Pipeline News North April 2014 by Pipeline News North

page 31: pipeline construction will boost government revenues APRIL & MAY 2014

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The next 12 months might be the most important ever for the economy of British Columbia. After the LNG tax is finalized, Final Investment Decisions could start rolling in, opening the flood gates for capital spending. Pipeline News North analysed the proposed LNG projects on Canada’s West Coast to bring you the latest on those that are on track and the ones that face delays. Two projects in the state of Oregon are also in the mix to liquefy and export Western Canada’s natural gas. Recognizing the urgency, British Columbia might conclude its LNG Income Tax by the summer. photos: matt lamers, Ian MuttoO

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Ditmarsia Holdings won the 11th Annual Fort St. John Oilmen’s 4 on 4 Hockey Tournament. (Matt Lamers Photo)

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PNN

NUMBERS

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

3: The number Final Investment Decisions that Aboriginal Affairs and Reconciliation Minister John Rustad hopes to see by the end of 2015. Story on Page 5 $11 billion: The price tag of the proposed Pacific NorthWest LNG project. The proponent could make an FID by the end of this year. Story on Page 7 7,200: The number of pages in the Coastal GasLink Pipeline’s Environmental Assessment Certificate application. Story on Page 8 4: The number of LNG projects approved by Greg Rickford, Canada’s minister of natural resources, in March. Story on Page 10

April 14, May 11: The First Nation LNG Summit in Fort Nelson and LNG in BC Conference in Vancouver, respectively. Calendar on Page 11 15%: The stake that Sinopec is reportedly interested in acquiring in Pacific NorthWest LNG. Story on Page 13 11: The number of consecutive years the Fort St. John Oilmen’s 4 on 4 Hockey Tournament has been filled to capacity. Story on Page 14 2: The number of projects in Oregon that are within a year of making FIDs on plans to import gas from Canada. Story on Page 16 15: The number of LNG export projects in

the works that would export gas produced in Canada. Story on Page 18 127,000: The number of net acres Progress purchased from Talisman Energy in the Montney in March. Story on Page 25 Matt lamers Photo 100%: The percentage of petroleum products South Korea currently imports from overseas. Story on Page 26 99%: The percentage of Canada’s oil exports that go to the United States. Canada and Korea signed an FTA in March. Story on Page 26 $12 billion: TransCanada’s plans for pipeline construction in B.C. Story on Page 27

pipeline news north 7 The charts: natural gas and oil B.C. could fast track LNG tax Snapshot: Pacific NorthWest LNG Spectra submits EA for Westcoast Connector

19 Snapshot: LNG Canada Gas

20 Snapshot: Triton LNG

21 Snapshot: Aurora LNG

Conoco Phillips/MCT

CEPA wants steering 8 committee on spills

PACIFIC NORTHWEST IN 13 HOMESTRETCH

25 Progress picks up 127,000 acres

matt lamers photo

25 FortisBC puts 200 NG vehicles on road 26 FTA with Korea will be boon for LNG 27 LNG: Itâ&#x20AC;&#x2122;s our opportunity to lose

In LNG race, itâ&#x20AC;&#x2122;s 16 B.C. vs. Oregon

29 Northern gateway is hiring

Snapshot: 18 Woodfibre LNG

31 Pipelines will bolster government coffers

jobs

Oilmen cap off winter 14 with hockey tourney

25 Dejour expands in Northeast B.C.

25 ALS Oil & Gas buys BMP Enterprises

Feds approve 4 10 more export permits Calendar 11 of events

22 Snapshot: Kitimat LNG

community

TransCanada submits 8 Coastal GasLink EA

projects

the charts

proposed lng site in kitsault, B.C.

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.

PIPELINE NEWS NORTH •

the charts

reporter@pipelinenewsnorth.ca

Alberta natural gas, daily average

Dec. 1 ($5.28) to April 1, 2014 ($3.35)

The NGX Alberta Market Price is a volume weighted average of prices for all delivered NG in a calendar month at the Alberta AB-NIT centre. Left, it peaked on Feb. 6 at $6.13/Gigajoule. Source: NGX

U.S. Henry Hub natural gas Left, the Henry Hub NG Spot Price (dollars per Million Btu) traded at $4.10 in the first week of December and began April at $4.39. It peaked on Feb. 17 at $6.24. Source: WSJ

B.C. could fast track tax, sees 3 FIDs by 2015 Matt Lamers Staff Writer

The final word on the anticipated LNG Income Tax, a levy on LNG exports that will fill the coffers of the provincial government, could come as early as summer, much sooner than the expected fall vote. In an interview with the Financial Post, Steve Carr, British Columbia’s deputy natural gas minister, said “the final decision is set for the fall legislature, but you can expect it earlier.” Meanwhile, Aboriginal Affairs and Reconciliation Minister John Rustad said he hopes to see three Final Investment Decisions by the end of 2015. Rustad is the MLA for Nechako

Lakes. Rustad would also like to see one FID by the end of this year or early next year. “My hope is that by the end of 2015, hopefully we’ll see three,” he added. In explaining the delays that some of the projects have experienced, Rustad acknowledged the scale and massive amount of money that is needed to get the projects off the ground. new: the pnn calendar

Don’t miss a thing: Go to Page 11 for a list of important industry events taking place over the next six months.

December 2013 to April 2014

Japan natural gas price The Japan LNG Import Price was trading at $15.70 MMBtu in the first week of April, down from $17 the previous month and down from $16.27 one year earlier. Source: World Bank

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March 2012 through February 2014

natural gas land auctions in b.c.

September 2013 through March 2014

Proceeds from oil and gas land auctions in B.C. had been steadily increasing in the past six months, with record sales per hectare in February. Net sales have cooled, but price per hectare is still red hot.

9995

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Spot oil price in Cushing, OK

September 2013 through March 2014

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The price of oil (USD/ barrel) has hovered around the $100 a barrel mark as economists weigh the health of the overall U.S. economy. Source: U.S. Energy Information Agency

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Conoco Phillips/MCT

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COVER STORY matt lamers photo

Pipeline News North analysed the proposed LNG projects on Canada’s West Coast to bring you the latest on those that are on track and the ones that face delays. Two projects in the American state of Oregon are also in the mix to liquefy and export gas from Canada. The proponents are presented in the order we expect them to make Final Investment Decisions. All dates are estimations unless otherwise stated.

courtesy photo

Pacific NorthWest LNG Final investment decision: 2014 Partners: Petronas, Japex, Petroleum Brunei, Indian Oil Corp Price tag: $11 billion Location: Land-based facility, Lelu Island, Prince Rupert Capacity: 19.68 million tonnes per year of LNG EA: Application submitted to EAO In-service date: 2018 Export license: Approved by NEB Pipeline: TransCanada’s Prince Rupert Gas Transmission Project Pipeline details and status: 48” diameter, 900 km, near Hudson’s Hope to Lelu Island. EA application submitted under BC EA. Source of natural gas: Progress’ holdings in North Montney

The proposed Pacific NorthWest LNG project would liquefy and export natural gas produced by Progress Energy Canada Ltd. in Northeast B.C. The $11 billion facility would be fed by TransCanada’s Prince Rupert Gas Transmission Project pipeline. Pacific NorthWest LNG has already arranged off-take agreements, making the project more economically feasible. Petronas is still seeking off-take partners. Latest On Feb. 28, 2014, Pacific NorthWest LNG filed its environmental impact statement with the Canadian Environmental Assessment Agency and B.C. Assessment Office. In March 2014, India’s state-run Indian Oil Corp. agreed to buy 1.2 million tonnes a year of LNG for at least 20 years, for a 10 per cent stake. Sinopec, China’s state-owned energy company, is reportedly interested in joining the project in an off-take arrangement. TransCanada is expected to file its Environmental Assessment application for the Prince Rupert Gas Transmission Project pipeline this month. Final Investment Decision A final investment decision is on track to be made in 2014, provided Petronas has the partners in place.

See LNG PROJECTS on PAGE 18

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BRIEFS

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reporter@pipelinenewsnorth.ca

Courtesy photo

courtesy photo

Spectra submits EA for WCC

TransCanada submits CGL EA

CEPA wants Industry Steering Committee on pipelines

MATT LAMERS

A major pipeline moved one step closer to reality in March. On March 21, Spectra Energy Corp. submitted its Environmental Assessment Certificate application to the BC Environmental Assessment Office (BC EAO) for the Westcoast Connector Gas Transmission Project. It is the culmination of three years of community engagement with First Nations and other impacted communities, and detailed scientific, heritage and research assignments. The pipeline 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 associated LNG project is Prince Rupert LNG, which is funded by BG Group. The 8,000-page application package includes some studies to assess baseline environmental and economic conditions, detailed descriptions of the project’s elements, as well as an analysis of the project’s benefits. “This marks a key milestone for our project, and a step towards growing new markets for B.C.’s abundant natural gas supplies,” said president of Spectra Energy’s Canadian LNG business, Doug Bloom. Service of the initial natural gas pipeline is expectåed to commence by 2020, pending an affirmative Final Investment Decision by BG Group.

Marking a significant step forward, Coastal GasLink Pipeline Ltd. submitted an application for an Environmental Assessment Certificate on March 12 to the B.C. Environmental Assessment Office (EAO). The 7,200-page application sets in motion a 180-day public review period during which the public is provided a second opportunity to submit input on the project. The EAO held open houses on March 27 at the Chetwynd Recreational Centre, April 1 at the Fraser Lake Rec Complex, April 2 at the Burns Lake Heritage Centre, and April 3 at the Riverlodge Recreational Centre in Kitimat. The 45-day public comment period runs from through May 4, 2014, after which the EAO prepares a report based on its review of the application and input from the public before it submits recommendations to the government. At 48 inches in diameter, the Coastal GasLink Pipeline would be one of the largest pipelines in Canada. The 650-kilometre pipeline would begin 40 kilometres west of Dawson Creek and conclude near Kitimat. It will be capable of moving five billion cubic feet (bcf ) per day of gas with six compressor stations. The Coastal GasLink Pipeline will feed the proposed LNG Canada natural gas export terminal near kitimat, which will be operated by Shell (U.S.), PetroChina (China), Mitsubishi (Japan) and Kogas (Korea). The application is available for review on the BC EAO website (www.eao.gov.bc.ca) and at libraries in the project area.

Staff Writer

As a first step in creating a “world-leading” spill preparedness and response regime, the Canadian Energy Pipeline Association has called for the creation of an Industry Steering Committee to study the issue. With government’s support, industry is prepared to have a fully functional ISC system in place by the end of 2014. The purpose and role of such a committee is the implementation of state-of-the-art land-based spill and response capacity in British Columbia. The new system would incorporate current systems and organizations. The report “World-leading land

based spill preparedness and Response in British Columbia” was published by the Canadian Energy Pipeline Association and the Railway Association of Canada on March 17. “As a starting point, we believe that the establishment of an Industry Steering Committee (ISC) would fully and most expeditiously meet the MOE Guiding Principles and Ministry Intentions,” it reads. See PIPELINES on PAGE 24 look for pnn on twitter For news that can’t wait, follow us on Twitter, @pipelineNN.

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Feds approve

more export permits ‘World energy demand is on the rise, and Canada has the unprecedented energy supply to meet that demand.’ — Greg Rickford, Canada’s minister of natural resources

Matt lamers Staff Writer

Noting rising demand for energy around the world and Canada’s abundance of natural gas, Greg Rickford, Canada’s minister of natural resources, gave the green light to four liquefied natural gas projects. “World energy demand is on the rise, and Canada has the unprecedented energy supply to meet that demand,” he said in a statement. On March 26, Rickford

Applications to export LNG

approved export licenses for Pacific NorthWest LNG, Prince Rupert LNG, WCC LNG and Woodfibre LNG totalling some 73.38 million tonnes of LNG annually. Rickford took his position on March 20 as minister of natural resources as a “staunch advocate” for Canada’s natural resources, vowing to create thousands of jobs in the sector. “We will continue to promote Canadian natural resources in new and emerging energy markets, ensure world-class environmental protection and secure Canada’s place as a 21st-century

resource superpower,” he said after his appointment. So far the federal government has approved eight plans to export natural gas from Western Canada. Five more projects await a decision by the National Energy Board before they will be presented to Rickford for a final decision at the federal level. Two of the projects involve piping Canadian gas into the United States for liquefaction and export. Premier Christy Clark welcomed the approvals.

Projects that have not applied yet Steelhead LNG is planning to file for a permit to export LNG from B.C. coast by the fall. As of March 2014, they have not identified a site. Pending long-term export decisions On March 5, 2014, Canada Stewart Energy Group Ltd. applied for a permit to export 30 MMt of natural gas per month for a period of 25 years from a liquefaction terminal to be located near Stewart, about 300 km north of Prince Rupert. On Jan. 13, 2014, Oregon LNG Marketing Company applied for a 25-year license to export 473 Bcf of natural gas to the U.S., where it will be liquefied and shipped to Asia. On Dec. 18, 2013 Kitsault Energy Ltd. applied for a

“British Columbia’s vision to become a global leader in clean energy supply is showing greater momentum, with the government of Canada approving four long-term liquefied natural gas (LNG) export licenses,” she said. “Our long and safe history of producing natural gas has opened the door to an unprecedented and transformative economic opportunity. Building an LNG industry is part of our longterm plan to grow the economy, and create more opportunities both today and for generations to come.”

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. On Nov. 29, 2013 Aurora Liquefied Natural Gas Ltd. applied to the National Energy Board to ship 24 million tonnes of LNG per year from the coast of British Columbia for a term of 25 years. On Oct. 29, 2013 Triton LNG Limited Partnership applied for a 25-year permit to export 2.3 million tonnes of liquefied natural gas per year from a floating liquefied natural gas processing plant.

See PERMITS on PAGE 11

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calendar May 10 South Peace Oilmen’s Assoc.’s Lobsterfest is held the day before Mother’s Day annually. http://dawsoncreekoilandgas.com May 21 The LNG in BC Conference will be held on May 21 at the Vancouver Convention Centre. www.lnginbc-register.ca/register June 4-7 The Fort Nelson Petroleum Association will hold its 52nd Golf Tournament this June.

www.fsjpetroleumassociation.com July 12 A River Boat Trip will be held by the South Peace Oilmen’s Association. http://dawsoncreekoilandgas.com June 21 The South Peace Oilmen’s Association’s annual Golf Tournament is being held in June. http://dawsoncreekoilandgas.com

Long-term export approvals On Feb. 20, 2014 Jordan Cove LNG L.P. was granted approval by the NEB to export 9 million tonnes of gas per year to the U.S. for a term of 25 years, where it will be liquefied and shipped to Asia.

On Oct. 13, 2011, 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 license issued by the NEB since the deregulation of the natural gas market in 1985.

On Dec. 16, 2013, WCC LNG was granted a license to export 30 million tonnes of LNG per year for a term of 25 years. On Dec. 16, 2013, Woodfibre LNG Export Pte. Ltd. earned a license to export 2.1 million tonnes of LNG

Sept. 30-Oct.1 BC Oil & Gas Conference will be held in Fort Nelson at the end of September. northernrockies.ca/EN/quicklinks/ bcogc.html

Oct. 22-25 The Fort Nelson Petroleum Asso-

per year for 25 years.

On Dec. 16, 2013, Pacific NorthWest LNG received permission from the NEB to export 19.68 million tonnes of LNG per year.

Sept. 16-18 The Canada LNG Export Conference will he held on Sept 16-18 at the Calgary Convention Centre

www.canadalngexport.com

Aug. 20-23 The Fort Nelson Petroleum Association is holding its annual Golf Tournament in August. fortnelson petroleumassociation.com

PERMITS from PAGE 10

On Dec. 16, 2013, Prince Rupert LNG Exports Limited was granted a license to export 21.6 million tonnes of per year for a term of 25 years.

ciation is holding it next Hockey Tournament in October. fortnel sonpetroleumassociation.com

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 will 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.

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April 14 The next First Nation LNG Summit is being held in Fort Nelson on April 14. http://fnlngstrategy.ca

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Pacific NorthWest LNG, which will be situated near the picturesque community of Prince Rupert, could make a decision on its final investment by the end of this year. Sam beebe photo

PACIFIC NORTHWEST IN HOMESTRETCH The public comment period for the massive Pacific NorthWest LNG project that has been proposed for Lelu Island, near Prince Rupert, runs from April 2 to May 1. Matt lamers Staff Writer

A public comment period for the Pacific NorthWest LNG Project is taking place from April 2 to May 1. The Canadian Environmental Assessment Agency is conducting a federal environmental assessment on the proposed project’s Environmental Impact Statement (EIS). See related story on Page 27. Pacific NorthWest LNG is subject to review under both CEAA 2012 and British Columbia’s Environmental Assessment Act and is undergoing a coordinated environmental assessment process with B.C.’s Environmental Assessment Office (EAO). Comments can either be submitted to the EAO or the CEAA. Following this comment period, the CEAA will prepare a draft Environmental Assessment Report,

in which it sets out its recommendations regarding the potential environmental effects, proposed mitigation measures, and the significance of any remaining adverse environmental effects. Another public comment period will be held for the project, this time on the draft Environmental Assessment Report, after it’s concluded. Progress Energy Canada would produce the gas in Northeast B.C. The $11 billion facility would be fed by TransCanada’s Prince Rupert Gas Transmission Project pipeline. Pacific NorthWest LNG has already arranged off-take agreements, making the project more economically feasible. It is thought to have pulled ahead of other projects in the race to export B.C.’s LNG, in part because of Petronas’ success in bringing in off-take partners. The proponent hopes to make a Final Investment Decision by the end of the year.

Sinopec considers Pacific NorthWest LNG China Petroleum & Chemical Corp (Sinopec) is reportedly interested in signing a long-term deal to buy some of Canada’s natural gas. The state-owned energy company is in talks with Malaysia’s Petronas to buy into the latter’s liquefied natural gas project at Lelu Island, near Prince Rupert. Pacific NorthWest LNG has three off-take partners. In March, Petronas sold a 10 per cent stake to Indian Oil Corp. Ltd. It also sold stakes to Japan Petroleum Exploration (10 percent) and Petroleum Brunei (3 per cent). Reuters reported that Sinopec is looking to buy a 15 per cent stake in the proposed project. The March 18 article said the information came from “three sources with knowledge of the matter.” Petronas has a 77 per cent stake in the project. Pacific NorthWest LNG is thought to have pulled ahead of other projects in the race to export B.C.’s LNG, in part because of Petronas’ success in bringing in off-take partners.

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Oilmen cap off winter with hockey tourney

10 teams and more than 100 people participated in the Annual Fort St. John Oilmen hockey title. The tournament was at capacity for the 11th straight year. Matt lamers Staff Writer

When Brad Campbell signed up for his 11th -straight Fort St. John Oilmen’s 4 on 4 Hockey Tournament, he knew what he was in for. “It’s good for work. It’s good for networking,” said the 38-year-old. “For work alone, you get so many new connections you never would have got if you came to a normal hockey tournament.” The biggest element is socializing, added the native of Fort St. John. “You get to meet so many new people,” he said. “Every year you get to play with a new team, so that’s the best part. The social element — guys that you see around town who you don’t know, you get to know their names this weekend.” See Page 11 for more events.

More than 100 people turned out for the 11th Annual Fort St. John Oilmen’s 4 on 4 Hockey Tournament at the North Peace Rec Center. Ten teams contended for the title this year. Matt Lamers photos

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For information on Membership

The April 2-5 tournament brought 110 people to the North Peace Rec Center. The hockey tournament was founded 11 years ago to try to entice younger oilmen to become members of the association. “It’s a sport for younger people,” said Lee Hartman, chairman of the organizing committee. “We knew years ago that we’d be running out of members if we didn’t do something for the younger membership to join and become involved.” The hockey tournament is foremost a social event, he added. “Some people come from out of province, although it’s mostly local people. It’s guys who don’t get to see each other regularly during the working day. They get to spend some time together, talk about their businesses and how they’re doing, and lots of conversations happen by people who don’t see each other through work.” Aaron Powell, from Dawson Creek, has played in the last five tournaments. “This isn’t just about hockey,” he said. “Hockey’s secondary. It’s more about hanging out with the guys, having a good time. Powell’s team, sponsored by Ditmarsia Holdings, won the title this year.

PIPELINE NEWS NORTH •

community

Ditmarsia Holdings won the 11th Annual Fort St. John Oilmen’s 4 on 4 Hockey Tournament. Matt Lamers photos

Blake Bowyer, Trevor Gould and Lorne Weiler. “I think getting together, playing four-onfour, no whistles and not knowing what team you’re going to be on is very interesting. It’s just a bunch of good guys having fun.” David Smith said the foundation of the tournament is camaraderie with peers. “The guys you work with and socialize with year-round. Building connections for work,

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friendships and having a good time with a lot of new friends every year.” Smith has played in nine of 11 tournaments. “It’s a 24-7 community. We don’t get a lot of time away from work and our jobs, so to have something like this gives the guys a chance to network and come together. It’s something we all dedicate our time to support,” said the Fort St. John resident.

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“It’s perfect. For businesses, you get to meet new people you don’t always get to meet. You play on a hockey team, and you can make 10 or 11 new friends. It’s my fifth time and I’ve played with different guys every time.” The Annual Fort St. John Oilmen’s 4 on 4 HockeyTournament included door prizes and breakfasts, and at least five games for participants. Cory Cross, a former NHL player, was a special guest this year. Previous years brought out Bryan Trottier (New York Islanders, Pittsburgh Penguins), Bob Bourne (New York Islanders, Los Angeles Kings), Ron Flockhart (Philadelphia Flyers, St. Louis Blues), Todd Simpson (5 NHL teams) and Lanny McDonald, who’s come to six of 11 events. Hartman credited the organizing committee for its huge effort in arranging a tournament of this size, and the sponsors for their support. “The sponsorship is fantastic,” he said. “Companies don’t hesitate to jump on board with this event. We have 10 main team sponsors, two division sponsors and many function sponsors for the stag, suppers and registration night. Too many sponsors to list.” The hardest part, he said, was getting players to sign up early. Although the tournament has been full all 11 years it has happened, it tends to take longer than the other Fort St. John Oilmen’s Association events to fill up. “It always seems like we’re waiting for two or three weeks for the event to fill up. It would be nice to have the guys jump on board, but everyone’s busy so they can’t commit to playing right away,” said Hartman, who’s been the hockey tournament’s chairman all 11 years. “It takes a while for guys to determine if they can make it, depending on spring break, family stuff, work stuff, so it takes a little longer than the golf tournament.” The 10-person committee also involves

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B.C. vs. courtesy photo

If the Jordan Cove Energy Project has its way, the race to export Canada’s natural gas to Asia might be won in the United States. Two projects in Oregon are within a year of making FIDs. Their plan is to import gas from Western Canada, liquefy it, and ship it overseas. Matt lamers Staff Writer

As mega-projects in Kitimat and Prince Rupert have started to slip, south-Oregon based Jordan Cove Energy is sticking to its in-service date of H1 2019 and Final Investment Decision by the first quarter of next year. Its natural gas would come from the Western Canadian Basin and the

U.S. Rockies. Although Pacific NorthWest LNG says it’s still on track to make a Final Investment Decision on its $11 billion project by the end of this year, other projects have stalled as they compete to lock up buyers for their liquefied natural gas and await British Columbia’s final LNG Income Tax decision. Two American projects, the $6.8 billion Jordan Cove Energy Project and the $6 billion Oregon LNG Mar-

keting Company, are vying to export gas that is produced in British Columbia and Alberta. In an interview with Pipeline News North, Bern Wadey, vice president of Jordan Cove LNG, said Oregon possesses a number of advantages over British Columbia. Topping that list, he said, is a diversified gas supply and an established network of pipelines. “Jordan Cove really hits the high notes on gas supply accessibility,

use of existing pipeline and the distance to ship LNG from Coose Bay in Southern Oregon to the primary consuming markets in the Asia Pacific area,” he said. The 450-kilometre Pacific Connector Gas Pipeline still needs to be built between the Oregon trading hub and Coose Bay, where Jordan Cove Energy Project will be located. Jordan Cove has its export approvals from Canadian and American regulators.

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pipeline interview The project is looking to receive a Federal Energy Regulatory Commission (FERC) certificate to show Jordan Cove passes environmental and safety scrutiny in the third quarter of this year. That would essentially clear it of all regulatory hurdles. Following is the rest of our conversation. Some have said that LNG projects in Oregon could emerge as leaders to export natural gas produced in B.C. and Alberta. Do you share that sentiment? We do believe that the Western Canadian projects will probably come in at a later time frame than Jordan Cove LNG. We are still looking for a first-second quarter of 2019 as an in-service date. I suspect you’re probably right that we’re going to be in service in advance of some of the Western Canadian projects who are starting to announce some delays. Jordan Cove is a very competitive facility for Western Canadian gas to flow through, and we use existing pipeline transportation that feeds out of Alberta and down through the trading hub in southern Oregon. There are only so many buyers for LNG in Asia. What advantages do you see in liquefying and shipping natural gas from Oregon, as opposed to B.C.? I think that Jordan Cove will be very attractive to market consumption in the Asia-Pacific region. Jordan Cove provides a number of advantages. It’s a diversified gas supply and the use of primarily existing pipelines. No. 1 is we’re sourcing gas supply from the entire Western Canadian basin and the U.S. Rockies. Those two areas are real powerhouses of natural gas supply

in North America. The reason Jordan Cove is unique is because [of] the existing pipeline system that feeds toward Southern Oregon from both Canada and the U.S. Rockies. That existing natural gas pipeline system that brings the gas to southern Oregon is one of the key features of Jordan Cove. We also have a unique location on the West Coast in the United States. We’re in a mild-weather area, which is very favourable for logistics of construction of these facilities. The distance from Oregon to some of the markets in the Asia Pacific Region of course is one of the significant advantages over the Gulf Coast [LNG] projects. When do you expect to have a Federal Energy Regulatory Commission (FERC) certificate to show

Jordan Cove passes environmental and safety scrutiny? The typical approval takes 12-18 months. We’re expecting our Draft Environmental Impact Statement likely in May. Then the procedural timeline that follows that is, we’re looking to probably receive our FERC authorizations for construction for both the pipeline and the terminal in the third quarter of this year. Can you share any details about the off-take agreements you’re working on? We’re working with a number of highly qualified prospective customers who will hold the capacity of Jordan Cove. We’re working through those agreements now. [He wouldn’t divulge any more details, such as

‘I suspect you’re probably right that we’re going to be in service in advance of some of the Western Canadian projects who are starting to announce some delays.’ – Bern Wadey, vice president of Jordan Cove LNG

Anne Hornyak photo

country of destination.] What still has to happen to make your project a success? The regulatory approvals are coming together for us. We’re very happy with our DOE authorization for export to non-FTA countries. We also have our FTA country approvals in place. We have authorization to export natural gas from Canada into the U.S. We’ve also received authorization to import that natural gas into the U.S. from the DOE. And of course, the last link of the chain for export was FTA approval [approval to export LNG to countries that the U.S. has free trade deals with], which came just last week [late March 2014]. Can you share any details about your engineering work? We have essentially completed our Front End Engineering Work, because that amount of engineering work is required for the FERC filings. We’re going to be working on additional engineering work prior to FID. We’ve done substantial engineering work, but there’s your final EPC contract that comes into play prior to your FID that’s under way. You touched upon project financing. Where are you with that? Of course we are working out project financing activities. We’re working through that process right now. Of course it’s tied into the realm of customers we’re working with, so it lags, but we’re initiating some work to ensure that this project goes very well through the project financing process. We expect to have two to three customers at our facility to make up the six million tonnes [of LNG shipments per year].

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LNG PROJECTS from PAGE 7

Woodfibre LNG Export Pte. Ltd. Final investment decision: Autumn 2014 Partners: Pacific Oil & Gas Price tag: $1.7 billion Location: Squamish, B.C. Capacity: Export 2.1 million tonnes of LNG per year EA: Woodfibre LNG filed a Project Description with the CEAA and BCEAO In-service date: 2017 Export license: Received license last December Pipeline: Existing FortisBC gas pipeline will be expanded

The Woodfibre LNG Project is a proposed small-scale LNG processing and export facility located near Squamish, B.C. The facility would be built at an existing industrial site, the former Woodfibre pulp mill, which the proponent says is suited for conversion into an LNG facility. The site has access to power and an existing natural gas pipeline. Woodfibre LNG is the Canadian subsidiary of Pacific Oil & Gas, an 11-year-old energy company based in Singapore and Jakarta that has the backing of Indonesian billionaire Sukanto Tanoto. Latest On Dec. 16, 2013, Woodfibre LNG Export Pte. Ltd. earned a license to export 2.1 million tonnes of LNG per year for 25 years. Currently Woodfibre LNG is acquiring a site from Western Forest Products that is subject to the completion of remediation of the site (e.g. dredging, removal of asbestos) and the issuance of a Certificate of Compliance from the Ministry of Environment. In November 2013, Woodfibre LNG filed a Project Description with the Canadian Environmental Assessment Agency and the B.C. Environmental Assessment Office to initiate the environmental assessment process. On Feb. 19, the BCEAO request for substitution of the environmental assessment process was accepted by the minister of the environment. Final Investment Decision In March 2014, Pacific Oil & Gas president Ratnesh Bedi said a “soft” FID is coming in the fall of 2014.

Stewart Energy LNG Final investment decision: 2014 Partners: Canada Stewart Energy Group Ltd. Location: Floating and land-based facilities, Stewart Capacity: Targeting annual capacity of five million tonnes EA: N/A In-service date: 2017 Export license: application submitted March Pipeline: N/A

Stewart is a small community about 300 km north of Prince Rupert that was put on the LNG map when Canada Stewart Energy Group Ltd. proposed establishing an LNG liquefaction and export facility there in March 2014. Without providing details, Stewart Energy said in a regulatory filing that it has signed off-take agreements with energy groups in two major Chinese cities. It also said there are plans for an 800-kilometre pipeline to transport natural gas to Stewart, although no details have been announced. Latest On March 5, 2014, Canada Stewart Energy Group Ltd. applied for a permit to export 30 MMt of natural gas per month for a period of 25 years from a liquefaction terminal. Final Investment Decision Stewart Energy LNG says it hopes to be in service in 2017, and will make a Final Investment Decision in 2014.

Oregon LNG Final investment decision: Q1 2015 Partners: Backed 80% by Leucadia National Corp. Location: Warrenton, Oregon Price tag: $6 billion Capacity: Up to 9 million metric tons of LNG per year EA: Draft Environmental Impact Statement to be issued in 2014 In-service date: Early 2019 Export license: Applied to Canada’s NEB, seeks approval from DOE in U.S.

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cover story This project began in 2004 as an LNG import facility. Changing economics has allowed it to change gears to become an export and liquefaction facility. Most of the gas would be produced in Canada. Latest On Jan. 13, 2014, Oregon LNG Marketing Company applied for a 25-year license to export 473 Bcf of natural gas to the U.S. per year, where it will be liquefied and shipped to Asia. The two proposed LNG terminals in Oregon are next in line to be vetted by federal regulators. Oregon LNG is on schedule to export Canadian supplies through its terminal by 2019, said its CEO. Final Investment Decision With construction slated to begin in 2015, a Final Investment Decision is due by the end of 2014 or early 2015.

Jordan Cove Energy Project Final investment decision: Q1 2015 Partners: Jordan Cove Energy Project L.P., Veresen Inc. Price tag: $6.8 billion Location: Coose Bay, Oregon Capacity: Liquefaction capacity of 6 million metric tons per year EA: FERC permit expected in Q3 2014 Export license: Has permits from Canada’s NEB, DOE in U.S. Pipeline: Alberta Ethane Gathering System, Alliance Pipeline, Pacific Connector Gas Pipeline (450 km, proposed) Source of natural gas: Aux Sable Canada (owned by Enbridge and Veresen), via Encana and Phoenix Duvernay Gas (JV participant of Encana)

Located in Coos Bay, Oregon, the facility will produce up to six million tons of LNG per year for export. The facility is owned and will be operated by Veresen Inc. Jordan Cove has proposed building a 400 km Pacific Connector pipeline through southern Oregon. Latest On Feb. 20, 2014 Jordan Cove LNG L.P. was granted approval by the NEB to export 9 million tonnes of gas per year from Western Canada to the United States for a term of 25 years. In August 2013, Black & Veatch and Kiewit completed the front-end engineering and design (FEED) work and pre-construction planning activities for the Jordan Cove Liquefaction Project. The U.S. Department of Energy gave export approval in March 2014. In June 2013, the Oregon International Port of Coose Bay and Jordan Cove Energy Project L.P. (JCEP) submitted applications for permits required to construct the marine facilities and LNG liquefaction facilities. The Federal Energy Regulatory Commission (FERC) application was submitted by JCEP earlier. FERC permit approval is expected in the 3rd quarter of 2014. The Financial Post reported it has secured heads of agreements with three unnamed Asian buyers. Final Investment Decision Veresen is expected to make a Final Investment Decision by the first quarter of 2015, a vice president told PNN.

LNG Canada Gas Final investment decision: 2015 Partners: Joint venture Shell Canada Ltd., Korea Gas Corporation (KOGAS), Mitsubishi Corporation and PetroChina Company Limited Location: Land-based facility, Kitimat EA: Application Information Requirements approved by BCEAO In-service date: 2018 Export license: Approved by NEB for 24 million tonnes of LNG per year Pipeline: TransCanada’s Coastal GasLink Pipeline Ltd. Pipeline details and status: 48” diameter, 650 km, near Dawson Creek to Kitimat. EA application submitted

Announced in 2012, LNG Canada proposes building an LNG export terminal, including marine facilities, facilities for storage and a gas liquefaction plant. This project is has the support of backers with deep pockets. Latest On Feb. 24, 2014, the British Columbia Environmental Assessment Office approved LNG Canada’s Application Information Requirements. The document identifies the information required in its application for an Environmental Assessment Certificate under the BC Environmental Assessment Act. By the end of 2014, LNG Canada is scheduled to submit its application for an Environmental Assessment Certificate. It will also select the Engineering Procurement Construction Management contractor. See LNG PROJECTS on PAGE 20

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LNG PROJECTS from PAGE 19 Final Investment Decision Shell has expressed concern over B.C.’s LNG Income Tax rate of 7 per cent, while Japan has also expressed disproval. Officially the target is still 2015 for an FID.

Triton LNG Final investment decision: 2015 Partners: AltaGas Ltd, Idemitsu Kosan Location: Floating facility, Kitimat or Prince Rupert Capacity: 2.3 million tonnes of LNG per year In-service date: 2017 Export license: Application submitted in October 2013 for 2.3 million tons of LNG per year Pipeline: PNG’s Looping Project Pipeline details and status: 24” diameter, 525 km, Summit Lake to Kitimat. Pre-application under BC EA.

AltaGas Ltd. and Idemitsu Kosan are doing preliminary work for the design and construction of a floating LNG facility that would either be placed in the vicinity of Kitimat or Prince Rupert. “The LNG production will be offloaded from the FLSO vessel through a loading arm to LNG carriers for transport to export markets,” according to the application to the NEB. Latest On Oct. 29, 2013 Triton LNG Limited Partnership (Triton LNG), a subsidiary of AIJVLP, filed an application with the National Energy Board for approval to export up to 2.3 million tonnes of LNG per year. Triton has said that it expects a decision by Q3 2014. Triton LNG has also said that it is preparing preliminary engineering designs for the construction of the liquefaction facilities and is considering potential locations. Final Investment Decision To meet the target in-service date of 2017, a final investment decision would have to be made sometime in 2015.

Kitsault Energy Final investment decision: 2015 Partners: N/A Location: Floating and possibly land-based facilities, Kitsault EA: N/A In-service date: 2018 Export license: Applied December 2013 for 20 MTA Pipeline: N/A

The Kitsault Energy project is unique in that it proposes turning an abandoned village near British Columbia’s border with Alaska into a massive LNG export hub. The company says an export terminal at Kitsault will require the shortest natural gas pipeline for the projects currently proposed in the region, saving 100 to 300 kilometers for a cost savings of up to $3 billion. Kitsault also has infrastructure ready: About 90 empty houses, 150 condos for some 1,000 residents, along with a recreation center, medical clinic, shopping center, post office, bank, restaurants and a supermarket. Latest On Dec. 18, 2013 Kitsault Energy Ltd. applied for a permit to export up to 20 million tons of liquefied natural gas per year for a term of 25 years. Kitsault Energy has begun contacting engineering firms, energy producers, First Nations communities as well as local, regional, provincial and federal government officials. Final Investment Decision Sales contracts and regulatory work has to be completed. No environmental assessments have been conducted, although the site was once home to a major mining operation, meaning an EA process might not take as long. It’s too early to put a timeline on a Final Investment Decision, although company officials have said they want an in-service date of 2018. An FID would have to be made in 2015.

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cover story Aurora LNG Final investment decision: About 2016 Partners: Nexen (CNOOC), INPEX, JGC Corporation Location: Land-based facility, Grassy Point, near Kitimat Capacity: Applied to ship 24 million tonnes of LNG per year EA: Responded to Request for Expression of Interest from province in 2013 In-service date: 2021, according to Chinese newspaper Caixin Export license: Applied to ship 24 million tonnes of LNG per year Pipeline: N/A Source of natural gas: Nexen assets in Horn River and Cordova basins

Nexen (CNOOC) controls 60 percent of a venture, while its Japanese partners, Inpex Corp and JGC Corp., control the rest. Having a major international investor like CNOOC is seen as a major advantage for Aurora LNG. CNOOC controls most of China’s LNG imports — 70 percent in 2012. Nexen says that third-party evaluators estimated its joint venture lands in Horn River and Cordova basins near Fort Nelson hold between four trillion and 15 trillion cubic feet of recoverable contingent resources, and that the Liard joint venture lands contain an estimated five to 23 trillion cubic feet of prospective resources. CNOOC has set a production goal of 40 million tonnes annually by 2020, meaning Nexen’s resources in Northeast B.C. could play a key role in meeting its targets. So far nine coastal LNG receiving stations have been built in China and another 11, including six controlled by CNOOC, are either planned or are under construction. CNOOC bought Nexen in 2013 for $15.1 billion. Latest In November 2013, Aurora LNG agreed to pay $12 million to the province and another $12 million one year later for the exclusive right to develop 614.9 hectares of land on the northern part of Grassy Point, near Kitimat. On Nov. 29, 2013 Aurora Liquefied Natural Gas Ltd. applied to the National Energy Board to ship 24 million tonnes of LNG per year from the coast of British Columbia for a term of 25 years. The project is undergoing an environmental impact assessment. Nexen says it expects to engage in “comprehensive consultation” with First Nations and stakeholders in the next few years. Final Investment Decision A Final Investment Decision can’t be made until the proponent secures more off-take agreements and acquires the requisite environmental permits. Post-2015 is a reasonable timeframe for an FID.

Prince Rupert LNG Final investment decision: About 2017 Price tag: $16 billion Partners: BG Group Location: Land-based facility, Ridley Island, Prince Rupert Capacity: 21.6 million tones per year of LNG EA: Comments collected on Draft Application Information Requirements In-service date: Had planned 2020, but moved to “about 2022” Export license: Approved by NEB for 21.6 MTA Pipeline: Spectra/BG Group’s Westcoast Connector Gas Transmission Project Pipeline details and status: 36”- 48” diameter, 870 km, up to 2 pipelines. Cypress to Ridley Island. Application Information Requirements approved by BCEAO in Sept. 2013. Proponent must provide info by Sept/2016.

BG Group’s LNG facility on Ridley Island will be one of the biggest on the West Coast if it is built. The plan so far is to construct the facility overseas in modules and ship it to Prince Rupert for assembly. The facility will be supplied by gas produced in Northeast B.C., and piped to the facility via Spectra’s Westcoast Connector Gas Transmission Project. Latest On March 7, 2014 the draft Application Information Requirements (AIR) was submitted to the BCEAO. It will identify the information that is required in its application for an Environmental Assessment Certificate. Public comments were collected March 24 to April 22. On March 21, 2014 Spectra filed for its environmental assessment certificate for the 850km pipeline. Final investment decision Roger Ayton, director of investment appraisals at BG’s North American unit, told Financial Post in February that FID “may be slipping a bit. Realistically we’re looking at about 2017.”

See LNG PROJECTS on PAGE 22

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LNG PROJECTS from PAGE 21

Kitimat LNG (KM LNG) Final investment decision: Later this decade Partners: Chevron/Apache 50/50 equity Location: Land-based facility, Bish Cove, Kitimat EA: Complete under BC EA (2008) Export license: Approved by NEB for 10 MTA Pipeline: Pacific Trails Pipeline Pipeline details and status: 42” diameter, 462 km, Summit Lake to Kitimat, public comment period held on EA certificate amendment: Feb 21-Mar 22, 2014 Source of natural gas: Chevron/Apache holdings in Horn River, Liard gas basins

Latest Kitimat LNG is currently in the Front End Engineering and Design (FEED) phase. In January 2014, JGC/ Fluor was awarded the engineering, procurement and construction contract. Apache is looking to sell a stake in the project because it doesn’t want to spend up to $1 billion in 2014 related to front-end engineering and design for the LNG export terminal. The project has all major provincial and federal environmental approvals in place. Fifteen First Nations have signed on to the project. The proposed facility would be built on land leased from the Haisla Nation. The facility will include two liquefaction trains to cool gas to a liquid state. Final Investment Decision The companies say a FID will require firm LNG sales agreements and more agreements with First Nations.

WCC LNG Final investment decision: N/A Partners: Imperial Oil/Exxon Mobil Location: N/A EA: N/A Export license: Approved by NEB for 30 MTA Pipeline: N/A

Exxon, the world’s largest energy company, and its Canadian subsidiary, Imperial Oil, have proposed to develop an LNG project under a venture known as WCC LNG Ltd. Judging by the export permit regulatory filings, this is a massive project. However, very little has been made public by the proponents. Latest On Dec. 16, 2013, WCC LNG was granted a license to export 30 million tonnes of LNG per year for a term of 25 years. The permit was approved by the federal government in March 2014. No environmental permits have been applied for as of March 2014 and no location has been secured. Final Investment Decision There is no definitive timeline. An Imperial Oil spokesperson said: “We’re a fair ways away from an investment decision. We’ll make that decision after we get government regulatory approvals and determine contracts and relationships with customers and suppliers and a variety of other factors.”

No name Final investment decision: N/A Partners: Woodside Petroleum Ltd. Location: South site of Grassy Point, Kitimat EA: N/A In-service date: N/A Export license: Has 1 year to obtain license Pipeline: N/A

Not much is know about this project, its partners, the pipeline or where exactly the natural gas will be produced, although clearly it will come from Northeast B.C. Woodside has until January 2015 to obtain an export license. Latest On Jan. 16, 2014, Woodside Petroleum Ltd. of Australia won the right to acquire 693 hectares of land at the south site of Grassy Point, near Kitimat. Woodside agreed to pay the province $17 million as a potential down payment, Final Investment Decision This project is barely off the ground and a Final Investment Decision won’t come until later this decade.

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cover story Steelhead LNG Final investment decision: N/A Partners: N/A Location: N/A Capacity: N/A EA: N/A In-service date: N/A Export license: N/A Pipeline: N/A

This Vancouver-headquartered LNG project was announced in March 2014, but not much else has been unveiled. They do not have a site and no official partners in Asia have been announced. The export license will be applied for “soon.” Latest On March 18, Steelhead LNG appointed former B.C. Attorney General Geoff Plant as a member of its board of directors. Also in March, the company’s executive went to Korea to participate in Gastech 2014, a natural gas conference and exhibition that is held every 18 months. Final Investment Decision Steelhead LNG has no timeline when it will make public its Final Investment Decision. It will probably happen later this decade.

Douglas Channel LNG Final investment decision: Was expected in 2014. Delayed. Partners: BC LNG Export Cooperative, Haisla Nation, LNG Partners Price tag: $500 million Location: Floating facility, Kitimat EA: Not required In-service date: Was expected in 2015. Delayed. Export license: approved by NEB for 1.8 MTA Pipeline: PNG’s existing pipeline and proposed PNG Looping Project Pipeline details: 10” diameter, Summit Lake to Kitimat.

This small-scale, $500 million project was once thought to be the front-runner to make a Final Investment Decision and begin exporting LNG. However, insolvency filings in British Columbia by LNG Partners LLC last October put the project in limbo. Original plans had construction beginning this year. Latest In March, the Financial Post reported that the project could be split into two. A deal was in the works whereby Calgary-based AltaGas would partner with Antwerp, Belgium-based Exmar NV and EDF Trading Ltd., a gas marketer. The other project would be led by the Haisla First Nation and Golar LNG Ltd., a Bermuda-based LNG shipper. No further details have been publicly released. Final Investment Decision Was expected in 2014. Delayed.

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PIPELINES from PAGE 8 The committee would provide regulators and stakeholders a means for coordination and communication, “and would ensure effective and sustainable land oil spill prevention, preparedness, response and recovery, while con tinuing to allow individual companies to address their specific risks.” The next step includes drafting a detailed mandate and

Terms of Reference, as well as working with the different branches of government to work out exactly what role the province and federal govrnment would take and how the mechanism will receive its funding. The report called for adoption of a subscription model. Incident response, it said, should continue to remain with the operator and not with the ISC.

isc duties would include • Credible technical advice to government on response priorities, objectives and actions in concert with current regulations • Data management and quality assurance • Strategic management and coordination of resources • Continuous improvement and sustainability • Government engagement and participation • Aboriginal participation • Potential incremental capacity support — Needs assessment — Enhanced capacity and gap closure plans — Area plans development — Joint exercises — Lessons learned

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Progress purchases 127,000 acres in Montney from Talisman Energy Matt Lamers Staff Writer

Progress, already the biggest driller in British Columbia, expanded its position in the province in March. Matt Lamers Photo

Progress Energy Canada Ltd. picked up 127,000 net acres in the Montney position from Talisman Energy Inc. The deal, which closed on March 12, is worth $1.5 billion. Progress was already one of the largest gas producers in Northeast British Columbia, and this acquisition will bolster its position in one of the most promising natural gas plays in the world. The region is estimated to be home to a volume of natural has equivalent to Lake Superior. Progress is the largest driller in B.C. and has 25

rigs in the North Montney area. The deal with Talisman was originally announced in November of last year. Hal Kvisle, president and CEO of Talisman, said the company has generated $2 billion in dispositions within the last year, and will continue with that strategy in the coming months, he said. “During the next 18 months, we will continue to focus our portfolio and aim to divest a further $2 billion of long dated, capital intensive assets. We will use proceeds from dispositions to maintain a strong balance sheet,” Kvisle added.

However, Talisman is not throwing in the towel on its extensive Montney positions. The company retained 48,000 net acres through its Groundbirch and Saturn assets. Progress is a natural gas exploration and production that is headquartered in Calgary, Alberta. On Dec. 7, 2012, Petronas Carigali Canada acquired Progress Energy for $5.5 billion. new: the pnn calendar Don’t miss a thing: Go to page 11 for a list of important industry events taking place over the next six months.

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FTA with Korea will be a boon for LNG Seoul needs to secure natural resources and Canada is keen to diversify its export markets, which are heavily reliant on the United States. Matt lamers Staff Writer

The ink is still drying on the Canada-Korea Free Trade Agreement, but it’s already clear the accord is going to be a boon for the domestic LNG industry. A report recently concluded that the FTA will spur more East Asian investments in Western Canada’s gas fields, adding to a number of Korean companies that are currently present here. Korea Gas Corporation (KOGAS)

is a partner in the LNG Canada project in Kitimat, which is expected to make a Final Investment Decision in 2015. In August 2010, Seoulbased STX Energy Co. bought natural gas properties in Northeast British Columbia for $152 million. The FTA is expected to benefit Canada and Korea in different ways, say analysts. Seoul needs to secure natural resources and Canada is keen to diversify its export markets, which are heavily reliant on the United States. Korea is particularly interested in

Korea and Canada signed a free trade accord in March. Above, the modern streets of Seoul are indicative of a bustling economy. Matt Lamers Photo

access to Canada’s energy products, like natural gas and bitumen from Alberta. The country, the 14th richest in the world with a GDP of $1.2 trillion, imports 100 per cent of its petroleum products.

Korea needs access to Canada’s energy products, like gas and possibly bitumen from Alberta.

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Alberta is keen to diversify its energy exports, 99 per cent of which currently go south of the border. The FTA will remove the 3 per cent duty on LNG, giving Canadian exporters duty-free access on their products to South Korea. Korea is already Alberta’s fifthlargest destination for exports and is B.C.’s fourth-largest trade partner. The deal, known as the CKFTA, will help Alberta market its products in East Asian markets. “Demand for Canadian products like crude oil and natural gas is strong in Asia and growing,” said Dave Collyer, president of the Canadian Association of Petroleum Producers (CAPP). “Diversifying markets for Canadian oil and natural gas products is vital to ensuring Canada continues to grow its oil and gas production and receives full value for its natural resources.” “We’re an economy that has grown on a free trade agenda and we believe it’s important to continue to support that,” said former

Alberta Premier Alison Redford after the deal was signed in March. British Columbia is looking to capitalize on the FTA, too. Korea has the second-largest LNG industry in the world, behind only Japan, and B.C. has one of the largest reserves of recoverable natural gas in the world in the Montney and Liard basins. “British Columbians gave us a mandate to strengthen the economy. A free trade agreement with South Korea will directly result in economic growth and jobs in B.C.,” said Premier Christy Clark. “This deal will hopefully be the first in a series of trade agreements, creating new opportunities with our other priority markets in Asia.” LNG accounts for roughly 20 per cent of Korea’s primary energy consumption by fuel type, according to the U.S. Energy Information Administration. Fifteen LNG export projects are in the works to export Canadian gas to Asia from the West Coast. Eight have export permits in hand, but no Final Investment Decisions have been made to date. “It is without question that the CKFTA has the potential to redefine Canada’s relationship with South Korea and by extension the AsiaPacific region,” wrote Kevin Sandhu and Geoffrey Marinangeli in an article for McMillan LLP. “Properly carried out, the CKFTA will bring about new economic opportunities for Alberta’s energy sector. “The changing landscape will prompt new legal challenges, which will need to be addressed to avoid unintended consequences while upholding the objectives of the CKFTA.”

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fort st. john

‘it’s our opportunity to lose’ The Prince Rupert Gas Transmission Project is part of TransCanada’s plans for more than $12 billion of pipelines in B.C. Matt Lamers Staff Writer

The Prince Rupert Gas Transmission Project along with Pacific NorthWest LNG have taken the lead in the race to get British Columbia’s natural gas to market, and the proponent is on schedule to make a final investment decision by the end of the year. That was part of the message delivered by John Dunn, vice president of Prince Rupert Gas Transmission Ltd. and TransCanada’s director for major projects development, when he updated the Fort St. John Chamber of Commerce on the project on March 18. In an interview, he said there is a “high degree of certainty” that an application for an Environmental Assessment will be submitted to the BC Environmental Assessment Office (BC EAO) by the end of the month. After that, the EAO has a month to evaluate the application before a second public review period kicks off. “The application we’re about to file will be north of 7,000 pages. It’s the most thorough, comprehensive environmental assessment I have ever seen,” said Dunn. The Prince Rupert Gas Transmission Project is part of TransCanada’s plans for more than $12 billion of pipelines in British Columbia. Pacific NorthWest LNG, a consortium consisting of Petronas, Petroleum Brunei, Japex and Indian Oil Corp., is on track for a final investment decision by year-end, “the proverbial come to Jesus moment,” Dunn said. “No other project is on track to make an FID in Canada this year. All of the other projects have started to slip.”

‘They’re looking to Canada for clean-burning natural gas. Believe you and me, if they can’t get it from Canada, they will get it from other jurisdictions. So it’s our opportunity to lose.’ – John Dunn, vice president of Prince Rupert Gas Transmission

John Dunn, vice president of Prince Rupert Gas Transmission Ltd., updated the Fort St. John Chamber of Commerce on March 18. Matt Lamers photo

The starting point for the proposed 900-kilometre pipeline is near Hudson’s Hope, west of Fort St. John, and delivery takes place at Lelu Island, just south of Prince Rupert. The 48 inch, $5 billion pipeline is the largest of the natural gas pipelines that have been proposed in terms of diameter and length, but not volume. After the requisite regulatory approvals are acquired, the next steps, Dunn explained, involve upgrading roads and rail lines, planning temporary construction camps, preparing and clearing the right of way, welding and installing the pipeline and compressor stations and, after that, rehabilitating the right of way. Fort St. John Mayor Lori Ackerman was one of about 50 people in attendance. “These projects are certainly going to bring activity to Northeast British Columbia, and to the businesses that operate out of here and service the natural gas industry,” she told PNN after Dunn’s presentation. “When that happens, in turn the community can benefit and grow as a result of it.” For businesses looking for opportunities with this and other pipeline projects, she suggests reaching out to the Fort St. John Chamber of Commerce or B.C. Energy Services. Russ Beerling, president of the Chamber, said he appreciates TransCanada reaching out to address issues within the project that are of concern for communities along the right of way. “I think that’s important,” he said. “I believe there’s a lot of opportunity. I think there’s great opportunity here for people to say employed for many years to come.” Pacific NorthWest LNG is one of 13 gas projects that have been proposed, ranging in volume from 1 to 5 bcf/day.

Go big or go home Dunn said achieving economies of scale is imperative for the proposed LNG projects to succeed, as are global connections. “When you’re talking about LNG projects [in B.C.] it’s important they are affiliated with global giants. If there isn’t an affiliation with a global giant, chances are they are not going to be successful, because the risk, the dollars, the capital is so huge that you need people with very high levels of credit, technical capabilities, and so on. Petronas certainly has that.” TransCanada is also building the Coastal GasLink pipeline, which will feed the LNG Canada Gas project that has backing of Shell, Kogas, Petro China and Mitsubishi. Coastal GasLink filed its EA application in midMarch. “So the 180-day clock has started for them,” said Dunn. “We’re just a couple months behind them in the regulatory process.” TransCanada affiliate Nova Gas Transmission Limited recently submitted applications to the National Energy Board for about $1.7 billion to expand the its NGTL system in Northeat B.C. The hearing process starts late August. They are slated to come online in Q2 of 2016. “This system is going to feed gas, not only for the Prince Rupert Gas Transmission Project, but will also interconnect with the entirety of the TransCanada pipeline system.” It’s an essential component for TransCanada, Dunn said. ‘It’s our opportunity to lose’ The first thing TransCanada looked at when it was planning the Prince Rupert Gas Transmission Project was demand. See PIPELINE on PAGE 28

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PIPELINE from PAGE 27 “China is desperately attempting to wean itself off coal. So great is the demand for energy in China that they’re still building goal plants,” said Dunn. “They’re looking to Canada for clean-burning natural gas. Believe you and me, if they can’t get it from Canada, they will get it from other jurisdictions. So it’s our opportunity to lose.” A study released in November more than doubled the amount of natural gas thought to be trapped in the Montney Formation. It was the first assessment of its kind for the region and estimated that the Montney formation in northeastern B.C. and northwestern Alberta can support commercial activity for 150 years or longer. The volume of marketable gas is now believed to be 12.7 trillion cubic metres, which is roughly the volume of Lake Superior. “It’s one of the largest gas reserves R001622840

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on planet Earth. It’s got enough gas, at Canadian consumption rates to last almost 150 years,” said Dunn. In January, BMO estimated that supply equivalent to some 22 Bcf/ day will come from new projects over the next 10 years from the U.S., Nigeria, Australia and Canada. The U.S. has plans for 32 Bcf/day, “and remember that many of these projects in the States are brownfield. These are on existing sites on the Gulf Coast. In Canada we have 12 projects for about 20 Bcf/day. Just from North America we have about 52 Bcf/day chasing a much smaller market. “So are all the projects going to happen? No way José.” The American projects have to go through the expanded Panama Canal. From the Gulf coast, it will take an LNG tanker about 20 days to reach East Asian ports, whereas that trip is fewer than 10 days from B.C.’s Prince Rupert.

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careers

Northern gateway is hiring Database aims to connect contractors with local workforce Matt Lamers Staff Writer

opportunity at that major capital level, and also significant opportunity at the subcontracting level.” Pennington said that larger businesses will also be able to use the database to express an interest with working on the 1,177 km pipeline. “Supply chain management over the next year and a half is going to be looking intensely at the services available for direct opportunities along the right of way,” she said. Pennington couldn’t say exactly how much Enbridge will rely on the database to procure business or how many workers would be hired from it.

“We need to know who’s out there and who’s interested, so that we can then supply that business information to our contractors,” added Pennington. The $5.5 billion pipeline would carry bitumen (heavy crude from oilsands) from Bruderheim, near Edmonton, Alberta, to a deepwater terminal in Kitimat, B.C. The proposal is to build a twinned pipeline that would move 525,000 barrels of bitumen per day westward, while the parallel pipeline would bring 193,000 barrels of condensate per day eastward.

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Want a job with Northern Gateway? Looking for business opportunities with the pipeline? Whether you’re a pipefitter or a contractor, Enbridge has a plan to get you involved. In February the Calgary-based energy delivery company rolled out a database that will help it meet the Joint Review Panel stipulation to include local workers and contractors during the construction period. Catherine Pennington, senior manager of community benefits and sustainability, told Pipeline News North that the database was modelled after a similar project by Rio Tinto Alcan. Behind the Northern Gateway Regional Skills and Business Database, said Pennington, is a commitment Enbridge made during the regulatory phase to develop a database that would act as a mechanism to connect a local, regional labour supply and businesses to contractors. Local inclusion is at the heart of the initiative. “Ultimately, this database will be a tool that we’ll provide to our contractors,” she said. “Those contractors are going to have pretty stringent requirements around local inclusion. We have made significant targets know around the inclusion of a local and Aboriginal workforce.” The 1,177 km pipeline was given the green light by a three-person panel in December 2013, provided it meets 209 conditions. A final decision will be handed down by the Natural Resources minister in Ottawa by June. In 2010, Enbridge made estimates on the inclusion of local goods and services. Enbridge now says it fully expects to meet or exceed those targets. “It’s also a tool we can use to have a better understanding of the local labour and business market. That will then infuse our programming,” she said. “We have been working on skills development and capacity initiatives since 2006 in the local community. This tool will be one of the mechanisms we can use to build those connections further and learn more about the market.” Individuals can enter the database and express an interest in working on Northern Gateway. “We’re going to be able to know that there’s an individual who lives in Smithers, Burns Lake, or Terrace, or Edmonton who’s expressed interest in working,” said Pennington. “We’ll be able to refine the database and provide that data back to the contractors, who are going to be looking to secure a local labour supply as per our commitments.” For contractors, it will be a similar process. “The businesses that have expressed an interest in subcontracting will also be connected back to contractors,” Pennington added. “For our own needs, we will know who’s interested and who has capacity for the larger-scale direct opportunities. This is, by every sense of the word, going to be a major capital project, so there will be significant

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locations that suit your business needs • Distributed to the community in general through these fine publications, Alaska Highway News, Dawson Creek Daily and Fort Nelson News. • Distribution by mail and direct drop-off to Oil & Gas companies,and related businesses and organizations, in the following communities: British ColumBia – Arras, Baldonnel, Cecil Lake, Charlie Lake, CHETWYND, Clayhurst, DAWSON CREEK, Farmington, FORT NELSON, FORT ST. JOHN, Goodlow, Groundbirch, HUDSON’S HOPE, Moberley Lake, Pink Mountain, Pouce Coupe, Progress, Rolla, Rose Prairie, Sunset Prairie, Taylor, Tomslake, TUMBLER RIDGE, and Wonowon. alBerta – Baytree, Bear Canyon, BEAVERLODGE, Berwyn, Bezanson, Bonanza, CLAIRMONT, Eaglesham, FAIRVIEW, Falher, Girouxville, GRANDE PRAIRIE, Grimshaw, Grovedale, HIGH PRAIRIE, Hines Creek, Hythe, LaGlace, MANNING, McLennan, PEACE RIVER, Rycroft, SEXSMITH, Silver Valley, Spirit River, VALLEYVIEW, Wembley, and Worsley, Zama City. R003424352

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closing argument

Pipeline construction would boost government revenues

y entonces photo

Discourse surrounding the need for new pipelines to transport Canada’s oil to market has been a dominant economic, environmental, and political issue for the past several years. Kenneth P. Green, Sean Speer Canada’s overwhelming reliance on the United States as a customer, the U.S.’s growing energy self-sufficiency, and limited pipeline infrastructure have placed a low ceiling on the prices Canadians are able to secure for our energy exports. New pipeline infrastructure to East and West Coast ports is key for Canadian resource companies to diversify their customer base and to raise Canadian export prices relative to global benchmarks. But the cause of new pipelines – not to mention the reassignment of existing ones – has become politicized and run into opposition. At present the debate has reached a stalemate of sorts. The economics of greater market access for Canadian resources has run directly into an environmental backlash led by some with concerns about pipelines in particular and some who are just generally opposed to fossil fuel resource development. One aspect of the debate that seems to have attracted little attention, however, is the impact that the current impasse has had on government finances. Specifically, low energy prices stemming from limited transport options have come to reflect themselves in less revenue for

Canadian governments. The economic case for new pipelines is well-documented. Canada has the world’s third largest proven oil reserves, is the fifth largest exporter of crude oil, and is the fifth largest producer of crude oil. And that is only expected to grow. According to the Canadian Association of Petroleum Producers (CAPP), production

ably lower production forecasts than those published by CAPP. The lack of safe, low-cost transportation capacity to move oil to world markets is the major barrier to this substantial economic development. Oil transport limitations are reducing revenues from Canadian oil sales by at least $17 billion per year and depending on market fluctuations,

‘$4 billion in new revenue would almost wipe out the $5.5 billion budgetary deficit the government is currently projecting for 2015.’ of oil from Alberta’s oil sands is expected to more than double between now and 2030, rising from 3.2 million barrels of oil per day to 6.7 million barrels per day. What are the economic benefits of such development? A 2011 study by the Canadian Energy Research Institute projects that investments and revenues from new oil sands projects would be over $2 trillion between 2010 and 2035. This would result in a $2.1 trillion increase in the Canadian economy, and job growth in the oil sands industry from 75,000 in 2010 to over 900,000 by 2035. And it is worth noting that this study’s estimates are based on consider-

those losses could reach $25 billion per year according to a 2013 study. The fact is Canada’s current price discount for its energy exports also means less tax revenue for the federal and provincial governments. The numbers are considerable. Alberta collected $2.4 billion less in oil sands royalties in the most recent fiscal year while Saskatchewan has also lowered its projected royalty revenue by $287 million in 2012-13. Governments are further affected by lower personal and corporate income tax revenues resulting from slower employment growth and reduced business profits. The federal Department of Finance, for instance,

has estimated that if Canadian prices for crude oil and natural gas were to return to historic norms for crude oil and half the prevailing natural gas prices in Europe, the federal government would collect an additional $4 billion in revenues. To put this in perspective: $4 billion in new revenue would almost wipe out the $5.5 billion budgetary deficit the government is currently projecting for next year and is more than the size of budgetary surplus it anticipates for 2015-16. So the potential for additional government revenues is not insignificant, and they could be put to good use increasing Canada’s tax and economic competitiveness. For example, this additional revenue could be used to lower personal incomes tax rates in Canada which are high relative to other jurisdictions such as the United States. It could also be used to reduce government debt and in turn lower debt servicing costs, freeing up room for other budget priorities. The current debate about new pipeline construction typically fails to account for the potential impact on government revenues. It is an important aspect of the issue and, as we head into government budget season, one that should not be ignored.

Reprinted with permission from the Fraser Institute.

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