PNN AUGUST 2018 by Pipeline News North

SPOTLIGHT: Clearing the last two LNG Canada hurdles / 12 AUGUST / SEPTEMBER 2018

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ENOCH CREE NATION CHIEF BILLY MORIN SPEAKS DURING A BLESSING CEREMONY FOR TRANS MOUNTAIN WHILE NATURAL RESOURCES MINISTER AMARJEET SOHI, ALBERTA PREMIER RACHEL NOTLEY, AND KINDER MORGAN CANADA PRESIDENT IAN ANDERSON LOOK ON. GOVERNMENT OF ALBERTA PHOTO

New rules for North Montney may be needed to ensure gas line is built; ARC takes seniors to the rodeo; Encana helps check out $10,000 for local food banks; Trans Mountain expansion could cost $9.3 billion; and Canadian LNG is still globally competitive, new study concludes

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AUGUST 17, 2018

WHAT IS FORT ST. JOHN PETROLEUM SOCIETY? The purposes of the society “Fort St John Petroleum Association” is to create a nonproﬁt fraternal organization for educational benevolent and social purposes.

• To create a medium through which the society members may express themselves in Social activities, Educational pursuits and Athletic endeavours. • To contribute to the community in supporting worthwhile projects as decided upon from time to time by the society. • To provide entertainment that is enjoyable, instructive and beneficial to its members and families. • To encourage a spirit of good fellowship among the society members VISIT http://fsjpetroleumassociation.com FOR MORE DETAILS

AUGUST 17, 2018

PIPELINE NEWS NORTH •

COMMENTARY

Horgan must defend B.C. rights over Coastal GasLink

few weeks ago, environmental activist Mike Sawyer made an attempt to impede a final investment decision from LNG Canada by filing a request to have the National Energy Board conduct a review of TransCanada’s Coastal GasLink pipeline (turn to page 11 to learn more). The move has outraged communities across B.C. because the project has already undergone an exhaustive provincial review that looked at everything from environmental concerns to agreements with First Nations. It prompted Skeena MLA Ellis Ross to write directly to Premier John Horgan, asking him to step up to the plate and defend the development of our LNG industry. A former chief of the Haisla First Nation, Ross correctly argues that the 670-kilometre length of the pipeline lies completely within our provincial border and, by law, is governed by the B.C. Oil and Gas Commission. It’s

therefore appropriate for the premier to intervene in defence of provincial jurisdiction. If Horgan doesn’t, it could set a very dangerous precedent. Chief Dan George of the Ts’il Kaz Koh First Nation laments the fact that 19 out of 20 First Nations have already signed agreements amounting to almost $1 billion in contract and employment opportunities.

There’s a lot at stake in this dispute not only for the Peace Region, where two companies, Surerus and Macro, are contractors, but for the province as a whole. Earlier this year, Premier Horgan took on Alberta and federal government over a federally regulated pipeline that had already received approval from Ottawa. Horgan must demonstrate equal enthusiasm for the defence of provincial rights over pipelines or lose all credibility as a government. This is going to be challenging because the junior partners in Horgan’s minority government have threatened to withdraw support if Green Party demands are not met. Quite clearly the premier of this province has a choice to make. Dan Davies is the BC Liberal MLA for Peace River North.

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OUTLOOK

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New rules raise industry concerns, but might be needed to ensure new North Montney gas line gets built NELSON BENNETT A moratorium of sorts on natural gas activities in the North Montney formation north of Fort St. John has sent a shiver through the oil and gas industry in Calgary. But at least one industry association executive says that the measures – though sure to drive up costs for companies operating in the area and make some areas off limits – are necessary to ensure the construction of the $1.4 billion North Montney Mainline gas pipeline project. The B.C. government, through the BC Oil and Gas Commission, last week posted an industry bulletin that declares areas of the North Montney either out of bounds for oil and gas activities altogether or otherwise restricted. The restrictions are part of an agreement signed between the Blueberry River First Nation and provincial ministries of Forests and Energy, Mines and Petroleum Resources. “There are critical areas where new surface disturbance will not be permitted or will be restricted and other areas where development activities will be managed,” the bulletin states. The agreement describes the varying levels of restrictions in three areas. Activities related to the North Montney Mainline would be allowed. The project is being built by Nova Gas Trans-

mission Ltd., a subsidiary of TransCanada Corp.. It was originally proposed for the nowcancelled Pacific NorthWest LNG project but might now supply at least some of the gas for the $40 billion LNG Canada project. It’s unclear why the new measures are being implemented, and the commission won’t make the agreement public. The Canadian Association of Petroleum Producers says the agreement was negotiated without industry consultation. The Blueberry River First Nation has a major treaty infringement claim against the B.C. government and is a signatory to Treaty 8, which guarantees in perpetuity the rights of signatories to carry out their traditional livelihoods in the area covered by the treaty, including hunting, trapping and fishing. In the treaty infringement claim, filed in 2015, the Blueberry River First Nation says decades of forestry, mining and oil and gas drilling and pipeline construction have severely curtailed those rights. Ellis Ross, BC Liberal MLA for Skeena, said the new interim measures are just the latest sign from the NDP government that it plans to abide by the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) in its regulation of resource industries in B.C. Despite repeated assertions by B.C. ministers that UNDRIP does not give First Nations a veto, a

AUGUST 17, 2018

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OUTLOOK

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• 11 different profiles & 26+ colours • Agricultural & Industrial recent directive on open-net salmon farms in the Broughton Archipelago suggests that the provincial government is prepared to grant veto powers even if the UN declaration doesn’t grant them. “Trying to resolve those cumulative impacts is honourable,” Ross said. “But given the NDP’s lack of support for LNG [liquefied natural gas] and the willingness to give First Nations a veto, I think that precedent is going to spread across different jurisdictions. “Anything that’s got to do with the natural resource sector, everybody will be watching to see what gets shut down next in B.C.” Dan Allan, president of the Canadian Society for Unconventional Resources, said the new measures have some companies in Calgary worried. “Will it cost the industry more? Yes, it will. But I don’t think it’s prohibitive, in my opinion. But I know the numbers are being run by a lot of organizations right now, and trying to get a better feel for exactly what that may mean.” He added that the measures may be a necessary concession to allow the North Montney Mainline project to proceed. The North Montney Mainline, needed to bring gas from the region into the North American pipeline system, gets special consideration to proceed under the new measures. “This is something that needs to be done,” Allan said. “It is, though, going to be requiring you to restrict your areas of operations to very site-specific parts of this land. Nothing is completely off limits, but if you’re going to do something in certain areas, you have to make sure you rectify other areas to have a zero effect. “Talking to some companies, they are concerned, but they also recognize that this is likely the way we have to manage traditional lands from First Nations, especially in areas that could have very robust development. “If we get positive FID [final investment decision] from LNG Canada, for example, areas like this would be targeted for pretty potentially heavy development, especially with the North Montney Mainline coming through there, and the First Nations want to say, ‘Hold it – this is not business as usual. We will want to have some safeguards.’” Pat Ward, CEO of Painted Pony Energy Ltd., said some companies might be affected by the agreement on new drilling but doesn’t think Painted Pony will be affected that much. “It’s more delay probably more than anything,” he said. “It costs money if you’re delayed. But from what we see, it doesn’t seem that onerous at this point to us.” — Business in Vancouver

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COMMUNITY Arc gives seniors the resource to catch the rodeo AUSTIN COZICAR When the first day of rodeo came around, so did the annual seniors tour — 47 seniors got on a bus, had a good supper, and got to enjoy the first day of chuckwagon races. Stacey Rowan, the senior field office coordinator for ARC Resources based in Beaverlodge, came up with the idea four years ago. “We try to do a lot in the community, and when I heard about the Better at Home program, I had asked them what kind of tours they take their seniors on,” she explains. “On a personal basis, I always take my grandma to our hometown rodeo, and so when we had the opportunity to do this for a number of seniors as a corporation, it just worked real well.” The fourth annual event was put on by Better at Home, a program helping seniors live independently, and ARC Resources, who foot the bill — about $5,000 for the bus, supper, and rodeo passes for the seniors. “The men are included. Lots of times when you have activities, it’s more women than men, and the men enjoy this one. We make it really accessible,” says Christine MacLean, field admin at ARC Resourc-

es’ DC office. “It’s quite expensive to go to the rodeo, so it gives them a chance to go to the rodeo and just enjoy, from when they were younger and on their farms,” says Arleene Thorpe, volunteer coordinator at Better at Home. The tour is in the same vein as the winter tours Better at Home puts on, but the rodeo is a real draw for the

men. “This is the one tour that guys love to come on, because some of the other tours they don’t want to be bothered, but the rodeo tour they really like to come on.” The first stop on the tour was a hearty meal at Old Gram’s at the Airport, which included roast beef, mashed potatoes, salads, and a dessert. Now going strong for four years, the day was a highlight for many se-

niors, as well as the ARC employees who came to enjoy the day with the seniors. “I think it has been getting better and better, and I think more and more people are coming and enjoying it, which is nice to see,” MacLean says. “It’s just fun, it’s a lot of fun,” says Thorpe. — Pipeline News North

AUGUST 17, 2018

PIPELINE NEWS NORTH •

OILMEN

FACEBOOK/ FORT ST. JOHN PETROLEUM ASSOCIATION

Gerd Juister and Brant Billings have been recognized by the Fort St. John Petroleum Association. Juister (at left with FSJPA President Luc Chretien) was named Oilman of the Year, while Billing (right, centre) was given the Ivor Miller Award. The awards were handed out at the association’s ninth annual family camping weekend Aug. 10 to 12.

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COMMUNITY

Encana helps check out $10,000 for local food banks AUSTIN COZICAR Shopping carts were flying during rodeo in Dawson Creek as local celebrities and rodeo royalty raced to fill their carts and cross the finish line. While there was a lot of unsportsmanlike conduct — cart stealing was a tactic used by more than one team, and bribery of the judges was recommended — it all went to a good cause. The 2018 Race for Hunger — which included the aforementioned shopping cart race at the Dawson Creek Co-op and a barbecue by Encana — raised $10,000 in food and funds for local food banks. While the Brown’s Social House “lagers” took home the trophy, three food banks — the Dawson Creek Salvation Army, Network Ministries, and St. Mark’s food banks — and their users were the real winners, sharing the pot. Encana had pledged to match dollar for dollar all funds raised, and $2 for each pound of food donated, bringing their total contribution to $5,217. — Pipeline News North

AUGUST 17, 2018

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COMMUNITY

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AUGUST 17, 2018

PIPELINES

Trans Mountain expansion could cost $9.3 billion NELSON BENNETT An expanded Trans Mountain pipeline could come in two years behind schedule and $2 billion over the last budget estimate of $7.4 billion, according to filings with the American Securities and Exchange Commission. On Aug. 30, Kinder Morgan Canada shareholders will vote on the Canadian government’s offer to buy the existing Trans Mountain pipeline and the Trans Mountain Expansion Project for $4.5 billion. In addition to the $4.5 billion that Canada will pay for the existing pipeline, associated assets and $1.1 billion in expenditures already made for the expansion project, the Canadian government will assume the cost of twinning the existing line, and then try to find a third-party buyer or consortium of

investors to buy the project. The estimated capital cost of the twinning project has increased several times since the project first was proposed, with endless delays contributing to the escalating capital costs. In May, when Kinder Morgan announced that the Government of Canada had agreed to buy the existing Trans Mountain pipeline and assume the cost of completing its expansion, the company did not provide an update on capital costs of completing the expansion. The last estimate was $7.4 billion, and its completion date was estimated at December 31, 2019. But in its proxy statement, Kinder Morgan notes that the expansion may not be completed until December 31, 2021, and could cost an additional $1.9 billion. That would put the total cost of the

expansion at $9.3 billion. In a written statement, Trans Mountain said neither the completion date nor the potential cost increase should be taken as forecasts. “They only represent a range of scenarios used by a financial advisor in its analysis of the transaction for the purposes of advising our board,” the company said in an email to Business in Vancouver. “I think we already assumed Trans Mountain would not be completed by 2019,” said Kevin Birn, director of energy for IHS Markit. As for the potential increased capital cost of the project, it’s not clear how much of that additional cost would have to be covered by the Government of Canada. Some of the additional costs might be absorbed through increased toll rates for shippers.

There are provisions in the original TMEP agreement to increase shipping tolls to cover unanticipated cost escalations. Alberta has also confirmed it will cover up to $2 billion worth of additional costs. “The Alberta government said they’ll backstop cost overruns up to $2 billion,” Birn pointed out. “So that would indemnify the feds on those overruns to the federal coffers.” Any money Alberta spends on overruns would be converted to equity in the new pipeline. Once the project is built, analysts have said they think the government will have no problem selling the project, even at a higher capital cost. “I don’t see an issue with them divesting that asset,” Birn said. — Business in Vancouver

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PIPELINE NEWS NORTH •

PIPELINES

NEB seeks comments from Coastal GasLink on jurisdictional challenge The National Energy Board is requesting comments from Coastal GasLink Pipeline Ltd. as to whether a process should be established to examine the jurisdictional question raised in an application made to the board. Michael Sawyer, a British Columbia environmentalist, wants the NEB to determine and issue an order that TransCanada’s $4.8-billion pipeline is within federal jurisdiction and subject to the board’s regulation rather than the province of B.C., which earlier approved the pipeline. The 675-kilometre pipeline would move gas from TransCanada’s federally regulated NOVA Gas Transmission Ltd. system near Groundbirch to Kitimat. Royal Dutch Shell plc, the majority owner in LNG Canada, is expected to decide later this year whether it will proceed with the project. In an application to the NEB, Sawyer argues that the pipeline project is under federal jurisdiction on the grounds that an otherwise local work or undertaking will be subject to federal jurisdiction if it is part of a federal work or undertaking in the sense of being “functionally integrated and subject to common management, control and direction.” The CGL pipeline connects to TransCanada’s NGTL system, the gas for the pipeline will come from the NGTL system and TransCanada itself sees the CGL as an integral part of the undertaking, according to the application, he points out. Sawyer’s application is similar to his earlier ap-

plication to the NEB for a preliminary declaration that TransCanada’s Prince Rupert Gas Transmission (PRGT) pipeline was in federal jurisdiction as it would have transported gas from the North Montney pipeline which crosses the B.C./Alberta border to the PETRONAS LNG project near Prince Rupert. The NEB dismissed the application but Sawyer successfully appealed the decision to the Federal Court of Appeal which sent the application back to the board for redetermination. The court found the board had erred in its application of the prima facie (first instance) test. It also found the NEB had erred in its constitutional analysis although the court did not make a finding on whether the pipeline project was within federal jurisdiction. Following cancellation of the PETRONAS project, the board dismissed Sawyer’s PRGT application without prejudice as the result of the material changes that had occurred with respect to the project. In his application to the NEB, Sawyer cites the Federal Court of Appeal decision, suggesting that several aspects of the decision are pertinent to the current application regarding the Coastal GasLink. For example, in both cases, a provincially-regulated pipeline will transport gas to export markets and in both cases CGL and the NGTL system are under TransCanada’s common management, control and direction which meets the preliminary test for a more comprehensive hearing by the board, he says. — Daily Oil Bulletin

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AUGUST 17, 2018

LNG

LNG Canada still faces numerous gas terminal hurdles NELSON BENNETT Judging by recent investment decisions, contract awards and the general buzz in Kitimat, it seems like a foregone conclusion that a final investment decision on the $40 billion LNG Canada project will be taken this year. But the liquefied natural gas export project still faces a couple of hurdles, one of which is Canadian tariffs on steel imports from China and South Korea, which would add hundreds of millions to the cost of LNG modules. The problem can be solved with the stroke of a pen in Ottawa, as the U.S. White House did recently, when the Donald Trump administration exempted Chevron and Shell from American steel tariffs. A bigger obstacle could be the Unist’ot’en. The aggressive and determined clan of the Wet’suwet’en First Nation has occupied a region near Houston, B.C., since 2010, blockading the Morice River Bridge, building permanent cabins and successfully threatening and chasing away pipeline survey crews, including ones from TransCanada Corp., the company that would build the Coastal GasLink pipeline that would supply natural gas to LNG Canada’s Kitimat plant. The Unist’ot’en have even stopped the RCMP from crossing the Morice River Bridge. “The only issue outstanding now is that blockade on the pipeline outside Moricetown,” said Ellis Ross, Liberal MLA for Skeena and former Haisla

Nation chief. Aside from the Unist’ot’en clan, the Wet’suwet’en generally support the LNG Canada and Coastal GasLink projects. The Coastal GasLink pipeline corridor is just a kilometre south of the Unist’ot’en blockade. The Unist’ot’en protest group is led by Freda Huson, who is an elected band councillor with the Moricetown Band, which signed a benefits agreement with Coastal GasLink. The Unist’ot’en have posted videos showing masked members evicting Coastal GasLink surveyors, warning that their equipment will be confiscated if they return and threatening “war” if peaceful means of keeping out industry fail. Despite the blockade, TransCanada spokeswoman Jacquelynn Benson said the company is ready to start pipeline construction once there is a final investment decision. “We have all of our major permits needed,” she said. “We have the majority of our fieldwork completed and done.” As for the other obstacle – Canadian duties on Chinese and South Korean steel – it’s still not clear whether Ottawa plans to provide an exemption for steel tariffs, which could make the project uneconomic. Canada has tariffs of 45% on prefabricated steel products from China, South Korea and Spain. LNG Canada and Woodfibre LNG have asked for exemptions. Ottawa also recently imposed duties on American steel and aluminum imports in response to American duties on

Canadian steel and aluminum. The federal Ministry of Finance declined to speak to Business in Vancouver to answer whether it will grant the exemptions. Dale Bumstead, mayor of Dawson Creek, was among seven northern mayors who travelled to Ottawa in April to lobby for the tariff exemptions. He said it was clear that Canada is afraid there could be implications for North American Free Trade Agreement negotiations if the duties are waived. “They were just worried [that] if they waived that steel tariff on that steel coming from Korea or China, if those components were built outside Canada, what kind of message that sends to the U.S.,” Bumstead said. “They were dancing around U.S., Canada and China,” said Fort St. John Mayor Lori Ackerman. “Although we did not get a firm commitment from them, they were fully cognizant of the fact that this was an issue. How they move forward is anyone’s guess.” Despite the obstacles that remain, there has been some significant progress on the LNG Canada and Coastal GasLink projects and, as a result, resumed optimism in Kitimat, where the plant would be built. Several important milestones have been reached since March, including: • the B.C. government scrapping special LNG taxes to put the LNG industry on the same footing as other industries (March); • LNG Canada awarding the engineering, procurement and construction contract to Fluor Corp. and Japan’s JGC Corp. for the Kitimat

LNG plant (April); • Malaysia’s Petronas announcing it will take a 25% stake in the LNG Canada project (May); • TransCanada Corp. announcing the awarding of construction contracts for the Coastal GasLink pipeline and $620 million in benefits agreements with First Nations along the pipeline corridor (June); and • Black Diamond Group announcing it has been awarded a $42 million contract to provide a 908-bed work camp for the Coastal GasLink pipeline, and Horizon North Logistics raising $50 million in equity to build a 1,000-person work camp in Kitimat (July). • LNG Canada has already begun preliminary site preparation work in Kitimat. At the beginning of the year, Ross was pessimistic about Kitimat’s economy. But he said that things look very different today. “The activity here, the amount of people moving in, the amount of workers moving in, is just amazing. There’s a lot of heavy equipment being moved around. There’s a lot of workers moving into the camps. “The Haisla Town Centre condominium is full. And contracts – and the talk about contracts – being settled in Kitimat, that’s going on on a daily and weekly basis.” Earlier this year, LNG Canada CEO Andy Calitz said the joint venture plans to begin construction in 2018. — Business in Vancouver

AUGUST 17, 2018

PIPELINE NEWS NORTH •

LNG Canadian LNG can compete globally: CERI study ELSIE ROSS Canadian LNG can be globally competitive and is in a position to benefit from a growing demand for the commodity, according to a new study by the Canadian Energy Research Institute (CERI). “We found that the growth in the LNG market is exceeding everyone’s expectations,” Allan Fogwill, CERI president and CEO, said in an interview. “The market is poised to absorb new supply because there are a lot of excess regasification facilities globally so it’s really the supply catching up to demand.” He also challenged the idea that there is a limited window in which LNG opportunities will be available. “There’s many more players and many more opportunities and many more positions to buy and sell LNG so as a result we are starting to get much more of an ongoing robust market,” said Fogwill. “We are not necessarily talking about reopening existing contracts or when a contract expires; we also are talking about expansion demand and that happens all the time.” The study, Competitive Analysis of Canadian LNG, concluded that with additional government incentives and certain cost-savings, Canadian West and East Coast integrated LNG projects are competitive and can outperform United States greenfield and brownfield projects. Provided that specific actions are taken by governments and proponents, the total landed costs for a Western Canada LNG project could be reduced to $7.55/mmBtu from $8.99/mmBtu in the northeast Asia market, said the study. “The resulting landed cost is recovered by an LNG project with a Brent price of [US] $65 [per bbl] (compared to initial $80),” it says. “Canada can be competitive on both the West and East Coasts under different conditions but definitely can compete internationally with other jurisdictions, in particular the U.S. Gulf of Mexico and Australia,” said Fogwill. The CERI study compared generic Canadian projects in British Columbia (13 million to 26 million tonnes per annum) and Nova Scotia (eight to 12 million tonnes per annum) with counterparts in the United States Gulf of Mexico (Texas and Louisiana) and Australia. (One

bcf/d equals about seven million tonnes/annum). It assumed 70 per cent of the supply for the projects would be subject to long-term contracts and 30 per cent would be sold on the spot market. “There was a lot of talk about people building completely merchant plants but that’s not what we are hearing,” he said. “Most of the plants — if not all of the plants — have some strong element of contracted demand in order for them to move forward.” The study also reviewed some of the incentives that governments have already implemented or could implement, as well as costs savings measures that are available to LNG producers to improve the cost competitiveness of Canadian LNG. With those actions, the study concluded, Canadian LNG also can reach destination market price levels in Asia and Europe, depending on whether it’s being exported off the West or East Coast. West Coast advantage Western Canada LNG has an overall landed cost advantage in the Asian market of US$1.70/ mmBtu compared to U.S. Gulf greenfield projects and of 30 cents/mmBtu versus U.S. brownfield projects, the study found. If supply costs of Canadian LNG are optimized, the difference grows to $3.10/mmBtu and $1.80/mmBtu for U.S. greenfield and brownfield projects, respectively. “Our [West Coast] advantage comes in terms of the natural gas cost — we are higher in terms of capital costs. We have got an advantage in terms of operating cost and compared to the United States we have got an advantage in terms of shipping costs to Asia,” said Fogwill. At the same time, U.S. Gulf projects hold an advantage over Marcellus-sourced gas for Eastern Canada LNG in the European market by $1.50/mmBtu for a U.S. greenfield and by $2.90/mmBtu for a U.S. brownfield project. “If supply costs of Canadian LNG are optimized, Eastern Canada LNG edges a U.S. greenfield project by $1/ mmBtu but loses to a U.S. brownfield by 40 cents,” said the study. British Columbia also appears to be more competitive globally than Nova Scotia as the western province has more incentives and lower

corporate taxes (26 per cent versus 31 per cent), according to the study. The Asian LNG market also is better priced than European gas markets (a 10-year historical average of $9.20/mmBtu compared to $6.30/ mmBtu). In addition, the cost of Montney gas and transportation to a B.C. facility is half that of an Eastern Canada project that sources gas from AECO-C or the Marcellus. East Coast LNG implies local supply The study found that Canadian LNG supply costs (excluding transportation) for Western and Eastern Canada LNG are $8.35/mmBtu and $8.09/mmBtu, respectively, for an integrated model in which LNG facility owners produce the gas. The integrated model for Eastern Canada implies the development of onshore local gas in Nova Scotia which is currently under a provincial ban on hydraulic fracturing. Eastern Canada integrated projects would hold a slight advantage (36 cents/mmBtu) over Western Canada due primarily to lower capital and transportation costs with an adjacent gas supply while a British Columbia project would have a 93 cent/mmBtu advantage in terms of natural gas cost. Costs for a merchant business model would be higher by $9.85/ mmBtu on the West Coast and $11.17/mmBtu on the East Coast. Western Canada LNG projects will need an oil price of approximately US$80/bbl WTI or higher over the life of the project to break even under long-term LNG contracts (11.5 per cent of Brent is used as the benchmark for all project economics) or $8.99/mmBtu on the spot market. The study found that Western and Eastern Canada LNG landed costs are higher than the current spot price in the United Kingdom. The difference is $2.50/mmBtu for western Canadian gas and $4/ mmBtu in Eastern Canada for Marcellus-sourced gas, $4.20/mmBtu for AECO gas and $1.10/mmBtu for locally-sourced shale gas in Nova Scotia. Eastern Canada LNG projects will need an oil price of approximately $100/bbl over the life of the project to break even under long-term LNG contracts, or $11.60/mmBtu to $11.40/mmBtu or higher in Euro-

pean markets, the study found. The historical average for the last 10 years in the U.K. is $6.30/mmBtu. CERI said it has not found a viable path to lower the landed cost of Eastern Canada projects below the European market price if the project sources gas from AECO-C or Marcellus. The final optimized landed cost is $8.80/mmBtu while the market price is $7.40/mmBtu. However, if local shale gas was available in Nova Scotia, the optimized cost reduces the landed costs to $7.35/mmBtu from $8.50/ mmBtu, making such an option viable under current spot prices, said the study. U.S. more cost effective If natural gas costs are not considered, the U.S. is a more costeffective jurisdiction than either of Canada’s provinces, it found. Total liquefaction costs (all costs except for natural gas) are higher by 70 cents/mmBtu to 80 cents/mmBtu in Western Canada and by $2.80/ mmBtu to $3/mmBtu in Eastern Canada. “Thus the costs of doing LNG business is 13 to 41 per cent lower per mmBtu in the GoM than in Western or Eastern Canada inducing further work of business and governments to reduce the deficiency in cost-competitiveness,” said the study. The recent change in corporate taxes in the U.S. has also given a boost to the U.S. industry with the corporate tax share per mmBtu of LNG decreasing by nearly 60 per cent to 44 cents/mmBtu from 52 cents/mmBtu, it noted. Canadian incentives to the LNG industry are estimated at about 51 cents per mmBtu (including increased capital cost allowances, the B.C. government’s Natural Gas Development Framework and the natural gas tax credit), said the study. “Still, even with these measures, U.S. greenfield projects have 27.5 per cent lower taxes per mmBtu than for a large 26 mtpa (million tonnes per annum) project in Canada after all modelled Canadian incentives are applied.” This leaves room for further improvement of the tax regime competitiveness in Canada, for instance exempting projects from ring-fencing and further increasing the capital tax allowance, the CERI report suggested. — Daily Oil Bulletin

• PIPELINE NEWS NORTH AUGUST 17, 2018

IN BRIEF

Canbriam sells ‘non-core’ Montney lands for $50M Canbriam Energy Inc. has sold some non-core Montney lands in northeast British Columbia for total proceeds of $50 million. The asset has no associated production and the disposition closed on July 30, 2018. “The disposition of noncore acreage supports the core development at our Altares Montney assets and the ongoing deleveraging of our balance sheet,” said Paul Myers, Canbriam’s president and chief executive officer. Canbriam’s Altares asset continues to deliver consistent performance with Q2 2018 production averaging approximately 40,400 boe/d, 16 per cent of which was liquids. Production rates reflect full

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Dates set for 2019 BC Natural Resources Forum The C3 Alliance Corp. will continue to host, manage, and operate the BC Natural Resources Forum in Prince George, it was announced Wednesday. The news was announced Wednesday, along with the dates for the 16th annual forum, to be held Jan. 22 to 24, 2019, at the Prince George Conference and

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presentations from 47 speakers. There were another 70 exhibitors, and the forum generates more than $2 million for the City of Prince George, according to the release. “The BC Natural Resources Forum has firmly established the ability to attract a wide range of speakers who share diverse views and insights on the challenges and opportunities facing BC’s resource sector,” said Dan Jepsen. “Working closely with our 30-member host committee, we will continue to ensure that the topics, speakers, and perspectives from First Nations, the resource sector, and northern business leaders are featured for many years to come. The 2019 BC Natural Resources Forum will be another must-attend event.” For more info, visit www. bcnaturalresourcesforum.com. — PNN

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Civic Centre. “I acknowledge that henceforward the BC Natural Resources Forum will be run exclusively by C3 Alliance Corp.,” Mike Morris, MLA for Prince George-Mackenzie, said in a news release. “The Forum has become a respected world-class event connecting communities across the province and showcasing northern BC’s integral contribution to the provincial and national economy. Prince George is honoured and proud to continue be the host city for this important conference.” The forum has been running for 15 years as an opportunity for industry and political leaders to meet and discuss the trends, challenges, and opportunities facing natural resource development in the province. The 2018 edition saw 925 delegates attend, with

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effective capacity of Canbriam’s owned and operated processing infrastructure. 2018 production expectations are reaffirmed between 37,000 and 39,000 boe/d, which includes routine downtime related to summer drilling and completion activities. — JWN Energy

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• Distributed to the community in general through these ﬁne publications, Alaska Highway News, Dawson Creek Daily and Fort Nelson News. • Distribution by mail and direct drop-off to Oil & Gas companies,and related businesses and organizations, in the following communities: BRITISH COLUMBIA – Arras, Baldonnel, Cecil Lake, Charlie Lake, CHETWYND, Clayhurst, DAWSON CREEK, Farmington, FORT NELSON, FORT ST. JOHN, Goodlow, Groundbirch, HUDSON HOPE, Moberley Lake, Pink Mountain, Pouce Coupe, Progress, Rolla, Rose Prairie, Sunset Prairie, Taylor, Tomslake, TUMBLER RIDGE, and Wonowon. ALBERTA – Baytree, Bear Canyon, BEAVERLODGE, Berwyn, Bezanson, Bonanza, CLAIRMONT, Eaglesham, FAIRVIEW, Falher, Girouxville, GRANDE PRAIRIE, Grimshaw, Grovedale, HIGH PRAIRIE, Hines Creek, Hythe, LaGlace, MANNING, McLennan, PEACE RIVER, Rycroft, SEXSMITH, Silver Valley, Spirit River, VALLEYVIEW, Wembley, and Worsley, Zama City.

AUGUST 17, 2018

PIPELINE NEWS NORTH •

IN BRIEF Hands-on lessons in oil and gas biz Want to learn about the oil and gas industry first hand — get ready for Seismic In Motion this September. Each year in late September the Canadian Association of Geophysical Contractors hosts Seismic in Motion to spotlight a wide variety of activities encompassing seismic in the oil and gas sector including some of the industries’ new technologies. SIM is an field trip encompassing more than 20 contractors donating time, people, and equipment. In-kind costs are estimated to be roughly $250,000 to put the event on. Seismic jobs consist of many contractors and within any job are separated by time and distance over the course of the project. SIM attempts to bring aspects of all elements to a one-stop informational field trip opportunity. “This is the one event where we bring the industry to the community; over the past couple of years we have teamed up with CAPP,

the CSEG Outreach Committee, and Energy Safety Canada,” say CAGC officials. “We have taken the saying ‘walk a mile in their shoes’ literally; in fact our success lies in the fact that we spend the day walking it together.” The Canadian Association of Geophysical Contractors (CAGC) is a trade association representing the business of seismic in the Canadian oil and gas industry. For more: tashia@cagc.ca — PNN

PSAC raises $42K to support literacy The Petroleum Services Association of Canada (PSAC) says its 2018 golf tournament raised over $42,000 to support energy awareness and education. The PSAC Working Energy Golf Classic was held on July 25 at the Inglewood Golf & Curling Club in Calgary. PSAC says its chairman, David McHattie of Tenaris, led PSAC in a new strategic direction with this

year’s event, revitalizing it to be a premier event for executives to celebrate Canadian energy and the contributions of the services sector to the Canadian economy while continuing to raise funds for education. The annual tournament is the primary fundraiser for the PSAC Education Fund, which was established in 2001 to promote the awareness of careers and create a labour pool for the petroleum services sector. Since 2001, the fund has awarded over $400,000 in scholarships and grants to deserving recipients. “Once again, the petroleum services sector came through with their outstanding generosity to support education and energy awareness despite the ongoing challenges of this sector in Canada,” PSAC CEO Tom Whalen said in a statement. Canada’s energy services sector employs over 450,000 of the 550,000 Canadians in the energy sector. — JWN Energy

Heartland petro complex advances construction Civil construction and fabrication activities at the $3.5 billion Heartland Petrochemical Complex advanced considerably during the second quarter, says Inter Pipeline. Piling activities were completed for the propane dehydrogenation facility, with more than 3,000 in place, and concrete work well underway. Fabrication in Alberta and globally is progressing on schedule and on budget including the approximately 90-metre propane/ propylene splitter and an 800-tonne reactor, which are expected to move to the Heartland Complex site near Fort Saskatchewan in early 2019. In the quarter, $153.5 million of capital was invested on this project with $279.3 million spent year to date. Inter Pipeline expects to invest approximately $700 million in total during 2018. — JWN Energy

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