Northern British Columbia and Alberta's Oil and Gas Industry Vol. 1 Issue 3 • dIst: 20,275 march 25 • 2011 • Free North McElhanney recently celebrated its one hundredth anniversary, a record few can match in any industry. Above: A member of a McElhanney Land Surveys crew checks his GPS unit during field work in Western Canada. (Photo courtesy of McElhanney Land Surveys) in this issue: • a hundred years and mcelhanney Is stIll countIng • zIFF energy - black sheep oF the Industry • opportunIty knocks - FIrst natIons InVolVed In o&g www.inland-group-fsj.com
Transcript
Northern British Columbia and Alberta's Oil and Gas Industry
McElhanney recently celebrated its one hundredth anniversary, a record few can match in any industry. Above: A member of a McElhanney Land Surveys crew checks his GPS unit during field work in Western Canada. (Photo courtesy of McElhanney Land Surveys)
in this issue:• a hundred years and mcelhanney Is stIll countIng
• zIFF energy - black sheep oF the Industry• opportunIty knocks - FIrst natIons InVolVed In o&g
8 Opportunity knocks - First Nations involved in O&G20 One hundred years - and McElhanney is still counting
2 • PIPELINE NEWS NORTH I March 2011
To the Editor,
Our welding company has been in the business for 35 years and is a CWB certified company for all oil patch structural steel applications.
We’re on-call 24 hours a day, seven days a week, to service the demands of the oil patch. Any and all types of welding – Talisman, Devon, Progress, Cambrian, Suncor, ARC, ConocPhillips, Enerplus are just a few of the en-ergy companies that Meier’s Welding works for.
We work hard, long hours in the daylight and in the dark – minus forty to plus forty – and we live a good life with the opportunities the oil patch gives us.
If it weren’t for oil patch work, our company and our lives would not be as comfortable as they are today. We have good trucks to drive to work, a few toys – sleds, a boat, a few horses. Some of these items we would not have if not for the oil patch.
Where we would be without this kind of work, I don’t
know. I, for one, am grateful that we have this kind of job opportunity this close to home.
It would be nice to see a few natural gas fired elec-tric generating plants started up, too. We have a great quantity of natural gas in B.C.. We should have a dozen natural gas-fired electric co-generation facilities in this province. What a boost to our local oil patch and our electric grid!
The co-gen facilities could be installed near where most of the electricity is needed, providing new oil patch related jobs to operate co-gen facilities.
B.C. would be the end user of its own commodity – natural gas. We could even export surplus electricity, if there is any. With this type of steady supply, this type of facility could be built in a very short time.
Mark Meiers
Meiers Welding
Fort st. John, B.C.
profiles
technology
industry news
community
environment
safety
careers & training
special features
opinion
2 Columnist: Don Thompson2 Letters to the Editor
3 Steamlining -Alberta to create single regulatory body6 Sharing the info - OGC and APEGBC sign MOU6 New royalty credits for O&G10 Alliance Pipeline - two lines are better than one11 For sale - Encana lightens the load12 GMP Securities launches new junior O&G index 28 CNRL report
4 Let’s talk - Farmers’ Advocacy Office18 Sandra Apsassin - finding a way to work together28 Challenge - walk to Alaska
23 Saving the caribou - Alberta Caribou Committee
12 Geophysicist - an accidental 35 year career
24 Going digital - two companies working hand in hand
14 Ziff Energy - black sheep of the oil and gas industry
16 Keeping it safe - pipeline safety & public awareness
The escalating conflict in Libya has once again reminded us of the volatility of the oil market and the importance of having a secure and stable energy sup-ply. The International Energy Agency recently estimated that Libyan production thus far has been cut by between 850,000 and 1 million barrels per day. As a comparison, the oil sands output last year was just over 1.3 million barrels per day. While the market can generally bear this loss in the short-term, analysts warn of increased complications if the Libyan crisis is prolonged, or if there are further supply disruptions in other countries.
As consumers, we are reminded of the volatility on a more personal level every time we go to the pump. I must say that I found it a bit of a shock to be paying over $1.15 per litre with the dog days of summer still far in the distance. But it’s not only our gas budgets that are taking a hit. Small businesses, charities and air travel-lers all feel the pinch of rising fuel costs.
As I recently saw on Global TV, Calgary-based airline
Westjet has seen a 33 per cent rise in jet fuel – translat-ing to an additional $200 million in costs.
Politicians in the United States have also taken note. Last week, Republican Senator Richard Lugar was quoted as saying: “volatile oil prices are a threat to United States’ economic recovery, and dependence on foreign oil limits our foreign policy choices. The State Department must work to diversify supply routes and boost our energy trade with reliable and transparent allies such as Canada in place of shaky and sometimes hostile suppliers.”
U.S. Secretary of State Hillary Clinton also said she is “generally supportive” of increasing American oil imports from Canada.
It is unfortunate that it takes these types of events to serve as a reminder that Canada is a safe, secure and friendly energy provider. Most Canadians do not give energy security a moment’s thought....we simply take energy for granted. The fact is, without the 179 billion barrels of oil reserves Canadians sit on, energy secu-rity would very quickly become a national concern in a country with very cold (and long) winters.
Bear in mind that Canada also has a resource and export driven economy that must transport its goods to markets over vast distances. If it weren’t for ongoing energy development, Canadians would be exposed to even more dramatic cost increases when it comes to food, home heating, transportation and other goods. It could even result in fuel shortages.
I believe that we can all be comforted by the fact that Canada is an energy producing nation – not only oil rich but endowed with many other sources of energy includ-ing coal, natural gas, hydro and nuclear power. We should be grateful for the entrepreneurism and technical talent of Canadians who have brought these sources to use and made Canada what it is today...an energy secure country.
For more information, please visit www.oilsandsdevel-opers.ca.
Does Canada have energy security?
opinion
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McQueen said during the press confer-ence. “The other piece of that is providing a clear public engagement process. And that’s certainly an area that the environ-mental NGOs asked us [about] in the beginning of the consultation – they felt that on the bigger policy discussions … there wasn’t enough opportunity for them to have engagement in that piece.”
“We met with all groups individually to start with, and then collectively,” she added. “What they told us was the cur-rent system was complicated – and that didn’t matter if that was a landowner or an NGO or a First Nations.”
McQueen also noted that the existing regulatory process that causes problems for oil and gas companies is just as ir-ritatingly time consuming for other groups who have to sift through the applications in order to ensure that their concerns – such as environmental concerns – are also being met.
“You go through that whole process that may take a year or more with ERCB,” said Liepert, discussing those same regulatory issues. “Then you have to turn around [and] take that certificate that the ERCB issues, go to Environment [and] start the whole process over again. This could happen three or four times within govern-ment. And it just seemed to me to be a
real waste of time.”“When you have one regulator and one
window where you’re actually going to have the consultation [and] the application go to,” said McQueen, “it makes it more efficient, not only for industry, but certainly for all of the stakeholders who need to interact with regards to the applications.”
Dallas also discussed those benefits of the Task Force’s recommendations.
“Where there’s potential opportunity here in terms of enhancing environmental and social policy is in the area of surfac-ing what gaps there might be between the kinds of … government policy that the regulator is interpreting and implement-ing, and how we can bring more clarity to some of those decisions that the regulator will be making by providing a better un-derstanding of the macro-picture in terms of the umbrella of policy in all areas – air … management, water, issues around land use framework and the like – and make sure that the regulator has an op-portunity to feed in questions – issues that are perhaps emerging issues as we adopt new technology and opportunities – into that discussion around the broader policy development. So, I actually see this as an opportunity to do a better job in the area of ensuring environmental sustainability,”
The Province of Alberta has decided to move toward creating a single regulatory body for its oil and gas industry.
This decision has been made in response to the recommendations of the Regulatory Enhancement Task Force that was formed in March, 2010. The Task Force itself was formed in response to the results of a Competitive-ness Review of the oil and gas industry in that province that was conducted last year and determined that the regula-tory system was becoming too complex and convoluted to ensure the continued prosperity of Alberta’s energy sector in the global marketplace.
“There were two main elements to the Competitiveness Review recommenda-tions,” said Energy Minister Ron Liepert during a January 28 press conference to discuss the government’s plans to adopt the recommendations put forward by the Task Force.
“One was that we needed to revise our fiscal framework – and we did that last spring. But the second one, and it is one that I’d heard more from industry prob-ably than I did around the fiscal frame-work, and that was the regulatory barri-ers that had built up over the years in the province in the oil and gas industry. And there was also, I must say, some scepti-cism from industry that we would actually … drag this thing over the goal line.
“There have been attempts made on numerous occasions in the past to make Alberta’s regulatory system more user friendly, and I don’t think they have always been very successful. One of the first things that (Sustainable Resource Development Minister) Mel Knight and (Environment Minister) Rob Renner and I did was make the determination that we needed to put the political stamp on this.”
Consequently, the parliamentary assis-tants from those three departments were appointed to the Regulatory Enhance-ment Task Force, led by Parliamentary Assistant to the Minster of Energy, Diana McQueen. Their mandate was to develop
recommendations for guaranteeing the efficient execution of oil and gas busi-ness while maintaining high industry standards and a commitment to promot-ing solid environmental practices.
The Task Force developed those recommendations through three ses-sions held from April to October, 2010 in which all forty-seven First Nations in Alberta were invited to participate, along with various other stakeholders including landowners, municipal govern-ment officials, environmental and other non-governmental organizations (NGOs), the upstream oil and gas industry, the Energy Resources Conservation Board (ERCB), and ten relevant provincial gov-ernment departments.
The measures put forward by the Task Force encourage improvements in a number of areas such as policy clarity, public engagement, industry and government accountability, information sharing among stakeholders, and risk assessment and management. The Task Force also calls for the creation of a policy management office to work toward integrating natural resource policies.
Perhaps the most significant element of the Task Force’s report – which is possibly the most controversial aspect as well – is the suggestion that the province should create a single regulatory body to deal with oil and gas industry applica-tions and approvals.
The controversy revolves around the idea that streamlining the regulatory pro-cess may actually eliminate environmen-tal checks and balances in the interest of green-lighting applications as quickly as possible.
However, McQueen and Sustainable Resource Development (SRD) Parlia-mentary Assistant, Cal Dallas – who was also a member of the Task Force – both insist that the measures endorsed by the Task Force are also an important step toward protecting the environment in regions of oil and gas development, par-ticularly by encouraging public engage-ment and establishing a policy manage-ment office devoted to integrating natural resource policies. According to McQueen and Dallas, those two elements of the recommendations go hand-in-hand.
“That’s an opportunity as policies are being developed for anyone – any Alber-tan – to have an opportunity for input,”
March 2011 I PIPELINE NEWS NORTH • 3
james watermanPipeline News North
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industry newsstreamlInIng- alberta to create single regulatory body
The conference room of the Farmers’ Advocacy Office in Dawson Creek had just seen three straight days of mediation and arbitration involving the Surface Rights Board that Friday morning in February.
One of the advisors with the FAO, Elvin Gowman, was away from the office that day, attending yet another mediation in Fort St. John, this time with the National Energy Board (NEB). The other advisor, Anne Clayton, had just returned from the neighbouring St. Marks An-glican Church, where she had been assisting with preparations for a Greek feast to be held at the church that weekend, the trace evidence of her culinary work still visible on her sweater.
The mo-ment was a fitting reflection of the important role that the organization and its staff have come to play in the community of northeast British Columbia during its few short months of operation.
“Apparently, it was ten years in the making,” said Clayton, discussing the origins of the FAO, initially proposed by the Peace River Regional District and Peace River South MLA Blair Lekstrom as a response to increas-ing oil and gas industry activity in the region, particularly in terms of addressing one significant problem: the general public did not have the necessary knowledge to deal with oil and gas companies when negotiating items such as surface rights agree-ments involving their properties.
The FAO officially opened its doors on October 7, 2010, just three days after the Province’s new Oil and Gas Activities Act (OGAA) was implemented. It was good timing for the FAO and those landowners who have required their support. OGAA includes a new consulta-tion and notification framework that outlines the responsibilities of energy sector companies and the rights of landowners who may be affected by industry activity when companies are planning to build new infrastructure or facilities such as roads, pipelines and well pads. Many landowners are still not aware of those changes, a fact that has allowed the FAO to immediately demonstrate its worth to the community.
“They measure the radius [of a circle] from the centre of the well pad,” said Clayton, describing one example of how that new consulta-tion and notification process is put to work as far as establishing a dialogue between companies and landowners who live on or near the land where a proposed facility is to
be built. “If [the landowner’s property is]
away from it, they just get notification of it. If they’re within the radius of the circle, they are invited to consult. So, they will receive this [consultation] package, and they have twenty-one days from when they receive it to file, if they have any objections, a stake-holder written submission form. And it may be that they’re only concerned about the operation’s impact on their water well. So, they would write this concern … and they would file a copy with the company and they would file a copy with the Oil and Gas Commission.”
“Well, since the Oil and Gas Activi-ties Act is new,” she continued, “they don’t always know about this. So, they will get their package, if they’re
fortunate enough to get one, and they will say, ‘Oh, what do I do with it?’ So, that’s a service we provide. They will come in here. If they are computer literate, we will just sit them in the computer station at the back and give them the [internet] links how to get there and what to do. If they’re not [computer literate], we will actually sit down and help them fill out the form and tell them where to take it and what to do with it. So, that’s one thing we do.”
“Another thing we do is, if they’ve got an offer from an oil and gas company for a surface lease or a right-of-way, and they want to know: ‘Is that appropriate value? Are they paying us enough?’ We will help them to access information that we have here about other surface lease rates in the area. And that gives them a tool to know if they are being treated fairly or not.
“We will sometimes find that they don’t get the consultation package. They’re just asked to sign. So, we will let them know they should have received it and let them know they don’t have to sign until they’ve re-ceived this and had their opportunity for input.”
Clayton has noticed and under-stood the difficulties that the Oil and Gas Commission has faced in trying to educate rural landowners such as farmers and ranchers about OGAA. The Commission has held OGAA open houses throughout the region, but apart from the information ses-sion held at Groundbirch just after Christmas, they have been poorly attended.
“The one that I attended was in Pouce [Coupe] and there were three people,” said Clayton. “Now, could have been the time of year, but a problem that we find is rural
residents don’t necessarily take the newspaper and they’re not neces-sarily listening to the radio. Well, how else do you reach them?”
“I felt really bad,” she added, “because there was very good infor-mation there … They were there to answer questions. So, landowners could have learned a lot by attend-ing. It was really poorly attended, despite their best efforts.”
Groups such as the regional chap-ters of the British Columbia Cattle-men’s Association and the British Columbia Bison Association have asked the FAO to help teach local landowners about OGAA and so the FAO has delivered five presentations throughout the area to date, always taking information about the legisla-tion provided by the Commission.
The FAO also allows local land-owners groups and other stakehold-
er organizations to hold meetings in their office, in addition to
providing a neutral location for meetings with land agents.
“They do much prefer it,” Clayton said of the option
to meet in a neutral location. “And some
of them like to have one of our advisors sit in with them.”
Clayton feels it is important to offer landowners that option. “People sometimes feel threatened when the land agent comes and is in a hurry to get their signature on something,” she said. “And they’re in their home. They’re farming. They’re busy. You know, it could be a very busy time in their farm operations. So, it’s important that they can book this facility and book it at their convenience.”
The Surface Rights Board also books the space for mediations even when the FAO is not personally involved in the proceedings.
The FAO is even hoping to use the office for training sessions.
“We’ve got plans to put on a map-ping training session to show people how to use the free mapping that’s available on the government sites when they’re preparing to go to me-diation or arbitration with the Surface Rights Board,” said Clayton.
However, following through on those plans, not to mention continu-ing to provide the services that the FAO currently offers, depends on the pilot project being extended beyond its eighteen-month contract with an initial budget of $240,000 supplied by the Peace River Regional District and the Province.
“One would like to think that it’s meeting a need,” said Clayton, dis-cussing the possibility of a long-term future for the FAO. “And we believe it is, because of the number of people who come through our door. And the activity is far more than we anticipat-ed. However, things can be political, and you don’t always get the part-ners putting in the money. I’m pretty convinced the regional district would support it. Whether the [provincial] government of the day will or not, we don’t know.”
let’s talk- Farmers’ advocacy Officejames watermanPipeline News North
Submitted by Jeannette and Al KarasiukThe Petroleum Association Midget Fly-
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6 • PIPELINE NEWS NORTH I March 2011
The BC Oil and Gas Commission and the Association of Professional Engineers and Geoscientists of BC signed a Memorandum of Understanding on January 24 designed to ensure that engineering work in British Columbia – particularly as it relates to the oil and gas industry – continues to be of the highest quality.
The main thrust of the MOU is in the area of sharing informa-tion between the two organizations that will assist APEGBC in matters related to licensing, registration, investigation and disci-pline of engineers and geoscientists in the province.
“Mostly around competencies and registration,” said Ken Paul-son, Chief Engineer and Deputy Commissioner with the Commis-sion, discussing the types of information to be shared as per the MOU. “So, competency of practice and registration, as well as investigations which we or APEGBC may undertake.”
“It gives us a more robust picture of how engineering is being practiced here in the province,” he continued. “I mean, the [Engi-neers and Geoscientists Act] under APEGBC essentially ensures that engineers and people who are practicing the professions of engineering and geology here in the province of B.C. are regis-tered and, in fact, are demonstrating professional competency.
“So, if we come across issues where someone is practicing engineering in British Columbia without being registered in British Columbia, that’s the kind of information we might be able to share with APEGBC. The other would be if we come across repeated instances of errors or omissions in submissions to us, which imply some concern about the competency of the individual. Then that’s again information that we could share. Similarly, if they were supporting a disciplinary action against a member of APEGBC for practice outside of their recognized scope of exper-tise, that’s information that they could provide to us.”
Derek Doyle, CEO of APEGBC, stresses the importance of the MOU in terms of sharing the necessary information to ensure that B.C. engineers are operating within their level of competency and area of expertise, as well as investigating instances where that may not be the case.
“Let us say that [the Commission] received a number of sub-missions from a professional engineer or professional geosci-entist,” said Doyle, “and the people reviewing it said, ‘This isn’t done correctly. This isn’t competent.’ So, they would [contact] us and say, ‘You know, so-and-so filed drawings and a design with us which is absolutely not up to snuff. It’s incompetent.’ So, what we would do then … is we would serve notice to the member and we’d go out with a competent engineer in that particular area of expertise.
And we’d review that person’s practice. We’d go in and review their files, discuss with them how they’re doing their work, inquire as to where they’ve acquired the expertise so we can satisfy our reviewer that they indeed have the training and competency to do the work, and point out to them that: ‘Look. If this hadn’t been caught, you would be causing risks to the public … If you’re not fully competent, you get a colleague to work on those aspects, and you work on the areas where you’re competent. Because we
james watermanPipeline News North
want to assure the public that the people doing the work are technically competent.’ And so we can get information back from the oil and gas regulator. We look at similar things with other regulators. Because we see huge benefits to collaboration between regu-lators to bring benefits to the public.”
In fact, protecting public safety is a major compo-nent of APEGBC’s mandate.
“The Association of Professional Engineers was established in 1920 by the government with the purpose of upholding and protecting the public inter-est in all engineering work,” explained Doyle. “So, the reason why we’re in business is we’re in the protection business. Now, in order to do the best job we can on that, we need to get feedback from other regulators. So, we go to [the Commission] and we say to them, ‘What problems are you experiencing in doing your duty in terms of oil and gas develop-ment and pipelining?’ So, if [the Commission] tells us [they] see a lot of problems with how people con-duct the preparation of, let’s say, emergency plans, than we’d say, ‘Okay. Let us design a program to teach people how to do better emergency plans. And we’ll collaborate on it because we’re the regula-tor of the individuals and you’re the regulator of the actual work.’ And that’s really … the driving force behind this [MOU].”
According to Doyle, the MOU, which has been in the works for almost a year, actually arises from
an instance of collaboration between the Commis-sion and APEGBC with respect to the various ways in which companies were submitting their as-built drawings of facilities such as pipelines to the Com-mission.
“So,” said Doyle, “we worked on a guideline here for professionals preparing as-built drawings – a general guideline. And we shared it with [the Com-mission]. And their chief engineer said, ‘This will meet our needs perfectly,’ and so they put it up on their website and said, ‘Here’s the rules on how you submit as-built drawings to us in the future. And you’re following what your profession has developed – APEGBC.’ So the public is the [beneficiary] of all of this work. And coming from that, what we saw was that we should do this in a lot more areas. So we went to work on developing the agreement.”
Doyle believes this new level of collaboration is a result of the maturing of the oil and gas industry in B.C. He points to the way in which the staff has grown at the Commission in the past five years as proof of the Province’s commitment to addressing the issues that come with oil and gas activity, par-ticularly considering that the number of wells being drilled has remained fairly constant during that same timeframe.
sharIng the InFoindustry news
- OgC and apegBC sign mOu
new royalty credits for oil and gas
A total of $120 million in royalty credits is now available to oil and gas companies working in British Columbia as part of a new phase of the Ministry of Energy’s Infrastructure Royalty Credit Program, announced on February 17.
The purpose of the program is to spur investment in roads and pipelines to help create new jobs and continue moving the provincial economy forward.
Through the program, companies can apply to receive credits on royalties that resource operations have to pay to the government in order to recover as much as fifty per cent of the cost of infra-structure projects. In turn, the province benefits from improved access to remote areas, as well as the revenue generated by year-round oil and gas activity.
“We’ve been very successful at lever-aging investor capital to generate ad-ditional royalty revenue for the Province,”
said Minister of Energy Steve Thomson in a statement.
“Not only does the program help cre-ate more year-round jobs, [but] it results in higher revenues that fund critical pro-grams like education and health care.”
The Infrastructure Royalty Credit Pro-gram, instituted in 2004, has contributed to almost 180 road and pipeline projects in the province, accounting for over $1 billion in capital investment.
The government anticipates that it will lead to about $240 million in new capital spending by the energy sector in B.C. in 2011, one of the key drivers of the provincial economy.
The industry is pleased with the Prov-ince’s efforts along those lines.
“The government’s royalty credit programs are a major force in the growth and success of B.C.’s natural gas sec-tor,” said David Pryce, Vice President of Operations for the Canadian Association of Petroleum Producers (CAPP), in a statement.
“It’s a very competitive industry and it’s innovations like the Infrastructure Royalty Credit Program that help keep industry investment focused on B.C.”
The Ministry of Energy is accepting applications for the 2011 Infrastructure Royalty Credit Program until April 14. •
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March 2011 I PIPELINE NEWS NORTH • 7
“And so you say, ‘There’s a lot more attention being given to details. A lot more consultation going on.’ I know myself that … the consultation that goes on with communities and First Nations around oil and gas development is now a very formalized process. And there [are] agreements in place with each of the Treaty 8 First Nations about how oil and gas will be developed so that it can take into account their environmental values and their heritage values that are there on the land. I think that the industry, both the company and the regulator, are really getting much more professional as time goes by,” said Doyle.
The MOU, Doyle explained, is another tool to en-hance that consultation, including the role of APEGBC in that process. Particularly, the MOU may assist APEGBC deal with complaints from the public about the work of the province’s engineers and geoscientists when they occur.
“We will receive complaints about how engineers and geoscientists behave in their work,” said Doyle. “And so that’s one area of complaint. Then the other area of complaint is people don’t feel that some work was done competently. And that is their technical skills. And again in those cases we will go out and examine the record and the situation, but we’re always using other professionals who are knowledgeable and competent in that area.
“We don’t have a bureaucracy to do it. We go to practicing members who practice in that area and say, ‘We’re asking you, as a member of the profession, to go and review this complaint.’”
“We run a very open and transparent complaint process,” he continued. “If people send in a complaint letter, we immediately appoint a professional … in that topic area … to review the complaint. And if we see, from that complaint, that the person needs to, let’s say, improve their competency skills, than we will re-quire them to maybe take courses or attend seminars or instruction, or to work with a colleague in improving their skills. If people are really incompetent, we can remove their licenses and say, ‘You’re not licensed to practice anymore.’ That’s a very rare occurrence, but we do it.
“And then we have a whole process of practice reviews. On a random basis, we go out every year, and we’ll go into someone’s practice and say, ‘We’re here. Our professional reviewer is here to see how you actually do your work. We’ll be checking your logs and books and files. And we’ll give you advice how to improve your practice and improve the quality of your engineering.’ And if we find – in a particular sector of the people we look at – if we find problems, than we go to deal with those problems, not only individually, but also at the general level through guidelines and standards … seminars, courses.”
Feedback about the competency of engineers and geoscientists, which may come through the Com-mission as per the information sharing portion of the MOU, shows APEGBC what issues need to be addressed at an industry-wide level through the sort of seminars and courses that Doyle mentions. That feedback also dictates the content of the seminars and courses.
It is all in the interest of accountability, which is obviously something that Doyle and APEGBC take seriously.
“You have a seal that you’re issued,” said Doyle. “And I like to use the seal as sort of an acronym. The S saying it’s safe. The E saying it’s been done in an ethical way; we’ve conferred and consulted with the
people affected. A: I am accountable; I have no excuses, because my commitment is to uphold and protect the public interest. So, I’m accountable. And the L is that it’s done legally. So, that, in essence, is the warranty that the professional engineer puts on her or his work.”
The question that may be on the minds of many observ-ers of the oil and gas industry in northeastern B.C. is how these standards – and how this new MOU might serve to uphold those standards – apply to Alberta-based energy companies that may be employing Alberta-based engi-neers. The simple answer is that Alberta-based engineers must register to work in B.C. According to Doyle, there are about 600 Alberta-based engineers registered to practice in B.C., many associated with the energy sector.
“We have mobility arrangements with the engineering profession all across Canada,” he said. “And if you’re an Alberta engineer and … you need to work in British Columbia – you just won a project – it will take you three days to be registered in B.C. So, we have full mobility in professional engineering and geoscience across Canada. But they do have to be registered here.”
“As a regulator,” Doyle continued, “we go to some of the
oil and gas conferences and shows in Calgary. And we’ll have a booth there to talk about what our experiences are with engineers, say, in the oil and gas sector, and areas where we can see support and improvement can benefit everybody.”
Doyle repeatedly returns to how the MOU can help the APEGBC protect public safety.
“The one thing I would say is the profession has as its very core, its reason for being, the thing that influences all council decision-making is: are we upholding and protect-ing the public of British Columbia?” said Doyle. “And we do that whether we’re dealing with geologists, developing mines or putting out reports on the quality of mining prop-erty for the public to invest in, or whether we’re looking at how people go about developing safely their drilling processes for drilling oil [and] gas wells in northeastern British Columbia.”
“There are many different associations that can work and represent different things. And they can be sort of business or profession promotion groups. We’re not in the profession promotion business. We’re in the public protec-tion business. Same as the Oil and Gas Commission.” •
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BC Oil and Gas Commission Chief Engineer Ken Paulson and APEGBC President Frank Denton shake hands on a new Memorandum of understanding between the two organizations on January 24, 2011.
The Fort Nelson First Nations are making their mark in the oil and gas industry in the Horn River Basin through a handful of companies and business partnerships.
Their ventures are diverse, ranging from construc-tion companies and catering services to arrangements that essentially allow them to be landlords of the work camps in the region.
The latter describes the partnership between the Fort Nelson First Nation and Black Diamond, known as Black Diamond Dene.
“Black Diamond was already a large entity in Fort Nelson,” said Steve Stein, Vice President and COO of the company whose business is ownership of industry work camps.
“We don’t cater them, but we own the camps,” he continued. “We’re sort of a landlord of remote sites. And this was a good business for the Fort Nelson First Nation. It’s very visible. It’s on their traditional lands all throughout the Horn River Basin. And it makes a lot of sense. And for Fort Nelson First Nation, they weren’t looking really for the employment side of things. They were looking for sustainable income for the band.”
The partnership started when Black Diamond first made contact with an advisory group to the Fort Nelson First Nation and its chief, Kathi Dickie, and is comprised of Mel Benson, Shane Parrish and Harvey Behn, a councillor with the Fort Nelson First Nation, as well as general manager of Eh Cho Dene Enterprises.
“We started talking to Fort Nelson First Nation,” said Stein, “saying, ‘If we partner together, we probably get more work than staying apart.’”
So, Black Diamond began discussing with them how that limited partnership would work.
“The struggle we had with Fort Nelson First Nation at the beginning was their lack of capital,” said Stein, “and we’re a capital intensive company because we just own camps. We don’t really operate them. So, it’s a fairly de-tailed agreement on how we can start building long-term equity for Fort Nelson First Nation with a partnership – not just your typical percentage royalty regime where it dries up the moment there’s no work. This is, they gain equity in actual structures with us, and we can remarket them after the first rental term. And they own it. So, we muddled our way through that, and that’s sort of how we started.”
Stein emphasizes that these are not deals to be entered into lightly.
“They have to be real,” he said. “There’s lots of soft partnerships out there.’”
“To be honest,” he continued, “they’re a lot of work. For us, we’ve got two main partnerships. We’ve got our Black Diamond Dene, which is our Fort Nelson First Na-tion partnership. And we have a new partnership … with West Moberly [First Nations]. And both those partner-ships, they take a lot of time and effort, communication-wise, trust-wise. For us, we like just to prosper and have better foundations of those relationships than a whole bunch of them. For us, it’s really time consuming, and if you don’t put the work into it, it will fail.”
According to Behn, the Fort Nelson First Nation was excited about the opportunity to work with Black Dia-mond in that manner.
“First of all, they’re world class,” he said. “They’re hard workers, go-getters, innovative, relentless – you know, all those characteristics of a good company.”
“In terms of partners,” Behn added, “they’re a good, honest, hardworking, straightforward kind of group.”
The goal of the Fort Nelson First Nation has been to find a way to participate in industry activities in the
region in order to benefit economically, while also en-couraging responsible development of the resources.
“We want to participate in the development,” said Behn. “That’s very important. So, how we do that is by, say, for example, Eh Cho Dene actually getting out there and building the plants ... or putting in their roads or putting in their campsite or their pipeline. We want to participate in that activity.
“So, we’ll derive all sorts of benefits from that, like employment, training, education. All those things. Plus, make a profit at the end. That’s one way of participating directly. The second way is to partner up with individuals or companies that are reputable, that are good compa-nies like Black Diamond.”
Eh Cho Dene is a construction company, established in 1980 and fully owned and operated by the Fort Nel-son First Nation. Its staff is split fairly evenly between Fort Nelson First Nations, other aboriginal groups such as Metis and Inuit, and non-native employees from the larger Fort Nelson community.
“Oil and gas has always been the core,” said Behn. “And forestry was a big part while it was here. And then when it shut down, then we just shifted – you know, seamlessly shifted – into exclusively oil and gas.”
“Before it was just roads and leases,” he added. “Now it’s gas plants, hydro stations, and right-of-ways. So, we’re sort of branching out a little bit.”
Business was not always booming for Eh Cho Dene, but they have been able to grow considerably in recent years, largely owing to their steadily improving reputa-tion and relationship with the oil and gas industry.
“We do good work,” said Behn. “We’re very safe. We’re a very safe company. And our prices are reason-able. So, those three – you know, the holy trinity of getting work.”
8 • PIPELINE NEWS NORTH I March 2011
james watermanPipeline News North
COntinueD PG 9
special featureopportunIty knocks- First Nations involved in O&g
A member of Snake River Energy Services kitchen staff prepares bread for oil patch workers staying at one of their camps.
(PHOTO COURTESY OF SNAKE RIVER ENERGY SERVICES)
March 2011 I PIPELINE NEWS NORTH • 9
Eh Cho Dene employs about 160 people during the winter peak, but their workload is now fairly consistent throughout the year due to the increase in year-round oil and gas activity.
“Normally, we’d have a [spring] break-up,” Behn ex-plained. “And that really doesn’t exist anymore because of the techniques and the kind of work, and also the access to remote areas.”
Many of their employees are what Behn calls “hand-raised” workers, interested young people who have been given training and experience in a variety of entry level po-sitions. They also work with the North East Native Advanc-ing Society (NENAS) to bring in entry-level workers from their programs.
nEnAS has recently signed a new five-year Aboriginal Skills and Employment Training (ASET) agreement with the government. NENAS Executive Director Audrey Sam explained that the agreement is designed to “build capacity and to train aboriginal people within the northeast region and match them to employment opportunities.”
“And so part of that training involves apprenticeship and skills development training,” she added. “And so NENAS works with industry in terms of identifying job opportunities that could be coming up, if there’s a major project that’s going to be happening within the Northeast. What we do is, we work with industry and we identify what kinds of training opportunities there would be.”
Audrey believes that aboriginal youth – and youth in general – have a tremendous opportunity to get involved in industries such as the energy sector because the baby boomer segment of the workforce will soon by retiring.
“And we have a growing youth population,” said Sam. “And, in particular, aboriginal youth is increasing … And so I think there’s a real opportunity to look at training our youth and getting them steered in the direction of apprenticeship and trades. Because, I think, in the past, what we’ve done is we’ve tried to steer youth into career ventures, like look-ing at longer term training for university-type skills and skill development. But I think that we’ve overlooked steering them in the direction of apprenticeship and trades, because that’s a huge area. And, you know, they’re good paying jobs. And especially in the Northeast here when we’re look-ing at oil and gas.
“Then there’s the mining, and all of these other projects that are coming up with the Horn River Basin, and different opportunities with new developments within the Northeast. We need to make sure that we don’t’ miss the boat and aboriginal people are trained so they [can] be competitive for filling these job opportunities.”
Falcon Contracting is another First Nations owned and operated construction company in the region. It is owned by Zane Pickering, who also operates Snake River Energy Services. About seventy per cent of the employees of those two companies are aboriginal.
“Falcon Contracting is a general contractor,” said Opera-tions Manager Lisa Girard. “And both companies are lo-cated in Fort Nelson. And so, Snake River, we provide the whole camp and catering service. So, our other company can assist with setting up the camps, because we have all the heavy equipment on the construction side of things.”
Snake River Energy is not simply in the business of setting up camps, however. They also provide an array of support equipment and services in addition to employing the kitchen staff responsible for the meals served at their camps.
Like many small, local companies in northern B.C. com-munities, they have had their troubles making themselves known to oil and gas companies based in Calgary, but they feel that the energy sector is becoming increasingly aware of their presence in Fort Nelson and the quality products and services that they offer, thanks in part to a recent em-phasis on hiring locally.
“There is awareness,” said Girard. “And that is increas-ing.”
Ultimately, Snake River Energy is only looking for a fair opportunity.
“Obviously, we can’t serve the entire market,” said Gi-rard, “but a little piece of the pie is all we’re looking for.”
Girard believes that companies such as Snake River En-ergy and Falcon Contracting are helping to bridge the gap that may exist between native and non-native people. She feels that industry takes the values of First Nations people more seriously when First Nations become involved in the industry in a practical way.
Also, Snake River does its part to expose the Fort Nel-son First Nation to the industry side of the relationship by inviting Band Council to visit the camps that they operate, giving them a sense of the work that some members of their community are doing with the industry.
“There needs to be that communication and that involve-ment,” Girard said of fostering a good relationship between
the two sides. “To have confidence, you need to build a trust between industries and First Nations.”
Girard has seen that relationship improve over the last few years.
“You need to make sure that the concerns are be-ing addressed,” she added. “You don’t want to have a cynical sort of view or have people thinking, you know, they’re just coming in here and taking our resources and then they’ll be leaving. I think that’s a concern – well – everywhere, but a concern here, too. So, what are you doing to work with us? How can we have a win-win relationship? That’s ongoing. And I think that has improved.”
The phrase that is often repeated by the manage-ment of these companies is “responsible development.” The Fort Nelson First Nation views protecting the environment as an important element of First Nations involvement in the oil and gas industry.
“By us being out there, we’re imparting our values on the activity,” said Behn, discussing his community’s relationship with the land and the role of Eh Cho Dene in conveying their values to the industry.
“We take that personal,” he added, referring to en-vironmental degradation in their territory. “We’re there. We’re involved.”
“That’s one thing that we bring to the table, as a com-pany, as First Nations people. We bring that sensitivity.”
However, Behn also believes that the energy sector now enjoys the challenge of trying to find ways to do their business in an ecologically responsible manner, just as much as they are growing to appreciate the land on which they work.
“At the end of the day,” said Behn, “they’re people like us, right? They want a clean environment. They want a safe environment. I mean, that’s kind of how I view it.” •
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opportunIty knocks- First Nations involved in O&g
Below: Falcon Contracting staff hard at work in the Fort Nelson area. Falcon Contracting – along with Snake River Energy Services – is one of two companies owned and operated by Fort Nelson First Nation community member Zane Pickering.
PHOTO COuRTESY OF FALCOn COnTRACTInG
Above: Workers from Eh Cho Dene Enteprises, a construction company completely owned and operated by the Fort Nelson First Nation, building a road for a major gas company in the Fort Nelson area.
PHOTO COURTESY OF EH CHO DENE ENTERPRISES
10 • PIPELINE NEWS NORTH I March 2011
allIance pIpelIne- two lines are better than one
Alliance Pipeline is early in the consultation process of a proposal to construct 60 kilometres of new pipeline infrastructure in northeast British Columbia and northwest Alberta.
The initial plan to build 15 kilometres of pipeline paral-lel to the existing system that runs from the Septimus meter station near Taylor, B.C. to the Blueberry com-pressor station near Gordondale, Alberta has been expanded to 60 kilometres to manage the receipt of growing volumes of sweet natural gas that companies are producing in the Fort St. John area. The proposed project – known as a pipeline loop – is designed to increase the existing system capacity by essentially doubling the amount of infrastructure between those two points.
“Part of the commercial interest that underpins this project relates to Alliance’s nGL (natural gas liquids) advantage,” said Rob Gray, Senior Communications Advisor with Alliance Pipeline. “The Alliance system is optimized to ship liquids-rich natural gas with nGL processing facilities in place at the terminus of the pipeline, via Alliance’s affiliate, Aux Sable. Together, the two entities provide shippers with a value-added trans-portation option unique to North America. The ability to ship nGLs within the gas stream provides for a higher energy value, which reduces the volumetric cost of transportation. This provides a direct economic advan-tage to our shippers. Shale gas, such as that produced in the Montney, tends to be rather liquids-rich. So, the Alliance system is particularly attractive as a transporta-tion option for shale gas.”
Although the project is early in the consultation process, Gray is confident that it will move beyond that stage with few difficulties, noting that Alliance hopes to “move forward with the regulatory application at some point in the relatively near future, targeting a construc-tion time period of spring 2012.”
Gray anticipates that the consultation process will be
made easier by the fact that the proposed pipeline is to be constructed along the company’s existing right-of-way.
“Construction of the Alliance Pipeline took place just over 10 years ago,” he said, “and so because the loop is proposed to be built parallel to the existing system, many of the stakeholders will be the same as during original construction. We see this as a positive because Alliance works hard to be a good neighbor in the areas where we operate and so we have an ongoing relationship with our landowners.”
“We strive to ensure that landowners are not adversely affected by having our pipeline on their property and take a consistent approach to providing fair compensation,” he added.
Alliance has engaged in initial conversations with local landowners, First Nations and other interested par-ties, as well as providing updates on the project to local government and discussing the proposed pipeline with prospective clients.
“And then, once we’ve got more definitive commercial underpinnings,” he said, “we’d kick off a more compre-
hensive consultation initiative.”Alliance has begun the necessary environmental work
as well.“Before we go ahead,” said Gray, “we have to do an
environmental impact assessment. And so that includes a range of different studies looking at everything from aquatics and fish to wildlife, plants, soil, archaeological, as well as a socio-economic impact assessment.”
“The project is proposed to be constructed within rural terrain, encompassing primarily agricultural land,” he added. “The project will involve a few small water cross-ings including the Pouce Coupe River, Kiskatinaw River, Coleman Creek and Doe Creek.”
Construction of the 24” pipeline – which will operate at a pressure of 9930 kpa – is expected to take ap-proximately three months once the plan has been fully approved.
“There certainly would be an opportunity for [local] employment associated with construction, although it would be temporary employment,” said Gray. “There really wouldn’t be any permanent positions created as a part of this.” •
james watermanPipeline News North
industry news
Alliance’s recently constructed Sunrise meter station, one of three new meter stations on the Alliance system in the area.
PHOTO COuRTESY OF ALLIAnCE PIPELInE
March 2011 I PIPELINE NEWS NORTH • 11
For sale- encana lightens the loadEncana is now offering its Cabin Gas Plant to other energy companies interested in purchasing and completing the construction of the natural gas processing facility in northeastern British Columbia.
The plant, currently in the early stages of the first phase of construction, is set to begin processing natural gas from the Horn River Basin at a rate of 400 million cubic feet per day (MMcf/d) in 2012.
“This is a large, large plant, fairly significant value,” said Phil Tahmazian, Vice President of Canadian Midstream at Encana, in discussing the proposed sale of the Cabin Gas Plant. “And processes like this – you know, we’ve gone fairly broadly to a variety of potential buyers, and we also have partners involved. So, a process like this is never quick. And, unfortunately, it usually means we can’t specify a very crisp timeline around them.”
“We’re moving this very diligently along,” he added, “and certainly our desire is to see this com-pleted in 2011.”
Encana initiated construction of the Cabin Gas Plant in order to meet its production targets, but always knew that they might ultimately sell the facility.
“This was one plant where I think we had always envisioned that there may be an opportunity to sell the plant,” said Tahmazian. “And we’ve obviously worked that through thoroughly with our partners and [have] come to a conclusion that we would like to sell the plant as a partnership.”
“We have existing facilities that we’re always looking at and trying to understand whether there’s value to be added to Encana by selling that for the right deal structure,” he explained. “We’re always looking at that. Sometimes, there is. Sometimes, there isn’t. So, we’ll hang on to facilities if we think that the right answer is for us to continue to own and operate that facility. In the case of this one, we looked at it and we said, ‘You know what? There is a deal structure there that makes sense for us to sell it.’ But to initiate the plant, that was done very specifically because we realized that … to meet those production targets, we needed to take this particular plant and run with it. At that point we introduced the [partnership] opportunity to basically all producers in the Horn River at the time, and had fairly good uptake on it.”
The announcement of their plan to part with the Cabin Gas Plant comes on the heels of an agree-ment to sell their Fort Lupton facility to Western Gas Partners for approximately US $303 million. The sale includes the plant near Denver, Colorado – which processes about 84 MMcf/d of natural gas – and five natural gas gathering pipeline systems and associated compression facilities.
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james watermanPipeline News North
What is flaring?
The BC Oil and Gas Commission is committed to reducing, and eliminating where possible, flaring at oil and gas operations in northeast British Columbia. This is achieved by the active maintenance of flaring guidelines, regular emissions reporting, air quality monitoring and utilizing new technologies.
Flaring is done to safely manage the disposal of gas in situations where it cannot be economically conserved or where maintenance or emergency activities necessitate depressurization of facilities. It is primarily restricted to short-term operations such as well drilling, well completions and maintenance at wells, pipelines and facilities, and is done in compliance with Commission regulations and government air quality standards.
Protecting Public Safety and the Environment
A key focus for the Commission is ensuring optimal recovery of oil and gas resources while protecting public safety and our environment. Gas that is flared is not available for further processing or downstream use as an energy source.
Efforts to reduce flaring are not always perceptible to the passerby. Upgrades and new technologies can be implemented without visible changes, but the Commission is continually working with operators to consider alternatives. Gas flaring accounts for less than two per cent of greenhouse gas emissions in British Columbia, and the province has seen a 92 per cent decline in the volume of solution gas flaring since 1997, with 96 per cent of solution gas currently conserved.
The Commission has also targeted continuous flaring facilities near populated areas for extinguishment where feasible, as well as for improvement and upgrades. In 2008, 14 sites operating with continuous flares within a five-kilometre radius of Fort St. John, Tomslake, Farmington and Rolla were identified. To date, all 14 sites have undergone improvements. The most prominent example was the dismantling late last year of a continuous flare stack near Fort St. John. The continuous flare is gone, along with the compressors, dehydrator, water tank and other associated equipment.
Guidelines
The Commission reviews and updates
the Flaring, Incinerating and Venting Reduction Guideline for British Columbia. This public document ensures expectations are clear and consistent for companies operating in the province – it provides industry specific requirements for reducing or eliminating flaring and venting, providing public notification and reporting.
Monitoring
In the summer of 2010, mobile air monitoring was introduced in the Peace region as a fully equipped mobile air monitoring laboratory visited communities near oil and gas activity, such as Tomslake, Groundbirch, Farmington and Rolla. The initiative, a coordinated effort by several government ministries and the Commission, had the vehicle stationed in these communities to establish baseline data for the air quality in the area.
Each year the Commission publishes the Flaring, Incinerating and Venting Reduction Report, which details the current state of flaring and venting in the province and progress made toward meeting the targets outlined in the BC Energy Plan.
Visit our website to learn more.
The BC Oil and Gas Commissionis an independent, single-window regulatoryagency with responsibilities for overseeingoil and gas operations in British Columbia,including exploration, development, pipelinetransportation and reclamation.
The Commission has offices throughoutBritish Columbia and employs over 200 BritishColumbians who are committed to preservingthe province’s quality of life. Come see us atthe office in your region: •FortSt.John,#100-10003110Avenue •FortNelson,#101-470155Street •DawsonCreek,#3-1445102Avenue
To learn more visit www.bcogc.caFollow us on TwitterPhone1-250-794-5200
Regulating Flaring in British Columbia
Oil and Gas — Fast Facts
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Encana’s President and CEO Randy Eresman recently announced a $5.4 billion deal with PetroChina, giving the Chinese energy company a fifty per cent interest in Encana’s Cutbank Ridge operations in northeast British Columbia.
Mel Best, President of Bemex Consulting International in Victoria, British Columbia, has been in the geophysics business for thirty-five years now, but that was not exactly his game plan when he first began his studies at the University of British Columbia.
He earned both his Bachelor’s and Master’s degrees in physics at UBC, subsequently earning his PhD at the Massachusetts Institute of Technology (MIT), but he never did study geophysics specifically.
“I grew up here on the coast,” said Best, explaining how his childhood in British Columbia led him to his career in geophysics. “And my Dad was in the log-ging business. He was a faller and I used to go working with him in the summer-time. And after I got my degree, I said to myself, ‘Do I really want to sit in an office all my life?’
“So, I started looking around at options to do science and be outside at the same time. And so geophysics came up as one of the possibilities. I liked the combination of science and being outdoors.”
Although he was eager to make the move to geophysics and join the oil and gas industry in that capacity, his first foray into that world was something of a fluke.
“I was trying to find what to do with my life,” he said. “And I was at McGill [University]. Actually, I was a research associate, teaching physics. And I wrote letters to – I don’t know – fifty oil compa-nies ... you know, just trying to see what might come back, and I got about fifty [rejection] letters from the oil business.
“And my friend phoned me up – my roommate that I was going to school with at MIT – [and] he said, ‘Guess what. I got a job with Shell.’ I said, ‘How can you get a job with Shell? You’re a physicist, not a
geophysicist.’ He said, ‘I don’t know. They wanted to hire me.’ So, it turned out, I went over to the McGill placement office and there [was] a sign saying Shell is coming, looking for Bachelor level people.
“So, I went in, and I said, ‘Look it. I’ve got a PhD, but I’m kind of interested in the oil business.’ He looked at me and he said, ‘Well, I’ll tell you what. I’ll take it back and give it to the geophysicists and they can look at it and see if they’re interested in you or not.’ That was back when Shell was actually working in the St. Lawrence Lowlands. They were actu-ally drilling right down by Drummondville at the time. And so one of the guys came through and phoned me and said he was working down there. And interviewed me in Montreal. Then, eventually, I got the job. It was just by luck, I think.”
However, that path immediately took an unexpected turn.
“I was hired for oil and gas,” said Best. “That was probably February. I get out to the job in June and the chief geophysicist says, ‘We’re starting a minerals company. Would you mind working in minerals instead of oil?’ And not knowing the differ-ence, I said, ‘Sure. Why not?’ Now I know the difference is major. So, I ended up in the mining side for the first ten years. And then I switched to oil and gas.”
Best was one of the first people in Shell’s minerals group. It was a great opportunity for the young physicist turned geophysicist.
“Shell Canada had a lot of money and they were willing to let us use it for exploration and research,” he said. “So, I worked in every province except [Prince Edward Island]. And also I worked up in Yukon, worked up in the Northwest Ter-ritories, did a lot of uranium exploration around Baker Lake area.”
“I loved it up there,” he added, discuss-ing the experience of working in the far North. “Beautiful country. Untouched.”
His work with Shell also took him to Holland for two years, where he was building an airborne electromagnetic sys-tem for mineral exploration in The Hague.
“And we actually did some testing in
France,” said Best.Recently, he has been doing hazard
studies with his own company in South America, mapping slip plains and examin-ing the landslide potential at Machu Pic-chu in Peru as part of a joint project with the Canadian International Development Agency (CIDA).
Geophysics has also brought him to northeast B.C. from time to time. He was working in the Horn River Basin this past December, supervising an airborne electromagnetic survey for an oil and gas company in the region.
“It was a groundwater study, looking for water for these frac jobs,” he said.
“I’ve worked in the Nechako Basin quite a bit,” Best continued, discussing the amount of time he has spent in the area. “Bowser Basin. Worked, of course, obvi-ously, in the Fort St. John area and Fort Nelson area.”
“I really enjoyed working in the Nechako Basin, particularly,” he added. “The coun-try there is so beautiful. You can almost forget you’re working.”
After starting his career as a geophysi-cist with Shell’s mineral group, Best even-tually made the switch to oil and gas.
“It’s not trivial,” he said of the transition.
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geophysIcIstcareers & training
- an accidental 35 year careerjames watermanPipeline News North
Mel Best’s career in geophysics has allowed him to see parts of Europe and South America, as well as most of Canada, including the gas fields of northeast British Columbia. He is now president of his own company, Bemex Consulting International, based in Victoria.
PHOTO COuRTESY OF MEL BEST
gmp securities launches new junior oil and gas index
GMP Securities followed the Febru-ary 1st launch of its GMP Junior Oil and Gas Index – the first such index to focus entirely on Canadian junior oil and gas exploration and production companies listed on the Toronto Stock Exchange – with the licensing of the index to Hori-zons Exchange Traded Funds (ETF), who launched the Horizons BetaPro GMP Junior Oil and Gas Index ETF on February 23rd.
At the time of the launch, the Index included 48 companies, or constituents, with a float market cap – the current market price per share of capital stock multiplied by the total number of float
shares – between $100 billion and $3 billion. Each company is given a relative weight according to their float market cap with no one company having a weight greater than ten percent. For example, the top weighted constituents, as of January 31st were Progress Energy Resources, Black Pearl Resources and Bankers Petroleum, all in the range of seven to eight per cent.
“The rationale was that … there was no index that referenced the junior, mid-market sector in Canada,” said Wade Fe-lesky, Managing Director of Investment Banking with GMP Securities, explaining the creation of the Index. “And this is an investable index now that there’s an ETF. We think that it’s a natural extension
of our strengths, as we are a premiere player in the resource market, and, in particular, the oil and gas market.”
“Some of our fundamental beliefs are that we have tremendous market knowl-edge, we have in-depth research, and that this benchmark will be the choice – investable choice – for people who want to play the Canadian junior oil and gas sector.”
According to Felesky, the benefit to investors with this ETF is that they do not need extensive knowledge of the various industry players in order to take advan-tage of the activity in the junior Canadian oil and gas market.
“You are looking in the paper every day,” Felesky explained, “and you see
that the Canadian energy [industry] is very active, there is a lot of news, there is momentum in the underlying stocks, but you want a passive way to participate in it, you may not want exposure to just one stock.”
Felesky noted that the ETF will also benefit the Canadian junior oil and gas companies.
“It’s what you call a continuous dis-tribution ETF,” he said. “So, the assets under management of the ETF grow through the buying and the trading of the ETF. And, as that ETF grows, we will be buying more and more and more and more of the underlying names that make up the basket. So, we’ll be driving trade towards the constituents of the basket.”
james watermanPipeline News North
March 2011 I PIPELINE NEWS NORTH • 13
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geophysIcIst
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It doesn’t end there
Mel Best also has a strong opinion about what it takes for a geophysicist to successfully make the move to running his own company, which he has been doing with Bemex Consulting International since 1997.
His road to his present position gives his opinions a great deal of credence, too.
“I left the oil business and went to the Geological Survey of Canada (GSC) in 1986,” said Best.
He was working for Shell in Calgary at the time, but a desire to return to the coast precipitated a career change as well as a change of scenery. It was not exactly the change that he was initially anticipat-ing.
“I was going to set up a consulting company,” said Best. “And just got a phone call from the GSC saying they’re looking for somebody to work down in Halifax at the Bedford Institute.”
“The [GSC] has an office down there,” he con-tinued. “A lot of it’s marine geoscience. And so they were looking for somebody to head up all the offshore basins on the East Coast and Hudson Bay. I got that job and moved down there. And it was really a wonderful job. I loved it. We were doing research on all the basins, like the Jeanne D’Arc Basin where the Hibernia field is, and all the offshore basins in nova Scotia, Hudson Bay, Labrador Shelf. Really a neat job.”
The GSC experience was important to Best in terms of building the reputation that has made run-ning his own consulting firm possible.
“The GSC was very good because it allowed me to publish papers,” he said. “And got my name out more.”
Best feels that publishing papers is a big step toward running your own business, along with giving talks on your area of expertise, attending confer-ences, and being active in geophysical societies, particularly as a board member.
He has also taught courses for the Society of Exploration Geophysicists (SEG) for ten years on topics such as basic seismic processing and map-ping reservoirs.
“I needed the experience of working for the oil companies,” he added. “I also worked for a consult-ing company for a year in Calgary. I think you need that experience before you can set up your own [company]. And, you know, the most important thing is to be in it long enough to have contacts. If you’re going to go on your own, you have to have some reason why people want to use you.”
After working for the GSC in Halifax, Best finally returned to the West Coast to take command of the Pacific Geoscience Centre in Victoria.
“I moved there in 1990,” he said. “And I was the director there for five years. And then I took the early retirement option and went consulting.”
It was not a path that would suit everybody, but Best is happy with his choice.
“Some people just don’t want to be bothered with doing that,” he said. “Basically, it’s a job. A nine-to-five job. They do it and then they turn it off when they go home. But when you love it like I do, you live it day and night.” •
Geological survey maps such as the one above play a vital role in providing information to industry and government groups. The work of geophysicists such as Mel Best contribute to the massive amount of data required to develop maps such as these.
MAP COuRTESY OF nATuRAL RESOuRCES CAnADA / WWW. GSC.nRCAn.GC.CA
“It’s easier for a geophysicist than a geologist, because a geologist tends to get involved a lot with volcanic rocks and mining. And, of course, in the oil business it’s all sedimentary rocks. But, for geophysicists, we tend to use a lot of the same types of techniques for the two disci-plines. So, it’s not so hard to switch over. And I switched back and forth quite often, actually, between the two.”
According to Best, approximately ninety per cent of the work that geophysicists do in the oil and gas industry is seismic work, and oil and gas company geophysicists “do very little fieldwork anymore.”
“It’s mostly done through contracting companies,” he said. “You may have a chance to go out and supervise a job in the field, but you really don’t do much of it your-self.”
“When I joined Shell,” he continued, “they had seismic crews of their own, and they actually sent people out with crews for six weeks, to learn how to do it. Now they don’t. It will be companies, you know, like these big contracting companies, that actually do the collection of the data and the processing.”
Most of the work that oil and gas company geo-physicists do now is the reprocessing of data from the contracting companies to ensure that it was all done correctly. They also interpret the data as a team of geolo-gists and petrophysicists.
“Now you’re considered more of an explorationist,” said Best. “They’re trying to get away from designating
people as geophysicists [and] geologists in the team. It’s more of a team effort. Everybody’s got a part to do.”
However, Best noted, there are also opportunities to work on the production side, such as monitoring the path of the steam in steam assisted gravity drainage (SAGD) projects in oil sands operations. That work also involves seismic work, as well as resistivity and electromagnetic applications. A geophysicist may also monitor the flow of water during waterflooding and the course taken by the fractures during hydraulic fracturing.
“You want to see how far the fractures propagate,” said Best. “And do they stay in the formation you’re interested in? Those kinds of questions. And they’re using what they call ‘passive’ seismic where they actually use the natural cracks and breaks caused by the fracturing. They monitor where those are going on just the same way you would monitor an earthquake. And that’s become a big business in the last five years. So, there’s a wide range of things you do in the oil business.”
“It’s an absolutely essential part,” he added, describing the role of geophysics in the oil and gas industry. “Without geophysics – I mean, you’re usually very deep [in the ground]. You’ve got to use geophysics to give you targets. There’s no way you can do it without geophysics.”
Best said that a young person considering a career in geophysics definitely has to have a “fair understanding of mathematics” and a “natural curiosity.”
“A lot of it’s to do with unravelling the geology,” he said. “Trying to understand. So, trying to understand how the earth works.” •
What else can we do? Well, the oil price is very high. How can we exploit [the] high oil price, use our savvy business knowledge, and scrape the oil out of old wells that still have oil there?’ Because many oil wells only took out thirty per cent of the oil. A lot of oil’s left.”
Interestingly, the unconventional resource of the oil sands is a significant element of the growing north American natural gas demand that Ziff Energy is anticipating to occur over the next decade, although industrial demand will decrease overall.
North American gas demand in 2010 was about 75.0 Bcf per day. It will climb to about 82.0 Bcf per day by 2020.
“And of that 75.0 Bcf,” said Gwozd, referring to the 2010 gas demand, “one third is gas for power genera-tion. One third is gas for industrial. And then the other third comprises the residential, the commercial, and the fuel for pipelines and lease fuel.”
“The gas demand for oil sands goes from about 1.2 Bcf a day now and it rises to 2.8 Bcf by 2020,” he continued. “Concurrent with that, the other industrial demand shrinks such that overall, by 2020, industrial demand is only a quarter of the entire matrix.”
Conventional oil extraction requires very little in the way of natural gas, but oil sands require substantial amounts of the resource.
“Oil from oil sands has literally just started,” said Gwozd. “We will see a lot more oil extracted. And to extract oil, natural gas use will increase. For example, gas demand for the Alberta oil sands, by 2028 … will be 2.8 Bcf per day versus today at 1.2 Bcf per day. This is more than double. And later than 2020, gas de-mand for oil sands will continue to grow. The balance of the gas demand growth by 2020 will come from gas being burnt to make electrical power. While residential and commercial gas demand will also rise, it is very slight. Industrial gas demand actually tilts down further, consistent with its use over the past several decades. To clarify, gas for industrial products has been declin-ing and, in the long term, will continue to decline.”
“When dinosaurs roamed back in 1973,” he contin-ued, “the industrial gas demand for North America was almost 30.0 Bcf a day. And you know now industrial gas demand is 20.0 [Bcf per day]. And so imagine all the processes, the new people that have been hatched, all the new cars on the road and houses that have been built, and apartments, and processes, and people putting fertilizer on their yards. All these things all happened in the last three decades – third of a century – and industrial demand’s fallen like a rock. And so it’s fallen because these guys can’t compete.
14 • PIPELINE NEWS NORTH I March 2011
zIFF energy- black sheep of the oil and gas industryZiff Energy has no friends.
That is why Bill Gwozd, Vice President of Gas Services for the energy sector consulting firm based in Calgary, al-ways keeps a tie in his office that features a bunch of white sheep and one lonely black sheep: Ziff Energy is that black sheep. Gwozd occasionally dons the tie simply to show that he has no problem with playing that role.
“Many people talk amongst themselves and they get these funny ideas,” said Gwozd. “And Ziff Energy comes along and says, ‘I’m not sure what you guys are smoking, but that ain’t the way it’s going to happen, folks. This is the way it’s going to happen.’”
“We just do our views totally independent,” he continued, “and we become the black sheep of industry.”
According to Gwozd, Ziff Energy is free to be the black sheep because they are not an energy company that has to convince its shareholders of conditions that may not prove to be true. It is also the reason why Ziff Energy believes that their view of the industry in western Canada represents the actual state of affairs.
“I say that, at the end of the day, Ziff Energy is unbiased or independent,” Gwozd explained. “What that means [is] I have no friends. And so if I say that western Canada’s [production is] going to tilt down – we’ve been saying that for a decade. Who believed Ziff Energy back in 2000 [when we said] it’s going to tilt down?”
The opinion of the sector itself was that production in western Canada was going to rise, necessitating the con-struction of the Alliance pipeline about ten years ago. Ziff Energy’s response at the time was that the Alliance pipe-line was not necessary at all, the existing TransCanada pipeline being sufficient to carry the supply.
“Now you got extra, surplus pipe capacity in the Western Canadian [Sedimentary] Basin,” he added. “TransCanada tolls are rising.”
A significant part of the work that is done by Ziff Energy is producing energy sector forecasts for items such as North American Natural Gas Demand to 2020, Canadian Natural Gas Exports to 2023, and Western Canada Gas Production Outlook to 2020.
A number of those forecasts mix together to paint a pic-ture of the immediate future of the western Canadian gas industry that may not necessarily reflect the opinions of all the industry players in the region at the moment, but may very well hold true in the long run.
Starting with western Canadian natural gas production, current production in the region is just below 15.0 billion cubic feet (Bcf) per day. Ziff Energy projects that gas pro-duction will decrease by just over 2.0 Bcf per day by 2020, putting it in the neighbourhood of 13.0 Bcf per day at that date.
“The shale gas is growing in northeast B.C. And tight gas is growing. And – holy smokes! – if it’s growing, why is [production] shrinking? And the reason why it’s shrink-ing is the conventional gas in Western Canada is falling quite quickly. And the reason why it’s falling quickly is it’s not cost recoverable,” Gwozd explained, noting that over eighty per cent of western Canadian natural gas was con-ventional gas as recently as 2002.
The local gas business has changed considerably since that time, and Gwozd presents a similar case for conven-tional oil.
“People say, ‘Well, let’s poke holes into the oil well sector because it’s very, very high prices.’ Hang on for a second. Western Canada oil’s almost all gone. We’ve already drained the Western Canadian [Sedimentary] Basin of oil. We’re just on the last leg for oil. We just have the oil sands that we’re going to drain. And so conventional oil, while you’d love to shift and poke another thousand wells—or two thousand or five thousand more wells—in conventional oil, there’s not that many drilling targets to aim for. You can only put so many oil straws into the oil pools to drain them.”
However, a handful of junior oil and gas companies have recently begun shifting their focus to conventional oil.
“So, they’re going to scrape the bucket,” said Gwozd.“These guys are saying, ‘Hey, we can’t do any work in
the conventional gas sector because there’s no work to do. COntinueD PG 15
Since Ziff Energy is the “black sheep” of the oil and gas industry, Bill Gwozd, Vice President of Gas Services for Ziff Energy, dresses appropriately in his “black sheep” tie.
PHOTO COURTESY OF ZIFF ENERGY GROUP
james watermanPipeline News North
profiles
The gas … is priced too high. And so you can extract the North American energy policy. And that is: price your gas high, drive the industrial demand overseas, and then lose your jobs and have your economy fall apart. So, that’s physically what’s hap-pened … And so the ability to link energy priority with economic stimulus is a very important attri-bute.”
The mention of using natural gas to generate electricity might cause some to imagine that the demand for western Candian natural gas will in-crease in Ontario, but, as explained by Gwozd, the demand for natural gas in Ontario is only going to grow very slightly over the next ten years, starting at 2.6 Bcf per day now and rising to 3.1 Bcf per day by 2020.
“And the big difference of growth there – ninety per cent of the growth – is gas for power genera-tion,” said Gwozd. “They only have five coal plants,” he added. “One fell over a few years ago. So, it’s not running anymore … Two of them are so small they’re insignificant … And the other two are slated for destruction over the next five years. And so if they proceed with their plan, which we’ve built [into our natural gas demand forecast], they would totally take coal out of the picture and [replace] it with gas. And gas would rise less than 1.0 Bcf per day. It wouldn’t rise a lot.”
According to Gwozd, Canada as a whole ac-counts for only twelve per cent of North American gas demand, while about sixty percent of that de-mand belongs to the three most western provinces.
“Alberta represents forty per cent of Canadian gas demand … and a big portion of that gas de-mand is from oil sands,” he said.
Although the overall North American natural gas demand in 2020 will be about 82.0 Bcf per day, North America will only be producing about 80.0 Bcf per day. The difference will be supplied by Trinidad and the Middle East in the form of liquefied natural gas (LnG).
“Western Canada supply and western Canada demand in North America are mutually exclu-sive,” said Gwozd, addressing the role of western Canadian producers in meeting the demand for natural gas. “Not linked together. Western Canada produces more supply than it needs. And they do so freely to transport the gas elsewhere. As an ex-ample, when dinosaurs roamed in 1990, they built a pipeline from Canada to New York City called the Iroquois Pipeline. And it was built for two purposes. One, to transport growing surplus gas from Western Canada to – the second point – to the growing U.S. premium priced gas markets. So, you have growing supply, growing demand. So, they built the pipe-line.”
“Today,” he added, “you do not have growing supply, but you still have growing demand in the U.S. northeast. That’s why you have gas prices, a couple weeks ago in the U.S. northeast, that were $20 per gigajoule, while gas in western Canada was $3 and $4. And so you get these blowouts because they don’t have big enough pipelines to transport enough gas to these growing markets on those colder days. And if you want to serve the markets, you’re going to build a big pipeline that’s going to be used like five days a year. So, who wants to invest in a pipeline that’s going to be used five days a year?”
March 2011 I PIPELINE NEWS NORTH • 15
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16 • PIPELINE NEWS NORTH I March 2011
safety
- pipeline safety & public awarenesskeepIng It saFe
Canada has over 100,000 kilometres of pipelines transporting natural gas and petroleum products throughout the nation.
A pipeline network of this magnitude, car-rying fuels such as natural gas and crude oil, obviously has inherent risks to public health and safety. So, it is important that the public is aware of their responsibilities and the responsibilities of the energy pipeline industry when it comes to managing those risks.
That is the domain of Ziad Saad, Vice President of Safety and Sustainability with the Canadian Energy Pipeline Association (CEPA), the organization that represents the transmission pipeline companies operating in this country.
“I’m mainly responsible for ensuring that our members continue to follow leading practices in the area of safety and sustainability, and to facilitate continuous improvement in that regard,” said Saad, describing his role with CEPA.
“We consider, definitely, damage preven-tion to pipelines one of the pillars of public safety,” he continued. “And so it’s directly linked into my responsibilities and the priorities of the Canadian Energy Pipeline Association.”
Preventing third party damage to pipelines is one of the key focal points of CEPA’s efforts to protect public health and safety, as primary concerns are oil and gas leaks from that infrastructure.
The third parties in question are con-tractors or farmers or other landowners that could potentially dig or excavate near or above pipelines.
“Third party damage poses the greater risk to safety,” said Saad, “because it can damage our facilities and place in danger members of the public.”
A significant aspect of that issue in terms of public health and safety
is the location of third party inci-
dents that do result in damage to the pipeline. As noted by Saad, a large portion of Cana-dian pipelines are located in rural areas. If a leak were to occur due to corrosion or the deterioration of the protective coating on the pipes in those areas, the impact on the public is virtually nil. The problem is that third party incidents almost always occur in areas of hu-man activity.
“If you consider sheer chance,” said Saad, “if corrosion develops into a leak, chances are it’s going to be in a remote area, and it will be responded to and fixed and there will be no injuries. But if it’s a third party that is causing this, well, by definition there’s somebody there as it’s happening.”
The individual who is digging or operating the machinery that strikes the pipeline is im-mediately at risk if damage does occur.
“And if that is happening in an area where there is population,” Saad added, “you’re put-ting more people at risk.”
The industry monitors its pipelines very carefully. All pipeline operators have monitor-ing control centres that continuously moni-tor pressures and flow and other pipeline parameters. Pipeline companies also monitor pipelines using in-line smart tools that are capable of detecting defects as they develop and repair sections of pipe that represent an immediate concern. Underground pipelines – and the vast majority of transmission pipe-lines are underground – are also marked and patrolled regularly, but it simply is not possible to watch every section of pipeline at all times.
“We have very well-developed programs to manage these elements,” said Saad, “but we can never, ever predict if somebody is going to dig on top of a pipeline.”
That is why most of the provinces in Canada have a “call before you dig” program known as One-Call.
“All our member companies are members of One-Call programs where One-Call programs exist,” said Saad.
“We do our best to inform stakeholders and landowners about pipelines to ensure that people are aware, number one, of the pipe-lines ¬– where they exist – and to know what the proper behaviour is around pipelines,” he
“And certainly not to dig on top of a pipeline without company supervision . They have to notify them.”
There are a number of steps that pipeline com-panies might take if other stakeholders or landown-ers plan to dig in the vicinity of their pipelines. If proposed ground disturbance is not going to be that close to a pipeline itself, the company that owns the facility may simply mark the pipeline and provide other necessary information to ensure that its loca-tion is known. In certain cases, when the planned disturbance is going to be quite close to the pipeline, the company may have to supervise the excavation or actually undertake the work personally.
“As you get closer,” Saad explained, “procedures become more and more stringent, and each com-pany handles it a little bit differently depending on their particular pipeline and its location.”
It is important that people do take advantage of the One-Call system, as even a scratch on the pro-tective coating can lead to problems in the future.
“Somebody digs close to a pipeline without au-thorization, and they are fortunate enough to realize what they’re doing without causing a puncture, but they’ve contacted the line,” said Saad, describing the sort of situation that has been known to happen on occasion. “So, they think that … no damage has occurred. Or it’s just a small nick, and they might be tempted to just backfill the hole and carry on, without informing the pipeline company that that occurrence happened. That is a risk area as well, because if you damage the coating … you’re exposing that pipeline to … potential corrosion down the road.”
“Pipelines have multiple layers of protection,” he added, while noting that every layer exists for a rea-son. “But, in spite of that, if you damage the coating, the pipeline has a weak spot at that location.”
Obviously, heavy equipment can cause more sig-nificant damage, such as an actual puncture of the line that could be a huge risk to public safety.
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Farmer’s AdvocacyThe process of creating the FAO of-
ficially began last March when the Peace River Regional District issued a Request for Proposal (RFP) for managing the of-fice for that eighteen-month period.
Aspen Grove and New Harvest Media, was eventually selected. That team reports quarterly to a management committee consisting of the CAO of the Peace River Regional District, an assistant deputy minister from both the Ministry of Energy and Ministry of Agriculture, and a rancher representing the local landowners.
Clayton admits that the FAO’s relation-ship with the oil and gas industry is a bit hit and miss at this point, which is partly why she hopes they will be given longer than eighteen months to develop that relationship.
“In terms of industry,” she said, “there’s been mixed reviews on it. We’ve had some companies – and I’m not going to name them – that we work very well with, and others who say, ‘We don’t have to do that. We don’t have to consult first before we sign up agreements.’ And I should just back up from that and say it’s not always companies either. It may be just the indi-vidual land agent that they hire.”
“And,” Clayton added, “you have to bear in mind we only see the troublesome cases, because, if people are happy, they don’t come in here.”
Additionally, Clayton is hopeful that the pilot period of the FAO will also see information becoming more readily avail-able to the public, but that might require industry companies shaking off their his-tory of extreme secrecy and confidentiality regarding their activities.
“Right now,” she said, “companies are required by legislation and regula-tion to file a copy of every surface rights
agreement that they sign with the Surface Rights Board. That legislation came into place October 5. The chair of the Surface Rights Board was here yesterday for arbi-tration. She has not received one.”
Clayton suggests that some companies may be reluctant to make that information public knowledge because that would im-pact negotiations with other landowners.
“It’s funny,” she continued, “because at one time those leases were available. The Surface Rights Board used to be up in Fort St. John and they used to get copies of those agreements. And they were all just in boxes. And people could go up to the Surface Rights Board and they could look through those agreements. It was time consuming, but it was available for them. And then there was a challenge to that practice under protection of privacy and freedom of information. And it was decided that was confidential informa-tion. Now, when OGAA came in, it was determined: no, the landowners need the information so they can bargain fairly. So, it was only changed back to that transpar-ent process in October of last year.”
However, Clayton insists that making this information available will not only benefit landowners, but will also benefit the industry by allowing the companies to reach agreements more quickly and re-ducing the number of challenges taken to the Surface Rights Board by landowners.
“We see our role as being helpful to in-dustry as well as landowners,” she added, suggesting the FAO should not be seen as anti-industry.
“We believe that the oil and gas indus-try is good for the economy here,” she continued. “It’s good for employment. It’s good for the whole province. But we be-lieve that given the imposition on people’s land and lifestyle in the rural area, they’re entitled to fair compensation for that.” •
COnt’D frOm PG 4
Email [email protected] Fort St. John 250.785.6009 Toll-free 1.800.667.5557www.enformbc.ca
Working with industry to help eliminate work-related incidents and injuries Enform is the safety association for Canada’s upstream oil and gas industry. Established by industry for industry, Enform helps companies achieve their safety goals by promoting shared safety practices and by providing:
» Effective training, including courses on general and operational safety programs and petroleum fundamentals
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Our vision is no work-related incidents or injuries in the upstream oil and gas industry. Contact Enform today for more information.
Sandra Apsassin has been working alongside the oil and gas industry in northeastern British Columbia since 2000, when she first began accompanying her mother, May Apsassin, a Blueberry First Nation elder, during site assessments for activity related to the energy sector.
It was decided by the provincial government in the mid-1990s that her com-
munity should be consulted
about any industry
activity occurring in the vicinity of First Nations traplines. Part of that consultation process is the opportunity for the Blueberry First Nation to send an elder to the site to act as a “traditional monitor”. The elder records the area of activity, the condition of the landscape, and the flora and fauna that may feel the impact of the activity, all in the interest of environmental protection and stewardship.
“They needed somebody to accompany her,” said Ap-sassin, explaining how she began assisting her mother with her work as a traditional monitor. “Somebody who understands the language … and understands what she’s talking about. So, I ended up going with my Mom.”
The scope of some of the activity that they were moni-toring, such as 3D seismic projects, dictated that Apsassin and her mother stay in work camps along with the crews. It was at that point that she began to see the conflict between her community and the industry, as well as the primary cause of that conflict: a lack of communication.
According to Apsassin, the First Nations were just “jumping up and down” trying to explain why the land is important to their people.
“Meanwhile, for industry,” she continued, “it’s that, ‘Gee, I wonder what we’re going to get out of there. What are we going to find in there? Is it going to be sweet gas? Is it going to be sour gas?’ And all that stuff.”
Apsassin decided that she had to act to solve the problem. So, she created a cross-cultural training presentation all about the Treaty 8 First Nations of northeastern B.C. Along with her mother, she began delivering that oral presentation to oil and gas industry compa-nies that are active in the area and industry
organizations such as the Canadian As-sociation of Petroleum Landmen (CAPL)
in 2005.The presentation begins with a bit of the oral and documented history
of the local First Nations and the region.
“There’s hardly anything about the local First Nations people that is written down anywhere around here,” said Apsassin, discussing the need for this sort of educational experience.
Apsassin continues to describe the relationship that her community has with the land and its wildlife, particularly the traditional role that hunting and trapping has played
in their economy. She also points out how that economy has changed in the past forty years, as
the last decade has seen a significant increase in First Nations involvement in the oil and gas industry in various capacities, including traditional environmental monitoring.
She gives the presentation a personal feel by featuring photographs of her own family, as well as talking about the two sides of her ancestry: the Beaver people on her mother’s side and the Cree people on her father’s side.
Her hope is that her presentation can help bring First Nations and industry together so that they can work cooperatively and collaboratively.
“I’m trying to do that,” she said. “Industry’s really interested, but the First Nation people, they’re not really interested. Because, number one, we have lost our identity. Number two, we have lost the language. So, we have lost the two most important things of our life. And so now we’re like – we’re lost.”
According to Apsassin, the loss of identity has con-tributed to the communication problem, as it causes a degree of reluctance among some First Nations people to deal with an industry that appears to have little in com-mon with their tradition and culture. She suggests that it has also contributed to a lack of ambition among some of the young people of her community.
“If you don’t know who you are,” said Apsassin, “than what’s the purpose of trying to go out there without a goal or a vision? You’re lost.”
Education is the key in her opinion.Apsassin feels that she was fortunate to have a
teacher like her mother during her youth, just as she was lucky that her grandmother played an important role in raising her when she was a young girl. She says that she inherited her values and her strong connection to her First Nations culture from those women.
The advice that her grandmother gave her just prior to her death has also left a lasting impression on Apsassin.
“She said, ‘Keep our tradition alive, but also combine it with education.’ She said, ‘Things are going to change. You’re going to need that education. And you combine it with our traditional life.’ She said, ‘You’re going to go a long ways.’”
Apsassin has taken that message to heart. Shortly after she began assisting her mother with her traditional environmental monitoring work, she enrolled in the Land and Resource Management program at northern Lights College in Fort St. John, graduating in 2004. She earned her Provincial Instructor diploma in 2007, which allows her to create and deliver adult education curriculum. Another presentation that she has developed discusses the importance of incorporating First Nations elders and fluent speakers into early childhood education.
Although she remains outspoken about her ecologi-cal concerns – she frequently tells of an incident when a young moose stumbled into a hole created by industry activity and had to be pulled out of that accidental trap by a backhoe – Apsassin and the industry seem to be enjoying their interaction with one another.
“When I’m out in camp,” she said, “I’m constantly visiting around, talking to people, and I learn some new things and they learn a lot of stuff from me, too.”
She shows them photographs of wolf dens and bear dens and explains how they are monitored.
james watermanPipeline News North
COntinueD PG 19
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She points out mineral licks used by moose. She ex-plains that mounds of spruce cone scales on the ground are actually red squirrel middens, a fact that even a few young First Nations individuals have learned from her as well.
“And the majority of them, they love it,” she said of the experience.
Apsassin laughs when she thinks of some of the young surveyors – fresh from university and new to the area – that she has met along the way. She has an amusing tale about one of those young men.
“He didn’t know what a moose lick was,” she said. “And so everybody was just telling him, ‘Oh, yeah, go over there and a moose will come and lick you.’”
Apparently, he thought that was true, until Apsassin finally set him straight.
Since completing the program at northern Lights Col-lege, Apsassin has been consistently trying to promote education and career opportunities relative to the oil and gas industry to her community.
“I said, ‘Somebody should go into the college and take these courses [such as] the oil and gas operators training. Let’s take advantage of the industry.’”
She is particularly adamant about aboriginal youth enrolling in programs such as the Land and Resource Management program, as that is the type of training that is vital to First Nations lands departments when dealing with oil and gas companies and performing environmen-tal monitoring.
As Apsassin mentions, thanks to their right of consulta-tion, the First Nations have a tremendous opportunity to work with industry to ensure that environmental distur-bance is kept to a minimum, but they need that education to be able to do so effectively.
“You’ve got to really know what you’re talking about,” she concluded.
Apsassin lays the blame for the lack of ambition squarely at the feet of First Nations leadership.
“Our leadership have no vision for education,” she said, insisting that there is not enough effort put into encouraging First Nations youth to attend college or university.
“We can have some of our people trained at the cooking school in Dawson Creek,” Apsassin continued, mentioning one possible career path.
“We can have catering companies. Anything to do with the oil patch, it’s there. And the oil patch is ready and willing.” •
Left: During a seismic project in northeast British Columbia on October 1, 2010, Apsassin and the crew discovered a message in a bottle dated September 5, 1943. It is just one of the many interesting experiences that Apsassin has enjoyed while working alongside the oil and gas industry in her role as a “traditional monitor.”
special featureone hundred years- and mcelhanney is still counting
A lot has changed in the land surveying business since an intrepid young man by the name of William Gordon McElhanney began his surveying career in northeast British Columbia in 1907.
He was just a survey party assistant to Dominion Land Surveyor Albert Stacey at the time. Three years later he set up shop in Vancouver as a full-fledged land surveyor, starting a company that still exists today as one of the most promi-nent surveying firms in western Canada, McElhanney Land Surveys. not only has his name endured for a century with McElhanney celebrating its one hundredth birthday in 2010, but the company that he began has also survived two World Wars, a Great Depression, and the much despised National Energy Program (NEP) of the early 1980s.
“It starts out with a pioneering soul and, you know, a horse and a level, and maybe some maps and a compass,” said Mike Jamieson of Business Development at McElhanney’s Calgary office, describing the early days of land surveying. “And off he goes and comes back with a bunch of information.”
Technologically, the industry has come a long way since 1910. It has even changed significantly since land surveyor Aubrey Petzold joined McElhanney’s Fort St. John office just thirty-three years ago.
“In the beginning, the survey meth-ods were a little more mechanical,” said
Petzold, a Senior Project Supervisor since taking early retirement from his manage-ment position and returning to surveying work in 2004. “All the theodolites were mechanical. The only thing we used that was electronic was a distance measuring unit and they were large, heavy, awkward units that were not part of the transit. It was a separate unit that had to be put on the tripod to make a distance measure-ment, and that’s all it did.
“The only other electronic instrument we had was a metal locator that ran on a couple AA batteries. So, the rest was all mechanical – shovels and picks, and we still used steel tapes to make some of the shorter measurements because it was easier to do than using that big, awkward machine. Compared with now, we’ve graduated to using electronic theodolites with built-in distance measuring units or Global Positioning Systems – GPS.”
Jamieson mentioned that it is not only the technology that has advanced, but also the education that college and univer-sity graduates are receiving prior to enter-ing the workforce, which has been a great benefit to McElhanney in recent years.
“Certainly, the technology’s come a long way,” said Jamieson. “The level of educa-tion that our tech grads and our university grads are getting has certainly improved and increased. The breadth and scope of what they’re getting – the most valuable members of our company, in some cases, are our newest graduates that we hire, because they come with a completely different mindset. You know, they under-stand things like linear programming and complex mathematics. So, they’re a real asset to us.”
According to Jamieson, the job has become very technical, with a lot of web
driven technology that has changed their approach to the work.
“It used to be pretty cavalier, I’ll be hon-est,” said Jamieson.
“It was kind of ‘throw on your cowboy hat, get your hands dirty, and get her done’. Now it’s systematic. There’s a lot more planning. Safety’s a huge concern for McElhanney. And it’s been a concern for the industry, of course. You know, getting home safe is the number one priority for a lot of our clients and that’s certainly shaped how we operate. And who our clients are – that’s changed over so many times, we’ve had to adapt to a lot of changes that way.”
One of those moments of adapting to the needs of new clients came in 1977 when McElhanney purchased Dabbs Control Surveys.
“And they got us going in the oil and gas side of things,” said Jamieson.
“Right around the same time, one of our surveyors moved up to Fort St. John,” he added. “His name is O’Brian Blackall. [He] moved up to Fort St. John to start a branch there and start up operations working in the oil patch. And that branch went from one person to over a hundred. A couple of years ago, we had over a hundred people.”
“The oil and gas industry has always been the bigger part of our business in Fort St. John,” said Petzold. “It’s a small community. And, really, if there was no oil and gas business here, one survey firm could provide the necessary services to service a town of this size – a small survey firm. Whereas now we have four large firms. So, we all depend on the oil and gas for probably about eighty-five per cent of our work.”
As much as those survey firms in Fort St. John rely on the oil and gas industry,
energy companies also depend heavily on those land surveyors.
“That’s why we’ve got the TILMA (Trade, Investment and Labour Mobility Agreement),” he continued. “We were hav-ing a hard time providing the service the oil and gas companies needed. And so now there’s a reciprocity agreement between Alberta and B.C. to allow more surveyors to come up here to work.
“But the oil and gas industry has changed in that it has become much more sophisticated. The requirements for infor-mation for submission to the Oil and Gas Commission has increased a hundredfold. We have a lot more work to do in gathering this information and preparing it in a suit-able format to present to the Oil and Gas Commission.”
Actually, the demand for land surveyors for the oil and gas industry in the last ten years has been difficult for McElhanney to satisfy.
“We haven’t been able to meet the hu-man resource needs of our clients as well as we would have liked,” said Petzold, “which means a lot of people working a lot of overtime, a lot of stress, and a lot of inefficiencies, because of that. That’s all changed in the last – well, since we had this [economic] crunch here in 2008, it’s not so bad, or not so good, however you want to look at it. But 2000 up to 2007 were pretty frantic years.”
The staffing situation, according to Petzold, is largely the aftermath of the lean years caused by the NEP in the 1980s.
“When I came here in 1978,” said Pet-zold, “things were kind of booming. There was lots of work and lots of activity. And I remember significantly the natural Energy Program being brought in 1981.
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james watermanPipeline News North
Gearing up for work on the 124th meridian surveys, 1912.
ALL PHOTOS COuRTESY OF MCELHAnnEY LAnD SuRVEYS
March 2011 I PIPELINE NEWS NORTH • 21
“I was up in Helmut, in camp, locat-ing well sites, and consultants from other companies that I wasn’t working for were trying to bribe me, to steal me away to work for them, because they couldn’t find any surveyors. It was that busy. And then the National Energy Program was announced, and I got a phone call from my boss here in Fort St. John to come home. There was no more work.”
“It was that sudden,” he added. “The oil companies just shut right down in the middle of winter, middle of their programs. Then, of course, we went through about a nine year recession where we barely made ends meet through the 1980s.”
McElhanney began to pull out of that downturn at the end of the decade, allowing them to build their staff and operations to their current level throughout the 1990s. The company was able to survive that tough period thanks to the development of Tumbler Ridge and the Bullmoose coal mine during the 1980s.
“We managed to get some work there to tide us over,” Petzold remarked. “Certainly, they weren’t growth years for us. We were just holding our own.”
McElhanney’s work with the oil and gas industry includes legal surveys of right-of-ways, surveys for well sites, pipelines, and other infrastructure, as well as the mapping that goes along with those projects. It was a pipeline job that really allowed them to establish a permanent office in Grande Prairie.
“We started out with the Alliance pipe-line,” said Jerry Quinlan from the Grande Prairie branch. “[It] was a big project. It’s probably the biggest one that we’ve done, and really got the Grande Prairie branch started.”
Quinlan noted that the Grande Prairie branch has also had its “growing pains” and troubles with finding adequate staff.
“Party chiefs, field guys, or drafters – big time turnover in those positions,” he said. “And then once, of course, you finally get some of those workers, then there was nev-er enough supervising staff to go around.”
However, the Grande Prairie is starting to benefit from the reputation that McElhanney has earned through its one hundred years.
“You know, the word getting out that McElhanney was here was always a tough thing,” said Quinlan. “We went from a field office to a full-fledged office, meaning that we created our own plans – you know, went from A to Z, so to speak.”
“The McElhanney name – I mean, after a hundred years, you do get: ‘Oh, McElhan-ney’s in Grande Prairie. Well, maybe we’ll get them to do the work.’”
Until recently, Quinlan was serving as the branch manager at the St. John’s Project Office in newfoundland, which was really a unique solution to a problem facing the land surveying industry in western Canada.
“It was the lack of employees that we could get out west versus the influx of people that wanted to be in Newfoundland,” said Quinlan. “A lot of McElhanney workers are East Coast people. So, it was a fact of bringing people from western Canada back to Newfoundland ... And the fact that there’s a college right there (College of the North Atlantic), that we could, I guess, start their careers, being at home, working for McEl-hanney, instead of having to leave.”
McElhanney Land Surveys’ only office outside of western Canada has been run-ning for about two and a half years. It is essentially just a support office for western Canadian operations, and no fieldwork is done at that site.
“The office could have been in Australia,” quipped Quinlan.
Bill Papove at work in northern British Columbia. The date of the photo is unknown, but it is likely the mid-1950s, shortly before Papove joined McElhanney
A young Bill Papove at work, in typically challenging terrain in B.C.Bill McElhanney plying his trade in the B.C. wilderness.
Despite what seemed to be the helicopter’s outrageous high costs, George Smith employed the newly available aircraft as much as he could on the Kemano Power Project surveys and extolled its efficiency as a justification. Left to right: Morley Horton, Henry Krol Van der Hoek and Doug Meredith, 1951.
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22 • PIPELINE NEWS NORTH I March 2011
Surveying for the oil and gas industry in this region certainly has its challenges apart from the staffing issues.
“Deep snow to muskeg, maddening insects, dangerous wildlife, dangerous consultants,” said Jamieson with a laugh, enumerating the difficulties that McElhan-ney crews often face. “You know, you’re getting your quads and snowmobiles stuck in obscene places in the middle of nowhere. Areas where you can’t even put evidence down by way of a survey pin. You have to literally drop it into the muskeg and sort of hope it hits where it’s supposed to.”
McElhanney copes with those chal-lenges through extensive training.
“Where the rubber meets the road for us is our party chiefs,” he said. “Those guys are extremely well trained. It’s not something you can just go and do in six months or six weeks. It takes a couple years to come up to speed to be a good party chief.”
“All of our party chiefs that operate in
wooded areas are certified fall-ers,” Jamieson continued, citing examples of training McElhanney staff undergo. “So, they’re able to cut down trees the proper way, the safe way of doing it. All of our guys take ATV safety courses.”
Jamieson feels that one hundred years is proof that McElhanney has found the right approach to doing business. “For one, it means we’ve got a model that works,” he said. “It worked through the Depres-sion, it worked through the [wars], it worked through the lean years in the eighties, and it actually worked really well during our most recent recession.”
“It’s a company that really looks highly upon its people. I think that’s the one thing – there’s a lot of pride around the fact that we are a hundred years old. But it also means that we’re not necessarily as quick to jump on the next, latest flavour as some companies might. We’re seldom a first adopter of technology, but we are never a late adopter. That’s sort of an internal mantra that we often hear.” •
One hundred years - and McElhanney still counting
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28446
technology sure has changed over a hundred years!
It was no secret to the Alberta Ministry of Sustainable Resource Development (SRD) that the province’s population of woodland caribou was in trouble in September, 2011.
Not only was the species legally designated as Threatened under the provincial Wildlife Act, but the Scientific Subcommittee of the Alberta Endangered Species Committee had also indi-cated that the woodland caribou was actually verging on becoming Endangered.
So, in the fall of 2002, the SRD formed an Alberta Woodland Caribou Recovery Team that consisted of representatives from the SRD and Alberta Energy, Parks Canada, the Federation of Alberta Naturalists, the Boreal Caribou Com-mittee, the University of Alberta, and the natural resource sector, particularly forestry and the oil and gas industry.
The work of the Recovery Team led to the development of the Alberta Woodland Caribou Recovery Plan. The Alberta Caribou Commit-tee (ACC) was born out of that Recovery Plan in 2005 as a multi-stakeholder organization – including representatives from government, industry, and other non-governmental groups – with the job of coordinating management activi-ties as they pertain to caribou.
According to Dave Ealey from the SRD, the ACC essentially replaced the Boreal Caribou Committee, which was concerned with herds in the vicinity of Alberta’s oil sands, and the West-Central Alberta Caribou Committee, which was concerned with herds in that part of the province.
“A very substantial amount of caribou re-search had been done under the auspices of the Boreal Caribou Committee,” said Ealey. “And the Alberta Caribou Committee continued on some of that research. Making sure that the monitoring was done. And, where there were opportunities for coordinating how funding would be distributed to the appropriate types of research activities, then they would have had a role in that. And also in facilitating the collabo-ration between researchers and, of course, industry partners.”
“The [Alberta} Caribou Committee was in-tended to cover the province,” he added. “Bring everybody together and at least provide a forum for regular contact between the government and quite a wide variety of these industry organiza-tions and various large businesses – the forest sector and academics and wilderness [and] conservation groups – to try to get a sense of
March 2011 I PIPELINE NEWS NORTH • 23
james watermanPipeline News North
saVIng the carIbou- alberta Caribou Committee
the wide perspectives of those different sectors. And we basi-cally started working with them on building landscape-plans that were another part of the Recovery Plan exercise.”
The Recovery Plan called for the creation of five land-scape-planning areas in which the various caribou herds could be managed on a region-by-region basis.
“And so we’d been working at different phases at what the Recovery Plan was recommending,” Ealey continued. “We had an opportunity through the ACC to have discussions about best practices that industry was applying, trying to sort of reconcile differences between government departments and different mandates and different legislation that governs what different departments do. So, it was really an effort to try and coordinate conservation actions in caribou country. The other thing was to have a single place where we would have data brought forward so everybody had access to the crucial data about the level of success for different caribou herds.”
The SRD is closely associated with the ACC, with ministry staff on its Governance Board alongside representatives from other government departments, First Nations, and the Cana-dian Association of Petroleum Producers (CAPP) and energy sector companies.
Ealey feels that the involvement of the oil and gas indus-try is important to the success of the ACC in achieving its conservation goals.
“Basically,” said Ealey, “they’re the ones that know what works on the land in an industry-dominated landscape. And they’re the ones that apply a lot of the practices, which, in fact, are some of the issues when it comes to caribou.”
A specific concern is changes to caribou habitat due to oil and gas activity – such as 3D seismic programs and the construction of access roads and pipelines – that alter the predator-prey dynamic to the detriment of the caribou.
“The increased predation that caribou face when wolves travel cut lines,” Ealey explained.
The key is developing a coordinated approach to the issue, which is a big part of the reason for establishing a single, multi-stakeholder organization concerned with caribou man-agement like the ACC.
“We do want to have industry show us how they can play a more coordinated role in achieving some of these habitat objectives,” said Ealey.
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Government, resource industries, and conservation groups in Alberta have joined together to form the Alberta Caribou Committee in the interest of protecting the threatened woodland caribou population in the province.
invoice data electronically. After an analysis of the local market, we ap-proached Cortex to discuss the possibil-ity of combining efforts to provide the best of breed solutions to our customers. It quickly became evident that a partner-ship made sense, as our companies provided non-competing, complementary services. Cortex focused on the collec-tion and delivery of invoices to the cus-tomer’s door, and Powervision focused on the internal processing and approval of these invoices, with strong integration with many of the popular ERP (enterprise resource planning) and accounting sys-tems used in the oil and gas industry.”
“From my standpoint, I think it has gone very well,” de Poyen said of the young partnership. “We put a lot of effort initially into the actual development … and so implementation [for] every cus-tomer so far has been very successful.”
“Our number one value proposition for the buying organization is increasing
the efficiency of the accounts payable department,” said Lailey, describing the benefits of the partnership and the busi-ness solutions that they offer jointly. “So, in the paper world, you know, if the sup-pliers are submitting invoices paper-wise – going through Canada Post and then it shows up in Calgary or in Edmonton and then it goes through and is processed manually – it takes a lot longer. What we do is, we actually load all of the financial information directly into their internal system, so there is no data entry, there is no scanning, there’s no manual effort on [the client’s] side of things. So, they can go through their approval process faster and pay their suppliers faster. You do have an advantage in being electronic because you will be paying the suppli-ers faster than a company that is not electronic. And then eventually what will happen is the suppliers will want to work for you more than the company that is paying them in ninety days.” •
24 • PIPELINE NEWS NORTH I March 2011
Ever since they announced their strategic partnership in March, 2009, Cortex Business Solutions and Powervision Software have been joining forces to make daily business more efficient for oil and gas industry companies in North America.
The partnership between the two technology outfits offers a solution to the challenges of doing business in an increasingly fast-paced and paperless business environment, especially for energy companies that may literally deal with thousands of goods and service suppliers, not to mention all the suppliers that also deal with those energy companies.
Powervision’s role is to address process efficiencies internal to the oil and gas companies, applications of its software including managing account-ing vouchers, land contracts, well files, human resources files and engineering drawings. The company was founded in 1992 and has had considerable experi-ence working with the oil and gas indus-try during the past nineteen years.
“Powervision solutions drive cost savings and productivity increases at companies ranging from an energy re-sources organization with over $17 billion in revenue, processing several million documents online, to SMEs (small and medium enterprises) with less than fifty employees,” said JP de Poyen, President and CEO of Powervision. “Our solu-tions integrate seamlessly to provide a powerful platform to capture, organize, index, store, secure, route and access a company’s vital corporate documents.”
“Our Workflow Management (software) solution is used extensively by accounts payable departments to automate and streamline the capture, processing and approval of supplier invoices, eliminating the paper chase throughout the entire payable cycle,” he continued. “Our customers vary widely in size, with some of the smaller companies processing a thousand invoices per month, and the larger ones processing over fifty-five thousand invoices per month.”
Cortex’s job is allowing the suppliers
and buyers to communicate with one an-other electronically through their Cortex Trading Partner Network – even when the two sides are using incompatible ac-counting software.
“What Cortex focuses on is the automation of the procurement process for, really, any industry, but our primary focus is oil and gas right now,” explained Ryan Lailey, Vice President of Busi-ness Development at Cortex. “So, what I mean by automation of procurement is the movement of purchase orders, goods and service receipts, and invoicing electronically as opposed to by paper. We’ve built a network of companies [and] we sit in the middle. And we act as an exchange of information between trading partners or companies that allows your suppliers and buyers to interact with each other regardless of what technol-ogy they’re using internally. And so if you look at a small business … you might be using QuickBooks or Microsoft Dynam-ics as an accounting system. But one of your customers is probably using SAP or Oracle. Well, those two systems don’t talk to each other. So, what we do is sit in the middle and everyone connects to us. And we act as a translator. And we move the information in the language … that the receiving party requires.”
“We have close to 4000 companies connected to the network today,” he added. “And that’s growing on a daily basis. So, each one of those companies can be a small, medium or a large sized supplier in the oil and gas business. And by adding new delivery points or new buying organizations onto a procurement network like this, it allows all of those companies to now interact with [each other].”
The partnership between Cortex and Powervision came on the heels of Powervision introducing its Business to Business (B2B) solution in February, 2009. The B2B technology allows sup-pliers and buyers to securely exchange information and enables the companies to enjoy an expedient and cost effec-tive invoicing process that is entirely electronic. The development ultimately led Powervision to its partnership with Cortex.
“During the development of our B2B solution,” said de Poyen, “we realized that it would be a daunting task for our customers to engage every one of their thousands of suppliers individually to agree on a format and process to send
Canada is proving a boon to drilling contractors with no sign yet of the slow-down that usually begins in March.
This week’s Rig Locator found 641 rigs at work, 80 per cent of the avail-able fleet.
That represents 165 more active rigs (the highest variance this year) than in the same week in 2010. And it is 408 more active rigs than the Rig Locator
reported on March 10, 2009 when only 234 units were employed.
This week, 464 rigs are at work in Alberta with 59 active in British Co-lumbia, 98 in Saskatchewan and 20 in Manitoba.
Compared to the same week last year, Alberta is ahead by 168 rigs, B.C. is down by 23 rigs, Saskatchewan is up 13 rigs and Manitoba has six more rigs at work. •
Daily Oil Bulletin - www.dailyoilbulletin.ca
“So,” Gwozd continued in his char-acteristically tongue-in-cheek style, “the technique that they do is let some grandmothers freeze in the dark, or they have them take knitting lessons or they offer brail or they offer candle-making as back-up plans. And so they have lots of back-up strategies in the U.S. when they have those cold days where they can’t get enough natural gas. They just pay more money. And then people complain it’s too expensive. But it’s only for one or two days.”
Besides, it is not as though western Canadian producers can simply ship more product to the northeastern United States at the drop of a hat. Additionally, it is not economically sensible to produce more natural gas for a specific customer than that customer is contractually obliged to receive just in case their natural gas needs increase on certain special occa-sions or during periods of especially cold weather.
“They produce up to their contractual requirements,” Gwozd explained. “And so they may have a market in New York for, let’s say, twenty per cent of oil and gas out of Western Canada. They just can’t produce thirty or forty or fifty per cent for New York. Those guys in New York buy some gas from the Gulf of Mexico, some gas here. So, our gas just can’t flow. The producer here just runs his well at a fifty per cent load factor. Turns it on Monday and Tuesday. Shuts it off on Wednesday and Thursday. Puts some gas into stor-age. Shuts the well in for a while.”
“The producers don’t really care about the gas markets,” he added, pointing to the true nature of the supply and demand dynamic. “Their business is to poke holes in the ground and exploit the basin and transfer the gas out of that basin into the pipeline and get it to markets. All the producers in North America are doing that right now. Because everybody didn’t care about the markets, they got to a point where there was actually more gas poten-tially available, not actually flowing.
“You can never have more gas than the size of the market. That’s mathematically and economically impossible. Because, if you do, nobody’s going to burn it.”
The natural gas export picture appears to be complex and full of variables.
Presently, Canadian natural gas exports sit at about 9.0 Bcf per day, but could fall to about 5.0 Bcf by mid-decade.
“And they’re falling because of the fall-ing supply and also falling because of ris-ing gas demand in Canada,” said Gwozd. “And so, as the gas for oil sands picks up, as the consumption in your neighbour-hood [and] my neighbourhood kicks up, and as supply tilts down, the net impact means less exports.”
That has interesting implications for the eastern half of the continent.
Ziff Energy’s projections for 2012 sug-gest that Ontario’s 3.0 Bcf per day natural gas demand will be provided by Western Canada, as well as imports from the United States to the tune of 2.0 Bcf per day through the Dawn hub.
However, the “end of the river” for the western Canadian gas supply is not On-tario, but Quebec and New York.
“And so the river runs through Ontario,”
said Gwozd. “And it’s strong enough to irrigate Ontario with natural gas require-ments.”
The river runs dry when western Ca-nadian natural gas can no longer supply Quebec and New York as well; Ziff Energy predicts that that river will indeed run dry.
So, that is why Gwozd can get a bit irritated when some people claim that natural gas development in shale forma-tions in the U.S. – such as the Marcellus – is not necessary because the eastern U.S. is being fed by Canada.
“Some guys will say you can’t put more gas into the U.S. northeast because Can-ada’s already feeding 2.0 Bcf in there,” he said. “That’s today. But, in the future, Canada won’t have 2.0 Bcf to feed them.”
A number of variables exist in the western Canadian scene that could have an impact on exports from that part of the country.
“Today, exports are around 9.0 Bcf [per day],” said Gwozd. “In 2023, they’re around 9.4 [bcf per day]. So, they actually went up. Hang on though. That assumes [the Alaska Pipeline and the Macken-zie Valley Pipeline] are both in place. If Alaska and Mackenzie are not in place, exports would be around 4.0 bcf [per day] in 2023. And that 4.0 [bcf per day] includes the 2.0 bcf being imported at Dawn from the U.S. And it also includes a bit of gas from Sable Island and Quebec-Utica. Therefore, the net out of Western Canada in 2023 – exports are less than 2.0 bcf a day.”
Ziff Energy’s opinion is that both the Alaska and Mackenzie Valley pipelines will be flowing by 2023 and so Canadian exports will be quite strong.
“These numbers are also premised on some gas going out through Kitimat,” Gwozd added. “But if you have a stronger demand for gas at Kitimat, then you would have more drilling activity in the Montney and Horn River area. Because if you can get oil prices for your natural gas, you’re going to poke more holes in the ground.
“But if you can’t get that higher price, you’re not going to poke more holes in the ground. And so the ability of North American producers and their marketing arm to go and speak Asian languages … and persuade them to purchase Canadian gas – if they’re successful, then you will have a higher production out of Western Canada with dedicated streams to Asia. Not necessarily dedicated to the eastern part of Canada.”
ultimately, Gwozd is confident that Ziff Energy’s forecasts will stand the test of time.
“The predictions that we do in writing are premised on … detailed supply mod-els,” he said. “And so we look at number of wells, the productivity, the decline rates by individual areas. When you roll it all up, you get a real clear, coherent picture.”
“Many of these guys that make these forecasts have bought low-cost binoculars to look at Western Canada. And they don’t see straight,” Gwozd continued. “But these guys don’t know all these funda-mentals. And so they shoot from the hips. Or they read it in some brochure. Well, if it’s not stamped with Ziff Energy, you can’t think it’s true.”
“We’re not contrarians,” he concluded, finally shrugging off the black sheep per-sona. “This is the realistic view.” •
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Ziff Energy - ‘black sheep’ of the oil and gas industry
Ealey noted that industry organizations and individual companies often have dif-fering perspectives and so it is necessary to try to bring those perspectives together to create more coherent solutions to these conservation problems.
“The organizations look at the broader policy implication and the bottom line for the overall industry,” he explained. “Whereas, I think, a lot of companies in sort of local areas are much more closely tied to the land and have greater op-portunity to put into effect some useful solutions. That’s harder to do across the whole province. And so we find successes in specific areas.”
“That’s what the landscape-plans were specifically designed to approach, but the proof of the effort is going to be in how it’s implemented,” Ealey continued. “And we still are working towards getting effective implementation of some of those plans. And, of course, at the same time, we’re monitoring the populations – and the majority are continuing to decline. So, our pressure on the caribou populations is growing. And so we want to use the recognition of the time crunch, as it were, to try and get faster action on some of the habitat components.”
An area of emphasis for the ACC is restoration and reclamation of caribou habitat, which is also an area in which the oil and gas industry is a major player, not only because of their impact on the land, but also because of their knowledge of the land on which they work.
Ealey describes the issue in terms of requiring a “robust plan for having these access routes return to a more continuous forest as soon as possible.”
“Restoration and reclamation,” he
continued, “are two major thrusts of the long-term habitat parts of the program that we need to move forward on. That’s something that does take time, of course.”
“We do know that there are certain types of access that don’t get recovered or restored,” Ealey added, citing certain roads and pipeline right-of-ways as spe-cific examples. “And that’s an area where I think our guys are trying to identify things that will work for the industry as well as, of course, the caribou.”
Ealey is realistic about the challenges facing the caribou, but he is also confi-dent about the ability of the concerned stakeholders who make up the ACC to face those challenges.
“Essentially,” he said, “the objective is to work towards making the Recovery Plan more real. Basically, trying to make sure that the conservation steps are identified – are implemented. Things like recovery plans are very good for laying out the full range of options, but as far as getting the implementation done, that’s another stage. That’s another part of the process here. And it’s been, I think, fairly dogged going, but I think that there’s some potential here. And we’re hoping, of course, that that happens before we see too serious declines [that] the caribou aren’t able to climb back out of. We feel that if we can apply all the different management tools that we have at our disposal, we can deal with the short-term stuff with the predation and the long-term stuff to ultimately provide for long-term presence of caribou.”
“How effective we are at … integrating with industry is part of the challenge, but we feel that there are a number of indus-try representatives that are committed to caribou. It’s a matter of finding ways to make their contributions – their efforts – most meaningful.” •
- corporationsWhen a shareholder active in the management of a private corporation
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So, it is important that people are aware of the existence of pipelines near their homes, schools and businesses, as they can also alert pipeline companies of excavation or other ground disturbance that may be occurring in the vicinity of their facilities.
“That awareness can cause somebody to call the pipeline company and say, ‘Are you aware that somebody is digging close to your pipeline?’” said Saad. “And that’s always very appreciated. Because, again, through fostering good relations with our landowners and our neighbours, they can be an extension of our eyes and ears, and we find that very, very useful.”
According to Saad, the One-Call sys-tem has been beneficial to public safety, as the number of incidents of unauthor-ized digging has decreased over the past ten years. Still, CEPA would like to see improvements to the program, including its expansion to the provinces that currently do not use the system, the introduction of one nationwide One-Call telephone number, and an increase in the number of companies – who current-ly join the system on a voluntary basis – who take part in the program.
“And this extends to people like cable – underground cables, communication cables and so forth. You know, water, sewer. It’s not just oil and gas. But any-body with underground infrastructure, in our view, should be a member of a One-Call system. So, have it across Canada, have everybody become a member of a One-Call system, and have one number across the country, would be immediate improvements.”
Despite the potential risks, CEPA is confident that transmission pipelines are safe.
“Pipelines are the safest way to trans-port hydrocarbons,” said Saad. “There’s absolutely no doubt about that. So, people should feel safe if there’s a pipe-line in their backyard. However, if there is an emergency, it’s important for them to know what’s appropriate behaviour to undertake. And that is outreach that all pipeline companies are very diligent about.”
It is not only important to be aware of the pipeline, it is also important to have an emergency response plan if an inci-dent should occur.
“We always try to provide informa-tion that, in case of pipeline emergency, here’s a number you can call, which is typically the operating company,” said Saad. “If you see products coming out of the pipeline location, don’t approach it.”
“If there’s a significant failure – that’s extremely rare that it would happen just spontaneously – but it will be obvious that something bad has happened,” he continued. “If there’s a pinhole, for example – and that’s rare as well – but in the case of natural gas, there’ll be the odorant in the natural gas that you might be able to smell. Certainly, in urban areas, the distribution lines will always have odorant. If it’s out in rural areas, there’ll be tell-tale browning, for example, of vegetation in that area. [That] would be one indicator that there might be a leak in there because, of course, the natural gas permeates the soil and has an impact in that regard. And there might be some other signs around the earth. It might be heaved or otherwise different from the surrounding terrain.
“In case of liquids, you would see evidence of the liquid. So, if it’s crude oil, you’ll see evidence of crude oil coming to the surface. And, again, crude oil has a distinct smell. So, you would have a smell. The key thing when you see those symptoms is not to approach. Pipeline companies always, always welcome somebody calling them and then they go out and if there’s nothing: great. But they’d much rather entertain that scenario than having somebody get hurt because they got close to where a leak location is.”
CEPA and the pipeline companies are committed to maintaining the safe opera-tion of Canada’s pipelines, just as they are keen to maintain a strong relation-ship with the Canadian public through programs such as One-Call. After all, transmission pipelines are critical to our lives as Canadians.
“Pipelines are really infrastructure,” said Saad. “Ninety-seven per cent of all hydrocarbons go through our pipelines … So, it’s a major undertaking, and it’s a very fundamental service for the popula-tion at large. So, we have to make sure that this delivery system is reliable and safe, because it is core to both our eco-nomics and our lifestyle.” •
Encana lightens the load
“This divestiture is part of Encana’s ongoing initiative to capture significant incremental value from its midstream assets – natural gas processing plants, pipeline gathering systems and com-pression facilities,” said Renee Zemljak, Executive Vice President of Midstream, Marketing and Fundamentals at Encana, as quoted in a recent press release.
“It’s important to understand that’s really not our business, the midstream,” said Encana spokesperson Carol
Howes. “It’s really sort of, we get these proj-
ects going and then … that’s generally not the business that we maintain.”
According to Tahmazian, the amount of time that it took to complete the Fort Lupton deal is not likely to suggest a timeline for the Cabin Gas Plant sale.
“It was underway for a fair amount of time,” he said. “But, then again, it had the value of not having partners that you need to keep in the loop throughout the process.” •
COnt’D frOm PG 11
A single regulatory bodyDallas continued, “I think there’s a
variety of areas where there’s some efficiencies of resources that could be applied to this,” Dallas continued. “And they aren’t necessarily all at the delivery of the regulation, but they’re also in all of the areas of the stakehold-ers that are involved in the process. So, whether you’re an NGO, a landowner, a First Nation group, you have a series of resources that you expect that you would apply to an application or a hear-ing and the like.
“Industry has the same challenges. What we found, in having a look at this, [is] that there was a redundancy, a duplication of information that was required on applications. There was a requirement for all of the stakeholder groups that wanted to participate, to participate through multiple windows. Really, a maze of scenarios that evolve along the way of the more complex applications, all requiring resources and time. So, I think that there’s lots of op-portunity to look at opportunities around gathering information for a [single] application, applying resources to that review. And the stakeholders that wish to bring concerns and raise issues rela-tive to that, some consolidation of their resources as well.”
Liepert suggested that the creation of a single regulator operating at arm’s length government can benefit both the pace of industry and environmental protection efforts, simply by virtue of its ability to make decisions without feeling obliged to any specific government department, while weighing all those concerns equally as part of an integrat-ed approach to energy sector matters.
“If we follow the model of the single regulator that exists today with the ERCB,” he said, “it is viewed as a world class regulator, arm’s length
from government, whereas when we’re talking about some of the approval processes through the departments of Environment and SRD, those are very much handled within government. So I actually think, from an environmental standpoint, the ability to have all of their concerns heard and addressed by an arm’s length regulator – I see it as an improvement.”
Presently, there is no definite timeline for when the recommendations will be implemented by the government or a definite plan for how the new single regulatory body will take shape.
“Caucus has accepted the report,” said Leipert. “We, in essence, by accepting the report, agree with the recommendations. It’s just that some of the recommendations … were not clearly definitive. We have to have that debate. We have to look at all the pros and cons about whether that single regulator is the ERCB with the other ap-proval processes merged in, or whether it’s a new entity. That’s the discussion that will happen before the legislation comes forward in the spring.”
“It’s not certain yet,” he added, “but the intent would probably be to bring forward a fairly extensive piece of leg-islation in the spring, and let it sit over the summer for input from industry and public and virtually anyone who would want to have some input into it. And if there were amendments that would be required, they could take place in the fall. So, that’s our agenda.”
Liepert is confident that when this plan is implemented it will mean a substantial cost savings for the industry, with no additional cost to government.
The key concern is improving efficiency.
“I can pretty much guarantee that any time you don’t have to duplicate pro-cesses, it’s going to be more efficient,” said Liepert. •
COnt’D frOm PG 3
COnt’D frOm PG 17
new tcl branch in baytree
TCL Oilfield Hauling, Sand & Gravel is expanding its operations with a new branch in Baytree, just outside Daw-son Creek, British Columbia.
“I’ve been looking to expand for the last couple of years,” said General Manager Tyler Kosick. “And business has definitely picked up over that way. I know that we wanted to get the right people in place before we decided to branch out.”
Business is booming in the region thanks in large part to recent shale gas development in the Dawson Creek area.
“Springtime,” Kosick added, “we’ll probably be looking at developing the yard over there, as soon as the snow’s
gone.”However, the new branch already
has a full-time sales representative, Sean Inkster, who will move into a management position as the facility grows.
Presently, the new branch offers the same services as the main branch in Fort St. John, but on a “smaller scale.”
“It’s close enough that we’ll be able to support that branch from Fort St. John, too,” said Kosick.
Kosick is also hopeful that the new branch will allow TCL to expand its operations into new territory for the company. “We’ve just got to keep an open mind,” he said, “and hopefully ex-pand into other areas as we grow.” •
Advantage Oil & Gas Ltd. increased its proved reserves to 143.37 million bbls of oil equivalent at year-end 2010 from 107.87 million boe a year earlier.
The drilling and development program resulted in a 22% increase in Glacier proved plus probable reserves from 137.4 million boe (0.82 tcf) at Dec. 31, 2009 to 167.4 million boe (1.04 tcf) exiting 2010.
At the end of 2010, Advantage had an estimated 243.6 million boe of proved plus probable reserves, up nearly five per cent from a year earlier. However, the 10 per cent discounted present value of those reserves declined to $2.5 billion from $2.7 billion at the end of 2009 due to a lower gas price forecast.
The reserve evaluation was done by Sproule Associates Ltd.Reserve additions in 2010 were driven by continued success at
Glacier where total proved plus probable reserves now exceed one tcf (167.4 million boe) and comprise 69 per cent of total company working interest reserves.
Advantage said production and test results at Glacier exceeded expectations with a 2010 exit production rate of 10,000 boe a day (60 mmcf a day).
Proved reserves represent 59 per cent of total company proved plus probable reserves compared to 46 per cent in 2009 due pri-marily to the 2010 development program at Glacier which led to a significant increase in proved reserves.
“Drilling results at Glacier have demonstrated that our Montney development is among the top tier natural gas resource develop-ments in North America,” Advantage said in a press release.
An additional 19,667 boe a day (118 mmcf a day) of produc-tion capacity currently exists, including test results from 22 of the company’s 28 Phase III Montney wells (100% working interest). The remaining six Phase III Montney wells have been drilled and are waiting on completions and testing which is expected to be under-taken by the end of the second quarter.
The company expects only 12 Phase III wells will be needed to initially achieve the 100-mmcf-a-day target with the remaining Phase III wells to be brought onstream as required to offset declines and maintain production.
Expansion of Advantage’s Glacier gas plant to 100 mmcf a day is expected to reduce operating costs to $1.80 per boe (30 cents an mcf) as the majority of the operating costs are fixed.
All Phase III wells qualify for the Alberta Natural Gas Deep Drilling Program (nGDDP) which will result in an effective royalty rate of five per cent for these wells.
Advantage’s 2010 capital program added 26.4 million boe of proven and probable reserves at a finding and development (F&D) cost of $10.97 per boe including the change in future development capital (FDC).
The company’s three-year corporate F&D cost of $12.43 per boe (proved plus probable rserves, including the change in FDC) reflects the strong organic growth achieved since 2008 at Glacier.
Advantage’s reserve life index is 27.5 years using the estimated fourth quarter 2010 average production rate.
The one-year recycle ratio is 2.4 using the finding, development and acquisition (FD&A) cost of $10.89 per boe (proved plus prob-able including the change in FDC) and the company’s 2010 operat-ing netback of $25.65 per boe.
In 2010, Advantage increased the number of fracs per horizon-tal well and optimized its frac design program which continued to improve well test rates. In addition, it drilled more wells on pad con-figurations which has reduced the drilling costs per well.
These changes helped to offset cost increases in 2010 due primarily to the increased demand on completion services driven by higher levels of multi-frac applications.
As part of its Phase III drilling program, further delineation in the upper Montney has confirmed the continuation of high quality res-ervoir characteristics to the extreme northeast and southeast areas of the company’s land block which further proved up significant un-drilled acreage. Wells located along the western portion of the land block continue to demonstrate the strong results seen in 2009.
In the Lower Montney, Advantage has drilled and completed a total of 10 (6.7 net) horizontal wells since 2008. An additional, two Lower Montney wells have been drilled and will be completed and tested by the end of the second quarter.
To date, the average 30-day initial production rate in the Lower Montney has been less than the Upper Montney at Glacier. How-ever, the Lower Montney wells are demonstrating a shallower decline which indicates significant reserve potential. Advantage said the Lower Montney is present over its entire Glacier land block and provides a significant opportunity for future reserves growth.
In the Middle Montney, Advantage is encouraged by the resource potential which has been proven to be productive elsewhere in the Montney fairway. Plans include horizontal well drilling to delineate and test this interval. No reserves have been assigned to the Middle Montney interval in the 2010 Sproule report. •
Daily Oil Bulletin - www.dailyoilbulletin.ca
industry newscnrl report- a great fourth quarterCanadian Natural Resources Limited announced its fourth quarter and yearend results for 2010 last Thursday, Mar. 3, posting higher than expected production, cash flow and earnings.
In fact the company achieved an overall record yearly production level, producing over 632,000 barrels per day of oil equivalent.
In addition to producing more oil than ever, CnRL also increased their proved and probable gross reserves by 9 per cent to 6.9 billion barrels, a figure more than three times the level of 2010 production.
As a result of this year’s strong results the com-pany’s board of directors increased the quarterly dividend to 9 cents per common share, up 20 per cent from 2010 when the dividend was 7.5 cents.
This marks the eleventh consecutive year of increases for CnRL.
“Over the last two years our core business has
generated approximately $6 billion of free cash flow allowing us to make discretionary acquisitions of $1.9 billion while at the same time reducing debt by $4.5 billion,” said John Langille, Vice-Chairman of CnRL.
The result of the strong financial footing, he pointed out, means that the company now has a debt to book capitalization of 29 per cent.
Company President, Steve Laut credited the company’s positive performance to strong opera-tion production and good cost controls.
“2010 was a strong year as we capitalized on the balance in our asset base through the effec-tive allocation of capital to projects that provide the highest returns. We are in a solid position as the project portfolio continues to build strength and optionality, preparing us to provide growth through a variety of commodity price scenarios,” he said.
The company plans to capitalize on strong oil prices going into 2011, continuing their program of allocating their capital re-investment in oil as op-posed to lower-priced natural gas.
“Until gas prices recover, that will continue to be our approach,” said Laut.
The company is also investing money in reha-bilitating their Horizon project, which suffered a fire in January. •
ryan LuxStaff Writer
challenge- walk to alaska
It’s time to lace up those running shoes and start walking…to Alaska.
The City of Fort St. John is daring businesses to walk 2,462 kilometres to Anchorage, Alaska in the Northern Vac Track 2011 Corporate Challenge.
Recreation programmer Serena Warkentine said one of the City’s goals has been to get the corpo-rate community more active.
“Of course the corporate people are the busy people that work all day and go home to their kids at night,” she said, adding that this challenge allows participants to go to the walking track any time between 6 a.m. and 9 p.m. on weekdays and 9 a.m. to 9 p.m. on weekends.
“We’re making it more accessible for them and try to instill active living and a way to educate that target market with active lifestyles.”
Businesses are invited to sign up teams of up to 10 people to walk the 6,155 laps of the 380-metre walking track. If a business does not have 10 em-ployees, they are allowed to have family members join their team.
Teams can log their laps with the Recreation At-tendants on the track during its hours of operation. The challenge runs from Mar. 21 to Jun. 15.
Warkentine’s goal is to have at least 20 teams participate. The first team to cross the finish line wins a night out at the Lido with a booth for 10 people at the event of their choice.
Since its October opening, the Northern Vac Track has gained wild popularity within the com-munity.
“I can’t believe how busy it is. It doesn’t matter what time of day I go up, it’s always busy,” she said.
“Now I can’t imagine a community not having a walking track anymore – people need something to do that’s accessible.”
She said there are over 800 people signed up for the current Walk To Peace River. Kids are invited to participate in the Walk To Taylor.
“It’s helping to improve the lives of so many people. A lot of seniors and parents and tots use it – the people that can’t go outside.”
For more information, contact Warkentine at 250-787-5780 or via e-mail at [email protected]. Warkentine said she’s planning a Family Challenge this fall. •
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