Bish Cove | Northwest Coast Energy News

Bish Forest Service Road reopens to the public on March 1, 2015

The Bish Forest Service Road will reopen to the public on March 1, 2015. With the upgrades created by the Chevron-led Kitimat LNG project, the single lane logging rough logging is now a high quality gravel “resource road.”

The first 12 kilometres of the road will be open “to provide public access to connecting roads, recreational areas and natural hiking trails,” Chevron says.

“In terms of Kitimat specifically we’ve completed a number of key projects,” said David Molinski, Chevron’s lead for Regulatory and External Affairs. “We’ve made the upgrades to the Forest Service Road, and the Early Works we’ve been doing on site at the Bish Cove site.

Bish FSR — A construction check point on the Bish Forest Service Road during a media tour, October, 2014. (Robin Rowland/Northwest Coast Energy News)

“So we’ve been for the past couple of years putting a lot of effort on advancing that part of the project. We’ve completed the key elements of the Forest Service Road upgrades over the past four years,” Molinksi said, “When we got there it was essentially a single track logging road and it was very difficult to access the Bish Cove site. So we wanted to make sure we had a road that would help support the project. That means having an all weather access all year round. That’s a very substantial development.

“It’s a public road, it’s always has been a public road, in fact it’s owned by the Crown.

“It’s time now for us to reopen that road. We had it closed for safety reasons. We wanted to make sure we completed the work on the road. There was blasting, moving rock, breaking down rock, stabilizing slopes.

“We had to make sure we could that work done in a safe way. Now that’s done, we’ve completed the road upgrades and we’re very happy to reopen it to the public. We look at it as being a long term legacy for the community.

Safety poster — Safety rules for travelling on the Bish Forest Service Road. (Chevron poster)

“The road is available for people in the community to use. There’s a number of recreation sites people in the community have used for many generations. So we’re pleased we can turn that road back into being publicly available and they can use it safely so they can get access to the areas they love around this community.”

In 2015, Chevron says, some work may continue on the road and “may include power line installation, paving and other construction activities.” There is also a need for the road to “stabilize” Molinksi said. “We’ll come back down the road and make a decision about what the right timing is to cap that road. Right now we don’t have a specific schedule It’s good for the road to stabilize and settle over the next couple of seasonal cycles.”

The decision about the future of the road will depend on the uncertain investment climate, due to the downturn in the energy industry.

In a panel at the open house on Feb. 24, Chevron said that projects like Kitimat LNG “are significant, very large and extremely complex with multiple moving parts that must all come together through hard work and perseverance in order to be successful.”

Chevron will continue to make a capital investment on the Kitimat side of the project but “the pace of field work in Kitimat at the LNG Plant will be decreasing as we focus capital spending on other aspects of the project.

For 2015, Chevron will concentrate on exploration in northeast British Columbia, Molinksi said, “That’s where the Liard Basin and the Horn River Basin are located and that’s where we’re developing the natural gas, substantial natural gas resources to support this project… This year we’re going to focus on getting additional data on the natural gas that we have a number of rigs that are running right now. We’re going to be drilling wells over 2015 and make sure we have a good understanding of those wells that are going to be supplying gas to this project. We have to know as much about that resource as this site here.”

“As a result there will be a decrease in site preparation work associated with the Kitimat LNG project and the Pacific Trails Pipeline during 2015,” the Chevron panel said.

Chevron sells 30% of Canadian Duvernay shale gas assets to Kuwait

Chevron Corporation says its wholly-owned subsidiary, Chevron Canada Limited, has reached agreement to sell a 30 per cent interest in its Duvernay shale gas play to Kuwait Foreign Petroleum Exploration Company’s wholly-owned subsidiary, KUFPEC Canada Inc., for $1.5 billion.

The total purchase price includes cash paid at closing as well as a carry of a portion of Chevron Canada’s share of the joint venture’s future capital costs. The Duvernay is located in west-central Alberta, and is believed to be among the most promising shale opportunities in North America.

The agreement creates a partnership for appraisal and development of liquids-rich shale resources in approximately 330,000 net acres in the Kaybob area of the Duvernay.

“This sale demonstrates our focus on strategically managing our portfolio to maximize the value of our global upstream businesses and is consistent with our partnership strategy,” said Jay Johnson, senior vice president, Upstream, Chevron Corporation. “The transaction provides us an expanded relationship with a valued partner. It also recognizes the outstanding asset base we have assembled.”

Following the closing of the transaction, Chevron Canada will hold a 70 percent interest in the joint venture Duvernay acreage and will remain the operator. The transaction is expected to close in November 2014.

“We remain encouraged by the early results of our exploration program and view the Kaybob Duvernay as an exciting growth opportunity for the company,” said Jeff Shellebarger, president of Chevron North America Exploration and Production Company.

Chevron Canada has drilled 16 wells since beginning its exploration program, with initial well production rates of up to 7.5 million cubic feet of natural gas and 1,300 barrels of condensate per day. A pad drilling program recently commenced which is intended to further evaluate and optimize reservoir performance as well as reduce execution costs and cycle time.

Chevron is developing the liquified natural gas facility at Bish Cove, south of Kitimat. Chevron’s partner in the venture, Apache, is looking to sell its stake in Kitimat LNG after a hedge fund with significant Apache stock holdings decided to change the company’s focus to U.S. operations.

Kitimat LNG progressing–or is it?

At the District of Kitimat Council meeting on Monday, October 1, as part of Mayor Joanne Monaghan’s regular “good news” briefing, she told council that the Kitimat LNG project continues to “progress positively.” The news from Calgary on Tuesday, however, was not as promising.

Both Bloomberg News and the Calgary Herald reported that Apache, which owns 40 per cent of the KM LNG partnership is worried about a recent decision by a rival gas company to sell natural gas to world markets at low North American prices rather than, as been customary up until now, as percentage of the world oil price. That differential gives the North American gas companies a profit in Asia and it is that profit difference that makes Kitimat attractive for LNG projects.

At the council meeting, Monaghan reported, quoting Apache’s Apache’s Manager of Public and Government Affairs Natalie Poole-Moffatt, as saying that Kitimat LNG will be opening a full time community office in downtown Kitimat near the City Centre mall in the near future. Apache says renovations are nearly complete and they will be holding an open house in the near future.

Monaghan said that work on the Kitimat LNG site at Bish Cove continues with blasting to create proper elevation, crushing and sorting of rock and constructing an access route to the forest service road. This summer work began on the two year $25 million upgrades to the old forest service road “which will improve conditions on the road.”

However, in Calgary, the Herald quoted KM LNG vice-president David Calvert as saying “things are going so well that it has been decided to risk spending on clearing ground before completion of the front end engineering and development study and final investment decision.”

But according to several media reports, Calvert told an Energy Roundtable in Calgary on Tuesday that a final go-ahead for Kitimat LNG is not a done deal. the Herald quoted Calvert as saying: “We remain convinced that oil-linked pricing is critical to the viability of our Canadian LNG industry.”

Bloomberg reported that a recent deal by Cheniere Energy Inc. to sell liquefied natural gas based on North American pricing (also known as Henry Hub pricing) means that it is difficult for Apache to find Asian customers to sign the long term LNG contracts needed to make the Kitimat project viable. (Asian LNG prices are based on the “Japan Customs Cleared Price” set by the Japanese government as a percentage of the price of crude oil).

Bloomberg quoted Calvert as saying: “It created quite a ripple through the marketplace,” and Bloomberg said, the Cheniere deal has created “unrealistic expectations.”

Related

Globe and Mail

Canadian gas producers dreaming big – again

Canada losing the race to sell LNG

Updated

The Haynesville Shale

Cheniere Deal Hurts Canadian LNG Project

Cheniere is less sensitive to prices given its role as a middleman, while Apache, Encana and EOG are producers, for whom the price is very important. One advantage of Kitimat is its west coast location, but that is only a minor cost advantage over Gulf Coast facilities.

The clock is ticking on Kitimat. It sounds like Asian buyers are sitting on the sidelines waiting for lower prices. Right now the U.S. government is sitting on future LNG approvals pending the release of a study around year-end. If the U.S. approves the pending applications, a proverbial flood of LNG will come to market with Henry Hub-based pricing. At that point Kitimat’s owners will be in a tough spot. Kitimat is vital to B.C., but the economics might not work.

Wall Street Journal

Cheniere Lights a Match in the Gas Market

Minor oil leak at Bish Cove

In a report to District of Kitimat Council, Apache’s Manager of Public and Government Affairs, Natalie Poole-Moffatt, also reported that on September 19, an oil leak was spotted on a piece of heavy equipment at Bish Cove. The report says;

WestCoast Marine was notified and booms were deployed as a preemptive measure in Bish Cove, no machine oil has migrated to Bish Cove. Environmental crews are on site executing a remediation plan. Both the [BC] Provincial Emergency PLan (PEP) and Aboriginal and Northern Affairs Canada were notified of the incident.

The piece of equipment is currently being repaired and will undergo operational tests to ensure the equipment can function without further concern. Environmental staff will remain on the site 24/7 until remediation is complete.

Kitimat LNG, Rod and Gun to consult on “legacy” fish and wildlife program at Bish Cove: NEB

Bish Cove, site of the KM LNG (Kitimat LNG) natural gas terminal, photographed on a stormy Sunday, Sept. 18, 2011. (Robin Rowland/Northwest Coast Energy News)

KM LNG (also known as Kitimat LNG) will consult with the Kitimat Rod and Gun club about creating a “legacy” fish and wildlife program at Bish Cove, according to the National Energy Board decision that granted an export licence for liquified natural gas to the partnership.

As part of its consideration of the social, economic and environmental aspects of the project, the NEB noted:

The Kitimat Rod and Gun Association requested that KM LNG and its partners establish a fish and wildlife “legacy” program for the area. In response, KM LNG committed to working with the Kitimat Rod and Gun Association to explore a partnership and stated it and its partners are committed to investing in the communities where KM LNG operates. KM LNG noted it already supported some community initiatives and would set aside funds to support others, after a positive investment decision.

KM LNG has hired the energy services company KBR to do a front end engineering and evaluation study of the project which is expected to be completed in December. The partners will then make the decision whether or not to go ahead with the project.

Mike Langegger of the Kitimat Rod and Gun, who made the presentation to the hearings in June, says the club has had some preliminary talks with the KM LNG public relations staff but so far there have been no formal talks about the legacy program.

In its presentation to the NEB, Kitimat Rod and Gun said it would ask KM LNG for a legacy fund that would be $7.25 million over the twenty-year period of the export licence. The money would be used to preserving fish, wildlife and habitat in the area around the natural gas terminal

Langegger says while it is uncertain if KM LNG will agree to the complete proposal, no matter what the outcome he wants all stake holders to be involved, with they are “consumers” (hunters and anglers) or “non-consumers” (naturalists) so that the habitat is maintained.

NEB decision on KM LNG application(PDF)

Kitimat Rod and Gun submission to NEB (PDF)

Kitimat fishers, hunters ask NEB for special conditions on KM LNG export licence

The Kitimat Rod and Gun Club Tuesday asked the National Energy Board to place special conditions on the Kitimat LNG project so as, in the words of Rod and Gun representative Mike Langegger, to preserve “the fish and wildlife values of the northwest,” from the “cumulative effects” of industry encroaching on the wilderness.

The board panel,which is considering the project’s application for a natural gas export licence, allowed Langegger to testify early in the proceedings, now expected to run at least until Thursday, because he has other commitments.

In response to a specific question from Lynn Mercier, presiding member of the board panel, Langegger asked that the NEB require the KM LNG partners, energy giants Apache, Encana and EOG, establish a joint committee with Kitimat residents, both First Nations and non-First Nations, to preserve the values of the wilderness around the liguified natural gas terminal.

He also asked that the energy companies create special funding “dedicated to fish, wildlife, and the environment…to maintain the fishing, hunting [and] recreational activities used by residents not just for now but for generations to come.”

The liquified natural gas terminal is proposed for Bish Cove, down Douglas Channel from Kitimat, an area that is currently still largely wilderness.

Langegger noted that crucial salmon breeding rivers flow into Bish Cove from the surrounding mountains. Bish Cove is also known as a habitat for deer and bears, both black bears and grizzlies.

He also asked that Kitimat residents continue to have access, as they do now, to the bush surrounding the proposed terminal “with no gates, no lockoffs.” Langegger complained to the board that Rio Tinto Alcan has, in recent years, restricted access to the Kitimat River estuary, near the aluminum plant, while once Kitimat residents had easy entry to the estuary.

Langegger said that Rod and Gun members and other Kitimat residents fear the cumulative effects of the destruction of the wilderness, and specifically that some of the past practices of the forest industry, which he said had a “huge detrimental effect,” could be compounded by the Kitimat LNG plant and other projects.

While not referring directly to the proposal, Langegger was bringing in the Enbridge Northern Gateway project, which is being considered in a separate National Energy Board proceeding.

Lanegger told the NEB panel that he hoped that “the new generation of industries coming [would] accept those values” of fishing, hunting and recreation.

Mike Langegger of the Kitimat Rod and Gun

club checks his notes while testifying before the NEB. (Robin Rowland/Northwest Coast Energy News)