Residents of British Columbia have just two days to file information and opinions on the province’s plans for “options for strengthening BC’s spill preparedness and response policies and capacity.”
Premier Christy Clark announced her controversial five conditions for pipeline development in BC in July 2012. Clark’s announcement was aimed both at the Northern Gateway Pipeline which would have its terminal in Kitimat, and the proposed Kinder Morgan pipeline expansion which has its terminal in Vancouver.
It is not clear how long the web page has been up, but the call for input from the public has received little, if any, publicity. The deadline for public submissions is February 15, 2013.
(Northwest Coast Energy News was alerted to the story by a Kitimat-based hiking club)
A separate call for academic papers had a deadline of January 25. The province plans a conference on oil spill response in Vancouver from March 25 to March 27. The website says”
As part of British Columbia’s commitment to a world leading preparedness and response regime for land based spills, it is hosting a symposium March 25-27, 2013 in Vancouver, BC. Due to the anticipated high interest in the symposium, attendance is by invitation only.
One question would be if invitation only is designed to exclude activist groups who may wish to participate or demonstrate. The Northern Gateway Joint Review panel banned public input at hearings in Vancouver and Victoria earlier this year to try, not always successfully, to head off demonstrations. The webpage says:
In keeping with the established polluter-pay principle, and recognizing the increase in development activities across the province, the Ministry of Environment (the ministry) is reviewing industry funded options for strengthening BC’s spill preparedness and response policies and capacity. Land based spill refers to any spill impacting the terrestrial environment, including coastal shorelines, regardless of the source.
This review addresses three aspects of land based spill preparedness and response: World leading regime for land based spill preparedness and response
Effective and efficient rules for restoration of the environment following a spill
Effective government oversight and coordination of industry spill response The ministry has developed a policy intentions paper for consultation (intentions paper) on the three aspects of the province’s land based spill preparedness and response regime under consideration.
The purpose of this intentions paper is to describe the ministry’s proposed policy direction and seek input on enhancing spill preparedness and response in BC. The intentions paper is a discussion document and your feedback will influence the policy approach.
Although the call for input is on the ministry website, the contact is a management consulting firm C. Rankin & Associates.
British Columbia newspaper magnate David Black says he’ll know in about 60 days whether his controversial idea for a new refinery on the West Coast will move forward or die a quiet death.
In a recent interview, Black said he has signed memorandums of agreement with parties interested in the idea of a $15-billion refinery at Kitimat, done some preliminary design work and talked to financial backers — though any deal has a long way to go.
“I’ve been pulling threads together — potential customers, financiers, government, First Nations — and they should all be saying ‘yes’ or ‘no’ within 60 days.”
If the parties say “yes,” there would be two years of regulatory approvals required before construction could begin, he said.
Enbridge Northern Gateway has told the Joint Review Panel that expansion of the proposed bitumen and condensate terminal in Kitimat is urgent so the company can access offshore markets for Alberta bitumen sands crude.
The JRP ruled against two of Weir’s motions but upheld, in part, her objection that the terminal plans were not part of a route revision.
In the Motion, Ms. Wier argues that there are a number of completely unrelated documents embedded within the route revision changes including, for example, a “noticeable increase in the number of oil tanks at the Kitimat terminal” with “significant size increases included.” There is no discussion in the update documents on how these changes are related to the proposed routing change. Ms. Wier further notes that this evidence was submitted after the completion of questioning on engineering (including regarding the Kitimat tank farm) in Prince George last
November.
The Panel notes that it may be of use to parties for Northern Gateway to identify which of the exhibits submitted on 28 December, 2012, were: (i) directly related to Route Revision V; (ii)corollary to Route Revision V; or (iii) unrelated to Route Revision V. Accordingly, the Panelorders Northern Gateway to submit, on or before 1 February 2013, a chart setting out this information for each of the exhibits submitted in the 28 December 2012 update. Further, where the documents are listed as “unrelated to Route Revision V”, Northern Gateway is to provide a
brief description as to why this evidence is being filed at this time.
In response, Northern Gateway filed a spreadsheet with the JRP to clarify the reasons for including the expansion of the tank farm. As the JRP requested, the explanation is brief, but significant.
Northern Gateway stated that “the size and spacing of tanks will be optimized during detailed design.”
In recognition of the urgency of accessing offshore markets, Northern Gateway and its Funding Participants have recently agreed to proceed with engineering and design activities.
Brief description as to why this evidence is being filed at this time required:
…for preparation of a Class III Cost Estimate, at an expected cost of over $150 million. Discussions with the Funding Participants in late 2012 resulted in a more detailed analysis of the tankage required by shippers, with particular emphasis on ensuring an adequate degree of commodity segregation within the tank farm. That analysis, which concluded in December 2012, revealed that additional tankage would be required to satisfy commodity segregation requirements.
Northern Gateway included this information along with its Route V filing as a matter of convenience to all involved.
In respone to Weir’s objection that the Enbridge Northern Gateway filed a major change to the project and noted that most intervenors are limited to the deadlines set by the JRP, and that the engineering hearings in Prince George had already concluded.
In response, the panel ruled that Enbridge could present the evidence at the marine hearings in Prince Rupert that resumed today.
In its letter enclosing the 28 December 2012 update on Route Revision V, Northern Gateway noted that, “to the extent that there are questions regarding this filing that have not been previously addressed, members of the Northern Gateway Kitimat River Valley engineering design and emergency preparedness witness panel will be available to answer same when they appear in Prince Rupert.”
The Panel is of the view that any substantive questions on the updated evidence could best be
addressed through questioning in Prince Rupert, as suggested.
At the opening of the hearings in Prince Rupert, Coastal First Nations withdrew from the process, citing the cost and complexity of the hearings. Both events once again call into question the fairness of the Joint Review Process and whether or not there is a double standard, with one set of standards for Enbridge Northern Gateway and another for intervenors.
The National Energy Board has approved an application by Shell Canada’s LNG Canada Development Inc. (LNG Canada) a licence to export liquefied natural gas from a proposed terminal near Kitimat.
The export licence will authorize LNG Canada to export 670 million tonnes of LNG (approximately equivalent to 32.95 trillion cubic feet of natural gas) over a 25-year period. The maximum annual quantity allowed for export will be 24 million tonnes of LNG (approximately equivalent to 1.18 trillion cubic feet of natural gas). The daily equivalent of these exports is 3.23 billion cubic feet per day.
In approving the application, the Board satisfied itself that the quantity of gas to be exported does not exceed the surplus remaining after due allowance has been made for the reasonably foreseeable requirements for use in Canada, having regard to the trends in the discovery of gas in Canada.
This is a David and Goliath scenario, said Art Sterritt. “It seems the only party that can afford this long and extended hearing process is Enbridge and, perhaps, the Federal Government. The average citizen can’t afford to be here and the Coastal First Nations cannot afford to be here.”
Sterritt, the executive director of the Coastal First Nations, said pulling out was a difficult decision because the Emergency Response Panel is dealing with important issues. “We planned to ask questions that included: does diluted bitumen sink; how quickly can a spill be responded to and how effective can cleanup be; how long will spilled oil remain in the ecosystem and what are the costs of a spill cleanup and who will pay.”
It is clear that more scientific study is needed on emergency preparedness, he said. “Despite the lack of information it is continuing with the process. Ultimately this means the JRP will not have the information it needs to make an informed recommendation and that in turn means the Federal Government will be making decisions not based on science.”
The funding disparity isn’t the only JRP issue the Coastal First Nations is unhappy with. “We are dismayed with the nature of the hearing process itself. Enbridge witnesses are not answering questions or their answers are self-serving and non-responsive. We see cross-examination answers by Enbridge witnesses which are crafted with, or provided by, other persons sitting behind these witnesses who cannot be cross-examined. This does not seem fair to us at all.”
We had agreed to participate in this process on the basis that the JRP was going to be a decision-maker on whether or not the project would go ahead. Then the Federal Government unilaterally changed the decision-making process, he said. “This was blatantly unfair and smacks of double dealing – something we as First Nation have become accustomed to with this government.”
Coastal First Nations will continue to monitor these proceedings and we will do what we can to participate given our limited resources, Sterritt said. “We are profoundly disappointed with the nature of this process. Taken together these problems undermine the legitimacy and authenticity of the hearing process, our pursuit of the true facts and, ultimately, a just result.”
Other groups and individuals have also long complained about the growing expensive of travel and monitoring costs for the Joint Review process.
The Haisla Nation, the federal government and the province of British Columbia have signed an agreement that opens the way for liquified natural gas development on Haisla territory on Douglas Channel.
The federal government also announced new regulations under the the First Nations Commercial and Industrial Development Act (FNCIDA). The regulations are necessary because First Nations are still governed by provisions of the century old Indian Act and reserve land is outside of provincial jurisdiction.
The agreement was announced at a news conference in Vancouver today, January 22, 2013. At this point it mainly concerns the Kitimat LNG project (also known as KM LNG)
The tripartite agreement with the Government of Canada, Government of British Columbia and Haisla Nation “ensures administrative, monitoring and compliance activities for the LNG facility are performed and enforced by provincial officials.”
The news release also quotes Haisla Chief Counsellor Ellis Ross as saying: “Kitimat LNG offers new, important and sustainable economic opportunities which the Haisla people are eager to embrace. We have seen new jobs, business opportunities, and skills training come to our people since KM LNG signed its agreement with us, and we know that the agreement signed today with Canada and BC is a milestone in making the project a reality. On behalf of the 1,700 Haisla people, I thank both governments for their commitment to this important agreement and the better future it is bringing our people.”
The federal news release goes on to quote BC Community, Sport and Cultural Development Minister Bill Bennett as saying: “The BC Government is working with industry and First Nations to foster economic growth through the expansion of our province’s natural gas sector. I would like to thank the Government of Canada and the Haisla Nation for working with us to move the Kitimat LNG facility another step forward.”
The federal release also quotes executives from both major companies involved in the Kitimat LNG project, Apache and Chevron. Chevron recently took over operating control of the project from Apache when that company had difficulty finding customers in Asia for the LNG.
The Government of Canada, Government of BC and the Haisla Nation have shown exceptional leadership and support towards BC’s new LNG industry” said Tim Wall, President of Apache Canada. “This regulatory agreement builds on the many other agreements with the Haisla that has led to jobs, training, education and economic development in Kitimaat Village.”
“I want to congratulate the Haisla First Nation, the Governments of Canada and British Columbia, and Apache Canada for their shared leadership in finalizing the regulations governing the Kitimat LNG facility site,” said Jeff Lehrmann, president, Chevron Canada Limited. “We look forward to working with the Haisla First Nation, both governments, other First Nations and local communities to realize the project’s long-term economic potential.”
In remarks prepared for the meeting Canada’s Aboriginal Affairs minister John Duncan was quoted as saying
The proposed project will provide Canada’s energy producers with a doorway to overseas markets, in addition to creating jobs and economic development opportunities not just for the Haisla First Nation, but the entire northwest region of British Columbia.
That’s good news for members of the Haisla Nation, good news for British Columbia, and good news for all Canadians.
These regulations are passed under the First Nations Commercial and Industrial Development Act, known as FNCIDA, which allows the federal government to develop regulations for complex commercial and industrial development projects on reserve in partnership with First Nations and Provincial governments.
For First Nations, FNCIDA can remove the barriers they face in pursuit of economic development opportunities, while providing the certainty investors require, and assuring the community that the necessary oversight measures are in place.
Together with the Province of British Columbia and the Haisla Nation, the Government of Canada has also signed an agreement which ensures administrative, monitoring and compliance activities for the facility are performed and enforced by provincial officials who have the necessary experience and expertise.
As a result, the regulatory pieces are now in place for project to proceed.
Duncan added:
To protect the environment as it relates to natural gas production, together with the Province of British Columbia we have completed an environmental assessment pursuant to the Canadian Environmental Assessment Act. With our partners, we will ensure that the LNG plant is designed and built to industrial safety standards and that the operation is properly regulated
Bermuda-based Golar LNG has confirmed that it has signed a finalized contract for both feed gas supply and LNG purchase and off-take for train #1 of the Douglas Channel LNG Project, the smallest of the three (so far) proposed LNG projects in Kitimat.
The contract award for LNG purchase and off-take was made jointly to Golar and LNG Partners, LLC (Houston, TX) (“LNG Partners”) and the contract award for feed gas supply was made to LNG Partners.
The DC Project is being jointly developed by the Haisla Nation and Douglas Channel Gas Services Ltd and is expected to produce approximately 700,000 metric tonnes per annum of liquefied natural gas from the initial planned production facility beginning in the second quarter of 2015.
Golar’s participation in the project and its commitment to the LNG off-take remains subject to the Company reaching agreement with the current proponents of the DC Project for financing of the facilities, and receipt of all permits required for the project to proceed on a firm basis.
Golar LNG describes itself on its website as “one of the world’s largest independent owners and operators of LNG carriers.”
At the meeting of District of Kitimat Council on Jan. 21, 2013, Mayor Joanne Mongahan said that the BC LNG – Golar deal would mean enough business to fill about one LNG tanker each month. That volume of gas can be transported over the existing Pacific Northern Gas pipeline, Monaghan said.
With temperatures climbing from climate change, the mountain pine beetle is now moving to higher elevations on mountain slopes, and is a “rising threat” to the whitebark pine, according to a University of Wisconsin-Madison study published today, Dec. 31, 2012, in the Proceedings of the National Academy of Sciences.
Map showing the range of the Whitebark pine. (Wikipedia)
The whitebark pine is found mainly in the Rocky Mountains and Coast Range of British Columbia and into the northern United States.
In the US, there there have been a number of studies of pine beetle infestation of the whitebark pine. In 2011, the Seattle Timesreported
A study in the mid-2000s showed whitebark trees had declined by 41 percent in the Western Cascades. Tree declines throughout Washington and Oregon hovered around 35 percent. In the coastal range and the Olympics, blister rust infection ranged from 4 to 49 percent. Nearly 80 per cent of the whitebark in Mount Rainier National Park are infected. Whitebark deaths in North Cascades National Park doubled in the last five years.
The Seattle Times also quoted the U.S. Fish and Wildlife Service reporting in 2007 that beetles killed whitebark pine trees across half a million acres in the US West — the most, at the time, since record-keeping began. Two years later, beetles killed trees on 800,000 acres.
Ken Raffa, a University of Wisconsin -Madison professor of entomology and a senior author of the new report says.”Warming temperatures have allowed tree-killing beetles to thrive in areas that were historically too cold for them most years. The tree species at these high elevations never evolved strong defenses.”
A warming world has not only made it easier for the mountain pine beetle to invade new and defenseless ecosystems, the scientists say, but also to better withstand winter weather that is milder and erupt in large outbreaks capable of killing entire stands of trees, no matter their composition.
“A subject of much concern in the scientific community is the potential for cascading effects of whitebark pine loss on mountain ecosystems,” says Phil Townsend, a Univeristy of Wisconsin-Madison professor of forest ecology and a senior author of the study.
The mountain pine beetle’s historic host is the lodgepole pine, and it was widespread lower elevations until the pine beetle infestation began to spread in the late 1990s. The pine beetle which are about the size of a grain of rice, played a key role in regulating the health of a forest by attacking old or weakened trees and fostering the development of a younger forest after the older trees died or were destroyed by fire.
However, recent years have been characterized by unusually hot and dry summers and mild winters, which have allowed insect populations to boom. This has led to an infestation of mountain pine beetle described by the scientists as “possibly the most significant insect blight ever seen in North America.”
Over most of the Interior, extreme winter weather (colder than minus 35 Celsius for at least several days or even weeks) historically killed most of the pine beetle population, limiting the duration of, and damage from, periodic epidemics. Such a wide-spread weather event has not occurred in the B.C. Interior since the winter of 1995/96.
The lodgepole pine co-evolved with the bark beetle, ad so it evolved chemical countermeasures, volatile compounds toxic to the beetle and other agents that disrupt the pine bark beetle’s chemical communication system.
According to the Wisconsin study, despite that robust chemical defense system, the lodgepole pine is still the preferred menu item for the mountain pine beetle, suggesting that the beetle has not yet adjusted its host preference to whitebark pine. “Nevertheless, at elevations consisting of pure whitebark pine, the mountain pine beetle readily attacks it,” says Townsend.
The good news, he adds, is that in mixed stands, the beetle’s strongest attraction is to the lodgepole pine, suggesting that, at least in the short term, whitebark pine may persist in those environments.
However, the 2007 US study quoted by the Seattle Times also warned that unlike lodgepole, whitebark pines produce few seed cones and do so late in life, so they “aren’t set up to survive massive slaughter.”
The new study, conducted in the Greater Yellowstone Ecosystem, also showed that the insects that prey on or compete with the mountain pine beetle are staying in their preferred lodgepole pine habitat. That, says Townsend, is a concern because the tree-killing bark beetles “will encounter fewer of these enemies in fragile, high-elevation stands.”
Whitebark pine trees are an important food source for wildlife, including black and grizzly bears, and birds such as the Clark’s nutcracker named after the famed explorer and which is essential to whitebark pine forest ecology as the bird’s seed caches help regenerate the forests.
(According to Wikipedia Clark’s Nutcrackers each cache about 30,000 to 100,000 each year in small, widely scattered caches usually under 2 to 3 centimetres of soil or gravelly substrate. Nutcrackers retrieve these seed caches during times of food scarcity and to feed their young. Cache sites selected by nutcrackers are often favorable for germination of seeds and survival of seedlings. Those caches not retrieved by time snow melts contribute to forest regeneration. Consequently,Whitebark Pine often grows in clumps of several trees, originating from a single cache of 2–15 or more seeds. Douglas Squirrels cut down and store Whitebark Pine cones in their middens. Grizzly Bears and Black Bears often raid squirrel middens for Whitebark Pine seeds, an important pre-hibernation food. Squirrels, Northern Flickers, and Mountain Bluebirds often nest in Whitebark Pines, and elk and Blue Grouse use Whitebark Pine communities as summer habitat. )
The BC government report says the pine beetle epidemic has now killed an estimated 710 million cubic metres of commercially valuable pine timber, 53 per cent of all such pine in the province. The rate of damage has been slowing for several years, but is projected to grow to 58 per cent by 2017 (to 767 million cubic metres).
Both the provincial and federal governments have spent hundreds of millions of dollars on the mountain pine beetle epidemic, beetle killed pine forest is more vulnerable to forest fires, and it is possible that the drier wood from beetle killed wood is responsible for the explosions at mills in Burns Lake and Prince George.
Map showing pine beetle infestation in British Columbia (BC Forests)
The BC government report says
B.C. has been battling the mountain pine beetle epidemic since the year 2000. From 2001 through 2004, the focus was on limiting the spread of the infestation and harvesting infested and susceptible pine stands. Not content to wait for frosts and winter cold spells that normally control the beetle, the Province took other steps to control the beetle’s spread. However the infestation continued to spread dramatically to 2007.
Throughout last decade, government and industry concentrated on salvage harvesting, to recover maximum economic value, and the reforestation of the dead stands. The provincial and federal governments invested hundreds of millions of dollars in mitigating the infestation’s impacts, in developing new markets for beetle-killed lumber, and in creating economic strategies for the future.
At the same time, the forest industry invested in adapting its harvest and milling technologies to the ever-changing forest resource, using the knowledge and experience gained from a significant, but much smaller, beetle infestation that hit the Cariboo-Chilcotin in the mid-1980s.
These actions have placed the industry, government and communities in the best position to address the next phase of the epidemic, as harvest and milling activities inevitably start declining.
Apache has a new partner in the Kitimat LNG project, Chevron Canada Ltd and, in effect, Chevron is taking over the project from Apache who has been unable to find customers for the liquified natural gas project in Asia.
A news release from Apache announced “a broad agreement with Chevron Canada Limited to build and operate the Kitimat LNG project.”
Chevron Canada and Apache Canada each will become a 50 per cent owner of the Kitimat LNG plant, the Pacific Trail Pipeline and 644,000 gross undeveloped acres in the Horn River and Liard basins. Chevron Canada will operate the LNG plant, which will be located on the northern British Columbia coast, and the pipeline. Apache will continue to develop shale gas resources at the Liard and Horn River basins in north eastern BC.
Encana and EOG Resources — currently 30 percent non-operating partners in Kitimat LNG and Pacific Trail Pipeline — will sell their interests to Chevron and exit the venture. As part of the transaction with Chevron, Apache will increase its ownership of the plant and pipeline to 50 percent from 40 percent.
G. Steven Farris, Apache’s chairman and chief executive officer said in the company news release, “This agreement is a milestone for two principal reasons: Chevron is the premier LNG developer in the world today with longstanding relationships in key Asian markets, and the new structure will enable Apache to unlock the tremendous potential at Liard, one of the most prolific shale gas basins in North America.” “With experience developing LNG projects, marketing expertise and financial wherewithal, Chevron is the preferred coventurer to join Kitimat LNG,” Farris said. “Apache has a proven record in finding and developing shale gas resources in Canada and is the logical operator for the upstream elements of the joint venture.”
In its news release, Chevron quoted vice chairman George Kirkland as saying: “The Kitimat LNG development is an attractive opportunity that is aligned with existing strategies and will drive additional long-term production growth and shareholder returns.”
“This investment grows our global LNG portfolio and builds upon our LNG construction, operations and marketing capabilities. It is ideally situated to meet rapidly growing demand for reliable, secure, and cleaner-burning fuels in Asia, which are projected to approximately double from current levels by 2025.”
The two-train (stage) Kitimat LNG Project is still working through the Front-End Engineering and Design (FEED) phase. Construction has continued at the Bish Cove site throughout the summer but has slowed down to the uncertainty over the future of the project and some environmental problems.
Current plans call for two liquefaction trains, each with expected capacity of 5 million tons of LNG per annum (about 750 million cubic feet of gas per day). Kitimat has received all significant environmental approvals and a 20-year export license from the Canadian federal government.
The 290-mile (463-km) Pacific Trail Pipeline is planned to provide a direct connection between the Spectra Energy Transmission pipeline system and the Kitimat LNG terminal.
While the Apache release says: “The project has strong support from many of the First Nations along the route,” there is no support at this moment from the Wet’suwet’en, in the area from Burns Lake through Smithers to the mountains, because some houses are strongly opposed to the pipeline on their traditional territory.
In the Apache news release, Farris says: “”We want to thank and acknowledge EOG and Encana for their contribution to the development of the Kitimat project. We appreciate the hard work of many employees and contractors to advance the project to this stage and the strong support the plant and pipeline projects have received from local communities, provincial and federal officials and the Haisla and other First Nations.
“Construction of the plant and pipeline will have a significant economic impact, and the operational phase will provide opportunities for employment as well as royalties and tax revenues for the Federal, Provincial and local governments for many years,” he said. “Chevron and Apache will continue to develop this project in a safe and environmentally responsible manner.”
As the news releases point out Chevron is a major player in Australia’s LNG projects, considered by many to be Canada’s rival in finding market for natural gas in Asia. Chevron is the operator and led marketing efforts at Wheatstone, a two-train plant with capacity of 8.9 million tons of LNG a year that is expected to commence operations in 2016. Chevron also operates the Gorgon LNG project in Australia and LNG Angola.
Much of the media attention is also on the deal for the natural resources northeastern BC, with, Chevron Canada acquiring approximately 110,000 net acres in the established Horn River Basin from Encana, EOG and Apache, and approximately 212,000 net acres in the Liard Basin from Apache. Chevron Canada Limited and Apache will each hold a 50 percent interest and Apache will operate these two natural gas resource developments.
In its news release, Encana concentrates on the natural gas deal, quoting Randy Eresman, Encana’s President & CEO, “This investment by Chevron, a multinational LNG player, represents a key step in the development of LNG export from Western Canada. Our main goal since we first acquired an interest in Kitimat LNG almost two years ago was to help ensure the progression of this project towards its development. While we are no longer a direct participant in this project, we continue to support LNG export as vital to diversifying markets for North American natural gas.”
The company goes on to say that: “The sale of Encana’s interest in the proposed Kitimat LNG export facility is consistent with the company choosing to focus on its core business. In addition, this transaction reduces Encana’s future capital commitments. The proceeds from this transaction will help to strengthen the balance sheet and provide further financial flexibility to fund capital programs and develop key and emerging resource plays.”
The Financial Post points out that “the Chevron deal leaves most of the LNG projects in the hands of foreign companies, which have competing interests in LNG projects across the world.” That means that the Haisla Nation, with its partnership with the BC LNG project, is one of the few Canadian players left in the LNG scramble.
PetroChina went on a multi-billion dollar natural gas buying spree Thursday, Dec. 13, 2012, picking up shares in operations in both Canada and Australia.
In Canada, Encana, one of the partners in the Kitimat LNG project, signed a joint venture arrangement with Phoenix Duvernay Gas, a wholly owned subsidiary of PetroChina, to explore and develop Encana’s extensive undeveloped Duvernay naturgal gas holdings in west-central Alberta. According to an Encana news release, Phoenix will gain a non-controlling 49.9 per cent interest in Encana’s approximately 445,000 acres in the Duvernay play for total consideration of C$2.18 billion.
Hours earlier, PetroChina agreed to pay $1.63 billion for BHP Billiton’s 10 per cent share for an Australian LNG development, known as Browse, that like the KM LNG project in Kitimat had been delayed by the uncertainty in the LNG market. The other partners in the Browse are Woodside Petroleum, Chevron Corporation, Royal Dutch Shell and BP.
Encana says the PetroChina/Phoenix investment is significant for the Duvernay, which Encana describes as a “liquids rich play” with potential for natural gas, butane and oi development.
THE Encana release quotes Randy Eresman, Encana President & CEO. “A transaction of this magnitude keeps us on track to create a more diversified commodity portfolio and maintain our balance sheet strength. It is a strong endorsement of Encana’s position as a reliable long term partner.”
The release also quotes Zhiming Li, Phoenix’s President & Chief Executive Officer, as saying The Duvernay project will combine Phoenix’s integrated upstream and downstream capabilities and financial resources with Encana’s proven resource play hub expertise. This joint venture will build a foundation for the successful development of the Duvernay play and help to diversify our business portfolio. Encana is our ideal long term partner for the development of our future natural gas business.”
The company goes on to say:
Having entered into several joint venture transactions in 2012, these types of arrangements have become an important part of Encana’s business model. Joint ventures help the Company to achieve a highly efficient deployment of capital throughout its vast exploration and development asset base as Encana transitions to a more diversified portfolio of commodities.
Significantly, the Encana release, while talking about LNG development and export, it makes no mention of the Kitimat KM LNG project, instead looking south to Louisiana.
These relationships have the potential to increase natural gas demand as a number of Encana’s partners are actively exploring opportunities to export liquefied natural gas (LNG), while some are industrial consumers looking to transition to natural gas as fuel for their operations. An example is a recent agreement with Nucor Energy Holdings (Nucor) which is designed to support Nucor’s increased use of natural gas for its facilities, such as its direct reduced iron facility currently under construction in Convent, Louisiana.
Reports say PetroChina paid a premium price for the Australian Browse natural gas project, anticipating that if it comes on stream, as planned in 2018, the current glut in the natural gas market will have eased and once again LNG will be a seller’s market.
The Browse project at James Price Point on the north-western coast of Australia is facing similar opposition to projects in British Columbia, including some of the site’s aboriginal landowners and from some environmental groups.
The opposition to the Australian Browse project, according to reports, reflects a split in the local aboriginal community. While Wikipedia says that 60 per cent of the local aboriginal people voted in favour of the project, there is also fierce opposition, according to the Australian Mining Journal, which reported in 2009:
[A] number of Traditional Owners, as part of the Save The Kimberley organisation, issued a statement which said there is not unanimous support for this site.
In a signed declaration, Traditional Owners have affirmed that they do not support the imposition of an industrial site on their country and will legally challenge the authenticity of any agreements entered into by the Kimberley Land Council supporting the proposal.
The statement said that “…many local Indigenous people are disgusted by the apparent abandonment of the established process put in place by the previous State government. Concerns include the threats made earlier in the year by the Premier regarding compulsory acquisition of land and the pre-empting of the Joint State and Commonwealth environmental and cultural assessment process via announcements by Woodside and the Premier.”
A company called Woodside Petroleum, which leads the LNG venture wants to build the “greenfield” onshore terminal but is facing competition from Shell’s proposed offshore floating LNG “given the land access challenges and soaring development costs in Australia,” even though Shell also has a stake in the Browse project.
Residents of British Columbia have just two days to file information and opinions on the province’s plans for “options for strengthening BC’s spill preparedness and response policies and capacity.”
