Manitoba Oil & Gas Review 2019

SERVING MANITOBA’S OIL & GAS INDUSTRY

MANITOBA Oil & Gas Review 2019

PUBLICATION MAIL AGREEMENT #40934510

Making a case for Canadian-branded energy

Energy rallies bring support for Canada’s energy industry

Tundra Oil wants everyone home safe, every day

The impact of cannabis legalization

Why ministerial discretion does not belong in Bill C-69

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Distances from Brandon, MB

Oilfield Location (km)

Virden (80)

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In this issue...

6 Manitoba Oil Activity 10 Message from the Honourable Amarjeet Sohi, Minister of Natural Resources

12

Message from the Premier

13

Message from Rick Chrest, Mayor of Brandon

16

Why ministerial discretion does not belong in Bill C-69

18

Update from the CAODC

19

Tundra wants everyone home safe, every day

20

The future of reclamation monitoring

22

E conomic and environmental impacts of methane emissions reduction in the natural gas supply chain

25 26

annabis legalization: Research and C regulations need to catch up to legislation oosomin Energy Rally sends message of M support for Canada’s energy industry

28

Making a case for Canadian-branded energy

29

n Update from the Canadian Society for A Unconventional Resources (CSUR)

30

Williston Basic Petroleum Conference highlights the industry

Index to advertisers Annugas Compression Consulting ...............................11 Aon Risk Solutions ...........................................................................16 Border Energy Ltd. ...........................................................................14 Carson Safety Services Ltd. ......................................................21 Corex Resources ....................................................................................3 Dallas Transport Ltd. .......................................................................31

4

Graham Construction & Engineering ...................32 Grimes Sales & Service .....................................................17 Hudson Rentals Inc. ............................................................14 Milwaukee Tools ....................................................................10 Morris Fracturing & Acidizing Ltd. ..............................8 North Dakota Petroleum Council ............................27 Regen’s Metals ...........................................................................6 Reliable Metal Buildings Ltd. ........................................13 Rural Municipality of Wallace-Woodworth .........7 Scott Land & Lease Ltd. ....................................................29

Dalziel Oilfield Consulting ........................................................10

Town of Virden .......................................................................20

Dennis County Development Partnership ..............................................................................................15

Tundra Oil & Gas .......................................................................5 Vermilion Energy Inc. .........................................................24

DL Parts for Trailers ...........................................................................28

Virden/Birtle Mainline Motors ....................................15

Economic Development Brandon ................................IFC

Virden Meter Services ..........................................................9

Epic Environmental Technologies Inc. .................13

Workers Compensation Board ..................................23

Manitoba Oil & Gas Review 2019

Published by: DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, MB R3L 0G5 www.delcommunications.com President & CEO: David Langstaff Editor: Lyndon McLean lyndon@delcommunications.com

Advertising Sales Manager: Dayna Oulion TF: 1-866-424-6398 Advertising Sales: COLIN JAMES Mic Paterson KARI PHILIPPOT DAN ROBERTS Gary seamans Production services provided by: S.G. Bennett Marketing Services www.sgbennett.com Art Director / Design: Kathy Cable Advertising Art: dave bamburak DANA JENSEN ©Copyright 2019.

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 | 2019

The most important part of any workday is coming home safe to the ones you love.

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overview

Manitoba’s oil activity 2018 Courtesy of the Manitoba Petroleum Branch 2018 Wells Drilled: 276, with 8 rigs working 2018 Oil Production: 14.6 million barrels Total producing wells: 3,693 Total SWD wells: 116 Total WIW: 643 WSW: 17 2017 Wells Drilled: 240 2017 Production: 14.1 million barrels

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Manitoba Oil & Gas Review 2019

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overview

MANITOBA DRILLING ACTIVITY

Manitoba’s Top Drillers – 2018 276 wells were drilled by 11 different companies.

For the seventh year in a row, Winnipegbased Tundra is the top driller (60 per cent of wells drilled).

110 wells were drilled by 10 other companies.

Manitoba Drilling Activity

This graph shows the correlation of oil prices to wells drilled. Industry is price sensitive.

From 2005 to 2017, annual crude oil production has grown from 811,924 cubic metres (m3) to approximately 2.1M m3 (1 m3 = 6.29 U.S. barrels). Production peaked in 2012-13 at over 3 million m3 − or about 9 million barrels annually − when prices were at historical highs, averaging around CDN $580/m3 or CDN $92/barrel.

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Manitoba Oil & Gas Review 2019

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Oil prices are going up – still less than the highs of 2013-14 but about 18 per cent higher than last year. Estimated value of production for the year is $755,433,540.

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Manitoba Oil & Gas Review 2019

9

a message from canada’s minister of natural resources

THE HONOURABLE Amarjeet Sohi On behalf of the Government of Canada, I would like to thank the

the proposed Trans Mountain expansion project. The Government

Manitoba Oil & Gas Review for its work and for giving me the op-

will be able to consider a decision on the project once we have

portunity to share how we are supporting the oil & gas industry in

fulfilled our Duty to Consult. This is the most responsible and ef-

Manitoba, and right across the country.

ficient path forward.

Building the infrastructure necessary to get Canada’s resourc-

As we work on opening up new markets for Canada’s resources,

es to market and supporting workers in the oil & gas sector has

our government is also investing in our energy industry. In De-

been a priority for our government since the beginning. Pipelines

cember, we announced a $1.6-billion package to support work-

remain the safest and most environmentally responsible way of

ers and boost competitiveness. This money can be used to invest

transporting oil & gas, which is why we approved the Line 3 Re-

in innovative technologies, address working capital needs, or ex-

placement project, which goes through Manitoba before crossing

plore new markets.

the U.S. border. This project has created thousands of good mid-

With hundreds of major resource projects − anticipated to be

dle-class jobs in Manitoba and across Western Canada. Canadian

worth over $500 billion in investment − planned across Canada

construction is almost complete, and we will continue to advocate

over the next 10 years, better rules are necessary to ensure good

for this project to counterparts in the United States. We will also

projects can go forward. That’s why we introduced legislation for

continue our strong advocacy for other critical projects, including

major project reviews, which will protect Canada’s environment,

Keystone XL.

create good jobs, and grow the economy.

Relying on a single buyer for our product puts us at a disadvan-

We continue to engage with provinces and territories, Indig-

tage. This is why our government is focused on gaining access to

enous communities, industry stakeholders, and the broader public

new, non-U.S. export markets. Doing so will help us get a fair price

to make sure we get it right. This bill would open the way to new

for Canadian oil and create more well-paying jobs in the process.

projects, provide greater certainty for investors, respect Indig-

LNG Canada − the single largest private sector investment in Ca-

enous rights, and create jobs.

nadian history that will get our LNG to global markets − is a great example of the work underway.

As Canadians build a cleaner energy future, oil & gas will continue to play a vital role. We have enormous confidence in Canada’s

Our government also stepped up to purchase the Trans Moun-

capacity to compete internationally – as a valued, innovative place

tain Pipeline and its related assets. We are now moving forward

to do business in the clean growth century, and that Canadian

and following the guidance from the Federal Court of Appeal on

workers and businesses will continue to lead the way. v

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Manitoba Oil & Gas Review 2019

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a message from THE MAYOR OF BRANDON

the honourable rick Chrest It gives me great pleasure on behalf of Brandon City Council and the citizens of Brandon to bring greetings to everyone involved in the oil & gas industry of Manitoba and beyond. Brandon has been pleased to host companies, organizations, and employees who are active in the oil industry. As the largest urban and commercial centre near 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 system 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 makes 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.

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 saying that I, along with all of you, am hopeful for renewed buoyancy and new prospects for the oil & gas industry in our region. I extend best wishes to all companies, organizations, and employees engaged in this exciting industry and hope that we have the opportunity to join with you all in moving forward the prosperity for our region and your industry.

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Manitoba Oil & Gas Review 2019

15

Why Ministerial Discretion Does Not Belong in Bill C-69

By Gary G. Mar, Q.C., President and CEO, Petroleum Services Association of Canada (PSAC) of other acts. In short, Bill C-69 is the federal government’s attempt to impose new “environmental assessment” measures on Canada’s resource sector. It has been widely criticized as likely to further delay and discourage investment in Canadian pipelines, mines, and other resource infrastructure.

On March 22, 2019, my board chairman and

Its “green agenda” threatens to trump eco-

I represented the Petroleum Services Asso-

nomic considerations while adding new

ciation of Canada (PSAC) before the Stand-

layers of bureaucracy, higher costs, longer

ing Senate Committee on Energy, the En-

delays, and more uncertainty on Canada’s

vironment and Natural Resources. We were

resource sector.

testifying on behalf of PSAC member com-

In preparing to appear before the com-

panies, offering their views and perspec-

mittee, we struggled with what we could

tives on Bill C-69, which would enact the

present that hadn’t already been said many

Impact Assessment Act and the Canadian

times before by other parties as deeply dis-

Energy Regulator Act, as well as amend the

tressed as we are with the disastrous con-

Navigation Protection Act and a number

sequences this bill portends. Nevertheless,

Aon is proud to support Manitoba’s oil and gas industry.

16

Manitoba Oil & Gas Review 2019

we felt it necessary to reiterate the issues of deep concern that had also come to the fore in our own assessment of the bill’s likely impact.

We pointed out that what began in 2014 as a downturn due to low commodity prices, a situation outside of the control of a federal or provincial government, has escalated into a dramatic flight of capital from Canada in response to factors that are within the control of governments. These include competitiveness, regulatory uncertainty, the tanker moratorium, the clean fuel standard, methane emissions reduction regulations, carbon taxes and, finally, Bill C-69. At a time when investors are looking for regulatory certainty and firm timelines, Bill C-69 in its current form threatens the opposite. Canada will continue to sacrifice billions of dollars of economic prosperity and growth even as jobs continue their flight to other countries.

One of the biggest problems with Bill C-69 is that it would give the federal Environment Minister added discretionary power on deciding whether a project goes ahead or not. This politicization of the process has been roundly criticized by numerous thoughtful commentators, including the four Atlantic premiers (including three Liberals) who told the Prime Minister that Bill C-69 in its current form “will not meet the dual objectives of environmental protection and economic growth”. They went on to say that a particular concern is that the bill “places final decision-making power in the hands of the minister or governor in council and provides the opportunity to

Legislators have the key responsibility of establishing the parameters within which such quasi-judicial administrative bodies exercise their authority.

They then need to stand out of the way and let their handiwork prove itself. veto the results of thorough scientific assessment and review of evidence”.

Telling the committee that PSAC shares this concern added nothing new to the debate. What is new is a key lesson coming out of the ongoing SNC-Lavalin saga.

In that regard, we reminded the commit-

The Petroleum Services Association of Canada (PSAC) is the national trade association representing the service, supply and manufacturing sectors within the upstream petroleum industry. PSAC is Working Energy and as the voice of this sector, advocates for its members to enable the continued in-

novation, technological advancement and in-the-field experience they supply to energy explorers and producers in Canada and internationally, helping to increase efficiency, ensure safety and protect the environment. v

tee that one of the purposes of administrative law is to take political decisions out of the hands of politicians and place it in the hands of subject experts. That’s what we seek: subject experts able to move the process forward in an objective manner.

Legislators have the key responsibility of establishing the parameters within which such quasi-judicial administrative bodies

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exercise their authority. They then need to stand out of the way and let their handiwork prove itself. The problem with politicizing the process by adding a ministerial override is that you will invariably have other ministers, MPs, and others with agendas lobbying the minister in question to exercise his or her discretion in a certain way.

The clear danger is that issues of national interest may be forced to take a back seat to those of political interest.

Our advice to the committee? If you don’t want the PMO, or ministers, or others exercising undue pressure upon an individual minister, then take away that possibility.

The process must not be politicized.

Let’s take to heart what the PM himself said about the SNC-Lavalin affair: “We will stand up and defend and create jobs, and we will always defend our institutions and rule of law.” By all means, create new and better institutions and laws as they deal

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Manitoba Oil & Gas Review 2019

17

Update

from the CAODC

By Mark A. Scholz, President and CEO, Canadian Association of Oilwell Drilling Contractors The association enjoyed a successful year in 2018, although the work we accomplished amounted to damage control for an industry in trouble. While the international oil & gas industry expanded market share to meet an increasing global demand, the sector in Canada remains mired in poor public policy and erratic leadership.

To the extent the industry can determine its own destiny, we have succeeded in making significant headway. CAODC members still standing have found efficiencies they did not know existed and have creatively managed to stay alive through an extended period of depressed day rates, sporadic and short-term work, large differentials, and steadily increasing costs.

In 2018, the association succeeded in working with provincial governments in Alberta and Saskatchewan on tax exemptions that amounted to substantial savings for members. While these savings likely did not amount to positive momentum, they certainly were valuable in maintaining stability, and I would like to thank both the Alberta and Saskatchewan governments for their cooperation on these files.

This year, among other initiatives, CAODC was successful in: 1. Working with the GoS to remove the PST on depreciated assets entering the province.

2. Working with the GoA to extend the carbon tax levy exemption to service rigs.

3. Continuing to lead the advocacy conversation through the Oil Respect campaign, educating the public on damaging legislation such as Bill C-69 and Bill C-48.

4.

Continuing to challenge governments in Canada to recognize and respect the value our industry brings to all Canadians.

Successes aside, moving into the fifth year of

18

Manitoba Oil & Gas Review 2019

this downturn, we’ve seen talent and equipment moving south at an accelerated pace, and the direction set forth for oil & gas in the United States has created jobs, opportunity, and wealth.

Leadership in the U.S. has made it crystal clear that energy independence and a healthy oil & gas industry are a priority for all Americans. As a result, according to the IEA, U.S. oil exports went from 16 million barrels in November of 2014 to 78 million barrels in December of 2018, and with that growth, the industry has recovered to 90 per cent of its pre-recession activity levels.

Leadership in Canada, however, has guided our industry in the opposite direction.

Since 2014, we’ve lost the Northern Gateway and Energy East pipeline projects, and we are still no further ahead with Keystone XL and the Trans Mountain Expansion. Additionally, during what many are now calling a recession even worse than the one we went through in the 1980s, the costs of doing business in our basin have steadily increased due to a sustained chorus of poor policy decisions.

Two very different approaches with two very different results; and after four years of witnessing how important leadership is to our industry, in 2019 we have a chance to choose again.

Whatever your political preference, I encourage you to educate yourself and others on the energy policies of all of the major parties and choose the ones that best align with building the foundation for the future growth and development of Canadian oil & gas.

This industry is at a crossroads. Our reputation as a legitimate oil & gas-producing jurisdiction is eroding, and with each passing month, our infrastructure deficit compounds further and further. If we are to preserve any of what we have worked so hard to build, we need immediate federal constitutional leadership on projects that are clearly in the national interest. Our founding fathers gave the federal government the necessary tools to move forward with nation building projects, and we ask them to use these tools.

Tone at the top has never been more important than it is now. v

Everyone Home Safe, Every Day Tundra’s new safety slogan is a reminder about shared responsibility in the workplace No one goes to work expecting to be injured on the job. And because no one understands potential hazards in the workplace better than the people on the job, Tundra Oil & Gas is giving employees an essential role in identifying safety concerns and preventing lost-time incidents.

“Safety has always been a deeply-ingrained part of our culture at Tundra,” says Ryan Potter, Manager of Health & Safety.

“Considering how quickly we have grown, we want to emphasize the importance of safety to employees who have recently joined our company as well as reinvigorate the diligence of the rest of our employees.”

The new safety slogan “Everyone Home Safe, Every Day” now appears on Tundra’s communication materials, work wear, protective equipment, and even on company vehicles in the field – places where employees will be reminded of it daily.

“It’s a statement that grabs your attention and makes you realize that safety is not just an inward focus, it’s an outward attitude,” Potter says. “Safety is the top priority in everything we do, and we all share the responsibility of ensuring that the people around us go home safe to their families at the end of the day.”

To help convey this message, Tundra produced a powerful 90-second video that expresses that the most important part of any workday is coming home safe to the ones you love.

“Our own people are featured in the video to demonstrate how much we all have at stake and the reason why safety is part of everything we do. Our goal is to get away from safety being about rules and regula-

tions and shift it to becoming a state of

nication as we exchange ideas and review

mind instead.”

potential hazards or near-miss incidents. It

Tundra maintains that business oppor-

ensures a good flow of information from

tunities are not pursued at the sacrifice

the people out in the field who actually wit-

of safety, and the company continuously

ness and experience these things.”

strives for improvement in safety and loss

After the safety gatherings, the shared in-

control performance. To assist with this,

formation is collected, analyzed and shared

Tundra’s field employees participate in safe-

with management and staff as a way to

ty gatherings, which gives them a forum to

discuss continuous improvement of safety

bring forward any safety concerns, discuss

procedures.

potential issues, or find solutions to ensure past incidents do not occur again.

Potter says that this process is working effectively, pointing out Tundra’s markedly

“To make it easier and more convenient

improving Total Recordable Incident Fre-

for our field operations, we’ve adjusted our

quency (TRIF) record, which is based on

format so that instead of coming in for safe-

100 people working a 40-hour week over

ty gatherings, we take the meetings out to

a one-year period. In 2017, Tundra and its

five different area offices in the field every

contractors had 0.57 recordable incidents

quarter,” Potter explains.

per 100 people working – down from 0.60

“Working in smaller groups tends to

incidents the year before, and looking back

make people feel more comfortable, which

even further, 1.24 incidents per 100 people

allows for more open and honest commu-

in 2010. v

Manitoba Oil & Gas Review 2019

19

Thirty-centimetre resolution imagery provides a detailed view of operations and reclamation.

The future

of reclamation monitoring Courtesy of Western Heritage Monitoring environmental health and track-

cesses with the potential for adverse envi-

ronmental conditions that existed before

ing change during reclamation and remedi-

ronmental effects, and some operations can

development. In addition, the ground test-

ation is important to every operation in the

have lifetimes spanning decades.

ing required for monitoring can be very

resource development sector but especially

The challenges they face when monitor-

time-consuming and expensive. Getting

so for oil & gas operations. Oil & gas organiza-

ing reclamation areas can be numerous.

quality information about past and current

tions often have footprints that cover large

Areas that began operations decades ago

environmental health in an efficient and

areas, they often utilize chemicals and pro-

often lack full information about the envi-

cost-effective manner can be difficult.

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Manitoba Oil & Gas Review 2019

In order to address these challenges, Western Heritage has developed the Environmental Footprint Monitoring Platform (EFMP). This platform uses 30-centimetre, high-resolution satellite imagery to extract important information about environmental health and delivers it to managers through an easy-to-access online platform. The platform identifies land use types defined by the client, and monitors change and fragmentation of the land cover. It measures vegetation health based on vegetation greenness and productivity or the change in biomass. It also measures aquatic health and change based on surface-water depth, volume, salinity, and turbidity. These indices are well suited to the needs of oil & gas producers, and the platform has been designed to accept any other relevant data.

Using 30-centimetre, high-resolution satellite imagery to monitor reclamation activities has a few key advantages. One of these is the ability to look back using archival imagery to assess environmental conditions prior to or early in the project’s lifecycle. Imagery is available from the early 1970s forward, and this can be used to more accurately assess baselines for reclamation and investigate the source of past and current environmental conditions.

Another advantage is the ability to monitor the entire project footprint at once, which allows managers to identify areas of potential concern and schedule ground testing or further analysis. This creates efficiencies in applying company resources − making sure that time and money are used as effectively as possible − and minimizes the risk of having staff in the field.

Because the EFMP uses satellite imagery, Western Heritage Geomatics has had to be creative in ways to identify indices. An example is measuring salinity. Salinity does not naturally alter the reflectance of water and, therefore, there is no way to directly detect saline water. Knowing the importance of this information to our customers, we had to find contextual clues to detect saline bodies of water. Salinity does alter the vegetation communities near the water; based on this, we have been able to map salinity in their project areas.

As technology changes, the way we look at the world is also changing. Reclamation monitoring using satellite imagery has the potential to save time and money and ensure the best possible information is available to decision-makers. v

Online management platform showing current and historical land use and land cover.

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Manitoba Oil & Gas Review 2019

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Economic and environmental impacts of methane emissions reduction in the natural gas supply chain Provided by the Canadian Energy Research Institute The Canadian government, along with some provincial governments, have set policies to cut methane emissions from between 40 and 45 per cent of baseline value by the year 2025. Baselines might differ between governments, but the overall targeted reductions by Canada are about 25 million tonnes (Mt) CO2e of methane emissions by 2025. The gas supply chain can be broadly divided into upstream, midstream, and downstream sectors where sources of methane emissions are identified and mitigation technologies are assessed from wellhead to burner-tip. Methane emissions from the sectors can be further grouped into source categories such as fugitives, flared, vented, line heating, and burnertip.

In line with the ongoing debate on the economic and environmental impacts of methane emissions from natural gas supply chains, the Canadian Energy Research Institute (CERI) developed a modelling tool,

the Integrated CH4 Emission Reduction Model (ICERM), with the objective to quantify methane emissions and assess reduction opportunities covering end-to-end of the Canadian natural gas supply chain. CERI used ICERM to quantify methane emissions from the Canadian natural gas supply chain in 2017 to be 40.4 Mt CO2e. Figure 1 details the emissions along the entire value chain for natural gas.

Western provinces with more upstream oil & gas activities generate more emissions than eastern provinces, where natural gas demand may be high but supplied from other provinces. Alberta contributes more emissions than other provinces, with an estimated total in 2017 of about 24.5 Mt CO2e, of which the upstream sector is responsible for up to 97 per cent of this number. These emissions are mainly from oil & gas wells and gathering facilities. The oil & gas wells emissions include methane emissions from all equipment at the wellhead and field

Figure 1: Overall Canadian Methane Emissions from Natural Gas Supply Chain Sources

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Manitoba Oil & Gas Review 2019

operations. Like Alberta, the other western provinces (British Columbia, Saskatchewan, and Manitoba) have higher upstream emission footprints, with total estimated values of 2.2, 11.7, and 0.8 Mt CO2e, respectively.

The optimization module in ICERM combines emission quantification and abatement cost data to evaluate emission reduction and economic impacts of various policy scenarios.

This study evaluated three different hypothetical policy scenarios to achieve emission reductions by adopting various combinations of mitigation technologies. These scenarios are: • Maximum reduction, which evaluated the economic cost and the maximum amount of emission reduction that can be achieved using the mitigation technologies assessed in the study. • Uniform reduction, which evaluated the economic cost and emission reduction achieved if a 45 per cent reduction target is assigned to each emitting device in the supply chain (except burner-tip emissions). • Optimized reduction, which identifies a costeffective mitigation pathway to reduce emissions to 45 per cent of baseline levels as reported in the National Inventory Report (this scenario is created to mimic methane regulations in Canada).

These scenarios are applied to the entire Canadian natural gas supply chain. This contrasts with the existing federal and provincial regulations, which place methane emission reduction targets mainly in the upstream sector. Figure 2 shows methane emission reductions from each supply chain sector and emitting devices for the entire Canadian natural gas supply chain under the three hypothetical policy scenarios.

In order to realize the most economic reductions in the optimized scenario, some of the emission source categories are omitted when

Figure 2: Methane Emission Reduction from Various Emission Source Categories under the Three Hypothetical Policy Scenarios for Canada Notes: 1) E ach colour represents a hypothetical policy scenario.

2) Venting in this figure refers to non-routine, whereas routine venting is presented in terms of the emitting devices. choosing where mitigation should be deployed. These include emissions from midstream venting, upstream fugitives, compressors, and surface-casing vent flow. Optimized emission reduction is calculated from the average of the results obtained using the lower and upper ranges of the abatement costs.

This scenario does not arbitrarily specify what emission sources should be controlled but uses linear programming to determine the cost-effective mitigation to meet expected reduction at both federal and provincial levels.

For provinces with existing methane emissions regulations (such as British Columbia, Alberta, and Saskatchewan), the optimized scenario specifies methane emission reduction targets according to provincial baselines as reported in the National Inventory Report. For other provinces, federal methane regulation baseline year (2012) emissions are adopted.

Reductions in the maximum and uniform scenarios are predominantly from upstream venting, fugitives and pneumatic pumps. In the optimized scenario, reductions are mainly from upstream venting and pneumatic devices including pumps, controllers and generic instrumentation. Figure 2 allows close comparison of emission reductions from each emission source category under the hypothetical policy scenarios. At the provincial level, optimized (45 per cent) reduction of emissions is based on contributions to total Canadian methane emissions during 2012.

As presented in Figure 2, mitigation of emissions from surface-casing vent flow (SCVF) and compressors are not done in the optimized adoption scenario due to their higher abatement costs. Most emission reduction opportunities are identified from pneumatic, venting, and fugitive sources under each mitigation scenario. Also, in line with the distribution of overall emissions across supply chain

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Figure 3:

Figure 3: Emission Reduction and Ranges of Total Cost of Abatement under the Three Hypothetical Policy Scenarios for the Entire Canadian Natural Gas Supply Chain

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sectors, the upstream sector is the major source of the emissions where significant mitigation efforts are to be channelled to achieve deeper cuts in emission reductions.

Figure 3 presents a results summary showing total emission reductions and cost of achieving those reductions under the various abatement analysis scenarios for the entire Canadian natural gas supply chain.

The provincial breakdown of these costs, along with the emission reductions, can be found in CERI study. For the three abatement scenarios, total cost of emissions reduction in the maximum reduction scenario is in the range of $3 to $5.5 billion, for a total methane emission reduction of about 33 Mt CO2e. For the uniform scenario, the cost is in the range of $1.4 to $2.6 billion and total reduction of 18 Mt CO2e, whereas the optimized reduction scenario achieves a 22 Mt CO2e emissions cut for a total cost range of $0.7 to $1.4 billion. We note that these do not include costs of administration, measurement and reporting which are required by existing methane regulations in Canada.

In comparison to existing methane regulations, Canadian federal regulation has a target of 40 to 45 per cent reduction below 2012 levels by 2025. Canadian national inventory report data indicate that total methane emissions in that baseline year (2012) was 107.5 Mt CO2e, of which about 51 per cent (55 Mt CO2e) was from oil & gas. Therefore, if the regulation covered all sectors of the natural gas supply chain for a reduction target of 45 per cent, that would amount to about 25 Mt CO2e. If our optimized reduction scenario applies the 2012 baseline reduction target across all provinces, the total cost of emissions reduction would be in the range of $0.9 to $1.7 billion. However, the federal regulation aims to achieve reductions from the upstream sector and transmission (midstream), so if the 45 per cent reduction is applied to these components alone, the reduction target would be slightly below 25 Mt CO2e given that most of the emissions are from upstream sector.

CERI acknowledges that more accurate data for modelling will become available over time as new field measurements are reported. Hence, future versions of ICERM will incorporate updated information in order to improve the accuracy of results. v

Cannabis legalization: Research and regulations needs to catch up to legislation

By Murray Elliott, president and CEO of Energy Safety Canada

Our industry is inherently risk-sensitive. Our fundamental view is that impairment in a workplace with high-risk activities − whether from a legal or illegal substance − has always been unacceptable and will continue to unacceptable. Over the last decade, the use of alcohol and drugs in the oil & gas industry has been a pressing safety concern.

As the national safety association of the oil & gas industry, Energy Safety Canada has spent the past several years engaged in conversations with government and industry about the legalization of cannabis and how it will affect safety-sensitive work environments. The concerns we heard when speaking to industry were that legalization may lead to increased use of cannabis. With increased use, there is a greater potential for workers to be impaired at work.

Now, as we move into this new era of cannabis legalization, further research and data is required to determine whether cannabis use has increased, and if so, whether there are more near misses or incidents reported as a result of employees being impaired at work.

Presently, owners and operators are prepared as best they can be. Employers have a responsibility to ensure a safe workplace

by preventing workers who may be unfit for duty from engaging in activities that could have devastating consequences − this has not changed with the legalization of cannabis.

Many employers have alcohol and drug policies in place that forbid any drugs or alcohol in the workplace. Policies include reporting mechanisms for employees who believe a co-worker may be intoxicated or impaired, training for managers on how to look for signs of suspected impairment, and investigation protocols if impairment is suspected or a near miss occurs.

If employers did not already have such policies in place, it was recommended by the legal community that companies revise their internal policies and procedures prior to October 17. To that end, the Construction Owners Association of Alberta (COAA) and Energy Safety Canada jointly released an updated alcohol and drug policy model, The Canadian Model for Providing a Safe Workplace, Version 6.0. The Model is a detailed cross-industry guideline to support companies with updating their workplace impairment policies.

Energy Safety Canada also recently released one of its first industry accepted stan-

dards: Life Saving Rules. The Life Saving Rules provide a consistent approach in the prevention of serious injuries and fatalities for our industry. One of the rules − Fit for Duty − speaks to being in a state to perform work safely − an important factor when considering the potential implications of cannabis legalization.

Despite these tools and resources, however, where all companies continue to be limited is testing. Energy Safety Canada believes employers should be permitted to test workers in safety-sensitive roles on both a pre-employment and random basis. With the right controls, legal framework, and legislative certainty in place, the application of random testing would improve an employer’s ability to manage the risk to workers and the public.

Currently, there are no tests for impairment, only presence and likely impairment.

This presents a significant concern to employers who are legally required to keep employees safe while at work. Energy Safety Canada believes further research is required around a standard approach to impairment testing in the workplace.

Energy Safety Canada is committed to continued engagement with government and industry around the need for proactive, standard regulations around testing in safety-sensitive work environments. We believe a tragic event should not have to be the trigger for these important regulation changes.

Cannabis in the Workplace Resources: http://www.saskatchewan.ca/cannabis http://www.worksafesask.ca/cannabis https://www.canada.ca/cannabis v Manitoba Oil & Gas Review 2019

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Moosomin Energy Rally sends message of support for Canada’s energy industry

By Kevin Weedmark Close to 1,000 people packed into the IJack Assembly plant near Moosomin to see Federal Conservative leader Andrew Scheer, Saskatchewan Premier Scott Moe, and New Brunswick Premier Blaine Higgs sent a strong message of support for Canada’s energy industry on Saturday, February 16.

The three leaders were invited to the rally, along with Canadian Senator Denise Batters and other politicians, industry leaders, and association leaders, to show their support for the Canadian energy industry and Canadian resource sector.

Months of hard work by a local committee, spearheaded by former Saskatchewan Association of Rural Municipalities president

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Sinc Harrison and retired businessman and developer Bill Thorn, went into the event.

“I would say it exceeded my expectation in every category,” Harrison says. “Everyone involved did an outstanding job. The speaker list just continued to grow as the planning went on, and it was a star-studded speaker list.

“The coverage by the press was unbelievable − it was great to see the rally livestreamed and broadcast on the news networks.”

Scheer, Moe, and Higgs stressed how important it is to unite as a country, to support, rather than hinder, the Canadian energy industry, and to start pushing back against policies put in place by the Trudeau government that have harmed the Canadian energy industry.

Federal Conservative Leader Andrew Scheer said he was proud of Canada’s energy industry and that Prime Minister Justin Trudeau’s policies were set up to deliberately hurt it.

“Canadian are paying for so many of his mistakes on so many files, but there’s one area where he’s doing significant damage to our country and economy, and he’s not doing that by mistake. His attack on Canada’s energy sector is by design. It’s on purpose,” said Scheer. “This is the one area where he’s

doing exactly what he said he would do.

He has talked down Canada’s energy sector long before he became prime minister.

And my message to you here today is that Canadians deserve a prime minister who is proud of the work that you do, who will champion Canada’s energy sector.”

Scheer says he believes Canada’s energy sector is something to promote around the world.

“Justin Trudeau went around Europe telling his friends at fancy resorts and gatherings of famous people that he was frustrated that he couldn’t phase out Canada’s energy sector faster,” he said. “Well, I’m here to tell you that I will travel around the world promoting Canada’s energy sector as a source of ethical and responsible and sustainable energy.”

He said he was aware of how much people in the industry are hurting right now.

“This industry is hurting − I know that; we hear it all the time, we see it when we’re at home in our communities,” he said. “Your federal representatives know that there is a great deal of difficulty and anxiety in this province and Alberta and in the sector across the country. We know that, we get that. We’re fighting to undo the damage that’s been done to you.”

New Brunswick Premier Blaine Higgs said it was time for provinces to unite to get a Canadian energy corridor built.

“I am convinced that, across this country, as we unite one province at a time, people are going to get on board,” he said. “We see it growing. We see it growing from New Brunswick. We see it growing in Ontario, we see it growing in Saskatchewan and Manitoba, and we see it growing in Alberta. So, we have one little place we need it to grow. But I’m saying, Quebec we need your help. We need you to help us make our country strong. We need you to be part of the solution − that’s our goal.

Saskatchewan Premier Scott Moe said it was time to “push back” against the federal government and stand up for Canada’s resource sector.

“It’s time for all of us to stand up and defend our world-class, our wealth-generating, our sustainable energy sector here in Canada,” he said.

“This is not a regional issue − this is not a Saskatchewan issue, this is not an Alberta issue. If it were, we wouldn’t have the leader of the federal opposition, Mr. Scheer, here today. If it were a regional issue, we wouldn’t have the premier of New Brunswick in this

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Making a Case

for Canadian-Branded Energy

By Gary G. Mar, Q.C., president and CEO, Petroleum Services Association of Canada (PSAC) In Canada’s history, it has taken the efforts of many to build an economic legacy that benefits all Canadians. But under our current rules, only the efforts of a few are required to stop it. One consequence of this condition is the paucity of investors in the Canadian energy sector. All that remains of investors are governments, and all their investment is with borrowed money.

CEOs, like Encana’s, have left the country. An accretion of regulations and legislation by federal and provincial governments and tax policy are further driving a flight of capital, both financial and human, away from Canada. TCPL should change its corporate name to reflect that they build more new pipelines in Mexico than Canada. Enbridge is growing by acquisitions in the US. They could move their headquarters accordingly. Calgary was once a head office centre that is now a branch office town. Canada may return to the status of being a colony, albeit one where corporations, not a sovereign government, call the shots and extract our resources at colonial prices.

While Sir Wilfred Laurier may have predicted the greatness of Canada at the dawn of the 20th century, he was unable to see far enough to accurately assess the current century. Canada, as a nation, has a poverty of ambition. We no longer aspire that achievement must be done, only that it might be done.

Even the humblest Mom-and-Pop grocery store aspires to have more than one customer. Canada should too. How? Build a pipeline to West Coast tidewater and supply China and India.

Concerned about Russia? Displace the buyers of Russian oil with Canadian oil. Vladimir Putin needs money to run his kleptocracy.

Should Canada want to help mitigate GHG emissions into the global atmosphere? Yes! Then build a natural gas pipeline to contribute to the efforts of China to convert from coal to gas-fired power plants.

Should Canada be consistent in its human rights stand with the Kingdom of Saudi Arabia? Yes! Then build a pipeline to tidewater in Canada and end our $2B a year reliance on oil from a repressive regime and provide the world with a Canadian option.

Concerned about Americans treating the Northwest Passage as international waters? You should be. Then buy a fleet of icebreakers and move energy supply out of Churchill and take it to Rotterdam or to Shandong. If you think the Arctic is environmentally sensitive, you are right. So establish the right rules to govern our territory and don’t let others use it with impunity.

Should Canada help developing nations rise out of energy poverty? Yes! Then build a pipeline to tidewater so we can provide them with reliable, affordable, safe energy to replace coal, wood, and dung.

These ideas may be right or may be wrong − but there is an absence of voices of value talking about how Canada can be a great middle power. Canadians need voices that speak up as Canadians first. Canadians should ask, “What’s in it for us?” and not, “What’s in it for me?” We should want a Canada that lives up to our potential as a great nation that competes with the world and not one of squabbling duchies.

The Petroleum Services Association of Canada (PSAC) is the national trade association representing the service, supply and manufacturing sectors within the upstream petroleum industry. PSAC is Working Energy and as the voice of this sector, advocates for its members to enable the continued innovation, technological advancement and in-the-field experience they supply to energy explorers and producers in Canada and internationally, helping to increase efficiency, ensure safety and protect the environment. v

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Manitoba Oil & Gas Review 2019

An Update

from the canadian Society for Unconventional Resources (CSUR) The power to Connect. The power to Convene. The power to Inform.

Navigating Canada’s LNG Opportunity

In March 2019, CSUR announced that it will play a key role in helping to navigate the province of Alberta’s opportunities in Canada’s emerging Liquefied Natural Gas (LNG) sector.

CSUR plans to roll out a variety of initiatives designed to raise the province’s LNG profile both domestically and internationally.

CSUR will work with JuneWarren-Nickle’s (JWN) Energy Group as part of a larger communications and outreach strategy. Over the next several months, an awareness campaign is planned that will help Canadians familiarize themselves with the LNG sector and the potential economic and social benefits of this endeavor. The awareness campaign will include events and workshops designed to help participants understand the global opportunities associated with LNG. There are several sessions already planned for various Canadian cities and towns, as well as international stops in Tokyo and London.

CSUR President Dan Allan notes, “We will be designing the program to appeal not only to the energy sector, but also all parts of the business community affected by a healthy natural gas industry. At the same time, we will be communicating globally in a way that signals to the world that Alberta and Canada intend to be significant players internationally as we move beyond our traditional North American markets.”

CSUR Outreach Initiative

The LNG Awareness Initiative, as detailed above, is an ideal complement to CSUR’s existing outreach program, which is headed by Dr. Brad Hayes, Director and Chair of the CSUR Outreach Program. The program’s objective is to educate the public on matters relating to unconventional oil & gas development. For technical audiences such as geoscience and engineering students, the focus is on how their educational aspirations can be applied in the field of unconventional resource development. The outreach presentations are tailored to address the type of audience participating

and the objective of the session. Since the initiation of this program, CSUR has engaged with both university and stakeholder audiences across Canada. The program has been viewed positively by all participants, and plans are to expand the program further throughout 2019.

Technical Market Intelligence In 2018, CSUR co-hosted two sessions on market intelligence with the Government of Alberta. The discussions, strategies, and outcomes from these sessions were incorporated into a summary report and distributed to CSUR’s membership. The report was also submitted to the Alberta government, with plans to discuss the report findings and consider the “next steps”. This report − which can be found on our website, together with other relevant documents and reports (www.csur.com) − will also be disseminated broadly to other governments and stakeholders across Canada to initiate further discussions.

The main themes that emerged from these sessions were: 1) A global perspective is required to maximize the economic growth impact for the energy industry in Alberta; and

2) Sustained positive leadership and action-oriented support is required from various levels of governments.

CSUR Technical Events

CSUR continues to be actively engaged with all its industry members as well as other stakeholders (academia, consulting companies, E&P companies, financial and lending institutions, general public, governments and its agencies, Indigenous groups, media and service companies) and is committed to executing a strong and relevant technical program for 2019. In addition to the planned core functions such as technical luncheons, a field trip, workshops, breakfast sessions and other geological playbased thematic events held throughout the year, CSUR continues to explore and source innovative ideas for sessions and workshops for its members, with many of these ideas coming directly from discussions with CSUR members and stakeholders. CSUR will continue to collaborate with its members and in conjunction with all stakeholders in order to improve the communications and facts related to the unconventional resource industry in Canada. v

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Highlighting the industry

The Williston Basin Petroleum Conference returns to Saskatchewan for 2019 The Williston Basin Petroleum Conference kicks off its 27th year from May 27 to 30, 2019, and event organizers have completely reimagined its purpose and intent.

In a period of profound challenges faced by industry – pipeline and transport capacity issues, emerging new methane emissions standards in Canada, water use, rapidly falling recovery rates alongside high drilling costs, and CO2 use and availability – conference organizers began to look at developing a conference and technical trade show less focused on sales and equipment, and instead focused on business development, emerging technologies, and company innovation.

“Saskatchewan already has two substantive trade shows – in Weyburn in June and in Lloydminster in September – that deal with the suppliers and distributors,” notes Dan MacLean, CEO of the Petroleum Technology Research Centre (PTRC), which directs the Williston Basin Conference. “It’s one of the differences between Regina and Bismarck when the Williston Basin is hosted north of the border. On even-number years, when the conference is in North Dakota, the trade component is enormous. We’ve come to re-

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Manitoba Oil & Gas Review 2019

alize that the event in Canada needs to be more business and technology directed.”

Norm Sacuta, director of communication at the PTRC, agrees. He’s seen the conference evolve in Canada over the last 10 years.

“We will still have an important trade show component at Williston Basin. That will never change,” says Sacuta. “But a preference will be given to companies that have innovative technologies that will address current and future challenges of the oil industry in Saskatchewan. The conference will focus on Saskatchewan’s heavy and light oil challenges, and on the rising importance of CO2 availability and use in tight, light and heavy oil operations.”

The reinvigorated focus will include discussions and presentations on pressing issues like flow line and pipeline integrity, CO2 availability and use in tight formations, artificial intelligence and block chain use in oil & gas, and managing methane emissions – all are planned in presentations and panel discussions.

An exciting new component to Williston Basin 2019 will be a one-day business conference on May 28th that will include highlevel panels and discussions that include

speakers from industry, banking, government, regulatory bodies, and politics.

“We are very excited to have the former premier of Saskatchewan, Brad Wall, for a question-and-answer session at the business conference,” notes MacLean. “We have several more high-level speakers from Calgary-based investment firms, our own Minister of Energy and Resources Bronwyn Eyre, and executives from the oil & gas industry.”

The conference will again kick off with two sessions of the Core Workshop on May 27th providing scientific and geological analyses of drilling cores from SE Saskatchewan that will be of particular interest for industry participants. It is hosted by the Saskatchewan Geological Society.

The technical conference includes important research applicable to heavy oil fields in Saskatchewan, to tight/light formation in the Bakken and Viking, and will include work by such groups as North Dakota’s Energy and Environmental Research Centre and the Saskatchewan Research Council.

Details on registration for the conference can be found at http://www.wbpc.ca/. v

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