APRIL / MAY 2017
PIPELINENEWSNORTH.CA
PIPELINE NEWS NORTH VOL. 9 ISSUE 4 DIST: 11,600
SERVING THE OIL & GAS INDUSTRY IN NORTHERN B.C. AND ALBERTA
FREE!
KT Energy celebrates OGC approval of $18-million LNG plant planned for the Northern Rockies; land sales show positive signs in early 2017; Zimmer slams federal plans to cut exploration incentives; Clark promises more Montney oil development; and Fort St. John Oilmen hit the ice to end the hockey season
Professional Survey, Geomatics and Mapping Services for Grande Prairie, Peace Country, and Beyond! John Haggerty, ALS, BCLS, CLS, P.Eng. and the rest of Challenger’s local team look forward to serving you from our new branch office, now open in Grande Prairie.
105, 10126 – 117 Ave, Grande Prairie, AB T8V 7S4 Tel: 780-833-4156 | Fax: 780-833-4159
www.challengergeomatics.com
2
• PIPELINE NEWS NORTH
APRIL 21, 2017
FORT ST. JOHN
PETROLEUM ASSOCIATION
8th Annual Couples Tournament
June 3 2017 Lakepoint Golf Course Cost: $100 per couple ( 18 holes golf, meal, and prizes ) To enter: Contact Bruce Craig at (250) 793-0000 or email brucekathy2013@gmail.com
55th Annual FSJ Petroleum Association Golf Tournament June 7 - 10 2017 entry form is now available - visit www. fsjpetroleumassociation.com
today!!
June 15
SAVE THE DATES:
June Golf Meeting @ 6:30 pm - 9:00 pm Lakepoint Golf on Country Club
July 8
FSJ Oilmen’s Trap Shoot - North Peace Rod & Gun Club
APRIL 21, 2017
PIPELINE NEWS NORTH •
OUTLOOK
3
Art Jarvis speaks at a networking event April 6 at London Bull pub in Fort St. John, part of a celebration of the merger of Energy Services BC and the Independent Contractors and Businesses Association of BC. MATT PREPROST PHOTO
Saguaro ready to accelerate Montney drilling activity Private junior Saguaro Resources says that with a new $50 million financing and recently expanded credit facility, it is fully funded and ready to accelerate Montney drilling this year. However, the company will be proceeding cautiously and watching markets, says CEO Stacy Knull. “We’re feathering the brakes, but hitting the accelerator at the same time and just easing into it this year,” Knull said. “Our high free condensate yield and low drilling and completion costs provide very attractive economics at current strip prices.” Saguaro’s 2017 capital program will include drilling 28 wells, 24 of which will come onstream in 2017 and the balance will be fracked in 2018. The company, which exited 2016 with 12,000 boe/d from 32 wells, will also invest in an expansion of its processing facility to 100 mmcf/d. In 2017, the company expects to exit with 15,000 to 16,000 boe/d. By the end of 2018, it wants to bump that up to 24,000 to 25,000 boe/d. In a play that is largely dominated
by public companies such as Encana, Progress Energy, Seven Generations, where wells typically cost $10 million to drill, complete and tie, it can be a bit of a stretch for junior producers. But, as a private company, Saguaro has flexibility on how to develop its assets and how fast, Knull says. More importantly, its assets are in less costly, shallower part of the Montney. “Our wells take 11 or 12 days to drill. We are about $2 million dollars to $2.2 million to drill. We’re completing them for under $2.5 million. So they end up somewhere in the range of $4.5 million $5 million to drill and complete each well, which is kind of unheard of in the Montney,” Knull said. Even through the last two years of the downturn, Knull cites “very positive” half cycle economics— over 30 per cent rates of return. In the current commodity price environment, those rates of return have climbed to between 40 and 90 per cent (based on strip prices, without escalation, half cycle). CONTINUED ON PAGE 5
OVER
OF
S E RV IC
E
LAND / REGULATORY ENVIRONMENTAL ARCHAEOLOGY GIS ANALYSIS & MAPPING UAV AND REMOTE SENSING
TERRACE FORT ST. JOHN PRINCE GEORGE FAIRVIEW
www.roynorthern.com
4
• PIPELINE NEWS NORTH
APRIL 21, 2017
#oilsands
PNN MISSION STATEMENT Our mission at Pipeline News North is to provide the most 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.
WILLIAM JULIAN REGIONAL MANAGER 250-785-5631 wjulian@ pipelinenewsnorth.ca
FILE PHOTO
A video screenshot of KT Energy’s proposed mini LNG modular plant system.
OGC greenlights KT Energy’s Fort Nelson LNG plant plans
MATT PREPROST MANAGING EDITOR 250-785-5631 C: 250-271-0724 editor@ ahnfsj.ca
MATT PREPROST editor@ahnfsj.ca
RYAN WALLACE ADVERTISING MANAGER 250-785-5631 C: 250-261-1143 rwallace@ ahnfsj.ca
CONTACT US Phone (250) 785-5631 Fax (250) 785-3522
www.pipelinenewsnorth.ca BILLING: Lisa Smith - Accounting Manager 250-562-2441 ext 352 Fax:250-960-2762 accounting@ pipelinenewsnorth.ca
Plans for an estimated $18-million liquefied natural gas plant near Fort Nelson have received regulatory approval. The BC Oil and Gas Commission granted KT Energy a LNG facility permit in March to build and operate its proposed Fort Nelson LNG Plant, expected to start construction next year. “It is an important step in moving forward on an exciting project that will be good for the economy of B.C. and the North, and for our company,” KT Energy CEO Betty Cheng said in an announcement on April 20. The facility, in development since 2015, would be located in the Maxhamish area 130 kilometres northwest of Fort Nelson. It will have an initial capacity of 20,000 gallons of LNG per day, according to the company. Because the existing natural gas pipeline network ends in Fort Nelson, the company views Fort Nelson as a “gateway” for a long-haul LNG supply for northern B.C., the Northwest Territories, the Yukon, and Alaska. The Alaska Highway and Highway 77 would serve as a “virtual pipeline” to supply natural gas to off-grid communities and industrial and commercial users looking to replace fuels such as diesel with a more economic and environmentally friendly option. “Natural gas is a more environmentally friendly and economic source of energy than the
liquid petroleum products it would supplement and replace,” the company noted in an announcement. The company says it will manufacture and supply the modular LNG processing equipment for the plant, equipment it says has already been proven in China, where it operates eight similar facilities. The company hopes to start site preparation and construction next summer, according to Cheng. On-site installation and construction is expected to take one to two months, with the plant scheduled to come online in late 2018. Any subsequent expansions would be tailored to market conditions. The facility would employ around eight workers, Cheng said, adding the company prefers to hire locally. However, the company still needs to secure offtake agreements for the gas. But it has established contacts with potential customers, Cheng said. “We are willing to develop the LNG supply chain with partners to stimulate and accelerate the adoption of LNG, making it a preferred option,” Cheng said. KT Energy, based in Vancouver, is a member of Kai Tian Energy Group, a group of companies in China and Canada that has been in the natural gas sector since 2002, according to the company’s website. KT Energy says it plans to build several “mini LNG modular plants” to meet Canadian domestic demand. The Fort Nelson plant would be its first.
APRIL 21, 2017
PIPELINE NEWS NORTH •
OPERATIONS
5
Cenovus to double production and reserves in Canada
Cenovus President & CEO Brian Ferguson: “This transformational acquisition allows us to take full control of our best-inclass oil sands projects.”
January 1, 2017. Concurrent with the acquisition, Cenovus has launched a bought-deal offering of common shares for expected gross proceeds of approximately $3 billion. The bought-deal offering is detailed in a separate news release issued by Cenovus. “This transformational acquisition allows us to take full control of our best-in-class oil sands projects and to add a second growth platform across the prolific Deep Basin that provides
Saguaro being built for initial public offering FROM PAGE 3 “It’s liquids-rich Montney. Our production is 70 per cent gas and 30 per cent liquids, but the revenue ratio is a lot better. We’re actually a balanced company on a revenue basis because 50 per cent comes from liquids and 50 per cent comes from gas,” Knull said. Saguaro also doesn’t have to be obsessed with quarterly results, as some public companies are, he adds. It can focus on building for the long run, continually experimenting with frack design, increasing the tonnes of sand per meter and other technology tweaks. “Every well that we have fracked out of the 32 that we have on production, we have changed something on the fracking side. We either went to tighter spacing, or more sand, or different mediums—whether that was an energized frack or a full slickwater frack—how fast we pumped... So we’re always pulling one lever
every time we do something to see if it helps and we’ll continue to do that for our 1500-well inventory,” Knull says. Like Seven Generations, which was a private equity-backed company that quietly went about its business in the Montney before going public at the end of 2014—Saguaro is being built for a potential IPO. “We’re still pretty young and we’re not pressured for a liquidity event. We’ve set the company up with good governance. It’s in a good play with lots of economic locations. We’re pretty much selffunding with our debt and cash flow for a full development plan, which could take us to 140,000 bbl/d and hold flat for 10 years,” Knull says. “So I think this company would compete very well for capital in the public markets. But we’re not quite there yet. But we’re always for sale.” —JWN Energy
complementary short-cycle development opportunities,” said Brian Ferguson, Cenovus President & Chief Executive Officer. “The acquisition is accretive and significantly increases Cenovus’s growth potential. Going forward, we plan to focus capital spending on these two value platforms. At the same time, we intend to divest a significant portion of our legacy conventional assets to help fund the transaction.” —PNN
ACUWELL Chinese Medicine & Acupuncture Clinic
Direct insuarnce billing
Ask About
Specials • Acute / Chronic Pain Management • Stress Management • Hormonal Testing • Food Allergy Testing • Fertility treatments for men and women R0011391368
Cenovus Energy Inc. has agreed to acquire ConocoPhillips’ 50 per cent interest in the FCCL Partnership, the companies’ jointly owned oil sands venture operated by Cenovus. Cenovus is also purchasing the majority of ConocoPhillips’ Deep Basin conventional assets in Alberta and British Columbia. Combined, these assets have forecast 2017 production of approximately 298,000 barrels of oil equivalent per day (BOE/d). The acquisition is immediately accretive to key metrics, and, assuming the successful completion of a planned divestiture program, is expected to result in an 18 per cent increase in 2018 adjusted funds flow per share compared with Cenovus’s original 2018 forecast. Total consideration for the purchase is $17.7 billion, including $14.1 billion in cash and 208 million Cenovus common shares. The cash component is fully financed with a portion of cash on hand, existing credit facility capacity and committed bridge loans. As part of the transaction, Cenovus has also agreed, in certain circumstances, to make contingent payments to ConocoPhillips. The transaction is expected to close in the second quarter of 2017, subject to customary conditions, including the receipt of necessary regulatory approvals, and has an effective date of
250.264.2322
11307 89A Street, Fort St. John, BC V1J 0E5 www.acuwell-alt.com
6
• PIPELINE NEWS NORTH
APRIL 21, 2017
LNG
Seaspan Ferries recently took delivery of its second LNG-powered ferry.
Use of LNG as transportation fuel accelerates in B.C. Natural gas share of ship, vehicle fuel market to increase to 11% from 3% by 2040, EIA says NELSON BENNETT nbennett@biv.com
It may be a few years yet before any company starts exporting liquefied natural gas from B.C. to Asia. Meanwhile, B.C. producers are finding a small but growing domestic market for natural gas, in the form of liquefied natural gas (LNG) and compressed natural gas (CNG), in the trucking and marine transportation sectors. Last month, BC Ferries received its second purpose-built LNG ferry from Poland. That brings to four the number of LNG-powered ferries that will soon be operating in B.C. waters. Two belong to BC Ferries, two to Seaspan Ferries Corp. One more purpose-built intermediate-class LNG ferry is still being built, and BC Ferries also plans to retrofit two Spirit-class vessels to run on LNG. Meanwhile, more trucking fleets and public transit authorities, including TransLink, have also been making the switch from diesel to natural gas when they replace buses. That’s a big benefit for Westport Fuel Systems, which has supplied the natural gas engines for those
buses. BC Transit now has 74 buses in B.C. running on compressed natural gas, and another 46 are expected to be on the road by 2018. TransLink has 45 CNG buses on the road, and another 51 are expected to arrive by the end of this year. Thanks to a surplus of new LNG plants, there is a glut of LNG on the market, which has historically been used mostly for thermal power generation. But thanks to their low costs and low carbon emissions, natural gas and LNG are starting to replace gasoline and diesel as transportation fuels. As of 2012, natural gas accounted for just 3% of the world’s transportation fuel, according to the U.S. Energy Information Administration (EIA), which estimates that share will grow to 11% by 2040. The B.C. government is encouraging natural gas utilities like FortisBC and Pacific Northern Gas, which serves northern B.C., to try to develop these new domestic markets for LNG and CNG in transportation. It recently amended its greenhouse gas reduction regulations to allow utilities to
offer more incentives to the marine sector to convert vessels to LNG and invest in LNG fuel storage and in new sources of renewable natural gas. “We’re working with utilities to stimulate the use of LNG as a marine fuel in large, ocean-going ships, and to increase the supply and use of renewable natural gas,” said Energy and Mines Minister Bill Bennett. The only company producing LNG for the marine sector in B.C. is FortisBC, which will complete the $400 million expansion of its Tilbury Island liquefaction plant this year. The existing plant has been used to make and store LNG for periods when pipeline gas supplies are overtaxed or interrupted. The expansion underway is intended to produce LNG for marine transportation and to supply remote communities, like Whitehorse, which uses it for thermal power production. Private trucking firms like Vedder Transport Ltd., Arrow Transportation Systems Inc. and Denwill Enterprises also buy LNG from FortisBC for their fleets of LNG trucks. Vedder trucks use engines developed by Vancouver’s Westport Fuel Systems.
Most of the ships converting to LNG are ferries and other shorthaul vessels. But even cruise ships and container ships are beginning to make the switch. According to Cruise Industry News, 10 new LNGpowered cruise ships are on order for delivery in 2017 alone, and another 15 are due in 2018. Meanwhile, TOTE Maritime, which runs container ships between Washington state and Alaska, recently took delivery of its second LNG-powered container ship. FortisBC hopes to capitalize on new international regulations that will likely accelerate the trend of ocean-going vessels converting from bunker fuel to LNG. Starting in 2020, the International Maritime Organization will require the international shipping industry to reduce sulphur emissions, which means large ocean-going vessels will either need to be outfitted with scrubbers, or switch to low-sulphur fuels like LNG and methanol. “There’s kind of a worldwide push on this,” said Doug Stout, vicepresident of market development and external relations for FortisBC. —Business in Vancouver
APRIL 21, 2017
PIPELINE NEWS NORTH •
LNG
Huu-ay-aht gives approval to Sarita LNG On March 25, Huu-ay-aht First Nations citizens voted 70 per cent in support of a co-management development arrangement for the proposed Sarita LNG Project with Steelhead LNG. The proposed LNG facility also received unanimous support of Huu-ay-aht’s Ḥaw̓iiḥ Council (Hereditary Chiefs) and elected Executive Council. “The people have spoken. We can move forward and take the people’s message to the world, showing them what world-leading means. The people’s vote will give the project business certainty to take it to the next stage,” said Chief Councillor Robert J. Dennis, Sr. “Our co-management arrangement for this project is ground breaking and, by approving such a world-leading approach, Huu-ay-aht is continuing to be a leader among First Nations.” The Huu-ay-aht citizen approval marks one of the earliest points in project development at which a
traditional territory on the west coast of Vancouver Island. “This is a first in B.C. and Canada, and creates a significant degree of certainty early in the project for not only Huu-ay-aht and Steelhead LNG, but also for government, investors and customers,” Steelhead LNG CEO Nigel Kuzemko said. The Sarita LNG facility is in the preliminary engineering and conceptual design stage. The National Energy Board has granted Steelhead LNG four licenses to export in the aggregate of 24 million tonnes of LNG per year for 25 years from Sarita Bay. The natural gas to supply the facility would be sourced from Canadian producers in northeastern BC and northwestern Alberta, and transported to Steelhead LNG’s facilities via pipeline.
STEELHEADLNG.COM
Proposed LNG facility site at Sarita Bay on Vancouver Island.
First Nation community has voted to approve an LNG export facility or pipeline project in B.C. The vote means that Huu-ay-
7
aht and Steelhead LNG will move forward with a co-management relationship to develop the proposed facility on Huu-ay-aht
—PNN
Matcon Environmental Ltd., an environmental and construction service company based in British Columbia, has been awarded the pre-construction contract for the Woodfibre LNG project. The contract relates to site cleanup before construction on the facility can begin, and covers site remediation through the removal of industrial debris from the area, which is a former pulp mill site. Up to 25 workers will be required to remove the pulp warehouse and
creosote pilings. Woodfibre has not yet awarded contracts for the project’s engineering, procurement and construction, but said this will be done by the end of the year. Pacific Oil & Gas Limited, Woodfibre’s parent company,made the final investment decision on the $1.6 billion LNG project in November. It will be the first LNG plant to be built in the province that will export B.C. natural gas to Asia. —Business in Vancouver
Petronas may consider Shell site Malaysia’s Petroliam Nasional Bhd may be looking at building a liquefied natural gas export terminal in northwestern Canada on the site of an abandoned Royal Dutch Shell plc energy project, according to the company’s chief executive officer. While Petronas, as the stateowned company is known, has yet to make a financial decision to move forward with its Pacific NorthWest LNG project in British Columbia, Shell’s Ridley Island site “could be one of the options” for a location for the complex, CEO Wan
Zulkiflee Wan Ariffin said. Shell said March 10 that it had dropped an LNG project on Ridley Island, acquired as part of its merger with BG Group. The island is next to the islet where PETRONAS proposed its own terminal. PETRONAS had already been looking at moving the project’s docking facilities to Ridley in a modification that would help to both quell local opposition and potentially save as much as $1 billion by eliminating the need for a bridge over a sensitive marine area. —Bloomberg
R0011404054
B.C. company gets Woodfibre LNG pre-construction contract
Effective January 1st, 2017
Patch Point/ Big Country Energy Services &
Pacer Corporation amalgamated to form MasTec Canada Inc. Our expanded services now include: Pipeline Construction Facility Construction Civil and Concrete Industrial Buildings Pilings and Foundation
ENERGY AND INDUSTRIAL CONSTRUCTION MasTecCanada.com
8
• PIPELINE NEWS NORTH
APRIL 21, 2017
ELECTION
BC Liberal leader Christy Clark speaks with reporters in Dawson Creek on April 18.
BC Liberal leader Clark wants to see more Montney oil production There are 10.5 billion barrels of light oil in the Montney basin and BC Liberal leader Christy Clark says she wants to tap into that resource if re-elected next month,. Clark made a campaign stop in Fort St. John and Dawson Creek April 18 to highlight her plan for continued development of the region’s resources, including oil, gas, and hydroelectricity. Clark is proposing a new oil, deepwell royalty credit for developing oil resources in the Montney Basin. “It’s really a high quality product, and there’s huge interest in it,” Clark said. “What my government will do is build a royalty regime that works so we can start getting the oil patch going up here too.” The BC Liberal platform is also calling for 50 per cent of new oil revenues tapped from development would be placed in the province’s Prosperity Fund, in which the Liberals have already put $500 million due to slower
than expected take off of a liquefied natural gas industry. “For the oil revenues, we want to make sure half of that goes into the Prosperity Fund because those non-renewable resources are non renewable,” she said. “Once we extract them and sell them, there’s a limited supply left for our kids. Let’s put the money aside for them that we earn from it, or at least half of it.” Clark took a swipe at the BC NDP platform, which plans to draw on what it calls the Liberal’s “fantasy” Prosperity Fund to help pay for some of its election promises, including to pay for eliminating bridge tolls in the Lower Mainland. The NDP platform mentions oil only once, noting it will review provincial subsidies. It also calls for a scientific review panel to ensure natural gas extracted in Northeast B.C. is produced safely and to study the impacts of hydraulic fracturing on seismic activity and water
quality. The NDP calls LNG a “significant opportunity” for the province, but says the industry must meet certain conditions, including B.C. jobs and training benefits, partnerships with First Nations, and completing a “madein-B.C.” environmental assessment, among others. Clark admitted developing the industry has taken longer to materialize than she wanted, but says the party remains committed to its development. “We are not giving up on this region, we are not giving up on the gas patch, and we are not giving up on LNG,” she said. “The market has been slow, but we all know the market will improve. We are literally sitting on a gold mine here so let’s make sure we are ready when the markets improve. —Pipeline News North
APRIL 21, 2017
PIPELINE NEWS NORTH •
ELECTION
9
BC NDP win would spell ‘infinite deferral’ or cancellation of LNG projects: analysts
B.C. opposition leader John Horgan.
hands to the NDP, we think there is a very real possibility
that the new government would look at re-evaluating the Liberal
party’s policies surrounding environmental and tax issues for LNG, creating a new layer of uncertainty for such projects. “If this outcome does take place, then we feel this will only push some, or all, of the pending projects in B.C. to cancellation or indefinite deferral well into the next decade.” While the global LNG market is currently drifting towards oversupply, GMP FirstEnergy and other analysts expect that tightening between supply and demand is coming in the near future. “Additional supply capacity is going to be needed within the next five to six years to prevent a supply crunch early in the next decade. As such, that means that supply players and countries need to begin to assess the real possibility of sanctioning new supply within the next 12 to 18 months.” Right now there is no nation in the world that is more rapidly embarking on LNG export capacity adds than the United States, the analysts wrote, which is positioned to grow from less than 2 bcf/d in 2016 to more than 10 bcf/d in 2020. —JWN Energy
Competitive, genuine
Perkins keep your engine running
efficiently and effectively 11115 - 100 Avenue, Grande Prairie, AB T8V 3J9
780-532-5900 780-532-5900
1.888.532.5900 www.gprindustries.com
Dealer
R0011406376
Proponents of Canadian LNG projects have between 12 to 18 months to capitalize on the “rapidly shrinking window of opportunity” to serve the second wave of global demand growth, but prospects could all but slam to a halt after May 9. That’s the date of British Columbia’s provincial election, where the main race has Opposition NDP leader John Horgan facing off against current Liberal Premier Christy Clark. Right now the election is a cloud of uncertainty for LNG proponents, according analysts with GMP FirstEnergy, because although the two parties have clear approaches to development, there isn’t a clear line of sight to who will win. “It is unclear whether the Liberal or NDP parties will form the next government. If the Liberals are returned to power, we expect that there would be little change to existing policies and tax structure surrounding LNG, creating additional investment certainty for project proponents,” GMP FirstEnergy wrote in a research note issued on March 29. “If the governing party changes
10
• PIPELINE NEWS NORTH
APRIL 21, 2017
OILMEN’S HOCKEY
MATT PREPROST PHOTOS
Cabre Oilfield vs. Ditmarsia. It took Cabre Oilfield 11 rounds of shootout to snap a 2-2 tie at the end of regulation, beating Ditmarsia 3-2 in the Jiffy Lube Game.
Wide open leads and tight shootouts at 14th annual Oilmen’s hockey tourney MATT PREPROST editor@ahnfsj.ca
Another year, another set of engravings for the trophies at the Fort St. John Oilmen’s Hockey Tournament. The 14th annual four-on-four event wound down with a handful of wide-open leads and an 11-round shootout to cap off three days of hockey action Saturday, April 8, at the North Peace Arena. Tom’s Construction skated away with a convincing 8-3 win over Northern Vac Services in the Petroleum Club game to take the tournament’s title trophy. It’s the first time the company will see its name engraved on the trophy since joining the tournament four years ago. “It’s awesome, it’s a great feeling,” company owner Tom Fisher said. “Winning’s always fun.” A long-time member of the Fort St. John Petroleum Association, Fisher said he waited a long time to get a company team in the tournament. He chalked up this year’s win to a strong draw of the 110 players who registered for
the event. “A real good mixed bag of guys, every field of industry. We got a fireman, we got equipment operators, oilfield operators, and obviously construction,” he said. “A really, really good bunch of guys. We meshed really well together.” Cabre Oilfield took home a nail-biting 3-2 win over Ditmarsia in the Jiffy Lube Game after 11 rounds of shootout, with Todd Alexander going top shelf for the game’s winning goal. Fort Motors took a close 8-6 win over Distribution Now in the Baker Hughes Game. CPS won 6-3 over Magnum Oilfield in the Sexsmith Financial Game, and TCL beat D+D Insulators 9-5 in the D&T Disposal Game. Former Vancouver Canucks goaltender Kirk McLean was the tournament’s special guest and though he wasn’t able to lace up his skates, he did share some of his experiences from his playing days, including the Canucks’ 1994 run to the Stanley Cup finals. “It was neat to hear some of the stories,”
tournament organizer Lee Hartman said. McLean’s visit follows the course on an impressive roster of former pros the tournament’s organizing committee brings each year, including Bryan Trottier, Lanny McDonald, Craig Simpson, and Dale Hawerchuk, among others. “It gives the opportunity for Winnipeg Jet guys to meet their idols in Dale Hawerchuk, and Edmonton Oiler guys to meet Craig,” said Hartman. “In Fort St. John, we have all kinds of fans.” It’s early yet, but Hartman said the committee hopes to attract two to three players for the tournament’s 15th year in 2018, and grow the event as a whole based on feedback from the players. “We all have our ears to the ground throughout the tournament looking for suggestions that make sense,” he said. The 55th Annual FSJ Petroleum Association Golf Tournament runs June 7 to 10 at Lakepoint Golf & Country Club.
APRIL 21, 2017
PIPELINE NEWS NORTH •
OILMEN’S HOCKEY
11
12
• PIPELINE NEWS NORTH
APRIL 21, 2017
PIPELINES Ashford 30
• Thermostatically Controlled • Tested up to 30 Hours on 1 Load of Wood
FLICKR/CANADIAN CLUB OF TORONTO
Federal Finance Minister Bill Morneau says phasing out tax deductions for early-stage oil and gas exploration was to make Canada’s tax code more “efficient” and to reduce fossil fuel “subsidies.”
2017 federal budget cuts exploration incentives MATT PREPROST editor@ahnfsj.ca
Local MP Bob Zimmer is taking aim at the federal Liberals’ budget for 2017 and its decision to eliminate tax incentives for small oil and gas companies. In the government’s 280page budget overview released March 22, Ottawa announced it would eliminate tax rules that allowed small companies to reclassify up to $1 million of Canadian development expenses as deductible exploration expenses. Instead of those costs being fully deductible the first year they are incurred, the government will allow the expenses to be deducted gradually over time. “At a point when the oil and gas sector in B.C. has just begun its recovery it’s disappointing that the federal Liberal government would put that at risk,” Zimmer said. The move disappointed the industry, particularly as companies struggle to attract investment following the prolonged slump in oil and natural gas prices. The deduction enabled producers to offset some of the costs of early exploration. During a meeting with the Calgary Chamber of Commerce on March 27, federal Finance Minister Bill Morneau cited two reasons for the government’s decision.
MP Bob Zimmer
“We, last year in our budget, identified that we wanted to work to make sure that our tax code was more efficient, that it was less complex and that it was fair,” he said, adding that a “significant number” of tax measures were reviewed, but not all were acted upon. Secondly, he cited Canada’s long-term international commitment to “deal with fossil fuel subsidies.” “In looking at those two things we were trying to make sure we dealt with things that created the ability to make our system less complex, more efficient.” As for the Canadian exploration expense deduction, he said: “We didn’t think that it was targeted appropriately, and believe there are other things we are doing that are having a very positive impact on the industry. And we’re going to be committed to continuing to have [a] positive impact on the industry—but not through that
kind of tax credit.” Ottawa expects oil and gas investment to stabilize this year, along with higher capital spending next year to sustain oil sands output. It expects oil prices to remain around US$50 a barrel over the next five years. While there were no specific oil and gas measures for B.C. listed in the budget, Ottawa will give Alberta a one-time $30-million payment to stimulate the sector there. Alberta Premier Rachel Notley has said that will go directly to reclaiming orphan wells in a bid to put oilfield workers back to work. Meanwhile, the government also proposes to extend eligibility for the mineral exploration tax credit for an extra year. The budget also calls for $11.4 million over four years to “set leading performance standards for natural-gas-fired electricity generation” to speed up the replacement of coalfired electricity by 2030. Zimmer applauded $21.4 million in funding starting in 2018-19 that is earmarked to help Indigenous and northern communities reduce their reliance on diesel. “Thanks to (the University of Northern BC) who presented biomass generation as a diesel alternative in Ottawa to the Ministry of Aboriginal Affairs,” Zimmer said. —with files from JWN Energy
APRIL 21, 2017
An exciting future is on your horizon
B.C. closes fiscal year land sale schedule with strong final quarter B.C. collected $61.23 million in bonus bids for its 2016/2017 fiscal year, a strong rebound after a record low $15.93 million for 2015/2016. The current fiscal year ends on March 31, 2017— B.C. holds one sale a month so the March 22 auction was the final one for the province’s fiscal year. The rebound was driven by a strong final fiscal quarter, largely helped by the January sale of $39.62 million. From January-March 2017, the government has collected $48.14 million on 24,142 hectares at an average price of $1,993.95. To the same point of 2016, industry had paid $2.1 million for 8,652 hectares at an average price of $242.56. On March 22, 2017, 12 parcels were sold covering 8,201 hectares, with an average price of $588.42 per hectare on bonus bids of $4.83 million. The highest value parcel in the sale was a drilling licence in the Sundown–Bissette Creek area, approximately 30 kilometres southwest of Dawson Creek. This parcel, picked up by Scott Land & Lease Ltd., earned more than $2.27 million in tender bonus at an average price of $2,589.97 per hectare.
FORT ST. JOHN CAMPUS
Roughneck Training for Service Rigs
June 12 - 20
Alberta, B.C. power 270% increase in Crown land spending
8:30 am-4:30 pm $786 plus $25 textbook
It’s been a tough couple of years for Crown land spending in Western Canada, but the first three months of 2017 was positive with producers spending $132.74 million, up from $35.52 million during the January-March period of 2016. Industry tied up 320,738 hectares at an average of $413.87. For the same three-month period of 2016, 275,867 hectares were acquired at an average of $128.74. The recovery was carried by Alberta and British Columbia, mainly featuring interest in the Duvernay and Montney.
Get to know the life of a roughneck, and get hands-on with service rig operations. Learn how to become a valued team member on the crew as you learn the chain of command, and the importance of a safe work culture.
ALBERTA Year-do-date, the province has attracted $82.72 million on 290,786 hectares at an average of $284.49. For the same three-month period of 2016, the province brought in $28.28 million on 254,682 hectares at an average price of $111.02.
MANITOBA The Manitoba government attracted $149,920 in bonus bids at its first and only land sale of the year in February. —Daily Oil Bulletin
Email FSJ_Student_Services@nlc.bc.ca or call 250-785-6981 to register
371/17-04--AHN-L
SASKATCHEWAN The Feb. 7, 2017 public offering of Crown petroleum and natural gas dispositions, the lone sale of Q1, generated $1.73 million for Saskatchewan, an average of $307.26 per hectare The industry picked up 5,633 hectares.
PIPELINE NEWS NORTH •
1-866-463-6652 • nlc.bc.ca
13
14
• PIPELINE NEWS NORTH
APRIL 21, 2017
IN BRIEF
27 contracts in place for new AB-ONT gas shipping plan TransCanada says it plans to file an application with the National Energy Board (NEB) on April 26, 2017 seeking approval for new long term fixed price service on its Mainline to Dawn, Ontario from Empress Alberta. The application follows the company’s successful second try at doing a deal to secure increased natural gas shipping volumes by reducing tolls. The large legacy market in Eastern Canada has been increasingly saturated with U.S. production, but producers were not using full system capacity due to high transportation costs. Previously it cost about $2.00/GJ to transport natural gas on TransCanada’s system from Alberta to Ontario. In October TransCanada proposed to drop tolls to a range of $0.75/GJ to $0.82/GJ, but that didn’t get enough support from producers to move forward. The company then proposed a simplified single toll rate of $0.77/GJ, and the shippers agreed. Now TransCanada says in total, 27 new long-haul contracts were executed for a total of 1.5 petajoules per day. For 90 per cent of the contract quantities, Nov. 1, 2017 was specified as the service commencement date, the company says. —JWN Energy
Montney wells continue getting longer, more productive Montney operators continue drilling longer wells with more frack stages to coax out more resources from the play straddling the Alberta-B.C. border. Paramount Resources is focused on getting the most out of its remaining 158 sections of Montney land and will adopt a new well design that Jim Riddell, the company’s president and chief executive officer, calls transformational. “As most of the industry had, we realized back in 2014 and 2015 that drilling longer wells, doing bigger fracks, and making wells much tighter-spaced was a recipe for better wells and values,” he told a recent CIBC investor conference. Instead of drilling a one-mile horizontal with 20 frack stages at 60 tonnes each, Paramount recently drilled a two-mile horizontal with 50 fracks at 100 tonnes each. “The first chance we got to show the new well design, we placed four times the frack intensity in a well compared to what we were doing before,” Riddell explained. NuVista Energy is focused on the Wapiti area south of Grand Prairie and is also planning longer wells and higher frack intensity. “When we go forward, we expect double the length and double the production, but it so happens these wells have outperformed even that,” Jonathan Wright, the company’s president and chief executive officer, told the conference. “Not only are they going longer, but they’re also going longer with denser fracks, much like Paramount. “We’re going from about 100 metres to about 50 metres based on the results we’ve had so far,” Wright added. —JWN Energy
m /22 undru re con / FEBRUARY 2016 tu p a c Y JANUAR carbon B.C.’s ment: nviron E . s v s nomic rt: Eco l Repo Specia ORTH.CA FREE!
EW
NE N I L E P I P
ENEWSN PIPELIN
ISSUE
STRY IN
S INDU
GA E OIL &
G TH
SERVIN
VOL. 8
H S NORT RN B.C.
NORTHE
Northern British Columbia and Alberta’s Oil and Gas Industry
BERTA
AND AL
,000
: 16 1 DIST
ce of in pla urces ada ng reso G Can r existi 82, LN g thei 19 in ce st rt . sin arve in B.C s on h eyes Fo totals erate to focu le s om sa ie gl n nd mpan d a co and west la ect co ports, the lo LNG, an ts exp ex of re l ys b e oi fi al d wak , an ude for Woo in the s hold s up cr nning d. And ter take .S. open ins pla beyon As win , the U ucers. ish beg 16 and . prod border for 20 Squam for B.C of the , s on it n th ti m u ea ra at m ort per explo ies. So th p lit ex at ci h ar LNG fa s at w 40-ye minin look gets a ub for Maryo as a h t Tim Nelson lumnis new co
PRINT & ONLINE EXPOSURE
Full Page 6 col x 180 ag (9.448” x 12.857”)
Quarter Page vertical only 3 col x 90 ag (4.645” x 6.429”) 7746
R00169
Half Page horizontal 6 col x 90 ag (9.448” x 6.429”)
Half Page vertical 3 col x 180 ag (4.645” x 12.857”)
Banner 6 col x 42 ag (9.448” x 3”) – 1/2 Banner (---) 3 col x 42 ag (4.645” x 3”)
“Pipeliner” 2 col x 32 ag (3.045” x 2.28”)
LOCATIONS THAT SUIT YOUR BUSINESS NEEDS
ADVERTISING RATES 2017 (Full Colour)
Back Page - $1500 Inside Back - $1000 Inside Front - $1000 Centre Spread - $1500 Full Page - $1000 Half Page - $600 Quarter Page - $350 Front Banner - $600 (limited Banner number) - $300 Half Banner - $200 Pipeliner - $100 DISCOUNTS: 1 year - 25%, 6 months - 15%
CANCELLATIONS
Display ads cancelled after deadline will be invoiced at 50% of the invoiced rate.
• 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.
APRIL 21, 2017
PIPELINE NEWS NORTH •
IN BRIEF
15
Pembina’s largest-ever pipeline project gets bigger
BC inks another LNG benefits agreement with First Nation
Pembina Pipeline is adding two more legs to a series of projects that comprise the largest capital development in the company’s history. Dubbed “Phase III,” the umbrella project was announced in December 2013 to increase crude oil, condensate and NGL take-away capacity from northwestern Alberta and northeastern British Columbia to markets in the Edmonton and Fort Saskatchewan areas. The capital cost at the time was estimated at $2 billion. In September 2014 the scope of the Phase III expansion was increased with additional capacity, bumping the capital cost to $2.44 billion, and now it has been increased again. In response to shipper demand in the Montney and Deep Basin plays, Pembina has announced two additional projects as part of Phase III with a capital cost of $325 million. “These developments build on our already strong start to 2017,” Pembina CEO Mick Dilger said in a statement. “We are encouraged by the level of volumes and business development activity we’ve seen in the early months of the year and our confidence in the outlook for Pembina continues to grow with the near-term completion of large-scale capital projects.” The initial 420,000 bb/d Phase III expansion is nearing completion and trending slightly under budget, Pembina says, expected to be in service in July 2017. The two additional pipeline projects, which will increase capacity by 440,000 bbls/d, are expected to be operational in late 2018. —JWN Energy
The B.C. government has concluded another major benefits and reconciliation agreement with a First Nation linked to the Petronas Pacific NorthWest LNG project in Prince Rupert and associated Prince Rupert Gas Transmission line. At a March 30 press conference attended by Wan Badrul Hisham, Petronas’ chief project officer for the PNW LNG project, and Kitselas First Nation Chief Joe Bevan, the government announced the Kitselas have signed an agreement that will give them $13 million in cash, 1,227 hectares of land and $500,000 annually for the life of the project. The benefits will form part of a reconciliation agreement that will eventually be included in a treaty agreement. It includes revenue sharing provisions for not only the PNW LNG and associated pipeline project, but the Shell LNG Canada project as well. The agreement represents only the government’s contribution. Petronas also signed a benefits agreement with the Kitselas, who live in the Terrace area, nearly two years ago that provides for skills and capacity training, job and business opportunities and annual payments for the life of the project. The Kitselas agreement is the third major benefits agreement to be signed recently aimed at moving forward LNG projects in the Prince Rupert area. —JWN Energy
2017 2016SCHEDULE SCHEDULE
PUBLICATION PUBLICATION DATEDATE
BOOkINg BOOKING DEADLINE DEADLINE
AD COPY DEADLINE DEADLINE
20 JAN152017 JAN 2016
18 13 JAN JAN2017 2016
19 2017 14 JAN JAN 2016
17 FEB122017 FEB 2016
15 10 FEB FEB2017 2016
16 2017 11 FEB FEB 2016
17 MAR 2017 2016 11 MAR
15 MAR 9 MAR2017 2016
16 2017 10 MAR MAR 2016
21 APR15 2017 APR 2016
19 13 APR APR2017 2016
20 2017 14 APR APR 2016
19 MAY13 2017 MAY 2016
17 11 MAY MAY2017 2016
18 2017 12 MAY MAY 2016
23 JUNE 2017 2016 17 JUNE
21 JUNE 2017 15 JUNE 2016
22 2017 16 JUNE JUNE 2016
15 JULY 21 JULY 2017 2016
13 JULY 2016 19 JULY 2017
14 JULY JULY 2016 20 2017
19 2017 AUG 2016 18 AUg
17 AUG2017 2016 16 AUg
18 AUg AUG 2016 17 2017
SEP 2016 22 SEP162017
SEP2017 2016 20 14 SEP
15 SEP SEP 2016 21 2017
OCT 2016 20 OCT14 2017
OCT2017 2016 18 12 OCT
13 OCT OCT 2016 19 2017
18 2017 NOV 2016 17 NOV
NOV2017 2016 15 16 NOV
17 NOV NOV 2016 16 2017
DEC 2016 22 DEC162017
14 DEC 2016 20 DEC 2017
AD COPY
14DEC DEC 2017 2016 21
R0011177933
16
• PIPELINE NEWS NORTH
APRIL 21, 2017
When You Are Out in the Field, Time IS Money.
QUALITY PARTS, EXPERT SERVICE!