Thursday, 18 May 2017

CARBON STEW

Published: Oilweek
By: Gordon Jaremko

POLICY

CARBON STEW
Dining habits cook up greenhouse gas storm

On the air-pollution scale, consumers have a counterpart to the oilsands, only bigger—much bigger. Call it the skeleton in the kitchen. The United States Department of Agriculture (USDA) exposes the startling results of rich eating and drinking habits in a report titled The Role of Fossil Fuels in the U.S. Food System and the American Diet.

     “Use of fossil fuels to produce the foods and beverages consumed by Americans in 2007 accounted for 13.6 per cent of economy-wide CO2 emissions from fossil fuels,” says the 90-page document.
     “Domestic fossil fuel use linked to U.S. food consumption produced 817 million of the nearly six billion metric tons of CO2 emissions economy-wide,” it says.
      The role of everyday American grub in the exhaust blamed for global climate change is 12 times the current annual oilsands contribution of 70 million tonnes and exceeds the Canadian total from all sources of 730 million tonnes.
     “The consumption of fossil fuels, nuclear power and renewable energy by the U.S. food system was on par, in 2002, with the entire national energy budget for India and exceeded the combined energy budgets of all African nations,” reads the report.
      The report, released this winter, summarizes the results of an epic research effort that developed a mammoth scorecard titled the Food Environment Data System (FEDS). No Canadian counterpart has surfaced, but the U.S. results are food for thought north of the border.
     California, with a similar population and standard of living to Canada, blows 70 million tonnes/year into the FEDS accounts of annual U.S. dietary contributions to greenhouse gas emissions—a tie with Alberta’s oilsands exhaust.
     The American ledger covers all aspects of food and beverages, from crop and livestock production through to processing, packaging, transportation, storage, retail and use. The immense information archive enables comparisons of regions down to the scale of counties and between types of consumption, such as homecooked or restaurant meals.
     Of the 817-million-tonne U.S. total yearly emissions tab for eating and drinking, 332 million came from burning coal, 282 million from natural gas and 202 million from oil products. Thermal power generation for electrical equipment accounts for 57 per cent of food-related energy use.
     FEDS also enables an educated guess at the consequences of policy and lifestyle changes. “Both the measurement of social costs from fossil fuel use and the appropriate mechanism for internalizing this cost in energy markets are the two great challenges facing the United States and other nations seeking to reduce their carbon emissions,” says the USDA.
     FEDS calculations raise doubts about the environmental usefulness of carbon taxes. Uncertain data points to a need for much further research into the effectiveness of financial action as an environmental reform tool, say the researchers.
     Levies ranging from US$6/tonne to US$123/tonne of emissions would only raise meal costs by 0.2 to five per cent. The average increase would be a marginal 1.7 per cent, which would not likely make a big difference to greenhouse gas output.
    Changing consumer taste would have larger effects.
    A moderate behaviour turn to a model “realistic healthy diet”—less meat, fats and sweets and more legumes, nuts and seeds—would cut energy use for food by three per cent. “This reduction is equivalent to the annual gasoline consumption of 3.7 million U.S. vehicles,” says the report.
    It would take an extreme switch to an “energy efficient diet”—a pescatarian or semi-vegetarian menu that drops steak and chicken altogether and piles on beans, nuts, fish and eggs—to achieve greenhouse gas cuts on the grand scale preached by eco-evangelists. This Spartanstyle diet would cut food-driven carbon emissions by 74 per cent, equivalent to scrapping 90 million vehicles or 35 per cent of American cars.
    FEDS inspires little comment or publicity from environmental factions. The silence is predictable. The U.S. research thinks about the unthinkable: serious lifestyle changes implied by eco-cleanup ideas as opposed to moves on energy corporations that the political left and Hollywood demonized long before global warming soared to the top of reformer agendas.
    The Alberta oilsands industry has no such luck of limiting its debate over its future to neutral specialists. About half of potential production growth will be lost unless thermal extraction plants curb their appetite for natural gas, shows the latest annual supply cost review from the Canadian Energy Research Institute (CERI).
    Barring a clean up by new technology still in experimental stages, the northern bitumen belt will hit the 100-million-tonne carbon emissions cap set by the Alberta government in 2026, CERI forecasts.
    The institute calculates that improving project economics in the increasingly efficient industry will enable oilsands output to reach 5.5 million bbls/d in 2036, up by three million from the current 2.5 million. But the emissions lid stops growth using current methods at about four million bbls/d, up only 1.5 million.
    For CERI and oilsands operations, the big question is whether the bitumen belt’s energy appetite can change more easily than the North American diet.

UPITFOS AND THIRTY YEARS OF OILFIELD SAFETY PROGRESS

Published: Oilweek
By: David Yager




It was early 1987 when Jim Dinning, Alberta’s then–minister of community and occupational health, blew a gasket and started phoning oil company chief executive officers, telling them if the oilpatch didn’t clean up its appalling safety record on its own, the government would do it for them.


     In addition to bringing about a devastating oil price collapse, 1986 had been a brutal year for accidents and fatalities. There was a terrible condensate explosion on a completion operation near Edson, Alta., leaving several workers with severe burns. When the province introduced drilling incentives that expired on December 31, a bunch of rigs with green crews went back to work in a hurry over the Christmas holidays, resulting in multiple fatalities. 
     Nowadays every rig that can shut down at this time of year does.
     In 1986, the lost-time-accident claim rate was 3.9 per 100 man-years worked, 13.3 per cent lower than in 1985. But for drilling and service rigs, it was 16 per 100, down marginally from 16.4 the prior year. This was after 30 per cent reduction in man-years worked because of the oil price slump. You’d think only the best hands would be working. Something was seriously wrong.
    The minister quickly got everybody’s attention. A good conservative, Dinning told this writer at the time he’d rather have industry fix itself than have the government intervene. But if nothing changed, the heavy hand of government enforcement was on its way.
   The result a year later was a remarkable report from the Upstream Petroleum Industry Task Force on Safety (UPITFOS), tabling 42 recommendations. The task force was negotiated then enacted in 1988 by the Canadian Petroleum Association, Independent Petroleum Association of Canada, Canadian Association of Oilwell Drilling Contractors, Petroleum Services Association of Canada and the Small Explorers and Producers Association of Canada. Three decades later, the results of UPITFOS are absolutely phenomenal.
    What the UPITFOS process agreed upon was, as the Canadian Association of Petroleum Producers would write 26 years later, the industry “strongly believes that the ultimate responsibility for improved safety performance lies with senior management of individual companies in the industry.” This included the oil companies, as they had significant influence on the behaviour of their service contractors on location.
     What the participants negotiated and agreed upon was the first set of industrywide standards and procedures under which it would operate to ensure everyone on a location was properly trained and properly equipped. This is when workers first became unable to get on a location without appropriate safety tickets, orientation and personal protective equipment. Industryrecommended practices were developed for higher risk operations like well testing and pressure pumping. What also emerged was the basic minimum standard safety program called Certificate of Recognition (COR). Responsible operators wouldn’t hire vendors without a COR, which forced every company, big and small, to ensure safety was a culture, not just a manual. Ongoing independent audits were also required.
    Thirty years later, the results have been spectacular. According to Alberta’s occupational health and safety report for 2015, mining and petroleum development was the safest industry in the province. The provincial rate for disabling injuries was 2.36. The oilpatch was 0.88. The provincial average for lost-time accidents was 1.26. Oil and gas reported 0.25, down 96 per cent from 1986. “The mining and petroleum development sector continued to have the lowest lost-time claim rate in 2015 at 0.25. Provincial and municipal government, education and health services had the highest lost-time claim rate in 2015 at 1.98,” the report reads.
    It was safer in the oilpatch than in the government. Industrial sectors with much worse safety performance than oil and gas, which is everybody, includes agriculture and forestry, business personal and professional services, construction, manufacturing processing and packaging, transportation communication and utilities, and wholesale and retail.
    What the heck are they doing to each other in the offices, plants, stores and warehouses while oilpatch crews are working in the field?
    What is unique about UPITFOS is this is the only major industrial sector that has chosen to develop industry-wide standards—above and beyond provincial rules and regulations—that are almost uniform across all locations and operations. The only exception is companies that demand more, not less.
    The result is a safety culture that has evolved to the point that a good safety record is a commercial necessity if you want to work for the most responsible operators, invariably those able to write the biggest cheques.
    Despite this compelling data, the oilpatch is still tarred with the brush of not working safely enough. But having set the standard, it would be nice if our critics could start improving their own safety performance.

Monday, 8 May 2017

B.C. Election Results Loom Large: Much On The Line For The Future Of Northeastern B.C. Resource Development And Environmental Policy

By: Paul Wells
Published: Daily Oil Bulletin


With British Columbians set to go to the polls Tuesday, the Bulletin continues its look at election issues of relevance to the oil and gas industry as they relate to the platforms of the two front-running parties — the B.C. Liberals and the NDP.

Gary Leach, president of the Producers and Explorers Association of Canada (EPAC), said the Liberals would be the oil and gas industry’s party of choice, noting the party’s promise to introduce a deep oil well drilling credit targeted at B.C.’s emerging Montney light oil resource that they say “will be competitive” with Alberta.

“This is something EPAC has been advocating for several years now so we were pleased to see that in their campaign pledges. The Liberals say that 50 per cent of the oil revenue they receive from the Montney would be put into a ‘Prosperity Fund’ for future generations,” he said.

“The B.C. Liberals also say they will freeze the carbon tax in the province until 2021 whereas the NDP platform says they will phase in the federal $50 per tonne carbon tax over three years starting in 2020. The NDP also say they will convene a panel to review the science behind hydraulic fracturing.”

Duane Bratt, a political science professor at Calgary’s Mount Royal University, agreed with Leach in terms of which party—the Liberals under incumbent Christy Clark, or the NDP-led John Horgan — would work better with industry to fulfill the vast promise of B.C.’s oil and gas bounty.

“The Liberals would be better for the oil and gas industry, absolutely,” he said.

Bratt said he’s been somewhat surprised that oil and gas-related issues have not been more of a focus on the campaign trail, where debate has been centred around the housing market, environmental policy and other Vancouver and Lower Mainland-centric issues.

“There really hasn’t been a lot of dialogue in this election regarding oil and gas, especially on LNG as it was Christy Clark’s big move last election [in 2013],” Bratt said.

“She said then that LNG was going to be the real economic revival of British Columbia. It hasn’t fizzled out, but it’s nowhere near what she was promising in 2013. Not even close.”

Yet the LNG issue, for the most part, has taken a backseat during the election campaign, he added. And that’s despite it being a focal point, an issue of prominence, for voters in northeastern B.C. and elsewhere in the province.

“You’re seeing the different views of the electorate in the Lower Mainland and areas like northeastern B.C. with Trans Mountain and LNG,” Bratt said.

“Even though there are a huge number of jobs at stake in Burnaby [part of the greater Vancouver area], most of the opposition is centred in Burnaby yet supported in the rest of the province, except maybe [Vancouver] Island.”

Bratt said parallels between the current B.C. provincial election and the next Alberta election can be drawn. In fact, he believes an NDP victory Tuesday could have ramifications that could impact the political scene on the other side of the Rockies.

And despite sharing the same party name and initials, he believes Alberta Premier Rachel Notley isn’t likely rooting for a B.C. NDP win come election night.

“The B.C. election could very well be a preview of the next Alberta election because it truly is a two-party election and that looks to be where we’re going [in Alberta]. I think Notley is a clear example of the difference of being the NDP in opposition and the NDP in government. I’ve been saying for a while, and for that matter the same with Prime Minister [Justin] Trudeau as well, they really don’t want to see the NDP in power in B.C.,” Bratt said.

“It’s interesting at how closely the Alberta and B.C. parties were until Notley was elected. There’s no love lost now because Notley knows that a B.C. NDP victory might cause her to lose power here. There’s no guarantee that if Clark wins that Notley would win. But I would suggest that there’s a really good chance that if Horgan wins, Notley would not.”

The first installment in the Bulletin’s B.C. election coverage, (DOB, May 3, 2017), looked at the respective platforms regarding the Trans Mountain pipeline expansion project and LNG development in the province.

The Montney and other northeastern B.C. natural gas and oil development

The Liberal Party under leader Clark plans to continue promoting and encouraging “responsible development” of the Montney and other petroleum-prone areas in northeastern B.C.

“For decades, British Columbia has benefitted from extracting natural gas resources. Communities like Fort Nelson, Dawson Creek and Fort St. John have seen jobs, economic growth and infrastructure created as a result of the natural gas industry,” the party platform states.

“Technological advances have vastly increased the supply of natural gas in British Columbia. Hydraulic fracturing has allowed producers to unlock previously unknown reserves and ensure B.C. has a strong and stable supply of natural gas for the next hundred years. Nowhere is hydraulic fracturing more important than in the Montney Basin, and nowhere in the world is it done more safely.”

The Liberals note that in just the past four years, “massive investments” have been made in pipeline and gas processing infrastructure to ensure natural gas resources are able to be extracted, shipped, and processed. Examples include:
  • A partnership between Encana Corporation and Veresen Inc. has committed $2.5 billion in three gas processing plants.
  • Painted Pony Petroleum Ltd. and AltaGas Inc. have invested $350 million in a gas processing plant just north of Fort St. John. In January, AltaGas announced a $475 million propane export facility in Prince Rupert.
  • TransCanada Corporation has received federal and provincial approval for their $1.7 billion North Montney Mainline project creating approximately 2,500 direct construction jobs.
  • Spectra Energy Corp. invested nearly $600 million to expand its natural gas collector pipelines.
The B.C. Liberal Party said that not only are there massive world-class gas deposits in the Montney, there are huge opportunities to create a new light oil industry in the Peace. The Montney deposit in British Columbia contains gas, oil, condensate, and other liquids such as butane and propane, making it an incredibly attractive reserve.

The Grits note that companies like ARC Resources Ltd., Crew Energy Inc. and Encana are currently drilling and evaluating the potential opportunity to extract this vast energy resource.

“Today’s B.C. Liberals want to responsibly develop the Montney for British Columbians. These deposits have the ability to generate jobs, revenues, and economic benefits for decades to come, provided the right regulatory, policy, and royalty frameworks to allow for environmentally sustainable development is in place,” the party said.

Moving forward, the Liberal Party pledges to “unlock the oil resources contained in the Montney Basin” through a new oil, deep-well royalty credit that is competitive with Alberta. It will also place 50 per cent of all oil revenues produced from the Montney Basin in the Prosperity Fund to benefit future generations.

During an editorial board sit down with Business in Vancouver, a sister publication to the DOB, Liberal leader Clark doubled down on her support for Montney development, highlighting the play’s growing light oil potential.

“We have some of the best reserves of light oil in the Montney, and we are going to get that going. I know the NDP and Greens don’t support oil. We have some of the best light oil anywhere in the world, and we are going to get that industry going, should we be elected,” she said.

The NDP platform didn’t dive deep into the party’s plans for development of the Montney resource and associated infrastructure.

However, the party noted that most of B.C.’s natural gas is produced using hydraulic fracturing, a process that has been used in northeastern B.C. for decades.

“With the potential of a significant expansion of gas production in the years ahead, we will appoint a scientific panel to review the practice to ensure that gas is produced safely, and that our environment is protected,” the NDP said in its platform.

“This will include assessment of impacts on water and, given recent minor earthquakes in the area, what role gas production has in seismic activity.”

The NDP platform also calls for a review of oil and gas subsidies.

Overall, the cost of doing business in B.C. would increase under an NDP government.

The NDP would raise corporate taxes to 12 per cent from 11 per cent — but shave half a percentage point off the small-business tax — and increase the minimum wage to $15 per hour by 2021 from the current $10.85.

When asked where he sees the province’s resource sector going in the next five years, NDP leader Horgan offered the following:

“I believe that there is an opportunity for our natural gas sector to continue to grow. The premier made some fairly outlandish commitments before the last election. None of them have been realized. Market conditions weren’t there five years ago,” he said.

“The world is awash in natural gas. We have it in abundance. It’s a natural resource that belongs to all British Columbians and I’m anxious to get that to… higher priced markets. So on the natural gas side, I’m very optimistic that, over the long term, I think there’s opportunity there.”

Bratt said Clark is “clearly” on the pro-development side and Horgan “is not.”

“It’s almost like Horgan sees the biggest opponent not as Clark, but [Green Party leader Andrew] Weaver. He [Horgan] is attacking on a lot of environmental issue and does not seem overly supportive, at all, of oil and gas development.”

Climate change and environmental policy

The NDP’s climate policies include new greenhouse gas (GHG) reduction targets and carbon tax increases.

“We recognize that climate change is among the most significant challenges we face. Countries around the world are taking action to modernize their economies, improve transportation and lower their impact on the environment. B.C. is well positioned to be a leader in these efforts with a government that will act, like John Horgan and the B.C. NDP. Under Christy Clark, B.C. is lagging behind,” the party platform reads.

The NDP believes that protecting the environment and taking action on climate change will build a sustainable economy and create good jobs in every sector and every region of our province, now and going forward.

“Christy Clark and the B.C. Liberals have chosen to pit jobs against the environment. It shouldn’t be that way, but the Liberals have shown over and over again that they are living in the past, and won’t do what’s right for the future,” the party said.

“We will take action to create tens of thousands of new, sustainable, permanent jobs, while reducing B.C.’s climate change emissions and growing the low carbon economy.”

Horgan said that Clark struck a panel on Climate Leadership and then “proceeded to ignore it.”
“The panel worked hard to identify innovative action that would support sustainable growth in our economy, reduce our carbon pollution and make life more affordable for families. Its work should be valued and implemented,” he said.

“We will renew the Climate Leadership panel within our first 100 days, and work towards implementing their full suite of recommendations under our core principles for climate action. We will put B.C. on a path to meeting B.C.’s legislated 2050 greenhouse gas emission reduction target of 80 per cent below 2007 levels and will set a new legislated 2030 reduction target of 40 per cent below 2007 levels.”

The NDP would introduce a federally mandated carbon price of $50 a tonne by 2022, but do it over three years, starting in 2020.

“It’s going to be a gradual implementation and we’re going to make sure that almost 80 per cent of British Columbians will get some form of a rebate so they can have less money out of their pocket than before,” Horgan said.

The NDP said its plan was built on solid principles: carbon tax revenue neutrality, affordability for British Columbians, and competitiveness with other jurisdictions to ensure B.C. citizens and employers “are not unfairly treated as we grow our economy.”

Working within the parameters of the federal government’s mandate, the NDP said it will work to provide predictability for B.C. businesses and protect B.C. families from facing another hit on their pocketbook, while taking action to further reduce carbon emissions. As outlined in its Clean Growth, Climate Action plan, the NDP would:
  • Phase in the federally mandated $50 per tonne carbon price by 2022 over three years, starting in 2020.
  • Create a new climate action rebate cheque for low and middle income families. This cheque will go to 80 per cent of B.C. households, with a majority receiving more back from this rebate than they pay in new carbon taxes. The rebate will be issued at the start of each year, so families aren’t out of pocket.
  • Provide certainty to stimulate investment and protect trade exposed businesses, maintaining the province’s competitiveness, by establishing separate sectoral reduction goals and sectoral reduction plans for transportation (30 per cent reduction by 2030), industry (30 per cent reduction by 2030), and buildings and homes (50 per cent reduction by 2030).
  • Update environmental assessment legislation and processes to ensure that they respect the legal rights of First Nations, and meet the public’s expectation of a strong, transparent process that results in the best outcomes as part of a made in B.C. assessment process.
  • Improve environmental assessments to provide certainty to project proponents, First Nations, and all British Columbians, faster.
The federal government is set to implement a national carbon price floor in 2018, as part of the 2016 federal-provincial-territorial Pan-Canadian Framework on Clean Growth and Climate Change. The carbon price floor will start at $10 per tonne in 2018 and escalate annually to $50 per tonne by 2022.

The NDP platform would match the $50 floor in 2022, but proposes a faster implementation of carbon tax increases than the national minimum: to $36 in 2020 and $43 in 2021.

Clark and the Liberals are campaigning on a “made in B.C.” climate plan.

“Clean energy is a vital part of British Columbia’s global leadership in climate policy. We were the first jurisdiction in North America to put a price on carbon, through a transparent and revenue-neutral carbon tax,” the party said in its platform.

“Last August, we released our Climate Leadership Plan that builds on the work started in 2008 and charts a course to hitting our target of reducing greenhouse gas emissions by 80 per cent of the province’s 2007 emissions by 2050.”

B.C.’s carbon tax was launched at $10 per tonne in 2008 by then-premier Gordon Campbell. It moved up to $30 per tonne and Clark froze it when she took office three years later and the tax currently still sits at the $30 per tonne level.

During the campaign, Clark said contrary to Horgan’s criticisms the Liberals accepted many of the Climate Leadership panel’s recommendations.

“We did not, though, accept the key recommendation in the minds of some of the folks from the environmental movement, which is that we double the carbon tax,” she said.

“Is now the time to double the carbon tax, to hike business taxes, to hike personal income taxes, when we are facing a rising tide of protectionism and a tax-cutting government down south of the border? I think it would be disastrous for jobs in our province.”

In December, the Clark-led provincial government signed onto the Pan-Canadian Framework on Climate Change and agreed to do its part to achieve the Canadian commitment on greenhouse gas emissions.

“The federal government agreed to help assist the province with funding to reduce our greenhouse gas emissions and store carbon. From converting energy sources in our natural gas fields from diesel to clean electricity, to helping fund the refurbishment of electricity transmission lines between Alberta and B.C. to help Alberta transition from coal fired power to clean electricity, British Columbia has a plan to help fight global climate change.”

Despite the NDP’s claims to the contrary, Clark is adamant that B.C. remains a leader on climate change.

“Nobody else in North America is paying a $30-a-tonne carbon tax, nobody,” she said. “And we should be very proud of our leadership position. As other people catch up we’ll be in a position to rethink that policy. But we are going to freeze it.”

Mount Royal’s Bratt says there’s a stark contrast between the two parties’ environmental/climate change platforms.

“Horgan plans to be more aggressive, absolutely. But the B.C. record, and Clark has been campaigning on her record, is not bad. They were the first jurisdiction to bring a carbon tax in and I wonder if that’s tied into her coal announcement to sort of remind people of the existence of the carbon tax and how it existed well before the Alberta carbon tax,” Bratt said.

“What Horgan is promising in regard to the carbon tax in B.C. goes well beyond what the requirements of even the Trudeau government are where Clark is saying there’s nothing wrong with the policy we have in place.”

At the end of the day, Bratt said the B.C. provincial election is taking on the tone and tenor of the last Alberta election.

“The real issue here, and I’m not in B.C., but what I’m seeing is that the strength of the NDP campaign is not about the issues of the day and the policy directions of the two parties, rather it’s almost like it’s the ‘time for a change’ approach,” he said.

“The Liberals have been in power a very long time, and it’s perceived by some that they have a sense of entitlement and are perceived to be arrogant by many — it’s reminiscent of what happened in Alberta during the last election. With potentially the same consequences.”


Wednesday, 3 May 2017

The Stakes Are High: Oil and Gas Industry Keeping A Watchful Eye On B.C. Election

Published: Daily Oil Bulletin
By: Paul Wells


The May 9 British Columbia election is fast approaching and the western Canadian oil and gas sector is casting a watchful eye on the proceedings as the two frontrunners -- Christy Clark's B.C. Liberal party and the John Horgan - led NDP - battle to the finish.

And the stakes could be high for the western Canadian oilpatch, as the parties and the two leaders have vastly different views on many oil and gas - related issues such as the future of the province's neophyte liquefied natural gas (LNG) industry, development of the vast northeastern B.C. natural gas resource, the future of pipeline infrastructure development and climate change strategies.

In an April 28 note, TD Securities Inc. noted that recent polls suggest that the NDP has an eight percent lead over the Liberal party. According to CBC polling analytics, as of late April there was an 83 percent likelihood that the NDP would form a majority government.

Gary Leach, president of the Explorers and Producers Association of Canada (EPAC), said the Liberals and NDP offer two distinct realities for the oil and gas sector with the Grits being the party of choice.

"Overall the B.C. Liberals offer continuity and certainty and a record of five years of balanced budgets. The NDP, particularly if propped up by a few Green Party MLAs, would unquestionably to the worse choice for the oil and gas sector," he said.

In general, Clark and the Liberals are widely viewed as being more oil and gas industry-friendly than Horgan and the NDP. This is the first of two pre-election stories that will be published in the DOB. The stories will provide a snapshot of the oil and gas and climate/environment-related platforms of the two parties.

Divergent views on Trans Mountain

Horgan and the NDP mince few words when it comes to Kinder Morgan Inc.'s proposed Trans Mountain pipeline expansion project.

"The Kinder Morgan pipeline is not in B.C.'s interest. It means a seven-fold increase in tanker traffic. It doesn't, and won't, meet the necessary conditions of providing benefits to British Columbia without putting our environment and our economy at unreasonable risk," the NDP said in its platform.

“We will use every tool in our toolbox to stop the project from going ahead.”

In January, Clark announced that the Trans Mountain pipeline expansion had met the five conditions set by the province to secure coastal protection and economic benefits for its residents.

“The province’s clear, consistent and principled position on its five conditions has resulted in tangible and significant investments that will protect British Columbia’s environmental and economic interests,” she said in a statement.

“The project has met the five conditions. We always said the five conditions were a path to ‘yes’ and that if the project met the five conditions we would say ‘yes’, and that’s where we are today.”

Clark said she is convinced that the $7.4-billion project will protect B.C. from potential environmental damage with world-leading spill prevention and response measures.

The project also promises $20 billion in economic growth over the next 20 years, she added.

The federal government gave its approval for the pipeline expansion late last year after the National Energy Board (NEB) recommended it go ahead if 157 conditions are met.

"The project has met the five conditions," Clark said at a news conference at the B.C. legislature. "We fought for these conditions for 4 1/2 years."

The expansion would triple the capacity of the existing oil pipeline, which runs from near Edmonton to Burnaby, B.C.

Among B.C.'s five conditions are world-leading marine and land oil spill response, protection and recovery measures for B.C.'s coast and land areas. The conditions also include environmental reviews, First Nations consultations and participation and economic agreements that reflect the level and nature of the risk the province bears with a heavy oil project.

"It is a federal decision, and they made it," said Clark. "But what is our job is, is to stand up for British Columbia. It's to fight to make sure our coasts, our land base, our communities are protected and benefiting from any change in the movement of heavy oil across our province."

Should Horgan’s NDP form government after the May 9 provincial election, the pipeline expansion would suddenly face a hostile provincial government.

Horgan has vowed to use every tool at his disposal to halt the expansion, which the project’s supporters say would generate $1.15 billion in construction spending, $25 million to $50 million annually in B.C. government revenue sharing (on top of the $5.7 billion in provincial taxes over the life of the project) and — according to the BC Building Trades —  10,000 to 11,000 construction jobs over the two-year peak construction period.

However, while Horgan’s promise to halt the expansion might give Kinder Morgan’s shareholders pause when the company makes a final investment decision later this year, Horgan has few legal tools to make good on that commitment, according to Robin Junger, partner and national co-chairman on environmental and Aboriginal law groups and oil and gas with McMillan LLP.

“The province has limited constitutional authority over these matters,” Junger said.

“They’re federally regulated undertakings, and they’re protected by our Constitution and division of powers.The law is that the province cannot lock or stop a federally regulated undertaking like an interprovincial pipeline. It can impose conditions, but those conditions cannot be unduly onerous,” he said.

“It’s also important to note that the provincial decision has already been made. I don’t think it’s open to anyone to revisit that. The conditions have already been set under the environmental assessment approval process and I don’t think it’s open under the existing statute for government to unilaterally amend those conditions.”

Leach said the prospect of an NDP victory is not welcomed news for proponents of the project.

“For the oil and gas sector on this side of the Rockies the defining issue in this election is continuity of provincial government support for completion of the Trans Mountain pipeline expansion project. The B.C. Liberals have made support for this project a key part of their platform, with their five conditions being sufficiently satisfied,” he said.

“On the other hand, the NDP leader said he would ‘use every tool in their tool kit’ to kill the project, which would have extremely negative implications not only for our industry and Alberta’s and Canada’s economy but also for investor confidence in Canada as a predictable, secure place to invest for the long term,” Leach added.

“Given the current very low levels of business investment in the Canadian economy, which is dragging down economic growth, as well as the federal government’s continued tinkering with the mandate of the NEB and scope of federal environmental assessments, an NDP push to delay or kill the Trans Mountain project would be unquestionably a bad news event that would reverberate well beyond the borders of British Columbia and Canada.”

LNG development

Right now the election is a cloud of uncertainty for LNG proponents, according to analysts with GMP FirstEnergy, because although the two parties have clear approaches to development, there isn’t a clear line of sight to who will win.

“It is unclear whether the Liberal or NDP parties will form the next government. If the Liberals are returned to power, we expect that there would be little change to existing policies and tax structure surrounding LNG, creating additional investment certainty for project proponents,” GMP FirstEnergy wrote in a research note issued on March. 29.

“If the governing party changes hands to the NDP, we think there is a very real possibility that the new government would look at re-evaluating the Liberal party’s policies surrounding environmental and tax issues for LNG, creating a new layer of uncertainty for such projects.

“If this outcome does take place, then we feel this will only push some, or all, of the pending projects in B.C. to cancellation or indefinite deferral well into the next decade.”

EPAC’s Leach noted that the NDP have announced their own “four conditions” before projects could go ahead, including a “fair return for our resources” and “full partnerships” with local indigenous groups.

“These campaign pledges offer little clarity for West Coast LNG projects that may be hanging in the balance, particularly at a time of global LNG over supply and the U.S. planning big export capacity expansions,” he said.

“An NDP victory would bring more uncertainty about whether governments in Canada really understand the competitive nature of global markets and whether our producers in the WCSB would find themselves missing the next window of opportunity to claim a share of the international LNG market.”

Since 2012, an estimated $20 billion has been invested in B.C.’s natural gas sector in new gas wells, pipelines and gas processing plants. While some of that investment has been driven by the Montney formation’s natural gas liquids — which have value irrespective of an LNG market — much of the investment has been to lay the foundation for LNG.

During the 2013 campaign the Liberals set a goal for three operational LNG facilities by 2020 and almost 100,000 jobs. Clark also campaigned on the LNG industry revenue being used to create a $100 billion so-called “Prosperity Fund” andthe industry accounting for $1 billion in economic growth within the next 30 years.

Clark, who has served as premier since March 2011, has been a strong advocate for advancing B.C.’s LNG industry, although progress has been slow despite it being one of her main election promises in the last provincial election held in 2013.

To date, only one small LNG project has moved forward with a final investment decision. In early November 2016, Woodfibre LNG said it will start building B.C.'s first liquefied natural gas processing and export terminal in 2017, a project that would grant Canada a long-awaited opportunity to enter the global market.

The facility near Squamish, north of Vancouver, will export 2.1 million tonnes a year once it is operational in 2020, according to a company statement.

However, Woodfibre is relatively small compared to other proposed LNG projects in the province.

Aside from Woodfibre, more than a dozen LNG projects have been proposed for B.C., but the global slump in energy prices has undermined their feasibility and delayed investment.

For example, in September 2016, the federal government approved a proposed C$36 billion, 12-million-tonne-a-year LNG project by PETRONAS. But the Malaysian state-owned oil company has yet to give the final go-ahead, and Canadian Aboriginal and environmental groups have filed lawsuits to stop it.

In its 2017 election platform, the Liberals said they will work with project proponents and upstream gas producers to “ensure that additional LNG developments are globally competitive for the next wave of LNG investment.”

Although the economic realities in the global LNG industry have worsened dramatically since 2013, Clark and the Liberals remain committed to ensuring the sector takes hold in the province. The party has a goal of three LNG plants moving to construction by 2020.

“Our proximity to Asian markets makes LNG a major opportunity that is already paying off. Our province has a supply that can sustain local and international markets for over 150 years,” the Liberal platform document said.

“Our LNG strategy is designed to provide the cleanest LNG possible for use around the world. And it’s working. To date, B.C. has one LNG plant in operation, one ready for construction, and 18 projects with LNG export permits ready to go when market conditions allow for these multi-billion dollar investments to be made.”

During a recent campaign stop in Kitimat, Clark reiterated her support on the LNG industry.

“By creating thousands of jobs in communities like Kitimat, and helping the world transition away from fuel sources like coal, B.C.’s growing LNG industry has a big role to play in our province, our country and the world,” she said. “Only today’s B.C. Liberals have a plan to get to yes on LNG projects, create jobs and secure a bright future for us all.”

Clark added that her government is “not giving up” up on growing the province’s LNG industry: “Quitters can’t be leaders. Yeah, market conditions have been tough for LNG, but we are going to get there.”

“If the Liberals are returned to power, we expect that there would be little change to existing policies and tax structure surrounding LNG, creating additional investment certainty for project proponents,” GMP FirstEnergy wrote in its research note.

The NDP has been generally supportive of LNG development, including the Woodfibre LNG plant. However, it has opposed PETRONAS’s Pacific NorthWest LNG project near Prince Rupert, due to the project’s impact on salmon habitat and impact on B.C.’s GHG emissions.

In its election platform, the NDP said Clark and the Liberals made their entire 2013 election campaign about LNG.

“Four years later, Christy Clark and the B.C. Liberals haven’t delivered a single major LNG project, and they allowed B.C. to be steamrolled in negotiations with big LNG companies,” the NDP said.

“No LNG plants, no LNG jobs, no revenue to pay down debt, and bad deals that last decades into the future: that’s the Christy Clark legacy on LNG. This despite Christy Clark’s insistence that several LNG plants would be up and running by now.

“The ground hasn’t been broken on one project. Even if a plant were to open, the desperate B.C. Liberals signed sweetheart deals with LNG proponents that leave British Columbians without any real benefits.”

To ensure B.C. benefits from LNG development, the NDP said it will require projects meet four conditions:
  • Projects must offer jobs and training for British Columbians, especially jobs for local people;
  • The people of B.C. must get a fair return for its resources;
  • Projects must secure full partnerships with local First Nations;
  • Projects must complete a made-in-B.C. environmental assessment, and achieve the highest environmental; standards while respecting commitments to combating climate change.
Horgan said a NDP government would eliminate Clark’s “bogus $500 million LNG fantasy fund,” saying the Liberal government “has not collected a single penny” from LNG.
“Instead, in 2016 she raised your fees and put that money into her LNG fantasy fund. We will give that money back,” he said.

“We will take the $500 million from the LNG fantasy fund and apply it directly to eliminating the tolls on the Port Mann bridge and Golden Ears bridge, as we work with mayors to find a fair and equitable solution for all regions over the long term.”

GMP FirstEnergy believes that if the governing party changes hands to the NDP, “we think there is a very real possibility that the new government would look at re-evaluating the Liberal party’s policies surrounding environmental and tax issues for LNG, creating a new layer of uncertainty for such projects.”

Stewart Muir, executive director for Resource Works, said the NDP’s climate policies, which include new greenhouse gas (GHG) reduction targets and carbon tax increases, could prevent a nascent LNG industry from developing.

“The LNG question is moot since the NDP also promises a 40 per cent GHG reduction target by 2030,” Muir said. “In other words, the carbon tax will have to rise by $10 each year starting in 2018 until it hits $160 in 2030. LNG is basically dead under that scenario.”