Special report: Drillers in Peace Region may tap Site C for clean power
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A heavy dose of reality
A reality check for Canada’s pipeline debate
Why some gas supply critics have it wrong Opportunities abound, even at $60 oil
Dawson Creek tells Squamish not to fear fracking
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Oil and gas will remain a part of Canada and the world’s future for a long time to come. It will continue to fuel a large part of the economy, while providing Canadians with access to reliable and affordable energy. Consideration should be given to the safest and most efficient way to transport oil and gas across the country.
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The following figures were taken from stories in the current issue of Pipeline News North.
$7.8 million: The amount that Alberta’s oil and gas land tender pulled in on June. 10. Chart on Page 5.
5.3 million: The number of barrels of oil per day that will be produced in Alberta by 2030, up from 3.7 million bbls per day in 2014. Story on Page 12.
$1.1 billion: The amount of money that will flow into Northeast B.C. from provincial coffers from the new Fair Share deal that was announced recently. Story on Page 20.
$273,000: The amount that B.C. oil and gas land tender pulled in in May. Chart on Page 5.
350: The number of companies that shoed up for the Peace Region Petroleum Show in grande Prairie. Story on Page 14.
$64: The price Brent crude was trading at on June. 12. It has been cut in half over the past 12 months. Chart on Page 5.
272: Thw number of golfers at this year’s Fort St. John Petroleum Association Oilmen’s Golf Tournament in June. Story on Page 16.
770: The number of pipeline accidents and incidents in Canada from 2009 to 2013, according to Transportation Safety Board data. Commentary on Page 30.
$12.31: The price of Japan’s LNG import price in June, off off 25% from one year ago. Chart on Page 5.
273: The willing score at this year’s Sporting Clays Shoot, hosted by the North Peace Rod and Gun Club. Story on Page 18.
3,000 trillion: The amount of British Columbia’s gas-in-place today in cubic feet, which is more than enough to satisfy both domestic consumption and export potential. Commentary on Page 31.
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The Alberta-B.C. LNG 5 discount (chart)
U.S. gas price 5 (chart)
B.C. land auction 5 (chart)
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Japan gas 5 price (chart)
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B.C. LNG inches toward first 5 final investment decision Drillers may tap 6 Site C for clean power
22 Dawson tells Squamish not to fear fracking
30 A reality check for Canada’s pipeline debate
Petronas FID 11 ‘in coming weeks’
31 Why some gas supply critics have it wrong
Oil production to grow, 12 but at a slower pace
20 Scaled-back Fair Share deal signed
28 When it comes to LNG — think small
B.C. inks deal with 10 major LNG project
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16 Fort St. John Petroleum Association Oilmen’s Golf Tournament
23 Squamish mayor heading to Dawson Creek
AltaGas inches closer to 8 final decision
14 Grande Prairie petroleum show pulls in record vendors
18 4th annual sporting clay shoot
Alberta petroleum 5 land auction (chart)
13 Opportunities abound, even at $60 oil
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Published monthly by Glacier Ventures International Corp. Pipeline News North is politically independent and a member of the B.C. Press Council. The Pipeline News North retains sole copyright of advertising, news stories and photography produced by staff. Reproduction is prohibited without written consent of the editor.
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the charts
#oilsands
alberta o&g land auction Alberta’s oil and gas land tender on June 10 pulled in $7.8 million. The next tenders will be held June 24 and July 8. Source: Alberta Energy Regulator
December 2013 to June 2015
the alberta-b.c. lng discount The Alberta-B.C. Natural Gas Discount — the difference in price for gas in Tokyo compared to Canada — fell to $9.77. (C$) December 2013 to June 2015
alberta gas price The AECO “C” spot price, the Alberta gas trading price declined to $2.36 as of the first week of June. (C$) Source: Natural Gas Exchange December 2013 to June 2015
B.C. LNG inches toward first final investment decision Mike Carter
Pipeline News North
A conditional final investment decision on a project that would transform the economy of Northern British Columbia could be in the offing as early as mid-June, according to media reports. Pacific NorthWest LNG chairman Wee Yiaw Hin will be in Vancouver June 11 meet with representatives from the Petronas-led consortium, the Globe and Mail has reported. Two weeks before that, the Petronas executive vice president told a Malaysian newspaper that the proposed $36 billion project has a good business case to proceed, and he hoped “to achieve something in weeks rather than months.” If approved, the project will be a massive driver of economic activity in Northeast B.C., where the gas will be produced by Petronas-subsidiary Progress Energy. Progress — the largest holder of drilling rights in the Montney play surrounding Dawson Creek and Fort St. John — has drilled 215 natural gas wells and identified 13,000 more locations In May, the consortium entered into an agreement to lock in royalties
over the coming decades and protect the project from industry-specific tax increases. The move was designed to reduce risks for the project’s partners and help spur a final investment decision. Amid a spate of bad news for LNG proponents over the months, pipeline companies have made progress in efforts to gain consent from First Nations to build pipelines through their respective territories. Calgary-based TransCanada Corp. — who has proposed building two pipelines to deliver gas from Northeast B.C. to the Pacific coast — announced that it has entered into benefit sharing agreements with the Doig River, Halfway River and Yekooche First Nations located along the Prince Rupert Gas Transmission (PRGT) pipeline route. Each agreement provides financial and other benefits related to the pipeline projects, including annual legacy payments for the duration of the pipeline’s operations, as well as immediate benefits on signing and payments at key project milestones. See DECISION on Page 26
b.c. o&g land auction
japan lng price Japan’s LNG import price stood at $12.13 in the first week of June, down slightly from last month and off 25% from one year ago. (US$). Source: World Bank
The BC Oil and Gas Commission’s monthly land tender pulled in $273,000 in May. The next sales will be held June 17 and July 15. Source: BC Oil & Gas Commission December 2013 to June 2015
December 2013 to June 2015
Oil price brent crude price
u.s. gas price
The price of Brent crude has found a trading range of $58 to $62 over the past two months. In the first week of June it traded at $61. Source: U.S. Energy Information Agency
Left, the Henry Hub Natural Gas Spot Price (US dollars per Million Btu) stood at $2.60 in the first week of June. Source: U.S. Energy Information Agency December 2013 to June 2015
May 2010-June 2015
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William Julian Regional Manager 250-785-5631 wjulian at pipelinenewsnorth.ca
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Jonny Wakefield
Pipeline News North
Natural gas producers between Dawson Creek and Fort St. John could plug directly into the Site C dam if BC Hydro moves forward with a proposed route for a major transmission line, a move which
could reduce upstream greenhouse gas emissions by forcing them to turn off their natural gas power generators. For the first time, BC Hydro is mulling Site C as a power source for its proposed Peace Region Electrical Supply (PRES) project, a high-voltage
line to increase transmission capacity in Northeast B.C. Hydro is looking at 11 routes for the project, the majority of which would connect to the GM Shrum Generating Station at the W.A.C. Bennett Dam. See HYDRO on 26
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go green?
Natural gas drillers between Dawson Creek and Fort St. John could plug directly into clean power from the Site C dam, a move which could reduce upstream greenhouse gas emissions by forcing them to turn off their natural gas power generators. Crews hang lines on the DCAT power project east of Dawson Creek. A second project that will connect the DCAT line to Hydro generating stations on the Peace River could see natural gas producers in Groundbirch drawing power from Site C. courtesy Photo
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AltaGas inches closer to final decision First phase of development will include Kitimat LNG liquefaction facility with a capacity of 110 million cubic feet per day.
Mike Carter
Pipeline News North
A $500 million liquefied natural gas (LNG) export facility is inching closer to a final investment decision as early as the end of this year. The proposed project is headed by the Douglas Channel LNG Consortium, a partnership led by AltaGas Ltd, a midstream company known in the Peace as the operator of the Younger Natural Gas Liquids Extraction Plant in Taylor and the Bear Mountain Wind Park in Dawson Creek. AltaGas applied to the National Energy Board (NEB) June 1 on behalf of the partnership for a licence to export LNG near Kitimat, British Columbia. The export licence, if approved, will last for a term of 25 years beginning on the date of the first LNG export. The NEB originally granted the export licence to BC LNG Co-operative LLC in February 2012, but it was revoked after that company dissolved in January 2015.
Douglas Channel LNG partners include Japan's Idemitsu Joint Venture Limited Partnership, Belgiumbased EXMAR NV and EDF Trading Limited, a subsidiary of Electricite de France S.A. The proposed LNG export project involves two phases. The first would see the construction of a floating liquefaction facility with the capacity to receive 110 million cubic feet of gas per day. The second will include more floating liquefaction facilities that would increase export capacity to one billion cubic feet per day. The company intends to make a final investment decision on the first phase by the end of 2015 and begin deliveries of LNG in 2018. “It is estimated that trillions of cubic feet of natural gas exist in the Montney Shale gas play located in Northwest Alberta and Northeast British Columbia,” a statement on the company's website said. “There is a growing need for gas processing capacity and pipelines as drilling activity increases in the area. AltaGas plans to meet this need by delivering gas processing and natu-
ral gas liquids extraction services to our customers.” Because the export licence had been previously approved, it is likely another license will be granted by the NEB. Gas for the first phase of the project will be transported from the Western Canadian Sedimentary Basin in Northwest Alberta and Northeast B.C. via the existing Pacific Northern Gas Ltd. (PNG) pipeline system, which runs from Summit Lake to Prince Rupert, with lateral transmission pipelines extending to Kitimat. The second phase of the project will require an expansion of the PNG pipeline system. PNG has engaged with the B.C. Environmental Assessment Office on the proposed PNG Looping Project, which would upgrade its gas transmission capacity by twinning the existing pipeline. Subject to regulatory environmental project approvals, construction of the PNG Looping project could commence as early as later this year, with an earliest in-service date in late 2016.
AltaGas holds a long-term lease agreement with the Haisla Nation on District Lot 99, which is located about eight kilometres west of Kitimat, B.C. The licence will expire 10 years after the date it is granted if gas exports have not begun. “The project is well positioned to be an early exporter of LNG off the West Coast of Canada, with unique competitive advantages,” said John Rittenhouse, EDF Trading executive in a February press release. The Douglas Channel LNG partnership's two-phased export facility is one of 21 projects that propose liquefying Canadian natural gas and shipping it to Asia. AltaGas has also proposed British Columbia’s first natural gas liquefaction facility for Dawson Creek, which will be for local consumption. Douglas Channel LNG is one of three proponents expected to make final investment decisions this year. However the others — Pacific NorthWest LNG and Woodfibre LNG — are facing increasing turbulence. dcreporter@dcdn.ca
JUNE 12, 2015
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B.C. inks deal with major LNG project Intended to spur FID and provide cost certainty NDP: Victoria wants 'a deal at any cost'
Staff reporter
Pipeline News North
The B.C. government announced that it signed a memorandum of understanding with Petronas-led if PacifNorthWest LNG to lock in natural gas royalties over the coming decades and indemnify the project from industry-specific tax increases. RELATED: Petronas FID ‘in coming weeks’ on Page 11 The MOU provides Petronas with great amount of certainty as it prepares to make a final investment decision on the $36 billion project. The B.C. and federal governments have sweetened the pot for proponents in the burgeoning industry in an effort to spur final investment decisions. In the spring, the federal government announced plans to extend the lifespan of LNG export licenses. The 2015 budget extends LNG export licenses from a maximum of 25 years to 40. The government hopes extending the life of a licenses will “improve regulatory certainty” for companies considering LNG plants on B.C.’s west coast. B.C.’s move to lock in natural gas royalties also follow’s a move by the majority federal Conservatives in February to roll out a capital cost allowance aimed at making it cheaper to build LNG facilities. “Today reflects the beginning of the company’s final decision path toward an investment decision,” said B.C. Premier Christy Clark. “Today’s agreement is the product of tremendous effort right across government and among many partners to recognize a generational opportunity and ensure that we are ready to seize it, for the benefit of British Columbians today and those who are to come.”
The initial phase of Pacific NorthWest LNG's facility. The design has not been finalized. pacific northwest lng There are 19 proposed LNG projects in B.C., but none have made a final investment decision. The project development agreement — which provides protection from tax increases and environmental regulations targeting the LNG industry — needs to be approved in the legislature. “The substantial progress experienced by Pacific NorthWest LNG over the past two years is a product of hard work, compromise and cooperation,” said Michael Culbert, president of Pacific NorthWest LNG. “Today’s commitment by the government of B.C. to legislate our Project Development Agreement provides the certainty that our investors need as we approach a decision whether to proceed with the project.” Petronas is awaiting environmental approval for the proposed export terminal project, which could come as early as October, according to industry sources. The province and Petronas continues to consult with Tsimshian Nations — Lax Kw’alaams, Metlakatla, Gitxaala, Kitsumkalum, Kitselas and Gitga’at First Nations — regarding the Pacific Northwest LNG project. B.C. has also engaged with 19 First Nations along the proposed Prince Rupert
Gas Transmission Pipeline route. Fourteen agreements related to the facility and pipeline have been achieved to date. Datuk Wee Yeow Hi, Chief Executive Officer of Upstream for Petronas, said the national oil and gas corporation is of the view that the proposed project has a good business case to proceed, although it has yet to make a final investment decision. “We have not made a decision yet whether to proceed with the project. We’re hoping to make the decision soon. At the same time we have to work with the First Nation to resolve their concerns before we can proceed with the project,” Wee told the Malaysian news service Bernama on the sidelines of the 26th World Gas Conference here in the first week of June. Lax Kw’alaams earlier rejected an offer of $1 billion in return for supporting PacifNorthWest LNG on the grounds that the project would harm a sensitive fish habitat near the project site. Asked if PacifNorthWest LNG necessarily needed consent from the First Nation, Wee said, “We will always make sure that we manage our stakeholders. Our [business] model is always to work with them.”
‘Today reflects the beginning of the company’s final decision path toward an investment decision. Today’s agreement is the product of tremendous effort right across government and among many partners to recognize a generational opportunity and ensure that we are ready to seize it, for the benefit of B.C.’
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Petronas FID 'in coming weeks' Nelson Bennett
Business in Vancouver
Affirmative final investment decision would be a boost for the Peace economy Drilling for the proposed LNG project will take place in the Montney
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One day after the B.C. government announced long-term royalty and development agreements with Pacific NorthWest LNG, the project’s owner, Petronas, confirmed it would make a conditional final investment decision on the multibillion dollar project in the coming weeks, according to Reuters. At a first quarter earnings press conference May 22, the Malaysian energy giant’s new president, Wan Zulkiflee Wan Ariffin, confirmed that his company will make the final investment decision on $11 billion Pacific NorthWest LNG plant and associated $5 billion pipeline in the coming weeks. That’s despite slumping revenues from lower prices and objections by a key First Nations player to the site the company has chosen in Prince Rupert. Reuters and Malaysian Insider quoted Ariffin, who referenced the deal announced a day earlier with the B.C. government on a commitment on tax rates and royalties: At a first quarter earnings press conference on May 22, Petronas’ new president confirmed that his company will "With this recent develop- make a final investment decision on Pacific NorthWest LNG in the coming weeks. ment, we are looking to achieve courtesy petronas a conditional final investment decision in the coming weeks. LNG has chosen. and Canada. term assurance that future govern“We will continue to have conThe site is problematic beShould Petronas green light its ments will not increase carbon and structive engagements with the cause of concerns about its im- final investment decision on the LNG taxes. If it does, the developFirst Nation, and keep all avenues open as we move forward with our pact on Flora Bank – an impor- Pacific NorthWest LNG project, the ment agreement requires the comtant salmon-rearing habitat total capital expenditure in Canada pany to be compensated. project.” at the mouth of the Skeena is estimated at $36 billion, some The government also agreed to a He referred to the Lax Kw’alaams, River. of which would include its up- long-term structure on natural gas which last week rejected a $1.1 bilIn its first quarter earnings, stream natural gas assets, which it royalties that address natural gas lion benefits agreement offered by Petronas reported a 21 per cent drop acquired when it bought Progress price and production fluctuations. Petronas in exchange for their sup- in revenue, due largely to low oil Energy Canada. Another major milestone still port. prices. On May 21, the B.C. government needs to be cleared before the PaLax kw’alaams leaders made it It also reported capital invest- announced a development agree- cific NorthWest LNG project can go clear that the Lax Kw’alaams are ments of $4 billion for the first ment that provides guarantees on forward: A green light from the Canot opposed to the LNG industry, quarter in exploration, develop- various tax rates — a move aimed nadian Environmental Assessment just the site that Pacific NorthWest ment and production in Malaysia at giving the company some long- Agency.
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Oil production to grow, but at a slower pace: CAPP In its 2015 Crude Oil Forecast, Markets and Transportation report, CAPP projects that oil production will rise to 5.3 million bbls per day by 2030 That’s up from 3.7 million bbls per day in 2014, but 1.1 million bbls per day lower than last year’s forecast The steep and persistent decline in global oil prices will hamper Canadian crude output going forward, says the Canadian Association of Petroleum Producers (CAPP) in its latest forecast released this morning. In its 2015 Crude Oil Forecast, Markets and Transportation report, CAPP projects that, primarily due to oilsands development, oil production will rise to 5.3 million bbls per day by 2030, up from 3.7 million bbls per day in 2014 but 1.1 million bbls per day lower than last year’s forecast. According to CAPP, the decrease is due to lower oilsands in situ production of about 835,000 bbls per day, lower oilsands mining output (33,000 bbls per day) and lower conventional oil production (260,000 bbls per day). CAPP’s June 2014 forecast estimated total oil production in 2030 at 6.4 million bbls per day. While the two forecasts are similar during the early years of the forecast period, the slower pace of production in the latter years is the result of reduced capital spending intentions due to the sharp decline in global oil prices. That said, the report says increased transportation capacity, in all forms, is still needed to meet growing domestic, U.S. and global demand for Canadian oil. In the report, CAPP said the timely development of infrastructure to obtain market access is a continuing concern. The in-service dates for many of the pipeline projects have already been delayed and could be even further delayed due to extended regulatory processes. Transport of crude by rail has been growing in importance. The growth of rail beyond 2018 will primarily depend on the availability of pipeline capacity. “Demand for Canadian oil in
tal investment is forecast to be lower by almost a third to $23 billion compared to $33 billion in 2014. Conventional oil Conventional production in Western Canada is currently 1.4 million bbls per day and is expected to decline slightly to 1.3 million bbls per day by 2020. Of these volumes, condensate and pentanes production comprise 182,000 bbls per day and output is expected to decline to 161,000 bbls per day by 2030 Conventional oil well drilling activity is expected to decline substantially in the near-term in 2015 and 2016. Although some recovery in drilling activity has been incorporated in the latter years, there is significant uncertainty surrounding the timing. Oilsands
Eastern Canada, the United States and globally remains strong,” Greg Stringham, CAPP’s vice-president, oilsands and markets, said in a press release. The International Energy Agency reports global demand for energy, including oil, is expected to grow 37 per cent over the next 25 years. Canada has 173 billion bbls of oil, the third-largest proven reserve in the world. However, today Canada only produces 3.7 million bbls of the 93 million bbls consumed every day around the world. “We have the energy the world needs — our challenge is getting it there,” Stringham said. “Connecting Canada’s growing supplies to these markets safely and competitively is a top priority.” The oilsands remain the primary driver
of oil growth in Canada, with production reaching four million bbls per day by 2030. Conventional oil production in Western Canada, including condensates, is projected at 1.3 million bbls per day by 2030. Eastern Canadian offshore production is forecast at 91,000 bbls per day by 2030. In light of current low prices, CAPP noted that oil producers in Canada continue to evaluate their growth plans. This market uncertainty is reflected most in the oilsands growth range in this year’s forecast. The range indicates future projects are under review. Total oil and natural gas industry capital investment is forecast at $45 billion in 2015, down nearly 40 per cent from $73 billion in 2014. In the oilsands, 2015 capi-
The vast majority of Canada’s crude oil reserves reside in the oilsands so it is natural for this resource to be the primary driver for future overall growth. The 2015 outlook for oilsands reflects an average annual growth of 168,000 bbls per day through to 2019. During the last decade of the outlook, the average annual pace from 2020 to 2030 declines to approximately 86,000 bbls per day. In 2014, 2.2 million bbls per day were produced from the oilsands of which 912,000 bbls per day was from mining and 1.2 million bbls per day from in situ projects. Looking ahead to 2030, mining production is forecast to reach at least 1.4 million bbls per day in 2030 from projects that are operating or in construction and up to 1.6 million bbls per day with the additional growth forecast. In situ production is forecast to reach at least 1.6 million bbls per day from the lower range and up to 2.4 million bbls per day with the forecast growth. — Daily Oil Bulletin
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Opportunities abound, even at $60 oil
Elsie Ross
Daily Oil Bulletin
This could be a good time for service companies to get into the oilsands business; “The magnitude of the supply chain is enormous and the opportunities are enormous”
While oilsands suppliers can still survive $60 per bbl oil, oilsands costs need to come down and new technologies can play an important role, companies from Quebec and France heard. “The downward pressure on prices makes everyone want to be smarter,” Bill Whitelaw, chief executive officer of JuneWarren-Nickle’s Energy Group, publisher of the Daily Oil Bulletin, told those attending an Alberta outlook reception. “People who come with high-value, low-cost cost solutions really are in the driver’s seat.” There also is a need to reduce the environmental footprint of the oilsands and there doesn’t necessarily have to be a tradeoff between economic and environmental performance, said Soheil Asgarpour, president of the Petroleum Technology Association of Canada. “We can sit back and hope for oil prices to go up or we can use technology and innovation to bring the costs down,” Asgarpour noted. A collaborative program with money provided by industry along with other government/industry sources, PTAC has raised $119 million since 2001 to address high-priority environmental and social issues related to oil and gas exploration and development in Alberta, he said. Industry has estimated cost savings of between $90 million and $350 million. According to Whitelaw, this is actually a good time for service companies to be thinking of getting into the oilsands business. “The magnitude of the supply chain is enormous and the opportunities are enormous.” Companies were advised to learn about the different oilsands projects with their various phases and what sorts of services they might need. Oilsands companies also are looking at ways to squeeze more out of their existing assets and service companies, Whitelaw said. “If you have a service that can target production enhancement, all of a sudden you can get right in there with these big companies that are looking at debottlenecking.” Although capital spending has declined, MRO (maintenance, repair and operations) is still huge, along with sustaining capital in both mining and in situ projects, said Whitelaw. “Think about all the ways your companies can provide goods and services in [terms of ] what companies still need to do.” As a service provider, “you have to understand the producer’s pain,” he said, noting that the oilsands business had become very costly over the years and is now trying to drive down those costs. “If you want to be one of the solution providers, if you want to get on the preferred vendor list, be one of the providers that takes the producer’s pain away.”
courtesy suncor
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This year's 2015 Peace Region Petroleum Show — held May 13 and 14 at Evergreen Park in Grande Prairie — had a record 350 companies registered despite the downturn in the oil and gas industry in Alberta. Daniel Przybylski Photos
Grande Prairie petroleum show pulls in record vendors Mike Carter
Pipeline News North
Every two years, the big players in the Peace Region's petroleum industry meet in Grande Prairie for a chance to share the latest industry information, equipment and technology. This year's 2015 Peace Region Petroleum Show was held May 13 and 14 at Evergreen Park in the Entrec Centre with a record 350 companies registered. The show is always held during the breakup season when things slow down for the industry. The Grande Prairie and District Chamber of Commerce and the Grande Prairie Petroleum Association co-host the event. Due to the increased demand from exhibitors this year, organizers had to open up additional booths in the hallway of
the Entrec Centre. "We actually had more interest, so we expanded it," Dan Pearcy, chief executive officer of the Grande Prairie and commerce told Alaska Highway News. "It's even bigger than we originally thought." Pearcy attributed this increased interest from industry exhibitors to the fact that current market conditions have led to lower than normal rig activity during spring breakup. "The last several shows there has been very minimal breakup. The industry was really busy, so it was tough for some vendors to get their equipment down here," Pearcy said. "This year, with the drop in oil prices, I think it has opened things up a little bit more. I had a great turnout from vendors. It's a combination of breakup and commodity prices really playing into our favour." dcreporter@dcdn.ca
JUNE 12, 2015
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Golfers finish up the best ball portion of play during the 53rd annual Fort St. John Petroleum Association Oilmen's Golf Tournament at the Lakepoint Golf and Country Club.
mcnee swings to three-peat Kevin McNee won his third consecutive Oilmen’s Golf Tournament among the 272 golfers at Lakepoint Golf and Country Club Byron Hackett
Pipeline News North
In the 53-year history of the Fort St. John Petroleum Association Oilmen’s Golf Tournament, several dynasty-like runs have come and gone. Former Lakepoint Golf and Country Club pro Kevin McNee nailed down his own legacy with his third straight championship flight victory. McNee, now the general manager of M & M Resources cruised over the three-day tournament, which included an 18-hole 2&1 win in the final match over Warren Haugan. “Got lucky again,” McNee said with a laugh after his round about how he was able to secure his third straight win. “I don’t play a whole lot, I don’t practice a whole lot but when I
come back here it’s kind of lucky.” Whether it was luck or not, McNee still had to win five matches over 54 holes to be crowned the champion. This year the tournament featured 272 golfers and 17 flights, down from the usual 300 plus golfers of past years likely because of the downturn in the economy. Despite the slightly lower turnout, chairman of the Oilmen’s Golf Tournament Lee Hartman said the three-day event was a success and a good time for all involved. “Really good,” Hartman said. “The weather was fantastic, committee members went above and beyond the call of duty and I think everybody had fun.” Ultimately, having fun and coming together with old friends is what has kept the now threetime champion returning year after year.
“This golf tournament means the world to me,” McNee said. “I grew up living out here and I worked at the golf course. The atmosphere, it’s the golf course. The people. The people especially, I come back here and I see people I haven’t seen in an entire year and it’s like I’m taking to my best friend.” Ted Pimm, general manager and CFO of Pimm's Production Equipment and 16-year member of the petroleum association added that in a tournament like the oilmen’s, building relationships often comes ahead of the golf. “Camaraderie,” Pimm explained as a major factor for the people continuing to come out to the tournament. “It’s all the guys who work in the oil industry and this is sort of the down time. So guys get a chance to mingle with other guys and net-
work a little bit.” The event also finished off with a dinner and a dance featuring Liquid Blue, a band from San Diego that played at the tournaments fiftieth annual event. Hartman added that the 22person organizing committee deserved a ton of credit for putting on the event, and once again Lakepoint was the perfect venue for the tournament. “The course was in great shape, Lakepoint did a great job in hosting it for sure,” said. McNee expanded the praise for his once home course, and where the oilmen’s tournament has been played every year since it began. “Once you got the ball on the green they were absolutely phenomenal,” he said. “Kudos to the grounds crew and the golf course. [The greens] were perfect.”
JUNE 12, 2015
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4th annual
sporting clay shoot
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Byron Hackett
Pipeline News North
In the short four year history of the Sporting Clays Shoot hosted by the North Peace Rod and Gun Club at Charlie Lake, the 64 competitors were the most by a long shot. Board of director John Fisher said the first time the club held a clay shoot they had about 32 shooters, and that went up to 40 last year before the 64 this time around. Fisher explained he’s amazed at the interest that has sprouted. “In a short, short time we have done well,” he said. “We have guys travelling from Kamloops, Edmonton, Calgary.” While many of the competitors are just out for a few enjoyable outdoor afternoons, Fisher noted several shooters have come to win. “Fun, Friends and Camaraderie,” Fisher said of where the interest for the event is for most shooters. “Some of the guys from Calgary, they are the big dogs. They are not just big dogs here; they are big dogs in Canada. These are top shooters. And we’re drawing them here.” Wayne Norton was the top shooter over the two-day shoot, with a score of 273 out of a possible 306 followed closely by Tom Stenger in the master class with a score of 272. Cory Tuff was the
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top “AA” shooter (250), Troy Fitt was the best “A” shooter (241), Robert Allen in “B” (221), Jeff Kitt in “C” (225) Boyd Wedge in “D” (216) and Egon Ungurian in “E” (194). In the vet class, Wayne Carlson was the best shooter with a score of 243, Fred White was the top Super Vet (211), Cody Schramm was the best Super Junior (206) and Pat White was the best lady (176). Many of the members of the North Peace Rod and Gun Club had been trap shooters since the late 60s and early 70s but more recently shooters have become interested in Clay Shooting. Fisher and some others felt the need to mix things up, and an annual clay shoot was born. “We just got tired of shooting traps,” Fisher said. “Trap shooting is more of a boys club. This is more of juniors; have a look anywhere you want, we have kids, girls, women… This isn’t about winning. Everybody is in a different class, we have hunter class to master class and everything in between.” Fisher acknowledged that clay shooting may not be for everyone, but recommends anyone who has thought about it do one simple thing. “Just try it,” he said. “There are always lots of people here willing to just pass you a gun. Pass you a gun and try it out.” sports@ahnfsj.ca
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Scaled-back Fair Share deal signed Signing concluded months of often-tense negotiations between the province and Peace Region leaders In February, the province pulled the rug from municipalities in Northeast on the last four years of the deal
Jonny Wakefield
Pipeline News North
Premier Christy Clark stood at a podium in Dawson Creek where two years earlier she promised to sign a new Fair Share agreement — the multimillion dollar natural resources deal that is the region's lifeblood. Before a crowd of party members, mayors and media, the premier signed a new $1.1 billion agreement, and in her words, made good on her promise. "It's so good to be back where I was two years ago, almost to the day now," she said. "That's what
The premier and municipal leaders from Northeast B.C. signed an extension to Fair Shar. The deal gives local governments in Northeast B.C. tax revenue for industrial activity outside city boundaries that draws heavily on municipal resources. jonny wakefield Photo today is about, keeping promises to the people of Northeast British Columbia." The signing concluded months of often-tense negotiations between the province and Peace Region leaders over the future of Fair Share. Since Clark promised to extend the deal at the height of the last election campaign, estimates for the amount of natural gas wealth coming to the Northeast from LNG have changed substantially. For Peace Region leaders, the
Mayor Dale Bumstead and some children welcome Premier Christy Clark in Dawson Creek before municipal leaders signed a new Fair Share agreement. jonny wakefield Photo
deal means long-term pot of money that will allow their cities to grow modestly with economic development. But for some, getting to a deal meant tempering expectations. The new deal will pay out $50 million beginning next year, which will be divided within the region based on population and the amount of industrial tax base inside a town’s borders. That amount of money will stay flat through 2020, at which point it will grow to keep pace with inflation. The deal
will be reviewed every eight years, giving the region a chance to argue for larger payments. While there is no firm end date for Fair Share, the $50 million payment will be reviewed after 2035. That’s up from the $46 million paid out earlier this year. Of that, 49 per cent went to Fort St. John, while Dawson Creek got 30 per cent. The rest is divided between smaller towns and rural areas. Fair Share was created in the 1990s to address a unique problem in the Peace Region. See FAIR on PAGE 24
Premier Christy Clark talks with a local resident in Fort St. John. After signing the new Fair Share deal in Dawson Creek, the premier headed up the Alaska Highway with Peace River North MLA Pat Pimm.
JUNE 12, 2015
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Woodfibre Natural Gas Ltd. is seeking to liquefy, load and export 2.1 million tonnes of LNG per year from the former Woodfibre pulp mill, an 89-hectare wateraccess site on Howe Sound about seven kilometres from downtown Squamish. Some residents fear the facility could turn the tide for Howe Sound, which they say has only recently recovered from decades of industrial development. Inset: Dawson Creek Mayor Dale Bumstead and council have invited Squamish Mayor Patricia Heintzman and her council to the North to learn about natural gas production. Sébastien Launay photo
Dawson tells Squamish not to fear fracking Jonny Wakefield
Dawson Creek invites Squamish’s city council to tour gas country after its mayor outlines fracking concerns
Pipeline News North
With the district of Squamish threatening to block an LNG plant that would export natural gas from Northeast B.C., Dawson Creek is stepping in to try to soothe that council's fears about fracking. Dawson Creek city council moved to invite the mayor and council of Squamish to tour the region's gas fields and fracking operations. Squamish council, some of whom were elected on an anti-LNG platform, are concerned about the proposed Woodfibre LNG plant — a $1.7 billion project that would process millions of tonnes of gas annually for export to Asian markets. In an April 30 submission to the Environmental Assessment Office (EAO), Squamish Mayor Patricia Heintzman outlined 18 condi-
tions needed for Woodfibre LNG to win her council's blessing. Point 14 asked the provincial and federal governments to further research "the potential harmful impacts of hydraulic fracturing on the environment" and create "higher standards for natural gas extraction" in B.C. While it’s still too early to say whether Squamish will accept the invitation, Dawson Creek Mayor Dale Bumstead said the visit could include tours of existing natural gas infrastructure. But he said the goal isn’t to change minds. “You don’t try to move your own thoughts, opinions, views on someone. For me it’s more about information,” said Bumstead. “If you’ve never seen a drilling rig, if you’ve never seen a processing plant or a pipeline, to me there’s nothing like seeing it for yourself.” “[Squamish] has indicated they don’t know enough about fracking,
but they have concerns,” Dawson Creek Chief Administrative Officer Jim Chute told council. “We have an interest, I believe, and this is certainly what the mayor has relayed to me, in helping people understand fracking better. It’s a huge economic driver up here and a very regulated and scientific process.” The stakes around Woodfibre LNG are high for Dawson Creek and the provincial government. Of the nearly 20 proposed projects to ship natural gas from B.C.’s West Coast, Woodfibre is considered among the furthest along. Petronas’ Pacific NorthWest LNG, the presumed frontrunner, is expected to make a final investment decision this summer. Woodfibre also has implications for the Site C dam. It would run off the BC Hydro grid, instead of its own gas, creating massive electricity demand. According to BC Hydro,
the Woodfibre plant, LNG Canada and an upgraded Tilbury project in Delta would generate enough demand to justify Site C. Fracking remains controversial. Producers in B.C. have fracked for oil and gas since the 1960s. Fracking to access tight gas and shale formations picked up in 2004. As of 2013, 86 per cent of new wells in B.C. were hydraulically fractured. Supporters maintain B.C. leads the world in environmental protection, while opponents believe the risk and greenhouse gas emissions outweigh potential benefits. The province released a Human Health Risk Assessment on fracking in March, which found the risk to human health from oil and gas development in B.C. was low — though some criticized the consulting firm involved as being too close to industry.
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Shell's state-of-the-art Saturn 1 Plant facility opened north of Dawson Creek a year-and-a-half ago. At full capacity, it will produce 200 million cubic feet of gas per day — equivalent to roughly 6 per cent of the current natural gas production in British Columbia. Squamish Mayor Patricia Heintzman plans to tour Northeast B.C. to learn about oil and gas production. matt lamers file photo
Squamish mayor heading to Dawson Creek
Staff reporter
Pipeline News North
In early June the Suamish Chief reported that Mayor Patricia Heintzman said she intended to accept the City of Dawson Creek’s invitation to visit. On May 11, Dawson Creek Mayor Dale Bumstead sent a letter to Squa-
mish Council inviting the mayor and councillors to tour oil and gas facilities in the region. In the letter, Bumstead wrote that, “The purpose of this visit would be to allow the members of council to see firsthand some of the components of the oil and gas industry.” He said the region has decades of experience in oil and has producing,
including fracking. “This [tour] would give you a firsthand experience to better equip yourself with the information as you face the decisions for your community and area with the planned LNG plant proposed in the Squamish area.” The Squamish Cheif reported that Heintzman would like tour oiland
gas facilities, but the mayor is also interested in the city’s alternative energy projects. “I think the City of Dawson Creek has done some really interesting things with regards to energy,” said Heintzman. The Squamish mayor and any councillors who attend the trip will pay for it out of their own pockets.
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Bumstead ‘pee your pants happy’ with new deal FAIR from PAGE 20 The oil and gas industry that accounts for so much of the region’s economic activity lies outside municipal boundaries — but draws heavily from municipal resources — severely limiting cities’ ability to pay for infrastructure like roads, sewers and community amenities. The province announced it wanted to sign a new deal in late February. Some said the province’s aim was to nail down a deal before liquefied natural gas investment decisions this summer, a suggestion the premier brushed off. “This isn’t about Petronas,” she said. “The reason we wanted to negotiate it now is communities want certainty in advance of Petronas, Shell and all of the other proponents getting up and running.” During the talks, the rate of growth was a major source of tension. One of the government’s objectives was to remove a clause that tied payments to growth in the natural gas industry. Local government Minister Coralee Oakes called that part of the agreement unsustainable amid declining revenues, while Fort St. John accused the province of trying to “exploit” the north for
its resources. During negotiations, Fort St. John said removing the socalled indexing clause would take around $70 million off the table. Fort St. John and Dawson Creek went their separate ways during negotiations. While Fort St. John waged a public relations campaign, Dawson Creek stayed largely silent. Fort St. John Mayor Lori Ackerman said the end of tying payments to industrial growth would present challenges. “While the communities will continue to grow and provide services, we’ll be growing at a different rate than the industry will be,” she said. “It’s different expectations with this agreement. But we feel it’s something we can work within. We feel Fort St. John is strong enough to be able to do that.” Dawson Creek Mayor Dale Bumstead did not measure his praise, saying signing the deal would be one of the most important things he does as mayor. “When I got elected as mayor I was over the moon,” he said. “On that day, with my grandbabies in attendance, I said I was ‘pee your pants happy’ over being elected as mayor, and today matches that day.”
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West Coast Amusements
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courtesy petronas
DECISION from PAGE 5
Details of the agreements are confidential and dollar values will not be released, TransCanada spokesperson Davis Sheremata told Alaska Highway News. The agreements provide “significant” financial and contracting benefits, said Doig River First Nation Chief Norman Davis. “[TransCanada] worked to ensure the environment and our traditional way of life will be adequately protected,” the chief said in a release. The agreements join previously announced PRGT First Nation agreements with Lake Babine Nation, Nisga’a Lisims Government, Gitanyow First Nation and Kitselas First Nation. “We have worked very hard with PRGT to arrive at arrangements that work for all parties and will help to ensure our shared future success,” Chief Darlene Hunter of the Halfway River First Nation said. TransCanada has also garnered First Nations support for a second pipeline, the Coastal GasLink project. The company entered into agreements with the Wet’suwet’en,
Skin Tyee and Nee Tahi Buhn as well as the Nisga’a First Nations along that pipeline’s route in January. Another agreement signed with the B.C. government — also announced on June 1 — ensured economic growth generated by PRGT, Coastal GasLink and the liquefied natural gas (LNG) export industry as a whole will benefit the membership of the Doig River and Halfway River First Nations. Details for these agreements were announced publicly by the government. Doig River will receive about $1.29 million as PRGT project milestones are reached. In addition, Doig River will receive $1.35 million as Coastal GasLink project milestones are reached, while the Halfway River First Nation will receive about $2.4 million in benefits associated with the Kitimat-bound line. The two First Nations will also receive a share of $10 million a year in ongoing benefits for each project. The PRGT pipeline is a proposed 900 kilometre pipeline that will deliver natural gas from a point near
Hudson’s Hope to the proposed Pacific NorthWest LNG facility at Lelu Island, off the coast of Port Edward near Prince Rupert. The Coastal GasLink project is a 670 kilometre pipeline that will deliver gas from the Groundbirch area — between Dawson Creek, Chetwynd and Fort St. John — to a proposed LNG Canada export terminal near Kitimat, B.C. Both pipelines have received Environmental Certificates from the British Columbia Environmental Assessment Office. Pending final regulatory approvals and positive investment decisions from the LNG Canada partnership of Shell, Korea Gas, Mitsubishi Corp. and PetroChina, construction on Coastal GasLink could begin next year. Andy Calitz, CEO LNG Canada, has said that a final investment decision is in the works for the first quarter of 2016. Construction on the PRGT could begin this fall, pending a final investment decision from the Petronas-led Pacific NorthWest LNG. The Pacific NorthWest LNG project took a hit last month when the Lax Kw’alaams First Nation rejected
a 40-year $1.14 billion agreement. Significant challenges remain. A report released June 4 by the Paris-based International Energy Agency described the “harsh reality” facing proposed Canadian LNG projects: lower than expected Asian demand, increased Australian and United States competition and an oncoming market oversupply. Those factors could cause delays or cancellations. But Dean Patry, president of PRGT pointed out to the Financial Post that LNG Canada and Pacific NorthWest LNG are more advanced than the other projects. “There is a silver lining in the pressure that the oil and gas sector is under,” Patry said, referring to the current downturn in oil prices which are tied to the price of LNG. “Whereas a year ago the chief concern you had was managing the supply chain and managing the cost, we have actually identified and captured significant cost reductions on our pipeline projects.” — With files from Jonny Wakefield dcreporter@dcdn.ca
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PRES would feed into the Dawson Creek and Chetwynd Area Transmission (DCAT) line, a $296.4 million project to upgrade power lines in the Groundbirch area east of Dawson Creek
HYDRO from PAGE 6
However, Hydro now expects that PRES won't be in service until 2022, making Site C, set for completion in 2025, a viable option. "It'd always been in the back of the mind that Site C was possible, but until it got approved it wasn't something we were looking into in a great amount of detail," said BC Hydro spokesperson Lesley Wood. PRES would feed into the Dawson Creek and Chetwynd Area Transmission (DCAT) line, a $296.4 million project to upgrade power lines in the Groundbirch area east of Dawson Creek. Crews in helicopters began stringing power lines on that project late last month. Both projects are being built to meet the "most dramatic single-industry driven regional load growth BC Hydro has ever seen," Wood said. Almost all of that demand is coming from natural gas operations in Groundbirch. There is much speculation around where demand for power from Site C will come from. While it is often said the 1,100 megawatt dam will provide enough power for
450,000 homes, some say the dam is being built with the province's nascent liquefied natural gas export industry in mind. Despite the downturn in the oil and gas industry, Wood said Hydro's projections show a steady increase in demand in the South Peace. Many of the projects are opting into the BC Hydro grid instead of burning their own natural gas for power. While taxpayers are ultimately footing the bill for the transmission lines, Hydro has required companies to pay a security deposit to ensure the line will have customers. As of last fall, Shell, Encana, Murphy Oil, Air Liquide and ARC resources had paid deposits to plug into the project. Wood stressed that it's too early to say what role Site C will play in PRES, adding that project planners are looking at all possible options. "The preliminary investigation showed that yes, [connecting to Site C] does appear to be feasible enough to do further investigation," she said. "[But] the two of them [Site C and natural gas] are not interdependent." reporter@dcdn.ca
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lng
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When it comes to LNG — think small
Daily Oil Bulletin
‘If even one of those projects makes it to the finish line, the direct and indirect benefits to Calgary’s business community will be significant and long-lasting’
International LNG projects are typically global in scale, demanding tens of billions in capital, and owned by the world’s multinationals and super-majors, but that doesn’t have to be the case, a Calgary audience heard. “The real opportunity for a broad-based participation for Canada in the LNG market exists through involvement in smaller-size, more flexible LNG projects,” Doug Arnell, an executive with a track record in the global LNG arena, told energy sector executives. A former president of Golar LNG, Arnell said multinationals often manage LNG projects in countries like Canada as just one part of larger, international portfolios that include LNG projects in countries around the world. In that scenario, the interests and benefits flowing to the local community often take a back seat to the company’s priorities. At the same time, Arnell told the Calgary Chamber of Commerce audience he did not take the podium to “talk down large-scale projects in the LNG space in Canada” or anywhere else. “If even one of those projects makes it to the finish line, the direct and indirect benefits to Calgary’s business community will be significant and long-lasting. These projects need to be supported, but we need to make sure [megaprojects] are not the only game in town,” he said. In the bigger picture, Canadians should be mindful of the difference between gaining direct exposure to a truly global LNG market place on the one hand, and having the world’s established LNG players coming to Canada to add it to their portfolio, on the other, he said. For those who believe the traditional, megaproject approach to LNG is the only way forward, there is growing evidence of change in the LNG sector, and it’s directly relevant for Canada, he said. “The proportion of global LNG being traded on a short-term basis is increasing, and new technologies and execution methods which are now available make smaller-scale facilities highly-competitive on a per-unit cost basis.” Those trends and others are opening the door to would-be LNG participants with smaller balance sheets and financial capacity to tackle projects with far less execution risk and uncertainty than the traditional approach, he argued. Arnell said companies in Western Canada’s energy sector have a solid track record, and are up to the challenge that participating in the LNG market poses. “We have a vibrant, highly-skilled, technically and financially capable upstream sector in Canada that is accustomed to building infrastructure to support the development of reserves,” he said. In terms of production costs in Canada, including the cost of delivering LNG to Asia, Canada is “miles below” the costs achieved on Australian LNG projects. As well, he said Canadian LNG
production costs should be competitive with the U.S. Gulf Coast, if transportation differentials are accounted for. “We have price advantage, expertise, and there’s no reason why Canada can’t be successful in this space,” he told the audience. The fundamentals augur well for LNG, he said, and the argument in favour of Western Canada’s gas producers getting behind LNG is clear. “It all starts with global energy demand, [which] will grow in the years to come, and it’s undeniable that the share of natural gas in the energy mix will increase over its main rivals — oil products and coal.” “Environmental necessity alone will force this to happen, along with natural gas’s clear power-conversion efficiency advantage. Add to this the fact that the locations of the gas reserves that are ready to be developed in the reasonably near term are long distances away from the main sources of demand, and you’ve got a recipe for a strong growth trajectory for new LNG production.” In terms of smaller-scale, Canadian LNG projects, a case in point may be the Douglas Channel project proposed for Canada’s West Coast by lead partner AltaGas Ltd. The onstream target date for the project is 2018, although the company is hoping to advance that timeline by one year (DOB, June 2, 2015). The head of AltaGas also addressed the Chamber audience, discussing the prospects for the Douglas Channel terminal and for Canadian LNG in general. “It’s critical for Canada to enter the [world] stage and start being a reliable shipper of LNG, and that will start by building that
James Mahony
capability,” said AltaGas chairman and chief executive David Cornhill. Earlier, Cornhill painted a picture suggesting LNG is the way forward for gas producers tapping the Duvernay and Montney formations in British Columbia. If new markets are not found, those producers and others in Western Canada will face a long period of slow volume growth and depressed gas prices, he predicted. “The opportunity and value today we believe lies in Asia,” he said. “We believe Asian gas demand will be driven by economic growth, the desire to reduce carbon emissions and to improve air quality. Canada’s gas has many advantages, including a nine-day sale to market, low ambient temperature, access to a vast resource, and a very stable political environment.” Cornhill described the Douglas Channel project as a barge-based, floating liquefaction facility, designed for a capacity of 550,000 metric tonnes of LNG per year. “While small in scale, we see this project as very competitive with Gulf Coast [LNG] projects. Gas will be sourced from Western Canadian producers and transported to site under a 20-year contract on the pipeline system operated by Pacific Northern Gas Ltd., he said. Cornhill acknowledged LNG faces a complex regulatory environment. We haven’t had an existing [LNG] business, so government needs to move forward [and] we’re making significant progress on that. I think you’re seeing momentum building, and over the next few months, I think you’ll see more. For our project, we think later this year, [we will] go forward with a [final investment decision].
JUNE 12, 2015
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closing argument i
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A reality check for Canada’s pipeline debate The debate over oil transport is often dominated by discussion of worst-case scenarios, but let’s be honest: Rational people do not live their lives by worst-case-scenario avoidance or zero-risk lifestyles
Kenneth P. Green, Taylor Jackson Fraser Institute
It’s been a difficult couple of weeks for Kinder Morgan’s proposed expansion of the Trans Mountain pipeline. The Santa Barbara oil spill has irritated already-sensitive public concern about oil pipelines. And as the pipeline’s review before the National Energy Board continues, several new reports commissioned by municipalities and groups in the region have expressed serious concerns about the potential effects of an oil spill. One study found that more than one million birds might be affected by a spill and 100,000 could possibly be killed as a result. Another asserted that millions of barrels of oil could erupt into flames, start a forest fire on Burnaby Mountain, stranding 30,000 students at Simon Fraser University. The latest report concluded that a 16 millionlitre spill in the Burrard Inlet could deliver a $1.2 billion blow to Vancouver’s economy. Alarming scenarios indeed. But a focus on worst-case scenarios loses sight of what’s vastly more likely to happen, which can only be assessed by looking at the overall performance of pipelines, where progress in controlling spills has been tremendous. According to Transportation Safety Board data, from 2009 to 2013 there were 770 pipeline accidents and incidents in Canada. Of this number, 654 resulted in some sort of release of product. Again, this may seem large, but during this period Canada’s feder-
ally regulated pipeline system moved more than 11 billion barrels of petroleum and natural gas products, making the per barrel accident rate remarkably low. More telling still is that only five accidents or incidents in this period resulted in any sort of environmental damage. This means that only about 0.65 per cent of all accidents and incidents cause some form of environmental damage. This is not entirely surprising when 90 per cent of releases are less than one cubic metre. Moving from the generic to the specific, let’s consider the safety record of the existing Trans Mountain pipeline. Since 2004, the earliest year with data, the pipeline has had 36 accidents or incidents, with 14 resulting in the release of product roughly equating to 790 cubic metres. The largest of these releases amounted to 305 cubic metres of oil. By way of comparison the hypothetical 16 million-litre spill, which could have a $1.2 billion dollar impact on Vancouver’s economy, is equal to 16,000 cubic metres — 52 times larger than the worst release in the pipeline’s history. The debate over oil transport is often dominated by worst-case scenarios and discussion. And of course, nobody wants to see oil spilled and nature harmed. But let’s be honest: rational people do not live their lives by worst-case-scenario avoidance or zero-risk lifestyles. If so, you’d never ride a bike, never drive a car, never board an airplane, or for that matter, never take a shower. In fact, your list of things you wouldn’t do given worst-case scenarios and
a zero-risk threshold would encompass pretty much everything you have ever or will ever do. Worst-case scenarios aside, real-world data and experience show that pipelines are one of the safest ways to transport oil. It’s not perfect, but it’s the best of the available options. On an apples-to-apples comparison, that takes into account the volume of oil transported, pipelines are associated with fewer accidents, injuries and fatalities when compared to rail and truck, which is how oil will move if pipelines are not built. Oil will remain a part of Canada and the world’s future for a long time to come. And continue to fuel a large part of the Canadian economy while providing Canadians with access to reliable and affordable energy. Consideration should be given to the safest and most efficient way to transport oil and gas across the country. Despite high-profile spills and worst-case scenarios, pipelines remain the safest, most effective way to transport oil. Kenneth P. Green is Senior Director, Centre for Natural Resources at the Fraser Institute. He has studied environmental, energy, and natural resource policy for more than 20 years at think-tanks across North America Taylor Jackson is a Policy Analyst at the Fraser Institute. He holds a BA in Political Science and is currently a MA candidate at Simon Fraser University. He’s coauthor of The Effect of Wait Times on Mortality in Canada.
JUNE 12, 2015
closing argument II
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How some gas supply critics have it wrong A report released by the Canadian Centre for Policy Alternatives (CCPA) used incomplete data to arrive at the false conclusion that British Columbia lacks enough gas to sustain an LNG export industry
Rich Coleman
B.C.’s minister of natural gas development
British Columbia has a large, growing supply of natural gas to support economic growth for decades to come, contrary to a report released recently by the Canadian Centre for Policy Alternatives (CCPA), which used incomplete data. Today, British Columbia has almost 3,000 trillion cubic feet of natural gas available. In technical terms, this is known as the gas-in-place. However, the author of the CCPA report (A Clear Look at BC LNG: Energy Security, Environmental Implications and Economic Potential) refers to “gas reserves,” which is a subset of gas-in-place. Technically, gas reserves are estimated at 42.3 trillion cubic feet. This is the recoverable portion of British Columbia’s total resource base at a certain time, and to suggest it is the total gas-in-place misrepresents the facts. British Columbia’s gas-in-place today is almost 3,000 trillion cubic feet, an estimate derived from a geological assessment by the provincial government, the BC Oil and Gas Commission and Canada’s National Energy Board. Using a conservative estimate, if industry recovered 30% of the gas-in-place over the long term, it would harvest well over 800 trillion cubic feet of natural gas, which is about 20 times more natural gas than the recent CCPA report suggests.
That’s a substantial amount of gas when you consider only 1.5 trillion cubic feet was produced in the province last year. Just a decade ago, British Columbia was on the verge of reaching peak production from conventional natural gas sources and technology could only recover some of the total available gas. Shale gas – also known as an unconventional gas – was underground in abundance, but it was inaccessible. With the advent of new technology, industry is able to recover much more gas than it could decades ago. Over time, we have put strict rules in place to govern industry and ensure it is rigorously monitored and as safe as possible. Now, some of the world’s most promising resource areas are found in B.C. That’s why the province is at the forefront of building a new liquefied natural gas industry. Large, global companies are proposing to invest billions of dollars in B.C. because our long-term energy prospects are good, with a vast supply of natural gas to sustain exploration and energy trade for hundreds of years – unlike the bleak outlook implied by the aforementioned CCPA report.• — Rich Coleman is British Columbia’s Deputy Premier, Minister of Energy and Mines, minister responsible for Housing and MLA for the riding of Fort LangleyAldergrove. He was first elected in 1996 and was re-elected in 2001, 2005, 2009 and 2013.
Large, global companies are proposing to invest billions of dollars in B.C. because our long-term energy prospects are good, with a vast supply of natural gas to sustain exploration and energy trade for hundreds of years – unlike the bleak outlook implied by the aforementioned CCPA report.
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• PIPELINE NEWS NORTH
JUNE 12, 2015
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