Energy, environment and science in northwest British Columbia
Common Dreams blog
Just in time for Canada Day, Alberta Finance and Enterprise Minister Lloyd Snelgrove chose to exhibit why Canadian democracy is devolving into something akin to corporate rule (“Ottawa urged to get behind Enbridge pipeline,” Edmonton Journal, June 23). This particularly appears to be the case in the province of Alberta where, more often than not, it is government of the oil industry, by the oil industry, for the oil industry.
It will take more than year for the Enbridge Northern Gateway Joint Review Panel to complete hearings and taking evidence before it even begins to consider a decision whether or not to approve the controversial pipeline proposal.
In deciding if the Project is in the public interest, the Panel will consider whether Canadians would be better or worse off if the Project was approved. The public interest includes all Canadians and refers to a balance of economic, environmental and social considerations that change as society’s values and preferences evolve over time.(Emphasis in original)
The significance of any negative environmental and socio-economic effect is only determined after considering the actions that are proposed to prevent or reduce the effects. (Emphasis in the original)
The government response will set out whether the Government of Canada agrees or disagrees with the conclusions and recommendations made the Panel by the panel regarding the potential environmental and socio-economic affects of the Project. The Governor-in-Council [ the federal cabinet] must approve the government response. This approved response will be made available to the public.
The Panel will issue its Reason for Decision which will include a decision whether or not the Project is in the Canadian public interest.If the Panel decides the Project can proceed, its Reasons for Decision will include conditions that Northern Gateway must meet before, during and after the construction of the Project.
If the Panel decides that the Project should proceed, the Panel will send its decision to the Governor in Council who can either accept or reject the decision but cannot modify it.
The Governor in Council means the federal cabinet, so the final decision will rest with Prime Minister Stephen Harper.
Another big energy company is looking for a way to get its shale gas from northeastern British Columbia to the lucrative markets of East Asia.
Nexen wants to find a partner with expertise in producing and selling liquefied natural gas, said Marvin Romanow, chief executive officer. The Calgary-based company last month opened the books on its shale-gas resources for review by interested parties.
“We looked for folks with good contacts in LNG,” Romanow said
Canadian Press reported:
Nexen Inc. (TSX:NXY) is on the hunt for a partner to help develop its vast holdings in the Horn River Basin. LNG expertise would be attractive in a partner, but Nexen is open to a variety of marketing strategies for its gas, chief executive Marvin Romanow said.
“I think you want to think about treating your market access as a portfolio, not as a single killer strategy.”
So it is likely that Nexen and its prospective partners, whether from Asia or North America, will be next in line of “gentleman callers” making their way to Kitimat to check out Douglas Channel.
While we weren’t looking at shale gas five years ago, today we have captured significant resource potential-enough to double our current proved reserves-in the heart of one of North America’s best shale gas plays. We are improving productivity and driving down costs as we improve equipment utilization, drill longer wells and initiate more fracs per well.
Shale gas can be brought on quickly, fuels our short-term growth and complements the larger projects in our portfolio.
Webcasts from the CAPP conference
PDF of Nexen’s Powerpoint presentation. (On the Nexen investor page, lower right)
LNG World News
Progress Energy wants consolidated process for LNG projects in Canada
Progress Energy Resources Corp, which signed a C$1.07 billion ($1.09 billion) shale gas alliance with Malaysia’s state oil company, is pushing for a consolidated regulatory process for pipelines and liquefied gas export plants, its chief said on Monday.
A big driver for Progress’s deal with Petronas is a plan to build an multibillion-dollar LNG plant on the West Coast to take all of the shale gas production from the partner’s lands in the North Montney region of British Columbia….
Progress Chief Executive Michael Culbert said federal and provincial authorities should consider combining regulatory proceedings for multiple plants and pipelines, with so many proposals now in the works.
The current pipeline capacity to British Columbia’s Kitimat region is about 100 million cubic feet a day, far below what will be required to support an export industry, he told reporters after a speech to the Canadian Association of Petroleum Producers investment symposium.
Canadian Press
LNG terminals planned for West Coast have enough gas to go around: executives
Northeastern British Columbia’s shale fields contain more than enough natural gas to feed a myriad of West Coast export terminals in the works, energy executives said at an industry conference Monday.
But some say collaboration may be necessary to ensure the gas makes its way across the Pacific in the most cost-effective way possible.
Penn West president Murray Nunns …said he sees the various LNG proposals joining forces at some point.
“The scale of the initial projects at a (billion cubic feet) or two probably isn’t suitable relative to the size of the resource in Western Canada,” he told reporters.
“I think in the end, it may only end up as one or two facilities but I think they’ll be substantially larger than what’s been considered.”
Daily Commercial News and Construction Record
Liquid natural gas exports will need infrastructure push
A growing number of energy industry players are looking to connect plentiful supplies of natural gas on this side of the Pacific with ravenous demand on the other.
It will be costly and complicated to link production from northeastern British Columbia’s vast shale natural gas fields to Asian consumers, but it’s an undertaking several observers say is worthwhile.
Ralph Glass, vice-president at AJM Petroleum Consultants in Calgary, likens the task to the construction of Canada’s major railways and seaways…..
It’s clear to energy consultant Glass that there’s enough Asian demand to soak up Canadian supply, but he’s less sure about the logistics of connecting the two.
He said there currently is not enough pipeline infrastructure between northeastern B.C. and the coast to accommodate the volumes necessary for each of the proposed projects. Getting new pipelines approved and built can be a slow process.
New York Times
(Registration required)
Oil Sands Project in Canada Will Go On if Pipeline Is Blocked
One way or another — by rail or ship or a network of pipelines — Canada will export oil from its vast northern oil sands projects to the United States and other markets.
The oil sands have reserves of 171.3 billion barrels, according to estimates by the provincial government of Alberta.
So the regulatory battle over the proposed Keystone XL pipeline, which would link the oil sands to the Gulf Coast of the United States, may be little more than a symbolic clash of ideology, industry experts say. Even if the Obama administration rejects the Keystone plan, the pace of oil sands development in northern Alberta is unlikely to slow
The outlook for Pacific Northern Gas issued by Canada’s Dominion Bond Rating Service on Friday not only gives an indication of the financial health of the company, it also gives a window into what the financial markets think of the prospects for Kitimat and the region,
DBRS gave Pacific Northern Gas “Secured Debentures and Cumulative Redeemable Preferred Share ratings… BBB (low) and Pfd-3 (low), respectively, both with Stable trends,” DBRS said a news release dated June 10, 2011.
DBRS says that like all utilities, PNG has a stable financial outlook, but “it still has a higher level of business risk when compared with other DBRS-rated utilities.”
The DBRS report goes on to say:
Economic conditions in PNG’s Western system remain weak, but are showing signs of improvement, albeit at a slow pace. Signs of economic improvement in the region include Rio Tinto Ltd.’s (Rio Tinto) announcement of an additional $300 million investment on preconstruction activities for the US$2.5 billion proposed modernization of its aluminum smelter in Kitimat, B.C.; the proposed Phase 2 of a new container handling facility at the Port of Prince Rupert; and continued modest growth in the oil and gas sector in the Northeast system area.
The closure of the West Fraser Kitimat [Eurocan] paper mill in 2010 resulted in some loss of customers in the region, which was offset by the increase in customers in the Northeast system service area. Despite the challenges in the Western system area, PNG has been able to maintain a stable customer base.
In the longer term, the competitiveness of natural gas as a fuel and heating source still remains a key focus for PNG, especially in the Western service area; however, residential and commercial electricity rates are expected to rise in the near term according to BC Hydro’s Service Plan. The proposed electricity price increase and current low gas price environment are expected to keep PNG’s delivered natural gas rates competitive with electricity rates in PNG’s Western system.
DBRS also liked the fact that much of the money paid by the KM LNG partners for the Pacific Trail Pipeline was supposed to go PNG shareholders:
In March 2011, PNG completed the sale of its 50% stake in Pacific Trail Pipelines Limited Partnership (PTP) for a gross consideration of $30 million. The Company has declared special dividends of approximately $22 million, which represents all of the initial payment. A final cash payment of $20 million will be paid if the purchasers make a decision to proceed with the construction of the Kitimat LNG export facility in British Columbia.
There is no guarantee that the final payment will be made.
Going forward, if the net proceeds from the second payment are retained and reinvested in the Company, this could have a longer-term positive impact on PNG’s creditworthiness. However, the extent of any credit impact will depend entirely on the amounts to be retained and how they are reinvested.
But as the Northern Sentinel reported, the BC Utilities commission wasn’t so happy with the dividend, especially when it came to the PNG “transportation charges” it levies on consumers and businesses. The Sentinel says Pacific Northern Gas agreed to pay $500,000 toward the transportation charges to avoid a court fight with the BCUC, after the commission questioned why PNG was not passing on some of the money from the sale to lower the charges.
It should be noted that $500,000 is just six per cent of the $30 million net proceeds PNG received for the sale.
In the long term, the DBRS report says: “increase[d] utilization on its Western system, [has] the potential to increase PNG’s margins and lower the average cost of transporting gas for all customers.” “Increased utilization” likely refers to the various liquified natural gas projects that may make further use of PNG facilities.
DBRS says that PNG expansion and diversification plans could eventually lower its financial market risk profile:
“through electricity and renewable energy generation. In 2010, it acquired the 9.8 MW McNair Creek “run of river” hydroelectric generation facility in British Columbia for $17 million. It also recently formed Narrows Inlet Limited Partnership with Skookum Power Corp. to undertake an investment of up to $2.5 million to advance the Narrows Inlet Project to the start of construction. The $190 million project was awarded a 30-year energy purchase agreement with British Columbia Hydro & Power Authority (BC Hydro) in spring 2010.”
As some energy executives have come to realize, but others have ignored, high PNG natural gas transportation charges are one main reason that the industry is mistrusted, if not hated, across the political spectrum from right to left in northwestern BC, a political constituency that goes far beyond the environmental activists.
At every public meeting on energy and pipeline issues, there are always questions about the PNG transportation charges, even at meetings on the Enbridge bitumen pipeline, which has little do with the natural gas charges here (although Enbridge is a major consumer natural gas supplier in eastern Canada).
At the information meeting in Kitimat earlier this summer, Thomas Tatham, managing director of BCLNG Energy Co-operative, which hopes to build the second LNG terminal near Kitimat harbour, promised that his company, using PNG lines, would absorb the transportation charges for Kitimat consumers.
The full Joint Review Panel hearings on the Enbridge Northern Gateway pipeline are tentatively set to open in Kitimat in mid-January, 2012.
Knowledgable energy industry insider sources confirmed the likely dates and that the bulk of the hearings will take place in Kitimat to Northwest Coast Energy News Friday after a number of the participants in this week’s National Energy Board hearings on the KM LNG pipeline made inquiries locally about booking meeting rooms and hotel accommodation for several weeks in a stretch, beginning in early January, 2012.
The Joint Review website says: “The Panel will start meeting with participants on 10 January 2012 at locations to be determined.” During last winter’s National Energy Board pre-briefing on this week’s LNG hearings, NEB staff said the location to be determined was always chosen to provide the best opportunity for those involved to speak before the board. While there were fears in Kitimat that the LNG hearings would be held Alberta, those fears proved to be unfounded.
The Joint Review panel is now traveling across BC offering information sessions to the public.
Updated schedule here. It is highly likely that hearings, like the information sessions, will be held in as many locales as possible, but those will likely be mostly about local issues, with the bulk of the concerns before the Joint Review Panel hearings in Kitimat.
A NEB source cautioned that dates are always tentative due to other hearings, staff commitments (some of the KM LNG NEB staff are also assigned to the Northern Gateway hearings) and, as sometimes happens, the lawyers agreeing on postponements.
According to the official website:
The Joint Review Panel for the Enbridge Northern Gateway Project is an independent body, mandated by the Minister of the Environment and the National Energy Board. The Panel will assess the environmental effects of the proposed project and review the application under both the Canadian Environmental Assessment Act and the National Energy Board Act.
The Joint Review panel has much wider powers to hear issues than the NEB did this week in the KM LNG hearings, where the only issue on the table was the partnership’s application for a natural gas export licence.
