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Senator Richard Neufeld poses for a photo at Cancor Rathole Inc. in Fort St. John, the heart of B.C.’s natural gas industry. Matt LamerS image

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NOVEMBER 15, 2013

PHOTOS FROM LAST YEARS OiLMEn’S BOnSPiEL

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NOVEMBER 15, 2013

PIPELINE NEWS NORTH •

Matt Lamers Photo

PNN NUMBERS

Matt Lamers image

The following figures were taken from the stories in this issue of Pipeline News North.

10 days: The amount of time Rich Coleman spent promoting the province’s natural gas in Asia. Story on Page 6. 13 days: The amount of time Premier Christy Clark will spend in Asia in November touting B.C.’s LNG as the solution to its energy woes. Story on Page 11. 9, 3: The number of corporations that have sought licenses to export natural gas from B.C. to Asia and the number that have so far been granted permits, respectively. Story on Page 24. 35: The number of LNG plants that are years ahead of British Columbia’s terminals in the race to supply Asia with liquefied natural gas. Story on Page 25. 10, 50: The share of the stakes that Korea Gas and China’s Sinopec are selling in their natural gas plays in B.C. Story on Page 7.

12.7 trillion cubic meters: The volume of natural gas in the Montney Formation, roughly equivalent to the volume of Lake Superior. Story on Page 25. 30: The number of years that Alberta’s oilsands could accommodate anticipated U.S. petroleum demand if the Keystone XL pipeline is built. Story on Page 28. 400 per cent: The top end of the turnover rate for field workers in the oil and gas industry. Story on Page 22. $1.8 million: The province’s 2014 commitment to support 456 students in trades training at 10 post-secondary schools. Story on Page 23. 1: The number of times the governor general used the word “emissions” in a throne speech in the last three years. Story on Page 13.

Dec. 31: The deadline for a joint British Columbia-Alberta working group to come to an agreement on transporting petroleum products. Story on Page 5.

88: The percentage of folks who reported that reducing CO2 emissions was either “important” or “very important.” Story on Page 14.

45, 142: The number of safety-related pipeline incidents in 2000 and 2011, respectively. Story on Page 12.

36: Communities that were represented at a First Nations conference on LNG. Story on Page 21.

1: The number of British Columbians on Prime Minister Stephen Harper’s Standing Committee on Natural Resources. Story on Page 10. 10: The number of natural gas producers that have signed on to a new fracking code of conduct. Story on Page 27. 2 per cent: The projected increase in the number of wells to be drilled in B.C. in 2014 from this year, according to the Petroleum Services Association. Story on Page 26. 20 per cent: Encana Corp.’s layoffs, mostly south of the border. The move could result in positive impacts on the Peace Region. Story on Page 26. $210,000: The amount that the Grande Prairie Petroleum Association has raised through their Annual Oilmen’s Hockey Tournament over six years. Story on Page 19. 88: The number of players who participated in the Icebreaker Tournament, which was put on by the South Peace Oilmen’s Association and the Senior Canucks. Story on Page 18. 12.7 trillion: The volume in meters of marketable natural gas now thought to be contained in the Montney Formation. Story on Page 25. R002424237

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NOVEMBER 15, 2013 Eric Kounce Photo

Alberta, B.C. 5 find common ground

18 A bit of glory, a lot of good will

‘The need in Asia 6 is remarkable’

19 Game on in Grande Prairie

Montney 7 estimate doubled

Zimmer gains 10 key position in cabinet Clark visits Asia 11 to hawk province’s gas

23 More funding for trades training

24 Triton wants permit to export LNG 25 B.C. plays catchup in LNG

26 Texas’ loss is the Peace’s gain

Feds sidestep 13 climate commitment

26 More drilling expected in 2014

Canadians see 14 a greener future

27 Fracking gets new code of conduct

keystone

Industry RIPS 12 CBC’S pipeline report

Fort St. John 13 tops region in spills

22 more jobs means more problems

The B.C. Boom 8 man in the middle

INDUSTRY

the east

21 First Nations UNITE on LNG strategy

community

the west

pipeline news north

enviro

28 Should Obama approve Keystone?

Published monthly by Glacier Ventures International Corp. Pipeline News North is politically independent and a member of the B.C. Press Council. The Pipeline News North retains sole copyright of advertising, news stories and photography produced by staff. Reproduction is prohibited without written consent of the editor.

NOVEMBER 15, 2013

reporter@pipelinenewsnorth.ca

PIPELINE NEWS NORTH •

The west

Alberta, B.C. find common ground Northern Gateway prospects less bleak after breakthrough Matt Lamers

Northern Gateway pipeline, is encouraged by the latest round of talks. “Certainly any time we hear of conSix months after British Colum- structive dialogue happening around bia officially came out against the these issues, it’s encouraging to us,” Northern Gateway pipeline project, Ivan Giesbrecht, communications B.C. Premier Christy Clark and Al- manager for Enbridge, told Pipeline berta’s Alison Redford took a big step News North. “At Northern Gateway, towards reconciling the differences we are committed to meeting Prethat ultimately caused that deal to mier Clark’s five conditions for oil pipeline development here in British fall apart. On Nov. 5, the premiers agreed to Columbia and committed to builda framework on moving energy re- ing the safest pipeline ever built in sources to new markets. As part of the Canada.” The bureaucrats don’t have a lot of deal, Ms. Clark agreed to endorse Alberta’s Canadian Energy Strategy and time. The final report is due Dec. 31. Ms. Redford agreed to the five condi- A joint statement announcing the tions put forward by B.C. negotiators. panel on Oct. 15 was the latest sign On the especially contentious fifth that relations between the premiers point, Alberta agreed that B.C. has a are warming. It also addressed B.C.’s environright to negotiate with industry on appropriate economic benefits. Both mental concerns and what constigovernments said it is not the govern- tutes a “fair” share of the economic ment’s place to negotiate these ben- windfall the provinces would reap from the export of oil and gas. efits on behalf of the private sector. Relations between the provinces They essentially agreed that Alberta’s royalties are not on the table for had been frosty since B.C. gave the thumbs down to the $5.5 billion negotiation. pipeline proposal last spring. The delayed pipeline would link Alberta’s oilsands with an export terminal in Kitimat on the – Alberta, B.C. joint statement northern coast of B.C., some 1,200 On Oct. 15, the premiers appointed a team of senior bureaucrats to try kilometres away. “British Columbia thoroughly reto reach a compromise on an energy export plan. The working group is viewed all of the evidence and subjointly chaired by deputy ministers missions made to the panel and asked from the two provinces. Its mandate substantive questions about the projis to collaborate on the sharing of in- ect, including its route, spill response formation and fill in gaps on federal capacity and financial structure to handle any incidents,” said Environenergy issues. While the group has not specifical- ment Minister Terry Lake at the time. ly been instructed to address North- “Our questions were not satisfactoern Gateway, the policy areas it will rily answered during these hearings.” Ian Anderson, president of Kinder address mirror the five conditions which Ms. Clark said must be met in Morgan Canada, told reporters folorder to gain the province’s approval lowing a presentation to the Energy Roundtable the talks between the for any pipeline through its territory. Besides the contentious issue of provinces will produce a resolution “fair” resource payments, the bureau- that will be a beneficial everyone. “We recognize that we are not alcrats are also discussing ways to both prevent oil spills and clean them up ways going to agree on everything after they occur on land and in water; and I think that’s positive,” he said. “If consultations with First Nations; and we are all agreeing to the same things all the time, I don’t know that we are other transportation options. Enbridge, operator of the proposed achieving the highest standard.” Staff Writer

‘It is not about royalty sharing, but rather receiving a fair share of the economic and fiscal benefits.’

B.C. Premier Christy Clark and Alberta’s Alison Redford agreed to a framework on transporting energy resources to new markets on Nov. 5. A final pact is expected by the end of the year. Courtesy Photo

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NOVEMBER 15, 2013

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‘The need in Asia is remarkable’ Matt Lamers Staff Writer

Rich Coleman, minister of Natural Gas Development for British Columbia, wrapped up his Asia Business Development Trip in October, where he spent 10 days promoting the province’s natural gas in Korea, China and Malaysia. Mr. Coleman expects announcements on investments are just around the corner. “The need in Asia is remarkable,” said Mr. Coleman in a conference call, addressing the demand for LNG overseas. “When I sat down with Sinopec [China Petroleum & Chemical Corporation], which has over a million employees, and their senior

management team in Beijing, the beginning of the conversation was how many millions of tons they needed of liquified natural gas to start coming online in the next five years to meet their needs alone.” Sinopec’s short-term demand is 30 million tons of LNG, he added, “and going forward even more. And they have significant need in China just with that one company alone.” The payoff from the LNG industry could be massive. Royalty revenues for British Columbia could reach tens of billions of dollars and over 100,000 jobs could be created. The premier has said that energy output from LNG would likely be as big as the total energy output from the oilsands. See REMARKABLE on PAGE 24

Rich Coleman, minister of Natural Gas Development, visited Asia in October. China is considered a top destination for B.C.’s natural gas. Shanghai, pictured above, is China’s second-largest city, with a population of 27 million people. Jakob Montrasio Photo

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Five financial frights and what to do about them

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Ghosts and goblins may no longer keep you up at night, but here are five financial frights that might. 1. You’re afraid fluctuating markets will wipe out your retirement savings One day the TSX is up, the next day, it’s down. But giving into your emotions is the worst thing to do, notes Jim Yih, an Edmonton-based financial educator who writes a blog called Retire Happy. “Just pause, take a step back and think before you react,” he says. “If you look at any downturn in the market, it always comes back.” Still, review your asset allocation mix regularly (what portion of your portfolio is in equities versus fixed income and cash). “A balanced asset mix will help temper the volatility,” Yih says, noting that someone who is close to retirement should have less equity exposure. 2. You’re worried you’re spending more than you’re earning We all know the solution: Spend less than we earn. “We can blame our debt on stores, financial institutions and corporations, but at some point in time, we have to be accountable,” says Yih. He recommends writing down all of your expenses, no matter how mundane, and keeping all of your receipts. Only then will you know where the money is going and what you’re spending too much money on. Besides reducing expenses, you could try some creative ways to come up with additional cash. For instance, Yih once bought a $1,500 barbecue, but instead of simply laying down the credit

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card, he sold some stuff in his garage to come up with the money. 3. You’re concerned you aren’t saving enough for your child’s education Open a Registered Education Savings Plan at your local financial institution pronto. Along with what you save, you’ll get an annual grant from the federal government of 20% of your contributions, to a maximum of $500 a year. Why leave free money on the table? “Start saving early, even if it’s only $50 a month,” says Mike Holman, who writes the Money Smarts Blog, focused on personal finance. Short on cash? Ask grandparents or other relatives to contribute to the RESP in lieu of giving you gifts, Holman suggests. Older children can also help contribute by working part-time during the school year and during the summer months. And have them apply for scholarships and bursaries – many are communitybased and are not necessarily based on having straight A’s, says Holman. Finally, Holman says there’s always the “pay-as-they-go” method. If you concentrate on paying down your mortgage when your kids are young, you’ll have extra money to help pay for their education by the time they’re ready to go off to college. 4. You’re unsure you have enough insurance to protect your family

We’ve all heard the stories. A woman breaks both legs while cliffdiving near a tropical resort and has to fork over thousands of dollars to pay for the cost of surgery. A man suffers a spinal cord injury, leaving him unable to work and support his family. You may have travel, life and disability insurance through your employer, but be sure to check the fine print. Is your income protected for the long term? You may need to supplement those policies with your own individual coverage. 5. You’re worried you may lose your job Want to be valuable to your employer? Think of the bottom line. “You have to find ways to tie your responsibility to the profit margin and finds ways to streamline processes and procedures,” says Melanie Benwell, managing director at PathWorks Personnel. If you score a major achievement, tell your manager. “You want to show that you’re adding value. If you don’t sell yourself, nobody else will,” she explains. While these tips won’t guarantee job security, “you can at least take those achievements and accomplishments to help you land your next job.” There’s nothing like taking action to dispel fear. Sleep soundly by assessing your needs and making sure you’ve taken the necessary steps to protect yourself and your family.

Submitted by: First Choice Insurance & Investment Services Inc. © Sun Life Assurance Company of Canada, 2011

NOVEMBER 15, 2013

PIPELINE NEWS NORTH •

the east

MONTNEY GAS ESTIMATE DOUBLED B.C., Alberta sitting on 4th biggest gas deposit in world ELAINE ANSELMI Staff Writer

The Montney Formation is well known for its gas, but a new report says Northeast B.C. might have more than twice as much of the stuff as previously thought. The provincial report, “The Ultimate Potential for Unconventional Petroleum from the Montney Formation of British Columbia and Alberta,” suggested that based on the new estimates, the field that straddles northeastern B.C. and runs into Alberta can support commercial extraction of natural gas for 150 years, and possibly longer. “I think it just sends a real strong message that B.C. is one of the global, big players around supplying natural gas,” said Mike Bernier, South Peace MLA.

‘it just sends a real strong message that b.c. is one of the global, big players around supplying natural gas’ – Mike Bernier, South Peace MLA The findings were a part of a joint study between the National Energy Board, the Ministry of Natural Gas Development, the B.C. Oil and Gas Commission and the Alberta Energy Regulator. Prior to this report, gas reserves for all of B.C. were estimated at 1,400 trillion cubic feet (tcf ). Now, the B.C. side of the Montney alone is pegged at 1,965 tcf, and the province as a whole closer to 3,000 tcf. Not all of that gas would be considered cost-effective enough to extract to be “marketable,” but looking at the marketable gas alone, the Montney would be the fourth-largest natural gas play in the world, if the new estimates are

correct, following the North Field in Qatar, the South Pars field in Iran and the Marcellus Shale in the U.S. Bernier highlighted the importance of the Peace Region being the only area of B.C. supplying natural gas and having such a large reserve. The formation is estimated to hold 12.7 trillion cubic metres of marketable natural gas – roughly the volume of Lake Superior. “The longevity we have in B.C. for this resource, for the jobs in the province, would be another point about this,” said Bernier. “With the amount of natural gas we have in the Montney, in the Dawson Creek area and in the Peace, shows why we really need to broaden our horizons around global markets because of that amount of gas supply, to make sure we continue to have jobs.” For the Peace Region, this could mean a significant increase in liquefied natural gas projects – of which more than 10 are currently proposed in B.C. and three have received export licenses, according to the ministry. A ministry source who asked not to be named echoed Bernier’s statements: “The growth and diversification of B.C.’s natural gas sector will create jobs province-wide.” The ministry previously reported that LNG development could see the establishment of more than 100,000 jobs across the province. A breakdown of these potential jobs in the sector is calculated based on the development of three small and two larger-sized LNG plants, as well associated pipelines. It also factors in both temporary positions through the construction period and full-time jobs, after construction is complete. “With 150 years’ supply, that means that with present or increased drilling activity, there are a lot of jobs for decades and decades when it comes to our region,” said Bernier. “We need to get some of these LNG plants up and running. We need to get the opportunities flowing around northern B.C.”

Matt Lamers of Pipeline News North contributed to this report.

The Montney formation is now estimated to hold 12.7 trillion cubic metres of marketable courtesy image natural gas – roughly the volume of Lake Superior .

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NOVEMBER 15, 2013

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Richard Neufeld is largely credited with crafting the framework that put British Columbia on a path to cash in on its energy wealth. Below, Mr. Neufeld poses for a photo at Cancor Rathole Inc. in Fort St. John, the heart of B.C.’s natural gas industry. Matt Lamers Photo

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B.C. BOOM

Can natural gas can do for B.C. what the oilsands did for Alberta? Richard Neufeld says yes.

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Matt Lamers Staff Writer

Throughout his career, Senator Richard Neufeld has been more than an advocate of the energy industry in Northeast British Columbia. He helped build it from the ground up. He served the province for close to 20 years before being appointed to the Senate in 2008 by Prime Minister Stephen Harper. He currently chairs the Energy, the Environment and Natural Resources Committee. As Minister of Energy, Mines and Petroleum Resources from 2001 to 2009, Mr. Neufeld is largely credited with crafting the framework that put British Columbia on a path to cash in on its energy wealth. Peace River Country is sitting on top of 12.7 trillion m3 of marketable natural gas, more than double previous estimates. It’s also roughly the volume of Lake Superior. It is the fourth largest natural gas play in the world, behind only North Field in Qatar (27 trillion m3), South Pars in Iran (14 trillion m3) and Marcellus in the United States (14 trillion m3). Senator Neufeld is a resident of Fort St. John when he’s not attending to his duties in the Senate a. Pipeline News North spoke with the senator about unlocking natural gas’ potential for the province of British Columbia, Canada, and the entire Northeast.

NOVEMBER 15, 2013

PIPELINE NEWS NORTH •

PROFILE Pipeline News North: You have long been an advocate for pipelines to the B.C. coast. Can you talk about that in the context of the potential for British Columbia’s burgeoning LNG industry and what it would mean for the province? Senator Richard Neufeld: I’ll give you a little background first: Before I was a senator, I was Minister of Energy for eight years. I was the MLA for Peace River North for 18 years. To be perfectly honest, I’m why we got all this interest in LNG, because I was the minister responsible for putting the programs to go and find the shale gas and produce it. I’m totally in favor of it. I think it’s great. That’s why I did it that many years ago. There has been some talk about reducing regulatory roadblocks. I think we’re doing it very effectively now, and I’m not sure whether there’s any thought that it’s not going fast enough. I guess some people want it to happen on Friday morning, but these kinds of things take a while to get done. First off, the companies have to go in and explore and develop all the natural gas. It’s not just sitting there, piped in, ready for us to deliver to an LNG plant. So that all takes time. ... [Energy companies] don’t make decisions on billions of dollars in investments without first having the markets tied up and knowing they have the product that they can deliver. Those things take some time, but I think it’s all moving along relatively quickly. How could the LNG industry benefit the people of British Columbia as a whole? Hugely, actually. If the LNG takes off as much as what everybody’s proposing it will, it will have as much effect on British Columbia’s economy as the oilsands do for Alberta’s economy. Because once the plants are built and the pipelines are built to the West Coast, 95 per cent of the activity is going to take place in Northeast British Columbia. It will mean a huge amount to the province as a whole. We have to try and get the message to the masses that live in the lower mainland that without resource extraction, B.C. would be in a sorry place. That’s a good segue into my next question. I spoke with Preston Manning a few days ago and his opinion is that oil and gas companies should communicate more candidly with stakeholders. Do you think Mr. Manning has a point? I don’t disagree with that. I talked to the oil and gas industry lots when I was minister about getting out there more and starting to tell people how important it is to them, even though they may not think it is. They do a certain amount, but there is certainly more they can do, and there is more that government can do, too. Even when I was minister, I always said that we didn’t do enough to promote oil and gas and how much it meant to the province of British Columbia. ... I agree we have to look at the environment very closely too, but we can’t miss these economic opportunities. ... China and Japan, they burn a lot of coal, and we’d like to get them to switch to natural gas and that’s LNG. That puts an awful lot less greenhouse gases into the atmosphere, and that helps all of us. There are no borders in the atmosphere. Specifically, how can oil and gas companies communicate more effectively. What should they be saying? See NEUFELD on Page 26

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NOVEMBER 15, 2013

Zimmer gains key position in cabinet Matt Lamers Staff Writer

On Oct. 22, Prime Minister Stephen Harper appointed Prince George-Peace River MP Bob Zimmer to the Standing Committee on Natural Resources. Courtesy photo

volve finding markets for Canada’s products, “so it’s trying to get our products to the West Coast, whether it’s oil or natural gas, forestry, or any product for that matter. I think that’s one thing we’re trying to address as a government, and I think we have solutions to do that,” he said. “We just have to do it responsibly, and I see that as my role.” Zimmer had a busy month in October. A week before being named to the committee, the prime minister appointed him to chair the B.C./ Yukon Caucus. He is also chair of the B.C. Pipeline Caucus and sits on the Standing Committee on Agriculture and Agri-Food. He started talking to other B.C./Yukon Caucus members soon after the appointment. “I’ve talked to the regional minister

Northeast British Columbia’s voice in Ottawa just got louder. On Oct. 22, Prime Minister Stephen Harper appointed Prince George-Peace River MP Bob Zimmer to the Standing Committee on Natural Resources. It’s one of the most sought after committees on Parliament Hill because of the fundamental role natural resources play in Canada’s economy. The appointment is also indicative of the growing importance that Northeast B.C. plays in Canada’s natural resource portfolio, particularly the massive reserve of natural gas, which is now estimated to be the fourth largest in the world. “Our government understands how important natural resources are,” Mr. Zimmer told Pipeline News North. “In terms of me being on the committee, – Prince George-Peace River MP Bob Zimmer I think what it says, and what the prime minister understands, too, is how signifi- and past chair, we’ve had a lot of discant our region is to the country and cussions already on what’s coming why it needs representation on the and what we’re going to be doing,” he committee. said. “There are good things ahead. “The prime minister knows where “We talked about natural resources northeastern B.C. is, as do most of and what B.C. has to offer. It’s a bright members of Parliament. They un- light that’s coming. It’s already there derstand how valuable northeastern for our economy. The province is B.C. is to us nationally.” chugging on all cylinders right now Having a louder voice in Ottawa economically, and we want to make will allow folks and businesses in the sure that keeps going.” region to address concerns, needs Zimmer said his party learned an and opportunities on issues relating important lesson from the past. to natural resources more effectively. “Most people remember the Na“It’s good to have a voice at the tional Energy Policy of [a] previous table, and now we do have a voice at Liberal government, and what a detthe table,” he said. riment it was to our economy. It abSenator Richard Neufeld, a resi- solutely destroyed northeastern B.C. dent of Fort St. John when he’s not and the resource development that in Ottawa chairing the Senate’s En- was there, because of a politician’s ergy, the Environment and Natural idea, and it was really the wrong idea Resources Committee, agrees that for Canada.” the region’s economic potential is no Instead, he said the Conservatives longer a secret in Ottawa. will ensure that business can operate Neufeld is largely credited with in a competitive environment and alcrafting the legislative framework low companies to bring resources to that put British Columbia on a path market, which will in bring benefits to cashing in on its energy wealth. like jobs and money to Canada. He thinks Zimmer’s appointment to “We can see from our past when the Standing Committee on Natural things don’t go well, so our job is to Resources is a sign that awareness is make sure it’s a positive for Canada. growing of the region’s potential. “I still remember as a kid in the “The people that should be in the late 70s, when everything went from know, know,” he said. boom to a ghost town. I think that Zimmer said his work with the our role in government is to make natural resources committee will in- sure that doesn’t happen again.”

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‘It’s good to have a voice at the table, and now we do have a voice at the table.’

NOVEMBER 15, 2013

PIPELINE NEWS NORTH •

British Columbia Premier Christy Clark will be in China, Japan and Korea for a 13-day trip to promote her province’s natural resources, in particular natural gas. Courtesy Photo

Clark visits Asia to hawk province’s natural gas Matt Lamers Staff Writer

Premier Christy Clark will be in Asia for 13 days to convince business leaders and her counterparts in government that the solution to their power woes rests in her province’s massive holdings of natural gas. Ms. Clark arrives in Beijing on Nov. 22, Seoul on Nov. 28 and Tokyo on Dec. 1 before returning to Vancouver on Dec. 3. Liquefied natural gas would be a good fit for the three Asian powerhouses. China is looking for costeffective ways to reduce its carbon footprint. The country currently relies on filthy coal to feed its soaring economy and is the world’s top producer of greenhouse gases. Japan has been looking for ways to diversify its power generation since a deadly tsunami caused a meltdown at the Fukushima Daiichi nuclear complex in 2011. Korea also relies heavily on nuclear power generation and imports 100 per cent of its petroleum products. Ms. Clark’s trade mission will be focused on expanding and strengthening the province’s trade relationships “in an effort to create jobs.” “The Government of British Columbia is acting to make sure that B.C. businesses are first in line to

take advantage of the growing market opportunities in Asia,” the province stated. “The upcoming Jobs and Trade Mission to China, Japan and Korea will open up new doors, connect B.C. businesses with Asian demand, and keep B.C.’s economy strong and growing.” The premier’s trip to Asia is a follow-up to Minister of Natural Gas Development Rich Coleman’s mission to Asia in October. “Successful LNG development requires a strong relationship with investors in Asia,” he said at the time. “They need to understand British Columbia is open for business and competitive with other jurisdictions. I look forward to discussing how British Columbia can best work with them to build and operate some of the world’s cleanest facilities along our north coast.” Of the 10 proposed LNG projects in B.C., three have been granted export licences from the National Energy Board. The province expects the LNG sector to add some 100,000 workers to its payroll in the coming decade if its potential is met. In the next two decades, the global demand for LNG is projected to increase two-and-a-half times, and B.C. officials say the province is well-positioned to take advantage of that. See CLARK on PAGE 20

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NOVEMBER 15, 2013

reporter@pipelinenewsnorth.ca

pipeline incidents British Columbia led the way with 0.076 significant faliure incidents per 1,000 kilometres of pipe, according to Canadian Energy Pipeline Association member data. Alberta reported 0.05, Saskatchewan had no incidents, Manitoba had 0.038, Ontario 0.023, Quebec 0.032, New Brunswick 0.03, Nova Scotia 0.05, Yukon 0.059 and Northwest Territories 0.054.

‘I don’t believe it’s an anti-pipeline agenda as much as it is some people have some reservations about the production of fossil fuel.’ – Philippe Reicher, VP Canadian Energy Pipeline Association

B.C.

NWT

Matt Lamers graphic / y entonces PHOTO

Industry RIPS CBC’S pipeline report Matt Lamers Staff Writer

A report issued by the Canadian Broadcasting Corporation on problems with pipelines is misleading, said the Canadian Energy Pipeline Association (CEPA). The report claims that the pipeline safety incident rate doubled in the past decade. The data the broadcaster presented was obtained from the National Energy Board (NEB) with a Freedom of Information request. From 2000 to 2011, the report stated, safety-related incidents doubled from one to two for every 1,000 kilometres of pipe. The data shows that there were 45 incidents in 2000 and 142 in 2011. However, CEPA said that those figures do not paint an accurate picture of the safety record of its industry. “The information con-

tained in the CBC report is not an accurate representation of what’s happening within our industry,” said Brenda Kenny, CEPA’s president and chief executive officer. “The number of incidents reported includes everything and anything – not just pipeline incidents.” The data the report cites does include everything from major oil and gas leaks to worker injuries and felled trees near metre stations. The NEB data covers pipelines that cross provincial and international boundaries. Companies are required by law to report leaks and spills over 1,500 litres to the federal regulator. Philippe Reicher, CEPA’s vice president, told Pipeline News North that the NEB data is not necessarily indicative of declining performance, but rather a greater effort on the part of the in-

dustry to report all incidents. He also said the CBC report failed to provide context. “If we’re talking about pipeline safety, which is what I think the CBC was trying to do, they should have been able to figure out the incidents that are important to talk about – i.e. the ones that could potentially have an impact on the public or the environment,” he said. Over the past 11 years, CEPA said that there has not been an upward trend in the number of significant pipeline incidents per year, adding that member companies reported a steady average of 3.6 significant incidents per year. CEPA considers that the best in the world, but would not provide supporting data. (A significant incident is defined as as a pipeline failure either causing a serious injury or fatality, a liquid release of greater than 50 bar-

rels of liquid, an unintentional ignition or fire, or a pipeline rupture.) Two initiatives will be pushed by the end of the year, said CEPA, to improve pipeline safety further. An industry-wide mutual aid agreement w ill be put in place, whereby pipeline operators in the vicinity of each other will come to each other’s aid if there is an incident. The idea is to pull resources together more quickly. The second is a more effective deployment of new technologies for leak detection. Pipeline safety has been a hot topic because the number of proposed projects has increased greatly in recent years due to the liquefied natural gas boom in B.C. There are seven major pipeline projects that have been proposed that would cut across the northern half of the province. There is also

the hotly debated 1,897 kilometre Keystone XL pipeline that would carry crude from Alberta’s oilsands to Steele City, Nebraska. In total, the proposed projects in B.C. would result in more than 10,000 km of new pipeline. Mr. Reicher said the industry is transparent when it comes to reporting incidents that could impact the environment and public health. “It seems to me that if they had done a bit more of their homework, I think they would have been able to provide a better story,” he said. At the end of the day, that’s a bigger, broader issue for sure. “The key is to make sure that when people talk about those issues that there is proper context so they can have a really informed decision or view of a particular issue.”

NOVEMBER 15, 2013

PIPELINE NEWS NORTH •

ENVIRONMENT

Feds to ‘build on’ climate record

Throne speech doesn’t mention new oil & gas sector regs Matt Lamers Staff Writer

The federal government’s parliamentary agenda, unveiled on Oct. 16 when Governor General David Johnston delivered his speech from the throne in the Senate, included a pledge to “build on” its record on climate change action. Mr. Johnston did not mention whether the government would follow through on its pledges to regulate greenhouse gas emissions in Canada’s oil and gas sector. Near the end of the speech, Mr. Johnston said the government promises to “build on its record as the first government to achieve an absolute reduction in greenhouse gas emissions by working with provinces to reduce emissions from the oil and gas sectors, while ensuring Canadian companies remain competitive.” It was the first time that he used the word “emissions” in a throne speech in three years. The last time was in 2010, when Mr. Johnston reiterated Canada’s support for the Copenhagen Accord, where Prime Minister Stephen Harper and thenU.S. President George Bush

past throne speeches 2007

“Climate change is a global issue and requires a global solution. Our government believes strongly that an effective global approach to greenhouse gas emissions must have binding targets that apply to all major emitters, including Canada.”

2008

“Our government has committed to reducing Canada’s total greenhouse gas emissions by 20 percent by 2020.”

2010

“Nowhere is a commitment to principled policy, backed by action, needed more than in addressing climate change. Our overnment has advocated for an agreement that includes all the world’s major greenhouse gas emitters, for that is the only way.”

‘The throne speech underscores the importance of improved and safe market access for Canada’s natural resources.’ – Dave Collyer, president of CAPP pledged to to cut their countries’ 2020 greenhouse emissions by 17 per cent. After the throne speech, Dave Collyer, president of the Canadian Association of Petroleum Producers, said CAPP welcomes the government’s focus on economic growth and job creation.

OPTIMISTIC from PAGE 25 North Peace MLA Pat Pimm remains optimistic. He said that B.C. “is acting very quickly already” to secure natural gas opportunities. “The bottom line is Asia is going to need gas

“The throne speech underscores the importance of improved and safe market access for Canada’s natural resources,” he said. “In the global context, as energy demand grows, Canada’s oil and natural gas is an increasingly sought after energy source given the country’s

reputation for high standards and reliability.” He added that CAPP supports a “balanced” greenhouse gas policy that considers both environmental performance and the competitiveness of Canadian industry. “We strongly encourage the federal government

long term,” he said. “I’m not concerned at all.” Peace River South MLA Mike Bernier also expressed the need for B.C. LNG to get to Asian markets. “We have a great opportunity in B.C. for natural gas,” he said. Bernier also said that the provincial govern-

and the provinces to work together to address [greenhouse gas] emissions across the economy.” Clare Demerse, director of Federal Policy for the Pembina Institute, told PNN that Canada is way off track to meet the Copenhagen commitment. “Under Environment Canada’s analyses, we’re projected to miss our 2020 target by more than 100 million tons, more than all of the emissions from passenger transportation in Canada,” she said. “That’s relevant for the discussion about resource development because we share that 2020 target with the United States. The three plans currently being considered by the government are Alberta’s “40/40 target,” which pledges a 40 per cent reduction in greenhouse gas emissions per unit of oil produced, along with a $40 per tonne levy on emissions above the regulated level. Industry prefers a 20/20 plan, and Ottawa wants a compromise of 30/30. “How much more pressure is it going to take for the government to do the right thing here in terms of putting some tough rules in place?” asked Ms. Demerse.

ment recognizes that “we don’t have the ability to wait too long” to get LNG to Asia. He added that he’s “not right now worrying” about the possibility of Asian supply overshadowing Asian demand. “There’s a lot of demand out there.”

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WHAT DO CANADIANS

THINK ABOUT ENERGY?

per cent of Canadians rank “Future Energy Needs” as an important issue. That’s higher than energy prices, education, housing affordability and traffic accidents.

Design

by Matt

Lamers

, Photos

24 25

per cent identify innovation as the most important factor in our energy future. That’s one of the highest ratings across countries to date, just behind Vietnam.

by U.S.

Geological

Survey , Charles

per cent of Canadians think the environment is the most important issue in regards to future energy. Supply, climate change, cost and economic growth followed.

Cook, E ric Kounce

NOVEMBER 15, 2013

PIPELINE NEWS NORTH •

ENVIRONMENT

Canadians see a greener futur e Matt Lamers Staff Writer

The message from a recent Ipsos survey couldn’t be any clearer: Canadians aren’t interested in an energy future that comes with significant environmental degradation. The environment is the most important issue related to future energy needs, and Canadians believe that innovation and collaboration are the most important factors in securing that future. Those were two of the key findings from the Ipsos survey of 1,511 urban Canadians conducted for Shell Canada in August. The results of the Shell Future Energy Survey were released at the Canadian Innovation Summit in Vancouver on Oct. 7. David Williams, head of Media Relations, told Pipeline News North that the biggest surprise in the survey was how Canadians perceived collaboration when it comes to innovation. “That was rated lower than what we expected. That was probably the big surprise,” he said, “that innovation appeals to Canadians as a means of finding

solutions, but are less certain about how the public sector, the private sector will work together to make the innovations work.” Shell’s summit brought together campaigners, educators, engineers, entrepreneurs, legislators and scientists from across Canada to look for “made in Canada”‟ innovations. More key findings from the survey: The environment ranked as a more important issue than supply and demand, climate change or even consumer cost. Solar (87 per cent) and wind (84 per cent) ranked as the cleanest perceived power generation methods, followed by hydro (62 per cent), nuclear (30 per cent), natural gas (24 per cent), coal (8 per cent) and diesel/ gasoline (6 per cent). Eighty-eight per cent of Canadians reported that reducing emissions was either “important” or “very important,” as opposed to just 6 per cent who said such actions were either “not important” or “not at all important.”

Men were four times more likely than women to be of the belief that cutting CO2 was not very important. “The survey shows Canadians care about energy and the environment, but also recognise the importance of innovating and working together to explore future en-

‘The survey shows Canadians care about energy and the environment, but also recognise the importance of innovating and working together.’ – Lorraine Mitchelmore, Shell Canada president ergy options,” said Lorraine Mitchelmore, Shell Canada president. “For me it’s about how we bring innovation and collaboration together with competition. This is what we’re asking of participants at our Innovation Summit in Vancouver.” The summit featured B.C. Premier Christy Clark, Minister of Transport Lisa Raitt and retired Space Agency astronaut Chris Hadfield. At the summit, Jeremy Bentham, Royal Dutch Shell PLC’s vice president of Global Business Envi-

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basis, including Canada,” said Mr. Bentham. “They highlight the need for business and government to find new ways to collaborate, fostering policies that promote the development and use of cleaner energy, and improved energy efficiency.” Shell is encouraged by the fact that Canadians believe in innovation as a route to solving energy issues. “Our challenge is to take this history of innovation,” added Mr. Bentham, “to actually drive the change that we need to happen faster.”

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A little bit of glory, a lot of good will Matt Lamers Staff Writer

It started as a fundraiser, but the Senior Canucks Icebreaker Tournament was never just about the money. “Money feels secondary at this point because everybody has such a great time,” said Sheldon Wilkinson, president of the Senior Canucks hockey club. “When we started doing it, and after the first year especially, we realized how much fun we could have.” In October, the community, family and friends watched as 88 players competed in the third annual tournament at the Dawson Creek Memorial Arena. The event is a partnership between the South Peace Oilmen’s Association and the Senior Canucks. With costs rising every year, Wilkinson said the tournament is now a key fundraiser for the hockey team, “which is a big deal for the club. We have no overhead this year and we expect to make a nice chunk of money for the club.” In the first two years the tournament barely made a profit, he said, because they had to cover startup expenses like jerseys and equipment. Now that they are free from those costs, Wilkinson hopes they will be able to pull in a few thousand dollars, which will go towards paying for the team’s ice time and travel expenses. “The community sponsors our team very generously. The community loves the team,” he added. “The Senior Canucks really appreciate our sponsors and our volunteers. Couldn’t do the tournament

without them. They’ve always been good to us over the last 65 years, and we want to be a part of the community forever.” W i l k i n s o n’s team, sponsored by Harpoon Energy, finished third. He and Aaron Powell organized the tournament. Both are Canucks alumni. Apache Canada beat Baker Hughes 10-5 to win the championship. Harpoon Energy won the inaugural tournament three years ago and C Norman Trenching took the prize last year. Wilkinson is optimistic about the Senior Canucks’ chances of success this season: “We’ve got a great core of local guys and the future looks great.” One of those players is Senior Canucks captain Adam Loncan, who played for runner-up Baker Hughes. “We just want to bring guys out and have a good little tournament to kick off the year,” he said. “It brings guys together. Guys from out of town come in. You get to play with guys you don’t usually get to. It’s a good little kickoff. [Something] to bring the boys together.” His team was undefeated before falling to Apache in the final, but Loncan said winning wasn’t the point.

Fort Nelson Matt Lamers Staff Writer

A few dozen people took part in the Fort Nelson Hockey Tournament from Oct. 2326, offering chances to meet people, mingle and then hurt them on the score sheet. Fort Nelson Oilmen Association Executive Director Louise Schindler said the tournament is a good place to start networking. “People get to network with people that are also in the oil and gas community. So it’s a nice social networking setting,” she said. It was open to all members

and associate members. About 60 people signed up on six teams. It’s also a place to raise money for the community. “We have offered different organizations in the area, like Fort Nelson Minor Hockey, a chance to come out and sell 50/50 tickets to raise money,” said Schindler. “We offered to pay the Fort Nelson High School Band to run our shuttle service. So there’s a few organizations we get involved with that way.” This was Fort Nelson Hockey Tournament’s sixth year. It is one of three events that are held annually for members.

NOVEMBER 15, 2013

PIPELINE NEWS NORTH •

community

Game on in Grande Prairie Matt Lamers Staff Writer

Hockey season’s in full swing in Western Canada, and that goes for the Grande Prairie Petroleum Association, too. The 7th Annual Oilmen’s Hockey Tournament was held from Oct. 16-18 at the Coke Center, Grande Prairie. Ron McMullan of the Grande Prairie Petroleum Association said more than 120 players on eight teams took part last year. There was also a shoot-out for a car. The tournament is a memorial for Jeff Toews, a local oil patch worker who tragically passed away in 2007. All proceeds go to the Jeff

Toews Foundation, Wembley Minor Hockey, KidSport Grande Prairie and search and rescue helicopters. “I was sitting there with Norm Miller and Sean McCaffrey. Sean had the idea to make it a memorial. Within 24 hours we had ice booked. We started getting sponsors. We had referees,” said Mr. McMullan. “We thought this was a great way to remember Jeff Toews. The person he was.” Toews was an oil patch worker for Bonnetts Energy Services, according to Mr. McMullan. “We wanted to put a hockey tourney in Grande Prairie,” he said. The Annual Oilmen’s Hockey Tournament has raised close to $210,000 in six years for charitable causes.

Apache Canada beat Baker Hughes 10-5 to win the Senior Canucks Icebreaker Tournament. The event is a partnership between the South Peace Oilmen’s Association and the Senior Canucks. MATT LAMERS PHOTO

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• PIPELINE NEWS NORTH

NOVEMBER 15, 2013

CLARK from PAGE 11 R002424272

Meanwhile, Alberta Energy Minister Ken Hughes and China’s National Energy Administration Chief Wu Xinxiong signed an agreement to increase trade and collaboration. “This is almost really unprecedented support from China in working with a province like Alberta to help ensure that we have clear understandings of how we can work together,” Mr. Hughes said in a conference call after signing the Framework Agreement on Sustainable Energy Development in the Great Hall of the People in Beijing in October. Chinese President Xi Jinping and Canadian Governor

General David Johnston were also in attendance. China hopes that Canada’s natural gas supplies could help the country alleviate its substantial air pollution problems. “The Chinese government is certainly pressuring the Chinese state-owned enterprises to reduce the amount of pollution that they generate, and to secure sources of natural gas as soon as they possibly can in order to improve environmental outcomes in China,” said Mr. Hughes. “I think that is a very optimistic sign, because we all know there are challenges here with the immense growth of this economy, and that has global implications.”

Laying the groundwork for Ms. Clark: Rich Coleman meets with Vice President Xie ChunWang in Beijing, on the China leg of his Asia tour to open doors to long-term business relationships. Courtesy Photo

NOVEMBER 15, 2013

PIPELINE NEWS NORTH •

community

From left: Regional Chief Jody Wilson-Raybould; Leonard Thomas, a chairperson; Tribal Chief Terry Teegee, host of the B.C. First Nations Liquefied Natural Gas Summit. Kelly Bergman PHOTOS

First Nations meet for LNG summit ‘I think our leverage is a lot better when we’re together’ Matt Lamers Staff Writer

First Nations communities and supporters gathered in Prince George on Oct. 9 and 10 for the second-ever B.C. First Nations Liquefied Natural Gas Summit. Thirty-six First Nations communities directly affected by LNG development were represented. Chief Terry Teegee from the Carrier Sekani Tribal Council, the organizer, said the summit fostered communication to deal with the mega-scale LNG projects that are in the works. “We’re all at different places in terms of engagement with these companies or the province, so we’re trying to bring communities up to speed and trying to get more information to them,” he told PNN. The summit set out to inform and equip First Nations with the information they need to make decisions about proposed LNG projects in Northern B.C. from points of extraction to processing facilities. The two

days consisted of workshops and a closed-door session. There were also economic, social, cultural and environment workshops. Japanese Ambassador Norihiro Okuda, Minister of Natural Resources Joe Oliver and B.C.’s Minister of Aboriginal Relations and Reconciliation John Rustad joined chiefs from First Nations who have a stake in the LNG developments. On the second day, chiefs met with representatives from the provincial and federal governments to talk about impacts the LNG industry has on First Nations. Mr. Oliver was confident that government, the private sector and aboriginal communities could iron out their differences on extraction and transportation. “When you start with the attitude going in that there is potential to developing resource responsibility for the benefit of communities, then you have the beginning of a very meaningful dialogue,” he said in an interview with hqprincegeorge.com.

Some chiefs voiced their concerns on a number of issues, but Art Sterritt, Coastal First Nations’ executive director, said that if environmental issues are allayed, aboriginal communities are confident that LNG development could go forward. British Columbia is the focal point in the global race to provide LNG to the Asian market. Presently there are 12 players in B.C. with proposed projects to ship natural gas to Asia. “We’ve been hearing from our members and other First Nation communities of all the challenges these projects impose on our people,” said Mr. Teegee. “We’d like to know more about natural gas policies, operations and the cumulative impacts that will occur on our traditional territories.” Improved collaboration was a key issue. “There’s a definite push for our First Nations communities to work together,” Mr. Teegee said. “The biggest challenge for a First Nations community is working together. I think it’s a big problem when we have communities [acting] indi-

vidually, because that kind of sets the bar on how these companies negotiate with communities and I think we’re way better off if we’re together. Our leverage is a lot better when we’re together than when we’re apart.” Anna Barley organized the three economic development workshops – one with a three-month outlook, one with a six-month outlook and another with a long-term vision. About 23 chiefs representing their communities signed a declaration pledging improved cooperation. Barley said the conference provided helped improve communication. “I think [the declaration] is definitely an opportunity for us,” she said. “A lot of people are probably going back to their communities to discuss it, and we’ll probably see some additional sign-ons after they’ve been able to take what they’ve learned at the conference, go back to their communities, and get a mandate to move forward.” The next First Nations LNG Summit will take place in the spring of 2014.

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NOVEMBER 15, 2013

reporter@pipelinenewsnorth.ca

heading off a labour shortage Matt Lamers Staff Writer

Carla Campbell-Ott, executive director of the Petroleum HR Council, paints a bleak picture of what happens to an industry when it doesn’t get the workers it needs. “Projects get delayed, projects get cancelled, not as much growth takes place, which doesn’t help the Canadian economy from that point of view,” she said. “It sure isn’t meeting its potential. You can say potential a number of ways – potential for Canada, for the region – it sure doesn’t meet that.” The Petroleum HR Council, which is now a division of Enform, has a plan to make sure that doesn’t happen. The Careers in Oil + Gas Initiative involves the online portal Careersinoilandgas. com, which is an education resource to learn about careers in the industry. It gets approximately 30,000 visits every month from around the world connecting workers and employers. “It’s the best place for anybody to start to get information on how to engage in the industry,” said Ms. Campbell-Ott. “The focus is for job seekers. It does provide a realistic voice to working in the industry.” It’s a key component in the Petroleum HR Council’s strategy to head off a looming shortage of labour. It says that between 125,000 and 150,000 permanent positions will be added in the next 10 years. “It’s real,” Campbell-Ott said of the looming labour shortage. “There is a huge labour shortage looming. Absolutely.” The numbers tell the story: In 2012, the oil and gas industry directly employed 195,000 people across the country.

The oil and gas industry in Western Canada is projected to need in excess of 100,000 workers if expansion projections are accurate. Matt Lamers GRAPHIC / Mark Hoffman photo

‘It’s real. There is a huge labour shortage looming. Absolutely.’ – Carla Campbell-Ott, executive director, Petroleum HR Council The council has come up with two scenarios that project labour demand over the coming decade. The first is known as the “lowgrowth” scenario. This case takes into account oil and gas production for North America only. It predicts that 125,000 workers will be hired over the next decade, but about 105,000 of those positions are due to age-related attrition and normal turnover. About 20,000 are new, permanent jobs. Scenario two, also known as the “expansion” scenario, takes into account over-

seas exports. This scenario predicts that 150,000 workers will be hired over the next decade, with about 110,000 of those positions due to age-related attrition and normal turnover. About 40,000 would be new, permanent jobs. Neither of the scenarios consider the number of people that would be needed to construct the new pipelines, LNG terminals or other supporting infrastructure. In British Columbia alone, another 100,000 people would be required to construct and then manage the LNG pipelines and facilities.

Aside from construction and project expansion, agerelated attrition and normal turnover are both key drivers of new hires in the industry – the former because of retiring baby boomers and the latter because of the unique factors in oil and gas employment. Replacing retiring workers and retaining employees are keys to any business’ success. For smaller companies, that’s easier said than done. “Industry needs a voice, so we represent the entire industry, including smaller companies who may not

have the budget to be able to market their opportunities as well,” said Ms. Campbell-Ott. “We create that awareness, and that’s why it matters. It’s a voice to talk about how to get engaged, perception of industries and awareness of careers.” Replacing retiring workers is going to be a challenge in the short term. The council projects that either scenario – low growth or expansion – will require replacing 13 per cent of the industry due to retirements, or 45,000 people. “That will especially affect the pipeline industry – although it is a smaller portion of the total oil and gas industry, it is the oldest,” she said. “So, when you take a look at all those management roles, a lot of them are going to be retiring. That opens up huge hiring requirements for us.” Then there is employee turnover. Ms. Campbell-Ott agreed that the various occupations in the industry can be challenges all their own. “For example, in the pipeline industry, turnover isn’t as great, in management positions turnover isn’t as great,” she said. “But when you start looking at the field workers in our industry, the turnover can be 50 per cent to 400 per cent. For every person they hire at the start of the year, they go through four. “It’s cold, remote, they move from site to site, it’s seasonal, cyclical, so trying to retain great workers is a significant challenge. Can you imagine being an HR recruiter? Hence the important role that the Careers in Oil + Gas initiative plays. To address the labour crunch, another strategy is improving energy literacy. To that end, Careersinoilandgas.com isn’t simply a job portal. See JOBS on PAGE 23

NOVEMBER 15, 2013

PIPELINE NEWS NORTH •

CAREERS

More funding for trades

JOBS from PAGE 22

Province marks $1.8 million for training Matt Lamers Staff Writer

British Columbia is ramping up efforts to mitigate the impact of a projected skilledlabour shortage in the northern half of the province. In October, Advanced Education Minister Amrik Virk announced $1.8 million in funding for 456 students in targeted trades training at 10 post-secondary institutions. The students will receive training for fields such as automotive refinishing, carpentry and millwright work. The funding includes $91,000 for 16 seats at the College of

New Caledonia’s heavy-duty mechanics program in Fort St. James. The announced $1.8 million in funding comes one month after Minister of Energy and Mines Bill Bennett promised funding to support the creation of a career counsellor position in the Peace River Regional District to encourage students to pursue careers in trades. “Trades will continue to be a vital component of our economy now and even more so in the future,” said Mr. Virk. “In addition to targeting specific trades, the funding also supports the trades discovery program that

gives young people an insight into what can be an exciting career and will put a pay cheque in their back pocket.” The Calgary-based Petroleum HR Council warns that a major shortage in labour could be around the corner. “The B.C. Construction Association will make the most of these increased opportunities for skills training to assist participants in our Skilled Trades Employment Program,” said Manley McLachlan, B.C. Construction Association president. “With the increased demand for skills that we are facing in our sector, this is good news,” he added.

“So it’s a little bit of career awareness and industry awareness.” From Oct. 28 to Nov. 1, The Careers in Oil + Gas Initiative teamed up with TalentEgg.ca for a week-long campaign targeted at young people who expect to graduate in either 2013 or 2014. They used social media to engage youth and educate them about the industry and the jobs that are available. “The reason we do that is because it’s difficult to reach all the audiences you want to reach, so this is a great opportunity to be able to reach young grads,” said Ms. Campbell-Ott. “It’s a good opportunity for those who are close to completing post-secondary.” “The role that [the Careers in Oil + Gas Initiative] and the role that we take is [to raise awareness] of the petroleum products that we use in our everyday lives, and also to try creating that awareness of how you can get involved in the occupations, and what skills and qualifications you need in order to get a job.”

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Long-term export approvals from the National Energy Board On Oct. 13, 2011, KM LNG Operating General Partnership (KM LNG) was granted a 20-year permit by the NEB to export an annual volume of 10 million tonnes of LNG. It was the first LNG export licence issued by the NEB since the deregulation of the natural gas market in 1985. The proposed terminal at Kitimat would be fed by the 463-kilometre underground Pacific Trail Pipeline, which has yet to be built.

A floating production, storage and offloading (FPSO) unit, a.k.a. floating LNG terminal, is moored at the Port of Melbourne. A number of LNG operations in British Columbia are considering similar FPSOs to save money and time. Marcus Wong PHOTO

Triton wants export permit 6 firms await decision from NEB; 3 approved Matt Lamers Staff Writer

On Oct. 29, Triton LNG Limited Partnership applied to the National Energy Board (NEB) for a 25-year permit to export 2.3 million tonnes of liquefied natural gas (LNG) per year from a floating liquefied natural gas processing plant. Of the six outstanding applications to export LNG from Northwest British Columbia, Triton LNG’s project is the second smallest in terms of annual tonnage. According to the export application, the point of export from Western Canada would be near either Kitimat or Prince Rupert. The gas would be transported through the pipelines of Westcoast Energy Inc. and Pacific Northern Gas Ltd. (PNG). Floating LNG facilities can be built at overseas shipyards and shipped to B.C., which gives them advan-

REMARKABLE from PAGE 6 But for British Columbia to tap Asia’s booming energy market, the province must remain competitive with internatoional LNG producers. Mr. Coleman said the message he’s received in Asia has been that B.C. is

tages over more expensive and time consuming onshore facilities. PNG’s Pacific Northern Gas Mainline is the only natural gas pipeline cutting across Northern B.C. Triton LNG is the sixth company to apply to export LNG from the Prince Rupert-Kitimat region so far this year, joining Prince Rupert LNG Exports, WCC LNG, Pacific NorthWest LNG, Woodfibre LNG Export and Jordan Cove LNG. “Triton LNG Limited Partnership’s export application shows the strength of B.C’s liquefied natural gas opportunity,” Rich Coleman, minister of Energy, Mines and Natural Gas, told Pipeline News North. Triton LNG LP has signed a 20year Transportation Reservation Agreement with PNG and the companies have advanced into the environmental assessment process with the British Columbia Environmental Assessment Office.

on the right track. “The response I’ve had in Asia is that ‘you guys are getting to the right place and we think you’ll be globally competitive. There’s a lot of confidence on that because they’ve had discussions confidentially with the folks in my ministry,” he said.

The filing stated that Triton LNG LP’s partners are Triton LNG Inc. and AltaGas Idemitsu LP. AltaGas Idemitsu LP is jointly owned by AltaGas Pacific Partnership and Idemitsu Canada Corporation. AltaGas Pacific Partnership is a subsidiary of AltaGas Ltd., which entered into an agreement to acquire Pacific Northern Gas Ltd. in 2011, the owner of the Pacific Northern Gas Mainline. Triton LNG LP’s export application was the ninth received by the NEB since 2011. Three have so far been approved. “We know demand is growing and with global LNG players showing interest in the province, we are on our way to creating economic opportunities and jobs across B.C., especially in the north. “The benefits of this are substantial, including our plans for a Prosperity Fund,” Mr. Coleman added.

On his final stop, Mr. Coleman visited Malaysia’s state-run oil firm Petronas to tour facilities and meet with Adnan Zainal, vice president of Petronas’ Global LNG Gas and Power. Mr. Coleman arrived in Korea on Oct. 11, where he took part in the World Energy Congress in Daegu

On Feb. 2, 2012, BC LNG Export Co-operative LLC received a 20year license from the NEB to export 1.8 million tonnes of LNG per year. The proposed LNG terminal on the Douglas Channel near Kitimat would be fed by pipelines from Northeast B.C. owned by Spectra Energy Transmission and Pacific Northern Gas, which are completed. On Feb. 4, 2013, LNG Canada was awarded a 25-year permit from the NEB to export 24 million tonnes of LNG per year at a terminal that will be built near Kitimat. This is by far the biggest of the three projects that have already gained export licenses. Pending LNG export applications Sept. 9, 2013: Jordan Cove LNG L.P. applied for a licence to export 9 million tonnes of liquefied natural gas per year for a term of 25 years. July 23, 2013: Woodfibre LNG Export Pte. Ltd. applied for a licence to export 2.1 million tonnes of LNG per year for 25 years. July 5, 2013: Pacific NorthWest LNG applied for a licence to export 19.68 million tonnes of LNG per year. June 19, 2013: WCC LNG applied for a licence to export 30 million tonnes of LNG per year for a term of 25 years. June 17, 2013: Prince Rupert LNG Exports Limited applied for a licence to export 21.6 million tonnes of per year for a term of 25 years.

and the Canada-Korea Dialogue on Energy in Seoul. His next stop was Beijing for the Canada-China Energy and Environment Forum. The minister was laying the groundwork for the premier’s Jobs and Trade Mission in November, during which she will explore

LNG development opportunities in Asia and promote B.C. as a stable and attractive place for investment and trade. Last month, Malaysia’s state oil firm Petronas increased the amount of money it plans to invest in B.C.’s natural gas from $15 billion to $35 billion.

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INDUSTRY NEWS

B.C. PLAYING CATCHUP IN LNG North Peace MLA Pat Pimm remains optimistic MATT LAMERS & WILLIAM STODALKA Staff Writers

British Columbia isn’t necessarily behind schedule, but the province is playing catch-up in its bid to supply Asia’s growing economies with natural gas. That was the message delivered to the province’s regulators and gas producers in the report “Managing Expectations,” by the Canada West Foundation, a Calgary-based think tank, and the Centre for Natural

Resources Policy. Len Coad and Pawel Mirski authored the report, which assessed the potential of B.C.’s LNG industry, particularly the projected supply and demand on the downstream end of the equation. Coad, who is also director of the Centre for Natural Resources Policy, told Pipeline News North that B.C. is neither ahead nor behind in the big picture of exporting gas compared to its competitors. “Our message clearly is that B.C. is coming late rel-

ative to a lot of other projects,” he said. The report also noted that supply is expected to grow to twice the demand by 2021, when the province’s LNG terminals would begin to come online. “Stakeholders in Asia want to diversify their energy portfolios and B.C.’s natural gas is in high demand,” said natural gas minister Rich Coleman. “We are strengthening relationships and securing investments to make it happen, which will create unprecedented economic wealth and

jobs for the people of our province.” The report suggests that B.C. should prepare for a more “modest” boom, and that they have to make sure B.C. remains cost competitive with other countries. The report identified 23 liquefaction plants that are within range of Asian markets in which construction has already begun, putting them ahead of British Columbia’s proposed LNG terminals. Another 12 plants have completed front-end engineering and design that are within range

of potential customers in Asia. Those are also ahead of B.C.’s proposed sites in Kitimat, Prince Rupert and Kitsault. Oversupply is another area of concern. Asia’s natural gas demand is predicted to reach 400 million tonnes per year (mtpa) by 2021, and surpass 500 mtpa by 2025. Supply, on the other hand, could increase much faster: to 800 mtpa by 2021 and almost 900 mtpa by 2025. “By the time the British Columbia projects are able to deliver LNG to Asian markets, Asian markets will look substantially different than they do today,” said Coad. “There will be LNG and pipeline projects that will compete with British Columbia projects. And some of those projects are more advanced than the B.C. projects are today.” To not fall further behind, Coad said there’s a need for coordination across the value chain – up-, mid- and downstream. “I think that it’s more a question of what the competitive pressures will be when the project arrives,” Coad said. “The LNG projects that are unable to successfully negotiate attractive contracts would not proceed to the construction stage. So as B.C. projects and competing projects go to the market to negotiate, we’ll start to get a clearer picture of who’s got the advantage and who doesn’t.”

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Encana cuts could be plus for the Peace

More drilling on way in B.C. in 2014

O&G sector using less water this year

Encana Corp.’s intention to cut 20 per Staff Writer cent of its workforce on Nov. 5 could actually see positive effects for the Peace Region, as the company has designated the Montney shale play as a key operation area. The designation means that rather than pulling investment, Montney – along with Alberta’s Duvernay shale play and three others in the United States – will see an added focus from the country’s largest natural gas producer. “The plan there is to accelerate our investment in the oil- and liquidsrich areas and continue along with the Cutbank Partnership in northeastern B.C.,” said Jay Averill, spokesperson for Encana. “In terms of Dawson Creek operations, they really fall into the Montney shale play, and it was identified as one of the top five regions.” “We’re expecting about $2.5 billion capital spending, and 75 per cent of that dedicated to the top five plays we identified today,” said Averill. “One receiving among the highest is the Montney play.”

B.C. is expected WILLIAM STODALKA to drill slightly more Staff Writer wells next year than it did this year, according to a national industry services association. Last week, the Petroleum Services Association of Canada released its forecast for natural gas drilling activity for 2014. The forecast calls for about 2 per cent more wells in 2014 than the 540 or so wells drilled in 2013. B.C. is bucking the trends for Canada. Most provinces, and all Western ones, are slated to see a decrease in the amount of natural gas wells drilled in their respective borders. Petroleum Services Association of Canada president Mark Salkeld said that the reason for their forecast is greater confidence in B.C.’s LNG, based on comments from government officials and foreign investment. Salkeld specifically pointed to “really good, strong language” from B.C. Premier Christy Clark and Minister of Natural Gas Development Rich Coleman, and a recent deal between Progress and Petronas to build an LNG plant.

The oil and gas inWILLIAM STODALKA dustry in B.C. used Staff Writer less water withdrawn directly from rivers in the first half of 2013 than the same period in 2012, according to new information put out by a provincial regulator. Only about 1.6 million cubic metres of water were withdrawn by industry from these rivers by the end of June, compared with about 2.3 million by the same point last June, according to a B.C. Oil and Gas Commission report on short-term water approvals for use in industry. Hardy Friedrich, an OGC spokesman, said there was “no specific reason” for why volumes were lower this year than last year. “It turns out water use is tied closely to the needs of industry, and it can vary quarter to quarter,” he wrote via e-mail. Friedrich went on to say that the requirements for water by industry were lower, and that much of the volume used for water this year was for well completions.

ELAINE ANSELMI

NEUFELD from PAGE 9 I think they’ve been starting to communicate quite well when it comes to the oilsands. … I think they have to do more of that, but focus on LNG and what the benefits are to British Columbia. I think that’s up to the B.C. government. I think they’ve done a pretty good job of bringing it to the attention of British Columbians, but they can’t relent. [Premier] Christy [Clark] campaigned constantly on LNG, and that was the first time in many years that the lower mainland had heard anything about what happens in Northeast British Columbia. In most cases we don’t exist. But the province did a good job on that, and what they have to do is continue to tell people what a ben-

efit it is to the province of British Columbia, just like they do for forestry. If you go around the province, you see all kinds of places where they talk about forestry; they have to talk more about LNG. And the industry has to do more of that, too. The other thing they have to do is get people from the universities to start talking about the benefits. It’s not just up to the oil and gas industry and government, because everyone will say “the government is in it for the money and industry for the bottom line.” So what you need are third-parties. How to get them on board when they seem to be more interested in the other side of the equation? Well not all of them. Some of them are. What

you have to do is find them. Get some people in the Lower Mainland to step out – more people at the Vancouver Board of Trade and all of those kinds of things. It’s a constant thing. It’s not something you do for a month and you’re done. It has to be constant – unrelenting. That means some money has to be put towards it, which I think is important. Industry and governments have to get the public more intertwined with all of our resource development – not just oil and gas. People want more hospitals and better services – well, where do you get it from? We have to get at the hearts and souls of the people that consume these products, and that’s every one of them. I don’t just

mean just driving our cars or heating our homes. We use them every day in thousands of different things we consume on a regular basis. Go to the grocery store and pick up a bottle of milk. It’s in a plastic jug, where do you think the plastic comes from? So those are the things that have to be relayed to the public in a way that they can understand and accept. What’s your take on the EU Fuel Quality Directive that would single out oilsands projects? Environmentalists have successfully, to a degree, targeted the oilsands to try and shut it down. [They’ve] left everyone else alone. You certainly don’t hear about them in Russia. You don’t hear about them going to

Venezuela. You don’t hear about them going to other countries that are producing heavy crude, and that’s because [those countries] wouldn’t stand for it. It seems to be more about communication with their populations and to a much lesser degree on helping the environment over there. We were talking about that earlier, about getting the message out. What they’re doing is getting the message out to the consumer that doesn’t research this and just listens to some media outlets talk about how terrible it is. Then they don’t want to use it. They don’t understand it. This interview was edited for length and clarity.

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INDUSTRY NEWS

Fracking gets new code of conduct Code has already been endorsed by leading associations WILLIAM STODALKA Staff Writer

A group representing petroleum service trades across Canada has put out a code of conduct for its members on natural gas fracking. “We started to see hear all the talk and the concern out there in the public (about fracking),” said Petroleum Services Association of Canada president Mark Salkeld. “Typically the service sector had been bad about going about our business and doing what we do and not talking about it. We saw there was a need to develop a means of talking about it.” Part of this could dispel misinformation about the fracking industry that cur-

rently exists among some members of the public, he added. The move was made after consultation in the Peace Region and other locations across western Canada. The new code has already been endorsed by leading service associations like Baker Hughes and CalFrac Well Services. Eight other companies have also agreed to hold themselves to these methods. The code commits companies to develop technologies to reduce water consumption in their operations and engage with local communities to understand and respond to specific local concerns. Some of these commitments are already required

by provincial regulators or already practiced by the companies themselves, such

Salkeld said that in talking with landowners, the companies were asked to step up

‘We saw there was a need to develop a means of talking about it.’ – Petroleum Services Association of Canada president Mark Salkeld as reporting incidents and spills required by regulations and best practices. Others are ones that aren’t required by regulators, such as a greater commitment to communicate with affected landowners and to develop processes that require less water and more environmentally friendly fluids.

their efforts to communicate the impacts industry could have on them, as some of them do not receive the Internet or read the newspaper regularly – methods that industry previously used to communicate about their projects. Salkeld added that PSAC is still looking at ways to

hold companies to account that do not follow the methods lined up in their code of conduct. However, he said that PSAC doesn’t “have the wherewithal to watch over their shoulder every day.” “(Service companies) have to excel already because the producers won’t use them if they don’t,” he said. “If they don’t, they get fired. What worse punishment can you get?” Pembina Institute analyst Adam Goehner praised the move. “It kind of shows that industry is trying to go above and beyond regulation where there probably is a lack of regulation or a lack of clarity on the industry should be moving forward,” he said.

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Should Obama

President Barack Obama delivers a speech at the TransCanada Stillwater Pipe Yard in Oklahoma in 2012. He is expected to make a decision on the Keystone pipeline in the first half of 2014. Even though a majority of Americans are in favour of the proposed pipeline, opposition remains stiff, with protestors seizing on Mr. Obama’s campaign pledge to end America’s “addiction to petroleum.” PHOTOs BY Matt Wansley & Chesapeake Climate Action Network

Michael B. McElroy

This article originally appeared in the November-December 2013 issue of Harvard Magazine (116:2; 37-39) and has been reprinted with permission. Few domestic policy issues have prompted more controversy recently than whether to build the Keystone XL pipeline. Proponents contend that it would enhance access to Canadian oil, significantly increasing North American energy security. Opponents counter that the pipeline, by opening a long-term channel to market for abundant, carbonrich, Canadian tar-sands oil, would sharply accelerate emissions of carbon dioxide (CO2), with global climate consequences that would be simply unacceptable. As climate scientist James Hansen said of the company proposing to build the pipeline, “Once the spigot is open, TransCanada will have every incentive to milk the massive tar-sands basin for all that it is worth.” Because the pipeline will transit the Canada-U.S. border, construction requires an affirmative decision by the U.S. State Department – and ultimately by the president. In his June 25 speech on climate policy, President Barack Obama defined the ground rules he proposes to follow in reaching a decision: “allowing the Keystone pipeline to be built requires a finding that doing so would be in the nation’s interest. And our

national interest will be served only if the project does not significantly exacerbate the problem of carbon pollution.” How seriously should we take the goal of North American energy independence – and can exploitation of the Canadian resource contribute consequentially? Would the pipeline necessarily trigger the disaster projected by at least some of the opponents? Given that the demand for oil will likely persist until we find an alternative, carbon-free means to drive our cars, trucks, ships, planes, and trains, are the problems associated with exploiting the tar sands so serious that the resource should be left in the ground? If approval for the pipeline is denied, would the operators not simply find a different path to market – perhaps by train and truck – or even a different market in Asia or Europe? (In terms of the climate impact, it makes little difference where the oil is consumed.) How should the president decide? Is there a middle ground? TransCanada, the entity that would construct, own and operate the proposed pipeline, is a large public company that operates diverse energy-related investments – among them, 57,000 kilometres of pipelines dedicated primarily to transportation and distribution of natural gas, storage for a fraction of this gas, and generation of electric power. It has recently expanded to include construction and operation of oil pipelines. Keystone, a wholly

owned subsidiary, already operates an extensive network of oil-distributing pipelines, including one that provides an important link between the Alberta oil sands and the United States. The existing pipeline extends

open a direct link between Hardisty and Steele City. As proposed, it could transport 830,000 barrels of oil daily – but not all from the Alberta tar sands: the pipeline would also carry at least some oil from the Bakken shale formation in North Dakota. Bakken oil output reached a record of nearly three-quarters of a million barrels per day this past April – a 33 per cent increase from the prior year. (North Dakota now ranks second in domestic oil production, behind only Texas.) Approximately 75 per cent of oil produced from the Bakken last spring left North Dakota by rail. The Keystone extension would only modestly address this imbalance; it would not eliminate the need for additional infrastructure to service the distribution requirements for the rapidly growing Bakken production. Transport of oil by rail has its own risks. A portion of the oil produced from the Bakken is currently transferred by rail through Canada to supply the eastern United States and Canada. The July derailment in Lac-Megantic, Quebec, where as many as 50 people died, involved a Montreal, Maine, and Atlantic Railroad train carrying Bakken crude. Problems, of course, can also arise in pipeline transport. An ExxonMobil pipeline carrying crude from

Could Alberta’s oil deposits markedly improve North American energy security? south from Hardisty, Alberta; proceeds east through Saskatchewan and Manitoba; crosses the border into South Dakota and Nebraska; and transitions east at Steele City, Nebraska, passing through Kansas, Missouri, and Illinois before ending up in Patoka and Wood River in Illinois. It channels the Albertan oil-sands product to refineries in Illinois; capacity is 590,000 barrels per day. An extension completed in February 2012 delivers some of this oil as well from Steele City to Cushing, Oklahoma, a key distribution center for U.S. crude. A further extension, endorsed by President Obama in March 2012 and now under construction, will facilitate transfer of oil from Cushing to refineries on the Gulf of Mexico, reducing the bottleneck for midwestern crude currently stranded in storage tanks in Cushing. The Keystone XL option would

NOVEMBER 15, 2013

PIPELINE NEWS NORTH •

Closing argument

approve Keystone?

(From Left) The 1,897 km-long Keystone XL Pipeline would transport Alberta’s oil to refineries in Texas, passing through two provinces and seven states. Protests have been persistent. Pipeline protestors say the pipeline would contribute to global warming and endanger sensitive ecosystems. Pipeline advocates say those concerns are exaggerated. A TransCanada pipeline pumping station in Nebraska. PHOTOs BY Bora Chung, Shannon Patrick

Canada ruptured earlier this year, dumping thousands of barrels of oil into a residential subdivision in Arkansas. TransCanada promises to institute comprehensive monitoring and install multiple shut-off valves to minimize, if not eliminate, problems with the Keystone XL project. Is the amount of oil in the Alberta deposits sufficiently large that its exploitation could markedly improve North American energy security? An estimated 170 billion barrels of oil is thought to be recoverable – sufficient to accommodate anticipated U.S. demand for at least 30 years – with tar sands accounting for 99 percent of the resource. By one recent estimate, Canada ranks third in proven oil reserves, trailing only Venezuela and Saudi Arabia, and the Alberta tar sands comprise 98 per cent of those estimated reserves. The resource is clearly significant, in North America and globally. Oil production from the Alberta tar sands totaled 1.9 million barrels per day in 2012 and is projected to double by 2022. About one-third of U.S. net imports of petroleum products – 2.55 million barrels per day – originated from Canada last year. The “oil” present in tar sands is a thick, heavy form of bitumen (the technical term for the product) with the consistency of tar. The bitumen can be extracted from the sand either by mining and subsequent separation at the surface, or by heating in situ so that it can be piped up in liquid form. (The min-

ing approach can be used only to extract bitumen within 75 meters of the surface, however, and the bulk of the tar sands lies deeper. Nevertheless, each technique accounted for roughly half of production in 2011.)

bon-rich component (coke). Both techniques require further processing to remove sulfur and nitrogen to enhance the resulting synthetic crude oil (SCO), and each step requires energy (typically fossil fuels), leading to a significant increase in greenhousegas emissions, notably CO2. From 1990 to 2011, Canada’s annual emissions of greenhouse gases increased from 591 million to 702 million tons; exploitation of the Alberta tar sands accounted for 7.8 per cent of total national emissions in 2011, an increase from 6.5 percent in 2009. All operations associated with tar-sands development, including extracting and upgrading the bitumen, accounted for 38.2 per cent of Alberta’s CO2 emissions in 2010, and the provincial government has taken steps to improve matters. Under regulations that went into effect in 2010, “large emitters” (operations responsible for annual releases in excess of 50,000 tons of CO2) must reduce emissions per unit of product by 12 percent relative to their 2003-2005 baselines. Failure to meet these targets requires purchasing carbon offsets from companies that exceed their quotas or contributing $15 per ton of excess emissions to a provincial clean-energy fund. (Assets available through this fund totaled more

one-third of U.S. net imports of petroleum products originated from Canada last year. The in situ approach produces slightly higher emissions of greenhouse gases, but the impact on the surface environment is significantly reduced. To date, more than 700 square kilometers of the Albertan landscape (an area nearly one-fifth the size of Rhode Island) have been altered by oil-sands mining activities. Major efforts are under way to reclaim approximately 10 per cent of the affected area, but real damage is likely to persist. In situ production is expected to account for an increasing fraction of future production. Once released, the bitumen can be converted into a useful form of oil by two techniques. One involves adding hydrogen to increase the hydrogen-to-carbon ratio of the resulting product, usually by reacting bitumen with a hydrogen-rich compound such as natural gas. The other involves separating bitumen into carbon- and hydrogen-rich products, followed by removal of the car-

than $300 million in April 2012.) Alberta has committed $1.2 billion to capture and sequester CO2 to reduce damaging emissions by burying it or by deploying it to enhance secondary recovery of oil and gas. The first project involves capturing CO2 from a bitumen-upgrading plant operated by Shell Oil; the facility, scheduled to begin operation in 2015, is intended to process up to 1.2 million tons of CO2 per year. The second, the Alberta Carbon Trunk Line, is to connect multiple carboncapture sites, deploying the carbon to enhance recovery of oil from conventional oil fields. As designed, this project would process up to 1.8 million tons of CO2 annually by 2015, with plans to increase capacity to handle as much as 15 million tons. These projects will likely make at most a modest (and expensive) contribution to reducing the scale of the tar-sands operations’ emissions, which alone exceed 50 million tons of CO2 per year now and are expected to increase significantly. Would approval of Keystone XL result in a significant increase in net emissions of greenhouse gases – the relevant question, given the global nature of the climate-change challenge? The critical issue relates to the net change in emissions resulting from the production, enhancement, distribution, refining and final consumption of the tar-sands product in the transportation sector as gasoline, diesel or jet fuel. See KEYSTONE on PAGE 30

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KEYSTONE from PAGE 29 Answering requires a comprehensive “well-to-wheel” assessment. A summary of such assessments in a recent Congressional Research Service report written by Richard K. Lattanzio concluded that per unit of fuel consumed, greenhouse-gas emissions associated with Canadian oil sands would be 14 per cent to 20 per cent higher than a weighted average of transportation fuels now sold or distributed in the United States. He added that “compared to selected imports, Canadian oil-sands crudes range from 9 per cent to 19 per cent more emission-intensive than Middle Eastern Sour, 5 per cent to 13 per cent more emission-intensive than Mexican Maya, and 2 per cent to 18 per cent more emission-intensive than various Venezuelan crudes.” Assuming that Keystone XL would deliver to U.S. refineries a maximum supply of 830,000 barrels per day, he concluded that “incremental pipeline emissions would represent an increase of 0.06 per cent to 0.3 per cent in total annual greenhouse gas emissions for the U.S.” – significant, though scarcely

game-changing. The impact could be even smaller if, as suggested, some pipeline capacity were deployed to transport oil from the Bakken field. In light of these data, should the president approve construction of the pipeline? Approval would undoubtedly draw criticism from at least some environmentalists. But a negative decision is unlikely to preclude further development of the tar sands. The United States will likely continue to be an important and growing final destination for Canadian oil delivered – if not by the Keystone XL pipeline – most probably by truck and train, both more carbonintensive means of transport. Should the president approve construction, he could couple his decision with a requirement that Canadian authorities take steps to reduce the carbon-intensity of extracting the tar-sands bitumen and processing it into SCO. Increased use of cogeneration to supply the steam and electricity needed for exploiting the resource could be significant, and use of renewable resources – steam produced from concentrated solar power (viR002424276

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able in that location) and wind-derived ancillary electricity, for example – could further reduce greenhousegas emissions. With options like these, the president could stipulate that the well-to-wheel emissions associated with the tar-sands resource should not exceed the average emissions associated with current use of liquid fuels for transportation in the United States. Increasing supplies of Canadian oil would reduce U.S. dependence on potentially unstable and unreliable sources such as Venezuela, Saudi Arabia, and Nigeria. A recent advertising campaign challenges this conclusion, arguing that the pipeline would simply provide a way to deliver heavy Canadian crude to Gulf Coast refineries for processing and export to foreign markets, notably China. But the United States is already a net exporter of petroleum products such as gasoline, diesel, and jet fuel. The transition from net importer to net exporter took place two years ago, resulting from competitive cost advantages enjoyed by refiners benefiting from increased supplies of U.S. crude oil and inexpensive domestic sources R002184226

of natural gas. Delivery of Canadian crude to the Gulf Coast would make at most a modest contribution to the trend already under way. And, as noted, it matters little for the climate impact where the oil is consumed. Aggressive commitments by Canadian authorities to reduce the greenhouse-gas footprint of tarsands development, combined with the initiatives already announced by the president to reduce U.S. national emissions, can minimize environmental damage. From the U.S. perspective, there are sound economic and security reasons to encourage development of the Canadian resource. Subject to the conditions noted here, I would recommend that the Keystone XL project should be approved.

Butler professor of environmental studies Michael B. McElroy considered the pros and cons of natural-gas development in “Fracking’s Future,” with Xi Lu, Ph.D. ’11, in Harvard Magazine’s January-February issue (page 24). He is also the author of “Time to Electrify” (July-August 2011, page 36) and “Saving Money, Oil, and the Climate” (March-April 2008, page 30).

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