Pipeline News North

R001697746

VOL. 6 ISSUE 3 DIST: 16,000 SERVING THE OIL & GAS INDUSTRY IN NORTHERN B.C. AND ALBERTA

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MARCH & APRIL 2014

crisis in crimea: russia’s turmoil is canada’s gain

WE NE ED GASAND WE need itmayor of Fort Nelson wants christy clark to complete LNG tax by the end of March

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64: The number of hectares Enbridge purchased from Western Access Inc. next to LNG projects on

the West Coast, sparking speculation the com-pany might soon jump on the LNG bandwagon.

Story on Page 5.

$16.50: The average price of LNG/MMBtu in Japan from March 2012 to February 2014.

Chart on Page 5.

$2.50-$7: The price range of LNG/MMBtu in the United States over the same time period.

Chart on Page 5.

$25 million: The proceeds from February’s oil and gas land auction in British Columbia.

Chart on Page 5.

30: The number of days Northern Rockies Regional Municipality Mayor Bill Streeper wants

B.C. Premier Christy Clark to finalize the LNG export tax. Story on Page 7.

$29 million: The amount of money the province dedicated to supporting the LNG industry in its

latest budget.Story on Page 8.

$10 million: The amount of money Victoria dedi-cated to environmental assessments of LNG plants

and pipelines in the budget. Story on Page 8.

2: The number of proponents that have sought permission from Canadian regulators to export natural gas to the United States for liquefaction

and export from terminals in the state of Oregon. Story on Page 10.

1: The number of those proposals that have so far been approved. Story on Page 10.

5: The number of LNG export permits in west-ern Canada which are currently being considered by the National Energy Board. Story on Page 10.

5: The number of LNG export permits in west-ern Canada which are currently being considered by the National Energy Board. Story on Page 10.

8: The number of LNG export permits in west-ern Canada that have already been approved by

the National Energy Board. Story on Page 10.

1.5-7%: Victoria’s tier-one and tier two tax rates for the export of LNG from British Columbia,

respectively. Story on Page 11.

2: The number of seats that Prime Minister Stephen Harper slashed from the Standing Com-

mittee on Natural Resources, costing MP Bob Zimmer his position.

Story on Page 15.

1.2 million: The number of metric tonnes of LNG that Progress Energy has guaranteed to the state-owned Indian Oil Corp. for 20 years as part

of the Indian company’s investment in the project. Story on Page 18.

$3.13 billion: The price Canadian Natural Re-sources paid for most of Devon Energy Corpora-

tion’s assets in western Canada. Story on Page 19.

35: The number of First Nations who partici-pated at the First Nations LNG Summit in Fort St.

John in February. Story on Page 20.

$2.64 million: The transaction price for Black-bird Energy Inc.’s acquisition of Pennant Energy Inc. Blackbird, a nan-cap, has designs to become

a large-cap. Story on Page 23.

$120 million: British Columbia’s quarterly pay-out to energy companies courtesy the Infrastruc-

ture Royalty Credit Program. The money is for infrastructure like resource roads and pipelines.

Story on Page 27.

$400: The subsidy British Columbia is offering to students in the North to attend an LNG jobs

conference in Vancouver. Story on Page 29.

Matt laMers Photo

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

PNN NUMBERSFormer Liberal Party leader Bob Rae was in Fort St. John to attend the First Nations LNG Summit. Story on Page 20.

PIPELINE NEWS NORTH The price of 5

LNG in Japan

The price of LNG 5 in the U.S.

Enbridge may jump 5 on LNG bandwagon

‘We need gas and we 7 need it now.’

Pacific NW LNG 8 files its EIS

B.C. budget has 8 $29M for natural gas

OREGON IN THE MIX 10 TO EXPORT B.C. GAS

Applications to 10 export LNG

Victoria unveils 11 plan to tax LNG

MP Bob Zimmer, 14 an interview

February’s land sale 18 nets $25M for B.C.

18 Progress sells stake in Pacific NorthWest LNG

19 CNR bets big on B.C.

20 Risk & reward: First Nations and LNG

22 When fatigue can be fatal

23 Blackbird: Small investor profile

24 Ministry of gas updates PNG Act

26 LNG Canada buys wharf, land in Kitimat

27 Royalty credit giveaway rises to $120M

29 $400 for job trip to Van City

31 RUSSIAN RISK IS CANAdA’S GAIN

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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.

MATT LAMERS PHOTO

MATT LAMERS PHOTO

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Enbridge sent the market a strong signal it could jump on the LNG band-wagon when it was revealed on March 10 that it purchased a large parcel of land at Grassy Point, next to plots pur-chased by LNG players Woodside and China-owned Nexen.

Enbridge bought 64 hectares of land from Western Access Inc. The sale happened last December.

Fourteen more projects are in the works to export LNG from the coast.

Although the projects are in various stages of environmental reviews, no final investment decision has been made on any of the projects.

Count Stewart Energy inOn March 5, Canada Stewart Energy

Group Ltd. became the 13th company to apply to federal authorities for per-mission to export natural gas from the West Coast.

So far eight have been granted ex-port permits ranging from 20 to 25 years. The remaining five are still be-ing vetted by the National Energy Board.

Canada Stewart Energy wants a permit to export 30 MMt of natural gas per month for a period of 25 years from a liquefaction terminal to be located near Stewart, about 300 km north of Prince Rupert.

Canada Stewart Energy has long-term sales agreements with buyers in two Chinese cities, according to the permit application.

The gas would come from the the Western Canadian Sedimentary Basin via a pipeline to Stewart.

Enbridge may join LNG partyMatt Lamers

Staff Writer

The price of oil (UND/barrel) has been re-bounding as the U.S. economy recovers from global economic meltdown in 2008. Source: U.S. Energy Information Agency

Proceeds from oil and gas land auctions in B.C. have steadily increased in the past six months, with record sales per hectare in February. Read the full story on Page 18. Source: BC Oil and Gas Commission

The gap in the price of LNG in Asia vs. North America averaged $12 since March 2012, but edged lower recently because of demand in N. America. This gap behind the LNG push.

The price of LNG in the U.S. has steadily recovered from its lows of 2012. Price/MMBtu soared in February be-cause of a colder than average winter, but is expected revert to the trend. Source: WSJ

price of lngin the u.s.

The price of LNG in Japan has ranged from $16.36/MMBtu in March 2012 to $16.63 in Feb.2014. Prices have rebounded in recent months due to stong demand. Source: World Bank

price of lng in japan

price difference: lng in japan-u.s.

natural gas land auctions in b.c.

spot oil price in cushing, ok

March 2012 through February 2014

June 2012 through March 2014

March 2012 through February 2014

September 2013 through February 2014

October 2013 through March 2014

the charts


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cover story

Bill Streeper, mayor of the Northern Rockies Regional Municipal-ity, criticized the provincial government’s delay in getting an LNG tax to a vote and challenged Victoria to finalize the tax by the end of March.

“I challenge Premier Clark to make a commitment that the B.C. government will have this all completely done by the end of March,” he said, adding “30 days. She should tell Minister [of Energy, Mines and Natural Gas, Rich] Coleman he has 30 days to get it done.”

Premier Christy Clark’s government had originally pledged to unveil the tax last fall, but the broad framework wasn’t announced until last month and the overdue tax won’t be put to a vote until the fall sitting of the provincial legislature. Further details won’t be ironed out until 2015, the government has said.

A number of energy companies had been expecting to make fi-nal investment decisions on their multi-billion-dollar projects by the end of this year, but the delay in the tax, which the province has dubbed the LNG Income Tax, could potentially push those an-nouncements back, as the companies study how the levy would impact their bottom lines.

For Streeper and the Northern Rockies Regional Municipality, sooner would be better.

“I think this government ought to hurry up and think about what they’re doing,” he said. “LNG right now is very time sensitive. You’ve got a lot of other countries in the world that are gearing up for LNG. [Asia] wants it. They want certainty. They want to know when they can get it and I think we’ve got to get the LNG in British Columbia off and running as quickly as possible.”

The LNG Income Tax is being proposed as a two-tier tax with a tier-one tax rate of 1.5 per cent and a tier-two rate of up to seven per cent.

The tier-one tax rate of 1.5 per cent applies to an operator’s net proceeds (revenue minus expenses) after the commercial produc-tion begins. The amount of the tier-one tax that has been paid will be deducted from the tier-two tax.

Premier Christy Clark’s government has said that revenue from the tax would eliminate the province’s $60 billion debt and fill the Prosperity Fund with between $100 billion and $260 billion.

“Our LNG income-tax-revenue framework strikes the right bal-ance between the need to maximize the return to British Columbi-ans, while also ensuring B.C. is an attractive and competitive place to develop LNG,” Finance Minister Mike de Jong said after the 2014 budget was announced in February.

See LNG TAX on Page 13

Matt Lamers

mayor of northern rockies regional municipality gives province 30 days to

conclude its overdue lng tax plan

‘we need gas & we need it now’


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British Columbia’s Feb. 20 budget contained $29 million to support the development of the liquefied natural gas (LNG) industry, and al-most $10 million for environmen-tal assessments of LNG plants and pipelines.

The budget also included a num-ber of projects to foster a larger base of skilled labourers.

One of the biggest hurdles to suc-cessfully developing the province’s natural gas industry is finding the labour.

The new Norkam Trades Centre of Excellence in kamloops is sched-uled to open later this year. It will provide training for mining explora-tion, industrial skills and construc-tion trades. Camosun College in

Victoria will welcome 370 students in the marine, metal and mechani-cal trades by 2016. Okanagan Col-lege in kelowna will more than dou-ble the size of the trades-training complex by 2016.

There are eight major pipelines in the works in B.C., five of which would transport natural gas through the northern half of the province to liquefaction plants and export ter-minals on the coast. Two would be for bitumen and anther is strictly for gas transport in the Northeast.

EIght projects have received the green light from federal authorities to export natural gas from British Columbia.

No final investment decisions have been made.

MATT LAMERSStaff Writer

B.C. budget includes $29M for natural gas

MATT LAMERS PHOTOMATT LAMERS PHOTO

Frank PeeblesPrince George Citizen

Pacific NW LNG files Environmental Impact Statement

One of the region’s predominant liquefied natural gas proposals has taken an official step forward.

Pacific NorthWest LNG is the pro-ponent behind a massive LNG port terminal it hopes to build on Lelu Island, a property controlled by the Prince Rupert Port Authority. The gas plant would liquefy natural gas and load it onto ocean liners for custom-ers in Asia.

The company has now submitted its Environmental Impact Statement to federal and provincial environ-mental protection bodies. To get to this point, it took months of prelimi-nary designs and public consultation.

“The filing of our Environmental Impact Statement to both federal and provincial regulatory agencies is a significant milestone in the life of this project,” said Greg kist, President of Pacific NorthWest LNG. “This marks a renewed round of consultation and feedback from all interested parties on our proposal and I encourage par-ticipation in this rigorous environ-mental review.”

This project resonates across north-ern B.C. due to the other components of this 900-kilometre industrial proj-ect. The natural gas Pacific Northwest LNG hopes to process would come from wells in the Montney Basin in the Fort St. John region. Progress Energy Canada is the production company that would do the work of exploring, drilling and extracting the natural gas.

In between Progress Energy’s wells and Pacific Northwest LNG’s port facility would be a pipeline built by TransCanada Pipelines un-der the working title Prince Rupert Gas Transmission Project. This as-pect of the overall proposal has to go through its own environmental assessment process.

“We are working on our application for an Environmental Assessment Certificate now and expect to file it with the Environmental Assessment Office soon. No firm date has been announced,” said Garry Bridgewa-ter, a spokesman for the pipeline segment. “Beginning on the day of submission, the application will be subjected to a 30-day completeness review by the EAO and the working group. The completeness review will ensure that the application meets all the Application Information Require-ments. Once the review is complete, a 180-day public review period begins, which includes another public com-ment period in which we will hold open houses and seek public input to ensure that all potential adverse ef-fects are identified and considered as part of the assessment process.”

The preliminary public consulta-tion has already resulted in changes to the original Pacific Northwest LNG draft blueprint.

Some of those improvements in-clude: Raising the height of the Lelu Island bridge for marine users; rais-ing the height of a section of the jetty trestle for marine users; adding a 30 metre tree and vegetation buffer around most of Lelu Island to provide a natural sound and light barrier.

“We want to build the best facil-ity possible, and that means hearing from residents on what their vision is for Pacific NorthWest LNG,” kist said. “Pacific NorthWest LNG intends to be a positive contributor to the local economy and a provider of long-term careers for decades to come. The sub-mission of our Environmental Impact Statement is another step in achiev-ing that goal.”

The entire three-part proposal is owned by Petronas, the Malaysian state-owned petroleum giant.

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On March 5, 2014, Canada Stewart Energy Group Ltd. applied for a permit to export 30 MMt of natural gas per month for a period of 25 years from a liquefaction terminal to be located near Stewart, about 300 km north of Prince Rupert.

On Jan. 13, 2014, Oregon LNG Marketing Company applied for a 25-year licence to export 473 Bcf of natural gas to the U.S., where it will be liquefied and shipped to Asia.

On Dec. 18, 2013 Kitsault Energy Ltd. applied for a per-mit to export up to 20 million tons of liquefied natural gas per year, or about 960 billion cubic feet per year (Bcf/y), for 25 years.

On Nov. 29, 2013 Aurora Liquefied Natural Gas Ltd. applied to the National En-ergy Board to ship 24 million tonnes of LNG per year from the coast of British Columbia for a term of 25 years.

On Oct. 29, 2013 Triton LNG Limited Partnership applied for a 25-year permit to export 2.3 million tonnes of liquefied natural gas per year from a floating liquefied natural gas processing plant.

Long-term export approvals

On Feb. 20, 2014 Jordan Cove LNG L.P. was granted approval by the NEB to ex-port 9 million tonnes of gas per year from British Colum-bia to the United States for a term of 25 years, where it will be liquefied and shipped to Asia from Oregon state.

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

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

On Dec. 16, 2013, WCC LNG was granted a licence to export 30 million tonnes of LNG per year for a term of 25 years.

On Dec. 16, 2013, Wood-fibre LNG Export Pte. Ltd. earned a licence to export 2.1 million tonnes of LNG per year for 25 years.

On Oct. 13, 2011, KM LNG Operating General Partner-ship (KM LNG) was granted a 20-year permit by the NEB to export an annual volume of 10 million tonnes of LNG.

It was the first LNG export licence issued by the NEB since the deregulation of the natural gas market in 1985.

The proposed terminal at kitimat will be fed by the 463-kilometre underground Pacific Trail Pipeline, which has yet to be built.

On Feb. 2, 2012, BC LNG Export Co-operative LLC received a 20-year license from the NEB to export 1.8 million tonnes of LNG per year.

The proposed LNG termi-nal on the Douglas Chan-nel near kitimat will be fed by pipelines from Northeast B.C. owned by Spectra En-ergy Transmission and Pa-cific Northern Gas, which are completed.

On Feb. 4, 2013, LNG Canada was awarded a 25-year permit from the NEB to export 24 million tonnes of LNG per year at a termi-nal that will be built near kitimat.

This is by far the biggest of the three projects that have already gained export licenses.

Matt LamersStaff Writer

Applications to export LNG

On Feb. 20, the National Energy Board approved Jordan Cove LNG L.P. ‘s license to export natural gas to a point in southern British Columbia to the United States, where it will be liquefied and shipped to markets in Asia.

The Jordan Cove LNG project repre-sents the first time the federal body has approved natural gas from Canada to be shipped to the U.S. to be liquefied and exported.

With delays on the part of the B.C. government in developing an export market here, some observers see this as a potential first step for the province’s burgeoning natural gas sector.

Veresen will operate pipelines for the project, as well as gas-processing facil-ities in the U.S. state of Oregon.

Jordan Cove LNG could potentially ship gas years before the proposed

projects in kitimat and Prince Rupert break ground.

Jordan Cove LNG is one of two proj-ects in Oregon that hope to ship Cana-dian gas to Asia.

On Jan. 13, 2014, Oregon LNG Mar-keting Company applied for a 25-year licence to export natural gas from the Western Canadian Sedimentary Basin to the U.S.

That application is for 473 Bcf per year.

The gas would be piped into the U.S., then to the proposed Oregon LNG proj-ect on the east side of the Skipanon Channel, in the city of Warrenton, Oregon.

According to Oregon LNG’s applica-tion, the natural gas supplies for the project can be sourced “entirely” from Canada.

It also forecast Henry Hub prices to average $6.10/MMBtu and remain un-der $8/MMBtu through 2045.

Matt lamersStaff Writer

Oregon in the mix to export B.C.’s gas Two permits sought to export gas to U.S.

Two projects have applied to export Canadian natural gas from the coast of Oregon state. The National Energy Board has so far approved one of the proposals. COURTESy USFWS


R001697755

BrItIsh columBIa

Premier Christy Clark an-nounced a long-delayed plan to tax exports of liquefied natural gas on Feb. 20 to mixed reviews.

The LNG Income Tax is being proposed as a two-tier tax with a tier-one rate of 1.5 per cent and a tier-two rate of up to seven per cent. The exact tax structure and rates will be subject to approval in the provincial legislature, which the government intends seek in the fall of 2014. Regulations and additional legislation will follow in 2015.

The tier-one tax rate of 1.5 per cent applies to an operator’s net proceeds after commercial pro-duction begins. The amount of the tier-one tax that has been paid can be deducted from the tier-two tax. The tier-two rate is not effective

until capital investment has been accounted for.

The province said that a review of the tax rate will continue until the legislation is introduced, add-ing that global and local economic conditions will be considered be-fore the key components of the LNG Income Tax are finalized “to ensure B.C. remains competitive.”

If approved on the new timeline, the tax will be more than one year overdue.

Calgary-based Ziff Energy, an influential natural gas analyst, and the Canadian Association of Petroleum Producers have stated concern that the tax could make B.C. uncompetitive compared to other jurisdictions that are com-peting for Asian investments. That list includes Australia and various regions in the United States.

The province pegs LNG as a tril-lion-dollar cash cow that will pay off its $60 billion debt.

The government commissioned Ernst and young to study the tax, who concluded that B.C.’s all-in taxes - corporate, federal, provin-cial, municipal, carbon and the new LNG tax - were comparable to other tax regimes around the world.

“Our LNG income-tax-revenue framework strikes the right bal-ance between the need to maxi-mize the return to British Colum-bians, while also ensuring B.C. is an attractive and competitive place to develop LNG,” said Fi-nance Minister Mike de Jong.

“The LNG revenue framework will deliver long-term benefits for British Columbia and pro-vide industry with the certainty it

requires to be successful,” the minister added.

B.C. says it also has an advan-tage over competitors based on proximity to markets in Asia, large natural gas reserves and a cooler, northern climate that effectively reduces operating expenses.

All natural gas proponents in the province will be subject to the same taxation framework.

To come up with the 1.5-seven per cent rate, government con-sulted with industry “to better understand LNG proponent busi-ness models, cost structures, and competitiveness issues,” it said. “Government has considered this input in designing a tax model that keeps B.C. competitive with other comparable jurisdictions while ensuring a fair share of rev-enues for British Columbians.”

ViCtORiA UNVEiLS PLAN tO tAx LNG


Rate will be put to a vote in the province’s fall legislature

Finance Minister Mike de Jong delivers B.C.’s 2014 budget. The government also unveiled the LNG export tax . COURTESy PHOTO

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LNG TAX from Page 7

Calgary-based Ziff Energy, an in-fluential LNG analyst, and the Ca-nadian Association of Petroleum Producers are more cautious. They have expressed concern that the tax could make B.C. uncompeti-tive compared to other jurisdic-tions which are competing to export natural gas to Asia. That list includes Australia and the United States.

Proponents will take into consider-ation a number of factors in deciding whether to go ahead with the proj-ects, including firm contracts with Asian buyers, costs of facilities, pipe-lines and processing, government taxation and access to labour.

For the Northern Rockies Regional Municipality, the stakes are high. The economy, to a large extent, has relied on the production of natural gas since Canfor shut down its operations, tak-ing most of the forestry business with it.

“This is a lifeline for Fort Nelson.

We have no other major source [of jobs] right now,” said Streeper. “For-estry is at a complete standstill. Our mills are completely shut down. We have been given no indication when they’re going to reopen, or if they’re going to reopen. They’ve already started pulling different assets out of the sawmills to send them to other lo-cations. The employment [from those mills] is zero.”

Streeper predicts that if a number

of companies make affirmative fi-nal investment decisions and large amounts of gas begin coming out of the ground in the near future, Fort Nelson will grow in population by four times, reaching 15,000-20,000 people by 2030. He said the town has plans to for subdivisions to service a population of 15,000 people.

Streeper has good reason to make those predictions.

In the vicinity of the Northern Rockies Regional Municipality rest two of the biggest shale gas fields in North America, Horn River and

Liard Basin. Apache Canada has called the Liard

Basin “the best shale gas reservoir in North America” and the Horn River Basin “among North America’s lead-ing shale gas basins.”

Chevron and Apache are 50/50 partners in the proposed kitimat LNG project, which would produce gas from fields near Fort Nelson and pipe it to kitimat for cooling and shipping to Asia.

Chevron is part of the Horn River Basin Producers Group, which con-sists of 11 companies who are work-ing together to develop the Horn River Basin around Fort Nelson. The list also includes ConocoPhillips, Devon, EnCana, EOG Resources, Im-perial Oil, Nexen, Pengrowth, Suncor, Quicksilver and Stone Mountain.

Streeper says the delay in the tax framework has already put develop-ment plans behind schedule.

“I think the government is drag-ging its feet,” he said. “This LNG means more to British Columbia, the northern part of the province and the Northwest than any other develop-ment project that’s happened in the history of Canada.”

Of approximately 14 proposals to export natural gas from British Co-lumbia to Asia, none have made final investment decisions. Eight export

permits have been issued by the Na-tional Energy Board and three more are under review.

Streeper warns that the govern-ment could end up derailing the pro-cess if it doesn’t play its cards right.

“We were supposed to be shipping LNG at the end of this year and in ear-ly 2015. And now it’s way off. We’re not the only ones that can supply LNG,” he said.

“Let’s talk about the jobs today. Let’s talk about the young people coming out of school that want to get involved in this industry. Are you going to tell them ‘yeah go get trained to be a gas plant operator, but we don’t need you for another year’? They’re not going to come into the industry.”

Streeper’s message for the provin-cial government is “get going.”

“you have 30 days to hammer this out. Get it done.”

Bob Zimmer, the member of par-liament for Northeast B.C., said the federal government, for its part, is do-ing what it can to make the regulatory process as streamlined as possible.

“Even though gas is something that’s coming, [Fort Nelson] doesn’t benefit from it right now,” he said. “There’s a lot of activity up there, but it’s not as busy as it could be. We’re trying to get the gas to the West Coast as soon as possible.”

MATT LAMERS PHOTO

cover story

‘There’s a lot of activity up there, but it’s not as busy as it could be. We’re trying to get the

gas to the West Coast as soon as possible.’— Bob Zimmer, member of Parliament

‘LNG means more to b.c. than any other project in the history of Canada — Bill Streeper, Northern Rockies mayor


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Three weeks before Rus-sia got involved in Crimea, plunging the country’s equity markets, Prince George–Peace River MP Bob Zimmer urged natural gas buyers to consid-er British Columbia because of our general stability com-pared to our dysfunctional natural gas rival.

In the interview with Pipe-line News North, Zimmer also said investors and natural gas buyers in Asia and beyond ought to be attracted to Can-ada because of our close prox-imity to their markets.

“Stability is a factor, espe-cially when compared to Rus-sia,” he said. “We’re a more stable democracy in terms of delivery, and we’re not going to have the same delivery is-sues that they could possibly with Russia.

“We’re going to keep the taps on,” he said.

As the federal representa-tive to Ottawa for the large swath of land between Prince George and Fort Nelson, natu-ral resources are a big part of Zimmer’s portfolio.

Ironically, Zimmer was a victim of his Conservative Party’s “small government” mantra when he lost his place on the Standing Commit-tee on Natural Resources af-ter it was downsized from 12 members to 10. Nonetheless,


Zimmer says his influence with Natural Resources Minis-ter Joe Oliver remains strong.

Following is an interview the member of Parliament gave to Pipeline News North.

How has your positions on the committees you sit on helped the people the North-ern British Columbia?

On the Natural Resources [committee] I have an influ-ence. I already talk to [Natu-ral Resources Minister] Joe Oliver already, and have some influence there. I’m still in-cluded on conversations, even though I’m not part of the [Standing Committee on Natural Resources] any more. He’s brought me in to discuss B.C. issues. I’m also the chair of the B.C. Cacus and chair of B.C. Pipeline Caucus, so I have a lot of opinions he wants to hear, which is good. I think that his main concern is how [the federal govern-ment] is perceived with the pipelines, the process and the joint review panel. Cabinet is making a decision whether to move forward with Enbridge’s Northern Gateway. So [ Joe Ol-iver] is consulting with us on a regular basis. That influence is there. He’s hearing it from my perspective.

One of the biggest chal-lenges in developing natu-ral gas in B.C. full-scale will be finding workers to build the plants, pipelines and terminals. Where are we

the skills being developed meet what’s required in industry.

The provinces haven’t been very open in changing their model of delivery. But that’s our goal, and the jobs grant is to make it more targeted to in-dustry needs.

There are a lot of places around the world competing for Asia’s investment capital in natural gas, especially Aus-tralia and the U.S. Why would a company invest $30 billion in British Columbia rather than those other places?

Proximity. We’re closer. Proximity is one of the biggest issues. Our costs are lower right now. Australia is start-ing to see some high costs for development. We’re very com-petitive down there.

Stability is another one, es-pecially when compared to Russia. We’re a more stable democracy in terms of de-livery, and we’re not going to have the same delivery issues that they could possibly with Russia. We’re going to keep the taps on.

In terms of LNG, is there a role the federal government can play to speed things up a little? It’s no secret that B.C. is behind its competitors, namely Louisiana and Austra-lia. They’re shipping LNG as we speak. The LNG tax will be at least a year overdue. There are First Nations issues.

See ZIMMER on Page 29

going to get 100,000-plus skilled workers from?

There are that many peo-ple in Canada that need jobs. Part of that will be filled by temporary foreign workers. But I don’t want to see one temporary foreign worker job given before all Canadians have a jobs.

What can the government do to help train workers and get other people in Canada the information they need to get these jobs?

We’ve done some programs where Canadians can go on the Web to see what jobs are available across Canada, not just in their own region, but if you’re a pipefitter, you can see what’s available across Cana-da. So we’re trying to connect people with jobs, but we need to do a better job, absolutely, because it’s going to really hit us in the coming years.

The other side of that is skills development. We’re try-ing to do our jobs grant [Can-ada Job Grant]. The intention is to provide the skills and the people with skills necessary to meet the [employment] needs we’re going to have.

Some of the institutions that typically give people skills for the workplace, we’re simply hearing from [employers] that it’s not adequate, that we have people coming out of certain places that don’t have the skills that they need.

So the [Canada Job Grant] is going to challenge that, make


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Progress Energy LNG locked up another buyer for its liquefied natu-ral gas in March when it sold 10 per cent of the project to India’s largest oil company.

In exchange for the un-specified investment, the state-owned Indian Oil Corp. will be guaranteed 1.2 million metric tonnes of LNG per year for 20 years. A final invest-ment decision on Pacific NorthWest LNG is ex-pected to be made by the proponent later this year. Operations could begin in 2018, after production commences upstream, a pipeline is constructed and a liquefaction plant is built on the coast, near Prince Rupert.

The gas would come from Prog-ress Energy Canada’s holdings in the

Montney, estamates of which recently tripled in volume.

Petronas is based in Malaysia. It plans to reduce its share in Pacific NorthWest LNG to about 50 per cent. It has already sold 10 per cent of Pacif-ic NorthWest LNG to Japan Petroleum Exploration Co. and three per cent to

Petroleum Brunei. Pacific NorthWest LNG has an ex-

port license and will undergo an environmental review by the Ca-nadian Environmental Assessment Agency and the B.C. Environmental Assessment Office.

Progress sells small stake in Pacific NorthWest LNG


February’s land sale nets $25M for B.C.

British Columbia pulled in $25 million in February’s petroleum land sale, $15 million more than January’s figure. In total, 5,977 of the 8,955 hectares on the block were purchased. The unsold land either received no bids or the bids did not meet a criteria.

The nine parcels of land that were sold netted a price of $4,246.46 per hectare, which is up significantly from December and January, which came in at $641.90 per hectare and $585.03 per hectare, respectively.

In the February auction, Standard Land Company Inc. set a new per hectare record by paying $14,771 per hectare for 777 hectares of land total-ling $11.478 million.

February’s sale revives the upward trend in which companies have been eager to purchase land in the

Montney area in Northeast B.C. and Northwest Alberta.

The high level of interest stems partly from a study released late last year that more than doubled the amount of natural gas thought to be trapped in the Montney.

It was the first assessment of its kind for the region. It was jointly con-ducted by the federal National Ener-gy Board, British Columbia’s Ministry of Natural Gas Development, the B.C. Oil and Gas Commission and the Al-berta Energy Regulator.

The assessment estimates that the Montney formation can support commercial activity for 150 years or longer at current production rates. The volume of marketable gas is now believed to be 12.7 trillion cubic me-tres, which is roughly the volume of Lake Superior.

Just over 12,200 hectares are on the block on 23 parcels of land at the March 26 land auction.


gas would come from Progress’ holdings in the

Montney, estamates of which recently trippled in volume.

PEUPLELOUP PHOTO


envIronmentIndustry news

In a blockbuster deal announced in Febru-ary, Canadian Natural Resources has agreed to purchase most of Devon Energy Corporation’s as-sets in western Canada for $3.13 billion.

During an analyst conference call, Steve Laut, Canadian Natural president, suggested it is further evidence of the company’s growing con-fidence in the gas market.

“This is a gas-weighted acquisition - about 70 per cent is gas,” he said. “And the metrics on the gas we think are very reasonable and fair.”

This is the second ma-jor vote of confidence that British Columbia’s gas sector has received from Canadian Natural in recent months.

Recently, CNR changed course on its plan to mon-etize its 375 sections, or about 240,000 net acres, of land in the the Graham

kobes area 80 kilometres northwest of Fort St. John. As recently as last August, Canadian Natural said it would “consider either outright sale of lands or joint venture partner with LNG expertise to jointly develop the lands.”

CNR is the second-larg-est natural gas producer in Canada.

The deal with Devon excludes the Horn River gas play in Northeast Brit-ish Columbia and some heavy oil properties in Alberta.

All the assets are lo-cated in close proxim-ity to Canadian Natu-ral Resources’ current operations.

CNR called the assets “key strategic facilities,” including six natural gas plants (with gross pro-cessing capacity in ex-cess of 1,000 mmcf per day) and four major oil batteries. Included in the purchase is 2.2 million net acres of undeveloped land and 2.7 million net acres of royalty and fee simple lands.

The company said tar-geted cash flow from the combined royalty reve-nue streams is expected to be between $140 mil-lion and $150 million this year.

“This acquisition fits our strategy of oppor-tunistically adding to our existing core areas, where we can provide immediate value, with the opportunity to add value in the fu-ture,” said Laut. “The acquired assets are … a very good fit with Canadian Natural’s existing assets and infrastructure. The combined assets and infrastructure provide synergies to more effectively and efficiently op-erate once fully integrated.”

About 900 Devon Cana-da employees will join CNR.

CANAdiAN NAtURAL RESOURCES BEtS BiG ON B.C.


CNR to buy most of Devon Energy’s assets

in western Canada

“This acquisition provides significant upside in liquids-rich natural gas and light crude oil properties where we already operate and have a strong understand-ing of the geology and operating perfor-mance,” Laut added. “The acquisition provides immediate value to sharehold-ers through produc-tion and cash flow, is accretive in earn-ings, cash flow and returns, and main-tains our strong financial capac-ity to effectively execute our well defined plan.”

Devon is based in Oklahoma City and Canadian Natural Resources is headquartered in Calgary.

For Devon, the deal with

Canadian Natural rep-resent a shift away from its non-core business assets.

Devon will “imme-diately repatriate the proceeds to the U.S. for use in the repayment of debt incurred to fi-nance its Eagle Ford ac-quisition,” according to a press release from the company.

“This agreement rep-resents a significant step forward in the exe-cution of our non-core divestiture process,” said Devon president John Richels.

“This tax-efficient transaction provides for a clean exit from our Canadian conventional business at a value of nearly seven times 2013 EBITDA, a substantial premium compared to Devon’s current trading multiple. Furthermore, the timely execution of the largest piece of our non-core divestiture process accelerates the refocus on core assets.”

COURTESy PHOTO


[email protected]

risk and reward

More than 300 people represent-ing about 35 First Nations in British Columbia crammed into the Pome-roy Hotel in Fort St. John from Feb. 17-19 to discuss the risks and re-wards of supporting the province’s burgeoning LNG industry.

The summit, hosted by Treaty 8 Tribal Association, brought in a slew of influential speakers, in-cluding Assembly of First Nations National Chief Shawn Atleo, B.C. Minister of Aboriginal Relations and Reconciliation John Rus-tad, and Bob Rae, former Liberal Party leader.

Seven oil and gas pipelines are in

the works, to go along with more than a dozen liquefaction and ex-port proposals. If fully realized, the scale of development could irre-vocably impact the way of life for First Nations.

Upwards of 52 First Nations would be impacted by the prov-ince’s ambitious plan to develop its energy industry, particularly those

situated within the so-called “en-ergy corridor” from Northeast B.C., where the gas is extracted, to the coast, where it will be liquefied and exported to ports in Asia.

The summit aimed to give First Nations leaders the knowledge and tools they need to make decisions on whether or not to participate in the projects, and come up with

steps on how to move forward.Day One on Monday began with

opening remarks by Chief Ronald Willson of West Moberly First Na-tions. Mark Podlasly, senior advi-sor, British Columbia First Nations Energy and Mining Council, took to the podium for a session titled “LNG 101” that set the stage for the rest of the summit.

“Here’s the playing field, here’s the rules of the game, here’s how the system works. How we respond as First Nations to that is up to the leadership, but we need to have this information to make these decisions,” said Podlasly in an in-terview. “First Nations for the first time are finding ourselves in the midst of an energy superhighway

that connects gas fields in North-east B.C. and consumers to places like Delhi, Tokyo and Shanghai,” he continued, before asking, “What does that mean to us as First Na-tions? How are we going to re-act? How are we going to partici-pate in that? How are we going to impact that?

“It’s very important to have the information to be able to do that. That’s why we’re here today.”

Shell gave give delegates a rare first-hand look at its operations and facilities in the area. The tour was closed to the media. There was a concurrent First Nations cultural tour that was also well attended.

Anna Barley, director of admin-istration and economic develop-ment for the Treaty 8 Tribal Asso-ciation, explained that the opening of the summit was intended to set the stage for “a really good conver-sation” on Day Two, “to find some common ground in those dis-cussions and develop some next steps and goals to move forward from there.”


First Nations want a bigger role in dialogue surrounding LNG

‘First Nations are finding ourselves in the midst of an energy superhighway that connects gas fields in Northeast B.C. and

consumers to places like Delhi, Tokyo and Shanghai.’— Mark Podlasly, senior advisor, B.C. First Nations Energy and Mining Council

TERRy TEEGEE, TRIBAL CHIEF, CARRIER SEkANI TRIBAL COUNCIL

The First Nations LNG Summit was held in Fort St. John from Feb. 17-19. Participants discussed the province’s burgeoning LNG industry. MATT LAMERS PHOTOS


FIrst natIons

risk and reward

Day Two featured a morning breakout session titled “Aboriginal Inclu-sion,” which explored ways that First Nations can participate in resource development projects across the province. From there, four groups were formed that discussed economic development opportunities, closing the educational gap, supply chain analysis and a water strategy for Northeast British Columbia.

In the afternoon, the breakout session focused on community impacts, with delegates splitting up to talk about cumulative impacts, pipeline safety, advancing a community vision, financial management essentials and social impact assessments.

In an interview on the second day of the summit, Tribal Chief Terry Tee-gee of Carrier Sekani Tribal Council said that if the province wants his

support to develop LNG, it must recognize “that we’re a decision-making authority, not only the province, but federally and provincially and First Nations.

“They need our consent, they need our input, they need our approval of the projects before any of them go through, so I think there needs to be more communication and more willingness from the province to work with us ... I think they just need more of our involvement in the decision-making process.”

Chief Sharleen Gale of Fort Nelson First Nation expressed similar senti-ments, adding that LNG development wouldn’t get her support if it threat-ened First Nations’ way of life.

“My biggest concerns are striking a balance,” she said. “How is shale gas development going to unfold in our territory but still allow us to live off the land as we always have? My biggest concern is future generations. I don’t want to leave nothing behind for them. Factories and industry plants – you can’t eat that.”

Exactly how First Nations could potentially benefit from LNG de-velopment was an important topic of discussion.

Clarence Willson, band councillor and negotiator for West Mober-ly First Nations, said there are several different layers of economic benefit that he anticipates.

“One of them is direct revenue from the government, as part of a tax-sharing structure, as well as with industry when we enter into

impact benefit agreements or participation agreements with the companies. So that ensures long-term revenue,” he said.

Coincidentally, B.C. Finance Minister Mike de Jong tabled the 2014 provincial budget on Feb. 18, which pinned the LNG tax and royalty regime on a sliding scale from 1.5 to 7 per cent of net profits. The province hopes that revenues from these taxes will add up to billions of dollars, solve its debt dilemma, and set the stage for an unprec-edented expansion of the economy.

It did not mention sharing with the province’s First Nations, who arguably stand to lose more than anyone else from the development, as upwards of 80,000 wells could be drilled in Treaty 8 territory.

Willson noted that LNG development could come with business opportunities for First Nations.

“Our community is partnerring with several proponents and ser-vice providers to offer supplies to the LNG industry, and there’s go-ing to be a training and employment program,” he said.

“I look at long-term employment and trades training as a long-term economic benefit from these types of projects. The prob-lem with these projects is they’re short term, so they’re there a few months and they’re gone.

“A lot has to happen in advance to get people ready to participate in these jobs.”

See FIRST NATIONS LNG on Page 26

First Nations want a bigger role in dialogue surrounding LNG

BOB RAE, FORMER PREMIER OF ONTARIO

DOIG RIVER FIRST NATION CHIEF NORMAN DAVIS

CLARENCE APSASSIN, MEMBER OF BLUEBERRy RIVER FIRST NATIONS

CHIEF SHARLEEN GALE, FORT NELSON FIRST NATION

CLARENCE WILLSON, BAND COUNCILLOR AND NEGOTIATOR FOR WEST MOBERLy FIRST NATIONS


[email protected] saFety

underslept? take fatigue lightly at your peril, and your colleagues’, too

Before sitting in on one of Susan Sawatzky’s pre-sentations at a mine in the yukon, a senior manager said he would have fired “on the spot” a worker who had been caught sleeping on the job. But after listening to Sawatzky’s presentation on how fatigue can impact safe-ty, the manager was singing a different tune.

Rather than implement a fatigue management plan at one part of a mine, as had originally been planned, the company decided to bring it in across the entire operation.

“To truly manage fatigue in the workplace, there has to be an awareness, an awareness of the issues in terms of health and safety,” said Sawatzky in an inter-view. “And the first step in fa-tigue management is bring-ing about that awareness.”

Sawatzky was in Fort St. John on March 5 for En-form’s first Safety Practitio-ner presentation of the year. About three dozen safety practitioner from compa-nies operating across the Peace River Region listened to her presentation “Waking Up to Fatigue Factors in the Workplace.”

Sawatzky, an independent consultant in the oil and gas and mining industries, is a fatigue management specialist and owner of In-Scope Solutions.

Her message to the prac-titioners was that fatigue ought to be considered a major factor in safety planning.

“The worst consequence with regards to fatigue is the microsleep,” she said. “That unplanned, unanticipated sleep that will occur for two to 60 seconds. If it occurs at the wrong time, it can

FATIGUE CAN BE FATAL


MARk HOFFMAN/MILWAUkEE JOURNAL SENTINEL/kRT

be fatal.”Rick Newlove, Enform’s

manager, B.C. operations, said the message is that fa-tigue is a safety issue.

“Clearly we want to make sure that fatigue as a safety issue is transferred from both the oil and gas operator

side, which often have the major policies right down to the field level,” said Newlove.

“The safety professionals that attend meetings like this are basically those that we have locally that can spread that message, right down to the ground level staff to

help encourage the culture of safety in regards to fatigue management.”

Sawatzky defines fatigue as reduced mental or physi-cal performance, with some factors being sleep loss, workload and the circadian curve, or the sleep cycle.

The real issue, Sawatzky said, is that it can impair a worker’s ability to safely per-form their job duties.

“Fatigue is a safety issue because it affects us in four key ways,” said Sawatzky. “It affects our alertness, which is our ability to notice changes that are occurring in our work environment. It affects our emotional stability, which is our abil-ity to remain calm and deal with workplace situations as they’re occurring. It affects our mental abilities, which of course is our decision making, our communica-tion skills. Finally, it can af-fect our physical abilities, our coordination, our reac-tion time, and that’s when it really starts to become a big issue.”

In the presentation, Sawatzky said that fatigue affects people in waves.

“If we haven’t managed it, it will eventually begin to af-fect our motor coordination. It will affect our balance, our hand-eye coordination.”

The point where fatigue becomes a critical safety is-sue, according to Sawatzky, is when you get to the next stage, microsleeps.

“you might have an un-planned sleep that lasts from two to 60 seconds while you’re driving or when you’re in the middle of oper-ating a piece of machinery. It’s the key reason why we need to manage our sleep and manage our fatigue. It affects our ability to work safely.”

So what should compa-nies do about it?

Organizations could come at it from two differ-ent places, she said. Bring-ing about change can be top down. It could start with educating the senior management so they under-stand the risk factors. That essentially involves mak-ing them aware of the issue. See FATIGUE on Page 27

Who is responsible for fatigue and safety?

“There’s always that balance between management and employee,” said Susan Sawatzky.

Organizational controls include shift designs, safety management systems and overall safety culture.

Individual controls involve the employ-ee being aware of fatigue. “They need to be fit work. Fatigue is a fit-for-work factor similar to drugs and alcohol. Understand-ing this really just involves fatigue man-agement competency.”

How do you assess fatigue in the field?In the future there will be devices and

cameras that use complex algorithms to assess fatigue in real time. “It’s coming,”

said Susan Sawatzky, “but it’s not likely to be at your doorstep soon, so for now here are some other things you can look at.”

Remote operation: If you don’t have cell service, you’ll probably have to look at a paper-based assessment. This is an individual fatigue likelihood assessment. It looks at various factors and uses a point system that can be put to a decision on what to do.

There’s an app for that: Free and paid apps quantify your fatigue. Give you feed-back as to how much fatigue will affect you. By being able to quantify it and relate it to a company based decision tree you are able to use these assessments to link fatigue levels to company guidelines and policies.

See QUESTIONS on Page 28

Fatigue expert Susan Sawatzky was in Fort St. John for Enform’s first seminar of the year. MATT LAMERS PHOTO


R001642872

Led by CEO Garth Braun, Black-bird Energy Inc. is positioning itself to be swept up by the “paradigm shift” currently taking place in the energy market in Western Canada. It’s a nano-cap energy company that has ambitions of being some-thing much greater.

Blackbird trades on the TSX Ven-ture Exchange and has a market capitalization of $16 million.

Blackbird (TSX Venture: BBI) re-cently announced plans to acquire the outstanding shares of Pennant Energy Inc. (TSX Venture: PEN). The acquisition increases Black-bird’s stake in the Bigstone Mont-ney project to 50 per cent and its share of the Mantario Oil project to 100 per cent.

The total transaction price is $2.64 million and includes 60 BOE/d of production and prov-en plus probable reserves of 805 MBOE. Pennant Shareholders will vote on the deal on April 4.

In an interview, Braun said Black-bird is a company that looks to get in front of trends by aggressively assembling land positions.

“Before the majors have come in and put a large land block together, we like to get ahead of the trend, identify geologically what we think is an exceptional opportunity, go

in, get that land position before the majors have paid and brought up the land prices, and make a discov-ery,” he said.

“That’s what we want to present to the marketplace. We’re a com-pany that can go out, get a proj-ect into play and then also, in es-sence, have it be a best of breed project that will attract a farm-in partner or that we can bring capital for.”

Braun was born and raised in Grande Prairie, Alberta.

He thinks a paradigm shift is tak-ing place whereby juniors will be-gin to be rewarded for putting land positions together with near-term production of natural gas.

“As it becomes clearer and clear-er that LNG on the West Coast is

going to happen, funds are going to start to invest, and people are going to start to invest in juniors, because of that access,” he said. “It’s still a ways away, but that’s an opportunity.”

Following is the rest of the in-terview he gave to Pipeline News North.

Can we start by talking about the paradigm shift that has taken

place in the gas market and how you’re situated to benefit from it?

The reality is the majority of our gas goes south at the present time. What’s happening is the nearer the likelihood of LNG going off [Cana-da’s] West Coast, that value starts to show up in assets in Alberta, and I think what we’ve all started to ac-

knowledge is that there’s go-ing to be more than one or two facilities built on the West Coast. I think there’s [14] un-

der application at this time. The majors have already taken

their position in Alberta … they’re not taking those positions for the purpose of selling their gas to the south, they’re looking at a new market that’s opening up and it’s going to shift the value of gas, and not be caught in the cycle of whether we’re having a cold winter or hot summer in North America.

See INVEST on Page 25

Matt lamersStaff Writer

Small investor profile

BLACKBIRd ENERGy INC.

52 week low: 0.04552 week high: 0.135Market cap: $16,54MEPS: -0.05

tsx venture: BBI

Feb. 10, 2014 to March 12, 2014

Invest

‘As it becomes clearer and clearer that LNG on the West Coast is going to happen, funds are going to start to invest,

and people are going to start to invest in juniors.’

[email protected]

R001697748


To improve the management of oil and gas projects in the prov-ince, the Ministry of Natural Gas Development has put forward changes to the Oil and Gas Activi-ties Act (OGAA).

The amendments will allow in-dustry to adopt new operational improvements, according to the ministry. Specifically, Bill 12, the Natural Gas Development Stat-utes Amendment Act, amends three B.C. laws: the Oil and Gas Activities Act, the Petroleum and Natural Gas Act and the Strata Property Act.

All natural gas activities in Brit-ish Columbia are regulated un-der the OGAA. The amendments are also intended to remove an exemption for a small number of “legacy pipelines.” Permits will be retroactively issued and the pipe-

lines will continue to be subject to enforcement actions by the B.C. Oil and Gas Commission and the requirements of the OGAA.

The Ministry of Natural Gas De-velopment said that the natural gas sector has changed signifi-cantly since the PNG Act was last updated in 1982.

The Bill 12 amendments are in-tended to modernize that act.

The amendments will create a more consistent approach for permits, leases and drilling li-cences, streamlining the admin-istration of natural gas regulatory administration.

The Ministry of Natural Gas De-velopment grants permits, leases and drilling licences on Crown-owned land for natural gas use under the PNG Act.

Exploration and development is permitted and regulated by the B.C. Oil and Gas Commission un-der the Oil and Gas Activities Act.

minisTry of gasuPDaTes Png acT


[email protected] INVEST


INVEST from page 23Rather it’s servicing Asia.

You’ve said in previous interviews that Delphi is cur-rently drilling right up to Blackbird’s Bigstone property. What does that tell you about your property?

They’ve drilled six wells directly south of our land. Basi-cally it’s confirmed that our Montney formation in that area is very productive. They’ve actually changed our property from being an exploration play to a development play.

Blackbird is updating its reserve report in April, once we’ve finished acquiring Pennant, we’ll own 50 per cent of that play.

But it looks like Donnybrook has put out a reserve report that’s increased their reserves substantially on what was previously assessed on the Bigstone play to a number that looks to be approximately be about 18 million.

[Donnybrook owns the remaining 50 per cent of the Big-stone play.]

Can you tell me about your other Montney position? We have a large Montney position of 21 sections just

south of Grande Prairie. We call it Greater karr, but it’s re-ally the Elmworth play. What we’re excited about there is that, in essence, Encana has just drilled a well five miles to the west of us.

What we like about this is that we put this land position together, the Montney rights and the Duvernay, and we’re looking to farm out that project, get a multi-well drill pro-gram in place. What I like about it is … we have the ability to take our gas north and south of the Wapiti.

Do you have a timeline for that?Obviously capital budgeting needs to be in place, but

we’ll look to accelerate that project aggressively in 2014.

Is there anything else potential investors should know about?

We’re well-funded. Near term, they should be track-ing what we do with our Elmsworth-Greater karr project. Clearly, we’re aggressively looking for a farm-in partner. We’re looking to move that project forward aggressively in 2014.

We’re looking [at] drilling our first horizontal well in our Mantario oilpool and developing that asset further. We have the ability to probably drill a second well without financing.

On our Bigstone asset, once we own 50 per cent, we’ll be looking to monetize that asset in some form, so that we can increase cash flow to our company.

You’ve said in a previous interview that you have large-cap ambitions. What needs to happen for that to take place?

I think that farm-out of our Elmsworth property will be major step forward.

The successful drilling of our horizontal well in our Man-tario oil discovery will be significant … there’s a lot of de-velopment potential there. Once that first well comes in and we understand the economics, that turns very quickly into a development play. That will change it.

If you want a correlation, you’d go and look at analogues of Rock Energy’s discovery in the Mantario, which is just 11 miles away from us. Different API, but a major discovery for them, which was really the asset that turned their story around. We see that as a real potential for turning value to our company.

[In] the Montney project, we see that with wells being drilled in near proximity to us, that’s a major asset for it. And once we can farm it out and unlock value through drilling, that will change the value of our company.

Blackbird Energy’s portfolio

The Bigstone Montney project

This project consists of sev-en sections (25 per cent work-ing interest). It is surrounded by Delphi Energy, Athabasca Oil Corp, Trilogy Energy Corp. and TAQA North. Of drilling inventory totaling 27 wells, three wells are producing. The company says this proj-ect has great upside potential. Blackbird has purchased the company which owns another 25 per cent stake in this play.

The Greater Karr project

Situated in Northwest Al-berta, the Greater karr area project came from Blackbird’s desire to discover Mont-ney oil. It includes 13,440 net acres in 21 sections. Recent drilling is within 10 kilometres of Blackbird’s position.

The Mantario Oil project

Located in central Saskatch-ewan, the Mantario Project has strong analogue support to a near proximity oil discov-ery, the company says. Black-bird Energy owns 70 per cent WI of the gross 1,920 acres.

The Flaxcombe Oil project

This project consist of 21,227 gross acres that were acquired with initial pro-duction of 28 bbls/d. Cur-rent production is about 50 bbls/d, according to the company. Blackbird has 100 per cent interest in the Sparky oilpool that has four produc-ing oil wells.

The Blackbird Alsask project

This project consist of 1,120 gross acres and has two pro-ducing oil wells with produc-tion of 20 bbls/d.

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FIRST NATIONS LNG from Page 21

Wednesday’s breakout sessions focused on how to find “common

ground.” Delegates separated into smaller groups to look best practices for successful First Nations joint ven-tures and economic negotiations.

LNG Canada has agreed to purchase or lease a wharf and some land at a port facility in kitimat from Rio Tinto.

The proponent hopes to construct a liq-uefaction plant and marine terminal for natural gas, however no final investment deci-sion has been made.

The financial arrangements of the deal were

not disclosed. LNG Canada is a joint venture between Shell

Canada Energy, Phoenix Energy Holdings (an affiliate of Petro-China Investment in Hong kong), kogas Canada LNG (an affiliate of ko-rea Gas Corporation), and Diamond LNG Can-ada (an affiliate of Mitsubishi Corporation of Japan).

“This is an excellent example of how we can generate meaningful value from our ex-isting assets by selling options on port facili-

ties to LNG Canada, enabling it to share one of the best deep water ports on the western seaboard of the country,” said Sam Walsh, Rio Tinto’s chief executive.

Andy Calitz, vice president of LNG Canada, confirmed the deal.

“We believe the LNG Canada project repre-sents the best opportunity to bring the lique-fied natural gas industry and its benefits to the people and communities of British Columbia,” he said.

LNG Canada buys wharf,

land in Kitimat


[email protected]

Later in the afternoon, participants examined impact benefit agree-ments, the Asia-First Nation connec-tion, business governance and treaty rights.

John Rustad, B.C. minister of Ab-original Relations and Reconcili-ation, addressed the delegates on Wednesday afternoon. Assembly of First Nations National Chief Shawn Atleo followed him, addressing the risks and rewards that First Nations face in the coming years.

Rustad told summit attendees that by working together, “we will create benefits for generations to come.”

The importance of working to-gether as First Nations is a theme that Atleo stuck with when he took the podium. First Nations support development, but not development at any cost, he said, adding that in-dustry and government have been ignoring the rights of First Nations.

Atleo added that First Na-tions bring a vision of balanced development.

In an interview, Bob Rae, former Liberal leader, said the more infor-mation that’s sent out to the public, the more discussion can be had. He agreed communication puts B.C. in a better place to avoid the kind of meltdown that occurred on the East Coast between First Nations and en-ergy companies.

“What is happening [in B.C.] is very healthy. A lot of issues are being put on the table,” he said.

Rae, the keynote speaker on Mon-day, is also a legal counsel, advisor, negotiator and arbitrator for First Nations across Canada.

He said that if proponents fail to gain a “social license,” they will ulti-mately miss the boat on LNG.

“Both the market and public opin-ion will have a significant impact on which proposals come to fruition,” he said. “The companies are recog-nizing increasingly that they’re op-erating under a broad social license, and that social license is accorded, in part, by public opinion across the province, but also in particular by ... First Nations. That’s now clearly embedded in law, embedded in the structure of consultation.”

Chief Harley Davis of the Saulteau First Nation helped close the confer-ence on Feb. 18 with a call for unity, calling for First Nations to put aside their differences.

“The reason why industry and gov-ernment comes to us is because we have a right, a treaty right,” he said. “It’s important that we connect and share stories together. It’s important that we go home and share what we learned today and make good decisions.”

Chief Gale, of Fort Nelson First Na-tion, who will host the next First Na-tions LNG Summit in April, followed Chief Davis with a call to action. “LNG and shale gas is the Alaska Highway of our generation. But to-day, we have the responsibility to do better. There is no excuse this time. We must do better and we will do better,” she said.

“Industry must be willing to sit at the table with us with open respect for our rights and our goals.

“We’re not going anywhere. This is where we live.”

Proprietors have been buying land in and around Kitimat in preperation for LNG exports. SAM BEEBE PHOTO


British Columbia’s burgeoning liquefied natural gas industry got a small boost last month when the province unveiled its quar-terly funding, courtesy the Infra-structure Royalty Credit Program (IRCP).

Energy companies will be grant-ed $120 million in royalties to build roads and pipelines. That’s a slight increase from the last roy-alty payments in September that doled out $115.8 million.

Most of projects are north of Fort St. John in the Montney area.

The money from the Royalty Credit Program system comes

from royalties the province col-lects from energy companies, effectively subsidizing the con-struction of infrastructure that is deemed important for the indus-try’s future growth.

March represents the 13th in-stalment of the Infrastructure Roy-alty Program that has so far award-ed over $830 million in royalties to eligible oil and gas companies.

The province calculates Return on Investment of two-and-a-half times, meaning the $120 million doled out this year from the IRCP will be parlayed into approximate-ly $300 million in royalty revenue down the road.

“The Infrastructure Royalty Cred-it Program continues to play an important role in helping natural gas and oil companies make sig-nificant investments in roads and pipeline infrastructure,” said Rich Coleman, minister of natural gas development.

The investments in infrastruc-ture will increase industry’s access to resource areas.

Since 2004, the IRCP has sup-ported the development of 78 resource roads and 140 pipe-line projects, representing a total capital investment of more than $1.9 billion, without direct cost to taxpayers.

After oil and gas companies fund the entire cost of an approved in-frastructure project, they are then eligible to recover up to 50 per cent of the project’s costs via the royalty refund program.

Oil and gas companies are en-couraged to apply for the latest instalment of IRCP by April 16. The province ranks applications according to potential benefit to British Columbia.

“The program gives an incentive to companies to capitalize on our resources while giving a fair re-turn to the owners of our resourc-es; British Columbians,” added Coleman.

ROyALty CREditS RiSE tO $120M


Quarterly royalty fund up slightly from September

envIronmentIndustry news

Resource roads will benefit from the latest Royalty Credit from the government of British Columbia. BRUCE MCkAy PHOTO

FATIGUE from page 22

Raising awareness of fatigue and safety at the bottom is the other way to go about it. This typically involves starting with worker training for-mally, or as part of a safety session. Raising awareness at the worker level helps them to manage the issue. It then often brings about the aware-ness of the need for guidelines or policies.

“Awareness is the key,” she said in the presentation. “I think for this more than any other safety issue, it really does come down to awareness. Fatigue is something we are all famil-iar with so we tend to dismiss it and not recognize it as a safety issue.”

Does fatigue only effect safety?Fatigue is also a health issue.

Long term fatigue has been shown to increase the risk of many health issues from heart attacks to can-cer. Many people who talk about “burnout” at work are often just suffering from long-term fatigue issues.

And what can workers do?“It comes down to ... managing

fatigue and overall health and well-ness,” she said. “Recognizing it’s an issue, recognizing it’s a safety issue and knowing, if it’s severe enough, you need to know the signs and stop deal with it as much as pos-sible. Because if you really recog-nize that this is a safety issue and it

is something that can affect me in my work and in my driving, you’re more likely to pull over, take that 20 minute nap and arrive alive.

Newlove said the trend in the industry is toward a greater accep-tance that fatigue is a major issue when it comes to safety.

“A lot of it is because new stud-ies and new information is be-coming available,” he said. “Once it becomes available, people get more proactive in trying to utilize the new information to implement new procedures and guidelines. I think that’s what our industry is doing here on a proactive basis. We have an agreement with the six ma-jor petroleum trade associations to

enact guiding principles on fatigue management. Guiding principles on what the key areas are of fatigue management.”

Sawatzky said fatigue manage-ment is all about enhancing aware-ness of the issue.

“Regardless of how you bring it in, the real key to fatigue manage-ment is bringing about that aware-ness and understanding. Fatigue is something that we all deal with.

We may not have knowledge of an addiction issue or what it’s like to show up for work drunk, but we all know what it’s like to be tired. So fatigue, because of the fact that it’s so common, needs to be addressed.”

March represents the 13th instalment of the Infrastructure Royalty Program that has so far awarded over $830 million in royalties to eligible oil and gas companies.

R001622840R003184226


[email protected]

QUESTIONS from Page 22

How can workers prevent fatigue from becoming an issue?

Mostly through diet, sleep, exercise and stress management.

“Managing fatigue in terms of preventing it comes down to keeping ourselves healthy,” said Sawatzky. “Avoid high-fat foods. Manage your Glycemic Index and avoid high Glycemic Index foods, which tend to shoot blood-sugar up quickly but then drop very quickly. Low Glycemic Index foods raise blood-sugar slowly. Stress management may involve trying to find a balance between work requirements and the need for rest.”

Does caffeine work?“Absolutely. Caffeine is a very effective

strategy for managing fatigue, but only minor fatigue. Less is more. you need to limit the amount of coffee you drink if you want it to be effective as a fatigue tool. Caffeine takes about 20 minutes to kick in, an hour to become fully effective and has a half life of five hours. It does have some downsides: It dehydrates you and it can flush a lot of minerals out of your system.

“Energy drinks, if you take too many, can bring your caffeine level to pretty critical levels. It is important to recognise that because they’re so potent and in such a small amount of liquid, you really can go over the top.”

have you looked up PIPELINE NEWS NORTH on facebook?


envIronment


$400 fOR jOB tRiP tO VAN CityConference to connect high schoolers with upcoming jobs

If you’re a high school student in northern British Columbia, the province gas pledged $400 for you to attend a natural gas jobs conference in Vancouver.

As part of a drive to encourage more of British Columbia’s youth to consider careers in skilled trades, the province is inviting young people from northern communities to take part in an interactive career experi-ence at the second Liquefied Natural Gas in B.C. Conference in Vancouver that will take place this spring.

The $400 per student must go towards transportation costs.

Victoria wants northern school districts, in particular, to include their students in this opportunity, since all of the jobs will be in northern B.C.

“For northern students, a lot of these LNG jobs will be in their backyards,” said Shirley Bond, minister of jobs, tourism, skills and training.

“So we want to make sure we’re con-necting them with the training opportuni-ties and information they need to be first in line for rewarding careers in their own communities.”

Fostering a workforce numbering more than 100,000 people will be necessary to construct only five of the 14 natural gas pro-duction centres, pipelines and liquefaction projects that have been proposed.

One of the biggest challenges for the LNG projects, if they move forward, will be at-tracting skilled workers.

The province thinks part of the solution rests with youth. By the time high schoolers graduate in a few years, work could already have begun on some of the projects.

As many as 43 per cent of the 1 million jobs that will open in British Columbia in the coming years, are expected to be for trades or technical positions, according to provincial estimates.

The May 21-23 conference is being held at the Vancouver Convention Centre.

At the youth Experience half-day

program, students in grades 10 through 12 will interact with post-secondary institu-tions to learn about programs related to the LNG industry, participate in a WorkBC pro-gram to identify career paths, learn about LNG jobs in general, and get some hands-on experience with heavy equipment.

The conference is being held alongside

a broader conference titled “Powering a Strong Economy: British Columbia’s LNG in the Global Market” that will bring together community leaders, educators, elected offi-cials, environmental leaders, First Nations, and LNG proponents.

The host, the Ministry of Natural Gas De-velopment, expects more than 1,000 busi-ness and industry professionals to be in attendance.

For more information: http://www.lngin bc-register.ca/youth-registration

‘we want to make sure we’re connecting them with the training opportunities and information they need to be first in

line for rewarding careers in their own communities.’ — Shirley Bond, minister of jobs, tourism, skills and training.

At Enform, our vision is to eliminate work-related incidentsand injuries in the upstream oil and gas industry. Everything wedo is dedicated to continuously improving your safety.

We were created by industry, for industry and together weare making a difference.

Learn more about us at www.enform.caYour safety is our business.

Email [email protected] Fort St. John 250.785.6009 Toll-Free 1.855.436.3676 www.enformbc.ca

Our goal is to get you home safely, every day.

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908

ZIMMER from Page 15

I think we’re just trying to make the [Nation-al Energy Board] review processes as stream-lined as possible.

When projects are being brought before us, to make sure we them as expedient as possi-ble, whatever the decision is.

Our job as government is to keep the gates open for business to operate, and that’s what we’ll continue to do. We’ll strive to make that a more efficient process as we go.

The analogy I use [for LNG] is McDonald’s and cattle producers. They [the big energy companies] are the biggest franchisees in the gas market in the world and we [Canada] are the cattle producer. Having McDonald’s to sell to is awfully good for us, for our long term sustainability and access to that large world market.

And through franchises like CNOOC [China National Offshore Oil Corporation], this gives us that opportunity.

Go to Page 31 to read an opinion piece sub-mitted by Bob Zimmer about how the crisis in Russia makes Canada’s gas more marketable.

careers

Northern British Columbia and Alberta’s Oil and Gas Industry

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[email protected] CLoSING ARGUMENT

RUSSiAN RiSK iS CANAdA’S GAiNThe E.U. will look to North America to avoid Russian brinkmanship over supply of natural gas

The world continues to watch closely the sit-uation in Ukraine, and Russian aggression in the Crimean peninsula. The Russians may claim more noble motivations for their actions, but to be perfectly clear- this is about energy.

Ukraine is in a strate-gically important posi-tion for Russian eco-nomic interests. Russia has pushed hard to install and maintain friendly regimes in the Ukraine, as a subser-vient Ukrainian Gov-ernment means that Russian oil and gas companies have access to not only Europe, but also export terminals on the Black Sea and at Mediterranean ports in Turkey.

What Russia is doing

is a clear demonstra-tion of why develop-ment of natural gas is so important for British Columbia. If our allies in Europe are depen-dent on Russian gas, then they will be unwill-ing to speak out against Russian bully tactics on the international stage. Russia does use energy as a bargaining chip to force their way. In 2006 and 2009, Russia shut their natural gas pipe-lines to Europe as a pressure tactic against a pro-E.U. Ukrainian Governments.

Russia is not shy about using their natu-ral resources as political weapons against their enemies, or even to force allies to be more com-pliant. That is what they did in 2009, and now the European Union is put in a difficult situation where the supplier of 40 per cent of their natural gas is working hard to

force the defeat of E.U. allies in Ukraine, de-spite popular Ukrainian desire for more cooper-ation with Europe.

In contrast, Canada offers stable, democrat-ic governments at all levels. British Columbia offers world-class in-frastructure and ethi-cal access to resources,

along with stable, dem-ocratic government. The B.C. Peace Region is the hub of Natural Gas growth in Canada, with projects such as TransCanada’s Costal Gaslink, and Prince Ru-pert Gas Transmission lines, looking to get our product to port in a safe and environmen-tally responsible way.

Customers of B.C. natu-ral gas do not have to worry, as Europe does, about energy being cut off as a means of po-litical extortion, and neither do they have to worry about being seen to collude with dictato-rial or violent regimes.

Europe is only now realizing that reliance

on Russia for energy is dangerous to the E.U. as a global power. Rus-sia is trying to recap-ture the influence it had on the world stage in the Soviet era, and has demonstrated that they can and will turn off supplies to Europe as political leverage. European nations are looking for alternate

Bob ZimmerMP, Prince George-Peace River

Chair, BC/Yukon Caucus

Northeast B.C. remains open for business, and as Russia has proven – reliable and democratic suppliers are

a rare commodity.

suppliers of energy, and they are looking across the Atlantic for solu-tions. B.C. is well posi-tioned to take advan-tage of increased foreign demand in natural gas. The oil and gas sector is building its’ way to the coast, as the industry seeks markets beyond the United States.

British Columbia is the only province with a coastline and the po-litical will to develop the natural gas indus-try. Eastern provinces, like New Brunswick and Quebec, are saying ‘no’ to natural gas develop-ment.

They seem to be unwilling to take

advantage of Canada’s international reputa-tion and high environ-mental and social stan-dards. B.C. has no such qualms, and has pros-pered because of it.

Northeast B.C. re-mains open for busi-ness, and as Russia has proven – reliable and democratic suppliers are a rare commodity.

kREMLIN.RU

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