Alberta news: Calgary-based Pembina interested in midstream acquisitions MARCH / APRIL 2015
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Number of in-demand occupations for Site C
26K
Projected openings in top 10 jobs in LNG by 2018
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Projects in the works to export B.C. & Alberta's gas
3%
Northeast B.C.'s jobless rate in Jan.
most in-demand jobs and what they pay $75M Property sales in Dawson Creek in 2014, up $10M
$379M
Northeast B.C. is already below what economists call full employment. And if just a few of the massive industrial proposals go forward, the labour market is going to get even tighter. Here's the projected five-most in-demand jobs in the region.
Property sales in Fort St. John in 2014, up $100M
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NUMBERS
The following figures were taken from the stories in this issue of Pipeline News North.
$2.88: The AECO “C” spot price, the Alberta gas trading price on March. 10. Chart on page 5 $600,000: Amount the BC Oil and Gas Commission’s monthly land tender pulled in in February — the lowest total in years. Chart on page 5 $58.60: The price of Brent crude on March 10. Chart on page 5 30 per cent, and 10 per cent: The respective capital cost allowance for equipment used to liquefy natural gas and for infrastructure at export facilities. Story on page 8.
130,944 boe per day: Tourmaline Oil Corp.’s average production for the fourth quarter of 2014, a 5% increase over output for the same quarter of 2013. Story on page 10. $31 to $58: Average hourly wage for an engineer. Story on page 6. $696 million: Amount of money distributed to municipalities in Northeastern B.C. from the Fair Share agreement since 1994. Story on page 13. $2.5 billion: The price tag for the first phase of the Sundance Fuels project. Story on page 16.
$570 million: Encana’s planned spending in the Montney this year. Story on page 21. 55: The number of fatal crashes on the Alaska Highway between 2004 and 2013. Story on page 22. $1.5 billion: The amount Petronas subsidiary Progress Energy Canada spend in March 2014 to acquire 127,000 acres in the Montney from Talisman. Story on page 23. $480 million: The price tag for a proposed wind farm near Tumbler Ridge that has begun regulatory work. Story on page 26.
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The Alberta-B.C. LNG discount 5 (chart) U.S. gas price 5 (chart)
PNN 26
B.C. land auction 5 (chart)
18 Blackbird tackles Montney challenges
Alberta petroleum 5 land auction (chart)
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Petronas will make 5 FID by June: CEO 5 most in-demand 6 jobs in B.C. Tax break aimed at 8 sparking FIDs
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20 Council backs off ‘frac sand’ action 21 Encana won’t cut jobs in Montney 22 MOST DANGEROUS ROADS IN THE PROVINCE 22 23 Investors target Montney’s riches
Energy East contracted 10 capacity rises
Tourmaline reports 10 record earnings
13 B.C. springs Fair Share deadline on towns 16 Public updated on gas plant
Japan gas 5 price (chart)
Pembina interested 10 in midstream acquisitions
11 SUPPLY WILL BALANCE OIL MARKET: CHEVRON
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25 FORT ST. JOHN OILMEN ENJOY A NIGHT OF LAUGHS 25 Chetwynd, Dawson Creek strike a deal 26 $480 million wind farm proposed 29 BC Hydro wants more local workers
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.
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THE CHARTS
#oilsands
alberta o&g land auction Alberta’s oil and gas land tender pulled in $29 million on Feb. 11. Further tenders are scheduled for March 11 and March 25. Source: Alberta Energy Regulator December 2013 to February 2015
the alberta-b.c. lng discount The Alberta-B.C. Natural Gas Discount (ABCD) is the difference in price that a BTU of natural gas costs in Tokyo compared to Alberta. It has recently rebounded to just over $10. December 2013 to February 2015
Alberta gas price $cdn/gj The AECO “C” spot price, the Alberta gas trading price. Source: Natural Gas Exchange
December 2013 to February 2015
Petronas will make FID by June: CEO Tyler Orton
Business in Vancouver
Malaysia’s Petronas will make its final investment decision (FID) on a northwest B.C. liquefied natural gas project in June, according to Reuters. Speaking at a press event Feb. 27 in Kuala Lumpur, Petronas CEO Shamsul Azhar Abbas said the energy giant wanted to farmout about 50 per cent of its Pacific NorthWest LNG project to other companies. “So far we have achieved 38 per cent,” he said, according to Reuters. Abbas added state-owned Petronas is in talks with a Chinese buyer for another 10-12 per cent of the project. Last month, Prime Minister Stephen Harper announced in Surrey that Ottawa would offer tax breaks as high as 30 per cent for equipment and 10 per cent for facilities used in the LNG sector. The tax breaks took effect February 19 and extend to 2025. The sharp decline in oil prices since last year has made LNG less lucrative for companies to invest. In December, Abbas announced
Construction begins on LNG facility in metro Vancouver One project has started construction on its a liquefied natural gas facility – but it is in Metro Vancouver rather than on B.C’s northwest coast. The $400 million expansion of the Tilbury LNG plant in Delta started construction in the third quarter of 2014, according to the major projects inventory compiled by the Association of Consulting Engineering Companies British Columbia. FortisBC, the owner and operator of the facility, awarded Houston, Texas-based Bechtel an engineering, procurement and construction contract to expand the facility, which will include a new billioncubic-foot full-containment LNG storage tank. See LNG Page 8
japan lng price
b.c. oil and gas land auction
The Japan LNG Import Price has rebounded slightly from a four-year low in December. Source: World Bank
The BC Oil and Gas Commission’s monthly land tender pulled in less than $1 million in February, a multi-year low. The next disposition is March 25. December 2013 to February 2015
December 2013 to February 2015
Oil price brent crude price
u.s. gas price
The price of Brent crude has fallen by about half in the past 12 months on oversupply in world markets. It has rebounded slightly. Source: U.S. Energy Information Agency
Left, the Henry Hub Natural Gas Spot Price (dollars per Million Btu). Source: U.S. Energy Information Agency
December 2013 to February 2015
Petronas was deferring its FID on the $36-billion project in Price Rupert. The company would only say a decision would be made “pending further clarity on substantive items of importance to ensure that critical project components align with economic viability of the project and competition from other LNG producing countries.”
May 2010-February 2015
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Number of in-demand occupations for Site C.
26K
Projected openings in top 10 jobs in LNG by 2018
Northeast B.C. is already near what economists call full employment. And if just a few of the massive industrial proposals go forward, the labour market is going to get even tighter. Here's the projected five-most in-demand jobs in the region. Pipeline News North
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EMPLOYMENT
It is no secret that the labour market is tight in the Peace. This past fall, WorkBC client services coordinator Jeanette Karasiuk told Alaska Highway News that in her 10 years working there, she’d never seen such a high demand for workers. According to Statistics Canada, as of September, the unemployment rate for Northeastern B.C. was four per cent, a stark contrast from the nationwide rate of 6.6 per cent, and
much lower than the provincial rate of 5.5 per cent. That's showing up in local demographics, too. Fort St. John’s population jumped 4.5 per cent from 2013 to 2014, an increase of nearly 1,000 new residents. The only other B.C. municipality that grew faster was Surrey. Similarly, Dawson Creek’s population saw an increase of nearly three per cent. And if some of the projects that the province is sighting up move forward – LNG export facilities thirsty for the Northeast’s natural gas to
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Projects in the works to export B.C. & Alberta's gas
3%
Northeast B.C.'s jobless rate in Jan.
nd jobs and what they pay $379M Property sales in Fort St. John in 2014, up $100M
liquefy, the pipelines that would deliver it, the construction of Site C (expected to start this summer) or even a massive gas plant in Chetwynd – that demand is only going to rise. In an effort to prepare the population for the possible growth, the province has put together a report, Pulse of the Peace, profiling five of the most “in-demand occupations” for
2015. Unsurprisingly, they are all in trades, the highest potential pay going to the most education: power engineer. Following is the projected five-most in-demand jobs in Northeastern B.C., according to the Pulse of the Peace report. (An honourable mention goes out to doctors and nurses. ) See JOBS Page 12
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Tax break aimed at sparking FIDs ‘What it allows developers to do is recoup the taxes paid a lot sooner on their investment,’ explained Bob Zimmer. ‘In an investment-heavy industry it’s an absolute blessing to them.’
David Dyck
Pipeline News North
In another strike of the match across the yet unlit liquefied natural gas (LNG) export industry in British Columbia, Prime Minister Stephen Harper was in Surrey in late February to announce tax incentives for the sector. A capital cost allowance rate for equipment used to liquefy natural gas was set at 30 per cent, and 10 per cent for infrastructure at export facilities. According to the government, this will allow developers to deduct a higher share of capital costs, something that would benefit companies. Previously, those rates were at eight and six per cent, respectively. The new rates are in line with Prime Minister Stephen Harper announces tax relief for the nascent LNG sector. those for Canada's manufacturing sector, and are similar Australia and the United States — two of B.C.'s biggest competitors. “[The break will] allow investors hoped the new rates will help spark a George-Peace River, was present with in facilities that liquefy natural gas final investment decision. Harper for the announcement. “With oil prices where they are, anywhere in Canada to recover their He said it was two years in the startup capital costs more quickly,” and all the global uncertainty, the making. said Harper, and compared them to change the federal government has “What it allows developers to do is other measures introduced to spur made is going to be a big help in mak- recoup the taxes paid a lot sooner on the manufacturing and processing ing sure LNG companies get to that fi- their investment,” explained Zimmer sectors. “Likewise, these initiatives nal investment decision,” said Clark, in a phone interview. “In an investwill provide the LNG industry with adding that the need to be competi- ment-heavy industry it’s an absolute even greater incentive to invest in tive is greater now than it was half a blessing to them.” year ago. Canada’s future,” he said. Zimmer said that when he talked Bob Zimmer, MP for Prince Premier Christy Clark said she
to the CFO of Petronas, the Malaysian energy giant considering an LNG plant on Lelu Island, in December, the tax break was something the company was asking about. Shortly after that conversation they put off making a final investment decision that is now expected sometime this year. “It was not a major issue but it was something that they wanted, if we could achieve it,” said Zimmer, adding that they were now just waiting for a positive FID. “We’ve made the best environment to make that decision as possible,” he added. Michael Culbert, the president of the Patronas-led Pacific NorthWest LNG project, said in an email statement to Alaska Highway News that he welcomed the announcement. “The Government of Canada is delivering on its goal to diversify and grow Canada’s energy exports,” it read. The new rate will be in effect for just under 10 years, until 2025, and is expected to benefit industry to the tune of approximately $50 million in the first five years, going up “substantially” after that, said the government. Clark said that she still hopes to see three of the proposed 19 LNG plants liquefying and exporting natural gas by 2020, though industry analysts have called that projection optimistic. peacereporter@ahnfsj.ca
Company would only say decision would be made 'pending further clarity on substantive items of importance to ensure that critical project components align with economic viability of project & competition from other LNG producing countries' LNG from Page 5
Bechtel, a world leader in LNGrelated construction, is also responsible for the startup and commissioning of the new liquefaction facility. The new LNG tank includes a 9 per cent nickel steel plate used for the cryogenic containment system within the tank’s concrete walls. Construction is expected to be finished in November 2016. The Petronas president and CEO Shamsul Azhar Abbas. project will add approximately
46,000 cubic metres of LNG storage and raise the facility’s liquefaction capacity to 1,740 cubic metres per day to meet the growing LNG demands of the transportation sector, remote communities and industry in the province, according to FortisBC. The original Tilbury LNG storage facility was built in 1971 and remains one of only two LNG plants in B.C. The other, also owned by FortisBC, is near Ladysmith on Vancouver Island.
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Energy East contracted capacity rises Shippers who have signed up for capacity on TransCanada Corporation’s proposed $600-million Upland oil pipeline in North Dakota have contracted for 70,000 bbls per day that will move on the Energy East pipeline system, company officials said. Those contracting for delivery into the Energy East pipeline at Moosomin, Sask., will have the flexibility to source their supply from receipt points in North Dakota, Saskatchewan and Alberta, Russ Girling, TransCanada chief executive officer, said in a conference call to discuss fourth quarter 2014 results. The company posted improved results for both the fourth quarter of 2014 and the year. TransCanada is developing the Upland pipeline in response to the desire by producers in the Williston Basin to get some of their crude off the rail system, said Paul Miller, executive vice-president and president of liquids pipelines. The 460 kilometre (285 mile) pipeline would provide crude oil transportation between multiple points in North Dakota with connections to other inter- and intra-state pipelines, including the 1.1 million-bbl-per-day Energy East pipeline from Alberta to Saint John, N.B. The company has not yet determined where Upland will cross the United States border but “straight south of Moosomin (just west of the Saskatchewan/Manitoba border) is a best guess right now,” he said. TransCanada will provide transportation services within the Williston Basin from various gathering systems and feeder pipelines to connect with other pipelines out of the region. The company also will continue to provide transportation for Bakken producers once it moves forward with Keystone XL, which has allocated 100,000 bbls per day for producers in North Dakota and Montana, said Miller. Girling noted that volumes have already been moving by rail from the Bakken through Canada to the Irving refinery in New Brunswick and “this is a safe solution to optimizing that movement.” — Daily Oil Bulletin
Pembina interested In midstream acquisitions The current economic downturn may offer acquisition opportunities for Pembina Pipeline Corporation as cash-strapped producers look for ways to monetize some of their assets and Pembina is on the look-out, says the company’s chief executive. “We are not sure we can buy something cheaper than we have in the past; I don’t know that the market has come that far yet … but what we do have a sense of is that there is going to be a lot more deal flow,” Mick Dilger, president and chief executive officer, said in a conference call to discuss 2014 results, which were the most successful in the company’s history. “Some producers, for example, that would never have considered monetizing a gas plant or something like that may just want to do that in this market so we are just seeing a lot more opportunity; I don’t know that it will be less expensive.” The company is interested in more fee-for-service assets, usually adjacent or connecting to its existing infrastructure, Dilger said. The company reported net earnings of $84 million in the fourth quarter, off from $95 million a year ago, while full-year earnings lifted to $383 million from $351 in 2013. Revenue declined to $1.26 billion in the quarter from $1.28 billion a year ago, while full-year revenue lifted to $6.07 billion in 2014 from $5.01 billion a year earlier. Dilger said the company is especially proud of its 2014 safety record with a full year of zero lost time injuries and zero recordable employee injuries, despite employees having worked 24 per cent more hours than in 2013.”This is an extraordinary accomplishment and evidence of our commitment to achieving safe, reliable and responsible operations — an effort that is clearly paying off.” As work continues on its $4 billion to $5 billion in new projects, Pembina expects to see costs begin to decline with reduced producer activity and is targeting a reduction of up to five per cent in operating and capital project costs, said Dilger. “That is a high focus area for us right now.” — Daily Oil Bulletin
FILE PHOTO
Tourmaline reports record earnings Tourmaline Oil Corp.’s production for the fourth quarter of 2014 averaged 130,944 boe per day, a 52 per cent increase over output for the same quarter of 2013 of 86,089 BOE per day. Production was 88 per cent natural gasweighted in the fourth quarter of 2014, compared to 86 per cent for the same quarter of the prior year. For the year ended Dec. 31, 2014, production increased 51 per cent to 112,929 BOE per day from 74,796 BOE per day in 2013. The company’s significant production growth when compared to 2013 can be primarily attributed to new wells that were brought onstream in 2014, as well as property and corporate acquisitions. Current production is ranging between 145,000 to 150,000 BOE per day. Mike Rose, president and CEO, said the company presently expects to achieve the 2015 average production target of 164,500 boe per day in late April. “For 2015 we’re forecasting production growth of 46 per cent and we think that will be the largest growth rate for the large intermediates, or companies with production greater than 100,000 BOE per day,” Rose said during Tourmaline’s year-end 2014 conference call this morning. “Our Q4 production was up 21 per cent over the previous quarter … so very strong sequential growth and we expect that to continue through 2015 on a quarterly basis.” Tourmaline increased fourth quarter oil and liquids output to 15,510 BOE per day from 11,700 boe per day during the same period in 2013. The accelerated growth in oil and NGL production is the result of increased drilling in the Spirit River/Peace River High Charlie Lake oil plays, incremental liquids recovered in the Wild River area via deep cut processing, which began in late 2013, and strong condensate recoveries from new wells tied-in in northeast B.C. — Daily Oil Bulletin
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Supply will balance oil market: Chevron John Watson, chairman and CEO of Chevron.
Richard Macedo Daily Oil Bullletin
While long-term fundamentals for oil remain attractive, the near-term outlook is weak and a drop in supply will be the “primary mechanism” to help balance the market, according to Chevron Corporation. In early March, company executives discussed the macro industry outlook and provided updates on various Chevron projects. Plans for the Kitimat LNG project its Duvernay play were not discussed. The company said last month it had tied in 12 wells in its Duvernay drilling program in Alberta, as of early 2015, and also is “significantly pacing” Kitimat LNG spending.
“Increasingly, though, new supply will come from more complex and remote sources with higher full-cycle development costs — Arctic, deepwater, heavy sour and the like. The IEA estimates that $12 trillion — that’s trillion dollars — of investment will be needed during this period. Much of this investment will require some combination of higher prices, lower costs or better fiscal terms to meet full-cycle investment requirements.” Watson pointed out that there’s a surplus of supply over demand resulting from growing shale and tight volumes in the U.S. and in-
creasing conventional production in Iraq, among other places. “This has resulted in growing levels of inventory in 2014 and early 2015,” he said, adding that there’s also “momentum in supply” from projects that have been under construction. “Though possible, we’re not expecting OPEC cuts or other supply disruptions to balance the market,” Watson said. “So, we’re quite sober about prices in 2015. But we’re starting a slow price period with a very modest surplus by historical standards.” See SUPPLY Page 28
‘Though possible, we’re not expecting OPEC cuts or other supply disruptions to balance the market.’
Despite the near-term challenges, the company offered a more positive outlook for the long-term. “The industry will need to develop 290 billion barrels of new oil resources [between 2013-2035],” said John Watson, chairman and CEO, during the company’s annual analyst meeting in New York. “Now, the resource is there and industry technology continues to advance to find and produce it.
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JOBS from Page 7
residential and industrial electricians There is an expected 1.1 per cent growth annually in this job between 2010 and 2020. On the industrial side, electricians will be needed for maintenance of factories, plants, mines, shipyards, oil and gas rigs and other industrial projects. On the residential side, electricians can work for electrical contractors, in building maintenance, or start their own business. An industrial electrician must have a certificate or be registered in the four-year apprenticeship program. For certification, the four-year program must be completed, as well as more than five years of experience and high school, college, or industry courses in industrial electrical
equipment. Key skills include effective communication and problem solving as well as competence in reading and numeracy. Electricians should be well-organized and safety-conscious. Post-secondary training can be done in the region at Northern Lights College in Fort St. John or Thompson Rivers University in Kamloops or Williams Lake. Electricians make $19 - $39 per hour, depending on experience and area of expertise.
oil and gas drilling service related labourers This is a broad-ranging occupation in the oil and gas sector, working for drilling and well servicing contractors and petroleum producing companies. Many of the job openings over the next 10 years will come from retirees. These jobs start at an entry level position as a lease or floor hand, and with time and experience, you can work up to senior crew positions. Employers look for a strong work ethic, willingness to learn and a clean drug and alcohol test. Although there is no post-secondary educa-
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tion required, there are several safety tickets required. Those can be obtained at Northern Lights College in Fort St. John, Dawson Creek or Fort Nelson, or various private safety licensing locations in the Peace. Workers must to be able to take direction and show initiative, work in any weather and be physically fit and flexible. The average full-time salary is $18-$31 per hour, depending on experience, though much of the earnings are made from overtime hours.
oil and gas drilling workers and service operators These jobs will service oil and gas wells in pre- and postproduction phases. Like oil and gas drilling service related labourers, there are a large number of retirees expected over the next decade. Some jobs in this field are fracturing equipment operator, drill stem test operator, wireline operator and power tong and casing operator. Employers look for Grade 12 with good math skills, a strong work ethic and willingness to learn. Many operators need to be properly licensed to operate heavy machinery and truck driving. Those can be obtained at Northern Lights College in Fort St. John, Dawson Creek or Fort
Nelson, or various private safety licensing locations in the Peace. Other skills required for this occupation are excellent hand-eye coordination, mechanical aptitude and a willingness to work in remote locations. Oil and gas drilling workers and service operators make on average between $26 to $42 per hour. Like oil and gas drilling service labourers, a large portion of the income from these jobs comes from working overtime hours.
power engineers Engineers are needed to maintain industrial equipment like boilers, turbines, generators, engines, pumps, condensers, compressors and controls. According to labour market studies, there will be between 37,700 and 47,900 job openings thanks to industry activity and attrition. In purely domestic growth in the LNG industry, there are only 640 job openings by 2022. However, in a scenario where a B.C.-based LNG export industry comes to fruition, that number is expected to be 1,600 jobs.
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The only regional option for training is at Northern Lights College in Fort St. John. Although not an apprenticeship trade, power engineers are organized into classes one through four, with four being the entry level class. Interprovincial exams must be passed to advance through classes Based on the class of engineer, the average wage is $31 to $58 per hour.
truck drivers Drivers are required to operate light and heavy trucks in many different environments. Drivers might work for trucking, transportation or manufacturing companies. There is no post-secondary or secondary education requirement. Dawson Creek, Fort St. John and Prince George all have training programs for a range of drivers licensing classes. There may be other work site training necessary for em-
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ployees, depending on the employer and circumstances. Obviously, good driving skills are a requirement, as well as the ability to remain focused for extended periods of time. Mechanical aptitude is also an asset.
Truck drivers have the potential to earn nearly as much as power engineers, with the salary range sitting between $30 and $50 per hour.
MARCH 13, 2015
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b.c springs fair share deadline Victoria wants negotiations to begin as soon as possible on a new deal that has pumped $696 million into local government coffers since 1994; hopes to ink pact with local governments in the Peace Region by April 30
Many say they were taken by surprise by the province’s sudden request to negotiate a new Fair Share deal, which compensates Peace Region cities, MATT LAMERS PHOTO towns and rural areas for the burden of oil and gas development outside their tax bases. Jonny Wakefield
Pipeline News North
Fort St. John councillor Bruce Christensen, who is acting mayor while Lori Ackerman is away, said his council would likely request more time from the ministry. “Our initial reaction is the timeline is too tight,” he said. “Our mayor is away, and we have other crucial people who should be part of this discussion away. [Fair Share] doesn’t expire until 2019, so we don’t see why all of the sudden there’s a huge rush.” Taylor Mayor Rob Fraser worried about getting the deal done on the province’s timeline. “It doesn’t really give us a lot of time to sit down and really consider our position,” he said. The province has never given a firm date to begin negotiations. While campaigning in the Peace Region in 2013, Premier Christy Clark committed to signing a 10year deal — extending Fair Share to 2030. See FAIR SHARE on Page 14
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Several Peace Region leaders say they're surprised by the province's sudden push to negotiate the multimillion dollar Fair Share natural gas deal within the next 60 days. The province has officially started the clock on Fair Share, saying it hopes to ink a deal with local governments in the Peace Region by April 30. Fair Share compensates Peace Region cities, towns and rural areas for the burden of oil and gas development outside their tax bases. It’s hard to overstate the deal’s importance to local governments, which rely on Fair Share to fund both capital projects and day-to-day operations. Fair Share has pumped $696 million into local government coffers since 1994. The agreement is one of the last moving pieces in the province’s drive to set the stage for its still-cloudy liquefied natural gas ambitions, which it hopes to have some clarity on after Petronas makes its final investment decision this summer. “I’m sure the province recognizes it’s very serious for them, and that’s part of their urgency,” said Area B Director Karen Goodings. “They need to be able
to say to companies like [Malaysian oil and gas firm] Petronas that they are secure as far as taxation goes.” Local government minister Coralee Oakes wants talks between regional and provincial representatives to begin as early as March 8. That sets the timer at 52 days. Some local government staff and elected officials say the deadline came out of nowhere. Others say they saw it coming. Pouce Coupe was the first local council to discuss the Feb. 24 letter from Oakes at a meeting. “It took everybody by surprise,” Mayor Bill Plowright told Alaska Highways News. “Six weeks to turn around and come up with something.” Fair Share pours around $900,000 into the village budget every year. Village administrator Carol Bishop said she was “pretty well everybody was shocked” by the deadline.
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The Fair Share agreement was created to compensate Peace Region cities and towns for oil and gas activity outside their boundaries. Above, a gas site sits near Dawson Creek. JONNY WAKEFIELD PHOTO
FAIR SHARE from Page 13 The agreement was created in 1994 as a means of paying for local services and infrastructure strained by natural gas development. Peace Region governments originally asked the province for authority to levy industrial property taxes on the roughly 14,000 natural gas facilities then in the region. The province, worried about the impact a new tax would have on international investment, said no to that proposal, but acknowledged something needed to be done. Unlike the forestry industry, where most mills are incorporated into towns, natural gas projects in the Peace tend to lie well outside urban boundaries. However, as service centres for industry, cities thought they deserved compensation. Under Fair Share, the province collects taxes from natural gas projects, and distributes them to local governments throughout Northeastern B.C. In return, local governments surrender the possibility of taxing natural gas projects — a messy proposition which could have led cities to undertake costly and unpredictable annexations of natural gas facilities. Payments to each Peace Region
town and rural area come from a complicated formula based on local oil and gas impacts. The latest deal paid Dawson Creek $13.6 million this year — almost a third of city revenues. In total, Dawson Creek has taken in $218 million in Fair Share dollars since 1994. Dawson Creek’s dependence on Fair Share funding for day-to-day operations has been a worry for some city councillors, since a decline or cancellation of the deal would leave a major hole in the city budget. Unlike Dawson Creek, almost all of Fort St. John’s Fair Share dollars go towards infrastructure projects. Fort St. John has gotten $319 million since Fair Share began — including $21 million this year. For now, it’s unclear what the negotiations will look like. Professional negotiators will stand in for elected officials. On the provincial side is Dale Wall, a former deputy minister. The Northeast B.C. Resource Municipalities Coalition, a quasi-government body created specifically to deal with the province on Fair Share, will also have negotiators at the table. Rural representatives do not sign the agreement, but will likely have a negotiator as well.
Dawson Creek chief administrator Jim Chute, who was involved with the creation of the deal in 1994, said negotiations are similar to collective bargaining sessions between unions and employers. “People gather at a table, exchange proposals, go do caucusing,” he said. “Some of those meetings carried on quite awhile.” For now, there is widespread speculation about the significance of the province’s April 30 deadline. Petronas announced earlier this month that it would decide whether to invest in an $11 billion export terminal by the end of June. Dawson Creek Mayor Dale Bumstead said he believed the deadline is tied to LNG investment. “I think there’s a final investment decision coming from one of the liquefied natural gas proponents on the West Coast in the next quarter,” he said. “They’re going to want to have all of these loose ends tied up, and the Fair Share agreement with upstream communities is one of those things they need to get locked in.” — With files from Mike Carter, reporter@dcdn.ca
MARCH 13, 2015
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CHETWYND
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The natural gas-to-gasoline plant would employ 150 people full-time once operational, and the number of full-time jobs could increase to about 250 to 300 once the methanol plant comes online.
Public updated on gas plant Mike Carter
Pipeline News North
About 100 people crammed into the Chetwynd and District Recreation Centre’s Cottonwood Hall on Feb. 19 to get an update on the project. During the presentation, Michael Macdonald, newly minted president of Blue Fuel Energy, noted that if the project is successful, there is room for more than one plant on the site. The natural gas-to-gasoline plant would employ 150 people full-time once operational, and the number of full-time jobs could increase to about 250 to 300 once the methanol plant comes online. The first phase of the Sundance Fuels project will cost approximately $2.5 billion, and will consist of a plant that will use natural gas, wind, and hydropower to produce reducedcarbon gasoline. The second phase will be lead by Canadian Methanol Corporation, and will consist of a second plant on the site, using the same natural gas to produce methanol, which will be sold overseas for use in developing plastics, lubricants and gels. All told, the capital cost of the Sundance Fuels facilities is projected to be in the range of $3 billion to $4 billion. The two companies are independent but will share infrastructure at Sundance. The company has a Memorandum of Understanding in place with the West Moberly First Nation, which allows “both parties to explore additional opportunities and commercial benefits arising form the prospective production of renewable hydrogen and gasderived liquid fuels on West Moberly First Nation’s traditional territory.”
Around 100 people crammed Chetwynd’s Cottonwood Hall on Feb. 19 to hear an update on Blue Fuel Energy’s natural gas-to-gasoline refinery project. MIKE CARTER PHOTO
The project has also been given what the company terms “broad-based” support among other Treaty 8 First Nations in the region.
Final investment decision A final investment decision on Blue Fuel Energy’s natural gas-to-gasoline refinery
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The second phase will be lead by Canadian Methanol Corporation, and will consist of a second plant on the site, using the same natural gas to produce methanol, which will be sold overseas for use in developing plastics, lubricants and gels.
New Zealand Plant: Blue Fuel Energy proposed to build a massive $3.8 billion natural gas-to-gasoline plant outside of Chetwynd, similar to the one pictured here in New Zealand. COURTESY PHOTO
between Dawson Creek and Chetwynd is listed as “achievable in 2016” on the company’s website.
The project’s completion date has been pushed back slightly, from late 2018 to early 2019.
The estimated cost to reach that final investment decision is $50 million. Blue Fuel Energy CEO Juergen Puetter said he hopes to announce “very soon” where the refinery will source its natural gas, saying he cannot elaborate on a more specific timeline because discussions are “quite confidential.” “We expect to be settling something very soon,” he said. “Very hard to give a specific time there.” The company has said that this does not pose a significant hurdle for the project due to the abundance of natural gas producers in the region. Puetter says it is likely the project will instead need between 1,000 and 1,500 people to piece together pre-built modules that will make up the plant. Final construction job numbers will not be known until the detailed engineering is completed, and quotes from potential construction firms come in. “Two thousand was always on the high end. We think it’s around 1,000 to 1,500 [construction jobs],” said Puetter, “ and of course that will ultimately be determined by when we get all the final quotes. “We can’t be very specific, but we know it’s not going to be 3,000 and it’s not going to be 500.” Factors like a shortened construction season and a shortage of labour in the Peace Region hinder the company’s ability to build the plant from scratch on site. See GAS PLANT Page 24
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ALBERTA
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The company now has 65 sections of land, having increased its acreage to the north and west of its land block through auctions and intends to “bulk up” to the northwest of its holdings, the meeting heard.
Blackbird tackles Montney
Having recently drilled two Montney wells with plans for at least three more this year, Blackbird Energy Inc. will be focusing on takeaway during the next two quarters, the company’s annual general meeting heard last week. Infrastructure is a big challenge, said Garth Braun, chairman, president and chief executive officer. “How are we going to deal with takeaway? We have a couple of options. I have a favourite but it’s not been settled yet,” said Braun. “We’re looking at takeaway that deals with gathering up the southern portion of the Wapiti [River] but also looking for our ability to get north of the Wapiti and gather up our production from the north side once we start drilling on the north side.” The company is striving to get production on in the fourth quarter of this year. “In dealing with requirements of where we place our battery, is it in the southern portion right by our Elmworth [operations], the southern portion, or do we put it down where, in essence, the gas plant would be? We’re looking at options … [and] we’re looking at how we can co-ordinate and work with other companies in the region for the design of our battery and gathering system,” said Braun. Blackbird plans to continue acquiring land in the area, the meeting heard. “We want to build as large a package of drilling-well inventory as possible and potentially be — maybe not the big anchor but the small anchor to a facility,” said Braun. The company now has 65 sections of land, having increased its acreage to the north and west of its land block through auctions and intends to “bulk up” to the northwest of its holdings, the meeting heard. Blackbird has two wells, each with 100 per cent working interest, aimed at delineating the Upper and Middle Montney. The first well targets the Middle Montney at Elmworth. It spudded from surface location 14-14-7007W6 with a vertical depth of approximately 2,330 metres and a lateral length of 2,000 metres to location 06-26-70-07W6. During its completion the company injected about 15,000 cubic metres (97,500 bbls) of load fluid, Braun told the meeting. It is striving to get back 20 to 30 per cent of that, posttesting, and initial results are imminent, he added. Blackbird will use analysis of its liquids to
prepare for processing and infrastructure, including the design of its battery and its takeaway, he said. The second well targets the Upper Montney interval, drilled from the same drill pad as the earlier well with a total vertical depth of 2,260 metres and a lateral length of about 2,000 me-
tres. The company believes that if its first two wells produce oil and liquids-rich gas, with the well data surrounding them, it will be able to geologically delineate 25 to 30 sections of land, Braun told the meeting. The goal of its drilling is to continue to de-
MARCH 13, 2015
PIPELINE NEWS NORTH •
ALBERTA
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The second well targets the Upper Montney interval, drilled from the same drill pad as the earlier well with a total vertical depth of 2,260 metres and a lateral length of about 2,000 metres.
challenges
this year, probably in the next few weeks, he said. It cost about $10 million to drill and complete each of Blackbird’s existing two wells, Braun told the Daily Oil Bulletin. Its 2015 budget depends on the chosen completion methods, well lengths and whether the company decides to drill Upper or Middle Montney wells on a single pad or not, he said. In recognition of the current slowdown being experienced by the suppliers Blackbird deals with, the company implemented
a timely pay strategy in which pre-approved invoices are payable after 15 days (versus 30 to 120 days). As a result of this program, Blackbird receives discounts to invoices and it creates strong relationships with suppliers who are facing delays on receipt of receivables, Braun told the meeting. Blackbird is forging strong ties with local service companies that will benefit the company on future projects, he added. — Daily Oil Bulletin
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SURROUNDINGS lineate and de-risk the Montney, “both the Upper, the Middle and we see two zones at minimum in the Middle Montney,” he said. Its strategy is to step away from those wells and establish at least three new well pads and to drill
another three wells this year. After drilling the two recent wells, it was left with about $25.5 million of working capital, and no debt. Blackbird plans to announce this year’s capital budget later
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PUMPING SOLUTIONS
‘Frac sand’ facility to move forward Under current rules, a sand offloading facility is permitted on the Dawson Creek property
Jonny Wakefield
Pipeline News North
After stepping in to scrutinize a rail facility that would handle sand used in hydraulic fracturing, Dawson Creek City Council is dropping a plan to further review the proposal. At a closed meeting last month, council abandoned its plan to rezone land between 8th and 15th Streets. The railway-adjacent land is being eyed as a place to offload sand from railcars, including proppant for use in the fracking process. The rezoning would have given council more control over how the land is used — allowing it to potentially block the development. But conversations with owner CN Rail led councillors to change their minds, Mayor Dale Bumstead said. “Now that we understand [what the land will be used for], we’re not going to proceed with restricting the usage and or changing the zoning,” he said. The move is a return to status quo. Under the current rules, a sand offloading facility is permitted on the property. Councillor Charlie Parlsow raised the issue in October. He said that discussions with both the proponent and CN led council to believe the sand facility was “not such a big operation.”
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Parslow said council had been told that rail traffic would not increase significantly — as trains carrying frac sand already service a similar facility on the west side of town. Council had moved to send the land use question to a special public consultation process, a plan that has since been abandoned. According to minutes released from a February meeting, council backed off the zoning change based on “new information received from CN” which made clear the “considerable time and financial resources that would be required.” Darryl Wiebe, who works for the concrete firm planning the facility, said the issue was blown out of proportion. He said the sand could be used in fracking, but that it’s just sand. “There won’t be anything dangerous in the city,” he said. “It’s clean, it’s washed, it goes across North America in rail cars. It’s the chemical that’s added on site that everybody gets confused with.” In October, Bumstead said the concern was not about the sand itself, but industrial use in the area. He said the rezoning would give council time to gather information and consult the public. Wiebe said his company planned to submit development permits “in the next couple months.” reporter@dcdn.ca
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A local concrete company intends to build a sand loadout facility on a property between 8th and 15th streets in Dawson Creek that would handle sand used in the hydraulic fracturing process.
MARCH 13, 2015
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MONTNEY
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Encana won’t cut jobs in the Montney play Jonny Wakefield
Pipeline News North
Encana Corp. has no plans to shut down rigs or lay off workers in the Montney gas field, a spokesperson told Alaska Highway News. Encana had planned to spend between $600-$700 million on its Cutbank Ridge Montney assets with partner Mitsubishi Corp, but that has been reduced. That has been revised down to a gross investment of $570 million in 2015, which includes Encana's net investment of approximately $245 million and Cutbank Ridge Partnership's $325 million. The latter’s spending is focused in the northeastern B.C. portion of the play, particularly around Dawson Creek.
around $570M on its assets with Mitsubishi
Encana is making the changes after commodity prices sunk below projections made in December. In late February, the Calgary-based oil and gas company announced fourth quarter financial results and changed its company-wide capital budget. According to spokesperson Doug McIntyre, Encana had expected the price of West Texas Intermediate (WTI) crude to stay above $70. A barrel of WTI, an industry benchmark, had slipped to around $49.00 as of early March. The company also downgraded its expected natural gas price from $4 per million British thermal units to $3 on the New York Mercantile Exchange. Natural gas for delivery in April traded at $2.88 as of March 10. See ENCANA on Page 28
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TRANSPORTATION
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most dangerous roads Caution urged while driving after data shows Alaska Highway one of B.C.'s deadliest roads
Drive carefully: the Alaska Highway is one of the most dangerous in B.C., according to new data.
William Stodalka
Pipeline News North
A 24-year-old man died in a vehicle collision at Mile 64 north of Fort St. John on the Alaska Highway, police said, just days after new data showed that the road is one of British Columbia’s deadliest. RCMP said that a logging truck slowed to make a turn and was rear-ended by a second logging truck. The driver from the second truck died from his injuries on scene, police said in a release. Local RCMP said visibility and road conditions contributed to the accident. Unfortunately these types of accidents are all too common on this highway. From 2004 to 2013, there were 55 fatal crashes on the Alaska Highway from Dawson Creek to the northern border, according to information obtained by a provincial newscaster. The majority of these crashes happened from Fort St. John to Fort Nelson, which had 30 fatalities during this time frame. This earned this stretch of the road the dubious distinction of ranking as
the fourth most deadly stretch of highway in B.C. Global BC, using information it had requested from ICBC, published data on how many fatalities occurred on provincial highways from 2004 to 2013. The data showed that Highway 1 had the most fatalities, with 264. Followed up by this was Highway 97, at 250. Highway 97 includes portions of the Alaska Highway. The newscaster also published data for northern B.C. It showed that there were 10 fatal crashes on the Dawson Creek to Alberta border, followed by 13 fatal crashes on the stretch of road between Dawson Creek to Fort St. John. Fort St. John to Fort Nelson had 30 crashes, and the stretch of road between Fort Nelson and the Alaska border saw 12 crashes. Fort St. John Councillor Larry Evans said it was “unfortunately” not surprising that the road between Fort Nelson and his city took such a high spot. “It’s a wicked stretch of road, it always has been,” he said. Northern Rockies Regional Municipality Mayor Bill Streeper
said that the Montney gas plays goes “straight through the middle” of the highway. He added that this road has begun to be compared to the “highway through hell” to Fort McMurray for its conditions. “We’ve had very little work done on the Alaska Highway; it just hasn’t caught up with the times,” Streeper said. “This is just showing what are the results, when you don’t have the infrastructure kept up to date … something’s definitely got to be done.” Evans also suggested that stretch of road should be fourlaned, although he admitted that may be “pie in the sky” thinking. “They are trying to put passing lanes in and keep it as clear as possible, but somewhere down the way we’re going to have to bite the bullet.” Streeper said that in particular, the area of Highway 97 near Bougie Creek and Sikanni Hill were stretches of road that particularly needed four-laning. Evans said that people should use common sense when driving through the road. Streeper also said that truck operators should
FILE PHOTO
55 fatal crashes on Alaska Highway between 2004 and 2013: new data from ICBC ask drivers of larger trucks to “have (their) guys back up a little bit” and break up to give room to motorists who want to pass some of these trucks. The stretch of highway that had the most fatalities was between Revelstoke and Golden, which saw 38 fatal crashes. The stretch of highways that had the least recorded fatalties was Highway 99 near Highway 97 in the Lilloet area, which only saw two fatalities. A Ministry of Transportation official said via e-mail that her ministry and their safety partners “have been working hard to reduce serious crashes in our highway system.”
MARCH 13, 2015
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MONTNEY
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Investors target Montney’s riches Nelson Bennett
Business in Vancouver
Low prices might be curbing oil and gas drilling in some parts of the world, including Alberta, but if recent investment decisions are any indication, they have yet to cool the zeal that energy companies like Encana Corp. have for northeastern B.C.’s Montney. In December, the B.C. government generated $38 million in bonus bids for oil and gas leases to energy companies compared with $7.8 million in December 2013. In total, B.C. generated $330 million from oil and gas leases in 2014, according to the Ministry of Natural Gas Development, and 90 per cent of all drilling activity last year took place in just one of B.C.’s natural gas plays: the Montney. Encana is one of a handful of companies pouring money into the region. Just before Christmas, it announced plans to spend $600 million to $700 million in 2015 drilling there for oil, gas and natural gas liquids. In March 2014, Petronas subsidiary Progress Energy Canada Ltd. spent $1.5 billion acquiring 127,000 acres of land and producing wells in the Montney from Talisman Energy Inc. In December, Painted Pony Petroleum Ltd. announced plans to spend close to $300 million in 2015 drilling in the Montney. Shell Canada, meanwhile, has proposed a new facility south of Fort St. John that would process natural gas liquids. The Montney is a massive shale gas formation straddling the B.C.Alberta border. It’s one of four major unconventional gas plays in northern B.C. but is considered the richest because of its abundance of “wet” gas (natural gas liquids). “We believe it’s one of the best overall energy resource plays in North America,” Encana spokesman Doug McIntyre said. Companies like Encana are drawn to the Montney because of the huge demand for natural gas condensate in Alberta, where it’s used to dilute oilsands bitumen. “The Montney is really the granddad of the unconventional resource plays, and B.C. has such a big part of it,” said Dan Allan, executive vicepresident of the Canadian Society for Unconventional Resources. “The fact
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that there is a liquids-rich component makes it very valuable today.” The “dry” gas that energy companies are finding in the Montney will have greater value, should liquefied natural gas (LNG) plants be built. Malaysia’s Petronas spent $6 billion to acquire Progress Energy, which was almost exclusively focused in the Montney, to feed its proposed Pacific NorthWest LNG plant in Prince Rupert. “They made that investment because of the potential of LNG,” Allan said. “So if LNG was not on the horizon, would Petronas have acquired Progress Energy? Probably not.” Petronas could make an FID this year. But the dry gas that would feed LNG plants can be found in other basins in B.C. And yet most of the drill-
ing has been in the Montney. It’s the abundant “wet” gas (butane, propane, condensate and oil) there that gives that region such a high value proposition. “It’s not just LNG,” said Brad Hayes, president of the petroleum consulting firm Petrel Robertson Consulting Ltd. “LNG is an important component, but the liquids, and the oil, are also important.” Encana’s production guidance for the Montney is 19,000 to 20,000 barrels per day of oil and natural gas liquids, about a quarter of which would be oil. It would also produce 580 million to 620 million cubic feet of dry gas per day. One of the driving factors behind the drilling boom in the Montney, apart from the sheer volume of the formation, is that its geology is well
understood, Hayes said. In 2013, the National Energy Board released a survey that estimated the Montney’s reserves at: • One billion barrels of oil; • 14.5 billion barrels of natural gas liquids; and • 12.7 trillion cubic m of dry gas. “What does that tell you? It tells you that the B.C. Montney is attracting capital, yet some of the oil plays in Alberta are not quite as exciting to a lot of companies.” Even in a liquids-rich formation like the Montney, not every well that’s fractured will bring up liquids. The geology needs to be just right to “cook” hydrocarbons into oil or natural gas liquids. If a reserve is too deep, it will have cooked the hydrocarbons into vapour (dry gas).
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Gas plant permitting to be done through OGC GAS PLANT from Page 17 Puetter said the company has not yet made a final decision on where the modules that will make up the plant will be constructed, but it is exploring options in Alberta. “The preferred place would be Alberta because it has manufacturing capacity and it’s relatively easier to get from there to here because you have flat terrain,” Puetter explained. “Of course it’s a lot longer if you go Prince Rupert, Kitimat or Vancouver — in all cases it’s roughly thousands of kilometres to come to the Peace [and] it’s not flat.” The project does not require an Environmental Assessment certificate from the provincial government, which came as a surprise to Puetter and his team. “We looked at the regulations to see where it triggers [an EA]. The thing that happened was we
couldn’t see anything that triggered it,” he said. “When we got that we said ‘that’s surprising, did we over look something?’” Blue Fuel submitted their analysis to the British Columbia Environmental Assessment Office (BCEAO) to have them double check their findings. “They reviewed and they said … [our] interpretation is correct. I tell you we were surprised.” The detailed report which Blue Fuel submitted to the BCEAO will be available in the near future on its website, Puetter confirmed. The permitting for the project will be done through the Oil and Gas Commission, which for Blue Fuel is a plus as it will be “much, much faster,” according to Puetter. Permitting is expected to take a year. dcreporter@dcdn.ca
MARCH 13, 2015
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Fort St. John Oilmen
enjoy a night of laughs
Sean Thomas, president of the Fort St. John Petroleum Association
Cliff Shore, a member of the Oilmen’s Club and native of Fort St. John.
Gerry Goss has been an Associate Member for 12 years.
Dozens of Fort St. John oilmen gathered at the Lido Theatre in Fort St. John for their monthly meeting in early March. Comedian Tim Nutt is provided comic relief. Nutt is an experienced comic. At the 2006 Just For Laughs he was named one of the “Best of the Fest.” December’s entertainment was the popular Dueling pianos. Sean Thomas, president of the Fort St. John Petroleum Association, said entertainment and networking are the two most popular ways
to get people to the meetings. “There’s over 100 people in the room from all different walks of the oil and gas industry, so you can get a chance to mingle with all of them,” he said. “It just so happens that we’re at the Lido this month, and it’s a great venue for us. We have great entertainment tonight.” Cliff Shore, a native of Fort St. John, was at the meeting to network and keep in touch with people. He said he likes the association’s entertainment and information sessions. Shore builds oilfield equipment.
Gerry Goss, another Fort St. John native, has been an Associate Member for 12 years. “It’s a good social environment,” he said. “I can meet people I might not get a change to see every day. It’s nice to get out and be involved.” “When you come to our meetings you’re going to want to come for the entertainment value. And the Lido provides great opportunity for entertainment,” said Thomas. “We tend to do a more information sessions at the Curling Club.”
Chetwynd, Dawson strike deal Taxation revenue from proposed gas plant would be shared with the City of Dawson Creek in the same formula and tax sharing agreement that currently exists for Mechanical Pulp project The District of Chetwynd and City of Dawson Creek have partnered to show their support for Blue Fuel Energy’s $2.5 billion gas and methanol plant. Taxation revenue would be shared with the City of Dawson Creek in the same formula and tax sharing agreement that c urrently exists with the Chetwynd Mechanical Pulp project (formerly Tembec, Louisiana Pacific).
Chetwynd is asking Blue Fuel Energy to support a boundary expansion that would see the project included in Chetwynd municipal boundaries. The proponent, Sidney, B.C.-based Blue Fuel Energy, hopes to make a final investment decision on the project later this year. “[The project] will be a huge asset to Chetwynd and Dawson Creek. We welcome the op-
portunity to work together to facilitate sustainable development,” Chetwynd Mayor Merlin Nichols said. Dawson Creek Mayor Dale Bumstead said this is an example of how area municipalities can work together to demonstrate a shared desire to promote economic growth in the area. dcreporter@dcdn.ca
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TUMBLER RIDGE
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$480 million wind farm propo
Red Willow Wind Partnership enters environmental assessment process for a wind farm east of Tumbler Ridge th biggest in British Columbia, but the company says it won't make a final decision without a BC Hydro contra
JIM GEHRZ PHOTO/ TNS
The proposed Red Willow Wind Partnership Limited would be located 40 kilometres southeast of Tumbler Ridge. The project is in an early stage, said Alistair Howard, manager of project development at Boralex.
William Stodalka
Pipeline News North
A company has begun regulatory work with the aim of building a possible $480 million wind farm near Tumbler Ridge. According to the company’s estimates, it could be larger than any other wind project currently operating in British Columbia. OThe B.C. Environmental Assessment Office announced that the Red Willow Wind Partnership Limited — a joint effort between Aeolis Wind Power Corporation and Boralex Inc. — had entered the environmental assessment process. This is a process where the provincial government allows or disallows a project to go ahead based on its environmental impacts. A certificate from the BC EAO is just one of the many hurdles the proponent will face. The time-line looks like this: Red Willow Wind hopes to have regulatory per-
mits in hand in 2016, begin construction in 2017, with the wind power operating by late 2018. Red Willow Wind's estimated capital cost is $480 million. “Red Willow is an early, early stage project," said Alistair Howard, manager of project development at Boralex. "We’re just positioning ourselves with, I guess, the optimistic view that there is going to be a need for power and wind power will be the best.” Howard also said his company won’t be “extremely aggressive” about the plan. “We definitely won’t make any kind of construction/investment decision without a contract from BC Hydro,” he said. The project could be a boon for the depressed Tumbler Ridge economy, which has struggled since nearby coal mines were shuttered last year. It would be located 40 kilometres southeast of the town. The project description estimated that the Red Willow project "may pro-
vide up to 200 person years of employment, with a maximum of approximately 300 jobs at one time." Eight full time jobs would be created over its possible 40-year life span. The Red Willow project could produce 200 megawatts of power from as many as 80 wind turbine generators. The turbines would be located on a series of ridges south of Stoney Lake and Highway 52. They would be 135 metres from base to the hub, with a rotorplusblade diameter of up to 126 metres. By comparison, the Statue of Liberty is 93 metres tall. Each wind turbine would have a capacity of two to three megawatts. By building so many turbines, Red Willow Wind hopes to achieve economies of scale, making the project more cost-effective. The project would also require a new and upgraded access road, new transmission lines, a project substation and an office control station. The company anticipates "that the energy generated by the project will be
MARCH 13, 2015
PIPELINE NEWS NORTH •
www.pipelinenewsnorth.ca
osed
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turbines
FROM SUBMITTED B.C. EAO DOCUMENTATION
The Red Willow Wind Partnership would be built 40 kilometres southeast of Tumbler Ridge pending a final investment decision.
“Red Willow is an early, early stage project ...We’re just positioning ourselves with, I guess, the optimistic view that there is going to be a need for power and wind power will be the best," said Alistair Howard, manager of project development
sold to BC Hydro … through a future Clean Power Call." Howard said that at issue is whether or not Red Willow Wind could get a contract with BC Hydro. BC Hydro currently has its hands full with the Site C dam, which could cost upwards of $8.7 billion. That project would generate 1,100 megawatts of power if completed. The District of Tumbler Ridge is on board. It recently urged BC Hydro to buy electricity from two proposed projects that have been shelved due to limited demands for power. A spokesperson for BC Hydro said its plan "doesn't specifically call for a new large energy procurement process," but that the utility has left the door open "for exploring clean, renewable sources like
wind to supply electricity if future demand is higher than anticipated." While the wind power would likely be cleaner than other sources of energy, the project description filed with the BC EAO noted possible negative environmental impacts. The wind turbines could kill bats and birds, and some culturally valued wildlife could be at risk during construction. According to the company’s description, a member from the Lands office of Moberly Lake Indian Band and Saulteau First Nations participated in a site visit. Red Willow Wind promised to prepare a First Nations consultation plan. Nearby residents would also have their views changed, and noise would be created, according to the regulatory filing.
Howard said the area around Tumbler Ridge is a world class wind resource, and it’s been "basically undeveloped.” In addition to Red Willow, Boralex is working on smaller projects near Tumbler Ridge, such as the Moose Lake and Babcock projects. Those projects are independent and have no bearing on Red Willow. They would come with five to seven turbines. Last month, Pattern Energy Group LP began construction of the Meikle Wind Energy project. The $400 million wind farm's 61 turbines would produce 185 megawatts of electricity. — With files from Jonny Wakefield, reporter@ahnfsj.ca
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BRITISH COLUMBIA
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A bright spot in Western Canadian drilling Licence counts in British Columbia the only bright spot in otherwise dark times. B.C. assigned 92 new licences last month (77 were approved or input in February), off from 96 new wells assigned the previous year
Daily Oil Bulletin records show new well permitting over the first two months of the year is at an almost 25-year low, with licence counts in British Columbia the only bright spot in otherwise dark times. Overall, operators across Canada licensed 604 wells in February compared to 1,378 a year ago. To the end of February, 1,454 wells have been authorized compared to 3,407 in the first two months of 2014 (a decline of about 57 per cent). That’s the lowest level of permitting for the January-February period since 1992, when 782 wells were authorized. Gas-prone British Columbia assigned 92 new licences last month (77 were approved or input in Feb-
ruary), off from 96 new wells assigned the previous year. Over the first two months of the year, the province has assigned 189 licences compared to 221 a year ago (down about 17 per cent). Saskatchewan licensed 134 wells last month compared to 371 in February 2014. In the first two months of 2015 the province has permitted 394 wells versus 849 a year ago (off 54 per cent). Records show 354 wells were licensed in Alberta in February 2015 compared to 856 a year ago. In the January-February period, the licence count stands at 797, down 64 per cent from 2,232 in the first two months of 2014. A total of 418 oil and bitumen wells were licensed to the end of
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February in Alberta, off from 1,036 in the first two months of last year. Gas permitting in Alberta has declined to 184 wells in the January-February period this year compared to 306 in 2014. Last month, 70 gas wells were authorized in Alberta compared to 185 a year ago. Permitting levels in Manitoba decreased to 24 in February 2015 from 55 wells licensed last February. The two-month tally has decreased to 73 from 105 in 2014. Operators licensed 852 wells targeting oil or bitumen in Western Canada in the January-February period (last year: 1,900) compared to 364 gas or CBM targets (last year: 500). Producers licensed 344 horizontal wells last month, with 1,008
horizontal wells permitted over the first two months of the year — off 49 per cent from 1,977 horizontal wells permitted over last year’s January-February period. Operators licensed only 34 oilsands evaluation wells last month, down from 124 wells last year and 390 wells two years ago. Over the first two months of the year, 98 oilsands evaluation wells have been authorized compared to 695 in 2014. The top five licensees of new wells in February, excluding experimental holes, were: Royal Dutch Shell plc (100), Canadian Natural Resources Limited (39), Crescent Point Energy Corp. (37), Encana Corporation (33) and Progress Energy Canada Ltd. (26). — Daily Oil Bulletin
ENCANA from Page 21
A few key decisions in past years have insulated Encana from oil price shocks relative to other companies in the sector. The company shifted to natural gas in 2013 from more marginal holdings, moving 80 per cent of its spending to four major plays. Encana’s Montney investment was buoyed by a sale late last year of around 500 kilometers of pipeline and seven compressors — most of which were in northeastern British Columbia — to Veresen Midstream, ahead of new spending upstream. McIntyre said that deal is expected to conclude in a "matter of weeks."
"We're still generating good margins even in this low price environment," McIntyre said. "Having said that, we will be adjusting spending somewhat in each of [the plays] as well as moving to a pace of development that makes sense in these current market conditions." He said that the company still intends to operate up to three rigs in the Montney in 2015 and does not plan to cut any jobs. "We have no plans to do layoffs anywhere in the company," McIntyre said.
SUPPLY from Page 11 Low prices should spur demand to some degree, Watson said, but with weak world economic growth, it will take more to balance markets in the near-term. “That leaves downward supply response from lower spending as the primary balancing mechanism,” he noted. “And big spending cuts are now rolling through the industry. “A focus of discussion has been the U.S. with sharp reductions in spending, rig counts and output estimates,” Watson said. Estimated production
for December of this year has been cut 500,000 bbls per day. “Spending reductions around the world have received considerably less discussion, although international supplies make up more than 85 per cent of world crude and NGL supply,” Watson added. “Host governments and national oil companies are facing very tough choices between funding to maintain and grow production or funding social and other spending. We also expect this to translate into investment reductions and lower oil supplies. We believe these market forces will bring supply and demand into balance.”
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PIPELINE NEWS NORTH •
EMPLOYMENT
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BC Hydro wants more local workers In an effort to stem the bleeding of employees going down south, the Crown Corporation hosted a job fair in Hudson's Hope and information sessions at high schools in Chetwynd, Dawson Creek and Fort St. John
MIKE CARTER PHOTO
A BC Hydro linesman walks elementary students through how the job is done. The students were attending a try-atrade event at Northern lights College earlier this year. BC Hydro is at high schools in Chetwynd, Dawson Creek, Fort St. John and Hudson’s Hope this week, recruiting students interested in what they have to offer.
Mike Carter
Pipeline News North
BC Hydro has had a tough time keeping employees in the north. In an effort to stem the bleeding of employees leaving to return to the Lower Mainland, the Crown Corporation went on an information tour at high schools in Chetwynd, Dawson Creek and Fort St. John this week, geared towards recruiting potential future employees. The week of information sessions culminated in a trade fair at the Hudson’s Hope community centre on Feb. 12. “If we can hire people who are from smaller towns, they are more likely to want to get a job in those smaller towns if there are jobs available, and they are less likely to want to move away,” Community Relations Manager Bob Gammer said. Gammer said a lot of companies, not just BC Hydro, find that once they’ve trained staff
and have got them located in roles in the north, they move south after a few years often because that is where they are from. “If we hire people from the north, there’s a better chance that they will stay in the north because of their family ties,” he explained. In order to maintain the level of service provided, BC Hydro is going to need a sustainable workforce for the north, Gammer said. “In a Human Resources context, it’s a very serious issue.” Keith Maurer, a director of instruction with School District 59, said it’s all about exposing students to what is available. “It’s our role to try and show what opportunities there are and ensure that we are trying to provide training for them to move down the direction that they’d like to take, whether that’s in a trades route or a university route. I think we have to do our best to keep the options open for them,”
he said. Maurer notes that this is not only important at the high school level. “One of our focuses that we’ve brought in this year is to start working with elementary students, not trying to push them in any kind of particular direction but, just to help them understand a little more about working with your hands, developing things, or creating things,” Maurer said, “so that by the time the get to [high school] they’ve got that understanding behind them.” One of these initiatives was the “try-a-trade” session, held at a recent Skills Canada competition at Northern Lights College in Dawson Creek. About 300 grade 7 students had a chance to sample trades, while learning about jobs training offered at the college, ranging from hair styling to aircraft maintenance. Gammer says BC Hydro isn’t limiting their intake at the moment to any particular
trade. “We’re not being picky at this point,” he said. “We want everybody who is thinking about any kind of trade to know what we want from them.” That includes electricians, power line technicians and protection and control technicians. Gammer said the information sessions and the trade fair itself is not tied to recruiting efforts for the Site C dam. “I mean sure, could it provide a spin off benefit ultimately? I guess so. But this is coming locally from the regional manager of our generation facilities.” Gammer later clarified that Site C recruiters would be present at the trade fair in Hudson’s Hope. “They were invited to be there. There will be a booth. But as I said before, this is being driven by the regional manager of our existing facilities.” dcreporter@dcdn.ca
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FORT NELSON
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Rogers expands coverage Move is part of a broader initiative to improve network in the province, but the so-called Extended Coverage is not meant for local, full-time use, but for people passing through the area
fort nelson
COURTESY ROGERS
Rogers' so-called "Extended Coverage" is coming to the Northern Rockies Regional Municipality area, but it is not meant for people who live in the area, according to the company. Actual coverage may vary. William Stodalka
Pipeline News North
Rogers is expanding its cell phone coverage throughout Northeast British Columbia, including adding the Fort Nelson area to its coverage umbrella — but there's a catch. The carrier's so-called "Extended Coverage" is not meant for people who live in the area, the company said. Maggie Burzawa, a Rogers communications manager, said people who live in Fort Nelson could technically sign up for a Rogers service and use it full-time, however, Rogers would likely contact those customers and discourage them from doing so, in part because Extended Coverage does not allow for some important features. People within an Extended Coverage area may see slower speeds, according to Rogers website. They will also not have access to some features like Name Display, phone finder, or 411 call completion. The move is part of a broader initiative to improve its network in the province.
“Rogers customers across British Columbia want to be able to stay connected from anywhere they travel,” Gordon Nelson, vice-president, Sales, British Columbia, said in a release. “Now with Extended Coverage, you can use your device in more places across B.C.” The service in Northeast B.C. falls under what the carrier calls "Extended Coverage." The Extended Coverage network uses a different telephony format than other Rogers methods. Parts of the Alaska Highway north of Fort St. John from Mile 73 to near Buckinghorse Provincial Park will now have coverage under this service. About 52-kilometres of the Alaska Highway between Fort St. John and Fort Nelson will still be in the dark, including a section near Klua Lakes Protected Area. After dropping for 30 kilometres, coverage will resume closer to Fort Nelson. Rogers notes that actual coverage may vary. “Reception may be affected by various factors, including system availability and capacity, customer’s equipment, signal
strength, topography, and environmental conditions,” it states. This coverage will extend to people with contract agreements with Rogers, but it will not be accessible for prepaid Rogers phones, according to Rogers. No extra charges will be assessed to use its Extended Coverage area. However, people entering an Extended Coverage area will receive a text message the first time they use it, and occasional reminders will be sent for regular users. “The signal strength may vary and you may experience slower data speeds (in Extended Coverage areas),” it states. Other features may also not be available. A call to a Rogers customer representative confirmed that people in Fort Nelson would be eligible for a Rogers wireless plan. Other areas of the province included in the new coverage area included Highway 97 from Prince George to Cache Creek, the road from Revelstoke to Golden, and the Fraser Canyon, connecting travellers from Vancouver all the way to northern B.C., a Rogers release states. reporter@ahnfsj.ca
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