MAY 29, 2020
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Big energy projects await return to full power
LNG Canada
NELSON BENNETT Unlike other sectors, like hospitality and retail, big energy projects underway in B.C. have not been forced into a wholesale shutdown by the COVID-19 pandemic, since they were deemed essential, although a number of them with large work camps have had to drastically scale back their work force. So like all other business in B.C., they are just waiting for the green light from the provincial health officer so they can gradually start bringing workers back to make up for some lost time. They expect that, even when restrictions begin to ease up, many of the preventive measures now being enforced will remain, such as limits on the number of people on work sites or in work camp dining halls, enhanced cleaning protocols and screening of employees coming in to work camps to begin two-week work rotations.
The four big energy projects in B.C. that were underway when restrictions on travel and physical distancing in the workplace went into effect in March were the $40 billion LNG Canada project, the associated $6.6 billion Coastal GasLink pipeline, the $12.6 billion Trans Mountain pipeline expansion and the $10 billion Site C dam project. LNG Canada drastically scaled back its workforce in Kitimat in March, reducing the number of workers at the site and in a work camp there by 65% – from 1,800 workers to about 600. There has been one confirmed COVID-19 case at the site. Ramping back up to prepandemic activity depends on guidance from public health officials, said Susannah Pierce, LNG Canada’s director of corporate affairs. “We really don’t have a timetable for it,” Pierce said. “It’s really just going to have to be when we’re
able to do it safely. Typically, we’re going to want to get back to doing those things that have already been underway.” That includes completing the construction of Cedar Valley Lodge, a 4,500-unit work camp in Kitimat that will house all the workers who are working on site. “We will not do anything until it’s safe to do so,” Pierce said. The related $6.6 billion Coastal GasLink project has been less affected by pandemic restrictions than the LNG site construction in Kitimat. Work has continued to clear the natural gas pipeline route. The project is operating with a reduced workforce right now, with about 300 workers, about 30% of whom are in work camps. But that reduction was more about spring breakup than pandemic health and safety restrictions. “Typically, we would see construction activities begin to increase after spring thaw in mid-
to-late May,” Coastal GasLink said in an email. “However, due to the COVID-19 pandemic, we are currently evaluating, and will adjust our construction schedules as required, prioritizing safety, working closely with our contractors.” BC Hydro and its contractors have reduced the workforce at the Site C dam work camp to 961. The project would typically have 1,700 workers on site pre-pandemic. Work on the Trans Mountain pipeline expansion, meanwhile, has never stopped throughout the COVID-19 pandemic. More than 2,000 workers have continued to work on the project in Alberta and B.C. For Trans Mountain, it has basically been business as usual, minus the public protests. “We expect to have construction underway in every spread and at all our terminals in B.C. and Alberta this summer,” Trans Mountain said in an email. — Business in Vancouver
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• PIPELINE NEWS NORTH MAY 29, 2020
New collaboration launched to curb methane NELSON BENNETT It is the Achilles heel of the natural gas and LNG industry: methane. Displacing coal power with natural gas can take a significant bite out of CO2 emissions, but anti-fossil fuel advocates point to a number of studies that suggest methane leaks from natural gas production may be significant enough to cancel out any benefits from CO2 reduction. Most of those studies have focused on the U.S., which is not directly comparable to B.C., and some of the studies have been called into question. For one, some may not have accounted for methane from coal mining and combustion. Measuring the impacts over different timescales also matter, since methane is more powerful than CO2, but shorter lived in the atmosphere. Some studies have been critiqued for the timescales used in their calculations of GHG life cycles and global warming potential. To get a better handle on the methane leaks in B.C., and to refine regulations and technology to reduce them, a new collaboration involving government, industry, regulators and the Pembina Institute has been launched. The BC Oil & Gas Methane Emissions Research Collaborative (MERC) will involve ministries of environment and energy, the BC Oil and Gas Commission, Canadian Association of Petroleum Producers, Geoscience BC, the Explorers and Producers Association of Canada, and the Pembina Institute. In B.C., natural gas production accounts for about 17% of the province’s greenhouse gas emissions. Reducing its methane
Gas sniffing drones are just one of the methane detection tools being used by Geoscience BC. | Submitted
emissions could be a cost-effective way of reducing the industry’s GHG profile. “Reducing methane emissions from the oil and gas sector is one of the lowest-cost opportunities to reduce carbon pollution and key to meeting our climate goals in B.C.,” said Maximilian Kniewasser, director of the B.C. Clean Economy Program at the Pembina Institute The B.C. government has a methane reduction target of 45% from 2014 by 2025, and the federal government has targets in a similar range. “We will investigate leading technology and identify best practices – including those to address the detection and repair of leaks in the natural gas sector,” George Heyman, minister of Environment and Climate Change
Strategy, said in a press release. “The work of the research collaborative will result in applying and adapting new technologies to B.C.’s resources beginning in 2023. Our response will ensure we capture the most methane for the least cost, keeping the sector economic while reducing carbon pollution from major emitters.” One of the problems with methane reduction targets is having a precise baseline of what the actual emissions are now, and what the main sources of the leaks are. A number of studies focused on American shale oil and gas fields have concluded methane leakage there may be high enough to cancel out the benefits from CO2 reductions. It can’t be assumed that the leakage rates would be the same for
B.C., however. “While the U.S. and Alberta based studies provide insights that are useful for B.C. generally, they may not always be applicable or relevant to use in decision-making due to the markedly different emission characteristics that can exist between basins and jurisdictions,” the oil and gas commission notes in a draft of the collaboration plan. “Through this research, we hope to fill knowledge gaps, identify additional cost-effective opportunities to reduce methane emissions, and ensure regulations are effective at reducing these emissions,” said Pembina Institute director Karen Tam Wu. “Minimizing methane emissions is critical for reducing carbon pollution from the gas sector and for achieving B.C.’s climate goals.”
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• PIPELINE NEWS NORTH MAY 29, 2020
Wet’suwet’en agreement slammed for lack of transparency and accountability NELSON BENNETT The Wet’suwet’en people have been fighting for decades for legal recognition of rights and title to 22,000 kilometres of unceded territory in B.C.’s Interior. So why would some members of the Wet’suwet’en – including elected chiefs and members of one of the nation’s five clans – be opposed to a landmark agreement that would acknowledge Wet’suwet’en rights and title? “I’m not opposed to it, but it needs to be done right, and we need to know exactly where we’re going to stand before and after,” said Dan George, chief of Ts’il Kaz Koh (Burns Lake Band). The problem, say the elected chiefs, is that the deal was negotiated behind closed doors by a handful of unelected hereditary chiefs, who excluded elected band councillors from negotiations, and that the agreement signed with the federal and provincial governments may further consolidate power into the hands of a few unelected chiefs, who generally inherit their titles. Undemocratic though the traditional Wet’suwet’en house system may seem, however, it has been recognized by the courts and government as a legitimate governing and negotiating authority, although that could end up being tested in court. George said elected band councils plan to issue band council resolutions (BCRs) denying the authority of chiefs with the Office of the Wet’suwet’en (OW) to sign the memorandum of understanding (MOU) on behalf of all 3,000 members of the Wet’swuwet’en. “We’re all going to do BCRs on a no-confidence vote in the Office of the Wet’suwet’en hereditary chiefs out of Smithers,” George said. Asked if it’s possible they might also launch a legal challenge to the MOU, he said: “You bet. We’re looking at all of our options.” The Wet’suwet’en are represented by 13 houses, five clans and six elected band councils. Some members of the Beaver clan are questioning the authority of the hereditary chiefs to negotiate the MOU on behalf of all Wet’suwet’en people. “Hereditary chiefs do not have the authority to make an individual decision, and that is what is happening here,” a letter from the
With the stroke of a pen, Scott Fraser, B.C.’s minister of Aboriginal Relations and Reconciliation, began the transfer of title and power over 22,000 square kilometres of land to 3,000 Wet’suwet’en. | BC Government
Tsayu (Beaver) clan to the Office of the Wet’suwet’en states. “It is the entire Wet’suwet’en membership that holds authority over the territory, not an individual society or chief. We hereby call on the OW hereditary chiefs to withdraw their premature announcement.” The letter purports to be from the Beaver clan, but it is unsigned, so it’s not clear if it represents the entire clan or just a few members. One of the wedges that has pried elected and hereditary chiefs apart has been the Coastal GasLink pipeline. All elected band councils support the project; several hereditary chiefs oppose it and have supported blockades. After blockades across Canada in support of their opposition to the pipeline became a national crisis, Canada and B.C. rushed to the negotiating table. They came to no resolution on the Coastal GasLink pipeline, but announced a plan to recognize Wet’swuet’en title, which ultimately involves the transfer of land ownership from the Crown. On May 14, at a virtual ceremony, federal and provincial cabinet ministers signed an MOU with the Wet’suwet’en hereditary chiefs that sets the stage for that transfer of title and governance power to the Wet’suwet’en. “This signing of this (MOU) would be the very start of a negotiating process,” said Scott Fraser, minister of Aboriginal Relations and Reconciliation, adding the process will involve elected chiefs, other communities, and other First
Nations. Fraser admitted that the MOU timelines – ratification before the end of this year – is ambitious, especially given the current restrictions on large gatherings due to the pandemic, which might limit attempts at public information sessions. When the MOU was first announced in February, there was an expectation that it would be ratified by the Wet’suwet’en people in some form of community vote. That apparently never happened, in part because the COVID-19 pandemic prevented large gatherings. As an elected chief, George has concerns over governance being concentrated in the hands of the Office of the Wet’suwet’en and hereditary chiefs. “I’ve got to know where the Burns Lake band sits,” he said. “Are we even going to be a band anymore, or are they just going to control everything?” Band councils have numerous agreements signed with industry, including TC Energy, which is building the $6.6-billion Coastal GasLink pipeline through Wet’suwet’en territory. “As elected council, we’ve got to know where our band sits, because we’ve done a lot of work for our communities for housing and economic development and everything else, so how is that going to work after this?” Fraser said nothing changes with respect to the agreements signed by elected band councils and Coastal
GasLink. “Those agreements are done,” he said. “None of that changes. This is a forward-looking document. The project’s a go; the agreements are in place.” Industry in the area has similar questions. Andy Thompson, owner of Seaton Forest Products, which has a sawmill near Moricetown, employs 22 people, most of them Wet’suwet’en or Gitxsan. “What kind of jurisdiction are they going to have?” Thompson wonders. “That’s what I’d like to know. And who is going to control the resources?” Another question is whether provincial parks will become Wet’suwet’en title land. That has long been a contentious issue in treaty talks. A recent freedom of information filing reveals that the B.C. government is putting provincial parks and protected areas on the table as part of land claims negotiations. Asked if parks could become Wet’suwet’en title land, Fraser didn’t rule it out. “There have been some instances where parks or pieces of parks have become part of a land selection,” Fraser said. The single biggest question for some Wet’suwet’en members is whether any elements of democracy will be included in governance. The MOU cites “clarity” on Wet’suwet’en governance as a goal. Whatever is decided is to be ratified by the Wet’suwet’en.
MAY 29, 2020
Death of Canada’s oil and gas sector has been greatly exaggerated In 1897 while in London in the midst of a worldwide speaking tour, American author Mark Twain became the subject of rumours back home that he was dead. To discover the truth, a reporter from the New York Journal wrote to Twain to ask if he was indeed dead or gravely ill. Twain, with his usual wry wit, wrote back chronicling how he’d also heard the rumours of his illness: “I have even heard on good authority that I was dead.” Twain explained that the gossip resulted from his cousin’s illness and mistakenly spread from there. “The report of my illness grew out of his illness. The report of my death was an exaggeration,” wrote Twain. Something like that mistaken assertion about Twain now faces the oil and natural gas industry worldwide and in Canada: that oil and gas demand will never resume from the steep decline occurring as a result of COVID-19 and the nearworldwide lockdown’s effect on the economy. Some anti-oil and gas advocates are sure of this and demand that Canada somehow transition away from oil and gas. But that’s not possible, according to the informed opinion of Vaclav Smil, University of Manitoba professor emeritus of the Faculty of Environment.
The barriers to a transition that’s ordered by government policy were summarily addressed by Smil in his 2017 book Energy Transition: Global and National Perspectives. In it, he points out that, “As in the past, the unfolding global energy transitions will last for decades, not years, and modern civilization’s dependence on fossil fuels will not be shed by a sequence of government-dictated goals.” It’s important to note that Smil wants to see renewable energy sources succeed. He’s also concerned about carbon emissions and their effect upon global temperatures. But he prefers to deal in hard facts and data that result from understanding the physical properties of various forms of energy, the energy density “punch,” as one journalist characterized the issue. The COVID-19 pandemic has severely impacted consumption of oil and gas in the short term. However, in previous recessions, oil consumption declined (though natural gas didn’t always follow the same pattern) before demand resumed and increased. Since the 1970s, temporary declines in oil consumption were followed by a return to ever-higher consumption. In the last recession, daily oil consumption fell from 87.1 million barrels in 2007 to 85.8 million
But before that happens, within three months from now, the MOU commits to the “legal recognition that the Wet’suwet’en Houses are the Indigenous governing body holding the Wet’suwet’en rights and title.” So while the B.C. government offers assurances that there will be discussions on things like governance, the starting point of the MOU is to affirm that the hereditary house system is the ultimate authority. So what if that authority decides, at the end of the day, that the hereditary chiefs will remain the sole governing body? There are fears over
in 2009, a 1.5% decline. After that, consumption rose by 10 times that decline, or 15%, to reach 98.8 million barrels of oil consumed daily in 2017 (the latest year for which comparable annual data is available from the U.S. Energy Information Administration). For natural gas, until the current crisis, world consumption has declined only once since 2000: during the 2008-09 recession, by just over 3%. After that and by 2017, consumption rose by 25%. Past trends aren’t guaranteed to repeat. However, the U.S. Energy Information Administration forecasts that petroleum consumption worldwide will decline by 5.2 million barrels in 2020 from 2019, a 5.2% reduction, before rising again in 2021 by 6.4 million barrels, a 6.7% increase. That forecast is an annual average, so it looks beyond just the massive double-digit drop in demand that has occurred in recent weeks. It assumes an end to the current shutdown and a partial economic recovery later this year and next. The U.S. agency doesn’t provide a natural gas forecast. But before the crisis, the International Energy Agency (IEA) forecast a 40% rise in world natural gas consumption by 2050. Back to the Twain-like assertion that oil and gas is dying. Canadians
gerrymandering of votes. “We’ve got 50% of people living off reserve,” George said. “So how do you involve all Wet’suwet’en First Nations? “It doesn’t matter where they live – this is their land too. So how do you involve everybody for a vote? You can’t just rely on a couple of people that show up for the meetings, and that’s what they’ve been doing. They’ve been having inhouse meetings and getting the vote there and saying, ‘We’ve got quorum on our votes.’ Yeah – whatever. Quorum from 20 people? That doesn’t account for the rest of the 3,000 people.”
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have heard this for a decade, with the same voices predicting and demanding the sector’s demise. They were incorrect. But the result of the activism and blocked developments (among other factors) meant that while some Canadians were debating if our oil and gas extraction should be “allowed” to survive, American oil and gas producers created 95,000 new oil and gas extraction jobs between 2009 and 2018. In Canada, just 1,610 oil and gas jobs were created in the same period. In crises, it’s hard to think beyond the severe economic destruction now underway. But unless COVID-19 and associated lockdowns continue for decades – not something advocated by any government, anywhere – the death of oil and gas is greatly exaggerated. The only question is if Canada will play any part in the world’s oil and gas future when demand resumes. Mark Milke is executive director of research and Lennie Kaplan is chief research analyst at the Canadian Energy Centre, an Alberta government corporation funded in part by taxes paid by industry on carbon emissions. They are the authors of Comparing the U.S. and Canada on oil and gas jobs: 2009 to 2018.
In final treaty agreements, a final vote is held, giving every member of the affected First Nation a ratification vote, including members who may live outside of the province or even the country. There is also the question of overlapping land claims by other First Nations, something that is not addressed in the MOU. “There will be overlap issues, absolutely,” said Doug McArthur, professor of public policy at Simon Fraser University. “I don’t know if anything in the agreement addresses how those are going to be dealt with.” — Business in Vancouver