B.C. Oil and Gas Report 2015 by DEL Communications Inc.

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B.C. leads Canada in economic growth LNG Buy BC program connects businesses with LNG opportunity Harbouring growth: Prince Rupert a key player in LNG

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B.C. Oil & Gas Report 2015

British Columbia

Oil & Gas Report

is published by:

2015

Contents 10 Message from the editor, Shayna Wiwierski 12 Message from the B.C. Premier, The Honourable Christy Clark 16 Message from the B.C. Minister of Natural Gas Development, The Honourable Rich Coleman 18 Message from the Minister of Aboriginal Relations and Reconciliation, John Rustad

DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, Manitoba Canada R3L 0G5 President David Langstaff

66 Fact or fiction: B.C.’s ICI construction sector on the future of LNG

Associate Publisher Jason Stefanik

68 Access to largest gas reserves in B.C. receives long-awaited upgrades

Managing Editor Shayna Wiwierski shayna@delcommunications.com

71 Is regulatory harmonization possible across provinces? It depends. BC Safety Authority

Sales Manager Dayna Oulion

20 BC Jobs Plan - Creating jobs and opportunities

72 Why wait for B.C. LNG? Putting natural gas to work in the Northern Rockies

22 Oil and natural gas development: Done responsibly for the right reasons

74 Are risks associated with LNG in the eye of the beholder?

24 LNG-Buy BC connecting local businesses with LNG opportunities

75 Apprenticeship programs: Training the futures of skilled trades in B.C.

26 BC Oil and Gas Commission studying induced seismicity

76 B.C. company turns up the heat on oil and gas projects

30 AltaGas to invest over $1 billion in natural gas processing and export infrastructure in B.C.

78 Relaxing systems for fluid transfer under ship motions

32 Prince Rupert awaits LNG development news

80 Maintaining a safe and healthy workplace

art Director Kathy Cable

34 A new regime: Bill 12 grants province authority over B.C. LNG port development

82 Innovation at McElhanney Land Survey’s Fort St. John branch

Layout & Design Joel Gunter

36 Strength in numbers

84 Efficiency through innovation

38 B.C. leads Canada in economic growth: What role will LNG play?

86 Little to no environmental impact: Remote building solutions that leave operating sites in their natural state

40 Canadian oil is down, but not out 42 Financial incentive for B.C.’s LNG industry 44 LNG in Prince Rupert: The birth of a new industry in British Columbia 46 Made in B.C. - LNG Buy BC program connecting B.C. businesses with LNG opportunities 48 Why the Express Entry to British Columbia System is important to the LNG industry 49 Keystone XL in temporary limbo following presidential veto 50 Oil industry will rebound: It’s time for North America to act like an energy superpower 54 Is it too late for B.C. LNG? 56 The growing contribution of the oil and gas services sector – How big is it? 58 SPE ramps up supportive benefits for the Canadian oil and gas industry 60 Levelling the playing field: A Q&A with Art Jarvis, executive director of ESBC

89 Pipelines are still the safest alternative 90 Sand management solved by innovative Canadian filtration system 92 Boilermakers co-operate to get the job done 94 High-tech simplifies safety and saves money 96 SDI expanding into new global markets 98 Tailored communication solutions for the north coast and beyond 100 A comprehensive solution for workforce logistics management 102 Simple solutions for your complex excavations 104 First in safety and service: Industrial Scaffold Services L.P. 106 Through the challenging terrain, LHI TutL’it are corridor specialists 108 Van Houtte Coffee Services: Specializing in coffee services custom-tailored to the fast-moving oil and gas sector

62 The College of New Caledonia: A cornerstone of B.C.’s economic development

109 Northwest celebrates six years

63 Training the next generation of skilled tradespeople

110 Index to advertisers

B.C. Oil & Gas Report • 2015

109 For all your needs: Raven Oilfield Rentals

Account Representatives Jennifer Hebert Mic Paterson Anthony Romeo Colin James Trakalo Production services provided by S.G. Bennett Marketing Services www.sgbennett.com

Advertising art Dana Jensen Sheri Kidd

Cover photo courtesy of the Port of Prince Rupert. © 2015 DEL Communications Inc. All rights reserved. Contents may not be reproducedby any means, in whole or in part, without the prior written permission of the publisher. While every effort has been made to ensure the accuracyof the information contained herein and the reliability of the source, the publisherin no way guarantees nor warrants the informationand is not responsiblefor errors, omissions or statementsmade by advertisers. Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher, its directors, officers or employees. Publications Mail Agreement #40934510 Return undeliverable Canadian addresses to: DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, Manitoba R3L 0G5 Email: david@delcommunications.com

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Editor’s message

Shayna Wiwierski

here’s a lot happening right now in B.C. LNG is making some serious headway as the province gears up to create an industry that will elevate the provincial economy. Northeast British Columbia is home to an enormous supply of natural gas, so much that there is enough to supply energy needs in Canada and around the world for more than 150 years. Since the need for energy is increasing globally, particularly in Asian economies, B.C. is able to meet this demand, and plans to be a global leader in energy growth. But, as we will learn in this issue of the B.C. Oil & Gas Report, setting up the province for successful LNG export isn’t so easy. We take a look at a variety of hot-button issues in this edition of the magazine. Whether it’s cementing relationships with different groups around the province, or making sure that B.C. has enough people to cover the immense workforce needed, there is a lot of activity going on. I truly hope you enjoy the 2015 edition of the B.C. Oil & Gas Report and make sure to visit us online at bcoilandgas.com to learn more about oil and gas activity around the province. Yours truly, Shayna Wiwierski Shayna@delcommunications.com S

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Message from the B.C. Premier

The Honourable Christy Clark

hey say success is what happens when good fortune meets hard work. British Columbia has the good fortune to have an abundant supply of natural gas – but to build a made-in-B.C. LNG industry, create 100,000 jobs for British Columbians and more opportunities for communities and businesses across the province – we’re working around the clock. Around the world, demand for energy is growing fast, particularly in Asia, where millions of people are being lifted out of poverty. As Canada’s Asia-Pacific Gateway, British Columbia is uniquely well positioned to meet this demand. Compared to U.S. ports, Vancouver and Prince Rupert save shippers up to 58 hours of travel time to Asia, and are ice-free and deep sea all year round. The lower average temperature in northern British Columbia than other jurisdictions helps lower operating costs and increase energy efficiency. All these competitive advantages build on our vast supply of natural gas, which continues to grow as exploration technology advances. The B.C. government committed to building an LNG industry only two years ago – and in that short time, we’ve come a long way. This past year we put the legislative framework in place to give proponents the certainty they need. We announced the LNG tax income that represents a fair, longterm return for British Columbians. We introduced greenhouse gas benchmarking that will make B.C.’s LNG facilities the cleanest in the world. We launched the B.C. Skills for Jobs Blueprint to make sure British Columbians are first in line for jobs, and that proponents would have access to a deep pool of skilled, talented labour. That work is starting to pay dividends. In June, Pacific Northwest LNG (a partnership led by PETRONAS) announced it was resolved to move forward with a Final Investment Decision. This would mean a $36 billion investment – the largest from the private sector in British Columbia’s history. This positive decision is the latest and boldest step towards a prosperous future. If five LNG plants are built in B.C., it would create a total investment of $175 billion and create up to 100,000 jobs. This economic activity would contribute up to a trillion dollars to the province’s gross domestic product. When we started pursuing LNG two years ago, there were two proposals; today we have 19 project proposals with more than 30 proponents. There is still work to do. We have to ensure First Nations communities share equally in the benefits of economic development, and that LNG projects are developed with the highest standards of environmental protection and enhancement. Two years ago, critics said B.C.’s LNG industry was a pipe dream. Today, we’re closer than ever to realizing that dream – and creating opportunity for generations. S

12 B.C. Oil & Gas Report • 2015

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Message from B.C. Minister of Natural Gas Development The Honourable Rich Coleman Building a global energy industry at home

espite the size and complexity of the global economy, one thing underpins its momentum: energy. All forms of energy are required to maintain our way of life, and demands are increasing every day as economies grow and become interconnected. Now, more than ever, British Columbia is poised to be part of this global energy marketplace with an emerging liquefied natural gas industry making strides across the province. Economic benefits will be far reaching. The export facilities proposed represent the largest capital investments B.C. has ever had, and final investment decisions are nearing. Once in operation, each LNG facility will have permanent positions to be filled. They will require highly skilled and technically qualified employees to successfully manage and operate this new industry. Based on the development of five projects, our analysis indicates up to 100,000 jobs will be created, including 58,700 16 B.C. Oil & Gas Report • 2015

positions in construction. Upwards of $12.5 billion has already been invested, supporting jobs linked to exploration, production, processing and transportation. Obviously the demands on our labour force are increasing. Training is essential to ensure British Columbians are first-inline for future job openings. The Skills for Jobs Blueprint details how the Government of British Columbia is prioritizing education and training so young adults are given every opportunity to be employed in a trade or directly within the industry moving forward. Support from our provincial government also includes the LNG-Buy BC program which was created for companies across the province to connect to the business side of LNG development. An online tool allows B.C.-based businesses to profile their goods and services to proponents and the industry, so connections can be made and contracts can be signed. First Nations are making those connections, creating strategic partnerships with industry and working closely with the provincial government to be part of new development. Pipeline benefits agreements have already been signed and a plan for skills training has been put in place, with a new $30-million fund for community-based programs. The approach is all part of our comprehensive plan to work with First Nations to facilitate economic prospects alongside industry growth. These efforts and more will be a focus

of the Province’s international conference – Clean Energy. Reliable Partner – this fall. On October 14-16, 2015, participants from all over the world will congregate in Vancouver and take part in three days of thematic discussions. The most influential LNG proponents and global companies will take part. A larger tradeshow is also planned, with elements to further education and awareness. There has been a lot said about global energy prices this past year but the fact remains, demand for energy and specifically clean-burning natural gas, is growing. The long-term economics for diversifying British Columbia’s natural resource sector are strong as evidenced by the activity underway now and the interest that continues to shine on our province’s prospective LNG future. Government, industry, First Nations, stakeholders – we are all championing a prosperous future for British Columbia. Let’s keep the momentum going to ensure this generational opportunity is available to our children and grandchildren. To read more about B.C.’s Skills for Jobs Blueprint, visit: www.workbc.ca/Job-Seekers/ Skills-and-Training/B-C-%E2%80%99sSkills-for-Jobs-Blueprint.aspx. To register with LNG-Buy BC, visit: engage. gov.bc.ca/lnginbc/lng-buy-bc-program/. For more information about LNG, and to register for the 2015 International LNG conference in Vancouver, visit: www.lnginbc.ca. S

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Message from the Minister of Aboriginal Relations and Reconciliation John Rustad Working with First Nations on natural resource development

he heart of the B.C. economy has, and will continue to be, resource development. A key question at the heart of the relationship with First Nations in British Columbia is whether we can and will be effective stewards of these resources together. First Nations leaders from all corners of the province have told me the answer is yes – they want to participate in sustainable economic development and share in the wealth created. As we work to bring the incredible liquefied natural gas opportunity to life in British Columbia, I hear time and again from First Nations that they want to participate so they can improve prospects for their people and conditions in their communities. The First Nations leaders I work with want to grow the economy in ways that are sustainable, respectful of the environment, their traditions and values, and provide social and economic benefits for their communities. They want to be engaged early in a collaborative

18 B.C. Oil & Gas Report • 2015

approach and included in the planning and pace of development. First Nations have been left out of economic growth for far too long. As we continue to make progress towards reconciliation, we’re working hard to change this, particularly in the context of developing a new LNG export industry. Our LNG work with First Nations is premised on three pillars: • Offering skills training and creating jobs in communities that can directly benefit from LNG development; • Enhancing environmental stewardship opportunities and land management; and • Providing financial benefits that encourage economic growth so First Nations can improve the programs and services available to community members. With emphasis on LNG job readiness, the provincial government is investing up to $30 million in skills training funding over three years to help members of Aboriginal communities access familysupporting jobs. The need for Aboriginal skills training is underscored by the fact that Aboriginal youth are B.C.’s fastest-growing demographic, a potential powerhouse in our future workforce. First Nations leaders tell all of us that they don’t want development to come at the expense of the environment. For over a year now, the Province has worked hand-in-hand with First Nations and industry to create the LNG Environmental Stewardship Initiative to address

First Nation priorities and establish a long-term environmental legacy. Our government, First Nations and industry are working together to improve certainty for project development, improve social and economic conditions for Aboriginal communities, and put in place a positive environment for investment – investment that contributes to the high quality of life British Columbians enjoy. Many companies in the natural gas and LNG sectors have been engaging First Nations early and often in their project design and have committed to negotiating impact benefit agreements with First Nations. This inclusive and collaborative approach is how progress is made in natural resource development. Meanwhile, the Province has reached one or more pipeline benefits agreement with nearly every nation across the North along the pipeline routes. The First Nations Limited Partnership is an excellent example of what can be achieved when we work together. An historic milestone was achieved this year when all 16 nations along the proposed Pacific Trail Pipeline route joined with industry partners, Chevron and Woodside, in support of the project. First Nations are partners in resource development and, together, we are forging a path to progress. These partnerships are built on respect, trust and shared prosperity; elements that move us closer to reconciliation with First Nations, and a brighter future for all British Columbians. S

BC Jobs Plan – Creating jobs and opportunities By Hon. Shirley Bond, Minister of Jobs, Tourism and Skills Training and Responsible for Labour

ritish Columbia is expected to be one of the leaders in Canada for economic growth in 2015, and our government is working hard to help communities and businesses throughout the province reach their economic potential. B.C. has amongst the highest small business confidence numbers in Canada and is second in the country in GDP growth according to preliminary 2014 numbers. We have tabled three consecutive balanced budgets and have maintained our triple-A credit rating. B.C. is a good place to do business. To keep our economy diverse, strong, and growing, the BC Jobs Plan is building on the strengths of eight of our province’s key sectors using our educated and skilled workforce. Those eight sectors are: Agrifoods, Forestry, Mining and Energy, Natural Gas, International Education, Technology and Green Economy, Transportation, and Tourism. We are developing our competitive advantages in each of those sectors by focusing on three objectives. First, working with employers and communities to enable job creation throughout B.C. Second, expanding markets to our goods and knowledge-based services in Asia and other priority markets. Third, working to strengthen our infrastructure to get goods to market. To move towards these objectives we have added four cross-sector areas of focus to the Jobs Plan: Aboriginal People

20 B.C. Oil & Gas Report • 2015

and First Nations, International Trade, Manufacturing, and Small Business. We all recognize that liquefied natural gas (LNG) is a once-in-a-lifetime chance to continue with strong economic growth and to provide employment opportunities throughout B.C. Over the next 10 years, the province is going to see the development of hundreds of major projects, and the LNG sector alone could generate 100,000 jobs – including more than 58,000 construction jobs – by 2024. To capitalize on those opportunities, we have created the LNG-Buy BC program. Its aim is to ensure B.C. businesses have the tools they need to connect with the opportunity LNG offers. As part of this program, to help businesses raise their profile to connect and benefit from LNG investments, we launched the LNG-Buy BC online tool at LNGBuyBC. ca. This tool currently has 585 companies registered and is a great way to help B.C. businesses, especially small and medium-sized companies, to promote their products and services to investors and make important business connections. Recently, Premier Christy Clark announced an agreement between the government of B.C. and Pacific NorthWest LNG that sets the stage for a potential US $36-billion investment in northern B.C. On June 11, 2015 Pacific NorthWest LNG announced their commercial investment decision, a further important step towards building a liquefied natural gas export facility in Prince Rupert. Developing

our LNG industry will result in some of the largest private-sector investments in British Columbia’s history, stimulating economic activity throughout our province like never before. While there is environmental work and First Nations engagement ahead, this is a positive step and a strong show of confidence in B.C.’s diverse and growing economy. That’s why we’re working hard to make sure British Columbians benefit with family supporting jobs. Growing the LNG sector will mean increases to local tax bases. And with this tax growth, local governments will be able to diversify their economies beyond the resource industries. With $7.3 billion in contributions to our economy and employment of 132,200 British Columbians, one area of diversification should be into tourism-related activities. In 2014, there were 250,000 more people that visited B.C. than previous year – that is a 5.3 per cent increase over 2013. Keeping B.C. at the forefront of economic growth in Canada takes a lot of planning and hard work. Whether it’s the BC Jobs Plan, investing in LNG, or capitalizing on our tourism industry, our government is committed to keeping British Columbia as one of the best provinces to live and to do business in the country. For more information on the BC Jobs Plan, please visit www.BCJobsPlan.ca. For more information on BC Skills for Jobs Blueprint, visit www.workbc.ca/skills. S

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Oil and natural gas development

Done responsibly for the right reasons

By Geoff Morrison, Manager, British Columbia Operations, Canadian Association of Petroleum Producers

ritish Columbia has a long, successful history of responsible natural gas development that’s contributing significantly to the economic prosperity of the province. We have world-class resources, and we develop them under an excellent regulatory regime and world-leading industry best operating practices. These are designed to ensure natural gas and oil are produced in an environmentally and socially responsible manner. Upstream natural gas and oil operations in British Columbia are regulated by the BC Oil and Gas Commission, an independent regulator with a mandate to ensure oil and natural gas resources are developed in the best interest of the province, protecting the public and the environment. Natural gas and oil resources have been developed in northeastern B.C. for decades. Wells have been hydraulically fractured since the early days, but innovation in drilling has meant more gas has become commercially viable. Technology enables industry to access natural gas from the source rock deep underground in addition to conventional geological formations. Transparency is important to ensure public trust, and as of January 1, 2012 the public has been able to review the composition of fracturing fluid and water volumes used in any well drilled in B.C. at www.fracfocus.ca. After decades of operations in B.C., about 9,000 wells have been hydraulically fractured without a documented case of impact on drinking water, according to the B.C. Oil and Gas Commission (OGC). The OGC publishes a quarterly Oil and

22 B.C. Oil & Gas Report • 2015

Gas Water Use Summary, which reports all short-term water use and water license data. Building on the existing strong water stewardship regime of the OGC, and five ministries with water management responsibilities, the B.C. government announced the Northeast Water Strategy in spring 2015. The strategy is a long-term approach for the sustainable use and management of water resources by all resource sectors in Northeast B.C. The strategy’s goal is “the responsible use and care of water resources through conservation and sustainable practices to ensure human and ecosystem needs are met now and into the future”. The B.C. Ministry of Health’s Northeast Oil and Gas Human Health Risk Assessment Study was released in March 2015 after three years of consolations and research. It included an extensive review of peer-reviewed scientific literature, regulatory and policy frameworks, and industry operating practices focusing on assessing emissions from natural gas processing plants, and oil and natural gas production facilities. The study concluded public health risks associated with the development of natural gas and oil in the region around Fort St. John are low. The International Energy Agency estimates that global demand for natural gas could increase up to 55 per cent by 2040. B.C. produces four billion cubic feet per day, or 1.5 trillion cubic feet annually – one year of natural gas production is enough to meet the residential demand of the entire province for 21 years. B.C.’s ability to operate at a leading standard in combination with abundant energy resources means there is an op-

portunity to supply global markets. For example, the Montney Basin is just one of four major unconventional natural gas basins in the province and has an estimated 271 trillion cubic feet of marketable gas. Of the 1.5 trillion cubic feet produced each year, 16 per cent is used in B.C., 43 per cent goes to the rest of Canada and 41 per cent is exported to the United States. Our traditional markets in Central Canada and the United States, however, are declining because of abundant supplies closer to these markets. For example, the U.S. Energy Information Administration estimates that by 2030, the U.S. will be producing enough natural gas to match the consumption of the entire United States and all of Canada. While the entire province benefits significantly from resource revenues, royalties and land right sales, many northeastern B.C. communities depend on the natural gas industry to support their families. According to the Canadian Energy Resource Institute, B.C.’s natural gas industry employs 12,000 people and that number could rise to 40,000 by 2035. The provincial government states that in the 2014/15 fiscal year the natural gas industry paid nearly $1.4 billion in royalties and rights acquisitions. This money helps pay for public infrastructure such as roads, schools and hospitals. Economic benefits and responsible resource development are achievable together, and B.C. is in a position to continue to develop resources at a worldclass standard all the while providing economic growth, jobs, and government revenues. S

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LNG-Buy BC connecting local businesses with LNG opportunities By Gordon Wilson

n September of 2013 at the Union of BC Municipalities’ annual conference, British Columbia’s Premier Christy Clark announced the LNG-Buy BC program, and within two months had appointed an advocate with a mandate to ensure that B.C. businesses understood – and were properly prepared for – the magnitude of the opportunity that would materialize with the export of B.C.’s huge natural gas reserves in the form of liquefied natural gas (LNG). The building of LNG export facilities is a global industry with well-established procurement practices and supply chains. Project management companies (EPCs) tend to award contracts to companies with whom they have established relationships with in order to provide a greater certainty with respect to supply and to avoid cost overruns caused by a break in the supply chain. Given that reality, it was a bold move

24 B.C. Oil & Gas Report • 2015

to introduce the LNG-Buy BC program. Where other jurisdictions tried to legislate procurement practices in order to favour domestic suppliers, tying the hands of industry causing prices to skyrocket, the LNG-Buy BC program has at its core a firm belief that the entrepreneurial spirit, skills, and innovative abilities of B.C. businesses will, given a fair opportunity to compete, lead to a high level of success regardless of where they enter within the long supply chain. This program is already showing dividends. While no formal final investment decision (FID) has yet been made, no one should underestimate the positive economic benefits that have already occurred. Imagine for a second that LNG development was like NHL hockey, where a FID is the dropping of the puck to start the game. Few would deny the huge economic benefits that accrue to those

preparing for the game along with widespread economic benefits that result, both directly and indirectly, during and after the game. The same can be said for B.C. preparing for the LNG opportunity. There are even now, numerous examples of B.C. businesses from the very large to single proprietorships that have found success in this early stage of LNG development, and the LNG-Buy BC program has played an important role in making sure that companies that want to engage, fully understand what will be required of them if they are to make a bidders’ list. Local contractors not only have comparable skills and ability, but they possess the most valuable of all assets: local knowledge. InletExpress in Prince Rupert is a perfect example of local entrepreneurial spirit combined with sound business acumen and local knowledge.

Owner and president John Turpin built up a small fleet of boats in order to supply hydroelectric, mining and forestry projects in the Prince Rupert area. When faced with the market downturn, he saw LNG on the horizon and decided to change course. Turpin’s first approach made a request to use his boats to undertake marine survey work for a proponent company. Why bring up a boat from California when local craft will do? This approach was met by a wave of restrictions and requirements all well documented in the proponent’s bid requirements. Undeterred, Turpin worked with local aluminum fabricators to design and build, in record time, a superstructure for his boat that would meet the requirement of the proponent. The best measure of how impressed the proponent company was with this man’s in-

novative and entrepreneurial approach

with sufficient information and support

to business can best be measured by the

to emulate the kind of business acumen

amount of work he has been awarded.

demonstrated by John Turpin. It works

And, that’s not the end of the story. Inle-

to ensure B.C. companies are properly

tExpress has successfully won contracts

informed and can participate in the real

with many LNG proponent companies,

opportunities that LNG development

and is among the most highly regarded

will bring at every level of the supply

B.C. marine suppliers in the region.

chain, and engages with the LNG indus-

The LNG-Buy BC program encourages and attempts to provide B.C. companies

try to articulate the real benefit that local knowledge and suppliers will bring. S

Growing with you in British Columbia

Calgary Edmonton

Grande Prairie Swift Current

Fort Nelson Fort St. John

canam.com

B.C. Oil & Gas Report • 2015

BC Oil and Gas Commission studying induced seismicity hydraulic fracturing operations in the Montney. Steps the commission takes related to seismic activity in the northeast include: • Responding to seismic events as soon as they appear on the NRCan website or a private dense seismograph array. Reports from the public are also investigated. • These events are compared alongside locations of oil and gas operations. • If there is a temporal and geographic similarity between the seismicity and oil and gas activities, the operators are contacted with a request for more data. This data is analyzed. • All data is used by the commission to closely monitor seismic activity in areas of oil and gas operations. Actions

are taken if and when required. he BC Oil and Gas Commission (commission) took a leadership role in the detection and miti-

lower magnitude events than previously

• Further steps may include deploy-

recorded, enhancing the commission’s

ment of dense arrays, which study

ability to track seismicity. This ability led

seismic activity in greater detail, or

gation of induced seismicity associated

to the Montney study, which focuses on

the moderation of hydraulic fractur-

with unconventional gas development

seismic events tracked between August

ing parameters, which can include

with release of the report Investigation of

2013 and October 2014.

limiting well pressures or suspension of operations.

Observed Seismicity in the Montney Trend.

The investigation found that out of

The report builds on a 2012 induced

about 7,500 hydraulic fracturing stages

Currently, the commission is work-

seismicity investigation in the Horn

during the study period, less than a

ing on implementing recommendation

River Basin, which determined that low-

quarter (0.15) of a per cent resulted in

from the investigation, which include

level seismic activity was caused by fluid

seismic events that were felt (11). Over-

increasing regulatory scrutiny for dispos-

injection during hydraulic fracturing

all, induced seismicity that is taking

al wells, encouraging the deployment of

near pre-existing faults.

place in northeast B.C. is very low level

high-resolution dense arrays, enhancing

As a result of recommendations from

and has not resulted in any injuries,

regulations to address induced seismic-

the Horn River Basin investigation, eight

damage to surface structure or vertical

ity, and increasing the availability of

new seismograph stations – funded by

wellbore integrity issues. From Aug. 1,

public data. The commission has also

the commission, Geoscience BC, and

2013 to Oct. 10, 2014, Natural Resources

formed partnerships with Natural Re-

the Canadian Association of Petroleum

Canada (NRCan) recorded 231 events in

sources Canada, the University of British

Producers – were added to the existing

the Montney ranging from Magnitude

Columbia, and Geoscience BC to study

two Canadian National Seismograph

1.0 to 4.4. Thirty-eight of these events

the effects and relationships between

Network (CNSN) stations to provide

are believed to have been triggered by

seismicity and hydraulic fracturing and

more accurate detection and location

a water disposal well northwest of Fort

water disposal.

capabilities. With the new stations, the

St. John. Another 193 of these events,

CNSN began recording many more

magnitudes 1.0 to 4.4, were triggered by

26 B.C. Oil & Gas Report • 2015

Read the report at www.bcogc.ca. S

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AltaGas to invest over $1 billion in natural gas processing and export infrastructure in B.C.

Ferndale LPG facility.

anada’s gas reserves are abundant and world class. The Montney formation is one of the largest in the world with expected recoverable gas volumes of 449 Tcf under foreseeable economic and technological conditions. A major shale gas and shale oil resource, the play remains competitive largely due to its low-supply cost relative to most other gas basins in North America. In today’s gas and liquids market, we see the demand in traditional Eastern markets weakening and the United States becoming more self-sufficient.

30 B.C. Oil & Gas Report • 2015

As a result of this market shift, Western Canadian natural gas producers will be faced with slow volume growth and depressed prices if new markets for natural gas are not found. AltaGas expects to invest over $1 billion in natural gas processing and export infrastructure in Northeast British Columbia to better serve producers in the Western Canadian Sedimentary Basin (WCSB). Our growth strategy is simple, invest in assets that process and move natural gas and liquids to key markets, including Asia. The company processes natural gas

from the prolific Montney region at its Younger, Blair Creek and Gordondale facilities, which are operating close to full capacity. Additional energy infrastructure will be added with the new 198 Mmcf/d Townsend shallow-cut natural gas processing facility, the expansion of Blair Creek, the proposed liquids handling and separation facility near Fort St. John and planned LPG export capability from Canada’s West Coast. Once completed, these facilities will provide producers with a fully integrated offering to move their products seamlessly from wellhead to market.

Today, AltaGas handles more than two Bcf/d of natural gas. This includes natural gas gathering and processing, NGL extraction and fractionation, transmission and storage, and natural gas marketing. AltaGas is also working with several parties, including producers and partners on the development of energy export infrastructure. Supporting local and First Nation communities where we operate is an AltaGas core value. Our philosophy is to respect the land, share the benefits and build the friendship. We work cooperatively with First Nations and other aboriginal communities in Western Canada, and over the years have developed solid long-term working relationships with the Tahltan Nation through our run-of-river hydroelectric projects in Northwest B.C. and with the Haisla Nation on the development of the longterm lease and commercial agreements for the Douglas Channel LNG Project. AltaGas has also entered into a partnership with the Indian Business Corporation in Alberta to develop the AltaGas First Nations Development Fund to support the development and growth of First Nation communities. Through its investment in Petrogas, AltaGas began exporting butane to Asia in 2014, two years earlier than planned from Petrogas’ Ferndale facility, the only LPG export facility on North America’s West Coast. This year, we began exporting propane, and plans are in place to

ramp up our export activity to 30,000 Bbls/d by the end of 2015. Petrogas’ extensive North American network and infrastructure has provided AltaGas with the ability to move its products either east or west. To further develop its plans to help producers reach new markets, AltaGas has entered into an exclusivity agreement to investigate an opportunity to build the refrigeration and related infrastructure to export propane and butane from the Canadian West Coast. The initial phase of this export facility is expected to ship approximately 25,000 Bbls/d with expansion potential. Final investment decision is expected in 2016. In Northern British Columbia, AltaGas expects to start up its pilot project to bring LNG to the region. With an initial investment of $35 million, the company expects to build a network of small liquefied natural gas facilities. Phase 1 consists of a proposed liquefaction facility in Dawson Creek, B.C. that will serve end users in the power generation, space heating, and oil and gas industries. AltaGas is targeting first deliveries in the fall of 2015 with capacity of 20,000 gallons per day. On the LNG export front, AltaGas is targeting a commercial operations date of 2018 for the Douglas Channel LNG Project to commence LNG exports. The project, located on the Douglas Channel near Kitimat, British Columbia, is a floating liquefaction facility with an

initial export capacity of 550,000 metric tonnes of LNG per year. Gas will be sourced from Western Canadian producers and AltaGas processing facilities, and transported to site on Pacific Northern Gas’ (PNG) existing pipeline system. PNG’s customers could see 25 per cent lower transportation costs on their gas bill when the pipeline system is fully utilized by the Douglas Channel LNG Project. PNG is a wholly owned subsidiary of AltaGas. Plans are also underway to grow the LNG export business to meet producer needs for export capacity. On June 1, 2015, AltaGas applied to the National Energy Board to export up to one Bcf/d of natural gas from our project development site near Kitimat. The application describes our first phase Douglas Channel Project, as well as our intent to expand LNG development up to a total of 1BCf/d through additional liquefaction facilities and pipeline expansion. Our goal is to provide Western Canadian producers with the opportunity to earn higher netbacks for their product by providing fully integrated midstream services. We will accomplish this by providing natural gas producers with access to new markets in Asia, as well as North America through the development of infrastructure in British Columbia. As a company, we are excited about the prospects ahead of us, and look forward to working with producers to develop Western Canada’s world-class resources. S B.C. Oil & Gas Report • 2015

Prince Rupert awaits LNG development news By Leonard Melman

ne of the most historic economic debates in history is now ongoing within the province of British Columbia, and it is no exaggeration to suggest that the outcome of that debate could have profound repercussions on the province, on several important special interest groups, and, most particularly, on the future of the city of Prince Rupert. The debate surrounds the process of converting natural gas into liquefied natural gas (LNG), which could then be transported to serve enormous markets, primarily in Asia. LNG is created when natural gas is cooled to approximately −162°C at atmospheric pressure, becoming a fluid which can be transported by special tankers. The entire question is of great interest because of two factors. First, the LNG infrastructure is very expensive, requiring enormous investments in plant construction, railway services, tanker terminals, expansion of natural gas drilling activities, and the training and hiring of many construction, plant and service personnel. Second, the potential market for LNG is enormous, estimated to total several hundred billions of dollars. The community with the highest vested interest in the entire LNG plant development concept would appear to be Prince Rupert since present plans call for the first and largest LNG development in B.C. to be built there. The city lies at the western terminus for CN Rail and their ocean-going port would also be home to LNG Trans-Pacific shipping operations. Given its present population of just under 13,000, it can be seen that a project with investments programmed to to-

32 B.C. Oil & Gas Report • 2015

tal more than $36 billion (according to present estimates) could virtually transform the entire community. Should the project go ahead, the community could finally look forward to important and sustainable employment growth and a solid improvement in its economic fortunes. However, there are problems to be overcome. Because of its present relatively small size, the community’s infrastructure would be forced to expand rapidly, putting pressure on the delivery of utilities, education and environmental protection services. Prince Rupert’s climate, being Canada’s wettest and cloudiest city, could provide difficulties. In addition, there are other particular problems which presently remain unresolved and which could be the source of considerable delays before construction finally begins. Prince Rupert happens to be located in a region of scenic splendor with high mountains, major rivers, huge forests and abundant wildlife. For this reason, environmentalists are prepared to do battle to save the region from any developments which they believe could negatively impact the community and its surrounding areas. Prince Rupert is also located in the home area of several First Nations (FN) peoples and, as this is written in mid2015, there is substantial opposition to the LNG terminal from regional tribes and organizations. Despite ongoing controversies, in June of this year the Province of British Columbia granted preliminary approval to the initial LNG project, the C$36 billion Pacific Northwest LNG Project, planned for Lelu Island near Prince Rupert and headed by Malaysian state-controlled gi-

ant Petronas, also including other Asian corporations Sinopec, JAPEX, Indian Oil Corporation and Petroleum Brunei. B.C. Premier Christy Clark called for a special session of the Provincial Legislature which began meeting in mid-July with the goal of providing legislative certainty for potential participants. Included among the major issues to be debated are present and future taxation and royalties – guaranteed for at least two decades, as well as provisions to insure participants against future political developments, such as the future election of a provincial government hostile to this and other LNG projects. Important questions continue to swirl about the Pacific Northwest LNG Project. These include a marked slowdown in the rate of Asian economic expansion which might reduce ultimate demand for LNG; still unresolved federal regulatory approval and the threat of lengthy court battles involving environmental and FN questions. One particular environmental and FN concern is the potential impact of operations on vegetation and salmon fisheries at Flora Bank, adjacent to Lelu Island. The project partners have stated they are committed to conducting further studies on this issue. Because of these economic and legal questions, the International Energy Agency predicts a lengthy interval, perhaps until at least 2020, before any LNG plant operations in B.C. could begin. However, we would note that while important questions remain, because of the vast sums involved, many powerful forces in business and government continue to strongly support the growing number of potential LNG projects. Prince Rupert will be watching developments most intensely. S

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A new regime

Bill 12 grants province authority over B.C. LNG port development

Photo courtesy of the Port of Prince Rupert.

By Jillian Mitchell

The BG Group’s proposed $16-billion LNG facility on Ridley Island near Prince Rupert will create an estimated 3,000 jobs during construction.

ecent legislation passed to regulate liquefied natural gas (LNG) development on federal port lands will offer immediate benefit for two of the province’s largest LNG projects – the proposed Pacific Northwest LNG project and the Prince Rupert LNG project.

Bill 12: the ins & outs Bill 12, the Federal Port Development Act (FPDA), will allow for authority and enforcement of provincial law on any LNG development occurring on federal port lands. The bill, which was brought to the B.C. Legislature in February 2015 by Deputy Premier and Minister of Natural Gas Development Rich Coleman, created a joint federal-provincial arrangement that put a provincial LNG regulatory system in place. Under the new legislation, the BC Oil and Gas Commission will take over regulatory, administrative or judicial control of industrial activities in B.C. 34 B.C. Oil & Gas Report • 2015

ports. The localized regulatory body is anticipated to create a seamless regulatory environment for development and operations, as well as peace of mind for investors. According to Minister Coleman, the province outlined two points of focus for the bill: first, the creation of LNG projects that were self-sustaining and able to cover the costs of implementing an LNG facility; and second, the practicality of utilizing an experienced governing body. “We sat down with the Port Authority and Transport Canada [...] and we came to the conclusion that since we already had an agency, it would be better if we moved to an agreement between us and the federal government that we would take over [LNG development and operations in B.C.’s federal ports],” Coleman shares. “The Oil and Gas Commission has had the experience of permitting and working with gas plants for a number of decades now. They have the expertise.”

Bill 12 & B.C.’s proposed LNG ports The first to be considered under Bill 12 is Pacific Northwest LNG and Prince Rupert LNG, which together, represent a $27-billion investment, among additional economic and social benefits. With an $11-billion price tag, the Pacific Northwest LNG port proposed for Lelu Island would contribute more than $1 billion annually to federal, provincial, and municipal governments in various taxes and royalties. The facility, which will liquefy and export natural gas produced by Progress Energy Canada Ltd., is anticipated to create an estimated 330 long-term careers (i.e. facility operation); 300 new local, spin off jobs in the community; and upwards of 4,500 jobs during construction. The project has been granted a license to export 19.68-million tonnes of LNG per year for 25 years beginning in 2019. Construction is forecast to begin in 2015. Similarly, BG Group’s proposed

As part of the Spring 2014 Trade Mission, Premier Christy Clark & Rich Coleman, Minister of Natural Gas Development, spoke at a luncheon that connected LNG industry reps. $16-billion LNG facility on Ridley Island near Prince Rupert will create an estimated 3,000 jobs during construction, and between 400 and 600 full-time positions, as well as spin-off jobs within the community. The site, which will be built and operated by Spectra Energy, is anticipated to boast a production capacity of up to 21 million tonnes (nearly 29 billion cubic metres) of LNG per year. Construction is anticipated to start in 2016, with an in-service date sometime in 2019. “We are working to promote and enable trade in a way that is environmentally sustainable, socially responsible, and economically beneficial for Canadians,” says Don Krusel, president and CEO of the Prince Rupert Port Authority, the organization that administers both ports. “Liquefied natural gas is a product that producers are eager to see moving to Asian markets. The two developments under consideration within our jurisdiction obviously signify enormous economic potential for our region and the nation. If these projects proceed, they would represent another step forward in the process of diversifying Canada’s northwest trade gateway.”

The Port of Prince Rupert is North America’s shortest trade route to Asia, and current shipping traffic handles over 23 million tonnes of goods. The Port of Prince Rupert supports 5,840 person years of employment and contributes $1.2 billion in total gross domestic product to British Columbia’s economy.

Bill 12 & the Canada Marine Act Bill 12 was designed to complement Transport Canada’s Canada Marine Act (CMA), more specifically, the 2014

amendments. The CMA, which received Royal Assent in June 1998, governs the marine sector in Canada and sets out the comprehensive legislative framework for the National Ports System comprised of 18 independently managed Canada port authorities. The 2014 amendments aim to facilitate project development and future growth at Canada’s marine ports, specifically those focused on the development of an emerging liquefied natural gas industry. “Regulatory regimes often involve complex administrative, enforcement and quasi-judicial bodies and systems. In this particular case, for liquefied natural gas regulatory oversight, the province of British Columbia has an established and comprehensive regulatory regime in place to administer and enforce effective regulatory oversight over the proposed LNG facilities,” says a spokesperson for Transport Canada. “There is currently no comparable federal regulatory regime specifically designed to regulate the design, construction, operation and maintenance of liquefied natural gas projects.” Marine traffic and LNG shipping will not be affected by the new bill, but will defer to regulations outlined by the CMA. S

B.C. Oil & Gas Report • 2015

Strength in numbers By Kylie Williams

People from the Wet’suwet’en First Nation undertake training at Huckleberry Mine. Photo courtesy of Shannon Haizimsque.

irst Nations across British Columbia are partnering with the provincial government, natural gas companies and each other to support, monitor, and reap the benefits of Liquefied Natural Gas (LNG) development projects. As of June 2015, the B.C. Government had signed 15 Natural Gas Pipeline Benefits Agreements with 11 First Nations. Numerous benefit agreements between gas companies and First Nations have also been finalized. Each agreement is unique and covers land access, legal obligations, financial benefits, skills training and the steps each party will take to protect the environment.

Deals with Kitselas First Nation The Kitselas First Nation, whose tradi36 B.C. Oil & Gas Report • 2015

tional territory straddles the Skeena River near Terrace in northern B.C., signed a Pipeline Benefits Agreement with the provincial government in December 2014, and a Pipeline Project Agreement directly with Prince Rupert Gas Transmission in April 2015 for multiple projects spanning their territory. “Over the short term, there’s training, there’s jobs and a bit of upfront cash,” explains Kitselas Chief Joe Bevan, “Longer-term it helps our people. We’ll spend the annual payments on the wants and needs of the community to create a legacy from this project that will go on for generations.” Chief Bevan advises other First Nations not to shy away from the negotiating table, urging them prepare for a long process and actively seek information

and expertise suited to their situation. “Each nation needs to work their own process and everybody needs to feel comfortable that their process has taken shape the way they needed it to,” says Bevan. The nation needed time to find the right people to negotiate alongside them, assess the socio-economic impacts, and explain the environmental process. The negotiations between Kitselas and its new partners took two years, with an LNG education campaign taking up most of the first 18 months. “We dispelled a lot of myths. Once we finished that series of education we went from one-third supporting LNG to twothirds supporting LNG,” he says.

First Nations collaborations Chief Bevan has since become one of

Photo courtesy of Liam Mullany. Photo courtesy of Brandon Thompson.

Kitselas First Nation Chief Joe Bevan. Frame from “Nis Ts’edilh (Moving Forward)”.

Wet’suwet’en First Nation Chief Karen Ogen.

Coastal GasLink (CGL) pipeline project signing at Wet’suwet’en First Nation. Photo courtesy of Brandon Thompson.

five co-signatories on a new Tsimshian Environmental Stewardship Authority (TESA) announced in July 2015. The authority includes the Metlakatla, who have also signed an agreement with Prince Rupert Gas Transmission Ltd., and the Kitsumkalum, Gitga’at and Gitxaala, who have not. TESA’s goal is to pool resources and experience to protect the environment and extract maximum value from benefit and partnership agreements. “We noticed the Tsimshian were all having the same issues. Why don’t we give one voice to this? We have more strength as a group, and all five nations at the one table makes it easier for industry,” says Bevan. A little further east, Wet’suwet’en First Nation Chief Karen Ogen is working to create a First Nations LNG Alliance of her own, bringing together all the bands in B.C. who have signed agreements. The Wet’suwet’en themselves signed a Pipelines Benefit Agreement with the B.C. Government in November 2014 for the Coastal Gaslink Pipeline Project.

“I’m creating a FN LNG alliance to communicate as much information as possible about gas pipelines, with an emphasis on environmental standards. The key to making decisions, especially in the north, is having information,” says Ogen.

environmental protection is foremost in their minds. “It doesn’t stop when the negotiations end, that’s when the real work starts,” says Bevan. S

Advice to gas companies The chiefs agree that companies need to familiarise themselves with the legal landscape in B.C. as it pertains to First Nations before they approach, especially the differences between operating in B.C. and Alberta. Once they understand the wider First Nations history, the next step is learning the specific cultural traditions and systems of government used by the nation they wish to approach. “Build a solid, trusting, long-lasting working relationship. This is very important and goes a long way,” says Ogen. Agreements between First Nations, B.C. government and gas companies transporting LNG across B.C. for export give First Nations a voice and access to social and economic development, but

People from Wet’suwet’en First Nation working at Imperial Metal’s Huckleberry open-pit copper mine. Photo courtesy of Shannon Haizimsque.

B.C. Oil & Gas Report • 2015

B.C. leads Canada in economic growth

What role will LNG play? By Kylie Williams

Natural gas compressor station in the North Peace region of British Columbia.

Gas drilling rig operates in the North Peace region of British Columbia.

ritish Columbia’s economy is growing at almost twice what is forecast for Canada as a whole this year. Recent Provincial Outlook reports from The Conference Board of Canada say B.C.’s economy will grow by 2.8 per cent in 2015, compared to 1.5 per cent nationally. A growing manufacturing sector and a booming housing market, together with strong consumer demand, is fuelling the B.C. economy so far in 2015. The numbers are impressive, especially since they don’t yet include the province’s bourgeoning Liquefied Natural Gas (LNG) industry. “There would be a big change if we see one LNG project go ahead, in terms of development,” explains Marie-Christine Bernard, associate director for provin-

38 B.C. Oil & Gas Report • 2015

cial outlook at the Conference Board of Canada. “The construction period would be very capital intensive, so that would create a lot of jobs.” B.C. has 19 proposed LNG terminals and pipelines as of summer 2015. The biggest is the Pacific NorthWest LNG plant backed by Malaysian energy company Petronas, which will likely go ahead in the next few years. “The project in total is worth $36 billion. A portion will occur outside of province, so about $20 billion would be invested in British Columbia. It’s probably one of the biggest investment projects in the province’s history, if not the biggest,” says Bernard. LNG projects like this one, announced but not yet approved, haven’t been included in the board’s forecasts so

far, but they will be in the future. While their impact is significant, uncertainty around the province’s emerging LNG industry remains.

LNG supplies in B.C. B.C. is generously endowed with natural gas reserves, found mostly in sedimentary basins in the northeast of the province around Fort St. John and the Peace River. “The northeast is the only part of province to produce natural gas. You can’t talk about ‘LNG’ until you have ‘NG’, and it comes from here,” says Jennifer Moore, regional economic development officer for the North Peace Region. According to an independent report recently commissioned by the North

ALL Photos courtesy of the North Peace Economic Development Commission (NPEDC) photo library.

economic proposition for the companies producing, liquefying and transporting it by the time B.C. is ready.

Demand is the critical factor

Service rig in the North Peace region of British Columbia. Peace Economic Development Commission, the northeast contributed nine per cent of B.C.’s total exports in 2013 with just two per cent of the population. “Northeast B.C. is punching well above its weight class in the provincial economy,” says Moore, adding that two LNG plants will double current production in the region. “There is a lot of talk these days about the development of the northwest – that’s certainly important – but the development in the northwest isn’t going to matter unless we get the gas out of the ground here in the northeast,” says Moore.

Sauder School of Business at the University of British Columbia, “The U.S. is building LNG plants already and they will come online very soon.” Antweiler is concerned that when Canada does come online, they will be entering an already-crowded market. He wonders if B.C. gas will remain a viable

Market prices are the critical factor in the LNG equation for the province. Most of the LNG exported from B.C. is destined for Asia, where many countries, for example South Korea, are importing LNG because they have none themselves. China is interested in replacing coal with natural gas for environmental reasons, and Japan has been replacing its nuclear power with natural gas after the Fukushima crisis. Antweiler warns oil and gas companies to be patient, but is positive overall. “LNG is a long-term play,” he says, “There will be setbacks, maybe the prices will drop, but they will recover eventually and the demand for natural gas will go up more and more as countries try to phase out coal and replace it with something much cleaner. The demand for natural gas will remain strong.” S

Can B.C. compete? British Columbia is a relative latecomer to the LNG industry, with the province’s first project not yet approved and no construction underway. Quite a number of countries are exporting LNG already, or will by the time Canada exports its first tanker. “Australia has become a very big player in LNG production and have been very fast in building LNG plants. They may even replace Qatar as the world’s largest exporter,” explains Werner Antweiler, professor of economics at the

2015 economic growth by province (CNW Group/Conference Board of Canada). B.C. Oil & Gas Report • 2015

Canadian oil is down, but not out By Wade McGowan, former Chairman, CAODC Board of Directors

ompanies who work in the hydrocarbon extraction business are categorized as being in the energy sector of the economy. Unfortunately, they are also categorized in an industry sector known as “cyclicals”. The activity level of this sector is influenced by two dominant issues, namely the “price” received for the commodity and the “cost” associated to bring that commodity to market. The activity level of the energy sector is highly sensitive to oil and natural gas commodity pricing. Oil is subject to

40 B.C. Oil & Gas Report • 2015

worldwide pricing pressures, whereas natural gas has largely been subject to North American economic pressures. With the development of facilities to move liquefied natural gas (LNG) offshore coming to the forefront, natural gas pricing will also become more exposed to world pricing mechanisms, as export volumes increase in the years to come. The price received by production companies for their commodities is largely outside of their control. Production companies require a minimum economic threshold price for their

oil and natural gas production in order to stimulate activity to bring on new production. Theoretically, in periods of economic prosperity and expansion, demand for oil and natural gas goes up, pricing for oil and natural gas is above the economic threshold price to stimulate activity. Our clients have access to an abundance of money and they are spending it to bring on new supply. The drilling and service sector enjoys a high level of activity which keeps people employed with great pay, lots of hours, and paid training. However, commodity prices are affected by the supply and demand balance. The drilling and completion techniques developed in the past decade have truly been revolutionary. These new technologies have materially altered the supply side of the equation as the industry has been successful in unlocking hydrocarbon from reservoirs that had previously believed to be non-productive, much less economic to produce. These advances have largely been developed and deployed in North America and it is where the most significant supply side increases have occurred when compared to the rest of the world. These advances led to an oversupply situation in the North American natural gas market in 2009 and now have led to an oversupply situation in the worldwide oil markets. The net result has been a material reduction in commodity prices. This will reduce our client’s access to cash, they will reduce spending, and we will go through the contraction portion of the cycle. The cost to bring new production to market in Canada is dependent on many different criteria, including but not limited to: 1) Governmental legislation, which includes taxes and royalties;

2) Governmental bureaucracy, which affects time delay in activity; 3) The productivity of the producing formation; 4) The quality of the hydrocarbons being produced; 5) D rilling techniques; 6) C ompletion techniques; 7) Proximity to existing processing facilities; 8) A ccess to markets or sale points; 9) C orporate profit margin. Each one of these criteria has a certain amount of cost and risk associated with them. Prudent production companies necessarily have to manage the cost and risk of each, through all phases of the economic cycle. In this portion of the cycle, they will apply significant pressure to reduce costs in an effort to maximize their existing production net value and reduce capital spending, which will re-

sult in reduced drilling and service activity. This is where the industry is today. Times are not so good. There is a saying in the oil patch that goes something like this, “The best thing for low oil prices, is low oil prices.” This implies that there will be a contraction in rig activity that will result in a drop in supply and cause supply and demand to rebalance. This will ultimately cause prices to rise to the minimum economic threshold and we will put rigs back to work. We are in the early stages of this in North America as rigs idle in response to the oversupply situation. We will have to be patient to see how long it takes for the declines in supply to be sufficient to promote industry activity. The good news is that the world is not reducing its demand for hydrocarbon consumption. There does not seem to be any compelling evidence that there

will be a material reduction in demand. Canada is in a very fortunate situation in that we have an abundance of hydrocarbon resources that the world will require in the decades to come. This will provide significant opportunity for all of us who are brave enough to stomach the cyclical nature of the oil and gas industry. S

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B.C. Oil & Gas Report • 2015

Financial incentive for B.C.’s LNG industry

Photo courtesy of the Province of British Columbia/Flickr.

By Melanie Franner

Agreements reached between the government of B.C. and Pacific NorthWest LNG establish the path to a final investment decision on the project and set the stage for a potential US$36-billion investment in Northern B.C. that will be a key driver of jobs and economic activity in the province.

he B.C. government’s plans to have at least three LNG facilities operational by 2020 may be a little closer to becoming a reality – thanks in part to the federal government’s recent announcement of tax breaks for the LNG industry. In February 2015, Prime Minister Stephen Harper announced a capital cost allowance rate of 30 per cent for equipment used to liquefy natural gas and a 10 per cent rate for infrastructure at the export facility. The tax relief measures will be available for capital assets acquired after February 19, 2015 and before 2025. “This is great news for the creation of LNG jobs in British Columbia, and great news for Canada,” said B.C. Premier Christy Clark at the time of the announcement. “We have been working with the federal government and industry for some time to achieve this outcome, and I am pleased they have delivered today.” Deputy Premier Rich Coleman, Minister of Natural Gas Development, echoed the positive sentiments.

42 B.C. Oil & Gas Report • 2015

“B.C. is already a safe, certain, competitive jurisdiction for LNG investment,” he said. “With today’s good news, B.C. is even better positioned to take advantage of this generational opportunity.”

Projected growth The federal government’s decision to enhance the competitiveness of B.C.’s LNG industry through the new tax relief incentive is expected to spur growth in a still-developing industry. “B.C.’s LNG industry is poised to result in some of the largest private-sector investments in British Columbia’s history, stimulating economic activity across the province like never before,” states Minster Coleman, who adds that there are 20 LNG proposals currently in the works, with more than 30 investment partners. “Canada’s change to the Capital Cost Allowance will allow LNG proponents to recover their capital investments sooner. This means proponents are more likely to make the large upfront capital expenditures necessary to build a LNG export facility, accelerat-

ing the growth prospects of B.C.’s natural gas sector.” The province of B.C. has an enormous supply of natural gas – an estimated 2,933 trillion cubic feet. This is said to be enough natural gas to support current and future energy needs for more than 150 years. Minister Coleman cites a recent KPMG LLP assessment that illustrates how the construction of five LNG plants within the province between 2015 and 2024 will create a total investment of $175 billion and create up to 100,000 jobs – 58,700 direct and indirect construction jobs, 23,800 permanent direct and indirect jobs for operators, and thousands more of induced jobs as a result of households having more income. “The economic activity will contribute up to a trillion dollars to the province’s GDP,” he adds. The B.C. LNG Alliance was quick to respond to the federal government’s announcement, citing it as a good move for continued investment. “The federal government’s CCA ruling encourages the development of a robust LNG industry in British Columbia,” states Jas Johal, director of communications, B.C. LNG Alliance. “Developing B.C.’s LNG industry will create thousands of new jobs for Canadians, jobs that will last for generations to come and guarantee the investment of tens of billions of dollars into Canada’s economy.” The B.C. LNG Alliance was launched in October 2014 with the specific goal of fostering the growth of a new, safe, environmentally responsible and globally competitive LNG industry in B.C. There are currently seven members. One of these members is Pacific NorthWest LNG. The company has proposed a natural gas liquefaction facility on Lelu Island within the District of Port Edward on land administered by the

Minister of Natural Gas Development Rich Coleman. Prince Rupert Port Authority. The facility would liquefy and export natural gas produced by Progress Energy Canada Ltd. in northeast B.C. The facility represents an estimated $11 billion initial investment. “Pacific NorthWest LNG welcomed the proposed changes to the LNG Capital Cost Allowance announced in February 2015 by the Government of Canada, as these changes create a more competitive tax environment for proposed LNG projects in Canada,” states Michael Culbert, president, Pacific NorthWest LNG. “Pacific NorthWest LNG has the potential to generate over $1 billion in tax revenues to all levels of government each year, contribute up to $2.4 billion to Canada’s GDP once in operation, as well as create up to 4,500 jobs during peak construction activity, and up to 330 long-term careers operating at the facility.”

Slow and sure The B.C. LNG Alliance’s Johal speaks of the industry’s already large investment that has been made to date. “Already, northern B.C. residents have witnessed a significant amount of work – in the tens of millions of dollars – being done by our members,” he says. “These investments have already created jobs and spin offs in First Nations communities, Prince Rupert, Terrace, Kitimat, Port Edward and Squamish.” At the same time, Johal acknowledges that further progression may be slow.

“LNG projects are large undertakings that require tens of billions of dollars of capital investment,” he says. “Projects therefore must have a strong business case and meet stringent economic tests before they proceed. We will continue to work with the provincial and federal governments in developing a regulatory and fiscal framework that sets the right conditions in place to establish a globally competitive and thriving LNG sector in B.C.” Unfortunately, the high capital costs associated with building LNG facilities have recently been combined with lower oil prices. This, in turn, has impacted the global LNG market. A recent report from the International Energy Agency speaks to an increasingly uncertain long-term outlook for increased demand for gas in Asia – an area of the world that was previously considered to grow its demand by as much as 40 per cent. The Agency’s Medium-Term Gas Market Report 2015 also states that gas markets will need to cope with a flood of new LNG supplies in the short term, projecting global LNG export capacity to increase by more than 40 per cent by 2020. The majority of these additions – some 90 per cent – is expected to come from Australia and the United States. Lower oil prices, adds the report, will mean that new projects may struggle to get off the ground. Although there aren’t any LNG companies as of yet that have made a final

investment decision about proposed operations in Canada, the B.C. government remains very optimistic. “We have ambitious goals for LNG,” states Minister Coleman. “We have put policies in place to give LNG proponents long-term certainty; policies building on our competitive advantages. Just last month, we signed a long-term agreement and MOU for a project development agreement with Pacific NorthWest LNG, which shows a lot of promise to be one of – if not the – first, large-scale export operations in the province.”

More to come The B.C. LNG industry continues to move forward – holding out the promise of more than a billion investment dollars and a hundred-thousand new jobs – and that’s if just five of the proposed 20 facilities come onboard between now and 2024. A total of 11 LNG proposals have already received export approval by Canada’s National Energy Board. And the province of B.C. has already issued environmental assessment certificates to seven LNG projects (including pipelines). “Industry’s response has been positive,” concludes Minister Coleman. “LNG proponents have told us that B.C. is competitive. The new tax treatment strengthens B.C.’s position to grow the economy and create jobs in the province by attracting investment for a new LNG industry.” S B.C. Oil & Gas Report • 2015

LNG in Prince Rupert

The birth of a new industry in British Columbia By Deb Smith

trong growth in the global natural gas market has spearheaded 19 proposed Liquid Natural Gas (LNG) projects in the province. Estimated investments of US$36 billion will create thousands of jobs with huge economic benefits for B.C. and Canada. An accessible harbour is key to getting the product to the global markets. According to Paul Vendittelli, Prince Rupert Economic Development officer, “Prince Rupert has one of the naturally deepest harbours in the world – it is ice-free, uncongested and closer to Asia than any other North American port, a three-to-

44 B.C. Oil & Gas Report • 2015

four-day round-trip savings in shipping time. The advantages of the harbour are one of the main reasons why there are currently four LNG projects at the forefront here looking to move forward.” The city of Prince Rupert is working with all the proponents, including the camp operators that have secured land to develop camps for workers, explains Vendittelli. “But it is the Prince Rupert Port Authority (PRPA) that is the ‘landlord’ over Crown land involved in the proposals,” he explains. With approximately 1,000 hectares of

federal Crown land, and the associated harbour and coastline under its jurisdiction, the PRPA works to fulfill its mandate of supporting Canada’s trade activity.

Four LNG proposals Once completed, Pacific Northwest LNG, under the majority ownership of Petronas, will export 22.2 million tonnes (mmt) per year from a facility on Lelu Island near the community of Port Edward and under the administration of the PRPA. The final investment decision waits upon completion of the Canadian

Prince Rupert LNG, proposed by BG Group (through BG Canada) received the National Energy Board Application approval in December 2013. The design features two LNG processing units, two storage tanks and shipping terminal. When finished, it could achieve a production capacity of 21 mmt per year from its $10 billion investment. government’s Environmental Assessment, estimated for the first quarter of 2016, and B.C. legislative acceptance of a project development agreement to stabilize taxes and environmental requirements. The facility will feature two liquefaction trains, two LNG storage tanks, a marine infrastructure with two berths for LNG carriers and a 250-metre suspension bridge and trestle connecting to the main terminal. Commercial operation is targeted for 2020 with a $9-11 billion investment. Progress Energy, wholly owned by Petronas, is developing natural gas production in the Montney region of northeast B.C. and northwest Alberta. TransCanada Corporation will build and operate two pipelines: the 305-kilometre North Montney mainline and the 900-kilometre Prince Rupert Gas Transmission Line from the Hudson’s Hope area. WCC LNG, put forth by Exxon, is located on a piece of property called Lot 444 along Tuck Inlet. “Although the City of Prince Rupert owns the property, it will work with the

Port Authority as the governing body for the harbourmaster and to ensure safe egress and access to water,” says Vendittelli. At an investment of $15-25 billion for Phase 1, the two-train design, with potential for a third, will ship 15 mmt of LNG from its three-berth jetty, the natural gas coming from reserves in the Western Canadian Sedimentary Basin. In December 2014, Exxon submitted its proposal for environmental assessment to the federal and provincial governments. Upon completion of the environmental engineering studies by the fourth quarter of 2017, the company will make its final investment decision, planning for operation by 2024. Nexen owns 60 per cent of Aurora LNG, along with Japanese companies INPEX Corp. and JGC Group. The facility will sit on Digby Island (known as Airport Island), approximately three kilometres southwest of Prince Rupert. Processing natural gas from northeastern B.C., Aurora LNG will cost between $17 and $20 billion with a projected completion date of 2021. Nexen anticipates making a final investment decision in 2017 and is undergoing environmental assessment by the B.C. government. Once up and running with two trains, it will ship 12 to 24 mmt of LNG. Prince Rupert LNG, proposed by BG Group (through BG Canada) received the National Energy Board Application approval in December 2013. The design features two LNG processing units, two storage tanks and shipping terminal. When finished, it could achieve a production capacity of 21 mmt per year from its $10 billion investment. Spectra Energy will build and operate the pipeline from northwestern B.C. onto the Tsimshian traditional territory of Ridley Island near Prince Rupert. The BG Group feels it has the best site for LNG development and is moving forward with community consultation and

the environmental assessment, which it hopes to file in the first quarter of 2017. The global LNG trade is intensely competitive, and new facilities along the west coast will build Canada’s position in the market, delivering huge economic growth to the province of B.C. “LNG is very big to the area,” says Vendittelli. “All these projects are within $10 to $15 billion; all are going to require about 5,000 workers at peak construction and three to four hundred for operations.” Each LNG proponent is working with First Nations and the local community to reduce the project’s environmental footprint, conducting extensive field environmental baseline studies. Within the jurisdiction of an already growing and diversified port authority, Prince Rupert and Port Edward are looking to be great host communities for the LNG industry in Canada as it works toward the challenges and rewards of the future. S B.C. Oil & Gas Report • 2015

Made in B.C.

LNG Buy BC Program connecting B.C. businesses with LNG opportunities By Jillian Mitchell

Liquefied Natural Gas (LNG) Natural gas is a by-product of decaying plant and animal matter left deep underground millions of years ago. This natural gas is trapped or isolated in rock formations which prevents it from surfacing. Hydraulic fracturing is a process that pumps fluid and sand down a well at high pressure to break apart rock and release natural gas. When the pressure is relieved, the water and gas flow up into the well. It is then sent to a processing facility by pipeline. The fracturing process has been used for over 60 years.

Minister of Jobs, Tourism and Skills Training and the Minister Responsible for Labour, Shirley Bond, who says that the LNG-Buy BC program was created to connect LNG project proponents with B.C. companies.

he world-wide demand for Liquefied Natural Gas (LNG) is rising, with a projected 250 per cent increase over the next 20 years – and B.C. is touted as having the supply. Ensuring B.C. businesses are first in line to harness this opportunity is the LNG Buy BC Program. “LNG has the potential to unleash incredible opportunities for our province, as well as B.C. businesses,” says the Hon. Shirley Bond, Minister of Jobs, Tourism and Skills Training and the Minister Responsible for Labour. “The LNG-Buy BC program was created to connect LNG project proponents with B.C. companies large and small in every corner of British Columbia.” The LNG-Buy BC program was announced by Premier Clark in the fall of 2013 with a mandate to link major investors across a range of industries with local B.C. businesses. The complementary online tool (www.LNGBuyBC.ca)

46 B.C. Oil & Gas Report • 2015

British Columbia has enough natural gas to supply domestic and international markets for over 150 years.

Converting Natural Gas to a Liquid Natural gas turns into a liquid when chilled to -160° Celsius.

was launched in November 2014. A kind of LinkedIn for the LNG industry, the user-friendly website has attracted a total of 610 companies, as of July 2015, and subsequent opportunities for business. “As proponent LNG companies select their prime contractors, B.C. businesses are able to engage through the LNG-Buy BC program,” adds Minister Bond of the online tool. “In addition, connections are also being achieved through direct consultation with business and community information sessions.” Since June 2014, the provincial government has hosted 26 workshops aimed to prepare British Columbians for these opportunities, with more than 800 participants taking part. Bond confirms that plans are in place to increase outreach to the business community in advance of the International LNG in B.C. conference in October. Last year’s strong participation at the

In liquid form, natural gas compresses, taking up 1/600th less space. Once compressed, LNG can be securely stored on a ship and safety transported overseas to markets.

International LNG in B.C. conference, along with significant interest through the many LNG-Buy BC workshops, indicates that local companies are interested in learning about how to benefit from LNG-related business. The minister continues, “As industry moves toward a final investment decision, the advantages of B.C. company engagement have been embraced by most engineering, procurement and construction (EPC) companies, giving the program and B.C. business a real boost. This is particularly true of aboriginal-owned businesses.”

A word from the online community Dr. Zoher Meratla of CDS Research Ltd. “As a B.C.-based company, we have been privileged to perform the pre-FEED1 and subsequently oversee FEED for the KM LNG project in Kitimat, the first LNG export prospect in Canada. During pre-FEED we canvassed the lower mainland for fabrication capabilities and were amazed by the tremendous capabilities available here in B.C. In the Kitimat area we experienced firsthand

the high expectations of the local communities. When LNG projects move to implementation, schedule and cost-cutting considerations can override proponent promises on local content. Qualified labour and hourly rates are common excuses. During our work on the Peru LNG export project we saw an exceptional integration of local labour and content into the

project, to the credit of both the proponent and EPC contract. Ironically, the Peru LNG project was completed on budget and on schedule, and is commonly referenced as a success story. In B.C., the government adopted at the outset employment of British Columbians and local content as key cornerstones of LNG development in our province. Equally important, participation in the early LNG projects will cultivate skill development for subsequent projects. The endeavours already in place for labour training gives B.C. workers a clear advantage. Given the expected access to opportunities, local fabricators and service providers will no doubt be competitive. The LNG Buy-BC Online Tool offers a unique platform

Dr. Zohar Meratla of CDS Research Ltd. for British Columbians to access, network and partake not only in LNG projects, but also pipelines. We have used this platform from the outset and found it extremely useful. The Ministry of Labour is to be particularly commended for including the WorkSafeBC Health & Safety Requirements so that prospective suppliers become aware of and comply with these requirements.” 1

Preliminary Front End Engineering Design.

CDS Research Ltd. project map.

The LNG-Buy BC program has been touted as a valuable way to help B.C. businesses raise their profile to connect and benefit from LNG investments once projects move forward. Add to that, the program is also helping B.C. companies identify and remove deficiencies from their business, and additionally, helping to connect fellow local companies. Bond confirms that joint ventures and partnerships are being encouraged, while supplier development support is provided. An estimated 2,933-trillion cubic feet of natural gas rests in northeast B.C. alone. For Bond, numbers like these hint at a bright future. “We are in the early stages of LNG opportunities within the province,” she says. “LNG projects will span many years.” S B.C. Oil & Gas Report • 2015

Why the Express Entry to British Columbia system is important to the LNG industry By Amanda Lefley

he production of Liquefied Natural Gas (LNG) is an extremely important industry to British

Columbia. In the northeast portion of the province, there is enough LNG to support the energy needs of the country, as well as other places in the globe, for more than 150 years, according to LNG in B.C.’s website. Approximately 100,000 jobs will be created by these plants, they say. This is one of the reasons why the

“Our priority is to have British Columbians first in line for jobs, however we know that economic immigration will play a key role in meeting the labour demands of a growing economy. Express Entry British Columbia will provide a more streamlined process and another pathway to permanency for skilled workers from around the world who wish to make B.C. their home,”

province’s new immigration stream is

Shirley Bond, Minister of Jobs, Tourism and Skills Training and Minister Responsible for Labour.

important, and also to support vibrant, growing industries like LNG within the province. In January 2015, under the Provincial

other pathway to permanency for skilled

this industry, there would still be a short-

Nominee Program (PNP), the Express

workers from around the world who

age of workers to fill the positions. That

Entry British Columbia initiative was

wish to make B.C. their home,” said

is how economic immigrations plays a

launched; a federal economic immigra-

Shirley Bond, Minister of Jobs, Tourism

role in meeting the rising demand for

tion system which provides processing

and Skills Training and Minister Re-

labour in the diverse, growing economy

for permanent resident applications

sponsible for Labour.

of the province.

with a specific allocation of nomina-

WorkBC’s website explains the work-

“To address the shortage and avoid

tions for the province under PNP. This

force demand in the LNG industry that

potential project delays, the Express En-

system works with Citizenship and Im-

will span between 2014 and 2023. Con-

try stream gives priority to skilled can-

migration Canada’s (CIC) Express En-

tributing to that are five LNG plants be-

didates who meet the criteria for one

try application system. Express Entry

ing constructed, with the project starting

of the federal immigration categories,

means faster processing time for skilled

this year and the completion expected

including minimum language require-

workers to gain permanent residence,

for 2024. The production capacity will

ments. Immigrants must also have a

while for employers it means access to

be 82 million tonnes per annum and

full-time job offer from a B.C. employer

more skilled immigrants, as the appli-

would generate a sector investment of

with a market wage adequate to sup-

cation requires a job offer from a B.C.

$175 billion. Of the 100,000 jobs an-

port him or herself, and any dependent

employer. And, those who are accepted

ticipated from the LNG industry, that

family members in the province,” said a

into the Express Entry pool are eligible

includes 58,700 in construction-related

spokesperson for the Ministry of Jobs,

for an invitation to apply for permanent

fields, 23,800 operations-related jobs, in

Tourism and Skills Training. “The new

residence.

addition to thousands of more opportu-

system – in tandem with the Federal

nities as a result of this growth.

Express Entry system introduced by Citi-

“Our priority is to have British Columbians first in line for jobs, however

So, why is the Express Entry British

zenship Immigration Canada – allows

we know that economic immigration

Columbia program important to the

government to select high-skilled work-

will play a key role in meeting the la-

LNG industry? A spokesperson for the

ers that will be top contributors to the

bour demands of a growing economy.

Ministry of Jobs, Tourism and Skills

province’s communities, labour mar-

Express Entry British Columbia will pro-

Training explained even if all eligible

ket, and overall economy, including the

vide a more streamlined process and an-

trained British Columbians worked in

LNG industry.” S

48 B.C. Oil & Gas Report • 2015

Keystone XL in temporary limbo following presidential veto By Leonard Melman

n one of the most impressive examples of lengthy delays brought about by both government and

ment. Steyer has stated that he was dedicating himself to tackling energy and climate issues.

can leadership stood steadfast in favour. Two major developments then took place in early 2015.

special interest, after seven years of hear-

Meanwhile, Charles and David Koch,

First, despite advance warnings of a

ings, inquiries and debate, the proposed

chairman and executive vice-president of

presidential veto, in late February the

Keystone XL pipeline remains ‘on hold’

giant Koch Industries, have consistently

Republican-led Congress passed a bill

and is facing indefinite prospects. The

promoted Keystone XL on the basis of

entitled “Keystone XL Pipeline Approval

proposed pipeline has been designed

the huge potential economic and job-

Act”. Next, as promised, the president

to move Canadian petroleum through

creation benefits, which could accrue

vetoed the legislation and the Repub-

the central U.S. and eventually down to

upon its construction and successful

licans were unable to muster sufficient

major refining facilities located on the

completion.

votes to over-ride the veto.

American Gulf Coast.

Political influence has played an im-

While the project presently remains

The project could be of vital inter-

portant part in the overall debates re-

in some form of political ‘limbo’, it

est to the Canadian provinces of British

garding the project. Generally, those

still commands attention. For example,

Columbia, Alberta, Saskatchewan and

on the political Left, apparently includ-

Warren Buffet, known as the “Sage of

Manitoba where intense exploration and

ing President Obama, are fervently op-

Omaha” and a frequent supporter of

development efforts relating to both ‘nat-

posed to the project on environmental

the president, came out in direct oppo-

ural’ petroleum deposits and those asso-

grounds. On the opposite side, those

sition, saying he would have approved

ciated with oil sands developments are

favouring the project point toward two

the project. Democratic ‘left-wing’ flag

ongoing. However, the great problem the

significant considerations. First, there

bearer, Senator Sanders of Vermont,

industry now faces is transporting abun-

are the direct economic benefits, which

criticized Hillary Clinton for not being a

dant production from Western Canada

would specifically include construction

sufficiently committed environmental-

to major refinery facilities and markets

employment and permanent operation-

ist on the XL project while Republicans

in the U.S.A. and perhaps beyond.

al job creation which would be distrib-

of all stripes continue to campaign for

Keystone XL is actually only one part

uted throughout the economy. Second,

its approval.

of the Keystone Pipeline System, with

successful completion of the pipeline

In the meantime, the oil that might

three phases already carrying crude oil

would further diminish America’s de-

have been transported via the Keystone

from Alberta. The Keystone XL pipeline

pendence upon foreign oil from unreli-

XL pipeline continues to pile up in stor-

– Phase 4 of the total system – will be

able sources.

age facilities in Alberta. This supply

an entirely new pipeline from Hardisty,

Since the Keystone XL pipeline origi-

overhang is having a negative influence

Alberta directly to Steele City, located

nates in Canada but passes through U.S.

on the economies of Alberta and B.C.

in southernmost Nebraska. It is the Ne-

territory, relations between Canada and

by rendering many borderline projects

braska portion, which lies at the heart

the USA are also involved and there-

unprofitable, and the diminished ability

of a major environmental controversy

fore, the issue comes under the scrutiny

to move end petroleum production to

relating to Nebraska’s and neighbouring

of America’s secretary of state; formerly

end markets has discouraged further ex-

states’ fresh water supplies.

current Democratic presidential candi-

ploration and discovery efforts, thereby

date Hillary Clinton, and presently John

driving business away from drillers, sup-

Kerry.

pliers, etc.

Powerful interests are supporting opposite sides of the controversy. To a large extent, forces opposed to the construc-

Throughout late 2014 and into 2015,

Many partisans on both sides of the

tion of Keystone XL are funded by bil-

the conflict entered the U.S. Congress

Keystone XL debate continue to moni-

lionaire Tom Steyer, founder and former

with President Obama leading the oppo-

tor developments closely. This story is a

chairman of Farallon Capital Manage-

sition while the Congressional Republi-

long way from its conclusion. S B.C. Oil & Gas Report • 2015

Oil industry will rebound

It’s time for North America to act like an energy superpower By Brad Wall, Premier of Saskatchewan

he great British Prime Minister Benjamin Disraeli once said there’s no education like adver-

sity. If that’s the case, the oil industry has done a lot of learning during the last few months, and so have governments that rely on the industry for investment, revenue and jobs. We have witnessed a precipitous drop in oil prices that virtually no one foresaw, a decline so steep the industry’s basic operating assumptions are being questioned by many. This is indeed a challenging time for companies, employees, and jurisdictions like Saskatchewan. As we deal with those challenges, we need to keep in mind that we’ve been here before, and not so long ago. Oil prices plunged in 2009, and the industry faced the same uncertainty it confronts today. But prices bounced back fairly quickly, thanks in large part

50 B.C. Oil & Gas Report • 2015

to growing demand in the developing world. And while this time prices may not recover as quickly, the industry’s demand dynamics have been forever altered by the rise of countries like China, India, Indonesia and Thailand. Even if those Asian economies weaken in the short term, it is difficult to envision a scenario where global demand for oil languishes for long. The world’s population is expected to increase to more than nine billion by 2050, with much of that growth to take place in Asia. Moreover, the world is becoming more affluent and more urbanized, which will translate into higher demand for energy. From 2000 to 2012, demand for oil in Asia grew by 41.5 per cent, while demand declined in Europe and the United States, according to the Organization of Petroleum Exporting Countries (OPEC).

OPEC forecasts that oil demand will climb from 90 million barrels a day in 2013 to 111 million barrels a day by 2040, with most of the increase coming in Asia. This is why I believe in the long term, the North American oil industry will prosper, provided we have the appropriate taxation and regulatory regimes in place and the necessary infrastructure to get our product to market. In the short-term, there will be some rocky days. Thankfully, the oil and gas industry is made up of tough and resilient people, and so is the Province of Saskatchewan. We are both accustomed to market volatility. Saskatchewan is a province of traders, exporting almost three quarters of the total value of what we grow, mine or build to markets around the world. Our economy relies heavily on natural resources to drive growth and investment. But while many know Saskatchewan as a leading producer of potash, uranium, and agricultural products, and that diversity of resources will help see us through a slowdown, the contribution of oil to our economic wellbeing is not as well known outside the province. That’s why, wherever I go, I am quick to point out these facts: • That our province has 53.9 billion barrels of initial oil in place and 1.3 billion barrels of remaining recoverable reserves; • That Saskatchewan is Canada’s second-largest oil producer and its thirdlargest natural gas producer; • That prior to the recent decline in prices, Saskatchewan was producing

a record amount of oil – more than 500,000 barrels of oil a day, with 65 to 70 of production exported to the United States. We ship more oil to the U.S. than Kuwait. • That Saskatchewan is a global leader in the research and development of enhanced oil recovery technologies; • That our industry has a solid track record of innovation, and has eagerly utilized horizontal drilling and hydraulic fracturing to boost production. Oil has provided an enormous economic boost to our province. In 2013, the industry accounted for an estimated 15.1 per cent of Saskatchewan’s $61.1 billion real gross domestic product. In 2014, it invested an estimated $6 billion in exploration and development, and supported approximately 38,000 jobs. Our government is extremely grate-

ful for the hard work and enterprise of the hundreds of companies operating oil and gas wells in the province and the firms that support them. The private sector deserves the credit for the impressive growth in Saskatchewan’s oil sector. For our part, the government has tried to help by creating an atmosphere conducive to growth. That we have had some success is borne out by the Fraser Institute’s annual Global Petroleum Survey, which ranked Saskatchewan as the third most attractive place in the world for the oil and gas industry. In these uncertain times, we will do everything we can to ensure Saskatchewan remains a competitive place to do business for the industry. That includes serving as a strong advocate on the national and international stage.

We have been vocal in our support of major pipeline projects that will benefit Canadian oil producers, such as Northern Gateway, Keystone XL and Energy East. In our view, it is imperative these projects proceed if Canada is to live up to its status as a world energy superpower. The pipelines will provide a major boost to the North American economy, and ensure our oil can get to tide water, enabling producers to receive world prices for their product. I’ve travelled to Washington in support of TransCanada’s Keystone project. In speeches and in meetings with lawmakers, I’ve made the point that there are already more than 80 pipelines carrying hydrocarbons between Canada and the United States, all operating safely right under the nose of actress Daryl Hannah and other fervent opponents of Keystone.

B.C. Oil & Gas Report • 2015

In those discussions, I’ve stressed the project’s economic benefits. According to the U.S. State Department, Keystone will contribute $3.2 billion to the U.S. GDP and create more than 42,000 jobs during construction. The State Department has also concluded that Keystone will not significantly increase greenhouse gas emissions. Keystone is truly a “no brainer”, as Prime Minister Harper has said. But President Obama doesn’t see it that way. The project is caught up in an intense political debate in the United States. I’m troubled by that debate, but I understand it. Opposition to the $12 billion Energy East project is harder to fathom. Energy East, another TransCanada undertaking, entails converting an existing natural gas pipeline to an oil pipeline, and extending the pipeline to ports in Quebec and Atlantic Canada. Seventy per cent of the pipeline is already built. Energy East, like Keystone, will enable Canadian oil producers to get world prices for their product, which will not only benefit those companies, but all Canadians through increased tax revenue, wages and investment. The pipeline will allow for the shipment of conventional oil from West to 52 B.C. Oil & Gas Report • 2015

East, opening up the possibility of Canadian oil displacing oil importing from countries like Saudi Arabia, Iraq and Nigeria. The economic benefits associated with Energy East have been confirmed by independent studies completed by Deloitte and the Conference Board of Canada. The Deloitte report predicts the pipeline will boost economic activity by $35 billion over its lifetime. This includes $10 billion in additional tax revenues, of which 20 per cent will flow to Quebec and 36 per cent to Ontario. It is estimated Energy East will create 10,000 full-time jobs in the construction phase, with most of the jobs going to workers in eastern Canada. Energy East is now the subject of a rigorous National Energy Board review. I was pleased to see that my colleagues, Premier Kathleen Wynne of Ontario and Premier Philippe Couillard of Quebec, have dropped their demand to expand that review to include the greenhouse gas emissions (GHGs) generated in the production of the oil transported in Energy East. Still, Quebec and Ontario are not yet supporters of Energy East. There is, in fact, considerable opposition to the project.

I have no doubt TransCanada will do everything it can to allay concern and correct misinformation. Those of us who support the oil industry, and understand and appreciate its importance to the Canadian economy, must help with the effort. And as we do, we need to deal in facts, for as the American president John Adams noted: “facts are stubborn things”. We should emphasize the fact that pipelines are by far the safest way to transport oil, far safer than moving oil by rail. We should make known the fact that every year, Canadian resource companies and governments lose out on billions of dollars in profit and tax revenue because we are unable to ship our oil to world markets. That means less money for job creation, less money for schools, hospitals and roads, less money for programs to help the most vulnerable among us. We need to disseminate the fact that few countries in the world have done as much as Canada to ensure the environmental sustainability of fossil fuel production. Over the years, billions of dollars have been invested to reduce the industry’s impact on the environment. And finally, we need to explain that the oil and gas industry has sustained the Canadian economy through difficult times, with the economic benefits extending far beyond the borders of Alberta and Saskatchewan. In 2013 alone, the industry invested $74 billion and employed 530,000 people. All Canadians should be proud of our oil and gas industry. We should trumpet its risk taking, its innovation and its social responsibility. Today, Canada can make an honest claim to being an energy superpower. It’s time we started acting like an energy superpower. S

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Is it too late for B.C. LNG? By Jay Roberge

n July 21, the British Columbia legislature passed a potentially “historic” Liquefied Natural Gas Project Agreements Act that allowed the government to enter into agreement with Pacific Northwest LNG – a consortium led by Malaysian energy giant Petronas – to build a liquid natural gas export facility in Prince Rupert, B.C. At $36 billion, the LNG project will be the single largest private investment in B.C. history, creating an estimated 4,500 construction jobs and generating $8.6 billion in taxes and revenues by 2030. As part of the negotiations, the B.C. government is making concessions to freeze the tax rate on the consortium for 25 years. Regardless of the final agreement, many critics argue that it is simply too late for B.C. to enter the global market for Liquid Natural Gas (LNG) and the tax concessions diminish the long-term benefits of the project. Critics argue that increased global LNG supply and a general decrease in natural gas prices make the project uneconomic. Furthermore, others believe the job creation is primarily during construction – so it is mostly temporary and brings little economic benefit. Such a view does not consider the risks of not having an LNG export facility on the west coast of Canada. With the glut of oil and natural gas supplies, natural gas prices have come down globally. While oil has been shipped by seaborne tankers globally for years, natural gas has not enjoyed the same robust global distribution network until recent years. It is important to understand that for Canadian natural gas there are two markets to consider with two different prices; the domestic North American market, where natural gas is consumed in Canada and sold to the United States; and the international market. Canadian gas suppliers cost-effectively deliver natural gas through a vast network of gas pipelines running thousands of kilometres from across Canada into the USA. This network of pipelines delivers 54 B.C. Oil & Gas Report • 2015

gas in mass quantities to be distributed through sub systems right into homes and businesses across North America so people stay warm in the winter, cool in the summer, and can fire up their barbeque for a summer burger. Virtually all of Canada’s exports are domestic and there is no Canadian participation in the international market. Some critics point to the fact that low natural gas prices make the B.C. LNG facility uneconomical. Such a view is short sited, and subscribes to a belief that commodity prices will always stay low. We can all remember a time when oil went to $145 per barrel. The “experts” were claiming then that oil would never be under $100 ever again. How times change. As the saying goes “the solution for high prices is high prices, and the solution for low prices is low prices”. In energy commodities, nothing goes up forever, and nothing stays down forever. Natural gas prices in North America – like any commodity – go up and down with supply and demand fluctuations, which are typically brought on by cold winters and hot summers. When demand starts to go down, inventories start to increase as supply starts to outpace consumption. Producers respond by shutting in production and reducing supplies to balance out with demand and stabilize pricing. In 2008, when oil reached up to US$145 per barrel, domestic natural gas prices peaked at about $14.50 per million British thermal units (Btu). Since mid-May, domestic natural gas have bounced between US$2.50 and $3.00 per million Btu. Pricing for natural gas in the international market is much different. In Asia, prices are also down, but are generally between three and four times higher than the domestic prices here in North America. For example, recent prices in Japan, where prices have been under downward pressure because of the returning use of nuclear power, natural gas is approximately $8.00 per million Btu.

Citigroup expects global LNG prices will trade within a range of $6 to $8 per million British thermal units from now to 2020. A B.C. LNG facility’s economics are based on prices received in the international market (taking transportation costs into account) and not domestic market pricing. An LNG export facility allows Canada to participate and compete in the global LNG market, where prices are higher than domestic prices, price appreciation will likely take place sooner, and overall volume demand is growing. Without an LNG export facility, Canada is beholden to selling their surplus natural gas to the United States. Problem here is that in 2011, the United States surpassed Russia to become the biggest producer of natural gas in the world. As a result, the United States has gone from being our biggest customer to being our biggest competitor with its own LNG export facilities under construction. Over recent years, Canada’s exports to the U.S. have dropped by 30 per cent. Perhaps the most important part of understanding pricing of natural gas (or any commodity) is the effect of only having one customer. When there is only one buyer of Canadian surplus natural gas it’s a buyers market and the buyer dictates price. In order to maximize the price or at least try to get a higher price, there has to be more than one buyer – the same holds true for natural gas and for Canadian oil. This ensures the longterm viability of the oil and natural gas industries in Canada, which play a key role in Canada’s overall GDP. Canada is the fifth-largest producer of natural gas in the world; fourth-largest exporter in the world and the natural gas industry is a major contributor to the economy of Canada. It is an abundant, important resource in Canada’s economy and the world’s energy needs. As a cleaner source of energy compared to the other carbon sources, and a globally distributed system, natural gas will repre-

sent a growing percentage of the world’s overall energy mix. On a more macro level, billion dollar projects are not based on the spot price of the commodity, but on the longerterm trend on demand and price forecasts. Today, natural gas is a low point in the price cycle, with increased global supply. Right now, at these low price levels, natural gas is offering the most practical, most affordable and cleanest carbon energy source available. Global pressure to reduce carbon emissions will see more countries around the world convert coalfired power plants to natural gas, which in time will produce increased demand for natural gas. This year, Beijing has experienced more “blue-sky” days then in the last 15 years due in part to a number of regional coal-fired power plants converting to natural gas. China has placed the environment on high priority, and is making significant moves to improving air quality. Overall global energy demand is going up, and it will take all energy sources to meet this demand. According to most predictions, global energy demand will increase on average of approximately 1.5 per cent per year for the next 20 years. In just two decades the world is going to have to produce 30 per cent more energy then it does today. While renewables are growing, there is no one single energy source that will displace any other source. Renewables are expected to increase from the current levels of three per cent to eight per cent over the next 20 years. However, fossil fuels will continue to meet two-thirds of the increase in energy demand. The global energy mix pie will get larger, and the pieces that each source represents will change and natural gas will continue to represent a growing portion. According to BP, a one per cent switch from coal to gas in power generation would cut as much carbon emission as an 11 per cent investment in renewable energy. Much of the recent debate focuses around China’s economic growth concerns and its importance to the success of B.C. LNG exports. No doubt it is a key

market in Southeast Asia, but not the only one. An LNG export facility opens Canada to multiple potential customers including China, Korea, Japan, and other countries that do not have the vast resources we enjoy in Canada. The second part of the China factor is that China has vast resources of shale gas to develop – the largest potential on the planet. However, these resources are mostly in the western part of China, where it is arid and lack of water for fracking is problematic. A long-term natural gas deal with Russia was testament to China’s long-term needs comparative to potential near-term domestic supplies. The current global economy is stagnant and has been in a period of subsidized growth, rather then real growth. There will be a time when real growth returns and we will see the United States, China, and Europe back on a positive growth trend, and in this growth cycle we will see commodity prices rise again along with energy consumption. Low energy prices in both oil and gas are a very strong catalyst to help the global economy turn to positive growth. With an LNG facility in place, Canada will be in position to take advantage and participate in a growing global economy. And yes, there are many other countries, such as Australia, the United States, and various countries in the Middle East already in the LNG market and adding more capacity. Canada is a sought-after source as it is a reliable country that respects the rule of law and is viewed as a politically stable country. Despite what many think, the USA is considered a higher risk supplier for China. Ensuring Canada has sufficient LNG export capabilities in British Columbia is the right decision for British Columbia, and Canada. It is critical to the long-term survival of our natural gas industry and provides the necessary infrastructure to make Canada competitive in the global natural gas industry. To do so it needs to invest and build pipelines and exportprocessing facilities to cost-effectively transport natural gas from the source, to the west coast and into the international

market. The easiest way to lose a competition is never to enter. Canada can and will compete. Some critics that argue Canada is losing its sovereign control over natural gas and that it should not be exported at all. It should be kept for generations. This is also short sited. The challenge here is that we share this planet with others and we do so through organizations like the World Trade Organization (WTO). And though natural gas is a carbonbased energy source, it is the lowest of all the fuels and plays a valuable role in meeting global energy needs while improving the global carbon footprint and bridging the gap to a sustainable energy future. Canada has a massive surplus of supply that will be part of our energy mix for years to come and until alternative sources of sustainable energy costeffectively power our planet. Critics argue that building such a facility only creates short-term jobs during construction. This is true, the number of jobs (estimated at 4,500) during the construction period of any project is generally higher then the number of jobs required to maintain a project. However, the economic impact of 4,500 working people during a globally stagnant economy is a welcome event, and long-term 300 jobs for management and maintenance will be a major boost to the regional economy of Prince Rupert and support services provincially. Now is the time to move forward and build an LNG facility in B.C. The timing is not going to improve as the global economy inches closer to growth each day. Building during the down cycle ensures Canada will be selling LNG in the up cycle. By the time the facility is completed, the global price of energy may be back on the rise. We need to build for the future and not for today. Global long-term demand for energy will continue to grow, and an LNG export capability is essential for Canada to compete and sell to multiple markets around the world and is a necessity to the long-term viability and survival of Canada’s energy industry. S B.C. Oil & Gas Report • 2015

The growing contribution of the oil and gas services sector – how big is it?

e don’t hear much about growth in the energy sector in Canada these days. So to talk about the oil and gas services (OGS) sector’s growing contribution may seem remarkable. Every year, though, the Canadian petroleum services sector makes substantial contributions to the country’s economy, as measured by gross domestic product (GDP), taxes, investment and employment. A recent economic study undertaken on behalf of the Petroleum Services Association of Canada (PSAC), the trade association that represents Canada’s leading oil and gas services, supply and manufacturing companies, shows that those contributions had been getting bigger, in a big way. The study shows that between 2006 and 2009 the OGS sector’s economic contribution to Canada’s economy grew by 15 per cent over that three-year period. That’s considerable growth in a short time. Some of the other considerable contributions of the sector highlighted in the report show: • OGS contributed $75 billion to Canada’s GDP (up from $65 billion in 2006). This represents a 5.1 per cent impact on Canadian GDP for the year 2009. • Taxes paid to federal and provincial governments by the OGS sector to56 B.C. Oil & Gas Report • 2015

taled $17.3 billion. • Direct and indirect employment across the country by the OGS sector reached 685,000. • Together, the OGS sector and Exploration & Production (E&P) sectors’ total industry contribution to Canadian GDP was $123 billion. While E&P companies are readily recognized for the major contribution their sector makes, the hundreds of companies and hundreds of thousands of workers in the OGS sector that provide services and products that support E&P activities and operations, often get overlooked as a top contributing sector in its own right. The study points out that over the last two decades, E&P companies have outsourced more and more of their regular activities, and that the OGS sector’s growth over the three-year period reflects this continuing trend. Mark Salkeld, president and CEO of PSAC, commented on the significance of the sector’s economic contributions, saying, “It is well understood that oil and natural gas exploration and production is a major industry in Canada that provides tremendous economic benefits to all regions of the country. What is less understood is that a substantial portion of those benefits are due to the oil and gas services sector. PSAC members provide the manpower, the technol-

ogy, and the materials to drill, complete and produce oil and natural gas – from manufacturing the rigs and wellheads, to developing leading-edge downhole tools and environmental services, or providing workers’ accommodations in remote camps – and everything in between.” Products and services that are used directly in support of exploration and production cover the lifecycle of activities, including exploration, drilling, completion, production, construction, processing, transportation, logistics, manufacturing, maintenance, and fabrication. What the report also hastens to highlight is that when it comes to changes in policy, policy makers clearly consider the impact on E&P companies, but it’s unclear whether they think about the OGS sector. Fiscal and policy decisions that target the E&Ps can have major economic and employment impacts on the OGS sector, whether intended to or not; it is impossible to set policies aimed at the E&P’s without impacting the OGS sector. While the scope and success of the OGS sector is particularly impressive when considering its short history – just 60 years ago, there was no Canadian petroleum services sector at all – there is no denying that our success depends on the E&Ps. Eighty to 90 per cent of what the OGS sector does, what it contributes, is derived from the service and products it provides to E&P companies. When energy industry revenues and capital expenditures collapse, like they have in the last few months, that downward slide is fast, perhaps faster, for the OGS sector because once the drilling stops or the capital dries up, so does the work for the service companies. From that perspective, E&P priorities – for market access, regulatory certainty and global competitiveness – are OGS sector priorities, too. S

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SPE ramps up supportive benefits for the Canadian oil and gas industry

SPE leaders (from left to right) Mike Gatens, Mark Rubin, Janeen Judah, Darcy Spady, and Cal Coulter.

ver the years, a number of breakthrough technological papers have been presented at the Society of Petroleum Engineers (SPE) global events bringing Canadianspecific innovation to the international stage. The ingenuity and intellect of energy professionals from SPE sections and chapters in Canada is respected by other SPE members around the world. Moving forward, it is going to take more of that specialized acumen to further the advancements of upstream operations. “Technology is key for the oil and gas industry,” says Mike Gatens, SPE Canada board chairman. “Doing more with less is essential during this market downturn. Energy professionals can lean on SPE as they weather the storm. Responding to market conditions, the society has augmented its already excellent benefits with more resources targeted to members who are needing extra support now.” Recently, at the SPE Canada Heavy Oil Technical Conference held in Calgary this past June, incoming 2017 SPE Presi58 B.C. Oil & Gas Report • 2015

dent Janeen Judah spoke about taking a long-term approach to the upstream exploration and production (E&P) industry, whether it is in heavy oil, LNG or unconventional resources. Judah addressed supply and demand in the marketplace, the benefits and risks of production, project management, as well as the political and environmental aspects of the oil and gas extraction process. “Here in Canada, the market downturn has had a profound impact on many industry professionals,” said Judah. “I am here to emphasize how important our members are to SPE and how committed we are to help in good times and bad.” SPE is a not-for-profit organization that offers a vast array of member benefits and tools with profits from training, conferences and workshops being invested back into our programs for members. SPE understands the recent downturn has hit Canadian operations and personnel quite harshly with many of our members experiencing layoffs. The society has several resources in place

to assist members who are coping with this difficult time, such as: • A new job board where energy-related jobs are posted on the SPE.org website, free for SPE members. http://www.spe. org/industry/jobs/ • Members may request a dues waiver if unemployed or for other financial hardship reasons. • Webinars are free to members with dozens to choose from. • E-mentoring programs are available for young professionals, which can be very helpful, especially in a downturn. • If a member has retired early or is unemployed, yet still wants to stay involved in the industry, PetroWiki is an ideal way to stay engaged and demonstrate one’s expertise. • SPE offers a free, online Competency Management Tool to members that allows individuals to assess their current professional capabilities against one of 22 key E&P job competency models covering geosciences, reservoir engineering, well engineering, production engineering and operations, project and facilities engineering and health, safety and environment. SPE is uniquely positioned to take a wide perspective on the industry since its membership offers a global, regional and local platform to its members. Canada has 6,255 professional members, eight sections, and 11 student chapters. Recently, the Vancouver section was established supporting training and networking events in the Vancouver and

UPCOMING EVENTS

Visit SPE.org/Canada for more details Southwestern British Columbia area. With LNG initiatives and pipeline projects of key concern to petroleum engineers working there, the opportunities for section activities are robust. Along with social events, the Vancouver section also hosts expert speakers from SPE’s Distinguished Lecturer program. The inaugural program took place in May 2015 with a presentation by David M. Anderson, “Unconventional Reservoirs Require Unconventional Analysis Techniques.” Three more lecturers are already scheduled for the spring 2016 season, and SPE Canada plans to hold an LNG and/or major projects workshop in Vancouver in 2016/2017. SPE is increasingly beneficial all over Canada with sections and student chapters from Newfoundland to British Columbia. SPE also publishes the Canadian Oil & Gas Evaluation Handbook (COGEH) and the Journal of Canadian Petroleum Technology (JCPT). In

October 6-7, 2015

SPE Deepwater and Harsh Environment Development Strategies Workshop St. John’s, Newfoundland and Labrador, Canada

October 20-22, 2015

SPE/CSUR Unconventional Resources Conference Calgary, Alberta, Canada

November 23-25, 2015 SPE Thermal Well Integrity and Design Symposium Banff, Alberta, Canada Visit the SPE Vancouver Section website for upcoming local events: http://connect.spe.org/vancouver addition, the SPE Canadian Educational Trust Fund provides a variety of scholar-

ships to post-secondary institutions and students. S

B.C. Oil & Gas Report • 2015

Levelling the playing field

Q & A with Art Jarvis, executive director of ESBC By Kathy Smith

rt Jarvis is the executive director of Energy Services BC (ESBC). For the past 39 years, ESBC has been the united voice for B.C.-based contractors who service the energy sector. Based in Fort St. John, B.C., he liaises with the service sector and producers through a three-pronged approach: advocating, educating, and strengthening relationships. In a recent interview, Jarvis reported that 2015 has been the worst he’s ever seen for B.C.-based contractors, due largely on an imbalance of work awarded to out-of-province contractors. He discussed why the current situation is unfair and how he’s lobbying for a solution to create a level playing field for B.C. contractors. Q: Mr. Jarvis, as the voice for ESBC members, what have local contractors been experiencing when looking for work this year? Art Jarvis (AJ): The winter of 2015 was the worst quarter I’ve seen in decades. A lot of contractors in Fort St. John are off work, so we’re really fighting hard and we’re lobbying the provincial government as much as we can. Q: ESBC lists B.C.-based contractors, so what factors are contributing to this shortage for local workers? AJ: We have lots of local people with contact information here, yet people, equipment, and services are still coming from across the border. It’s impossible for us to compete because it costs 20 to 25 per cent more to be based here. The majority of the service companies drive in and don’t get taxed – if they’re not a

60 B.C. Oil & Gas Report • 2015

big truck they don’t even get looked at. Q: An abundance of out-of-town contractors is detrimental on many levels – can you give me a scenario of how it affects the average person? AJ: Say your house painter comes from elsewhere – he paints it then leaves – how does that benefit your community? If he lives down the road you can expect him to buy groceries, diapers, chewing gum, maybe a new car. If you pay someone from outside, he heads back home and you’ve just sent the money with him. We’ve got work here and we’re just watching it go by. Q: Producers have dropped projects and have sent letters to service companies requesting discounts. Not all of the contractors working on the remaining projects are local, so how does this affect the community? AJ: They bring in out-of-province companies and do the work right under our noses. It doesn’t matter how much money a company spends here if the money doesn’t stay here. Visiting contractors use the hospital, which is currently 10 doctors short, as well as roads and so on, but they don’t contribute to the community because they’re mostly in camps. Q: To some, the ongoing construction of buildings in Fort St. John suggests that the city is a hive of activity – is this a misnomer? AJ: By the time they build a new hotel, the economy may have changed and they’re in it for a 30- or 40-year span – our biggest concern is for the next two years – I can give you a list as long as

my arm of locals who were going to be working on small to multi-million dollar projects, but much of that is on hold now. Q: A number of new residential developments have been built in anticipation of growth connected to LNG. How is that going? AJ: We’ve been very strong here for the last four or five years, so out-of-province workers didn’t affect us – if you’re getting your fair share then you’re okay. Last year, housing contractors were digging basements for houses that were already sold – this year to keep their guys busy they’re building on speculation, and that’s a 180-degree difference. Q: The economy in Northeastern B.C. is dependent on work in the energy sector, and if locals are not getting their fair share, what are the financial implications? AJ: One lending institution has offered a three-month payment holiday to their corporate clients. Some banks are offering payment vacations on mortgages. You pay more for it, but right now you may really appreciate that relief. The fact that they’re doing that tells me they know these are tough times. Q: What is your major concern? AJ: I’m concerned that the B.C. government is so focused on long-term LNG plans, that they’re not watching what’s going through the sieve right now. Q: What is the solution you are seeking? AJ: We need a tax concession for service

companies and contractors who build a base in B.C. That doesn’t mean it’s their only office, it just means they’ll rent, buy or lease property here, hire B.C. people, pay B.C. insurance on their vehicles, and submit corporate taxes. Q: You meet regularly with MLA Pat Pimm and speak often with MP Bob Zimmer. How is that going? AJ: Yes and I’ve also had discussions with every provincial politician who can assist with the situation. It really is a provincial problem and they have to understand the severity. I don’t think everyone fully comprehends what is referred to as the ‘Alberta advantage’. Q: I spoke to with MP Bob Zimmer recently and he acknowledged the problem. I asked; Mr. Zimmer, what are your thoughts on industry hiring local contractors versus out-of-province workers? Bob Zimmer: We’ve gone to bat for industry to get them as much as we can and it’s important that industry understands the importance of local companies and contractors. They should be looked at first. All things being equal, price and everything else, we want them to use the local population first – I support Art in that. If someone’s working from out of province, they’re technically supposed to be paying B.C. tax – that needs to be captured somehow. B.C. doesn’t know what it’s missing because that money is leaving the province. That would help to level the playing field… There’s also the option of being in a preferred contractor group – as long as you qualify, you’re given first right to bid on a project, but you still have to win your bid. Q: In speaking with MLA Pat Pimm I asked, Mr. Pimm, what can you add to this and how is the issue being addressed? Pat Pimm: We’re working on this

through the jobs ministry. We talk about B.C. first, Canada second, and opening it up after that, so we want to look after B.C. jobs. This discussion has been on my plate since I started six years ago, and it was on all the MLA’s plates prior to that. It’s a problem that’s been here for a long time. I would like to take an avenue similar to what’s done with First Nations – we guarantee they will have some employment with these projects and I’d like to see local guarantees under social licence… the problem is that as the jobs go down the procurement line, people end up offering jobs to the people they know well. Q: You mentioned that Buy BC Advocate Gordon Wilson could also be a good source of support in this. AJ: The provincial government must level the playing field to make it fair for businesses to locate here, [it’s] an incen-

tive for them to compete fairly when we’re bidding against out-of-province contractors. Q: Is Alberta open to helping at this point? AJ: Alberta has promised to raise corporate tax, so that’s going to help, but why do we have to wait for Alberta to help us with our problem? That doesn’t make any sense. Q: With more work to be done, what are your closing thoughts? AJ: A strong private sector is critical to the development of municipalities. If we win this battle, everyone in the province will benefit. Small businesses are the fingers of the hands that built this province, and if you cut the fingers off now, how are you going to lift the load once final investment decisions are made for LNG, and the work comes? S

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The College of New Caledonia:

A cornerstone of B.C.’s economic development

In January 2015, Premier Christy Clark announced funding for CNC to purchase new tradestraining equipment to support students studying in in-demand fields that are critical to LNG.

ith the growing interest in LNG and other trades-related industries, B.C. is increasingly relying on its post-secondary sector to ensure that its labour force is well trained and adaptive to the changing labour market. The College of New Caledonia (CNC) in Prince George is a great example of how the industry, government, and post-secondary sectors are working together to meet the emerging needs of the province. In January of 2015, Premier Christy Clark announced $375,028 for CNC to purchase new trades-training equipment to support students studying in in-demand fields that are critical to LNG and other industries. Then, in July of 2015, the Ministry of Advanced Education an-

62 B.C. Oil & Gas Report • 2015

nounced another $1.5 million for trades training equipment for CNC. The province has also allocated $604,079 for 136 critical trades seats and $197,000 for training and programs across all of the CNC campuses. These funding allocations were informed by consultations with post-secondary institutions, the Industry Training Authority (ITA), and the most-recent labour-market data. The trades equipment funding came as a part of B.C.’s Skills for Jobs Blueprint commitment of $185 million over three years for trades training infrastructure and equipment at public post-secondary institutions. As a result, students, colleges, communities, and the economy are all benefiting. With these funds, CNC has been able

to update some of its equipment so that it can provide its students with the most up-to-date training methods. This has allowed the college to stay relevant in a continually changing and developing industry market. Examples of equipment purchased with this money include a fiber fusion splicer for electrician students (used for joining two optical fibers end-to-end using heat), updated welding machines for welding students, and a Pro Link Ultra Elite Scanner for heavy-duty mechanic students (used for heavy-duty vehicle diagnostics). The college works extensively with its industry partners to ensure that the training it provides meets the standards sought after by employers. So, these new equipment purchases mean that students who attend CNC receive hands-on experience with the most up-to-date equipment. So, when they graduate they are able to smoothly transition into their respective employment fields. This, in turn, further helps develop B.C.’s communities and its economy because it provides tradespeople with the opportunity for long-term, well-paying jobs. “When the opportunity is there for graduates to find stable employment directly after completing their training, then those individuals are able to immediately begin contributing to the economy and giving back to their communities,” said Henry Reiser, CNC president. “That is one of our main goals across all of our regions as a community college.” As these industries continue to grow, CNC will be at the forefront of training and innovation. With such a strong partnership between the government, the post-secondary sector and industry leaders, the future of B.C. is looking bright. S

Training the next generation of skilled tradespeople

irst Nations communities throughout B.C. are launching emblematic training-to-employment programs for aspiring apprentices, and industry partners are taking notice. March 31, 2015 was an exciting day for more than 15 students from North Vancouver as representatives from government, industry, Kwantlen Polytechnic University (KPU), and CLAC gathered at the Squamish Nation Training and Employment Centre to celebrate the accomplishments of students, teachers, and administrators of the ACE IT Piping Foundation program. The shop floor was buzzing with activity as highly engaged young apprentices spoke passionately about their future career paths. Squamish Nation’s ACE IT Piping Foundation, an important initiative under the

province’s Skills for Jobs Blueprint, is designed to provide opportunities for high school students to accelerate their career in the skilled trades. Students complete their first level apprenticeship and gain valuable on-site experience with CLAC contractors. Alongside Chief Ian Campbell, Minister Naomi Yamamoto, the ITA, KPU, and the principal of Mountainside Secondary, CLAC B.C. director David Prentice applauded the work of the trade centre’s dedicated staff and students. Prentice said that he hopes the program “will inspire other First Nations communities throughout British Columbia to run trades training programs for tomorrow’s generation of tradeswomen and tradesmen.” CLAC and its contractors have been

privileged to participate in a similar training-to-employment venture with the Haisla Nation, whereby Thompson Rivers University delivered construction craft worker training to apprentices on the job site via CLAC’s innovative Virtual Classroom Training System. The students, employees of Ledcor in Kitimat, B.C. Oil & Gas Report • 2015

Students such as those at the Squamish First Nation Training and Employment Centre are preparing themselves for the upcoming opportunities, sharpening their skills on the tools, but also developing key life and leadership skills, which will make them very attractive to potential employers and, hopefully, positive examples in their work and life communities. and members of the Haisla Nation were able to complete their education in twohour modules after working hours, and as such, were not required to miss any work time, to their own benefit and the contractors. The energy sector is eagerly awaiting the arrival of the next generation of young, skilled tradespeople. As British Columbia inches closer to the start date for the main civil works of the massive Site C Dam construction, and LNG plants in Kitimat and Prince Rupert appear to be actualizing, conversations surrounding labour supply and skills shortages may peak in the months to come. While estimates of the impending shortage vary, B.C.’s Labour Market Outlook to 2022 forecasts one million job openings and a notable deficit of trades and technical occupations. Students such as those at the Squamish First Nation Training and Employment Centre are preparing themselves for the upcoming opportunities, sharpening their skills on the tools, but also developing key life and leadership skills, which will make them very attractive to potential employers and, hopefully, 64 B.C. Oil & Gas Report • 2015

positive examples in their work and life communities. A variety of initiatives will be required if British Columbia is to meet industry’s needs in the next decade, but perhaps the most critical are such practical, training-to-employment programs developing in partnership with First Nations communities. We have the unique op-

portunity to equip British Columbia’s youth with the skills and aptitude to accomplish their life goals. Therefore, we must make meaningful efforts to ensure that these emerging ventures are successful if we are to meet industry’s demand for skilled workers and foster vibrant relationships throughout our province. S

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Fact or Fiction:

B.C.’s ICI construction sector on the future of LNG

The British Columbia construction workforce is lacing up its boots to prepare for a future with LNG opportunity.

ith LNG talk in British Columbia, what’s the construction industry’s take? Here are some insider thoughts from the sector. Type the letters LNG into a search engine and a multi-tabbed maze of newspaper articles and glossy PDF guides will gradually develop on screen. The use of northern B.C.’s natural resource, liquefied natural gas is one topic leading the conversation concerning British Columbia’s future. And while there’s plenty of information to access, this topic’s relevance to the construction sector is a perspective of the story better told by those in the industry. Through a survey conducted online by the British Columbia Construction Association (BCCA) and Construction Business magazine, members from the

66 B.C. Oil & Gas Report • 2015

sector shared thoughts and expectations surrounding the LNG proposals. Generally speaking, LNG plans turning from talk into production seems like a lengthy timeline to some, but will it really happen? The answer appears to be: likely. In terms of the overall industry opinion, 68 per cent of those surveyed believed the LNG opportunities are real. Of those members who believed these opportunities were relevant to their business, trade contractors took a lead in the category of most optimistic. Considering the scope of the potential LNG projects, there’s hope they can get a “sliver of the pie”. In terms of regional opinion in northern B.C., it’s higher with 76 per cent believing LNG’s future is set to become a reality. Some northern companies are

getting ahead by preparing to bid for those opportunities on the horizon. By these standards, it may simply come down to a matter of when. “We better not miss the boat. The government better start making decisions.” That’s not to say northern B.C. hasn’t been experiencing development activity while waiting for final LNG investment decision. Things are happening in these traditionally dormant communities: hotels and food chains are setting up shop and taking on the investment risk, local malls are getting a second life, and subdivision housing is booming. All building up for what’s likely to come. But let’s be clear: the point that never changes in the conversation about B.C.’s future is the need to develop local, qualified skilled trades workers. Regardless if a wrench does tighten the first bolt for an LNG plant’s construction, worker development in the trades is an important issue. LNG could be one more way to help with the projected B.C. skilled tradespeople shortage. The opportunities from LNG are there, especially for new entrants to B.C.’s labour force. As it stands, LNG plans currently rank with more relevance to the northern B.C. companies, while opinion from southern B.C. focuses on the labour drain concern. It’s valid, yet a miss in terms of recognizing the apprentice development opportunity. The proposal estimates an opening of 58,000 jobs within B.C. construction. And, while programs such as the BCCA’s STEP and Foreign Skilled Workers (FSW) ensure skilled tradespeople are connected to B.C. construction employers, the investment in apprentices

ensures skills training, upgrading, and long-term benefits for the province. Out of the companies surveyed who believed the LNG opportunities are relevant to their business, 73 per cent currently hire apprentices. “I feel the opportunities are real and, should one or more [plants] be developed, there will be positive impact throughout the province’s construction sector. The spinoff for service and supply will increase and diversify demand for industrial development.” With the programs in place working to feed qualified skilled workers into the trades market, LNG potential for job creation translates into lifelong skillset learning for workers. Even with the concern for LNG’s potential to largely impact the current labour pool, it’s best to see as a refreshing opportunity. For the first time in many years, apprentices, including underutilized groups such as aboriginal workers and youth, are getting a warmer welcome and greater chance for development in the workforce. The LNG revenue received from longterm supply agreements will filter back into the province for greater funding in the education and training, contributing to the advancement of these apprentices within the workforce. The plan could also help generate even greater opportunities for companies in northern B.C., places like Kitimat and Prince Rupert, and throughout British Columbia. “They seem to be mega projects tailored to companies much larger than ours. We would like to be involved and use the LNG opportunities to grow our company.” This comes back to working for that piece of a potentially very large pie and building on opportunity. And perhaps that’s a good way to sum up the construction sector’s LNG story: one of growth and opportunity in many ways, when the day comes and those glossy plan guides become present-day reality. S

Types of ICI construction companies who see LNG opportunities as relevant to their business.

3% 3% 6%

Trade Contractor

General Contractor

4% 46%

Supplier

Construction Manager Manufacturer Other

26%

Insurance/Bonding Human Resources

Of those who identified LNG opportunities as relevant to their business in the survey, trade contractors have high hopes for securing a “sliver of the pie”.

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B.C. Oil & Gas Report • 2015

Access to largest gas reserves in B.C. receives long-awaited upgrades:

Fort Nelson River Bridge By Kathy Smith

The Fort Nelson River Bridge from the river bed.

n July 24, 2015, MP Bob Zimmer, MLA Pat Pimm, and Northern Rockies Regional Municipality (NRRM) Mayor Bill Streeper announced funding to upgrade the Fort Nelson River Bridge. The bridge is the only route to B.C.’s expansive worldclass gas plays, the Liard Basin, and the west side of the Horn River Basin. The Federal government is funding up to $17.5 million, and the Province is funding $22 million for this major highway corridor upgrade. Known as the Bailey Bridge, it is located on Highway 77 and is often referred to as the Liard Highway. It is the only river crossing that links communities with emergency services and essential goods and supplies. 68 B.C. Oil & Gas Report • 2015

Built in 1984 when the highway became operational, it was constructed in preparation for a visit by Pope John Paul ll. The single-lane ACROW bridge is unique in that it is one of the longest in the world, spanning over 1,000 feet. Its timber deck over concrete piers and abutments has supported truckers in the natural resource industry, tourists, and community members for the last 31 years, and it has long been showing its age. For the past 10 years, increased traffic due to natural gas development and heavier loads has resulted in complete decking failures, even with the crossing of a light pickup truck. The audible and visible waves experienced when crossing are undeniable proof that the bridge

must be brought up to modern standards before a major incident or fatality occurs. When the bridge is out of commission or loads exceed the maximum allowable weight, those servicing the natural gas industry have to be re-routed through Alberta and the Northwest Territories. The long additional distances affects the competitiveness of companies and has a negative economic impact on B.C. During the upgrades, the timber deck will be replaced with a modern two-lane steel girder and concrete deck, and improvements will be made to strengthen the piers and abutments. Completion is expected in the fall of 2016. Following the announcement, MLA Pimm, Mayor Streeper, and MP Zimmer

Photos by Paul Coupe, NRRM Deputy Corporate Manager.

Federal and Provincial funding was announced to upgrade the Fort Nelson River Bridge, paving the way for further development in B.C.’s largest world-class shale gas plays. MLA Pat Pimm, Northern Rockies Regional Municipality Mayor Bill Streeper, and MP Bob Zimmer gave the long-awaited news. discussed the benefits the bridge upgrades will bring to the area, such as safe modern access to the natural gas plays and local employment. They later commented on projections for natural gas activity in the NRRM. “The bridge upgrade is part of the new 10-year transportation plan, ‘B.C. on the Move’,” said Pimm. “We’ve heard overwhelming support from British Columbians to keep our highways, roads, bridges and side roads in good condition. Keeping drivers safe along our northern transportation network is top priority, and once this project is complete, the bridge will be able to handle greater capacity. The upgrade will provide a safer, wider crossing for years to come, enhance the movement of goods and services to communities, and provide economic benefits. The project is also expected to create jobs in Fort Nelson and surrounding areas.” Mayor Streeper called the announcement a huge bonus for the province. “Upgrades to this bridge will open the door for major infrastructure to go ahead within the natural gas plays. This,

as well as upgrades to the Alaska Highway secures Fort Nelson as the service sector for the oil and gas industry in this area – we have qualified local people here to achieve this,” he said. Mayor Streeper recalled a recent discussion with Chevron’s Rod Maier, manager of Kitimat LNG external relations and communications. Mayor Streeper said to Maier that, “Some quick math in transportation – this bridge will save you $250,000 on every rig you move to the Liard and every rig you move out, so on one rig alone that’s a half a million bucks – the three of us got you a half a million bucks, and you’re going to argue over a northern contractor for a thousand dollars on a bid – give me a break.” Streeper said Maier acknowledged his point, and that Chevron is onside with this. On the issue of local employment, MP Zimmer added, “What Bill [Streeper] said is the thing to do – talk to the big companies directly and tell them that all things being equal, they need to make hiring local workers first a priority. This connects to the role of Energy Services BC. Local contractors should be looked

at first and they should have the right of first refusal. Meanwhile, there are trade barriers within our country and we don’t want to establish more, but we also want to make sure that companies coming into B.C. are paying B.C. taxes.” The Northeast B.C Mayor’s Coalition was created to identify these kinds of problems Pimm went on to say. “If everybody works together and we have a solid firm position – that will carry a lot of weight when challenging companies to do their local piece with a social conscience,” said Pimm. MP Zimmer agreed, “If you complement this with local MLA’s and MP’s who are willing to help, this carries even more weight.” As a long-time advocate of the Northern Rockies Regional Municipality (NRRM), Mayor Streeper read emails of support he received from industry. Chevron’s Maier wrote, “I want to thank you for your leadership on this file. Without your continued support and determination to advocate both the provincial and federal government on this issue, I am sure we would not have received such a positive outcome… the voice of Fort Nelson is well heard. The support that Fort Nelson continues to show for our project and industry is both recognized and appreciated.” Quicksilver’s communication and stakeholder relations representative Ericka Belleth emailed, “Quicksilver Canada Inc. is pleased to hear about the recent decision to upgrade the Highway 77 Bailey Bridge… this is a positive step to development in the area… by removing limitations set by the old structure, this should allow for optimal and efficient use of resources for development.” Spectra Energy vice-president of external affairs, Gary Weilinger, wrote, “… For more than 50 years, Spectra Energy has been a proud partner in the Fort Nelson community, providing jobs and economic growth to the area by processB.C. Oil & Gas Report • 2015

The bridge buckles under heavy vehicles. ing and transporting locally produced natural gas… the infrastructure investment will support the prosperity of the community for years to come…” In anticipation of increased activity in the area, MLA Pimm commented on the recent agreement with Petronas and projections by the Canadian Association of Petroleum Producers (CAPP). “We just passed legislation that enables the Petronas deal to go forward. B.C. Liberals want to see that move forward. All the way through the discussions NDP voted no to the jobs, and they wouldn’t do it if it was up to them. We made a good deal with Petronas – we’re giving them 25 years of security so they can make the big investments. We think that’s important.” He added that a recent document released by CAPP says Canada currently produces about 14 bcf (billion cubic feet) of gas per day, which goes to all of the country’s markets. “If we do not get a new marketplace, their projections are that by 2022 or 2023 we’ll be down to about 12 bcf of gas. If we get LNG and the Asian market, 70 B.C. Oil & Gas Report • 2015

that number will go up to about 16 or 17 bcf by 2023. Those are very important projections and we know we need to get LNG on the go. When Petronas gets past the environmental assessment, they’ll be able to make their final investment decision, and you’ll start to see movement here. Shell is following very closely, and I’m hopeful we’ll see LNG projects that will stimulate the economy here again.” MP Zimmer gave an update on the progress of the environmental assessment. “We wanted to make the best business case for LNG in B.C., and the last rung is the environmental assessment. We anticipate a draft report by the end of summer and hopefully things will continue to move on as planned.” MLA Pimm added that if another government were to come into power, the agreement states that Petronas would be compensated for any direct taxation to them, such as LNG or royalty structure. Therefore, Petronas would not be affected under the 25-year agreement. There is also room to negotiate a better deal, and it is believed that other companies com-

ing in will see this legislation as a model to aspire to, and negotiate accordingly. “We’re looking to get this industry up and running,” said Pimm. “We’ve had to make concessions to make this happen, and we know these companies need to have that kind of security if they’re going to build a $30- or $40-billion-dollar project – they have to know things aren’t going to change for them, so that’s critical.” In closing, Mayor Streeper said the Petronas agreement paves the way for other companies, such as Chevron, in their plans for LNG. “Woodside is in partnership with Chevron, and because of their expertise in Australia, they’re handling the liquefied natural gas while Chevron is handling the drilling. Chevron will not make any major decision on what type of LNG plant they’re going to build, and Woodside will not make any major decision on the drilling and transportation. You can’t have two majors competing on these decisions – what they’ve done is brilliant, a true partnership.” S

Is regulatory harmonization possible across provinces? It depends.

BC Safety Authority might have a solution for you

or years, provincial regulators have been hearing industry’s plea for harmonization of the adopted technical safety standards and regulations across provincial borders. While Canadian codes and standards are established and intended for nation-wide adoption, each province adopts codes and standards in different manners, either in whole, in part, or with stated exceptions through their individual regulatory frameworks. These differences in regulatory adoption can be explained for reasons that are unique to the circumstances surrounding each province’s industrial makeup and legislative priorities. B.C.’s Alternative Safety Approaches (ASA) regulation may offer a solution to industry’s interest in standards harmonization. The ASA regulation offers instruments to enable full regulatory compliance to the requirements of B.C.’s Safety Standards Act, while allowing for flexibility in the recognition of safety practices adopted in other regulatory jurisdictions. In essence, through the ASA regulation, the BC Safety Authority (who administers this regulation) can allow for harmonization of safety programs already in place and functioning elsewhere within your operations. Sounds simple? It should. But it

doesn’t come without some important effort. In order to have an existing safety management program recognized in B.C., you, as the business owner or operator, must propose your program as an alternative to the established and prescriptive regulations in this province. Accordingly, you must do this by recognizing the differences between B.C.’s technical safety regulations and those referenced in your existing operating program. While most people would say this approach holds true for any other regulatory jurisdiction, the difference in this case is that you may not need to alter your established practices as long as it can be demonstrated that the safety outcome of your practices will meet the intent and objectives of B.C.’s Safety Standards Act. Current adopters of the ASA regulatory instruments have found value in four primary areas: 1. administrative process alternatives; 2. harmonization of international codes and standards, and/or of technical standards and proven operating practices in other regulatory jurisdictions; 3. equipment certification alternatives; and, 4. alternatives to prescribed worker qualifications. How can you begin to develop an alternative proposal?

First, invest some time to understand what the prescriptive regulations call for, and the safety objectives of these requirements. Seek local advice from licensed contractors, consultants, and even the BCSA. You can also visit www.safetyauthority.ca/regulations. Second, compare your company’s existing safety management system/ program with the requirements of B.C.’s regulations. Third, list the gaps or regulatory “rub points” where current practices may not appear to meet the prescribed method of compliance. As an example, this might be an identification of specific codes, standards, or regulation clauses referring to a process, equipment certification, or worker qualifications. Fourth, articulate how your current practices achieve the intent or safety objective for the identified items above. Finally, submit your information in an alternative proposal application, and you are well on your way to a formal assessment. While the above procedure sounds simple, we acknowledge that some owners may be unfamiliar with local codes, standards and regulations. Be rest assured, the BCSA is here to help simplify your approach to full and innovative compliance to B.C.’s Safety Standards Act. For more information about B.C.’s Alternative Safety Approaches regulation, contact Fred Tewfik, BCSA’s leader of business development, at asa@safetyauthority.ca. S B.C. Oil & Gas Report • 2015

Why wait for B.C. LNG?

Putting natural gas to work in the Northern Rockies

ith some of the richest natural gas plays in Western Canada, the Horn River, Liard and Cordova Basins are poised to pay significant future dividends in the Northern Rockies Regional Municipality. There’s just one problem – with decisions and investment for LNG projects on B.C.’s west coast stalled, the gas available in Northeast B.C. stays put, with little economic benefit to Fort Nelson and its surrounding region. Community development officer Mike Gilbert of the Northern Rockies Regional Municipality is kept busy with inquires of a different nature; what other opportunities are there for products of natural gas? “Over the past year we’ve had signifi-

72 B.C. Oil & Gas Report • 2015

cant interest from a variety of investors for value-added natural gas products,” says Gilbert. “Feasibility plans for projects we’ve consulted on have ranged from small-scale LNG facilities utilizing existing natural gas infrastructure, and destined for more northern markets (Yukon, Northwest Territories and beyond), to gas-to-liquid developments which produce diesel primarily from natural gas that could easily supply the local market with a competitively priced, locally produced product.” Working with B.C.’s Major Projects Team, those involved think these are among the best kinds of projects for communities like Fort Nelson, and have the best chances for long-term success. The Northern Rockies continues to

strive for a diversified economy, initiating a Forestry Rejuvenation Project in the spring of 2015, coined a “Roadmap for Forest Sector Innovation”. At its foundation, the roadmap details moving from producing value-added forest products in mega-mills to developing a cluster of manufacturing facilities in the region that complement one another and fully utilize the wood coming from the forest, including the residue from the manufacturing facilities. It would seem that oil and gas sector development is being approached through a similar lens – the more variety, with the most value added, the better – and more sustainable. With a range of affordable properties available in all sectors (heavy and light industrial, commercial and residential),

an enviable tax structure for business, and a service sector well prepared to deliver, the opportunities for development are endless. Fort Nelson’s proximity to rail, the Alaska Highway, and the conventional gas plays make it a competitive place to do business in the north. Over 300 new businesses of all sizes have established themselves in Fort Nelson since 2009, with a continued expectation of growth beyond 2015. Reaching the peak of business success is no small feat – though doing so in the Northern Rockies is well within reach. Contact Invest Northern Rockies by email, ecdev@northernrockies.ca, or phone, 250-774-2541. You can also visit them online at www.InvestNorthernRockies.ca. S

B.C. Oil & Gas Report • 2015

Are risks associated with LNG in the eye of the beholder? By Stewart Muir

or the first-time visitor to Osaka’s Kyocera stadium, the three gigantic spheres a stone’s throw from the gates look, fittingly, like gigantic baseballs. Inside them is a highly flammable substance – yet nobody seems to mind. At a recent baseball game featuring the Osaka Tigers and the Orix Buffaloes, fans were treated to a uniquely Japanese style of play accompanied by the raucous cheers of what are surely among the world’s most enthusiastic sports fans. What the fans were not making any noise about at all were the three immense propane containers located on the grounds of the Osaka Gas Company right beside the stadium. Although propane is potentially more hazardous than other forms of natural gas – because it is a heavy gas that pools at ground level – the presence of the holding tanks were of no more significance than passing trains and other human activities also going on close by. It was intriguing to me because, at the same time, like many British Columbians, I am aware of public concerns here about potential safety hazards created by the shipping of natural gas in a liquefied form. Here at home, the shipping routes proposed are largely through industrial or sparsely inhabited areas. We have heard from leading world experts that LNG is a very safe form of natural gas that is difficult to combust and would pose, in worst-case scenarios, low risks to people. In addition, the Resource Works Citizen’s Guide to LNG found that LNG is transported by sea to be handled at terminals located in densely populated urban areas in at least eight places in the world.

74 B.C. Oil & Gas Report • 2015

So why are some groups so concerned about shipping LNG from an expanded, 44-year-old LNG facility on the north arm of the Fraser River in Delta? Recently, I had the chance to ask a Japanese natural-gas executive why he thought baseball fans in Osaka were so blasé about the location of gigantic, potentially explosive tanks beside their stadium. He reflected before delivering his thoughtful reply. “It is because propane, to Japanese people, means being a modern nation,” he said. “We did not have energy sources of our own as we modernized. People embrace this energy source and that is why it is a natural part of the landscape at the stadium.” Concerns about LNG probably also stem from the fact that overseas trade in Canadian gas is a new activity. Until now, all our natural gas sold abroad has gone (by pipeline, not ship) to a single destination: the United States. When you actually start to look around British Columbia urban areas, what’s striking is that there are potentially explosive fuel sources all around us. At Costco, for example, consumers think nothing of lining up, with children in tow, to have their barbeque propane tanks refilled from a giant holding tank. As the attendant fills the tanks, cars containing tanks full of potentially explosive gasoline drive past, and nobody bats an eye. Elsewhere, retailers exchange empty propane tanks for full ones using storage lockers onsite. What if some person bent on evil decided to do harm? LNG has been shipped by sea without major incident since 1964. For Resource Works’ Citizen’s Guide to LNG we tried

Any use of fossil fuels creates additional issues, not just of safety, but of environmental protection. This is another area that has drawn legitimate public questioning. to find any incidents that had not been reported, to no avail. We’re also aware there is a vigorous lobby arguing that LNG ships will inevitably “blow up”, creating catastrophic damage to those nearby. The evidence for this assertion could not be validated. Any use of fossil fuels creates additional issues, not just of safety, but of environmental protection. This is another area that has drawn legitimate public questioning. Citizens need to ask tough questions, and they deserve honest answers. Over time, it’s to be expected that where LNG is located near urban areas in British Columba, local residents will eventually regard it as a neutral part of the landscape, just as they do the propane tanks at Costco and Superstore. As with propane in Japan, the presence of LNG exports will likely also come to be associated with a prosperous, modern existence in a nation where real risks are managed through sound laws and regulations carried out by competent professionals. Stewart Muir is the executive director of the Resource Works Society. Learn more about the new think tank that is creating a respectful, fact-based public dialogue about the responsible use of British Columbia natural resources at www.resourceworks.com. S

Apprenticeship programs –

Training the future of skilled trades in B.C. By Gary Herman

.C.’s Skills for Jobs Blueprint: Re-engineering Education and Training is helping to align training and education with in-demand jobs. There has not been a better time than now for employers to get involved in hiring of apprentices and training them to become the journeypersons of tomorrow. Support during the apprenticeship journey is critical, and the Industry Training Authority (ITA) has systems in place to ensure resources are available for sponsors and apprentices to continue on the pathway to success in job training, education and certification. A team of 15 apprenticeship advisors was created as an extension of ITA’s customer support team. Apprenticeship advisors are based in various regions across B.C. and are in tune with local trends, demands and barriers, allowing them to provide timely and relevant support to both employers and apprentices. Six of the 15 advisors are also focused on supporting apprentices within aboriginal communities. ITA has also added

an industry relations team and 11 sector advisory groups to better understand, communicate and respond to each industry’s needs in B.C. (www.itabc.ca/ industry-engagement). In addition to the skilled team of apprenticeship advisors, the free Appren-

ticeship Job Match Tool, available on the WorkBC website, www.workbc.ca/ trades, is also a great resource for employers looking for the right apprentice. Employers can use the online tool to post apprenticeship opportunities with specifications and requirements of the job and connect with qualified apprentices from its database. Currently, there are over 5,000 apprentices in the Apprenticeship Job Match Tool. Employer sponsors play an integral role in growing B.C.’s skilled trades community. Training and investing in skilled trades apprentices will ensure that the province is able to respond and provide B.C. with the right skilled workers when and where they are needed. For more information, visit www.itabc.ca. Gary Herman is the chief executive officer of ITA. S

TO SUCCESS . Secure your future workforce today to meet the demands of tomorrow. Find the right apprentice for your business with the Apprentice Job Match Tool.

Visit: workbc.ca/trades

B.C. Oil & Gas Report • 2015

File: ITA-198465-06 JobMatch_BCOil&GasReport

Project: Job Match Magazine Ad

1/4 pge Horizontal: 4.625" x 3.375"

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B.C. company turns up the heat on oil and gas projects

Encana - 4 x 60 MM Btu/hr and 1 x 25MM Btu/hr glycol heater.

ow do we heat a merchant tank of heavy crude oil from -5°C to 13°C in 24 hours?” That was the technical challenge presented to Wellons Canada in early 2007 by a prominent Western Canadian oil pipeline and merchant tank facility operator who needed a solution to heat and transfer a merchant tank of crude oil to their pipeline, on demand, in winter conditions. Drawing on 30 years of experience in biomass and gas-fired thermal energy projects for the wood products industry across North America, Wellons’ solution of a gas-fired 24 MW glycol heat medium system, employing glycol to crude oil heat exchangers, was operational at one of the pipeline operator’s merchant tank facilities by mid-2008. Since that project, Surrey, B.C.-based Wellons Canada has designed and fabricated 23 modular heat medium packages for O&G projects in British Columbia and Alberta. These projects have included: • Eight 17.5 MW process heat medium and two 7.5 MW utility heat medium heater packages for two gas plants in the Horn River area of B.C. Wellons’ scope for each of these two projects also included modular pump assem-

“

76 B.C. Oil & Gas Report • 2015

Pembina Gas Services - 2 x 12MM Btu/hr glycol heater.

blies consisting of eight 200HP glycol pumps, shop-assembled on nine shipping module skids for a 34-metre-by14-metre pump building on site. • Two 14.7 MW and one 10 MW glycol heater for an oil processing facility in the Christine Lake area in Alberta. • Two 3.3 MW glycol heaters c/w skid building, pumps and expansion and drain/fill tanks, for a gas plant project in northern B.C. • A waste heat recovery system to recapture the latent heat in the exhaust gas from natural gas-fired turbines to generate nine MW of thermal oil for an

Organic Rankine Cycle (ORC) system to create 2.2 MW electrical. Wellons Canada has been in operation since 1976 and has 80,000 square feet of fabrication capacity at its Port Kells, B.C. facility. A member of the Wellons Group of Companies that includes Wellons Inc. in Vancouver, WA and Wellons FEI in Ste-Julie Quebec, Wellons’ thermal project experience includes 50 gas-fired projects and 250 biomass-fired thermal projects, 40 of which are CHP. For more information about Wellons Canada, please visit www.wellons.ca. S

Spectra Energy - 2 x 11MM Btu/hr glycol heaters.

Wellons Canada specializes in the design and fabrication of gas fired heat medium skids, ranging in size from 2 MW to 20 MW. Wellons heaters can be horizontal or vertical configurations, and are a double helical coil, triple gas pass design.

Total Projects from Concept to Completion The Wellons Service Edge

Wellons Canada Corp. 19087 â&#x20AC;&#x201C; 96th Ave. Surrey, BC, V4N 3P2

The heater skids can be shipped with all combustion equipment, gas trains, fluid piping and field devices shop installed. Control room units can be totally shop assemble pre-piped and pre-wired with appropriate field connections. Wellons also designs and fabricates waste heat recovery units for oil & gas facilities and gas turbines.

Tel: 604 888 0122 Toll Free: 1 888 211 6077 Fax: 604 888 2959

E-mail: sales@wellons.ca Website: www.wellons.ca

Relaxing systems for fluid transfer under ship motions By Jack X. Liu, PE, PhD, President of Liuxon

iuxon has emerged from an advanced pipeline consulting firm (Liu Advanced Engineering, LLC) to a technology/solution provider for fluid transfer. Liuxon has developed several proprietary transfer solutions for loading/ unloading ships using flexible hoses. These solutions simplify transfer operations, enhance safety, and reduce both CAPEX and OPEX significantly. Composite hoses are available for years and offer great flexibility. They comprise metal rings for strength in the hoop direction and multiple polymeric layers for pressure containment and strength in the axial direction. The hoses have been used for loading/unloading ships, but are often stored either on the ground/platform or freely hung at one end high above a water level. The hoses laid on the ground could be worn or kinked, and the hoses hung high above the ground require a high supporting structure and swivel joints. Liuxon has developed solutions that use hoses much more effectively and increase hose service life.

this case, the hoses need to be made of cold-resistance materials, such as stainless steel for metal rings, and polyamide for pressure containment. When a cryogenic pipeline is oriented inclined with a high end at an onshore facility and a low end at a loading platform, an automatic vapour-removal technique can be used during non-transfer periods where vapour travels towards the high end automatically. More information about this long pipeline transfer system is available in the 2014 B.C. Oil and Gas Report. The system allows the ship to be docked with mid-ship manifolds next to the loading platform (i.e., the vertical shaft) and uses the mid-ship manifold for fluid transfer with a short length hose (e.g., less than 30 metres). The vertical shaft can be anchored to the seabed and serve as a part of berth for a vessel. When two ships are docked at the opposite sides of the shaft, this system can also be used for ship-to-ship transfer (e.g., tanker lightering, fuel barge to ship, between FLNG/FRSU and LNG tanker).

Stationary transfer system (side by side) The system includes a vertical shaft, a hose saddle supported on the top of the shaft, and hoses hung freely between the saddle and a rigid pipe that ends at the shaft as shown in Figure 1. The hoses are fluidly connected to a fluid source or destiny through the rigid pipe, and have a mobile end intended for fluid communication with ship manifolds of a vessel. During non-transfer periods, the hoses are stored inside the shaft and protected from winds, ocean waves and UV lights. For fluid transfer, simply pull some of the hose out of the shaft and tie in the mobile end to ship manifolds. With a dry connector/coupler at the mobile end of the hoses, there is no need to purge the fluid inside the hoses before and after the fluid transfer. This reduces the connecting and disconnecting time by 60 per cent. With a properly designed weight unbalance mechanism, the mobile end of hoses can be automatically retrieved back to the saddle once it is disconnected from the ship manifolds. The ship is then ready for departure. For cryogenic fluids, pipelines typically extend from an onshore facility (e.g., storage tanks) to a loading platform. The offshore end of the cryogenic pipelines is set free for thermal contraction or expansion and the thermal stress in the pipelines is reduced by at least 50 per cent. The hoses can accommodate pipe end displacement, in addition to ship motions. In 78 B.C. Oil &â&#x20AC;&#x2C6;Gas Report â&#x20AC;˘ 2015

Figure 1: Side-by-side loading operation.

Mobile transfer system A mobile transfer system is necessary when fluid transfer is needed at a temporary location (e.g., emergency, or a location without a port facility), or at a harsh environment where two ships are not safe for side-by side operations within a short distance (e.g. several metres). This mobile transfer system comprises a pair of hoses (e.g. a front hose and a rear hose), a dual reel for storing hoses, and means for keeping hoses in tension during deployment and flu-

id transfer. The hoses are coupled at the reel and wound around the reel in the same winding direction. For deployment, pull the external end of hoses and unwind the hoses simultaneously. This system can establish fluid communication between a fluid resource and fluid destiny separated by hundreds of metres of water. It can be relocated for transfer operations elsewhere or for storage. It reduces cost by up to 80 per cent and has a number of applications as follows: 1) B etween ship and shore The mobile system can be set up quickly for fluid communication between a ship and a fuel truck as shown in Figure 2. Alternatively, the truck can be a pipe manifold fluidly connected to a storage tank. It is ideal for loading/ unloading a small-scale tanker, or for filling bunker fuel to a ship. These mobile systems allow a berth or port for loading various fluids.

Figure 2: Fluid transfer between fuel truck and ship. 2) Between two ships (tandem configuration) Two ships are typically docked in a tandem configuration in a harsh environment with a safe distance varying from 50 metres to 120 metres. One mobile transfer system can establish fluid communication between a stern manifold on a stationary vessel and a bow manifold on a tanker. Two sets of mobile transfer system may be arranged in series when two vessels are docked with midship manifolds hundreds of metres apart. It is ideal for unloading a production vessel, such as FPSO, or providing fluids from a service vessel to a drilling vessel, or filling bunker fuel to a ship at an open sea.

buoy and a tanker. With a suction header being fluidly connected at the external end of the front hose, this system can be used for cleaning oil spill at a water surface or for dredging operations at a shipping channel. The mobile transfer system can sit on a service vessel, or float on a water surface with a buoyancy device. The system can sail to, or be towed into a position between a fluid source and a fluid destiny where fluid transfer is needed. Unwind hoses simultaneously and make a fluid connection with an external end of hoses fluidly connected to the fluid source and fluid destiny respectively. The hoses are kept in tension by applying a torque on the reel opposite the winding direction of hoses. With suitable hoses, the systems can be used for transferring any fluid that can flow through a tube. It includes crude oil, gasoline, diesel, bio-fuel, bunker fuel for ships, drilling mud, drinks (water, wine, juice), lubricates, chemicals, LNG, LPG, ammonia, liquid ethylene, liquid nitrogen, etc. The mobile transfer systems offer unbeatable price and performance for transferring cryogenic fluids at a site subjected to natural disasters, such as tsunami and storm surges. Even though this mobile system is intended for a large separation distance with floating hoses, it can also be used for sideby-side fluid transfer in calm water with short hoses or a short paid-out length of long hoses. Both systems use hoses for accommodating ship motions and eliminate the needs for swivel joints. Fluid communication can be quickly established between a fluid source and a fluid destiny at a designated location or a temporary location. They can use existing mid-ship manifolds for fluid transfer and eliminate the need to modify ships. Both systems simplify connecting/disconnecting procedures and enhance operation safety with significant cost savings. For more information about Liuxon and the systems, visit www.liuxon.com. S

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Figure 3: Fluid transfer between two ships in tandem configuration. 3) O ther applications This system can be used for fluid transfer between a SPM

41 Fawcett Road, Coquitlam, BC V3K 6V2 Office: 604-525-1002 | Email: esa@ccscoatings.ca

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Corrosion Management | Asset Rehabilitation | Lead Abatement | Industrial Marine Painting

B.C. Oil & Gas Report • 2015

Maintaining a safe and healthy workplace By Scot Filer, President, Lions Gate Risk Management Group

ions Gate Risk Management Group is based in Vancouver, B.C. with an office in Calgary, Alta. Our focus is to assist our corporate clients with identifying and managing the wide range of business risks that they are exposed to. We provide operational support from three pillars of expertise: proactive, ongoing, and reactive risk management. Our various business lines ensure that our clients do not have to allow the events to set the agenda. One of the most valuable assets for companies is their human capital. In our business, much of what we do is led by our ability to acquire intelligence and act proactively versus reactively. We therefore recognize how vital our corporate clients’ human resources are 80 B.C. Oil & Gas Report • 2015

and offer the evidence-based Mental Health First Aid (MHFA) Canada training course as a proactive service to help organizations stay ahead of the pack in their awareness, risk assessment, risk management, and support capacities. As an employer, it is clear why the mental wellness of our human resources needs to be a priority. The Mental Health First

the most affected by mental health problems or mental illness. Lost productivity due to absenteeism, presenteeism, and turnover related to mental health problems and mental illness cost organizations approximately $6 billion in 2011. It is estimated that the total cost to the Canadian economy over the next 30 years will amount to $2.5 trillion. Across the country, more than 6.7 million people in Canada are living with a mental health problem or mental illness. Each and every Canadian is affected through their personal and professional relationships. The Mental Health First Aid training program we offer is an initiative of the Mental Health Commission of Canada. Our program is designed to help managers, supervisors, and human resource personnel recognize – and appropriately manage – mental health-related issues. The Mental Health First Aid Canada basic course aims to improve mental health literacy by providing attendees with the skills and knowledge necessary to better identify and manage developing mental health problems and mental health crises in their organization. It is a proactive HR education and awareness strategy that will assist those with supervisory responsibilities within your company that make informed decisions about mental health-related problems.

Aid Canada training that Lions Gate can provide can make the difference

Course content:

between having the knowledge to recog-

This 12-hour course, taught over two full days, introduces attendees to four categories of mental health problems: 1. Substance-use disorders 2. Mood disorders 3. Anxiety disorders 4. Psychotic disorders

nize a developing crisis versus having to respond to one in its aftermath.

How does Mental Health First Aid relate to business risk? Working-age Canadians are among

Attendees will learn: • The basics about risk factors • How to recognize signs and symptoms for each disorder • Recommended initial Mental Health First Aid actions to take • How best to guide a person towards appropriate professional help • Crisis first aid skills for situations, involving acute stress reactions, panic attacks, overdose, suicide, and psychotic disorders Organizations committed to creating a mentally healthy workplace, in turn, report benefits to their recruitment and retention efforts, reduced disability and absenteeism costs, and a reduction in workplace conflicts and reported grievances. The result is greater operational output for your organization. We are here to help you maintain a healthier and productive workplace.

Contact us today by emailing Scot Filer, president, at scotfiler@lgrmg.ca, or phone, (604) 383-0020, ext. 1. You can also get in touch with Andrea Ringrose,

MA, MHFA instructor and risk manager at aringrose@lgrmg.ca, or (604) 383 0020, ext. 6. Our expertise is your peace of mind. S

• We are a corporate risk management firm, with our primary focus being in the energy sector. • We offer a range of proactive and reactive service solutions across various business lines. • Our objective is to identify, assess and prioritize our clients risks and vulnerabilities, and then to respond with a coordinated, economical application of solutions and resources.

“Our Expertise is Your Peace of Mind”

• We are a ‘one stop shop’ for security, investigation, assessment, intelligence and consultation services, including CZ246.1 audits. • We have our own inhouse uniformed security guard service and K9 security and detection service.

Lions Gate Risk Management Group | ARC Protection Corp Email: scotfiler@lgrmg.ca Office: 604 383 0020 | Mobile: 604 375 1669 | Toll free: 1 888 212 2026 Web: www.lgrmg.ca | www.arc-corp.ca B.C. Oil & Gas Report • 2015

Innovation at McElhanney Land Survey’s Fort St. John branch

ince opening their Fort St. John branch in 1977, McElhanney Land Surveys Ltd. (MLSL) has

82 B.C. Oil & Gas Report • 2015

worked hard to earn the enviable reputation of providing unmatched, exceptional surveying services for the oil and

gas industry in Northeast British Columbia. Staffed by a group of energetic, skilled, and engaged local workers, the branch’s attention to detail and sense of community has made the branch an invaluable player in the region. Our team of experts in Fort St. John has access to one of the most complete datasets in Northeast B.C., as well as state-of-the-art equipment and software. The branch’s mapping and CADD groups are equipped with an abundance of local knowledge and expertise to take on a wide variety of jobs, while the professional and administrative staff focus on offering a level of service that is unprecedented in the industry. By employing such a versatile group of staff, the branch is even able to provide custom mapping services and over-the-counter sales. In addition, the Fort St. John branch is uniquely the only survey firm that has an in-house Crown Land Referral Group in Northeast British Columbia. Our excellent field crews are equipped with Level 1 line locating and ground disturbance training to provide underground facility locating services alongside their typical surveying work. McElhanney’s field staff are different than the typical crew because they both collect and manipulate the data. This creates an advantage as they are then better equipped and prepared to make improved decisions on the fly, helping clients save time and money. All MLSL employees are backed by a world-class HSE program, where training and prevention are a major focus to ensure employees are kept safe. Some highlights of the program include a COR certification, in-vehicle monitoring, and faller certification. One of the core values of McElhanney is our commitment to providing a highquality product that is second-to-none

on every job. The surveying industry is an increasingly competitive market where costs count. McElhanney has

made it clear that they will not cut corners on jobs to save money. Rather we are working on improving our internal processes and looking to technology to help find efficiencies, while continuing to provide the high-quality product our clients have come to expect. Currently, MLSL has begun to utilize unmanned aerial vehicles (UAVs) and laser scanners to help their clients save time and money. By being a pioneer in technology, McElhanney is set on a path to be a leader in what has typically been a traditional industry. MLSL’s Fort St. John branch offers extensive experience in oil and gas surveys of all types, as well as: • Construction surveys • Control surveys • Municipal and residential surveys • Legal surveys • Wind farm and mine surveys

Our team of experts in Fort St. John has access to one of the most complete datasets in Northeast B.C., as well as state-of-the-art equipment and software. • Highway surveys • Canada lands surveys • LiDAR planning and design support • Crown land referral application support • Data management and tracking • Customized mapping • Geoworks GIS system MLSL’s Fort St. John branch is located at 8808 72nd Street, Fort St. John, B.C., V1J 6M2. The branch can be contacted at 250.787.0356. S

SERVICING GREAT CLIENTS SINCE 1910. Contact an office near you. McElhanney.com Surveying | Mapping | Environmental | Engineering and Materials Testing B.C. Oil & Gas Report • 2015

Efficiency through innovation

Figure 1 – Screenshot of active Alberta locations.

Figure 2: ARKIT active site project info, tasks and budget.

n 2013, Summit Liability Solutions Inc. (Summit), like many professional environmental providers, had to evaluate how to increase work efficiency for a limited amount of available labour resources in what was a stretched labour market. Summit and its team of managers and senior specialists looked at several options that were available in the industry, as well as evaluated the development of our own management system which could be used in real time to track fieldwork data, assign fieldwork, and to schedule work in the field in the most efficient manner as possible for all reclamation and remediation projects. Summit’s goal was to secure a powerful project management software, which allowed field and office personnel to easily access GPS-based site information in order to coordinate and execute field activities allowing for cost-saving initiatives. In 2015, with the downturn in the oil and gas sector, this management tool became far more important to implement, as efficiency is absolutely necessary to manage workloads in a way that maximizes tight profit margins and manage the ever-soimportant costs on projects as accurately and as up-to-date as possible. After careful deliberation of the various options available, Summit decided to opt into an agreement with Ark Platforms Inc. (Ark Platforms), located in Calgary, Alberta and Vancouver, British Columbia. Ark Platforms provides a web-based management system with a GIS background, called ARKIT. Ark Platforms consulted with Summit and has been able to de84 B.C. Oil & Gas Report • 2015

velop this system in a manner to achieve data capture that is consistent with the requirement of most of Summit’s oil and gas clients, thus aiding our project managers and senior specialists in day-to-day management of sites. The ARKit system allows for GPS-based site information to be loaded for all client sites. All staff within our environmental assessment division have access to the program so that information can easily be shared throughout office and field locations. A quick snapshot from the program will allow any project manager and client to see visually the breadth of geography that we currently cover with reclamation and remediation services for clients across Western Canada, as well as the site-specific information they need to make decisions. Figure 1 gives a reference of some of the site allocation Summit has across the province of Alberta and gives a visual example of how the software could be used simply for the allocation of fieldbased specialists and deployment of staff for fieldwork. In the screenshot above, each circle represents a site location that is currently managed and tracked in our system. The colour of each of the circles represents the assigned client, and the icon on each

of the circles represents the stage of work. Any number listed on the icon identifies multiple sites within that area, and by further zooming in on the image, individual sites will be populated. This project management system is a powerful tool to allow our project managers and regional managers the ability to stay actively engaged in terms of capacity requirements. By logging into the system, our staff in any location can have real-time data on current site information, upcoming and in-progress field work, laboratory data and EM surveys, actual spend versus budget, and timelines for deliverables, as can be seen in Figure 2 above. Data can also be exported in various formats and is currently reformatted following export to meet our clients’ reporting requirements. Any new sites that are added or approved by a client can then be loaded into our system and compared against any additional upcoming work in the area. Our regional managers can then determine what resources will be required. Project managers are trained in identifying cost savings opportunities for clients, so that work can be parceled together in an area, and costs can be shared across clients for travel and mobilization. ARKIT is one of the tools that Summit has invested in to increase our efficiency both in the field and the office, and provides our clients with real-time data, which is essential in decision-making, whether it be for the allocation of limited resources, or for ensuring field activities are being scheduled with cost control being the primary objective. S

Little to no environmental impact

Remote building solutions that leave operating sites in their natural state By Amanda Monaghan, Marketing Manager, Britespan Building Systems Inc.

xploration companies are more and more looking for ways to construct safe, strong, and reliable site buildings for the exploration, processing, and storage of commodities, as well as equipment storage buildings, and even worker housing for remote sites. And it is becoming increasingly more important to leave exploration sites in their natural state. Conventional buildings, such as steel buildings, have traditionally been the choice for these sites, but are they the best choice? These buildings can be costly, difficult to ship to remote areas, can be time consuming to construct, and are essentially permanent structures. None of these are ideal in an industry that often requires buildings to be rapidly constructed, has a variety of building 86 B.C. Oil &â&#x20AC;&#x2C6;Gas Report â&#x20AC;˘ 2015

uses, and may, at some point, have to be moved to a new work site. One of the first things that make fabric buildings a preferred solution for oil and gas operators is that they can either be permanent, temporary, or entirely portable. This is achieved by offering a number of foundation options, from concrete blocks, shipping containers, or a base rail foundation. These are all options for temporary or portable building solutions, in addition to the many permanent options. Fabric buildings can be completely deconstructed and moved or stored when a site is finished with it, creating little environmental interference. Using shipping container foundations allows fabric building manufacturers to create hybrid building solutions, that are particularly ideal for the oil

and gas industry because the containers themselves act not only as a foundation for the building, but as functional space used for employee housing, change rooms, washrooms, workshops, storage, etc. This really allows fabric-building owners to maximize the use of their buildings. In addition to the foundation options, fabric buildings are also completely customizable, from door sizes and types, insulation option, and length, width and height. What would you use a fabric building for? Just about anything. The buildings

All Weather, All-Purpose Modular & Permanent Building Solutions. Why choose Britespan™ Building Systems • Portable, temporary & permanent solutions, ability to extend or relocate • Rapid installs in remote areas • Built on containers - use for storage, offices, employee housing and more • Post-welding hot dipped galvanized steel for superior rust protection • Tested ability to withstand corrosive commodities • Extra high clearance for truck safety & unloading • Naturally bright interiors for safe working environments

Warehousing

Heavy equipment

Base rail foundations Authorized Britespan Building Systems Dealer:

1.800.407.5846

www.britespanbuildings.com

1.866.935.4888 www.spanmaster.ca

can be used for warehousing, workshops, vehicle, equipment and commodity storage, and coverage for working machinery. The possibilities really are endless. The extra-high clearspan design of the buildings allow for large and heavy equipment and machinery to operate within the building without issue. Fabric buildings also increase the longevity and maintain the condition of equipment and machinery, by protecting them from the elements. Employee safety and creating a healthy working environment is another reason fabric buildings far exceed traditional buildings. Customers of fabriccovered buildings often say the environment is the most comfortable and safest environment for their workers, with superior air quality and ventilation, and the floods of natural light create a shadow-free, safe working environment. And of course, another reason fabric buildings are the ideal solution for oil and gas companies is that they can be constructed anywhere, no matter how remote the location. They are often built in less time than traditional buildings, making for almost immediate job sites. 88 B.C. Oil &â&#x20AC;&#x2C6;Gas Report â&#x20AC;˘ 2015

Customer overview With one of the heaviest snow loads in British Columbia, a customer out of Terrace, B.C. required a building in a remote location that could withstand the snow load of 5.4Kpa. The building would be used as a warehouse for storing heavy equipment used to build a future pipeline. This customer worked with Britespan authorized dealer SpanMaster Structures Ltd. out of Tappen, B.C. Together, SpanMaster and the customer decided the right building solution for the remote site was a 60-footwide by 300-foot-long Britespan Apex Building Series on a solid row of concrete blocks. Under permit conditions, the block foundation and structure was built on a compacted gravel pad. By using the block foundation, SpanMaster was able to provide the customer with a building that had little to no environmental impact on the site, should the operations decide to move the building to another location. The building could be deconstructed and removed without any lasting changes to the land, its surroundings, or the environment. Britespan and SpanMaster were

able to ensure the rigorous standards and guidelines of the operating company were met prior to the construction. Structural drawings and letters of assurance regarding the process and schedule were supplied. SpanMaster provided the customer with a complete and turnkey building ready for use with a construction timeline of 10 days from start to finish. SpanMaster has a reputation across British Columbia for providing their customers with quality installations and the best fabric building solutions from Britespan. Both companies are 100 per cent Canadian owned and operated, providing Canadian-manufactured products to Canadian customers. As winner of the Industry Supplier of the Year Award for the 2015 Canada Oil & Gas Awards, Britespan is always striving to provide the best building solutions to the oil and gas industry, and growing and innovating with them as an industry partner. Working with expert dealers like SpanMaster Structures Ltd. allows us to meet and exceed our customersâ&#x20AC;&#x2122; needs and requirements, as well as the environmental demands of the operating sites. S

Pipelines are still the safest alternative By Brian Cochrane, business manager, IUOE 115

anada is currently having an unprecedented national conversation about the safety and efficacy of energy pipelines. However, there is one critical question that has been lost in the national debate over pipelines and their safety: what, if any, are the alternatives to pipelines? The members of IUOE 115 have been building pipelines for decades. The vast majority of the time these pipelines operate safely and efficiently, often passing through communities unnoticed. But some people are concerned about the risk of pipeline leaks causing spills and other environmental damage, and say that no more pipelines should be constructed. But what are the real risks involved in transporting energy, and how do pipelines compare to the alternative? Is blocking future pipeline construction really the safer, more environmentally responsible alternative? Much of the energy transported in Canada that does not move by pipeline instead travels by rail. However, as the Lac-MĂŠgantic disaster shows, rail transport is even less safe than pipelines. Train tracks go through populated areas and cross streets, introducing a large element of risk that pipelines do not share. The statistics on accidents relating to energy transportation show that there are far more incidents involving trucks and trains than there are pipeline spills. Trains and trucks also face other risks that pipelines do not: derailment, inclement weather, and road-grade traffic all introduce an element of risk. So long as our society continues to consume energy, we will need to transport it, and pipelines remain the safest way to do so. Canada already has nu-

So long as our society continues to consume energy, we will need to transport it, and pipelines remain the safest way to do so. merous pipelines operating throughout the country, many of which are older and already at maximum capacity. By building modern pipelines with thicker walls, advanced pump station sensors, and other safety features, we can improve even further on the safety of these systems, reducing accidents to the absolute minimum. Pipelines are also the most efficient way of moving energy around the country, reducing the environmental footprint of our consumption. Unlike trains and trucks, pipelines do not produce carbon emissions. As the most efficient means of moving energy around,

they are also the most environmentally friendly transportation method available. The simple reality of our modern society is we use oil, and not just in our cars. Everything from the farm machinery that helps grow our food to the truck that brings it to the grocery store requires oil. As a result, a properly constructed and maintained pipeline system is a necessity. Pretending otherwise does not change this fact, and can lead to decisions that are well-meaning, but ultimately counter-productive. Even if we ban all pipeline construction in the country, the energy will still need to be moved, either by older, less safe pipelines, or by rail cars and tanker trucks travelling through communities across the country. The over 11,500 members of IUOE 115 live and work in British Columbia, and we believe that pipelines are the safest and best way to transport the energy our society needs. S

B.C. Oil &â&#x20AC;&#x2C6;Gas Report â&#x20AC;˘ 2015

Sand management solved by innovative Canadian filtration system By Niki Reitmayer

and management has always been a challenge for any oil and gas producer, especially in the non-conventional plays of Western Canada. Faced with the risk of a washout, many industry-leading producers are turning to specialists in the field of sand filtration. Calgary-based Dynacorp offers one of the only filters that eliminates all sand, as opposed to the more common sand separator. “We encourage potential customers to be proactive instead of reactive with sand management,” said Bruce McKenna, Dynacorp’s vice-president of business development. “Drilling technology and completions have changed and so has the development of our sand filter designs, configurations, and technology. We offer one of the only – if not the only – sand filters with a unique patent

90 B.C. Oil & Gas Report • 2015

that eliminates 100 per cent of sand, effectively avoiding washouts.” In November 2009, a pipe burst at a well site situated near the small village of Pouce Coupe. The BC Oil & Gas Commission released a report determining the cause of the washout was “internal erosion resulting from flowing fracture sand suspended in the gas stream”. The leak and resulting investigation triggered a policy change in the province, obligating all operators of gas well sites to abide by stricter sand management rules. Proper sand filtration is desired by industry leaders to avoid expensive and potentially dangerous washouts. This technology is most effective in liquidrich gas wells stimulated though hydraulic fracturing. With proper sand management, water can be recycled in fracking operations, reducing damage to the environment.

“Traditional desanders cannot handle slugs of denser fluid,” McKenna explains. “When slugs appear, the accompanying sand is passed through, or the desander is clogged and the well needs to be shut in. What we build, rent, and sell at Dynacorp can filter particles down to 50 microns in diameter.” With Dynacorp’s innovative, patentpending sand filter, a large, horizontally arranged knock-out chamber removes coarse material through velocity and pressure drop. Then a small, vertically arranged filtration chamber screens the finer materials for 100 per cent sand filtration. The ability to automate their sand filters and integrate into a producer’s SCADA systems offers a stand-alone solution. “We have the ability – because we manufacture our own product – to custom-build and design through our full

engineering team. Accompanied with our field service group and technical sand filter field staff, we set ourselves apart from any and all competition.” Dynacorp has a manufacturing facility in Clairmont, Alberta and a head office in Calgary, Alberta, which offers the ability

for custom, in-house design and engineering. With a wide range of configurations, the company is able to meet the demands of any well type specific to a clients’ need. As a fabrication company, Dynacorp offers flexible terms and can either rent, rent-toown, or build for purchase, depending on

a clients’ budget and needs. “Because of the innovative product we design, there is comparison between us and our competition,” added McKenna. “If it’s a true sand filtration system that a client is looking for, than they need look no further than Dynacorp.” S

SPECIALIZED PRODUCTION INTEGRITY Dynacorp is the industry leader in North America for fabricating well testing equipment.

Dynacorp’s patented sand filter design offers the industry’s only true 100% sand filter technology.

• leading edge design and engineered equipment that continues to raise the bar for service, quality and delivery.

• we are a fabricator and not just a reseller.

• 3D design software for realistic layout views.

• we are the leader in research & development for sand management & development of our 3 configurations of sand filters.

• equipment that lets our clients maintain operational integrity for their clients on site. • maximum pressure and temperature rating, minimum weight designs. • first class QC program includes comprehensive documentation ensuring safety is first. • storage tanks, line heaters, pressure tanks, high pressure flow line, flare, stacks, etc.

• we are able to custom build to customer specifications.

Dynacorp’s fully equipped & certified facilities produce a comprehensive range of engineered, custom-fabricated process equipment & vessels. • full in house engineering & design. • meeting customers’ requirements for quality, delivery, safety and cost-competitiveness.

• in-house design, engineering and fabrication.

• ensuring the design and material integrity of the equipment we build exceeds the customers’ expectations.

• we offer rentals, rent to own, and sales of our filters.

• pressure vessels, separators, line heaters, treaters, flare stacks, KO’s and much more.

403 217-1332 | www.dynacorp.ca 510, 815 8TH AVE S.W, CALGARY, ALBERTA, T2P 3P2

B.C. Oil & Gas Report • 2015

Boilermakers co-operate to get the job done

One of the key skills boilermakers bring to the oil and gas industry is tank building, as shown here. When companies have a tough construction, shutdown, or maintenance job to do, there’s one source they can rely on for the skilled workers and the expertise they need to get the job done: Canada’s boilermakers union. Throughout the energy industry, boilermakers play a crucial part in building plants and keeping them operational. With hundreds of qualified boilermakers and boilermaker-welders available in British Columbia alone, the union says it can handle any job, no matter how big. “Boilermakers will be a lynchpin in the development of B.C.’s liquid natural gas (LNG) developments,” says Joseph Maloney, the Edmonton-based international vice-president of the union. “We’ve worked with our employers over the last 40 years to develop systems and processes to successfully overcome the many challenges the LNG industry faces.” Boilermakers are the people who will 92 B.C. Oil & Gas Report • 2015

erect, weld, repair, test and maintain the boilers, tanks, pressure vessels, liquidtight containers and power plants that LNG plants require.

Hundreds available Through Boilermakers Lodge 359, based in Langley, contractors can find the skilled professionals they need to get these jobs done properly, safely, and on time. Besides its hundreds of members in B.C., Lodge 359 can count on the help of Red Seal-certified boilermakers from across Canada, who frequently travel to sites in the west to work for months at a time on large-scale projects. As well, the union can rely on members in the United States, and has developed its own innovative temporary foreign workers (TFW) program to bring in qualified boilermakers from Europe if none are available in Canada. But the boilermaker advantage goes beyond simply supplying skilled work-

Photo by Richard MacIntosh

By Richard MacIntosh

Boilermakers from Lodge 359 in British Columbia specialize in all kinds of welding for tanks, ductwork, pressure vessels and other components needed in the LNG industry. ers. The union works with its employers to maintain a safe jobsite, and to ensure its members are trained to use the latest methods to get the results contractors need. This year, the union has launched Boilermakers Total Health (BtH), a health and safety program that is unique in the industry. It not only promotes safe worksites, but works to ensure that every boilermaker is fit to do the jobs that are required, whether they be working in confined areas or at heights, or require specialized training such as working with respirators. The program, co-ordinated by a full-time health and safety director, is partnered with the worldrenowned U.S. National Institute of Occupational Health and Safety (NIOSH). The union and its contractors have made a multimillion-dollar investment in state-of-the-art training centres across Canada so that members can continuously upgrade their skills to deal with new challenges. These include helping members learn project-management and jobsite-supervision skills.

Co-operation works The proof of the union’s co-operative work philosophy is in the pudding, and the latest example is the $4 billion upgrade of Kitimat’s Rio Tinto aluminum smelter. Boilermakers Lodge 359 supplied over 300 journeypersons and apprentices during the modernization project and the revamp of its power plant. “We had challenges. But the boilermakers and the contractor came together to get the job done for our client, which is what this is all about,” noted Ken Stenfanson, a boilermaker general foreman. “We had a crew that was focused on safety. We had a lot of heavy lifts that required teamwork. Heavy objects were lined up correctly because we have people that have the skills to do the job.” “We installed two kilometres of duc-

Skilled boilermakers work as a team to install crucial components in facilities for the oil and gas industries. twork,” said boilermaker steward Brent Pennington. “Each piece had a unique shape, size and weight, creating a different centre of gravity. With proper planning and teamwork, we got the job done.” It’s the kind of cooperation that will

power the resource economy of B.C. into the future. Richard MacIntosh is a Vancouver-based representative for the International Brotherhood of Boilermakers. He can be reached at (604) 219-3589. S

B.C. Oil & Gas Report • 2015

High-tech simplifies safety and saves money

f an army moves on its stomach, then a company moves on its data. In order for a business to be competitive, it needs to handle all of its data more efficiently and effectively. Traditionally this has focused on financial information, but there has been a dramatic increase in data collection through stringent health and safety regulations. It’s not uncommon for workers to spend up to an hour laboriously filling in safety forms, JSA’s, and audits before even starting on revenue generating work. While no one denies the need for strict safety controls, there is often a battle to temper that requirement with a desire to become more efficient and competitive. Technology has successfully reached a level where it can provide a solution that

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meets the needs of the field teams, the accountants and company executives at a low cost and with a quick ROI. We are now moving closer to that 1970’s notion of a paperless office. Western Industrial Solutions (WIS), a B.C.-based software tech company, has developed TaskSafe, a solution that automates manual forms in the field to an effective digital format. Combined with mainstream Windows tablet-based technology, TaskSafe allows the “boots on the ground” to rapidly fulfill safety and business documentation with more completeness and due diligence than traditional paper-based forms. “We’ve talked with a lot of companies. Without exception, they hate paper forms,” states Chris Mitra, COO of WIS.

“Companies find them wasteful and unproductive. It takes vast manpower to fill them in, gather them, file them and try and collect any useful data. Many of these companies think that a pen and paper are cheap, but in reality the extra handling involved is costing a fortune. Not only that, the manual process leaves a company with a big liability concern. We developed TaskSafe to address those issues.“ It’s true that more and more business-

es are moving away from paper. While the low cost and ease of use were attractive, it’s obvious that there are inherent flaws. Companies stuck in the paper world face issues like weak document security, inferior project management, loss of data backup and redundancy, lack of insight into critical data, and weakened teamwork functionality. This all equates to a considerable liability concern. According to Paperless Office 2014: An Update from the Battlefield, an AIIM (Association for Information and Image Management) survey of nearly 450 respondents, 68 per cent agree that business-at-the-speed-of-paper will be “unacceptable” in the near term. Mitra has no problem coming up with success stories. “Our customers are seeing improvements on day one of use. The company beta-testing TaskSafe become our first customer. They saw their service guys saving 30 minutes or more on paperwork for every job. With seven guys out in the field and four or more jobs a day, that adds up to a huge savings. Plus, the head office is able to submit invoices almost immediately. In the past, they could wait days or weeks until the guys were able to drop off all the safety paperwork and documentation into the office.” TaskSafe was built with input from workers to make their job easier. Efficiencies gained on the jobsite increase as the data moves through the organization. It also includes a user interface designed to be optimal for daylight use and offline modes that keep field crews operational and fully compliant even without network access. Other notable features include electronic storage of company OH&S manuals and safe work procedures, as well as handling of its’ material safety data sheets, including the three- year rotation. These items alone will eliminate the need for stacks of binders often found in service vehicles.

With its short learning curve, fast adoption and quick ROI, TaskSafe provides you with the technology and information that you need to move your company forward. To learn more about TaskSafe, visit www. westernindustrialsolutions.com, or email info@westernindustrialsolutions.com. S

TaskSafe was built with input from workers to make their job easier. Efficiencies gained on the jobsite increase as the data moves through the organization.

Still doing business at the speed of paper?

TaskSafe can lower costs, increase due diligence and save money with a field system that: • Eliminates inefficient paper forms • Makes document management easy • Manages your Material Safety Data Sheets • Works online or offline - always keeping employees fully compliant • Increases safety awareness

Learn more at westernindustrialsolutions.com or call 778-471-1043

Leaders in workforce automation and safety documentation management

We are… Safety Simplified B.C. Oil & Gas Report • 2015

SDI expanding into new global markets

pecialized Desanders Inc.TM (SDI) provides an engineered solution to the hazards associated with fracturing and formation sand entrained in high-pressure multiphase flows. With pressure ratings up to 41,370 kPA (6,000 psig), SDI offers a range of recently designed TILT Desanders from 10 through 24 inches in diameter. Increasing industry demand for its multi-phase desanding equipment has ignited rapid expansion into new global markets in recent months, specifically within the U.S. and Australia. Specialized Desanders Inc.TM has opened up operations in Pittsburgh, U.S.A. and has been selling units in Queensland, Australia to Steelhead Desanders. Growing desander appeal is correlated to the growing popularity of horizontal, multistage stimulated liquid-rich gas wells.

96 B.C. Oil &â&#x20AC;&#x2C6;Gas Report â&#x20AC;˘ 2015

SDI is committed to meeting increased demand by producing and manufacturing larger units featuring greater capacities and higher pressure ratings. Within the desander, temporary separation of the multiphase flow allows a stratified flow to develop as gravity sepa-

ration causes the sand to drop through the liquid and collect inside the unit. The clean discharge stream then passes through above-ground infrastructure, including chokes, valves, and other process equipment. This technique greatly reduces the risk of erosion and equip-

ment damage, which in turn makes the process substantially safer. Installed at the wellsite, SDI Desanders remove fracturing proppants and produced sand from the production fluids, preventing uncontrolled or accidental release of hydrocarbons that might occur with erosion damage. A typical design targets 95 to 98 per cent removal of all particulate, 150 microns or larger. At lower flowrates, particles as small as 60 microns may be removed without any filter. SDI’s engineers model the performance for each desander installation to ensure that the equipment will provide optimum performance over an expected range of operating conditions. With the sand removed, the liquid and gas phases recombine as they leave the desander, ready to feed into the gathering infrastructure under pressure. Notably, it is not necessary to flare early gas production to remove the sand, yielding higher revenues, as well as achieving regulatory compliance. Wells can be put on production sooner, immediately following testing, without concerns about equipment damage, disturbance to the environment or nearby land-owners, especially at sites where production contains hydrogen sulphide (H2S) gas. SDI desanders function effectively over a wide range of flowrates. Sized to work with high initial rates, they are also able to handle the higher gas phase velocities that develop as production continues and flowing pressures drop. This allows the same equipment to remain in service, despite changing conditions. For wells with continuing sand production, it is not uncommon for the desander to be on the well for extended periods of time with some installation durations reaching years. SDI is taking great strides to expand operations to meet global demand and provide a safe, simple, and reliable sand removal solution. S

SDI desanders function effectively over a wide range of flowrates. Sized to work with high initial rates, they are also able to handle the higher gas phase velocities that develop as production continues and flowing pressures drop. This allows the same equipment to remain in service, despite changing conditions.

www.desanders.com SPECIALIZED DESANDERS INC. Multiphase Desanding Services

SPECIALIZED DESANDERS INC.TM Multiphase Desanding Services TM

Specialized Desanders Inc.™ has been providing engineered Desanding solutions since 2001. With SDI’s equipment, operators save money and keep their wells producing no matter how challenging the conditions.

SDIinformation@desanders.com Calgary, Alberta ........... (403) 233-2040 Three Hills, Alberta ....... (403) 443-5453 Grande Prairie, Alberta .. (780) 897- 8140

Fort St. John, British Columbia ........... (250) 793-5140 Pittsburgh, Pennsylvania (412) 535-3396

B.C. Oil & Gas Report • 2015

Tailored communication solutions for the north coast and beyond By Rob Dykman

Coast Mountain Wireless head office in Terrace, B.C.

oast Mountain Wireless strives to provide customized communications solutions to Northwest B.C. Over the years, our business has been established as the premier communications partner for companies operating in the north coast region; recently our services and reputation have taken us beyond our backyard. Coast Mountain Wireless (CMW) was proud to be named one of British Columbiaâ&#x20AC;&#x2122;s top 100 companies measured by percentage growth in revenue over the past five years (from 2009 to 2013). Although this award depicts the recent growth and development of our business, CMW has established itself locally since 1999. It was in 1999 that our business realized the need to redesign the mountaintop repeaters. At the time, the design of the shelters were large and took

98 B.C. Oil &â&#x20AC;&#x2C6;Gas Report â&#x20AC;˘ 2015

up to three days to install. Recognizing the importance mountaintop repeaters contribute to extending the working range of two-way radios, CMW technicians designed a lighter, more-efficient model called the A-Pod repeater. The A-Pod repeater allows the technicians to completely test all functionality of the repeater prior to installing on the mountain. It can be slung in by helicopter as a complete unit and installed in less than four hours. The A-Pod has proven its functionality, even in north coast winter weather conditions. In recent years, Coast Mountain Wireless introduced the northwest region to the COW; a transportable, self-contained digital radio system that providers can also use to provide local Wi-Fi and Ethernet connectivity. The COW, much like the A-Pod repeater, was brought in due to its efficiency and functional-

ity. Permanent structures are often used on projects to provide communication; however when projects have work sites that continually change (a pipeline for example), the COW provides a communication system that will move when the project does. The COW can be transported within two hours, leaving behind no permanent installations. Utilizing the on-board power system, which includes a combination of generator, solar panels, batteries and a mix of other electronics, the system is very energy efficient.

The generator runs for a short duration every three or four days, reducing emissions and fuel costs. A 60-inch pneumatic tower provides the necessary coverage for two-way radio or Wi-Fi signals. In a recent project, the COW provided digital radio service to over 700 users with flawless coverage. Another cost-effective, efficient solution Coast Mountain Wireless provides customers is our satellite Internet service. By using the latest in compression

techniques, monitoring and filtering, satellite bandwidth for remote camps can be competitively priced while providing the camps with Internet, email, and phone service. Coast Mountain Wireless is nearing completion to achieve the Canadian Federation of Construction Safety Association’s COR™ (Certification of Recognition for Health and Safety). With customers in mind, our business is currently working towards becoming

YOUR WORLD.

Rob Dykman is the general manager at Coast Mountain Wireless. S

OUR SOLUTIONS.

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

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

www.coastmountainwireless.ca Motorola XPR7550

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

Industry Standard Organization certified (ISO 9001™,) to ensure quality standards in all of our work. Myself, as well as the staff at Coast Mountain Wireless, look forward to working with new partners to develop communication customized to their needs. Please contact us at 1-855-638-0577, or visit us online at www.coastmountainwireless.ca.

11-03-15 2:06 PM

B.C. Oil & Gas Report • 2015

A comprehensive solution for workforce logistics management

orkforce transportation has become an increasingly important component of resource development projects, which require a large number of workers with a broad range of skills, both to develop the infrastructure and to operate it on completion. North Sands Air Workforce Logistics was formed in 2013 by the owners of Flair Airlines Ltd. to provide comprehensive workforce transportation solutions to a range of companies operating in the natural resource development and heavy construction industries in Western Canada. “The ability to efficiently and cost-effectively manage the transportation and delivery of skilled workforces is a key component in the successful operation of many remotely located major projects,” says Chris Lapointe, director of business development for North Sands Air Workforce Logistics. The company is exclusively focused on the needs of cli-

100 B.C. Oil & Gas Report • 2015

ents in this sector. North Sands employs a team of experienced professionals who understand the projects they service and workforce transportation dynamics, and who are able to provide start-to-finish trip planning, management and tracking services. Backed by Flair Airlines Ltd., and with an established network within the air carrier community in Western Canada, North Sands can manage the movement of both large and small workforce complements to project sites serviced by international, regional, or local airports.

Core capabilities • Centralized program management: Single source for comprehensive workforce logistics project planning and operations. • Aircraft procurement & vendor management: Ability to draw on a wide variety of aircrafts from multiple vendors. • Aircraft scheduling & gauging: Trans-

portation schedules that are tailormade to fit your projects’ unique personnel requirements. • Data tracking & reporting: Careful review of on-time performance, passenger loads, yield management, etc. to identify areas for potential increased efficiency and cost savings, and to provide tracking for project KPI’s. • Safety & quality assurance: Safety assurance and oversight of all transportation vendors with safety management system integration. • Reservations & inventory management: North Sand’s reservation system has been specifically designed to meet the unique needs of workforce-related transportation.

Fleet options With North Sands, you will have the ability to flex gauge across a variety of aircraft types and vendors, allowing you to mix and match resources together to fulfill demand and increase reliability.

For example, in the event an aircraft is unable to make a trip, an alternative will be readily available to step in. North Sands offers a diverse range of aircrafts from seven to 158 seats. All aircrafts sourced by North Sands operate under Transport Canada regulations and have been successfully audited by multiple aviation quality assurance organizations to ensure the utmost level of transportation safety and operational quality.

With North Sands, you will have the ability to flex gauge across a variety of aircraft types and vendors, allowing you to mix and match resources together to fulfill demand and increase reliability. North Sands offers custom scheduling for effective crew rotations.

Safety, flexibility, and customization can truly be the differentiators between

The advancement of newer technolo-

service providers, along with their re-

gies can also increase safety. Some air-

sponsiveness. Ultimately, with any con-

lines have invested in Flight Data Moni-

tract, you are buying the people, not the

Customized solutions

toring (FDM or FOQA-Flight Opera-

plane. North Sands is a group that is

A key benefit of North Sands is the ability to customize your workforce transportation schedule to meet specific operational needs. This includes your choice of departure and arrival airports, with access to private boarding areas at most locations that are away from congested main terminals. Additionally,

tions Quality Assurance) to enhance the

responsive to your needs and is able to

oversight on both mechanical systems

customize your schedule at a moment’s

and personnel. Though significantly ex-

notice without sacrificing safety and ef-

pensive and not required by regulation,

ficiencies.

this technology has a proven track record of improving performance by provid-

For more information about North Sands,

ing more detailed feedback of flights to

visit www.northsands.ca, or

those companies using it.

call (587)-885-1043. S

COMPREHENSIVE WORKFORCE LOGISTICS • • • •

Centralized Program Management Aircraft Scheduling & Procurement Reservations & Inventory Management Safety & Quality Assurance

WWW.NORTHSANDS.CA

1 5 8 7 -8 8 5 -1 0 4 1 B.C. Oil & Gas Report • 2015 101

Simple solutions for your complex excavations By Dominique Gunton

enco Hydrovac Excavation Ltd. is a Prince George, B.C.-based company specializing in hydrovacing and daylighting of buried utilities. The company was established in 2012 and currently have two tri-axle hydrovacs, one single axle, and are in the process of completing a smaller unit to help our clients with small space excavations. Our team is growing and we are dedicated to being B.C.’s premier hydrovac company. We achieve this by having excellent customer service and continually working with our clients to accommodate their needs. Every year, buried infrastructure gets damaged by traditional excavating. This can cause damage to the environment, and creates costly repair and clean up, including interruption to vital public services, such as 911, traffic lights, electricity, and heat. Line strikes can be caused by inaccurate drawings, emergency situations where pre-planning is not an option, or operator error. By us-

102 B.C. Oil & Gas Report • 2015

ing a hydrovac, you will greatly reduce the impact to the environment and have no damage to your infrastructure. This is done by using high-pressure water and a vacuum system. Our operators are trained in the safe exposure of all types of utilities. We offer a wide range of solutions for all your hydrovac and daylighting needs. Whether you need utility line verification, utility pole and anchor holes, trenching for utility installation, steam and industrial cleaning, or a complete excavation to facilitate repairs to buried infrastructure, our staff is ready to complete it for you. We love challenges and are continually coming up with innovative ideas to help our clients complete their projects on budget and on time. Our units are fully winterized and have a large onboard burner to heat the wash water. This allows us to work in below-freezing temperatures and excavate any depth of frozen ground. By using remote hose we can reach ar-

eas up to 300 feet away from the trucks. This allows our teams to access challenging areas, such as indoors, under pipe racks, in ditches, and steep banks. This can save the customer the cost of building a road and causes limited environmental impact. Our trucks are equipped with suction booms that rotate 360 degrees. We have the ability to vary the size of the hose from eight inch to one inch. This allows us to clean out environmental monitoring wells and public water shut off valves, as well as pipe and culverts. With 20+ years of service, our teams are well versed with all types of excavations. We have experience in utilities, mills, refineries, pipeline, environmental, trenching, sloping and shoring. Our estimator does excellent work of accurately bidding on your projects and is always offering cost-saving solutions. Our teams are provided with training and follow a company safety program. Our program is continually evolving to

exceed regulatory compliance and industries best practices. We are available 24 hours a day and have a team available to respond to any emergency. We can be reached at 250-961-8287, or by visiting our website at www.zencohydrovac.com. Whether you have a simple or complex excavation we are the team for you! Dominique Gunton is the safety manager at Zenco Hydrovac Excavation Ltd. S

Simple solutions for your complex excavations • Experts in complex excavations, including shoring and sloping for client safety • Multiple units with largest available water and debris capacity • Fully winterized with boiler for frozen ground • Operates up to 300 feet from the truck • High volume wash pump for efficient excavating • Diverse range of employee experience including mills, refineries, pipeline, utilities and environmental projects • 24 hour service Stu Chizik, CEO Dominique Gunton, SAFETY MANAGER 250-961-8287 250-640-3424 zencohydrovac@hotmail.com

www.zencohydrovac.com

B.C. Oil & Gas Report • 2015 103

First in safety and service

ndustrial Scaffold Services L.P. is a full-service scaffold and environmental containment provider servicing the oil and gas, pulp and paper, energy and utilities, mining and marine sectors for over 25 years. We have built a strong and dedicated team that manages a diverse and recurring base of large and reputable industrial customers all over Western Canada. Our head office is in the city of Nanaimo, B.C. on Vancouver Island, where it was founded almost three decades ago. Al Brown, president and founder, is still very active in the business and everyday aspects of the company. Our management and scaffolders ensure the highest safety standards in the industry. This sets us apart, as we meet all your expectations in your most demanding production and delivery needs. Project consultation, ongoing communication, mock modeling, and specification review ensures our safety and yours, and in turn, keeps the project on target and on budget. Industrial Scaffold Services LP is a 24-hour full-service scaffolding company that maintains a substantial inventory for material rentals. Our material is delivered, erected and dismantled by

104 B.C. Oil & Gas Report • 2015

specialists and highly qualified field supervisor personnel that maintain a safe and efficient work environment for our employees, your employees, and the successful completion of any project. Our teams can design the scaffolding from the ground up, around, over, hanging or down to suit each project’s specific needs. Whatever the job, the challenge, or the complex specifications, our men and women, from apprentices to journeyman to management, successfully

complete shut downs, maintenance, and new projects. Safety and the environment is a core business value at Industrial Scaffold Services LP. Our shrink-wrap specialists are the best in the business and meet all HSE requirements. This is the best way to contain potential hazards from entering the environment. It can also protect workers from the environment itself, such as strong winds, cold temperatures, and other extreme weather conditions. Some of our recent projects in the oil and gas industry include: • Spectra Energy – Highway flow splitter and kobes compressor upgrade • Progress Energy – Lily Lake refrigeration plant construction Phase 1 and 2 • CNRL – West stoddart • Canbriam Energy – Altares Gas Plant construction These are a just a few of our projects. Please visit our website for more great pictures and information about Industrial Scaffold Services L.P. at www.industrialscaffoldservices.com. Also, visit us in person at 2076 Balsam Road, Nanaimo, B.C., V9X 1T5. S

Industrial Scaffold Services

Western Canadaâ&#x20AC;&#x2122;s leading provider of scaffold and associated services

Through challenging terrain, LHI Tutl’it are corridor specialists

collaborative approach to business development led to the success of LHI Tutl’it Services Inc. (LHI) starting back in 2008, and it continues into the future. Working together, the team at LHI is keen to solve those challenges facing resource developers across many sectors in the north with services ranging from permitting to clearing or design to implementation. With expertise in a wide range of forestry and engineering-related disciplines, and mobility to take its services anywhere, LHI has built a solid reputation of delivering results. To date, LHI’s projects have specialized in road access and clearing-related services for resource corridors, be it for potential gas pipeline routes, or BC Hydro’s transmission lines. The terrain remains the challenge as corridors are built and maintained across our vast 106 B.C. Oil & Gas Report • 2015

province. Hand fallers continue to be part of a solution, though it is the specialized equipment, dedicated professionals, and consistent service record that have given LHI its competitive edge. The recent completion of the Northwest Transmission Line is a case in point as LHI was given praise and gratitude for a job well done with its work in debris disposal and specialized clearing projects throughout the entire new corridor. With its care and attention to riparian areas, and its sensitivity to environmental concerns, LHI has managed to develop its select harvesting or whole tree removal using equipment that is purpose built for the challenge. Supervised by a dedicated team of professionals, LHI provides support services for geotechnical projects supporting pipeline corridor development to ongoing maintenance for BC Hydro’s vegetation management

of its vast network of transmission corridors. And yet for each project, LHI looks to establish relationships with local businesses or communities to provide tailored solutions. Led by George Lacerte of the Nadleh Whut’en First Nation, LHI builds on collaboration and prides itself on getting a job done well. Building a solid business and creating opportuni-

With expertise in a wide range of forestry and engineering-related disciplines, and mobility to take its services anywhere, LHI has built a solid reputation of delivering results. ties for individuals has been a cornerstone of Lacerte’s success over the years. It was especially gratifying to have been recognized for LHI’s commitment to getting the job done right when the BC Achievement Foundation, through its BC Aboriginal Achievement Awards, recognized LHI with an Outstanding Business Achievement Award in the Joint Venture Category. S

B.C. Oil & Gas Report • 2015 107

Van Houtte Coffee Services

Specializing in coffee services custom-tailored to the fast-moving oil and gas sector

or more than 30 years, Van Houtte Coffee Services has been providing quality coffee services

to a variety of businesses in Kitimat, Terrace, and the surrounding areas. Ac-

quired in December 2010, Van Houtte Coffee Services is a wholly owned subsidiary of Keurig Green Mountain, Inc., (Keurig) (NASDAQ: GMCR), a leader in specialty coffee, coffee makers, teas and other beverages with its innovative brewing technologies. Today, Van Houtte Coffee Services employs over 750 staff in 32 branches and offers the largest national service coverage of any coffee service company in Canada, thus servicing over 50,000 businesses and serving up more than one million cups per day nationally. When it comes to product quality, Van Houtte Coffee Service has something to satisfy even the most distinguished

Prince George 3963 15th Ave 250-562-4856 1-877-898-4856

Quesnel

1195 Highway 97 N 250-992-9007

108 B.C. Oil & Gas Report • 2015

coffee-lover. Drawing upon almost 100 years of coffee roasting and café bistro experience, we offer a vast selection of quality, gourmet coffees and beverages, as well as the most complete line-up of renowned Van Houtte coffees available in Canada. Our line-up of coffees also include some of the most popular brands available on the market, including Timothy’s, Green Mountain, Barista Prima, Tully’s and Starbucks. As well, we inventory an impressive variety of teas, hot chocolate, specialty beverages, iced beverages, and allied products to help augment your employee coffee program. From traditional brewing systems and high-capacity brewers to single-cup and specialty coffee brewing systems, Van Houtte Coffee Services has it all. Our coffee programs offer customers state-of-the-art coffee equipment that is placed on a loaned basis at nocharge and provides free equipment maintenance and servicing on all our coffee-brewing systems. This means no up-front costs or capital investment required and no more dealing with broken-down coffee equipment. We all know you have better, more productive things to do to keep your business operating smoothly. So whether you are looking for a coffee program for your corporate office, camps, field offices, or site offices, look no further than Van Houtte Coffee Services. We have precisely the right coffee selection, coffee-brewing equipment, and service quality that is best suited for all business aspects of the diverse oil and gas sector. Van Houtte Coffee Services, Canada’s leader in workplace coffee solutions. S

Northwest celebrates 60 years

t all began 60 years ago in 1955 when a small trucking company named InterCity Express Ltd. was established to serve the greater Vancouver area. At the time, Bill Blaney was driving trucks and starting his career with a major oil and gas company in northern Ontario. This experience was the foundation for the vision of what Blaney believed it would take to be a leader in the tank truck industry: an unparalleled

commitment to safety, dependability, and exceptional customer service. Blaney moved across Canada and purchased InterCity in 1972, which then boasted a fledgling tank division ripe for expansion. The vision gained momentum through his steadfast leadership rooted in his core values – values that permeated the entire organization. The company grew quickly, and by 1990 as International Chemical Express Inc., it

had developed a solid reputation as a regional bulk carrier serving the pulp and paper, mining, chemical, and oil and gas industries in Western Canada. In 1996, with current CEO Tom Blaney at the helm, the company expanded into Alberta by acquiring a natural gas liquids tank-truck business. This acquisition strengthened the company’s regional service capabilities and marked a significant milestone in the evolution of the company that became known as Northwest Tank Lines. With highly trained and experienced drivers, and a team of excellent staff members, Northwest continues to focus on continual improvement resulting in an enviable retention rate with customers and employees. With an uncompromising dedication to safety and outstanding customer service, there is no doubt that Northwest will continue its growth that started 60 years ago with Bill Blaney’s vision. S

For all your needs

Raven Oilfield Rentals

aven Oilfield Rentals has been operating in northeastern British Columbia and northwestern Alberta since 1988. Our head office is located in Fort St. John, B.C., with branch offices in Fort Nelson, B.C., Grande Prairie, and Calgary, Alta. Raven Oilfield Rentals is one of the largest independently owned rental companies in the area. We have an extensive inventory of exploration, production, construction, and pipeline equipment available to rent year-round. Raven Oilfield Rentals is COR certified and is registered with both the HSE Registry and ISNetworld. Raven strives to be a leader in the oil and gas sector with outstanding service, excellent safety

programs, and quality staff. Working with the B.C. Safety Council, the Canadian Society of Safety Engineers, and the Workers’ Compensation Board of B.C. and Alberta, Raven Oilfield Rentals is committed to providing a safe work environment whether it be in the field, in the shop, or at the office. With safety being one of the most important issues, Raven is pleased to offer our new style 30 yard and rig bins. These bins utilize a rolling lid to eliminate the hazards of a traditional cable or winch lid system. Raven offers a wide variety of equipment from surface tanks, generators, 1,000-litre to 30,000-litre fuel systems,

aerial equipment, office, meeting, washroom, first-aid trailers, and much more. Raven is also one of the largest suppliers of access mats in northern B.C. and Alberta, with a large inventory of wood mats available for rent or sale. The company can take care of all your transportation and mat installation needs with our fleet of specialized equipment. Our fleet of loaders, skid steers, excavators, sixwinch tractors with trailers, and five-bed trucks can move or transport any mats or equipment safely and efficiently. Raven also has three Super B trailers for the transportation of large quantities of access mats. All equipment is operated by trained, quality professionals. S B.C. Oil & Gas Report • 2015 109

Index to advertisers Akita Drilling Ltd.....................................................................................................82

Liuxon...............................................................................................................................4

Aluma Systems........................................................................................................21

McElhanney Land Surveys..............................................................................83

BK Two-Way Radio Ltd.....................................................................................108

Muskwa Valley Ventures....................................................................................27

Britespan Building Systems Inc/ Spanmaster Structures Ltd..........................................................................87 British Columbia Safety Authority..............................................................23 Cambridge House International Inc.........................................................57

Northern Rockies Regional Municipality...............................................73 Northlands Water & Sewer Supplies Ltd................................................61 Northwest Tank Lines..........................................................................................17

Can-Am Geomatics..............................................................................................25

Praxair Canada Inc.................................................................................................41

Certified Coating Specialists...........................................................................79

Quality Mat Co.................................................................................................... OBC

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

Raven Oilfield Rentals.........................................................................................11

Clac..............................................................................................................................65

Rosenau Transport Ltd.......................................................................................59

Coast Mountain Wireless Communications Ltd................................99 Compass Bending.................................................................................................41 Cor Solutions Ltd......................................................................................... 28-29 D & D Insulators Ltd.................................................................................................8 D & D Soft Covers.....................................................................................................9

Specialized Desanders Inc...............................................................................97 Summit Liability Solutions...............................................................................85 Ta Structures.............................................................................................................53 Tdb Consultants Inc............................................................................................51

Dynacorp....................................................................................................................91

Terrapro Group Of Companies.....................................................................33

Flair Airlines Ltd....................................................................................................101

Tog Systems...........................................................................................................IBC

Harris Rebar...............................................................................................................10

Trans Peace Construction....................................................................................5

Industrial Scaffold Services...........................................................................105

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

Industry Training Authority.............................................................................75 International Brotherhood of Boilermakers, Iron Ship..................93 International Union of Operating Engineers Local 115............. IFC Kitimat Lng...............................................................................................................89

Volant.....................................................................................................................14, 15 Wellons Canada......................................................................................................77 Western Industrial Solutions..........................................................................95

Landsea Camp Services....................................................................................13

Williams Scotsman Of Canada Inc..............................................................19

Lhi Tutl It Services Inc.......................................................................................107

Wsp/Focus Surveys..............................................................................................67

Lions Gate Risk Management........................................................................81

Zenco..........................................................................................................................103

Please support the advertisers who help make this publication possible. 110 B.C. Oil &â&#x20AC;&#x2C6;Gas Report â&#x20AC;˘ 2015

WE’LL WEATHER THE STORM WITH YOU. WALTER NORDHAGEN

PRESIDENT, TOG SYSTEMS

Whether it’s blizzard conditions or frozen oil prices, we’ll be here to make sure you and your business stay connected. Our team is committed to providing our customers with the best products and outstanding service. When budgets have tightened and priorities shifted, we know there is still work to be done. And when quality counts, we will continue to be the official supplier of whatever-it-takes. Get Western Canada’s most trusted and reliable provider of oil and gas communications working for you.

ALBERTA • BRITISH COLUMBIA • SASKATCHEWAN

1.844.356.3965 Visit us for more info: togsystems.ca

all-weather location 24/7

Don’t be a stick-in-the-mud. quality mat is the standard in the mat business. Manufacturing and installing mats worldwide for 40 years! World’s largest mat supplier. over 60,000 mats in stock in Bismarck, Dickinson, tioga and Killdeer locations. Minimize: · environmental impact · road congestion · reclamation cost · accidents · rock cost · Dust

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