Pipeline News North August 2014

R001697746

VOL. 6 ISSUE 8 DIST: 16,000 SERVING THE OIL & GAS INDUSTRY IN NORTHERN B.C. AND ALBERTA

PIPELINENEWSNORTH.CA

PIPELINE NEWS NORTHFREE!

AUGUST & SEPTEMBER 2014

Profiles: South Peace and Fort Nelson petroleum associations

alberta’s energy regulator gets a facelift

Marking the AER’s first anniversary, CEO Jim Ellis plans to introduce time lines for decision making processes. “This will be extremely advantageous

for investment decisions in this province and will continue to ensure we are a very competitive market.”

MCT, TransCanada Photos

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Al Seib / MCT

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

PNN NUMBERS

$11.10: The Alberta-B.C. Natural Gas Discount is at its lowest level in more than two years.

Chart on Page 5.

$3:67: The AECO “C” spot price, the Alberta gas trading price, has nearly doubled in the past

year, to $4.13/Gj. Chart on Page 5.

19: The number of LNG export projects that have been proposed in Alberta and British

Columbia. Story on Page 8.

$800-million: The cost of TransCanada Corpora-tion’s Northern Courier pipeline project, which was approved by the Alberta Energy Regulator

to start construction. Story on Page 10.

$4.3 million: Transport Canada’s contribution to Northern Rockies’s airport throughout the

Airports Capital Assistance Program. Story on Page 14.

$12 million: The government’s offer to Gitxsan, plus bonuses, in exchange for consent to build

two pipelines through its territorial lands. Story on Page 17

1991: The year the South Peace Oilmen’s Asso-ciation became official under the BC Societies

Act. Story on Page 18.

1: Australia will be the top producer of natural gas by the end of the decade. Story on Page 21.

$60 billion: The cost of Chevron’s mammoth Gorgon LNG plant in Australia.

Story on Page 21.

623: The number of wells expected to be drilled in British Columbia in 2014, according to the

Petroleum Services Association of Canada. Story on Page 23.

4: The number of liquefaction plants proposed for the Vancouver area. Story on Page 25.

$41.79 million: The revenue from Alberta’s July petroleum and land tender, the second highest bonus total of the year. Half was earned from one 4,608-hectare parcel. Story on Page 30.

PNN 19th LNG project proposed

Chart: Alberta-B.C.

LNG discount

Chart: Alberta gas price

Chart: Japan

gas price

Chart: Oil & gas tenders in B.C. & Alberta

Alberta’s energy regulator gets facelift

Northern Courier

pipeline project

Cenovus increases Q2 oilsands output 33%

Osum Oil Sands buys

Orion Project Trans Mountain over

subscribed 71%

Kitimat airshed can handle development

Woodside files LNG

application with NEB

WCC LNG sets sights on Prince Rupert

Look for PNN on Twitter @PipelineNN

Look for PNN on FB: pipelinenewsnorth

14 AiRPORT PREPS FOR LNG BOOM

15 Profile: The Fort Nelson Petroleum Association

16 interview: CAPP’s Geoff Morrison

17 B.C. offers deal to Gitxsan First Nation

18 Profile: South Peace Oilmen’s Association

20 Oregon LNG wins export approval

21 AuSSiE LNG ONE yEAR AWAy

22 Living with the boom

23 Canadian drilling forecast increases

25 Van island gets 2nd LNG terminal pitch

25 TOWNS FORM ALLiANCE ON LNG

29 Prince Rupert, Wi LNG enter into agreement

30 $20 Million parcel powers Alberta’s land auction

Email reporter@ pipelinenewsnorth to share your story idea.

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Published monthly by Glacier Ventures International Corp.Pipeline News North is politically independent and a member of the B.C. Press Council. The Pipeline News North retains sole copyright of advertising, news stories and photography produced by staff. Reproduction is prohibited without written consent of the editor.

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#oilsands the charts

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Alberta and British Columbia now have 19 LNG export projects between them - major and minor in scale.

Despite Apache’s exit from its Canadian LNG plans, proponents continue to line up with proposed LNG projects.

Quicksilver recently announced a massive terminal it hopes to construct on Vancouver Island.

The project is named Discov-ery LNG and would be based near the Campbell River on Vancouver Island.

It’s the second project in as many months that has proposed building a major LNG terminal on Vancouver Island.

Following is brief summary of the 19 LNG projects on the West

Coast. For a full up-to-date report pick up next month’s issue.

Awaiting applicationIn July, the City of Prince Rupert

entered into an exclusivity agree-ment with Watson Island LNG to repurpose the island for a small LNG export terminal. There is no timeline on construction or when export will begin.

In July, Petrox Resources Corp. announced a cooperation frame-work with Qingdao Sinoenergy of China and Asiafic Clean Energy of Hong Kong to establish an Alberta joint venture company called Gas-cana AB Energy Ltd.

Liquefaction would take place in Sturgeon County, Alberta, and the LNG would be transported to the West Coast for export via a rail link.

See LNG on Page 20

19th LNG project proposedMatt Lamers

Staff Writer

Left, the Henry Hub Natural Gas Spot Price (dollars per Million Btu) traded at $4.10 in the first week of December and began August at $3.77. Source: U.S. Energy Information Agency

The Japan LNG Import Price continues to trend downward after reaching all-time highs last year. Source: World Bank

The AECO “C” spot price, the Alberta gas trading price, nearly doubled in the past year to $4.13/Gj but fell to $3.60 in August. Source: Natural Gas Exchange

Alberta gas price

The so-called Alberta-B.C. Natural Gas Dis-count (ABCD) is the dif-ference in price that a BTU of natural gas costs in Tokyo compared to Alberta. Sources: Natural Gas Exchange, Bloomberg

The alberta-B.C. lng discount

Japan gas price

U.S. gas price

December 2013 to August 2014

March 2012 through August 2014

September 2013 through August 2014

December 2013 to August 2014

The price of oil fell below the psychologi-cally important level of $100 per barrel in early August, but is still trending upward for the time period 2010-2014. Source: U.S. Energy Infor-mation Agency

The BC Oil and Gas Commission’s monthly land tender pulled in only $3 million in August, the lowest total this year, reversing the upward trend line. Source: BC Oil and Gas Commission

Alberta’s oil and gas land tender pulled in $41 million in early August, the second best showing so far this year. Source: Alberta Energy Regulator

alberta land auction

b.c. landauction

Oil price

June 2013 through July 2014

January 2014-August

May 2010-August 2014


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The Alberta Energy Regulator plans to introduce time lines for its decision-making processes, its chief executive said.

“This is a significant announce-ment that will add considerable certainty to the regulatory pro-cess,” Jim Ellis said at an event in Calgary that marked the first anniversary of the AER, a single-window regulator responsible for every aspect of energy develop-ment in Alberta. “This will be ex-tremely advantageous for invest-ment decisions in this province and will continue to ensure we are a very competitive market.”

The change also will add cer-tainty to stakeholders who have struggled in the past, along with industry, to understand the regu-latory system and its timelines, he said. The addition of the timelines will occur in phases, beginning with the public land applications and will be announced and in place by March 31, 2015.

Federal government legisla-tion recently introduced decision timelines for major projects to be considered by the National En-ergy Board.

Alberta regulators will break out the different types of applications and set timelines within them, Ellis said later in an interview. Although the AER is trying to put timelines into contested applica-tions, “that has to be more flex-ible,” he said.

“You have landowners and oth-ers that are trying to work within the system but at least we are try-ing to get some boundaries there where people can actually un-derstand that it’s not an entirely open-ended process.”

However, Ellis warned that for the timelines to be successful, the AER will need technical experts that can handle the files and in-dustry to do a good job of provid-

ing applications with complete information.

“That way we can move through the process in the agreed-to time-line,” he said. “If applications go back for further clarifications the clock will stop and will start again once the regulator has re-ceived the requisite information required to make a decision.”

Every application that comes in will be posted on the AER website.

“It is extremely important to note that these steps will not lower any environmental performance

or any environmental outcomes that were set,” Ellis emphasized.

The three-phased approach to the creation of a new regula-tor and governance structure brought together the responsi-bilities of the previous Energy Resources Conservation Board (June 2013), adding public lands and geophysical responsibility in November 2013. The third phase in March 2014 dealt with air, wa-ter and biodiversity as they relate to energy development.

The second phase (public

ELSIE ROSSDaily Oil Bulletin

alberta’s energy regulator gets faceliftMarking the Alberta Energy Regulator’s one-year anniversary,

chief executive Jim Ellis said he planned to introduce time lines for decision-making processes, a single-window


alberta featuretwitter.com/pipelineNN

lands) was launched in the midst of the winter drilling program and the AER was presented with a backlog of thousands of Public Lands Act ap-plications with little detailed infor-mation, according to the regulator’s 2013/2014 annual report.

“This was a significant test, result-ing in immediate changes to the process, including significant man-agement oversight,” said Ellis. “This was a true test under fire for this organization.”

The retired Canadian army colonel said he has been under fire physi-

cally in various parts of the world. “I remember getting situational reports from the folks who were running the winter drilling program,” said Ellis. “We took it [public lands responsibil-ity] over on the first of December and I can tell you there wasn’t a day that went by that I wasn’t missing Afghan-istan or Bosnia — at least you could fire back there.”

In tackling the backlog issue, the AER asked operators to submit their top 10 priorities for processing and accepted no other applications until the priority applications were com-

pleted, according to the regulator’s 2013/2014 annual report.

“At the same time, the AER used analytics and detailed tracking sheets to assess the remaining applications, giving staff a clearer picture of the scope of the work required,” says the report. By using this strategy, the AER will have eliminated backlog of 5,300 applications by July 1 and it is already beginning to see applications for next winter, Ellis told theDOB.

“While examining the tracking sheets, it became apparent that PLA application processing was not meet-

ing its targets,” says the report. “For example, applications with a 20-day target were taking 56 days to process, while applications with a 30-day tar-get were taking more than 300 days.”

The AER will continue to make improvements to the PLA process to reduce the processing times in the coming months, according to the report.

In his presentation, Ellis outlined some of the AER’s initiatives in the first year apart from the merger and day-to-day operations.

See ALBERTA REGS on Page 12

alberta’s energy regulator gets faceliftregulator responsible for every aspect of energy development in Alberta.

“This will be extremely advantageous for investment decisions in this province and will continue to ensure we are a very competitive market.”

FAR LEFT: AL SEIB/MCT LEFT: MAGNuS LARSSON

ABOVE:

FROM LEFT: MCT, TRANSCANADA, MATT LAMERS


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#LNGinAlbertaalberta

pipelineWork on the Northern Courier pipeline will start in Q3 and conclude in 2017.

The pipeline will service the Fort Hills mine in the Athabasca oilsands.

Construction on TransCanada Corporation’s $800 million North-ern Courier pipeline project is scheduled to begin in the third quarter of 2014 and be ready for ser-vice by 2017, says the company.

The project to provide bitume-nand diluent transportation service to the Fort Hills mine in the Atha-basca oilsands has received Alberta Energy Regulator approval.

Northern Courier consists of two

90-kilometre bitumen and diluent pipelines. A 24-inch outside diam-eter pipeline will transport heated or diluted bitumen from the Fort Hills mine and bitumen extraction facility approximately 90 kilometres north of Fort McMurray to the Sun-cor Energy Inc. East Tank Farm about 27 kilometres north of Fort McMurray.

A 12-inch pipeline constructed parallel to the bitumen pipeline will

transport diluent (condensate, die-sel and synthetic crude) from the tank farm to Fort Hills.

Associated pipeline installations consist of a pipeline tank farm and bitumen pump station at the north-ern end of the pipeline route and a diluent pump station at the south-ern end. The tank farm includes two 300,000-bbl bitumen tanks, one 150,000-bbl diluent tank and one 50,000-bbl diesel tank.

The Fort Hills Energy Limited Partnership selected TransCanada to design, build, own and oper-ate the Northern Courier pipeline project, which is fully contracted under a long-term agreement. Fort Hills is operated by Suncor (40.8 per cent interest) with part-ners Total E&P Canada (39.2 per cent interest) and Teck Resourc-es Limited (20 per cent interest). — Daily Oil Bulletin

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alberta briefstwitter.com/pipelinenn#LNGinAlberta

Shippers will be able to deliver only 29 per cent of nominated crude oil volumes from AL-berta on Kinder Morgan Canada Inc.’s Trans Mountain pipeline system in British Colum-bia, which is oversubscribed by 71 per cent overall for August.

The announcement to shippers will result in a 1 per cent oversubscription for firm ser-vice nominations, a 45 per cent oversubscrip-tion for uncommitted barge nominations for Westridge dock, a 90 per cent oversubscrip-tion for uncommitted tanker nominations for the Westridge dock and a 72 per cent oversub-scription for land based destinations.

Total nominations accepted are: 286,612 bbls per day for the Trans Mountain Main-line, 118,781 bbls per day for Puget Sound and 76,524 bbls per day for the Westridge dock.

— Daily Oil Bulletin

Trans Mountain over subscribed by 71%

Shippers will be able to

deliver only 29% of crude

oil volumes on the Trans

Mountain pipeline system.

Private company Osum Oil Sands Corp. has completed its previously announced purchase of Orion oilsands project fromRoyal Dutch Shell plc for C$325 million.

“We believe Osum has a unique opportunity to build a significant production platform from both Orion and our neighbouring Taiga project in the Cold Lake region,” Steve Spence, president and chief executive officer, stated in a news release.

He said the Orion acquisition provides Osum with significant production and cash flow. As well, his company welcomes the qualified, expe-rienced operating team members joining Osum as part of Thursday’s deal.

Cash-on-hand and net proceeds from a new uS$210 million senior-secured term-loan facil-ity to Osum Production Corp.funded the project. With a maturity date of July 31, 2020, the term-loan facility has an interest rate of LIBOR plus 5.5 per cent, with a one-per-cent LIBOR floor.

Further, the company has access to a uS$15 million senior-secured revolving-loan facility for general corporate purposes, with Barclays Bank PLC and Goldman Sachs Lending Partners LLC acting as joint-lead arrangers and joint bookrun-ners for both the term-loan facility and the revolv-ing-loan facility.

The Orion project is located in the Cold Lake oilsands region, close to several major oilsands developments. It is about 18 kilometres south-west of Osum’s Taiga project, which has received regulatory approval for the construction and op-eration of a facility. — Daily Oil Bulletin

Osum Oil Sands buys Orion Project

DEJOuR PHOTO

Cenovus Energy Inc.’s second quarter 2014 oilsands production rose 33 per cent from the year prior, averaging 125,000 bbls per day net, driven by higher output at Christina Lake as a result of phase E reaching nameplate production capacity.

Christina Lake production increased 77 per cent from the second quarter of 2013, averaging nearly 68,000 bbls per day net while the company completed a planned partial turnaround with minimal impact to production.

Cenovus also benefited from higher commod-ity prices, contributing to a 37 per cent increase in cash flow, of almost $1.2 billion, compared with the same period a year earlier (see tables).

Net earnings for the quarter were $615 million, more than three times higher than the same pe-riod a year earlier.

The increase was primarily due to higher op-erating earnings and a non-operating unrealized foreign exchange gain of $177 million compared with a loss of $97 million a year ago.

This was partially offset by an $11 million un-realized risk management loss compared with a gain of $26 million in 2013.

“Both our Foster Creek and Christina Lake facil-ities have been running exceptionally well,” said John Brannan, executive vice-president and chief operating officer. “utilization rates have been exceeding the 90 to 95 per cent normal operat-ing range. Christina Lake continued the Phase E ramp up and consistently produced near its de-sign capacity of 138,000 barrels per day.”

— Daily Oil Bulletin

Cenovus increases Q2 Oilsands output 33%

CENOVuS PHOTO

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ALBERTA REGS from Page 7

These included the incident report-ing tool that gives stakeholders access to information on all energy-related incidents in a timely manner. It also created a stakeholder and govern-ment relations division, in recogni-tion of the strategic importance of engaging with stakeholders.

For increased transparency, the regulator for the first time now pub-lishes notices of all applications and decisions on its website and plans live-streaming audio of public hear-ings wherever possible.

The AER has also developed a stra-tegic plan for the 2014-2017 period as the number of applications it pro-cesses is anticipated to increase to more than 60,000 in 2014-2015 from 35,000 in 2013-2014. The broad-based plan is designed to move the AER and the regulatory process significantly forward, said Ellis.

The plan will focus efforts on be-coming a best-in-class regulator that is protective, effective, efficient and credible.

To increase efficiencies, the regula-tor plans to move to a risk-based ap-proach to regulation that will enable its regulators to focus on high-risk ac-tivities such as sour natural gas wells near urban development. “It will also result in reduced costs, greater clarity and a clearer process that will benefit landowners, industry and the public,” said Ellis. “At the same time, regular and open reporting of our activities and our results will demonstrate our performance.”

By the end of the current fiscal year, he said, the AER estimates it will have identified cost savings to the industry of $60 million, which equates to the increased charges it faced when the government decided industry should fund the entire cost of the regulator.

“That doesn’t mean I don’t need $60 million,” said Ellis. “That means we are doing a whole bunch of work now to look at the processes — there are a bunch of archaic processes, there is a bunch of duplication in the applica-tion process.”

And while there is concern that streamlining of the system “will put things at risk,” it’s actually the op-posite, he said. “We have found that because some of the processes are ar-chaic and cumbersome, we as a reg-ulator are spending too much time on pieces of the regulatory process that quite frankly are very low risk and I need to take those regulators and have them focused on high-risk activities.”

Cleaning up the regulations also frees up environmental regulators focusing on higher risk activities

such as pipeline crossings across wa-terbodies.

If its strategy is to be effective, the AER must be viewed as a trusted, credible regulator, Ellis emphasized. “We can be the most protective, ef-fective and efficient regulator in the world but if we are not a trusted, cred-ible regulator, none of this matters.”

To earn that credibility, the AER knows it must report on its results publicly, form better relationships with stakeholders and work towards a common definition of what is meant by “best-in-class,” he said.

He also acknowledged in the in-terview that in recent years there has been a change in the way the regula-tor is perceived. “We used to be given a lot of space,” said Ellis. “You trusted the regulator; you may not under-stand; you may not like it but it’s the regulator,” he said. “Now expecta-tions are extremely high on us; we have to demonstrate to Albertans and to stakeholders what we are doing and go forward from there.”

That means the AER has to tell peo-ple what it’s doing and why it’s mak-ing those decisions, said Ellis.

In the past year, the regulator also has demonstrated that it is prepared to take action when an operator breaks the rules. In July 2013, the AER ordered a full audit of Plains Mid-stream Canada in connection with a number of pipeline spills.

Plains also went to “global refer” and “that was hugely painful for that company,” he said. “I, as the CEO of this organization, approve every sin-gle application that company has …. I am busy so it takes time.” All routine applications are considered non-routine and “that has implications for that company.”

Since then, “they have done signifi-cant work,” said Ellis, noting that the AER is in the final stages of the Plains audit.

AER moves to risk-based approach to regulation

“We can be the most protective,

effective and efficient regula-tor in the world but if we are not

a trusted, credible regulator, none of

this matters.”


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Woodside Energy Holdings, a unit of Australia’s Woodside Petroleum, applied to the NEB for a li-cense to export 20 million tonnes of super-chilled gas per year for 25 years from a proposed terminal on the Northwestern coast.

The move comes seven months after the com-pany won the rights to acquire 693 hectares of land at the south site of Grassy Point, near Prince Rupert. Woodside agreed to pay the province $17 million as a potential down payment.

In June, company officials attended a city meet-ing to update councilors on the project’s consul-tation plans, facility concepts and benefits to the city.

Woodside Energy Holdings plans to submit its project description to the B.C. Environmental As-sessment Office this summer.

It’s one of two LNG proposals slated for at Grassy Point. “Each new milestone is proof that the Prov-ince’s strategy to supply Asia with clean energy continues to gain momentum,” said Minister of Natural Gas Development Rich Coleman. “This is a company with experience operating natural gas projects around the world, and they have chosen British Columbia to invest in tomorrow’s energy potential.”

MATT LAMERSStaff Writer

Woodside files LNG application with NEB

WCC LNG, a partnership between ExxonMobil and Imperial Oil, started coming into focus last month.

After WCC LNG reached an agreement with the City of Prince Rupert to develop its terminal at Lot 444 on Tuck Inlet, the company sought feedback from the public.

The company had been looking for a site for its LNG project since 2011.

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

The company is proposing up to construct six floating barges along the edge of Tuck Inlet to complement a liquefaction facility.

The Northern View reported that a project de-scription will be filed later this year.

There is no definitive timeline for a final invest-ment decision, although construction would run from 2018 to 2023.

An Imperial Oil spokesperson said: “We’re a fair ways away from an investment decision.”


WCC LNG sets sights on Prince Rupert

COuRTESY PHOTO

A new study titled the Kitimat Airshed Assess-ment concluded that the city’s airshed is able to handle significant industrial development with-out damaging the quality of the its air.

The independent study showed that with proper management, Kitimat’s airshed can ac-commodate industrial growth, particularly in oil and gas and Rio Tinto Alcan’s expansion plans.

The study looked at the cumulative impacts of industrial air emissions, such as sulphur and nitrogen oxides, and potential impacts on the environment and human health.

Specifically, the Kitimat Airshed Assessment looked at:

— Rio Tinto Alcan’s existing aluminium smelt-er and its planned modernization;

— A proposed oil refinery;— Four proposed LNG facilities;— BC Hydro gas turbine powered electrical

generation facilities;— Predicted increased to marine shipping in

Douglas Channel“This study tells us that with proper manage-

ment there is significant capacity in the Kitimat airshed to safely accommodate industrial growth, while still protecting human health and the environment,” said Mary Polak, minister of environment, in a statement.

In total, 12 scenarios were evaluated by the study, based on existing and proposed facilities with different levels of emissions.

Each scenario considered the effects of sul-phur and nitrogen oxides on human health, wa-ter, soil as well as vegetation.

“The study confirmed there is lots of opportu-nity for industrial growth in the airshed if prop-erly managed,” said the ministry.

The full report can be read at: www.bcairqual-ity.ca/airsheds/kitimat-airshed-assessment.html


Kitimat airshed can handle development

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Fort Nelson’s airport

is getting much-needed

upgrades that will allow

it to accommodate more

and larger aircraft,

which will be more

frequent as natural gas

production picks up.

As part of Northern Rockies Regional Airport’s plan to accommodate an expected increase in traf-fic due to natural gas de-velopment, crews have started reconstruction on part of the airport to im-prove safety and service.

Work on the $2.5 million plan began in June and is expected to conclude at the end of August. It is one of five approved projects that passed through the 2013 Infrastructure Fund-ing Loan Authorization Referendum.

It involves the recon-struction of the western half of the airport’s Apron 2. (An airport’s apron is where aircraft are parked, unloaded, loaded, refu-eled or boarded.) There is also a taxi lane in the cen-tre where aircraft move to Apron 3.

“It’s important on a few different levels,” said Eric Desnoyers, the airport’s business manager. “No. 1 is safety. It really created a bottleneck for aircraft to

pass. (Apron 2) was quite small as well. Aircraft would have to wait for an-other to go by before they could even start their en-gines.”

Northern Rockies Re-gional Airport had been using only half of Apron 2 since Transport Canada decommissioned part of it prior to 1999, when the airport was transferred to Northern Rockies Region-al Municipality.

NRRM is the service hub for the the Horn River Ba-sin, which is the largest known shale gas field in Canada at about 250 tril-lion cubic feet (tcf ) of nat-ural gas.

The current construc-tion is part of the North-ern Rockies Regional Air-port Development Plan, which aims to enhance economic development opportunities for business and industry, improve safety, and serve as a posi-tive first impression for travellers to the region.

More than 107,000 pas-

sengers passed through the airport in 2012.

According to statistics recorded by NAV Canada, the NRRA had more air traffic in the summer of 2012 than any other Tier 2 airport in Canada, includ-ing Fort St. John, Grande Prairie, Prince George and Ottawa.

“We welcome this ex-pansion as it will signifi-cantly improve the safety of maneuvering aircraft, increase the operational apron area to allow for easier access to on-site fa-cilities and provide better service to our users,” said Danny Soles, NRRM’s act-ing mayor.

“As well, it fits with our overall plan to expand other parts of airport in-frastructure in order to ac-commodate the expected increase in traffic due to LNG and natural gas de-velopment in the region.”

Transport Canada approves funding

Transport Canada

Matt LamersStaff Writer

airportpreps

for lng boom

Eric Desnoyers, the airport’s business manager, said the apron reconstruction “allows for better movement of aircraft and handle larger aircraft like 737s.”.


northern [email protected]

Oil and gas is the main economic driver for Fort Nelson’s economy, so it’s no surprise that the Fort Nelson Petroleum Association plays an im-portant role in the community.

Fort Nelson is the administra-tive centre of the Northern Rockies Regional Municipality and is home to roughly 4,000 residents, but that could more than double if even some of the proposed natural gas develop-ment takes place.

Vic Komori, secretary of the Fort Nelson Petroleum Association, ex-plained that the role of the club is to facilitate communication within the industry.

“Our role is to have a medium for the guys in the oil and gas industry to meet and have some events to partici-pate in, make contacts with other oil and gas people,” he said. “It’s a good place to network, we talk about what’s going on.”

The association, which is been in existence for almost half a century, has about 200 members. They meet about every two months, usually at the Poplar Hills Golf & Country Club.

“I think it’s a good opportunity to be a part of an association that has a focus on oil and gas. We do offer

a number of recreational and social events that guys can participate in.”

Their three annual events are a curl-ing bonspiel in April, a golf tournament in the summer and a hockey tourna-ment in October.

Socializing isn’t all they do. Helping grow Fort Nelson as a com-

munity is also a key part of their agenda.

The Fort Nelson Petroleum Associa-tion is non-profit, so any surplus funds it has at the end of the year are rein-vested into the community. Last year $40,000 was donated to four organiza-tions, including the Northern Rockies Senior Society and fort Nelson Golf and Country Club.

Funding recipients are required to leave a lasting legacy.

“There is an application for funding. The only stipulation is that they leave a lasting legacy. They have to build something in the community. We also have annual bursaries to give to high school graduates,” said Komori.

Membership in the Fort Nelson Pe-troleum Association costs $100, which includes eligibility for the three annual events. Dinner is included at meetings.

For more information, go to fortnel sonpetroleumassociation.com.

Profile: The Fort Nelson Petroleum Association

approved NRRM’s funding request through the Airports Capital Assistance Program. The Federal government will contribute $4.3 million over two years for the reha-bilitation/reconfiguration of Apron 1.

Desnoyers said that project will tie into the new Apron 2 area that is currently under renovation.

“It allows for better move-ment of aircraft and handle larger aircraft like 737s,” he said, adding that “it strate-gically positions us to help carry the load that we’re an-ticipating for the natural gas development.”

Mayor Bill Streeper said im-proving the airport is part of the city’s plans to prepare for increasing oil and gas activity in coming years.

“The Airports Capital Assis-tance Program funding means updating the transportation infrastructure of NRRM.

“We’re hoping to have a re-vival in drilling, which means more planes will go in and out of there,” he said in a phone interview from Costa Rica.

“There wasn’t enough space. This creates a better safety aspect and modernizes the airport.”

‘Our role is to

have a medium for

the guys in the oil

and gas industry

to meet and have

some events to

participate in,

make contacts

with other oil

and gas people.

It’s a good place

to network,

we talk about

what’s going on.’


R001697743

fb.com/pipelinenewsnorth

“We’re meeting with communi-ties to hear what they think about the opportunity and the concerns they might have,” said CAPP Man-ager of B.C. Operations Geoff Morrison.

“If LNG goes forward, there could be a lot more activity here, so we’re trying to understand what are the things that are important to the peo-ple of northeastern B.C.,” he added.

Morrison said the impact on roads, availability of affordable housing and water usage were the dominant topics discussed in meetings between CAPP and lo-cal government representatives. He said information on the process was also of interest: what shale gas is and what hydraulic fracturing involves.

CAPP presented to the Dawson Creek and District Chamber of Com-merce at a luncheon on July 15. Mor-rison said the discussion was largely geared towards how the community can prepare and match the growth within LNG.

The Chamber has been particu-larly vocal about the need for devel-opment in the region to benefit local operators, which Morrison said is also in the interest of industry.

“With most companies, it is ac-cepted practice that it’s better to hire local,” said Morrison. “It benefits the local community and the busi-ness as well because the proximity is helpful: there is an economic benefit to the company, too.”

Pipeline News North sat down for a conversation with Morrison on the future of LNG, particularly in the exploration and production phase, known as upstream.

“If we look at the LNG opportu-nity, it starts with the shale gas re-source, but that opportunity could mean a much bigger and more active upstream activity,” said Morrison.

“Right now we produce some-where around 3.5, almost 4 billion cubic feet a day of gas, and that goes to the rest of Canada and the u.S., and about 16 per cent gets con-sumed here in B.C.

“If we develop that market over-seas we could see a doubling or tri-pling amount of that activity here and obviously that has the potential to strain the resources here in B.C., but if we can plan for it that would be better.”

Efforts to plan for the LNG boom include CAPP’s community visits where upstream activity is concen-trated, as Morrison said that entry into foreign markets is a must if the

province hopes to reap the proposed benefits of LNG.

“From a producer’s point of view, the North American market for natural gas is oversupplied. If we don’t develop a new market, we may actually see a decrease in activ-ity in Canada. In fact, we have seen that in the last five years produc-tion and export, overall production in Canada, is actually down,” said Morrison.

“We talk about this great opportu-nity going forward, but overall pro-duction in Canada is actually down, and that’s because our only custom-er is the u.S. – and they’re becoming more self sufficient when it comes to natural gas.”

With the access to the Marcel-lus shale gas play that stretches across parts of New York state, Pennsylvania, Maryland and West Virginia opening up, Morrison said

ELAINE ANSELMIStaff Writer

interview: geoff morrison Representatives from the CAPP visited the Peace Region last month to discuss

liquefied natural gas opportunities. The idea is to head off problems before they happen, so the availability of affordable housing and water usage were dominant

MCT PHOTO


R001642872

[email protected]

customers in the u.S., as well as Ontario and Quebec, are moving away from piping gas from the west.

“Finding a new market is not a nice ‘to do.’ It is a real imperative for the upstream industry,” said Morrison. “We see that the u.S., because of the evolution ... of shale gas, there is more gas in North America than there is demand. So if we don’t find those new markets, our industry will be diminished.”

As far as increasing usage of LNG, Morrison said there is a great deal of opportunity both in Canada and abroad, saying that CAPP sees LNG as a sort of “bridging fuel” towards lower global carbon emissions.

“We’ve seen it: the u.S. has the lowest gas CO2 emissions

in 20 years because that afford-ability and reliability of natu-ral gas has enabled utilities to make economic choices that benefit the environment,” said Morrison.

“When we talk about natural gas as a bridging fuel for cli-mate change, we have a very good example in North Ameri-ca that without a lot of govern-ment intervention, achieved a lot of economic growth and environmental benefit.”

A part of CAPP’s recent ef-forts have been on education, working in particular with Ca-nadian Geographic on “energy literacy.” Globally, Morrison said, 86 per cent of energy con-sumed is fossil fuels.

“CAPP would say it’s not fos-sil fuels versus renewable, it’s all types of energy. We’ll need

all types to supply demand in the future: how do we change that carbon mix? We think nat-ural gas is a huge part of that,” said Morrison.

“We don’t really think of where we get our energy and how we use it everyday. Even in B.C., where we have a very clear narrative around BC Hydro and renewables and green,” said Morrison.

“If you looked at the energy we use everyday and compare it apples to apples in joules of energy, as opposed to mega-watts or litres of gas, even in B.C. 75 per cent of energy we consume everyday is fos-sil fuel. That kind of puts into context the importance of that fuel type in our daily lives,” he added.

See CAPP on Page 24

interview: geoff morrison

After negotiations between British Colum-bia and Gitxsan First Nation reached an im-passe, the government reached out to dozens of hereditary chiefs last month to outline a multimillion-dollar pipeline deal.

The government went public with its offer to Gitxsan of about $12-million, on top of a stag-gered signing bonus. In return the province wants Gitxsan’s consent for two pipelines to cross its territorial lands.

The pipelines – the Westcoast Connector Gas Transmission Project and the Prince Ru-pert Gas Transmission Project – are essential to getting gas produced in Northeast B.C. to proposed liquefaction plants on the coast.

The government has offered the First Nation $6.26 million for the Westcoast Connector and $5.81 million for the Prince Rupert line. If the Nation accepts the deal by Sept. 30, an addi-tional $2.4 will be provided. That signing bo-nus falls to $1.81 million through Dec. 31 and $1.2 million by March 31, 2015.

Laurel Nash, chief negotiator at the Minis-try of Aboriginal Relations and Reconciliation, said the funding was calculated according to a formula devised by the ministry.


B.C. offers pipeline deal to Gitxsan First Nationtopics, as were details on hiring local contractors

and workers, and the processes involved in gas development and hydraulic fracturing.


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As the South Peace Oilmen’s As-sociation approaches its quarter century anniversary in the Daw-son Creek area, president Dale Suderman said they remain true to their roots.

“One of the original mandates of the organization when it got started was to promote aware-ness of industry in the area. At that time the oil and gas industry wasn’t as well known,” said Sud-

erman. “Another mandate was of supporting youth in the commu-nity and families in the area; that was the original mandate of the association.”

The group was made official un-der the BC Societies Act in 1991 and has grown from a 25 person membership to more than 70. A new president elect, Suderman said he welcomed the title, seeing the organization as a worthwhile

contributor to the community.“Some of the things we’ve done

recently here have been a lot of fundraising towards the new lift at the ski hill, improvements to the Dawson Creek golf course that have occurred in the past, con-tributions towards the bridge on the walking trail and being able to support youth and families in the area of Dawson Creek,” said Suderman, adding that the group

incorporates Pouce Coupe and surrounding areas. “It’s another avenue to promote businesses to be here, to work towards that in-dustry … part and parcel with that is making the area a better com-munity for youth, a lot of people who move to town with families want to have recreational oppor-tunities such as the ski hill, walk-ing path, golfing and curling.”

The organization supports

Elaine AnselmiStaff Writer

‘It’s a matter of reaching out to businesses as well and working with companies. It gives a sense of stability; the oil and gas industry and the association work together to promote stability.’

Profile: South Peace Oilmen’s Association


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local athletics such as the figure skating club and youth hockey, and Suderman said they also re-ceive specific requests for dona-tions to families needing medical support for children.

“We don’t necessarily donate to a specific children’s chari-ties, what we do is we take in re-quests,” said Suderman. “We raise funds and do what can we do to enhance the lifestyle for young people in the area.”

Suderman said the oil and gas industry wasn’t always as preva-lent as it is today, with many op-erators now setting up offices in town.

“It’s a matter of reaching out to those businesses as well and working with those companies,” said Suderman.

“It gives a sense of stability; the oil and gas industry and the asso-ciation work together to promote some stability.”

By supporting community or-ganizations, particularly directed at youth, Suderman said it makes the community a more appealing place for the young families mov-ing in to take positions within the oil and gas industry.

“It’s not here today, gone to-morrow,” said Suderman. “It’s a

means of enhancing community in the area to make it more attrac-

tive for business in the area.” [email protected]

South Peace Oilmen’s Association president Dale Suderman said the Dawson Creek Walking Trail bridge is an example of the organization’s contributions to making a more liveable community. ELAiNE ANSELmi PHOTO


fb.com/pipelinenewsnorthour lng

LNG from Page 5

Pending export decisions

In July the Canadian unit of Fort Worth, Texas-based Quicksilver Resources applied to the National Energy Board to export up to 20 million tons per annum (mtpa) of LNG. The project is named Discov-ery LNG and would be based near the Campbell River on Vancouver Island.

In July, Woodside Energy Holdings, a unit of Austra-lia’s Woodside Petroleum, ap-plied to the NEB for a license to export 20 million tonnes of super-chilled gas per year for 25 years from a proposed terminal on the Northwestern coast.

Last January Woodside pur-chased rights from the B.C. government to build an ex-port facility at Grassy Point.

On July 8, 2014, Steelhead LNG applied for five licenses to export LNG from Vancou-ver Island for 25 years.

On June 20, 2014, WesPac Midstream Vancouver LLC applied to export up to 400 million cubic feet of liquefied gas a day from a liquefaction plant to be built in Delta, B.C.

On March 5, 2014, Canada Stewart Energy Group Ltd. ap-plied 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.

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, for 25 years.

Export approvals

On May 1, 2014, Oregon LNG Marketing Company re-ceived permission from the NEB to export 473 Bcf of natu-ral gas to the u.S., where it will be liquefied and shipped to Asia. The export point is the vicinity of Kingsgate B.C.

On May 1, 2014, Aurora Liq-uefied Natural Gas Ltd. re-ceived permission from the NEB to export 2.3 million tonnes of LNG per year for a 25-year term from a terminal near Prince Rupert, B.C.

On April. 16, 2014 Triton LNG Limited Partnership re-ceived permission from the NEB to export 2.3 million tonnes of LNG per year for a 25-year term from a floating processing plant.

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

On Dec. 16, 2013, Prince Ru-

pert LNG Exports Limited was

granted a license to export 21.6 million tonnes of per year for a term of 25 years.

On Dec. 16, 2013, Pacific

NorthWest LNG received per-mission from the NEB to ex-port 19.68 million tonnes of LNG per year. Pacific North-West LNG has emerged the frontrunner, potentially mak-ing an FID by year-end.

On Dec. 16, 2013, WCC LNG was granted a license to ex-port 30 million tonnes of LNG per year for a term of 25 years.

On Dec. 16, 2013, Woodfibre

LNG Export Pte. Ltd. earned a license to export 2.1 million tonnes of LNG per year for 25 years.

On Oct. 13, 2011, KM LNG

was granted a 20-year per-mit by the NEB to export an annual volume of 10 million tonnes of LNG. It was the first LNG export license issued by the NEB since the deregula-tion of the natural gas market in 1985.

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

On Feb. 4, 2013, LNG Cana-

da was awarded a 25-year per-mit from the NEB to export 24 million tonnes of LNG per year at a terminal that will be built near Kitimat.

LNG projects closing in on 20

In the race to export British Columbia and Alberta’s natural gas, Oregon LNG move one step closer in July.

LNG Development Co. LLC, a.k.a.Oregon LNG, received conditional approval from the u.S. Department of Energy to export liquefied natural gas to non-free trade agreement coun-tries (FTA).

Related story on Page 5.

(Approval to export to FTA countries is im-plied, but companies must seek permission from the DOE to export to countries which have not concluded free trade pacts with the united States.)

Oregon LNG’s terminal in Warrenton, Or-egon is authorized to export the equivalent of 1.25 Bcf/d of gas for a period of 20 years.

Oregon LNG must receive environmental certificates and final regulatory approval be-fore any LNG leaves its terminal.

It’s one of 19 projects that has proposed pro-ducing gas in British Columbia and Alberta, piping it to the coast, where it will be liquefied and shipped.

The u.S. has been experiencing a boom in natural gas production, but as prices have fall-en drastically in the last five years, producers have sought to export LNG to overseas mar-kets, where it sells for a as much as five times more.

Oregon is the sixth American project to re-ceive conditional approval.

“Oregon LNG states that the project will con-nect to the Oregon Pipeline, which will extend approximately 86 miles to an interconnect with the interstate natural gas pipeline system of Williams Northwest Pipeline Co. (Williams system) near Woodland, WA,” according to the DOE.

“Through this interconnect, Oregon LNG anticipates that the project will have access to supply basins in both Western Canada and in the u.S. Rocky Mountains.”

According to Oregon LNG, exports are scheduled to begin in late 2017 and a fi-nal investment decision will be made early next year.

matt lamersStaff Writer

Oregon LNG wins export approval


their [email protected]

COuRTESY PHOTO

Together these seven projects will boost Australia’s LNG produc-tion capacity to around 87 mtpa – giving Australia a bigger produc-tion capacity than Qatar before the turn of the decade.

The announcements underline that while most of the projects have conceded that they face large cost over-runs, for the most part they have done better in terms of schedule than many expected they would.

World first’s CSG-to-LNG plantThe BG group-led Queensland

Curtis LNG (QCLNG) project – ex-pected to be the first of the seven to begin operations, – said towards the end of June that it had started up a major processing network for

coal-bed methane (CBM), or coal-seam gas (CSG) as the Australians call it. When it comes on stream, probably later this year, after some delay, it will be the world’s first natural gas liquefaction plant to

be supplied by CSG.The project consists of two

4.25 mpta trains, the first of which is 50:50 owned by BG and China’s CNOOC and the second 97.5%-owned by BG and 2.5% by Tokyo Gas. The project was initial-ly estimated to cost uS$15 billion but in May 2012 BG said estimated cost had risen to uS$20.4 billion. Date of first gas was given as 2014, which still holds today, though start-up was initially due early in the year rather than towards the end.

monster projectGorgon LNG, the Chevron-led

project being constructed on Bar-row Island offshore north-western Australia, reported at the end of June the arrival of the final module for its first train. The module is the largest of the 21 that will make up the train, weighing 6,300 tonnes and measuring 55 metres by 46 metres by 45 metres.

Chevron Australia managing di-rector Roy Krzywosinski said: “The arrival of the final train 1 module marks a key milestone in the de-velopment of the largest single re-source development in Australia’s history.” The three-train 15.6 mtpa project also happens to be one of the most expensive. The proj-ect was initially expected to cost A$43 billion but as of December last year that estimate had risen to A$55 billion.

The project is also significantly behind schedule. Initially expect-ed to start up this year, date of first

gas has shifted to mid-2015 and some observers regard that as op-timistic, seeing 2016 as more real-istic.

Commenting on the sched-ule earlier this year at Chevron’s first-quarter financial results an-nouncement, CFO Pat Yarrington said: “The final two gas turbine generators have been installed and additional progress has been made on the LNG tank, jetty and other related infrastructure on the island. All major 2014 milestones are on track, and we expect plant start-up and first gas in mid-2015.” He added that as of the end of April the project was 80% complete

Three milestones for APLNGAnother CSG-to-LNG project,

Australia Pacific LNG (APLNG), said in early July that it had reached three “key milestones”. Hydro-testing of LNG tanks on Curtis Island has begun, construc-tion of the main gas transmission pipeline has been completed, and gas from the recently commis-sioned Condabri Central gas pro-

cessing facility is being delivered into the gas network.

APLNG CEO Page Maxson said: “These three milestones mark very definitive steps in the progress we are making in the gas fields, on the pipeline and at the LNG facil-ity on Curtis Island . . . Testing the integrity, quality and stability of the LNG storage tanks is a crucial part of ensuring they are ready to receive the first LNG, and we are pleased that our tank construction has reached this point.”

Following construction and commissioning in June, gas from Condabri Central Train 1 is now being delivered into the domes-tic gas network together with gas from APLNG’s existing Spring Gully and Talinga facilities. Con-dabri Central is the first of seven new gas processing facilities being constructed.

The project expects to start up in the middle of next year, which was the target year announced when the project was sanctioned. How-ever, there has been a large cost over-run.

See AUSSiE on Page 26

ALEx FORBESGastech News

GORGON LNG IN AuSTRALIA IS SIGNIFICANTLY BEHIND SCHEDuLE AND OVER-BuDGET.

CONSTRuCTION OF BIRTHS IN QuEENSLAND

GORGON LNG

AuSTRALIA PACIFIC LNG

Several of the seven LNG export projects under construction in Australia have reported reaching significant milestones in recent months, with the front–runners now less than a year away from start-up.

AUSSiE LNG iS oNLy1 yEAR AwAy


fb.com/pipelinenewsnorthDawson creek

It was supposed to focus on LNG development and its effect on life in the Northeast.

But a big town hall meeting full of local officials that took place in July night in Dawson Creek brought out a dizzying array of is-sues over a marathon, three-and-a-half-hour session.

The Dawson Creek and District

Chamber of Commerce hosted the meeting, which was moderated by former CBC journalist and CEO of the Industrial Trades Authority, Kevin Evans.

“Living With The Boom” brought out elected officials and public managers from all over the North-east to discuss resource develop-ment in the Peace.

“This gas industry is not going to be Calgary and Victoria – this gas industry is going to be Calgary, Vic-toria and the Peace River District,” said Northern Rockies Mayor Bill Streeper, one of the panelists along with Dawson Creek Mayor Dale Bumstead, Taylor Mayor Fred

Jarvis, South Peace MLA Mike Ber-nier, Peace River Regional District (PRRD) Chair Karen Goodings, Ministry of Transportation District Manager Scott Maxwell and B.C. Oil and Gas Commission (OGC) CEO Paul Jeakins.

Chamber of Commerce Presi-dent Jerimy Earl spoke about some of his organization’s existing concerns towards development, but underscored that the meet-ing is about bringing about solu-tions rather than dwelling on the problems.

He listed four points that had garnered the chamber’s atten-tion, including maintaining and expanding infrastructure to meet the growing demand, the influx of a transient population, meet-ing demand for training and re-tention of skilled workers and ensuring opportunities around LNG are leveraged to benefit all industries.

Evans also noted that the goal of the meeting in Dawson Creek was to take a constructive look at building a positive path forward as the region sees a potential indus-

trial boom.“The reason we talk about chal-

lenges is to prevent them from be-coming a problem,” said Evans.

The crowd of approximately 50 people offered up many of their own areas of concern, which mostly hewed to development al-ready taking place in the region – leading to a later discussion of possible solutions for some of the issues raised.

Housing affordability was a common concern. South Peace Community Resources Society (SPCRS) Executive Director Jane Harper spoke to this, as did com-munity member Daneka Hussey, who shared her own problems with finding housing.

One solution offered by a com-munity member suggested that municipalities enforce a contin-gency that developers offer a cer-tain number of low-income units or a form of rent control.

However, the public officials were quite firm in their position that they wouldn’t be imposing on private operations in that way.

“You cannot control somebody that is building a house, what he’s going to sell it for,” said Streeper. “The market will dictate what it’s going to be, and the only thing that can happen is if you have a chance to expand the market, people will move up into a higher-end house, which will free up the lower-end house.

“In Canada, it’s a free enterprise system – you cannot [tell] some-body what he’s going to sell his product for.”

A broader concern of the audi-ence members was the general disruption to rural residents as oil and gas activity increases in those areas. One audience member voiced concern over the constant noise and traffic on rural routes, degradation of roads and trespass-ing on private property.

Asked where such concerns

should be directed, Jeakins said in cases not requiring police or oth-er immediate law enforcement, the OGC would be the proper authority.

“For permitting, it would be us, absolutely, 100 per cent,” said Jeakins.

“If there’s a company out there and they’re doing something on that property or in that area, then you call the Oil and Gas Com-mission once we determine that authorities can be out there – we condition what they’re allowed to do and not allowed to do.

“The law is allowing them to do some things and not allowing them to do some things,” Jeakins added.

ELAINE ANSELMIStaff writer

DAWSON CREEK MAYOR DALE BuMSTEAD

SOuTH PEACE MLA MIKE BERNIER

It was supposed to focus on LNG development and its effect on life in the Northeast. But a big town hall meeting full of local officials that took place on a warm July night in Dawson Creek

brought out a dizzying array of issues over a marathon, three-and-a-half-hour session.

LiviNG thRoUGh thE BooM

NORTHERN ROCKIES MAYOR BILL STREEPER


[email protected]

British Columbia will see an increase of 623 wells drilled in 2014, according to the Petro-leum Services Association of Canada’s recently released second update of the 2014 Canadian Drilling Activity Forecast.

In B.C., the update accounts for a 13 per cent increase from PSAC’s original 2014 forecast from October 2013, whereas Alberta saw a decrease from the original forecast of less than 1 per cent.

Saskatchewan is also forecasted to see an in-crease of 11 per cent from the original numbers, giving it 3,562 wells drilled, while Manitoba will see a 9 per cent decrease, with 435 wells drilled in 2014.

Across Canada, the forecast suggests the num-ber of wells drilled will increase by 1 per cent in 2014 compared to 2013. In total, 11,170 wells are expected to be drilled across the country this year.

“With a longer winter than normal across Canada this year and a breakup with continued activity in Q2, drilling activity is keeping on par with our original forecast in October,” said Mark Salkeld, president and CEO of PSAC. “Activity remains steady for our member companies and many companies have been facing challenges with meeting demand as the shortage of skilled labour continues.”

As well as the forecast released on July 30, PSAC presented its commissioned Horizontal Well Workforce Study, looking at employment through horizontal drilling and hydraulic frac-turing. Northeast B.C. was one region focused on in terms of supplier groups including: loca-tion, drilling, completion and logistics for typi-cal wells. Other regions of interest included cen-tral Alberta and southern Saskatchewan.

With 6,128 wells studied in total, the results suggested 61,331 workers were required on a 40-hour work week, over 52 weeks of the year. De-pending on the well type, individual wells typi-cally employed between 239 and 302 workers.

“The numbers are staggering when you con-sider how many jobs industry activity gener-ates,” said Salkeld. “We know that the use of directional drilling with hydraulic fracturing has been critical to accessing Canada’s vast re-sources, and now we have a much clearer idea of the workforce generated by these new genera-tion plays.”

Elaine AnselmiStaff Writer

Canadian drilling forecast increases

TAYLOR MAYOR FRED JARVIS

One concept that gained some support was to see the development of food and hospitality services along the Dangerous Goods Route in Dawson Creek, alleviat-ing the need for trucks car-rying potentially hazardous loads to travel into the city for amenities.

Another aspect of safety that entered into the conversation was sexual health. Presenting statistics on the increase in sexually transmitted diseases, particularly around young men, during boom times, HIV Educator for Positive Liv-ing North Samantha McRae asked that education and ser-vices around sexual health be increased.

Water supply was again a hot topic, with the challenge of imposed restrictions in Dawson Creek brought up. Residents called for a guaran-teed water supply, question-ing whether the OGC restric-tion for water use by industry would impact the city’s sup-

ply as well.Referencing the Shell Water

Reclamation Plant, Bumstead noted that efforts have been made to supply industry with grey water, rather than fresh, noting it was a positive col-laboration between the city and business.

Goodings spoke about the PRRD’s recent request of resi-dents to offer up private wells and springs for groundwater testing, facilitated by a team from Simon Fraser university, to map out and better under-stand the system in the Peace River basin.

Evans posed the question to Jeakins whether a lack of available water could curb productivity in the region. “Yes, it could in the short term,” Jeakins responded, adding that there is sufficient water in the region and efforts have been made to assess dif-ferent options.

Land use, particularly for industrial development, brought the conversation to the controversial Agricultural Land Reserve.

“We have a real issue with the Agricultural Land Com-mission and removing land for industrial development,” voiced one resident at the meeting.

Bernier spoke to the provin-cial government’s introduc-tion of Bill 24, which divides ALR designations between the northern and southern

parts of the province, seeing that the two areas need to be viewed in different ways.

“The northern part of the province, specifically the Northeast, is being recog-nized as one of those areas that are different,” said Ber-nier.

As well as physical infra-structure, the demands on social infrastructure includ-ing social services, healthcare and policing were brought up. Harper said a major challenge for SPCRS was recruiting staff for positions that don’t offer the high wages seen in the oil and gas industry.

Other topics of interest in-cluded: cutting back on edu-cation funding despite the need for skills training, man-aging growth and recogniz-ing the bigger picture around development, identifying core values of the community that cannot be sacrificed, the skilled labour supply and an increase in violence against women during boom times, a historic trend.

B.C. OGC CEO PAuL JEAKINS

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CAPP from Page 17

As the LNG industry awaits the announcement of a tax regime specific to natural gas, Morrison said the major focus for industry right now is establishing commer-cial relationships with customers.

“Where in North America, most natural gas is traded on the mar-ket, the daily market, internation-ally LNG is traded on long-term contracts – so without a long-term contract in place, it’s difficult,” said Morrison.

“It’s one of those catch-22s where the investors in an LNG project wants certainty before they go into the contract and agree to build $10 billion in an LNG pro-posal, and the customer wants a plant in place before they agree to buy the gas. There is a way to get there, but because of the size of the investment, it takes longer.”

Once investment and customers are secured, there is still the reality that the products of the oil and gas industry are not renewable.

Asked what happens when the resource dries up, Morrison said the Montney is expected to sup-ply 100 years worth of gas, and be-

yond that, advances in technology could open other as yet untapped resources.

“We should as a society be think-ing about how we can take this re-source and use some of it now for consumption, but also use some of the benefit from that for technol-ogy to get somewhere else,” said Morrison.

“That’s what we need to do, what the government needs to think about as they collect a royalty, to use some of that money to pay for services, but also collectively think about what do we do. How do we take that wealth to make the future better?

There is certainly a world in the future where we will figure out new energy sources that aren’t fossil fuel, so that’s important, using that wealth to invest in the future.”

Use oil wealth to invest in the future: CAPP

‘How do we take

that wealth to

make the future

better?’


twitter.com/pipelinenn inDustry news

Local governments in British Columbia’s Northwest have banded together to form an al-liance that will increase their bargaining pow-er with the province when it comes to revenue sharing from the province’s expected LNG bonanza.

The Northwest BC Resource Benefits Alli-ance includes the Regional District of Kitimat-Stikine (RDKS), the City of Terrace, the Dis-tricts of Kitimat, Stewart and New Hazelton, the Village of Hazelton, and all RDKS Electoral Area Directors.

Bruce Bidgood, chair of the alliance, called for an start to revenue-sharing discussions and negotiations promised by Premier Christy Clark during the 2013 provincial election and re-affirmed in June 2014.

The province has promised to create a Pros-perity Fund from royalties collected from LNG export. It will be financed by the so-called LNG Income Tax, the details of which will be finalized in fall.

The province is projecting revenues of $100 billion from LNG over the coming decades.

“The newly formed Northwest BC Resource Benefits Alliance is ready, willing and able to engage in revenue-sharing discussions and negotiations promised by Premier Christy Clark,” said Bidgood. “There is not a moment to lose. We need to start revenue-sharing dis-cussions immediately; Northwest B.C. is al-ready booming. I understand that the prov-ince is finalising its fiscal framework for the LNG industry, and major companies will be making final investment decisions this fall or in early 2015.”

The alliance sites the Columbia Basin Trust as a model to benchmark for revenue sharing.

“The RBA seeks early access to an equitable share of revenues from the massive economic expansion now underway in Northwest BC. We have all experienced the boom and bust economy,” Bidgood added. “The Northwest is about more than fly-in fly-out camps. This time, Northwest BC communities must be provided access to significant revenue sharing so we can make the necessary investments to build long-term sustainable communities for the future.”

Matt lamersStaff Writer

Towns form LNG alliance

In July the Canadian unit of Fort Worth, Tx-based Quick-silver Resources applied to the National Energy Board to export up to 20 million tons per annum (mtpa) of LNG.

The project is named Discov-ery LNG and would be based near the Campbell River on Van-couver Island.

It’s the second project in as many months that has proposed building a major LNG terminal on Vancouver Island.

The latest proposal from the Calgary-based company joins a growing list of LNG projects that

plan to export liquefied natural gas from the coast of British Co-lumbia and Oregon to markets in Asia. In total, there are 19 proj-ects involving B.C. and Alberta gas.

Quicksilver Resources Canada possess 130,000 net acres in the province’s Northeastern Horn River basin play, including 12 wells as of year-end 2013.

Regulatory approvals and permits could take two years to complete, according to its web-site. Following that, first-phase construction o is expected to take four more years.

That puts initial LNG deliveries around 2021.

The proposed site is currently

occupied by the close Elk Falls Mill, which was owned by Cata-lyst Paper Corp.

Quicksilver Resources Can-ada’s application said the gas would be sourced from its hold-ings in Northeastern B.C., trans-ported via pipeline to the termi-nal, where it will be liquefied and export it to markets in Asia.

Last October, Quicksilver re-ceived a conditional Environ-mental Assessment Certificate for its Fortune Creek Gas Plant, in the vicinity of the Horn River Ba-sin, 110 kilometres north of Fort Nelson.

The new plant will remove hy-drogen sulphide and carbon di-oxide from raw natural gas, pro-ducing treated gas for transport to market. The initial phase will have a capacity of 4.25 million standard cubic metres and the final plant will have a capacity of 16.9 million standard cubic me-tres/day.

“Given the applicant’s large re-source base, gas supply for the project will be primarily from the applicant’s proprietary gas; how-ever, gas supply may also include gas obtained through commer-cial gas supply arrangements,” Quicksilver said in the filing to the NEB.

See QUiCK on Page 28


Vancouver Island gets 2nd LNG terminal pitch

COURTESy PHOTO

image courtesy Gastech News

R001697732


[email protected]

facebook.com/pipelinenewsnorth

prince rupert

CONSTRuCTING WORKERS’ VILLAGE FOR THE ICHTHYS LNG PROJECT.

Prince Rupert, WI LNG enter into agreement

AUSSiE from Page 21

The initial estimate of uS$20 million has risen to A$27.4 billion.

Past half-way pointThe INPEx-led Ichthys LNG

project recently celebrated reach-ing the half-way point in con-struction. No cost-over-runs have so far been announced for the two-train 8.4 mtpa project and last year INPEx confirmed that first gas is still due in 2016.

Of the remaining projects, the Santos-led 7.8 mtpa GLNG proj-ect, the third CSG-to-LNG plant, still expects to start up in 2016, though as of early 2014 estimated cost had risen from uS$16 billion to uS$18.5 billion. The Chevron-led 8.9 mtpa Wheatstone project is expected to start up in 2016.

The final project of the seven is Shell’s Prelude floating LNG (FLNG) facility. The project is still

expected to come on stream in around 2017, producing 3.6 mtpa of LNG and further volumes of up-stream liquids. Cost has not been disclosed, but is believed to be around uS$12.5 billion. There are rumours of large cost over-runs but Shell not confirmed them.

It remains to be seen whether all the projects will stick to their current schedules, but if they do Australia could become a bigger LNG producer than Qatar much earlier than anyone would have believed possible, even as recent-ly as a couple of years ago.

It is important however to dis-tinguish clearly between LNG ca-pacity and LNG output. Qatar’s LNG trains have been performing very impressively in recent years in terms of utilisation. Some of the Australian projects could face gas supply issues, especially the CSG ones, given that they will be the world’s first. — Article appears courtesy of Gastech News. — Ed.

SHELL’S NORTH WEST SHELF VENTuRE IN AuSTRALIA.

British Columbia’s list of lique-fied natural gas projects continues to get longer by the month.

The City of Prince Rupert’s ex-clusivity agreement with Watson Island LNG Corporation will allow the island to be repurposed for a small LNG export terminal.

Related stories on Page 20.

The city is proceeding with de-commissioning the old pulp mill and working to obtain provincial assistance for the removal of in-dustrial chemicals and a number of other environmentally danger-ous substances.

The city said that WILNG will perform due diligence on the ex-port facility.

“After many months of inves-tigation, council believes the city has found a company with the vision for Watson Island that will bring jobs and a substantial new economy to Prince Rupert,” said Prince Rupert Mayor Jack Mussalleml.

“We recognize the city has gone down this road before, however, we have never given up on our vi-sion to repurpose Watson Island and get it back on the tax-roll.

“We are optimistic this project will be an economic generator that will bolster the City and cre-ate new jobs in the region,” he added.

Ed Neibauer, director of WI LNG, said the company plans to estab-lish good working relationships with the community, First Nations and regulators.



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QUiCK from Page 25

Quicksilver reportedly purchased the Elk Falls Mill last year for $8.6 million.It’s the fourth project to be located close to Vancouver. Another LNG project in the Lower Mainland is Woodfibre LNG, slated for

Squamish. Woodfibre LNG is a proposed small-scale processing and export facility.

Texas-based WesPac Midstream LLC filed an application with Canada’s National Energy Board to export 3 million tonnes of LNG a year for 25 years from a liquefaction plant would be built in Delta, B.C. south of downtown Vancouver.

The Vancouver-headquartered Steelhead LNG project took a significant step forward when it applied to Canadian authorities in June for a license to build its terminal on Vancouver Island, after agreeing to terms with Huu-ay-aht First Nations to construct facilities on its land on Sarita Bay, at the south-ern end of Alberni Inlet.

A 4,608-hectare licence in north-western Alberta, which was acquired for $20.14 million, powered the prov-ince’s Wednesday land sale, which drew $41.79 million, the second high-est bonus total of the year.

A total of 37,642 hectares ex-changed hands this week at an av-erage of $1,110.21 per hectare (click here for the lease and licence re-sults, and here for oilsands results). Year-to-date, the province has col-lected $303.2 million in bonus bids on 630,165 hectares at an average $481.14. To the same point of 2013, industry had paid $485.78 million for 1.53 million hectares at an average price of $318.14 per hectare.

Highlights of the sale included the $20.14-million land sale high bid, which was submitted by Charter Land Services Inc. The broker paid an average of $4,370.90 for the licence located along the Alberta/British Co-lumbia border, northeast of Dawson Creek, B.C. The area has been a focus of land buying this year, in both

provinces.This 4,608-hectare licence includes

five tracts:Tract one: southern half and north-

east quarter of section six at 81-11W6; section 13, 24, the northern half and southeast quarter of section 36 at 80-12W6; and the southern half of section one and section 21 at 81-12W6. All petroleum and natural gas (P&NG) rights were included;

Tract two: the northern half of sec-tion 24 at 81-13W6 for P&NG below the base of the Bluesky-Bullhead;

Tract three: sections 13, 19 and 20 at 81-12W6 and the southern half of 24 at 81-13W6 for P&NG below the

base of the Charlie Lake formation;Tract four: the southwest quarter of

section 36 at 80-12W6 and the north-ern half of section one and sections two and 12 at 81-12W6 for P&NG below the base of the Halfway forma-tion; and,

Tract five: the northwest quarter of section six at 81-11W6 and sections 11, 14 to 16 and 22 and 29 at 81-12W6 for P&NG below the base of the Doig formation.

“This would have been a typical re-source play posting a couple of years ago, with deeper rights posted – be-low Charlie Lake and deeper – over much of the parcel,” said Brad Hayes, president of Petrel Robertson Con-sulting Ltd. “It appears that the Mont-ney fairway is being expanded along its northeastern flank again, likely in response to recent drilling results on the Montney tight siltstone play and particularly in an area where oil and liquids are likely.”

Steve Hager, senior exploration analyst with Canadian Discovery Ltd., said this parcel, which includes a mix of P&NG rights from surface to basement and below various Tri-assic zones (in each case including the Montney), is located in the Pouce Coupe and Doe fields, northeast of Montney horizontal gas wells drilled by ARC Resources Ltd., TriOil Re-sources Ltd. and Birchcliff Energy.

Stomp Energy Ltd., meanwhile, picked up three parcels that com-bined for total bids of $8.9 million in the area around 69-08W6.

These three parcels include vari-ous P&NG rights below Cretaceous, Jurassic and Triassic horizons (but in each case including the Montney).

$20 MillioN PARCel PoWeRs AlbeRTA’s lANd AuCTioN


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Pipeline firm signs training deal

People don’t only want the chance to work, but where available, they want the chance to work in their community, according to a senior executive with an incoming liquefied natural gas project.

“These are exciting times here in the north,” said Bruce Wells, vice-president of project de-velopment for TransCanada’s Coastal GasLink pipeline prior to adding his signature to an agreement with the Prince George Nechako Ab-original Employment and Training association (PGNAETA) and the company’s Prince Rupert Gas Transmission pipeline.

The agreement is for more than $250,000 to support PGNAETA programs focusing on trans-ferable workplace-based literacy and essential skills in Aboriginal communities.

“It is imperative that we are able to provide both quality and variety in skill development for our young still trying to enter the workforce and for those who have longed to embark on a trades career but did not have the literacy at the level required to be successful,” said Karin Hunt, PG-NAETA executive director.

Established in 1993, PGNAETA works focuses on human resources development of First Na-tions people in the province’s northern interior.

The TransCanada donation would provide ac-cess for 48 Aboriginal students to participate in the federal government’s 16-week Aboriginal Skills Employment and Training Strategy, ad-ministered out of PGNAETA’s Aboriginal Gate-way Training Centre.

The Aboriginal population is the fastest grow-ing in Canada and ensuring that demographic has access to training is an important element to addressing the predicted skilled labour short-age, said Rebecca McElhoes, manager of the Prince Rupert Gas Transmission project.

Wednesday’s announcement was the first step, said Wells, with TransCanada finalizing other partnerships as part of their Pathway to Pipeline Readiness program.

The proposed Coastal GasLink natural gas pipeline is proposed to be 650 kilometres long, running from near Dawson Creek to Kitimat. The Prince Rupert Gas Transmission project

Charelle EvelynPrince George Citizen

would run 900 kilometres from Hudson’s Hope to Port Edward.

Both projects are in the environmental review stage.

Finding new partnerships and collaborations to fund training is key, said Terry Teegee, tribal chief of the Carrier Sekani Tribal Council.

Teegee has been on PGNAETA’s board for the past five years and said he’s seen a decline in funding opportunities and an increase in bu-reaucracy to access what’s available.

“And I hope many other industries take a page out of this [agreement], whether it’s for-

estry, mining, tourism, and we start building new relationships, accessing different funds,” Teegee said.

“Because quite simply, over the last 10 years relying on federal funds or provincial funds is not going to happen - there’s a great decline in funds coming to our training society.”

The training also has to go beyond skilled trades, Teegee added.

“We have to be in jobs that are in manage-ment, the higher level jobs, and that’s really important for our people to really be gainfully employed in all aspects of industry,” he said.

From left, Prince George Nechako Aboriginal Employment and Training Association executive director Karin Hunt, Aboriginal Gateway Training Centre manager William Phang, TransCanada’s Prince Rupert Gas Transmission project manager Rebecca mcElhoes and vice-president of project development for the Coastal GasLink pipeline Bruce Wells sign a funding agreement for more than $250,000 between TransCanada and PGNAETA in the Prince George Public Library’s Knowledge Garden. Prince George Citizen Photo

‘We have to be in jobs that

are in management, the

higher level jobs, and

that’s really important

for our people to really be

gainfully employed in all

aspects of industry.’


#LNGinBC oilMen

On one of the hottest days this sum-mer you wouldn’t have known it based on the 105 competitors that filled the gun ranges at the North Peace Rod and Gun Club.

The crowd was there for the 31st an-nual Oilmen’s trapshoot, one of the several occasions throughout the year that the group gets together for a full day of fun and competition.

In his fifth year involved with the event, chairman Shane Stirling said it was another successful day that brought the Oilmen community together.

“Overall it was a great event,” Stir-ling said. “For the oilmen’s as a group it’s a good way for people within the industry to get together and hangout and do something that interests ev-erybody… maybe get some new peo-ple in.”

Operator of the North Peace Rod and Gun Club Mike Lahaye also noted that anytime you get an opportunity to promote gun sports in a positive manner is great for the club.

“It’s part of a community service we do, so that helps us tremendously,” he said about the importance of the event. “It encourages shooting sports which is what we are all about.”

It was team Twylight Pressure who got the nod as the top group in the team category putting up an overall score of 429. Ditmarsia Holdings came in just behind with a score of 413.

In the individual competition, Tyler Mikkelson was the top shooter put-ting up an impressive score of 95. He managed to just edge out the second place competitor Vern Turriff who scored a 94.

At the end of the day there were plenty of winners and very few los-ers as almost everyone who came out went home with a prize, and for Stir-ling that lines up with the spirit of the day.

“Everyone gets a chance to win something, which is good that way,” he said. “As well as people, even the ones in the middle ground who didn’t think they shot that good they still get a chance to win something. In the end it’s a fun shoot.”

Shooters of all skill levels compet-ed in team events, a handicap class, singles class and slider classes for a chance to win a big prize or maybe even a toaster (there were actually several toasters awarded as prizes).

Stirling has also seen a significant shift in the age demographics that are coming out to the group’s events.

“We’ve seen a lot of younger shoot-ers coming out, a lot more young people from the area or just younger people to the industry so we are see-ing that shift come a bit,” he said.

“That’s been pretty interest-ing because it seems to me there are a lot more mediocre to good shooters and they’ve been shoot-er for a long time. They’re having a lot of fun and they are learning a lot.”

COuRTESY PHOTOS

Byron hackettStaff writer

Hot shots at Fort St. John trapshoot


Northern British Columbia and Alberta’s Oil and Gas Industry

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

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