BCBusiness

32 BCBusiness september 2015 n a brisk March day I meet with Morten Bergan, assistant operations manager, at Snohovit. Bergan, an electrician and plumber by trade, moved to Hammerfest for the LNG opportunity from his home in the Lofoten Islands, 400 kilometres to the south- west. After clearing security, we jump into the cab of his late-model Toyota four-wheel-drive pickup truck and enter the half-kilometre-long tunnel that burrows beneath the sea f loor and connects the island plant to the mainland. Gulls circle overhead as we emerge on the other side and follow a road that spirals to a high point, where Bergan takes us to view the facility in its entirety. "This is the biggest money-maker for Statoil. The plant will be in production until 2055 and we're still finding new sources of gas," Bergan says over the wind as we stare down at Snohovit's matrix of pipes and towers, an administration office and four massive tanks capable of storing 250,000 cubic metres of gas, as well as 75,000 and 45,000 cubic metres, respec- tively, of condensate and liq- uefied petroleum gas. Afterward, we hop back in his truck and drive to the operations and administra- tion complex. Bergan leads us to the facility's nerve centre—a control room that's like the bridge of the Starship Enterprise. Snohovit is a slick operation that employs 250 people full-time and gener- ates hundreds of other jobs in secondary and ancillary industries in Hammerfest. A half-dozen casually dressed technicians sit at computer terminals, remotely monitoring the flow of gas along sea-floor pipelines from the Snohovit field of three deep-sea gas wells, located 140 kilometres away in the Barents Sea, as well as the German- engineered liquefaction plant, which cools the natural gas and reduces the volume 600-fold. Snohovit capitalizes on the region's cold arctic air to gain efficiencies and reduce costs for the extremely energy-intensive LNG process. Though the Hammerfest plant has had some operational and technical glitches—including prob- lems with the cooling system and a gas leak in December 2014 that could have been catastrophic— it now forms the cornerstone of Norway's natural gas export sector and the country's ever-expanding public purse of oil and gas revenues. Norway's Gov- ernment Pension Fund Global, the world's richest sovereign wealth fund founded on oil and gas rev- enues and launched in 1990, was worth $1.1 tril- lion as of May 2015, with investments in hundreds of companies worldwide. Foreign companies pay to play in Norway's oil and gas sector. In the early 1970s, the country enacted laws that gave Statoil ownership of 50 per cent of all oil and gas explo- ration licences. Furthermore, according to those same laws, Statoil finances 50 per cent of the costs of exploration undertaken by foreign entities (with the proviso that the Norwegian state retains a 50 per cent equity stake) while profits from upstream activities are taxed up to a whopping 78 per cent. Comparisons between Norway—with its nation- alistic stewardship of fos- sil fuel resources—and Canada's energy provinces are sobering. Take Alberta first, which, despite pro- ducing almost twice as much oil annually as Nor- way, has socked away just $17.5 billion in its Heritage Savings Fund since 1976— or about 15 per cent of what Norway has put into its sov- ereign fund since 1990. In B.C., meanwhile—which has been in the natural gas business since the 1980s, when the first wells were drilled in Peace River coun- try—we still don't have a dedicated fund for growing public wealth from gas revenue and royalties; compa- nies pay a royalty that fluctuates with price. Royalties hit a peak in 2008/09 of $1.3 billion, when gas prices were high, but plummeted to $200 million in 2012/13, even though production volume had tripled since the 2008/09 high. Annual royalties have recovered mod- estly, but last year's budget predicts another fall from an expected $542 million in 2014/15 to $344 million for 2015/16. Now B.C. is scrambling to get into the LNG game with no guarantee that the province will get the hoped- for windfall in return. The province is wooing foreign LNG investors, two of which are state-owned Petro China and Malaysia's Petronas, at a time when prices in Asia, the target market for future B.C. LNG exports, O B.C. is scrambling to get into the LNG game with no guarantee that the province will get the hoped- for windfall in return. The province is wooing foreign LNG investors, two of which are state-owned Petro China and Malaysia's Petronas, at a time when prices in Asia, the target market for future B.C. LNG exports, are soft 32 BCBusiness september 2015

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