special report: lng use booms in the west, but not yet in the peace JANUARY & FEBRUARY 2014
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Northern Lights College will be key to meeting rising labour demand in northern british columbia When Jonathan Koning, Joryn Burle and Shane Woods completed their practicums at the end of December, they became three of Northern Lights College’s 16 newest Oil and Gas field operator graduates. Terry Beaton (right) was their instructor. Matt Lamers Photo R001697746
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NUMBERS Matt lamers Photo
The following figures were taken from the stories in this issue of Pipeline News North.
92,800, 109,200: The number of people who were employed in Canada’s Oil & Gas Extraction sector in January 2013 and December 2013, respectively. Chart on Page 5. $4.37: The closing price of natural gas in 2013, hitting a nearly two year high. Chart on Page 5. 16: The number of students who will be enrolled in the inaugural Northern Lights College Oil and Gas Field Operations program in Chetwynd this February. Story on Page 7. $75,000: What the province gave Northern Lights College to create a new entry-level program for potential workers in the natural gas industry. Story on Page 8. 100,000: The number of workers that will be needed to construct and operate the proposed pipelines, production centres and liquefaction plants. Story on Page 8. 5,975: The number of kilometres of new pipeline in varying regulatory stages, mostly in British Columbia. Story on Page 13 48: The diameter of the proposed Coastal GasLink Pipeline from Northeast B.C. to the
coast, which would tie it for the biggest pipeline in Canada by width. Story on Page 14. 900, 48: The length and diameter of the proposed Prince Rupert Gas Transmission Project, which would give it the title of largest pipeline in Canada by diameter and length, but not volume. Story on Page 15. 4.2 billion: The cubic feet per day of natural gas that would pass through the Westcoast Connector Gas Transmission Project pipeline, making it the largest gas pipeline in terms of daily volume. Story on Page 15. $1.5 billion: The price tag of the proposed North Montney Mainline pipeline that will start between Dawson Creek and Fort St. John and conclude 305 kilometres north. Story on Page 19. 209: The number of conditions the Joint Review Panel slapped on Enbridge’s Northern Gateway when it gave the $5.5 billion pipeline the green light. Story on Page 16. 162 Celsius: The temperature that natural gas is chilled to when it’s shrunk by 600 times in volume and shipped to markets around the world. Story on Page 20.
$5,000, $10,000: The amount of money the South Peace Oilmen’s Association Bonspiel raised in 2012 and 2013, respectively. Story on Page 22. $240,000: The amount of money that eight applicants were granted to support their research for the federal environmental assessment of the proposed Prince Rupert LNG Project by the National Energy Board. Story on Page 24. $56 million: The amount of money Alberta Oilsands wants for compensation after the cancel leases on properties in the vicinity of Fort McMurray. Story on Page 25. 0%, 100%: The amount of natural gas in Northeast British Columbia currently being used as fuel for transportation and the amount of new gas energy companies want to either export or use else ware in the province, respectively. Story on Page 26. 58%: The percentage of workers at 80 of Canada’s top oil and gas companies that will see raises of between 3-6 per cent this year, according to a Hays Canada survey. 4 per cent will see raises of more than 10 per cent. Story on Page 29. R001697743
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pipeline news north 16 Panel gives Gateway green light
What the 5 charts say
NEB approves four 5 LNG export permits Answering the bell: 6 Northern Lights College Interview: 8
Stacy Smith, associate dean
19 Trans Mountain Expansion Project
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Pacific Northern Gas 13 Looping Project
Northern Gateway 16 pipeline
24 Comments closed for Prince Rupert pipe
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26 LNG booms in the West, but not in the Peace 28 A new front in natural gas campaign 29 In the oilpatch? Expect a raise
jobs
Westcoast Connector 15 Gas Transmission Project
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22 On the button: South Peace Oilmen Bonspiel
25 Fort Mac’s growing pains
Coastal Gaslink 14 Pipeline
Prince Rupert 15 Gas Transmission System
20 If he builds it, will they come?
24 Trans Mountain files for expansion
Pacific Trail 14 Pipeline
19 North Montney Mainline
community
British Columbia, 13 the pipeline province
Pipelines
the charts
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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.
JANUARY 17, 2014
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Gas prices closed the year off near a twoyear high of $4.37. Much of that increase was due to a colder than usual winter. Source: Wall St. Journal. Figures are latest available.
Number of wells drilled in b.c.
January through DECEMBER 2013
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WHAT THE CHARTS SAY Natural gas prices - Henry Hub
January through DECEMBER 2013
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526 well were drilled in British Columbia in 2013, 40 more than the previous year. 27 wells were drilled in December, which was down from 47 in November. Source: B.C. Oil and Gas Commission.
marketable gas production, alberta Alberta’s production of gas declined slightly from 281,939 103m3/d in September to 272,714 103m3/d in October. Source: National Energy Board. Figures are latest available. January through OCTOBER
NEB approves four more natural gas export permits Matt Lamers Staff Writer
The National Energy Board cleared a growing pile of paperwork from its desk in December. On Dec. 16, the NEB handed out export permits to Prince Rupert LNG Exports Limited, Pacific NorthWest LNG, WCC LNG and Woodfibre LNG Export Pte. Ltd, respectively, bringing the number of approved LNG export permits to seven. The four proponents were awarded permits to export about 73 million aggregate tonnes of
LNG per year for 25 year terms. In approving the four export permits, the NEB cited technological advancements that have resulted in a huge increase in the supply of marketable natural gas in both Canada and North America. “As a result, the Canadian gas industry is seeking to access overseas gas markets through exports of LNG,” the NEB said. “The Board determined that the quantity of gas proposed to be exported for each application will be surplus to Canadian requirements.” The NEB is weighing applications for four more export permits.
d e t a l u Ins ibs B & s a k r a P
Well authorization approved
oil & gas extraction jobs in canada At the start of 2013, 92,800 people were employed Canada’s the Oil & Gas Extraction sector. That rose to 109,200 in November. Source: Statistics Canada. Figures are latest available.
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BC CUSTOMERS SAVE PST EVERYDAY
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January through DECEMBER 2013
Through 2013, Well Authorizations Approved in B.C. hit 907. 814 of those were natural gas, 84 were oil and nine were service wells. Source: B.C. Oil and Gas Commission. Figures are latest available.
January through NOVEMBER 2013
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Jonathan Koning, 23, moved to Fort St. John from Vancouver Island last year in search of a new career. Unsatisfied in his role a Walmart pharmacy manager, he looked to the oil and gas sector for a change. Koning enrolled in Northern Lights College’s Oil and Gas Field Operations program. “It’s one of the best introductions to the oilfield you can get,” he said. “Most people just tell you that there is lots of money out there without really explaining it. This is an introduction to everything. It’s more practical, and you get to expand into different areas if you want to.” Students said the course gives them the information they need to get jobs right away. “The course is short, sweet and gets your foot into the door, whereas most [other] programs aren’t really hands on. But with this one, we’re on tours, in the workshop to see what things do and pull them apart and see how things work,” Koning added. Joryn Burle, 19, a native of Fort St. John, will graduate with Koning. Working in the oilpatch runs in his family. “I learned quite a bit. I like the hands-on work,” he said of the program. When Koning and Burle completed their practicums at the end of December, they were two of the college’s 16 newest Oil and Gas field operator graduates. They are part of Northern Lights College’s broader goal to be the centre of oil and gas in British Columbia, from education to analysis. If Fort St. John is the center of oil and gas in B.C., Northern Lights College is the epicentre. “[Northern Lights College] needs to be the hub of information, communication. It needs to be that place where, when people want to know about oil and gas, they can look to,” said Stacy Smith, associate dean, B.C. Centre of Training Excellence in Oil and Gas at Northern Lights College. The college’s Oil and Gas Centre of Excellence/ Jim Kassen Industry Training Centre opened its doors in 2007, and was jointly funded by government and industry. The province put up $6 million and private sector provided the remaining $6 million. “As far as oil and gas goes, it’s about the educational side,” Smith added. “That’s what we want to be the hub of. And be able to look at where some of the skills and labour shortages may be and address those through the centre so that we can start to build and grow programs, not only for the North, but [programs] that can be accessible for the whole province.” The college has its work cut out for it. One of the biggest challenges for the province to develop its burgeoning LNG industry will be training a workforce of more than 100,000 people in the coming decade. In the works are more than 20 LNG projects that would ship more than 100 million of tonnes of liquefied natural gas a year to power-hungry markets in Asia. See COLLEGE on PAGE 10
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EDUCATION SPECIAL
answering the bell after it’s rolled out later this year, Northern Lights College’s oil and gas curriculum will help northern british columbia meet rising labour demand
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Stacy Smith, associate dean, B.C. Centre of Training Excellence in Oil and Gas, is spearheading the creation of oil and gas education ciriculum for British Columbia.
Matt Lamers Staff Writer
Northern Lights College in Fort St. John has a huge responsibility on its shoulders. In less than five months, the college will release curriculum that will be used in schools throughout British Columbia to train workers for the natural gas industry. If government and industry forecasts are correct, the province is going to need more than 100,000 more workers to build and operate the production centres in the Northeast, the pipelines and the liquefaction plants in the Northeast. The Oil and Gas Centre of Excellence/Jim Kassen Industry Training Centre at Northern Lights College is going to play an important role in meeting those employment projections. Stacy Smith is associate dean, B.C. Centre of Training Excellence in Oil and Gas. He has been with the college for eight-and-a-half years. Pipeline News North sat down with Smith to talk about his role in the creation of the new curriculum and the B.C. Centre of Training Excellence in Oil and Gas. Can we talk about your vision for the Oil and Gas Centre of
Excellence? Stacy Smith: The centre of excellence needs to be the hub of oil and gas for the province of B.C. It needs to be the hub of information, communication; it needs to be that place where, when people want to know about oil and gas, they can look to. There’s has been quite a bit of expansion at the college in recent years. Any more in the works? We would still like to grow the Simulated Well Production site. There are some more pieces to that puzzle we’d like to add. Growth is part of the North, so any time [the college] has a chance to continue to grow, it is beneficial to everyone. We want to look to the fact that the Centre has to be that provincial entity. So you want be the go-to resource for information on oil and gas. Yeah, and that’s what we want to be. As far as oil and gas goes, it’s about the educational side. That’s what we want to be the hub of. And be able to look at where some of the skills and labour shortages may be and address those through the centre so that we can start to build and grow programs, not only for the North, but ones that can be accessible for the whole province. Do you have any targets in terms
of student body growth? There is very keen interest in the oil and gas sector from students who want to come in and take the programs that we have. Our Oil and Gas Field Operator program is very well subscribed to, as well as our Power Engineering program; instrumentation, electrical, a lot of the trades are definitely growing as far as numbers go, of course because of the potential for these mega projects to go through. There’s great opportunity. People definitely see that. Student growth could be quite substantial. Northern Lights College is careful about training people for jobs that are available. How do you make sure you don’t create a surplus of labour before industry is ready to fill those jobs? We try to. And that’s where our relationship with industry is so important and valuable, so we can take the feedback that we get and ensure that we’re not putting students through programs that there is no possibility for employment. So we try very hard to gauge demand. We’re lucky up here because there’s huge demand. The Centre is responsible for coordinating oil and gas training at post-secondary institutions throughout the province. Can you tell me how you’re going
Matt Lamers photo
about doing that? We’re still kind of working on how we’re going to tackle that. So one of the main duties of the steering committee will be to not only review the internal structure of the Centre of Excellence itself, but how we’re going to address the issue on a provincial level. It’s a big responsibility. We’re moving ahead quickly and we’ll have our first steering committee in January. Can you tell me about the composition of the committee? The steering committee is in the final [stage] of development. It’s a mix of post-secondary, government, industry, the best mix that I could put together for a group that should hopefully cover the bulk of the province for the sectors that deal with oil and gas. But at the same time it has to be a manageable committee. It has to be 18-20 people [from throughout the province]. There’s probably going to be a minimum of two meetings per year, maybe four in the first year. The best thing about that is I will be able to include more people into that mix to see how the larger group entity can work towards it. It’s going to be, in a big context, a large working group committee that will have people in specific areas of expertise that will be able to break off into subcommittees and have specific goals that they will target.
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COLLEGE from PAGE 6 On Dec. 18, it received an infusion of $200,000 from the province to help train workers for the oil and gas sector. About $125,000 of that will be diverted to the college’s Centre of Training Excellence in Oil and Gas, which is responsible for coordinating oil and gas training at post-secondary institutions throughout the province. The additional $75,000 will come from the B.C. Natural Gas Workforce Strategy Committee to develop a new entry-level program for students who are interested in working in the natural gas industry. The province expects the program to be rolled out in July for post-secondary institutions in British Columbia. The curriculum will be developed in an advisory group established by Smith. After it’s completed, there will be a pilot program at NLC, which will be followed by an assessment before being released for the rest of the province. “It makes sense to do a lot of the oil and gas related pilot projects test runs at Northern Lights in Fort St. John simply because we’re in the centre and we have the ability to provide some of that hands on, with our oil production site, we have the resources to do that,” said Smith. It’s an important task, a limited budget and and a tight schedule. How’s Smith going to make it happen? “By being creative and not reinventing the wheel,” he said. “There’s a lot of good information out there and there is a lot of good informa-
tion that we already teach in our program, so it’s not like we have to start from scratch. We have to figure out the most economically feasible way to take what we already have and assemble it in a way that fits the guidelines of that program. “[The timeline] is possible. It’s soon. It’s going to take a lot of hard work and dedication, but it’s possible. If you get the right people together and everyone is travelling down the same path towards the goal, anything is possible,” added Smith. Northern Lights College’s Oil and Gas Field
And beginning in February, the program will be expanded to Chetwynd. Students from Chetwynd had been required to relocate to For St. John for up to five months to take the course. “Now they don’t have to move for four or five months to Fort St. John for this program, and that’s important if you’ve got someone who’s retraining,” said Brad Lyon, executive director of communications and community relations for Northern Lights College. “They’ve been in a different line of work. They’ve got family. They’ve got a wife or husband and kids at home,” he added. The program will be offered to 16 students in Chetwynd, 12 of which will be reserved for dualcredit high school students and the remaining four spots will go to adult — Stacy Smith, associate dean, B.C. Centre of Training students. Excellence in Oil and Gas “It can be a big deal to pick up and move for four or five months to get that Operations program has played a central role training. If we can offer it in their home commuin training students for the local petroleum in- nity, that’s just one less obstacle for them to get dustry. Since it was first offered about 10 years the training they need,” said Lyon. ago, more than 400 students have completed the Using the college’s mobile oil and gas lab, the course. program in Chetwynd will follow the same curThe program is offered twice a year at the Fort riculum as those offered in Fort St. John and St. John campus, every summer in Dawson Creek Dawson Creek. and has been held in Fort Nelson and for Seabird “This is an opportunity for Northern Lights Island First Nation in the Upper Fraser Valley. College to train some additional workers in a
‘It makes sense to do a lot of the oil and gas related pilot projects test runs at Northern Lights in Fort St. John simply because we’re in the centre.’
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EDUCATION SPECIAL
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career area that is in high demand,” said Lyon. “By being able to train, in this case in Chetwynd, an additional 16 entry level oil and gas field operators, we’re helping meet the demand that’s out there in industry and helping train some additional workers.” The program in Fort St. John usually comes with a lengthy wait list for prospective students. Lyon said the school is conscious of local job demand in the energy sector, and as such, is careful not to release more graduates than businesses need. Students are trained in aspects of oil and gas production and learn how to operate a drilling rig, pump jack, wellhead, three-phase separator,
glycol dehydration unit, line heater, flare stack, storage tank, gas compression unit, amine unit and a pig receiver/launcher. Terry Beaton, an Oil and Gas Field Operations program instructor, said Chetwynd will be operated as a pilot project, and whether or not it will be offered there again will depend on various factors. “We’re offering the program in Chetwynd because we’re anticipating more people located in that area, working in that area,” Beaton said. “So by supplying a training program there, we’re gearing more towards local people working in a local area.” For the province, it’s a potential trillion-dollar
industry. For Koning and Burle, it’s a new career and a lifetime of guaranteed employment. “I really just want to get into the oilfield, learn what it’s all about. I have a dad and father who both do it, they like it. They get up every day and love going to work,” said Burle.
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special report ENVIRONMENT fort st. john
bc: the pipeline province
dawson creek
prince rupert kitimat
Matt Lamers Staff Writer
Pipelines are essential to British Columbia’s plan to cash in on its abundance of natural gas. Of the eight major pipelines in the works in B.C., five would transport natural gas through the northern half of the province to liquefaction plants and export terminals on the coast. Two more would be for bitumen and another is strictly for gas transport in the Northeast. Yet another pipeline might soon be announced to feed Kitimat Clean Ltd., the proposed $27-billion oil refinery on B.C.’s coast. A number of other pipelines have been bandied about, but have not yet entered the regulatory process. The eight projects, not including the refinery, call for the construction of 5,975 kilometres of new pipeline in B.C. and Alberta, most of which cuts through the north. Two of the proposals are expansions to pipelines that already exist: Trans Mountain and Pacific Northern Gas’ pipelines. Only one new pipeline heads southward to the lower mainland.
PNG’s pipeline that stretches from Summit Lake, north of Prince George, to Kitimat, might actually have spawned two offspring, which could set a precedent for further pipeline development. Environmental impacts notwithstanding, the Peace River Region stands to benefit from the economic windfall if businesses here can find the workers to meet the demand. And that’s a big “if,” considering the region already sits at full employment. Steve Thorlakson, president at Thorlakson Management Ltd. and former mayor of Fort St. John, says whether local businesses benefit from the pipeline construction boils down to the capability of their workforce. “I think the No. 1 thing they can do is train up their staff in apprenticeship programs to get them qualified,” he said. “If you’re a major oil company, you want to hire people who are qualified and capable. The gap seems to be in certification: the supply of trained, skilled people is considerably lower than the demand.” Though much of the pipeline construction would take place hundreds
of kilometers away, local business leaders say they could still take advantage. The pipelines would come with a big expansion of fracking in the Montney Formation, on which Fort St. John and Dawson Creek reside. Labour and environmental mitigation are going to be the biggest stumbling blocks for the region. There’s already a labour shortage and LNG “is going to exacerbate it. It’s going to make it worse,” said Thorlakson. It’s one thing to have good paying jobs, it’s another thing to have capable people. If Site C goes ahead, it’s going to make it even tighter.” Following is an overview of the eight pipelines and where they stand in the regulatory process. PNG Looping Project The Looping Project is one of the most interesting projects in the works because its stems from a pipeline that already cuts through the North, the only one that does what five more want to do. After selling its stake in the original “looping” plan in 2011, PNG opted to go ahead with a similar plan in July 2013. Its original line now has two off-
png looping pipeline
spring, presenting a potential model for more pipelines down the road. The new project, like the old, envisions twinning Pacific Northern Gas’ pipeline that was originally built in 1969 from Summit Lake, north of Prince George, on the Spectra Energy pipeline system, to Kitimat. PNG wants to expand the 525-km pipeline to meet the growing needs of its consumers in Northwest B.C. and feed small-scale LNG export projects, it says. At 24 inches in diameter, it’s the smallest of the pipelines that are in the works. Current status Public comments were received on the draft Application Information Requirements through Jan. 2, 2014. An AIR is issued by the B.C. Environmental Assessment Office and specifies the studies that must be conducted and other information to be included with the application for an Environmental Assessment Certificate. PNG hopes to submit its application for an Environmental Certificate in the Fall of 2014 and break ground in the fourth quarter of next year, according to its website.
This is what it is
summit lake kitimat
Six east-west pipelines are in the regulatory process. They are the Northern Gateway Pipeline, the Westcoast Connector Gas Transmission Project, the Prince Rupert Gas Transmission Project, the Pacific Trails Pipeline, the Pacific Northern Gas Looping Project and the Coastal GasLink Pipeline. Two more, not shown, are the Trans Mountain Expansion Project and North Montney Mainline. Though most will only be built if their associated LNG projects get the go-ahead, the pipelines are key components to the future of British Columbia’s economic growth.
Proponent: Pacific Northern Gas Associated LNG projects: Small LNG projects proposed for Kitimat Length: 525 kilometres Where: Summit Lake to Kitimat Diameter: 24 inches Price tag: N/A
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pacific trail pipeline
This is what it is Proponents: Pacific Trail Pipelines Limited Partnership Associated LNG projects: Kitimat LNG Length: 463 kilometres Where: Summit Lake to Kitimat Diameter: 36 inches Price tag: $1.2 billion
kitimat
The Pacific Trail Pipeline is further along the regulatory path than the other pipelines, having already completed its Environmental Assessment and receiving the green light from provincial authorities in 2008. The project was originally concocted by Pacific Northern as a joint partnership between PNG and Galveston LNG Inc. to “loop” PNG’s existing line from Kitimat to Summit Lake. On Feb. 7, 2011, PNG cashed out, selling its 50 per cent
prince george
stake for $50 million ($30 million in 2011 and the rest if Kitimat LNG breaks ground). The 463 km, 36-inch pipeline would be capable of moving 1,000 MMcf per day of natural gas to the terminal, where it will be liquefied and shipped to Pacific Rim markets. The pipeline’s associated LNG projects include Kitimat LNG (Chevron Canada, Apache Canada) and BC LNG. The latter was awarded a 20-year export permit from the
coastal gaslink pipeline
National Energy Board for a maximum annual volume of 1.8 million tonnes of LNG in 2012. Kitimat LNG was granted a 20 year export permit by the NEB in October 2011. The natural gas would come from the 644,000 undeveloped acres in the Horn River and Liard basins that Chevron Canada and Apache Canada have jointly invested in, according to regulatory filings. Current status In 2013, Pacific Trail Pipelines
This is what it is groundbirch
Proponent: TransCanada PipeLines Associated LNG project: LNG Canada, Shell, Petro China, Mitsubishi, Kogas Length: 650 kilometres Where: Groundbirch to Kitimat Diameter: 48 inches Price tag: $4 Billion
kitimat
At 48 inches in diameter, the Coastal GasLink Pipeline would be the biggest pipeline in Canada. The 650-kilometre pipeline would begin 40 kilometres west of Dawson Creek and conclude near Kitimat. It would be capable of moving five billion cubic feet (bcf)per day of gas with six compressor stations.
The Coastal GasLink Pipeline would feed the proposed LNG Canada natural gas export terminal near kitimat, which would be operated by Shell (U.S.), PetroChina (China), Mitsubishi (Japan) and Kogas (Korea). LNG Canada’s strength is that it already has buyers in place for its gas.
contact Art Jarvis, Executive Director for contact information see www.energyservicesbc.org
R001697752
For information on Membership
R001668780
Limited Partnership signed an agreement with 15 First Nations (the First Nations Group Limited Partnership) to provide up to $200 million in financial benefits over the life of the project. What’s holding this project up is a final investment decision from its LNG partners. That won’t come until Kitimat LNG has firm contracts in place from buyers in Asia. Provincial authorities must also finalize gas tariffs.
Current status Public comments were received on the draft Application Information Requirements (dAIR) from March 11 to April 10, 2013. An AIR is issued by the B.C. Environmental Assessment Office (EAO) and specifies the studies that must be conducted and other information that must be included in order to earn an Environmental Assessment Certificate. The public comments would be incorporated into the Application Information Requirements. On Feb. 4, 2013, LNG Canada was awarded a 25-year permit by the NEB to export 24 million tonnes of LNG per year. Public comments closed for LNG Canada’s Application Information Requirements on Dec. 13, 2013. Construction of the pipeline is contingent on LNG Canada making a final investment decision, which might happen as early as next year, Shell told Pipeline News North.
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special report ENVIRONMENT This is what it is Proponents: TransCanada Associated LNG project: Pacific NorthWest LNG (Petronas, Petroleum Brunei, Japex) Length: 900 kilometres Where: Hudson’s Hope to Lelu Island, Prince Rupert Diameter: 48 inches Price tag: $5 billion The Prince Rupert Gas Transmission Project is the largest of the natural gas pipelines that have been proposed in terms of diameter and length, but not volume. The 900 km, 48 inch pipe would cut a path from a point near Hudson’s Hope, about 80 km from Fort St. John, to the proposed Pacific NorthWest LNG facility on Lelu Island, within the District of Port Edward. This project has a lot going for it upstream, midstream and downstream. The associated LNG project is Pacific NorthWest LNG, which would rest on land administered by the Prince Rupert Port Authority and
prince rupert pipeline
prince rupert
is a joint venture by Petronas (Malaysia), Petroleum Brunei (Brunei) and Japex (Japan). Downstream, this project already has buyers in Malaysia, Brunei and Japan. Upstream, Progress will produce the gas in Northeast B.C. Progress Energy Canada Ltd. has signed agreements with NOVA Gas Transmission Ltd. for about two billion cubic feet per day of firm gas transportation through its pipeline, and in 2019 the proposed North Montney Mainline extension will connect to the proposed Prince Rupert Gas Transmission system, providing deliveries to the planned
This is what it is Proponents: Spectra Energy and BG Group Associated LNG project: Prince Rupert LNG Length: 850 kilometres Where: Southwest of Fort St. John to Prince Rupert Diameter: 48 inches Price tag: $6 Billion
Pacific NorthWest LNG terminal. Progress Energy Canada was acquired by Petronas in 2012. The pipeline’s capacity would be two billion cubic feet of gas a day, with the ability to expand to 3.6 billion cubic feet per day. Current status In November 2013, the proponent submitted its draft Application Information Requirements (AIR) and held a public comment period from Nov. 19 to Dec. 18. The next step on the path to acquiring an Environmental Assessment Certificate is incorporating the
public comments and concerns it received into the Application Information Requirements. On Dec. 16, 2013, Pacific NorthWest LNG received permission from the NEB to export 19.68 million tonnes of LNG per year. A final investment decision on Pacific NorthWest LNG is probably coming at the end of 2014, construction could begin in 2015 and the first LNG delivery would be come in 2018. Like the other pipelines, this one will only get the go-ahead if its LNG project makes an affirmative final investment decision.
WESTCOAST CONNECTOR PIPELINE chetwynd
prince rupert
Current status The proponent submitted its draft Application Information Requirements (dAIR) early last year and held a public comment period from May 3 to June 2. The next step on the path to acquiring an Environmental Assessment Certificate is incorpo-
rating the public comments and concerns into the Application Information Requirements. On Dec. 16, 2013, Prince Rupert LNG Exports Limited was granted a licence to export 21.6 million tonnes of per year for a term of 25 years. Prince Rupert LNG’s final investment decision isn’t expected until 2015.
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The Westcoast Connector Gas Transmission Project is the largest gas pipeline that has been proposed in terms of daily volume. The proponents, Spectra Energy and BG Group, envision a pipeline that would move 4.2 billion cubic feet per day of natural gas from Spectra’s pipe system at Station 2, southwest of Fort St. John, to Ridley Island, near Prince Rupert, some 850 kilometers away. The proposal involves building a twinned pipeline. The associated LNG project is Prince Rupert LNG, which is a 50/50 joint venture by BG Group and Spectra Energy. Significant challenges to overcome include securing long-term buyers for its natural gas and finalizing a route for the pipeline, as well as gaining a “social licence” from impacted communities and First Nations.
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Panel gives Gateway green light
How local businesses can profit from proposed pipeline Matt Lamers Staff Writer
The Joint Review Panel established to examine Northern Gateway has concluded that the $5.5 billion pipeline is in the best interest of Canadians, on the condition that Enbridge meets 209 conditions. The three-person panel weighed information it received during 180 days of public hearings in 21 communities throughout Alberta and B.C. that would be impacted in some way by the pipeline. Now the ball is in the federal Cabinet’s court. Prime Minister Stephen Harper must issue a final verdict on Northern Gateway by the end of spring. “After weighing the evidence, we concluded that Canada and Canadians would be better off with the Enbridge Northern Gateway project,” said the report. The 1,150-kilometre pipeline would carry more than 500,000 barrels a day of crude oil from the Alberta oilsands to Kitimat, where it would be exported to markets in Asia. With nearly 99 per cent of Canada’s
petroleum exports going to the United States last year, the oil industry has been looking to diversify markets, but limited pipeline capacity to tidewaters has long been a hindrance. David Pryce, Canadian Associa-
troubled waters. Energy East would carry crude from Alberta to the East Coast, with a capacity 850,000 barrels per day from 2017; the Trans Mountain pipeline expansion would provide an additional 590,000 bpd from 2017; and the politically challenged Keystone XL Pipeline might deliver 830,000 bpd from Alberta to Steele City, Nebraska, – NEB panel on Northern Gateway if U.S. President Barack Obama concludes that tion of Petroleum Producers VP of it is in the best interest of Americans. operations, said Canada needs every pipeline it can get to move product to The local impact market, including Northern Gateway. Sean Thomas, president of the “It’s a decision that’s part of the reg- Fort St. John Petroleum Association, ulatory process,” he said. “There will said expanding to markets beyond be continuing challenges of getting the United States is essential for the on the ground and constructing it. I long-term success of the oil industry. think companies and governments “We have an excellent buyer in the need to continue that dialogue United States, but when you only around how that’s going to happen.” have one customer, that customer Other oil pipeline projects are ei- can then set the price. If you can ther at early stages or are stuck in branch out to other customers, you
‘we concluded that Canadians would be better off with the Enbridge Northern Gateway project.’
northern gateway pipeline
can get yourself into a more competitive market,” he said. “That’s why it’s important it gets approved, so Canada can expand into the world market and not just stay focused on North America.” Thomas said some businesses in Fort St. John would be in a position to gain from the construction of the pipeline, in particular transportation and pipeline outfits. Thomas works at TCL Trans Carrier Ltd. “The biggest thing is that you have to do your own research to see how you can benefit from it or how you can help,” he said. “I see this [being good] for the local transportation side, the labour side and the pipeline outfits that are in town. These people are branching out all over. They don’t have a problem heading over there.” Terry Beaton, an instructor for Northern Lights College’s Oil and gas Field Operations program, said local businesses could stand to win contracts from Enbridge. “We would look at pipeline companies, as well as safety companies, because you would need to have safety personnel on site,” he said.
This is what it is Proponents: Enbridge Length: 1,177 kilometres Where: Near Edmonton, Alberta to Kitimat, B.C. Price tag: $5.5 billion
kitimat
The proposed Northern Gateway pipeline is the most controversial of them all. It would carry bitumen (heavy crude from oilsands), rather than natural gas, which some environmentalists claim is more harmful to the environment in the event of a pipeline rupture. The proposal is to build a twinned pipeline that would move 525,000 barrels of bitumen per day westward, while the parallel line would bring 193,000 barrels of condensate per day eastward. The pipeline has become the focal point in Canada for critics of the oilsands, due to the latter’s heavy emissions of greenhouse gases.
Supporters say the pipeline is key to diversifying Alberta’s oil exports from the U.S. market. They say Canada must find new markets for its energy products because demand is weaning from our southern neighbour. The 1,177 km pipeline would move bitumen from Bruderheim, near Edmonton, Alberta to a deepwater terminal in Kitimat. From there it would be exported mostly to Pacific Rim nations. There is an ambitious plan to construct an oil refinery in Kitimat, but that is still in a very early stage of planning and faces significant economic and social challenges.
Current status In December 2013, the National Energy Board concluded the pipeline to be in the nation’s best interest. A three-person panel recommended that the federal Cabinet approve it, provided 209 conditions are met by the proponent. The Cabinet now has six months to make a decision on the NEB ruling. Provided Prime Minister Stephen Harper gives the project the go-ahead, construction on the $5.5-billion pipeline could begin later this year and conclude in 2017. However, environmental groups have vowed not to stop fighting.
JANUARY 17, 2014
Let’s shift focus to greenhouse gas emissions. The Alberta Trunkline has been in the news recently. It will be the largest carbon capture and storage project in the world. It has the opportunity to neutralize carbon emission from oilsands development in the long term. Do you think something like this is the future of carbon offsets, or do you see another option? It’s hard to tell what will be the prevailing technology, but I think this is a step in the right direction. At the end of the day, there’s going to be a fusion of different technologies.
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reporter@pipelinenewsnorth.ca
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we would have looked at, but with the cancellations, the project has basically been killed. I’m sure if the project had gone forward we would have looked at it. But it wasn’t in our plans, and I guess it won’t be now.
putting this levy on. On the topic of the EU, do you think the recently-announced FTA with the EU presents export opportunities, the EU fuel quality directive notwithstanding, especially in light
There are other pipeline projects in the works that will have a major impact on how you do business. Energy East and Northern Gateway, as mentioned. Can you talk about how they fit into your future? It would depend on the location of the project, because the locations are dependent on the owners and operators of those pipelines. They’re set already. From our point of view, if we’re looking at any additional properties to acquire or existing properties to develop, that would be one of the criteria to look at — the proximity to those pipelines. Now, in looking at which pipelines would be more beneficial to us, you look at location, obviously, but then you get into negotiations with the pipeline owners are on usage levies. We haven’t gotten to that stage yet because we haven’t started producing.
‘Oilsands is just starting out in terms of technology i ... It has a lot of potential. I could see in 10-20 years, there could be a lot of exports to different areas of the world: China, the EU.’
Is offsetting your carbon footprint a priority for Alberta Oilsands Inc.? For us, just to go back to our Clearwater project, offsetting our carbon footprint would have been something
– Interim CEO and president Binh Vu The EU wants to put a levy on oilsands, even though they don’t import any oil from Canada. What do you think is behind this? It’s economics and politics combined. Oilsands is just starting out in terms of the technology in the oil industry overall. It has a lot of potential. I could see in 10-20 years, there could be a lot of exports to different areas of the world: China, the EU, so maybe this is what they’re anticipating by
of the Energy East pipeline project? Assuming [our other projects] get off the ground, yeah I think it’s another market for companies like us to pursue. Definitely it would be a benefit. The pipelines, as you mentioned, would increase capacity and open up avenues to the south as well. You’re talking about Keystone. Exactly. It’s easier access to get it out of Canada.
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north montney mainline This is what it is Proponents: NOVA Gas Transmission Associated LNG project: Progress Energy Canada, other producers in North Montney Length: 305 kilometres Where: Peace region Price tag: $1.5 billion
aitken section starts
trans mountain pipeline
NOVA Gas Transmission Ltd. (NGTL) has proposed constructing the 305-kilometre North Montney Mainline, which it says is needed because of the rapidly increasing development of natural gas production in Northeast B.C. NOVA Gas Transmission is a wholly owned subsidiary of TransCanada. The North Montney Mainline comprises two sections. Both the 180 km Aitken Creek and the 125 km Kahta sections will be 42 inches in diameter. The former will run about 35 km southwest of Fort St. John to 190 km northwest of the city, while the latter section would continue northward, roughly following the Alaska Highway, for another 125 km. It would be an extension to the Groundbirch Mainline. Current status An environmental assessment commenced on Nov. 8, 2013. On Aug. 8 last year, NOVA Gas Transmission Ltd. submitted a preapplication project description. TransCanada told PNN that, if approved by the NEB, construction of supporting infrastructure could commence in the first quarter of next year. Pipeline and facilities construction would commence in the third quarter. It expects the Aitken Creek section of the pipeline to be in service by the second quarter of 2016, and the Kahta section in the second quarter of 2017. NGTL has signed agreements with Progress Energy Canada Ltd. for approximately two billion cubic feet per day (Bcf/d) of firm gas transportation. NGTL is also in discussions with other producers in the North Montney area for service in the proposed pipeline. In early 2019 this proposed North Montney Mainline pipeline will also connect to the proposed Prince Rupert Gas Transmission system.
edmonton
This is what it is Proponent: Kinder Morgan Length: 1,150 kilometres Where: Near Edmonton, Alberta to Burnaby Diameter: 24 to 30 inches Price tag: $5.4 billion
Trans Mountain is one of two major pipelines already crossing British Columbia that are planning significant expansions. The original 1,150-kilometre pipeline was built in 1956 to transport crude oil from Strathcona County, near Edmonton, to the Westridge Marine Terminal, near Vancouver. The proposed expansion would increase capacity from 300,000 barrels per day to 890,000 barrels per day and would require approximately 981 km of new pipeline.
It would mostly follow the current pipeline’s right-of-way. Similar to Northern Gateway, supporters of Trans Mountain say the expansion is needed to diversify oil exports away from the U.S., which is increasingly less dependent on Canada’s energy. Their argument is essentially that Pacific Rim markets are key to increasing oilsands development. If the Northern Gateway oil pipeline is any guide, this expansion could face fierce opposition from municipalities and First Nations. Communities along the pipeline’s route have already lined up in opposition. Burnaby Mayor Derek Corrigan has said the new pipeline is “just devastating to our community.” Trans Mountain has over 50 years of history going for it, though. Since 1961, 80 spills have been reported to the NEB. Most of those instances were minor and occurred at pump stations or terminals. Since 1961 there have been no spills at Port Metro Vancouver associated with oil transported through Trans Mountain. Current status Trans Mountain filed an application, officially called a Facilities Application, on Dec. 16, 2013 with the National Energy Board. If the NEB concludes all is in order, it will announce a schedule for public hearings. A Project Description was filed by Trans Mountain on May 23, 2013. The pipeline is in a very early stage of development.
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reporter@pipelinenewsnorth.ca
courtesy photos
Hamlet to hub
Investor hopes to turn abandoned village in Western B.C. into LNG cash cow Matt Lamers Staff Writer
If Krish Suthanthiran has his way, Kitsault, population 0, will be home to an export terminal for liquefied natural gas. Not just any terminal: It would be the first terminal to come online on British Columbia’s west coast, playing an important intermediary role in transporting the province’s abundant natural gas to Asian markets. Kitsault is a former mining community that was built from scratch during the 1970s and 1980s. The town’s high hopes were dashed when falling molybdenum prices brought its economy crashing down. By 1982, after being fully inhabited for only 18 months, there was no one left. It’s been dormant for the last 31 years. Kitsault’s fortunes took a
turn for the better when the businessman purchased it in 2004 for the bargain price of $5 million ‑ just a fraction of the hundreds of millions of dollars that was spent constructing it. Now this scenic waterfront town is the site of a proposed floating LNG terminal. “It’s real,” Mr. Suthanthiran said of his LNG dreams for Kitsault. “It’s not just a pipe dream.” Progress is moving quickly. On Dec. 18, 2013 Kitsault Energy Ltd. applied for a permit to export up to 20 million tons of liquefied natural gas per year, or about 960 billion cubic feet per year (Bcf/y), for 25 years. He has sent teams to China to meet potential partners and hopes to sign a partnership agreement “pretty soon. And we’re hoping in the next few months we can do that. Right now we’re talking to close to a dozen potential serious part-
ners ‑ mid-stream, up-stream and down-stream. The buyers are all from Asia.” Kitsault is one of about 20 projects that aim to export natural gas from B.C.’s coast. Seven long-term export permits have been approved by the National Energy Board, while four more, including Kitsualt’s, are under review. Eight other short-term export permits have been issued, including one to Mr. Suthanthiran’s project, Kitsault LNG. Suthanthiran said Kitsault has significant advantages over the other proposed LNG terminal sites. For starters, a shorter pipeline would be required to get the natural gas from where it rests in Northeast B.C. to Kitsault, which would save significant time and money. In September 2012, Spectra Energy and BG Group announced plans to construct a
pipeline from Northeast B.C. to a potential liquefied natural gas terminal in Prince Rupert, some 850 kilometres away, said Suthanthiran. The gas would be chilled into a liquid state and shipped in specialized tankers to ports in Asia. Then in January, TransCanada Corporation was selected by Progress Energy Canada Ltd. to design, build and operate a $5 billion pipeline to bring gas from the North Montney gasproducing region near Fort St. John to Prince Rupert, where it would be shipped to Asia. Both pipelines, Mr. Suthanthiran said, could potentially pass through Kitsault. Importantly, Kitsault’s floating terminal could be ready years ahead of the proposed sites in Kitimat and Prince Rupert. “It will cost them an additional $3 billion,” said Suthanthiran, to extend pipelines from
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Kitsault to Kitimat and Prince Rupert, some 250 kilometers away, over “rough” mountain terrain. He also said Kitsault’s unoccupied houses represent another important advantage over Kitimat and Prince Rupert. “All of the places they’re talking about, there’s no housing infrastructure, there’s no BC Hydro, there’s also lots of problems about the land with First Nations in Prince Rupert,” he said. Kitsault has readymade housing for 1,000 people. Time is another advantage he sites. “We have the shortest route, a $3 billion to $5 billion cost saving and a two-year time saving. The other thing is that some of them are focusing on land-based projects, but we’re focusing on floating LNG. We can get a ship built in about two years, the same it
takes to build a pipeline,” he said. Suthanthiran said he chose a water-based LNG terminal over a land-based one because the former can be constructed more quickly and cost effectively. Floating LNG terminals are the wave of the future, he claimed, pointing out Austra-
in more than three decades. A lot of their work is focused on getting homes ready ‑ or at least making sure they don’t fall into further disrepair. They’re replacing and repairing roofs, fixing plumbing and siding, and painting interiors. Suthanthiran said some buildings are
‘We have the shortest route, a $3 billion to $5 billion cost saving and a two-year time saving ... we’re focusing on floating LNG.’ – Krish Suthanthiran lia’s plans to allow Shell to develop the Prelude and Concerto gas fields off the country’s northwest coast using its floating LNG technology. There, processing takes place at the site of the gas field, where it is chilled to -162 Celsius and shrunk by 600 times in volume before being delivered to markets around the world. “This is the future,” he said. “With floating [terminals], you contract it to a shipbuilding yard, and then they build it to your specs, and everything is fixed. They have a delivery time, and if they don’t deliver, there is a penalty. Weather is a factor during construction in B.C. too. The whole thing takes time. In a shipyard, they can build it anywhere [in the world] and they can just bring it in [to Kitsault]. Kitsault is considering building its floating facility in Korea. A team of 15 people have been preparing Kitsault for its first permanent inhabitants
ready for new inhabitants, but he isn’t about to open the town just yet. “I need to make sure I get the funding to support hiring a couple hundred workers to do more things, but we will probably begin to do that next year. Add more people to restore more things,” he said.
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reporter@pipelinenewsnorth.ca
On the button
South Peace Oilmen’s Association Bonspiel hopes to raise over $10,000
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Team Encana, consisting of Darren Gingles, Mike Gerow, Shawn Pandachack and Jason Good, won the South Peace Oilmen’s Association Bonspiel’s Draw A. They made the trip from Beverlodge, 40 kilometres west of Grande Prairie, Alberta. Matt Lamers photos
Matt Lamers Staff Writer
Rocks were flying at the South Peace Oilmen’s Association Bonspiel in January. The event was Dale Suderman’s fourth. For Suderman and his colleagues, the annual curling tournament is part of the fabric of the community. “It’s an opportunity for individuals who work in the oilfield to collaborate, get together and share some fun with each other,” he said. “So it’s really a team building effort for the community and for the oilpatch.” Suderman’s team was one of 21 that participated. “It’s a good opportunity for people that work in the industry to associate,” he said, adding that it also highlights awareness of the oilmen’s organization. Trevor Shaw, chairperson and event organizer, said the tournament has been growing steadily over the years. “The vision of the bonspiel is just to have a good time and raise money for the oilmen’s association,” he said. Last year the tournament raised about $5,000 for local causes, but this year the hope is that
will be at least doubled. “Every year that we do it, it gets a bit easier. People know that it’s coming around,” said Shaw, who had help organizing the tournament from Trevor MacLean. It was the seventh straight year the bonspiel was held. Team Encana, consisting of Darren Gingles, Mike Gerow, Shawn Pandachack and Jason Good, won Draw A on the tourney’s third day. They made the trip from Beverlodge, 40 kilometres west of Grande Prairie, Alberta. They said Dawson Creek’s bonspiel is good for the community because it gives them a chance to meet new people. “It’s good for the sponsors, too,” added Gerow. “If we come out to support the South Peace Bonspiel, then maybe some of them will come out to the Beverlodge Bonspiel in February,” added Good. For a lot of people, curling is only part of the fun. Saturday night featured the “peg toss,” the closest one to the middle wins half the money, with the remainder going towards the Dawson Creek Junior Curling Program. Later that evening a poker tournament was held. Bottle draws and a 50/50 draw also raised
money for the junior team. Charity is an important facet of the South Peace Oilmen’s Association Bonspiel. Proceeds from last year’s bonspiel went to a new T-bar and drag groomer at Bear Mountain Ski Area, which is in line with the oilmen association’s goal of helping youth. Money raised at the tournament is going to the oilmen’s general fund, which hands money out to organizations and individuals that are in need of financial assistance. Shaw said sometimes that means paying hospital bills, and other times it could be transport. “Anybody who needs some cash,” he said. “This year we donated to the Mile Zero Speed Skating Club to help one of their events. “If an oilfield worker dies on the job or gets injured, we usually help out the families of those people. We try to keep it oilfield, but we do end up sponsoring quite a bit, like the Canalta Elementary School playground in Dawson.” Daniel Bonim was another participant at the bonspiel. “I like to support it. It helps your contacts and you can get together with all your customers and fellow oilmen.”
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Another proponent plants flag at Grassy Point MATT LAMERS Staff Writer
On Jan. 16, Woodside Petroleum Ltd. signed a sole proponent deal with British Columbia for 1,712 acres at Grassy Point, near Prince Rupert. The agreement gives Woodside the exclusive right to negotiate a long-term lease for a facility to liquefy and export natural gas on the south site of Grassy Point. “Woodside looks forward to working with the Government of British Columbia, the First Nations and the
community as we assess the feasibility of an LNG development at Grassy Point,” said Peter Coleman, Woodside CEO and managing director. Woodside will pay $4 million to the province immediately, $7 million in one year if it chooses to advance the project, and another $7 million one year after that. The $17 million will be subtracted from the final price of the long-term lease, which is yet to be concluded.
Trans Mountain files to expand oil pipeline MATT LAMERS Staff Writer
Following nearly 18 months of consultations with various communities, Kinder Morgan filed its muchanticipated Facilities Application for the Trans Mountain Pipeline Expansion Project with the National Energy Board (NEB). The NEB will hold public hearings on the application before it makes an approval decision. The $5.4 billion project would result in the twinning of the existing pipeline within the existing right-ofway between Strathcona County, Alberta and Burnaby, British Columbia. Capacity would nearly tripled from 300,000 to 890,000 barrels per day (bpd). Crude oil, refined and semi-refined
products are currently transported through the pipeline, which was built in 1953. The last expansion occurred in 2008 as part of the Anchor Loop Project when 158 km was twinned between Hinton, Alberta and Hargreaves, British Columbia. The project would open the door to increased exports to Asian markets. “Bolstered market access for Canada’s energy is critical to create jobs and provide economic benefits for all Canadians,” said Canadian Association of Petroleum Producers vicepresident Greg Stringham. If it gains regulatory approval, Kinder Morgan expects it to go into operation in 2017.
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Alberta
reporter@pipelinenewsnorth.ca
growing pains
Provincial government stings Alberta Oilsands by cancelling leases; now company wants its money back Matt Lamers Staff Writer
Fort McMurray’s explosive growth hasn’t come without side effects. In June, Ken Hughes, Alberta’s then-energy minister, announced the government’s intention to cancel leases on almost three dozen properties in the vicinity of Fort McMurray, the booming oiltown in Northeast Alberta. That has some oil companies peeved. Hardest hit was Alberta Oilsands Inc., which had leased land approximately two kilometres southeast of the Fort McMurray Regional Airport. Company officials say they suffered the biggest blow. Of all the impacted companies, they say their plans had been more developed than the rest. The government says the city needed time and space to address issues related to its unprecedented growth. Now Alberta Oilsands wants its money back. Fort McMurray is one of the fastest growing municipalities in Canadian history. The city, which is 435 kilometres northeast of Edmonton and 65 kilometres west of the Saskatchewan border, had a population of 34,000 in 1990. That is expected to soar to 130,000 people by 2030, which would make it the thirdlargest urban centre in Alberta. Besides the now cancelled Clearwater Project, Alberta Oilsands has three other projects on the books in the province: Grand Rapids, Algar and Lake Mackay. The Clearwater Project, which the government essentially killed, was a two-phase Steam Assisted Gravity Drainage (SAGD)
Mark Hoffman/Milwaukee Journal Sentinel/KRT
bitumen plan. Resting in the Athabasca oil sands region of Northeast Alberta, the Clearwater property covered 27.3 sections and comprises the McMurray Formation. In an interview with Pipeline News North, Interim CEO and president Binh Vu talked about carbon emissions, pipelines, possible export markets and the impact that the cancelled Clearwater Project has had on Alberta Oilsands. Pipeline News North: The province cancelled a number of oil sands leases to allow for further development around Fort McMurray. But don’t you think that developing Fort McMurray will ultimately benefit Alberta Oilsands from a labour and service access standpoint?
Binh Vu: No. It won’t, because our interests was to develop the oilsands there. So we had a plan in place. We had facilities designed. We were ready to go. We were at the final stages of the ERCB application process. We would have been off the ground within the year. So they pulled the carpet out from underneath you. Exactly. Among the other companies in the area, we were at the most advanced stage, from what I understand, in terms of development. It didn’t hit them as hard as us. That compared to Fort Mac’s urban development, from what I understand, they’re at the beginning stages of their development in terms of their expansion. I think they have to go through zoning,
urban development stages as well. We were just caught at the wrong time.
interest. The $51 million is based on what we’ve spent on the property.
Alberta Oilsands has calculated you are owed $56 million to cover investments and you’ve submitted an application to the government of Alberta to support the claim. What’s the next step? It’s all set out in the legislation. Whenever the government cancels any leases, whether it’s oil or mineral and mining leases, they have a formal way to compensate the leaseholders. That’s where we’re at right now. We’ve submitted, as of [November], our claim.
And that doesn’t take into account foregone future revenue? It does not. We haven’t really spoken on that point, on future economic loss. We’re still taking a look at that, but right now what we’re concentrating on is what we can quantify.
And we’re talking about the $56 million? Correct. Broken down, it’s around $51 million in actual costs and $6 million in
Where does that leave you? We’re kind of starting from scratch from our other projects right now. We have other oilsands projects that are not at the advanced stages, so we’ll probably concentrate on that once we get our compensation back [from the Alberta government]. See PAIN on PAGE 17
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reporter@pipelinenewsnorth.ca
Matt Lamers Staff Writer
Northeast British Columbia boasts one of the largest deposits of natural gas in the world, but it’s not available here as fuel for transportation. And while it’s becoming more common in other regions of Western Canada, it could be years, if ever, before transportation companies in the Peace are able to make the switch to the cheaper, cleaner alternative to diesel. Gerd Juister, owner of Fort St. Johnbased Ditmarsia Holdings Ltd., is in favour of natural gas-powered transport, and questions why it can’t be used domestically as well as for export. “We have the natural gas, why don’t we use it? he asked. “It’s all there.” Juister’s answer is two-fold. He says natural gas powered engines don’t
LNG booms in the West, have quite the power of diesel engines. The other problem, he thinks, is getting a service station here. “It’s too expensive.” If someone would build a service station, transportation companies like his would convert to natural gas “right away,” he asserted. According to Bob Fedderly, manager of Fort St. John-based Fedderly Transportation Ltd., the problem goes much deeper than engine power. He said the political will isn’t there to put pressure on natural gas producers. Fedderly wants the province to give royalty credits to the company that builds the first LNG station in Northeast British Columbia. “[The province] is issuing royalty credits for road building and pipeline infrastructure, so why aren’t they issuing royalty credits to the company that will build the first LNG station?
That would benefit all of us, not just the producing companies.” Fedderly also questions why Pacific Northern Gas isn’t getting involved. “Ironically, everybody has a pipeline right to their house, and with a small compressor and refrigeration plant, could have their own LNG system if they wanted. So I don’t
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see what’s holding back producers or natural gas distributors like PNG from doing that sort of thing, because they could have a system in place to refrigerate the product and compress the product to make it available. “It’s a fuel availability issue.” The closest LNG fuel station to the Peace River Region will be located in
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BRITISH COLUMBIA
but not in the Peace Why natural gas? The price of CNG is relatively stable, with little fluctuation. One litre of CNG costs about $.74. That’s almost half the price of gasoline and diesel, which costs about $1.25 per litre and $1.40 a litre, respectively.
Northeast British Columbia has one of the largest deposits of natural gas in the world, but it’s not used as a fuel for transportation here. Matt Lamers Photo
Grande Prairie, Alberta. It is slated to come online by the end of the year. There’s enough natural gas under our feet to fill Lake Superior, it’s cheap and it’s less environmentally damaging than diesel, so why aren’t we using it to power our vehicles? It’s a question Blaire Lancaster, director of government and public affairs for Ferus Natural Gas Fuels Inc., gets a lot. Lancaster says it boils down to the chicken and the egg dilemma. “Trucking companies are hesitant to make the switch to natural gas because there is no infrastructure. There is no fuel, so why would they invest in it?” she asked. “And infrastructure providers like Ferris and ENN Canada are hesitant to build it because there is no demand from trucking companies yet.” Another reason so few automobiles are powered with the province’s own natural gas is the lack of liquefaction plants to convert the gas to a fuel. Almost all of the liquefaction plants that have been proposed in recent years would be used for export purposes only. Last year proved to be pivotal for domestic LNG use everywhere but in Northeast B.C. In November 2013, Ferus Natural Gas Fuels and ENN Canada announced a joint venture to construct,
own and operate two LNG liquefaction plants. One will be established in Vancouver and the other will be built in Edmonton. They will service the on-road trucking market as well as other high-horsepower applications, including marine, rail and oil and gas exploration. A number of new stations were announced throughout Western Canada. ENN Canada is planning LNG stations in Chilliwack, Vancouver, Kamloops, Edmonton and Calgary, as well as three new locations in southern Ontario. “It’s happening throughout Canada,” said Lancaster. “[Trucking] companies can’t switch until the supply is there. Essentially it’s like, if you build it they will come.” LNG supply is starting to be addressed with new Shell and Encana/ Ferus facilities coming online from 2014 to 2016. FortisBC is planning to expand output at their LNG production facility in Delta, B.C. ENN Canada, a subsidiary of ENN Group, one of the largest natural gas distributors in China, plans to construct two LNG liquefaction plants that will be operational at the beginning of 2016, which would greatly expand the amount of liquefied natural gas that is available for the transportation sector. Founded in 2012, it
hopes to foster a booming LNG sector in Canada. Alicia Milner, president of Canadian Natural Gas Vehicle Alliance, says it’s not a question of “if” but “when” transport companies in Western Canada adopt LNG as a fuel. “Whereas all of these vehicles now rely on diesel fuel, LNG will start to be an option for fleets that operate along regional corridors or returnto-base,” Milner said. “The timing to start to see this transformation will be in the next two-to-four years, as we build on early adopters such as Vedder Transport in Abbotsford with their 50 LNG tractors.” Two factors critical to market transformation, she said, are access to LNG and the availability of a higher horsepower engine for the Class 8 trucks that are suitable for use in regional oil and gas operations. For some trucking companies, engine horsepower is an issue. The withdrawal of Westport’s 15 litre engine means that the maximum available horsepower engine is the Cummins Westport 12 litre ISX G, which is rated up to 400 horsepower. This engine can be used for trucks that operate on CNG or LNG. A higher horsepower Volvo 13 litre engine is coming to the market in 2015, however Cummins recently announced plans to halt development
of its 15-litre natural gas engine. “These new engines will be critical, as they will open up factory-built vehicle availability options that are more suitable to the types of higher horsepower applications being used in Western Canada,” said Milner. Even with the new engines, Milner says the market for natural gas is limited. “Natural gas will remain as a niche fuel that is suitable for certain applications depending on vehicle range requirements,” she said. “Third party analysts are suggesting that we will start to see natural gas capture 5-10 per cent of the sales of new Class 8 trucks over the next several years.” The Canadian Natural Gas Vehicle Alliance forecasts 500-1,000 trucks will be converted to natural gas in the coming years in Western Canada. Ferus has a slightly more optimistic outlook. It said “thousands” is not unrealistic in the next three years, “especially as the LNG infrastructure becomes available. Where there is LNG supply, which is what we’re contributing to with our plants, and the LNG refueling stations, which is what ENN Canada is bringing to the table.” That number could explode to “tens of thousands” within a decade. The demand for diesel in B.C. and Alberta is 2.8 billion gallons per year, which is about 7.5 million gallons per day. That could essentially be the target market for LNG suppliers. “We’re not assuming or looking to replace all of that diesel demand with LNG,” said Lancaster, “but that is what the total LNG market could be in B.C. and Alberta.” “Our belief,” said Lancaster, “is the more and faster we build this necessary infrastructure, like LNG plants, which is Ferus’ area of expertise, and associated dispensing and fueling equipment, the more end users are going to start switching over more quickly.”
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A new front in the natural gas campaign The Canadian Natural Gas Vehicle Alliance opened up a new front in the campaign to get more trucking companies to convert to natural gas. Starting this month, three new outreach hubs will be open. The Western Outreach hub will be based in Calgary and offer workshops, access to a toll-free number for inquiries and other information provided to fleets interested in learning more about both CNG and LNG as vehicle fuels. The hub will build on the website’s success. It was launched in English and French in October 2012 to be a resource for commercial fleets who want to learn more about natural gas as an affordable, lower-emission option. “The Go With Natural Gas website was developed with the goal of simplifying access to basic information about factory-built, R001622840
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medium- and heavy-duty natural gas trucks and buses as an option for Canadian fleets,” said Alicia Milner, president of the Canadian Natural Gas Vehicle Alliance. In consulting with fleets to develop natural gas use in the Canadian transportation sector, the Canadian Natural Gas Vehicle Alliance was told that it took a lot of research and effort to understand the basics of CNG and LNG as vehicle fuels. Trucking companies also had a hard time getting information on available vehicle and engine options, and refueling station considerations. The site offers a number of calculators to help simplify fuel costs and consumption calculations. Site traffic has increased steadily and now averages about 1,600 visits per month, which reflects a 30 per cent increase since the start of 2013.
JANUARY 17, 2014
PIPELINE NEWS NORTH •
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employment ENVIRONMENT
reporter@pipelinenewsnorth.ca
In the oilpatch? expect a raise Oil and gas workers could be in line for raises of over 3% Matt Lamers
Just under half of the employers believed the economy would strengthen in the next six to 12 months, while 48 per cent believed it would remain the same.
Staff Writer
58 per cent of employers will increase salaries by 3-6 per cent in 2014. “It’s worth noting that oil and gas employers remain optimistic even when data suggests that a temperate outlook would be more prudent,” said Hays Canada President Rowan O’Grady. “Companies would be better served by producing more accurate assessments of their growth prospects and adjusting their hiring plans accordingly.” The report also found that most of the
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If you work in Canada’s oilpatch, you’re in store for a raise this year. The only question is how much. Hays Canada has an answer ‑ kind of. The international recruitment consultant polled 80 oil and gas companies in Canada about their business last year and their projections for this year. In the 2014 Salary Guide report, Hays says that 27 per cent of employers will increase salaries by three per cent in 2014, but 58 per cent will increase wages in the three to six per cent range, while four per cent of the companies will issue pay raises from six to 10 per cent. The report also found that half of the employers expected to hire more full time, permanent staff this year, but 12 per cent expected their workforces to decrease and 38 per cent expected it to remain the same. Hays also asked employers what they’re doing to attract workers amidst a labour shortage. The survey found that the 80 companies boasted extended health benefits, more than 10 days vacation for new hires, performance related bonuses, pension/RRSP contribution or matching, and training or certification support. The 2014 Salary Guide came with some bad news. It found that too many oil and gas business leaders were off the mark in their projections for 2013. According to its data, seven per cent of the 80 businesses expected a dip in activity last year, but 18 per cent experienced one. “Canadian business leaders in the oil and gas industry have proven to be overly optimistic about their business and hiring prospects while suffering severe skills shortages,” according to the study. Accordingly, fewer permanent workers were hired than the 80 companies had expected. However, things could improve this year. The Hays report found that 68 per cent of the employers forecast business activity to increase in 2014.
companies are suffering from a shortage in skilled labour; 66 per cent of the surveyed companies reported that they suffered from “moderate to significant” shortages; 34 per cent blamed a lack of training and professional development; and 33 per cent said too few people were entering the labour market. Hays presented a course of action for the employers. “There are options for Canadian companies that are frustrated by an inability to find skilled professionals, particularly at the mid management level where there is additional pressure to fill vacancies,” they said. “It is possible to hire a slightly less experienced candidate with transferable skills who can be trained and mentored to develop into the ideal employee. However, employers will have to invest more in their human capital to achieve the desired results.”
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