Manitoba Oil & Gas Review 2016 by DEL Communications Inc.

SERVING MANITOBAâ&#x20AC;&#x2122;S OIL & GAS INDUSTRY

MANITOBA Oil & Gas Review 2016

Making the Case for New Pipelines

Support continues for Energy East, Keystone XL and other projects

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Training for New Trends in the Industry

Managing Tough Economic Times

In this issue... 6 Manitoba Oil Statistics 2015 10 Energy East Deserves Support: A message from Larry Maguire, MP for Brandon-Souris 12 Message from Brandon Mayor Rick Chrest 14 Message from Virden Mayor Jeff McConnell 16 A Time of Opportunity: A message from the Honourable Jim Carr, Minister of Natural Resources 18 Message from Brad Wall, Premier of Saskatchewan 20 Making the Case for Pipelines 22 Manitoba Still Highly Regarded for Petroleum Exploration and Development Investment 26 Hope Thrives Despite a Slow Economy 30 Coping Mechanisms in Troubling Economic Times 32 Williston Basin Petroleum Conference Focuses on Moving the Bakken Forward 36 The 2016 Redvers & District Oil Show is Fast Approaching 38 Brandon: the Perfect Balance 42 The Breakup from Hell 2.0 44 Oil Respect: Let’s Stick to the Facts 45 New Pipelines Can Support Action on Climate Change 46 Enhanced Oil Recovery Can Extend a Reservoir’s Life by Decades 48 Why This Oil Price Collapse Is Different From the 1980s 50 Recent Poll Unveils Canadians’ Anxieties 52 Arguments Remain Heated on Both Sides of the Energy East Debate 54 Reducing Costs and Improving Quality in Heritage Management 56 Field-Portable XRF in Oil and Gas Exploration and Production 60 Oil & Gas HR Report Identifies New Trends and Requirements in Workforce Development 62 Keystone XL Controversy Enters U.S. Court System 64 Gearing up: Keeping Safe, Dry and Warm in the Oilfield 66 How CAPPA Supports Production Accountants and Industry 68 Training Opportunities Prepare Workforce for New Trends 71 Transportation of Dangerous Goods by Ground 72 Pro-Drill Industries Ltd. Moves Forward with Vision and Innovation 74 Livingstone Landscaping: Manitoba-Grown 76 Presidential Election Year 2016 Likely To Be Filled With Surprising Developments 79 Index to Advertisers 80 DRIVING FORCE Delivers new Vehicle Options for Manitobans 82 ABCO is Your One-Stop Shop for Quality Products and Installations Cover photo of Keystone XL construction courtesy of TransCanada Corp.

Manitoba Oil & Gas Review 2016

Published by: DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, MB R3L 0G5 www.delcommunications.com President & CEO: David Langstaff Publisher: Jason Stefanik Editor: Lyndon McLean lyndon@delcommunications.com Advertising Sales Manager: Dayna Oulion TF: 1-866-424-6398 Advertising Sales: Jim Norris Mic Paterson Anthony Romeo Gary seamans Production services provided by: S.G. Bennett Marketing Services www.sgbennett.com Art Director / Design: Kathy Cable Layout: JOEL GUNTER Advertising Art: SHERI KIDD DANA JENSEN ©Copyright 2016. Manitoba Oil & Gas Review. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher. While every effort has been made to ensure the accuracy of the information contained herein and the reliability of the source, the publisherin no way guarantees nor warrants the information and is not responsible for errors, omissions or statements made by advertisers. Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher, its directors, officers or employees. Publications mail agreement #40934510 Return undeliverable Canadian addresses to: DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, Manitoba, Canada R3L 0G5 Email: david@delcommunications.com PRINTED IN CANADA 05 | 2016

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overview

Manitobaâ&#x20AC;&#x2122;s oil statistics 2015 Courtesy of the Manitoba Petroleum Branch Geophysical Licenses Issued...............................................................................14

Water Production (m3) .........................................................................13,447,356

Geophysical Expenditures ($)..........................................................120,541.12

% Water Cut................................................................................................................83.6

Drilling Licenses Issued........................................................................................235

Avg. Oil Production (m3 per day)................................................................ 7233

New Wells Drilled.....................................................................................................205

Remaining Reserves (at Dec. 31)000 m3.................. Not yet evaluated

New Wells on Production...................................................................................181

Value Oil Sold ($)...................................................................................927,482,640

New Wells Abandoned...........................................................................................12

Crown Oil Royalty ($ received).................................................12,280,285.82

Horizontal Wells Drilled........................................................................................152

Freehold Oil Tax ($ received).........................................................7,424,314.63

Metres Drilled................................................................................................... 364 300

Average Oil Price per m3 ($).................................................................... $351.31

Wells Capable of Production (Dec)........................................................... 5374

Reservation Sale Bonuses ($).................................................................................0

Wells Producing (December)........................................................................ 4056

Lease Sale Bonuses ($)...................................................................$2,258,298.92

Abandoned Producers............................................................................................79

Reservation & Lease Rentals & Fees($)....................................$354,881.22

Other Wells Abandoned............................................................................................9

Crown Reservation Area (ha).................................................................................0

Certificates of Abandonment Issued.............................................................49

Crown Lease Area (ha)..........................................................................92,836.230

Crude Oil Production (m ).....................................................................2,640,069

Total Crown Area Under Disposition (ha)................................92,836.230

oil prices (manitoba light sour blend) 2015....................................................................................................... $/M3.................... $/BBL January................................................................................................................................................$297.13 ............................. $47.22 February..............................................................................................................................................$334.39.............................. $53.14 March....................................................................................................................................................$325.81.............................. $51.77 April........................................................................................................................................................$370.73.............................. $58.91 May.........................................................................................................................................................$414.00.............................. $65.79 June.......................................................................................................................................................$444.47.............................. $70.63 July..........................................................................................................................................................$392.29.............................. $62.34 August..................................................................................................................................................$313.59.............................. $49.83 September........................................................................................................................................$316.11.............................. $50.23 October...............................................................................................................................................$353.30.............................. $56.14 November..........................................................................................................................................$355.82.............................. $56.54 December..........................................................................................................................................$298.11.............................. $47.37 Avg. 2015........................................................................................ $351.31...................$55.83 2016....................................................................................................... $/M3.................... $/BBL January................................................................................................................................................$227.44.............................. $36.14 February..............................................................................................................................................$227.07.............................. $33.38

Manitoba Oil & Gas Review 2016

message

Energy East Deserves Support Larry N. Maguire, Member of Parliament, Brandon-Souris

t the beginning of this session of Par-

resources here at home. Canada ranks third in the

liament, I urged my fellow MPs to sup-

world for proven crude oil reserves, and whether

port the Conservative Caucus’ motion

the Liberals like it or not, the oil and gas sector is

in the House of Commons calling on

a critical part of our economy. It directly and indi-

the government to back the Energy East pipeline. The Energy East project would strengthen Canada’s energy security by decreasing our dependence on authoritarian regimes with poor human rights records, rampant corruption and deficient environmental controls.

rectly employs over 360,000 people in Canada, accounting for almost eight per cent of GDP in 2013. Energy East alone is expected to generate $10 billion in taxes for all levels of government. What’s more, pipelines are by far the safest and

Approximately 700,000 barrels of oil are im-

most environmentally responsible way to trans-

ported every day to refineries in Eastern Canada,

port oil, and Energy East will displace the equiva-

coming from countries such as Saudi Arabia, Ven-

lent of over 1,500 rail cars traveling the same route

ezuela and Nigeria, while at the same time, most

each day. The reality is that from 2008 to 2013,

of Western Canada’s oil production is exported to

more than 99.99 per cent of oil transported by fed-

the United States. In 2013, 97 per cent of our oil

erally regulated pipelines was done so safely, and

exports went to that country. Energy East will cre-

thanks to the previous Conservative government,

ate access to higher value international markets which will further support the Canadian economy. The project is supported by the governments of Alberta, Saskatchewan, Ontario and New Brunswick, would dramatically cut the amount of oil traveling by rail each day, and would scale back

companies are liable for up to $1 billion of costs and damages, irrespective of fault. I am extremely proud of the thousands of Canadians who contribute to our economy through the natural resource sector, particularly right here

our dependence on foreign oil from authoritarian

in Westman. At a time when our economy is strug-

regimes.

gling, the Liberal government needs to stand up

It makes no sense to import foreign oil while Canada is blessed with an abundance of natural

for these Canadians and take a clear position in favour of Energy East. v

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brandon is open for business brandon mayor rick chrest

’m pleased to bring greetings to Manitoba’s oil & gas sector on behalf of Brandon City Council and all of our citizens. The oil industry on a worldwide basis has certainly been experiencing a significant downturn providing a period of uncertainty and rationalization of projects and investments. Despite the tumble in world oil prices, we know the oil & gas industry to be resilient and somewhat accustomed to dealing with these market fluctuations. As one individual long associated with the business told me, “This isn’t our first rodeo…we’ve been here before and the industry will forge on.” As the industry may progress and rebound over time, Brandon is pleased to offer itself as a community keen to host companies, organizations and employees who are active in the oil industry. As the largest urban and commercial centre in close proximity to Manitoba’s oil fields, we are ideally situated and equipped to be home base for enterprises associated with the oil & gas sector. Brandon is “open for business” and several oil industry firms have chosen our great city as the centrepiece for their operations in the region. With an urban population of 50,000-plus, Brandon is rich with amenities and services that enhance any business enterprise. Consider our large regional health centre and outstanding educational facilities, including a strong public school sys-

tem, as well as Brandon University and Assiniboine Community College. A large and diverse retail sector coupled with an abundance of restaurants and hotels make Brandon a significant regional commercial hub. Clustering with other industrial enterprises and business services from legal to engineering to financial make Brandon an attractive setting. Rounding out our amenities, Brandon boasts a vast array of sporting activities to participate in or to enjoy from the stands plus a diverse offering in recreation, arts and culture as well. Brandon’s development community is active and skilled in our busy housing sector and commercial and industrial development as well. Several areas for industrial and business expansion are available in our city, which may make start-up quick and expedient. Our Economic Development Department would be pleased to assist in providing information and assistance to any prospective enterprise wishing to consider Brandon. Let me close by extending best wishes to all companies, organizations and employees who are engaged in the oil & gas industry and hope that market conditions soon brighten and your renowned resiliency and entrepreneurship makes you stronger moving forward. Best regards, Rick Chrest, Mayor of Brandon v

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HELLO FROM VIRDEN Jeff McConnell, Mayor of Virden

ello from Virden, the Oil Capital of Manitoba! In preparing this greeting for the Manitoba Oil & Gas Review, I read over last year’s version of this message. I think last year’s message said it best when I shared that “Even though this past year has provided some significant challenges to our region, the southwest corner of Manitoba still has a strong future with lots of growth.” We are still strategically located at the intersection of two major highways and within the heart of Manitoba’s petroleum-producing region. We have over 3,100 people who call Virden home. We did not have the same flood concerns in 2015 that were present in both prior years, but we did have the significant tornado event which presented lots of challenges for the region. As well, last year I shared that “the current price of oil has caused some concerns for many but the strength of community has not wavered. When I talk with businesses in the area, I learn that they are continuing to invest in their futures in our community.” This is still true today. The price is a greater concern but the businesses still want to be here.

We are the Oil Capital but we have so much more than oil. Virden is well known for its cultural activities and recreational facilities. Tundra Oil & Gas Place, multi-purpose facility, is home to large banquet functions, our famous indoor rodeo, concerts and regional/provincial sporting events. The Virden Oil Capitals, a Manitoba Junior Hockey League team, have a large fan base and have made another trip to the playoffs. The CP Station Art Gallery is home to Arts Mosaic, which hosts an art gallery and offers many shows in the 500 seat Aud Theater, Western Canada’s Oldest Opera House. Our airport offers a paved runway and tarmac, as well as Jet Fuel and Avgas. It is a surprisingly busy facility. Industrial development continues to pop up in our industrial park next to the airport. The agriculture and oil sectors contribute to the need for our many retail and service businesses. We welcome the opportunity to discuss your commercial or industrial concepts for our community, whether it’s in Virden or in the surrounding communities. On behalf of the council, staff and people of Virden and area, we hope you find exactly what you are looking for in Virden, where we have a proud heritage and strong future! v

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A Time of Opportunity The Honourable Jim Carr, Minister of Natural Resources

n behalf of the Government of Canada, I would like to thank the Manitoba Oil & Gas Review for the opportunity to discuss the Canadian energy industry. Despite the current global downturn in commodity prices, the long-term prospects for Canada’s energy industry remain strong. In fact, according to the International Energy Agency, the world will need nearly one third more energy by 2040 than we have now – and almost three-quarters of that energy will come from fossil fuels. Key to that future is restoring public trust in the way Canada reviews and assesses major resource projects. If we’re going to attract the investments we need to sustainably develop our resources and get these to markets, we have to better engage Canadians, conduct deeper consultations with Indigenous peoples and base decisions on science, facts and evidence. To ensure greater certainty for projects already in the queue, we introduced an interim approach based on five key principles:

1. No project proponent will have to start over; 2. The views of the public and affected communities will be sought and considered; 3. Indigenous peoples will be meaningfully consulted; 4. Direct and upstream greenhouse gas emissions will be part of the environmental assessment; and, 5. Decisions will be based on science and traditional knowledge of Indigenous peoples. In Budget 2016, we committed $16.5 million to implement this interim approach. We also provided $50 million for technologies that will reduce greenhouse gas emissions in the oil & gas sector. While this is a challenging time for the energy industry, it is also a time of opportunity. Canada’s oil & gas sector has immense potential to achieve great prosperity, and our government is committed to ensuring that the conditions are right for this to occur. Together, we will demonstrate that economic growth and environmental protection can go hand in hand. v

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the impact of oil prices Brad Wall, Premier of Saskatchewan

askatchewan is among many resourcebased jurisdictions around the world dealing with the impact of dramatically lower oil prices. It’s a time of great uncertainty for the energy industry and the governments that depend upon it for employment and revenue. I believe Saskatchewan’s economy is better placed than most to remain strong through the downturn, thanks to our diversified, rich resource base and our competitive environment for investment and business. More than that, I have confidence in the future because our oil & gas sector is composed of tough, resourceful, resilient entrepreneurs who are finding ways to ride out the current market turbulence. They will need to be resilient because most analysts believe there will be no meaningful increase in crude oil prices anytime soon, with the most optimistic forecasts calling for an upturn in the second half of 2016. However, I believe when markets rebound, our industry will be stronger and more competitive than ever. Our government is doing its part to make sure this comeback story unfolds as it should. Our top priority has been to establish a royalty and tax regime that is competitive and stable. While other jurisdictions have considered changes to their royalty structure, we understand that what the industry needs from government now is certainty. And so we are following the ancient medical dictum: first, do not harm. That stability is central to our efforts to maintain a good business and regulatory environment. It may explain why our province will account for 50 per cent of Western Canada’s shale and tight oil output by 2017, according to the National Energy Board. We’re grateful the industry continues to invest in Saskatchewan even in difficult times. For exam-

Manitoba Oil & Gas Review 2016

ple, Crescent Point Energy (Saskatchewan’s largest oil producer) expects that most of its $950 million to $1.3 billion in capital spending will take place in our province; the company is planning to increase production by five per cent over 2015. Husky Oil announced a $500 million capital budget for 2016. Whitecap’s ongoing drilling operations in Saskatchewan include 66 new wells in 2016, an investment of nearly $60 million. Meanwhile, Raging River expects to spend $168 million in 2016, and has a long-term plan to drill nearly 1,900 wells and invest over $2.8 billion over the next 17 years. Our government will maintain its focus on ensuring we have sensible oil and gas policies and responsible governance, in Saskatchewan and across Canada. To that end, we continue to advocate for increased pipeline capacity for Western Canadian oil. All oil pipelines are important to Saskatchewan, not just those that carry Saskatchewan oil, because they can free up space on existing pipelines and open the door for even more investment. This is why our government has been so vocal in our support of pipelines like Energy East that will help bring western Canadian oil to tidewater and decrease our reliance on imports from other countries; this is important not just for Saskatchewan, but for all of Canada. In addition, we remain steadfastly opposed to a national carbon tax that would unduly penalize western Canadian oil & gas producers. In our view, a carbon tax would result in an unconscionable and punitive wealth transfer from the west to other regions. It would add insult to the injury represented by Canada’s unfair equalization system. If the objective of a carbon tax is to reduce greenhouse gas emissions, a far better way to accomplish this goal is through an investment in technology. That’s why the Government of Sas-

katchewan has committed more than $1 billion to the Boundary Dam 3 project, the first commercial power plant in the world with a fully integrated post-combustion carbon capture system. Our advocacy has also included a call for the federal government to support the industry as it deals with the impact of lower prices. For instance, we urged Prime Minister Justin Trudeau to commit $156 million in federal funding to pay for the cleanup of oil and gas wells no longer capable of production. The Accelerated Well Cleanup Program (AWCP) would create about 1,200 badly needed jobs in the decommissioning and reclamation of about 1,000 nonproducing wells in Saskatchewan. Saskatchewan’s oil production has held up remarkably well despite the turmoil. We produced about 177.6 million barrels in 2015. This is a 5.6 per cent decrease from 2014, but a less severe drop-off than what was experienced in Alberta, where conventional production declined nearly 10 per cent between November 2014 and 2015. Our energy sector remains a crucible of innovation. R.I.I. North America recently commissioned a $60 million enhanced oil recovery project near Lloydminster that uses state-ofthe-art downhole steam generation in heavy oil production. The technology will raise recovery rates significantly while reducing the energy and water required in the production process and cutting upstream greenhouse gas emissions. Meanwhile, applications for steam-assisted gravity drainage (SAGD) are being examined in projects under construction in the Lloydminster area – four operated by Husky Energy, two by Northern Blizzard and one by Serafina Energy, with more planned. SAGD is an enhanced oil recovery technology for producing heavy crude oil. Current recovery rates under primary production methods are approximately five per cent of oil in place; with these projects fully implemented, recovery rates are expected to increase to as much as 50 per cent. Husky has been investigating the use of carbon dioxide to enhance heavy oil recovery with support from Saskatchewan, and has also been undertaking research to develop new technologies to provide a source of carbon dioxide. We are optimistic that in time, these new technologies will benefit other heavy oil producers. Thanks to the industry’s commitment to innovation, the dubious charge that Canada produces “dirty oil” will become more implausible than ever. Driving all of this is a simple understanding: it is not enough to be blessed with the resources the world needs – the world needs to be able to access these resources. Consequently, we’ve done our best to create an operating environment that is highly competitive. We are a low-cost jurisdiction with an approach to red tape accountability described as “on the right track” by the Canadian Federation of Independent Business. The Fraser Institute Global Petroleum Survey, 2015, a survey of petroleum industry executives and

managers, ranks Saskatchewan as the most attractive place to do business in Canada and the sixth most attractive jurisdiction in the world among the 66 jurisdictions ranked in the survey. Our commitment to maintaining a favourable environment for oil and gas investment will not waver. We know how important energy is to the economic and social well-being of our province, our nation and the world. During the last eight years, Saskatchewan has gone through a remarkable period of growth. Our population is now at its highest level in our history – over 1.1 million – and growing faster than it has in generations. Tens of thousands of people have come to Saskatchewan because there is opportunity here. And much of that opportunity has been created by the oil & gas industry and the dynamic businesses that serve it. We’re grateful for this, and we intend to keep a good thing going. v

Brad Wall Premier

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Making the Case for Pipelines High Safety Rates are a Good Start but Investment Should be a Priority By Robin Rorick, Group Director of Midstream and Industry Operations, American Petroleum Institute

orth American pipeline capacity is in the spotlight after a decade of surging oil and natural gas production in the United States and Canada. While the most famous pipeline, Keystone XL, hasn’t been constructed,

gic-Plan-Mar-3-s.pdf ), pipelines transported about 16.2 billion

the tens of thousands of miles of pipelines transporting oil and

that pipeline releases along the sensitive areas of the right-of-

natural gas every day demonstrate the benefits – and impres-

way dropped 50 per cent from 1999 to 2013. Particularly, two

sive safety record – of this crucial infrastructure.

causes that have been excessive in the past have significantly

barrels of crude oil and petroleum products in 2014 at a safety rate of 99.999 per cent. Pipeline Safety Excellence – launched in 2014 to ensure continual safety improvements – also reported

More than 199,000 miles of liquid pipelines crisscross the

decreased. These are corrosion incidents, which are down 76

United States. According to the latest data collected as a part

per cent, and damage from third-parties, which have declined

of the Pipeline Safety Excellence initiative (http://www.aopl.org/

78 per cent, in this same time period. While these trends show

wp-content/uploads/2015/03/2015-Annual-Perf-Report-Strate-

progress, the industry focus is prevention of all incidents, so op-

Manitoba Oil & Gas Review 2016

Updating energy infrastructure in the United States could generate up to $1.15 trillion in new private capital investment and support 1.1 million new jobs over a 10-year period.

Pipeline constraints, on the other hand, can be costly to consumers too. According to the U.S. Energy Information Administration (EIA), residents of the northeastern U.S. paid up to 68 per cent more for electricity than the national average in the winter of 2014, while industrial users paid up to 105 per cent more for electricity than the national average. Failure to expand natural gas and electricity infrastructure in the Northeast could cost the region’s households

erators continue to advance technology that can better detect threats to pipeline integrity. The industry also continues to develop safety standards promoting best practices that achieve the industry-wide goal of zero incidents. This year, the American Petroleum Institute plans to issue a new recommended practice, RP 1176, to strengthen the industry’s capability to predict and prevent crack-related pipeline failures by enhancing the gathering, integration, and analysis of data. Issued in December 2015, RP 1174 provides operators with an enhanced framework to enable continual improvement of the pipeline emergency planning and response process. Also issued last December, RP 1175 provides guidance on the development, implementation, and management of a sustainable leak detection program. Finally, RP 1173, Pipeline Safety Management Systems, was published last summer and provides a scalable and flexible framework ensuring companies continually assess their practices to guarantee the appropriate steps are taken to prevent spills. Commitment to continual safety improvements is nothing new, but the 21st-century energy resurgence has created new infrastructure needs. Prior to the production advances of the past decade, the priority was to transport imported energy from the coasts to points inland. Now that production is surging in places like North Dakota, Pennsylvania, and the Canadian oil sands, infrastructure priorities have shifted. According to a study from Energy Policy Research Foundation, Inc. (http://eprinc.org/wp-content/ uploads/2013/10/EPRINC-PIPELINES-TRAINS-TRUCKS-OCT31.pdf ), shipments of crude oil from the Midwest to the Gulf of Mexico jumped from just 50,000 barrels per day (b/d) in 2008 to over 380,000 b/d in 2013, while shipments from the Gulf to the Midwest decreased 500,000 b/d. For producers, inadequate transportation infrastructure creates bottlenecks that can raise production costs and depress revenue. The lack of efficient access to markets can lead to lower well-head values and reduced revenues for royalty owners, as well as local, state and federal governments. Failure to address these limitations could discourage production investment – along with the associated employment and economic advantages that greatly benefit consumers. Updating energy infrastructure in the United States could generate up to $1.15 trillion in new private capital investment and support 1.1 million new jobs over a 10-year period, according to a study by IHS. Pipeline investment alone could support up to 830,771 average annual jobs.

and businesses an estimated $5.4 billion in higher energy costs and more than 167,000 private-sector and construction jobs between 2016 and 2020, according to a study from the New England Coalition for Affordable Energy. Some progress is underway. EIA reports that over the past 10 years pipeline operators have invested more than $57 billion to complete more than 400 projects adding about 15,200 miles of pipeline and approximately 151,300 million cubic feet per day (MMcf/d) of capacity to transport natural gas to consumers and businesses. At the same time, according to EIA, operators have announced plans to invest more than $40 billion on 105 projects to add more than 7,500 miles and more than 72,650 MMcf/d in pipeline capacity. It’s a good start, but more expansion is needed. With a 99.999 per cent safety rate, pipelines are among the safest, most efficient methods for transporting energy. To maintain and build upon the economic benefits of North America’s energy renaissance, additional pipeline investment must be a priority. v

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Manitoba Oil & Gas Review 2016

Manitoba Continues to Be Highly Regarded for Petroleum Exploration and Development Investment Fraser Institute 2015 Global Petroleum Survey Findings By Gerry Angevine

s in 2013 and 2014, the 2015 Fraser Institute Global Petroleum Survey of explorers and developers indicates that Manitoba is the second most favourable jurisdiction in Canada, behind only Saskatchewan, for upstream petroleum exploration and development. Moreover, the province has now placed first or second in Canada, and achieved a very high rating when compared with jurisdictions in the United States and other countries according to the survey’s all-inclusive Policy Perception Index scoring methodology, for seven straight years. The Fraser Institute’s ninth annual survey was conducted during the summer of 2015, and the results were published on December 1st. The findings are based on responses from 439 petroleum industry executives, managers, and experts to questions regarding barriers to investment in petroleum exploration and production development in 126 provinces, states, regions and countries. As in previous years, the survey questions targeted 16 important factors impacting investment in upstream petroleum exploration and development. These include fiscal terms; taxation and other factors affecting the commercial environment, such as the availability of skilled labour; quality of and access to essential infrastructure; the

Manitoba Oil & Gas Review 2016

regulatory climate which investors face including the cost of regulatory compliance, duplication, inconsistent interpretation, and enforcement of regulations; and a number of other important issues such as land claims disputes and uncertainty with regard to how environmental regulations may be changed. The survey scores assigned to the various jurisdictions are based on the percentage of responses that indicate that a given factor is considered to be “a mild or strong deterrent to investment” or is so onerous that respondents “would not invest” in the jurisdiction in question due to that policy factor. Because of the focus on negative perceptions, jurisdictions with the lowest scores are considered to pose lower or fewer barriers to investment and, therefore, to be the most attractive for investment. It is important to note that the “Policy Perception Index” rankings referred to above (with regard to Manitoba and Saskatchewan), in which all 126 of the jurisdictions rated in the survey are included, do not reflect the extent of the various jurisdictions’ crude oil and natural gas resources or reserves. When jurisdictions’ proved petroleum reserves are considered, the rankings are much different. For example, when grouped with 14 jurisdictions each holding at least one per cent of total proved pe-

troleum reserves (of the 118 jurisdictions ranked in the 2015 survey which have at least some proved reserves), Alberta – the only Canadian jurisdiction with “large” reserves – ranks as the third most attractive jurisdiction for investment (down from second in the 2014 survey when there were 26 jurisdictions in the group), behind only Texas and the United Arab Emirates but ahead of Iran, Russia, Venezuela, Qatar, Iraq, Kuwait and five other jurisdictions in the group of 14 large reserve holders. Among 38 jurisdictions holding at least 0.1 per cent of total proved reserves, but less than one per cent, British Columbia (the only Canadian jurisdiction in this group) ranks as the 17th most attractive for investment. This compares with 19th (of 44) in the 2014 survey and 14th (of 40) in 2013. Oklahoma, North Dakota, Norway-North Sea, West Virginia and Louisiana are the five top-ranked jurisdictions in the group of medium reserve holders. All of the other Canadian jurisdictions with proved reserves fall in a group of 66 jurisdictions with relatively small reserves. As in 2014, Manitoba ranks just below Saskatchewan in this group, lying in seventh position compared with third place a year earlier. The only jurisdictions of the 66 that ranked more highly than Manitoba were the Netherlands-Offshore, Alabama, Mis-

sissippi, Kansas, Arkansas and Saskatch-

Table 1

ewan. The high rankings awarded to these seven jurisdictions, and eighth-place South Australia, reflects their generally positive attributes with regard to most of the investment drivers addressed in the survey. Newfoundland & Labrador, Yukon and the Northwest Territories’ fairly attractive scores placed them in 16th, 22nd, and 23rd place (of 66), respectively. Nova Scotia ranked 33rd and New Brunswick, 38th. On the basis of the Policy Perception Index rankings obtained when all of the jurisdictions for which sufficient survey respons-

es were obtained are included, regardless of the extent of their petroleum resources, Table 1 demonstrates that Manitoba and Saskatchewan were ranked higher by sur-

vey participants in 2015 than Canada’s five other significant oil- and gas-producing jurisdictions in terms of attractiveness for upstream investment – repeating the rec-

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The findings are based on responses from 439 petroleum industry executives, managers, and experts to questions regarding barriers to investment in petroleum exploration and production development in 126 provinces, states, regions and countries. ognition that the two provinces have had for many years. But the fact that both provinces’ survey scores were somewhat higher in 2015 than a year earlier reflects some slippage as to how they are regarded by survey participants. This is because the higher scores reflect higher percentagers of negative responses with regard to a number of the investment drivers captured by the survey questions. Of the seven jurisdictions compared in Table 1, the Northwest Territories demonstrated the most improvement in 2015, rising to 4th place from 7th position in each of the previous four years as the result of a lower (i.e. more positive) score. Newfoundland & Labrador moved up to third place, from fourth. Nova Scotia dropped to last place from fifth in spite of a slightly improved score. During 2012 through 2014, as Alberta backtracked from the royalty hikes embedded in the so-called “New Royalty Framework”, it achieved relatively attractive survey scores and ranked third among the group of seven Canadian petroleum jurisdictions included in Table 1. However, Alberta’s score was worse in 2015 than at any time since 2010, causing the province to slip from 3rd place to 5th. With respect to Manitoba, the cost of regulatory compliance was indicated to be of much less concern in the 2015 survey than in 2014. Regulatory duplication was also less of an issue. However, rather large increases in the percentages of negative responses to the survey questions pertaining to land claims disputes, uncertainty regarding protected areas, taxation in general, and infrastructure were observed. As well, although more modest, there were indications of greater concern than in 2014 with regard to other investment drivers including environmental regulation, regulatory

Manitoba Oil & Gas Review 2016

uncertainty, and fiscal terms. As a consequence, Manitoba’s score increased (i.e. deteriorated) by 6.7 points from 2014. In the case of Saskatchewan, although the fiscal terms, regulatory uncertainty, and infrastructure factors were indicated to be of less concern than during the previous year, respondents indicated that, as in Manitoba, land claims disputes had become much more worrisome. In addition, labor availability, uncertainties in relation to protected areas, the cost of regulatory compliance, taxation in general, and a number of other regulatory issues were of greater concern than in 2014. The less positive indications with respect to some of the survey questions were sufficient to more than offset reduced levels of concern within relation to others, thus increasing (worsening) Saskatchewan’s score by 3.6 points compared with 2014. But because this was less than the increase in Manitoba’s score, the gap between the two jurisdictions is now more apparent. Newfoundland and Labrador’s improvement from 2014 is attributable to significantly lower negative score percentages on the survey questions pertaining to labor regulations and agreements, labor availability, land claims disputes and regulatory duplication. This, as well as more positive perspectives in relation to fiscal terms, more than offset a rather large increase in the extent of concern pertaining to the cost of regulatory compliance and regulatory uncertainty and somewhat greater worries with regard to taxation in general and environmental regulation than indicated in the preceding survey. The Northwest Territories achieved a remarkably improved score in the 2015 survey compared with the preceding year (Table 1) because of lower percentages of negative perspectives over a wide range of

survey questions but, especially, regulatory duplication (which had been a major issue there for some time), labor regulations and agreements, uncertainties in relation to protected areas, the cost of regulatory compliance, regulatory uncertainty, and quality of infrastructure. More concern was expressed than a year earlier in relation to environmental regulation but this was more than offset by the widepstead reduction in negative sentiment in relation to other issues. Alberta’s less attractive score than a year earlier and drop in the rankings is mainly attributable to a significant increase in negative perceptions in relation to fiscal terms. However, increased concern was also indicated by the survey respondents with reference to a number of other issues, especially taxation in general, environmental regulation, regulatory uncertainty, and uncertainties pertaining to protected areas. The worries in relation to fiscal terms undoubtedly reflect the new provincial government’s commitment to launch a review of oil and natural gas royalties. The rise in the percentage of negative responses with regard to taxation in general is most likely a consequence of both the increase in the corporate income tax rate and increased tax rates applicable to high income earners. The greater level of concern pertaining to various regulatory issues suggests that respondents were fearful that the new government would advance costly new regulations on the upsream petroleum industry. That concern over labor availability was much less than a year earlier appears to reflect the marked weakening of the Alberta economy because of the drop in oil prices. British Columbia’s score improved as the result of lower percentages of negative responses over a broad range of survey questions. The improvement was most apparent with regard to fiscal terms, taxation in general and labor regulations and agreements.

Table 2

Referring again to Policy Perception Index results for all jurisdictions regardless

sues so that they don’t gradually erode the province’s attractiveness for investment.

Dr. Gerry Angevine is a Senior Fellow at the Fraser Institute, a non-profit research and education organization. The full report on the results of the 2015 Global Petroleum Survey may be downloaded free-of-charge at: http://www.fraserinstitute.org/sites/default/ files/global-petroleum-survey-2015-rev.pdf The 2016 survey will be launched during the summer and results will be available in the fall. v

of the extent of their petroleum resources, Table 2 shows that Manitoba, which has been among the top 10 jurisdictions surveyed by the Fraser Institute for four con-

Since the 2015 survey was completed the Alberta Royalty Review Panel has recommended that the Province hold the line on oil and gas royalties and the Alberta Government has accepted those recommendations. As a consequence, participants in the 2016 survey are likely to view Alberta somewhat more favorably.

secutive years, dropped from 5th place to 10th. Eighth place Saskatchewan (compared with 3rd place in both 2013 and 2014) ranked among the top 10 jurisdictions worldwide in terms of attractiveness for upstream investment for the third year in a row. Alberta fell from 16th (of 156) to 38th place (of 126) globally. British Columbia improved its global standing from 62th place to 50th place. No doubt that this reflects that province’s improved score. But one needs to be mindful of the fact that had the number of jurisdictions ranked in the 2015 survey remained the same as in 2014 at least some of the changes in ranking might have been less significant or even in the opposite direction. In order to maintain its position as one the two most attractive attractive jurisdictions for investment in petroleum exploration and production development in

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uncertainties surrounding protected lands, taxation (in general), and several other isManitoba Oil & Gas Review 2016

Oil Downturn Slows Economy but Hope Still Thrives

By Melanie Franner

here is no doubt that the impact of the oil & gas industry downturn has spread far and wide throughout the province of Manitoba. But that impact has been lessened by several factors, namely a diversified economy, a resilient attitude, and an ongoing hope that better times are on their way. The Numbers Have It According to the Government of Manitoba, Jobs and the Economy, employment in all primary industries in Canada decreased by six per cent between 2014 and 2015. The number for Manitoba was three per cent. Statistics from the Statistics Canada Labour Force Survey (LFS) show that employment in occupations related to all primary industries was 1.4 per cent lower in Manitoba in 2015 compared to 2011, while employ-

Manitoba Oil & Gas Review 2016

ment in the sector decreased 1.6 per cent Canada wide. And Manitoba’s Labour Market Occupational Forecast predicts further job contraction in the oil & gas sector for 2016. In fact, the trend is expected to continue – albeit slower – through 2017 and 2018 before reversing in the following two years, when a small number of new jobs is expected to be created. The Government of Manitoba, Mineral Resources Department, states that the number of oil & gas licenses issued over the last few years has also been on the decline – falling from 537 in 2013 to 533 in 2014 to 235 in 2015. Similar trends can be seen in the number of wells drilled and metres drilled (1,000 metres). The number of wells has decreased from 530 in 2013 to 464

in 2014 to 205 in 2015, while the metres drilled has fallen from 1,017 to 848 to 364. Estimates for 2016 show that there may be only 100 licenses issued and drilled during the year. Municipalities Tough It Out The Town of Virden is one municipality that has really felt the oil & gas bust. “The oil fields are a huge part of our economy,” says Mayor Jeff McConnell. “But I don’t think it has been as substantial a hit as in some Alberta and Saskatchewan communities. Our activity had dropped a bit but there hasn’t been a significant impact on families as of yet. For those families who may be affected, we as a community will try to band together to help where we can. There is a lot of nervousness, but businesses are trying very hard to keep things going.”

At the same time, McConnell is quick to point out that Virden is home to some substantial employers that are not part of the oil industry. “We call ourselves the oil capital of Manitoba, but the fact is that oil is not our only industry,” he says. “Our community is so much more than oil, particularly at times like this when the oil industry is slow.” The Town of Virden has managed to keep momentum going on economic development, with some businesses continuing to develop plans in the town’s industrial park. “Development may not be occurring as quickly as it would have in the past, but it is continuing,” says McConnell, adding that the town will take advantage of this current slowdown to ponder strategic planning going forward. “We will take the time to reflect and see where the community fell short on needs during the boom. Municipalities aren’t in the position to respond in a heartbeat to the needs of industry. I think we and every other municipality around here will take a breather and identify what needs to be done in the future.” A similar story comes from the Rural Municipality of Pipestone, which encompasses the communities of Reston, Pipestone, Sinclair and Cromer and is home to about 1,500 people. “The oil within our municipality is mainly surrounding the communities of Sinclair and Cromer,” says Tanis Chalmers, Economic Development. “Enbridge has a large facility in that area and Tundra has a large presence as well. There is also a variety of other oilrelated companies.” According to Chalmers, the communities began to feel the effects of the downturn about 10 months ago. Although she admits that some of the “underemployed” individuals are looking at opportunities outside of the municipality, she says that most are looking for answers closer to home. And there seem to be plenty of opportunities available. “During the oil boom, we noticed that it would have been beneficial to have some more service-oriented businesses here, like

convenience stores and rental properties,” says Chalmers. “This is still something we want to pursue. We also have some businesses for sale on our main streets, not due to the downturn in the oil industry but more related to retirement and succession. Therefore, there are new opportunities in the area of entrepreneurship as well.” Chalmers admits that having the two major employers of Enbridge and Tundra puts the municipality in pretty good staid. She also says that the focus on development and growth will continue. “This is an opportunity for us to prepare for the future,” she says. “We’re still offering commercial and residential cash incentives. We also have some developed property available for interested candidates. With spring coming up, this is the perfect time for us to do some research in business development.”

for strategic economic development,” says

That Was Then, This Is Now Located in the southwest corner of the province, the municipality of DeloraineWinchester has a population of about 1,500 and recently went through a forced amalgamation. “This slowdown in the oil industry provides us with a great opportunity for the new amalgamated councils to get together

As the second-largest city in the prov-

Liza Park, Economic Development Officer and Recreation Director. According to Park, the municipality is more of a bedroom community to the oil fields. “We felt some growth during the boom,” she explains. “For example, it allowed out farmers to diversify during the off season by hauling water and things like that. The slowdown has definitely had an impact on our economy, but oil was never the numberone driver for us; agriculture is. We reaped the benefits of the oil boom off our neighbours, but the downturn hasn’t created a crisis for us. We’ve just gone back to the way it was before the boom.” Park calls the boom a “good eye-opener” for the municipality. And one that they hope they will make them better prepared for the future. ince, Brandon is more susceptible to experiencing economic trends on a larger scale. “Brandon is very fortunate to have a diversified economy,” says Sandy Trudel, Director of Economic Development. “Though the oil sector is an important part of the economy, it’s not the dominant economic sector. The downturn in this sector has Manitoba Oil & Gas Review 2016

photo courtesy of the RM of Pipestone

positively impacted labour and negatively impacted businesses that are directly tied to the oil sector and others that are a step removed but still do a lot of business with oil-related companies. Admittedly, there is less disposable income in the region, which in turn is felt in the local retail and hospitality sectors.” According to Trudel, the city of Brandon is “on par” economically with a year ago. She cites a recent Chamber of Commerce survey of Brandon business leaders that shows close to half of them expect that their company will perform better financially in a year’s time. Some 62 per cent anticipate that they will employ the same number of people, while 30 per cent expect to employ more. “The unemployment rate has crept upward over the past year as a result of the downturn in the oil sector, which in turn is helping local businesses that have historically found it challenging to hire for hard-to-fill positions,” says Trudel, who cites that 36 per cent of the respondents in 2012 cited labour shortages as the greatest challenge for businesses while

Manitoba Oil & Gas Review 2016

only 28.8 per cent cited it in the most recent survey. “Having access to additional labour has helped those industries that chronically ran short-staffed, which allows them to capitalize on business opportunities, positively impacting the local economy.” Brandon is also home to a couple of what Economic Development refers to as “base industries”, which helps grow the economy. Further to this, Trudel confirms that Greenstone Structure Solutions is expecting to become operational in the first half of 2016 with a new 26,000-squarefoot facility and Federated Cooperatives Limited is in the permitting stage for the construction of a new bulk granular-fertilizer storage facility. “The North American retail sector continues to evolve as well, resulting in a few retail closures and opening the door for new opportunities,” says Trudel, who adds that the city’s housing rental market has softened but remains healthy, with an overall vacancy rate of 2.2 per cent. “Developers continue to plan and construct new rental units, with several large, multi-

family projects either underway or in the development application stage. Residential sales have also remained steady.” In The Pipeline With the province of Manitoba representing close to 90 per cent of its total business, Tundra Oil & Gas knows firsthand the impact of the recent downturn in the oil industry. The privately owned company is the province’s largest producer of crude oil and currently produces an impressive 30,000 barrels a day, which is up from the 24,000 barrels a year ago. “We have made a number of strategic acquisitions over the last 15 months,” says Tundra Oil & Gas President Ken Neufeld. “However, we are definitely slowing down activity in some areas of the business, like exploration and development drilling. Our capital programs are less than half of what they were two years ago. But we have 3,500 active wells in the province, which we continue to actively operate.” According to Neufeld, the company’s current strategy is focused primarily on looking at ways to manage its cost structure.

Ron Koslowsky, VP of Canadian Manufacturers and Exporters .

“Those activities that we’re involved in, we’re trying to do less expensively,” he says. “We’re trying to work with our suppliers and partners to keep our operations going so that all parties benefit.” Neufeld reports that the company, in his opinion, has done fairly well in weathering out the current downturn. He admits that he doesn’t have a crystal ball but hopes that things will begin to turn around in 2016. “In the meantime, we’re trying to do the things that will help us manage in this difficult environment.” In the near term, Neufeld anticipates that the company will continue to focus on operating strategies, such as replacing its primary drilling activities with workovers designed to improve production from existing wells and by focusing on enhanced oil recovery projects aimed at recovering more barrels from its existing fields. “I think we will be fairly well positioned when things ramp up again,” he says, adding that to date, the company has been able to keep most of its staff. “We’re very pleased with being able to keep everyone on board. There is no guarantee that we can do this indefinitely, but we’re all working together to try to make it happen.” The Bigger Picture Like the province itself, many businesses within Manitoba have a diversified product line. Ron Koslowsky, Manitoba Vice President of Canadian Manufacturers & Ex-

Ken Neufeld, President, Tundra Oil & Gas.

porters (CME), reports that it is this diversification that has limited the impact of the downturn for his organization’s members. “Companies tend to have more than one area of focus,” he says. “In many cases, the companies have two, three or more products. One of these may be oil & gas related and the company is clearly experiencing a downturn in that one area of its business. But on the other hand, that same company is spending more energy focusing on its other product areas. So, in the end, it may end up increasing its sales of a certain product to the U.S., especially now with the low Canadian dollar. Or it may increase its sales within Canada but in a product line not related to oil & gas. Businesses are getting creative with their marketing and are finding new customers as a result.” Koslowsky cites an old adage: Never waste a good recession because it gives you a chance to grow your market share. “This is one of the key strategies that a lot of companies are now adopting,” he adds. That being said, the CME Manitoba remains actively involved in helping its members. “We have about 18 people who are committed solely to helping manufacturers in a variety of different ways, like how to grow the business or how to better use technology,” he says. “This help is often at a very high executive level.” The CME Manitoba also facilitates executive council meetings with seasoned

individuals at the helm in order to provide shared learning experiences and to make new connections. “We are certainly seeing more interest in this area of our offerings,” says Koslowsky, who adds that the organization also has another six or seven individuals supporting companies on LEAN methodologies. A Stronger Tomorrow Although the downturn in the oil & gas industry has certainly impacted almost all within the province, it would appear that for the most part, the municipalities, businesses and people of Manitoba have managed to weather the current cycle – for the time being at least. Innovative marketing, strategic thinking and the unerring drive to survive have come together to create a tough and resilient population. And let’s not forget that the downturn has, in turn, created some positives. “Companies are taking advantage of the lull to explore business opportunities that in the past have been ignored, as they were simply too busy,” concludes Brandon’s Director of Economic Development’s Trudel. “Companies are also committing human and financial resources to improving efficiencies, professional development for their employees and undertaking strategic planning – positioning themselves favourably for the time when the sector returns to its new norm.” v Manitoba Oil & Gas Review 2016

A New Tomorrow

Coping Mechanisms in Troubling Economic Times By Melanie Franner

espite the low oil prices and its impact on the economy, the province of Saskatchewan is poised for an upturn in employment. In their February 2016 Monthly Economic Indicators Report, Saskatchewan’s Ministry of Economy cites the Conference Board of Canada (CBOC) August 2015 Provincial Outlook which states the labour market is expected to “revive over the next two years, with employment rising 0.6 per cent in 2016 and 1.2 per cent in 2017.” Unfortunately, the numbers aren’t quite as uplifting when it comes to employment levels in the forestry, fishing, oil & gas sectors. The province’s Ministry of Economy cites a year-to-date decline of 6.9 per cent in employment levels from January 2016 over January 2015. The largest job losses in 2015 took place in educational services (-4,700), public administration (-2,600), and construction (-2,200). These are significant job losses, many of which will have professional and per-

Manitoba Oil & Gas Review 2016

sonal repercussions on individuals for an extensive period of time. And while other provinces, including Manitoba, have been impacted to different degrees by the recent economic downturn, there are processes and coping mechanisms available to help lessen the anxiety and stress inherent in these life-altering events. Instructional Insight “Losing your job can be exceptionally stressful,” says Therese Lardner, registered psychologist and careers specialist with Mining Family Matters, an online support network empowering Canadian families in mining, oil and gas. “Research shows that it’s one of the top 10 most stressful life events that you can experience, similar to reconciling a marriage or experiencing poor health of a loved one.” According to Lardner, it is important for people who have recently lost their job to “remember that it is a process – there will certainly be good days and bad days, but

you’ve got to hang on for the ride.” The decision to get out and start to seek employment immediately or to take some time is an individual one. “How quickly to begin job searching will be different for everybody,” she says. “Some people need time and space to grieve for what has happened and process their thoughts and feelings. Others get started right away. How quickly you can start can be determined by how able you feel to carry out an effective job search.” Lardner admits that market conditions, such as a downturn in the oil & gas sector, can have a huge impact on a person’s jobsearching experience. But the trick is to not focus on the fact that the market is flat but to ensure one gets creative about how one markets one’s skills and experience. She also adds that networking is key to finding success – and that the job loss itself can turn into a positive. “I can’t tell you how many people I have worked who wish they had the ‘push’ to

find a new role sooner,” she says. “Active job seeking following a job loss will force you to really think about what you want to do so job choices are often aligned with an overall career plan. It gives you the opportunity to reflect on your skills, achievements, and how far you’ve come over your career.” Stressful Times Job loss can be a very significant source of stress for both the individual in question and for the spouse. “Even small demonstrations of daily support are vital,” says Lardner, in speaking of ways in which a spouse may help. “This is a time when the individual can lean on the spouse, friends, and family. Spouses or partners should try hard not to enquire about what the individual is doing all day, as comments like this may cause them to shut down and get defensive. Instead, they can assist with things like proofreading, if that’s a strength. They should also be clear on what sort of job the individual is looking for so they can help with networking.” Lardner cites symptoms such as disrupted sleep patterns (sleeping more/less than usual, trouble going to/staying asleep), increased or decreased appetite, and the use of coping mechanisms like alcohol or recreational drugs as signs that the individual may be going through depression or anxiety. “You need to talk to the person to understand what’s going on with them,” she says. “If you don’t feel equipped to have this discussion, then you need to talk to your doctor or local mental health professional for some ideas on how you could approach the situation. A simple ‘Are you okay?’ is a great place to start.” Stress and anxiety may also impact one’s family, including children. The impact of such is often dependent upon their ages. “A very young child may only have the capacity to understand that mummy or daddy isn’t leaving the house and returning as normal,” says Lardner. “An older child may grasp the concept of the job that you do and may understand that you’re looking

for another place to do that job. A teenager may be more sensitive to the impact of the job loss. The main thing is to keep the message age appropriate and invite questions. Try to be honest about any of the negatives so that the child understands but, at the same time, highlight the positives – such as having more time to play with them.” According to Lardner, there are ways that one can help alleviate child stress. “Try to be a positive role model for coping and talk them through why you’re approaching stress the way you are – like ‘I’m getting really frustrated now so I am going to take a break and come back to this later,’” she advises. “Job loss can often upset the normal household rhythm so try to create a ‘new normal’ to provide some structure and certainty in their lives. Ask if they have any questions or would like to talk about what’s going on, and also try to make the most of job search downtime by doing things that raise your energy levels and nurture your relationship with your kids.” A New Tomorrow Although landing a new job is certainly cause for celebration – Lardner suggests

that one celebrate in a way that’s meaningful – it doesn’t necessarily mark the end of the anxiety. “Change can be daunting even if we choose it,” she advises. “To reduce some of the stress, you should think through your short- and medium-term goals of your new role. What will you need to learn? Who will you need to get to know? How can you build your reputation and career through this role? What could be some of the new challenges? How will you overcome them?” By learning how to manage stress, an individual can better cope with job loss and job seeking. This will also have an impact on an individual’s spouse, family and friends. Lardner advises that people maintain motivation and engagement throughout the job loss/job find process. And to help keep stress in check by taking care of oneself through diet and exercise. “Keeping your motivation up and stress down is a sure-fire way to get through tough organizational change or tough career situations,” she concludes, adding change in itself may be frightening but, in the case of job loss, one is often rewarded with a richer and more fulfilling career. v Manitoba Oil & Gas Review 2016

Photo Credit Renae Mitchell

24th WBPC Focuses on the Technologies and Techniques That Will Move the Bakken Forward

“ The one unchangeable certainty is that nothing is unchangeable or certain.” – John F. Kennedy 32

Manitoba Oil & Gas Review 2016

ertainty is something that all businesses strive for, but it is also elusive. This is especially true in commodities, where so many external influences from politics to weather can change the outcome of operations overnight. Yet, as uncertain as certainty may be, it does breed innovation and efficiency. While politics, weather and even economics can’t be changed, individual operations of companies can, and we’ve witnessed that over the course of the past year as the oil industry and related businesses have done what they can to change and adapt to market conditions.

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And the change has been remarkable. Just two years ago, we lauded the fact that companies were becoming better at what they do, making it economic to produce oil and a “mere” $70 per barrel. Today, we see production continue as the barrels hovers at $35. It has not come without its pains, but industry is rising to the challenge. Slowdowns afford the opportunity to evaluate operations, cultivate ingenuity, embrace efficiency, and deploy the technologies that will take the Bakken forward. Although the mainstream media is concentrating primarily on the price collapse and lay-offs, industry publications are focused on

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what it this period could be: the opportunity to be better. “This makes the phase that we’re in very exciting. It’s not the best financial time for any of us, for sure, but it’s a great time of learning and reflecting,” Don Conkle of Carbo Ceramics told E&P Magazine. Ryan

Hummer of NCS Multistage echoed those sentiments: “We’ve probably learned more as an industry in the last 15 to 18 months than we have in the previous several years where the activity was so high there wasn’t as much focus on costs. Now everyone is laser-focused on making every improvement

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we can make, whether it’s on the completion side, on the drilling side or reducing operating costs. It’s actually an exciting time for the industry as we go through this, even though it’s painful certainly for the services industry and painful for our customers as well.” In fact, the Williston Basin Petroleum Conference was borne from very similar conditions that we face today. The resource was there but the ability to harvest it was not quite ready, and so began the Williston Basin Horizontal Drilling Symposium. This symposium brought together industry leaders to explore the technologies that have since unlocked the Lodgepole Field under Dickinson, the Cedar Hills Field in Bowman County, and of course eventually the Bakken, defining our region as a top energy producer in the world. This is a feat that just a little more than a decade ago may not have seemed plausible because, at that time, the Bakken was still considered uneconomic to produce. The relentless work of industry pioneers, however, led to the innovation and combinations of technologies that have since made the Bakken shale play a world-class resource. The conference has since evolved into the Williston Basin Petroleum Conference, but its focus is still on making the technology, technical and regulatory improvements needed to move our industry and this resource play forward.

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Manitoba Oil & Gas Review 2016

HARLEY MCCORMICK CIP, CAIB Commercial Account Executive Direct Line: 204-851-6104 Virden hmccormick@guildinsurance.ca

At this year’s WBPC in Bismarck, North Dakota, we are pleased to welcome many prominent industry and company leaders to discuss the technologies and efficiencies that are changing the way we develop our vast natural resources. Among them will be CEOs Jim Volker of Whiting Petroleum, Rick Muncrief of WPX Energy, and Jay Ottoson of SM Energy, who will share their experience in the industry and how their companies are deploying technology, people and resources to protect and enhance their assets in the Bakken. Also joining them will be Gerbert Schoonman, Vice President for Hess Corporation’s Bakken Asset, to talk about the company’s use of lean manufacturing to reduce well costs and optimize well productivity. Attendees will also hear a keynote address from Don Hrap, the president of Lower 48 for ConocoPhillips. Hrap leads the development, operations and services related to the company’s exploration and production business in the Lower 48 region of the United States and will offer valuable insight into the future of the Bakken and

John Gerdes

ConocoPhillips’ involvement as one of the largest producers in North Dakota. Market Research Analyst John Gerdes of KLR Group will be present to add some insight into how and when prices may rebound and what we can expect from the “new normal”, while other speaker panels will focus on optimization, technology and artificial lift to maximize production from existing wells. Neel Kashkari, the newly hired president of the Minneapolis Federal Reserve Bank, will discuss the regional economy and widespread economic pull of the Bakken. Encouraging our industry’s best and brightest to find these new opportunities

Lou Holtz

will require leadership, especially during these more difficult times. To inspire current and future leaders, legendary coach Lou Holtz will provide the keynote address the final day of the conference. Deemed “the master of the turnaround,” Holtz’s experiences and lessons learned as a coach can be applied outside of sports, especially when and where leadership is needed most. A few years back, the motto for the WBPC was “The best is yet to come.” We still believe that’s true. We look forward to the discussions that will grow out of the 24th Annual WBPC and see the investments that can – and will – move the Bakken and our industry forward. v

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The 2016 Redvers & District Oil Show is Fast Approaching

he sixth Redvers & District Oil Showcase is coming up fast – May 12th and 13th – so don’t miss out, as there is limited space available to get in as an exhibitor! This year’s keynote speakers at the dinner on Thursday night are Bernie and Sheila Inman, oilfield safety ambassadors. The schedule of events this year will be the same as previous shows, with set-up for exhibitors being all day Wednesday and Thursday morning, and the show opening to the public at noon and running until 4 p.m. Dinner will be served at 6 p.m., with cocktails prior to that and the Inman’s taking the stage around 7 p.m. On Friday, the show will be open to the public from 10 a.m. to 4 p.m. The committee has made great strides this year and has added online registrations for exhibitors and visitors. Everyone visit-

ing the show is encouraged to pre-register online, which will help you skip the line at the door. Pre-registering takes just a minute and can be done through our website, www.redversoilshow.com. The slow economy has challenged our committee, but with Redvers being situated right in the middle of the Bakken play in southeast Saskatchewan and southwest Manitoba (as well as adjacent to the same play in North Dakota), it’s in the perfect location to showcase existing and upcoming technologies for the oilfield and related industries. The Oil Showcase will have items and exhibits of interest to everyone from company officers, engineers, and consultants to drillers, landpeople and many others who work in the oil industry. Our previous oil shows revealed Redvers as a town progressing and moving forward, and we want to show that we’re continuing

that trend. With our hotel and campground, there’s ample space for all to stay and play in town at the upcoming oil show. The 2012 and 2014 oil shows were a tremendous success, with Tim McMillan, MLA in charge of Energy & Resources, being the keynote speaker to a sold out crowd at the banquet on Thursday evening. Onehundred-and-thirty-seven exhibitor spaces were filled both inside and outside the Redvers arena – showcasing a number of oilfield and other industry technologies – and close to 1,500 people came through the door. Our show was made possible with the tremendous help of dozens of companies and individuals. Feedback from the last oil show was remarkable, and we anticipate another successful show again with loads of exhibitors and hopefully a similar showing of people taking the opportunity to look around and make new industry contacts. The committee would like to thank all of the sponsors and volunteers who helped make the 2014 event a success, and we look forward to seeing you! To be a sponsor or to request a booth at the upcoming show, please contact the Redvers and District Oil Showcase Committee at 306-452-3225, e-mail redversoilshow@hotmail.ca, or visit our website at www.redversoilshow.com. v

Manitoba Oil & Gas Review 2016

Brandon

the Perfect Balance

By Sandy Trudel, Director of Economic Development, City of Brandon

randon’s proximity to southwest Manitoba’s oil fields makes us close enough to be home, especially with WestJet’s daily direct flights to

continue to benefit from close proximity to the oil fields while their employees and families enjoy the amenities and the quality of life available in an urban centre of nearly 50,000 people. Brandon benefits from many positive locational factors including: • A one-hour drive to the field

and from Calgary. Trican Well Service, Evolve Surface Strategies, and Hydrodig recognized Brandon’s locational advantages and set up operations in the city. Today they

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• Full service urban centre • A skilled and semi-skilled workforce of 32,000 • Assiniboine Community College’s oilfield safety certification training • Excellent transportation infrastructure for ground and rail movement of materials east-west and north-south • Reliable supply of affordable electricity and natural gas • Available industrial land, both serviced and unserviced • A state-of-the-art wastewater treatment facility and potable water supply Thanks to a diversified economy, the prolonged oil sector downturn – though certainly being felt in Brandon – has not had the devastating effects found in many oil sector-dominant communities. Local companies directly serving the oil field are, for

the most part, in what would be classified as a stable holding pattern. Work continues but growth plans remain on hold. With less disposable income in the region, consumer demand has slowed, but not sufficiently to deter the retail and hospitality sector from expanding. The local labour market has benefited from the relocation of many individuals who were working in the Alberta oil

sector, providing existing businesses with access to an expanded skilled labour force. Located only an hour’s drive from the Bakken, the oil & gas sector continues to be an important economic driver within Brandon’s economy. Local consulting firms, contractors, manufacturers, and trucking firms have adapted their business model to meet the needs of the nearby oil industry. Assini-

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offers the widest range of specialized services. A low crime rate, a wide variety of housing choices, educational excellence, and abundant recreation and cultural opportunities create an enviable quality of life for residents. Brandon is consistently ranked in the top 10 as one of the best places to live in Canada. Brandon is a sports-oriented city full of top-notch recreation facilities offering multiple golf courses, skiing, soccer, equestrian sports and everything in between. Multiple indoor fitness centres offering a full range of services and equipment, as well as personalized trainers, are found throughout the city. Several racquetball and squash courts, an outdoor and indoor running track, and numerous indoor and outdoor swimming pools and waterslides are readily available in the city. For those who are a little more adventurous, thereâ&#x20AC;&#x2122;s a variety of challenging recreational opportunities offered in Brandon: pilot lessons, parachute jumping and rock climbing walls to name a few. With the Assiniboine River winding 17 kilometres through the heart of Brandon and 44 kilometres of paved walking and hiking trails, the city is an oasis for outdoor enthusiasts. Hiking and cycling are extremely popular in Brandon and the near-

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The Breakup from Hell 2.0 By Mark Salkeld, President and CEO, Petroleum Services Association of Canada (PSAC) Mark Salkeld

nder normal circumstances, we in the Canadian oilfield services sector refer to the first quarter of every year as the “100 Days of Hell.” That’s when we go the hardest to get the jobs done for our customers; logistically intense, fast, safe, and efficient. It is one of our many claims to fame in the Canadian oilfield services sector – on top of a hard work ethic, pride in work well done, and teamwork. This is all good when the patch is performing. But last year and this year have been anything but good. Instead, spring breakup came around way too soon last year and this year the same – but more for economic reasons than environmental. We stopped work sooner, and we’re bringing our equipment home where we service, repair, inspect, and rack it against the fence so it’s ready for the next round. And the next round didn’t come last year, and it’s highly unlikely to come this year. More and more of our folks are out of work, out of luck, and out of income. Other industries have gone through the same bad circumstances, maybe even worse. For example, think of fishing out east, the automotive sector, and now manufacturing. But what seems almost like adding insult to injury is all the noise in the media and online from so-called experts about how the oil & gas industry is ruining Canada. Tell me: how would we be better off leaving these resources in the ground? I mean, really? How ill-informed is that? Did those same detractors write their opinions on computers or papyrus paper? I don’t recall reading anything about leaving the fish in the sea, fruit on the trees, or parking all the cars. And yet, how would all those opinion-

Manitoba Oil & Gas Review 2016

ated Canadian detractors find their way to their computers, fresh fruit, and seafood if it wasn’t for oil and gas. Oil and natural gas products are found in electronics, sports equipment, and in your yard, closet, kitchen, car, bathroom, and local hospital. There are petroleum products in the clothing and accessories you wear every day – shades, clothing, shoes, pantyhose, raincoats, and more. Petroleum Services Association of Canada (PSAC) produced a series of PSAC Product Videos that everyone should check out to see how many products in our world today are made from petroleum products. Find out more and watch the videos at: oilandgasinfo.ca/oil-gas-you/products/. It’s like our detractors can’t see the forest for the trees – all good in their world as long as they are warm at night, have hardworking oilpatch workers to pick on from the comfort of their natural gas heated homes and synthetic bath robes, made in China and flown to Canada on planes using oil and gas derivatives. And how do we get the industry detractors their natural gas? With hydraulic fracturing no less. A very old and proven technology perfected over the years by those now unemployed oilfield services workers. It seems there is a whole generation that doesn’t appreciate the fact that Canada is not an overly hospitable place to live if we didn’t have heat for our homes, garages, and places of work. Oil & gas provides a means to bring food in when we can’t shop for or grow food within walking distance of our nice warm or cool houses. So industry detractors pick on something they are not educated about.

Fracking just sounds good to say in a negative way. From the perspective of the hardworking oilpatch worker, it’s like they’re telling our world they are fools, and uninformed people listen to these same fools because the word fracking strikes an emotional chord. Just how the detractors like it. Let’s play up emotion and throw out facts, good old-fashioned Canadian ingenuity, and entrepreneurialism out the window. I find it interesting that quite a few universities across Canada and the U.S. teach hydraulic fracturing to their engineering students and have done so for years. Hydraulic fracturing has been researched, tested, improved, taken to such a high level of sophistication and success that other countries are banging on Alberta’s oilpatch door asking for help on how to develop their own natural resources in environmentally responsible manner. And how does the oilpatch fare through all of this? Like the other industries hit with tough circumstances beyond their control, we tough it out, find work elsewhere, ask for help as a last resort and do the best we can. So hats off to the Canadian Association of Oilwell Drilling Contractors (CAODC) for their Oil Respect campaign. I hope it begins to resonate with the generation that thinks gas for their cars comes from gasoline pumps connected to convenience stores, just like carrots and fresh fruit comes from grocery stores, and their snow boards and bindings come from the same sporting goods stores that supply them with their down-filled ski jackets flown in from somewhere other than Canada for the most part. Oil Respect is about connecting the dots between a high quality of life our industry detractors take for

granted and the oilpatch worker that just wants to work for a living. So get your bumper stickers and T-shirts and sign CAODC’s online petitions at oilrespect.ca. Retweet and share their posts on social media. PSAC is also working hard on initiatives to raise awareness of this industry: who we are, how good we are, and how highly respected this industry is by folks from other countries that want what we have. I travelled to India last fall and discovered that many companies from India want to do business with Canadian oil & gas services companies, especially PSAC members, because they hold to high standards and are highly respected in the industry. I also just came back from Mexico and Colombia, where I participated in trade missions to build connections with Canadian oilfield services companies interested in doing business internationally. It’s a good idea to diversify your markets in this economic downturn. At home, PSAC is working hard to educate, build relationships with, and influence policy with provincial and federal governments and educating thought-leaders and communities about how safe and technically sound hydraulic fracturing is to produce our resources, as all of the pressure pumping companies in Canada are PSAC members. We are working hard on behalf of our members to pave the way for them to go back to work and stay working. I am extremely proud of this industry, the people, the work ethic, the ingenuity and camaraderie. We are successful because we communicate between each other, the service providers, the customers, the regulators, and the governments. We are transparent. We are open. We want success for ourselves, our families, and our friends. It’s too bad that our industry detractors also benefit from the hard work that we do. Sometimes I wish they couldn’t so they could see the value the oil & gas sector brings to their lives. Imagine if those that think we should leave the oil and gas in the ground have all that comes from oil and gas taken away from them, from their families and their like-minded friends. How would they get dressed in the morning,

At home, PSAC is working hard to educate, build relationships with, and influence policy with provincial and federal governments. drive their cars to work or use their computers without petroleum products? As long as they live in Canada in comfort, our detractors are truly exposing themselves as ill-informed folks that take everything they have for granted. At the end of the day, we in the Canadian oilfield services sector will survive. We will

go back to work, we will hire new people, and we will continue to develop our natural resources better than anyone else in the world. And because of our efforts, people around the world with less than us will benefit – maybe even to the point where they can take an exceptional quality of life for granted. v

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Let’s Stick to the Facts By Mark A. Scholz, President of the Canadian Association of Oilwell Drilling Contractors

Mark Scholz with Blake Richards, MP for Banff-Airdrie.

il Respect was launched a few weeks ago, and public support has been overwhelming. One of the campaign’s objectives is to provide regular Canadians with an opportunity to stand up for Canada’s oil & gas industry and the workers who make it run. It’s a goal that has attracted supporters from Victoria to St. John’s, which isn’t surprising. Oil workers and oil families matter. The industry employs over 500,000 people, and everyone in the industry knows people who have lost jobs; a friend, a father, a daughter – more than 100,000 people unemployed because of the recent downturn. But oil workers aren’t just losing their jobs; families are losing their homes. It’s the worst slump since the 1980s, and soft oil prices aren’t the only problem. Radical environmentalists, foreign celebrities and grandstanding politicians continue to distort the record of Canada’s oil & gas industry further imperiling job prospects for oil workers. Oil Respect is also about correcting the record against these exaggerations, half-truths and fabrications. If we don’t push back with the facts, bizarre ideas can take root in the media and among people in positions of influence. For instance many opponents of Canada’s oil and gas industry would have you believe that if Canada quit producing oil, the world’s greenhouse gas emissions would go down. This of course is untrue. Other nations would immediately step in to make up the

Manitoba Oil & Gas Review 2016

Launch of the Oil Respect campaign in Calgary.

extra production. In fact, the current swoon in oil prices has been caused by increased production from countries like Saudi Arabia, Iran, Russia and Venezuela. Unfortunately, none of those countries meets the same strict carbon emission standards as Canada, not to mention Canada’s far higher labour, safety and human rights standards. Despite this, imports of Saudi, Nigerian and U.S. oil are on the rise in Canada. We believe Canada would be better off in every way if eastern refineries were taking oil from Alberta instead of Algeria, but we need pipelines to do that. To put the argument the other way around the world would be better off in many ways if a bigger share of the world’s oil production came from Canada. Furthermore, the International Energy Agency projects that the world demand for oil will grow in the decades ahead. If so, doesn’t it make sense for that oil to come from a country like Canada? In the meantime, many companies are developing new ways to produce clean and renewable energy. In Canada, the leaders in the production of wind and solar energy are also some of Canada’s largest oil and gas companies such as Enbridge, Suncor, Shell and Trans Canada. Profits from oil and gas development and transport make that possible. Again, these are facts. But the revenues from oil and gas development, transport and processing help in other ways too. Not only do they come back to us in the form of profits in our RRSPs

and to the Canada Pension Plan, they also provide billions of dollars in revenues to Canadian governments. On average, $17 billion dollars a year comes from oil & gas to fund nurses, teachers, firefighters and police officers. These are the facts of life in Canada, and if we ignore them we risk basic government services. Finally, it is a fact that the safest and most efficient way to transport oil, or any petroleum liquids, is by pipeline. Building pipelines also ensures that we can move Canadian oil to market, meaning better profits for companies, more revenues for governments and more jobs for workers. The proposed Energy East pipeline would mean a $14 billion shot in the arm for the Canadian economy. Trans Mountain would inject $9 billion, and all of that $23 billion dollars would be private money. Tens of thousands of workers would be employed without asking taxpayers to pony up. The much discussed “middle class” would benefit as soon as approvals were received. Again, these are facts. Oil Respect ensures that regular Canadians, and the hard facts, are at the forefront in the sometimes emotional but entirely legitimate discussion about Canada’s use of our oil & gas resources. Help us get the attention of governments by signing the petitions at www.oilrespect.ca and by liking our Facebook page. Let’s fight together to protect and promote an industry that has done so much to make Canada the best country in the world. v

New Pipelines Can Support Action on Climate Change By Marg McCuaig-Boyd, Minister of Energy for the Province of Alberta

ipelines are the safest and most efficient way to transport our energy resources, but over the last decade Canada has failed to build a major new pipeline to tidewater. That must change. We have to get a pipeline built. For this to happen, governments have to address the concerns Canadians have with pipelines – not with talk, but with real action. One of the main questions Canadians have is: how can we support the development of new pipelines while also combating climate change? It’s a good question, one that for years has lacked a good answer. As a result, the conversation about pipelines has been reduced to two opposing positions, making it seem contradictory to support new pipelines and also support actions to prevent climate change. Conservative governments in Alberta and federally just didn’t get it. They failed to recognize much of the battle against pipelines was a battle against the expansion of the oil sands. The conversation about pipelines became a conversation about the oil sands, and conservative governments refused to take that conversation seriously. Turns out, they should have. Their inaction hurt our economy along with families in Alberta and across Canada. Alberta’s single largest energy customer – the United States – blocked the Keystone XL pipeline not because of the safety of the pipeline, but because of the reputation of the product carried in the pipeline. President Obama said our energy products aren’t good enough, that they’re too dirty. While this isn’t true, we need to change our

reputation, and we need to do so in a way that’s meaningful. Alberta’s Climate Leadership Plan turns the page on that old debate and provides the opportunity to show the world that we can combat climate change while also protecting the good, mortgage-paying jobs of our oil and gas industry. This plan has brought together an alliance never before seen in Alberta, including environmentalists, oil sands executives, First Nations and the provincial government. These onceunlikely allies support us taking long-overdue, meaningful action to combat climate change, while also demonstrating that Alberta can be one of the world’s most progressive energy producers. One of the key commitments of our climate leadership strategy is to limit emissions from our oil sands. Finding less carbon-intensive ways for our oil sands to produce, while also protecting and creating more energy jobs, means investment in new technology. It won’t happen any other way. For Alberta to make the kind of investments necessary to transition away from a carbon emission intensive economy, we need to get full value for our resource exports. Right now, we don’t. Almost all of our energy resources are sold to the United States, who as a result of the shale oil and shale gas revolutions, have in a few short years transformed from our best customer to our biggest competitor. As a result, we are selling our energy products to our only customer at a discount. This discount means that Albertans and Canadians get less value from our natural resources, with lower royalties and less

economic benefit. This in turn deprives us of critical public funds necessary to invest in the kind of technology that will be required to transition our economy toward a more prosperous, low-emission future. Building pipelines to tidewater and to new markets, while at the same time taking action to curb emissions, are the two essential components required to transition away from carbon intensive energy production and assert ourselves as one of the world’s most progressive, responsible and forwardlooking energy producers. But pipelines aren’t just good for Alberta. They are good for all of Canada. Canada currently imports almost a million barrels a day of oil from other countries. It makes no sense to finance the economies of other countries in this way, when it would be both more economically and more environmentally responsible for Canada to rely on its own abundant energy resources. There was a time when discussions around pipelines would see new proposals judged on their merit – public safety, job creation, market access. We want to return to those discussions. Doing so will take hard work, an unprecedented commitment from our partners in the oil industry, environmental groups and First Nations, and a long-term commitment from the government of Alberta. The good news? Our climate leadership plan has established the unprecedented coalition needed to get this work done. Together, we can develop the technology to take the carbon out of the barrel. Together, by showing we’re serious about climate change, we can take the politics out of pipelines. v Manitoba Oil & Gas Review 2016

Long Horizon Enhanced Oil Recovery Can Extend the Life of a Reservoir by Decades

Tundra was the first company to endeavour to apply EOR methods in the Bakken reservoir. This graphic shows Sinclair Unit 1 - Lyleton, an original vertical development of 16 producing vertical wells featuring 400m interwell spacing (2007).

orking in a low oil price environment has Tundra Oil & Gas focusing on longterm production, including how to recover a higher percentage of oil contained in its existing reserves base. The key to this is enhanced oil recovery (EOR), which usually involves injecting water or gas into the reservoir to add energy in order to sweep more oil to the producing wells and improve ultimate recovery. Primary recovery, which relies on the natural energy of the reservoir, typically recovers up to 10 per cent of the original oil in place. Secondary and tertiary EOR methods, including waterflooding and CO2 injection, can increase ultimate oil recovery up to 35 per cent. When you consider a play that consists of over a billion barrels of oil, such as Tundra has discovered in the Bakken reservoir, even a small increase in ultimate oil recovery can have a tremendous effect. “Compared to the price of drilling new wells, it can be relatively low-cost to recharge a reservoir by injecting water,” explains Jane Mactaggart, Tundra’s VicePresident of Reservoir/Exploitation. “In this

Manitoba Oil & Gas Review 2016

Sinclair Unit 1 - Lyleton, waterflooded with open-hole horizontal injector wells, featuring 200m interwell spacing and a custom designed injector (2011).

environment of low oil prices, using existing infrastructure is a good strategy; we inject water in to increase the pressure and, hopefully, will see an improved production response in the future.” Tundra was one of the first companies to apply EOR technology in the Bakken reservoir and remains a leader in the region. With the company’s 2014 acquisition of over 840 wells from EOG Resources and 550 wells from Penn West in 2015, it looks forward to expanding its EOR applications. “The purchase of the EOG and Penn West assets gives us an opportunity to apply what we’ve learned over the years as we continue to expand our enhanced oil recovery processes,” says Raj Sharma, Tundra’s EOR Manager. That’s not to say that implementation won’t be without its challenges, as the previous operators’ focus was mainly on primary recovery. But there are some things working in Tundra’s favour, including the fact that the wells are already drilled and that unitization (mineral owners must agree to EOR in exchange for a share of the oil that comes out of a larger project area rather

than from individual wells) on much of the land is already in place, which would otherwise be a lengthy process to undertake. “While not all of the wells may prove to be ideal for secondary recovery methods, we look forward to leveraging what we’ve learned from similar reservoirs to keep this field producing for a long time,” Sharma says. “We believe if anyone can do it, it’s Tundra.” The Future of the Field The Midale Field is a 42-square-mile oil patch located in the Williston Basin west of Virden. Vertical wells were first drilled on the land in 1952, and thanks to EOR methods, not only is the field still producing 60 years later, but many of its wells are expected to produce oil beyond the century mark. “The Midale Field is an example of a mature pool that should have another 30 to 40 years of life ahead of it,” Mactaggart says. “Tundra has similar assets in Manitoba, including a waterflood that’s really working well for us in the Sinclair-Daly Field. It’s really exciting to know that we’re part of a different kind of business now, one with a long range, 30- to 40-year viewpoint.”

Sharma explains that back in the day, oil companies would come in, purchase land, drill wells and move on quickly if they didn’t yield the expected results. “Things have changed significantly in the last few years. It’s no longer a matter of getting in there, making a quick buck and getting out without worrying about what’s going to happen down the road because that’s ‘someone else’s problem,’” he says. “Our vision from day one has been to keep assets producing for a long time, to reinvest wisely and to do what’s right for the environment. That’s why with everything we develop, we always keep our ultimate goal of maximizing recovery in our mind.” Making long horizon decisions means that Tundra must envision future socioeconomic changes. “Realistically, if we have an asset that’s going to produce for the next 50 or 60 years, we need to consider how world attitudes will change around carbon, as that’s definitely going to be part of the commercial and environmental world we’re operating in,” says Mactaggart.

“We’re particularly intrigued by the potential for CO2, as we see a greater number of projects for carbon sequestration (the longterm storage of carbon dioxide to either mitigate or defer global warming and avoid dangerous climate change) in Canada and more discussions about carbon taxes as a way to encourage innovation,” she says. Tundra implemented a CO2 pilot project in 2008, which it has been continuously monitoring and modifying to evaluate its potential in commercial production. While there have been some short-term challenges in containing the injected gas in the reservoir in order to keep pressure up, it has improved production quality. “Any other company might say that in a low oil price environment, you should shut down the tertiary pilot if you’re merely spending money to learn, but that’s not the case with Tundra,” Sharma says. “We believe CO2 fits into a longer-term recovery strategy and are committed to that focus,” Mactaggart adds. “We may not have all of the answers now, but in the coming years, we will continue to innovate as tech-

nology improves and we find ways to work with environmental changes that come at us. Although we’re producing carbon-based fuel, we can mitigate some of those potential issues by injecting CO2 back into the ground and sequestering it in the reservoir. We’re excited to see how we can become part of the carbon solution.” The low price environment has caused Tundra to shift its focus and innovation toward enhanced oil recovery, and according to Mactaggart, that’s not a bad thing. “I think that there is a lot of innovation happening within Tundra, and we’ve continued to build a team of innovative people who are continuously looking at ways to optimize these secondary processes,” she says. “Part of Tundra’s strength is that we have such a big base of opportunity that allows us to try new things in the field. Our team has struck a good balance between recognizing when its best to leave things alone when they’re working well and knowing when it’s time to roll up our sleeves and get innovative in order to make things even better.” v

Proudly investing in Manitoba since 1980. Manitoba Oil & Gas Review 2016

Why This Oil Price Collapse Is Different From the 1980s By David Yager

umerous comparisons of the 2014-2016 oil price collapse to that of the 1980s have been made, with many saying this

reaching the equivalent of US$117.18/b in

the worst downturn ever in this notoriously

ed exploration and drilling boom, which re-

cyclical business. It is not – there are paral-

sulted in a flood of new supply – and even-

lels to the 1980s price collapse but also sig-

tually the price drop. Similar to the tight oil

nificant differences, including data showing

bonanza of the past five years.

1979. The response of the global industry to the 1970s price spike was an unprecedent-

the current market overhang of crude oil

But back in 1973, non-OPEC oil pro-

supply in excess of demand is nominal and

duction was 24.67 million barrels per day

therefore temporary.

(mmb/d). By 1981, non-OPEC production

Here is some history: The red line shows

gains of about 9 mmb/d were starting to

the price of oil (Illinois Crude Oil Sweet,

seriously crowd out OPEC. A cartel that

which trades slightly below WTI) in infla-

was producing 30.9 mmb/d in 1979 (not

tion-corrected 2015 dollars. The first major

far from current output of 32 mmb/d) was

OPEC price spike of 1974 raised the price

down to 16.1 million b/d by 1985, with

of crude oil from about US$20 per barrel to

OPEC members withdrawing as a whole

US$40 almost overnight. The relentless up-

some 14 mmb/d or 47 per cent.

ward climb caused by OPEC flexing its mus-

Saudi Arabia alone lost over 6 million b/d

cles and other events culminated in crude

of crude oil output, at which point it an-

Manitoba Oil & Gas Review 2016

nounced it would not shut in even more oil to sustain prices. The price collapsed, and by 1986 oil would fall to about US$25 per barrel 2015 equivalent, effectively losing 79 per cent of its value in real terms. In late 1986, OPEC formally introduced a 16 mmb/d quota that officially pegged the price at US$18 per barrel, the equivalent of about US$39 today. With the exception of a brief price spike in 1990 concurrent with the First Gulf War, oil stayed at or near these levels for nearly eight years. During the slump of 1998, it got as low as US$12.47 a barrel, less than 10 per cent of its peak price. When oil hit its recent low in mid-January, that price was still not much lower in real terms than prices in the latter half of the 1980s. Back to the present. In November 2014, Saudi Arabia repeated history and decided not to restrain production to sustain prices – a move ratified again a year later. But exiting 2014, correcting the market was only a matter of one or two mmb/d, not 14 mmb/d. Another factor contributing to the allegation the current slump is the worst ever is supposedly massive crude oil inventory levels. This chart (top left on opposite page) shows the Organization for Economic Cooperation and Development oil inventories at the fourth quarter of 2015. Note the average storage levels for the period 2010 to 2015, which saw both high and low oil prices, is about 2.7 billion barrels. Oil storage exiting 2015 was about 290 million barrels above the five-year average.

Source: International Energy Agency, January 19 2016

This chart (top right) from 1988 shows OECD oil inventories were higher than current levels. Obviously, high inventories didn’t help the price in the late 1980s, but the numbers were larger than today. Presumably OECD countries have built more storage in the past 30 years. Where did they put the oil then? Where is it now? So to compare the current situation of world oil markets to that of the 1980s is wrong. The crude oil market overhang 30 years ago was 14 million b/d. Today it

Source: Arthur Andersen & Co./Cambridge Energy Research Associates

ranges from 1 million b/d to 2 million b/d, depending upon which data set you are reading. While the high inventory levels of the 1980s did indeed exacerbate low oil prices for an extended period of time, that slump was caused by massive excess supply and inventories. According to this data, both situations are significantly better for oil prices today. More analysts are concluding that due to growing oil demand, continuing decline rates in all reservoirs and massive capital

spending cutbacks in new supplies, the global supply/demand curves will cross later this year. In an oil-dependent world, there is increasing understanding that the price of oil has already been too low for too long. David Yager is the National Leader of MNP’s Oilfield Services group and a 33-year veteran of the Canadian oilpatch. Contact David at 403.648.4188 or david.yager@mnp.ca v

Tough Times Require the Right Decisions As a player in Canada’s volatile oilpatch you’re as tough as they get. Agile, hard-working, able to move forward in prosperity or adversity. To stay on top of this highly competitive industry you need a strong team behind you. MNP’s oilfield services professionals deliver the financial management, analysis and business advisory tools you require to make the right decisions at the right time. No matter where the markets go, we’ll keep you ahead of the curve.

Contact: Julee Galvin, CPA, CA Virden T: 204.748.1340 E: julee.galvin@mnp.ca

Deb Calverley, CPA, CGA Deloraine T: 204.747.2842 E: deb.calverley@mnp.ca

Corie Wudrick-Mohrbutter, CPA, CA Moosomin T: 306.435.3347 E: corie.wudrick-mohrbutter@mnp.ca

Manitoba Oil & Gas Review 2016

Recent Poll Unveils Canadians’ Anxieties By Melanie Franner EKOS Research Associations Inc. The poll took place between February 16th and 26th, 2016 and included the responses of a random sample of 2,098 Canadians aged 18 and older. “The most striking thing about the results of this poll is the collision of two forces in public opinion, namely the economy and the environment,” says Frank Graves, President of EKOS Research. “Typically, when people feel this gloomy about the economy, their concern for other issues like climate change, is lessened. In this Alberta Environment Minister Shannon Phillips.

anadians across the country are deeply concerned about the state of the economy. They also have strong support for Al-

case, we see paradoxical views on the environment and energy.” The poll found that Canadians identify the economy as the most important issue facing the country – capturing 33 per cent of the votes, with education next in line

berta and the province’s current energy

at 12 per cent. The economy also scored

situation. Such are the findings of a recent

high on the list when Canadians were

CBC-sponsored online poll undertaken by

asked to rate their degree of concern with

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Manitoba Oil & Gas Review 2016

a number of issues. The economy was seen as the most significant, with 57 per cent of the people saying they were “very concerned” and another 35 per cent saying they were “somewhat concerned”. Improving the health care system garnered 46 per cent of the “very concerned” votes and 43 per cent of the “somewhat concerned”, while the environment came in at 44 per cent and 39 per cent respectively. Energy and Environment Canada’s oil & gas industry is recognized in the poll for its role in the economy. Some 92 per cent of Canadians think that the oil & gas industry is important to Canada’s economy today, while only 69 per cent think it will be important in the future. The poll also asked Canadians about their support for various pipeline projects – Energy East, Enbridge Northern Gateway Pipeline and the Trans Mountain Pipeline. Results show that Energy East is by far the favourite, with 59 per cent of Canadians expressing support for the project (35 per cent were in opposition). The other two projects received 48 per cent and 47 per cent respectively. “There are some regional differences, which is less surprising,” says Graves. “For example, Alberta and Saskatchewan are very strong proponents of Energy East.” According to Graves, one of the strong take-aways from the poll is the recognition of the importance of energy to the country’s economy and its importance to Alberta’s present and future economy. “From what I see, most respondents say we should be helping Alberta out at this stage,” he says.

In fact, the poll showed that six in 10

Minister Phillips is also closely follow-

which we have. In addition, we need to

Canadians support an additional $700

ing the government’s policy in regards to

get our energy products to market and

million in spending earmarked for Alber-

green energy. The poll found that 73 per

to engage with our trading partners and

ta’s infrastructure. In comparison, only 33

cent of Canadians believe the focus go-

other provinces.”

per cent are in opposition. There is also

ing forward should be on green energy

The EKOS Research poll describes the

strong support to remove EI restrictions

investments, with just 20 per cent saying

Canadian public as being “conflicted” in

for Albertans, with some 56 per cent of

the focus should be on expanding fossil

their attempt to reconcile the threat of

Canadians in agreement versus 34 per

fuel use.

climate change with the recognition that

cent in opposition.

“We look forward to government

energy will remain critical to the economy.

“I think this poll showed that there is

investments in the green energy and

“How people are dealing with these two

broad acceptance across Canada for the

green technology space so we can bet-

forces describes the country as a whole,”

fact that Alberta’s energy product powers

ter align ourselves,” says Phillips.

concludes EKOS Research’s Graves. “There

the country, which is a good thing,” says Alberta’s Environment Minister Shannon

is deep division across many of the issues Changing It Up

surrounding these forces, especially once

Phillips, who adds that the province’s

Despite the broad support that Alber-

you push down into the regions, demo-

leadership on climate change looks like

ta has received across the country, the

graphics and partisan lines. For example,

it has been well received – although she

province is in no way sitting back and

the burgeoning need to deal with the en-

adds that there is still a lot of work to do.

waiting for change.

vironment is almost completely rejected

“Canadians have an ethical environmen-

“The number one reason our econo-

tal stance. All Canadians want to ensure

my is in the shape it’s in is because we

The good news, it would appear, is that

that we’re being responsible with the

rely too much on one price on product

Canadians for the most part are in agree-

environment. There is no doubt that we

on one market,” says Phillips. “We can’t

ment in their concern for the economy.

have more work to do. That’s why we’re

do anything about the price, but we can

How the environment will play out with

engaged with the other provinces.”

make some moves toward diversifying,

that remains to be seen. v

by the conservatives.”

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Manitoba Oil & Gas Review 2016

High Stakes Arguments Remain Heated on Both Sides of the Energy East Pipeline Debate By Leonard Melman

Hardisty ON

Moosomin

Lévis Montréal New Pipeline Construction

Saint John NS

Terminals

Existing Pipeline Conversion

ne look at an atlas clearly illustrates a serious problem for Alberta and Saskatchewan petroleum producers and developers. The simple fact remains that both provinces are located some distance from sizeable markets and, therefore, reliable means of transporting huge quantities of petroleum – both Alberta and Saskatchewan light, as well as Alberta’s diluted bitumen recovered from oil sands projects – must be developed. For various reasons, many producers believe that transportation via pipelines represents the only workable option since there are no navigable waters available and using lengthy trains of rail tanker cars has been intensely discouraged since the Lac Megantic tragedy of July 2013, which saw 47 people killed in a fiery inferno. Three important pipeline projects have been proposed: various suggested pipelines to Pacific ports which are presently

Manitoba Oil & Gas Review 2016

tied up in regulatory and legal knots; the Keystone XL pipeline, which would carry Western Canadian petroleum through the U.S. to refineries and ocean ports located inside that country but which is presently likewise engulfed in time-consuming controversy; and the Energy East Pipeline Project, which would be located entirely within Canada. The proposed Energy East pipeline, to be built by TransCanada Corp., would extend about 4,500 kilometres from a new tank terminal planned for Hardisty, Alberta across the prairies, Ontario, Quebec, and New Brunswick to marine shipment facilities on the Bay of Fundy in the port city of St John. Ocean-going oil tankers would then transport the petroleum to major world markets. As planned, the capacity of the pipeline would be slightly more than 1 million barrels of crude per day. Underlying economic fundamentals relating to the petroleum market are an

important consideration. As matters now stand, Alberta produces far more petroleum than is required for domestic markets within that province – and this is also true for Saskatchewan production. Because of the existing difficulties in storing, transporting and marketing excess production, the petroleum industry has inflicted a “negative premium” on Western Canadian production. According to a December 22, 2015, article in Canada’s National Post newspaper, while world commodity markets were pricing crude oil near US$35 per barrel, the article stated that, “…In Western Canada, some producers are selling for less than US$22 per barrel.” Pro-pipeline commentators suggest that a completed Energy East project would allow for efficient transport of all production, eliminating current storage costs, and therefore would allow Alberta and Saskatchewan production to sell at prices much closer to world quotes. TransCanada has planned for the project to be developed in three sections. These include converting an existing natural gas pipeline into an oil transportation pipeline; construction of new pipelines where none presently exist or where necessary to link up with the reconstructed sections; and construction of associated facilities such as pump stations, tank facilities in Saskatchewan and St. John, and construction of marine facilities in St. John. Consultation work began on the project in the first half of 2013, and regulatory applications were filed in mid-2014, with a Regulatory Application Amendment being filed in late 2015. A proposed future timeline includes construction beginning in mid-

2017, and final commissioning and actual service starting in 2020. Passions are indeed heated on both sides of the project approval debates, with proponents pointing toward significant economic benefits while opponents are strenuously objecting to potentially negative environmental impacts. Not surprisingly, the Alberta petroleum industry itself remains one of the most consistent supporters of Energy East. They note that not only Alberta, but also the rest of Canada, gains from a healthy oil sands development industry, as more than 2,000 companies outside Alberta benefit from the industry’s activities. They claim that as of 2014 the industry provided more than 500,000 jobs for Canadians and, therefore, they support the Energy East pipeline as a project which will further economic progress. TransCanada Corp. itself also provides additional arguments in favour of the project, noting, “Energy East alone will support more than 14,000 direct and indirect jobs annually during its design and construction stages. This means employment opportunities for welders, truck drivers, crane operators, engineers and environmental specialists as well as other spin-off benefits…” In addition, the company also notes it is working toward a high level of environmental stewardship and the pipeline will be making a contribution toward energy independence as “building Energy East will reduce the need for higher-priced foreign oil imports.” Other voices being raised in support of the project include Saskatchewan’s Premier, Brad Wall, who was quoted in a February 2, 2016 Canadian Press article as declaring that newly-elected Prime Minister Justin Trudeau should take a stand and support the Energy East pipeline. In the article, Wall countered environmentalists’ arguments by stating, “If you sift through some of the rhetoric, they just don’t like oil, and I don’t think that is a good enough reason to hold up a pipeline that will benefit all of the country.” He was referring to objections filed by

Underlying economic fundamentals relating to the petroleum market are an important consideration. environmental groups with the National Energy Board (NEB), which is presently evaluating remaining portions of the application approval process. Environmental movement arguments against the pipeline are numerous and varied. One that has shown up with some consistency is the declaration that oil sands petroleum production is a significant producer of greenhouse gases and construction of the pipeline would ultimately result in greater oil sands production and, therefore, greater pollution. The Pembina Institute states filling the Energy East pipeline would help spur 650,000 to 750,000 barrels of additional production per day from the oil sands. Other objections found listed in literature provided by The Council of Canadians – an organization that describes itself as “acting for social justice” – itemizes several arguments against the pipeline: • The pipeline would not result in a stronger Canadian refining industry, but the oil would be “shipped, unrefined, to places like India, Europe, and possibly the

United States.” • Company assurances that the regulatory processes ensure pipeline safety are wrong as “The Harper government’s 2012 omnibus budget bill almost entirely wiped out environmental regulations in Canada.” They also stated that the NEB was “industry-friendly.” • Converting the existing natural gas pipeline to petroleum transport would incur safety risks such as “Pre-1970s pipelines are predisposed to cracking corrosion along lengthwise seams.” • Company claims regarding economic stimulation are wrong and that “TransCanada has a bad record of over-estimating potential jobs.” They would rather see advancement of renewable energy projects which would “outpace jobs in oil and gas by as much as six to eight times.” Passions on both sides of this project remain intense, and many wait to get a clearer picture regarding the future influence of the new Trudeau government in Ottawa on the application process. The stakes are indeed high. v

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Manitoba Oil & Gas Review 2016

Reducing Costs and Improving Quality in Heritage Management open during peak seasonal demand, but customers can book services from them throughout the year, even if the staff needs to be brought in from another office at our cost. Currently our field offices include Grande Prairie and Winnipeg. We will be opening a field office in Swift Current in 2016. To serve the Weyburn area, we maintain an office in Regina year-round.

Field offices and centralized coordination allow Western Heritage to provide fast response time across multiple jurisdictions, reducing administrative and management costs for our customers.

t’s no secret that resource development industries – and oil & gas in particular – continue to transition toward a future defined by lower commodity prices. Low commodity prices have had a wide range of effects on Canadian firms, but in every cloud, there is a silver lining. Suppliers are doing everything they can to both lower costs and raise productivity in order to improve profitability and provide value to their clients and partners. Western Heritage provides heritage management and geomatics services across western Canada. One of our key goals across all levels of the oil & gas supply chain has been reducing costs while improving quality. We have successfully reduced our costs and improved our response time, while meeting or exceeding regulatory and CSR goals. We don’t believe that you can only pick two out of “speed, quality and cost.” We allow you to pick all three. To achieve this, over the past 15 months, we have continued to innovate our service delivery model.

Manitoba Oil & Gas Review 2016

Task-based Billing Most professional service firms charge for a professional’s time at the same rate whether they are delivering a high level professional service or sending you a report. Western Heritage thought this was unreasonable and has adopted task-based billing. This means that customers pay a set rate for the task being completed, regardless of the seniority of the person completing it. For example, clerical work is charged at a single rate, even if senior management performs it. While this provides significant cost savings to the customer (up to 30 per cent), it allows us to improve response time, as all available staff can be conscripted in order to meet our customer’s deadlines. This innovation has significantly reduced time required to invoice and has effectively reduced our already low error rate to near zero. Field Offices Western Heritage has been experimenting with the delivery of services from field offices. In most cases these offices are only

Centralized Coordination Western Heritage uses a centralized project coordinator to handle coordinating our team across Canada and the world. This ensures a fast response time and the ability to easily handle multiple jurisdictions for a single client or partner. There is no need to try to manage multiple service providers; with licensed staff and offices across much of Canada, we can provide service for all of your projects. Discounts for Repeat Business This is our way of showing appreciation for our repeat customers. Discounts start at the second development in a single project year and range from five per cent to 25 per cent

New Geophysics and Geo-archaeology tools (such as OSL profiling) increase accuracy and reduce costs.

depending on the product or service. We will apply the discounts even if the projects are distributed across multiple jurisdictions. Ongoing Innovation Whether it is reforming internal processes or finding a better way to characterize heritage sites, research and innovation have always been part of our DNA (we were originally spun out of a research council). In 2015, for example, we have been developing a new geophysics tool for archaeologists to increase accuracy. Another of our innovations is using satellite imagery to minimize the

Optimizing schedules and routes can reduce travel expenditures significantly.

costs of monitoring environmental change in reclamation sites and project footprints.

travel costs even further. Why should the

records. These products have reduced travel

Satellite imagery provides more comprehen-

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sive change measurements at a lower cost

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age determination app which determines

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ern Heritage office to discuss your service

for health care practitioners. Over the past

service fleet. It reduces travel time and fuel

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Footprint Monitoring Platform.

Manitoba Oil & Gas Review 2016

Application of Field-Portable XRF in Oil and Gas Exploration and Production By A. Somarin, PhD, PGeo, Department of Geology, Brandon University

Fig. 1. Examples of FPXRF (left from Oxford, right from ThermoFisher).

ield-portable x-ray fluorescence (FPXRF) is a technique that is gaining momentum and acceptance in addressing applications in various fields in geology and mining including oil and gas exploration and production. These instru-

ments are capable of measuring elements from Mg to U including light elements (Mg, Al, Si, P, S) in an adjustable assay time from 30 seconds to a few minutes depending on the accuracy and precision requirements (Fig. 1). FPXRF can analyze a variety of common sample types in the oil and gas upstream exploration and production industry including drill cuttings, oil and gas cores, outcrops, and piston cored sediments. The geochemical data from these analyses can easily be used in mud logging as well as chemo-stratigraphy. Although FPXRF analyzers cannot analyze hydrocarbons, they can be used to characterize reservoir properties that influence porosity (cements),

Manitoba Oil & Gas Review 2016

permeability (clays, cement type), fracture population (Si content), and productivity (e.g. V, Cr, Mo content). FPXRF is used on-site to determine elemental composition of a sample in real time. Then mineralogy of the sample can be often inferred from this geochemical composition. The mineralogy is subsequently used to identify rock type and infer physical properties of the rock unit using a geochemical strip log (Fig. 2). Bulk chemistry is used to infer sample mineralogy and thus identify silicates, alumino-silicates (e.g., clay and feldspar), carbonates, and sulfides. For example, a low Si/Al ratio indicates greater alumino-silicate content in a rock unit because these minerals have high Al content. In addition, clay types and their volume can be inferred from geochemical data. In conclusion, FPXRF analyzers can provide fast and reliable geochemical data at the drill site, in the field, and in the core lab. This

Mo (ppm)

Al% 536 536.5 537 537.5 538 538.5 539 539.5 540 540.5 541 541.5

Meters

542

542.5 543

543.5 544 544.5 545 545.5 546 546.5 547 547.5 548 548.5 549 549.5

536 536.5 537 537.5 538 538.5 539 539.5 540 540.5 541 541.5 542 542.5 543 543.5 544 544.5 545 545.5 546 546.5 547 547.5 548 548.5 549 549.5

U (ppm) 2

536 536.5 537 537.5 538 538.5 539 539.5 540 540.5 541 541.5 542 542.5 543 543.5 544 544.5 545 545.5 546 546.5 547 547.5 548 548.5 549 549.5

25 50 75 100

536 536.5 537 537.5 538 538.5 539 539.5 540 540.5 541 541.5 542 542.5 543 543.5 544 544.5 545 545.5 546 546.5 547 547.5 548 548.5 549 549.5

Th/U

Fe/Al 0

0.25

0.5

536 536.5 537 537.5 538 538.5 539 539.5 540 540.5 541 541.5 542 542.5 543 543.5 544 544.5 545 545.5 546 546.5 547 547.5 548 548.5 549 549.5

Si/Al 30

536 536.5 537 537.5 538 538.5 539 539.5 540 540.5 541 541.5 542 542.5 543 543.5 544 544.5 545 545.5 546 546.5 547 547.5 548 548.5 549 549.5

Si/Ca 10

536 536.5 537 537.5 538 538.5 539 539.5 540 540.5 541 541.5 542 542.5 543 543.5 544 544.5 545 545.5 546 546.5 547 547.5 548 548.5 549 549.5

100*Mg/Ca 2

536 536.5 537 537.5 538 538.5 539 539.5 540 540.5 541 541.5 542 542.5 543 543.5 544 544.5 545 545.5 546 546.5 547 547.5 548 548.5 549 549.5

0 1 2 3 4 5 6 7 8 9 10 11

Fig. 2. (above and below) An example of geochemical strip logs for a well from eastern Saskatchewan (as part of a Geology Honors Thesis at Brandon University, Manitoba).

allows geologists to predict where the oil and gas is in the rock formation, what factors affect the porosity, and predict the volume of oil and gas present. It also allows geologists to determine how the permeability of the rock can affect the flow of oil and gas from the

rock to the well bore, and how a rock formation can be engineered to produce more by fracturing and well treatments. This can help operators to maximize the potential of each well and avoid waste related to ineffective fracture treatments. v

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Manitoba Oil & Gas Review 2016 PM 9/7/11 3:02:11 57

Looking Forward:

Research Applications of XRF Technology Mark Klapheke, 4th Year Honours B.Sc. Geology Student, University of Brandon I am looking at the Lower Amaranth Formation which is primarily a silty to shaley Jurassic redbed with some very fine sand units at its base. Because shale is a very homogeneous looking rock, it is often difficult to notice changes in it by regular examination. However, shale has many more trace elements that are not generally found in sandstone or carbonates for example. As the PXRF can detect these elements very quickly, it can be used to suss out information that may not be as apparent. Changes in these trace elements as well as differences in ratios of more common elements allow me

Maxwell Rogowski, 4th Year Honours B.Sc. Geology Student, University of Brandon Portable x-ray fluorescence is a useful tool for detecting geochemical proxies that help show productive hydrocarbon intervals. Accurate stratigraphic correlations are augmented by chemostratigraphic techniques, utilizing common mineral forming elements and trace element ratios and abundances. Lab data obtained from six Lower Amaranth cores, one Lodgepole core and one Three Forks/Bakken core located within the Northeastern part of the Williston basin provides a wealth of analytical and stratigraphic information. Visual

Figure 3.19: Strip log of the 16-22-12-27W1 hole. Known oil saturation is shown in grey.

Manitoba Oil & Gas Review 2016

to build a more complete story of what was happening in the past and to see things that cannot be seen otherwise. It allows me to build strip logs of individual elements quickly and to compare them which can reveal relationships and patterns. Although I have been scanning a core at Brandon University, because of its portable nature, it is possible to take the PXRF to a well site and even use it on the well cuttings to make decisions on the fly with minimal disruption to drilling. As you know, time is the drillerâ&#x20AC;&#x2122;s enemy. However, used with traditional well site knowledge it can be an extremely useful tool in getting more accurate information to the drillers quickly saving both time and money while making decisions with better information.

analysis alone of the three slabbed formations reveals minor color variations but fails to show the subtle geochemical components required for understanding the mineralogical controls of hydrocarbon traps in the carbonate rich Amaranth and Lodgepole reservoirs. The core study also provides additional information about the controls over source rock hydrocarbon potential in the Three Forks and Bakken Formations. Major elements such as Si, Ca and Al were analyzed for rapid rock categorization into specific lithologies at every ten centimeter interval. Minor elements such as Mg, Fe, S, K20 and TiO2 were used to further define lithologies and provide insight into the diagenetic and detrital processes.

Figure 3.20: Strip log of the 16-22-12-27W1 hole. Known oil saturation is shown in grey, EF- Enrichment Factor of concentrations. All other concentrations are in ppm unless otherwise stated.

Figure 3.21: Fe/S correlation analysis, Si/Zr correlation analysis. Bulk lithology of the Bakken and Three Forks Formations.

Further analysis of detrital input in carbonates was indicated by Zr abundance and Th/U ratios. The trace elements utilized in this study provided information into hydrocarbon saturation potentials of prospective units, such as Mo, Zn and U serving as proxies for organic content. U, Mo, Fe and S being utilized as proxies for anoxia. Other comparisons were made to determine silica type (terrestrial, biogenic or authigenic) through Si/Zr correlation analysis. Analysis of micro-fracture populations (Si wt% vs Zr ppm) provided possible target zones suitable for fracking. Fe/S correlation analysis was used to rapidly distinguish sulfides from microscopic evaporites and ferric oxides/silicates. Permeability was analyzed using Al/Si ratios to determine if detrital clays were affecting the hydrocarbon saturation in prospective units. Ca/S ratios were used to define the reservoir characteristics of the Amaranth Formation due to extensive anhydritization.

Process of Analysis Each core was rinsed with distilled water and wiped down with paper towel to remove excess drilling mud from the surface of the 1/3 split core. The slab was marked using a measuring tape and permanent marker and analyzed using a Thermo Scientific Niton X3lt GOLDD+ portable XRF analyzer. The measurement was done at every 10-centimetre interval from the end of the core or a known depth, carried out for accurate depth confirmation. Analysis of the flat 1/3 cut core samples was accomplished using the attachable lead shield that served to stabilize the PXRF in place on the sample, and to minimize backscatter emissions. Cores with zones of brittle rock intervals that may have been mixed in the core boxes were carefully

Figure 3.1: Strip log of the 16-01-13-27W1 hole. Known oil saturation is shown in grey.

organized and closely monitored for significant chemical changes. Intervals of core that were made up of shattered brittle rock were set into a fixing tray within a lead box that held the sample and minimized the distance from the analyzer to the sample. Brittle intervals and mixed rock types underwent batch analysis and averaging to improve the accuracy of the data collected. The instrument set to â&#x20AC;&#x153;Mining Modeâ&#x20AC;? which had four filters. In each filter, a set of elements were analyzed and timing for each filter was adjustable. The overall analysis time was set to three minutes (30 seconds on Main, Low, High filters each, and 90 seconds on Light filter) to acquire the targeted elements in accurate quantities. Sample data (such as name, date, etc.) were entered and then the samples were analyzed. Once completed, the results were downloaded to a computer and saved as Excel file. Then the raw data were readjusted using certified standards that were previously analyzed by the same analyzer under the same conditions. Elemental abundances were plotted against depth into binary graphs. Major rock-forming elements were converted to pseudo-elements and used in ternary diagrams to determine the bulk lithology of each interval. I should also mention that no one study will be applicable to all regions containing similar formations. For example, other studies completed on the Bakken utilized elemental abundances like V, Cr, and Ni to determine paleoredox conditions successfully. I was unable to use these proxies due to the high Fe content that had diminished V and Cr values in my samples. Examples of the binary graphs, correlation analysis and bulk lithology are below and on opposite page. (This study was completed for an Honours Thesis in Geology). v

Figure 3.2 Strip log of the 16-01-13-27W1 hole. Known oil saturation is shown in grey, all concentrations are in ppm unless otherwise stated. Manitoba Oil & Gas Review 2016

People Needs Oil & Gas HR Report Identifies New Trends and Requirements in Workforce Development By Lisa Fattori

new report by the Petroleum Labour Market Information (PetroLMI) Division of Enform highlights HR trends in Canada’s oil & gas industry. Released in September 2015, Shifting Priorities and a Shifting Workforce examines business shifts within the industry in recent years and identifies drivers that are changing workforce needs. The report offers insights into emerging occupations, corporate priorities, and current skills gaps, which will help industry, educators, and government stakeholders to implement new workforce training and development strategies. Grooming the next generation of workers to meet future needs will ensure that Canada’s oil & gas industry remains robust and competitive within the global market. The findings within Shifting Priorities and a Shifting Workforce are based on interviews with 28 industry representatives, as well as a broad array of secondary research. The report identified three industry priorities that are prompting changes in workforce requirements: accessing technically complex unconventional reserves; balancing performance and cost management to achieve profitability; and achieving market diversification to grow the business. Advances in the application of horizontal drilling and hydraulic fracturing have increased activity in unconventional oil plays, as producers now have the ability to tap into these reserves. The use of sophisticated technologies has, in turn, necessitated a more technologically savvy workforce. Automated procedures and computer-based tools for enhanced communication throughout the supply chain

Manitoba Oil & Gas Review 2016

requires workers who are highly skilled at reading, numeracy, communicating and problem solving. Sophisticated tools that improve drilling accuracy and microseismic monitoring of the fracking process, which has the potential to optimize production in fewer wells, are state-of-the-art technologies that will become mainstream. As use of these technologies ramps up, the industry will require a higher level of expertise in field operations, geophysics, geology, and reservoir and completions engineering. “The most significant change in the oil & gas industry from 10 years ago has been the advances in technology,” says Carol Howes, vice-president of communications at PetroLMI, Enform. “This has provided accessibility to tight reserves, but it has also made operations more technologically complex, with much more automated and computerized equipment. Even for entrylevel positions, the expectations are much higher. Rigs are more technical than they were before, and we’re seeing new applications being used in the field, such as documentation and communications on tablets and phones.” Another significant business priority is the need to cut costs and improve efficiency for greater profitability. While companies have always been motivated by the bottom line, the current economic downturn in the sector amplifies the need to get more bang for your buck and to implement cost saving practices throughout all facets of a company’s operations. Eliminating redundancies, minimizing down time, scheduling the timely delivery of supplies and equipment, and organizing work crews to maximize productivity is the new corporate culture

that requires commitment by all members of an organization. Supply chain management professionals, occupations that deal with organizing rotational workers and those with expertise in asset management, equipment reliability, and preventative maintenance are playing a key role in helping companies to achieve both performance and profitability. “Oil & gas companies are in a very competitive environment,” says Howes. “With the ramp up of activity comes increased costs, and the focus on efficiency and cost management has been driven further down in the organization, broadening out to field workers. The amount of services required at the well site has grown significantly and you now need expertise in logistics to get large scale equipment and materials to those sites. Many companies are streamlining processes, such as sourcing out supplies and services from their head offices.” The breadth of services required in unconventional oil plays is evidenced in a 2014 Petroleum Services Association of Canada study that reported the need for 45 or more suppliers and up to 300 workers per well, compared to 75 workers for a conventional well. Horizontal drilling and hydraulic fracking activity has increased demand for frack operators; Class 1 and Class 3 drivers to haul equipment and materials; and plant operators in charge of facilities that recycle water used in drilling operations. Multiple well pads and more technically advanced drilling rigs require mechanical engineers and technologists, instrumentation engineers and technologists, and skilled tradespeople, including welders, electricians, heavy duty technicians and electronics/instrumentation technicians.

“ The most significant change in the oil and gas industry from 10 years ago has been the advances in technology.” Carol Howes, Vice-President of Communications at PetroLMI, Enform

The surge in the U.S.’s domestic supply of oil & gas has reduced demand for Canadian petroleum resources, prompting a shift among Canadian producers to access new offshore markets. The opportunities afforded by Canada’s burgeoning liquefied natural gas (LNG) industry also benefits the midstream sector, which is experiencing heavy investment in pipeline and facility construction. New and retrofitted processing plants will increase the need to hire and train plant operators, and these mega projects require the expertise of project and construction managers, design and project engineers, and supply chain and materials management professionals. In addition, given the pipeline sector’s aging infrastructure, there has been a growing demand for pipeline integrity specialists. “LNG is a new industry for Canada and one that has very specific requirements,” says Howes. “Other countries, including

Australia, have a lot more experience in LNG development, and Canada can benefit from expatriates who can come here and apply their expertise.” Issues surrounding the environment, safety, and the impact of operations on surrounding communities has added to the growing complexity of oil & gas business. “In the past, exploration projects were located in more remote areas, but with unconventional resources and pipeline development, the industry is expanding into new areas,” says Howes. “The need for more negotiation and discussion has created new occupations in regulation and compliance, as well as stakeholder, community and Aboriginal relations.” More traditional roles in the oil & gas industry are giving way to new occupations and the need to upskill the existing workforce. Field technologists, for example, are replacing workers who had a mechanical aptitude and received on the job training. Growth in unconventional drilling has decreased the need for wireline and slick

line services and, with fewer exploration projects, the demand for seismic work has decreased. The proliferation of walking rigs has lessened the demand for workers to dismantle and truck rigs between locations and the trend toward on-site water recycling technologies will decrease the need for trucked in water. Today’s HR requirements, by contrast, include a greater emphasis on supply chain management, project and processing facility management, contingent workforce management, and professionals in regulatory roles and stakeholder/Aboriginal relations. “When we look at the labour market, some of these new occupations are now included in our forecasting,” says Howes. “In May, we’ll also be launching an online tool that will profile these emerging positions and show people how they can transition to these new occupations. Our goal is to support workforce planners within the industry, but we also want to assist people who want to develop new careers in oil & gas.” v

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Keystone XL Controversy Accelerates, Enters U.S. Court System By Leonard Melman

ew subjects have garnered as much media ink during the past couple of years as the unlikely subject of petroleum pipelines. Not only have they become a subject of intense concentration within the world of petroleum exploration, production and transportation, but they’ve also infiltrated the highest levels of public interest in political matters. Perhaps the greatest degree of interest in the subject of pipeline construction has been the focus on one such endeavor: the Keystone XL Pipeline project. As we enter the early part of 2016, important headlines continue to be made and rapt attention continues to be paid to the project’s progress – or lack of same. Keystone XL is a proposed massive pipeline extending almost 2,000 kilometres (about 1,200 miles) from the prolific oil sands of Alberta to Steele City, Nebraska, where it would join up with existing pipelines for transport to major refineries and Gulf of Mexico shipping ports. The pipeline would carry about 830,000 barrels of petroleum per day and would be constructed by TransCanada Corp. Financing would be provided by that corporation, plus refineries and oil shipping companies, which would be recipients of the end product. The matter is of vital importance to two particular petroleum producing regions, the economies of each one having prospered mightily through previous petroleum exploration, development and production. The two regions are the province of Alberta and the oil-rich regions of western North Dakota, particularly including the Bakken

Manitoba Oil & Gas Review 2016

oilfields. In each case, these regions produce petroleum far in excess of their area’s domestic consumption and therefore are heavily dependent on transporting excess production to various markets. Few alternatives other than pipelines are available to accomplish the necessary transportation. Both regions are land-locked, so marine tankers are unavailable; trucking is a non-starter considering the quantities of petroleum which must be transported; and shipment via lengthy rail tanker trains has been heavily condemned by environmental and safety experts since the tragic derailing of a lengthy oil tanker train in Lac Megantic, Quebec in 2013, when the resultant fire incinerated much of the town’s downtown and tragically killed 47 people. Some of the strongest arguments for the project come from economists and those politicians who strongly advocate resource development, given that construction of Keystone XL would result in 42,000 jobs and completion of the project would permit continued expansion of petroleum production in both regions. However, consistently strong opposition to Keystone XL has arisen among environmentalists, and their voices have strongly impacted America’s political systems. Because those environmental voices are not quite as potent in Canada as in America, construction permits for the Canadian leg of the pipeline were granted in 2010; but in the U.S., much more powerful opposition emerged. In fact, Keystone XL has even become a major issue in this year’s American presidential election.

At the same time Canada approved the northern leg of the pipeline, it was anticipated America would grant similar approval, but the Environmental Protection Agency (EPA) strongly suggested that President Obama not approve the project. He followed their advice by verbally discouraging Keystone XL, and finally in 2015, he took decisive action by vetoing a Republican-led bill which would have given the project final authorization. Just prior to the president’s decision, TransCanada Corp. asked the U.S. government to simply put any review of the project on hold. Encouraged by the president’s action, the environmental community stepped up their attacks on the project, stressing two points in particular. First, the route chosen through Nebraska would pass through what they regarded as a particularly fragile ecosystem, which they wanted to protect. Second, they declared that approval of the project could be interpreted as tacit approval by the U.S. government of expansion of production from the Alberta oil sands, which they regard as particularly “dirty” oil. Matters finally came to a head on November 6, 2015, when the Obama Administration issued a formal declaration rejecting TransCanada’s application to build Keystone XL. Many believed the seven-year saga was finally at an end as the president declared, with apparent finality, that the pipeline, “… will not serve the national interests of the United States of America.” The State Department also added that, in its view, the pipeline would not make a meaningful contribution to the U.S. economy.

TransCanada president and CEO Ross Girling quickly replied in a positive manner, stating simply that he continued to believe that Keystone XL would be built and that “TransCanada and its shippers remain absolutely committed to building this important infrastructure project.” As reported by the CBC, reaction to the president’s announcement was quite predictable. Environmental organizations were quick to heap glowing praise on the president, while energy groups blasted the

president, declaring that his decision was based more on political motivation than on adherence to scientific fact. However, one more dynamic development remained and that took place on January 6, 2016 when TransCanada filed a $15 billion claim under Chapter 11 of the North American Free Trade Agreement (NAFTA) on the basis that the denial was “arbitrary and unjustified”. The company also filed a lawsuit in the U.S. Federal Court in Houston, Texas asserting that the president’s decision

“…exceeded his power under the U.S. Constitution.” As this article is being prepared in February 2016, matters are now winding their way through the U.S. legal system. It’s worth noting that, for many people, the stakes in the eventual outcome of TransCanada’s legal actions are vitally important, and that several Republican candidates for the U.S. presidency have staked out positions strongly supporting of the pipeline’s completion. v

Courtesy of TransCanada Corp.

Manitoba Oil & Gas Review 2016

Gearing up to Keep Safe, Dry and Warm in the Oilfield By Lisa Fattori

rom exposure to hazardous materials to the potential for impact injuries, personal protective equipment (PPE) is designed to minimize risk and offer another layer of protection for workers. Compliance with workplace safety regulations extends to the use of PPE. Employers providing work wear and gear are obliged to outfit employees with the appropriate equipment for a particular task, and to train workers about the proper use of the PPE. Employees, in turn, must use the equipment in accordance with manufacturers’ specifications, take steps to prevent damage to the PPE, and inform employers, if the equipment becomes defective. “PPE is seen as the last line of defense in keeping workers safe,” says Dave Kramer, Portfolio Leader-Production, Manufacturing, Agriculture, Forestry and Mining, SAFE Work Manitoba. “What you want to see is a hierarchy of controls that engineer out the hazards. This could be substituting a hazardous chemical for another, or implementing administrative controls, so that the job is performed properly within a particular environment. In the oil & gas sector, PPE is very prevalent, with protective gear in eyewear, flame-resistant clothing and equipment to protect workers from contamination.” Some commonly used PPE in the oil & gas industry include hard hats, eye/face protection, hearing protection, steel-toe safety footwear, gloves, flame resistant clothing and high-visibil-

Manitoba Oil & Gas Review 2016

ity clothing. Some work sites will have different procedures and equipment, and may require specific types of PPE, such as respirators. Manitoba’s Workplace Safety and Health Act may reference a standard within a regulation, which makes that standard law. Other standards are considered best practice, but are not legal requirements. With safety becoming increasingly important in the last decade, many employers are equipping workers with PPE that goes above and beyond regulations. “While flame-resistant clothing is standard for oil & gas work sites, some companies want the added protection of ARC flash and are ordering dual-approved products,” says David Finlayson, North American Product Manager for Helly Hansen Work Wear. “We’re also starting to see requests for high-visibility clothing and flame-resistant base layers, as an extra safety precaution. The overall interest in these products has increased, which leads me to believe that people are adopting safer practices in the oil patch.” CAN-CGSB 155.20 Workwear for Protection Against Hydrocarbon Flash Fire is the Canadian flash fire standard, while NFPA 2112 is the U.S. standard. “There is no overseeing global body to regulate standards, but we’re starting to see a movement for North America to come under one standard,” Finlayson says. “NFPA 70E for ARC Flash is being accepted across the board, which is much better for larger companies operating in multiple sites around the world.”

Manufacturers of PPE have long known the importance of designing workwear that is as comfortable as it is protective, to ensure compliance. Workers that are dry, warm and comfortable stay focused, which improves personal safety, as well as productivity. An outer layer that is waterproof, windproof and thermal, combined with base layers that transport moisture away from the body to keep skin dry, help to maintain an even, comfortable body temperature. A layered system offers flexibility, enabling workers to add on or shed workwear so that they remain comfortable throughout a wide range of temperatures and weather conditions. “In the last 10 years, we’ve seen many improvements in the design of flame-resistant clothing, which is a change from the standard coverall, work shirt and work pant,” says Sara Olsen, Research Analyst at Mark’s head office in Calgary. “Today’s designs are more comfortable and look like regular clothing. Looking good and feeling comfortable are important from a safety standpoint. If people like what they are wearing, compliance increases considerably.” Key gear in the oil & gas sector includes self-contained breathing apparatuses, which require clean-shaven faces for the equipment to fit properly. If a worker isn’t prepared, a supervisor can limit the worker’s access to a worksite. There are some reported cases of supervisors keeping razors on hand to ensure that workers are compliant. Proper fitting and comfortable gloves is another safety regulation that some workers may consider less important, but compliance is essential to avoid injury. “The number one injury in the oil & gas sector is hand and finger injuries,” Kramer says. “Wearing proper gloves is the one issue that is the most challenging to address. If the gloves are not comfortable, then workers will take them off. There has to be a

balance between protection and having the dexterity to do the job. It’s important to have good communication between workers and health and safety coordinators, so that people can try different models and find a pair of gloves that they like.” A proper fit in protective eyewear is also a top priority, and better access to optometry services is also helping to improve compliance. In 2012, the Manitoba Association of Optometrists (MAO) introduced an Occupational Vision Care (OVC) program that offers company employees eye exams, and the fitting and dispensing of prescription safety eyewear that meets the function and safety requirements legislated in the workplace. OVC buying power provides companies with the best value and lowest product prices, and easy access to participating optometrists throughout the province makes it simple to replace scratched lenses, or lost or broken eyewear. If glasses aren’t comfortable or are scratched, workers are less likely to wear them and run the risk of impact injuries, including metal foreign bodies and injury from high-pressure spraying of materials, such as gravel. By streamlining professional optometry services, the OVC program helps to increase compliance in wearing protective eyewear. “Before the OVC program, access to safety eyewear was limited to maybe one location in a large city, which made it difficult for workers to get the services that they needed,” says Michelle Georgi, Chair of the OVC program for MAO. “The program is available to every optometrist in Manitoba and currently about 80 per cent of optometrists carry the kits. There are approximately 30 samples of safety frames to choose from, and workers can go to the same optometrist where they get their dressware glasses. According to SAFE Work Manitoba, over the last 15 years, reported eye injuries have gone down 50 per cent. Awareness and the availability of safe eyewear is making a difference.” v Manitoba Oil & Gas Review 2016

The Numbers Network How CAPPA Supports Production Accountants and Industry By Kylie Williams

ike so many great ideas, this one started over a pint. In the early 1950s, two oil & gas production accountants, Brian E. Smith and Ian Hartley, met for a drink to discuss some of the issues they both faced in their similar roles. Their gatherings quickly grew, and by 1955 a strong fellowship of production accountants had formed to comfortably exchange ideas and information. In 1961, a group of eight founders wrote bylaws and applied to become a society. The Canadian Association of Petroleum Production Accounting (CAPPA) was born. Their application included a vision for CAPPA; to educate its members, to keep its members informed, and to provide opportunities for its members to network and develop friendships. The goals of the association remain similar today. CAPPA membership has now grown to over 1,000 oil & gas production accountants (PAs) and royalty accountants, and the professional association offers an industry-recognized Certificate Program and numerous opportunities for further education, advocacy and resources. Gavin Schafer has been chair of the CAPPA board for three years and in production accounting for 20 years. He explains that the primary goal of the association is to support its members and their careers. “We’re an open network for members to post job opportunities and benefit from peer support. Current industry austerity measures

Manitoba Oil & Gas Review 2016

have led to job losses, so we’ve been an integral support system for our members seeking career guidance and workshops,” Schafer says. His current role as manager of production accounting at Crew Energy Inc. puts him at the centre of oil & gas accounting in Canada. Calgary-based Crew Energy is a dynamic, growth-oriented explorer and producer focused on development of their sizeable assets in the Montney Basin in north east British Columbia, as well as some small heavy oil properties in Alberta and Saskatchewan. “The current low price environment, specifically on the oil side, is very challenging for oil & gas companies. Producing at a certain cost per volume and then selling it on a volatile market impacts company budgets on a weekly to monthly basis, as opposed to quarterly to yearly. This poses significant challenges for governments striving to maintain their budgets, given that industry royalties make up a major part of their revenue,” explains Schafer. It is oil & gas PAs who keep track of these numbers. They combine accounting and data analysis skills, and a thorough knowledge of oil & gas regulations, with the requirements to report revenue and royalties. Joe Chan, a CAPPA-certified PA who works as supervisor of production accounting at Crescent Point Energy Corp, explains, “A production accountant performs monthly tasks of gathering, analyzing, interpreting and reporting production data into a specialized

accounting system. We are able to work collaboratively with field staff and team members to accurately report financial data like revenues, volumes and payment of royalties.” The information needed to produce these monthly reports comes from a range of sources, including field sites, land managers, joint-venture analysts, marketing and financial departments. The data is critical to company operations, management and financial reporting, so it’s vital that the people juggling these numbers are trained and certified. “The data that’s collected on behalf of government regulators is generated and submitted by production accountants. There is a vested interest in making sure those people are well trained and know what they’re doing,” says Schafer, who has been an instructor for the CAPPA Oil and Gas Production Accounting Certificate program for over 10 years. Practicing PAs can take the certification course full-time at Mount Royal University and Southern Alberta Institute of Technology (SAIT) Polytechnic, or via distance education online. “The CAPPA course helped me gain the basic framework and background required to understand my daily work. It led to a better understanding of the industry’s standards and assisted in my daily responsibilities as a production accountant,” says Chan, who obtained his CAPPA certification from SAIT in 2005. In response to student and industry feedback and the changing regulatory front, a three-year project to redesign the course curriculum is currently underway. “We’re just over one year in and we are excited with the progress,” explains Sheila McFadyen, who was appointed as CAPPA’s first CEO in January 2014. “In addition to providing an updated and expanded program, we are structuring our courses to provide a more dynamic, interactive technology-based style for the students. We are also providing new, continuous-learning opportunities, including webinars for distance students.” Under McFadyen’s leadership in recent years, CAPPA has rebranded and rejuvenated their website, logo, offerings and advocacy. The association has embarked on a new chapter and looks forward to moving back into better economic times with their membership. Typically, when there’s a downturn, people will take the time to upgrade and hone their skills with courses like the CAPPA certificate. But this time around, observes Schafer, it seems to be a deeper cut and the uncertainty in the industry is a disincentive to invest in that training. Canadian producers have been rocked by falling oil prices and competition with other countries, including the United States. The questions surrounding the approval and construction of pipelines from the land-locked provinces of Alberta and Saskatchewan creates further uncertainty. During downturns like these, PAs face job insecurity like all professions in the oil & gas industry. “When they come to start cutting costs, companies may see production accounting as something that can be outsourced and

Gavin Schafer, chair of the CAPPA board

offshored. Production accountants provide too much value being on site and in the office here, closest to production. They need to be talking to the field, they need to be engaged with the engineers in-house. We’re very much the hub of information,” says Schafer. PAs are the first point of contact for records of the oil & gas volumes and emissions necessary for robust environmental regulation too. In May 2015, the Saskatchewan Ministry of the Economy (ECON) announced plans to update and modernize oil & gas measurement and reporting requirements to align with the existing systems in neighbouring Alberta. ECON is rolling out an Enhanced Production Audit Program (EPAP) in Saskatchewan with the new requirements coming into effect in April 2016. “We’ve been executing EPAP on the Alberta side for about four years and Saskatchewan will have adopted many of the same requirements. Industry should be familiar enough with it to effectively implement on the Saskatchewan side. It definitely should be seen as a positive thing,” says Schafer, who is confident the transition will go smoothly. The value that oil & gas accountants provide to the petroleum industry cannot be understated, particularly during challenging times when regulations, oil prices and the industry itself are changing so rapidly. Many PAs are looking outside the industry as conditions continue to destabilize, but those who remain continue to support each other, perhaps over a pint, as the founders of CAPPA envisioned 55 years ago. For more information, visit www.cappa.org. v

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Training Opportunities Prepare Workforce for New Trends in the Oil & Gas Sector By Lisa Fattori

espite the downturn in the oil & gas industry, Manitoba is faring better than other oil-producing provinces. Manitoba’s Labour Market Occupational Forecasts reports that employment in the resources sector decreased by over six per cent in Canada, but by only three per cent in Manitoba, between 2014 and 2015. In the oil & gas sector, further job contraction is expected for 2016 – a trend that will slow over 2017 and 2018, and then reverse in the following two years with the creation of new jobs. A slower economy provides producers with the opportunity to improve efficiencies and prepare their workforces for the eventual upswing in the market. According to Apprenticeship Manitoba, registered apprenticeships have more than doubled in the last nine years, with a reported 10,971 apprenticeships in March 2015. In oil & gas-related skilled trades, top apprenticeships are for Steamfitter-Pipefitter; Bas Turbine Repair and Overhaul Technician; and Boilermaker. Heavy Duty Equipment Technician and Rig Technician apprenticeships are also available. Launched in 2013, the Harmonization Initiative is aligning apprenticeship training across Canada by streamlining training requirements in the Red Seal Trades. Work to harmonize 10 trades is almost completed and another eight are currently undergoing interprovincial consultation to develop more consistent training requirements. The goal of harmonization is to support the mobility of apprentices, foster higher completion rates, and enable employers to access a larger pool of apprentices.

Manitoba Oil & Gas Review 2016

“With harmonization, technical training is paced the same across Canada, so that workers can move from province to province and have met the same standards,” says Jamie Carnegie, Manager of Corporate Services and Special Projects at Apprenticeship Manitoba. “Colleges already update their programing regularly, and the new curriculum will incorporate the harmonized technical training.” A new certified occupations act is also providing better training and skills development for Manitoba workers. Passed by the Manitoba legislature in May 2015, the act prepares new entrants to specialized jobs, enabling them to receive certification in their occupations from on-the-job training, as well as classroom training from accredited providers. The first occupation to be certified under the act is commercial truck drivers, a sector that is key to servicing the province’s oil & gas industry. “The certified occupations act applies to professions that don’t fit the traditional apprenticeship model,” Carnegie says. “Truck drivers do a lot of hauling of dangerous materials. Companies can look for this qualification and know that they are hiring a driver who has been validated to a certain level of rigor. Certification benefits companies using these services and the professionalization of their occupation makes drivers more marketable.” Within the oil & gas industry, building and maintaining pipelines is a specialized skill that requires expertise in transportation logistics, equipment operating, pipe trades and craft labour. On its website, the Pipeline Contractors Association of Canada (PLCAC) offers a series of short videos that outline the career opportunities within the pipeline sector, and the Association helps interested candidates by directing them to the appropriate training facilities. “The mainline pipeline sector employs a huge number of workers; a single pipeline spread will require 700 workers, so we have about 5,000 to 6,000 people working in the field a year,” says Neil Lane, Executive Director of PLCAC. “People who call in to our office are showing the most interest in apprenticeships in welding and operating equipment, which are two of the highest paying trades.” While PetroSkills has provided oil & gas training for 15 years, the 2014 purchase of Research Development Company expanded the company’s course offerings to include e-learning products.

PetroSkills e-learning programs include ePilot and ePetro libraries, which enable companies to customize learning curricula to meet the needs of workers. The ePilot online learning for Operations and Maintenance is geared to facility operators, offering over 1,000 hours of content and unlimited access to the ePilot library. The program provides pre-testing to identify knowledge gaps, and posttesting to verify learning. Training is self-paced, using web-based technology, and content can be customized. “The trend now is to incorporate eLearning, which saves em-

ployers a lot in time and money,” says Lori Koran, Solutions Marketing Specialist for PetroSkills/RDC. “You don’t have to pull people off of the job and reserve class time to train a group of employees. Recently, we’ve had a lot of interest in blended programs, which is a mix of online and instructor-led training that is delivered virtually. With the low price of oil right now, companies are tightening their belts and don’t have the budgets to send employees away for public course training. E-learning and virtual instruction can be more economical and flexible.”

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For the second year, Assiniboine Community College (ACC) is offering oilfield safety certification at its Victoria Avenue East campus in Brandon. The training is a collaboration between ACC and Enform to give Manitoba workers required safety courses locally. In 2015, course offerings included Well Service Blowout Prevention and Detection and Control of Flammable Substances. People can earn tickets in these courses again this April, as well as for Coiled Tubing Well Service Blowout Protection. ACC plans to offer the courses every spring, with registration for the next session open in November. ACC has also expanded its introductory oilfield safety courses, by bringing programing directly to First Nations communities. Introduced in 2015, the training includes Standard First Aid, Fall Arrest, Confined Spaces and H2S Alive courses, which are required to begin working in the oilfield.

Manitoba Oil & Gas Review 2016

“These courses are geared toward people interested in working in the oil & gas sector,” says Tannis Hudson, Director for the Centre of Continuing Studies at ACC. “To save on transportation costs and being away from family, we’re bringing this program directly to First Nations communities, for workers looking to start a career in the sector.” Employers looking to prepare their workforces for emerging trends in oil & gas can access a new report by the Petroleum Labour Market Information (PetroLMI) Division of Enform. Released in September, 2015, HR Trends and Insights: Shifting Priorities and a Shifting Workforce, identifies three business shifts within Canada’s oil & gas industry, which are driving the need for new and more intricate skills and different occupational requirements. These business shifts include new technologies designed to access harder-to-reach

reserves; cost-management strategies to improve returns and productivity; and the need to diversify into new and expanded markets. In response, the industry requires workers to be proficient in reading, numeracy, communicating and problemsolving. The report also identifies demand for specialists in supply chain and logistics, LNG, well abandonment and reclamation, and stakeholder/Aboriginal relations. “This report examines how technological changes have impacted the labour market, and what skills will be needed to address those changes in occupations,” says Carol Howes, Vice President of Communications and PetroLMI, Enform. “Our findings will help industry and educators to develop training to meet these needs. We’ll also be launching an online tool that will profile these emerging positions and show people how they can transition to these new occupations.” v

Transportation of Dangerous Goods by Ground Limited Quantities Exemption – 1.17 By Tracey Thibeau, Safety Sales Consultant, Danatec

limited quantity of dangerous goods, other than explosives, must be packed in a means of containment in such a way so that under normal conditions of transport and handling, there will be no accidental release of the dangerous goods that could endanger public safety. This special case, section 1.17, exempts the shipper from Part 3 (documentation), Part 4 (dangerous goods safety marks), Part 5 (means of containment), Part 6 (training), Part 7 (emergency response assistance plan) and Part 8 (accidental release and imminent accidental release reporting requirements) when handling, offering for transport or transporting limited quantities of dangerous goods on a road vehicle, railway vehicle or a ship on a domestic voyage. Each outer means of containment has a gross mass less than or equal to 30 kilograms. For solids, the amount per inner container cannot exceed the number in column 6 (a) of Schedule 1 of the Transportation of Dangerous Goods Regulations expressed in kilograms; liquids ex-

pressed as litres, must have a volume that

“ltd. qty.”, “consumer commodity”, or these

is less than or equal to the number shown

words in French. The means of contain-

in column 6 (a) of Schedule 1; and gases,

ment may also have the UN number of

including a gas in a liquefied form, must

the dangerous goods displayed within a

be contained in one or more means of

square on a point and the line forming the

containment, each of which has a capacity

square on a point must be black and at

less than or equal to the number shown

least two millimetres wide. If there are dif-

in column 6(a) of Schedule 1, when that

ferent UN numbers, the square on a point

number is expressed in litres.

must be large enough to include each UN

When a limited quantity means of

number. The line, UN numbers and letters

containment is placed inside of another

must be on a contrasting background.

means of containment or wrapped in

Each UN number and letters must be at

plastic in such a way the limited quantity

least six millimetres high.

mark is not visible, the word “overpack”

If you meet all the conditions of section

and the limited quantity mark must ap-

1.17 of the Transport of Dangerous Goods

pear on the outside of the outer means of

Regulations, you may ship some danger-

containment or the plastic wrap.

ous goods as a limited quantity.

Until December 2020, instead of the mark used in the previous paragraph,

For more information on TDG training, visit

you may use the words “limited quantity”,

www.danatec.com or call 1.800.465.3366. v

PLEASE RECYCLE

Manitoba Oil & Gas Review 2016

Pro-Drill Industries Ltd. Moves Forward with Vision and Innovation

48”-diameter and 52”-diameter reamers built for a customer.

iversification and innovation are the key factors to the evolution that Allan Brown of Pro-Drill Industries Ltd. has seen from a one-man operation in the early 1990s to employing as many as 10 staff today. But Pro-Drill’s roots go back to the summer of 1974 when Allan, a farm boy from southwestern Manitoba who had just graduated high school, was looking at a whole life ahead of him and asked the question “What do I want to be when I grow up?” By the spring of 1975, Allan had graduated from Assiniboine Community College with a certificate and a dream of being a machinist. He began work at Grant’s Welding, a machining and repair shop In Virden,

Manitoba Oil & Gas Review 2016

where he learned and grew alongside many mentors until 1988, when he decided he was ready to be more. Allan ventured out, built his own shop and designed The Judge. Built with blood, sweat and tears, and fueled by testosterone, The Judge was the final voice at truck and tractor pulls across the nation: the country’s best self-propelled pulling skid. But being an achiever, Allan wanted more creations, more challenges. In 1992, he began building drilling rigs for the horizontal directional drilling (HDD) world. From the ground up he always had an idea to make it bigger, better, stronger and faster than anyone else had. A true innovation specialist had come to life.

In the 1990s, horizontal directional drilling was still relatively young industry with ample opportunity for change and growth. Pro-Drill Industries began building HDD drilling rigs from scratch and also produced their own line of accessories and tooling to complement the drills. Soon the business began to concentrate their resources on the tooling line and ceased production of the complete drill units. Once the tooling line was fine-tuned, the company found itself seeking new lines. Enter the world of mass production. In co-operation with another local company that produced commercial grain handling systems, Pro-Drill began producing a variety of shafts, couplers, and varied components for incorporation into the grain-handling systems. Once this venture settled in and demanded less time from Pro-Drill staff for organization and production, the desire to expand and need to diversify was on the front line once again. In late 2012, Pro-Drill began to do some occasional repairs for one of the oil production companies in western Manitoba. These repairs included the time-consuming task of trying to rebuild pumping unit components (including gearboxes, center-bearing and tail-bearing units, and wrist-pin assemblies) built in the early 1950s and ’60s that were totally worn out but had no OEM replacements available. This spurred Pro-Drill to re-design and produce replacement units that were compatible with the rest of the existing structures. In most cases, it became immediately obvious that it was less costly to build the complete replacement unit from scratch than spend countless hours trying to rebuild the original com-

New OEM replacement components.

ponent. The second advantage to building new OEM replacement units is the ability to incorporate new technology and materials, which enabled Pro-Drill to build a superior unit. Pro-Drill now produces approximately 12 complete direct-replacement units, as well as over 40 various components such as shafts, housings and end caps. In addition to pioneering and producing new revenue possibilities, Pro-Drill staff

continue to move the company forward by researching innovative ways to improve their existing product lines and make the manufacturing processes more efficient. “Having keen staff who are interested and involved in the products we build or repair, who embrace change, and welcome challenges makes moving forward so much easier for our company,” says shop foreman Marcel Van Meijl.

Business Manager Duane Somerville agrees, also noting the importance of connecting with customers. “Part of being competitive and moving forward is also communication with your customers, listening to what they have to say or what they think they need,” Somerville says. “If you can build what they want or can help them achieve their goals, you have a customer for life.” v

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Considering a career in the machining industry... Join our team today – call for current openings. Manitoba Oil & Gas Review 2016

Livingstone Landscaping: Manitoba-Grown By Tammy Schuster

lush residential backyard oasis, a crisp and tidy stone patio behind an industrial warehouse, or a rich wood deck and trellis expanding the seating area of a downtown bistro. Livingstone Landscaping is helping their clients extend the square footage of their home or business by creating usable outdoor space. Established in 1992 and owned and operated by the Berg family, the Brandonbased company serves residential, commercial, industrial clients throughout Manitoba and Saskatchewan. A full-service landscape design-build firm, Livingstone offers a complete range

Manitoba Oil & Gas Review 2016

of services from concept development through to project completion. Using the latest technology, such as full-colour three-dimensional computer-generated renderings, clients can virtually walk through the layout of their proposed landscape design. Under the companyâ&#x20AC;&#x2122;s landscape construction division, Livingstone has full capacity to manage a project, including installation of plants and shrubs, paving stones, retaining walls, and sprinkler systems. The carpentry division oversees and builds fences, decks, patios, and water features. Their team can operate the full facet of a project from start to finish.

With the majority of the oil industry located in southwestern Manitoba, Livingstone regularly supplies and installs chain link fencing, and provides site spraying or

site clearing to allow for pumping or drilling equipment installation. They also provide regular site maintenance and snow clearing throughout the year. Livingstone’s services also include lawn and grounds maintenance, mosquito spraying, snow removal, and ice management. One of the most noticeable trends in landscaping is the need to create a landscape that is both attractive and low maintenance – a design that extends a client’s

home into the outdoor space that’s also sustainable and enjoyable for years to come with little to no maintenance. But the company says it is seeing more thought and attention put toward the image of commercial and industrial spaces as well. Commercial clients have been more focused on the beautification of their outdoor spaces, converting areas that were previously parking lots or storage into areas their customers and employees can enjoy.

A lot of industrial businesses are tying into this trend as well by making space more approachable and enjoyable. More care has been put into creating small patio areas for customer-appreciation barbecues or social meeting areas for employees. With summer approaching, the theme is always maximizing outdoor space. Livingstone Landscaping can create a plan that best utilizes the space available, making it useable regardless of the size, terrain, or season. v

Livingstone Landscaping Ltd is located in Brandon, MB and provides landscape design and construction services; certified paving stone installation. They also specialize in soil work, seeding, sod, hydroseeding, erosion control, chain link fence installation and repairs, general skid steer & excavator work, dump truck service, single and tandem, landscape design, and certified pesticide applicators for weed and pest control. Our full service company has other offerings such as grounds maintenance, parking lot sweeping and line

painting, and a full fence and deck crew.

www.livingstoneltd.com

Livingstone Landscaping Ltd. | 370 Park Ave East, Brandon, MB R7A 7A8 PH: 204-578-5291 | FAX: 204-578-5294 | Email: office@livingstoneltd.com Manitoba Oil & Gas Review 2016

Presidential Election Year 2016 Likely To Be Filled With Surprising Developments By Leonard Melman

Manitoba Oil & Gas Review 2016

hese are indeed difficult times for the world of petroleum and natural gas in both Canada and the U.S.A. as the number of problems created by falling prices and declining industry activities is beginning to have a serious impact on many areas which only recently had been enjoying true boom times. Alberta and Saskatchewan are excellent examples. It wasn’t too long ago that the corridor from Calgary to Edmonton and up to the rapidly-growing community of Fort McMurray was widely regarded as one of the most prosperous regions on earth. Then the industry came face-to-face with price collapses for both crude oil and natural gas. Crude oil plunged in a spectacular manner from a relative peak of US$112 in mid-2013 all the way down to below US$30 per barrel in January 2016, while natural gas suffered through declines from above US$6.50 per contract (10 billion British thermal units) in early 2014 to below US$2 per contract in late December 2015. As a result of these declines, many projects that had been very profitable suddenly found that revenues had fallen below their production costs and, unable or unwilling to sustain losses, they began to reduce or even cease operations. At the same time, many exploration and development projects which had previously been able to attract investment financing suddenly found those sources had dried up – and many such projects were put on care and maintenance or entirely abandoned. The effects of these pullbacks on previously prosperous areas have been significantly negative.

In Alberta, famous for relentless growth of oil sands recoveries, the news has taken on an ominous overtone. Waves of newcomers to the province are now unable to find work and are returning home. Apartments and condominiums are being abandoned in cities like Fort McMurray. The Alberta government reported that recent job losses are the worst since the recession of 1980. Moody’s Investors Service recently indicated it was placing many Canadian oil companies under review for downgrading of their debt. The situation is also turning bleak for those areas of southern Saskatchewan involved in exploration, development and production of oil within the northern regions of the Bakken deposit. In early February, Saskatchewan Premier Brad Wall reported that a deficit during this fiscal year was very likely and that it would be difficult going forward to maintain the government’s programs. He pointed to “falling resource revenue” as an important source of the province’s fiscal difficulties. North American problems associated with falling energy complex prices are hardly limited to Canada, as several areas within America are also being hit hard with North Dakota – primary home of the Bakken discovery – feeling particular pain. State Governor Jack Dalrymple reported in late January 2016 that state revenues would fall by more than $1 billion this year and state agency budgets would face deep cuts. Williston, the epicentre of Bakken activity, has gone from boom to bust in short order with lengthy lineups each day at the city’s job center. One-bedroom apartments that used to rent for $2,000 per month are now sitting empty. Manitoba Oil & Gas Review 2016

In addition to North Dakota, states such as Colorado and Texas, both heavily involved in petroleum recovery via the controversial method known as fracking, have likewise seen prosperity quickly evaporate like water in the hot Texas sun. Given this difficult situation and the array of problems the industry is facing, some are now turning more than ever toward government action to help provide meaningful assistance; but in fact, many others within the industry believe that government itself might be a source of new difficulties given the powerful influence of the environmental community. Despite the evident problems, concerns relating to government policies continue to mount, including taxation; climate change; cap and trade; pipeline non-approvals; water purity; promotion of alternative energy sources; and continued land set-asides. And now another vital ingredient is in place – the reality that 2016 is a presidential election year for America and the stated energy-related policy preferences of many of the candidates in both parties contain sharp differences. Accordingly, candidate statements on this topic are truly worthy of note. In the Republican Party, three candidates have emerged from the pack following the initial round of primaries. Those candidates are Senator Ted Cruz, Donald Trump and Ohio Governor John Kasich. Each one has issued policy statements regarding petroleum development. Ted Cruz: Senator Cruz has given several indications that he is a strong supporter of the petroleum industry. He has come out strongly against cap-and-trade legislation, declaring that this measure, which would add considerably to industry and consumer costs, would “weaken the nation’s global competitiveness with virtually no impact on global temperatures.” He has argued against government set-asides which would prevent oil exploration and development over wide areas. In addition – and in line with an expressed goal of reducing general government interference in commerce – he has specifically come out against excessive government regulations, stating he would attempt to “stop costly new regulations that would increase unemployment, raise consumer prices and weaken the nation’s global competitiveness...” On the issue of the Keystone XL pipeline, Cruz has spoken strongly in favor of the pipeline’s completion and co-sponsored Bill S2280, a bill to approve the Keystone XL Pipeline. (The bill subsequently passed but was vetoed by the President.) He also cosponsored Bill S2181, which called for a prohibition on the adoption of any new Environmental Protection Agency regulations until a final cost-impact analysis had been completed. Donald Trump: Candidate Trump has openly questioned the science behind the “human-caused global warming” concept. During a Fox News interview in 2014, he declared the concept to be a “hoax”. He has also stated that many of the suggested remedies, such as the widespread use of wind turbines, to actually be “an environmental and aesthetic problem.”

Manitoba Oil & Gas Review 2016

Like Cruz, Trump has also spoken out against cap-and-tax laws, stating that they would force Americans to “face ever-increasing (petroleum) prices.” He heaped scorn on President Obama’s opposition to Keystone XL, calling the President’s rejection “disgraceful.” In regard to the Keystone XL project, the San Antonio Business Journal noted that “Trump is in favor of the Keystone XL Pipeline, which would run from the tar sands oil region of Canada to the Houston and Port Arthur areas.” John Kasich: Kasich also has taken a stand against excessive environmental regulation by voting “no” in 2000 on an amendment that would have allowed full implementation of the international Kyoto protocol of 1997. He has also been a strong supporter of Keystone XL and sharply criticized President Obama for his decision to terminate the project. However, he has taken some heat from the petroleum industry for favoring a sharp increase in taxation when recoveries take place through the fracking process. While several candidates dropped out of the race by early spring, some of their industry-related comments show generally strong support among Republicans for petroleum exploration and development. Senator Marco Rubio has been quoted regarding climate change that he would not do anything which would make “America a harder place for people to live, to work or to raise their families.” He has been quoted by ABC News as declaring that he does not believe humans are responsible for current climate trends but rather believes that climate has always been changing and has never been static. As a result, he is opposed to the complex regulations being proposed which would control vast areas of human activity. Rubio also strongly opposes cap-and-trade schemes. During his 2010 senatorial campaign, he stated, “As a U.S. Senator, I would oppose a national energy tax on American consumers, farmers and business owners. At a time when our economy is struggling, a cap-and-trade scheme would further strain family budgets and destroy jobs.” Ben Carson declared his antipathy to government domination in general by stating, “I have concluded that the best policy is to get rid of all government subsidies, and get the government out of our lives and let people rise and fall based on how good they are. It goes back to the concept of regulations. Every regulation costs in terms of goods and services.” Senator Rand Paul of Kentucky would also strive to cut government down to size. He recommends that “cutting the red tape and encouraging energy freedom, new technologies and discoveries will be a priority in my administration.” He also favors free-market competition, developing mineral and energy resources on public lands and completion of the Keystone XL pipeline. On the Democratic Party side, only Hillary Rodham Clinton and Vermont Congressman Bernie Sanders remain as viable candidates for the Democratic Nomination. Both appear to favour strong environmental regulation.

Hillary Clinton: During a 2015 broadcast of a CNN debate, Clinton stated her opposition to the Keystone XL pipeline by noting, “I now oppose Keystone, but I withheld opinion at first.” Regarding energy markets, she stated that a Clinton administration would “go after energy traders and speculators.” She would also use government to investigate high gas prices when they occur. In point of fact, Clinton has made few definitive statements regarding petroleum over the past few years, causing the National Journal to discuss her energy issue statements in this manner: “At the same time, there is genuine sense of uncertainty about the front-runner, who has yet to offer detailed energy policy positions.” There was some hope among oil industry leaders that Clinton would be more open to their cause than President Obama, but Clinton recently supported Obama’s Keystone XL decision. Bernie Sanders: Representative Sanders is the most avowedly leftist of all the important candidates and, in fact, has

described himself as a democratic socialist. As such, it is not surprising that he describes his commitment to climate change legislation as “very advanced”. He has issued statements describing climate change as a moral matter, he advocates a tax on carbon, and he opposes Keystone XL. Sanders recently made the sharply partisan statement that “the fossil fuel industry is funding the Republican Party”, and he has made no secret of his advocacy of moving away from fossil fuels and toward sustainable energies. In a June 2015 statement, he defined those sustainable energies as wind, solar, geothermal, and biomass, among others. Many observers agree that in general, the positions espoused by the Republican candidates appear to be in closer conformity to the goals of petroleum developers and producers than those of the two leading Democrats, who indicate they are in agreement with the environmental movement’s goals and with the concept of using government’s regulatory powers to advance those objectives. It should be fascinating for the world of petroleum to follow the presidential race as it progresses through 2016.v

Index to advertisers Abco Supply & Service Ltd...................................................... 83

Neset Consulting Service.......................................................... 19

Annugas Compression Consulting Ltd................................ 23

Norbert’s Manufacturing.......................................................... 16

Aon Risk Solutions..................................................................... 50

Notre Dame Used Oil.................................................................. 69

Brandon Bearing Supply Ltd................................................... 41

Peloquin Mfg. Inc......................................................................... 61

Certified Inspection Services................................................... 67

Perimeter Aviation LP................................................................. 39

Collet Crane Rental Ltd.............................................................. 40

Pixels Inc.......................................................................................... 13

Colonial Inn.................................................................................... 40

Prairie Battery................................................................................ 40

D & G Polyethylene Products Ltd..............................................7 Dalziel Oilfield Consulting Ltd................................................ 12 Danatec............................................................................................ 71 DL Parts for Trailers...................................................................... 73 Driving Force................................................................................. 81 Economic Development Brandon........................................IFC Falcon Enterprises Ltd................................................................ 17 Fontana’s Trucking....................................................................... 34 Fountain Tire.................................................................................. 69 GB Contract Inspection Ltd...................................................... 11 Good Lands Environmental Inc.............................................. 12 Graham.........................................................................................OBC

Prairie Mobile Homes................................................................. 14 Pro-Drill Industries Ltd............................................................... 73 Redvers & District Oil Showcase............................................. 37 Reliable Metal Buildings Ltd.................................................... 10 RM Wallace-Woodworth........................................................... 34 Scott Land & Lease Ltd............................................................... 53 Silverline Oil Field Services..........................................................3 SNC Lavalin Inc.............................................................................. 43 Synergy Land Services Ltd........................................................ 16 Town of Virden.............................................................................. 35 Tremcar Inc..................................................................................... 51

Guild Insurance Brokers Inc..................................................... 34

Triangle Welding & Machining................................................ 15

Integra Tire...................................................................................... 80

Tundra Oil & Gas........................................................................... 47

Leech Printing............................................................................... 38

Virden Meter.....................................................................................5

Livingstone Landscaping Ltd.................................................. 75

WCB................................................................................................... 25

Manitoba Petroleum Branch......................................................7

Welders Supplies Ltd.................................................................. 57

Milwaukee Tool............................................................................. 10

Western Heritage......................................................................... 55

MNP................................................................................................... 49

Williston Basin Petroleum Conference................................ 33

Manitoba Oil & Gas Review 2016

DRIVING FORCE Delivers new Vehicle Options for Manitobans

DRIVING FORCE has been serving the petroleum and mining industry for over three decades.

DRIVING FORCE logo may be new to many Manitobans, but if you’ve been involved with the petroleum and gas industry in

Inn) to better serve customers using Winni-

Alberta, it’s a well-known and trusted brand.

expertise to the province. The company

Opening its first location in Manitoba in

originated in Spruce Grove, Alberta – just

February at 450 Oak Point Hwy in Winnipeg.

minutes west of Edmonton – and has since

In July, the company opened a second lo-

expanded from coast to coast, with 24 loca-

cation at 1750 Sargent Road (the Sandman

tions to date and more on the way. A big

peg’s international airport. DRIVING FORCE Vehicle Rentals Sales and Leasing brings decades of industrial

Jason Reid has over a decade of experience in commercial vehicle rentals.

204-748-2894 337 King Street, Virden, Manitoba 100% Locally owned — Danny Pierrard Visit our website at www.integratire.com

Manitoba Oil & Gas Review 2016

part of the company’s success since its 1978 beginning has been its unwavering commitment to customer service, and its recognition that keeping the industrial customer well served and properly supplied with the right equipment is every bit as important as serving the retail rental customer. In fact, DRIVING FORCE is one of the most respected and wide-ranging rental

and leasing brands in the Alberta oil and mining sector.

Understanding that some companies

That experience is now on tap for Mani-

have specific preferences for certain makes,

toba customers. Reid has years of experi-

“DRIVING FORCE has developed great

models and body styles, this company

ence in the Manitoba truck market, and

relationships with many customers in

deals with all major truck manufacturers;

close support from additional petroleum

Alberta’s petroleum and mining sec-

whether you’re looking for Dodge, GM or

project and mining site expertise whenever

tors,” says Jason Reid, branch manager

Ford products, DRIVING FORCE can deliver

he needs it.

at DRIVING FORCE’s Winnipeg location.

them completely equipped to meet the

“Working with them has made DRIVING

specific standards of the mining site.

“We’re continuing to build on that base of experience as we develop long-term

FORCE an expert in the commercial rent-

“Experience has shown us that our

relationships here in Manitoba. I’m al-

als field. For example we’ve been work-

customers value the convenience of or-

ready familiar with many companies here

ing with Flint Energy Services (a division

dering vehicles for a specific destination;

in Manitoba, but it’s great to know there’s

of URS and AECOM) in multiple mining

it can save them time and money while

also a wealth of connections within DF

locations for years, providing everything

creating peace of mind,” says Bruce Jack-

to help me provide exactly what the cus-

from half-tons to Class 4 heavy-duty ser-

son, DRIVING FORCE’s Edmonton and

tomer wants. We deliver anywhere in the

vice trucks.”

Area rental manager. “For example, when

province – rigged for your specific needs

DRIVING FORCE takes pride in giv-

we get a call for a specific mining proj-

and ready to go. We’re looking forward to

ing customers exactly what they want,

ect, we know exactly what is required – a

working with customers and showing off

whether it be half-ton pickups for yard

buggy whip, amber light, back-up alarm,

what DRIVING FORCE can do to make their

work, one-ton crew cabs for on-site haul-

a 30-pound fire extinguisher, first aid kit

rental and leasing experience better than

ing and transportation, two-ton half-

and flares. We also install GPS (global po-

they ever thought possible.”

decks, cube vans or any of a variety of

sitioning satellite) equipment and unit

picker trucks and service bodies. Their

markings. When the customer picks up

Jason can be reached at 204-694-3488,

long-term relationships with trusted and

the vehicle (or we deliver it), they’re liter-

1-800-936-9353, or you can visit

respected truck builders mean they really

ally able to sign off, get in, turn the key

www.drivingforce.ca for more information

can deliver on that promise.

and head off for work on-site.”

about DRIVING FORCE. v

We Rent... • SUVs • Cars • Trucks • Corporate and commercial • Daily, weekly, and monthly rates • 4x4s • Vans

450 Oak Point Hwy, Winnipeg

204•694•3488

1750 Sargent Avenue, Winnipeg

204•774•3488

Locations coast-to-coast-to-coast

www.drivingforce.ca

Manitoba Oil & Gas Review 2016

ABCO is Your One-Stop Shop for Quality Products and Installations

BCO Supply & Service Ltd. is a privately owned Winnipegbased electrical/mechanical contracting firm. Recognized as

one of Western Canadaâ&#x20AC;&#x2122;s most respected and successful multi-trade contractor and service companies, we have staked our reputation on quality products and installations, and quick response times with supe-

rior workmanship since our incorporation in 1973. We are proactive in continually reviewing and upgrading our training, safety, procedures, and techniques to exceed the ever-changing demands of the industry.

Manitoba Oil & Gas Review 2016

ABCO owns and operates a 33,000square-foot complex consisting of our head office, warehouse, and fabrication facility. Our fabrication facility has a fiveton indoor overhead crane, enabling us to pre-fabricate many of the complex mechanical piping systems used within our industry. With our millwright division, we also custom fabricate and modify many components for clients in the manufacturing, food & beverage, oil, gas, mining and utility industries. ABCO operates in all major economic sectors: commercial, manufacturing, industrial, utility, mining and institutional. Our diversification of multiple trades enables us to provide our clients with: • A one-stop shop advantage • Skilled and experienced project management, supervisory and craft personnel • Teamwork approach • Value-added engineering recommenda tions on alternative means and methods • Savings due to the single-source management of multiple trades creating improved project scheduling and costing We approach every undertaking with a great degree of pride and a philosophy of providing uncompromising quality, whether it’s a small retrofit or major construction project. We are committed to our customers’ needs and satisfaction. v

Recognized as one of Western Canada’s most respected and successful multi-trade contractor and service companies, we have staked our reputation on quality products and installations, and quick response times with superior workmanship since our incorporation in 1973.

1346 Spruce Street, Winnipeg, MB 204-633-8071 | www.abcosupply.com Mechanical, Electrical & Service Contractors

With our diversiﬁcation of multiple trades, it enables us to provide our clients with:

 A One-Stop Shop Advantage  Teamwork Approach  Value-Added Engineering  Recommendations on alternative means and methods  Savings due to single source management of multiple trades creating improved project scheduling.

COMMERCIAL/INDUSTRIAL Electrical Process Piping Millwrighting Plumbing Heating Welding

Gas Fitting Refrigeration Air Conditioning Controls Instrumentation Design Build

24 HOUR SERVICE Manitoba Oil & Gas Review 2016

With 90 years of experience in construction, Graham has the resources and expertise needed to complete our clientâ&#x20AC;&#x2122;s oil and gas projects safely, on-time and on-budget. As a leader in the industry, Graham delivers excellence on every project, every time.

Your Construction Solutions Partner. graham.ca