PNN JULY 2021 by Pipeline News North

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Oil and gas ‘restoration economy’ underway, says OGC By Tom Summer Work to reclaim oil and gas sites in B.C. is exceeding new drilling due to provincial regulations and an injection of federal money, the PRRD heard last week. BC Oil and Gas Commissioner Paul Jeakins gave the regional district board an update and forecast on industry activity on June 11, showing decommissioning or restoration work on almost 400 orphan sites last year, with more than 250 sites targeted for cleanup this year. The OGC manages 770 orphan sites, 128 of which have been reclaimed. Restoration activity is planned for another nearly 2,000 dormant sites in 2021 and 2022, according to OGC trends and forecasts presented to the board. “Industry’s got a big role and a lot of activity in this space,” Jeakins said. “B.C. will ensure that industry will be restoring sites as they develop new areas. We can now track planned restoration by company and start to predict how that’s going to play out over time.”

The OGC has set 10-year reclamation timelines for wells under its care, with plans to shorten that where possible, Jeakins said. “Naturally we’re going to make every effort to reduce that timeline, and staff are busy working on what that could look like,” Jeakins said. “It’s a combination of crews, money, scheduling, there’s a lot of that going on.” Director Dan Rose (Area E) asked Jeakins what tools the OGC is using to keep reclamation work on target. Jeakins said regulation and enforcement are key, but added that companies have also increased their programs and taken advantage of federal stimulus too. “We’ve got a lot of very big companies operating in B.C. so they’re trying to get them off their books as much as we want them off their books,” he said. There were 370 wells drilled in B.C. in 2020, with 580 well applications expected this year. At the end of April, about 178 wells had already been drilled this year. “Production started fairly slowly but increased steadily, and now it’s at or above last year’s levels,” said

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Jeakins, adding producers have switched focus from liquids to dry gas. “There was a lot going on. It was surprising for us in terms of what we anticipated through the pandemic. But certainly we’ve seen that the numbers have stayed pretty high.” Current gas production is around 6 billion cubic feet per day, which is expected to grow to 8bcf per day when the first phase of LNG Canada comes online, Jeakins said. “The interesting story in that is the number of wells needed,” said Jeakins, noting up to 30 wells can be placed on a pad. Jeakins said a six-hectare pad averages about 16 wells, meaning about 130 hectares of land disturbance given drilling numbers. He noted one company is applying to double the number of wells on one of its pads, from 18 to 36. “With the improvements in technology, there’s fewer wells needed than we would have expected even a couple of years ago. Plus, the Montney is a worldclass natural gas formation so that’s a really good thing for B.C.,” he said. “As you see the reclamation go up, I think B.C. has a pretty good

story to tell about how we’re managing this,” he said. Jeakins said producers are still focused in the Montney basin despite the shift from liquids to dry gas, which has not translated to more activity in the Northern Rockies and the Horn River and Liard basins, he said. “We haven’t seen that move up. There’s a big number of other issues for those before they’re ready to come onstream. Montney is the focus,” Jeakins said in response to question about the shift from Taylor Mayor Rob Fraser. “As to why they’re switching, a lot of the condensate was going to the oilsands, so I’m not sure whether the slower production up there had anything to do with it. That’s just what we’ve seen and observed.” Jeakins also noted that Coastal Gaslink is scheduled to come online by 2025. Ripple effects can be expected for the upstream work related to the pipeline and LNG Canada project, he said. “We’re working with companies right now in terms of what that is going to look like, how much activity, and

when they think it’s going to happen,” said Jeakins. Dawson Creek Mayor Dale Bumstead said he’s looking forward to the economic benefits. “Coastal is just one more focus on the Montney region that will certainly drive additional activity in the next year or two as companies start to ramp up to provide another 25% of the production that they have,” he said. “It’s certainly very positive for the industry.” The OGC completed 4,945 inspections in 2020-21, issuing 32 orders and eight penalties totalling $130,000. —Local Journalism Initiative

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716 dormant wells targeted in latest round of cleanup By Matt Preprost Fifty-three B.C.-based oil and gas field service companies are being awarded $50-million in funding clean up more than 700 dormant oil and gas sites, the province announced Thursday. The Ministry of Energy says it has awarded the second instalment of funding provided by the federal government for work on sites nominated by landowners, local governments, and aboriginal groups through the Dormant Sites Reclamation Program. Funding will support work on

716 well sites, of which 659 were nominated by Indigenous people, and 11 Indigenous-owned oil and gas contractors will carry out site restoration work, the ministry said. “The Halfway River Group, a collection of Halfway River First Nation businesses, would like to acknowledge that the processes implemented during the second round of funding for the Dormant Sites Reclamation Program has opened the door for our participation, incentivizing our inclusion, in a manner that was not available to us in the first round of funding,” said Brad Bonner,

president and CEO of the Halfway River Group, in a statement. “These opportunities cultivate an optimism and spirit that makes a visible and tangible difference within Indigenous communities.” There are currently 9,055 dormant well sites in B.C., according to the ministry. The first round of funding went to 79 B.C.-based service companies to perform reclamation activities on nearly 1,900 dormant wells, the ministry said. “By working collaboratively with Indigenous Nations and seeking community input, the second round

of the Dormant Sites Reclamation Program leverages local knowledge to restore oil and gas sites of concern,” said Energy Minister Bruce Ralston. “This funding will benefit the environment, while providing thousands of good-paying jobs for British Columbians.” Funding support for the dormant sites program comes from $120 million in federal monies announced last year. Successful applicants are given up to $100,000 for work on dormant well sites.

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By Nelson Bennett BC Hydro and the B.C. government are missing the boat on addressing greenhouse gas emissions from the natural gas industry, says David Austin, a lawyer specializing in energy law at Stirling Business Law. BC Hydro yesterday released a long-awaited draft Integrated Resource Plan (IRP), which maps out the Crown power utility’s plans over a 20-year period. The IRP forecasts a surplus of power, and therefore no need for any additional sources of power generation, for at least a decade. A large amount of power will come online sometime mid-decade when Site C dam is commissioned, and through a combination of conservation and declining demand in some sectors, notably heavy industry, BC Hydro does not expect it will need any new, additional power generation until after 2032. That’s despite the fact it does expect an increase in demand in the south coast of B.C., thanks to rapid adoption of electric vehicles. “At a system-wide level, before demand-side measures, new energy needs are not expected to occur until fiscal 2029, while capacity needs are not expected to occur until fiscal 2032,” the IRP states. Austin, who has represented independent power producers in B.C., said BC Hydro could be using that surplus power to electrify natural gas pipelines, which use compressor stations powered by natural gas, but there is no plan to do that. He pointed to a recent application in the U.S., where a pipeline operator has applied to electrify pipeline compressors, as an example that B.C. should be following. Tellurian Inc. has applied to the Federal Energy Regulatory Commission to add a new 37-mile pipeline in Louisiana that would use electric drive for its compressors.

“Why hasn’t BCH with its surplus of electricity been pushing for mandatory electrification?” Austin wondered. Austin said there is too much focus on reducing fugitive methane emissions from the natural gas industry, and not enough focus on the CO2 produced from burning natural gas to power natural gas processing plants and pipelines. “Methane emissions, as adjusted for their higher GHG impact than carbon, account for about 10% of the GHG emissions in the gas fields,” Austin said. “The remaining 90% come from gas processing plants and pipeline compression stations.” In 2018, Clean Energy BC produced a white paper that estimated extensive electrification of oil and gas production in B.C.’s Montney formation in northeastern B.C. could reduce sector GHGs by 60%. BC Hydro has been investing in new transmission projects to bring electricity to the northeast region of B.C. where natural gas is produced, and some natural gas processing plants are now running on electricity, rather than natural gas. But Austin said most natural gas processing plants in B.C. are still not electrified, and there appears to be no plan to electrify the pipeline systems. He points out that none of the compressor stations for the Coastal GasLink pipeline that is being built to feed the LNG Canada plant in Kitimat will use electric compressor stations. Natural gas extraction, processing and transmission accounts for about 18% of B.C.’s GHG emissions. Until the B.C. government addresses emissions from that sector through electrification, it has no chance of meeting its GHG reduction targets, Austin said. “We are not even going to get even close to our objectives,” he said. — Business in Vancouver

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4 The Pipeline News North, JULY 15, 2021

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UNBC prof to study ways to mitigate geohazards UNBC Engineering Assistant Professor Dr. Wenbo Zheng has received a Natural Sciences and Engineering Research Council Discovery Grant. Photo courtesy University of NBC

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An engineering professor at the University of Northern British Columbia has received a federal research grant to study the efficiency and safety of shale gas and geothermal energy extraction. The UNBC says Dr. Wenbo Zheng, an engineering assistant professor at the school, has received a $142,500 grant from the Natural Sciences and Engineering Research Council to further his research into deep earth resource extraction. The university says Zheng’s project sets out to better understand how sand used as proppants during hydraulic fracturing interacts with rock formations home to shale gas reserves. His research will also explore ways to extract gas and deep geothermal energy efficiently while mitigating geohazards such as small-scale earthquakes and landslides. “This research project will advance my longterm objectives by improving the characterization and modelling of the rock-proppant interaction in hydraulic fractures to safely enhance natural gas recovery from deep rock formations,” Zheng said in a release. “The improved characterization and modelling of the rock-proppant interaction are also applicable to the emerging enhanced

geothermal systems.” The university says the grant will support both undergraduate and graduate researchers in Zheng’s lab. Zheng will be collaborating with Dr. Ranjith Pathegama Gamage and the Deep Earth Energy Research Group at Monash University in Australia, as well as Dr. Xinli Hu and the geohazard group at the China University of Geosciences. Zheng says the UNBC is ideally situated near natural gas fields in northeast B.C. to carry out his research. He will also be working with Calgarybased AGAT Laboratories and is seeking other opportunities to work with industrial partners and provincial oil and gas regulators, the university said. “Situated in northern B.C., UNBC provides an excellent venue for conducting research in the area that is globally significant as well as highly relevant to the local industry,” he says. “UNBC has a comprehensive multi-disciplinary research team in natural resources and environmental sciences, which provides great opportunities for interdisciplinary collaboration through this project.”

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Tidewater says its proprietary process produces renewable diesel that meets all the specifications for diesel in Canada and the U.S. While the technology has been commercialized in Europe, the U.S. and Asia, the Prince George Refinery project would be the first in Canada. The project would use much of the current infrastructure of the Prince George Refinery, however the project will require the installation of a small boiler, several heaters and six additional storage tanks on the site. “The gas fired heaters and the small boiler will utilize modern burner technology to minimize combustion emissions,” Tidewater’s report said. “The reformer gas fired heater will be equipped with a Selective Catalytic Reduction (SCR) unit to minimize emissions. SCR is a process capable of abating emissions of nitrogen oxides (NOX) to extremely low levels by utilizing an ammonia catalyst to convert the nitrogen oxides to naturally occurring nitrogen and water.” A “minimal increase in emissions” were expected as a result of the project. The rezoning necessary for the project are going before city council on Monday night for first and second reading. Public consultation and a public hearing will be required before council considers final approval of the rezoning. Tidewater purchased the Prince George Refinery from Husky Energy in 2019. — Prince George Citizen

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By Arthur Williams The company which owns the Prince George Refinery is looking to develop a plant on the refinery site to convert vegetable oils, used cooking oil and animal fats into millions of litres of renewable diesel per year. Calgary-based Tidewater Midstream and Infrastructure Ltd. Is seeking city council’s approval to rezone part of the refinery site on PG Pulpmill Road to allow the construction of the plant. A project summery provided to city council by the company said Tidewater hopes to begin construction as early as this month, and have the facility operational in two years or less. Once complete, the plant is expected to produce 150 million litres of renewable diesel per year – nearly 25 per cent of the province’s target to produce 650 million litres of renewable fuel in B.C. by 2030. “Renewable diesel differs from bio diesel in that it lacks the oxygen that makes bio diesel prone to separation and unsuitable for cold temperatures without blending; renewable diesel does not require blending with traditional diesel to be utilized, and is, therefore not subject to blending limitations,” Tidewater’s report said. “Once in operation, the Prince George renewable diesel facility is estimated to have a carbon intensity (CI) rating of 10-20 g CO2eq/MJ, which yields an ~80-90% reduction in greenhouse gas (GHG) emissions based on various viable feedstocks.”

6 The Pipeline News North, JULY 15, 2021

Murray River drilling sets TC Energy record

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The recent completion of the Murray River Horizontal Directional Drill (HDD) marks a huge milestone for Coastal Gaslink – the largest trenchless water crossing on the project has been completed with zero safety incidents. This 1.3 kilometre section of pipe weighs over 1.2 million pounds, and the 48-inch HDD signifies the largest of its kind for TC Energy and one of the longest in North America. Before work could even begin on-site, years of planning went into making sure everything went smoothly in coordination with our prime contractor Surerus Murphy Joint Venture (SMJV). An HDD pull is a process that involves the expertise of many including engineers, crossing companies, environmental specialists and surveyors. Several tests need to be done beforehand to make sure the entire process is safe, and this particular pull had an added level of difficulty for the crew to maneuver due to the steep slope of the river. It takes a large amount of coordination throughout the pull once the process starts. As the tunnel is drilled under the water crossing, the pipe is being held by cranes on land – some segments suspended 9 metres in the air in order to ensure the proper 14-degree angle at the entry point. “Some of the cranes here have one hundred thousand pounds on them, we’re dealing with a lot of weight, we have to react in real-time,” explains Dave, an HDD support foreman on the Murray River project. The pipe is then carefully passed through the cranes on land and into the drilled tunnel under the Murray River. No

matter the difficulty, safety comes first, and the Murray River HDD was successfully completed with zero safety incidents. We’re committed to achieving the highest standards of environmental protection during construction, and for the life of the project. We recognize that how we navigate water crossings matters to the local communities, which is why we utilize advanced engineering methods to safely construct around and across all water bodies. Reclamation is a priority and readings are taken before the pipe is installed so that we can test both during and after construction to monitor that the pipeline continues to operate safely and efficiently without affecting the environment and the communities around us. For example, our teams look out for changes in sediment, dissolved oxygen levels and suspended solids in the water. We work in beautiful areas of nature with so many different species, including “areas that have commercial, recreational and Indigenous species of importance within the river system” says Jeff, lead environmental inspector for the Murray River HDD. Across the entire project route, we strive to leave the land the way we found it. Jeff knows that projects like this “show the planning and coordination of pipeline construction and the commitments and legislation we follow and how we do this work in a sustainable way.” Pulling the pipe through a tunnel under the river meant no impact was made to the body of water, minimizing our footprint and reducing the environmental impact. — Coastal GasLink

The Pipeline News North, JULY 15, 2021

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8 The Pipeline News North, JULY 15, 2021

Province unveils hydrogen strategy

By Nelson Bennett The B.C. government unveiled a hydrogen economy strategy Tuesday that is intended to foster innovation and adoption of both hydrogen use, as well as its production. It includes 63 actions for government and industry to act on in developing a hydrogen economy. It follows the announcement of a federal hydrogen strategy in December. “As we face the global challenge of transitioning away from fossil fuels, renewable hydrogen will be a critical part of our achieving clean energy and climate goals,” said Bruce Ralston, minister of Energy, Mines and Low Carbon Innovation. As Ralston pointed out, hydrogen can be used in fuel cells in areas that are more difficult to electrify — heavy duty transportation, for example — and can also be injected into the natural gas grid to low its carbon intensity. “With our clean energy advantage, abundant natural resources and innovative companies, we are well positioned to attract investment in the growing hydrogen economy, and create new opportunities for British Columbians,” Ralston said. He said the 2021 budget committed $10 million over three years to help implement the B.C. hydrogen strategy, and BC Hydro recently announced a discounted electricity rate for renewable hydrogen production. B.C. is a hydrogen technology leader. In addition to Ballard Power Systems and Loop Energy — two hydrogen fuel cell manufacturers — BC Hydro’s Powertech Labs provides testing and some research and development for hydrogen technology.

“More than half of Canada’s companies active in the hydrogen and fuel cell sector are located in B.C.,” the B.C. hydrogen strategy notes. While B.C. has some advantages on the adoption and manufacturing side, it may find itself outpaced by Alberta and Quebec when it comes to producing hydrogen. The Quebec government is aggressively pursuing green hydrogen production, using its vast hydro power resources, and Alberta is already a hydrogen producer that it poised to dominate in the blue hydrogen production space. Hydro-Québec recently awarded an engineering contract to Thyssenkrupp, a German company, to build an electrolyzer plant that would produce 11,000 metric tonnes of green hydrogen annually. And the federal and Alberta governments recently signed a memorandum of understanding with Air Products Canada to build a $1.3 billion blue hydrogen production plant in Edmonton. Alberta’s advantage is that it already produces hydrogen — used in the petroleum industry — abundant natural gas and the Alberta Carbon Trunk pipeline, which is a dedicated pipeline that can be used to transport and sequester the CO2 captured from industry, including blue hydrogen production. B.C. has both abundant natural gas and hydro power, so it has potential to see investment in either blue or green hydrogen production, or both. Currently, green hydrogen — produced from water and electricity — can cost four to five times more to produce than blue hydrogen, which is hydrogen made from natural gas with carbon capture and storage. It’s expected it will be 10 years before green hydrogen production can compete with blue hydrogen in terms of production costs.

“Production costs for all pathways are heavily dependent on the price of inputs, such as natural gas and electricity,” the strategy notes. B.C. does not have Alberta’s advantages when it comes to carbon capture, transportation and storage. The strategy notes that it will need to develop new regulations for CCS in B.C. “It (CCS) has some challenges in the sense that the costs are not yet economic on a commercial basis,” Ralston said. “Here in British Columbia we have the potential for green hydrogen because of our clean electricity grid. So the opportunity here in British Columbia is for green hydrogen as well. “But both will go forward together. The development of the blue hydrogen sector, I think, is — given the natural gas resources in British Columbia — an opportunity for British Columbia as well.” The strategy says a range of new codes, standards and regulations will be needed for hydrogen production, transportation and storage, including regulations around CCS. As for hydrogen technology and adoption, the strategy proposes the creation of regional hydrogen hubs where both production and demand are “co-located,” subsidies for fuel cell vehicles and infrastructure, and expansion of the use of hydrogen in industry. The B.C. government estimates hydrogen use could potentially reduce the province’s emissions by 7.2 megatonnes of carbon dioxide equivalent per year by 2050. —Business in Vancouver

The Pipeline News North, JULY 15, 2021

Hydrogen fuelling station coming to the northeast

By Matt Preprost A fleet of 65 heavy-duty trucks will be making the switch from diesel to hydrogen in northeast B.C., the province said Monday. According to a release, the Ministry of Energy says Hydra Energy will receive Low Carbon Fuel Standard credits worth a current market value of $1.9 million to build a hydrogen fuelling station in the region. The ministry says trucks that rely on conventional diesel will be retrofitted

to allow them to transition to low-carbon byproduct hydrogen that will be captured at a local sodiumchlorate facility. Retrofits will allow the trucks to use 40% hydrogen fuel and will cut emissions by 67 tonnes of carbon dioxide equivalent per truck per year, the ministry said. “By working with hydrogen suppliers and the trucking industry, we’re hauling B.C. toward a low-carbon future. Hydrogen fuels allow us to reduce emissions in our

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transportation sector,” said Energy Minister Bruce Ralston in a statement. “This project demonstrates B.C.’s hydrogen opportunity, helps a business realize fuel cost savings and accelerates our transition to a cleaner economy.” The province’s Low Carbon Fuel Standard requires fuel suppliers to reduce the carbon intensity of gasoline and diesel by 20% by 2030, and offers credits to fuel suppliers to increase the use of lowcarbon fuels that would not

occur otherwise. The ministry says hydrogen is “the only practical solution” to decrease emissions in sectors including heavyduty transportation, and to help achieve emissions reductions targets set out under the provincial CleanBC plan. The ministry says Hydra Energy was the first company to provide the technology for commercial co-combustion trucks in B.C., and that the trucks being retrofitted have

driven more than 200,000 kilometres. Hydra anticipates the hydrogen facility will be operational by early 2023, according to the ministry. “Hydra is proud to be in British Columbia, an ideal jurisdiction for the development of low-carbon hydrogen,” said Hydra CEO Jessica Verhagen in a statement. “We hope to see B.C.’s approach replicated in Canada’s forthcoming clean fuel standard.”

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10 The Pipeline News North, JULY 15, 2021

CAODC announces name change and new mandate

After 72 years as the Canadian Association of Oilwell Drilling Contractors (CAODC), and after extensive member and industry consultation, the Association will become the Canadian Association of Energy Contractors (CAOEC) to reflect its expanded mandate and leading role in the oil and gas, hydrogen, helium, geothermal, and carbon capture, utilization and storage (CCUS) sectors. “Today, governments and industry leaders from across the country, and around the world, have issued a challenge: to make energy development cleaner and even more sustainable to meet ambitious climate targets,” states CAOEC CEO Mark A. Scholz. “This goal is well within our grasp. For over 70 years, CAOEC members have proven to be capable of great things; it is what we do, it is who we are, and there is no challenge too large for our people to solve.” “Our industry is comprised of leaders who have safely developed Canada’s natural resources to the benefit of each and every Canadian, building the industry into the world-class business we are known for today,” says Scholz. “Our new name represents a bright future for Canada’s energy services industry as we innovate to help lead one of the greatest energy transformations in over 150 years.” The new CAOEC logo, with its bold colours and redesigned shield, symbolizes the history of an organization first formed in 1949 by ten drilling contractors, as well as the opportunity that exists

in new markets for Canada’s best-in-class energy services sector. The CAOEC embraces its role in an evolving energy landscape, while recognizing all of the important work done on behalf of the Canadian drilling and service rig sector over many decades. Moving forward, CAOEC represents Canadian energy service companies operating close to the wellhead, employing tens of thousands of energy workers. As hydrogen, helium, geothermal, and CCUS industries emerge, the CAOEC will continue expanding its membership base to include additional energy companies, ensuring a strong, resilient, respected, and influential energy services sector in Canada. “We will lead Canada’s energy industry, become a beacon of hope and direction, and build upon our legacy as we embark on a new and exciting journey together.” Initial reaction to CAOEC’s name change and rebrand has been well received throughout the industry and government: “Name changes seem small, but in this case it’s fundamental. The workers in this association helped build this country, and now you’re building our low-emissions energy future. You are leading the charge, using your skills and technical knowhow in hydrogen, geothermal, and CCUS for a more prosperous future that leaves no one behind,” saidthe Hon. Seamus O’Regan, Federal Government, Minister of Natural Resources

“Congratulations, Canadian Association of Energy Contractors, on your new name and logo. With more than 20 of your member companies based in Saskatchewan, we recognize the significant contribution that CAOEC makes to our vital energy sector, which now includes emerging resources such as geothermal, helium, hydrogen and lithium. Saskatchewan will continue to support an active drilling sector and wishes CAOEC members every success going forward,” added Hon. Bronwyn Eyre, Saskatchewan Government, Minister of Energy and Resources “Becoming the Canadian Association of Energy Contractors is a reflection of the positive shift occurring in the energy sector, and the many new and exciting opportunities that come with it. Alberta looks forward to continuing to work with all of its industry partners – including the CAOEC – as it maintains its commitment to advocate for the energy industry and the hardworking people it employs,” echoed Hon. Sonya Savage, Alberta Government, Minister of Energy. “Energy service companies remain an important part of British Columbia’s economy, creating goodpaying jobs for British Columbians. Harnessing the power of innovative solutions like hydrogen, geothermal, and carbon capture will allow us to realize a low-carbon future,” said the Hon. Bruce Ralston, B.C. Government, Minister of Energy, Mines and Petroleum Resources.

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California Standard, Eyremore Canadian Pacific Railway #1, Alberta in 1942. Shothole rig in foreground, drilling hole for velocity survey. Glenbow Archives

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