Northern British Columbia and Alberta's Oil and Gas Industry Vol. 3 Issue 1 • dist: 18,000
JANUARY • 2013
h t r No
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in this issue:
• WHAT TOMORROW BRINGS - GOOD YEARS BOUND TO GET BETTER WITH LNG • THE ALMIGHTY DOLLAR ENCANA TALKS FOREIGN INVESTMENT • LEADERS OF THE PACK - CANADA’S MOST POWERFUL WOMEN
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encana is working hard to build the transportation and high horsepower natural gas markets - ENCANA PHOTO
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• PIPELINE NEWS NORTH
JANUARY 2013
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A changing of the guard After four great years with Tyler Kosick at the helm, the Fort St. John Petroleum Association is starting a new chapter with Kosick’s most recent vice president and Trans Carrier Ltd. (TCL) colleague taking over as president.
“That has been a phenomenal success,” Kosick added. “And the group that took that by the horns and made it happen has done a phenomenal job. It’s been great for the club and for the families and for the young ones.”
Kosick is confident that the club is in good hands.
It is an event that Kosick thought it was particularly important to create because of memories of his childhood when his father was a member of the club and they would hold a family picnic every summer.
“I think he’s got a good knowledge of what we do and how we do it,” he said of his successor. “And I don’t think he’ll have any issues. The club basically maintains as it goes.” “It was Tyler that kind of pushed me,” said Thomas, whose first involvement with the club was his role on the committee organizing the 50th anniversary celebration. “That was kind of driven by Tyler,” he continued. “And I got to see how he works and functions with everybody and communicates with all the different people throughout the organization.” Thomas is excited work with his new vice president, Ryan Ross, and the new executive, which includes three new members. “They bring a different light, a different set of eyes into the organization. Maybe some fresh ideas. New ideas,” said Thomas.
“And it’s been great,” he said. “He’s left a great legacy. It’s going to be a tough position to fill following him,” said Thomas. “I wish there was somebody else in between,” he added with a laugh. Kosick believes that Thomas can do the job, particularly now that the extra work involved with those 50th anniversary celebrations is in the past. “We’re back to just sailing straight ahead,” said Kosick. “Obviously, they’re going to have ideas as a new group of how we can make the club better.” R001424268
“He’s been in the community for a lot of years,” he said of Ross. “He went away for school, but he’s been born and raised in the community. Their family and their company are very active in the community.
Kosick felt that had to evolve to incorporate all the quads, boats and holiday trailers that so many members of the club own and enjoy.
“I’ve got a good person there to use as a resource.” As the man who oversaw the 50th anniversaries of the club, the annual golf tournament and the annual curling bonspiel, Kosick has left quite a legacy. “The biggest thing that’s happened to our club during my term is the creation and the start of the family camping weekend,” said Kosick. The family weekend that takes place every August at Peace Island Park is now one of the club’s most popular events, even though it only began just a few years ago.
Sean Thomas (left) is taking over from Tyler Kosick (right) as president of the Fort St. John Petroleum Association.
PETROLEUM ASSOCIATION - HAPPENINGS
JANUARY 2013
industry news FUELING THE FUTURE Encana and Ferus join forces on LNG plant james waterman Pipeline News North Encana is continuing to drive toward a natural gaspowered future with plans to build a liquefied natural gas (LNG) plant with Ferus LNG near Grande Prairie, Alberta. The LNG fuel to be produced at the facility will be of the quality necessary for high-horsepower engines used extensively in nearby oil and natural gas plays such as the busy Montney formation in northeast British Columbia and the emerging Duvernay formation in northwest Alberta, both of which are hot commodities thanks to their liquids-rich natural gas reservoirs. Applications for the LNG include drilling rigs, pressure pumping services and transportation. “We’re very early-stage in many of the markets for using natural gas in transportation,” said David Hill, Encana’s vice president of natural gas economy operations. “So, we’re looking at areas where we can bring not only the fuel to the market and the solutions for fueling, but also some of the market to the plant.” Encana has been active in the Montney near Dawson Creek for some time. They also announced a joint venture with PetroChina subsidiary Phoenix Duvernay Gas to develop their assets in the Duvernay on Dec. 13, just four days prior to announcing that they would be constructing the LNG plant. Their present and future activity in those plays – as well as the activity of other industry players in that region – played an important role in their decision to build the LNG plant and locate it near Grande Prairie. “We look at the [exploration and production] industry as really a jumpstart to using natural gas in transportation,” said Hill. “So, we kind of picked that area because of the activity for high horsepower, on-road, off-road – it’s a nice geo-location where we can really base a plant up there. And also get access to gas right off of our system. “Right now, there’s no LNG production in Alberta,” he added. Hill noted that Ferus will be converting their truck fleet in the region to LNG when the plant is operational. “And with that we’ll be underpinning the plant as well as the investment in the infrastructure to fuel,” he said. That isn’t the only reason behind Encana’s decision to work with Ferus on the project, however. “Both of us were looking at using natural gas in our operations,” said Hill. “Ferus is a long time supplier of cryogenic fluids to the industry through liquid nitrogen and liquid CO2 (carbon dioxide),” he added. Ferus also has a history as an LNG supplier that has provided fuel for hydraulic fracturing operations. R001424264
“They’re very experienced in transporting cryogenic fluids,” Hill continued. “As well as getting out to location, which is really important.” That is partly because transporting fuel to drilling sites often involves off-road travel, which is significant considering plans to create a mobile fuel storage and dispensing system alongside the new plant. Hill explained that a permanent fueling station requires a great deal of capital to build and a great deal of business to make profitable. A permanent station can cost as much ad $3 million, while mobile fuelling can cost less than $1 million. “Mobile fuellers are very profitable,” he added. “They also provide the fleets the flexibility to move.” That has considerable value when a producer company’s drilling program changes during the year. “We don’t like them to [change], but sometimes they do,” said Hill. “So, by having a mobile fueling solution as the fleet moves from a basin or an area of a field to another, we can move the fueling with them. And it really provides a lot of flexibility. “It also provides a lower capital cost to get a fleet started, to test this in a pilot project,” he added. Encana brings similar experience transporting cryogenic fluids to the partnership, particularly as the fuel supplier for the largest LNG truck fleet in North America, which is operated by Heckmann Corporation, the company that provides water to Encana for their Haynesville shale gas operations in Louisiana. “We [also] bring some market to the table,” Hill added. Initially, the plant will produce 190,000 litres of LNG per day, but Hill explained that it is being built with expansion in mind because they expect the LNG market in the region to continue to grow. “We see this as very integral into our vision of integrating natural gas … into our operations,” said Hill. Encana is already using compressed natural gas (CNG) for their light duty truck fleet and encouraging their service providers to convert to natural gas for their vehicles. “Throughout North America, we have about 51 per cent of our drilling rigs today using natural gas,” Hill continued. About 30 per cent of their drilling rigs used natural gas in 2011. “Before, we were just using field gas – gas being produced in the field – and we were tapping into the lines and bringing them over to the location as we did our resource play hub, where we do pad drilling and do multiple wells from a pad,” said Hill. “Having LNG in the market in that area provides us the continued pg 28
PIPELINE NEWS NORTH •
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special feature 8 12 16
Almighty dollar - Encana talks foreign investment LNG bringing B.C. boom Canada’s most powerful energy sector women
community 18 Fort St. John residents earn Queen’s Jubilee medals
industry news 4 World issues - international 5 23
LNG conference in B.C. CAPP tackles earthquakes B.C. opens two trade offices in India
careers & training 29 Tech companies join forces in the patch
environment 10 Money for Mother Nature - Shell’s Fueling Change 20 Keeping clean - innovative water treatment technology 27 B.C. looks at oil spill response
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• PIPELINE NEWS NORTH
JANUARY 2013
North
industry news WORLD ISSUES B.C. hosting first international LNG conference
james waterman Pipeline News North
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British Columbia is set to be the centre of the liquefied natural gas (LNG) world this February as host to the first international conference focusing solely on that industry. Rich Coleman, minister of energy, mines and natural gas, announced on Nov. 29 that the conference would be taking place in Vancouver on Feb. 25-26 to bring together international stakeholders in the growing LNG business ranging from municipal governments and First Nations communities to global investors and energy sector companies planning LNG export projects in B.C. “The conference will highlight the latest developments in B.C.’s race to enter the LNG global marketplace,” said a ministry spokesperson. “In addition to skills training and labour needs, the focus of discussion will be on international and prospective markets, B.C. regulations and environmental protection, as well as First Nations and community engagement.” “I think that’s pretty exciting,” said Geoff Morrison, the B.C. operations manager for the Canadian Association of Petroleum Producers (CAPP). “There’s a great opportunity for British Columbians to take part in an emerging market,” he continued, while adding that it isn’t exactly a new market. “The first LNG shipments were probably 30 or 40 years ago,” said Morrison. “The industry, though, really has only started to grow in a substantial way in the last 10 or 15 years. So, now that shale gas – and unconventional gas – in general has ensured that there’s a sufficient amount of gas to both meet domestic needs [and] also export to foreign countries, [there] is a great opportunity for B.C. to take part in that market. “We’re emerging into a market that’s growing, but it’s competitive.” The ministry suggests that B.C. is poised to become a world leader in the LNG trade. “The province has an abundant supply of natural gas to meet growing energy demands and is geographically positioned to be a major supplier of LNG to the Asian marketplace,” said the ministry spokesperson. “The conference will highlight the expertise each LNG proponent brings to B.C., talk about how this energy sector industry is developing in the province and provide domestic and international economic perspectives on B.C.’s emerging new industry. “
As mayor of Kitimat, the community expected to be the export hub for most of B.C.’s LNG export projects, Joanne Monaghan is glad that B.C. is hosting the first international LNG conference, but is also concerned about the chosen venue. “I would have liked to have very much seen the conference up here in the Northwest, especially in Kitimat, because that’s where it’s all going to happen,” said Monaghan. “I don’t know why they put it in the place where they have when none of it is even going down there. “I don’t understand why everything has to be held down there instead of up there. It’s like we don’t exist.” Monaghan suggested that residents of the natural gas producing regions of northeast B.C. could be feeling the same way, which she believes is indicative of an enduring disconnect between the north and the south of the province. “This is an international conference and many people from outside B.C. are expected to attend,” said the ministry spokesperson, explaining the decision to hold the event in Vancouver. “Vancouver offers many advantages for hosting a conference of this size and magnitude, including travel accessibility and accommodations, in addition to a premier building for hosting the conference’s agenda and attendance,” the spokesperson continued. “Key governments and local stakeholders will be invited from B.C.’s northwest and northeast.” Monaghan said that her city council would likely be represented at the conference, as did Dawson Creek mayor Mike Bernier, whose community is only about 50 kilometres east of Shell Canada’s Groundbirch operation that is expected to supply their LNG project with natural gas. Shell is working with PetroChina Company, Korea Gas Corporation (KOGAS) and Mitsubishi Corporation to export LNG from Kitimat under the banner of LNG Canada. “I think it’s important, even at a local government level, that we understand what could be happening, what impacts it might have for British Columbia,” said Bernier, noting he will probably accompany one or two of his city councilors to the conference. Bernier also remarked that it would be valuable for local service sector companies to attend as well. Art Jarvis of service sector association Energy Services BC (ESBC) agrees. “It would be advantageous for me to go and then come back with some information for our members and,
of course, our board of directors,” said Jarvis. “And just be available for question-answering. Because I’m certainly [more] accessible than the majority of the government people.” Although Vancouver is a long way from where Bernier and Jarvis live and work, the natural gas producing region of the province, they understand why the government would hold the conference in that city. “I think it’s really important and exciting that this first LNG conference be held right here in B.C.,” said Bernier. “When you look at the possibilities on the horizon for British Columbia basically being Canada’s hub of LNG, this is obviously fitting that it’s being held right here. “Being the first one,” he continued, “I think it’s important to have it in a place where we’re going to have … people involved and possibly large investors as well looking at what’s going to be happening with LNG. So, being in Vancouver right now doesn’t offend me at all.” Holding the conference in Vancouver could ensure the high level of attendance that Bernier believes is important for the first such event. “Going forward,” he added, “there’s going to be lots of opportunity for similar conferences, maybe on a smaller scale, being in northern British Columbia where a lot of the activity’s going to take place. “But for now this is … just to get interest, understanding and investment opportunities.” Although the ministry indicated that much of the discussion during the conference could be around very high-level subject matter, Jarvis and Bernier are hoping that local concerns specific to northeast B.C. will be addressed. Some of those concerns are fairly high-level as well. “Getting right down the crux of it, what is the earliest date that the plants could be completed – and pipelined to of course – and solidify some contracts with the overseas markets,” said Jarvis. “We have to get our contracts in place as early as possible, because, if we don’t, somebody else in another country has certainly got the opportunity to jump in there and get the best of the contracts. Because the longer you wait, the less opportunity you’ll have for a decent contract.” “We need a better understanding of the global markets and why it’s so important,” said Bernier. “A lot of this activity taking place here,” he continued. “And we want to make sure that, at the end of the day, as much of the money as possible and the job opportunities are in our region.”
JANUARY 2013
PIPELINE NEWS NORTH •
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frack management CAPP tackles seismicity issue head-on james waterman Pipeline News North
The oil and gas industry wants to reassure the public that fracking is safe. The Canadian Association of Petroleum Producers (CAPP) has followed through on their promise to develop new operating practices for assessment, monitoring, mitigation and response when it comes to hydraulic fracturing and anomalous induced seismicity in the oil patch. The BC Oil and Gas Commission (OGC) released a report on August 30, 2012 indicating that there was a link between fracturing and a series of minor earthquakes that occurred in a section of the Horn River Basin shale gas play of northeast British Columbia between April 2009 and December 2011. CAPP responded at that time with a promise that they would be introducing relevant new practices to be adopted by their member companies this fall, which they did on Wednesday, Nov. 28. “Certainly, one of the most important finds of the OGC report was that there was never any harm or damage to the environment, people – including workers – or property [from those earthquakes],” said Geoff Morrison, CAPP’s operations manager in B.C. “Hydraulic fracturing is still safe,” he continued. “It remains safe. And we’re committed to ensuring that in the future. And that’s the purpose of this practice, is to bring that reassurance to the public that this industry is committed … to operating and working safely.” This new practice is the latest addition to a set of six hydraulic fracturing practices introduced by CAPP in January, 2012 and the first to focus specifically on the problem of induced seismicity. The initial practices mostly concern issues related to fracturing fluids such as water management and disclosure of chemical additives in those fluids. This practice encourages natural gas
producers to assess the potential for induced seismic activity in the areas where they are planning to conduct fracturing operations and react accordingly if the possibility of seismic activity does exist. That includes proper wellbore placement and design as well as the development of adequate mitigation and response measures in case seismic events should occur. “This practice was constructed in cooperation with our members and through a task force,” said Morrison. “The CAPP practices and principles are expected to be used by all our members throughout Canada.” However, that doesn’t suggest that the possibility of seismic activity caused by fracturing is national in scope or poses a considerable threat to the public or the environment. Indeed, the OGC report revealed that only one of the 272 seismic events examined through the course of their study was felt at surface. Additionally, all of those tremors occurred within a small and isolated area in the Horn River Basin. “The OGC study identified some new information about the potential for anomalous induced seismicity that previously was unknown and it certainly seems to be initially restricted to the geology of the Horn River Basin,” said Morrison. “But more study needs to be done,” he added. CAPP will be expecting their member companies to confirm their use of the practice by demonstrating that they have developed appropriate procedures for assessing seismic potential. CAPP will also be looking at wellbore placement and design, communication with onsite personnel and monitoring and mitigation procedures in cases where seismic potential has been identified through that preliminary assessment. CAPP is asking that companies make all those procedures publicly available. “CAPP doesn’t spell out how they
After the BC Oil and Gas Comission determined a link between hydraulic fracturing and this collection of seismic events, the Canadian Association of Petroleum Producers began developing new standard practices around induced seismicity.
BC OIL AND GAS COMMISSION MAP
should do that,” said Morrison. “Some companies choose to make them available on their websites and other companies choose to have you in-
quire about them. But we do expect them to be publicly available in some format. “We want to maintain that open relationship with the public.”
Upgrades on the way for SYD Road STAFF REPORTER Pipeline News North
Working in the Horn River Basin shale gas play of northeast British Columbia is about to get a bit safer for the men and women who travel the Sierra Yoyo Desan Road on a regular basis. The BC Liberals announced on Dec. 18 that they have awarded a $13.9 million contract to Hoban Equipment of Salmon Arm to upgrade a 30 kilometre stretch of the SYD from KM 61 to KM 90. The upgrades are meant to increase safety and cut travel time by improving surface strength and drainage, as well employing new dust-control measures. The width of that section will also be increased from 8
metres to 9.2 metres. The 188-kilometre SYD connects the community of Fort Nelson and its oil and gas service sector with the shale gas resources in the Horn River Basin and Cordova Embayment. “With this contract award, improvements to over 91 km of Sierra Yoyo Desan Road are either complete, underway or pending,” said Peace River North MLA Pat Pimm. “These upgrades will provide a safer, more efficient route for industry to access B.C. oil and gas resources,” he added. The upgrades are scheduled to begin this January. The expected completion date is October, 2014. The Horn River Basin Producers Group, an associa-
tion of oil and gas companies operating in the Horn River Basin, is also encouraging the provincial government to split the cost of a new central corridor road proposed by the Producers Group. “It allows us to start doing more local work out of Fort Nelson,” said new Producers Group chair Dave Rushford of Quicksilver Resources Canada. “We have a significant reduction in travel time, which is going to increase safety for all of our workers and our contract workers. And, obviously, reduce transportation costs as well, which will help with the profitability of the basin. “There really isn’t an area that that central corridor doesn’t have a positive impact on from a Producers Group perspective.”
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• PIPELINE NEWS NORTH
JANUARY 2013
special feature WHAT TOMORROW BRINGS Good years bound to get better with the promise of LNG
james waterman Pipeline News North
When Tyler Kosick says it was a good year in the natural gas plays of northeast British Columbia in 2012, he does so with a note of cautious optimism. The outgoing president of the Fort St. John Petroleum Association has his finger on the pulse of the oil and gas industry in the region as well as anybody. Born and raised in Fort St. John, he is now the owner and general manager of the family business, Trans Carrier Ltd (TCL), and Backcountry Truckin’, both of which provide various services to the energy sector. So, his words carry a certain weight when the topic of conversation turns to the patch. “I think the past year has been good with the outlook of the LNG (liquefied natural gas) terminals on the coast and us being able to export our resources,” said Kosick, noting the importance of diversifying the markets for Canada’s oil and natural gas beyond what has traditionally been our biggest trading partner – the United States – through initiatives such as exporting natural gas from B.C. to Asia in liquid form. Still, it was a challenging year for natural gas producers in this province. Already suffering through a period of record low com-
modity prices that was slowing production, especially in the Horn River Basin shale gas play that lacks the more valuable liquids-rich gas that is fairly common in the Montney play, companies had to deal with a summer of forest fires threatening wellsites and gas plants, not to mention a severe drought that led to the BC Oil and Gas Commission (OGC) suspending water withdrawals from many of the watercourses in the region for industry uses such as hydraulic fracturing. However, Kosick can see a glimmer of hope on the horizon, largely because of the recently approved acquisitions of Canadian oil and gas producers Nexen – which has natural gas assets in the Horn River Basin – and Progress Energy Resources – which has significant assets in the Montney formation – by China National Offshore Oil Corporation (CNOOC) and Petronas, respectively. Nexen has been kicking the tires on an LNG export project using natural gas from their Horn River Basin assets, while Petronas and Progress were already partnering on producing natural gas in the Montney play and plans to export that resource as LNG prior to the acquisition. Petronas is one of the major players in LNG globally. “I think there’s a lot of excitement,” said Kosick. “What it’s telling us is there’s foreign countries – foreign companies – that are willing to invest in Canada’s
infrastructure,” he continued. “They’re not only investing in our land, but also our technology and our people.” Although reports on the oil and gas industry in major newspapers across Canada in 2012 were often about embattled plans to transport Alberta oil sands bitumen to refineries in the southern United States via TransCanada’s Keystone XL pipeline and export crude to Asian markets via Enbridge’s Northern Gateway pipeline that would stretch across B.C. to the coast at Kitimat, the hot topic in the Northeast was often the burgeoning LNG business. A few projects were already in the works when the provincial government made LNG the focal point of their Natural Gas Strategy that was launched in February. The LNG industry was front and centre again when Premier Christy Clark visited the Peace Region in July for the grand opening of Spectra Energy’s new Dawson Processing Plant, as well as when minister of energy, mines and natural gas Rich Coleman spoke at the Fort St. John Energy Expo in May and the Dawson Creek Energy Conference in September. “The year 2012 was one of much excitement and progress, especially for B.C.’s growing natural gas sector,” said Coleman, sharing his thoughts on the past year and the new one just beginning with Pipeline News North.
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JANUARY 2013
“We reached out to investors and built strong business relationships with prospective trade partners,” he added. “Significant steps forward were taken, including policy changes to foster growth and ensure power availability to support development.” A key policy change was an amendment to the Clean Energy Act that now allows burning of natural gas for power generation to supply electricity to liquefaction facilities that require considerable energy. However, Charlie Lake residents and opponents of BC Hydro’s Site C proposal Rick Koechl and Mike Kroecher want to see natural gas power generation on a scale large enough to eliminate the need for the controversial hydroelectric project. “We live overlooking the Peace River Valley,” said Kroecher. “And we’ve become extremely fond of this area. Of the valley. I’d hate to see it destroyed, which Site C would definitely do.” “The natural gas is being sourced here, it’s available and it’s being processed here,” said Koechl. “It could stimulate the main industry we have in this area: gas production,” added Kroecher. “Nobody has an issue with the fact that probably 90 per cent of our homes in this province are heated with natural gas,” he continued. “Perfectly normal. Nobody argues that point. But when we want to generate some electricity by using natural gas, people say, ‘It’s not clean.’” “All of this is sort of counterintuitive,” said Koechl. Kosick believes Site C could be important to the success of the natural gas industry in northeast B.C. and not only because the energy is required for LNG. “Honestly, I think that’s going to play a big role in retention of skilled workers if it goes through,” said Kosick. “If done properly,” he continued, “we’ve got the potential to grow our community, bring in a lot of very good services. “I think that could be very good for the community, but it has to be structured properly.” The BC LNG Export Co-operative and the Kitimat LNG partnership, which now consists of Apache and Chevron Canada after the latter acquired stakes in the project previously held by EOG Resources and Encana, had already received LNG export licenses from the National Energy Board (NEB) when Shell Canada and
British natural gas giant BG Group officially entered the fray in 2012. BG Group announced in early September that they would be working with Spectra Energy to build a pipeline to Prince Rupert for the purpose of exporting B.C. natural gas as LNG. Previously, Shell Canada and their partners, PetroChina, Mitsubishi Corporation and Korea Gas Corporation (KOGAS), announced that they would be moving forward on a project to export natural gas produced from their Montney formation assets in the Groundbirch area just west of Dawson Creek under the banner of LNG Canada. It was just part of a busy summer for Shell that included the grand opening of their new offices in Fort St. John and the water reclamation plant the company built with the City of Dawson Creek. Sewage treated at that facility becomes non-potable water perfect for hydraulic fracturing. Shell now pipes that water to their Groundbirch operation, thereby virtually eliminating freshwater consumption at that site. Shell also contracted TransCanada to build the Coastal GasLink pipeline that would connect Groundbirch to the proposed export terminal in Kitimat. As one of the first major projects to face federal regulatory review under the new CEAA 2012 Act, which was brought into effect on July 6 in order to improve the efficiency of that review process, the pipeline proposal caused a minor stir in November. The issue was that the Canadian Environmental Assessment Agency (CEAA) issued a call for public comment on Coastal GasLink on Nov. 13, indicating that comments received could play a role in determining if a federal environmental assessment of the project is necessary. A popular B.C. newspaper ran with the story that Coastal GasLink might not face a federal environmental assessment as a result, ignoring that a list of projects that usually require such assessments, known as the Regulations Designating Physical Activities, suggests that an environmental review is highly likely. After the acquisitions of Nexen and Progress by Asian companies, industry experts were suggesting that LNG projects featuring an Asian partner stand a better chance of securing contracts with customers in that continent than projects
City of Dawson Creek Mayor Mike Bernier compares drinking water to effluent treated by the new sewage treatment plant the City built with industry partner Shell Canada. Shell is using that water for hydraulic fracturing in their Groundbirch natural gas operations west of Dawson Creek. Some of that gas is destined for export as LNG, too.
JAMES WATERMAN PHOTO
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Premier Christy Clark visited Spectra Energy’s new Dawson Processing Plant for its grand opening in July. LNG was a big part of the conversation during her visit.
JAMES WATERMAN PHOTO
such as Kitimat LNG that solely involve North American outfits. “You’re guaranteeing your end supply,” Kosick said of the Asian companies investing in Canadian resources that they need at home. “I’m not going to go out and buy a whole bunch of trucks if I don’t know that there’s a contract on the table to go and move a whole bunch of stuff,” he continued, discussing the contract situation. “It’s no different. They’re not going to invest a whole bunch of money in Canada and our natural resources if there’s not … a market for it. “With that being said, I think we need to retain a portion of it. We don’t want to give it all away.” Kosick began to turn his attention to very local matters as he set his sights on 2013. “There’s some infrastructure needs that need to be done,” he said, suggesting that a transportation corridor between Fort St. John and the Alberta border should top the list of priorities. “For personal safety reasons for everybody,” he added. “And access to the community, knowing that there’s growth potential.” The Horn River Basin Producers Group has been discussing a similar idea with the provincial government to build a new transportation corridor between Fort Nelson and the patch north of town, also citing safety concerns as a reason for the project. “It makes sense,” said Kosick. “You have to plan for the growth. But the worst part about Fort Nelson is, right now, it’s hard to justify it, because they’re slow.” Activity is expected to increase in the Horn River Basin when LNG projects are really underway, but that timeline is still very uncertain. “I think once the shovels are in the ground and the pipe is getting laid to the coast and those contracts are in place, there’s probably … two to three years of pipelining, which gives you two to three years to build some infrastruc-
ture,” said Kosick. “It’s a balancing act.” Kosick and his peers in the patch are also worried about the spring election. “I think there’s a very big concern in our area [about] an NDP government,” he said, noting that a resurgence of the BC Conservative Party could split the vote on a right wing that has essentially been the exclusive domain of the BC Liberals in recent years and allow the NDP to form the government. “Small business, big business, business in general in the province – my belief and a lot of belief of local business people is that the NDP is detrimental to that.” However, the NDP has also voiced their support for LNG. “And they have to because LNG is such a big part of our economy,” said Kosick. Kosick doesn’t think NDP support for LNG will create an opportunity for local service sector companies to discuss their concerns with that party if they do form the government. “They overspend on social programs,” he said. “There’s certain services that, in a recession time, can’t be provided,” he added. “Currently, we’re still in a recession. Even though B.C. is working strong, we’re not quite out of it yet. So, we’re in very tender times. And if somebody throws a monkey wrench into the whole thing, we have the possibility of going way backwards instead of continuing on the climb.” Even though his party may not hold the reins of government for very long, Coleman is enthusiastic about the prospects for the next year, which will feature the first international LNG conference in Vancouver in February. “Moving into 2013,” said Coleman, “we remain confident in our aspirations for LNG and its potential to generate thousands of jobs and billions of dollars in revenue for the Province.”
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special feature the almighty dollar Encana knows the value of foreign investment james waterman Pipeline News North As the Canadian business world was closely watching the drama around the impending acquisitions of Canadian oil and gas companies Nexen and Progress Energy Resources, Encana was quietly going about their business – the business of securing foreign investment to help them unlock the potential of their natural gas assets in western Canada. “Foreign investment is awfully important to the upstream oil and gas industry. It is, has been and always will be,” said Richard Dunn, vice president of regulatory and government affairs with Encana’s Canadian division. Encana has demonstrated their wholehearted belief in that idea over the past few years.
After a joint venture deal with PetroChina to develop their Cutbank Ridge assets in northeast British Columbia fell through in the summer of 2011, following a year of negotiations, Encana continued to seek partners from across the Pacific Ocean. The Canadian natural gas giant signed a $2.9 billion agreement with Mitsubishi Corporation on Feb. 17 2012 to develop those same Cutbank Ridge assets, the Japanese company acquiring a 40 per cent interest in the project. Encana would continue to be the operator of those assets, as well as the managing partner of that new Cutbank Ridge Partnership. Subsequently, Japan’s Toyota Tsusho Corporation announced that they would be investing $602 million in exchange for a 32.5 per cent royalty interest in natural gas production from Encana’s
coalbed methane project in southern Alberta. “We have another significant [partnership] with KOGAS (Korea Gas Corporation) … up in the Horn River area,” said Dunn. “The industry is roughly $50 billion a year of capital that goes in,” he added, noting that growth of the industry requires that a portion of that investment come from foreign sources. Encana has a variety of reasons for seeking foreign investment, depending on the circumstances of the play under discussion. For example, the KOGAS and Mitsubishi investments concern assets where there is no longer any associated exploration risk and the investment dollars can be put toward production in those fields. In the case of Toyota Tsusho’s invest-
ment in coalbed methane, the funds are simply used to keep a mature asset producing. Previously, the majority of the investment in the Canadian industry has come from the United States and Europe, but, as shown by Encana’s recent partnerships, an increasing amount of that investment is now coming from Asia. Dunn doesn’t believe that is an issue for their local stakeholders. “I think that there’s recognition that Canada has very strong … regulatory regimes that ensure effective management of upstream oil and gas activities,” said Dunn. “And I think that that’s certainly one area that provides an awful lot of comfort – that we all play by the same rules.” Dunn also noted that Encana has maintained the role of operator in all of their
Attention - Oilfield Producers and Transport Companies Properly Classifying Oilfield Production Fluids Transport Canada reminds oilfield producers and cargo tank transport companies that the “consignor” (i.e. shipper) of dangerous goods must properly classify the substances before placing them in transport. While the consignor is usually the oilfield producer, it can be the carrier when they assume full responsibility for the shipment. Consignors must classify any oilfield production fluids that meet the dangerous goods criteria according to Part 2 of the Transportation of Dangerous Goods Regulations. This may include testing the material at oilfield sites before transport to determine factors such as flammability and corrosivity. To learn more about this issue, please contact the following Transport Canada regional office: Pacific Region (B.C.) Phone: 604-666-2955 E-mail: TDGPacific-TMDPacifique@tc.gc.ca
Attention : Producteurs de champs pétrolifères et compagnies de transport Classification adéquate des fluides pétrolifères de gisements Transports Canada rappelle aux producteurs de champs pétrolifères et aux compagnies de transport de citernes à cargaisons que le « consignataire » (c.-à.-d. l’expéditeur) de marchandises dangereuses doit bien classifier les substances avant qu’elles soient transportées. Bien que le consignataire soit habituellement le producteur de champs pétrolifères, il peut être le transporteur lorsqu’il assume l’entière responsabilité de l’expédition. Les consignataires doivent classifier tous les fluides pétrolifères de gisements qui satisfont aux critères de marchandises dangereuses en vertu de la partie 2 du Règlement sur le transport des marchandises dangereuses. Cela pourrait comprendre des essais sur le matériel à des champs pétrolifères avant le transport pour déterminer des facteurs comme l’inflammabilité et la corrosivité. Pour en apprendre plus à ce sujet, veuillez communiquer avec ce bureau régional de Transports Canada : Région du Pacifique (C.-B.) Téléphone : 604-666-2955 Adresse électronique : TDGPacific-TMDPacifique@tc.gc.ca
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partnerships and joint ventures. tsunami, that they’ve moved away from “So, they continue to see the Encana nuclear and moving towards natural gas name.” as a greater source of energy supply for “And the reality is that these investtheir electricity. ments are critical to the local economy,” “I think the public sees that connection.” he said, adding that those economic Dunn suggested that the supply and benefits then extend to the province and demand dynamics of the industry today the nation. are making it essential for Canada to see “This partnership with Mitsubishi that investment from Asia. we have in the Montney, for example, is North America has a glut of natural expecting to create some 14,000 ongoing gas. jobs across Canada,” he explained. “And “The United States does not need our this would be direct, indirect and induced. natural gas resources to the extent that they did because they’re developing their So, this is all the way from people working on the rigs to people in the hotels in own,” said Dunn. the service industries.” “We have this wealth of resource opportunity [and] our traditional customer Dunn added that 10,000 of those 14,000 jobs would be in B.C. alone. doesn’t need us to the extent they did,” “These are huge impacts on the econo- he continued. “So, we’re looking for my. And there’s an awful lot of people alternative markets, which … most likely that are working as a result of this foreign will be Asian markets. To that extent, we investment.” offer a stable, secure supplier. And part Dunn also explained that Canada of that security is the ability for Asian is quite attractive to foreign investors, companies to invest in the whole value particularly those in Asian countries chain.” that are looking at Alberta oil and B.C. However, the situations with Nexen natural gas as answers to their energy and Progress were a different story. questions. While Encana was inking partnerships “What Canada offers from a competiand joint ventures with Asian compative advantage standpoint is a stable, nies, Nexen and Progress were facing secure source of energy,” said Dunn. outright acquisition by two state-owned “And this is strategic energy for enterprises, China Offshore Oil Corporathese Asian countries. And the foreign tion (CNOOC) and Malaysia’s Petronas, investment is attracted in recognition respectively. of that.” That prospect raised concerns from the general public and the federal That security is best achieved, according to Dunn, when government in those companies “What Canada offers terms Canada realizing a net are able to own benefit from a stake in the from a competitive upstream side of the takeovers Nexen and the industry, as advantage standpoint is of Progress, well as the part of which must be the industry where natural gas is lique- a stable, secure source the case for the government to fied and exported of energy.” approve such in the form of LNG, as an example. acquisitions “It certainly of Canadian – Richard Dunn, Encana provides a level of firms by foreign security that other companies. competitors to Canada may not be able The federal government did eventuto provide,” he said. ally approve those deals on Dec. 7, but also subsequently announced changes “I think that people recognize why foreign investment – in particular, Asian to the rules concerning foreign investinvestment – is coming,” he continued. ment by state-owned enterprises. The “It’s in anticipation of export of that enmessage was that Canada would prefer ergy supply to Asia. investment from private companies and “Certainly, it’s widely understood, for only tolerate minority investment from example, in Japan, with the unfortunate state-owned enterprises in the form of
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One of Encana’s projects in the Montney natural gas play of northeast British Columbia. Investment from Asian companies is helping Encana develop their assets in that play, as well as their coalbed methane and Duvernay shale gas assets in Alberta.
ENCANA PHOTO
partnerships or joint ventures where the Canadian companies remain the majority stakeholder. Shortly after that announcement, Encana unveiled a new joint venture partnership with a subsidiary of PetroChina – a state-owned enterprise – to develop their assets in the Duvernay shale gas play of western Alberta. Dunn said the deal fits perfectly with the federal government’s new policy. “The government’s still very much interested in [promoting Canada] as a good place to invest in natural resources,” he said of the policy. “And [it] is a signal that this sort of a deal, this sort of a joint venture where it’s a non-controlling interest, certainly, by a foreign state-owned entity, is a preferred way to go.” It is also an ideal situation for Encana. “We have an awful lot of opportunity in the Duvernay,” said Dunn. “The Duvernay is in the very early stages. It’s a liquidsrich natural gas play. And, as such, early indications have been very prospective. But we need to learn a lot more about the
play and we need to get our development costs down.” Dunn said that the investment by PetroChina allows Encana to “accelerate the learnings in the play and start to unlock the potential of the play.” The new partners will be spending about $4 billion over the next four years to test the Duvernay. “To get to the point where it’s economic and profitable,” said Dunn. “Certainly, there’s a lot of potential there, but we’re in that phase – that early life phase – of unlocking that potential.” It also puts the pieces in place for the long-term development of the resource over the next twenty years or so. “It allows us to unlock it, but also allows access to the significant capital through our partner that will enable the development of the play,” said Dunn. That underscores the value of foreign investment in Canada’s industry. “We’re long on opportunity,” said Dunn. “And short on capital to develop that opportunity.” R001424176
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environment MONEY FOR MOTHER NATURE Shell Canada helping community groups help the environment
NEAT’s plan to grow hydroponic vegetable gardens in Fort St. John has been put on hold due to funding shortfalls even though the organization recently secured a $10,000 grant through Shell’s Fueling Change program. NEAT’s Karen MasonBennet is still enthusiastic about Fueling Change despite failing to earn a larger grant.
JAMES WATERMAN PHOTO
james waterman Pipeline News North The seeds of a local hydroponic vegetable garden plan aren’t about to grow any time soon despite a recent addition of financial fertilizer. It was announced on Dec. 4 that the Northern Environmental Action Team (NEAT) in Fort St. John has received $10,000 for their Green Freight project from Shell’s Fueling Change program, which allows Canadians to vote on environmental initiatives vying for a share of $2 million of funding every time they purchase Shell products. “We would have really liked to receive $100,000, but $10,000 is awesome, too,” said Karen Mason-Bennett, NEAT’s program coordinator in Fort St. John. “The project itself really required $100,000 worth of funding,” she added. “So, at this point, it’s on hold.” NEAT will be gauging public support for Green Freight and their board of directors will be reevaluating the project at some point in early 2013. “It will definitely allow us to evaluate some other food security projects and things that are going on in our communities,” said Mason-Bennett. “And maybe provide a little bit of funding to other organizations.” The way Green Freight is meant to work is that hydroponic units would be set up in shipping containers on a brownfield lot in Fort St. John in order to grow tomatoes, leafy greens and herbs. Rain would be collected from spring through fall to supply a portion of the two standard garbage cans of water required every four weeks. NEAT is looking at alternative energy such as solar power for the considerable amount of energy required for lighting, heating and pumping the water and nutrients through the system. All of that explains the high cost of the project and the need for additional funds beyond the $10,000 provided through Fueling Change. Although NEAT wasn’t able to realize their goals with this round of Fueling Change, Mason-Bennett has nothing but good things to say about the program. “I think it’s really innovative,” she said. “I enjoy it.” Shell, which is active in the Montney natural gas play of the region, was also excited about the opportunity to fund a project in one of their operating areas.
“To be able to be involved with agencies where we operate is sort of first prize for us,” said Shell spokesperson Patty Richards. “The fact that it’s just the general citizen who’s voting is great in and of itself,” she continued. “But then, if it’s able to recognize projects in our communities where we have an asset, that’s excellent. Because those are the agencies that we usually have direct relationships with and who we know on a community level. “It just makes it all the more fun for us.” Consequently, Shell was quite disappointed to hear that NEAT is unable to move forward with the project at this time. Richards explained that Fueling Change awards multiple projects with grants of $25,000, $50,000 and $100,000. All other projects approved to participate in the contest receive $10,000. “While unsuccessful in achieving a larger grant, Shell and its customers are pleased to provide NEAT with a grant of $10,000 to support the project and encourage their continued fundraising efforts,” said Richards. Shell also works in the Edson, Alberta area, where the Edson and District Recycling Depot earned a Fueling Change grant for the second year in a row. “One was for expansion of our existing building for the education programming and hosting seniors days and school tours and all that kind of stuff,” said depot manager Anne Auriat. “The $50,000 the second time around was for construction of our Take It Or Leave It program.” The program has been running for about ten years, Auriat explained, but its growing popularity has necessitated the construction of its own building. “It just matches items that people no longer feel are useful or no longer need with people that actually need those items,” she said. “There’s probably around 200 people every Friday and Saturday that come in to go to that program. And it just becomes a traffic jam in our regular recycling program.” The new building is about 2,400 square feet in size and features recycled paint on the interior walls and recycled rubber tire roofing materials. “It will have some passive solar on the south side,”
said Auriat. The facility will also include electrical outlets so that visitors can test the electronic equipment they might be taking home. “Every time we try to build something, we like to make sure it follows … our philosophy,” said Auriat. The $50,000 grant is a significant contribution to the project. “It pays for half of it,” said Auriat. “Fifty-thousand dollars for a non-profit group is huge when you are struggling to try and get provincial funding or other kinds of funding,” she continued. “You have to host a whole bunch of bake sales and a whole bunch of garage sales in order to come up with $50,000. It’s a lot of work. “It’s six months of advertising and promoting that project within your community, but it’s well worth it.” Auriat said the popularity of Take It Or Leave It translated into considerable community support for the recycling depot’s efforts to secure a Fueling Change grant, especially from seniors and the local schools. “It was great public support,” she remarked. Auriat was also happy to see Shell contributing to one of their operating areas again through Fueling Change. “What’s important is creating an environment so that industry can partner with various non-profit groups, with residential groups, with municipalities,” she said. “And those are all the factions of your community. You need to include all of those in any of your projects and build on that. “It’s really good that they are here and putting money back into this community.” David Winkler of The AREA was just as happy to see Fueling Change money going toward initiatives in the Canadian oil and gas capital that is Calgary. “Calgary is an oil and gas city,” said Winkler. “We grew up with oil and gas.” Winkler describes the AREA – the name stands for arts, recreation, education, environment and agriculture – as a privately owned community hall occupying a quarter-acre property in downtown Calgary. The AREA received a $25,000 grant for an urban agriculture project utilizing the garden section of the property. “That garden space is used for education,” said Winkler. “People can grow in the garden space. And then they teach what they’re trying to accomplish. The funding helps to pay for the educational tools that we can use to demonstrate urban agriculture,” he continued. That includes constructing a simple greenhouse and teaching people how to use such a facility effectively to extend the growing season. “It just basically allows people to have a visual understanding of what makes urban agriculture successful and easy to do.” Winkler said that Shell employees had volunteered at The Area even before this round of Fueling Change began. “The people that work at Shell are people that we know,” he added, noting that that is a fact that can be forgotten by Calgary residents from time to time. “That’s a problem,” said Winkler. “People fully misunderstand the … industry itself. These are people just wanting to get a day’s work done, keep the lights on in their house, have a family. Eat. They’re human just like us.” Many of the projects in the Fueling Change competition are very local to their communities, as is the case with Green Freight, Take It Or Leave it and The AREA’s urban agriculture project, but the voting process shows that they still resonate with a larger segment of the Canadian population.
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“They’re asking people to vote for project ideas that people might not necessarily come into contact with at all in their daily [lives] and that probably is its biggest strength,” said Mason-Bennett. “I think that people are appreciative of new ideas,” she added. “And I think that they’re appreciative of things that can make people’s lives easier, especially when those things are something that they might take for granted. “An idea up here is definitely local food, but also public transportation. If you live in Vancouver and … you frequent your farmers’ market and you take the bus, you would definitely want to see other people have access to those things as well.” “I can’t speak for why somebody would vote for a particular project,” said Richards, noting that she casts her own votes with her hometown and her own particular interests in mind. “I’m really intrigued and delighted by the projects that feature the power of people,” she continued. “One of the reasons that I’m proud to work for Shell is that the people who work for Shell are pretty impressive. And you can talk about being a big company, but we’re a big company that is made up of people who are trying to do things the best way they know how. And Fueling Change is just one way that we recognize that same sort of initiative in communities. “One of the things we try to do as a company is talk about what impact we can have, what our footprint is and how we’re trying to make that better. And these projects where it’s individuals trying to make a difference on their own footprint, I think that makes a lot of sense to people. And it’s appealing to them. Because they also see how it’s replicable. They see how they can do it themselves.” “I think it highlights the possible,” said Mason-Bennett, discussing the impact Fueling Change and Green Freight could have on the community.
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Construction crew building the new home of the Edson and District Recycling Depot’s Take It Or Leave It program. The popularity of the electronics recyling program meant the organization had to construct a new building to house it. A $50,000 Fueling Change grant courtesy of Shell Canada has made that possible.
EDSON AND DISTRICT RECYCLING DEPOT PHOTO
Mason-Bennett suggested that Fort St. John residents haven’t really adopted the idea of eating locally in the same way as other communities in British Columbia, partly because of the long winters and short growing season in the region, but Green Freight could change that behavior. “It just makes it flexible,” she said of Green Freight. “So, you could eat certain things that were locally produced and hopefully that would open the door and the conversation to producing more locally, as much as we could.” “We’ve gotten away from growing our own food for various reasons,” said Richards. “Most of us, somewhere in the last 100 years, came from some sort of agricultural background. And
that is shifting. “It is nice that these projects get us in touch with the landscape around us.” The funding shortfall isn’t the only obstacle NEAT has faced trying to get their hydroponic program up and running. They have also seen opposition from the City of Fort St. John over permitting issues. “Permitting is always a little bit of an interesting thing,” said Mason-Bennett. “Their concern – and rightly so – is that they’ve worked really hard to get containers out of the city and we wanted to bring them into the downtown core. There’s a little bit of a conflict there, though a friendly one, I believe. And I think we have the opportunity to definitely work through that.
“There was a lot of support for this project.” Mason-Bennett believes that the use of the shipping containers should trump the aesthetic issues, but also noted that NEAT has ideas as far as beautifying the project. “There are a lot of options that we explored,” she said. “One of them was a façade that would turn them into something that looks like buildings that were around. And then we could definitely highlight sponsors for the project on those facades. The other thing was to create landscaping on the outside that mirrored what was happening on the inside. “We would look at landscaping around with edible plants.”
Shell Canada exits Tahltan Nation territority in northwest B.C. STAFF REPORTER Pipeline News North Shell Canada is losing a natural gas asset but gaining a water recycling plant in what can best be described as win-win situation for the oil and gas giant and the Tahltan Central Council. An agreement between the Province of British Columbia, Shell and the Tahltan that was announced on Dec. 18 has Shell relinquishing its tenures in the Klappan region of northwest B.C., a area of cultural, spiritual and social significance to the Tahltan Nation, while a separate agreement has Shell receiving $20 million in royalty credits to build a water recycling facility alongside their Gundy operations in the northeast of the province. “The government of British Columbia would like to thank the Tahltan Central Council and Shell for their commitment to positive communications during the last few years,” said minister of energy, mines and natural gas Rich Coleman. “Together, we have put agreements in place that respect the interest of all three major parties and have tangible benefits for British Columbians.” “Resolution of concerns around the Klappan area is a significant step in this government’s relationship both with the Tahltan and with industry,” added minister of
aboriginal relations and reconciliation Ida Chong. Shell admits that their Klappan assets were not a priority project, but the company had invested $32.5 million in that 3,200 square kilometers of land since acquiring the tenure in 2004. Rather than ask for that level of compensation in return for abandoning their interests in the Klappan, Shell is accepting the $20 million in royalty credits for the Gundy water recycling plant. “Close relations with Aboriginal communities are important to our many business opportunities in British Columbia,” said Lorraine Mitchelmore, president and country chair for Shell Canada. “We are pleased to have found common ground on our petroleum and natural gas tenure in the Klappan. We now focus on growth opportunities with better commercial and geological prospects in northeast British Columbia. “Good water management is central to sustainable operations,” she added. “And we thank the government of British Columbia for their contribution to this aspect of our exploration and production activities.” By recycling and reusing flowback water from their Gundy wells, Shell can not only reduce the amount of freshwater required for their operations, but also take about 6,500 trucks – that travel approximately 1.5 million kilometers per year – of the roads in that region.
That has benefits in terms of improved road safety and reductions in noise, dust and greenhouse gas emissions. Shell acquired their tenure in the Klappan in 2004 with the intention of producing coalbed methane. After drilling three exploration wells in 2004 and 2005, Shell ceased activities in the area in response to concerns raised by the Tahltan Nation about natural gas exploration and production in their traditional territory, a region that is also host to the headwaters of three important salmonbearing waterways, the Skeena, Nass and Stikine Rivers. Shell agreed to amend its tenure in 2008 to allow a two to four year reprieve from further activity in order to discuss the situation with the Tahltan Nation. “We want to acknowledge Shell for its decision to respect the wishes of the Tahltan Nation by giving up its plans to develop coal-bed methane in the Klappan,” said Annita McPhee, president of the Tahltan Central Council. “The Klappan is one of the most sacred and important areas for our people. It is a place of tremendous cultural, spiritual, historic and social importance. “Our people do not want to see it developed, and we look forward to working with B.C. on achieving permanent protection of the Klappan.”
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special feature booming british columbia
Conference Board predicts economic windfall for westernmost province thanks to LNG james waterman Pipeline News North British Columbia is on the brink of realizing tremendous economic gains from its natural gas industry, but that is largely tied to the continuing development of the Alberta oil sands and the success of the burgeoning liquefied natural gas business in the province, according to a Conference Board of Canada report. The Conference Board report released on Dec. 17 examines the role of natural gas in the Canadian economy, predicting that B.C. should experience greater investment in natural gas exploration and production than any other province in Canada. B.C. should see almost $6 billion per year in natural gas investments over the next 24 years, amounting to $181 billion of the $386 billion to be invested across Canada overall. “British Columbia faces the challenge of developing on two fronts: unconventional shale gas production and infrastructure to support liquefied natural gas exports,” said Len Coad, director of environment, energy and technology policy with the Conference Board, explaining the level of investment in natural gas in B.C. That infrastructure includes pipelines to connect natural gas plays in northeast B.C. – and potentially Alberta and Saskatchewan – to the west coast, where liquefaction plants and export terminals will also need to be built. The report assumes that four LNG export projects will proceed at a total capacity of 20 million tonnes of natural gas per year. “Which would be about half the capacity that’s actually been proposed,” said Coad. That would transform Canada from a nation that doesn’t export any LNG to the second largest supplier of LNG in the world. However, there is still a degree of uncertainty around the LNG business. “If that LNG production doesn’t occur, then the related investments would obviously not occur,” said Coad. “I would suggest some caution … in terms of interpreting the upstream results in British Columbia if LNG doesn’t go,” he continued. “And the reason for that is it’s a very complex and challenging issue to determine how much of that production that would have gone to LNG would still be developed for markets in California and British Columbia.” Coad indicated that although there is currently a surplus of natural gas in North America that makes exporting LNG possible, the domestic supply and demand situation could change in the future. “Once you get about ten years into the forecast, ensuring that there’s enough gas supply to meet all markets is more of an issue than it is today,” said Coad. “Some of the LNG production might occur anyway and be diverted to other markets.”
Peace River South MLA Blair Ekstrom and Dawson Creek mayor Mike Bernier listen in during the Dawson Creek Energy Conference in September, where a significant topic of discussion was LNG. Bernier knows the benefits the natural gas industry can bring to the Peace Region and hopes the area will continue to see an appropriate share of the benefits when the LNG export industry picks up.
JAMES WATERMAN PHOTO
The demand for natural gas for in situ mining operations in the Alberta oil sands – where natural gas is burned to generate steam for the steam assisted gravity drainage (SAGD) technique of oil extraction – is also uncertain because the pace of production in the future is tied to heavy oil pipeline projects such as TransCanada’s Keystone XL and Enbridge’s Northern Gateway that face stiff competition and so may never be built. Coad suggests that natural gas consumption in the oil sands will decrease regardless as operators improve their efficiency. “And the bitumen production forecast that we used is relatively close to the producers own view … over the next 10 to 15 years,” said Coad. “And then our outlook beyond that flattens out.” The forecast issued by the Canadian Association of Petroleum Producers (CAPP) shows that bitumen production will continue to increase beyond that date. “And the infrastructure required to get all that bitumen to market is a good question,” he added, indicating that production could decrease without new infrastructure to export the resource. “I think the report did a really good job at really laying
contact Art Jarvis, Executive Director for contact information see www.energyservicesbc.org
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out the obstacles and the opportunities for the industry,” said Aaron Miller, manager of natural gas with CAPP. “As the report stated,” he continued, “despite the doubling of demand [for natural gas], our production in Canada is going to remain relatively flat. And that is primarily due to the large indigenous shale supply in the United States. “They don’t need as much Canadian gas as they used to. And, to boot, they are going to start penetrating and taking some of our own central and eastern Canadian markets.” That underscores the important role of exporting LNG to Asia in terms of Canada realizing the full economic benefits of its natural gas industry, as suggested by the Conference Board in their report. Miller noted that oil sands development and power generation in Canada will also drive natural gas demand, but LNG is the prize. “Getting the LNG offshore into those Asian markets is very competitive,” he said. Miller explained that it takes about ten days to transport LNG from Kitimat, B.C. to Asian markets, but it takes only seven days from Australia, one of Canada’s biggest competitors in the LNG game. “Literally, it’s going to be a race to those markets,” said Miller. “So, although we have the federal government’s approval for the LNG facilities, it’s still not a given. There’s still risk there. But we’re confident that industry and the provincial government will create the environment for it to happen.” “LNG is a unique, historical opportunity for British Columbia and for Canada,” said a ministry of energy, mines and natural gas spokesperson. “It’s a new industry for the country that will create jobs, revenues and prosperity for British Columbians and Canadians. “We are not the only jurisdiction looking to increase LNG capacity. So, maintaining our competitiveness in a timely fashion is essential.” If the Canadian LNG business is successful, the Conference Board predicts it will create 1.2 million person-years
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of employment and over $46 billion in tax revenue in B.C. over the next 24 years. B.C.’s gross domestic product (GDP) is expected to increase by over $116 billion between 2012 and 2035 due to investments in natural gas, but Alberta’s GDP is expected to rise by about $153 billion due to natural gas investments, despite trailing behind B.C. in that regard. The economic impacts – direct and indirect – will extend across Canada. For example, Ontario will see just 7 per cent of direct investments, yet see 18 per cent of the associated employment and 16 per cent of total labour income. Quebec, Manitoba and Saskatchewan also stand to benefit. “Most of the impacts that you see [in Ontario and Quebec] result from relatively modest direct investments in power generation in Ontario and natural gas distribution in Ontario and Quebec both,” said Coad. “And then the rest of those jobs in those provinces are essentially manufacturing sector jobs to create some of the inputs required to make the investments in British Columbia and Alberta.” “The large industrial base in Ontario and Quebec – they’re feeder industries right into the extraction process,” said Miller. Overall, the natural gas industry could mean an additional $1 trillion to the Ca-
nadian economy, as well as an average of 260,000 jobs per year, between 2012 and 2035. Dawson Creek Mayor Mike Bernier knows well the impact a prosperous natural gas industry can have on an economy. “As we’ve seen even this year, with the downturn a little bit in the oil and gas exploration, the impact it’s had to programs and to the provincial budget, you start to realize how important this industry can be to [our] livelihood,” said Bernier. “Not only locally, but the impact it has provincially.” Indeed, Finance Minister Mike de Jong has blamed declining natural gas revenues for the $1.14 billion provincial deficit. “When you look at the possible expansion of LNG to hit some of the world markets, now that takes it out of just British Columbia,” Bernier continued. “This is more of a national situation now because you’re going to have Saskatchewan, Alberta, those areas, that now can consider bringing their products right across to the Pacific Coast.” Bernier indicated that the LNG export business is crucial to realizing the potential of a “landlocked” natural gas resource in northeast B.C. “Our shales are domestic, basically, just with the Americans and the Cana-
dians,” he said. “Because of that supply and demand issue, it’s really hindered the growth of the industry.” LNG would be a game-changer in that respect. Bernier noted that the Peace Region is currently seeing the benefits of natural gas exploration and production in northeast B.C., but he has concerns about how that could change with LNG. “If LNG goes through, the anticipation is that the Peace Region will continue to grow that much faster,” said Bernier. “And so we want to make sure that, at the end of the day, people have jobs and that we have that investment taking place locally. “We want to make sure that we’re always showcasing the fact that we want the jobs here, we want the businesses set up here, so that, from a community standpoint and a regional standpoint, we can be sustainable by keeping that money as local as possible.” Bernier hopes that the economic benefits felt in the Peace Region are proportionate to the social and environmental issues that can accompany the industrial growth associated with LNG. As far as environmental impacts, Matt Horne, director of climate change initiatives with the Pembina Institute, said that the natural gas industry could be second
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to the oil sands in terms of Canadian greenhouse gas emissions growth if B.C. succeeds with its LNG strategy, but he also considers the local impacts. “Concerns around hydraulic fracturing and water contamination and depletion,” said Horne. “I don’t have a problem with Canada taking advantage of those economic opportunities. I think we just have to do so in a way that fully respects the environment.” “This is back to trying to find that balance of how we kind of coexist with the growth in industry,” said Bernier. “It’s great to say that … it will bring a lot of prosperity … and jobs into the region, but there’s some of these social impacts, environmental impacts that have to be considered on all of these projects any time there’s growth. And that’s whether it’s oil and gas, agriculture, forestry. “Every industry and every operation has its own impact in one way or another.” Bernier said it comes down to developing good relationships with the producers and ensuring they earn their social license to operate. “They can invest here, they can do business here, but it’s not at such a cost where people in the region will have to pay the price so somebody else can prosper.”
ERCB seeking feedback on new regulatory approach Daily Oil Bulletin The Alberta Energy Resources Conservation Board has unveilled a new approach to regulating development of unconventional resources such as tight oil, shale gas and coalbed methane. The new approach is outlined in a discussion paper, Regulating Unconventional Oil and Gas in Alberta, which was released on Monday. The board says the new framework encourages early and meaningful stakeholder engagement, minimizes surface impacts, protects water and maximizes resource recovery. Feedback will be accepted until March 31. Although the technology used to develop unconventional resources -- such as hydraulic fracturing -- isn’t new to Alberta, it’s being deployed on a much greater scale than in the past. To address the challenges of bigger developments, the ERCB wants to move from well-by-well regulation to an area-focused approach. In a news release, the board said this play-focused regulation would be “performance-based to achieve specific outcomes in public safety, water protection, air quality, waste management, surface impacts, resource conservation and orderly development.” About 171,000 wells in Alberta have been stimulated using hydraulic fracturing since the technology was first introduced in the 1950s, the ERCB says. Since 2008, about 5,000 horizontal wells have been completed in the province using multi-stage hydraulic fracturing. Currently there are 15 ERCB oil and gas directives covering matters such as groundwater protection, handling of drilling waste and restricting shallow fracturing operations. The board says the new approach recognizes the distinct challenges of developing unconventional resources, such as a higher concentration of infrastructure over a larger area, increased water use and cumulative regional effects. To meet these challenges, the new framework uses risk-based regulations (which are proportional to the risks posed) and play-focused regulations (which apply to an entire play and are designed to achieve specific environmental economic and social outcomes).
Development within plays must achieve acceptable address water management, surface infrastructure deoutcomes for water and waste management, air quality, velopment, reservoir management, stakeholder engageresource conservation and orderly development, public ment and wellbore integrity. safety and dissemination of information on the extent of A new approval process will be introduced for multiresources in the play, production capacity, reserves and well pads. The new process will combine approval for other geological and reservoir characteristics. activities such as drilling and completing multiple wells and installing related production equipment on a pad Under the new framework the ERCB will formally declare plays based on their unique qualities and the level into one approval. of risk that development may entail. Play-focused regulation is meant to enhance public “While the requirements in the ERCB’s existing frame- engagement by ensuring early disclosure of developwork will serve as baseline regulatory requirements that ment plans. “Not only will the ERCB require operators must be followed, these requirements may be modified to develop and implement effective community engageor superseded by play-focused requirements where ment processes, but stakeholders will have the opappropriate. The ERCB will clearly identify changes portunity to give feedback on play development plans. to, or deviations from, baseline requirements for each The ERCB will consider all feedback in its decision to declared play,” the discussion paper says. approve the plan,” the paper says. To mitigate the impact of unconventional resource As well, the ERCB will establish performance indicators and measures to monitor and evaluate whether extraction, play development plans will be used. regulatory outcomes are being achieved. This perfor“To manage the effects of development and other issues of a regional nature, a play development plan will mance information is to be made public, making the use a performance-based regulatory approach, rather ERCB and play operators accountable for achieving the than prescribing how regulatory outcomes must be established outcomes, the paper says. achieved,” the paper says. R001425636 “The ERCB will encourage multi-operator play development plans, in which a group of operators can show how play-specific outcomes are achieved. These plans will offer operators flexibility in how Specialists in H2S and noxious odour control solutions the regulatory outcomes are achieved. “Collaboration will allow optimization of infrastructure needs and placement, sharGrande Prairie, AB Provost, AB Calgary, AB Ft. St. John, BC Carlyle, SK ing of information and knowledge, and a one-window Mobile Scrubbers operate without electricity approach for communication Tanker & Vac Truck Mounted Scrubbers with stakeholders.” Play development plans Liquid scavenger chemicals proven to reduce costs by reducing usage must include enough detail to show how operators will www.almontinc.com 24 hr: 1-855-396-2950
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industry news First Alberta sale of 2013 draws over $85 million Daily Oil Bulletin
The Alberta government’s first land sale of 2013 produced total revenue of $85.05 million. A total of 354,476 hectares exchanged hands at an average of 239.94. The first sale of 2012 generated $63.43 million in auction revenue for 157,063 hectares at an average price of $403.88. “I think that the sale was driven primarily by the Montney,” said Brad Hayes, president of Petrel Robertson Consulting Ltd. “Most of the parcels are posted for deeper rights below existing Cretaceous production, although some small segments of the postings are for all rights,” he said. “Shallower plays may be driving the bids on one or two parcels, and one must keep in mind that there are many plays stacked in this part of the basin, so sometimes there’s a surprise.” The land sale bonus high was paid by Pro West Land Services Ltd., which submitted a bonus bid of $13.56 million for a 1,792-hectare licence. It included several sections at 63-06W6 and 64-06W6. The broker paid an average of $7,568.23.
Adjacent to this, private producer Seven Generations Energy Ltd. acquired two licences for a combined $9.54 million. One was a 1,024-hectare parcel that attracted a bonus of $6.53 million and an average price of $6,378.69. It included three tracts at 64-07W6. The tracts included: sections two and 11 for petroleum and natural gas below the base of the Peace River formation; section one for petroleum and natural gas below the base of the Bluesky-Bullhead; and section three for petroleum and natural gas below the base of the Fernie group. The other parcel, a 512-hectare licence, drew a bonus of just over $3 million and produced an average price of $5,867.88. It included two tracts at 64-07W6: one for section 14 for petroleum and natural gas below the base of the Spirit River formation, while the other tract included section 10 for petroleum and natural gas below the base of the Fernie group. Steve Hager, senior exploration analyst with Canadian Discovery Ltd., said that these three licences in the Kakwa field are located to the west of a group of Montney
horizontals licenced by Seven Generations and Contact Exploration Inc., both known Montney operators, also at Kakwa. Other highlights of the sale included a bonus bid of $3.51 million submitted by Windfall Resources Ltd. for a 512-hectare licence. The broker paid an average of $6,845.94 for sections 17 and 18 at 6603W6 for petroleum and natural gas below the base of the Dunvegan formation. O & G Resource Group Ltd. paid $4.57 million for a 2,816-hectare licence, which produced an average price of $1,623.68. The parcel included three tracts. One is located at section 18 at 66-08W6 for petroleum and natural gas; tract two included section 13 at 66-09W6 for petroleum and natural gas below the base of the Bluesky-Bullhead; and the third one at 66-09W6 included sections seven, eight, 10, 15 to 17, 20, 21 and 31 for petroleum and natural gas below the base of the Fernie group. The 11-section parcel in the Wapiti Field is offset to the north by a Montney horizontal licenced by Sinopec Daylight at Wapiti 08-08-67-09W6, Hager said.
A further three licences in the area around 67-06W6 and 68-05W6 -- all picked up by Scott Land & Lease Ltd. combined for bonus bids of $8.96 million. The two, four and one-section parcels in the Gold Creek Field are offset by Montney horizontals licenced by NuVista Energy Ltd. and Royal Dutch Shell plc. Western Land Services Co. Ltd. scooped up a 768-hectare licence, paying a bonus of $2.4 million, and a per-hectare average of $3,129.71, for two tracts at 71-25W5. “[This parcel] is interesting in that one of the three sections posted is for rights below Granite Wash, which is a sand that generally sits right on the basement, meaning you would not expect prospectivity below that horizon,” Hayes said. “Perhaps most of the value of the parcel was in the other two sections, for which all rights were available, or perhaps in this case the sand designated as Granite Wash lies on a prospective zone [perhaps the Slave Point] above basement.” Hager said the parcel at Clouston is offset by Cenovus Energy Inc.’s Montney horizontal at 13-30-71-25W5.
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Proposed Trans Mountain Expansion allocates nearly 80 per cent to firm shippers will include adding new facilities to existing ones rather than starting from scratch. “Obviously, some of the issues that Enbridge faces from environmental concerns are no different than ones that we’ll face,” he said. “I think there is a lot of work still to be done to get out the facts and the studies around some of those issues and we’ll continue to do that.” AT 890,000 bbls per day, up to 34 Aframax tankers per month will be loaded at Trans Mountain’s Westridge marine terminal, an increase from the up to 25 that had been anticipated with the smaller expansion. At present, up to five tankers a month currently load at the Westridge dock. Plans also call for a total of 61 storage tanks and three loading berths plus one utility berth with spill response equipment. With the latest expansion, the pipe size will be increased to 36 inches outside diameter compared to the existing 24-inch line and the 30 inches contemplated in
Construction of Kinder Morgan’s Anchor Loop project in British Columbia. The company is proposing to twin its Trans Mountain pipeline through the province, adding 890,000 barrels per day of oil transport capacity.
KINDER MORGAN PHOTO
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About 182,000 bbls per day out of a total capacity of 890,000 bbls per day will be available to spot market shippers on the Trans Mountain pipeline with the addition of 140,000 bbls per day to the initial expansion, Kinder Morgan Canada Inc. said Thursday, Jan. 10. The remaining 708,000 bbls per day (79.6 per cent) will be allocated to the 13 firm service customers who signed up for 15 and 20-year contracts, it said. The $5.4 billion expansion will complete the twinning of the existing 300,000 bbl per day pipeline from Strathcona County east of Edmonton to Burnaby, British Columbia. Based on two open seasons, Trans Mountain earlier had proposed to expand the pipeline to 755,000 bbls per day, including 508,000 bbls per day of firm capacity, from the existing 300,000 bbls per day. Last year, it first proposed an expansion to 850,000 bbls per day then reduced it to the 750,000 bbls a day after some of its supporters dropped out. The company initiated a third open season between October and November of last year in response to a National Energy Board ruling disallowing a contractual provision requiring shippers who signed a Facility Support Agreement (FSA) to waive their rights to oppose the tolls application before the board. In a filing with the board as part of its application seeking approval for the way it calculates tolls, Trans Mountain said it had received requests for firm transportation service from three additional shippers that exceeded the 96,000 bbls a day of available capacity.
In its application, the company has asked the board to approve the implementation of firm transportation service on up to 80 per cent of the expanded system’s nominal capacity with up to 20 per cent reserved for uncommitted volumes In a briefing with reporters, Ian Anderson, president of Kinder Morgan Canada, operator of Trans Mountain, declined to attribute the resurgence of interest in the expansion to short-term market impacts, which have recently pushed Canadian heavy crude prices to more than $40 a bbl under WTI. “I think it’s a broader recognition that pipeline capacity out of the (Western Canadian producing) basin is growing in its constraints and that more market access is required. This is a piece of that puzzle,” he said. A $6 billion proposal from Enbridge Inc. for the 580,000 bbl-per-day Northern Gateway pipeline from Bruderheim, Alberta to Kitimat, B.C. that will target Asian markets is currently the subject of regulatory hearings with a decision from the Joint Review Panel expected before the end of this year. Both projects face stiff opposition from environmental groups and many native communities who warn of increased greenhouse gas emissions as oilsands development intensifies and of higher risks of oil spills. Kinder Morgan has also faced opposition from the Vancouver city council over the increased tanker traffic the expanded capacity would bring. Anderson, whose company has spent the last few months holding information sessions in communities that will be affected, said the projects differ mainly due to the fact that Trans Mountain expansion
the earlier expansion project. There will be a total of 35 pump stations along the 1,150 kilometre route. In announcing the further expansion, Trans Mountain also listed the names of all the firm shippers, in contrast to Enbridge which has not revealed the names of all the backers for its embattled Northern Gateway project. The list includes virtually all the major oilsands producers along with a Puget Sound, Washington refiner. Signing up for firm capacity are: BP Canada Energy Trading Company, Canadian Natural Resources, Canadian Oil Sands Limited, Cenovus Energy Inc., Devon Canada Corporation, Husky Energy Marketing Inc., Imperial Oil Limited, Nexen Marketing Inc., Statoil Canada Ltd., Suncor Energy Marketing Inc., Suncor Energy Products Partnership, Tesoro Refining & Marketing Company and Total E&P Canada Ltd.
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special feature LEADERS OF THE PACK Women’s Executive Network recognizes energy sector execs with Canada’s Most Powerful Women awards
Canadian Energy Pipeline Association president and CEO Brenda Kenny is one of four women from the energy sector to be named one of Canada’s 100 most powerful women by the Women’s Executive Network in 2012.
CANADIAN ENERGY PIPELINE ASSOCIATION PHOTO
james waterman Pipeline News North Brenda Kenny never consciously thought about becoming a role model. However, after almost a decade with the Canadian Energy Pipeline Association (CEPA), the president and CEO of that organization is now a new grandmother and a recipient of a Women’s Executive Network (WXN) 2012 Canada’s Most Powerful Women: Top 100 Award, joining a handful of Canadian women working in the natural resources industries on that list last year. “I guess I’m at that point in my life and my career,” said Kenny, suddenly realizing that she is now in a position to be a role model. “I’ve always enjoyed meeting young people who want to ask questions about their own careers and choices,” she continued. “But it is important that we stand up, we voice our views, we act with integrity and we model the kinds of choices people have in their own lives at any number of stages.” Kenny said that her path to this point in her life and career has been all about asking the difficult questions.
“I’m a curious person,” she said. “And that’s probably what drew me into science in the first place. But when I started working in research, it was interesting questions that drew me in. When I moved into regulation, I found myself being one of the people that was asking, ‘Why do we do it this way? Or isn’t there a better way to do it? What are we trying to accomplish?’ “Focusing on results and asking hard questions – it always opens new doors.” Kenny kept asking those hard questions as a doctoral student in sustainable development several years into her career and when she finally moved into her present position with CEPA. “It’s not at all a traditional role of just simply representing company interests,” she said, emphasizing the importance of collaboration with other stakeholders in an industry that is one of the largest in the world. “It’s a very well-deserved recognition,” said Kim McCaig, the recently retired vice president of operations with CEPA, discussing the WXN award presented to Kenny. “Brenda’s been a fascinating figure in the energy industry for over a decade,” he said of the woman who has been his colleague for about eight years. “And she
is one of the more influential people that’s in that energy discussion right now in Canada.” Kenny and McCaig began their tenures with CEPA at about the same time. “I came from a pipeline company and Brenda came from the national regulator,” said McCaig, recalling those early days working together. “My first impression of her when I first met her way back eight years ago was this was a person who thoroughly understood the industry she was involved with, had a really good grasp of the issues that was facing the energy industry, and she had her feet firmly planted on the ground around how the … general public was viewing infrastructure renewal and development in Canada and in North America. “She was the right person at the right time to come into and head up the Canadian Energy Pipeline Association.” McCaig said Kenny has been a good leader largely because her actions always match her words. “She doesn’t put out positions or thoughts or ideas that she hasn’t thought about,” he explained, adding that she not only possesses a great deal of technical information about the industry, but also understands human relationships. “When you’re trying to help people understand the issues, you’ve got to understand their perspectives as well, and Brenda is a really great role model for that.” McCaig believes that partly stems from Kenny’s experiences teaching at the University of Calgary and her participation in groups such as the Chamber of Commerce. “Just a wide variety of groups that have helped her understand how people perceived different issues and how it impacts that local community at the provincial and federal levels,” said McCaig. “I believe she’s a person that’s really trusted and respected,” he continued. “And people really like engaging in a dialogue with her because it challenges them how to think differently. “She genuinely respects the people she’s talking with. And she tries hard to understand how they view things so that she can help provide information that stimulates that discussion, stimulates the conservation, so people can arrive at informed conclusions.” McCaig said Kenny also has a genuine interest in finding solutions to problems that are beneficial to both the pipeline industry and the other stakeholders. “She legitimately wants to find win-win solutions to issues so everybody feels relatively satisfied they’ve accomplished something, rather than a winner take all approach. McCaig feels those are necessary characteristics for an individual who has to play such a vital role in the Canadian pipeline industry, particularly when relatively few Canadians have had firsthand experience with pipelines.
“What Brenda helps with in the conversation is that she tries to present information from her own experiences based on what she believes the facts to be, and that helps people become more aware,” he said. Conversations with Kenny are never attempts at persuasion either. “She’s not there to try to convince me of the righteousness of her position or try to convince me to come onboard with her,” said McCaig. “What she’s trying to do is help me think about it differently.” WXN’s Canada’s Most Powerful Women awards were announced on Dec. 4, 2012, recognizing women from business, industry, government and academia across the country. “What makes a man or woman powerful is the power that they have within a sector or an industry at an organizational level to make a change,” said WXN founder Pamela Jeffery. “It might be to grow a company. It might be to take a company international. It might be to be very innovative. It might be to grow a company by hiring good people and growing and empowering teams of people. “A woman who’s able to be a role model – has the ability to empower a generation of young Canadian women.” Jeffery looks to her childhood and the early stages of her career as a businesswoman in downtown Toronto to explain the importance of recognizing powerful women in Canada. “There were not many men or women who I knew of who were CEOs or holding C-suite roles,” Jeffery said of her youth in London, Ontario. It wasn’t much different in Toronto in the nineties. “There was really a need that I had personally to have a larger peer community of women,” she said. “There were too few women in leadership roles. And for those of us who were in those roles, we really didn’t know each other very well. And so I started WXN as a way to create a community for women in management. And so it grew from there. And we very quickly expanded to Vancouver and then to Calgary and Ottawa and then to Montreal. And we expanded through offering a speaker series. So, we would invite women to come to the WXN podium who were highly successful leaders, who were good role models.” Jeffery realized that those women in senior management roles were still largely unknown throughout Canada, which is why she decided to create the Canada’s Most Powerful Women award program in 2003, just six years after WXN was born. “The idea here is to shine a light on those women who are in those senior roles,” she said. “And their power in part comes from their ability to help empower the next generation of women.
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“We really encourage these award winners to come and speak about where they’re from and how they got to where they are. I think that’s really important.” When the award program began, there were only two women in the energy sector on the list. The 2012 awards recognized four women from the energy sector, including Kenny, Trudy Curran of Canadian Oil Sands, Helen Wesley of Talisman Energy and Lorraine Mitchelmore, president and Canada country chair with Shell Canada. Mitchelmore’s duties extend beyond Canada as vice president of onshore exploration throughout the Americas. “I think it’s all about merit,” said Jeffery. “I think that companies are increasingly aware of the importance of identifying people for leadership roles and not necessarily leaving the hiring decisions to folks who may hire in their own image. “Human nature being what it is, people tend to hire in their own image. But if you can take bias out of performance review
and succession planning and you can look objectively at what a position calls for and look at skill sets, then that’s where you see the companies moving towards more untraditional leadership choices. And these women are definitely untraditional in [that] industry. But it takes courage. “And it’s good for business for oil and gas companies to be attracting and keeping these top talents, whether they’re men or women.” “I think things have really changed a lot,” Kenny said of female participation in the energy sector. “When I first started out many years ago,” she continued, “it certainly was more unusual to see women in senior ranks. And that is changing.” However, the success that some Canadian women are enjoying in such technical and scientific fields doesn’t mean that young women in Canada are pursuing education and careers in science, technology, engineering and mathematics (STEM) in greater numbers these days.
“I see there being a shortage of women who are studying in STEM,” said Jeffery. “It’s a very deeply technical field,” said Kenny. “We still, unfortunately, have a relatively low proportion of women going into, for example, engineering. To some extent, it’s not surprising that the numbers of vice presidents of operations who are women are similarly relatively low.” Kenny is encouraged by the number of women in professions such as finance or law and hopes that will extend to science and technology. “My sincere hope is that women who are interested in science will see a great opportunity in learning how to use that science for society.” Kenny suggested that demonstrating that connection between science and society to young women is one way of encouraging them to go into STEM. Another way is emphasizing the “fun factor” of the field. “That it is interesting and exciting,” she said.
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“I think too often we characterize science and technology as something that’s very cold,” she continued. “But, in the root of it, when you think about the challenges we face in Canada, many of the breakthrough changes that will improve society are going to have to come from science and technology. So, it’s that connection to things that matter to people that I find often resonates with young women.” Kenny believes the Engineers Without Borders program is a perfect example of that phenomenon. “They focus a lot of their efforts overseas in developing countries, but at their heart is how to solve social problems through engineering,” she said of the organization. Kenny said that about half of the attendance at their major conferences is always women. “That tells me a lot about where the genuine interest lies, the heart and soul matters of engineering, and that’s always been the attraction for me.”
Industry promised “seamless” transition to new energy regulator Daily Oil Bulletin A “seamless” transition is what industry can expect as the province moves towards a single regulator for all oil, gas, oilsands and coal projects, says Diana McQueen, Alberta’s environment and sustainable resource development minister. “We’re not turning one system off until the other system is up and running effectively. So it’s business as usual in the sense of your applications and going through the process,” she told a sold-out Calgary Chamber of Commerce luncheon Thursday. In response to questions from the audience, McQueen said the province would be working closely with industry as the new regulator takes over next year. “It will truly be a governance board in the sense of the governors need to do the governance piece, and the hearing commissioners ... need to be separate.” In October, the provincial government announced its move towards a single energy regulator to assume the regulatory functions of the Energy Resources Conservation Board (ERCB) and environment ministry. A board of directors with a chief executive at the helm would govern the arm’s length agency, expected to be operational by June 2013. In November, the government passed amendments to clarify the appeal mechanism for the new regulator. Following the chamber luncheon, when asked about costs associated with changing from the ERCB brand to a new regulator name, to be called the Alberta Energy Regulator, McQueen said: “I don’t have the costs of what that might be, but I think it’s more important that as we look at regulating oil, gas, oilsands and coal in the prov-
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ince in the next 25 to 30 years, that we have a system that works for Albertans. “So there will be some costs for that, but more importantly it will be a system that will be effective for Albertans.” McQueen said the new single regulator aims to offer a streamlined process for industry as it submits applications for developments in the energy sector. However, along with those improved efficiencies, she warned, will come increased expectations on those making the applications. “So in the past, we all wanted to get our applications in and get it in the queue. Well now when your application comes in it will need to be complete, and that will be the process. If it’s not complete, we’ll be generously sending it back to you and asking you to finish the application process.” Although the province continuously seeks public feedback on the new single regulator, McQueen said, the province has already worked with stakeholders - such as landowners, environmental groups, municipalities and industry -- over the past two years leading up to passing the appropriate legislation. “The feedback has been good,” she said, adding landowners are pleased to have an avenue to express grievances with industry through the single regulator, as well as the fact that the regulator must notify a landowner of activity in his or her area. Further, she said, the new policy management office allows a forum by which issues broader than any individual development application can be discussed. “That was something that was really brought forward initially by the environmental groups, but everyone who we had discussions with said that made a lot of sense moving forward.” McQueen also discussed Alberta’s current progress in
land-use planning. For example, the Lower Athabasca regional plan which was implemented on Sept. 1 following consultation from various stakeholders offers a legallybinding plan to enhance the government’s environmental management, as well as to address growth pressures and support economic development in the oilsands area. McQueen said there are seven jurisdictions for which the government is developing land-use plans, with the South Saskatchewan Region plan next to come online. She said the government’s approach to land-use planning is to make decisions based on benefitting Alberta for several decades into the future, rather than just until the next time Albertans go to the polls. “It’s taking the broad perspective of 50 years, and planning outside of our four-year election cycle, and really looking at how we make sure, as we plan for the next 50 years for our children, grandchildren and for all Albertans, that we’re taking those broad outlooks.” Further to that, McQueen said the province next year will begin an Alberta-wide water consultation process about future water usage. She said there are four main topics to be discussed, including water management and allocation, water and wastewater, healthy lakes, and hydraulic fracturing. The province would certainly be working to properly inform the public on the fracing issue, said McQueen. “We’re going to be doing an education piece so that people understand what really is happening, what are the processes, and when you look at fracturing, that people understand what the usage of water is, and that we’re transparent in that discussion.”
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community ALL THE QUEEN’S OILMEN
Trio of Fort St. John Petroleum Association stalwarts earn Queen’s Jubilee medals james waterman Pipeline News North
It was a family affair when Prince George-Peace River MP Bob Zimmer and Peace River North MLA Pat Pimm stopped by the Fort St. John Petroleum Association meeting on Jan. 3 to hand out a trio of Queen’s Jubilee medals. One of the award recipients was Mike Kosick, the founder of Trans Carrier Ltd. (TCL), who was sharing the spotlight on that night with his son and current general manager of TCL, Tyler Kosick, and longtime family friend Vic Brandl, the founder of V.E. Brandl. “I certainly think Mike and Tyler are both very deserving of it,” Brandl said following the presentations. The three men were recognized for their contributions to the community such as sponsoring minor sports, supporting the local hospital foundation and participation in community groups such as the Shriners, Masons and the Petroleum Association. Mike credited Brandl with encouraging his involvement in the community during their years working side-by-side in construction ventures in the region. “We don’t do these things to get recognized like this,” said Mike, emphasizing how proud he felt to share the moment with his son and a good family friend. “It’s quite an honour,” said Tyler. “At my age, to be recognized with an honour like this is absolutely unheard of,” he added. “It takes a lifetime to gain the amount that these two
LEFT TO RIGHT: Prince George-Peace River MP Bob Zimmer, Mike Kosick, Tyler Kosick, Vic Brandl and Peace River North MLA Pat Pimm. Zimmer and Pimm presented Queen’s Jubilee medals to Brandl and the Kosicks at the Fort St. John Petroleum Association meeting on Jan. 3.
JAMES WATERMAN PHOTO
gentlemen have done in our community.” Tyler looks at the award at this stage in his life as motivation to keep working for his community. “It’s definitely not an excuse to quit,” he said. “There’s a lot more to give back to this community in
any way, shape or form we can. That’s the way we were brought up. Community is your home and you’ve got to work to keep your home livable. “My roots were grown in this community. I plan to be a part of the community for a lot longer.”
FortisBC keeping an eye on LNG projects
james waterman Pipeline News North
FortisBC wants to set the record straight: the energy utility fully supports plans to export liquefied natural gas (LNG) from British Columbia to foreign markets. That didn’t appear to be the case when the media got their hands on a Nov. 16 letter from FortisBC to the National Energy Board (NEB) concerning the application for a license to export LNG that was previously submitted by LNG Canada, a group led by Shell Canada and including PetroChina Company, Mitsubishi Corporation and Korea Gas Corporation (KOGAS) that plans to transport natural gas from the Montney formation of northeast B.C. to a liquefaction and export hub on the Pacific Coast at Kitimat. “The letter indicated support for the B.C. LNG export projects,” said a FortisBC spokesperson. “However, the wording in the letter created some confusion in the industry and the media as to FortisBC’s support.” The Nov. 16 letter discussed FortisBC’s concerns as to how the LNG export industry could adversely affect the supply and cost of natural gas they deliver to their customers in B.C. Many of those concerns were related to pipeline infrastructure. The letter noted that FortisBC receives
about 85 per cent of its natural gas through the Westcoast Energy system in B.C., the remainder coming from Alberta via Nova Gas Transmission, Southern Crossing Pipeline and the Westcoast system, as well as through the Williams Northwest Pipeline that connects to B.C. at the Washington border. “Increasing access to basins outside of [northeast B.C.], like those in Alberta and the Rockies, is currently limited by available pipeline capacity,” the letter said. “Increasing this pipeline capacity would require the construction of significantly expanded facilities, which would likely increase transportation costs for our customers.” FortisBC recognized in the letter that the supply of natural gas in B.C. will grow with the continued development of the Montney, Horn River Basin, Cordova Embayment and Liard Basin as the LNG industry picks up, also admitting that access to foreign markets is necessary for the industry to develop those resources. The letter notes that those developments could also increase the natural gas supply available in the province for B.C. customers. “FortisBC generally supports the orderly and prudent development of LNG export facilities and related pipeline infrastructure,” said the letter. FortisBC encouraged the NEB to ensure that Canada continues to enjoy a surplus of natural gas if LNG export projects move
forward, partially by deregulating imports from the United States where the Marcellus and Utica shales in the northeast are supplying Ontario and Quebec. “If the Ontario and Quebec market is relying on … Marcellus and Utica gas supply to meet domestic needs, this should be considered when determining the potential surplus,” said the letter. However, the pipeline infrastructure issue is a concern that goes beyond supply concerns. “FortisBC is interested in understanding how pipeline infrastructure requirements in [northeast B.C.] will develop in response to the establishment of LNG exports, and how natural gas flows through this infrastructure will impact prices from this source of supply,” said the letter, which also noted that the primary concern of the utility is providing its customers with a cost effective supply of natural gas. “These changes will ultimately affect the cost of natural gas for consumers in B.C.” FortisBC suggested that the issues surrounding natural gas supply and pipeline infrastructure dictate that proponents of LNG export projects clearly identify how they plan to “source and transport gas to its proposed export facility.” A Shell Canada spokesperson indicated that the percentage of the B.C. natural gas supply to be exported through LNG Canada
would quite small and “unlikely to have any effect on natural gas prices in Canada.” The natural gas supply in B.C. and Alberta – the sources of natural gas to be exported as LNG – is thought to exceed 200 trillion cubic feet (tcf) of natural gas. A spokesperson for the ministry of energy, mines and natural gas in B.C. said that the provincial government is supports LNG Canada’s export license application, as they are hopeful that three such projects will be up and running by 2020. FortisBC clarified their stance in a second letter to the NEB dated Nov. 19. “It said that we are supportive of the LNG export projects being developed in B.C. We believe these projects will help the province realize the full potential of our natural gas resources for the benefit of British Columbians,” said the FortisBC spokesperson. “We would like thoughtful and prudent infrastructure development and integration of the pipeline systems. And, if possible, utilization of existing, available pipeline systems. “I couldn’t really say whether new pipeline costs would be held by our customers just because that hasn’t happened yet. And it all depends on who the players are. “We support the projects and how they will be developed and how they can impact the region positively. We’re supportive of everything, but we just want to express concern that it would need to be carried out in a prudent fashion.”
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Feds seeking public input on Coastal GasLink project WILLIAM STODALKA Pipeline News North The public’s input is being sought on a 650-kilometer pipeline from a natural gas export facility in Kitimat, B.C. to the community of Groundbirch, 40 kilometres west of Dawson Creek. On Monday, Dec. 31, the Canadian Environmental Assessment Agency (CEAA) announced that it had determined that a federal environmental assessment is required for TransCanada’s Coastal GasLink Pipeline Project. The government has put up a guideline for how it will prepare its Environmental Impact Statement of the pipeline on their website, and are asking for the public’s input on the document by Jan. 30. “The Canadian Environmental Assessment Agency administers the federal environmental assessment process, which identifies the environmental effects of proposed projects and measures to address those effects, in support of sustainable development,” according to the CEAA. Not every project is required to have this type of assessment, and the Federal
government announced earlier that it was seeking public input as to whether or not this assessment was warranted. The pipeline, estimated to cost approximately $4 billion, is expected to carry 1.7 billion cubic feet of gas per day. “The final pipeline route will take into consideration Aboriginal and stakeholder input, the environment, archaeological and cultural values, land use compatibility, safety, constructability and economics,” according to an earlier TransCanada statement. The project will also aim to “engage with Aboriginal people and groups that may be affected by the project,” according to the draft Environmental Impact Statement on the CEAA’s website. The final impact statement will take into account the effect the project may have on animals living near the proposed pipeline and the surrounding environment, among other things. Calls directed to TransCanada were not returned. However, TransCanada spokesman Shawn Howard said earlier that they have contacted landowners in the past about this project.
RMP to focus on montney light oil with $85 million 2013 capital budget Daily Oil Bulletin A 2013 million exploration and development expenditures program of $85 million will focus on continued development of 100 per cent-owned, Montney light oil resource plays with plans to drill 14 wells, says RMP Energy. The company expects to fund the 2013 capital budget from cash flow. RMP, though, said it possesses the financial flexibility for additional funding through the company’s bank credit facility, which was recently expanded to $110 million, for any capital program expansions. At Waskahigan in west-central Alberta, the company plans to drill eight wells with five wells planned at Ante Creek and one well at Grizzly, southeast of the company’s Waskahigan asset base. Drilling and completions are projected to account for approximately $57 million, with remaining budgeted funds of approximately $28 million allocated towards investments in well-site equipment, field facilities, gathering lines and strategic undeveloped land expansion. Forecast average daily production is 6,000 bbls of oil equivalent per day to 6,500 boe per day, approximately 60 per cent light crude oil and natural gas liquids and 40 per cent natural gas. Forecast production range represents a 15 per cent to 25 per cent increase over the company’s 2012 average daily production estimate. Notwithstanding strong budgeted production growth within a cash flow-based capital program, RMP’s forecast assumes limited gas processing capacity at Ante Creek of approximately three mmcf per day. The company currently is facility limited for processing of associated solution gas at Ante Creek. The associated Montney solution gas is conserved and processed at an area operator’s gas plant. Oil production from Ante Creek is currently being trucked into RMP’s Waskahigan oil battery. RMP said it is evaluating numerous gas take-away alternatives in order to increase processing capacity for 2013. Additionally, the forecasted production assumes limited ability to truck oil during spring break-up surface conditions at Ante Creek. The company is factoring into its 2013 forecast reduced oil trucking loads of 50 per cent during the months of April and May. Assuming the median of the forecasted average daily production range and based on the current forward 2013 pricing assumptions of US$88.50 per bbl for West Texas Intermediate oil, an AECO gas price of $3.05 per gigajoule, an oil differential of $11.30 per bbl and an above par Canadian dollar exchange rate of $1.01 (US$/C$), the company’s funds from operations for 2013 is estimated at $83 million (80 cents per share), an increase of 66 per cent and 60 perc cent respectively over respectively, over projected 2012 funds from operations. For 2013, the company has 1,000 bbls per day of crude oil hedged with a fixed weighted average price of $100.17 per bbl.
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KEEPING CLEEAN
Water treatment company earns federal funding for groundbreaking technology james waterman Pipeline News North At a time when so much of the talk concerning the natural gas industry revolves around water management and hydraulic fracturing, the federal government is investing in a water treatment technology that could prove to be a game changer. Axine Water Technologies announced on Dec. 4 that the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP) is contributing as much as $240,000 towards developing and testing their method of treating wastewater contaminated with toxic organic substances. “It’s particularly relevant for the oil and gas industry,” said Axine’s president and CEO Jonathan Rhone, discussing the technology. “What this funding is for is to help us do long term durability and reliability testing of the technology, which is really important to our customers,” he continued. “They buy this technology and implement it as an infrastructure part of their facility.” The technology can treat water for a range of toxic substances from phenols to benzene, as well biodegradable organic compounds, ammonia and pathogens, all through an electrolytic oxidation process that doesn’t require chemicals or produce sludge. Rhone used the steam assisted gravity drainage (SAGD) method of oil sands extraction as an example of how the technology can work. “If you look at SAGD water,” said Rhone, “when SAGD water is recycled, there’s a whole bunch of dissolved organics in that water that are currently not removed, and they can cause some really significant process problems and bottlenecks.” Applications aren’t limited to SAGD, however. “In tailings water,” he continued, “it would include things like naphthenic acids, which are highly toxic if that water is ever going to be discharged to surface. In produced water and in enhanced oil recovery, there’s often the use of gels and polymer-based chemicals in the fracking fluids and in some of the things like polymer floods. And these are all long-chain dissolved organics. And they need to be treated before they can be either discharged or reused.” Oil refineries also produce wastewater containing toxic organic substances.
Axine’s water treatment technology uses electricity to remove toxic organic compounds and other contaminants from wastewater produced by oil and gas industry activities ranging from oil extraction to oil refining. Contaminants in the water react with OH radicals created during the process, leaving behind benign substances such as carbon dioxide and water.
AXINE WATER TECHNOLOGIES DIAGRAM
“It really plays throughout the whole value chain.” The electrochemical process involves a membrane cell coated with metal oxides that act as a catalyst. One side of the cell has a cathode and the other side has an anode, which is where the wastewater first comes into contact with the cell. “It flows down the face of this catalyst,” said Rhone. “And then we apply a little bit of electricity to that catalyst. And the catalyst is designed – in the presence of water and electricity – to produce these OH radicals. And the OH radicals are one of the most reactive oxidants available. It’s extremely
reactive with these long-chain organic molecules. And what they do is they break down these molecules into benign substances.” Those substances include carbon dioxide, nitrogen and water. “We bundle a whole bunch of these cells together into modules that are about four feet by four feet by four feet,” said Rhone. “Depending on the volume of wastewater to be treated, we will supply customers with 20 modules or 100 modules. And they’re all linked together.” Rhone explained that the focus on water is increasing not only in the oil and gas industry, but also in industries such
as mining and manufacturing. “Because water is so critically important to so many of these industries,” he said, adding that companies in those sectors no longer believe that the amount of water at their disposal is unlimited and so are trying harder to reuse water as much as possible. “Improve their water efficiency,” said Rhone. “It’s just a huge trend,” he continued. “It’s being driven by regulation. It’s being driven by water scarcity. It’s being driven by increasing cost of disposing. “These types of technologies can help the oil producers improve their performance and reduce their costs, ultimately.”
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That cost reduction extends to energy efficiency. “Our energy costs compared to other types of oxidation technologies are an order of magnitude lower,” said Rhone. “In wastewater, you have to be low cost.” Axine has been hard at work for about six months developing the technology. “We’re still at a relatively early stage of development,” said Rhone. “We’re pre-commercial. And so we’re working with a number of the producers and energy services companies to test and validate the technology in a single-cell unit. Then next year we expect to be out in the field at customer facilities with pilot plants. And then we expect to [release our] first commercial product by 2014.” Axine will also be working with NRC staff throughout that process in addition to making use of their funding. “They’ve got a number of national labs and they’ve got a number of very strong people in electrochemical technologies,” said Rhone. “And so they’ve got a big network of people out there where they can help provide some technical sounding board on our product development process, which we found useful.” Axine’s water treatment cells can be bundled together into square modules and as many as 100 modules can be employed at a single site, depending on the volumes of wastewater to be treated. Axine will be using the funding provided by the National Research Council of Canada to bring the technology to the point where it will be ready for use throughout the oil and gas industry as a low cost and efficient method of treating water contaminated with toxic organic compounds and other harmful substances. AXINE WATER TECHNOLOGIES DIAGRAM
Pad drilling offers economical and ecological benefits Daily Oil Bulletin
to the next, so we save the costs from more profitable oil wells. rig moves, or substantially reduce the One reason for the popularity of pad costs of setting up on the next wellbore, operations is their stability, Salkeld says, noting that companies build pads solidly because we’re not moving them very far.” Surbey says the idea of pad drilling has and with more permanence than other rig been around for a while, but improvements sites, allowing crews to work for longer in multi-zone fracture stimulation and horiintervals in the same location. zontal drilling over the past few years have “It’s almost like setting up a factory increased the technique’s popularity. hole-drilling operation and it allows them “These horizontal wellbores allow you to work longer. If their drilling season to go out both to the north and the south goes into break-up, they could very easily from the same location, for instance, have all the equipment in one location to whereas if you were just drilling convencontinue to work well into break-up.” tional wells, you would deviate them perAs cost-efficient as pad drilling might haps, but the horizontal drilling technology be, though, Surbey says it also requires has advanced the case for pad drilling.” fairly extensive initial costs to set up the Hydraulic directional drilling deserves rig. As well, not every site lends itself to much of the credit for the increased this sort of operation. popularity of pads, according to Mark continued pg 27 Salkeld, president and CEO of the Petroleum Services Association of Canada. “Now you can have 15 wells to a pad, you can have two rows of eight pads, or INVESTIGATION more, drilling off into sepaINFORMATION WANTED rate directions, tapping into Did you lose money purchasing PROMISSORY NOTES formations,” he says, adding in BC or ALBERTA companies? Were they specifically that while hydraulic direcbacked by “LLS” Promissory Notes allegedly BROKERED tional drilling was originally (BOUGHT) on your behalf? You are amongst many applied towards tight natural others! Do you want more FACTS about the history and gas production, when gas the status of “LLS” and IMMINENT LEGAL ACTION? prices started plummeting, Phone E. Barber Jones at 250-219-5760 or the industry redirected the drilling technology towards email PFI.INVEST@gmail.com.
Little Loan Shoppe (“LLS”) $135 Million Ponzi
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Increased cost-savings from horizontal pad drilling goes hand-in-hand with a reduced ecological impact, according to producers embracing this centralized multi-well format. “It’s like having either 30 different gas stations in your community, or one gas station that can handle the volume that 30 can handle,” says Brian Spiegelmann, Devon Energy Corp.’s Lloydminster development engineering manager, about the efficiencies associated with pad operations. Devon is routinely working upon farmland around the Lloydminster and Bonnyville areas, so reducing the company’s environmental impact is important out of respect for the agricultural industry, he says. Centralizing multiple well heads on a single pad reduces the number of holding tanks required at each well, for example, and means less travelling across ground surface because all the well heads are on the same spot. “The idea of a pad is, in a holistic sense, it’s trying to minimize the footprint.” Jim Surbey, corporate development vice-president for Birchcliff Energy Ltd.¸ says pad drilling simultaneously offers a financial benefit for companies while promoting better environmental operations. “In the Montney/Doig resource play we’re on, it’s a big play and there are lots of wells to be drilled. If there are local residents, they don’t want you to
populate the entire area with drill sites and well sites. So we think it’s prudent to aggregate into one area -- to the extent that you can -- with one pad.” Pads definitely reduce the land reclamation costs for companies -- one of the many financial benefits from this increasinglypopular means of extracting oil and gas on the Western Canadian landscape, he says. According to Bellatrix Exploration Ltd. Executive Vice-president Brent Eshleman, pads are quite effective when used on vast resource-rich stretches such as the Cardium, where companies regularly drill multiple wells in a given section. “You put the rig on the pad and you can just drill the wells and complete them back-to-back as you go, because then you don’t have to move the rig,” he says. Moving a rig even a short distance can cost upwards of $200,000 and constructing roads and other infrastructure for each well rig cost money as well. “It doesn’t take long before you’re saving yourself at least $300,000 per well. So if you’re to drill eight wells a pad, you’d save yourself, I’m going to say, $2.5 million.” Surbey says Birchcliff has moved into pad drilling over the last couple of years after observing transportation savings from other producers who had adopted the practice. “The efficiencies are in avoiding mobilization and demobilization costs,” he says. “In the case of the drilling side, we have a rig that can walk on over from one location
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industry news SEEING THE WARNING SIGNS Apache lends a hand to avalanche forecast program
Apache has donated two remote weather stations and an additional $25,000 for the launch and upgrade of the equipment.” In addition to the funding, the provincial government has also donated $50,000 towards this program. Peace River South MLA Blair Lekstrom explained this project will help make sure that those who use the backcountry recreationally will have the appropriate information. “It’s really about safety. As we see more and more recreational users in the backcountry, particularly people out sledding and skiing, safety is the foremost concern for everybody,” said Lekstrom. Carole Savage, snowmobile program coordinator for the Canadian Avalanche Centre, has high hopes for the project. “The North Rockies pilot project is a one-year project that we got government funding as well as private sector funding for, to get some more information on the North Rockies area south of the Peace Arm,” she said, adding that currently there is only a once-a-week conditions outlook. “Our job this winter is to network with the stakeholders find out where people are playing and see what are options are to come up with a better conditions forecast for you.” Klassen agreed. “The whole reason for doing this is to find out what we need to do in the future to make it sustainable long-term forecast region.” According to Seefried, Apache decided to donate the satellite stations because they felt they would benefit the Norm Seefried, senior productions foreman for B.C. operations with Apache, explained that his company donated the money and equipment to the Canadian Avalanche Centre to help make sure that people make it home safe from both work project and help it get up and running faster. and play in Canada’s great outdoors. “The two satellite stations we had in stock and we ALLISON GIBBARD PHOTO realized that they would fit and complement what CAC is ALLISON GIBBARD risks for avalanches. trying to do with some minor upgrades. They could put Pipeline News North “An avalanche forecast is like a weather forecast,” them into service quickly and start the program, so as a said Karl Klassen, acting exresult we agreed to provide those “We value safety as Safety and knowledge of weather conditions is proving ecutive director for the Canadian weather stations and the funds to be a main priority of a new avalanche forecast pilot Avalanche centre. to upgrade them so they’re fully project that was announced by the college. a core for our people functional,” said Seefried. “What our forecasters do is “We value safety as a core for our people and we the they look at the weather, Because the Canadian demand that our people take safety seriously and that they look at the snow pack that Avalanche centre is a non-profit and we demand that works either at work or with their families and we want to exist in an area, they look at organization, these contributions make sure that everyone comes home every night either what kind of avalanche activity our people take safety go a long way, said Klassen. through work or through play and for that reason I am is going on and then they try to “The money that’s been honored to be here today,” said Norm Seefried, senior predict when avalanches are provided by the province of seriously.” productions foreman for BC operations for Apache going to occur and then warn British Columbia and by Apache Canadian, at the Northern Lights College Dawson Creek people about times when there Corporation and the equipment campus on Friday, Dec. 7. is greater risk and more hazards that Apache has given us is go– Norm Seefried, Apache An avalanche forecast is important in the region for avalanches,” To help ensure ing to allow us to start down the because it will give recreational users an idea of that those who choose to play in road toward producing better and what areas are safe and which ones have increased the backcountry know exactly what they are up against, more avalanche information for the region.”
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A PASSAGE TO INDIA B.C. growing business presence in Asia with two new trade and investment offices
james waterman Pipeline News North
Michael de Jong has a simple answer to the question of why British Columbia would choose to open a pair of trade and investment offices in the Indian cities of Mumbai and Chandrigarh. “It’s all about sales,” said the provincial finance minister, fresh from his early December trip to the Asian nation in support of the new endeavor. “It’s about promoting the sales of B.C. products into the Indian market and about identifying investment opportunities that exist both in India and, as importantly, in British Columbia,” he added. “There is a vast amount of potential investment wealth in India looking for opportunities elsewhere in the world. And what we want to do is ensure that they understand the opportunities that exist in Canada and, particularly, in British Columbia.” Mumbai is the financial capital of India, while Chandrigarh enjoys a strong cultural connection with British Columbians of Indian heritage as the capital of the States of Punjab and Haryana. “Part of the history of this province for over 100 years,” de Jong said of Punjabi-Canadians. “The challenge, I’ve always said, is how to take that strong cultural linkage and transform it into an even more powerful economic linkage. And we’re beginning to see that happen.” De Jong has been interested in developing that economic connection between British Columbia and India throughout his time in government. “It’s actually something that I’ve been a proponent of for the better part of ten years,” he said. De Jong draws parallels between these new efforts in India and past efforts to sell B.C. wood products to Chinese customers that began about a decade ago. “They gave me all the reasons why it wouldn’t work,” he said, adding that China is now the province’s biggest market for wood products by volume. “India’s a different place,” he admitted. “And we’ll have to go about this in a slightly different way. But I think we can enjoy similar success. “Thousands and thousands of B.C. families are working today because of the success that we’ve had in China. I think we can do the same thing in India.” Interestingly, just as was the case with China a dozen years ago, the most recent efforts in India revolve around an abundant natural resource in the province, one that is also coveted by China and their Asian neighbours such as Korea and Japan. “The opportunities associated with the development of liquefied natural gas,” said de Jong, explaining that Indian companies have strong interest in LNG due to the high cost of energy required for manufacturing they are enduring presently. “In their manufacturing sector, in many cases, their highest input cost is energy,” he said. However, a less expensive source of energy isn’t their only interest. “This is what struck me during my time there,” said de Jong. “We generally associate countries like India with a manufacturing base given their lower labour cost. But because of their high energy cost, they are beginning to look at a place like British Columbia as a potential location for some manufacturing activity.” The implication is that is partly due to the abundance of locally sourced natural gas available at a low price.
“India is a country that we will be paying a lot more “We saw some extraordinary examples of people attention to going forward.” delivering health care in rural parts of India in what we De Jong describes India’s potential demand for B.C.’s would describe as very basic facilities in some very chalLNG in terms of a population of 1.2 billion people and the lenging circumstances.” largest middle class in the world. De Jong also saw the potential for run-of-river hydro“Their domestic consumption is steadily on the rise,” electric projects in the northern part of India, a country he said, noting that their rate of economic growth should that has begun investing heavily in renewable energy. only trail that of China in the coming years. “Northern India is tremendously well suited for the “Regrettably, we have been a little bit late getting into the development of … smaller scale run of the river projIndian market, but I think we can make up some lost ground.” ects that we have developed world leading technology around,” said de Jong. Exporting natural gas to such a large market is top of mind for de “There is a huge potential “We have been a little Jong, especially considering the for technology transfers into links between low commodity prices bit late getting into the that market,” he continued, and the provincial deficit that he has noting that India presently sufdiscussed. fers from an energy deficit. Indian market, but I “Finding a destination for a com“When I was walking across modity that we have in abundance northern India towards Chanthink we can make up digarh to open the office, virtuand securing access for that commodity in markets that are paying ally every night, in the rural significantly more for that product parts of India that I was in, the some lost ground.” is a no-brainer,” he explained. “And power went out for two hours.” that’s why liquefied natural gas repThe new trade and invest– Michael de Jong resents such a huge and important ment offices are expected to opportunity for B.C. help connect interested parties in India and B.C. whether the subject is wind power, “We conservatively estimate the benefits that would flow to communities in B.C. and the province itself in the natural gas or even farmed salmon. tens of billions of dollars.” “By having people on the ground, we can source out those opportunities,” said de Jong. “Almost in the way However, during his walking tour of northern India, a journey to raise awareness about diabetes and hyperten- that a marriage might be arranged, we can introduce the sion, he recognized another energy link between British parties to one another. Columbia and India. “Ultimately, the agreements and the sales are made by the “I actually walked through rural parts of Punjab visiting people that know the products and the technology best. But health clinics,” de Jong said of the trek. “And we were what our trade representatives can do is source out those particularly focused on diabetes prevention because opportunities and get the right people in the room together. Punjabis both here and in Punjab … are suffering above “That, by the way, is precisely the formula we have average rates of diabetes. And it leads to all sorts of used with such success in China when it comes to wood chronic health complications. products.”
Michael de Jong being sworn in as minister of health in 2011. The current finance minister followed through on a commitment he made as health minister to raise awareness of chronic diseases by doing a walking tour of northern India while in the Asian nation to open a pair of new trade and investment offices. India is among the Asian target markets for B.C. natural gas.
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LNG plant proposed for Kitsault, B.C. Daily Oil Bulletin
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Kitsault Energy plans to explore establishing a pipeline for natural gas, an LNG plant and a dedicated export terminal for LNG, at Kitsault, British Columbia. Kitsault, 800 kilometres north of Vancouver and 140 kilometres north of Prince Rupert on the province’s northern coast, is a purpose-built resource community with complete community infrastructure and housing for more than 1,000 residents. With nearly 350 acres of industrial land, full B.C. Hydro service, and a deep water port, Kitsault makes both economic and environmental sense as the preferred location to be the LNG terminal site for the export of natural gas from northeast B.C. to Asia and other markets, says a press release from the proponent. There doesn’t appear to be information on supply, market, ownership or where money for the project will come from. The former mining town was abandoned in the 1980s after commodity prices crashed. The president of Kitsault Energy is Krishnan Suthanthiran. According to a 2005 Washington Post article, “the Virginia-based businessman saw a news story about a whole town being for sale in remote Western Canada, he called the same day to offer a cheque for $5.7 million -- sight unseen. “Today, Krishnan Suthanthiran owns Kitsault, a ghost town abandoned by miners’ families more than 22 years ago and preserved like a museum display of suburbia....” According to a biography, Suthanthiran was born in Southern India. As a young man, he moved to Canada to attend Carleton University in Ottawa. After completing his masters in mechanical engineering, he took pre-med courses at the University of Toronto and worked for an oncologist in the U.S. In 1977, he founded Virginia-based Best Medical International, and over the past 33 years has grown Best and its affiliated companies into major manufacturers and distributors of health care products globally. The Kitsault townsite features over 90 occupant-ready family homes, and approximately 150 two and three bedroom condominium units. The community facilities include a complete community complex with an aquatic centre, community recreation rooms, an indoor arena for basketball, a curling ring and racquetball courts and much more. The town’s amenities include restaurant facilities, a shopping center, a post office, a bank, a supermarket, a medical centre, as well as numerous outdoor amenities. Kitsault Energy is in the process of consulting First Nations communities about training, education and employment opportunities. The Kitsault LNG terminal will result in job training and permanent well-paying careers for First Nations’ youth, a press release stated. Kitsault Energy has also begun the process of consulting with LNG energy partners, as well as local, provincial and federal governments.
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THE DAY WE HIT THE COAST TransCanada planning to build pipeline to Prince Rupert for LNG project
Russ Girling, TransCanada CEO (farthest right), seen here last September, has said that TransCanada is “very pleased” to have been selected to build a $5 billion pipeline from the Fort St. John area to Prince Rupert, B.C.
transcanada PHOTO
WILLIAM STODALKA Pipeline News North A $5 billion pipeline is going to be built between Prince Rupert and the Fort St. John area, TransCanada announced on Wednesday. TransCanada has been selected by Progress Energy Canada to design, build, own and operate the Prince Rupert Gas Transmission Project. The project will bring natural gas from the North Montney gas-producing region near Fort St. John, to the recently announced Pacific Northwest LNG export facility in Port Edward near Prince Rupert, B.C. “We’re very pleased and honoured to be selected as a partner with progress,” said TransCanada CEO Russ
Girling. “They have the wherewithal to actually implement a project of this magnitude.” The project is expected to bring in 2,500 jobs over the project’s three year life span. However, Girling said it was “too early to say” how much of these jobs would come to the Fort St. John/Dawson Creek area. Girling also said that he was not sure about the pipeline’s route. “We have some ideas about where the pipeline’s going to go, but it’s premature for me to say which communities it’s going to impact.” However, local business would likely see a boost from this project, as Girling expected Peace Region contractors and Aboriginal communities to participate in the project.
“These are pools of expertise that we’ll have to pool together,” he said. “We’ll work to ensure that there’s training programs so that we can develop a workforce to participate in both the construction and design of the project … they can be part of the ongoing work force that maintains and operates this pipeline for the next few decades.” Girling also said that they will consult local landowners about the pipeline’s route. The pipeline is expected to be 750 kilometres of pipeline, capable of transporting two billion cubic feet of gas per day. According to a TransCanada press release, the pipeline is expected to be in service around the end of 2018. TransCanada’s partner, Progress, is owned by Petronas, a state-owned Malaysian energy company. The LNG export facility the line is connecting to will help meet natural gas needs in Asia. Canada’s Natural Resources Minister, Joe Oliver, praised the move in a press release. ““Today’s announcement demonstrates the benefits of British Columbia energy pipeline projects that create jobs and economic growth,” Oliver said. This Prince Rupert pipeline is not the only project TransCanada is currently pursuing within the Peace Region. TransCanada currently has approximately 360 kilometres of pipeline in service or pending regulatory approval. TransCanada is currently seeking approval for a 1,400 kilometre from northeast B.C. to a liquid gas facility yet to be approved in Kitimat, B.C. Petronas, a state-owned Malaysian energy company, acquired TransCanada’s partner, Progress Energy, in 2012. The move was somewhat controversial at the time. In October 2012, Federal Industry Minister Christian Paradis said that he was “not satisfied that the proposed investment is likely to be of net benefit to Canada.” However, in December, the acquisition was approved. After the decision was announced, Paradis said that “Petronas has made significant commitments to Canada” about transparency, disclosure, and other factors that demonstrated it would be a net benefit to Canadians.
Canadian Energy Services buys U.S. drilling mud assets
Daily Oil Bulletin
Canadian Energy Services & Technology Corp. (CES) said its United States subsidiary has acquired the assets of privatelyheld Mega Fluids Mid-Continent LLC, an Oklahoma-based drilling mud company that services producers focused on the growing Mississippi Lime oil play, CES management said one the morning of Jan. 2. The transaction was completed through CES’s wholly-owned U.S. subsidiary, AES Drilling Fluids LLC, which acquired Mega Mid-Continent’s drilling fluids assets. No price or value for the deal was disclosed. “We are acquiring a growing mid-continent drilling fluids company, with great customers, and excellent drilling fluids
sales, technical and field personnel,” Tom Francis, Mega Mid-Continent’s presiSimons, CES president and chief execudent. “Our team is excited to integrate tive, said in a news release today “A big into AES’s operations in an expedient driver for us ... fashion, and work was the [compato grow “Our team is excited together ny’s] leadership, the business,” he Jason Francis to integrate into AES’s added. and Bryan Coy. Started in 2007 We are pleased to and based in operations.” have them join our Edmond, Oklateam and lead our homa, Mega operations in the Mid-Continent – Jason Francis, mid-continent.” serves oil and Mega Fluids Mid-Continent At Mega Midgas producers Continent, the working mainly sentiment was much the same. “We in Kansas, Texas and Oklahoma. The are excited to be joining AES and ... company has over 30 clients and proven CES, the leading independent drilling technical capabilities in delivering highfluids company in North America,” said quality drilling fluid products and services,
according to CES. The deal is expected to strengthen CES’s position as the leading independent North American drilling fluids provider, CES said. The deal also expands AES’s scale and operational capabilities in the U.S. and makes the company a leader in the emerging Mississippi Lime oil play, CES said. At closing, Mega Mid-Continent was providing drilling fluids to 16 active drilling rigs. AES also said it would add Mega Mid-Continent’s key field, technical and sales-focused drilling fluids employees, expanding AES’s capabilities to service customers. CES management expects the deal to be accretive to its cash flow and earnings before interest, taxes, depreciation and amortization, and to net income.
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industry news Service sector heavyweights could broaden Canadian footprint through M&A As plays such as the Horn River and Duvernay continue to attract investment and interest from producers, Western Canada’s service sector could see an evolution in merger and acquisition (M&A) activity as larger multi-nationals and American-based entities look for a bigger piece of the pie. At least that’s the view of BMO Nesbitt Burns Inc.’s North American oilfield services analyst Michael Mazar, who says the long-term potential of some plays in Western Canada is likely to pique the interest from service sector heavyweights once the plays begin to enter full exploitation mode. “To the extent that you get plays like the Duvernay that are viewed as long lead-time, world class-type play -- it’s early days in the Duvernay and probably too early to categorize it as those things at this time - but lets say for
example that, combined with if liquefied natural gas (LNG) export capability ever came on, that would also make the Horn River, Montney and Liard formations potentially world class, as well.” Mazar said. “What you would see then is increasingly guys like Schlumberger (Ltd.), Halliburton (Co.), Baker Hughes (Inc.) whoever - deciding that they need to have a bigger presence in Canada given that there’s a very positive outlook and longterm visibility for those plays. “They are areas where you’re going to be seeing high levels of activity.” Over the past decade or so many large-scale integrated service companies have scaled-down Canadian operations. But Mazar believes the long-term potential of some of the emerging plays in Western Canada would be enough for them to increase their presence north of the border. “They would decide, ‘Well now I need
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to be in those plays in a bigger way. It’s too difficult for me to do it organically and I think I will do it via acquisition,’” Mazar said. “But I think they would need some visibility that those plays are going to be world class-types of assets before making those kinds of decisions ... then you could have international or multinationals or U.S. companies wanting to establish a bigger presence in Canada and making acquisitions of Canadian names.” Mazar said that while some large U.S., international and multi-national companies have a “sprinkling” of assets and activities in Western Canada, acquisitions would likely be the fastest road for them to ramp-up in Canada and deploy their integrated service models that they generally employ. “They provide services on an integrated basis where they’re providing everything, as opposed to somebody doing the drilling, someone doing the fracturing and someone else doing the well tie-in,” he said. “In Canada, that has never historically been the model. “But as these plays emerge and potentially become these world class-type assets they may be characterized by being developed that way. Schlumberger may say, ‘I have fracturing assets in Alberta but I don’t have drilling assets or I don’t have well servicing assets.’ So they could look to accumulate those types of assets so that they can continue that integrated service model that they’re doing elsewhere.” Mazar noted that he doesn’t expect a surge in domestic service companies joining forces. But he said the Canadian space could see more international activity whereby companies look to other markets in an effort to diversify operations. “I don’t see a lot of M&A between Canadian companies ... maybe at the margins some small companies. Otherwise I see it as being Canadian companies looking abroad and looking to establish a foothold in some attractive international markets where it’s far lower risk to do an acquisition than it is to do organically.” Scott Treadwell, vice-president of equity research, oil and gas services for TD Securities, agrees that as the domestic E&P landscape continues to change, so too will the business realities of the service sector. “I think going forward, especially as you see resources consolidated in the hands of national oil companies, super majors and the international guys, that the relevance of a 10-rig fleet, or a couple of coiled-tubing units, is going to get worse and worse,” he said. “I think you’re going to see consolidation driven partly by the sellers where the little guys see that they’re just going
to be scraping for table scraps from the big guys and also from the international integrated service guys.” Treadwell noted that with the emergence of potentially large-scale resource plays in Western Canada, the area will move up in “strategic importance” for the big boys in the sector. “Now it’s not going to be enough to have a small footprint in pressure pumping in Canada or a couple of cementing units. I think larger companies will do a strategic analysis and say, ‘look, there’s a gap in our operations and it’s called Canada.’” “In the medium term, call it three years or so as the Duvernay and LNG projects start to advance, it will not surprise me at all to see the big guys, globally, coming into Canada just to bulk up their presence.” Treadwell said that acquiring existing Canadian companies would also help the larger entities avoid some pitfalls that could occur upon a large-scale re-entering of Canada. “I’m talking about the labour side and the customer relations side, those types of issues,” he said. “I think the only way to rectify that is through M&A.” Rhys Renouf, national sector leader, energy services for KPMG, said some Canadian companies may choose to find a domestic dance partner and amalgamate in order to bolster their offerings. “In terms of bulking up there’s a very good argument that, yes, through mergers and acquisitions it gives you the capability to bulk up because the costs in terms of equipment and your ability to service your customers -- and because of safety capital requirements -- you tend to need a bigger template these days,” he said. “You tend to need a bigger company that’s got the resources to get the equipment and to meet the safety requirements of your clients these days and that generally requires a larger enterprise to do that.” That said, Renouf isn’t convinced that there will be a large increase of M&A in the Canadian service sector. “I think there’s always going to be M&A and it will ebb and flow,” he explained. “Will it increase? I don’t know, though I think there are lots of logical reasons for it to increase.” Mark Salkeld, president and chief executive officer of the Petroleum Services Association of Canada (PSAC), said there’s “lots of opportunity” for service sector M&A going forward. “I think Canada is positioning itself in a really good way,” he said. “There’s lots of interest in the energy sector, including service companies. We’re getting lots of foreign interest in Canada and they’re bringing cash to the table.”
environment
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PROTECTING THE EARTH
B.C. government begins consultation on land-based oil spill procedure
Environment minister Terry Lake is discussing oil spill prevention, response and recovery practices with stakeholders until Feb. 15. The Province is trying to develop world-leading land-based oil spill procedures.
BC GOVERNMENT PHOTO
STAFF REPORTER Pipeline News North When Premier Christy Clark and her BC Liberal government announced their five conditions for supporting heavy oil pipelines crossing the province to export hubs on the coast, they indicated that the development of world leading land-based oil spill prevention, response and recovery practices would be essential.
Following up on that announcement, the government released Land-Based Spill Preparedness and Response in British Columbia: Policy Intentions Paper for Consultation, which they will be discussing with representatives from the oil and gas, chemical and transportation industries until Feb. 15. “Our government is committed to protecting the environment,” said Environment Minister Terry Lake.
“That means, regardless of future pipeline opportunities, we need worldleading standards for spill preparedness and response in place immediately for all hazardous material spills. This is why we are developing a plan, in partnership with industry, which will put B.C. at the forefront of environmental protection, while at the same time working with the federal government to develop a world-leading marine-spill response.” The potential for land and marine oil spills have become a hot button issue in the ongoing discussion about Enbridge’s Northern Gateway pipeline and Kinder Morgan’s Trans Mountain Expansion, both of which would increase movement of Alberta oil sands bitumen to the coast for export to Pacific Rim markets. They are also issues that could derail those plans. That underscores the need to develop land-based spill preparedness and response practices, environmental restoration guidelines if a spill should occur and adequate government oversight of spill response, which are they discussion points in the consultation paper. Online engagement with First Nations, municipal governments and environmental organizations will also be part of the consultation process. That process will be followed by a sym-
posium featuring experts in land-based spill prevention and response tentatively slated to take place in Vancouver this March. Feedback from the energy sector has been positive so far. “We support the government of British Columbia’s policy, which re-enforces an effective spill preparedness and response framework for the Province,” said Brenda Kenny, president and CEO of the Canadian Energy Pipeline Association (CEPA). “It mirrors the transmission pipeline industry’s commitment to excellence in emergency management and pipeline safety,” she continued. “The Canadian pipeline industry already follows strict national standards and regulations which enable the industry to operate in the safest and most environmentally sound manner. “However, any opportunity to review and continuously improve on these standards and regulations for the benefit of Canadians and the environment is always encouraged.” “We support this review by the B.C. government,” added Dave Collyer, president of the Canadian Association of Petroleum Producers (CAPP). “Providing the public with confidence that our industry operates in a safe and responsible manner is key to industry’s social license to operate.”
Pad drilling means steadier work for service companies cont’d from pg 21 “You have to build a bigger pad, and you have to have the geology and drilling locations capable of all being reached from that pad. And, of course, you don’t want to drill one that’s too far away, and where you would give up the efficiencies by having to drill a lot farther. “So you need your geology and landholdings to align properly so it makes sense to do it all from one pad.” However, Eshleman says the high initial costs that might deter smaller companies from pad drilling come from the simple fact they would have to drill multiple wells, for which some companies do not have the capital. As for setting up the physical pad, Eshleman says it is not overly expensive for companies who will be drilling multiple wells at a site anyway. “The surface lease that you’re taking is just marginally bigger. So it might be twice as big and maybe the additional cost is an extra $100,000.... You drill eight wells you save $2.5 million.” Spiegelmann says the only drawback he sees from pad drilling is that a company cannot just drill one well, start production and drill another right next to it. He says the limited space available on a pad pretty much means all the wells must be drilled and completed before production can begin at the site, which can take
upwards of 36 days for a really large pad with lots of wells tied into it. “But I consider that a small problem,” Spiegelmann says, adding the benefits certainly outweigh the drawbacks for Devon, which currently has about 250 pads representing approximately 50 per cent of its total operations. From the perspective of the service companies, Salkeld says, pad drilling requires adjustments in operations, as well as building fleet and equipment to service the centralized rig format. “But what it also does ... is that it’s allowing for longer operating times in the sense there are more operating days, so you can have steady crews, and the crews are working regular shifts, and they’re getting job security and payroll security. That’s not a bad thing. And since it’s extending our season, it helps with employee retention and crew consistency, which improves competency as well as improves safety.” Salkeld says it is very easy for someone trained on another rig operation to transfer his or her skills over to the pad. “It’s all the same basic operation. They’re still drilling the same well and they’re still completing it the same. It’s just a bit of a nicer environment and steadier work.” Although a service company must train its crews to move a pad rig around the pad location, Western Energy Services Corp. CEO Dale Tremblay says the grow-
ing popularity of pad rigs doesn’t really represent a huge technological challenge for those who build them. Western Energy has other rigs that work on pads but aren’t designed specifically for pads. However, during the third quarter of 2012 the company was awarded the contract for an efficient long reach pad rig. “The rig we’re building is the first in the fleet that is designed from the ground up to be a pad rig,” Tremblay says, adding while he foresees the industry moving increasingly towards pad rigs they also are pricier than their conventional counterparts which means service companies must recover those costs. “So it does affect us, because it’s more money. To build a pad rig is more expensive than just a regular conventional rig. So we’ll have more capital dollars tied up, and therefore in general we will want to command a higher day rate.” While pad rigs might be more expensive to build, Salkeld says the longer lifespan for a pad operation can be another benefit. “It could go on for years. You could use one rig to drill 16 wells on a location, if it was two rows of eight wells each. The maintenance is easier, as it’s not moving as much.” According to Bob Geddes, Ensign Energy Services Inc. president and CEO, while the technology enabling pads has been around for awhile --his company started drilling multiple wells on a pad
in the late-1980s with two pad rigs near Cold Lake-- there are nonetheless some innovations to which service companies are increasingly responding. “What is changing on the rig is the use of larger mud pumps and the use of integrated controls, where the drilling contractor is doing a lot of the directional work. That’s where the evolution is going,” he says, adding such integrated controls means third-party directional services are becoming less necessary on drilling rigs, as companies such as Ensign can increasingly do it all. Geddes says he believes producers will continue to demand pad rigs as a more cost-effective means of extracting resources, as drilling itself becomes more efficient. “Certainly, there’s a number of good reasons why it’s being done. You’ve got lower surface impact. We’re able to go out further and further horizontally without any impact at the surface, and more cost-effectively.” Into the future, Salkeld envisions improvements in downhole technology making pad-drilling even more viable. “There are just lots of technologies with respect to fluids and scalability. I mean, you’re drilling down 1,000 metres and then you’re drilling a leg out 1,500 metres, and we’ve got downhole tools that just keep that bit in the perfect position and in the formation, and we’re always perfecting that.”
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industry news Encana working to build transportation and high horsepower market for natural gas cont’d from pg 3
railing happening.” Encana has been working with CN on flexibility to continue to use natural gas a pilot project testing natural gas as a fuel as we move into liquids-rich plays,” he for their locomotives. continued. “We can lower our cost and the rail“We don’t have to go back to diesel.” roads can lower their operating cost as Encana also hopes to expand on a pilot well,” Hill said of using natural gas for rail project conducted in the Horn River Basin transportation. shale gas play “As a shipper on of northeast B.C. a railroad, we’re “That really gets us where they were paying a diesel using natural he excited when we finally surcharge,” gas for prescontinued. “If we sure pumping can take that diesel focus on the high services. surcharge off, then “That really all of a sudden evgets us excited horsepower market.” erybody gets more when we finally efficient.” focus in on the Marine transpor– David Hill, Encana high horsepower tation is another market,” said potential market, Hill. but Hill believes “And this has many layers.” that is farther down the road than some By using natural gas for drilling and other applications. pressure pumping, Encana reduces their Not all of these applications are directly costs and the negative environmental tied to the new plant being built in Grande impact of their operations. The company Prairie, but the project is one small part sees the same effect when they and their of those larger efforts to grow the market service providers use natural gas for for natural gas at a time when the launch transportation fuel. of an LNG export business meant to save “Then we look a little further beyond the Canadian natural gas industry from this,” said Hill. low commodity prices is still at least five “Thinking about the rail industry, we years away. are railing … sand, pipe, condensate and “LNG for export is a great [option] for oil across North America,” he continued. the country as well as the producers to “Think about all the rail going on right now find new markets,” said Hill. “But also for oil – there’s a tremendous amount of when you look at other options for using
natural gas, whether it’s industrial uses, viable and this is sustainable.” expanding the power generation market, Hill doesn’t think expanding the domestransportation becomes a natural market tic market for natural gas will cause the domestic price to price significantly. that seems to have been neglected. “The use of natural gas as a transporWhen we look at it, we look at this market as very viable.” tation fuel is also a long-term view,” he explained. “It definitely requires a capital The question Hill is asking is: why aren’t we using the domestically proinvestment for infrastructure, a capital duced resource that is natural gas as a investment to convert the engines for the transportation fuel on a larger scale? vehicles to natural gas.” Hill suggests that its abundance in Hill said that the North American transportation market currently uses about North America, lower cost and smaller carbon footprint make it an obvious 150 million cubic feet (mcf) of natural choice for transportation fuel. gas per day. If every engine outside of “I think we have overcome the supairplanes converted to natural gas, North ply challenge, which is evident in the America would be using about 70 billion cost of natural gas,” he said, noting the cubic feet (bcf) per day of natural gas for gap between oil prices and natural gas transportation. prices. The forecasts are only projecting a “It’s a very significant gap and all the maximum natural gas use for transportaforecasts from tion of only 5.0 bcf all the experts per day by 2025. “Natural gas prices show that gap “We just have sustainable into this to purhave actually gotten to sue option the future,” he this market,” added. said Hill. “Will it be less volatile.” “Natural gas help stabilize the prices have acprice? Sure. Any tually gotten to new demand is – David Hill, Encana be less volatile really going to help and appear to sure up the price be maintaining because we have a window of price. And the projections found so much supply. Will the prices are very reasonable into the future spike? All the studies we’ve seen on LNG compared to oil. But we need to work export and others show resiliency in the on projects like this to demonstrate to price not to spike because of the supply the market and to the fleets that this is situation.”
Chevron acquires share in Kitimat LNG from EOG and Encana STAFF REPORTER Pipeline News North Even though exports of the product are still years away, the face of the LNG industry in British Columbia has already changed considerably with Chevron Canada acquiring a stake in Kitimat LNG in late December. It was announced on Christmas Eve that EOG resources, one of three companies that had a stake in that project along with Apache and Encana, would be selling its 30 per cent share in the plan to ship natural from Kitimat as LNG to Chevron, including their stake in the liquefaction and export facility on the coast and the Pacific Trails Pipeline that would transport natural gas from the Horn River Basin of northeast B.C. to Kitimat.
EOG would also be selling over 28,000 acres of as yet undeveloped assets in the Horn River Basin. “While we still believe in the viability of the Kitimat project, our decision to exit is consistent with EOG’s focus on domestic onshore crude oil production, which is generating more immediate reinvestment opportunities,” said Mark Papa, chairman and CEO of EOG. It was simultaneously announced that Encana would also be selling their share of Kitimat LNG to Chevron. The partnership would also be restructured so that Apache and Chevron would be equal partners in the project. That partnership includes 644,000 undeveloped acres in the Horn River and Liard Basins. Chevron, an expert in the LNG business, would operate the pipeline and the liquefaction facility, while Apache
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would take charge of the exploration and production end. “This agreement is a milestone for two principal reasons: Chevron is the premier LNG developer in the world today with longstanding relationships in key Asian markets, and the new structure will enable Apache to unlock the tremendous potential at Liard, one of the most prolific shale gas basins in North America,” said Steven Farris, Apache’s chairman and CEO. “With experience developing LNG projects, marketing expertise and financial wherewithal, Chevron is the preferred co-venturer to join Kitimat LNG,” Farris said. “Apache has a proven record in finding and developing shale gas resources in Canada and is the logical operator for the upstream elements of the joint venture.” Apache was already working with Chevron on an LNG project in Australia known as Wheatstone. “Chevron’s got a ton of experience in the LNG markets and I think that will bring a lot of benefit to the project itself,” said Kevin Smith, vice president of Encana’s northwest business unit, speaking during an unconventional resources conference in early January. “The capital commitments ongoing with that project are significant,” he added. “And I don’t think Encana would have best been served by staying in and having to bear that capital on the downstream when our real goal and focus is to develop the upstream. “If you take a look at the potential in the Horn River, I think it’s ideally suited to support LNG given the nature of the high productivity and the low decline that the type curves there exhibit.”
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SATELLITE STATES Tech companies working together in the most remote corners of the western Canadian oil patch
james waterman Pipeline News North MRL Integrated Solutions weren’t just celebrating their ninth anniversary as an oil and gas sector service company in December. They were also celebrating the resurgence of satellite provider Globalstar. MRL provides a connection between their clients and the data produced at their wellheads at remote sites in the oil patch of western Canada, sites where personnel are not often present. “These are machines. And unattended machines,” said MRL president George Tulle. “They’re left out on wellheads without any power or anything,” he continued. “And the little machines run by themselves. And so clients need to access the readings off those machines.” The machines are portable. The usual method of transmitting data from the machines to the clients is through cell modems, but cell coverage isn’t always available at these remote locations. “Our clients, they’ll be going from well to well … not knowing if they’re going to be inside cell coverage or not,” said Tulle. “When they get outside of cell coverage, we need a satellite provider.” That helps explain the how and why of MRL’s relationship with Globalstar that began in April, 2004, when MRL began to test the use of Globalstar’s duplex modem. Globalstar experienced a few setbacks since that relationship began with gaps in their satellite coverage, but business is starting to turn around now thanks in part
to continued support from companies such as MRL. “Our systems are able to overcome the gaps in coverage which were taking place,” said Tulle. “And now those gaps are getting smaller and smaller. And we’re seeing wonderful responses from the coverage in terms of being able to get the data through on a more frequent basis.” “We’ve had an amazing last year or so after a few years of pretty tough times,” said Globalstar’s vice president and general manager Jim Mandala. “It’s been good for us – finally. And we’re getting busy again.” The turnaround has come with the re-launch of several satellites that began about 18 months ago to fill the gaps in coverage the company had been experiencing over the past few years. “Really started to replenish the network,” said Mandala. “We launched 18 satellites so far and we have six more to go in the first week of February. And that will complete the regeneration of the network,” he added. “We’re just seeing that a lot of our customers that weren’t using us for a while, because the network wasn’t robust enough, are starting to come back.” A number of those customers had left Globalstar as long as five years ago. “We view ourselves as the enabler of communication – remote communication,” said Mandala. “The beauty of it is the hardware,” said Tulle. “It’s low power. It’s compact. It’s rugged. It’s reliable.”
New year and new name at SEPAC Daily Oil Bulletin
Hotel General Manager A hotel general manager is required for the Lakeview Inn & Suites in Fort Nelson, BC - a very successful 82 room select service hotel. The successful applicant will: • Be a professional personable career oriented individual • Be capable of leading a staff compliment of approximately 15 employees through a demonstrated commitment to excellence. • Be readily able to demonstrate initiative and work with a minimum of supervision. • Be comfortable in a computer assisted work environment. • Be comfortable with the opportunities and challenges of residing in a robust northern BC community. Related hotel industry experience is an asset but is not essential. A vehicle and valid driver’s license are required. Lakeview Management Inc. is a vibrant growing hotel management company with 38 hotels in its portfolio and a reputation for excellence within the hotel industry. This position includes an excellent employment package. To learn more about our company please visit our website at www.lakeviewhotels.com Please submit your resume to: Ms. Christine Schneider Operations Coordinator Lakeview Management Inc. Fax: 204-957-1697 Email: cschneider@lakeviewhotels.com Only those under consideration will be contacted. Thank you.
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The Small Explorers and Producers Association of Canada (SEPAC) welcomed in the new year by officially changing its moniker to the Explorers and Producers Association of Canada (EPAC). Founded in 1986, the association represents a wide spectrum of independent oil and gas companies ranging from start-ups to junior and mid-sized producers operating in Canada, the United States and around the world. But with the industry undergoing extensive change over the decades, EPAC executive director Gary Leach said the new name is more reflective of current realities. “The association has been in existence for nearly 30 years and our board members know first-hand the changes that are transforming the junior and intermediate sector. We wanted to select a name we felt is descriptive of our membership and would be relevant for many decades to come,” he said. “As one of our board members said, ‘Our members don’t think small,’ so we felt the new name better reflects who we represent and the aspirations of our members for the future.” Leach noted that Canada is home to a “great collection of entrepreneurial companies” in the junior and intermediate sector and these companies help make the nation’s energy industry one of the “strongest and most unique” in the world. “Our focus will continue to be to make sure that Canada remains a place where Canadians can start an oil and gas company and find opportunities to grow,” Leach said. “That’s what we like to remind politicians, regulators and the public every day and we will continue to work collaboratively with our colleagues at the Canadian Association of Petroleum Producers and the other upstream industry associations to achieve these goals.”
It also locates the satellite on its own. the level of coverage. “Our clients don’t have to spend a “We can provide coverage in a much whole lot of time rigging in our system more vast area because you don’t have to once they’ve installed the machine,” said put a cell tower near there,” he explained. Tulle. “It’s very simple plug and play. “As far as the actual communication goes, it’s very similar. The data goes out to They don’t have to program the satellite communicator, the data modem. They our satellite, down to a ground station, and don’t have to aim it.” that ground station is located, for western Tulle noted that the system works in Canada, in High River. And then the data the low temperatures that are common in goes into High River and gets put into the winters across northern Manitoba, Sastelephone switch there just like any data katchewan, Alberta and British Columbia would be put into a telephone switch and Yukon and Northwest Territories, all from cell or from satellite.” of which comprises MRL’s operating areas. “And the power consumption to burst the data through the modem and into the Globalstar network is very Yard Supervisor low power,” he added. “We can get away with very small Applicants should have extensive knowledge of pipeline solar panels and batteries to and facility construction, have good organization and make it all work.” communication skills, and possess basic computer skills “It could actually wake as well as the ability to multi-task while meeting strict deadlines. The successful applicant will be expected itself up and then use the power,” said Mandala, noting to organize and distribute, in a team environment; yard equipment, trucks, tools, and other assets. Manage that the system isn’t contime, space and personnel, effectively and efficiently. stantly using electricity. Operate and maintain all types of equipment, and have “We have devices that Safety as a top priority. are extremely low cost, extremely low power, can go Applicants must have a valid H2S and OFA 1 ticket (or be willing to obtain) as well as a valid driver’s license into sleep mode so they use with a clean driver’s abstract. very little of ongoing draw. And they’ll look for the satel- Patch Point offers an attractive compensation and benefits package. lite when you request them to look. Please email resumes and contact information in Still, Mandala believes the confidence to: FSJ-Dispatch@bces.com true benefit of Globalstar is
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JANUARY 2013
careers
Search on for leaders for Alberta`s new energy regulator Daily Oil Bulletin
The Alberta government is looking across Canada to recruit the leaders of the new agency who will regulate oil, gas, coal, and oil sands development in the province. “We are creating a world-class organization, and are relying on it to build a regulatory process that is efficient and effective for industry, protects the environment and respects landowners,” said Energy Minister Ken Hughes, said in a news letter. “A great organization needs
great people, and we are using an open, competitive process to find them.” The Alberta government is recruiting a chair and executive officer who will first serve on a transition committee, and then move into permanent roles as the chair of the board of directors and the chief executive officer of the Alberta Energy Regulator. The new agency will take on the responsibility for work currently done by the Energy Resources Conservation Board (ERCB) and by parts of Alberta Environment and Sustainable Resource Develop-
ment. When operational, the new agency will include nearly a thousand staff, process tens of thousands of applications a year, and manage a budget of more than $200 million. The recently-approved Responsible Energy Development Act creates a transition committee to oversee the transfer of duties, functions, staff, and property from the ERCB to the new regulator which the government earlier said was expected to be in operation in June 2013. The committee will be supported
by Dan McFadyen who is leaving his current position as ERCB chair as he completes his term. “Dan has led the ERCB with great spirit and integrity for nearly five years,” said Hughes. “We appreciate that he is willing to share his expertise with the transition team for several additional months.” Brad McManus, currently ERCB vice-chair, will perform the chair’s functions and ensure the board`s continued performance until the new regulator is operational.
Fracturing fluid information to be available online in Alberta Daily Oil Bulletin Albertans will soon have online access to information on the fluids used in hydraulic fracturing operations through the FracFocus website. The Energy Resources Conservation Board’s Directive 59: Well Drilling and Completion Data Filing Requirements has been updated to enhance reporting
requirements for fluids used in hydraulic fracturing operations. These changes support the ERCB’s commitment to the open disclosure of fracture fluids and align with the government of Alberta’s focus on improved transparency in support of responsible development, said the board. The enhanced reporting requirements will be effective as of Dec. 31, 2012, and will be mandatory for all hydraulic fracturR001424278
Working with industry to help eliminate work-related incidents and injuries Enform is the safety association for Canada’s upstream oil and gas industry. Established by industry for industry, Enform helps companies achieve their safety goals by promoting shared safety practices and by providing: » Effective training, including courses on general and operational safety programs and petroleum fundamentals » Expert audit services » Professional advice Our vision is no work-related incidents or injuries in the upstream oil and gas industry. Contact Enform today for more information.
Email bc@enform.ca Fort St. John 250.785.6009 Toll-free Toll-free 1.855.436.3676 (855.4ENFORM) Email bc@enform.ca Fort St. John 250.785.6009 1.800.667.5557 www.enformbc.ca www.enformbc.ca
ing operations going forward. Albertans will begin to see increasing amounts of information on FracFocus by the summer of 2013 as data from newly drilled and completed wells is reported under the new reporting rules. As with all of its regulations, the ERCB will regularly review the directive to ensure it continues to meet its objectives. FracFocus.ca has been implemented R001424349
by the British Columbia Oil and Gas Commission to facilitate the disclosure of hydraulic fracturing fluid information in Canadian jurisdictions. Adoption of the site supports Alberta’s participation in the New West Partnership. FracFocus.ca is based on FracFocus.org, a site developed in the United States by the Interstate Oil and Gas Compact Commission and Groundwater Protection Council.
JANUARY 2013
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locations that suit your business needs • 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’S 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.
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PUBLICATION dATe Last Friday of each month
(unless otherwise indicated)
BOOkINg deAdLINe Tuesday week prior to publication
Ad COPY deAdLINe Thursday Noon week prior to publication
(unless otherwise indicated)
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18 JAN 2013
7 JAN 2013
8 JAN 2013
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15 FeB 2013
4 FeB 2013
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15 MAR 2013
4 MAR 2013
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19 APR 2013
8 APR 2013
9 APR 2013
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17 MAY 2013
6 MAY 2013
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14 JUNe 2013
3 JUNe 2013
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12 JULY 2013
4 JULY 2013
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16 AUg 2013
8 AUg 2013
9 AUg 2013
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