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Understanding Asia’s growing thirst for Canadian crude nelson bennett A $7.4 billion expansion of the Trans Mountain pipeline makes no economic sense, if the idea is to open Alberta heavy crude to Asian markets — that’s the argument that has been made by some of the expansion project’s critics. They note that almost all of the oil that has moved by tanker out of Westridge Marine Terminal in Burnaby has, to date, been destined for the U.S., not Asia. If there were a market for Alberta oil in China, why hasn’t Alberta oil been moving by tanker via Vancouver all along? However, those critics may have a hard time fitting recent tanker shipments to China and South Korea into the narrative that no one in Asia wants Alberta’s dirty oil. On October 15, the Nordtulip, a Portuguese crude oil tanker, left Vancouver destined for Rizhao, China, according to marinetraffic. com. And according to S&P Global Platts, at least three more shipments of Alberta crude have been booked by Chinese buyers for the fourth quarter of 2018. Earlier this year, EnergiNews also reported that the Serene Sea, carrying about 514,000 barrels of crude, left the Westridge Marine Terminal on July 4 destined for Guangdong, China. South Korean refineries have also taken at least two shipments

of Alberta crude this year – a total of 591,000 barrels – according to Platts. Between January and August, 873,473 barrels of heavy crude from Alberta were shipped to China via Vancouver, according to Statistics Canada. The value of those exports was $44 million – $51 per barrel. Twice that amount – $91 million – of heavy crude shipped to China via Newfoundland. Kevin Birn, director of North American crude markets for IHS Markit, said the recent sales confirm a market for Alberta crude exists in Asia. Darryl Anderson, managing director and multi-modal logistics expert at Wave Point Consulting, said Alberta oil has also been making its way to Asia via the U.S. Some oil has moved by rail through Oregon, and some has shipped through the U.S. Gulf Coast. “There’s Canadian oil, over the last couple of years, that has flowed through the pipeline and was exported through U.S. Gulf ports, and some of that [went] to Asia,” Anderson said. “You’re going to tell me there’s no market?” Platts notes that it is unusual for Asian buyers to be booking so many shipments of Canadian heavy crude. “Purchases of Canadian crude had been extremely rare by Asian refiners before 2018,” Platts states in its report. It cites an uncertain supply of

BONSPIEL OPENS — Jeff Campbell throws his second rock of the first end for Team Nalco during the opening night of the 58th Oilmens Bonspiel on Nov. 14. Turn to pages 8 and 9 for more. dillon giancola photo

heavy crude from Venezuela and falling production in Australia for the sudden increase. U.S. President Donald Trump’s trade war with China could also result in increased demand for Canadian oil in China, which recently stopped buying American oil. The biggest factor in shifting demand for heavy oil is Venezuela. It may sit on the world’s largest oil reserves, but the country’s economic crisis has spurred an exodus of skilled workers and repelled the capital needed to keep up infrastructure and production. As a result, Venezuela, like Canada, has an abundance of oil it can’t

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sell, but for different reasons. Canada’s problem is simply a lack of pipeline and rail capacity – something Alberta Premier Rachel Notley last week said she planned to lobby Ottawa to address. Notley wants the federal government to step in and help out with the rail capacity needed to provide a temporary outlet for Alberta oil, until new pipelines can be built. Three are at various stages of shovel-readiness – Line 3, Keystone XL and the Trans Mountain pipeline expansion. But all have encountered regulatory delays. MORE ON PAGE 7

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NOVEMBER 16, 2018

FORT ST. JOHN PETROLEUM ASSOCIATION ELECTION RESULTS LUC CHRETIEN

stepped down and took the position of PAST PRESIDENT. (2 year term)

DUSTIN STIRLING

was elected as the NEW PRESIDENT. (2 year term)

SHANE STIRLING

was elected as VICE PRESIDENT (taking over Dustin’s old term with 1 year remaining)

CHRIS JORVEN

was re-elected as TREASURER (2 year term)

MICHAEL FRIESEN

is continuing his term as SECRETARY (1 year remaining)

CARL LEHR

resigned his position as Director.

CHRIS CLAY

was elected as DIRECTOR OF TECHNOLOGIES (taking over Carl’s old term - 1 year remaining)

DEREK TSURUDA

was newly elected as DIRECTOR (taking over Shane’s old term with 1 year remaining)

RICK BANACK

was newly elected as DIRECTOR (2 year term)

CLAYTON LINGEL

was re-elected as DIRECTOR (2 year term)

KEITH ROST

was re-elected as DIRECTOR (2 year term)

DAVE KELLESTINE

was re-elected as DIRECTOR (2 year term)

CURTIS WHITFORD

is continuing his term as DIRECTOR (1 year remaining)

DILLON MAIER

is continuing his term as DIRECTOR (1 year remaining)

Normally we would have our elections at the party but this year the club decided to hold elections in November and just have fun at the party (no ofﬁcial business).

Coming up... Fort St John Petroleum Association

Christmas Party Thursday, December 13 at the Lido

NOVEMBER 16, 2018

PIPELINE NEWS NORTH •

lng canada photo

LNG Canada decision proves naysayers wrong

he single, largest private sector investment in the history of Canada. Those were the words that Prime Minister Trudeau and British Columbia Premier Horgan repeated over and over again when announcing that Canada will finally become an exporter of liquefied natural gas. Earlier this month, a business consortium of energy giants announced its final investment decision for LNG Canada, a $40-billion project that will help Asia get off coal, and replace it with the world’s cleanest LNG. It will also provide goodpaying, family-supporting jobs to thousands of Canadians. This is a great story for Canada and yet some may have missed it. On the day of the announcement, it took the Canadian Broadcasting Corporation more than 15 minutes to report the story on its flagship evening news

program The National and it dedicated a whopping 96 seconds to it. Apparently that’s what $40 billion of private investment into our country will get you in air time from our public broadcaster. Of course, there were smiles all around the room at the Oc. 2 announcement. This was most certainly a story Trudeau wanted to brag about considering it’s under his watch that foreign investment in our resource sector has been vanishing at an accelerated pace since he took office. While Trudeau and Horgan were proud to take credit for this story, I bet deep down inside – at their very core – they were a little displeased that Canada’s oil and gas industry was expanding. I think it may be valuable to some readers to be reminded of how this megaproject actually came to light. The idea of liquefied

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natural gas has been discussed in the province for decades. But it’s in the early 2000s that the issue kicked into high-gear. Canada was running out of natural gas supply, as were the Americans. In fact, an import LNG facility was approved on BC’s north coast to meet the growing demand to supply our market. Thanks to the leadership of former B.C. premier Gordon Campbell – who allowed directional drilling and horizontal fracking in the province – huge reserves of natural gas were discovered in Northeast BC. Other regions in North America

also found similar deposits. Suddenly, governments were determined to find new export markets for trillions of cubic feet of natural gas. At first, few believed in that idea. But over time, people started to appreciate the immense potential. Among those who did not believe in that prospect is the current premier of British Columbia and a number of his cabinet ministers – those same individuals who were all smiles at the announcement. Not long ago, John Horgan called LNG “an industry that’s going nowhere.” Horgan’s environment minister has referred to LNG as “pixie dust,” his education minister once said it was “pie in the sky,” and the NDP energy minister said LNG “ain’t good for anybody in this province.” Isn’t it interesting how a $40-billion investment, thousands of jobs, and billions of revenue dollars from royalties and taxes for

our social programs can change someone’s mind? Of course, Horgan was more than happy to consider this massive investment his own achievement. Don’t be fooled: LNG is not the brainchild of the NDP. He may have helped bring the project to the finish line, but all the heavy-lifting was done prior to his premiership. As you can see, it’s often very eye-opening to review our history once in a while to better understand where we’ve come from and where we’re going. I tip my hat to former premiers Campbell and Clark for their leadership on this file. They have every reason to be proud and celebrate LNG Canada’s recent announcement. For my hometown of Fort St. John, for my region, my province and, indeed, my country, this has been the best news we’ve had in a while. Richard Neufeld is a Senator for British Columbia.

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pnn MIssIon stAteMent Pipeline News North provides current, interesting, and relevant news and information about the oil and gas industry in Northeast B.C. and Northwest Alberta. Have an interesting story to share or a news lead? Email us at editor@ahnfsj.ca.

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From left, Dan Rose, Chetwynd Public Library; Melissa Millsap, Chetwynd Public Library; Angela Reay, DC Arts and Wellness; Shauneen Gibbons, FSJ Irish Dance; Pam Blaney, Upper Pine PAC; Kelly Ballard, Rose Prairie Curling Club.

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In May, Shell in Groundbirch launched their second Northeast B.C. Community Grants Program offering $50,000 in funding to nonprofit organizations. The program included an additional $10,000 this year to celebrate the Groundbirch asset’s 10th year operating in the area. “This grant program is offered once a year and is an excellent opportunity for organizations that may not meet the qualifying criteria for our regular social investment funding due to geographic location, program structure, or for other reasons,” explains Jennifer Prochera who manages the Community Grants Program. “This bucket of funding is also unique in that community members help select the recipients based on the needs they see in their communities and all of Northeast B.C.” Through the NEBC Community Grants Program, Shell can give up to $5,000 per grant to each organization who applies. Applications closed in June and in the months following, submissions were collected and reviewed against the grant criteria. Drawing from their community knowledge, a panel of local volunteers and Shell staff living in NEBC made the final selections in late summer choosing 11 successful projects. “Each of these non-profit organizations does incredibly important work and our grant program is one way we can help these groups meet the needs within our community,” says Prochera who recently celebrated the winning

organizations at a luncheon. Spanning from Fort St. John, Dawson Creek and Chetwynd, to Rose Prairie and Upper Pine, the successful 2018 projects include: • The Ark Building Improvement – Dawson Creek Youth Center Society • Re-insulation Project – Rose Prairie Community and Curling Centre • Alphabites – Chetwynd Public Library Association • Facility Improvements – Chetwynd Minor Ball •Dawson Creek Arts and Wellness Fund – Dawson Creek Arts and Wellness Society •2018 D.a.r.e (Drug Abuse Resistance Ed) Program for NEBC – D.a.r.e •Outdoor Classroom Gazebo Project – Upper Pine Elementary Junior Secondary School • Winter Sport Expansion (snowshoeing & downhill ski equipment) – Special Olympics B.C. • Don Titus Outdoor Classroom – Don Titus Parent Advisory Council • Motion on Wheels – South Peace Child Development Centre • Portable Flooring for Community Events – Fort St. John Irish Dance Society Over the past two years, a combined $90,000 has been given to 24 grant applicants. This is in addition to the more than $800,000 that Shell has invested in Northeast B.C. through general social investment funding.

NOVEMBER 16, 2018

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outlook Petronas resumes Montney drilling after two-year absence Deborah Jaremko Malaysia’s state-owned oil and gas company is back in the field in Northeast B.C. after two years of no drilling. Petronas subsidiary Progress Energy resumed drilling activity in the basin this month, spudding four wells from an existing pad, analysts with Peters & Co. said on Monday. In addition to having the largest shipping commitment on the North Montney Mainline, which is currently under construction, Petronas is now a joint venture partner in the LNG Canada project, they noted. About a year after cancelling its own B.C. project, Pacific NorthWest LNG, in May 2108 Petronas purchased a 25 per cent interest in Shell’s $40 billion proposed project. LNG Canada got the final go-ahead earlier this month. Progress has not been drilling in Northeast B.C. since March 2016, and has not licensed a new well since December 2017, Peters & Co. said. “However, Progress has over 300 undrilled well permits dating back to 2010. Well permits in B.C. expire after two years if construction has not commenced, however almost all of the outstanding Progress well permits are on constructed well pad sites where one or two wells have been drilled during initial deletion, so it is likely that most of these well permits are still valid.” — JWN Energy

Rigstar awarded telecomms contract for Coastal GasLink Coastal GasLink Pipeline LP has selected Rigstar Communications Inc. as the project telecommunication services provider. The contract will support 10 camps and associated offices along the 670-kilometre pipeline from the Dawson Creek area to the LNG Canada facility near Kitimat. The pipeline will safely transport natural gas across Northern B.C. to the west coast where LNG Canada will prepare it for export to global markets. Rigstar received the conditional waiver notice and full notice to proceed under its agreement with CGL effective Oct. 5, 2018. Rigstar has spent the last four years engineering and designing a unique and complex remote telecom network solution that will support more than 20,000 workers over a three-year period. To further enhance its commitment to the region and ensure the overall success of the project, Rigstar intends to open a number of remote field offices along the route including its’ principal service centre in Prince George. — Daily Oil Bulletin

Progress Energy resumed northeast B.C. Montney drilling in October with Citadel Drilling, according to Peters & Co.

Fort St. John wants standing in pipeline review Matt Preprost Fort St. John city council wants a say in an upcoming jurisdictional review of TransCanada’s Coastal GasLink pipeline. Council is seeking intervenor status as the National Energy Board readies to hear arguments from B.C. environmentalist Mike Sawyer that the pipeline may form part of a federal undertaking and be subject to regulation by the board. The $6.2-billion Coastal GasLink pipeline will bring natural gas from Northeast B.C. to Kitimat, where it will processed and shipped to Asian markets through Shell’s LNG Canada project. Two Fort St. John contractors, Surerus Pipeline and Macro Industries, have joint venture projects hired to build segments of the pipeline. “The Coastal GasLink pipeline will have a direct impact on our community, and will provide economic benefits through both employment and contracting opportunities,” Mayor

Lori Ackerman wrote in a Oct. 29 letter to the NEB. “As a result, Fort St. John is directly affected by how the Coastal GasLink pipeline is regulated and how the National Energy Board (NEB) review process may affect the project, therefore requests that the community be permitted to fully participate in the NEB process on this jurisdictional matter.” The pipeline has already secured approval from the B.C. government. Sawyer, however, wants the NEB to determine and issue an order that the pipeline is within federal jurisdiction and subject to the board’s regulation rather than the province. In September, Ackerman added her name to a letter with other Northern B.C. mayors criticizing Sawyer and the West Coast Environmental Law Association for their last-minute effort to stall construction of the pipeline. — Pipeline News North

TransCanada ‘disappointed’ with review TransCanada Corporation said it is disappointed with the National Energy Board’s decision to move forward in reviewing jurisdictional arguments for the Coastal GasLink project. “We understand this decision only represents the start of a review process to examine the issue of jurisdiction more closely, and not a final decision on the jurisdiction of the project,” TransCanada stated. “However, the Coastal GasLink project was subject to a robust two-year environmental and technical review as part of the B.C. regulatory process, whereby it received all of its valid permits under the current provincial regulatory bodies.

“TransCanada will continue to respond as appropriate through the National Energy Board and believes that the facts pertaining to this project will support a strong case of continued provincial regulation of the pipeline.” In a decision Oct. 22, the NEB said it has determined that there is an arguable case that the project may form part of a federal undertaking and could be subject to regulation under the NEB Act. The board was ruling on an application from B.C. environmentalist Mike Sawyer who had asked it to declare Coastal GasLink properly under federal jurisdiction. — Daily Oil Bulletin

NOVEMBER 16, 2018

PIPELINE NEWS NORTH •

Opportunity knocks for Canadian oil FROM THE FRONT PAGE Because it has high sulphur content, Alberta crude is not suitable for some refiners. It’s not an issue for the Chinese buyers, however, Platts notes. Some of the Alberta crude China has purchased appears to be intended mostly for making asphalt. A lack of both pipeline and rail capacity has led to a recent record discount of about US$50 per barrel for Alberta oil, compared with American oil. About US$15 to US$20 of that discount can be attributed to the lesser value that is placed on heavier crudes like Alberta’s, compared with other oils, because an extra step is needed to refine it, making it costlier to refine. But about US$30 of the current discount is attributable to a lack of pipeline and rail capacity. That steep discount may now be improving the economics of Alberta oil for Asian buyers. “Arbitrage economics to import Alberta’s landlocked oil had often been difficult due to hefty transportation and logistics costs,”

Platts notes. “Asian trade sources also noted that Vancouver was an expensive port to export oil from due to strict environmental regulations for tankers. “However, with cash differentials for heavy sour Canadian grades including Cold Lake Blend and WCS [Western Canadian Select] consistently remaining at steep discounts this year, various Northeast Asian end-users have stepped up their heavy Canadian crude imports.” But even if China’s demand for Alberta oil continues to rise, there’s limited pipeline and rail capacity to get it there. The current Trans Mountain pipeline is stretched to capacity. Recently, only about 25,000 barrels per day (bpd) of heavy crude from Alberta have flowed on it, although in April it hit 88,000 bpd, according to the National Energy Board. An Aframax tanker, which can hold up to 750,000 barrels, would take several days to fill with those kinds of flows. “We’ve always thought the big-

gest limitation to exports to Asia was adequate, efficient pipeline capacity to the west coast, not that there wasn’t a market,” Birn said. “Asia as a whole is the second largest for heavy crude oil in the world.” The largest is the U.S., and there, as well, there may be an increasing demand for Canadian heavy oil, despite the shale oil boom in the country. Refineries on the U.S. Gulf Coast are configured to process heavy crude oil, with Canada, Mexico and Venezuela being some of the biggest suppliers. But Venezuela is on the verge of economic collapse, threatening its ability to continue to process and sell its oil. Oil production in Mexico, meanwhile, has been falling for years, and now the new president, Andrés Manuel López Obrador, plans to restrict oil exports and keep Mexican oil for domestic refining purposes. Meanwhile, U.S. sanctions on Iran mean an even tighter supply of heavy crude oil worldwide. It all adds up to a potentially

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increasing demand for Canadian heavy oil in both Asia and the U.S. “Venezuela is losing production – one of the fastest declines in the world – Iranian production is being tightened off by U.S. sanctions, Mexico is in a long-term decline, and then you have [López Obrador] talking down those exports as well,” Birn said. “So you could see, if I’m a refinery that has heavy [refining capacity], whether I’m in Asia or in the Gulf Coast, why I might want to look around to try to lock into something else from somewhere else. “Western Canadian production is about as stable as you get, when you look at 40-year production profiles. As a refinery, that’s the kind of production you want to lock into, because you can configure your facility to meet that production for many, many years.” — Business in Vancouver

â&#x20AC;¢ PIPELINE NEWS NORTH NOVEMBER 16, 2018

Left: Kirk Rutz slides out of the hack, hoping to draw to the button. Right: Don Gunther sweeps his heart out for Team Balon.

dillon giancola photos

The curlers stood on either side of sheet four, listening to Brad Moskalyk and Mayor Lori Ackerman kick off the 58th Oilmens Bonspiel.

NOVEMBER 16, 2018

PIPELINE NEWS NORTH •

oilmen’s bonspiel going strong with 60th anniversary on the horizon dIllon GIAnColA

Bonspiel Committee Chairman Brad Moskalyk. Brad pointed out that curling isn’t like hockey or trapshooting. Half of the men who play in the bonspiel don’t curl regularly, if at all. It makes finding curlers a challenge, but shows how much the industry workers value the event.

“There seems to be more support this year compared to last, and people were really eager to help out,” Vic said. The Moskalyks were grateful to the event sponsors, such as Pimm’s Production Equipment, Peace Country Rentals, the Fort St. John Petroleum Association, and

Northern Metallic, which continue to support the bonspiel year after year. The bonspiel was scheduled for three more days, with the finals taking place on Saturday, Nov. 17. — Pipeline News North

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When the 128 registered players gathered at the Fort St. John Curling Club to begin the 58th Oilmen’s Bonspiel on Nov. 14, they were thanked for all they do for the city and ensured that good things were still to come for Fort St. John. “We have a bright future in Fort St. John, and I want to thank you guys for your contributions to the community,” said Mayor Lori Ackerman during the opening ceremony. “Be safe; I used to skip when I was younger, and this stuff can hurt when you land on it wrong.” The bonspiel, which began in 1960, is still going strong, even though Fort St. John has and continues to change. “When this started, Fort St. John only had one TV channel, and there were only six NHL teams to watch. The boys had to do something to have fun,” said Oilmen’s Bonspiel Committee member Vic Moskalyk. Though the bonspiel had 64 teams curling just five years ago, this is the third straight year with 32 teams, and the bonspiel committee was pleased with the interest that the oilmen continue to show in the event after all this time. “We’re still able to make the event three days and show everyone a good time,” said Oilmens

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NOVEMBER 16, 2018

outlook Community players put hammer and nails to a new playhouse austin cozicar After about a year of work done mostly on weekends, the South Peace Child Development Centre has a new playhouse, thanks to the volunteer hours and donations by community members and partners. “What we find with kids now is they’re very structured in their play, so what the playhouse does for us is it opens up just a world of imagination,” says Kim Hughes-Brinsky, Executive Director of SPCDC. “They can be everything from a playhouse to a pizza parlour to an ice cream store to place to do construction or whatever. It’s just so much diversity to it, so it’s a platform for us to just create so many levels of imagination and encourages that type of play, which is absolutely what we want to embrace and encourage for kids.” Tracy Pearson, of Pinebear Playhouses, and an employee of Ascension Builders Ltd in Pouce Coupe, built the playhouse, putting in some serious time and care. “I’ve been doing this for some time, everyone of my grandkids ended up with some form of a playhouse, whether it be a pirate ship or what have you,” he says. Ascension Builders Ltd also kicked in some money, materials, and perhaps most importantly delivered the playhouse to the SPCDC playground once it was built. “I think it’s just great to be involved in the community,” says owner Jonathan Simmons. “If you can afford to give a little bit, give a little bit.” From the financial perspective, the biggest backer was ARC Resources’ annual $2,000 donation. “We like to work with anything that helps the kids, and the [SPCDC] has been in Dawson for a long time and they do good work, and we know the money stays in the community,” says Darren Rosie of ARC. — Pipeline News North

Darren Rosie, Tracy Pearson, Jonathan Simmons, and the SPCDC’s Amy Atzenberger stand in front of the new playhouse.

Dawson Creek Oilmen raise stones, give the DC Curling Club 20K austin cozicar The Dawson Creek Curling Club were the happy recipients of a $20,000 draw to the button from the Dawson Creek Oilmen’s Association. The money will hurry hard towards capital asset improvements. “We’ve got a capital asset reserve and a three to five year capital asset plan. So we offered them a couple of different options to help contribute to some of those objectives and they chose to do that, so it’s very welcome. What we’ll do is we’ll take that money, invest it right now until we do the improvements next summer,” says Curling

Club GM Jeff Ginter. “That money will either go towards improvements to our bar and kitchen and bathroom facilities, mainly upstairs, or it will aid us in developing an addition, an annex on the side of the building that was planned a year or so ago.” Ginter notes donations like these are key to the clubs’ success. “Since 2015 — I’m ballparking numbers a bit — but we’ve received probably close to I would say $900,000 in grants and donations, and without that money, we’re not able to do capital improvements, so it’s critical for what we do,” he explains. — Pipeline News North

NOVEMBER 16, 2018

PIPELINE NEWS NORTH •

Two Japanese buyers for Canadian liquefied natural gas nelson bennett The $40-billion LNG Canada project is not the only large liquefied natural gas project proposed in the world, several of which involve some of the same partners involved in the Canadian project. It’s expected final investment decisions on some of those other projects could come in 2019. But the Kitimat project is “the most competitively advantaged project” of all of them, LNG Canada CEO Andy Calitz told a group of more than 200 businessmen and women at a Greater Vancouver Board of Trade event Friday, October 26. A little over three weeks ago, Royal Dutch Shell and its four partners announced a final investment decision on the $40-billion project. One week later, Tokyo Gas and Toho-Gas announced they will be buying LNG from Mitsubishi Corp., which owns a 15% stake in the LNG Canada project, Calitz said. Mitsubishi owns some upstream natural gas assets through the Cutbank Ridge Partnership. “The significance of that moment in some ways got lost, because for the first time Canadian gas has been sold to Asia,” Calitz said. Earlier this week, on October 22, Calitz was at an industry conference in Nagoya, Japan, attended by all 44 LNG importing nations and 19 exporting nations. “The most talked about project was the project called LNG Canada here, in your British Columbia,” Calitz said. Getting the project to approval was an eight-year process that hit several hurdles, including a major downturn in oil, gas and LNG prices that put the project in a holding pattern. “Indeed, if we had known all

LNG Canada executives, from left: Calitz, Pierce, Dakers, Corbin. nelson bennett photo

the difficulties at the outset of this project, I think we might have reconsidered,” said LNG Canada’s commercial director Rob Dakers. Ultimately, Dakers said the NDP government’s decision to scrap the previously Liberal government’s special LNG taxes and approve a new “competitive tax structure” was what allowed the partners to pull the trigger and sanction the project. There has been some confusion over the LNG Canada capital costs. It wasn’t clear at first whether the $40 billion figure is for full build out of a four-train LNG plant, natural gas pipeline and upstream gas development, or the two-train project that is currently planned. Susannah Pierce, LNG Canada’s external affairs director, said the $40 billion capital cost is for a twotrain plant. Trains are the processing units that chill natural gas into liquid form. So, if the project is later expanded to four trains, that will mean a further investment of several billion dollars more.

The two-train LNG plant in Kitimat alone will cost about $18 billion. Not all of that money will be spent in B.C., however. About 65% of the total spending of $40 billion will be in Canada, Caltiz said. A good chunk of the spending outside of Canada will be for the prefabricated LNG modules, which will be built in China and Southeast Asia. In 2021, “the largest fabricated steel structures in Canadian history will arrive in Kitimat,” said LNG Canada executive project director Steve Corbin. “At that time, we will have probably in the region of about 4,000 already working on our site,” Corbin said. In addition to the Kitimat plant, $6.2 billion will be spent on the 670-kilometre Coastal GasLink pipeline, which will bring natural gas from Northeast B.C. to Kitimat. In total, the LNG Canada plant, pipeline and upstream gas development will employ 10,000 workers at peak construction.

Caltiz said he’s confident the company can find those workers in Canada without having to hire foreign temporary workers. Once the project is complete, a total of about 1,000 permanent jobs will be created. One potential hurdle that the project may still face is regulatory. Based on a jurisdictional challenge by Michael Sawyer, who also successfully challenged a pipeline associated with the now defunct Pacific NorthWest LNG projects, the National Energy Board will now consider whether or not the pipeline should have been a reviewable project. Even if it decides that the project is not reviewable, that decision could be challenged in court. Asked if LNG Canada is concerned that could delay the project, Pierce said: “This is something Coastal GasLink is looking at very closely. “With any project you never remove all risk. I believe Coastal GasLink will see it through the process and is a mitigated risk.” — Business in Vancouver

More than 21,000 oil cars set to be made obsolete in November nelson bennett The discount on Canadian crude oil hit a record last week – about US$50 per barrel – due in part to severe pipeline constraints that have forced more oil to move by rail. In July, a record 206,624 barrels per day of Canadian oil was shipped by rail to American refineries. Now, even that option could be severely crimped, thanks to accelerated Canadian railcar safety regulations and a unilateral move by the BNSF Railway in the U.S. that could

potentially take a significant number of oil cars off the tracks. All major oil pipeline expansions in Canada and the U.S. have faced regulatory delays: the Trans Mountain pipeline expansion, the Keystone XL and Line 3. That has forced more oil to move by rail, which is more expensive and, in some cases, more hazardous than moving it via pipelines. The 2013 Lac-Mégantic explosion that killed 42 people underscored that danger, although in that case, the oil cars were carrying Bakken

shale oil, which contains explosive methane gases, unlike the heavier crude that Alberta produces. To address safety concerns arising from oil shipped by rail, Transport Canada has ordered some 21,367 “unjacketed” oil cars to be retired as of November 1. That alone could decrease capacity to move oil by rail and exacerbate the already steep discount for Canadian oil. “It is significant, because you know what kind of volumes are moving right now,” said Brad Her-

ald, vice-president of Western Canadian operations for the Canadian Association of Petroleum Producers. “So any car, I think, that comes out of service right now is a concern for the industry.” Transport Canada and U.S. regulators have accelerated the phase-out of older unjacketed railcars. They were to be phased out 17 months from now but are now scheduled for retirement November 1. — Business in Vancouver

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Kikinaw awarded for outstanding business achievement matt preprost Fort St. John’s Kikinaw Energy Services has been recognized for outstanding business achievement at the 2018 BC Indigenous Business Awards. Awards were handed out at a gala ceremony Oct. 15 at the Fairmont Hotel Vancouver, where more than 650 people gathered to honour excellence in Indigenous business in British Columbia. “It’s not my award, it’s the company’s award,” said company president Kory Wood, a member of Saulteau First Nation. “There’s a lot of people behind the scenes who have helped us grow and develop.” Kikinaw means “our home” in Cree, and with a background in electrical instrumentation Wood incoporated the business in 2014 shortly after he started work as a contractor for the Willow Creek mine. From there, the company was knocking on the doors of wind companies in Chetwynd and Tumbler Ridge, and over the last four years Kikinaw has grown its national profile, working on projects in B.C., Alberta, Newfoundland, New Brunswick, and Ontario. Today, wind energy maintenance and construction makes up 55 per cent of Kikinaw’s business, and Wood hires out of Northern Lights College’s wind turbine maintenance program in Dawson

Kory Wood of Kikinaw Energy Services at the 2018 BC Indigenous Business Awards. Facebook/kikinawenergyservices

Creek. The company has held steady electrical work at Site C since August 2015, and with the $40-billion LNG Canada project on the horizon, the company is turning its focus to growing its oil and gas portfolio, Wood said. Kikinaw employs 33 people today, and Wood says his business would have “stopped in its tracks” if he didn’t have good employees under his wing. The company invests around $10,000 a year in community spon-

sorships, from minor hockey in Chetwynd, to free golf for youth at Lone Wolf in Taylor, to the Tse’K’Wa Heritage Society in Charlie Lake, to a youth entrepreneurship camp at the Northeast Aboriginal Business Centre, and much more. Wood is working on a Master of Business Administration degree from Athabasca University to develop the business and take advantage of emerging opportunities, but he’s cautious about growing too big. “I never want this business to

be outside my ability to have a relationship with everybody in our business,” Wood said. “We’re still a young company and we’re still improving. We’re still constantly looking within and saying how could we provide better service? How can we be a better employer? How can we develop more careers? We’re always trying to find ways of getting better.” — Pipeline News North

B.C. to review competitiveness of upstream industry Richard Macedo The B.C. government will be conducting a competitiveness review of its upstream industry, according to Dave Nikolejsin, B.C.’s deputy minister of Energy, Mines and Petroleum Resources. He noted this during a B.C. government update at a Canadian Association for Unconventional Resources (CSUR) event on Friday, Nov. 2. “We are going to be back to the whole competitiveness exercise and understanding how those things play against each other, how

our different actions are affecting competitiveness with what we’re doing with our own environmental legislation, or royalty programs or whatever that might be,” he said. “We’re going to be launching a total review of the upstream competitiveness space. “We’ve done this before historically, we’re going to do it again. We’re going to school that up and try to really understand those dynamics and work with you all in the producer community and others around how to square that circle and make sure that we maintain competitiveness while we pay attention to this

brand that we’re trying to develop.” Nikolejsin later added: “Part of what’s happening is, it’s not just things like carbon taxes that are affecting competitiveness. “Everything, from what we’re doing with our environmental assessment, we’ve got all this stuff we’re doing with UNDRIP … and other things, then you’ve got labour code changes coming. “You start to stack them up, and which straw breaks the camel’s back? That’s what I want to know.” Ines Piccinino, assistant deputy minister in the oil and gas division, said the upstream review will be

done in 2019. “Every two years, we do an internal competitiveness report,” she told the CSUR event. “We still don’t know how we’re going to do it; we’re discussing it internally. “At the end of the day, we’d like to look at the world through your eyes in terms of seeing all of the stuff that you see happening to you in terms of government initiatives and how there are accumulation impacts [to the] competitiveness of the upstream.” — Daily Oil Bulletin

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Conuma Coal pays it forward More than 40 Conuma employees recently boarded a plane and flew to Bolivia – they were there to help 73 children in two orphanage. Conuma employees helped construct projects, learn new life skills and help the kids build their confidence. Employees brought clothes, shoes, toys, and other items. “The response has been overwhelming – not only from our employees but our local communities who have also joined in by sponsoring a child – It is awesome to see the gift of love shared across borders,” says Mark Bartkoski – Conuma President. “Our team’s hard work to build security is not only a benefit to their families, - but a legacy of paying it forward is developed.” Conuma recently reached it’s two year anniversary and now employs more than 800 people and have three projects in northern BC. — Pipeline News North

Fort St. John to host BC Geophysical Symposium Fort St. John has been announced as the host city of the 2019 BC Geophysical Symposium. The day-long event goes June 19, 2019. The Alberta symposium will be hosted by Red Deer. — Pipeline News North

Husky adds $100M to Deep Basin, Montney program Husky Energy is accelerating spending on drilling in the Deep Basin and Montney plays while slowing primary heavy oil production. The shift is tied to the current blowout in the light-heavy oil differential, executives said last week. Husky has increased its capital spending guidance by $200 million, $100 million of which will be directed to increased drilling in Western Canada and $100 million will be spent in the Asia Pacific region. In the Deep Basin, “an accelerated drilling program that was increased from an 18 to a 25-well program in the Ansell and Kakwa areas of the Wilrich formation is progressing, with 15 wells drilled and 13 completed,” Husky said in its third quarter results. “In the oil and liquids-rich Montney formation, four wells have been drilled as part of a 2018 program of up to eight wells, primarily in the Wembley and Karr areas. Three have been completed.” — JWN Energy

Conuma employees recently boarded a plane and flew to Bolivia – they were there to help 73 children in two orphanages.

Encana boosts liquids production in the Montney Encana Corporation boosted total production during the third quarter to 378,200 barrels of oil equivalent per day, up 33 per cent from 284,000 boe/d a year ago, with major increases in Permian and Montney volumes. Montney liquids volumes were up 151 per cent year-over-year and are on track with a fourth quarter target of 55,000 to 65,000 barrels per day. Current liquids production from the play is about 55,000 bbls/d. Total Montney production lifted to 200,600 boe/d in the third quarter compared to 111,300 boe/d in the comparable quarter a year ago. The company brought the Pipestone Liquids Hub online in September, ahead of schedule, supporting condensate growth plan. It also lowered Pipestone drilling and completion costs by 25 per cent compared to 2017 averages. Duvernay production during Q3 declined to 15,900 boe/d from 20,700 boe/d a year ago. Year-to-date, Duvernay output has averaged 16,600 boe/d compared to 19,500 boe/d in the first nine months of 2017 Total production from the Permian rose 54 per cent year-over-year to 98,500 boe/d, with current production over 100,000 boe/d. Overall, total liquids production of 178,700 bbls/d during the quarter was up 40 per cent year-over-year, and 15 per cent from the previous quarter (Q2/2018: 155,300 boe/d). The company said liquids made up 47 per cent

of total third quarter production and 46 per cent year-to-date, with high-value oil and condensate making up more than 75 per cent of total liquids volumes. The company reported Q3 net earnings of $39 million, while cash from operating activities lifted to $885 million, up 148 per cent year-over-year. Encana has adjusted its corporate guidance, lowering its expected transportation and processing costs to between $7.20 and $7.40 per boe for a reduction of about $25 million. — JWN Energy

Imperial reduces Montney, Duvernay plans Imperial Oil is putting its focus into its oilsands assets. The company announced it is reducing growth plans in the Montney and Duvernay following its decision to proceed with the $2.6-billion Aspen in situ project. “With Aspen sanctioned, Imperial has elected to pare back its Montney/Duvernay program versus the initial plans presented at last year’s investor day,” analysts with Peters & Co. wrote after the company’s 2018 investor day. “Imperial now expects the program to reach ~20,000 boe/d in 2020 (potentially reaching 30,000 boe/d in 2023), which is roughly 50 percent below last year’s plans to reach 30,000 to 50,000 boe/d in 2020.” Imperial plans to spend $1.0 billion to $1.1 billion in growth capital annually over the next five years, which will be primarily directed to Aspen and to increasing production at the company’s Kearl oilsands mine. — JWN Energy

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New LNG plant in Washington must use B.C. gas nelson bennett A new liquefied natural gas plant proposed for Tacoma, Washington, will result in a net reduction of greenhouse gases for Washington State, but only if the natural gas that supplies it comes from B.C. That’s the recommendation of the Puget Sound Clean Air Agency in a supplemental environmental assessment for the Tacoma Liquefied Natural Gas Facility. The LNG plant would not be exporting LNG. Rather, the LNG it would produce would be used as an alternative fuel for marine vessels and trucks. It would also provide backup supplies of natural gas – a need that was dramatically underscored recently with the explosion of an Enbridge natural gas pipeline that has reduced flows of natural gas to both B.C. and Washington State. Enbridge confirmed today, October 31, that a 36-inch pipeline that was ruptured has been repaired and is now being brought back into service. Because the LNG that the plant would produce would replace other fuels, like diesel, there would be a net benefit in terms of lower GHGs. “The use of LNG produced by the Proposed Action, instead of petroleum-based fuels for marine vessels, trucks, and peak shaving is predicted to result in an overall decrease in GHG emissions in the Puget Sound region,” the agency concludes in a report. “The conclusion regarding the overall reductions in GHG emissions stated above is dependent upon the assumption that the sole source of natural gas supply to the facility is from British Columbia.” The biggest concern with the project, from a climate change perspective, is upstream emissions from natural gas production. The agency cites tighter controls on upstream emissions in Northeast B.C. for producing gas that has a lower emissions profile than gas produced in the U.S. A life-cycle analysis suggests that natural gas sourced from the U.S. could have emissions that are five to eight times higher than natural gas from B.C. “The life-cycle analysis report indicates that GHG emission factors for natural gas production in the United States may be as much as five times higher than those for Canada,” the agency states. It adds that recent research has suggested it may even be as much as eight times higher. One of the reasons cited for the lower emissions profile is the tighter regulations for drilling and natural gas processing in B.C. “British Columbia has adopted comprehensive drilling and production regulations that are intended to reduce methane emissions,” the agency states. It adds that new federal regulations are forthcoming as well. The natural gas for the plant would be transported from B.C. via the Duke Energy Westcoast Pipeline. — Business in Vancouver

Joel Chartrand of Tidy Trucking Ltd (Fort St. John) at Sunset Water Hub in Groundbirch. Austin cozicar photo

Eyeing Duvernay growth, Chevron adds to Pembina midstream deals Chevron Canada is expanding the commercial development program on its Duvernay leases in west-central Alberta. The company says it has executed agreements with Pembina Pipeline Corporation for additional midstream services to the deals it announced one year ago. These agreements will increase the gross midstream capacity for Chevron’s Duvernay development to 200 million cubic feet per day of natural gas, 10,000 bbls/d of propane-plus liquids and 50,000 bbls/d of condensate. Chevron announced it was moving ahead with commercial development on its Duvernay shale acreage in November 2017, six years after commencing exploration activities in the play. The company says the Duvernay is “considered one of the most promising shale opportunities on the continent.” The company shares its Duvernay interests with KUFPEC Canada, a subsidiary of Kuwait Foreign Petroleum Exploration Company. “This expanded midstream infrastructure will provide additional capacity to meet our growing gas-processing and liquids-handling needs in the Duvernay,” Chevron Canada president Frank Cassulo said in a statement. — JWN Energy

Horizon North starts executing LNG Canada strategy Horizon North Logistics has started executing its west coast LNG strategy, following the recent sanction of the $40 billion LNG Canada project. The company says it will install an initial 200 beds of a potential 1,000 bed open camp facility, and develop commercial and residential modular offerings on its land in Kitimat, British Columbia. The Calgary-based provider of modular construction and industrial services closed a $50 million equity financing in summer 2018, half of which was earmarked to pay down debt in order to “take advantage of opportunities associated with new LNG projects in Western Canada,” the company said. Analysts with Peters & Co. Limited believe that Horizon North is pursuing “a broader scope of opportunities” related to the project. This includes the custom sale of a part of the LNG Canada main construction camp; catering and operations contracts for the camp; the construction and custom sale of modular residential housing in Kitimat; and the redeployment of rental beds to support construction of the related Coastal GasLink Pipeline. “In aggregate, we estimate the first phase of the LNG Canada project represents $80 million to $115 million of EBITDA opportunity for Horizon North through 2023,” Peters & Co. said in a note last week. — JWN Energy

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