Special Report: ‘Sleepless nights’ as Pacific NorthWest LNG decision nears / Page 6 SEPTEMBER / OCTOBER 2016
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AltaGas and Painted Pony cut the ribbon on the new $430-million Townsend facility, Clark government signals to industry that there will be no increase to the carbon tax, B.C. pulls in its highest land sale total of the year, and Tim Maryon reminds us why taking the long view is critical when it comes to crude oil demand and pricing.
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OUTLOOK
Long view critical when assessing where crude pricing is headed
S
omething I’ve learned in my 30-plus years in the oil business is that it’s important to take the long view—and not to get too caught up in short term anomalies. Over the last few weeks there have been many reports that the count of active oil drilling rigs is growing (slightly) again. Oil prices are volatile as traders speculate that marginally rebounding US crude oil production combined with larger than historical crude oil inventories will continue to depress crude oil pricing through the fall and winter. That may yet happen—but what of the longer view? To me, some more significant but much less reported facts are: • In 2015, crude oil exploration companies discovered only about a tenth as much oil as they have annually since 1960. For example, from 1993–2014, ExxonMobil more than replaced their oil-equivalent production with new reserves each year. However, in 2015, EM only replaced 67 per cent of their oil equivalent production. Other major oil companies did much worse. • Global spending on exploration has been cut from $100 billion USD in 2014 to a forecasted $40 billion USD in 2016—with little increase expected in 2017 and 2018. • Persistently low pricing also means the exploration dollars that are spent tend to be focused on less risky investments—for example appraisal wells on existing fields rather than wildcat drilling on the frontiers. Another example, last
Tim Maryon OIL MATTERS
year Shell abandoned exploration investments of more than $7 billion USD in the Alaskan Arctic, and, just a few weeks ago, Shell abandoned 8,600 square kilometres of exploration permits in Canada’s Arctic. • According to the Energy Information Administration, world demand for oil has grown from approximately 63 MBD (million barrels per day) in 1980 to approximately 91 MBD in 2013. Demand is forecasted to be about 120 MBD by 2040. Where is all of this new production going to come from? So what does this mean for consumers and for those of us in the business? Reduced and narrowly-focused exploration spending is already having a negative impact on the discovery and development of new reserves. World population growth and economic development will continue to drive demand for oil. As demands continue to increase and exceed the diminishing world supply, pricing will inevitably rise to balance supply and demand. Just remember to take the long view. Tim Maryon is vice-president of sales and business development at Peace Country Petroleum in Fort St. John.
BC tops $2.7M at September sale The B.C. government brought in $2.77 million at its September land sale, the highest at a single sale so far this year. The province has three sales left in 2016 to evade the record low of $16.72 million set in 1982. On Sept. 7, industry purchased the rights to 20,172 hectares at an average price of $137.52. Year-to-date, the province has collected $8.38 million on 63,249 hectares.
Highlights of this month’s sale included a licence acquired by Scott Land & Lease Ltd. for $1.65 million. for a 5,287-hectare parcel in the Tupper Creek-Swan Lake area, about 35 kilometres south of Dawson Creek. Sales this year have ranged from a peak of $1.9 million in March to $0 in February. The sale in August brought in $950,000. —Daily Oil Bulletin
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OUTLOOK B.C. natural gas export volumes climb, but value sinks: BC Stats
B.C. exported more natural gas during the first half of 2016 than it did during the same period the year before, but the increase failed to make up for low commodity prices. Natural gas exports totalled $675 million through June 2016, according to BC Stats data released in August—a decline of 13 per cent over the same period in 2015. Natural gas accounted for 3.8 per cent of the province’s exports during the first half of this year, down from 4.3 per cent. Despite that, the province exported 11.3 per cent more natural gas during the same period. All of that gas went to customers in the United States, much of it on the Alliance Pipeline between Northeast B.C. and natural gas sales hubs in the Chicago area. Overall energy product exports—a category that includes natural gas, coal and electricity sales—fell from 17.6 per cent to 14.8 per cent of B.C.’s export mix. Leading the decline were coal exports, which lost 21.2 per cent in value, followed by electricity sales, which saw values decline 16.5 per cent despite a slight increase in volumes sold. Energy products remained B.C.’s secondlargest export category behind solid wood products, which account for more than a quarter of the province’s overseas sales. Static or declining U.S. natural gas prices have been part of the reason for the B.C. government’s push to establish a liquified natural gas export industry, which would secure higher prices in Asian countries. Despite that, some analysts say the world faces an LNG supply glut over the next few years. —Jonny Wakefield
Province breaks from its Climate Leadership Team on carbon tax hike JONNY WAKEFIELD reporter@dcdn.ca
B.C.’s Climate Leadership Plan will place a major focus on electrifying oil and gas development and expanding BC Hydro’s renewable power capacity in lieu of a carbon tax hike, Premier Christy Clark announced Aug. 19. Clark laid out the details of the plan at a news conference in Richmond, during a record-setting heatwave. While government will adopt some of the 32 recommendations of its Climate Leadership Team—a panel of academics, local governments, environmentalists, First Nations and business groups tasked with developing an emissions reductions strategy—it will not bring in an annual 10 per cent hike to the province’s carbon tax. The province was the first North American jurisdiction to bring in a tax on carbon in 2008. “The proposal to double the carbon tax in just four years, to have it rise to $100 dollars in just eight years and to keep going up, is just one we weren’t able to implement,” Clark said. “I have to balance the need for our carbon tax to remain world-leading with the obligation to ensure family affordability is at the forefront of our minds, while protecting the economy and job creation.” Environmental organizations were quick to criticize the plan, saying increasing the carbon tax from $30 per tonne of CO2 equivalent (CO2e) was the only way to bring about meaningful reductions. Critics of the tax say further increases would drive business out of British Columbia. Earlier this year, Peace River North MLA Pat Pimm came out against increases to the carbon tax, taking the unusual step of petitioning his own party to freeze the tax rate. Following the release of the plan, Pimm was pleased to see the tax freeze, noting it comes amid talks of a national carbon tax plan from
BC GOVERNMENT HANDOUT
Premier Christy Clark laid out details of the province’s climate lan at a news conference in Richmond on Aug. 19.
Prime Minister Justin Trudeau. “I’m really happy the government has said, ‘no, we’re not doing that for now,’” he said. Pimm reiterated the impact a hike in the tax would have on local industry and pipeline companies, who already pay considerable carbon taxes. Pimm also said consumers would feel a hike at the gas pumps and on their heating bills, noting he paid $350 in carbon taxes on his heating bill alone last year. “People don’t understand how much it costs until we report how much these things are going to cost people in their own pockets,” he said. “That’s how we’re going to change the discussion.” B.C. has committed to axing emissions by 80 per cent of 2007 levels by 2050—a reduction of around 13 million tonnes CO2e per year. Clark laid out six policies to meet that goal in lieu of a carbon tax hike, including methane reduction and electrification in the oil and gas sector. See CARBON TAX on A13
Pro-LNG Chief appointed BC Liberal candidate Haisla Chief Councillor is making the jump from band council to provincial politics. Ellis Ross, the chief councillor for the Haisla First Nation and ardent supporter of a liquefied natural gas industry, has been appointed the B.C. Liberal candidate for Skeena by Premier Christy Clarke and the B.C. Liberal Party. Ross’s appointment was announced Monday September 12. Ross is among the First Nations leaders in B.C. who have wholeheartedly supported the development of an LNG industry. He and his people have opposed the Northern Gateway pipeline proposal, however. In Kitimat, the Haisla have struck a number of partnerships on LNG projects, all of which have either stalled or been delayed, including Shell’s multi-billion dollar LNG Canada project. Last month, he told Business in Vancouver he
thinks an LNG industry will develop in B.C. but that it will be delayed until LNG prices recover. The Haisla also have partnership agreements with Rio Tinto, which recently undertook a massive multi-billion dollar expansion to its aluminum smelter in Kitimat. “My life’s work has been getting First Nations to the table with industry and government, so that all British Columbians can benefit from economic development,” Ross said in a press release. “I’ve done everything I can as Chief Councillor. Now I want to do everything I can in the Legislature to make sure we are sending a strong message to the world: Northwest B.C. is open for business and our communities, Aboriginal and non-Aboriginal alike, are ready to welcome good jobs and investment.” Ross was first elected to band council in 2003, was elected chief councillor in 2011 and re-elected in 2013. —Business in Vancouver
SEPTEMBER 16, 2016
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ENVIRONMENT
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Study reveals ‘profound’ gaps in understanding of Peace Region’s groundwater system Hydrogeologist finds spotty data, worsening quality in first-ever survey of groundwater in oil and gas region JONNY WAKEFIELD reporter@dcdn.ca
The provincial government must address “profound” gaps in knowledge about groundwater quality in Northeast B.C., a regional district-commissioned study has found. Hydrogeologist Gilles Wendling delivered the results of a two-year survey of water quality in Northeast B.C. at a Peace River Regional District meeting Aug. 25. It is the first comprehensive study of groundwater to be carried out in the Peace, the hub of B.C.’s oil and gas industry, and it raises new questions about whether water quality is adequately monitored and protected in the region. “Before, we were quite ignorant,” Wendling said. “We didn’t have this information together. It was extremely awkward to access.” The study relied on 875 groundwater samples collected from 522 locations between 1943 and 2015, as well as 11,935 surface water samples taken between 1955 and 2014. While the data was publicly available, including through the Northern Health authority, it had never been compiled or standardized. The study identified “profound” gaps in knowledge about “the presence and migration of fluids” in the earth’s intermediate subsurface—the roughly 1,500 metres between potable groundwater and producing gas wells. Wendling identified increased
sodium and sulfate concentrations in groundwater in certain water wells. Barium concentrations also increased in several locations “over a relatively short time period,” the study found. “Such an increase is not expected under natural conditions” and “could possibly result from the intense drilling activity in the region.” However, Wendling said it is too early to conclude what caused the declines in water quality. He also JONNY WAKEFIELD PHOTO noted the data is incomplete for many water wells, making it diffi- Dr. Gilles Wendling says there are major gaps in water quality monitoring in the Peace Region, raising new questions about the impacts of hydraulic fracturing on groundwater. cult to compare over time. The B.C. Oil and Gas Commission claims there has “never some people living in the area that Commission spokesperson Grabeen an instance of groundwater there were risks to water,” said ham Currie said the commission contamination due to hydraulic Gwen Johansson, mayor of Hud- supports the draft report’s recfracturing” in the province. Most son’s Hope. “We can’t get a baseline comendation to enhance water natural gas wells are drilled be- because we can’t go back in time, quality monitoring in the region, tween 2,000 and 3,200 kilometres but we can at least try to establish but “would need to review the final below the surface, compared to what (water quality) is now.” reports before it could comment 150 metres for the average domesShe added “there was no ac- further on the technical aspects of tic water well. tion coming from the province” the presentation.” However, the study suggests that on additional water quality “In principle, the Commission there is still much that is unknown monitoring. supports water quality monitoring about the impacts of industrial acThe province currently has and baseline studies in northeast tivity on groundwater, including seven groundwater monitoring B.C., including more and ongoing the “presence and migration of flu- wells in the Peace Region, which academic research,” Currie wrote ids in the intermediate zone of the Wendling said is insufficient. in an email. subsurface.” The Netherlands, considered the “The Commission is not aware “Adequate characterization and most-advanced country in terms of groundwater ever being conmonitoring programs need to be of water quality monitoring, has taminated by a hydraulic fracdesigned and implemented very “thousands” of monitoring wells, ture in Northeast B.C. Hydraulic rapidly,” the report concludes. he said. fractures occur in rock formaThe PRRD launched the study in The regional board has since tions deep under the ground and 2014 with support from the Treaty passed a resolution asking the is done in a manner that isolates 8 Tribal Association and the Real province to improve water quality the fractures from much shallower Estate Foundation of B.C. monitoring in the region. groundwater.” “There was a feeling amongst In a statement, Oil and Gas
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Kristi Leer stands by an idle drilling rig. Her oilfield traffic control company Kleer Enterprises is one of many in Fort Nelson that have been forced to lay off employees during the latest oil downturn.
‘Sleepless nights’ for locals as Pacific NorthWest LNG decision nears
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Kristi Leer has spent sleepless nights worrying about LNG. As a businesswoman in Fort Nelson, Leer has gobbled up every piece of news she can find about Pacific NorthWest LNG—a massive liquefied natural gas facility proposed near Prince Rupert that many see as the key to turning around Northeast B.C.’s struggling oil and gas industry. She helped start Fort Nelson for LNG, an advocacy group to push the town’s case to federal leaders. She’s keeping a close eye an online clock to count down the days until the Trudeau government’s decision on the project. A decision is expected Oct. 2. “Everything could turn,” Leer said Sept. 6. “It’s sleepless nights. We’re all sitting and wondering what we’re going to do. What if they say no? What if they say yes?” The decision will be a watershed moment for the new Trudeau government, which faces pressure from both the hard hit oilpatch and environmental groups that say the project is not in keeping with Canada’s climate commitments. Alan Yu, who programmed oilpatch radios before being laid off last year, said the government’s decision would affect whether he stays in Fort St. John. “I moved to Fort St. John just over a year ago because of LNG,” said Yu, a founder of the advocacy group FSJ for LNG. “If it’s not approved, I may have to consider moving. It’s a big turning point.” Fort St. John Mayor Lori Ackerman said having a 40-year outlet for the region’s gas would lead to more investment in the town. “It gives us the ability to invest in the resources and add value to them, (and to) do a lot more innovative
approaches to how we operate this industry on the ground,” she said. The federal government planned to deliver its verdict on the project this summer, but delayed after concerns over its impact on both greenhouse gas emissions and Skeena River salmon fisheries. The Petronas-led congolmerate delivered additional details on its environmental mitigation plans June 27. Opponents say the current plant design is too risky—in particular the suspension bridge over a sensitive eelgrass bed where salmon spawn. The 812-member Lax Kw’alaams First Nations band initially opposed Pacific NorthWest LNG, but voted 65 per cent in favour of the project late last month. Environmental groups, meanwhile, say extracting the natural gas needed for the facility will cause B.C.’s carbon emissions to balloon. The B.C. Liberal government maintains LNG will help Asian countries transition from higher-emitting energy sources like coal. ‘Total review’ before FID: Petronas If the plant gets the go-ahead, Petronas would conduct a “total review” before making a final investment decision. Upstream producer Progress Energy would supply gas via the proposed Prince Rupert Gas Transmission pipeline. However, the company has not finalized its drilling schedule and it’s unclear what immediate impact approval would have on upstream activity. Despite that, a go-ahead for the project would be a morale boost for Leer and others struggling with one of the worst oil and gas downturns in a generation. If the answer is no, “my family will probably be leaving,” Leer said. “There’s nothing else we can do here without oil and gas.”
SEPTEMBER 16, 2016
PIPELINE NEWS NORTH •
LNG
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Plan to ‘electrify’ B.C. Montney depends on LNG JAMES MAHONY Daily Oil Bulletin
A plan to make electricity widely available to natural gas facilities in Northeast British Columbia depends on whether or not proposed West Coast LNG projects go ahead. The climate change plan B.C. Premier Christy Clark released Aug. 19 referred generically to “infrastructure” that would have to be built to “close the gap between electricity and natural gas costs” in B.C. Since then, B.C. government staff has explained the cryptic reference. The government’s plan is to use electricity to power gas production and processing facilities in Northeast B.C., while the infrastructure mentioned is the series of high-voltage transmission lines that would have to be built to the region, as well as other needed equipment, such as electric pumps and compressors. Provincial government staff said
B.C. Hydro’s proposed Peace Region Electricity Supply (PRES) project and ATCO Power’s proposed North Montney Power Supply (NMPS) project would allow lowcarbon electricity to be supplied from the BC Hydro transmission grid to gas-processing facilities in the region. However, the plan depends on West Coast LNG.
“Construction of this electrification infrastructure will begin once LNG companies make their final investment decisions,” stated a note from B.C. government staff in response to queries from the Bulletin. In recent months, some West Coast LNG projects have been postponed, while investment decisions on others have been delayed.
The B.C. government is also consulting with industry on programs to encourage use of electric equipment over gas-driven equipment in upstream gas production and processing facilities. Should the plan to ‘electrify’ the Montney go ahead, B.C. would partner with the federal government to invest the necessary capital to build the required power lines and infrastructure, staff said. Provincial officials estimate full electrification of the Montney could avoid “up to” four megatonnes of greenhouse gas (GHG) emissions per year, minimizing the GHG footprint of upstream gas development. As well, government staff said broader electrification of the Montney formation will require the design of programs to make the cost of using electric pumps and compressors comparable to natural gas-driven equipment for upstream applications, in order to encourage electrification.
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Guts. Glory. Ram. AltaGas, Painted Pony, cut ribbon at Townsend facility AltaGas officially opened its Townsend facility at a special ceremony on Sept. 14. Company executives for both AltaGas and Painted Pony Petroleum were joined by special guests and dignitaries, including Fort St. John Acting Mayor Gord Klassen, and members from both the Halfway River and Blueberry River First Nations. “We are committed to continuing to grow our presence in British Columbia by developing assets that will provide producers with valueadded services and the opportunity to move natural gas and natural gas liquids to new markets,” AltaGas President and CEO David Harris said. Townsend is located around 100 kilometres north of Fort St. John, and 20 kilometres southeast of the company’s Blair Creek facility. Operations at the $430-million facility officially began July 10 well ahead of schedule and under budget, the company says. Rich Coleman, B.C.’s natural gas minister, called the facility a “promising development.”
“British Columbia has a vast supply of natural gas to support value-added production and economic growth,” Coleman said. “The Townsend Facility is another promising development for our province, showcasing our capacity to build new infrastructure in the natural gas sector and support clean energy production for domestic and international markets.” Earlier this year, AltaGas signed a 10-year agreement with Halfway River to provide a framework for consultation, financial benefits, community investment, employment opportunities, and support for a wildlife study in the band’s traditional territory. Harris recognized the support of both Halfway River and Blueberry. “We wish to thank the Blueberry River First Nation and the Halfway River First Nation for their support and understanding as we developed and built this project, and look forward to the long-term benefits this Facility will bring to the community,” he said. —Matt Preprost
SEPTEMBER 16, 2016
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OPERATIONS
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OPERATIONS Enbridge to buy Spectra Energy in deal worth $37 billion
Deal expected to close in first quarter of 2017 MIKE CARTER dcreporter@dcdn.ca
Enbridge Inc. has finalized an agreement to purchase Spectra Energy Corp. in a $37-billion deal that will create North America’s biggest energy infrastructure company. The value of the combined entity is pegged at $165-billion. The Globe and Mail reports the head office will be located in Calgary and current Enbridge President and Chief Executive Officer Al Monaco will become the president and CEO of the new company. In a release, Enbridge said it will use each company’s “complementary and diversified asset base to increase customer service offerings.” It added that the acquisition will enhance its ability to pursue new projects, strengthen its balance sheet and ENBRIDGE PHOTO provide an industry-leading return Current Enbridge President and Chief Executive Officer on investment. Al Monaco will become the The deal was an- president and CEO of the new nounced in a Sept. company. 6 conference call to Spectra shareholders. Enbridge shareholders will own 57 per cent of the new company. Spectra shareholders will retain 43 per cent. Combined revenue of the two is estimated at $40 billion, with earnings before interest and taxes of $5.8 billion. The transaction was unanimously approved by the boards of directors of both companies and is expected to close in the first quarter of 2017, subject to shareholder and certain regulatory approvals, and other customary conditions. Spectra has several pipelines and properties in Northeast B.C., including the Pine River Gas plant near Chetwynd and another plant in Fort Nelson. Spectra has recently secured approvals from the National Energy Board for its Jackfish Lake and High Pine pipeline expansion projects.
JONNY WAKEFIELD PHOTO
Spectra Energy’s McMahon Gas Plant in Taylor. Spectra, which is being bought by Enbridge, is in the process of building three pipelines in Northeast B.C. to increase its system capacity.
As Enbridge acquisition looms, Spectra moves forward on Northeast BC pipelines Three pipelines would boost capacity on existing system JONNY WAKEFIELD reporter@dcdn.ca
When pipeline giant Enbridge officially acquires Spectra Energy early next year, the company will have dozens of kilometres of new pipe in the ground in Northeast B.C. Spectra is in the process of building three pipelines to increase its natural gas-moving capacity, government and community relations lead Jay Morrison told a meeting of the Peace River Regional District Sept. 8. The Jackfish Lake, High Pine and Wyndwood expansion projects are part of a $1.2 billion spend the Houstonbased company plans to make in B.C. over the next two years. All three are being built
along existing pipelines. Some right-of-ways will have to be widened, but the company doesn’t plan significant new land clearing. Construction began on the Jackfish Lake expansion August 15. There are around 400 people working on the project, Morrison said. It includes two additional “loop” segments totalling 36 km between the McMahon gas plant in Taylor and Chetwynd. The National Energy Board (NEB) approved the High Pine pipeline Aug. 17. The 38 kilometres of pipe will expand capacity between gas plants near Wonowon and Chetwynd. Morrison said the company hopes to begin construction on the project “soon,” with a projected in-service date in
early 2017. Wyndwood, a proposed expansion of the Fort St. John mainline east of Chetwynd, has yet to receive NEB approval. Enbridge hopes to finalize its merger with Spectra Energy in early 2017. Morrison said it’s not yet clear how the company’s Northeast B.C. operations will be impacted. The $37 billion deal will be one of the largest in the history of the Canadian oilpatch, according to a report in the Calgary Herald. If the deal is approved, the combined company will be the largest energy infrastructure firm in North America. Eighty per cent of natural gas in B.C. is now transported on Spectra pipelines, according to PRRD presentation.
SEPTEMBER 16, 2016
PIPELINE NEWS NORTH •
OPERATIONS
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Few details on explosion that injured worker at Encana site MIKE CARTER dcreporter@dcdn.ca
Encana and provincial officials say they continue to investigate a suspected explosion at the company’s Montney Water Resource Hub in the Bessborough-Farmington area near Dawson Creek on Sept. 12. One worker was injured and was taken to hospital, though the extent of the injuries and the worker’s condition are unknown. “We suspect there was an explosion but there is no fire at the facility,” Encana spokesperson Doug McIntyre said. “There is no evidence of a spill and no current risk to local residents. Our top concern is for the well being of the injured worker.” Emergency crews secured the site shortly before 11 a.m. on Sept. 12 and are working to determine the cause of the incident. RCMP, Oil and Gas Commission and Min-
istry of Environment officials were part of the assessment. McIntyre said he could not provide an update on the injured due to privacy concerns, but did say the worker was not an Encana employee. The Oil and Gas Commission deferred comment to Encana, but has confirmed there was no environmental damage as a result of the incident. Spokesperson Phil Rygg said the commission had sent inspectors to the site. Most of the staff at the plant were waiting outside, some of them speaking to RCMP and other emergency officials. Several dozen employees in high-visibility coveralls were standing around in the yard at the plant. The plant draws subsurface saline water for use in fracking operations, allowing the company to reduce its use of fresh water. Fed by 20 source wells, the water
JONNY WAKEFIELD PHOTO
Workers speak with RCMP following a suspected explosion on Sept. 12.
is transported from the plant by pipeline to gas wells. The hub also functions as a recycle and reuse loop by blending water returned from frack sites
with the saline water. —with files from Jonny Wakefield
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OPERATIONS
Encana Corp. taps water from former float plane base MIKE CARTER dcreporter@dcdn.ca
Primed to drill four new frack wells south of Dawson Creek this winter, Encana Corp. is once again looking to the city’s former float plane base as a source of water. City Council approved the company’s proposal to draw water for use in gas drilling operations from the 4,000-foot man-made lake located behind the Dawson Creek regional airport this week. Encana plans to pump the water to a proposed reservoir about six miles away. The company has drawn water MIKE CARTER PHOTO from the now defunct float plane The 4,000-foot man-made float plane base behind the Dawson Creek Airport hasn’t been base before, as recently as last year. used in at least five years. Now, Encana Corp. reclaiming the water for use in tracking Spokesperson Brian Lieverse operations. said the water is needed for the four new wells, which will feed struction in Tomslake. to truck it,” he said in an interview. into the company’s South Central “This gives us the opportunity “We have a new target zone within Liquids Hub currently under con- to pump the water versus having our Montney play here that we’re
looking to develop to see how it pans out.” Lieverse said Encana plans to drill even more wells in the spring, but that those plans have not been finalized. At the request of council, Mayor Dale Bumstead said he would approach the company about sourcing work for the project from local suppliers. Water was first drawn from the former float plane base for oil and gas operations in 2010. This reduced the “runway” area from 5,000 to 4,000 feet. Chief Administrative Officer Jim Chute said the waterway’s depth has been reduced, making it unsafe for planes to land there. The base was established in 1964 and is one of only two manmade water bases in Canada. The other is located in Quebec.
Safety tips offered for Myshak Group branches out with move into FSJ driving on resource roads MATT PREPROST editor@ahnfsj.ca
An Alberta-based family business is branching out with a new office in Fort St. John as it gears up to support a number of industrial developments in the region. The Myshak Group of Companies is opening a branch in Fort St. John, and has been recruiting mobile crane and equipment operators, along with managers, heavy haul truck drivers, safety staff, and technicians for its new office. “We’re moving to support our current and long-term customers with the vision of supporting growth of the community and the indigenous communities,” Josh Myshak, the company’s marketing director said. Those customers include Ledcor, Encana, and WorleyParsonsCord, the latter of which was awarded a $130-million contract for Cutbank Ridge Partnership’s 15-27 Saturn Phase 2 sweet gas plant project. Myshak, with a head office in
Acheson, Alta., provides equipment rentals, engineering services, storage and warehousing, custom matting, and other site services. The business began in 1996 and has worked from Fort McMurray to Calgary to Kitimat, Myshak said. The company is looking to start with about a dozen employees, before it starts ramping up later this fall. “We’re collecting resumes, going through them all. We’ve got locals and local support already and we’re looking to grow that,” he said. Partnering with First Nations is also a focus, he added. “Going forward, we have more and more jobs that we’ve been doing involving the indigenous community, Myshak said. “We currently have a few partners involved, and we’re looking to grow that.” The company plans to be actively involved in the community, Myshak said. “We’re there for the long haul,” he said.
The B.C. Forest Safety Council is urging caution as resource roads are expect to get busier with the start of hunting season. It offered the following tips for those who don’t use the roads on a regular basis: - Expect to see logging, mining and other trucks. A loading log truck can weigh 10 times more than a regular pickup truck, has limited maneuverability, and can take up to 100 metres to stop. “Down” or “loaded” traffic has the right of way. It is good practice to yield to all industrial vehicles. Pull into a designated pullout when possible or as far over to the right, stop, and give them enough space to pass. Two-way radios are recommended for safe travel on resource roads. If you do not own a radio, one can be rented at radio communication shops in many small and large centers. Designated radio channels are posted at the beginning of all resource roads. Note that in 2016 resource road radio channels throughout B.C. changed to RR channels. If you have a radio, it may need to be reprogrammed.
- Most resource roads have speed limits posted at the beginning of the road - generally 60-80 km/h. Reduce speed depending on the road conditions, traffic flow and road maintenance crews. Always obey the posted rules of the road. - Wait until you can see clearly; do not drive in the dust of the vehicle ahead, and if pulled over, wait for the dust to settle if a vehicle has passed you in the opposite direction. Travel with your headlights on at all times. If you need to stop or pull over, do so at a designated pullout or a straight stretch of road with good visibility. - Never pass a vehicle unless it pulls over and indicates that it is safe to do so. Even when indicated it is safe, pass cautiously. - As a general rule, as kilometre markings go up, you are travelling further from town. Pack extra emergency supplies such as first aid equipment, water, food, blankets and let someone know where you are going and when you are expected back. Hunting season began Sept. 1. —Prince George Citizen
SEPTEMBER 16, 2016
PIPELINE NEWS NORTH •
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Alberta-BC oilfield services border wars heat up in Peace Country JIM MAHONY JWN Energy
Local workers and businesses in northeastern B.C. are not getting a fair shake in the region’s oil and gas development, due largely to Alberta contractors who take much of the work but may not always pay their share of B.C. taxes, according to a coalition of local governments in the area. A northeastern B.C. contractor says the problem has existed for years as Alberta contractors in the trucking, oilfield service and other fields regularly cross the border to take part in the brisk oil and gas development there. The situation is made worse by an industry downturn that has forced many Alberta contractors to look further afield for work in recent months, as more workers and contractors on Alberta’s oil and gas plays are idled. JOEY PODLUBNY/JWN PHOTO “We have to level the playing field in regards to Some Alberta companies active in northeastern B.C. are Alberta companies coming to northeast B.C.,” says already going local and clearly making efforts to hire local Dave Turchanski, president of Energy Services BC workers and contractors. (ESBC). ESBC represents oilfield service and other northeastern B.C. contractors, many of whom also “Often, the Alberta-based oil and gas produwork in the oil and gas sector. cers know a friend of a friend, and all of a sudden, Turchanski says B.C. contractors find themselves they’ve hired someone out-of-province and are in in a tough spot. After paying the seven per cent here with their CATs, their vacuum trucks or whatprovincial sales tax (PST), many are at a disadvan- ever. What bothers me most is that there are a lot of tage, he says. They also pay PST on whatever goes people in the local service sector that are not getting on their vehicles on top of the tax paid to purchase the opportunity to bid on work in B.C.,” he says. them. Yet, the tax disadvantage is not the only issue, The owner of Fort St. John–based Gas Link Indusaccording to Turchanski. tries, Turchanski acknowledges that businesses in
the northeast might not always have the people or equipment to fulfill every oilpatch contract, sometimes forcing Alberta producers operating in B.C. to go elsewhere for manpower or hardware. “I don’t have a problem with that,” he says. In fact, when it comes to supplying the needs of natural gas exploration and production companies such as drilling rigs or fracturing and completion crews, as much as 75 per cent of what’s needed comes from outside B.C., Turchanski says. Yet, for the roughly one-quarter of contracts northeastern B.C. businesses can readily handle, they are overlooked, he says. When asked what message he would have for producer executives based in Calgary, Turchanski was low-key. “If you’re working in B.C., give the local service sector the opportunity [to bid],” he says. “Whether it’s Fort St. John, Fort Nelson, Dawson Creek or Chetwynd, give the locals an opportunity first, then go to the outside.” Some Alberta companies active in northeastern B.C. are already going local and clearly making efforts to hire local workers and contractors. Trican Well Service, for example, runs a Fort St. John branch office that hires locally. “We don’t have rotational workers,” chief executive officer Dale Dusterhoft says. “Our Fort St. John facility…is 100 per cent people that live in the community,” although he acknowledged some might have moved there from other places. Read more at jwnenergy.com
RCMP search for vehicle, trailer stolen from Surerus Fort St. John RCMP are searching for a side-by-side and utility trailer stolen from Surerus Pipeline last week. Police say a 2015 Can-am Commander that was loaded on a utility trailer was stolen from a Surerus parking lot at 9312 109 Street in Fort St. John on Sept. 8. Police believe the theft took place between 1 a.m. and 8 a.m. The Can-am Commander is described as black and yellow with an Alberta licence plate of GTH69.
The trailer is described as a silver 2014 single-axle Aluma with an Alberta licence plate of 5AT919. Anyone with information is asked to call the detachment at 250-787-8100. Anonymous tips are accepted through Crime Stoppers at 1-800-222-8477. Police say a cash reward of up to $2,000 will be paid for information that leads to an arrest and charge.
CARBON TAX from A4 Other policies in lieu of a carbon tax hike include: • reforestation in areas hit by mountain pine beetle infestation • moving BC Hydro from 98 per cent renewable power to 100 per cent by 2025—one year after the scheduled completion date of the Site C dam • increased focus on electric vehicles and emissions reduction in the transportation sector, as well as more stringent emissions guidelines for the construction sector The Canadian Association of Petroleum Producers praised the plan, saying it would not stifle investment in the oil and gas sector. Fossil fuel production accounts for around 17 per cent of B.C.’s overall carbon emissions.
—Matt Preprost Sybil Seitzinger, executive director of the Pacific Institute for Climate Solutions, said B.C. could still meet its targets with the new plan and a “modest” liquefied natural gas industry. “The plan’s assumed expansion of the natural gas industry presents a major challenge in reaching our emissions reduction targets,” she said. “While natural gas is often seen as a bridging fuel to a low carbon future, greenhouse gas emissions during production and processing can be large.” The “heavy lifting” of the plan will fall on the forestry and agriculture sectors, she said, which are expected to contribute to a 12 million tonne reduction in emissions through reforestation and nutrient management plans to reduce greenhouse gas emissions from fertilizer use. “Much more detail is needed to know how the 12 million tonnes of reduction is going to come
RCMP HANDOUT
from these two areas.” Meanwhile, groups like the Alberta-based Pembina Institute and Clean Energy Canada expressed disappointment with the province’s plan. “There are a few promising commitments … including an increase to the low-carbon fuel standard, but the key ingredient of an increasing and expanding carbon tax remains absent,Josha MacNab, Pembina’s B.C. director, said in a blog Aug. 19. Other activists were still less impressed: “Instead of bold action, B.C.’s climate leadership has fizzled,” Merran Smith, executive director of Clean Energy Canada, said in a press release. —with files from Matt Preprost, Daily Oil Bulletin
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SEPTEMBER 16, 2016
EDUCATION Northern Lights College to get new $33M trades centre MIKE CARTER dcreporter@dcdn.ca
Though the economy remains depressed, some uplifting news for the Peace Region came Aug. 22 in the form of $33 million to build a new trades training centre on the Northern Lights College (NLC) campus. The project is funded by contributions from the federal government, the province and industry. The state-of-the-art facility will expand the current Energy House and Campus Centre buildings in Dawson Creek to create new training spaces for the welding, carpentry and wind turbine maintenance programs. “This project is long overdue,” President Bryn Kulmatycki said. The architectural design will feature a small rooftop garden which will help reduce heat loss in the winter, as well as a fully-lighted display of the northern lights that will face 8th Street. The original trades buildings at
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the college were built in the 1950s and were supplied to NLC by the Canadian military following the deconstruction of the Distance Early Warning (DEW) Line — a system of radar stations in the northern and Arctic regions set up to detect incoming Soviet bombers during the Cold War and provide an early warning for a land-based invasion. Two large buildings and several other smaller ones that have already been decommissioned will be torn down to make way for the new
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The new state-of-the-art facility will expand the current Energy House and Campus Centre buildings to create new training spaces for the welding, carpentry and wind turbine maintenance programs.
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centre. Building permits are already in place and were obtained during previous meetings with the city in order to keep the announcement under wraps, according to Peace River South MLA Mike Bernier. The tender process for the construction has already begun. Bids close Sept. 28 and work on the project will begin immediately after that, Kulmatycki said. “The buildings that exist today are vintage buildings,” he said. “(They)
do not have enough power to run welders, they’re energy inefficient — we lose heat and we can’t keep them warm in the winter. There’s all kind of issues.” The $14.57-million federal contribution comes from the PostSecondary Institutions Strategic Investment Fund. The province kicked in $15.06 million, and $3.39 million came from companies including Canbriam Energy Inc., Encana Corp., Shell Canada, and TransCanada.
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• Distributed to the community in general through these fine publications, Alaska Highway News, Dawson Creek Daily and Fort Nelson News. • Distribution by mail and direct drop-off to Oil & Gas companies,and related businesses and organizations, in the following communities: BRITISH COLUMBIA – Arras, Baldonnel, Cecil Lake, Charlie Lake, CHETWYND, Clayhurst, DAWSON CREEK, Farmington, FORT NELSON, FORT ST. JOHN, Goodlow, Groundbirch, HUDSON HOPE, Moberley Lake, Pink Mountain, Pouce Coupe, Progress, Rolla, Rose Prairie, Sunset Prairie, Taylor, Tomslake, TUMBLER RIDGE, and Wonowon. ALBERTA – Baytree, Bear Canyon, BEAVERLODGE, Berwyn, Bezanson, Bonanza, CLAIRMONT, Eaglesham, FAIRVIEW, Falher, Girouxville, GRANDE PRAIRIE, Grimshaw, Grovedale, HIGH PRAIRIE, Hines Creek, Hythe, LaGlace, MANNING, McLennan, PEACE RIVER, Rycroft, SEXSMITH, Silver Valley, Spirit River, VALLEYVIEW, Wembley, and Worsley, Zama City.
SEPTEMBER 16, 2016
PIPELINE NEWS NORTH •
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BUSINESS Construction supply shop expands northern reach MATT PREPROST editor@ahnfsj.ca
Michael Forget heard about all the stereotypes Lower Mainlanders hold over Fort St. John when he applied for sales work in the city: it’s a dirty town, it has a drug problem, it’s too small with no amenities, etcetera, etcetera. But true to his name, he forgot about them and let the town do the talking when he came up from Delta for a tour in March to get a feel for the city and see firsthand the plans that Convoy Supply had for a new warehouse along the East Bypass. “When I came, and what I saw and what I heard was a different story MATT PREPROST PHOTO totally,” Forget said. From left: Michael Forget, Greg Jackson, Kevin McGilloway, and Art Mattson.. “I saw it’s … an area that’s growing. I like the community, people are tinues to branch out across B.C. and George, we are within an hour of Dawson Creek, we’re within a couple pretty friendly. I thought it was a place Canada. to settle down and grow for a bit.” The company has been supplying hours of Chetwynd, we’re kind of Forget moved from Delta to the construction markets for 44 years, central here,” Branch Manager Greg city earlier this summer to help including northern B.C. and the Jackson said. “Fort St. John right now has a lot of open Convoy’s new 13,000 square Yukon, traditionally shipping from construction going on.” foot warehouse, and was one of two Vancouver or Prince George. The city’s latest building report “Now, instead of having to wait people who uprooted themselves for the move north as the company con- for something to come out of Prince for August shows a total of 95 build-
ing permits issued so far this year for construction values of $58.1 million, mostly driven by the continuing hum of commercial and institutional builds. It’s well off the mark from the same time in 2015, when 210 permits had been issued by the end of August for a combined construction value of $126 million. “We’re not dependent on the oil patch. We see there’s a lot of potential, a lot of projects we’ve already bid on,” Forget said. “There’s a lot of work for us that will be coming through.” Jackson said the company’s move to the city represents an estimated $3.2 million investment with plans to grow business in the north. The company supplied roofing materials for the city’s newest hospital, he noted. “(Fort St. John is) a good hub for B.C. and Alberta. To get to the Yukon, it all has to come through us anyway,” Jackson said. “We’ve been here 40 years in Fort St. John, it’s just going to be sustaining it. We’re not new to the area, we’re new physically to the area, but not as far as supplying the area.”
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SEPTEMBER 16, 2016
Oil spill response group to make $200M upgrade NELSON BENNETT nbennett@biv.com
The company responsible for containing and cleaning up oil and fuel spills along B.C.’s shipping lanes plans to invest $200 million to enhance its existing spill response capability, in anticipation of the Trans Mountain pipeline expansion. The investment is contingent on the $5.4 billion Trans Mountain pipeline expansion project being approved by the federal government in December. The Western Canada Marine Response Corporation (WCMRC) is responsible for containing and cleaning up marine oil and fuel spills and is funded by shipping and energy companies, such as Kinder Morgan Inc.(NYSE:KMI). The company currently operates 17 vessels stationed throughout Burrard Inlet and has three bases – in Burnaby, Duncan and Prince Rupert. The expansion will add five new bases, 26 new additional vessels and 115 new employees. Should Kinder Morgan get final approval by federal cabinet in December, the WCMRC will move forward with its enhancement plans. The investment is one of the requirements of the National Energy Board (NEB), which approved the Trans Mountain pipeline expansion in May, with 157 conditions. The B.C. government also required, as one of its five conditions for approval, that any new pipeline project develop a world-class marine spill response system. Kinder Morgan will pay the lion’s share of the $200 million investment, although the entire shipping industry operating along the B.C. coast will benefit, said Michael Lowry, communications manager for the WCMRC.
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One of the existing 17 vessels in the WCMRC fleet, which will expand to 43.
“All of these enhancements will be available for any type of spill from any vessel all along the southern shipping lane,” Lowry said. The last significant spill that the WCMRC had to deal with was in English Bay in 2015. It was not an oil spill from a tanker, but a bunker fuel discharge from a cargo ship. The relatively small spill took 16 days to clean up, and the Coast Guard’s response to the incident was criticized for being slow off the mark. The City of Vancouver was not even notified of the spill for 13 hours, and there was a three-hour delay in the WCMRC being called into action.
In the wake of that spill, B.C. politicians slammed the federal government for having closed the Kitsilano Coast Guard Station, and the City of Vancouver voiced concerns that the region is not prepared for a major marine oil spill. The Liberal government has since reopened the Kitsilano Coast Guard station and as part of the NEB’s approval of the Trans Mountain expansion, enhanced oil spill capabilities were required. The biggest oil spill the WCMRC ever cleaned up was 100 tonnes of synthetic bitumen in 2007, after a Trans Mountain pipeline ruptured. —Business in Vancouver
Rains further delay Snake Pit Road repairs Bypass washed out during June 2016 floods, temporary bridge expected by fall JONNY WAKEFIELD reporter@dcdn.ca
Heavy rains have delayed repairs on a section of bypass road that washed out when Dawson Creek flooded June 16. The Snake Pit Road section of the city’s dangerous goods bypass was destroyed during the floods after its culverts filled with debris. The provincial ministry of transportation initially planned to build a temporary bridge over the creek by the end of July. Repairs were then pushed back to mid-August. Now, the province hopes to reopen the route by “early fall,” spokesperson Kate Mukasa said in an email. “Due to wet weather, construction has slowed,” she said Sept.
9. “With dry weather anticipated next week, we expect our crews will be able to make good progress. At the same time, Ministry staff are working on a long-term plan for the road that we hope to have ready to share later this year.” “The detour for passenger vehicles remains Highway 49 directly into Dawson Creek. Detours for trucks carrying extraordinary loads can take Highway 2 from the Alberta/BC border to Dawson Creek, then onto the Dangerous Goods Route and then take either Highway 97S or Highway 97N to Fort St. John and points north.” Dawson Creek saw double its average August rainfall last month, marking an end to a wet summer. Eighth, 15th and 17th Streets in
JONNY WAKEFIELD PHOTO
Snake Pit Road east of Dawson Creek was washed out in June flooding. Heavy rains in July and August further delayed efforts to rebuild.
Dawson Creek were all damaged in the floods—among the worst in the town’s history. City council has asked the province to replace the culverts on 8th and Snake Pit Road with bridges to mitigate flooding in the future.
Earlier this year, the Dawson Creek Chamber of Commerce and the Northern B.C. Truckers Asscoiation expected the loss of the road to lead to shipping delays and heavier truck traffic through the city.