in key business areas such as oil sands and Atlantic Canada offshore will be published this November in the 2013 Responsible Canadian Energy Progress Report at www.capp.ca/rce. Giles Ody, Environment and Operations Advisor at CAPP

context . volume 1 . issue 2

What’s Up at CAPP?

CAPP/EPAC Scholarship Program Encourages Success in Oil and Gas

CAPP and Members Score Communication Gold

A single parent to seven children, Cherie Souther never thought she would pursue a post-secondary education at the age of 44. “I worked for my family business for years before moving to Lethbridge to open my own business,” says Souther. “Post‑secondary education was always something I wanted but it was never the right time.”

In June, the International Association of Business Communicators (IABC) announced their 2013 Gold Quill award winners. These prestigious awards are granted every year in recognition of outstanding achievement in communication. Competition is global; the IABC has more than 13,000 members in 40 countries around the world.

Finances were an issue, but in 2012, Souther applied for and received a CAPP and The Explorers and Producers Association of Canada (EPAC) scholarship. The funding has allowed her to pursue a diploma in Geomatics Engineering at Lethbridge College, which she completed in April 2013. “I am extremely grateful to have received the CAPP/EPAC scholarship,” says Souther. “It is a huge relief to know that there are individuals and organizations behind you, wanting you to succeed.” The CAPP/EPAC scholarship program was created in 1995, and to date over $6 million in individual scholarships have been given to more than 1,500 students. Over $342,000 in scholarships were awarded to post-secondary students across Alberta in 2012. The program provides scholarships for students enrolled in programs related to the oil and gas industry in 13 academic institutions across Alberta. For more information, contact Colleen Houston, Oil Sands Communication Advisor at CAPP, Colleen.Houston@capp.ca.

The CAPP/EPAC scholarship program has provided

$6 million in scholarships to more than

1,500

students

The Washington Post’s energy correspondent Steve Mufson gave a luncheon talk on June 20, 2013, in Calgary. Mufson shared insights from his 2,736 kilometre road trip down the route of the proposed Keystone XL oil pipeline, including what he’s hearing in the United States about Keystone and the Alberta’s oil sands. You can watch the presentation at:

This year, CAPP took home the Excellence Award in Advocacy Communication, for its Canadian Oil Sands Advertising Campaign, led by Evelyn Ferchuk, Manager Corporate Communication. Ferchuk was on hand to receive the award at a June 24 gala, part of the IABC World Conference held in New York. “It was an honour to receive this award on behalf of the great creative team we have at CAPP and on behalf of the members who guide and fund the integrated oil sands strategy. Thanks to everyone who has helped illuminate the stories of people and technology and develop compelling messages about oil sands’ economic and energy benefits,” said Ferchuk. Canada’s oil and gas industry did very well at the 2013 IABC Golden Quill Awards. Winners included Cenovus Energy, Champion Technologies, ConocoPhillips Canada, Encana Corporation, Imperial Oil Limited, and Suncor Energy.

For a list of Calgary Gold Quill award recipients visit: http://calgary.iabc.com/2013/06/congratulations-toour-2013-gold-quill-award-winners/

Evelyn Ferchuk, Manager Corporate Communication at CAPP (left) and Janet Annesley, Vice President Communication at CAPP (right) collect an Excellence Award at the IABC Gold Quill Awards held in New York in June.

http://www.youtube.com/watch?v= dSBLzJy4fCY&feature=youtu.be 12

context . volume 1 . issue 2

capp.ca/context

What’s Up at CAPP?

Policy and Environment Revenue Transparency Initiative At the G8 meeting held in June in Northern Ireland, Prime Minister Stephen Harper committed Canada to the construction of a revenue transparency framework for mining and energy companies. The impetus for this was originally concern about bribery and corruption in third world countries. However, the proposed policy now involves disclosure of payments made by companies to both domestic and foreign governments. As well, the federal government has set an aggressive timeframe to introduce the framework of the disclosure program this fall, with full implementation in two years. “CAPP and its members broadly support revenue transparency reporting,” says Alex Ferguson, Vice President Policy and Environment at CAPP, “However we feel and are advocating with government that the requirement for domestic paymentsto-government transparency is already adequately addressed through Canada’s global leadership in corporate governance standards and requirements.”

We feel and are advocating with government that the requirement for domestic payments-to-government transparency is already adequately addressed through Canada’s global leadership in corporate governance standards.

The mandatory reporting of payments made to foreign governments aspect of the policy is supported by CAPP; as Ferguson notes, “This will level the playing field for all Canadian corporations with respect to international competitors in foreign jurisdictions.” To the limited extent that enhanced domestic reporting is appropriate and necessary, CAPP’s position is that the program needs to encompass the activity of all companies resident in Canada, including companies not listed on a Canadian securities exchange. For more information, contact David Daly, Manager, Fiscal Policy at CAPP, David.Daly@capp.ca.

Coming soon: The Facts on British Columbia Natural Gas and Crude Oil Are you curious about the impacts of natural gas and crude oil development in B.C.? This handy pocket book will give you fast, easy access to B.C. natural gas and crude oil facts to help you get in on the discussion. To get your copy of the latest Upstream Dialogue fact book, email upstreamdialogue@capp.ca.

Ferguson cites as evidence the fact that the Prime Minister recently announced partnerships with Peru and Tanzania, where Canada has agreed to assist these nations through the transfer of Canadian experience and expertise in corporate governance standards. CAPP is also requesting that, in light of the differences between the mining and oil and gas industries, that the federal government engage in sector-specific discussions on the nature and composition of revenue transparency, as well as on the timing of implementing sector-specific requirements.

capp.ca/context

context . volume 1 . issue 2

What’s Up at CAPP? Supreme Court Provides Favourable Ruling on Daishowa

Our Industry Makes

$18

billion in Payments to Governments annually

Alex Ferguson, Vice President Policy and Environment at CAPP presents on social licence issues related to the oil sands and the Atlantic Canada offshore industry. It was part of a panel discussion on social licence at the Noia conference, held in St. John’s, N.L., June 17-20.

AQMS Implementation CAPP has been engaged in the development of the federal Air Quality Management System (AQMS), which is a comprehensive approach for improving air quality in Canada. It is the product of extensive collaboration by the federal, provincial and territorial governments, and stakeholders. AQMS will help lower levels of criteria air contaminants (CACs) — industrial air pollutants like S02 and NOx that cause smog, acid rain and other health hazards.

In May, the Supreme Court of Canada released a unanimous decision in the case of Daishowa-Marubeni International Limited versus the Queen. Though the case specifically involved the tax obligations associated with the sale of a forestry company, it held major implications for all resource industries where purchasers can potentially assume reforestation or reclamation obligations. The case revolved around Canada Revenue Agency’s (CRA) position that a seller must include the fair market value of an assumed liability in the sale proceeds (above and beyond the purchase price) — specifically, that Daishowa should pay taxes on the estimated value of reforestation obligations it has passed on to the buyer as part of the sale of timber licences. CAPP was granted leave to intervene in the case, given the scope of the oil and gas industry and the unique nature of oil and gas well abandonment and reclamation. As part of its intervention application, CAPP noted that a voluntary survey of 13 CAPP members showed that from 2006 to 2011, these members would have had to include $1.9 billion in reclamation obligations in their dispositions — resulting in a potential additional tax cost of over $460 million. Among its arguments, CAPP’s counsel pointed out that the CRA’s position would result in an asymmetry between the purchaser (who would not be allowed to include the reforestation liability in their adjusted cost base) and the seller (who would have to include the liability in their disposition proceeds). The Supreme Court sided with Daishowa, agreeing that it should not have to pay taxes on reforestation obligations assumed by the buyer. “The decision is an important and positive one,” notes David Daly, Manager Fiscal Policy at CAPP. “It saves the oil and gas industry from potentially hundreds of millions of dollars in additional taxes. Many thanks go to the member volunteers on the CAPP Tax Committee who devoted long hours of thought and discussion to ensuring CAPP made the strongest possible intervention case.” For more info, contact David.Daly@capp.ca.

The implementation process for AQMS began earlier this year. One component of the system will be emissions requirements that set equipment specific limits for performance for all major industries in Canada. These are encompassed within Base-level Industrial Emissions Requirements (BLIERS), which are quantitative or qualitative emissions requirements proposed for major industrial sectors and some equipment types. “This is good news for operators who will benefit from a leveling of the playing field on a cross-provincial basis,” notes Elise Bieche, Manager National Air Issues at CAPP, “It allows for consistency across industries and goes a long way to addressing stakeholder concerns regarding air quality.” For more information, contact Elise.Bieche@capp.ca. 14

context . volume 1 . issue 2

CAPP assisted in organizing a tour for Newfoundland and Labrador Minister of Natural Resources Tom Marshall of one of Crescent Point’s South Saskatchewan licences in early August. Minister Marshall visited the site to learn more about shale oil development and hydraulic fracturing technology. Pictured above (left to right): Curtis Swain (Crescent Point), Paul Barnes (CAPP), Natural Resources Minister Tom Marshall (Government of NL), Deputy Minister of Natural Resources Charles Bown, and Larry Wells (Executive Assistant to Minister Marshall). capp.ca/context

Photos: courtesy Noia (top right); courtesy Government of Newfoundland and Labrador (bottom left)

Did You Know?

Photo: courtesy Husky Energy

What’s Up at CAPP?

Spill response equipment deployed offshore of Newfoundland and Labrador during Synergy — an on-water spill response exercise organized annually by offshore operators

3,500

tankers visit eastern Canada each year.

Operations Presenting to Transport Canada on Marine Spill Preparedness Transport Canada announced the formation of a panel in March to conduct a pan-Canadian, evidence-based review of Canada’s regulated marine oil spill preparedness and response regime. CAPP was invited and made a presentation to the panel in Vancouver in early June.

The West Coast has less than 500 tanker visits. If approved, the Northern Gateway and Trans Mountain pipeline expansions together would result in an

“It was important for CAPP to help inform the panel on our industry’s oil spill prevention and response regime on both coasts, and the excellent safety record of the tanker industry,” noted Paul Barnes, Manager Atlantic Canada.

additional 750 tanker visits per year

After reviewing industry’s Spill Preparedness and Response Plans, Spill Response Capability, Training, Exercise and R&D work, CAPP highlighted a number of key messages for the panel: • Consistent approaches and requirements should be applied on both East and West Coasts, recognizing there are different contexts; • Industry is committed to continuous improvement and that oil spill technologies are continually being improved and refined through research; and • On-shore spill preparedness work is ongoing in British Columbia and CAPP encourages both provincial and federal levels of government to collaborate on ensuring Canada has integrated world-class regimes on land and marine that are complete and not duplicative.

(or about 14 total visits per week from both ports).

For more information, contact Geoff Morrison, Manager B.C. Operations, Geoff.Morrison@capp.ca and/or Paul Barnes, Manager Atlantic Canada, Paul.Barnes@capp.ca. capp.ca/context

context . volume 1 . issue 2

What’s Up at CAPP? CAPP Approaches Government About Cumulative Cost Burden CAPP met with the Alberta government in July to highlight an area of increasing concern for oil and gas producers in the province. CAPP members have observed an emerging trend of escalating costs due to numerous policy and regulatory initiatives launched by a number of departments across government. These costs include both direct (known) costs, opportunity costs and, more broadly, the project delay and investment costs associated with uncertainty. In some cases, these cost burdens are associated with cost savings anticipated to be gained through efficiencies in other areas; in other cases new cost burdens are regarded as necessary to maintain or secure social licence through enhanced environmental performance. Examples of these initiatives that fit within the above categories include the Alberta Energy Regulator, the Joint Environmental Monitoring Program, the Tailings Manage Framework, Wetlands Policy, Pipeline Safety Review, Limited Liability Rating (LLR) Change, Urban Wells Policy and so on.

While individually the costs associated with many of these initiatives are incremental, there is concern that the overall cumulative cost burden to industry isn’t being taken into account. “While individually, the costs associated with many of these initiatives are incremental, there is concern that the overall cumulative cost burden to industry isn’t being taken into account when these initiatives are being developed,” notes Vicki Ballance, Manager of Regulatory Affairs, Alberta Operations at CAPP. “These are for the most part, individual initiatives without apparent integrated strategic oversight and without a sufficient lens on how they affect industry’s overall competitiveness.” Further, CAPP has identified a need to evaluate new policy and regulatory initiatives with a view to ensuring overall policy alignment. For example, industry is required to maximize the recovery of the hydrocarbon resource, which can become increasingly energy-intensive as the quality of a given reservoir diminishes, leading to potential conflicts with expectations regarding air and water policy. CAPP supports a policy and regulatory environment that realizes both environmental performance and economic growth. Additional cumulative cost burden analysis will take into consideration 16

context . volume 1 . issue 2

the relationships between acceptable costs (within the context of social licence considerations) with a lens on overall competitiveness. To achieve this balanced policy context, CAPP is advocating for a senior level oversight mechanism that can look at policy and regulatory initiatives from a big-picture perspective. CAPP will be further pursuing both the cost burden analysis and the integrated policy analysis with the government of Alberta, with the objective of ensuring potential impacts on competitiveness are well understood, and that unintended consequences of policy initiatives are identified and addressed. For more information, contact Vicki.Ballance@capp.ca.

Markets and Oil Sands CAPP Responds to Keystone XL Draft SEIS On March 1, 2013, the U.S. State Department released its draft Supplemental Environmental Impact Statement (SEIS) for the proposed Keystone XL pipeline project. The SEIS is a technical review of the potential environmental impacts arising from the project, and is a key step in the process towards U.S. President Barack Obama’s decision on the Presidential Permit for Keystone XL, expected later this year. “The draft SEIS clearly addresses the remaining issues on KXL, particularly as it states that Keystone XL will cause no substantive changes in global greenhouse gas emissions,” notes Greg Stringham, Vice President Markets and Oil Sands. “We provided comments in support of the project and in particular provided clarification on the key issue of GHG emissions related to the project.” The draft SEIS describes Canada’s oil sands per barrel GHG footprint as being 17 per cent higher than the average barrel of oil refined in the United States, based on a 2005 study by

1.2 million:

The number of comments the U.S. State Department received in 45 days regarding its Draft Supplemental Environmental Impact Statement on Keystone XL. The comments can be viewed at: http://www. regulations.gov/#!docketDetail;D=DOS-2013-0011. capp.ca/context

What’s Up at CAPP?

the National Energy Technology Laboratory. More recent independent data from the 2012 IHS CERA study shows that the average barrel of Canadian oil sands refined in the U.S. is only 9 to 12 per cent higher than the average barrel of all oil refined in the United States. Moreover, the comparison isn’t an ‘apples-toapples’ comparison, since the oil sands crudes imported from Canada are expected to displace heavy crudes from Mexico and Venezuela. Since the Gulf Coast refineries will continue to consume heavy oil, the more appropriate comparison would be heavy oil from Canada compared to heavy oil from Venezuela, which has a similar GHG footprint. Also of note is the SEIS’s assessment that rail would be a capable alternative for crude oil producers to get their production to market if Keystone XL was not approved. The rapid increase in oil-by-rail to over a half a million barrels per day in a few years out of the Bakken fields in North Dakota demonstrates how quickly this can happen. Participating in the 45 day public comment period following the release of the draft SEIS, CAPP sent a letter to U.S. Secretary of State John Kerry commenting upon these issues, as well as emphasizing the significant alignment between Canada and the U.S. on climate policy. CAPP’s commentary on the draft SEIS may be viewed on MemberNet: http://membernet.capp.ca/default. asp?V_DOC_ID=1001&dn=223648 The U.S. State Department now reviewing the comments and writing the final SEIS that is expected to be released in early September.

Making the Final Case for Northern Gateway In June, CAPP presented oral arguments in support of the Enbridge Northern Gateway pipeline project before the federal Joint Review Panel (JRP) at a regulatory proceeding in Terrace, British Columbia. This was the final step in a two-year review process involving multiple hearings held along the pipeline route from Edmonton, Alberta, to Kitimat, British Columbia. CAPP has been involved from the beginning. “Market growth and diversification is very important to our members,” notes Nancy Bérard-Brown, CAPP Manager Oil Markets and Pipelines, “That’s why we’ve been very engaged in this proceeding.” A record number of stakeholders participated in the review, including communities and First Nations affected by the development, the governments of British Columbia and Alberta, various ENGOs and funding participants. Throughout, CAPP presented written and oral arguments and cross-examined witnesses on issues important to members, such as the underlying need for new pipelines to access new markets, and the economic capp.ca/context

consequences of limited capacity to reach market causing depressed regional oil prices. Enbridge’s Northern Gateway project would provide 525,000 barrels a day of pipeline capacity from Edmonton, Alberta to a new marine terminal in Kitimat, British Columbia. The target in‑service date for the project is late 2017. The Joint Review Panel will now assess whether the project is in the public interest and determine what conditions will need to be implemented if the project is approved. The timeline for this decision is December 2013. 2013 Crude Oil Forecast Released CAPP has released its annual Crude Oil Forecast, Markets & Transportation report. The publication provides an up-to-date long-term outlook for Canadian crude oil production based on CAPP’s 2013 surveys of both producers and refiners. Often quoted within the industry and by the media, the report is a resource that helps build a common understanding among industry, government and the public regarding the growth in Canadian oil supply and the need for and timing of additional market access. The CAPP forecast includes: • The production forecast to 2030 for all regions of Canada, • A market analysis and outlook across North America and beyond, and • A comprehensive review of the transportation options (pipelines and rail) to move the forecast production to markets. Highlights from this year’s outlook include: • Canada’s oil production is forecast to continue to grow from the 2012 level of 3.2 million barrels per day to reach 6.7 million barrels per day by 2030. • Oil sands remains the largest component of production growth, but a notable change from last year’s forecast is a resurgence of conventional crude oil production, which is forecast at 300,000 b/d higher by 2030. Light, tight crude oil production is expected to account for most of this growth. • Transportation capacity is currently tight and in addition to new pipeline options coming forward, rail is quickly becoming another option to move oil to market. A digital copy of Crude Oil Forecast, Markets and Transportation may be downloaded at: http://www.capp.ca/forecast/Pages/ default.aspx context . volume 1 . issue 2

O&G 101

Oil and Gas 101: Monitoring Pipeline Integrity Technologies

Monitoring of pipeline integrity is a comprehensive process involving monitoring and surveillance using sensors plus visual inspections by aerial surveys and groundbased work crews. Also key are regular inspections and scheduled maintenance of the pipeline. Pipeline operators develop monitoring programs that are consistent with the risk profile and operating conditions associated with a particular pipeline. Supervisory Control and Data Acquisition (SCADA) and pipeline inspection gauges (pigs) are examples of the types of tools and technologies that operators can deploy to meet the objectives and requirements of their monitoring programs.

SCADA Pipelines can be monitored using Supervisory Control and Data Acquisition (SCADA) computer systems. These systems allow for 24-hour 7-day-a-week

remote monitoring of pipeline networks, paying special attention to preventing and mitigating leaks. Strategically placed sensors along the pipeline measure variables such as flow rates, temperatures and pipe pressures. All data is relayed to a centralized control centre where experienced system controllers watch for signs, like a drop in pressure, that may indicate a possible leak. System controllers can initiate pump station shut downs remotely if they see abnormal conditions; SCADA systems are also built with automatic leak detection alarms and shut-off devices in case of emergency.

In-line Inspection Tool Pipeline Inspection Gauges (pigs) are an essential tool in pipeline monitoring and maintenance. These devices are inserted into the pipeline and travel the length of the pipeline. The latest generation of pigs can identify small changes in pipeline integrity, such as dents, wall thinning and cracks. Early detection of such defects can provide advance warning of a problem that can be fixed before it results in a loss of containment. One category of pigs commonly used to detect pipeline defects are magnetic

flux leakage (MFL) pigs. These work by temporarily magnetizing the pipeline and then recording the resulting generated magnetic field. Defects like cracks and pits in the pipeline are detected via leakage of the magnetic field outside of the pipeline.

Regulatory Oversight Oil and gas pipelines crossing provincial boundaries are regulated federally by the National Energy Board (NEB). Pipelines crossing the Canada/U.S. border are regulated by the NEB on the Canadian side and the U.S. Department of Transportationâ&#x20AC;&#x2122;s Pipeline and Hazardous Materials Safety Administration (PHMSA) on the U.S. side. The NEB and PHMSA also have an arrangement to enhance cooperation and coordination for the purpose of improving pipeline safety in both countries. The vast majority of provincially regulated energy pipelines are concentrated in British Columbia, Alberta and Saskatchewan. The Alberta Energy Regulator (AER) and the Oil and Gas Commission (OGC) are the provincial pipeline regulatory authorities in Alberta and British Columbia respectively. The Ministry of Economy is the regulatory authority in Saskatchewan. Retail gas lines (smaller distribution systems to homes and businesses) are overseen by the British Columbia Utilities Commission and the BC Safety Authority in British Columbia, the Alberta Utilities Commission (AUC) in Alberta and SaskPower in Saskatchewan. For technical requirements applicable to the design, construction and operation of oil and gas pipelines, the Canadian Standards Association (CSA) standard CSA Z662 has been widely adopted by provincial and federal regulators and serves as the definitive and unifying code for pipelines in Canada.

context . volume 1 . issue 2

capp.ca/context

Illustration: CEPA â&#x20AC;&#x201C; Maintaining Safe Pipelines (left); Photo: courtesy TransCanada (top right)

Pipeline integrity is a vital consideration for the upstream oil and gas industry, both within its own pipelines that transport product to and from wells and facilities, as well as for long-distance transmission pipelines that carry the upstream industryâ&#x20AC;&#x2122;s product to market.

O&G 101

“Pigging”

refers to the use of Pipeline Inspection Gauge devices (pigs) in the pipeline.

What is CEPA? Just as CAPP represents Canada’s upstream oil and gas producing companies, the Canadian Energy Pipeline Association (CEPA) represents Canadian transmission pipeline companies. These companies operate 125,000 kilometres of pipeline in Canada and the United States. These typically large-diameter, longdistance pipelines move approximately 1.2 billion barrels of liquid petroleum and 5.5 trillion cubic feet of natural gas each year. www.cepa.com

Smart pig used to detect structural defects being loaded into a pipeline

Provincial Reviews In light of recent incidents and heightened concerns over pipelines, all three western producing provinces have initiated reviews to validate existing prevention, preparedness, and response and recovery capabilities, plus identify opportunities to further enhance regulatory oversight and efficiency.

Types of Pipeline

Gathering pipelines

More than 250,000 km Move crude oil and natural gas from wellheads to oil batteries and natural gas processing facilities.

Feeder pipelines

Approx. 25,000 km Transport oil and gas products from batteries, processing facilities and storage tanks to transmission pipelines.

Transmission pipelines

115,000 km Long-distance pipelines that transport crude oil and natural gas within a province and across provincial and national boundaries.

Distribution Pipelines

About 450,000 KM Natural gas distribution lines that deliver natural gas to homes, businesses and industry.

capp.ca/context

In August, the Alberta government released the results of a third-party review which examined the adequacy of the regulatory requirements with respect to pipelines under the jurisdiction of the Alberta Energy Regulator (AER). The review provided a number of recommendations on enhancing regulatory oversight with respect to key areas of concern including pipeline integrity management process and planning; the safety of pipelines crossing waterways; and responses to pipeline incidents. The AER has accepted all of the review’s recommendations and is addressing most of them through the regulator’s Safety and Loss Management System Assurance Program, expected to be implemented by November 2015. The report’s recommendations may be viewed here http://www.aer.ca/about-aer/ spotlight-on/pipeline-safety-review. In Saskatchewan, and in an effort to ensure legislative requirements remain up to date and relevant, the Ministry of Economy has announced that they will be opening up The Pipeline Act for review and consultation in 2013. British Columbia’s Ministry of the Environment released a “policy intentions paper” describing the

government’s plans to review and enhance land-based spill preparedness and response in the province. The federal government has also initiated a review, recently unveiling proposed regulatory changes that should in the long-run enhance pipeline safety and performance, including new penalties for noncompliance, strengthening of emergency response management and a better definition of safety zones to protect pipeline assets. Further, the federal government recently announced that pipeline operators will be expected to have a minimum financial capability to deal with spills of at least $1 billion. Where and as requested, CAPP has provided informational support and context around pipelines owned and operated by producing companies.

If laid end-to-end,

there are enough underground natural gas and liquids pipelines in Canada to circle the Earth at the equator

20 times

Visit CAPP Online

CAPP publishes a pipeline map of North America. To view or download, visit: http:// www.capp.ca/CANADAINDUSTRY/OIL/ Pages/PipelineMap.aspx

context . volume 1 . issue 2

Feature Story

Activists

Joanna Desjardins, Allyson Simpson and Matthew Kielbasinski (left to right) 20

context . volume 1 . issue 2

capp.ca/context

Photo: Jason Dziver

Energy

Feature Story

About the ‘Tree Hugger’ Barcelona-based artist Jaume Plensa designed two metal sculptures gracing the environs of the 58-story The Bow building, home to Encana and Cenovus Energy. The first and most striking piece is a 12-metre tall steel mesh head of a girl entitled Wonderland, located in the front plaza. The second is a life-sized bronze cast of the artist Plensa himself hugging a tree, at the back of the building. The bronze sculpture is entitled Alberta’s Dream (though it predictably has acquired the nickname “Tree Hugger”).

Young oil and gas professionals gather to solve the world’s problems—and they really mean to do it. Come late October of 2013, young oil and gas professionals will gather from around the globe to attend the 4th World Petroleum Council (WPC) Youth Forum. The meeting is held once every three years and aims to give professionals in their twenties and early thirties a chance to share ideas, learn from industry mentors and propose their own solutions to industry challenges. CAPP recently met with three such young professionals: Joanna Desjardins, 29, a project interface engineer with ConocoPhillips Canada, Allyson Simpson, 26, a communications professional with Enbridge, and Matthew Kielbasinski, 28, a commercial analyst with Canadian International Oil Corporation. In addition to their challenging day jobs, each has signed on as members of the WPC Youth Forum’s 17-person organizing committee. Responsible for putting together the three-day conference with seminars running day and night, involving 1,500 delegates and dozens of speakers — well, suffice it to say that none of them are getting very much sleep these days. But then again, these are not your ordinary worker bees. Smart, articulate, filled with an infectious and youthful energy and passion, Desjardins, Simpson and Kielbasinski represent a strong voice in the industry that both wants and needs to be heard. “I think it’s important to engage the future leaders of our industry,” notes Allyson Simpson who acts as the marketing lead for the Youth Forum organizing committee. “We’re at this tipping point in our industry capp.ca/context

where we’re so heavily scrutinized by the public for a lot of operating practices, and for our perceived environmental performance. I think it’s going to take a strong and unique perspective in order to bridge that perception.”

movement can help. One issue they’ve identified is the negative image the industry has in some circles, particularly among younger Canadians who often don’t see oil and gas as a preferred career path.

We want to bring a little attention to some of the successes we’ve had as an industry, not just the challenges. “This is an opportunity for the oil and gas industry to engage youth and hear what resonates with them,” says Matthew Kielbasinski, who works on the organizing committee’s sponsorship team. Kielbasinski adds that the language isn’t always the same across generations, making it essential to have a forum that fosters inter-generational understanding and dialogue. As such, senior industry executives will also be invited, to pass on their wisdom and mentorship, and perhaps learn some new ways of looking at things from their younger colleagues. “We really want to be ambassadors for our industry,” adds Joanna Desjardins, who is the Chair of the Youth Forum. “There’s a lot of great things that are happening. We want to bring a little attention to some of the successes we’ve had as an industry, not just the challenges.” As ambassadors, the industry could hope for few better. Desjardins, Simpson and Kielbasinski are savvy and focused on what they see as key challenges and opportunities for the industry and how a properly motivated and informed youth

“There’s a bit of a perception challenge in this sector,” notes Kielbasinski, “Both for attracting young people to join and also for retaining people who have built up five, ten years of experience and who are lured away for many reasons.” Attracting and retaining new workers is crucial for an industry here in Canada that must hire over 100,000 new workers in the next decade simply to replace losses due to turnover and retirementrelated attrition. Both Desjardins and Simpson acknowledge that they fall in the category of those who didn’t choose oil and gas careers, but rather fell into the industry by accident. “When I was in school, I never imagined working in the oil and gas industry,” admits Desjardins. “Just by virtue of where we are in Calgary, you fall into that first summer job, you fall into that career position, and then you grow to like it.” “I think what we need to do is get students thinking up front that this is a viable industry they want to be a part of,” she adds. context . volume 1 . issue 2

Feature Story According to these three oil and gas professionals, there’s a lot about the industry to like, including the tremendous drive and energy of the sector, the diverse opportunities available on a global scale, and the use of cutting-edge technologies backed by significant research and development dollars. Kielbasinski talks, for example, about the complex and mentally stimulating problem of figuring out how to extract resources that are three kilometres below the surface of the earth as responsibly and cost-effectively as possible. “That’s pretty cool. I think that would resonate with a lot of geeks like myself, ten years younger.”

digital-age savvy, and some out-of-thebox thinking to create solutions to some of the industry’s challenges. “The youth forum was inspired to bridge a gap,” Simpson remarks, “to bring the knowledge and wisdom of senior level executives together with the youthful innovation of young professionals and marry the two.” The forum’s organizers hope the synergies created by gathering so many bright minds together in one place will inspire a generation of oil and gas workers who are activists in their own right — people who not only believe in their own industry but who are deeply committed

Are there things we could be doing better? Absolutely. Is there room for people to come in and leave their mark? Yes. The trio hopes to engage more than just job prospecting students at the forum, though. They’ve also reached out to community stakeholders like First Nations and activist members of ENGOs; they stress the forum is open to all who are curious about the industry. By bringing different groups together, the organizing committee hopes the Youth Forum will provide an opportunity for industry professionals to spread the word about the many ways in which the industry develops resources responsibly and sustainably, as well as frankly discussing the real problems the industry faces and how they might be solved. “It’s about creating a conversation, creating a dialogue,” says Desjardins, “It’s an honest and sincere effort to make sure we have the tools we need to make our industry successful.” Of course the group that stands to both gain and offer the most benefit via the Youth Forum are the current generation of young oil and gas professionals. With a motto, “Unconventional solutions for an unconventional world,” the intention is that these youth will bring their technical, 22

context . volume 1 . issue 2

to continual improvement in meeting the environmental and social challenges of the 21st century. Kielbasisinski cites the example of a co-worker and friend who is a self-confessed “left-leaning hippie.” “His view is that you can affect change in the industry from within a lot more effectively than you can on the outside. Some would view that position as selling out. I disagree. Are there things we could be doing better? Absolutely. Is there room for people to come in and leave their mark? Yes.” Desjardins believes that her generation can encourage “contributing to solutions rather than complaining,” and cites a quote by Dr. Randy Gossen, President of the World Petroleum Council and VP of Global Business Relations at Nexen Inc: “We believe that young people are our industry’s greatest spokespeople and must be involved in crafting the future, not just inheriting it.” Simpson agrees: “The young professionals that we want to engage are going to be those change agents that push their organizations to do more than they are doing now, to gain that social licence.”

Social licence, meeting environmental and social challenges and opportunities, is something these young oil and gas workers not only believe in, but identify with. Referring to a statue outside Calgary’s iconic The Bow building, headquarters to Encana and Cenovus Energy, Simpson says, “People keep asking me, why do you have a statue of someone hugging a tree outside an oil and gas building? My response is: why wouldn’t you?”

What is the World Petroleum Council? The World Petroleum Council (WPC) is dedicated to the promotion of the sustainable supply and efficient use of oil, gas and other energy sources. Headquartered in London, England, since 1933, the WPC includes over 65 member countries representing over 95 per cent of global oil and gas production and consumption. WPC membership is unique as it includes both OPEC and Non-OPEC countries with representation of National Oil Companies (NOC’s) as well as Independent Oil Companies (IOC’s). Every three years, the council holds a World Petroleum Congress in one of its member countries, which it calls the “Olympics” of the petroleum industry. The next one will be held in Moscow, Russia, June 15 – 19, 2014: www.21wpc.com The WPC Youth Forum was created to give young people in the oil and gas sector a greater voice and involvement in the WPC and their industry. The first Youth Forum was held in 2004 in Beijing, and has been held every three years since, in the year just prior to the WPC Congress. More info: http://www. wpccanada.com/youthforum/ capp.ca/context

On the Cover

social

Licence Catch phrase or key concept: What is social licence? If you’ve worked in the oil and gas industry in the past decade, chances are you’ve heard, seen or spoken the term. Maybe it was a CEO giving a speech, or your corporate social responsibility manager presenting PowerPoint slides at a symposium. Maybe it was an ENGO spokesperson protesting to the media over a recent regulatory application. Regardless, the term “social licence” has definitely become a regular part of the industry vernacular. But is ‘social licence’ just another buzz phrase? What does it really mean? “The social licence to operate is the support of the public, stakeholders, and communities in which industry operates,” notes Dave Collyer, President of CAPP. “It’s required because industry actions have social, environmental and economic impacts and because the public, stakeholders, and communities are able to demand accountability, and potentially take action — legal or otherwise — to delay or refuse industry access.” “Social licence includes regulatory approvals for projects, but increasingly this is not necessarily sufficient for industry to proceed — we need broad public support, social licence,” says Collyer. “This has to be earned and maintained through our performance as an industry and the manner in which we communicate and engage.” Social licence is an imperative for the success of our industry. Social licence, along with enhancing industry’s capp.ca/context

competitiveness, are the two fundamental strategic outcomes that are the goal for all of CAPP’s activities. And it matters to CAPP because it matters to our members. “Social licence for Imperial is a relentless pursuit to establish and maintain public and government trust and confidence in our company by consistently doing the right thing,” notes Glenn Scott, President of ExxonMobil Canada Limited. “At Tamarack Valley Energy, we recognize that we’re part of an industry that is receiving its share of scrutiny. As a smaller producer, we rely on CAPP to help lay the groundwork of public acceptance and credibility for the industry that’s needed to get things done,” says Brian Schmidt, CEO of Tamarack Valley Energy and current Chair of CAPP.

to the creation of specialized regulators for our industry. We can see this most recently with the new Responsible Energy Development Act creating the Alberta Energy Regulator (AER), which is directed by Section 2 of the Act to “provide for the efficient, safe, orderly and environmentally responsible development of energy resources in Alberta.” “The institutions that we as a society have established to govern and to regulate are central to the acceptance and approval by society of energy development,” notes Nick Schultz, CAPP’s General Counsel, “In Alberta, the AER has been given a clear mandate to weigh a wide range of environmental, social and economic inputs to determine whether or not a natural resource project should proceed within a

Social licence is required because the public, stakeholders, and communities are able to demand accountability, and potentially take action — legal or otherwise — to delay or refuse industry access. Social Licence, Good Governance and the Public Interest Social licence as a term may be new but the concept of ensuring industrial development serves society well is not. The responsible development of our energy resources has long been a matter of public interest and is what led

process that provides for the adjudication of opposing views by independent hearing commissioners. “Regulatory approval, typically with many conditions that relate to the issues and concerns that arise during the process, should go a long way to ground social licence.” context . volume 1 . issue 2

On the Cover

Somewhere along the line expectations have changed, and many more people today self‑identify as affected stakeholders to oil and gas development. Mainstream literature on the matter supports Schultz’s interpretation and indicates that broadly defined mandates have provided the flexibility to keep pace with societal conditions and public knowledge, and have been a benefit to regulators and the public both. However, as Canadians become more informed, or perhaps more opinionated, about what is in their best interest, or in the collective interest with respect to oil and gas projects, it has become apparent that at least in some circumstances, regulatory approval is a necessary, but not necessarily a sufficient condition. Broader social licence is required. “It sets up the idea that we may not have social licence for a project that has been determined by the regulator to be in the public interest,” says Janet Annesley, CAPP’s V.P. of Communications. “Oil and gas companies have a long history of working with stakeholders and typically do well working with directly affected stakeholders to create project benefits and manage project risks to an acceptable level. But somewhere along the line expectations have changed, and many more people today self-identify as affected stakeholders to oil and gas development.

context . volume 1 . issue 2

“This comes as a result of global issues such as climate change, new communication tools such as social media and the many campaigns urging people to be concerned, get involved, have their say and demand to be a part of the formal decision-making process.” This makes earning social licence for oil and gas development both larger and harder, she says. “Unfortunately the quality of conversation and the ability of companies and governments to resolve conflicts and address issues is significantly diminished in the new paradigm because it occurs without structure, particular expertise or knowledge, and is easily hijacked by special interests. The end goal of some industrial opponents is to never grant social licence to the oil and gas industry, she indicates. “Some of the most vocal participants in the broader public discussion aggressively argue and market the view there’s no public interest in any oil and gas development or use, which is totally false.” Annesley cites the recent ForestEthics Advocacy suit against the federal government over changes to the law determining who can participate in pipeline hearings conducted by the National Energy Board as an example. To

be clear, the new legislation provides that anyone who is directly affected or who has relevant information or expertise may participate in the hearing process. Despite this, ForestEthics Advocacy still argues the changes violate free speech and are therefore unconstitutional. “In Canada, anyone with an opinion and the desire has the ability to meet in person, pick up a phone or send a letter to their political representative, the prime minister, the media — anybody — and state their case. That’s free speech,” Annesley notes. “The Forest Ethics case is not about freedom of speech, but the headline appeals to a sense of fairness that all should be heard. In reality, it’s about one thing, and that’s frustrating the regulatory process and creating a system that gets to ‘no.’” NEB hearings are quasi-judicial processes and it is normal to have some limits on participation in such processes based on whether someone is affected in a way that is different from the entire population or if they have information or expertise that will assist the regulator. As the NEB hearing process involves large amounts of technical information it is reasonable to require participants have something to say that will assist the NEB in making its decisions, within its legal framework.

capp.ca/context

On the Cover

So, what has happened to public trust in our institutions? The 2013 Edelman Trust Barometer, an annual survey of trust and credibility, provides some clues. The survey reports that trust in business, which rose from 53 per cent in 2012 to 58 per cent in 2013, is 10 points higher than trust in government, which rose from 43 per cent to 48 per cent. Business leaders, however, saw minimal trust increases. Globally, only 43 per cent of the informed public trust CEOs as credible spokespeople and only 18 per cent of the general population trust business leaders to tell the truth regardless of how complex or unpopular the truth is. Business leaders can take little comfort knowing that it’s even worse for government leaders, at only 13 per cent trusting them to tell the truth. “Influence and authority has clearly moved from the few to the many,” Annesley says. “For an industry that relies on relatively small, often remote communities of affected stakeholders to say yes, and a handful of experts to provide credible testimony on safety and environmental matters, this is an issue.”

Performance + Communication = Reputation Moving the needle of broader public opinion can provide the right positive environment to aid project approvals. For example, for the past three years, CAPP has run an annual advertising campaign, combining TV, on-line, print and out-ofhome (transit, elevators, posters, etc.) ads designed to inform Canadians about oil sands environmental technologies, measures and industry’s dedicated people, and the economic and social benefits the industry provides. The result is that in November 2012, 49 per cent of Canadians in four major cities (Toronto, Vancouver, Ottawa and Montreal) say they have a positive impression of the oil sands (versus 26 per cent negative) — up from a baseline of 36 per cent positive and 36 per cent negative in March, 2010 (Angus Reid, 2012). capp.ca/context

Large-scale projects like Keystone XL and Northern Gateway fall somewhere in the middle; while it is necessary to earn the approvals of communities along the pipeline route, these projects clearly have national and international dimensions, and an inherent social licence risk, given the involvement of media, governments and activists, and the high degree of public scrutiny. Here, CAPP takes on a focused role in earning social licence for the oil and gas industry, engaging with the public and key decision makers to ensure that a full, factual understanding of the industry’s social, environmental and economic impacts and benefits are a part of the conversation.

Social licence, however, is much more than a public relations exercise. It’s about having respectful conversations to find out what people care about, and aligning industry’s performance to meet those values. “Humility, transparency and the willingness to explain the mutual benefit are key,” Annesley says. “We also need to instill a sense of pride in our industry and the positive influence it has on the country as a whole.” For the oil and gas industry, this means mitigating land, air and water

Only 18 per cent of the general population trust business leaders to tell the truth regardless of how complex or unpopular the truth is. In an age when industry opponents are only too happy to highlight every flaw and incident in the arena of public opinion, it is vital to widely communicate what industry is doing to earn its social licence, and how its performance is either improving towards or meeting the standards of public social acceptance. “The Canadian industry is among the best in the world in terms of responsible development,” notes Annesley, “But we haven’t always been great at communicating it.” The situation is definitely improving and CAPP continues to expand its communication and outreach efforts, particularly in light of the challenges the industry faces in terms of market access and impediments to development, arising from ENGO anti-development campaigns, a growing trend towards NIMBYism (Not In My BackYard) as well as disparate regional political agendas. One example of this response is CAPP’s recently launched B.C. outreach campaign (read more about it on page 10).

environmental impacts. This also means providing safe and healthy work environments, plus tangible benefits to communities. “Performance plus communication equal reputation,” says Annesley. “And the reputation of our industry as a whole is fundamental to earning social licence. “Without the performance, without the ongoing efforts of industry to improve and adopt leading practices when it comes to environmental, social and economic benefits to all Canadians, we wouldn’t be able to tell the great stories that we as an industry do,” notes Annesley. For the industry to maintain its social licence and continue to expand and grow, it’s a story that must be told often and proudly.

context . volume 1 . issue 2

Feature Story

Partners in

Success

First Nations show off their entrepreneurial spirit in a new form of collaboration with industry.

Photo: Zoltan Varadi

by Ian Doig

A driving dance beat echoes across the Buffalo Run golf course, located on the Tsuu T’ina Nation reserve just west of Calgary. A team of young, First Nations entrepreneurs takes the stage; it’s part of the Tsuu T’ina First Nation Alberta flood benefit concert. Confidently breaking into an energetic, well-choreographed dance routine, they exhibit clothing, jewellery, makeup and hairstyles they and their colleagues have created.

First Nation Entrepreneurs Xochitl Crane, Taide Crane and Amanda Littlelight (left to right) have started a successful mobile hair and beauty business, thanks in part to a Tsuu T’ina run, Suncor sponsored small business incubator. 26

context . volume 1 . issue 2

This is the launch ceremony of the Tsuu T’ina Small Business Incubator, and the surprising new face of entrepreneurial co-operation between Aboriginal communities and the oil and gas industry. The incubator and its enthusiastic, strongly invested clients represent a community-directed trend in Aboriginal employment strategy. It’s an emerging sea change creating win-win scenarios for First Nations and their corporate partners.

The Tsuu T’ina Small Business Incubator “Our vision is to position our entrepreneurs to be world-class,” says Tsuu T’ina income support director Ivonne Crane. The Suncor-sponsored incubator represents one facet of her office’s ambitious Work Corp Program. She emphasizes that her nation has one of the lowest social dependency rates in the country and a long history of entrepreneurship; for centuries, the Tsuu T’ina were traders with other indigenous peoples from Mexico to the Canadian Arctic. “It’s something we have to take back,” she says. The employment strategy was developed by a group of four Tsuu T’ina women — Tracy Dodginghorse, Samantha Whitney, Courtney Big capp.ca/context

Feature Story

Plume and Crane. Under the plan, a professional internship program moves high school graduates into the workforce, and the incubator serves as a self-employment vehicle. Among its initial batch of 12 start-ups is Little Brown Sugar, a mobile hair and beauty business launched by Taide Crane, sister Xochitl and Amanda Littlelight, the three young women who organized the stage show. Through the incubator, Taide explains that she’s taken business courses, received coaching from experienced business people and made connections. “You need that, because you get easily discouraged,” she says. “This program has been the biggest support for my business. I wouldn’t be where I am without it.” Such excitement and buy-in has not been the norm with employment projects. First Nations represent a substantial, youthful labour pool, and unemployment is often chronic on reserves. Yet neighbouring oil and gas operations endure skilled labour shortages and the imminent retirement of baby-boom generation employees. The two sides appear to be perfectly aligned partners, but productive co-operation is only being realized through recent efforts like the business incubator. “The problem is determining scope of partnership, and clarifying roles,” says Greg Brady, Canadian Association of Petroleum Producers Manager of Aboriginal Affairs. Co-operative ventures may involve multiple levels of government and First Nations with a backdrop of historical grievances and complex legal issues as a barrier to rapid resolution of challenges. “What we need is a single vision and for everybody to push in the same direction,” says Brady. “It’s a juggling act that demands tact, patience and long-term commitment on all sides.” Brady sees the situation improving. While industry and First Nations are making concerted efforts to come together, the governments have starting the effort of streamlining the regulatory processes. The key to project sustainability, says Crane, is self-direction, as it generates both individual and community pride. Past programs have dictated terms from outside First Nations and met with limited success. “We’re not opposed to industry helping us, but it’s got to be owned by the capp.ca/context

people,” she says. With industry support, nations can strategize and innovate from within. The incubator exemplifies this outward drive, offering coaching and support from First Nation staff members who are also business owners. Clients receive help with business planning, capacity building, start-up support and self-promotion. Participants receive training on everything from taxation and accounting to dressing for success and accessing procurement opportunities. The Tsuu T’ina incubator illustrates how industry and First Nations are reaching out to each other in more considered and constructive ways. As the program’s financial sponsor, Suncor’s Aboriginal programming is broad in scope. Since 1992, it has done $2 billion worth of procurement business with Aboriginal corporations in Alberta’s Wood Buffalo region and has contributed $100,000 over the past two years to the Tsuu T’ina program.

We’re not opposed to industry helping us, but it’s got to be owned by the people. Ironically, another incubator pilot project in Fort McKay lost steam due to the nation’s high employment rate. The model didn’t fit a community in which the labour force was largely employed and most entrepreneurs already operated businesses. “What we learned from the project was that it needs to be community driven,” says Anne Harding, Senior Advisor Stakeholder and Aboriginal Relations at Suncor. The Tsuu T’ina incubator represents a lesson learned. “It’s a program that is built by Tsuu T’ina people, for Tsuu T’ina people,” says Harding. “Suncor’s involvement is not in how it should be set up or how it should be run. It’s a recognition that Suncor will benefit if the Aboriginal communities that are close by are economically prosperous.” Suncor has taken what she calls a community-connector role, sponsoring coaching and support as needed, including having a faculty member of the Banff Centre Indigenous Leadership and Management program visit the reserve and help the incubator team build strategic and business plans. context . volume 1 . issue 2

Eva John-Gladue of the Tribal Chiefs Employment and Training Services Association believes their goal must be long-term sustainable employment.

Tribal Chiefs Employment and Training Services Eva John-Gladue echoes Crane’s belief that First Nations need to innovate to eliminate employment barriers. “We can’t just complain, we’ve got to do something,” says John-Gladue, who manages the Northeast Alberta Apprenticeship Initiative (NEAAI), a program created by Tribal Chiefs Employment and Training Services Association (TCETSA). The six Treaty 6 First Nations, including the Heart Lake First Nation, Beaver Lake Cree Nation, Whitefish Lake First Nation, Kehewin Cree Nation, Cold Lake First Nation and Frog Lake First Nation, run Tribal Chiefs Employment and Training co-operatively. NEAAI is funded by three different Ministries of the Alberta government and corporations such as Statoil, OSUM and Canadian Natural Resources Limited, Primco Dene as well as working in partnership with Blue Quills College, Portage College and Lakeland College. All are expected to be active program participants. “This is a team effort” says John-Gladue. While connecting employers with prescreened, skilled First Nations and nonaboriginal workers, the organization also helps workers access technical training to elevate earning power and job security.

context . volume 1 . issue 2

First Nations are already doing effective pre-trades training, says John-Gladue. “The nations are doing a wonderful job with the initiatives, and we don’t want to take anything away from them. We just want to be that other resource. Tribal Chiefs has become solution finders,” she says. It identifies individuals and markets them to industry to help fill the labour shortage gaps. The simple lack of a driver’s licence, for example, often keeps qualified workers from accessing job sites. In response, staff members have become tutors, helping clients pass learner’s exams. Facilitating training on-reserve or at offreserve colleges, Tribal Chiefs encourages further training once individuals are hired. Crucial to job retention, the organization’s business industry liaison (BILS) and Apprenticeship Support Coaches mediate between employer and employee when a conflict arises. “The end result is longterm, sustainable employment,” says JohnGladue. “If all we’re doing is prepping individuals for labour jobs, unfortunately, when the economy crashes, they’re the first sent home.” Response from business has been enthusiastic. As an example, TCETSA’s T.R.E.A.T.Y Model (see sidebar) process was piloted in two separate nations, and it scored a huge, tangible success. Kehewin First Nation reduced its social dependency rate from

78 per cent to just 24. John-Gladue commends the community for its flexibility and willingness to make changes. “The process works if you have people that believe in it,” she says. Phaedra John, Kehewin employment and training manager with the Aboriginal Skills and Employment Training Strategy (ASETS) program, says the band’s social welfare rate continues to fall. “People want to work now. Even with the youth, it’s trickled down. Their parents are working, so they want to work.” Band members are employed as oil patch tradespeople and with service companies as camp workers in labour, janitorial and food services positions. “You don’t want your people, the children, living in poverty,” says John. “It really affects the community. There are happier people. Everyone’s supportive of each other.”

TCETSA’s Treaty Model

The Supply of First Nations Workforce Retrain Employment Transition Centres Access to Meaningful Employment Training Leading to Retention Your Succees For more info contact Eva John‑Gladue, evajohn@telus.net.

capp.ca/context

Photos: Curtis Comeau (left); The Canadian Press/Darryl Dyck (right)

Feature Story

The B.C. LNG Export Co-Op In a precedent-setting move, the Haisla First Nation has partnered equally with LNG Partners of Houston, Texas, in the creation of B.C. LNG Export Co-Op near the port of Kitimat on the British Columbia coast. The multi-million-dollar export facility is projected to begin accepting Alberta and British Columbia natural gas in late 2015. Its barge-based liquefaction plant will supply liquefied natural gas (LNG) to tankers bound for Asian customers at a higher return than North American natural gas markets. The Co-Op’s 21 contractual members include gas producers, trading companies and buyers. Though the $400 to $600 million project is relatively small by industry standards, the potential benefits to both partners are substantial. The band and Chief Councilor Ellis Ross have been commended for balancing cultural and environmental concerns with business and economic aspirations. While the Haisla will realize all the financial benefits conferred upon a founding venture partner, the band’s direct engagement in the provincial approval process has shortened its timeframe. Ross has emphasized that industrial projects are benefitting the Haisla with skilled employment opportunities that generate both income and community pride. “It has been important for us to negotiate directly with industry but not as important as it is for industry to negotiate with us,” emphasizes Ross who is also chairman of the Aboriginal Business Investment Council. “This project got ahead quickly because of our partner’s willingness to include the Haisla at all levels of their project.”

the First Nation’s willingness to discuss business principles, and the proponents’ openness to share information.” LNG Partners managing director Tom Tatham echoes this. Industrial projects in B.C., he points out, typically require the consultation of Aboriginal groups with area land claims. “You need to bring them on side with the project. That can be a long and tedious negotiation. Our approach was to simply bring them in as an equal project development partner and be transparent about the economics that could be achieved. I think it has served us and the Haisla well.”

A Business Incubator: Is a program designed to provide support to entrepreneurs just getting their businesses off the ground. Support varies but includes access to physical resources like office space, as well as training and consultation on topics such as business planning, marketing and networking.

Haisla First Nation Chief Ellis Ross (right) shakes hands with Federal Minister of Natural Resources Joe Oliver at British Columbia’s first international conference on liquefied natural gas (LNG), held in February. The Haisla are building partnerships as a key player in B.C.’s LNG industry.

As a model that other co-operative projects might follow, his advice is direct. “Using this approach is dependent on

capp.ca/context

context . volume 1 . issue 2

Feature Story

Responsible

Innovations

Here are a few ways industry is realizing the promise of innovation to improve environmental, social, and economic performance. by Melanie Collison

Every year, the Canadian oil and gas industry invests hundreds of millions of dollars towards technological innovation. It’s the search for new magic bullets, and why not? Technology and the willingness to seek innovative approaches to old problems have the power to improve environmental and social performance (by, for example, reducing water usage, workplace injuries or greenhouse gas emissions) while also, quite often, enhancing competitiveness through reduced costs and/or improved productivity. Creating innovations that make it to every day use isn’t without challenges, though. It often takes a while to move from concept to application. Many a ballyhooed innovation has fallen quietly to the wayside in the long journey from great idea to commercial application.

Illustrations: courtesy Canadian Natural

Here, we profile four technologies that are almost ready for prime time: each is either at the industrial demonstration stage, or is an active product on the market. Each has real promise to improve industry competitiveness and social licence.

Housed in photobioreactors built by Pond Biofuels, Canadian Natural’s algae process will turn industrial waste into biofuel and other commercially useful products 3D rendering of Canadian Natural’s algae‑based bio-refinery being built at their Primrose South location 30

context . volume 1 . issue 2

capp.ca/context

Feature Story

Algae That Convert Waste into Value

The Challenge: Deal with waste products produced by oil and gas operations, in particular, C02 emissions. Construction starts this autumn on an algae farm near Canadian Natural Resource Limited’s thermal in situ oil sands operation, 55 kilometres north of Bonnyville in northeastern Alberta. Algae, you say? Believe it or not, these simplest of organisms can be used as molecular conversion powerhouses, taking waste products from oil and gas operations and turning them into products of commercial value.

The NRC and Canadian Natural are joined by Toronto-based Pond Biofuels, who manufacture the large, specialized tanks called photobioreactors that hold the algae. Together, the three partners recently announced their $19-million, three-year Algal Carbon Conversion Pilot Project near Bonnyville as a means of demonstrating the commercial viability of the algae farm.

Like plants, algae take in CO2 and water, and through the process of photosynthesis, turn these basic inputs into organic matter. Algae also has the advantages that it grows prolifically, converts carbon dioxide into carbon-rich lipids (which can easily be transformed into bio-diesel fuel) and doesn’t require arable land to grow.

The technology could reduce the CO2 emissions from Canadian Natural’s Primrose thermal in situ operation by 30 per cent.

The algae farm starts operating in the first quarter of 2014. If the technology is successful at an industrial scale, Canadian Natural expects that it could ultimately reduce the CO2 emissions from its Primrose thermal in situ operation by as much as 30 per cent. At the same time, the biomass from the algae plants can be processed to extract bio-oil to be used for jet plane fuel or blended into other oils. The remaining algae husks can be dried and used as cattle feed and fertilizer. The genesis for the project came when The National Research Council (NRC) approached Canadian Natural. “They’d been working on [harnessing algae] for 10 to 15 years and felt it was ready to bring to commercialization. They were looking for partners,” says Joy Romero, Canadian Natural technology development vice-president. “They felt the technology was proven at a small pilot scale level, but not yet large scale and seven days a week. Our role is to be a large enough site for a commercial scale project.” capp.ca/context

The farm takes advantage of multiple synergies between algae growing conditions and the waste products produced at the oil sands plant. Not only do the algae consume the carbon dioxide, sulphur and nitrogen in the flue gas, the low grade-waste heat produced by the oil sands facility provides a warm temperature for the algae to grow. Add in some treated waste water and LED lights to trigger photosynthesis, and the recipe for a revolutionary waste-to-riches bio-refinery is complete.

It’s estimated that each tonne of algae will reduce C02 emissions by 1.8 tonnes while yielding 0.3 tonne of biofuel and 0.7 tonne of biomass products. About 1.3 tonnes of oxygen will be released into the atmosphere. Canadian Natural intends to share this technology with the other 13 members of the Canadian Oil Sands Innovation Alliance (COSIA — see sidebar).

1.8 tonnes C02 + algae =

0.3 tonnes

biofuel + fertilizer and livestock feed

COSIA In March, 2012, Canada’s Oil Sands Innovation Alliance (COSIA) was formed by oil sands producer companies, who agreed to work together to accelerate the pace of improvement in environmental performance through collaborative action and innovation. COSIA represents a major breakthrough in that member companies have all agreed to share innovations. This leverages the monies being invested into innovation, and dramatically accelerates how quickly a given innovation can be turned into an industry standard. In just over a year, COSIA member companies have shared 446 distinct technologies and innovations that cost over $700 million to develop.

Canadian Natural: www.cnrl.com Virtual Marine Technology: www.vmtechnology.ca CCW Energy Systems: www.ccwenergysystems.com Devon Canada Corporation Nitrogen Foam: www.dvn.com Canadian Oil Sands Innovation Alliance: www.cosia.ca context . volume 1 . issue 2

Feature Story

Photo: courtesy CCW Energy Systems

Using Pumpjack Kinetics to Save Energy

The Challenge: Harness the otherwise wasted kinetic energy produced by the downstroke of a pumpjack. A pumpjack is a familiar piece of equipment that is used to pump oil out of the ground. You’ll see them nodding up and down like giant sideways metronomes in fields all across the prairies. To get the pump moving and keep it in motion requires a fair bit of energy, considering the pump is attached to a steel sucker rod that can weigh several tonnes. An electrical engine drives the upstroke of the pumpjack, and electricity is often one of the largest bills that an operator faces. What goes up must come down. An Edmonton company has figured out how to make that gravitational fact pay off when it comes to reducing operator electrical bills. Canada Control Works (CCW) Energy Systems has devised a pumpjack controller that harvests the otherwise wasted kinetic energy produced during the downswing of the pumpjack. Its Enersaver drive system converts this motion into electricity and sends this electricity back to the electrical grid, to be credited to the pumpjack’s operator. The controller also stores some of the electricity coming off the motor to use on the pumpjack’s next life cycle, further reducing the pumpjack’s electrical bill. To make the system work, CCW founders Lorne Tilby and Michael Lesenko scoured the world for a suitable energy regeneration base unit. They found one made for solar energy in Italy, and wrote new software programming to adapt it to pumpjacks. Along the way, the pair solved the problems of high and low frequency noise and harmonics that had plagued other attempts to develop such a motor control system. The company is proud of building the world’s first working certified regenerative drive for a beam pump, notes Bryan Richards, CCW’s International Technical Support Director. “Payback time on a new installation could be 12 to 18 months,” says Richards, “On a refit, it could take 18 to 24 months and sometimes longer because the utility supplier charges their clients as if it were bad power quality.” According to CCW, the Enersaver can reduce power usage by upwards of 25 per cent and increase drive efficiency by 30 per cent. As a bonus, each installation cuts CO2 emissions by 20 tonnes per year, CCW estimates. 32

context . volume 1 . issue 2

CCW Energy Systems Enersaver controller harvests the energy from a pumpjack’s downstroke

Simulation Training To Save Lives

The Challenge: Improve the training of lifeboat operators without subjecting them to unnecessary risk. Lifeboat designs for offshore oil and gas operations have improved over the years. Equally important, however, is the training and expertise needed to load and operate these technologically advanced lifeboats, particularly under adverse weather and sea conditions. In response to requests from the offshore oil and gas industry, a company called Virtual Marine Technology has developed a physical training simulator. The simulator places a coxswain — the crew member who operates the lifeboat — inside one of the fully enclosed lifeboats used by the industry. With authentic controls and an immersive virtual environment, the coxswain is taken through different training scenarios, simulating the tough environmental conditions and unpredictable dangers that might occur in a real-life situation. “Coxswains were learning in flat, calm conditions. There’s a huge difference trying to work in stressful conditions,” says Virtual Marine Technology spokesman Matt Simms. The goal was to provide the experience of training in rough weather without the risks that accompany actual lifeboat launch and recovery under such conditions. “Things go wrong that test [crews’] cognitive abilities under stress. The simulator allows them to make mistakes,” notes Simms. “Another bonus is that by training virtually, safety equipment is not subjected to unnecessary wear and tear.”

capp.ca/context

Feature Story

The goal was to provide the experience of training in rough weather without the risks that accompany actual lifeboat launch and recovery. The idea for the simulators began in the mid-2000s, when Petroleum Research Atlantic Canada, now called Petroleum Research Newfoundland and Labrador, called Memorial University in St. John’s, Newfoundland, for help in developing tools to enhance offshore lifeboat training. The university’s faculty of engineering and applied science responded by conducting lifeboat-centred simulation research inspired by best practices from airline pilot simulator training, but adapted to the unique requirements of the marine environment. Based on the success of the initial research, Virtual Marine Technology was eventually created to commercialize the technology globally. In February, Hibernia Management and Development Company Ltd. installed the simulator system on its Hibernia production platform. Crews incorporate both simulated and real exercises into their weekly drills. The simulator software includes accurate representations of the platform and surrounding waters, allowing for training to be adapted to the specific layout of the facility.

Using Nitrogen Foam to Conserve Water

The Challenge: Save water during hydraulic fracturing. Hydraulic fracturing with nitrogen foam is boosting Devon Canada Corporation’s natural gas operations while saving significant amounts of water. Nitrogen foam itself isn’t new, but over the past 20 years, foamproducing technology and equipment have been re-engineered to achieve dramatic improvements in the quality and consistency of foam. Nitrogen foams have received particular attention in recent years due to public concerns over the amount of water used during hydraulic fracturing. Devon has been using nitrogen foam for two years in the Cardium and Glauconite stratigraphic zones. “It doesn’t work too well in shales, but in sandstones it does. It depends on what you’re fracking — the zone, what kind of characteristics and properties the reservoir has,” says Dave Jones, completions leader at Devon’s Ferrier drilling operation.

Photos: courtesy Virtual Marine Technology (top); courtesy Devon Canada (bottom)

“In the formation we’re working with in Rocky Mountain House, the foam has worked very well,” he says.

Lifeboat simulators allow training for tough environmental conditions and unpredictable dangers

Nitrogen foam substitutes for up to 80 per cent of the water consumed in traditional hydraulic fracturing. With the consistency of shaving foam, it provides substantially better support in sandstone formations to carry sand further into the formation than the more commonly used “slick water”— water mixed with a small percentage of chemical additives. Nitrogen can add $100,000 to $700,000 in costs to a well, Jones says, but the actual differential is slashed to less than 20 per cent when the company factors in the avoided costs of hauling, pumping out and disposal of five times as much water. “We’re looking long-term,” he says. “We feel we get good return for a longer period of time, and we’re being a good corporate citizen.”

Nitrogen tanks on Devon’s lease area near Rocky Mountain House, AB capp.ca/context

Using less of the nearby residents’ water makes for good community relations. Besides water conservation, benefits include less truck traffic required to transport water — meaning less dust, noise and congestion, and reduced wear and tear on local roads. As well, Jones notes that because the nitrogen foam does less damage to the sandstone formations than water, it should enhance the producing longevity of the well. context . volume 1 . issue 2

Ask An Expert

Meeting Maestro “When was the last time you walked out of a meeting thinking, ‘That was a slam dunk!’? Business meetings have the potential to spawn great ideas, foster camaraderie, instill a sense of

Q: What are your top three tips for an effective and efficient meeting? A: # 1. A strong chair who knows how to dance with the group. By strong, I’m referring to a leader/facilitator, not a dictator. # 2. Effective participants. You will have a greater return on investment by not relying on one person (the facilitator) to make the meeting run. A meeting should resemble a canoe, not a train. Everybody has a role to move the group forward, to: engage, paddle and balance. # 3. Compass. The group should not just be looking at success on a onemeeting basis. Look one, two and three years ahead to determine the objectives and measures of success for the group. Q: What do you see as the biggest mistake that meeting participants make? A: Silence is not golden in the boardroom. Believe it or not, individuals who talk too little in a meeting create a significant problem around the boardroom table. Decisions may be flawed and the risk level goes up because people are quiet. Get engaged in the discussion. Q: What is the best advice that you can provide a junior person in a meeting setting? A: At the beginning, be in the learning mode. Listen and look for opportunities to upgrade your knowledge and help the 34

context . volume 1 . issue 2

group. Ask yourself, “What can I do as a constructive and engaged partner of the group?” It’s ironic, but sometimes it is the ‘silly’ question that the junior or new member of the team asks that is on everybody’s mind. Q: What is the best way to breathe new life into a working group or committee? A: Have a compass or sense of purpose for the group. This compass should be developed when a group is created, and reviewed on a yearly basis to identify what success will look like at the end of the year or what the legacy will be. It’s

Photo: courtesy Eli Mina

purpose and propel results to new levels.” - Eli Mina

Eli Mina, M.Sc., PRP, is a professional meeting facilitator, management consultant and seminar leader. Mina’s work includes chairing difficult meetings, mediating organizational disputes, and demystifying and humanizing the rules of order for meetings. He is the author of the newly published “101 Boardroom Problems and How to Solve Them.”

A meeting should resemble a canoe, not a train. Everybody has a role to move the group forward to engage, paddle and balance. important to look at meetings from a micro perspective (what’s on the agenda) and from a macro perspective (how the group and agenda items fit into the bigger picture and needs of the organization). Q: Do you have a suggestion for facilitators on how best to engage people in meetings without putting them on the spot? A: Clarify that it’s everybody’s role to share in the meeting, not in the parking

lot later. Meetings are not social clubs, they are a place where business is done and where goals are accomplished. The culture of the group needs to be such that putting someone on the spot is not an issue. For example, when dealing with a controversial subject, the facilitator might ask participants to take two minutes and write their answer to the question on a piece of paper. Following two minutes, the facilitator may ask, “What did you come up with?” This approach provides people time to think about their response. capp.ca/context

Community

A New Face to Fort Mac

Photo: JM Photography, courtesy YMM (top)

Fort McMurray is more than a stereotypical industry town according to Krista Balsom. The 27-year-old publisher and editor of Your McMurray Magazine (YMM) is piling up evidence with each new edition. Known as an oil town where people come for the jobs and don’t stay long, the Fort Mac stereotype is of a place where there’s not much to do except work hard and maybe hang out in your hotel room or trailer with a six-pack. According to Balsom, however, there’s a growing sense of community here, and a lot more going on than one might think. “A lot of our services and shops rely on the success of our biggest industry,” Balsom said. “But I do think there are lots of interconnections (supporting) other parts of the community as well.”

In YMM, readers will find stories about, yes, the oil sands, but also features on the town’s fine dining and nightlife, arts and culture, high-tech scene, local sports and community affairs. The 2013 summer edition of YMM, for example, ran a list of 25 things to do in Wood Buffalo, the regional municipality that surrounds Fort McMurray, including a Metis festival, a children’s festival, a Cancer Society fundraiser relay and a Heritage Day multicultural celebration. There’s even space in YMM for social issues. A recent issue tackled the challenges faced by Filipino nannies in gaining recognition for the support they provide local families. “We have this tagline — it’s a magazine for everyone who lives, works and plays here,” Balsom explained. Balsom graduated from high school in Fort McMurray

and came back after five years at the University of Ottawa. “I like to think of myself as someone who is really passionate about our community,” Balsom said. “The opportunity here is astounding for young people. There’s a large group of people here who really want to tell the positive side of our community, and help shed the stereotypes.” YMM, which has both print and online editions, covers anything Balsom’s stable of local writers can successfully pitch to her — and there’s been no shortage of stories to date. — SS

YMM’s publisher Krista Balsom explores the many sides of Fort Mac

First Graduate of Conklin Sunchild Savannah Adby has many dreams. The first graduate of Conklin Sunchild E‑Learning and High School is an honourroll student and football fan who wants to study hairdressing and esthetics as well as restore vintage muscle cars. She also wants to become a power engineer. This latter ambition may well help Adby realize the rest, suggests the school’s teacher-mentor, Sara Loutitt. Completing her high school education will make a post-secondary engineering career possible. In the past, young people in Conklin, about 155 kilometres south of Fort McMurray, have had to live and study in Lac la Biche or Fort McMurray if they wanted to go to high school. Having to go capp.ca/context

to school so far from the support of family and community has discouraged many from completing a high school education. Devon Energy, which operates near the small town, recognized local kids weren’t graduating and going on to skilled work. The company built the school, and Devon employees provide science and math tutoring and even guitar lessons.

Then it’s on to Portage College in Lac la Biche to study the trade. “This is a significant event for Conklin and other Aboriginal communities where parents have had to send their kids away for an education,” says Loutitt, “and now we’re going to build on that success.” — ID

While local schooling has allowed Adby to enjoy the support of her family, the honour-roll student and natural role model has also helped care for her four gradeschool siblings. “It’s very special to them,” she says of her graduation. After her graduation ceremony, Adby will job-shadow a power engineer at Devon.

Savannah Adby with her grandmother Marjorie Quintal-Adby attending the 2012 Responsible Canadian Energy Awards dinner context . volume 1 . issue 2

Events Listing September 10-11, 2013

Oil Sands Trade Show and Conference Network, collaborate, and hear from experts and leading innovators in the oil sands industry speak about issues and opportunities at hand. Suncor Community Leisure Centre, Fort McMurray, Alberta http://oilsandstradeshow.com/2013/

Canadian Sedimentary Basin. CAPP Members receive a 15 per cent discount by entering the code “CAPP15” when registering. Calgary, Alberta http://www.canadian-businessconferences.com/c145/crudemarkets-and-rail-takeaway-summitcanada-2013

October 1-2, 2013

September 15-18, 2013

September 25-26, 2013

October 1-3, 2013

Canadian Society of Safety Engineering (CSSE) Professional Development Conference The conference features national and international speakers presenting on the theme: “developing world-class safety.” Fairmont The Queen Elizabeth, Montreal, Quebec http://www.csse.org/annual_ conference

September 18, 2013

CAPP Speaker Series: David Wilkins, former U.S. Ambassador to Canada Former ambassador Wilkins discusses energy issues from a U.S. / Canada context, including the political climate underlying the Keystone XL debate. The Metropolitan Centre, Calgary, Alberta Save the date, CAPP members on the Speaker Series invite list will receive an invitation to register by email in early Sep. Email andrew.mah@capp.ca to be added to the invite list.

September 17-19, 2013

Crude Markets & Rail Takeaway Summit Canada 2013 Driving Crude Rail Infrastructure Expansion To Increase Takeaway Capacity, Open Up New Markets and Improve Price Differentials For Light and Heavy Crude Produced In The Western

Tight Oil & Shale Gas Water Management Canada Water experts discuss techniques and strategies for recycling and handling flowback and produced water. CAPP Members receive a 15 per cent discount by entering the code “CAPPSWC” when registering. Coast Plaza Hotel & Conference, Center, Calgary, Alberta http://www.tight-oil-shale-gaswater-2013.com/

September 26, 2013

Canadian Petroleum Hall of Fame Induction Dinner Gala dinner to honour persons whose contributions to the Canadian petroleum industry have been of superior benefit to the nation. Westin Hotel, Calgary, Alberta http://www. canadianpetroleumhalloffame.ca/

October 1-2, 2013

The Maritimes Energy Association: Core Energy Conference Learn about the latest advances and developments in the East Coast energy industry. Pier 21, Halifax, Nova Scotia http://www.maritimesenergy.com/ eventdetails.asp?ID=92

Answer Key to Safety 101: What’s Wrong with This Picture? Here’s what’s wrong with the illustration on page 37: 1. Only using one hand to steer: Both hands should be on the handlebars for full control at all times. Items being transported should be strapped securely to the vehicle. 2. Wearing a hard hat not a helmet: Always use a real ATV or motorcycle helmet; your hard hat won’t protect you in case of a collision or rollover. 3. There’s debris in the exhaust pipe: Debris should be kept clear of the exhaust to prevent wildfires. CAPP Health and Safety Analyst Claudette Fedoruk also notes that when riding an ATV in the wilderness, one should remember to bring a fire extinguisher and shovel. “And if you’re riding alone, make sure to follow a working alone protocol,” adds Fedoruk. “This means letting someone know where you are and following a check-in schedule so that if you get lost or are injured, someone will know to look for you.” Other safety questions or suggestions for future Safety 101: What’s Wrong with this Picture topics? Email Claudette.Fedoruk@capp.ca.

context . volume 1 . issue 2

Natural Gas Vehicle Infrastructure Canada Conference and Exhibition How to develop profitable and sustainable natural gas vehicle infrastructure. Ritz Carlton Hotel, Toronto, Ontario http://ngvevent.com/canada

B.C. Energy Conference Brings together industry leaders, all levels of government and academics to generate shared awareness and general literacy related to the energy sector in Canada. Fort St. John, British Columbia http://www.bcenergyconference.ca/

October 1-3, 2013

Seismic in Motion One-Day Field Trips (one offered each day) The Canadian Association of Geophysical Contractors is offering full-day fields trips to observe the technology, safety and environmental practices of this growing field. Near Calgary, Alberta http://www.cagc.ca

October 2-4, 2013

Offshore Safety & Workforce Capability Assurance Accelerating SEMS, Training and Risk Management Systems to Mitigate Major Hazards and Ensure Systematic Compliance. Houston, Texas http://www.marcusevansconferences-northamerican.com/ OSWCA2013CAPP

October 8, 2013

ES&G (Environmental, Social and Governance) Accountability Forum Addresses one of the top ten sustainability challenges for Canadian business: how can companies better respond to the proliferation of reporting requirements? Calgary, Alberta http://www.eventbrite.ca/ event/7035490341?ref=ebtnebregn

October 9-11, 2013

15th Annual Unconventional Resources Conference This year’s theme on “Creating Value in an Unconventional World” promises to be both timely and relevant as the energy industry continues to develop these important resources. Telus Convention Centre, Calgary, Alberta https://event-wizard.com/ CSUR2013Introduction/0/ pages/54940/

October 15-17, 2013

CAPP Health and Safety Analyst Claudette Fedoruk

October 20 – 23, 2013

Canadian Chemical Engineering Conference The main themes of this year’s conference are Resources, Environment and Energy, which are critical issues faced by chemical engineers both in Canada and around the world. Fredericton, New Brunswick http://www.chemistry.ca/index. php?ci_id=3217&la_id=1

October 22-25, 2013

4th World Petroleum Council Youth Forum Providing a global perspective on industry best practices, technological advancements, corporate social responsibility, financing, as well as the opportunity to develop solutions to current key issues and foreseeable challenges. Telus Convention Centre, Calgary, Alberta http://www.wpccanada.com/ youthforum/

October 29-30, 2013

In Situ Oil Sands SOR Reduction Initiative 2013 Optimizing reservoir selection, steam based and non-condensable recovery techniques and steam quality. Commonwealth Centre, Calgary, Alberta http://www.oil-sands-sorreduction-2013.com/

November 12-13, 2013

B.C. Business Summit 2013 Bringing together government, business, and First Nations thought leaders from across the province to explore the opportunities and most pressing challenges facing B.C.’s economy. Vancouver Convention Centre West, Vancouver, British Columbia http://www.bcbc.com/

November 12-14, 2013

Canadian Common Ground Alliance (CCGA) Damage Prevention Symposium This event will focus on critical issues specific to Canadian stakeholders. Delta Lodge at Kananaskis, Kananaskis, Alberta http://www.canadiancga.com/ events.html

April 3-4, 2014

2014 CAPP Scotiabank Investment Symposium The premier investment event for Canada’s upstream oil and gas industry. Sheraton Centre Toronto Hotel, Toronto, Ontario RSVP/More info Capp.symposium@scotiabank.com

Canada’s North Summit 2013 Featuring success stories from communities, businesses, governments and other organizations across the north. Whitehorse, Yukon http://www.conferenceboard.ca/ conf/north/default.aspx capp.ca/context

Online / Safety

What’s

Online at CAPP The Oil Sands Today website is now mobile optimized for use on

What the heck’s a

meme?

(pronounced “meem”)

According to the Merriam-Webster dictionary, it’s “an idea, behavior or style that spreads from person to person within a culture.” Memes are cultural analogues to genes in that they self-replicate, mutate and respond to selective pressures. On the Internet, a meme is a single, self-contained concept, fact or idea that spreads rapidly from person to person via e-mail, forums, blogs and social networking sites. Yes, it’s hard to explain, so here’s an example:

your mobile devices. oilsandstoday.ca

Looking to connect with fellow CAPP members and find out the latest goings on in industry? Join the CAPP LinkedIn Group for updates and discussion.

Support the oil and gas industry: share CAPP memes on your social networks — look for new ones each month at facebook.com/

oilsandstoday and facebook.com/ natgascanada.

Main Links: www.capp.ca

The Facts on Oil Sands mobile app is now available for free download

www.capp.ca/context

on your Android device!

http://twitter.com/#RCE

http://appstore.capp.ca/oilsands

http://www.facebook.com/OilGasCanada

Join the online conversation about B.C.’s energy future. Visit the discussion forum www.BCFTP.ca and use #BCBalance on Twitter.

Safety 101: What’s Wrong With This Picture? Can you identify at least three safety issues with this picture? [answers on page 36]

capp.ca/context

context . volume 1 . issue 2

In Closing

By Nick Schultz

On March 27, 2013, the National Energy Board released its decision on the TransCanada Mainline toll and tariff restructuring application.

Under this application, TransCanada would have shifted the costs and risks of the underutilization of its Mainline and Foothills pipelines to TransCanada’s wholly owned affiliate, NOVA Gas Transmission Ltd (NGTL). This was to be accomplished by having NGTL extend its service to the Saskatchewan/Manitoba border on the Mainline and to the U.S. border on the Foothills pipeline. The decision was a key one for CAPP members who ship on NGTL. The additional cost to NGTL shippers was to be in the order of $450 - $500 million per year. This would have been an almost 1/3 increase in the NGTL cost of service — an indefinite

arrangement that would have added billions in new costs in a matter of a few years. As we now know, in its March decision the NEB rejected TransCanada’s proposal to transfer costs to NGTL. The NEB also adopted CAPP’s alternative proposal: a five-year fixed-toll methodology. CAPP, supported by both the Alberta and B.C. governments and several other parties, successfully argued that the TransCanada proposal was a violation of regulatory law and principle — that it was contrary to the basic business by which people take on obligations when they contract for service on a pipeline. We pointed out that NGTL shippers had not

This was a highlight — proof of the capacity of CAPP members to come together in a clear and effective way that also builds support from other parties. The decision saves shippers on the

NGTL up to

$500

million a year

context . volume 1 . issue 2

contracted on the TransCanada Mainline; that if NGTL were an independent company it would never agree to this arrangement; and that the addition of these costs to NGTL would be harmful to development of the basin and gas consumers in Western Canada. Success is always sweet but, in my 18 years at CAPP, this was also a highlight — proof of the capacity of CAPP members to come together in a clear and effective way that also builds support from other parties.

When it comes to pipeline toll decisions, it is always that brief moment when the decision comes out that captures attention, but there is a lot of behindthe-scenes effort — long hours by CAPP staff working alongside volunteer representatives from member companies on applications, preparing evidence, long days of hearings and arguments, all to ensure that, whatever the outcome, we will have done our best to represent the interests of our members. It’s one of the bread and butter things we do at CAPP. Finally, I would be remiss not to add that though the hearing process can take on an adversarial tone, the goal is, within a market-oriented energy framework, to continue to work with other stakeholders towards mutually beneficial outcomes with the pipelines that provide us market access. TransCanada, which submitted their Mainline restructuring application in an attempt to deal with cost of excess capacity due to lost long haul volumes, is now examining the commercial basis for repurposing Mainline capacity not needed for natural gas service to crude oil service. Should this happen, it will open new markets for western Canadian crude oil producers.

Nick Schultz Vice President Pipeline Regulation and General Counsel Canadian Association of Petroleum Producers

capp.ca/context

THE 2011 RESPONSIBLE CANADIAN ENERGY PROGRESS REPORT HIGHLIGHTS View the full report online at www.capp.ca

MEASUREMENTPEOPLE TRANSPARENCYLAND PROGRESS CHALLENGESAIR OPPORTUNITIES WATER DID YOU KNOW? W E S T E R N

C A N A D A

O I L

S A N D S

A T L A N T I C

C A N A D A

Canada’s upstream oil and gas industry contributes $18 billion a year in taxes, royalties and lease sales to government. Find out more in CAPP’s Responsible Canadian Energy 2013 Progress Report A performance picture for Canada’s oil and gas industry. Key metrics on people, land, air and water. Case studies of leading practices.

CONTEXT is printed on 100 Per cent Post‑Consumer Fiber, manufactured using Biogas Energy by using

CAPP Executive Team

Offices

President Dave Collyer

Calgary: 2100, 350 – 7th Ave SW, Calgary, Alberta T2P 3N9, Tel: 403.267.1100

Dave.Collyer@capp.ca

1683 kg of recycled material we saved:

Vice President Communication Janet Annesley Janet.Annesley@capp.ca

40.5 kwh of energy

Vice President External Relations - Ottawa Bob Bleaney Bob.Bleaney@capp.ca

74,584 litres of water 1.85

tonnes of green house gases

538 kg of solid waste 37 trees

Vice President Markets and Oil Sands Greg Stringham Greg.Stringham@capp.ca Vice President Operations David Pryce David.Pryce@capp.ca Vice President Pipeline Regulation and General Counsel Nick Schultz Nick.Schultz@capp.ca Vice President Policy and Environment Alex Ferguson Alex.Ferguson@capp.ca

Ottawa: 1000, 275 Slater Street, Ottawa, Ontario K1P 5H9 St. John’s: 403, 235 Water Street, St. John’s, Newfoundland and Labrador, A1C 1B6, Tel: 709.724.4200