Western Canadian Properties Ltd.
Northeast BC Update
We have had several calls and emails asking what's going on in Northeast BC after the election of the NDP, the newest announcement by Petronas and the review by the NDP of the Site C Dam. First, let us say "the sky is not falling in Northeast BC".
News outlets know that negative news sells. And whether we agree with it or not, it's the reality we live in. We always urge our clients to get the facts before they make any decisions to get the facts.  Sometimes this means looking beyond what papers or broadcasters deem important. Here are links to articles that talk about the companies that are investing, what is happening in Northeast BC today and what is expected for the future. When we look back in a few years, it's our opinion that the recent announcements by Petronas and by the New Democrat Party about a Site C Dam review will be viewed as minor setbacks for this region. Here's why:
On July 25 Petronas announed plans to cancel an $11.4 billion liquefied natural gas terminal in Prince Rupert CLICK TO READ .  This was disheartening news as Northeast BC would have been the biggest beneficiary from the 40-year LNG project. While disappointing, Northeast BC has always been about natural gas drilling because the area has huge reserves. In short Northeast BC is about the natural gas (NG) much more than being about liquid natural gas (LNG). Even though Petronas is not proceeding with the LNG facility in Prince Rupert, they will continue to invest in drilling in Northeastern B.C. "For Petronas, we are positioning Progress Energy to be one of the top natural gas exporters in North America", CLICK TO READ.   i.e. progess is likely to export Natual Gas via pipelines to the US rather than export LNG via Price Rupert.

Taking a look at the $40-billion Shell LNG project in Kitimat, on June 30, 2017 Premier Horgan , "It has all of its permits in place, has social license from First Nations in the region, has the support of the community, and is waiting for economic conditions to turn around, and that project will proceed CLICK TO READ.   On July 27, 2017 Shell CEO that he still thinks the Shell LNG project could be a go. "We need to get the timing properly right -- we think we can," he said. "If we look at an investment decision in the next 18 months or so, this is going to be a project that could start producing right at the moment when the spot market, the short-term market is getting very tight again".  CLICK TO READ

The $1.6-billion Woodfibre LNG project in Squamish, which has already made a positive final investment decision, is it will move forward.  CLICK TO READ

If BC fails to develop the liquefaction facilities on the BC coast, CLICK TO READ that the natural gas will still be developed and shipped by pipeline from Northeast BC to LNG facilities in the US and then on to Asia

The Montney gas reserve in Northeast BC has been compared to the booming Permian Basin play in Texas due to its stacked resource potential, prolific wells, relatively low costs and ongoing improvement potential through technology development. Truth be known, the Montney is the only formation that had its production grow since 2014 according to the National Energy Board report released June 14, 2017.
"Montney condensate is obtained from tight gas wells and sells for a higher price than crude oil in Western Canada because it is in high demand as a diluent that allows bitumen to be shipped by pipeline."
Our research shows natural gas drilling and pipeline activity is alive and well with robust growth forecast well into 2020. This is further supported by  the face that the partners in the now-cancelled Pacific Northwest LNG project remaining committed to Montney shale gas development

Producers continue to up the ante in the Montney CLICK TO READ:
  • Encana, currently the largest Montney producer, expects to double its liquids production by 2019
  • Seven Generations Energy, with year-over-year quarterly production up 73 per cent and funds from operations up 146 per cent, expects to spend $1.5 billion and $1.6 billion this year
  • ARC Resources $750 million capital program for 2017 includes Montney infrastructure investments
  • Painted Pony's increased its Montney land position by 52 percent CLICK TO READ.
  • Tourmaline to ramp up operations heading in to third quarter. Tourmaline is currently operating 10 drilling rigs, and plans to ramp up to having all 18 rig in its fleet operating in July  CLICK TO READ
  • Japex stays to Montney gas development despite LNG project cancellation CLICK TO READ
Furthermore, the New Democrats have committed to supporting the oil & gas and pipeline industry in British Columbia. B.C.'s new Attorney General Trans Mountin Permits. CLICK TO READ

Trans Mountain permits. The BC NDP reaffirms comittment t to LNG despite Petronas' project cancellation.  CLICK TO READ

And finally, it's too early to know the conculsions and recommendations resulting from a WCUC review of Site C Dam.

The New Democrats have promised a six-week review of the Site C project, however the BC Utilities Commission review has not been ordered yet. In the meantime, the NDP have said that construction won't be stopped, so it is business as usual. Site preparation on the dam began in 2015. The work is now 20 per cent complete, and $1.75 billion has been spent. Contracts worth a total of $4 billion have been awarded for work that is either just starting or not yet begun. Although BC Hydro would avoid spending $4 billion to $5 billion by not building the dam, there would be expenses associated with halting it. Cancelling the project would mean that the $2 to $4 billion spent to date and to be spent on cancellation penalities would need to be recovered from ther BC Hydro customers (you and me) through increased hydro rates - similar to what happened in Ontario when their government cancelled in process power plans.  The recently appointed BC Hydro chair is Kenneth Peterson, whose 40-year career in the electricity industry has seen a decade's work as CEO of Powerex, the marketing and trading subsidiary of BC Hydro.
Most in the North don't feel that the review will result in the shut down of Site C and this is as much about politics as it is about good business so no one can say for sure. Fortunately, our rentals aren't significantly impacted by Site C. We estimate that about 15/220 (7%) of our rentals in Fort St. John are rentals related to BC Hydro.
British Columbia's economy just keeps going. RBC has boosted its growth rate to 3.0% from 1.9% for 2017 keeping BC at the top of the provincial growth ranking for the third consecutive year. Employment growth of 3.6%, is spectacular.
In closing, we will attempt to keep you updated with regular emails as matters unfold.
In the meantime, don't be afraid to write emails or letters to your MLA's or to the Premier asking how the NDP is committed to developing the LNG industry in BC, and what steps they are taking to do so. Tell them that you invested in this region based on the belief that our province has an opportunity to responsibly extract our resources creating much needed jobs for BC and the rest of the country. By developing our resources, royalty revenues will be able to fund healthcare, public education, and create a legacy for our children, grandchildren and great grandchildren.
On behalf of the Western Canadian Properties Group team, we'd like to thank you for your continued support.

If you have any questions, please do not hesitate to contract:
604-908-8460 (EXT #101)

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