China | Northwest Coast Energy News

Kitimat key to Canada’s future relationship with China, Asia Pacific Foundation says

An editorial published today by the president of the Asia Pacific Foundation of Canada says that the media concentrating on Prime Minister Stephen Harper’s trip to Beijing has it wrong, the key to the relationship between Canada and China is in Kitimat, not Beijing.

In the editorial, President’s View, Future of Canada-Asia Energy Relations in Kitimat , foundation president Yuen Pau Woo reflects on a recent visit to Kitimat where he met representatives of the First Nations, industry, and municipality.

Woo says: “Kitimat’s livelihood depends on trade with Asia and the community knows it.”

The editorial lists such projects as the Kitimat modernization porject at the Rio Tinto Alcan, KMLNG’s Kitimat LNG project, other proposed LNG projects, “sharply increased vessel traffic through the Douglas Channel” and, of course, the proposed Enbridge Northern Gateway pipline.

Woo’s key paragraph reads:

The future of Canada-Asia energy relations is not about Beijing; it is about Kitimat. It is in this remote coastal community that the confluence of Asia’s growing economic clout, Canada’s abundance of natural resources, the livelihoods and economic aspirations of First Nations, the challenge of supporting rural communities, and the pristine environment of the Canadian wilderness have created conditions that demand new forms of partnership for a sustainable future.

Woo says that “the Alcan Modernization Project and the Kitimat LNG Plant are excellent examples of community and First Nations consultation and collaboration that have so far yielded positive results,” without mentioning how long it took to come to those agreements; the decades of problems outlined by Haisla leaders before the Joint Review Panel, and that the current agreements are just the start to redress those problems.

On Northern Gateway, Woo concludes:

The challenges facing the Northern Gateway Pipeline project are of a different order of magnitude, but even on this most contentious of projects, I would not underestimate the capacity of stakeholders to find a uniquely Canadian solution that is based on mutual benefit, compromise, and the long-term good

PetroChina looks to Kitimat as it spends $1 billion for Shell shale gas in northeastern BC

PetroChina has bought a 20 per cent stake in Shell Canada’s Groundbirch shale-gas project in north eastern BC, leading to media reports that PetroChina is also investing in Shell’s planned Kitimat liquified natural gas export terminal in Kitimat.

The Groundbirch “play” in the northeastern BC shale gas fields produces 180 million cubic feet of gas a day form 250 wells.

A Hong Kong website, FinanceAsia, reported that PetroChina is paying $1 billion for the stake in the northeast BC shale gas operation.

China Daily confirmed the story, quoting Mao Zefeng, the Beijing-based spokesman of PetroChina, who declined to give the value of the transaction.

China Daily said Shell and PetroChina’s parent agreed in June to increase cooperation in energy exploration in China, estimated to hold the world’s largest reserves of shale gas. The semi-official newspaper says Petro China is looking to Canada to obtain drilling technology and expertise.

“It’s a continuation of our cooperation in China, and we can learn about shale-gas exploration and production by being a partner in the Canadian shale-gas project,” Mao said. “The project will also bring us good investment returns.”

Barron’s also reported that China is looking to get more experience shale gas, quoting Benchmark analyst Mark Gilman who told Dow Jones Newswires. “They are trying to learn about this business, on the basis of their belief that it will better position them to assess and develop similar resources within China,” he said. In fact, Shell and PetroChina are exploring for shale together in China, so the Canadian deal may be a “quid pro quo” gesture to Shell, he added.

Shell executives said at a meeting in London on Thursday that the company has invested $400 million in shale gas exploration in China, funding 15 wells with more in the future.

Last fall, Shell purchased the old Methanex site and the Methanex marine terminal in Kitimat.

Both The Globe and Mail and Postmedia News are tying the investment directly to Shell’s Kitimat LNG export project.

The Globe and Mail says that PetroChina as well as Japan’s Mitsubishi and Korean Gas are stakeholders in the Shell Kitimat LNG project.

PetroChina’s had agreed with Encana, a partner in the KM LNG project to invest $5.4-billion in the company’s shale gas operations in British Columbia. That deal collapsed last fall after the two companies could not agree on finances.

PetroChina is also a heavy investor in the Alberta bitumen sands.

The deal between PetroChina and Shell came on the same day that National Energy Board approved the BC LNG project, the second one to be proposed for Kitimat. The first, approved in October, is the Kitimat LNG project owned by the KM LNG partnership.

It also comes a few days before Prime Minister Stephen Harper begins an official visit to China.

Analysis: Rumour that China, not Canada, will build Gateway adding to pipeline controversy

On the same day:

In Davos, Prime Minister Stephen Harper told the World Economic Forum that his government consider it a “national priority” to ensure the country has the “capacity to export our energy products beyond the United States, and specifically to Asia…In this regard, we will soon take action to ensure that major energy and mining projects are not subject to unnecessary regulatory delays — that is, delay merely for the sake of delay.” (See Globe and Mail Harper vows ‘major transformations’ to position Canada for growth)
The New York Times in In China, Human Costs Are Built Into an iPad exposes the horrendous, almost slave like conditions in China’s dark satanic mills that create and polish the shining iPads (that probably millions actually to use to read the Times.)
In The Ottawa Citizen, Terry Glavin writes Questions Canadians should be asking about China. The University of Victoria journalism professor takes a hard look at the growing power around the world of Sinopec, the Chinese state petroleum company, one of the biggest backers of the Northern Gateway pipeline, saying that “Sinopec became co-author of Stephen Harper’s new foreign policy and energy strategy.”
In the Vancouver Sun, Mark Jaccard, of Simon Fraser university, takes a wider view of the Northern Gateway pipeline and its effect on greenhouse gas emissions in Pipeline itself not the only problem we should worry about and also questions the role of China in oil sands and pipeline development.
A quiet rumour has been heard more and more in Kitimat for the past month, that China, not Enbridge, will build the Northern Gateway pipeline, bringing in thousands of Chinese workers, living in work camps for the pipeline construction.

You hear a rumour once, it’s just a rumour, not worth reporting.

You hear it three or more times; a couple times in quiet conversation with different people, then overhear it in a Shoppers Drug Mart lineup, it means that rumour, unlikely, in fact far fetched, as it would be in reality, shows that the pipeline debate is touching a raw nerve in northwestern British Columbia.

On its surface, the rumour could never be correct, Canada would never agree (as this country did when building the railways more than a century ago) to bring in thousands of Chinese workers to build the pipeline across the British Columbia wilderness.

On the other hand, one thing fuelling the rumour is that when China invests in other countries, often there are compounds full of workers and managers from China, who capture the best jobs in a project, leaving the low-level work to local labour. The media has reporting Chinese abuse of workers in Africa for the past few years. The latest in The Guardian on January 2, 2012, reported Workers claim abuse as China adds Zimbabwe to its scramble for Africa

Underlying the rumour is fear, fear of further loss of jobs to China.

In northwestern BC, the saw mills are closing, while raw logs are shipped to China. Each day CN hauls huge coal trains (coal, of course, one of the greatest contributors to greenhouse gases) to the port of Prince Rupert, returning with intermodal trains, averaging 170 cars, with containers full of cheap Chinese made goods destined mostly for the United States.

According to new poll, published in The Calgary Herald, 84 per cent of Albertans want the bitumen upgraded in the province. (Marc Henry The politics of upgrading Alberta bitumen )

At the same time, the Harper government continues to demonize the environmental objections to the Northern Gateway pipeline, which leads at least one columnist on The Calgary Herald, Stephen Ewart, to say Northern Gateway pipeline debate could stand better diplomacy quoting Natural Resources Minister Joe Oliver as saying

“You wouldn’t hear from American special interest groups, celebrity environmentalists and champagne socialists that Canada’s oilsands are subject to the toughest environmental monitoring and regulation in the world,” Oliver said.

Ewart, who is pro-pipeline, goes on to say:

Canada needs an export pipeline to a location on the West Coast to sustain the economic impact on the national economy from oilsands development. What isn’t needed is more antagonistic comments from government ministers.

It will likely take a lot more than diplomatic niceties to calm the pipeline controversy.

The one promise from Enbridge, the Alberta bitmen sands and the Harper government that may have some traction in northwestern British Columbia is tens of thousands of temporary construction jobs. It is well known that there will be very few permanent jobs from the Northern Gateway pipeline in this part of Canada.

Now it appears that some people here in the northwest are starting to believe there won’t even be construction jobs along the Northern Gateway pipeline.

The Calgary oil-patch, who today cheered Environment Minister Peter Kent when he said he would fast track the regulatory process for energy development, should take note, the rumour about vast compounds of Chinese workers building a pipeline through the BC bush is not coming from “champagne socialists” but from working people who want solid, good, long-term, well-paying jobs. These are people who also fish, hunt, hike and boat and are worried about the environmental impact of the pipeline and trying to balance jobs and the environment.

The campaign against “foreign” environmentalists, fronted by Ezra Levant and Ethical Oil but likely originating in the inner circles of the Conservative political war room, may be backfiring.

Raise the question of foreign interference and that incites all kinds of political rumours, rumours unintended in the political bubble just inside the Ottawa Queensway.

The China worker rumour appears to have started just a short while after Ethical Oil’s campaign against the foreign environmentalists began to attract widespread media attention.

The China worker rumour doesn’t come from the political commentary set who published columns today, but from the coffee shops, drug store lineups and Legion Halls.

The China worker rumour shows a lack of trust in northwestern BC for Enbridge, for Sinopec, for the province of Alberta, for the Harper government.

As far fetched as the rumour is, the idea that Chinese workers will build the pipeline can only escalate the controversy over the Northern Gateway pipeline.

Blue Horizon obtains injunction to stop Methanex equipment leaving Kitimat site

Old Methanex site, Kitimat BC — A truck enters the old Methanex site, now being dismantled, on the snowy afternoon of January 13, 2012. (Robin Rowland/Northwest Coast Energy News)

Blue Horizon, the company that had and lost the contract to dismantle the old Methanex site in Kitimat has obtained an injunction preventing the buyer of the equipment from removing the material from the site by the Kitimat River.

Last November, Ko Yo Development of Hong Kong cancelled its contract with Blue Horizon that would have seen the equipment in the plant dismantled and shipped to China.

Part of the old Methanex site is now operated by Cenovus and is used to ship condensate to the Alberta bitumen sands by rail.

Shell purchased the Methanex site and marine terminal in October, 2011, as part of its plans for a liquified natural gas facility at Kitimat. At the time of the contract cancellation in November, Shell spokesman Stephen Doolan told Northwest Coast Energy News “The transaction … does not affect Shell’s purchase of the Cenovus property, nor is Shell involved in any way.” On Friday, Doolan said he had nothing more to add to the original statement.

A news release issued by Blue Horizon says:

Blue Horizon Industries Inc. (“Blue Horizon” or the “Corporation”) (CNSX:BH) announces that its wholly owned subsidiary Blue Horizon Energy Inc. (“BH Energy”), on behalf of its wholly owned division Blue Horizon Contracting, obtained on January 12, 2012 an injunction in the Supreme Court of British Columbia, Vancouver Registry, prohibiting Ko Yo Development Co. Ltd., a Hong Kong incorporated company (“KoYo”) and Guangan Lotusan Natural Gas Chemicals Co. Ltd., a corporation incorporated under the laws of the Peoples Republic of China (“GLN”) from removing any portion of the dismantled ammonia or methanol plants from the Province of British Columbia unless and until KoYo / GLN posts security in court in the amount of $4,180,000 by way of an irrevocable letter of credit or other security acceptable to BH Energy and to the Court.

Mr. Don Allan, President and CEO of Blue Horizon, stated “We are pleased that the Supreme Court of British Columbia ruled quickly and decisively in this matter by issuing the injunction against KoYo / GLN while at the same time awarding significant security for costs and court costs to BH Energy. We are continuing to focus our attention on completing the bid process for a number of new high value dismantling contracts expected to be awarded for execution in 2012 as well as advancing our other operating businesses.”

The dispute between Blue Horizon, the Red Deer based contractor and Hong Kong based Ko Yo goes back months. The original contract was awarded in February, 2011, renegotiated in September 2011 and then cancelled in November, 2011.

Bula sign on Methanex site — On the Methanex Project sign at the entrance to the decomissioning site, stencils from Bula.ca, the new contractor, can be seen overwriting Blue Horizon, the former contractor. (Robin Rowland/Northwest Coast Energy News)

The dismantling of the Methanex plant has since resumed with work being handled by a new contractor, Bula Enterprises, also of Red Deer. A profile of Bula Enterprises on the website shows that it has extensive construction experience, much of it in the Alberta oil patch, including projects for Shell Albian, CNRL, Suncor, Conoco Phillips in Fort McMurray. As of late Friday afternoon, Bula had not returned calls seeking comment on how the injunction might affect the deocommissioning.

Ko Yo Chemical (Group) Limited, formerly Ko Yo Ecological Agrotech (Group) Limited, is a Hong Kong based investment holding company. According to a company profile it is engaged in the research and development, manufacture, marketing and distribution of chemical products, chemical fertilizers and bulk blending fertilizers and has a natural gas energy utilization project at Dazhou City, Sichuan Province, China. The company has a number of subsidiaries with similar names.