Manitoba Oil & Gas Review by DEL Communications Inc.

SERVING MANITOBA’S OIL & GAS INDUSTRY

TEXT

MANITOBA Oil & Gas Review

PUBLICATION MAIL AGREEMENT #40934510

2013

Manitoba Oil Facts 2012 Regional Municipalities Adapt to the Province’s Oil Boom Manitoba Ranked Top Province for Investment Oil Producing Municipalities of Manitoba Spills and Cleanup | New Transload Facility in Cromer

Community Profiles: Brandon | Virden

Impact Oilfield Management Team

is a leading firm that specializes in supervision for the oilfield in all phases of construction, drilling and completion. What sets this firm apart from all the rest is their desire to strive as a team. Gregg Fischer and Steve Lobreau have both excelled in the oil and gas industry and have worked alongside each other since the early ‘80s. They started the Impact team in 2007 with a small, core group of individuals and have grown the company into a strong team. The Impact team has a wide variety of specialized expertise in the oil and gas industry with: • Multi-Leg Horizontals

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• Logistics and Liaisons

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• Reclamations

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In this issue... Manitoba Oil Facts 2012........................................................................................................................ 8

Message from Premier Greg Selinger.............................................................................................. 12 Message from MLA Larry Maguire.................................................................................................. 14 Message from Virden Mayor Jeff McConnell............................................................................... 16 Oil Spills and Cleanup.......................................................................................................................... 18 Regional Municipalities Adapt to Manitoba’s Oil Boom............................................................ 20 Oil Producing Municipalities of Manitoba Address Industry Issues...................................... 26 Manitoba Ranked Top Province for Investment........................................................................... 28 Yes! Winnipeg Looking to the Oil Industry.................................................................................... 32 Tight and Shale Oil Plays in the Western Canadian Sedimentary Basin............................... 33 Brandon Embraces the Oil Industry................................................................................................. 38 CN and Tundra Team up to Provide Crude by Rail....................................................................... 42 Virden Grows to Meet Industry Needs........................................................................................... 44 Speeding up Multistage Completions............................................................................................. 48 Oil Patch Contractors Be Wary!........................................................................................................ 50 Virden Skills Training Inc. Rolls with the Oil Boom...................................................................... 52 The Future of GIS Mapping................................................................................................................ 54 Training to Save Lives........................................................................................................................... 57 Growing to the Next Level.................................................................................................................. 58 Public Outreach More Important Than Ever................................................................................. 60 Oilwell Ownership through Joint Venture Limited Partnerships............................................. 63 Local Investment Opportunity in Manitoba’s Oil & Gas Sector.............................................. 64 Taking On Any Challenge.................................................................................................................... 66 Meeting the Industry’s Production and Frac Tank Needs.......................................................... 68 Complete Metal-Working Solutions................................................................................................ 70 Clarifying Dataroom Confusion........................................................................................................ 72 The Benefits of got mats?................................................................................................................... 78

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 Advertising Sales: BRIAN GEROW ROSS JAMES MARTIN NAULT Jimmy Norris Mic Paterson Anthony Romeo Production services provided by: S.G. Bennett Marketing Services www.sgbennett.com Art Director / Design: Kathy Cable Advertising Art: CAITLYN HAIER Dana Jensen ©Copyright 2013. 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 04 | 2013

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Manitoba Oil & Gas Review 2013

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manitoba oil ACTIVITY

Oil Facts 2012 • Manitoba has two potential areas for oil and gas production: southwest Manitoba and the Hudson Bay lowlands. • Oil was discovered in Manitoba in and has been produced since 1951. • Manitoba’s current oil production is located in southwest Manitoba along the northeastern flank of the Williston Basin, a sedimentary basin that also occupies portions of southern Saskatchewan, North Dakota, South Dakota and Montana. • Potential hydrocarbon bearing-formations in southwest Manitoba occur to depths of up to 2,300 metres (7,500 feet). • The majority of the approximately 8,500 wells drilled in Manitoba have only been drilled to Triassic, Mississippian or to the Bakken; this represents approximately one half of the potential hydrocarbon bearing formations. • Production in 2012 was a record 2,840,138 – 17.8 million Barrels. The month of March 2012 had the highest production on record – 270,403.2 m3 (1.7 million Bbls) or 54,894 Bbls per day. • There is over 76 kilometres of core from wells drilled in Manitoba available for examination. • All pre-1980 oil production originated from Mississippian Lodgepole and Mission Canyon formations at depths that range from 600 to 1,050 metres (2,000 to 3,500 feet). These formations accounted for approximately 68% of Manitoba’s cumulative oil production. • Oil was discovered in 1980 above the Mississippian in the Triassic Amaranth Formation. Approximately 41% of Manitoba’s 2012 production originates from the Amaranth Formation in the Pierson-Waskada area. • In 1985, oil was discovered in the Missis-

Manitoba Oil & Gas Review 2013

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December 31, 2003

December 31, 2008

December 31, 2004

December 31, 2009

SINCLAIR 2003-2012

December 31, 2005

December 31, 2010

December 31, 2006

December 31, 2007

December 31, 2011

December 31, 2012

Daly & Sinclair Field consolidation in 2010

sipian Bakken Formation in the Daly area. Production from the Bakken made up 3.7% of the 2012 annual production. • In 1993, oil was discovered in the Jurassic Melita Formation in the St. Lazare area. • In 2001, oil was discovered in the Devonian Three Forks Formation in the Daly Field, marking Manitoba’s first pre-Mississippian Production. In 2010, it accounted for 39.3% of Manitoba’s oil production. • As of December 31, 2012, Manitoba oil fields have produced a total of 50.17 million m3 (315,709,106 Bbls) of oil. The Virden field has produced 49% of this total. • The oldest producing well drilled in Manitoba is Daly Unit #3 Prov. 7-12-10-26, which has produced since July 1951. Manitoba’s most productive well is 2-21-11-26W1 in North Virden Scallion Unit No. 1, which has produced 1.99 million barrels of oil since June 1955. • Manitoba’s oil is of good quality, and in 2012, the average posted selling price for light sour blend crude was $531.95 per cubic metre ($84.53 CDN per barrel). The estimated value of oil sold in 2012 was approximately $1.51 billion. • As of December 2012, there are approximately 4,365 producing oil wells in Manitoba, 2,485 of which were put on production

Manitoba Oil & Gas Review 2013

since January 1, 2006. • In December 2012, average production rate for producing horizontal wells in the province is 3.8 m3 per day (23.9 barrels per day), compared to an average production rate of 1.91 m3 per day (12 barrels per day) for producing vertical wells. During 2012, horizontal wells accounted for 77.6% of the province’s total production. • Currently, there are 15 designated oil fields and 178 producing oil pools in southwest Manitoba. • Manitoba’s crude oil production is equivalent to approximately 43% of the province’s refined petroleum products requirements. • Approximately 12.7 million m3 (80 million barrels) of salt water were produced in 2012, that’s 4.5 m3 of salt water for every 1 m3 of crude oil produced. Salt water must be separated from the oil and re-injected into subsurface formations. • Approximately 510 wells are used for purposes other than production, such as disposal of produced water. • The current cost to drill and complete a well in Manitoba ranges from $325,000 to $1.8 million depending primarily on depth. • 614 new wells were drilled in Manitoba during 2012 including 566 horizontal wells; of these wells, 506 were cased as potential oil producers (success rate of over 89%), 12 were abandoned dry.

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Manitoba Oil & Gas Review 2013

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MESSAGE FROM MLA larry maguire

On the Road to Success By Larry Maguire, MLA Arthur-Virden Manitoba has topped Alberta and Saskatchewan in one key area in the oil industry. Manitoba is the top jurisdiction for energy companies to invest in, and fifth internationally, according to the Fraser Institute. Most of that investment already takes place in southwestern Manitoba, where drilling rigs continue exploration throughout the southwest region of the province. That investment has driven up Manitoba’s oil royalty payments to greater than $24.5 million, and provides even more benefits to the overall growth in the industry and the communities served by their efforts. Since 2003, Manitoba’s oil production has more than quadrupled to an average of more than 48,800 barrels per day. That translates to 17.8 million barrels per year. This, even after the province suffered a one-in-300-year flood in 2011 throughout Manitoba’s key oil producing regions. It shows the resilience of Manitobans who have come to work in the oil patch and those who have moved here from elsewhere to join them. Accommodations, restaurants and all retail businesses have

benefitted from this industry expansion. Oil production brings in more than $42.4 million in tax revenue to the provincial government in 2011. However, the NDP government in Manitoba should be doing more to help everyone develop energy resources. Industry needs more access to RTAC roads and bridges. Less government red tape would help. Industry needs more help accessing power sources for its equipment, such as Hydro. More efforts into processing land use designations and permit applications are required. These investments will pay off for Manitobans and the Industry will generate more profits and royalty revenue. Strategic investments like that are symbiotic. While rapid growth does have its shortfalls, the investments of those corporate citizens have led them to reinvest some of their profits back to local communities and their infrastructure and other local services and needs. There is every reason that success will continue this year. Manitoba is forecasted to have 614 new wells drilled in 2013. As the industry expands in Manitoba, it is always important to ensure everybody wins. Everybody can, if everybody does their part. u

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irden is not slowing down. We continue to work hard to insure that the community has many

opportunities for recreation, culture and in doing so we are also maintaining our built heritage. Our multi-purpose recreation facility is home to many large banquet functions, our famous indoor rodeo, concerts and regional/provincial sporting events. This past year it became the home of the Virden Oil Capitals, a Manitoba Junior Hockey League franchise that was the envy of the rest of the league when the team attracted an average of more than 1,000 fans per game. The oil industry continues to drive the local economy. The recently expanded industrial park for the town has seen development thrive in the past year alone. We are able to accommodate even more going forward. The agriculture and oil sectors

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The Operating Engineers Training Institute of Manitoba (O.E.T.I.M.) has been in business since 1986 as a nonprofit organization and registered as a Private Vocational Institution and recognized by Human Resources and Development Canada as an educational institution. OETIM Offers: • Training anywhere in the province • Issues T2202A (official tuition tax receipts for income tax purposes) • Nationally Recognized Credentials • Certified curriculum • Accepts various funding supports

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Oil Spills and Cleanup M

anitoba’s oil boom has resulted in innumerable benefits to the province. Unfortunately, though, the increase in activity means the number of spills that occur each year also goes up. Spills have been increasing in numbers during the past few years, but that’s not surprising considering the increased oilfield activity in the province. The 10-year average for spills is 55, and the five-year average is 73. In 2012, the Petroleum Branch recorded 90 spills, of which 36 were tank-related (12 tank trucks and 24 production tanks), 19 were flowlines, 17 were wellheads and another 18 were classed as miscellaneous. In 2012, the spills impacted 46,890 m2, less than the five-year average of 49,412 m2 per year. In spite of the increased numbers, the Petroleum Branch has measures in place to ensure cleanup is done quickly and effectively, minimizing loss and any damage to the environment.

Reporting Within a few hours of discovering a spill, the operator typically notifies the Petroleum Branch office. Reported spills are handled by Petroleum Branch administration staff at the appropriate district office or by inspector on 24-hour standby (on weekends), ensuring they will always be addressed. The Branch then completes an initial spill report form (internal), collecting details and assigning a spill number. An inspector immediately travels to the site to take photos, record the actual details and to discuss spill cleanup, repair of facility (if applicable) and prevention of a reoccurrence. The inspector assesses the spill, and may re-visit the site to follow up and ensure adequate cleanup has been done. The landowner is also notified of the situation.

By Lyndon McLean

A formal spill report is then completed by the company on the Branch-provided spill report form and submitted within seven days after the day the spill was discovered. This report is tracked by administration staff to ensure it is received and entered into the database. Upon receiving the spill report, inspection staff review the information for completeness and accuracy, and corrections are made, if necessary. The formal spill report is used to input data into the database. If the spill report isn’t received within the required timeframe, a non-compliance form is issued to the operating company.

Cleanup All oilfield-contaminated sites are to be cleaned up as per CCME standards. In cases involving large produced water spills, it’s not practical to remove extremely large amounts of damaged soil. In these cases, on-site treatment – removing the sodium from the root zone by applying amendments through the Manitoba rehabilitation monitoring program – is the best option. The actual spill clean-up involves: • Addressing all safety hazards for workers and public • Stopping the spill • Preventing the spill from migrating or mitigating the impact of the spill • Reporting the spill, as per the regulations • Proceeding with clean up (by the company and/or subcontractors) Typically, the free fluid is collected by a vacuum truck, and the soil is either washed and contaminated fluid is collected or contaminated soil is removed and replaced. Contaminated fluid or

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soil is disposed of at an approved waste facility. In the event the spill involves an underground facility, necessary ground disturbance issues are addressed prior to excavation for cleanup and repair. Small spills are cleaned up during the same day the spill has occurred, but large spills may take weeks to clean up if contamination is significant or collection of contaminated material is difficult. If spill cleanup is inadequate or not completed in an appropriate amount of time, it’s addressed by a Petroleum Branch inspector as a non-compliance issue. In the event the spill has caused a negative impact on the productive land/surrounding land, the site is entered into the Petroleum Branch’s rehabilitation monitoring program for future remediation. All sites are rehabilitated to condition as near as possible to the surrounding lands before being released from rehabilitation. In cases involving a more sensitive spill, a more detailed report may be requested from the responsible company. u

101(1) Where a spill occurs from a well or oil and gas facility and: (a) the spill occurs on or spreads to land off the wellsite or the site of the oil and gas facility; or (b) the volume of fluid spilled is more than 0.5 m3; the operator of the well or oil and gas facility shall, as soon as practicable, notify the owner of the land and shall, not later than 12 hours after the spill is discovered by or reported to the operator, notify the district office of the size and location of the spill, plans for disposal of any oilfield waste, and any other information that the inspector may request. From the Manitoba Oil and Gas Act (C.C.S.M. c. 034)

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Box 352 Virden, MB R0M 2C0 Ph: (204) 748-2796 Fax: (204) 748-2295

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Manitoba Oil & Gas Review 2013

Regional Municipalities Adapt to Oil Boom in Southwestern Manitoba

Legacy battery in the RM of Edward.

By Lisa Fattori

he oil boom in southwestern Manitoba is an economic shot in the arm for the province; however, it’s a

much more complex and illusive phenomenon at the local level. For some Regional Municipalities (RMs), increase drilling activity has turned near ghost towns into vibrant communities with renewed growth and development. For other communities, where oil activity is still in the exploratory phase, the impact is trickling in and holds

no promise of long-term prosperity. In some instances, RMs are bypassed altogether and have only the wear and tear on local roads to remind them of the drilling bonanza going on around them. Bordering both Saskatchewan and the US, the RM of Edward has been a hotbed of oil production activity for the last five years. Situated in the heart of the Pierson Field, the R.M. has approximately seven oil companies drilling in the area, includ-

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ing Tundra Oil & Gas, Canadian Natural Resources, Legacy and EOG. In the town of Pierson, growth in the commercial sector includes the construction of a new building and the occupancy of a defunct building by a hauling company. In 2012, three new oil batteries were constructed. Businesses are seeing record profits and, in real estate, properties are selling quickly. “In 2011, we spent $500,000 on upgrading a bridge to industrial capability and repairing a bridge that was damaged from being overloaded,” says Debbie McMechan, a councillor for RM of Edward and Secretary for Oil Producing Municipalities of Manitoba (OPMM). “Oil brings investment into the community, but it comes at a price because it causes a big stress on the infrastructure. There is a tremendous number of rigs on Highway 256 at Lyleton to Highway 3. The road is crumbling and I don’t know when it’s going to be repaired.” New opportunities in oil exploration

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Legacy battery in the RM of Edward.

and production have migrated to the east, as well as to the north of the RM of Edward. In the RM of Arthur, the Town of Melita is playing host to workers who have come from as far away as Estevan, Saskatchewan to work in the surrounding oil fields. Centrally located to the Pierson and Waskada Fields to the south, and the Virden and Daly Sinclair Fields to the north, Melita has become a busy hub for those seeking accommodations and a whole host of amenities. “We know we’ve had a big influx of people, but with so many people renting, we can’t know for sure the total popula-

tion,” says Bob Walker, Mayor of the Town of Melita. “We’re not seeing an increase in school-age children yet, but daycares and nurseries are growing, so young families are here.” In Melita, a previously closed motel has been renovated and opened to oil workers, and bed & breakfasts are full. Older homes are being snatched up and converted into multi-bedroom dwellings, as people try to capitalize on the acute demand for accommodations. Despite a 200-room workers’ camp north of Waskada, the shortage in living quarters has prompted the construction of a new 240-room camp on the east

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side of Melita. Some of the modular units are already on site, and the camp is scheduled to open September 1st. While a surge in population has meant booming business for local retailers, the downfall facing employers is the difficulty in attracting and retaining staff. When workers can receive $10 per hour more in the oil field than they can anywhere else, shops and restaurants can’t compete. Melita also has a hospital that has to be staffed and is all the more busy because it services the workers in the surrounding oil fields. “A real challenge for us is keeping our medical people here,” Mayor Walker says. “We have a 24-hour, seven-day-a-week ER and five of our nurses are close to retiring. We’re getting short of doctors, nurses and lab workers, and if you don’t have the staff, you can’t admit people in to the hospital. Even if we attract more medical workers, we don’t have anywhere that they can live.” Southeast of Melita, in the RM of Brenda, the Village of Waskada is experiencing a renaissance of growth and prosperit due to recent oil activity. “As production

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Manitoba Oil & Gas Review 2013

dwindled in the mid-1990s, we went into survival mode for the next 10 years,” says Mayor of Waskada Gary Williams. “As a community, we had to take over the local grocery store. In the last five years, sales at the store have grown from $350,000 to $1 million annually. We have a strong housing market and have acquired 23 acres of the north end of town that is slated for development. School enrollment has increased 50 per cent and we have a new arena project that we’ll be proceeding with this summer. With our strong agricultural sector, together with the oil and gas activity, we have nowhere to go but up.” Oil patch suppliers include Weatherford, CE Franklin Ltd., and STO-VAN Oilfield Maintenance, who constructed a new building within Waskada. The village has a 24-hour card-lock fuel facility, a brand new Credit Union building and interest by the mayor and council in the future development of an industrial park. EOG operates a new gas plant five kilometres from town, and Penn West is slated to construct a gas plan as well.

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For the Town of Deloraine in the RM of Winchester, newcomers to town travel approximately 45 minutes to an hour to work and can pay up to $1,200 a month for rent. Housing is also a challenge, with little or no places to rent and escalating home prices. “Before the oil boom, you would never see a house sell for $120,000 in Deloraine,” says Liza Park, Economic Development Officer for the Town of Deloraine. “The number of vacant lots to build on is limited, so if the town wanted to develop a subdivision, we would have to look to the RM for land. We want to keep oil patch

workers in our town so that they continue to patronize our local businesses. We’ve been lucky to get some great people here. They attend community events and are very supportive of local fundraisers.” Oil companies working in the area have also given back to the community, donating money towards a new fire truck and a community rink. A new 24-hour room hotel has been built, the town has a new restaurant and the local Legion is busy serving meals to oilfield workers. Some full-time residents have left their previous positions to work with the oil industry, and farmers are benefitting by providing

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hauling services during their off-season. Independent of the pressures that come with growth in oil activity, town administrators are focused on the development of a new $2.5 million water plant that will replace the current facility. The province’s talk of amalgamating RMs is another distraction that makes it difficult to make long-term plans regarding the future growth and development of Deloraine. The northern stream of oil activity centres on the resource-rich Virden Field and the Town of Virden. In the RMs of Wallace, Sifton, Pipestone and Woodworth, there are 20 oil-producing companies and 24 oil field service and supply companies. Approximately half of those companies are located within the RM of Wallace, which surrounds Virden. The RM has close to 1,200 producing wells and receives some revenues from mineral rights. Eight years ago, the RM of Wallace installed a rural water pipeline system, which benefited the local agricultural and hog industries tremendously. The RM’s superb water supply was a valued asset that attracted businesses to locate to the area. While mostly surface water is used in oil production, the oil industry has access to this water and has tapped into the municipal water line. The local oil industry has benefited the RM by providing approximately 30 per cent of its population with employment and by contributing to the community’s infrastructure through philanthropic endeavours. The growing pains experienced to the south, however, also apply to the RM

of Wallace, which is in need of more housing and improved road maintenance. “We need to catch up with the infrastructure and are working to get ahead of the curve, but growth is a good challenge to have,” says Don Neufeld, Reeve of the RM of Wallace. “We have the land available and have had developers apply for subdivisions, but the province has a mandate as to what we can and can’t do. We’re trying to expedite approvals so that we can plan for development in a timely fashion.” In contrast, the RM of Pipestone, to the south, is quite literally giving land away – or is selling residential building lots for a mere $10. Successful applicants must put down $1,000, start a foundation within 90 days and complete the home’s construction 12 months after that. When conditions are met, purchasers receive $990 back from their initial down payment. The first two phases of the program include 24 lots in Reston and, this year, a 16-lot subdivision will be available in Cromer. Commercial real estate is also for sale for $16,000 to $20,000, and grants are available for both residential and commercial properties. “We have a smaller population than Virden and haven’t the same resources,” says Tanis Chalmers, Economic Development Officer for the RM of Pipestone. “The $10 lot program is our way of competing to grow our community. We want to benefit from the surrounding oil industry and see some jobs creators coming to the RM. The construction of residences is a longterm investment that will lead to greater commercial development.”

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In the RM of Archie, home ownership is even more attainable with that RM’s lot program that offers building lots for $1. The initiative was designed to help boost the RM’s population of only 330 and to attract oil field workers living in other communities, such as Virden. While oil-related companies have been invited to set up shop in McAuley and Manson, so far the RM has not seen an influx of people and businesses. “Drilling has been going on in Manson for the past few years now, and we’re just starting to see drilling near McAuley,” says Nicole Dyke, CAO for the RM of Archie. “Some of our roads that were built 50 to 70 years ago are not used to the big trucks and heavy hauls that you see now. These trucks are just passing through, but we have to maintain the roads.” The RM of Birtle is similarly just starting to feel the effects of the oil and gas industry. The RM’s key employers are potash mines, including the Rocanville Potash Mine, and the community has a strong agricultural industry. Current oil activity is in the southwest corner of the RM and includes exploratory drilling by only a few companies. “Other RMs are telling us, ‘learn from us, because you’re in the honeymoon phase right now, when companies are building their fields and have a bigger budget,’” says Charles Bertram, Councillor for the RM of Birtle. “I guess, when you get six companies working day after day, it’s more difficult to know who should be responsible when a road gets punched out. We’ve

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been very fortunate and have found the oil companies very good to work with.” Southeast in the RM of Glenwood, Souris is an attractive place to live and do business because of its close proximity to Brandon. “Taxes and prices are a bit lower here than in Brandon, so homes sell quickly,” says Sven Kreusch, Economic Development Officer for the Town of Souris and RM of Glenwood. “The effects of the oil industry are just starting to trickle in. There are a lot of new residential areas and we are trying to find new properties in town for commercial growth. We’re interested in

attracting new businesses, including those that can support the oil and gas industry.” According to Manitoba’s Department of Innovation Energy and Mines, there are 13 designated oil fields and 200 oil pools in southwestern Manitoba, with 6,450 producing wells, as of December 2012. While RMs welcome the economic spin-offs that benefit their communities, staying ahead of the growth is challenging. Common concerns include the need to fast-track residential development and to address the financial burden of maintaining roads and infrastructure.

“With the Holiday Tax, the province got oil and gas companies interested in this area, but the government didn’t come up with a strategy to maintain the infrastructure,” McMechan says. “RMs that act as a conduit sustain the damage to their roads, without any way to recapture that money. Oil companies are just as interested in coming up with an equitable solution. The province needs to create some structure that puts money back into the RMs. Improving the infrastructure will ultimately encourage more drilling.” u

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Oil Producing Municipalities of Manitoba Working Toward Long-Term Solutions to Vital Industry Issues By Debbie McMechan

anitoba has been home to the oil industry for a number of decades. The introduction of horizontal drilling technology and government incentives of the past few years have changed the face of the industry in our province. In 2011, municipalities with oil exploration and development formed the Oil Producing Municipalities of Manitoba for the purpose of addressing issues specifically related to the industry. The OPMM currently encompasses 18 municipalities in a geographic block in the southwest of the Manitoba.

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Although the member municipalities are in a contiguous block, impact and economic development can be seen in a number of differing ways. Some municipalities have older fields with primarily vertical wells, while others have very little production at this point but their roads serve as corridors for the movement of product and industrial materials such as sand and gravel. It is crucial to find means to address the needs of these member municipalities as well as the ones that are experiencing dramatic increases in development. The OPMM’s goal and objectives – defined primarily as the long-term pro-

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Manitoba Oil & Gas Review 2013

tection of our communities and our infrastructure – can only be achieved by forming strong partnerships and respectful relationships with industry and government. Universal among member municipalities is the desire to see the oil field grow and prosper, while developing infrastructure that services the new industry and encourages economic development. A crucial focus of our association is to lobby the provincial government to make investments in the highways and bridges in the area, as well as to develop municipal/provincial strategies for the renewal of upgrade of trunk roads. 2011 saw Manitobans facing a “one-in300-year flood”, and as such, rural municipalities and the provincial government devoted their energies to the pressing needs of flood control. However, by 2012 the executive began to organize meetings with the Department of Energy, Innovation and Mines to address concerns. In a July meeting, calling our issues “urgent”, Minister Dave Chomiak initiated a provincial working group encompassing various branches of government, industry and the Association of Manitoba Municipali-

The OPMM’s goal and objectives – defined primarily as the long-term protection of our communities and our infrastructure – can only be achieved by forming strong partnerships and respectful relationships with industry and government. ties (AMM), the creation of which is to establish tools for all stakeholders. November 2012 was the first meeting of this group, facilitated by the Petroleum Branch, Manitoba Infrastructure and Transport, Manitoba Local Government, representatives of the Canadian Association of Petroleum Producers and the Small Explorers and Producers Association of Canada. This initial meeting looked at the primary concerns of OPMM and a brief discussion was held on a variety of topics. In field meetings with industry contractors, the issue of permit harmonization across the Manitoba and Saskatchewan borders was discussed. Creating a flow of acceptable standards would create a system with increased user flexibility for the movement of heavy equipment and product throughout the year, especially during road bans. Crossing the provincial border has become a problematic issue for many companies that provide crucial support to the industry. The OPMM presented the information they had gathered from the government of Saskatchewan and look forward to seeing improvements in this area. The development of truck routes connecting municipalities has been a major focus of the association from its development, and along with that process has come the realization that not all infrastructure in the area is adequate to support the impact of oil exploration and development. We continue to work toward a collaborative effort with provincial government, rural municipalities and industrial users to prioritize roads where investment would be the most effective. The nature of today’s oil industry creates an ever increasing need for fresh water. Member municipalities have identified the use of fresh water resources as an area of serious concern. The availability of water suitable for the needs of industry, drilling, tracking and servicing varies

from area to area and the proper licensing and monitoring of that water is a critical component to environmental sustainability and industrial growth. OPMM members believe that close communication between government licensing departments and municipal governments can ensure the most responsible use of resources.

The OPMM can see a co-operative working environment developing that comprises the expertise of government, the experience and needs of rural municipalities, and the industry working toward long-term solutions that fuel Manitoba’s growth into a prosperous future. u

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Manitoba Again Ranked as Most Attractive Canadian Jurisdiction for Upstream Oil and Gas Investment By Dr. Gerry Angevine, Senior Fellow, Fraser Institute

etroleum explorers and developers participating in the Fraser Institute’s sixth annual Global Petroleum Survey in 2012 pointed to Manitoba as the most attractive Canadian jurisdiction for investment. Having been briefly overtaken by Saskatchewan (in 2011), this marks the third time in four years that Manitoba has come out on top. The 2012 Survey rankings reflect the responses received from 623 petroleum industry officers, managers and advisors pertaining to how a number of important factors impact investment in oil and gas exploration and development in jurisdictions with which they are familiar. Sufficient data was gathered to rate 147 countries, states, provinces, territories and offshore regions around the world. The 18 factors on which jurisdictions were judged include fiscal terms, taxation in general, the regulatory climate (including the uncertainty with regard to environmental regulation, the cost of compliance, duplication and inconsistency, and legal system fairness), trade barriers, quality of infrastructure, land claim disputes, labor availability, political stability, security of personnel and equipment, and corruption. Because the rankings are based on index values derived from the percentages of negative responses such as “a major deterrent to investment” or “would not invest”) received with regard to each of the various factors, jurisdictions with lower scores are regarding as the more attractive. Table 1 shows that the four western provinces ranked within the top five of

Manitoba Oil & Gas Review 2013

Canada’s seven significant oil- and gasproducing jurisdictions in 2012 – the best overall performance of any of the past four years. The fact that each of the four western provinces achieved significantly lower (and therefore better) scores on the survey in 2012 than previously is an indication that barriers to investment have been toppling to some extent, especially in Alberta and British Columbia, where they’ve been of most concern in recent years.

which shape the commercial environment such as fiscal terms but, more importantly, to an improved regulatory climate. In particular, respondents expressed less concern than a year earlier regarding uncertainty pertaining to regulatory administration and enforcement (including environmental regulation), the cost of regulatory compliance and regulatory duplication and inconsistency. British Columbia also achieved a much-

Table 1 Survey Results for Selected Canadian Jurisdictions Index Values and Canadian Rankings (of 7) Manitoba Saskatchewan Alberta Nova Scotia British Columbia Newfoundland & Labrador Northwest Territories

2012

2011

2010

20 09

11.1 (1)

17.5 (2)

12.5 (1)

20.1 (1)

14.6 (2)

17.5 (1)

17.6 (2)

25.1 (2)

21.1 (3)

32.7 (5)

37.7 (6)

47.5 (6)

26.2 (4)

26.6 (3)

33.3 (5)

30.4 (3)

27.7 (5)

41.4 (6)

33.2 (4)

37.7 (4)

33.8 (6)

32.3 (4)

32.4 (3)

40.1 (5)

39.6 (7)

64.8 (7)

44.1 (7)

62.8 (7)

While second-place Saskatchewan outperformed Manitoba with regard to some of the important investment drivers addressed in the survey such as fiscal terms, Manitoba’s improved scores on questions pertaining to taxation in general, the cost of regulatory compliance, uncertainty over environmental regulation, and infrastructure quality propelled the province to the top of the Canadian rankings. Alberta moved up to third spot in Canada from fifth. That province’s improved performance is attributable to modest improvement with regard to a number of factors

improved score this year compared with 2011 and moved up to fifth place in Canada from sixth place as a result. B.C.’s improved assessment is due in part to stronger performance on the taxation in general parameter question. (The reason for this is unclear but it could reflect the provincial government’s decision to abandon harmonization of the provincial sales tax with the federal GST.) In addition, British Columbia achieved improved scores on a number of issues including fiscal terms, regulatory uncertainty, the cost of regulatory compliance, labor availability, and disputed land claims.

As Table 2 illustrates, the improved scores allowed each of the western provinces except Saskatchewan to move up in the global rankings – indicating improvements in their relative attractiveness for investment in oil and gas exploration and development compared with other jurisdictions around the world. Furthermore, Manitoba, Alberta and British Columbia each attained higher global rankings than at any point during the 2009-2012 period. The improvements indicated by the

30 positions to reach rankings of 21st and 39th (of 147) respectively. While Saskatchewan’s ranking didn’t improve, the province continues to rank very high on the global scale and, like Manitoba, achieved an enviable first quintile (0 to 19.9) index value for the third successive year. Because not many jurisdictions have index values in that category, this means that the survey participants viewed only a relatively small number to be more attractive for upstream petroleum investment than those two

Table 2 How the Western Provinces Ranked Worldwide Manitoba Saskatchewan Alberta British Columbia

2012

2011

2010

2009

(of 147)

(of 135)

(of 133)

(of 140)

2012 survey results were most remarkable in the case of Alberta and British Columbia, each of which climbed a full

provinces. Alberta, with an index value of 21.1 was very close to being among the prestigious group of first quintile perform-

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ers while, as indicated, British Columbia also made significant gains. As a group, Canada’s westernmost provinces now appear as preferred locations for investment in petroleum exploration and development. While some challenges remain, as with the cost of regulatory compliance and land claims disputes, especially in British Columbia, considerable improvement is indicted by the results of the 2012 survey. Globally, Manitoba shone as the 5th most attractive of 147 states, provinces, offshore regions and countries for petroleum investment on the basis of survey participants’ scoring of the 18 factors impacting investment decisions. This compares with the province’s 12th place ranking (of 135 jurisdictions worldwide) in 2011, 8th place (of 133) in 2010, and 21st place performance in 2009. Manitoba’s improved global standing in recent years is due to several factors. In 2012 the “taxation in general” factor (i.e. corporate and personal income taxes and sales taxes) and the “quality of infrastruc-

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ture” questions were seen as posing lower barriers to upstream investment than in any of the previous three years. In fact, in Manitoba, five US states (including Texas and Oklahoma) and three European countries, infrastructure quality issues (such as access to transportation services) were of virtually no concern to investors in the 2012 survey. Combined with low percentages of negative responses with regard to the fiscal terms and labor availability factors, this resulted in Manitoba’s ranking according to the Commercial Environment Index improving to 4th place globally compared with 24th place in 2011, 5th position in 2010, and 24th place in 2009. At the same time, improved scores on the uncertainty of environmental regulation

and cost of regulatory compliance questions than in 2009, 2010 and 2011 resulted in the province’s Regulatory Climate Index ranking improving to 6th place globally compared with 8th place in 2010 and again in 2011, and 35th place in 2009. Land claim disputes continue to be the most significant obstacle to petroleum exploration and development in Manitoba. However, this issue is not as much of a problem for investors as in a number of other Canadian jurisdictions including Quebec, New Brunswick, British Columbia, and, especially, the Northwest Territories and Yukon. According to the 2012 survey participants, land claim disputes were of greater concern in Bolivia, the NWT and the Yukon than in any of the

other 144 jurisdictions that were assessed. Looking ahead, Manitoba will undoubtedly be challenged to maintain its position as the most attractive Canadian jurisdiction for upstream petroleum investment. In particular, the province will need to monitor how its fiscal regime and taxation levels compare with the other western provinces, US states and other jurisdictions with which it must compete for investment and make adjustments if necessary. Manitoba must also ensure that its regulatory climate continues to be attractive for investment and strive to reduce the barrier to investment posed by land claim disputes.

The Fraser Institute is a non-profit research and education organization. The full 2012 Global Petroleum Survey report may be downloaded free of charge at: http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/global-petroleum-survey-2012.pdf. The results of the 2013 Survey (currently in progress) are expected to be available in August or September. u

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Yes!Winnipeg Looking to the Oil Industry

es! Winnipeg, Winnipeg’s Business Development team, is focused on creating new jobs and investment in the Winnipeg region. They do that by attracting non-Manitoba companies to set up operations here, and assisting local companies and entrepreneurs to launch expansions and new companies here. Yes! Winnipeg has obtained a list of the leading companies supplying products and services to the oil patch of southwest Mani-

toba, the Williston Basin and the broader Bakken reserve. “We recently commenced to proactively reach out to those companies via introductory letters/emails and follow-up by phone to remind them that we are the largest major metro center in closest proximity to the oil patch and to ask if they would consider setting up manufacturing/assembly or distribution centre operations here to serve the oil patch,” says Leader Bill Morrissey. “We have had some preliminary conversations.” u

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Tight and Shale Oil Plays in the Western Canadian Sedimentary Basin Courtesy of the Canadian Energy Research Institute This article originally printed in the October 2012 issue of CERI Commodity Report â&#x20AC;&#x201C; Crude Oil

henever shale oil is mentioned, most think of the US shale oil plays and their unprecedented production growth in the last five years. Some energy agencies are predicting future US oil supply will outstrip oil production of Saudi Arabia and the US will become energy-independent.1 When it comes to shale and tight oil formations in the Western Canadian Sedimentary Basin (WCSB), they are spoken about less frequently. It is no secret that low natural gas prices are driving producers away from pure gas plays in the WCSB toward the more lucrative oil and liquids plays and, more specifically, to tight oil. The National Energy Board (NEB) notes tight oil production in Canada started in the Saskatchewan and Manitoba Bakken play in 2005 but by 2010 Alberta led all provinces because of activity in the formations such as Cardium (see Figure 1). The type of oil drilling in Western Canada has also changed. In 2005, about 28 per cent of oildirected wells were horizontal. By early 2011, this had increased to close to 80 per cent; over the same time period, horizontal rigs targeting tight oil went up from 10 rigs to 140. The NEB cautions it is still too early to confidently estimate the ultimate impact of exploiting tight and shale oil plays in western Canada.2 Tight and shale oil have the potential to add significant light crude oil production that had not been anticipated. While this article will cover five key plays where activity is starting to pick up, there is increasing interest in other plays that could emerge as important sources of new exploration and production. The new oil supply from these and other plays will impact transportation requirements to move WCSB oil production to market. CERI will continue to monitor WCSB tight oil developments along with other emerging trends.

FIGURE 1: Oil Production by Play

Source: NEB.

FIGURE 2: Bakken Stratigraphy

Source: Saskatchewan Ministry of Energy and Resources

The Alberta Bakken When the Bakken is mentioned, most think of southeastern Saskatchewan and North Dakota in the US. But straddling the international border in southern Alberta, the Alberta Bakken may be just as big. Geologically similar to its eastern counterpart, itâ&#x20AC;&#x2122;s a Devonian shale light oil play that extends from southern Alberta Manitoba Oil & Gas Review 2013

FIGURE 3: Bakken, Three Forks, and Torquay Tight Oil Production

Source: NEB

FIGURE 4: Montney Deposits

Source: NEB

into Montana, measuring over 160 kilometres north to south and around 50 kilometres across.3 While widespread, the Bakken formation is not prospective across the entire formation as reservoir conditions vary widely. Bakken reservoirs in Alberta are generally deep, high-pressure and oil-prolific. Wood Mackenzie, Ltd., an energy consulting firm, estimated the resource potential of the Alberta Bakken at 2.6 billion barrels in late 2011.4 As Figure 3 shows, the production out of Bakken and related units had increased substantially, going up by almost 80,000 barrels per day (Mbpd) in 2011. Within the Bakken play, the new supply indicates production levels of above 60 Mbpd. One of the companies currently exploring this play is DeeThree Exploration Ltd. The company started in this play in early 2011 and wasn’t too successful until it moved its search to its eastern block, where a much thicker part of upper Bakken was discovered to be full of oil. In 2011, analysts estimated drilling in the Alberta Bakken would be targeting 35-42 degree API oil at depths ranging from 1,500 to 2,400 metres. But DeeThree’s wells have been shallower – at around 1,250 metres – and its discovered oil is closer to 30 degree API, with very low gas-to-oil ratios (GORs).

Montney Oil

FIGURE 5: Montney/Doig Tight Oil Production

Source: NEB

FIGURE 6: Schematic of Viking Formation Stratigraphy

Manitoba Oil & Gas Review 2013

Source: NEB

Montney too has been mentioned for the past half-decade or so, especially when it comes to shale gas in British Columbia. But its oil-prone side, primarily in western Alberta, is gaining momentum. The Triassic Montney and Doig Formations were deposited in western Alberta and northeast British Columbia approximately 240 million years ago (see Figure 4). The Triassic Montney formation consists generally of shallow-water sands in the east and deep-water muds to the west. They’ve been exploited for decades, but with the introduction of horizontal multistage fracking, the deepwater mudstones became attractive for shale gas. Now, more explorers are moving into the less mature mudstones seeking oil. The exploration and development for tight oil in the Montney/Doig play had picked up in 2009 when production rose sharply from under 1 Mbpd in 2009 to 6 Mbpd in 2011 (see Figure 5). Some companies got in early. One company, Trilogy Energy Corp., claims they have acquired the best part of the pool. Trilogy is planning on spending about $125 million in the Montney this year. Reservoir depth is about 1,800 metres and Trilogy’s wells go out about 1,600 metres on the horizontal with around 22 fracs each. Open Range Energy Corp., recently acquired by Peyto Exploration & Development Corp., has been getting good rates in the Montney oil play as well. The company has been drilling its wells to around 2,400 metres with horizontal legs up to 1,400 metres, with 17 fracs on its last well.

Alberta Viking

FIGURE 7: Viking Tight Oil Production Source: NEB The Viking Formation is understood to be a coastal system that was deposited during the Lower Cretaceous (about 100 million years ago) in a similar manner to the Cardium Formation. The sea level periodically fell and caused deposition of shoreline sands on what was the sea floor, creating what would become conventional sandstone oil reservoirs (Figure 6). Like the Cardium, muddy sandstones of the sea floor surrounding existing oil pools are new targets. The Viking is shallower in many places, generally less than 800 metres in the Dodsland and Redwater areas, which means drilling costs can be reduced, but can also present challenges to horizontal drilling. So FIGURE 8: Duvernay Shale Deposits Source: NEB far, companies have reported about 58 million barrels of proved and probable reserves in the Viking.5 In Alberta, the Viking stretches from the Alberta-Saskatchewan border south of Lloydminster, around Provost, roughly northwest to Redwater. From central Alberta, it grows thinner and more “shale-y”, to almost entirely silty shale around Redwater. Activity is concentrated in three main regions: greater Dodsland in west-central Saskatchewan, and Halkirk-Provost and Redwater in Alberta. According to the NEB, total Viking production rose to 16 Mbpd mid-2011, of which Alberta Viking oil production was just under 6 Mbpd. Several companies are exploring this area. In the Halkirk-Provost region Crescent Point Energy Corp., Charger Energy Corp., Muirfield Resources Ltd., and Equal Energy Ltd. are dominating the scene. The leading producers at Redwater are WestFire Energy Ltd., Baytex Energy Corp., Tamarack Valley Energy Ltd., and Husky Energy Inc. (Figure 8). The Duvernay has long been known as the organic Wells in the play are mostly shallow, averaging between 700 rich source rock for the oil and gas in the Leduc reefs surrounding and 900 metres in vertical depth. And horizontal sections are it. It’s what started the development of Alberta’s oil and gas indusrelatively shallow, between 600 and 800 metres long, although try in 1947. there have been a few long laterals reaching 1,200-1,400 metres. The Muskwa Shale is already being exploited for natural gas in Because the Viking is shallow, short horizontals are more comthe Horn River Basin of northeast British Columbia as shale gas. mon in order to keep costs low. The Halkirk-Provost region sees In Alberta, bituminous (organic-rich) shales of the Duvernay and a mix of both. Initial production rates range from 70 to 100 barMuskwa are gaining interest, not just for shale gas, but also for oil. rels per day at Redwater, to over 100-150 barrels per day on some In particular, it appears that, in many areas toward the east and of the Halkirk-Provost properties. southeast the formation is oilier, or at least the gas is “wet”. Another indication of increased activity in the area are the Costs for Duvernay wells are on the high end compared with mergers and acquisitions among Viking-focused players, includsome other shale plays. Trilogy Energy Corp. had experienced an ing deals involving Whitecap Resources Inc. and Compass Petroaverage well cost somewhere between $11 and $12 million ($6 leum Ltd.; Crescent Point Energy Corp. and Cutpick Energy Inc.; million for the drill and $5-$6 million for the completion). Triland the pending acquisition of WestFire Energy Ltd. by Guide ogy has budgeted $40 million for Duvernay in 2012 in hopes to Exploration Ltd. develop commercial production while trying to control costs.

Duvernay Shale Liquids

The Duvernay and Muskwa Shales make up the same formation, but are named differently in different areas. The shale is called the Duvernay in central Alberta and called the Muskwa in northwest Alberta and northeast British Columbia. The shale was deposited in marine basins between tall reefs and a large, shallow water carbonate platform that grew in the mid-Devonian

Lower Amaranth Formation (Manitoba) Often termed the Manitoba Spearfish, this play is actually the Lower Amaranth formation in the southwestern corner of Manitoba. Across the US border in North Dakota, it is called the Spearfish. The Lower Amaranth in Manitoba is a section of sandstone and siltstone deposited on top of a widespread erosional surface Manitoba Oil & Gas Review 2013

FIGURE 9: Schematic of Lower Amaranth (Spearfish) Stratigraphy Source: NEB

FIGURE 10: Lower Amaranth Tight Oil Production

Source: NEB

that formed during worldwide low sea levels at the beginning of the Triassic (see Figure 9). Oil migrated into the Spearfish from underlying oil-rich formations where they overlap at the erosional surface. Until the advent of horizontal multistage fracking, the play was only marginally economic. Now producers like its shallow, low-permeability sandstone, which yields sweet, light oil. It is expected to account for about 30 per cent of Manitoba’s oil production this year. With approximately 250 wells, the production in Lower Amaranth reached 14 Mbpd in mid-2011 (Figure 10). The Legacy Oil & Gas Inc. is active in the Spearfish on both sides of the border and drilled its first well in early 2011. Another company, EOG Resources Inc., had been highly successful – in 2008 initial production rates on their wells were reported at 150-200 barrels per day.

Endnotes IEA, “Medium-term Oil Market Report”. 2012

1 2

NEB, “Tight Oil Developments in the Western Canada Sedimentary Basin”. Energy Briefing Note. December 2011. 3 An estimate because it’s still being delineated. 4 Oilweek, “The Hot, Hot West”. October 2012. 5 NEB, “Tight Oil Developments in the Western Canada Sedimentary Basin”. Energy Briefing Note. December 2011. u

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Brandon –

Embracing the Oil Industry

By Sandy Trudel, Director of Economic Development

il drilling and production are driving significant growth throughout Brandon’s economy. Local consulting firms, contractors, manufacturers and trucking firms regularly service the nearby oil industry. Brandon benefits from many positive locational factors including: • Excellent transportation infrastructure

for both east-west and north-south movement of raw materials in and finished product out including trucking/ logistics companies, the Trans-Canada Highway, both national railways and excellent regional trunk highways • Ample supplies of very affordable electricity, natural gas, water and other inputs

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Manitoba Oil & Gas Review 2013

• Available serviced industrial land • Ample wastewater treatment capacity • A reliable skilled and semi-skilled workforce Located an hour’s drive from the Bakken Field, Brandon’s proximity to southwest Manitoba oil fields makes us close enough to be home. The business community is eagerly embracing the opportunities presented by the nearby oil activity and welcomes the chance to grow with the oil sector. Trican Well Service, Interra Energy, Evolve Surface Strategies, Apex Distribution and Hydrodig recognized Brandon’s locational advantages and have established offices in the city. The record levels of production in southwest MB provide continues to create opportunity for the entire region. From its earliest inception, Brandon was and today remains the education, health,

CLOSe enOugH TO Be HOme Highly diversified industrial and commercial business sectors Consistently ranked in the Top 10 Best Places to Live in Canada A large, dedicated, and skilled labour force Serviced industrial lots available Overall business cost competitiveness consistently ranked in Top 10 Birdtail (135) Manson (125) Kirkella (120)

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Distances from Brandon, MB

Oilfield Location (km)

Virden (80)

Souris Hartney (70) Regent (80)

Tilston (145)

Pierson (160)

Waskada (140)

Whitewater (95) Mountainside (100) Lulu Lake (105)

retail, service and entertainment centre for the southwest Manitoba region’s 180,000 inhabitants and an important contributor to the Manitoba economy. Brandon’s diverse economic base has enabled the city to carve out a long standing reputation as a city that offers both a stable economy and room and opportunity for businesses to compete profitably in the global marketplace. The strength of our economic diversity was clearly demonstrated recently, as we recorded growth in many sectors amidst a global recession. As Manitoba’s second largest city and the only Canadian city with a population less than 50,000 with a university, community college and an Emergency Services college, Brandon boasts amenities, services, educational and employment opportunities generally found in much larger centres. Not only does Brandon offer close proximity to oil patch activity, it provides the quality of life elements that ensure a stable and content labour force. As a medical referral centre for Southwestern Manitoba, the medical services available in Brandon are extensive. For non-teaching hospitals in Manitoba, Brandon Regional Health Center offers the widest range of specialized services. A low crime rate, a variety of housing choices, educational excellence, and abundant recreation and cultural opportunities create an enviable quality of life for our

residents. Brandon is consistently ranked in the top 10 as one of the best places to live in Canada, and #1 in Western Canada. Recent rankings from Western Investors as one of the top 10 western Canada communities for investors, and the Canadian Federation of Independent Business and Financial Post’s positioning Brandon as 37th out of 100 top entrepreneurial cities, confirm Brandon offers two key business success factors, positive business climate and quality of life for its residents. 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 racquet ball and squash courts, an outdoor and indoor running track and numerous indoor and outdoor swimming pools including a waterslide and an Olympic-sized pool are readily available in the city. For those that are a little more adventurous, there are a variety of other challenging recreational opportunities offered in Brandon, including flying lessons, parachute jumping and rock climbing. With the Assiniboine River winding 17 kilometres through the heart of Brandon and 40 kilometres of paved walking and hiking trails the city is an oasis for out-

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Manitoba Oil & Gas Review 2013

door enthusiasts. Hiking and cycling are extremely popular in Brandon and the nearby Brandon Hills. Brandon offers a nice mix of manmade and natural scenic trails perfect for walking, hiking, biking, rollerblading, horseback riding, skiing and snowshoeing. The city is home to diverse art and cultural offerings, featuring visual exhibits, drama and musical performances in a variety of genres. A diverse offering of concerts and performances are available at the Western Manitoba Centennial Auditorium. The Art Gallery of Southwestern Manitoba features national and international exhibitions and works by regional artists and is home to a comprehensive art school facility. Their ceramic facility is unmatched by any art gallery in Canada with many people using the ceramic facility as a studio for their own hobby or art practice. wAt the end of the day, one of Brandon’s greatest assets is the balance between profit and personal reward. Additional information on Brandon can be found at www.economicdevelopmentbrandon.com or www.tourism.brandon.com. u

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Crude by Rail:

New Manitoba Transload Terminal Offers Market Advantage to Crude Oil Producers By Jillian Mitchell

oday, industry estimates as much as four per cent of total Canadian crude is being shipped via rail – and more than $1 billion has been invested in expanding rail infrastructure. Subsequently, as the stats suggest, this stopgap method is a favoured solution to the current pipeline restrictions. In similar fashion, a partnership between the Canadian National Railway Company (TSX: CNR) (NYSE:CNI) and Tundra Energy Marketing Limited will offer oil producers additional relief from the restricted North American pipeline capacity. The joint-venture involves the

construction of a new crude-oil rail car loading terminal near Cromer, Manitoba. The site, which will cater to Bakken oil producers in Manitoba and Saskatchewan, will assist in transporting crude out of Western Canada and into U.S. refineries in the East and on the Gulf Coast. The new terminal is expected to provide a market advantage to crude oil producers and shippers, alike – as much as a sixfold increase in existing Manitoba capacity. Initial start-up is planned in the late second quarter of 2013, and the loading rate will ramp up to over 30,000 barrels of crude oil in the fourth quarter – the

equivalent of approximately 50 tank cars per day worth. As an added perk, a supplementary 410,000 barrels of storage is available nearby. Crude oil by rail is one of the railway’s fastest-growing businesses, confirms CN executive vice-president and chief marketing officer Jean-Jacques Ruest. In fact, industry anticipates that the number of crude tank cars expected to be delivered by the end of 2014 will be enough to move two million barrels of oil per day – a major increase for a company that only began testing the movement of crude by rail in 2010.

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Manitoba Oil & Gas Review 2013

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In fact, industry anticipates that the number of crude tank cars expected to be delivered by the end of 2014 will be enough to move two million barrels of oil per day – a major increase for a company that only began testing the movement of crude by rail in 2010. “We are pleased to be a key supply chain a later date. Currently, there is a portable tion over the last few years, specifically enabler for Tundra Energy Marketing. CN transloading unit in Woodnorth, three through new drilling technology. Right will help Tundra’s customers reach mar- miles east of the Cromer facility, but the now, there is a large incentive to move kets with good net-backs for their crude,” Cromer site will be the first greenfield crude oil via railcars. Railing crude is Ruest says. “And further growth will be facility for loading crude oil in Manitoba not cheap, but there is such a large differinto tank cars and the first to have contract part of the story.” ence in pricing between the two markets The Cromer transload terminal is ex- storage available at the terminal. pandable, he adds, with the potential to “I think the industry itself has been sur- (North Atlantic and Mid Continent) that handle complete crude oil unit trains of prised by the increase in crude oil produc- it is economical, at the present time.” u more than 100 cars – each train carrying approximately 60,000 barrels per day of crude oil – which Ruest believes will generate “greater efficiencies and market reach for Canadian crude oil.” Tundra Energy is equally pleased with their latest joint endeavour with CN, shares Dale Clark, spokesperson for Tundra Energy Marketing Ltd. “We believe that there’s an opportunity to achieve higher net-backs for our crude oil by shifting into non-traditional markets, and CN sees a great opportunity to increase their freight movements.” In this rural Manitoba area, there is not currently contractual commercial tankage Magazine Add.plt 08/01/2013 1:23:53 PM Scale: 1:0.59 Height: 2.135 Length: 4.635 in available. However, with the construction Site Development (Underground & Surface Construction) of the Cromer terminal, there is will be the Infrastructure Development (Bridges, Roads, Culverts) opportunity to store barrels if pipeline operational problems occur – or if the indusSurveying, Project & Construction Management try goes into Contango . Equipment Rental (Fleet of Heavy Equipment) “Our facility is connected into the EnMHCA bridge mainline system, as well as other Unit 5-1595 Brookside Blvd., Winnipeg, MB R2R 1V6 ™ producers, so we can store barrels for a few Ph: 204.942.1516 | tri-core@tri-core.ca months and bring the barrels back in at a www.tri-core.ca later date. As well, we hope the rail facility operates very smoothly, but we know that it’s not always going to be the case. Having storage allows us to store the oil – the alternative being to push crude back to the wellhead which causes shut-in of crude oil,” Clark says, noting that storage is not restricted to Tundra Energy, and other parties are also welcome. The project began August 2012 with the construction of three tank bases – each 205,000 barrels in size. At this time, however, construction will continue with two tanks; the third tank will be completed at Certificate of Recognition

COR

Manitoba Oil & Gas Review 2013

Virden Continues Growing to Meet the Industry’s Needs

hile Virden’s economy is diversified and includes agriculture and chemical manufacturing, almost all of Virden’s exponential growth in the last three years has been due to the oil sector. While much of the current oilfield growth is just to the west and south of Virden, the community still exerts its dominance in the region as the primary oil service centre by providing the services, human resources and facilities that this type of growth demands. New exploration targets to the north and west will also increase oilfield activity in the community in the coming years, and the steady redevelopment of the existing oilfields surrounding Virden will only add to this growth.

Much of Virden’s position as a regional center for oil exploration and servicing is in large part due to the trained human resource capability that exists in Virden and surrounding area. In addition, the town’s location on both the Trans-Canada Highway and mainline CPR rail system, as well as secondary highways heading north and south, allows for the ease of movement of goods, services and personnel rapidly throughout the whole region. A recent trend in the last few years that speaks to the confidence in the continued growth of the local oilfield sector in western Manitoba is the buyout of small to medium oil-producing companies and oilfield service companies by larger national and multi-national firms. The Bakken

zone continues to play a key role in this growth in the Virden area but other zones are being explored and or re-developed as exploration for new reserves continues to grow. Along with the development of producing oil wells goes the development of oil batteries, flow lines and pipelines. Enbridge Pipelines is a major employer in Virden and area and continues to expand their oil pipeline facilities at Cromer. A relatively new feature is the construction and growing use of oil transloading facilities on rail lines. Complementary growth has also been seen in new housing starts, the transportation sector, and oilfield servicing, as well as in the food and accommodations sec-

Manitoba’s Oil Capital

Industrial Lots New Residential Subdivisions Unique Heritage Buildings and Districts Local and Regional Recreational Opportunities

www.virden.ca | 204-748-2440 | email: info@virden.ca 44

Manitoba Oil & Gas Review 2013

Along with the growth in oilfield development, complementary growth has also been seen in new housing starts, the transportation sector, and oilfield servicing, as well as in the food and accommodations sectors. tors. The chart on the following page de-

existing companies that have grown be-

kota to the Enbridge pipeline depot at

picts the exponential growth of building

yond their current location’s capacity.

Cromer and to various rail transloading

permit values in Virden from 2002 to the

One of the new industrial park resi-

facilities in Manitoba and Saskatchewan.

end of 2012. With several large potential

dents is Terroco Oilfield Services. Asked

A spokesperson for Paul’s Hauling indi-

projects on the horizon, it is expected that

why they chose Virden, Jim Longney, Dis-

cated that they expect to add an additional

this trend will continue for the next sev-

trict Manager for Terroco, stated that they

five truck units in the very near future,

eral years.

choose Virden “because it was centrally

bringing their total number of trucks on

Over 50 per cent of the available land in

located to the current activity in the Mani-

the road to 31.

Virden’s airport industrial park has been

toba oil patch and because of the range of

GCS Oilfield Services of Red Deer, Al-

sold within the last year. New tenants

services that the community provides to

berta recently established a new office and

include transportation, environmental,

support their operations and employees.”

construction equipment depot in Virden.

technology and oilfield service companies.

Paul’s Hauling also is located in the In-

Locally, GCS has 35 pieces of heavy equip-

They include a mixture of new companies

dustrial Park and has a fleet of 26 semi-

ment but corporate wide they have access

coming to the region and the expansion of

trailer tankers running from North Da-

to over 350 pieces of heavy equipment. In

Virden Head Office 204-748-3944 We cover Liabilities & Property/Equipment for Oilfield related exposures such as:

Reston 204-877-3541

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Jim Lee

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2012, GCS employed 30 people out of the

companies continue to be major tenants in

Virden office and peaked at 80 employees

the local motels, as they shift people in and

in the region. When asked why they chose

out of Virden while operating 24 hours a

Virden, Jim Moser, District Manager of

day.

GCS indicated that “Virden was centrally

There also continues to be strong inter-

located for their operations in Manitoba

est in constructing more motel accommo-

and southeast Saskatchewan and the area

dations due to oilfield demand and due

had a large volume of oilfield activity.”

to Virden’s location on the Trans-Canada

With the construction of a new Com-

Highway. With a population of over 3,100

fort Inn in 2011, an additional 60 rooms

people, it’s the largest service centre in

was added to the local accommodation

Manitoba’s producing oilfield region. Ed

inventory, bringing the total to 185 rooms.

Brethour, the Town of Virden’s Economic

Large oilfield exploration and service

Development Manager, states: “I antici-

pate that at least one new motel development will be announced this coming year.” Virden’s housing market continues to remain tight, particularly in the area of rental accommodations. Residential lot demand is also very strong. Due to the filling of the town’s Kenderdine Subdivision in 2011 and a rapidly diminishing inventory of serviced lots in privately owned subdivisions, several new subdivisions are in the planning stages for 2013. These include single-family dwellings, mobile/ modular home subdivisions, condominium developments and rental unit developments. 2013 is expected to be a very busy year in subdivision and housing development. For further information about available lots in the industrial park (or other development enquiries in general), contact Virden’s Economic Development Manager, Ed Brethour, at 204-748-2440 or at Virden_edm@mymts.net. u

Manitoba Oil & Gas Review 2013

WESTMAN WELLSITE SERVICES Box 66 • Melita, MB • R0M 1L0

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Resettable Frac Isolation on Coiled Tubing Speeds Multistage Completions By Eric G. Schmelzl, P. Eng, NCS Energy Services

ultistage Unlimited™ technology developed by NCS Energy Services combines a coiled tubing-deployed frac-isolation assembly with either proprietary Grip/Shift™ sliding sleeves or sand-jet perforating to deliver single-trip multistage completions more efficiently than any other method. The system is fully compatible with today’s coiled tubing units and has been used in thousands of vertical and horizontal wells in unconventional and conventional plays around the world.

Why coiled tubing? Plug & perf and packer & ball-sleeve completion methods bullhead fracs and fluids down the casing, with no feedback about formation response at the frac zone, no recourse in the event of a screenout and no way to manage water or chemical consumption. Both methods also require extensive post-stimulation work to achieve an unrestricted, full-ID wellbore. Using

coiled tubing as a work string/dead string and as a circulation path to the frac zone overcomes these limitations.

Fast frac isolation, mechanical sleeve shift The coiled tubing running string enables the use of the resettable frac plug and mechanically shifted Grip/Shift sleeves. At each frac stage, the resettable frac plug isolates the target zone and shifts the sleeve open. This highly efficient combination eliminates the need for pump-down plugs, perforating, drop-balls, and restrictive ball seats.

Circulation path to the frac zone Circulation capability throughout the completion operation delivers four important benefits: • It is a means to monitor real-time, bottom-hole treating pressure for frac analysis. • It provides a way to reduce water and chemical requirements.

Frac ports sealed

Resettable frac plug seals and grips inner barrel

• It provides quick recovery from screenouts by reverse-circulating excess sand out of the well. • It enables the use of sand-jet perforating to add stages in blank casing, without tripping out of the hole.

Grip/Shift sliding sleeves Grip/Shift sleeves eliminate the problems and limitations associated with ordinary sliding sleeves while delivering all the benefits of precise frac location and control and a nonstop frac operation. With their unrestricted ID, Grip/Shift sleeves permit normal cementing operations, so you get all the advantages of a fully cemented completion string, including remediation flexibility. And they do not impede production or future well intervention. Grip/Shift sleeves are built to match the host casing and are shipped with an upper handling pup joint and conventional pin-down/box-up configuration for easy handling and make-up at the rig. Sleeve locator latched in sleeve recess

Before shifting

Frac ports open

Inner barrel shifted

Locator recess closed, locator keys disengaged

After shifting

Illustration A: Typical sleeve completion sequence. Completions begin at the toe of the well, with the frac-isolation assembly positioned below the sliding sleeve. As the isolation assembly is pulled upward, the sleeve locator keys snap into a recess at the bottom of the sliding sleeve.

Manitoba Oil & Gas Review 2013

Illustration B: A complete Multistage Unlimited sleeve frac stage, including moving the isolation assembly to the next stage and shifting the sleeve open.

Unique resettable frac plug The resettable frac plug has three functions: isolate the frac zone from the hole below, grip the sliding sleeves for shifting, and anchor the isolation assembly during frac pumping or sand-jet perforating. It incorporates an automatic J-slot mechanism that sets, releases, and resets the tool with straight up/down coiled tubing motion. The frac plugâ&#x20AC;&#x2122;s construction, clearances, and self-flushing design make it extremely sand-friendly and compatible with frac operations. It has been used to isolate more than 37,000 stages and has been cycled more than 40 times during a one-trip completion operation. An integral equalization valve facilitates releasing the frac plug.

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PUMPING UNITS

Sand-jet perforating sub Sand-jet perforating is used to add stages in blank casing without tripping out of the hole. It is also used in lieu of sliding sleeves when completion economics dictate or when the well is already cased.

Sleeve locator The robust, one-piece mechanical sleeve locator has a special profile that matches a recess at the bottom of the Grip/Shift sleeves. As the frac-isolation assembly is pulled up through the sleeve, the fingers snap into the recess. The instant increase in coiled tubing weight is positive surface indication that the assembly is properly positioned inside the sleeve.

Decompression sub A flow path is required at the toe of the casing to relieve the pressure when the first sleeve is shifted. The optional decompression sub is made up below the sleeve locator. This sealed atmospheric-pressure chamber has a burst disc exposed to the coiled tubing annulus. When the frac plug moves downward, fluid compression ruptures the disc, and the displaced fluid flows into the empty chamber in a virtually instantaneous operation. u

http://grimessales.com Manitoba Oil & Gas Review 2013

Oil Patch Contractors

Be Wary!

Courtesy of Stino Scaletta, CA MNP LLP

t is more common for independent contractors to use a corporate structure to do work in the oil patch due to oil & gas companies wanting to pass on some of the risks related to

their operations to independent contractors. The benefits to them include staffing flexibilities: layoffs, reduced severance payments and WCB reductions. While these risks are transferred to the independent contractor, the corporate structure they operate under ends up providing them with benefits too, including creditor protection and limited liability, as well as reduced income tax rates. Through a corporate structure, for example, the first $400K of income earned by an independent contractor will be taxed at 11 per cent in Manitoba and the first $500K of income in Saskatchewan will be taxed at 13 per cent. A tax deferral is achieved when the after tax earnings are kept in the corporation and distributed later to the shareholder via dividends.

Changes to PSB tax rates On October 31, 2011, the federal government released proposed legislation which may impact how independent contractors are taxed, if they operate under a corporate structure and are classified to be a Personal Service Business (PSB). Although the PSB rules have been part of the tax law for some time, the implications of being classified as a PSB has been altered. In simple terms, a PSB is a corporate employee and the affiliation between the independent contractor and the oil company is one that mirrors an employer – employee relationship. Being classified as a PSB means corporate income to your PSB is not taxed at 11 per cent or 13 per cent but at 28 per cent and the PSB expenditures are limited to what an employee can deduct. Deductions include meals, travel and your wage, with all other expenditures deemed non-deductible.

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There are no hard and fast rules to determine if the PSB classification applies to an independent contractor and will depend on specific fact patterns. The Canada Revenue Agency (CRA) uses an analysis of the following four criteria: • Control – how much control does the independent contractor have over the work? An employee would have little control, while an independent subcontractor would have more control. • Chance of profit – if a mistake happens on the job, is the independent contractor on the hook for making it right? An employee may be reprimanded but should not be out of pocket for the mistake. • Ownership of tools – does the company provide tools for the job? Independent contractors would provide their own tools while an employer would supply the employee with tools. • Integration – employees are integrated into the operations of their employers such as being part of the pension plan or having company issued uniforms. An independent contractor would not be integrated with the company as they would be responsible for their own pension plan and uniforms. The above is a sample of what the CRA would look at to determine if a PSB relationship exists. The more independent jobs or contracts one enters into, the more apt that the relationship is one of an independent contractor than a PSB.

In the past, if the relationship was deemed a PSB and the contractor conceded to the fact that their expenditures were limited, the income tax implications were somewhat bearable. The corporate tax rate would only be 15 per cent. When coupled with the personal tax rate, the overall tax was within one per cent of the highest personal tax rate of 46.4 per cent in Manitoba and 44.7 per cent in Saskatchewan. Being classified as a PSB after these legislative changes means the tax rate will increase to 55.58 per cent in Manitoba and 51.33 per cent in Saskatchewan, which definitely puts the independent contractor at an income tax disadvantage.

It may be difficult to determine if a PSB classification applies to you except with professional advice from a trusted business advisor – they will analyze your situation and provide workable solutions to help you avoid the PSB trap. u

You could be a PSb.

Where do you go from here? Independent contractors in the oil and gas industry could face hefty tax bills if the CRA deems them a Personal Service Business (PSB). MNP has extensive experience working with oil and gas clients to deliver strategies that meet your corporate, personal and cross-border tax needs. Together, we’ll ensure you minimize your exposure and maximize your tax savings. contact an oil & Gas Services advisor near you: Virden, Mb — Julee Galvin, ca at 204.748.1340 or julee.galvin@mnp.ca deloraine, Mb — deb calverley, cGa at 204.747.2842 or deb.calverley@mnp.ca Moosomin, SK — corie Wudrick-Mohrbutter, ca at 306.435.3347 or corie.wudrick-mohrbutter@mnp.ca

Manitoba Oil & Gas Review 2013

Virden Skills Training Inc.

Rolls with the Oil Boom By Peggy Foy

ith the development of the Williston Basin came the speculation of southwest Manitoba and southeast Saskatchewan becoming the “New Alberta” by those seeking employment in the oilfield industry. Large corporate companies moved into the area, some taking over smaller businesses, some of these smaller businesses expanding and the construction industry booming. The oilfield service companies have experienced growth as well. New faces and big trucks are all over. Mixed feelings about this rapid expansion are held by businesses and citizens alike. Some are excited about the growth and the new influx of oilfield wealth into this area; others are apprehensive as their quiet little space in rural southwest Manitoba is being invaded. Jobs were available for anyone who wanted to work. Lately, there hasn’t been as much hiring activity. Some say the “big push” is over…some say it hasn’t begun.

Virden Skills Training Inc. has experienced a roller-coaster ride through the expansion of the oilfield industry in their service area, which includes the Village of Elkhorn, the Town of Virden, the Town of Oak Lake, and the Rural Municipalities of Pipestone, Wallace, Archie, Miniota, Sifton and Woodworth. The office has always been geared towards providing employment assistance services to local individuals and businesses. The oilfield expansion increased these employment options; staff researched online job opportunities, educating themselves on the type of work involved and contacted many companies operating in southwest Manitoba for job orders. They successfully matched eligible clients to these employment opportunities. Word of mouth spread about the services offered and soon the staff was unable to keep up with the job orders and those seeking employment. Organizing a recruitment expo in Virden in April 2012 proved very successful for the 37 ex-

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Manitoba Oil & Gas Review 2013

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The oilfield expansion increased these employment options; staff researched online job opportunities, educating themselves on the type of work involved and contacted many companies operating in southwest Manitoba for job orders. hibitors and 600 individuals who came through the doors. Virden

Alberta and even as far away as Tennessee have called the office

Skills Training Inc. staff developed several new business contacts

regarding recruiting employees. Newcomers relocating here for

and built up a level of trust whereby they could rely on staff to

work bring their families, who often seek employment opportuni-

provide them with potential eligible employees. Business services

ties in their field of choice. Staff works diligently to be aware of all

include developing and in-house job postings, job matching, and

employment opportunities in the area.

providing information on the local labour market and services.

Virden Skills Training Inc. is hosting another job fair – the Re-

Virden Skills Training Inc. receives many calls and visitors from

cruitment & Trades Expo-Virden 2013 on March 22 and 23, 2013

all over looking for work, mainly oilfield related. Companies from

in Virden’s Tundra Oil & Gas Place. u

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Looking to the Future

of GIS Mapping

ltus Geomatics Manitoba, through our three offices, is proud to offer the most comprehensive group of land surveying services across Manitoba. We strive to provide the best service for our clients through our processes and our commitment to continuous improvement. We meet our clients’ expectations on quality, value and timeliness by hiring the best people and providing industry leading work and safety training. We also meet clients’ needs through our network of affiliated Altus Geomatics offices and have worked on projects spanning from Thunder Bay to British Colombia (Please see coverage map on page 56 for individual office locations). Through our strategically located branch offices, we are able to save clients time and money by reducing crew travel and through our understanding of the local terrain (see LSD NAV ad). All of our branches employ field crews, drafters, administrative staff and project managers and surveyors, allowing us to provide the highest possible level of service. This added level of flexibility ensures those rush jobs are executed quickly and efficiently. In the end, it is our people that make the difference. Our local presence and extensive knowledge of regulations enables us to streamline customers’ projects. Many of our staff have

Manitoba Oil & Gas Review 2013

grown up and lived in the areas they now work, providing the kind of experience that sets Altus apart from the competition. We know and understand the areas our clients operate in and understand the little things that will get their projects approved and completed on time and on budget. Altus Geomatics has been at the forefront of creating and adapting innovative technology into the industry. From the early days of total stations to GPS to the use of LIDAR methodologies, Altus has pioneered many of the processes and uses of these technologies into Geomatics and their uses in the oil and gas industries. These new tools have allowed Altus to cut down on field time, find cost savings to its clients and increase employee and public safety. The latest technology is Altus’s Job Safety Analysis (JSA) program for iPads and iPhones. This program allows employees to effectively manage Altus’s comprehensive safety management system, protecting our staff, visitors, property, equipment, the environment and the general public from loss or injury caused by accidents, unsafe acts or hazardous conditions. Altus sought nomination for the 2013 David Thompson “Innovation in Geomatics” award for this program for its contribution to implementing its safety program. Also on iPad and iPhone,

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Altus has developed its innovative LSD Nav program for the devices. This program is a simple yet powerful app designed to help navigate western Canada’s oil patch. It was the winner of the 2012 David Thompson award for Innovation in Geomatics and a finalist in the Contribution to Society category. By creating unique tools for today’s latest technology, Altus has created a client/contractor relationship that allows both parties to reap the rewards. Altus Geomatics has an extensive GIS (Geographic Information System) that sources geographically referenced data from a robust database and displays it through an internetbased interface: a website. Having this system built and maintained in-house – while creating and incorporating custommade tools – gives Altus an advantage over its competitors. The Internet GIS is used extensively within the company on a daily basis and is a relied upon resource, both in the office and at the field level. This unique 24-hour online access is also offered to clients of Altus Geomatics, with each individual using login credentials to access their custom client map. This ensures the secu-

Manitoba Oil & Gas Review 2013

rity and integrity of all information. With access to maps for Western Canada including British Columbia, Alberta, Saskatchewan and Manitoba, we have an enormous amount of information available. Some of the datasets include Hydrology, Transportation, Wildlife Sensitivity, Contours/Elevations, Air photos and Altus Survey plans. All of this information at our clients’ fingertips allows for better decision making, cost savings and increased efficiency. Altus Geomatics is excited for the next chapter of internet GIS mapping. After 13 years of service, the current Altus mapping site will be retired with a new site forecasted to launch in August 2013. The new system will encompass all the data and tools from the current mapping site, leaving plenty of room for growth and more customization with newer technology. Altus Geomatics and Altus Geomatics Manitoba have an industry-leading safety program because safety is not just a program but a way of life. Altus ensures every person is certified for their role and maintains several safety association memberships. u

Training to Save Lives F

or Brent Fowler, it’s quite simple. “The more people that complete training, the more likely it is that someone will act quickly when someone else has a heart attack,” he says. “With a few hours of training, anyone can learn how to save a life.” After 20 years as an emergency-medical responder, Fowler joined St. John Ambulance Manitoba eight years ago and is now Director of Training and Operations. “In emergencies, the first few minutes are crucial,” he says. “After someone has a heart attack, for instance, the chance of survival is 70 to 90 per cent if a defibrillator is used within three to five minutes,” he says. “For every minute after that, it drops by about 10 per cent.” St. John Ambulance Manitoba delivers training in first aid, CPR (cardio-pulmonary resuscitation) and AED (automated

external defibrillation) to approximately 30,000 people each year. Courses are available in a variety of options (e.g. first aid alone or with CPR) seven days a week and 360 days a year. “Many people don’t want to accept that the symptoms they’re feeling indicate a lifethreatening problem,” Fowler says. “They attribute it to indigestion, for instance. It’s sad, but many people die of heart attacks because they fail to ask for help.” Given this reality, much of the training focuses on recognizing the symptoms of

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The Fusion of History and Experience: Making a Good Thing Better By Melanie Franner

tart with a long familial lineage in custom welding and fabrication and add in a heavy dose of hands-on experience and the result is the potent combination currently known as Hamilton Iron Limited. Today, the Brandon-based

company employs some 25 people, provides services throughout the province and is run under the tutelage of two men, each of whom brings his own distinctive advantage to the table. Bill Hamilton, who left the safe confines of a company in which

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father had partial ownership to venture out on his own, founded Hamilton Iron in the early 2000s. Fast forward a few years to the time when Hamilton passes away unexpectedly and his nephew, Jordan Funk, takes over the business. Funk realizes that two heads are better than one and approaches his friend of more than a decade, Dan Lyle, to help run the shop and grow the company. “I started with the company last May,” says Lyle, who has most recently taught welding in the city of Brandon and was working in the oil fields prior to that. “I’ve had my Journeyman Welding ticket since 1999. I also have a Bachelor’s Degree in Business Administration.” For the most part, Hamilton Iron has made its mark via the strong relationships it has forged with general contractors to provide structural steel components and miscellaneous steel, such as beams, columns, stairs, handrails, etc. The company is also involved in the oil fields to a small degree.

“Personally, I’d like to see our oil field work grow,” comments Lyle. “My experience in this area is in pressure welding but I can see a lot more opportunity out there. The oil field industry in Manitoba is growing. We feel it’s a good opportunity for us and we’re working on getting our name out there and getting known for this type of work.” Another potential avenue of growth is to work with the growing list of general contractors on larger construction projects, such as providing steel framing and other more substantial structural components. Lyle and Funk are both committed to capitalizing on these markets and to growing Hamilton Iron to the next level. “Our industry has become a lot more competitive and more automated,” concludes Lyle. “We’ve already made some significant adjustments to incorporate these trends so that we’re better positioned to take advantage of today’s business climate.” u

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Manitoba Oil & Gas Review 2013

Public Outreach More Important Than Ever

anada’s oil and gas industry has a lot of experience. Working in some of the toughest conditions on the planet, we have become experts in finding and producing oil and gas safely and efficiently, while protecting people, animals and the environment. Over the past 100-plus years, our industry has continually improved on science, technology and training to ensure we operate within, and often above, the most stringent regulations in the world. In short, we do a top-notch job of supplying Canadians and others with the vital energy they rely on every single day. So why do we sometimes get a bad rap? Because the one thing we haven’t been quite as good at is communication. We

haven’t been good at talking about what we do, why we do it and how. We haven’t been good at answering questions or addressing concerns about our operations or performance. And we haven’t been good at showcasing our innovations and successes. That’s changing now.

New Era, New Initiative This year, the Petroleum Services Association of Canada (PSAC), along with several of our members from the service, supply and manufacturing sector, are reaching out to stakeholders with a new program called the Working Energy Commitment. The program, officially launched in late February 2013, is named in honour of the more than 80,000 PSAC member-compa-

ny employees who are on the front lines of the Canadian oil and gas industry. These hard-working people drive rural roads to access remote locations, get their hands dirty when they have to, and do their highly skilled jobs at all hours and in conditions some would call unworkable. As such, they truly personify the concept of “working energy”.

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Drilling Production & Geology PO Box 730 117 North Welo Street Tioga, ND 58852

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The Working Energy Commitment program’s goal is to increase public confidence in these people – and our industry – by listening to public concerns about oil and natural gas development and addressing those concerns with facts and honesty. The program is also designed to bring greater transparency to the efforts that service companies and their skilled employees put into health, safety and the environment, whenever and wherever they work.

Fracturing First PSAC’s Working Energy Commitment is first going to focus on hydraulic fracturing, which has been much in the news of late. Many of the public’s concerns stem from a lack of information – or misinformation – about hydraulic fracturing: what it is, why it’s needed, how it works and how any risks are mitigated. Tackling this topic first is a must because hydraulic fracturing is a critical part of our industry’s business. Without hydraulic fracturing, our industry – and Canada’s access to many of the proved reserves of oil and natural gas resources – could grind to a near halt, with no road to recovery and tens of thousands of jobs lost. No surprise then that 10 PSAC member companies, all involved in hydraulic fracturing, were the first to sign on to the Working Energy Commitment. They are: Baker Hughes Canada Company, Calfrac Well Services Ltd., Canyon Technical Services Ltd., GasFrac Energy Services LP, Halliburton Group Canada, Nabors Well Services Canada Ltd., Iron Horse Energy Services, Sanjel Corporation, Schlumberger Canada Limited and Trican Well Service Ltd. These companies are leaders for stepping up to the plate. With support from PSAC, the 10 pumping companies started by developing and committing to a Working Energy Commitment Statement of Principles (see sidebar) that reflect how they operate every day. Their next task is to develop a hydraulic fracturing code of conduct, which will bring these high-level principles down to the ground level. It is expected that this code of conduct will define

Online Outreach As part of the Working Energy Commitment initiative, PSAC is also reaching out to stakeholders via our public information website www.oilandgasinfo.ca. The site provides users with key information about Canada’s oil and gas resources and industry. Fracopedia, a new section developed for the site, provides more detail about hydraulic fracturing operations. Another new section will act as the home base for updates about the Working Energy Commitment program, the public consultation sessions and the hydraulic fracturing code of conduct. These website updates are still in their infancy, but will grow in content and scope along with our program.

PSAC Working EnErgy CommitmEnt StAtEmEnt of PrinCi PlES • Operate safely and responsibly in the co mmunities where we We will listen to the con work. cerns of citizens, work with them to find solution provide safety leaders s, hip to our customers and the communities where we operate, and perform our work to the highest stan dards set by our industry and our govern ment regulators. • Meet or exceed all e nvironmental standard s that are required by industry regulato rs. We will conduct ope rations in an environmentally respon sible manner, and enc ourage our partners, customers and supplie rs to make the most env ironmentally responsible choices possible in our mutual undertakings. We will provide leadership in environmentally res ponsible practices and strive for continuous improvement of our indu stry’s environmental per formance. • Act with integrity in our actions, dealing s and agreements w members of the co ith mmunities where we work. We will be ope about how we conduc n t our operations, share our knowledge about industry and conduct our all our business in an honest and ethical ma nner. • Continually improv e our practices and services. As our indust evolves, so do we. We ry will focus on developin g and using the most appropriate technolog ies, and we will continu ally improve our employ training programs and wor ee k procedures. These imp rovements contribute to the goals set out in our code of conduct and meet the requirements of our customers for cos t-effective and superio r results. • Treat all members o f the community with r espect, dignity and trust. As we grow our operations and dev elop relationships with communities, it is imp erative that we learn abo ut, appreciate and treat all people with res pect. We will enter into honest, respectful relationships in the com munities where we wo rk to build trust with our community partne rs.

Manitoba Oil & Gas Review 2013

Building Momentum Our Working Energy Commitment builds on another successful public outreach program we launched in 2010. Along with the support of the other major Canadian oil and gas associations, PSAC created Community Partners, in direct response to public feedback about how we operate as an industry. Community Partners, still managed by PSAC, is an industry-wide in-the-field courtesy program that commits companies, their employees and their contractors to be good neighbours. Each of the companies leading the Working Energy Commitment has also signed on to the Community Partners program. That commitment demonstrates to local stakeholders that we are starting this year’s public consultations from a place of sincerity. Dozens of other producer and services companies have also signed on to the program since it launched. (For more information, please visit www.communitypartners.ca.) How PSAC members – and the industry as a whole – operate is very complex and technical. But it’s no longer enough to operate safely and responsibly. We have to communicate about it. We have to help the general public and residents of communities most impacted by our operations understand how and why we do what we do, so we can strengthen relationships and build valuable support of our industry. PSAC is the national trade association representing more than 250 of Canada’s leading service, supply and manufacturing companies in the upstream industry. Our members employ more than 80,000 people, and contract almost exclusively to exploration and production companies. For more information, please see us at the Saskatchewan Oil and Gas Show or visit: www.psac.ca. A PDF of the Working Energy Commitment statement of principles can be found online here: http://www.oilandgasinfo.ca/images/Postcard.pdf. mutual expectations for working with stakeholders, and reflect standard practices for sound technical and environmental performance when fracturing a well. Because of its very nature, a code of conduct like this should not, and will not, be developed in isolation. Rather, PSAC and its pumping company members are holding a series of public engagement sessions to gather stakeholder input into the code of conduct.

These public events, taking place this year in key operating centres throughout Western Canada, will provide local community members with the opportunity to meet and speak directly with representatives from hydraulic fracturing companies, as well as local representatives from producing companies and regulators. We recognize that not all regions of Western Canada are as supportive of our industry as others. We may be asked some tough questions. But PSAC and our mem-

bers are confident about how well our industry operates and about our commitment to health, safety and the environment, so we welcome the opportunity to answer questions and address concerns as a way to build public trust. We fully believe that with the productive dialogue from these sessions, we will be able to draft a comprehensive and respected hydraulic fracturing code of conduct and release it by year end. u

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Manitoba Oil & Gas Review 2013

Oilwell Ownership through Joint Venture Limited Partnerships By Nelson Shodine, Bird River Resources

il in the ground is money in the bank. If you are an accredited investor, you may be able to tap into this oil bank account through a joint venture (JV) participation

with an oil producer drilling a new well. There are several oil-producing formations in southwestern Manitoba that are part of the Williston Basin. The best known are the Lodgepole, Mission Canyon, Three Forks, Spearfish and the Bakken, which all produce what is known as light sweet crude. The Bakken has been the darling of the news media due to the recent production and frantic drilling in North Dakota. The cost of a new horizontal well in the southern Manitoba area with a 600-metre or a 1,300-metre leg is about $1.5 million. The main reason the cost is so low in this area is that producers only have to drill down less than 1,000 metres. The same well in Saskatchewan would be two or three times the cost, and in North Dakota it would be four or five times the cost due to the depth there.

How are Joint Ventures Constructed? a) Joint Venture agreements are structured with a general partner acting as management and limited partners providing the capital.

b) JVs can have one or more limited partners with participation ranging from 2½ % to 100%, in increments of 2½ % (in other words, 2½ % - 5% - 7½ % - etc.). c) Each partner receives a signed JV agreement outlining details of their per cent of ownership of the well and the working arrangement. d) Cheques are issued monthly for revenue received from oil shipped. This can vary from month to month due to fluctuating prices. JVs are often referred to as an “investor’s dream.” Why? Because some JVs do make that true, at least from a historical point of view, since some wells have paid for themselves in 12 to 24 months and there are some tax write-offs, such as capital cost allowance. Many of the old vertical wells are still pumping after 50 years, albeit at a much reduced rate. From time to time, JV opportunities become available to new, accredited investors. For more information, contact Nelson Shodine through Bird River Resources at 204-589-2848 or by email at shodine@mts.net. This is not to be considered a solicitation and is for information purposes only. u

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Local Investment Opportunity in Manitoba’s Oil and Gas Sector By Lyndon McLean

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Grunthal Welding Takes On

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stablished in July 1982 by founder Len Hiebert and his wife Nettie, Grunthal Welding is a family-owned business nestled in southeastern Manitoba. They sought to provide the community’s welding needs and fabricated quality products. Len realized that in order to succeed, he needed help and so enlisted his sons Leonard, Dan and Alex, who came on as full-time employees once they completed school. In 2005, Len and Nettie sold their shares to their sons but still act as an advisory to the company. In 1982, they started with approximately 2,500 square feet of floor space and have since grown to a business known for its quality products and willingness to serve its customers. With over 18,000 square feet of shop floor space, Grunthal fabricates many products in the industrial industry: specialty truck decks, buckets, stair railings, specialized custom prototyping projects and much more. Their truck decks and bodies are designed and fabricated to meet and adhere to the CMVSS/DOT standards.

In 2005, Grunthal Welding fabricated its first truck body designed for the oil field industry. In meeting with the client, it is established what style of truck body is needed. As each company operates in a unique way, they realized the need to build each unit as a custom unit. Once the body style and design are determined, the design team gets to work determining what materials are needed to complete the project. As the drawings are completed and signed off by the client, the drawings are sent to the techs and the body starts taking shape. Grunthal staff realized there was a constraint in the initial start of any project in the processing division. To combat this issue – and after many discussions – they decided to go with a 6-foot by 12-foot CNC-operated Hydro Jet cutting table because of the many different materials required in the industry. This has increased our production and has helped with the accuracy and consistency of the parts going to our fabricating techs. The company initially started building BOP tool trucks and

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have now evolved to include other units, including specialized welding units, boiler units, service units and catwalk trailers. The BOP tool trucks can be outfitted with many styles of compartments and holders to ensure each tool is safely stored. The boiler units are designed with the boiler and genset system enclosed with the water and fuel systems all integrated to meet the oilfield demands. With two entrances/exits needed for the boiler/ genset room, Grunthal has developed a hydraulic assisted staircase system to create a safe working environment for the crews on site. The catwalk trailer has its outrigger arms rated at 35,000 pounds each. With four arms, this is a total gross capacity of 140,000 pounds of well pipe. When tripping pipe in or out using this catwalk trailer, the centre pipe holder has an air-assist pipe

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Meeting the Industry’s Production and Frac Tank Needs

t started with a fusion of friendship and expertise. Hudson Rentals Inc., located in Cromer, was established in the spring of 2011 when Jamie Thiessen, owner of Arcrite Welding, approached his friend Sheldon Reimer about the idea of starting a tank rental company. The rest, as they say, is history.

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Hudson Rentals’ tanks are multi-functional as some are used as production tanks on well sites, for fresh water storage on drilling rigs or as flow-back tanks. One exceptional feature on a portion of the fleet is the sloped floor, which makes for a more efficient and cost-effective clean-out for the customer. Jamie started out with a mobile welder doing onsite welding,

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out building six 400-barrel production/frac tanks and has steadily added to their inventory as needed to meet demand, which has been constantly growing. Hudson Rentals’ tanks are multi-functional as some are used

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tank gets the job done. With quality and safety assurance being a top priority, all of the tanks meet API-12F specs. So for any of your tank rental needs – whether it’s one tank or ten – don’t hesitate to call Sheldon or Jamie, or check out their

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Clarifying

Dataroom Confusion By J. Douglas Uffen P. Geoph (APEGA), P. Geo (APEGBC), President and Managing Partner, Geo-Reservoir Solutions Ltd.

eophysical datarooms are an important element of business in the resource industry. They are staged for many reasons, such as: when a company undertakes a sale process of assets or properties, during a show and tell presentation, or a farm-in process to attract new investors. Confidentiality agreements (CAs) are often put in place to protect the data and competitive information of the disclosing party. The geophysical dataroom is often appended to the primary business activity at hand. As such, it may often be handled separately in another meeting, is implemented with a variety of non-standard procedures across industry, and may involve a broad mix of entities. Those involved in the dataroom can vary from internal land departments, internal exploration/development business groups, third-party property divestiture

houses, third-party consulting houses, financial institutions, and investment houses. Over the years, an informed geophysical person has not always been involved in the process, leaving the opportunity for inadvertent poor practices to evolve and become entrenched in industry. In May 2010, the Association of Professional Engineers and Geoscientists of Alberta (APEGA) published a guideline entitled “The Ethical Use of Geophysical Data” in an effort to assist professional members in dealing with the use of licensed geophysical data within the oil and gas industry (APEGA, 2010). The document was general in nature but it did provide a few scenarios as examples in an effort to give context regarding what constituted ethical behaviour. However, of particular interest to APEGA members are what activities can or cannot be done in a dataroom. In

turn, how does one go about setting up a dataroom in compliance with the APEGA guideline? The purpose of this article is to focus on the specific subject of datarooms.

Background on Data Ownership, Competition, and Applicable Law The original stakeholders who acquire the geophysical data are said to possess the “trading rights” to the data, much akin to an author holding the copyright or ownership to a book. Multiple parties could be involved in the original field operation, often tied together only with an AFE (Authority for Expenditure) document. This document may become the sole record denoting who the original participants in the geophysical data acquisition were. Hence, adequate management of data records is vital to prevent the potential loss of this historical record and to identify what datasets

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possess which ownership classification.

commonly, a licence to the data can be

Data of varying data ownership classes

granted by the original acquirers of the

possess different privileges. The greatest

data by means of a licence agreement. The

freedoms are associated with 100 per cent

licence may disclose terms or conditions

ownership of proprietary data because it

with respect to the ongoing protection

involves only one entity. In this scenario,

of the confidential nature of the data and

any harm created by offering the geophysi-

its use by the licensee. Hence, once again,

cal data to another third party is solely

suitable records management practices are

related to the entity making the decision.

required to keep track of this important

With partnered data, there is another en-

documentation. It is industry standard

tity to consider. Licensed data, specula-

practice for any geophysical data to be re-

tive survey data and participation survey

leased for potential sale that unanimous

data all have licence agreements, subject to

stakeholder approval be granted. Any one

varying terms, obligations and conditions.

party possessing the trading rights, regard-

Keeping track of data ownership classes

less of their working interest, can prevent

and the ensuing agreements that govern

the data from being released for sale. This

them – such as Joint Venture (JV) agree-

is related to the fact that geophysical data

ments and AMI (Area of Mutual Interest)

is often thought to be confidential infor-

agreements – is a vital precursor to identi-

mation that offers a competitive advantage

fying what geophysical data could be used

regarding the potential acreage involved to

to stage a dataroom.

the party that possesses the data.

Within industry, seismic data is an as-

When dealing with seismic data one

set that can be bought and sold. The data

needs to understand the common law (in-

can be sold by one of two methods. Most

cluding how it applies to contracts), appli-

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cable legislated law such as copyright law, and the laws governing confidential information (Hunt et al, 2012). These aspects of law are in place to protect the competitive interests of all parties involved, including the data owners. Some third-party seismic data licensing agreements can be quite liberal regarding the use of the data by the licensee while other agreements can be quite restrictive. These differences in licences, and the uses they allow, often become relevant when dealing with a geophysical dataroom scenario. Knowing what privileges a licence permits is essential for setting up a dataroom as licence agreements are not standardized across industry between vendors and have often changed over the years by the same vendor. The second method to convey ownership of the data is to sell the trading rights possessed by the original acquirer(s) of the data. Working interest entitlements cannot be subdivided in order to accomplish this. For instance, if two parties owned a dataset equally with a 50 per cent working interest, one party could not “cut-in” an additional third party by reducing their interest to 25 per cent and granting 25 per cent ownership to the third party without the consent of the other 50 per cent partial owner because this creates a third entity

P R

G I N

A T I N G

(204) 748-2864 74

act of interpretation. Interpretation is the “process of deriving a geological model or concept from geophysical data.” It includes the creation of derived products by measurements made on processed data and the maps and other displays made from the data. It also includes conclusions or inferences made by the interpreter, such as geologic edges or fluid contacts (APEGA, 2010). A review of an existing interpretation is a general assessment of the information as presented, without active manipulation of geophysical data. If third-party licensed data is placed in a dataroom, the act most likely to be permitted is that of a review rather than an interpretation. This is also true for partnered data, but sometimes the partner will permit the act of interpretation if so asked. Regardless of whether the act of interpretation or a review is permitted, maintaining direct control of a dataroom environment is paramount. “Direct control” is the ability to prevent copying or other unauthorized use of a licensor’s data (APEGA, 2010). Direct control can be exercised in numerous ways, sometimes employing multiple methods simultaneously. Readonly workstation access can be granted that restricts the visiting party from conducting an interpretation, even if they tried. The USB ports can be disconnected,

Manitoba/Saskatchewan/Alberta

B L A

P B C O

One of the first aspects to consider is to determine what classes of data would be involved in a dataroom. If 100 per cent proprietary data is involved, the host company may choose to permit a review of the data along with their accompanying interpretation or they may wish to permit the

Setting Up a Dataroom

I E

who would then be entitled to the data. Due to the confidential nature of geophysical data, the first partner possesses the right and ability to have a say in the creation of a third licence. Within industry, trading rights can be sold without the consent by a partner in the dataset, but this can only be accomplished by “stripping” the previous partnered owner of all instances of the data so as to ensure that a new licence is not created. Stripping an entity of all instances of the data does not stop at just simply removing it from a storage house; it also means removing it from the interpretive workstations, map racks and all other instances of occurrence. For datasets that have permeated an organization for years, this becomes an almost impossible task; hence, these deals occur much less frequently due to the nature of this obligation. They are often restricted to 100 per cent proprietary data transactions only.

Manitoba Oil & Gas Review 2013

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thereby preventing any copying or loss of the data and the ensuing interpretation. A “babysitter” who monitors the visiting party’s activities or who actively drives the workstation for the attendee is another way to maintain direct control. It is the obligation of the hosting party of a dataroom to make sure that third-party licensors or partners are not harmed in any way. This obligation does not extend just to the professionals licensed by APEGA but also to the companies that possess a permit to practice from APEGA. When acting on behalf of a company disclosing geophysical data, a professional member is obligated to advise any visitors about their requirement to comply with applicable licences. Based upon ownership classifications and any licence agreements, one of the first decisions to make is whether the dataroom will have an interpretive approach or a review-only approach. Licence agreements need to be checked to make sure that the data being placed in the dataroom environment is permitted to be there. One should also check to see if there are any Area of Mutual Interest (AMI) documents, Joint Venture (JV) documents or other partner agreements that prevent the data from being viewed by other third-parties. Many properties being sold in a divestiture process have not been worked on for years. It is prudent to access the most recent workstation project(s) and clean up the interpretations to tell a uniform story. Nothing is more frustrating for the dataroom attendee than to try to sift through years of history on a project to discern what horizons have been uniformly interpreted over the project area. An interpretive “clean-up” is often a good investment of time and money. After all, don’t you wash and wax your car before you try to sell it? Companies with limited resources may find this an onerous task. Options exist for compa-

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nies experienced in dataroom set-up, to “clean-up” existing interpretations prior to staging a dataroom.

Attending a Dataroom Visitors to a dataroom are obligated to inquire about the ownership status of the data in order to guide their own conduct. “When geophysical data, information and knowledge derived from the data is being disclosed, all professional members must be aware of their professional responsibilities. Professionals must be aware of and

honour any restrictions associated with the disclosure of the data” (APEGA, 2010). Before knowingly interpreting any thirdparty trade data, the visitor must have the data owner’s consent or have acted with diligence in determining that such activity is specifically provided for in the licence agreement.

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ing can constitute a tracing of an image on the screen. The hand-drawn diagrams cannot make reference to any measurable numbers derived from the data itself. The taking of a camera image via a cell phone camera or any recording device is strictly forbidden. Some datarooms may even request that cell phones or any electronic device that contains a camera be surrendered in advance of entering a dataroom. If the dataroom is set up as a review only option, the attending party and professional are obligated to conduct themselves accordingly.

Summary Companies are allowed to make use of their geophysical data to facilitate their business. They are not allowed to harm a third party in the process. The creation of a geophysical dataroom can be a worthwhile exercise to showcase the upside potential of the assets being sold or divested. Care must be taken that the dataroom be set up in compliance to the APEGA guidelines and any third-party licence agreements of partner agreements. The type or style of dataroom must be considered along with what action (interpretation or a review) will be allowed in a dataroom setting. Taking a bit of time and effort to clean-up the project can add considerable value to the sale or divestiture process.

Acknowledgements I wish to recognize and thank Doug Pruden P. Geoph. (APEGA) and Lee Hunt P. Geoph. (APEGA) for their contributions associated with editing this article.

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Manitoba Oil & Gas Review 2013

About the Author: Doug Uffen, P.Geoph (APEGA), P. Geo (APEGBC) is the president and managing partner of a consultancy called Geo-Reservoir Solutions Ltd. He is a seismic interpreter with over 30 years of experience. Doug has extensive experience and knowledge with respect to seismic licensing issues and dataroom conduct. Doug teaches a course to industry which focuses upon the rules associated with various classifications of seismic data ownership in different business situations. He was also a member of the APEGA committee that created the guideline document regarding the ethical use of geophysical data. He is a past president of the Canadian Society of Exploration Geophysicists (CSEG) and is a member of APEGGA, APEGBC, CSEG, SEG, EAGE and the Calgary Petroleum Club. u

References: Guideline for Ethical Use of Geophysical Data, V1.0, May 2010, APEGGA. http://www. apegga.org/pdf/Guidelines/EthicalUseOfGeophysicalData.pdf Hunt, L., B. Palmiere, H. den Boer, J. Boyd, M. Sykes, D. Uffen, C. Welsh, 2012, A Practical perspective on APEGGA’s Guideline for Ethical Use of Geophysical Data: CSEG Convention Abstracts, 1-4. u

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These are the benefits that got mats? products provide to help out with their customers’ important operations. So now let’s talk about who got mats? is and exactly what the product is.

Who is got mats?

his article could start by talking about who is got mats? but got mats? would rather focus on the customer’s needs and benefits of using their products.

The Customer’s Benefits? There are many advantages to using access mats: • Make Money – The customer will not have to shut in oil well production that is difficult to access due to wet conditions – and oil revenues continue to flow. • Save Money – Access matting speeds up rig moves and decreases equipment fatigue and failures. • Stay on Schedule – Even in wet conditions, oil companies will be able to enjoy access to rig leases so their drilling program can continue as planned. • Increase Safety – Access mats provide a harder and more stable surface that is safer to work on than soft soils. • Protect – Provide extra protection for underground infrastructure such as pipelines and cables. • Maintain Relationships – Local farmers appreciate the minimal land disturbance on their land.

Manitoba Oil & Gas Review 2013

Based out of Virden Manitoba, got mats? is a local company started by Chris Allison and Eric Ducharme, who both have ties to Manitoba’s oil industry. The vision to start the company came during the winter of 2010 when they noticed equipment sinking into the super-saturated soils in Southwest Manitoba at a time when the ground should be frozen. With extreme moisture conditions came an unusual situation and the potential of a business opportunity. Shortly after, got mats? was established.

Product Specifications: The access mats are 8 feet by 14 feet and made of oak. The structural characteristics of oak fibers for longevity, flexibility and shock resistance capacity make for a superior product. A three-ply laminated design is used with two-inch by eight-inch oak boards that are held together with carriage bolts. More bolts are used to increase the strength of the mat compared to most mats offered in the industry. Got mats? now offers 8-foot by 40-foot steel-enforced rig mats that work great for frac jobs and other applications.

Rent or Buy? Got mats? recognizes clients have different wants and needs, so the options to rent or buy are available. Please call Chris at (204) 851-1709 or Eric at (204) 724-0592 for prices. u

8’x 14’ Oak Access mats & Steel-enforced 8’ x 40’ rig mats

Eric Ducharme (204) 724-0592 • Chris Allison (204) 851-1709

DEL Communications Inc. has in excess of 100 years combined experience working for you.

DEL

Communications Inc.

www.gotmats.ca

Custom construction modular

We offer outstanding personal service and quality in the areas of: • Creative Design • Advertising Sales • Trade Publications • Qualified Sales & Editorial Team

accomodations DORMS & CAMPS MULTI-FAMILY BUNK HOUSES MOTELS

ofﬁces

SITE OFFICES OFFICE COMPLEXES SKID OFFICES

Suite 300, 6 Roslyn Road Winnipeg, Manitoba R3L 0G5

(204) 325-9558

www.delcommunications.com

www.grandeurhousing.com Manitoba Oil & Gas Review 2013

Hotel & Motel Guide Lowest price of any national chain • Free Local Calls • Free Wi-Fi • Coin Laundry • Meeting Room • Wheelchair Accessible Rooms • Kids Stay Free • Pet Friendly • Fitness Room • Elevator • 15 Kitchenette Units 815 Middleton Avenue Brandon, MB R7C 1A8

204-726-4000 800-466-8356

www.motel6.com www.motel6-brandon.com

Countryside inn V I R DE N ,

M B

~ Very Comfortable & Quiet Guest Rooms ~ ~ Free Hot Breakfast ~ ~ In-Room Coffee ~

Brandon

Come see our new look! Every room recently renovated.

Pool & Hot Tub SuperStart ® Breakfast High Speed Internet Conference Room Fitness Room In-room Coffee & Hair Dryer Iron & Ironing Board in Room Coin Laundry Kids 17 & Under Stay Free with Adult 1570 Highland Ave.

(204) 729-8024

Email: super8reservations@yahoo.ca

www.super8.com 1-800-800-8000 www.super8brandon.com

Manitoba Oil & Gas Review 2013

~ Wi-Fi Internet ~ 561 Wellington St. E. Virden, MB R0M 2C0 Tel: 204-748-1244 Fax: 204-748-6019 http://countrysideinn.netfirms.com

Superior hotels and motels when your crew is on the road.

A luxury Winnipeg hotel within minutes of the Winnipeg International Airport, Downtown, and across the street from the Polo Park Shopping Centre. Closer hotel to the New IKEA store! Completely renovated in 2010, Winnipeg’s Ramada Viscount Gort Hotel is a modern luxury hotel boasting 135 spacious guest rooms, as well as a contemporary and elegant banquet centre, that can accommodate up to 600 people. Also consist of the Gort Dining Room and Average Joe’s Lounge. Ideally located in the heart of Winnipeg, the Ramada Viscount Gort is just minutes from the Winnipeg James Armstrong Richardson International Airport and across the street from Polo Park, the largest shopping mall in Manitoba. We are also less than a five minute drive from downtown, as well as only 10 minutes away from the world famous Assiniboine Park that is home to a zoo, conservatory, outdoor theatre and museum. When you stay at the Ramada Viscount Gort Hotel your comfort and satisfaction is our mission. “Turning the ordinary into the extraordinary!”

Sunday to Thursday $105.00 Friday & Saturday $115.00

Based on availability and blackout dates may apply.

Reservations

800.665.1122

1670 Portage Avenue Winnipeg, Manitoba, Canada Phone: 204.775.0451 Reservations: 800.665.1122 www.viscount-gort.com

Manitoba Oil & Gas Review 2013

BRANDON’S NEWEST SUITE SPOT! Free Deluxe Hot Breakfast • Salt water pool / hot tub 2130 Currie Blvd • 1 888 213 2192 • 204 7273600 DAYS-INN-BRANDON.COM

CENTRAL HOTEL FEATURES • 15 comfortable guest rooms • 60-seat dining room • Steaks and pizza • Pizza delivery • 200-seat cozy lounge • VLTs • Banquet and Meeting Facilities • Catering • Crew Welcome

44 Sixth Avenue South VIRDEN, MB

Phone 204-748-2444 www.virdencentralhotel.com

PIPESTONE OIL WORKERS SLEEPING UNITS AVAILABLE 1ST UNIT 5 BEDROOMS, 9 BEDS

2ND UNIT 5 BEDROOMS, 10 BEDS

THERE ARE TWO SIDE BY SIDE UNITS WITH FULLY FURNISHED KITCHENS, LIVING ROOMS, BATHS, LAUNDRY, HIGH SPEED INTERNET, CABLE, TV, CELL BOOSTERS- ALL INCLUSIVE! FOR SALE OR RENT

PLEASE CALL

204.748.8989 FOR MORE INFORMATION

Manitoba Oil & Gas Review 2013

• • • • •

Pool/Waterslide Exercise room Wi-fi Hot continental breakfast Meeting room

For reservations call (204) 707-6020 380 Frontage road West, virden, MB

CLARION HOTEL AND SUITES... RECONNECT, RELAX AND EXPLORE.

Winnipeg’s most exciting full service hotel. Featuring a full service day spa with exotic mineral pool, free in room high speed internet, free parkade parking, free airport shuttle, valet services, fitness centre, lounge, full service restaurant and extended personal services. Corporate Rates Available CLARION HOTEL & SUITES/ URBAN OASIS MINERAL SPA 1445 Portage Ave., Winnipeg, MB Canada R3G 3P4 T. 204.774.5110 F. 204.783.6858 TOLL-FREE 1-800-4-CHOICE www.clarionhotelwinnipeg.com

Eat.

Meet.

Stay.

Play.

Toll Free: 1.888.33.CANAD Or reserve online at: canadinns.com Canad Inns Destination Centre Brandon 1125-18th Street, Brandon, MB R7A 7C5 PH: 204-727-1422

Canad Inns Destination Centre Garden City 2100 McPhillips Street, Winnipeg, MB R2V 3T9 PH: 204-633-0024

EXPRESS INN

3740 Portage Avenue • Winnipeg, MB R3K 0Z9

P: 204.837.5831 TF: 1.888.866.5831 F: 204.831.6137 www.howardjohnsonwinnipeg.com • E: hojo1@mts.net

Manitoba Oil & Gas Review 2013

Index to advertisers 24-7 Enterprises Ltd........................................................................ 20

Dmg Events................................................................................. 14, 36

Abco Supply & Service Ltd........................................................... 42

Enbridge Pipeline Ltd....................................................................... 47

Agwerks...............................................................................................37

Essential Coil & Stimulation Services........................................... 13

Allen’s Machine Works................................................................... 66

Estevan Plastic Products Ltd...........................................................53

Altus Geomatics..................................................................................5

Expro Group Ltd...................................................................................7

Annugas Compression Consulting...............................................25

Fast Trucking Sarvices Ltd...............................................................37

Antler River Resources Ltd............................................................. 42

Fontana’s Trucking (2006) Ltd..................................................... 26

Arc Rite Welding.......................................................................60, 69

Fountain Tire.......................................................................................52

Bird River Resources........................................................................ 63

Four Corners Associates................................................................ 45

Brian Nixon......................................................................................... 82

FoxTail Hauling...................................................................................23

Burns Maendel Consulting Engineers Ltd.................................. 58

Freightliner Manitoba....................................................................... 41

Canadian Wilderness Inn............................................................... 83

GB Contract Inspection Ltd.............................................................76

CanadInns.......................................................................................... 83

General Metal Fabrication Ltd........................................................ 71

Cancade Company............................................................................77

Got Mats............................................................................................. 79

CanElson Drilling Inc........................................................................57

Graham Industrial Group............................................................OBC

Cardinal Signs Ltd..............................................................................57

Grandeur Housing............................................................................ 79

Carson Energy Service Ltd.............................................................. 19

Grimes Sales & Service Co. Ltd..................................................... 49

Central Hotel..................................................................................... 82

Grunthal Welding..............................................................................67

City of Brandon................................................................................. 39

Hamilton Iron.................................................................................... 59

Clarion Hotel & Suites..................................................................... 83

Harmax Services Ltd........................................................................ 68

Classic Vacuum Truck Ltd.............................................................. 30

Hodgson Custom Rolling Inc............................................................9

Comfort Inn & Suites Virden......................................................... 82

Hot Rod’s Oilfield Services Inc...................................................... 66

Competitor Fire................................................................................. 66

Howard Johnson Express Inn........................................................ 83

Cor Solutions................................................................................... 58

Hudson Rentals Inc................................................................... 52, 69

Countryside Inn................................................................................80

Hydrodig Canada...............................................................................32

Custom Helicopters Ltd...................................................................32

Impact Oilfield Management...........................................................4

D&G Polyethylene Products Ltd....................................................37

Ironrider Oilfield Services............................................................... 68

Dalziel Oilfield Consulting Ltd....................................................... 24

K. Kilford Construction Ltd..............................................................75

Days Inn & Suites Brandon............................................................ 82

Larry’s Oilfield Engine...................................................................... 47

Diamond Shelters............................................................................ IFC

Lee’s Service Centre......................................................................... 45

Please support who help make this 84

Manitoba Oil & Gas Review 2013

Index to advertisers Manitoba Innovation Energy And Mines..................................... 11

Rural Municipality of Pipestone.....................................................23

Manulife Securities.......................................................................... 65

Rural Municipality of Wallace....................................................... 47

Marmit Plastics Inc...........................................................................75

Ryan Bochek Consulting Ltd.......................................................... 46

Meyers Norris Penney LLP.............................................................. 51

Scott Land & Lease Ltd..................................................................... 18

Millennium Directional Service Ltd.............................................. 17

Souris Economic Development......................................................27

Motel 6................................................................................................80

Sparks Sand & Gravel...................................................................... 47

NCS Oilfield Services........................................................................ 15

St. John Ambulance..........................................................................57

Neset Consulting Service...............................................................60

Sto/Van Oilfield Maintenance...................................................... 45

Noble Well Services Inc.................................................................. 64

Sunrise Credit Union........................................................................73

Norbertâ&#x20AC;&#x2122;s Manufacturing.................................................................77 Norman G. Jensen, Inc.....................................................................77 North Dakota Petroleum Council.................................................. 16 Odanah Truck Line Inc..................................................................... 41 Operating Engineers Training Institute of Manitoba Inc......... 17 Outback Mats................................................................................... 64 Outlaw Oilfield Hauling Ltd........................................................... 70 PosTech Foundations........................................................................27 Prairie Blasting & Coating Ltd........................................................74 Precise Tong Services Inc................................................................23 Precision Well Servicing................................................................IBC

Super 8................................................................................................80 Testlabs International Ltd............................................................... 30 Texcan Sonepar Canada................................................................... 11 The Restâ&#x20AC;&#x2122;n Inn.....................................................................................22 Third Dimension Industries............................................................ 31 Town of Virden..................................................................................44 Tri-Core Projects Manitoba Ltd.................................................... 43 Triangle Welding & Machining...................................................... 21 TSL Industries Operations LP........................................................ 50 United Rentals of Canada Inc.........................................................72

Pro-Drill Industries Ltd.................................................................... 50

Virden Meter......................................................................................73

Ramada Viscount Gort Hotel......................................................... 81

Watson Land Services (1994) Ltd.................................................75

Rancan Group Inc. / Ranchers Welding..................................... 29

Welders Supplies Ltd........................................................................76

Redwood Motor Inn.......................................................................... 41

Western Financial Group................................................................40

Reliable Metal Buildings Ltd........................................................... 18

Western Heritage Services...............................................................3

Rocking Horse Energy Services.................................................... 62

Western Motel..................................................................................40

Royal Lepage...................................................................................... 47

Western Safety Sign Co.................................................................. 43

Royal Oak Inn & Suites..................................................................... 41

Westman Premier Homes Ltd....................................................... 38

R.T. Jebb Electric............................................................................... 24

Westman Wellsite Services LLC................................................... 47

the advertiers publication possible. Manitoba Oil & Gas Review 2013

SASKATCHEWAN 2013

DEL Communications Inc. is working for you. Publications mail agreement #40934510

The voice of the oil industry in Saskatchewan.

Image courtesy of Occupational Health and Safety Division – Saskatchewan Ministry of Labour Relations and Workplace Safety.

Tight and shale oil plays in the WCSB Fraser Institute: Saskatchewan very attractive for Canadian petroleum exploration and development Oil boom creates new opportunities for Saskatchewan’s construction industry Pilot oil upgrader could lead to bigger things in the Battlefords The unconventional renaissance

TEXT

A B O IaT MAN G s Review TRY

INDUS OBA’S OIL & GAS SERVING MANIT

Oil &

British ColumBia’s natural gas industry Being driven By lng potential enCana introduCes tool to manage hydrauliC fraCturing fluid additives

2013

nexen pursues a top-tier shale gas play in northeastern B.C.

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optimism and Caution for the horn river Basin produCers group: spring aCtivity update

Watford City: in the bullseye of the Bakken

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AGREEMENT #4093

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Bakken oil brings wealth of change to Sidney, Montana

ts 2012 om Manitoba Oil Fac Province’s Oil Bo lities Adapt to the Regional Municipa nt me est Inv d Top Province for Manitoba Ranke nitoba nicipalities of Ma r Oil Producing Mu Facility in Crome | New Transload p anu Cle and Spills n

s: Brandon | Virde Community Profile

Crude-by-rail services expedite takeaway capacity N.D. addresses infrastructure challenges in Bakken oil counties Potential impacts to the oil industry of proposed federal tax legislation

We offer outstanding professional and quality service in the areas of: Trade & Association Publications | Rosters & Directories Qualified Sales & Editorial Team | Creative Design

DEL

Communications Inc.

Suite 300 - 6 Roslyn Road, Winnipeg, Manitoba, Canada R3L 0G5

www.delcommunications.com

SERVICE LINES

COMPLETION & PRODUCTION Service Rigs Snubbing Units Wastewater Treatment Equipment Rentals Coil Tubing CONTRACT DRILLING Drilling Rigs Camp & Catering Oilfield Supplies Rig Builds & Repair Drilling Rigs (U.S.)

BUSINESS UNITS

COMPLETION & PRODUCTION Precision Well Servicing Live Well Service Terra Water Systems Precision Rentals

As Canadaâ&#x20AC;&#x2122;s largest well servicing contractor, Precision Well Servicing (PWS) provides customers with quality staff and equipment to provide a full slate of services including: completions, workovers, abandonments, well maintenance, high-pressure and critical sour well work and re-entry preparation. Precision Well Servicing rigs are deployed from key centres in Manitoba, Saskatchewan, Alberta and British Columbia to reduce travel, increase efficiency and lower total well costs for customers.

CONTRACT DRILLING Precision Drilling LRG Catering Columbia Oilfield Supply Rostel Industries Precision Drilling (U.S.)

VIRDEN OFFICE

204 748 2381

ESTEVAN OFFICE

306 634 8886

SWIFT CURRENT OFFICE

306 778 7707

AREA MANAGER Pat Sinclair 306 461 9046