Celebrating Alberta’s
energy
2013-2014 November 2013
Box 1629 | 515 Highway 10 East Drumheller, AB 403-823-2580 information@drumhellermail.com www.drumhellermail.com
2 | Celebrating Alberta’s Energy 2013-2014
TheDrumhellerMail.com | November 2013
What’s inside ....
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Thank You For Participating .... Introduction
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Messages from our MP and the Minister of Energy
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Messages from our MLA and the Mayor of Drumheller
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Steady growth for drilling expected
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Alberta ranks third
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Renewable energy resources
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Adams Industrial Supplies Alberta Ink N Toner Allied Distributors Angie’s Window Tinting Big Country Construction Big Foot & Co. Inc. Broerson Construction Ltd. Broersen Construction Ltd. Calmena Centre Street Insurance Contact Safety Service Ltd. Dean’s Machine Inc. Directional Drilling Doug’s Tank Service Encana Enform Express Laundromat/Dry Cleaning For Sight Vision Centre Fountain Tire Grant’s Oilfield Services Inc. Image Crafter Signs Inc. Jason Hale, MLA
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Sales Wendy Braun | Kathryn Chambers sales@drumhellermail.com
Production Barb Coney | Michael Love Hiba Charles | Darrel Nastiuk information@drumhellermail.com
Editorial Patrick Kolafa | Michael James news@drumhellermail.com
515 Highway 10 East | Box 1629, Drumheller, AB T0J 0Y0 | 403.823.2580
As your Member of Parliament, I salute our energy sector and all those involved. We appreciate your dedication and commitment.
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Crowfoot Constituency Office 4945 - 50 St., Camrose, AB T4V 1P9
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Editor/Publisher Ossie Sheddy information@drumhellermail.com
Crude Oil & Water Hauling
KCL Methenol Waxsol & Xysol
Kevin Sorenson, MP Kold Katcher Merv’s Welding & Oilfield Serv. Newalta Numberz Chartered Accountants Palliser Well Service Quick Print RCOilfield Services Ltd. React Rick Strankman, MLA Sam’s Truck Wash Ltd. Sarge’s Oilfield Services Smith Earth Moving Services Suncor Swab King Ltd Tarpon Terroco Oilfield Services Town of Drumheller Ultimate Safety Uncle Rob’s Oilfield Services URS Flint Vortex
Phone: 1-800-665-4358 Fax: 780-608-4603
Hon. Kevin Sorenson, M.P. Crowfoot
e-mail: kevin.sorenson.c1@parl.gc.ca
TheDrumhellerMail.com | November 2013
Celebrating Alberta’s Energy 2013-2014 | 3
Introduction We have the power. We have the power to move things, the power to move people, and the power to move a country. In fact, Drumheller has been supplying the energy needed to build a nation for over 100 years. Sure the names have changed, and indeed even the products. We have gone from a time of coal mining magnates to multinational oil and gas companies supported by the skills of local entrepreneurs. Through these eras the community has adapted to the industry and the industry has adapted to the needs of the community. Today there is a robust and diversified economy owed much to the success of the energy industry. Less than an hour away, coal is being used to create electricity. All around oil is being recovered to power the economy, and the industry continues to look at new ways to use natural gas, the cleanest burning fossil fuel. And the innovation doesn’t stop there. Industrial capacity wind generation now surrounds the valley as key players begin to recognize the importance of alternative forms of energy. The next exciting innovation is not on the industrial scale, but at the grassroots. Starland County has taken the initiative to introduce solar power to some of its county facilities, and with Alberta government is making it feasible for farmers to produce their own power. The future is unwritten, but the spirit that has made our community thrive for more than a century will guide it to the next innovation.
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Celebrating Alberta’s Energy
Drumheller-Stettler Constituency Office #22, 170 Centre Street Box 1929 Drumheller, AB, T0J 0Y0 p. 403-823-8181 f. 403-823-6586 drumheller.stettler@assembly.ab.ca
| VEHICLE DECALS |
Rick Strankman Your Member of the Legislative Assembly of Alberta
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4 | Celebrating Alberta’s Energy 2013-2014
TheDrumhellerMail.com | November 2013
Ken Hughes
O
NERGY HAS shaped Alberta’s past and will continue to shape our future. Last year alone, Albertans received $7.6 billion in revenue from non-renewable resources to help pay for important public programs, services and infrastructure. The development of Alberta’s signi icant energy reserves will continue to bene it communities across Alberta for many years to come. The creation of jobs, a vibrant economy, and high standard of living are some of the many reasons people come to work and live in our province. The past year brought economic challenges in the form of lower prices for our oil, due to the limited access Alberta has to new markets. Our government continued to show leadership by supporting access to new markets which will earn better prices for our oil. Increased revenue will help pay for the public programs and services we all enjoy. In addition to increasing market access, responsible resource development remains a
welcome
Kevin Sorenson MP (Crowfoot)
NE HUNDRED years ago, the settlers – the earliest citizens of Drumheller – calculated that the riches all around this area would serve them well in building a strong community and way of life. The coal miners gave us our great start here in Drumheller and we became one of the major coal producing regions in our young nation. When it comes to Canada’s status as ‘Energy Super Power’, our Drumheller coal miners were one of Alberta’s irst pioneers. By 1948, we struck oil! After that, natural gas became the fuel that we harvest. As oil and gas superseded coal as a source of energy in the 1950s, Drumheller’s local economy shifted its emphasis to agriculture and then tourism and more. The strong foundation of our energy economy helped our later development. Drumheller continues to be part of Alberta’s and Canada’s energy wealth and today, many irms in our area service our massive energy industry.
Minister of Energy
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We know that Canada is an ‘exporting’ nation and in Alberta, energy is our major export. In Ottawa, our government is aggressively working to enhance Canada’s position as a stable, secure and environmentally responsible energy supplier to North America and the world. Canada’s diverse energy mix is contributing to North America’s economic prosperity, while also allowing us to make a signi icant contribution to global energy security and economic stability. Kevin Sorenson, MP (Crowfoot) 4945-50th Street, Camrose, Alberta, T4V 1P9, call 780-6084600, toll-free 1-800-665-4358, fax 780-608-4603 or e-mail Kevin.Sorenson.c1@parl.gc.ca.
priority for our government. For example, the new Alberta Energy Regulator, launched this summer, will ensure even more ef icient and environmentally responsible development of Alberta’s resources. Our job is to tell Alberta’s energy story in Canada and across the world, and to build partnerships that will ensure more prosperity for our province. Thank you, Drumheller, for your hard work and entrepreneurial spirit which have placed you prominently on the map and make you an important part of our energy story. Ken Hughes, Minister of Energy Government of Alberta
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TheDrumhellerMail.com | November 2013
Celebrating Alberta’s Energy 2013-2014 | 5
Terry Yemen
MLA Drumheller Stettler
Mayor of Drumheller
T
D
HE PROVINCIAL electoral riding of Drumheller Stettler is blessed with an abundance of energy resources that are a large and important component of the economy of Alberta. The contributions of the energy industry are evident in a great many community projects, such as Community Facilities, Arenas, parks and funding for sports teams and programs. The Alberta oil and gas industry creates employment for a large portion of the population and the inancial bene it is felt in virtually every sector of the Alberta economy. New technologies are constantly being developed to improve energy ef iciency and to minimize environmental impacts. These technologies
are being initiated by the producers themselves as part of their corporate responsibilities to the communities they operate in. It is my pleasure to salute the energy industry throughout Alberta and recognize them for their contributions to Alberta.
RUMHELLER AND AREA has been fortunate to be involved in the energy industry for over 100 years. The Town was built on the coal mining industry that helped fuel all of Canada. After World War II we started a transition period to oil and gas and this industry quickly became an economic driver for the Town of Drumheller and area. We continue to bene it from the many positives of having vibrant oil and gas industry in the valley. Oil and gas has brought along a number of local startup support companies, which has helped to create the sustainable community of Drumheller. The companies and their employees’ community support have and will continue to be a great asset to the Town of Drumheller.
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welcome
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A proud supporter of Alberta’s oil and gas sector, amongst the finest in the world. Jason Hale, MLA
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Strathmore-Brooks Constituency Energy Critic Constituency Office: P.O. Box 873, 403-2nd Ave. West, Brooks, AB T1R 1B7 Phone: 403.362.6973 Fax: 403.362.5923 Strathmore Office: Bay A1, 510 Hwy 1, Country Lane Mall, Strathmore, AB Phone: 403.934.4400 strathmore.brooks@assembly.ab.ca
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6 | Celebrating Alberta’s Energy 2013-2014
TheDrumhellerMail.com | November 2013
Increasing oil production strengthens Canada’s position as a preferred supplier Courtesy CAPP The Drumheller Mail
NCREASING OIL SANDS and conventional oil production continues to strengthen Canada’s position as a preferred supplier to North American and global energy markets. CAPP’s 2013 Crude Oil Forecast, Markets and Transportation report forecasts Canadian crude oil production will more than double to 6.7 million barrels per day by 2030 from 3.2 million barrels per day in 2012. This includes oil sands production of 5.2 million barrels per day by 2030, up from 1.8 million barrels per day in 2012. While the overall trend is similar to last year’s forecast, the notable differences include an increase in total production of 500,000 barrels per day by 2030. The increase includes incremental conventional production of 300,000 barrels per day by 2030 and oil sands production of 200,000 barrels per day by 2030. This year’s forecast also includes a progressive shift toward more supply from oil sands in situ, or drilling, production.
declining production trend over the last decade. Production was 1.2 million barrels per day in 2012. It is expected to rise to 1.4 million barrels per day by 2015 and remain at about that level throughout the forecast period. Supply from the Atlantic Canada offshore is unchanged throughout the forecast period at about 200,000 thousand barrels per day. Increasing Canadian oil supply is aimed at markets in Eastern Canada, traditional and new markets in the United States (displacing imports from less secure foreign sources) and growing markets in Asia. “Our industry is focused on energy security and reliability, economic growth and environmental performance,” Stringham said. “We
want to be the preferred supplier to a diversity of markets – the most reliable, open, transparent, responsible oil producer in the world. This will create jobs throughout Canada and provide secure and reliable supply for our customers.” A broad range of new transportation projects, including both pipeline and rail, are being advanced to move this growing supply to markets. Timely regulatory decisions on these new infrastructure projects will enhance Canada’s international competitiveness in attracting the investment needed to support production growth and realize market opportunities, benefitting all Canadians. The full report is available at www.capp.ca/forecast.
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“Stronger performance for conventional tight oil in Canada and the United States, coupled with oil sands growth from Canada, enables greater North American energy security,” said Greg Stringham, CAPP vice-president, markets and oil sands. “It creates further opportunities to replace foreign crude oil imports in both Canada and the United States, and to increase exports to new markets beyond North America.” Crude Oil sands production growth reflects Canada’s supply potential and the growing international demand for oil. In 2012, 1.8 million barrels per day were produced, including 800,000 barrels per day from mining operations and one million barrels per day from in situ operations. By 2030, in situ production is forecast at 3.5 million barrels per day and mining production is forecast at 1.7 million barrels per day. Conventional tight oil production is increasing because new technology allows industry to produce oil from formerly uneconomic resources, reversing a significant
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TheDrumhellerMail.com | November 2013
Celebrating Alberta’s Energy 2013-2014 | 7
Encana announces vision and strategy, bold action underway Calgary, Alberta (November 5, 2013)
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NCANA CORPORATION announced its clear vision and strategy today, earlier than initially expected, and has already started making the significant and bold changes needed to put Encana on track to be a leading North American resource play company. “We are doing what it takes to get Encana back to winning and we have already begun executing on our strategy with some of that impact being seen in our strong third quarter results,” says Doug Suttles, Encana President & CEO. “We have a focused long term plan in place, the resource base to support that plan and a talented team of people with the energy and drive to succeed.” The key points of Encana’s strategy are: • Focus its capital investment on five oil and liquids-rich resource plays in North America. • Continue to lower cost structures by leveraging its proven operational expertise and focusing operations to improve efficiency. • Grow liquids production to build greater commodity diversity in its portfolio while retaining significant high quality natural gas resource options. • Align the organizational structure with its strategy. • Reset the company’s dividend to align this return of cash to shareholders with current cash flow generation, while maintaining financial discipline and a strong balance sheet. • Unlock additional value from the portfolio through asset divestitures and an initial public offering (IPO) of its Clearwater mineral fee title lands and associated royalty interests. “Encana is focused on developing high quality resource plays in North America and continuously striving to operate in those plays more efficiently than our competitors,” says Suttles. “Our tremendous asset base offers us the opportunity to build a focused portfolio with exposure to different geographic regions and product diversity, providing quality investment options and the ability to prosper through variable commodity price cycles.” Through its disciplined and focused growth strategy the Company believes it can average a more than
10 percent compound annual growth rate in cash flow per share through 2017. “The Board is confident in this strategy because of the deep level of research and intense analysis undertaken by Doug and his team,” says Clayton Woitas, Encana’s Board Chairman. “We believe this is the right path forward for Encana.”
In addition to its investment in its top five plays and the Clearwater royalty business IPO, Encana will continue to seek opportunities to improve its portfolio and realize the full value of its massive asset base. The Company identified a number of assets that have considerable upside potential through a divestiture process scheduled to begin immediately.
Unlocking value from its portfolio The Company will invest approximately 75 percent of its 2014 capital into five high return oil and liquidsrich plays: the Montney, Duvernay, DJ Basin, San Juan Basin and Tuscaloosa Marine Shale. “One of Encana’s competitive advantages is our team’s ability to develop large, complex resource plays where we can implement our full resource play hub process that is proven to drive down costs and create higher returns,” says Suttles. “The five high quality liquids-rich plays we’ve chosen to focus on offer the scale and running room we need to realize that advantage.” Encana also plans to transfer its significant mineral fee title land position and associated royalty interests across southern Alberta – approximately five million net acres where the Company holds the oil and gas rights and can collect royalties on production – into a separate company through an IPO by mid-2014. Encana intends to retain a significant stake in the new company which will manage leasing activities in the area currently known as Encana’s Clearwater play. This gives the Company the opportunity to unlock value from what it believes is an undervalued royalty business in its portfolio while offering the potential for longer term cash flow generation to Encana.
Taking action for 2014 The Company is in the process of aligning the organization with its focused strategy and the new structure is expected to result in an approximate 20 percent workforce reduction. Encana will consolidate its office locations to Calgary, Alberta and Denver, Colorado resulting in the closing of its Plano, Texas office. “In order to align our organization with our strategy, we have had to make a number of exceptionally
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difficult decisions,” adds Suttles. “The restructuring that is underway reflects our shift from funding about 30 different plays to focusing our resources on five key areas. We will work as hard as we can to make these staffing decisions quickly and thoughtfully and we will treat everyone affected with respect as we work through this very difficult part of our transition.” The Company expects its capital program to be approximately $2.5 billion for 2014 and intends to issue more detailed guidance for that program in mid-December 2013. “I’m excited about Encana’s future and encouraged by how our people have rallied as one team to get Encana back to winning,” says Suttles. “While we have a lot of challenging work ahead of us, I am more confident than ever that we will be successful.” Dividend Declared On November 4, 2013, the Board declared a dividend of $0.07 per share payable on December 31, 2013, to common shareholders of record as of December 13, 2013. “The dividend is an important component of total shareholder return. The current level is consistent with maintaining a strong balance sheet in a volatile commodity price environment and recognizes the attractive investment options within our portfolio,” adds Suttles.
1
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8 | Celebrating Alberta’s Energy 2013-2014
TheDrumhellerMail.com | November 2013
Steady growth in drilling activity predicted Submitted The Drumheller Mail
I
N ITS THIRD update to the 2013 Canadian Drilling Activity Forecast, the Petroleum Services Association of Canada (PSAC) expects to see a three per cent increase over 2012 drilling levels. The revised 2013 forecast estimates a total of 11, 415 wells (rig releases) to be drilled, which represents a slight increase of 15 wells from PSAC’s original 2013 forecast
released in early November 2012. PSAC is basing its updated 2013 forecast on average natural gas prices of $3.40 CDN/mcf (AECO) and crude oil prices of US$90/barrel (WTI) and the Canadian dollar averaging $1.00. “This updated forecast is a reflection of a continued healthy pace for our industry,” said PSAC President and CEO, Mark Salkeld. “Our forecasted activity levels for this year are levels that meet PSAC members’ expectations given they are looking
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The Petroleum Services Association of Canada is anticipating a steady increase in activity in 2013 over last year. photo by Patrick Kolafa
for a steady pace of activity to last differential which has resulted in year’s, despite experiencing a wetter some uptick in the number of oil than normal spring resulting in an wells being drilled as industry shifts extended break up.” their operations toward oil plays. On a provincial basis, the July reviOverall, the expected levels of drillsion to the April update includes a ing activity coupled with increasing decrease expected in Alberta from efforts to get product to new markets 7,563 to 7,190, representing a five points strongly to a positive sign per cent change. As well, the updated for steady growth over the next few outlook anticipates an uptick in years.” British ColumThe Petro“This updated forecast is a bia from 457 leum Services reflection of a continued healthy wells to 506 Association of pace for our industry.” an 11 per cent Canada is the increase, a national trade Mark Salkeld, president and CEO of PSAC decrease of acassociation tivity of six per representing cent in Saskatchewan to 3,081 wells, the service, supply and manufacas well as a decrease of nine per cent turing sectors within the upstream to 613 wells in Manitoba. petroleum industry. PSAC represents “There are many factors in play a diverse range of nearly 250 memthat are having an effect on activity ber companies, employing more levels,” said Salkeld. “Among those than 80,000 people and contracting having the biggest impact are onalmost exclusively to oil and gas exgoing low gas prices, current higher ploration and production companies. prices for oil and tightening of the
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TheDrumhellerMail.com | November 2013
Celebrating Alberta’s Energy 2013-2014 | 9
Facts and Statistics
Alberta’s energy • Alberta ranks third, after Saudi Arabia and Venezuela, in terms of proven global crude oil reserves. • In 2011, Alberta's total proven oil reserves were 170.2 billion barrels, or about 11 percent of total global oil reserves (1,523 billion barrels). • Almost all of Alberta's proven oil reserves are found in Alberta's oil sands. Of Alberta's total oil reserves 168.7 billion barrels, or about 99 percent come from the oil sands; and the remaining 1.5 billion barrels come from conventional crude oil. Notably, Alberta accounts for an overwhelming majority (about 98 percent) of Canada's oil reserves.
• In 2011, Alberta exported about 1.3 million barrels per day (bbl/d) of crude oil to the United States (U.S.), supplying 15 percent of U.S. crude oil imports, or 7 percent of U.S. oil demand. Total oil consumption for U.S. in 2011 was 18.9 million bbl/d. Canada as a whole exported 2.23 million bbl/d of crude oil to the U.S., or about 25 percent of the U.S. total crude oil imports in 2011. • In the fiscal year 2011/12, the Alberta government collected about $4.5 billion in royalties from oil sands projects. This was the third fiscal year in a row when oil sands royalty was the top source of Alberta’s non-renewable resource revenue. • Oil sands investment increased to $17.2 billion in 2010, a 63 percent increase from $10.6 billion in 2009. In 2011, oil sands investment has been projected to further increase to $21.6 billion.
Statistics from www.energy.alberta.ca
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10 | Celebrating Alberta’s Energy 2013-2014
Suncor’s Wintering Hills Wind Project: proud to be a part of your community
We strive to create energy in ways that deliver economic prosperity, social well-being and a healthy environment. It’s a continuous journey of learning, engaging, improving. And a journey we’re proud to be making. Discover more in the 2013 Report on Sustainability at suncor.com/sustainability
TheDrumhellerMail.com | November 2013
TheDrumhellerMail.com | November 2013
Celebrating Alberta’s Energy 2013-2014 | 11
Suncor continues commitment to wind power Michael James The Drumheller Mail
W
HEN IT COMES to a commitment to renewable energy Canada, Suncor Energy has proven itself to be a leader. One of the main focuses of their renewable energy efforts has been in wind energy. “As an integrated energy company, Suncor is committed to developing and supplying energy options that meet the needs of both today and tomorrow. Suncor is a signi icant player in renewable energy in Canada. Our investments to date are focused on wind power and biofuels. We believe that wind power, a clean, safe and renewable energy source, is an important part of Canada’s future energy mix,” said Nicole Fisher, a media advisor with Suncor. In the Drumheller area, Suncor has demonstrated its commitment to wind power with two projects. In 2011, Suncor commissioned the Wintering Hills wind farm south of Drumheller. The Wintering Hills turbines are one of the largest Suncor projects in Canada, with 55 turbines producing 88 megawatts of energy. A second project is in the works for the Hand Hills near Delia, northeast
wind arm was constructed near Taber two years later with a similar capacity. Suncor’s wind capacity jumped in 2007 with the completion of a 76 Megawatt, 38 turbine, farm near Ripley, Ontario. In 2011, in addition to inishing Wintering Hills, they completed a small 20 Megawatt/8 turbine farm near Thamesville, Ontario. “The total installed wind capacity of these operations is 255 megawatts, enough to power about 100,000 Canadian homes per year,” said Fisher. Suncor is also awaiting approval for two more projects in Ontario which would see their capacity skyrocket by another 140 megawatts. “Suncor continues to evaluate new technologies in the market and to incorporate innovative ideas into our operations to minimize our impact on the environment,” said Fisher. “Wind energy is, and is expected to be, a key component of Suncor’s Suncor’s total wind capacity since 2007. So far, Suncor has a total capacity of 255 megawatts from commitment to advancing six facilities in Alberta and Ontario. In the Drumheller area, Suncor operates an 88 megawatts, 55 different forms of energy.”
of Drumheller. The Hand Hills wind power project aims to construct 54 turbines, producing a total of 80 Megawatts. The project is currently awaiting approval from the Alberta Utilities Commission. The goal is to have the Hand Hills wind farm up and running in 2015. The Drumheller area, according to Suncor, is an ideal location to invest in wind energy. “We chose the Drumheller area for these two projects because there is a wind resource, transmission access and supportive communities. When we look at wind resource we are looking for a place where there are
consistent, moderate wind speeds. In regards to transmission access, Drumheller is near load centers and has good transmission lines. There is also capacity on the lines in this area,” said Fisher. Suncor has continued to build its wind energy capacity for over a decade. In 2002, they completed their irst wind farm in Gull Lake, Saskatchewan. The farm is the smallest in terms of capacity at 11 megawatts from 17 turbines. In 2004, they built their irst in Alberta near Magrath, which is comprised of 20 turbines producing 30 megawatts. A second Alberta
turbine, facility in the Wintering Hills and is aiming to open an 80 megawatt, 52 turbine, farm in the Hand Hills near Delia in 2015. submitted
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12 | Celebrating Alberta’s Energy 2013-2014
TheDrumhellerMail.com | November 2013
Facts and Statistics
Alberta’s energy Production Of the total 168.7 billion barrels of proven bitumen reserves, about 80 percent is considered recoverable by in-situ methods and 20 percent by surface mining methods. Oil sands within 75 meters of the surface can be mined; whereas, oil sands below this threshold must be extracted using in-situ methods. In 2011, Alberta’s production of crude bitumen reached over 1.7 million bbl/d; of this surface mining accounted for 51 percent and in-situ for 49 percent. In 2011, about 57 percent of crude bitumen production was sent for upgrading to SCO in the province.
these projects are mining projects. By 2021, crude bituAs of January 2013, there were 127 operat- men production is expected to more than ing oil sands projects in Alberta. Only five of double to 3.7 million
bbl/d. On average it takes about two tonnes of mined oil sands to produce one barrel of SCO.
Statistics from www.energy.alberta.ca
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TheDrumhellerMail.com | November 2013
Celebrating Alberta’s Energy 2013-2014 | 13
Opportunity awaits in oil and gas sector Michael James The Drumheller Mail
O
PPORTUNITIES ARE EVERYWHERE for those wishing to make a career in the energy industry. Alberta is renowned for its energy potential and the same is true of the Drumheller area. Employment continues to rise in the energy industry, but vacancies remain commonplace. “For the mining, oil and gas industries, they had the highest employment increase for September, but still had the highest job vacancy rate, 18.4 per cent, in the Drumheller employment region,” said Jake Moore, business and
industry liaison with Alberta Works. “There are positions that have stayed open for quite awhile.” Moore explains there are a couple reasons why vacancies remain so high. “Some of it would be turnover, but it would be a combination of turnover and growth. Employment in the mining, oil and gas industries has been projected to grow 2.2 per cent for 2011 to 2015,” said Moore. For those wishing to start a career in the energy sector, already having some of the necessary skills and credentials will help, but are not essential. “Because we have a pretty low unemployment rate, any time you are looking for work it will be a little easier, but I would say you’re ahead of the game if you have some applicable skills,” said Moore. “Most companies are willing to try to find the right people and then develop them over a long term.” Local jobs could also lead up north eventually. “What might happen is companies will train someone locally, then they’ll go up north for a higher paying position,” said Moore. “It’s good news on an employee side, because they can get experience close to home, then be more ready for jobs up north.” Though there are opportunities abound, jobs within the energy sector can be physically and mentally demanding. “The average Albertan works 36.2 hours per week. In the energy sector it can be up to 46 to 48 hours, so there can be a bit more overtime,” said Moore. For more information on how to make a career in the energy sector in Alberta, visit the Alberta Works office on the second floor of the Riverside Centre at 180 Riverside Drive.
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14 | Celebrating Alberta’s Energy 2013-2014
TheDrumhellerMail.com | November 2013
Wintering Hills wind farm tests revolutionary technology Michael James The Drumheller Mail
T
HE DRUMHELLER AREA will help wind power take the next great leap forward. A new battery technology will soon be tested at the Wintering Hills Wind Farm south of Drumheller, which is owned by Suncor. The goal is to develop an on-site battery that can store the energy produced by wind turbines. “It’s a irst of its kind battery storage demonstration in Alberta. It’s ‘behind-the-fence,’ which means it will be installed within the boundaries of the facility where the actual (power) generation occurs,” said Kirk Andres, managing director of the Climate Change and Emissions Management Corporation (CCEMC). The CCEMC provided roughly half the funding to the $18.5 million project. “We have a mandate to help Alberta reduce greenhouse gas emissions and adapt to climate change. We do that through the discovery, development, and deployment of green technology,” said Andres. “Annually, we get somewhere in the neighbourhood of $70 to $80 million to invest in the very best
technologies we can ind.” Though there are a number of wind farms in Alberta, the battery project will be the irst time such technology has been attempted in the province. “It’s a transformative technology, so there is a bit of risk of it not working, but it could greatly help reduce emissions in the province. They (researchers) have been working on them, but haven’t quite solved the problem. This is a irst of a kind project in Alberta,” said Andres. “We’re very optimistic the technology will prove successful.” The project aims to address one of the challenges of wind power; keeping power lowing even when there is little to no wind. “The challenge with wind is you generate power when it’s blowing, but it doesn’t always blow continuously or when you think you need it. One of the obstacles has always been to convert that intermittent energy to a form where you can put it one the grid when you need it. This project is to explore exactly how we can do that,” said Andres. “If this works, it will go a long way to help greening the grid, which will give us a lot of emissions reductions in the province.”
Suncor’s Wintering Hills wind farm is the irst installation in Alberta to test on-site battery storage of wind energy.
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TheDrumhellerMail.com | November 2013
Celebrating Alberta’s Energy 2013-2014 | 15
Kevin Sorenson, M.P., Crowfoot Parliamentary Report
Celebrating
Alberta’s energy
Getting Canada’s Energy Resources to New Markets In our riding, many constituents know about our Conservative government’s efforts since 2006 to expand international markets for our agricultural products. In addition to agriculture, which continues to be a major industry in Alberta, natural resources and energy exports are full of potential. That’s why we have been successful cultivating new markets and enhancing existing ones. We know that we are an ‘exporting’ nation and it is challenging to increase our exports in an increasingly ‘global’ economy. Our government’s focus is on what matters to Canadians – jobs, growth and long-term prosperity. In our region of Alberta, agriculture continues to be our major industry. In Alberta, energy is our major export. In Ottawa, our government is aggressively working to enhance Canada’s position as a stable, secure and environmentally responsible energy supplier to North America and the world. Natural Resources Minister Joe Oliver is responsible for developing new markets for Canada’s energy products. Recently, the Minister delivered the keynote speech at the Global Energy Summit in New York City. Minister Oliver emphasized the pivotal contribution that Canada’s diverse energy mix can make to North America’s economic prosperity, while
also allowing us to make a significant contribution to global energy security and economic stability. In his speech, he points out that Canada has the resources in place to meet our own needs as well as the growing energy demands of global markets. Canada is well-positioned to help fill the demands for energy resources from countries who need them. In fact, Canada: has the third-largest known oil reserves in the world; has the fifthlargest production of hydroelectricity; is the fifth-largest producer of natural gas; is the second largest producer of uranium; and has the ninth largest installed capacity of wind power. Canada’s approach to the responsible development of natural resources includes supporting jobs, economic growth, environmental protection and the energy security of North America. Our plans also entail reaching new markets for our energy resources to create opportunities for Canadian companies. Since 2006, our government has invested more than $10 billion in green infrastructure, energy efficiency, clean energy technologies and the production of cleaner energy and fuels. Most recently, Canadians are considering TransCanada’s Energy East Pipeline Project Proposal. TransCanada has released the Deloitte & Touche LLP report on the job creation and economic
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benefits of their ‘Energy East’ proposal. The Deloitte report’s findings demonstrate that the Energy East pipeline project would generate high-quality jobs for Canadians, including Aboriginal peoples, in every province along the pipeline route. The report estimates that more than 10,000 full-time jobs would be created during the development and construction phase, and another 1,000 during the operation of the proposed pipeline. The project would also generate $35 billion in gross domestic products and $10 billion in tax revenues for municipal, provincial and federal governments. In Alberta, we are hopeful that this project would transport western Canadian oil to the east and new markets abroad. At the same time, pipeline safety an integral part of our government’s plan for Responsible Resource Development. We have increased protections and will only allow such energy projects to proceed if they are proven safe for Canadians after an independent, science-based environmental and regulatory review. If you have any questions or concerns regarding this or previous columns you may write me at 4945-50th Street, Camrose, Alberta, T4V 1P9, call 780608-4600, toll-free 1-800-665-4358, fax 780-608-4603 or e-mail Kevin. Sorenson.c1@parl.gc.ca.
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16 | Celebrating Alberta’s Energy 2013-2014
TheDrumhellerMail.com | November 2013
Alberta overflowing with renewable energy resources Michael James The Drumheller Mail
A
LBERTA IS UNQUESTIONABLY a world leader when it comes to energy production. Pump jacks dot the province and the hunt for oil and gas has never been more intense. However, there are many resources that remain virtually untapped. Renewable energy, which is slowly gaining traction in the province, has considerable potential. “There are a number of sources of renewable energy development we are interested in. There’s wind, solar, and geothermal,” said Kirk Andres, managing director of the Climate Change and Emissions Management Corporation (CCEMC). The CCEMC is an Alberta-based not-for profit which helps fund projects that help fulfill their mandate of reducing greenhouse gas emissions in Alberta. “We have a pretty strong energy economy in Alberta, so we have a responsibility to reduce our greenhouse gas emissions,” said Andres. “We have a climate change strategy in place. The targets are to reduce greenhouse gas emissions by 50 megatonnes by 2020 and 200 megatonnes by 2050. Everything we fund helps hit those targets.” Wind energy is a growing market in Alberta. Various parts of Alberta have some of the world’s best locations for wind turbines. The Wintering Hills, south of Drumheller, has a fully functioning wind farm constructed by Suncor and another has been proposed for the Hand Hills near Delia. “Wind power is a form of green energy, so it
doesn’t produce any greenhouse gases. The bulk of our power generation right now is coal,” said Andres. “It is a significant potential source of energy. Different parts of Alberta have world class wind resources and there a number of facilities generating power.”
“There are a number of sources of renewable energy development we are interested in. There’s wind, solar, and geothermal.” Kirk Andres, managing director of the Climate Change and Emissions Management Corporation (CCEMC)
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Alberta’s dry climate and sunny skies also bode well for solar power, which turns sunlight into electrical energy. The Drumheller area, which typically sees little rain and clear skies has a growing solar economy. Starland County, in particular, has been a leader in expanding solar power. “With solar, there are different kinds. There are the photovoltaic cells you might see on a house, for example. We just financed a project, which was a first of its kind in Canada, called concentrated solar. Imagine a set of mirrors that are curved. They basically take the sunlight and concentrate it to heat things, generate steam, and therefore power,” said Andres. Other potential sources of renewable energy include geothermal energy and utilizing Alberta’s waste from the forestry and agriculture industries. “The other thing we’ve playing with is the conversion (to energy) of biomass, so basically wood or straw, or any waste material from agriculture or forestry. It’s a renewable source of supply that can be converted in energy,” said Andres. Despite Alberta’s abundance of renewable energy resources, the challenge is to make building and operating green facilities economically viable. “There are a lot of opportunities out there. The challenge is that they can be marginal from an economic point of view, so unless somebody is prepared to subsidize them, they have to be able to stand on their own two feet,” said Andres. However, companies and all levels of government continue their commitment to renewable and green resources.
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TheDrumhellerMail.com | November 2013
Celebrating Alberta’s Energy 2013-2014 | 17
Facts and Statistics
Alberta’s energy Investing in research and technology The Alberta government recently invested $57 million directly into clean energy research.
Reducing Greenhouse Gas Emissions Alberta is the only jurisdiction in North America with mandatory greenhouse gas emission reduction targets for large emitters across all sectors. Our program includes a price on carbon, a regulated carbon offset market and a clean energy technology fund worth over $312 million (as of April 2012). We are achieving real results with more than 32 million tonnes of reductions to date off of business as usual. These steps are only our first. Alberta
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will ensure our industry operates under a comparable level of effort to our competitors. We will continue to push for policies that reduce emissions at the source. Climate change is fundamentally an energy issue – and we are all energy consumers. Ultimate success relies on curbing global consumption while reducing emissions at all stages, from production to use. information from www.oilsands.alberta.ca/cleanenergystory
Carbon Capture and Storage Alberta’s $1.3 billion commitment to this clean energy technology will result in a collection of projects, pipelines, storage and financing that is unique in the world. As carbon capture and storage is a global strategy to reduce greenhouse gas emissions, there are tremendous opportunities for those who have knowledge and experience they can provide to others around the world.
18 | Celebrating Alberta’s Energy 2013-2014
TheDrumhellerMail.com | November 2013
Strong third quarter results for Cenovus, driven by commodity prices and production Submitted The Drumheller Mail
C
ENOVUS ENERGY Inc. (TSX, NYSE: CVE) continued to expand its oil production in the third quarter as the company remains on track to achieve its goal of reaching more than 500,000 bbls/d of net oil production by 2023. The increased production, combined with stronger crude prices, contributed to solid growth in operating cash low from oil in the quarter. Operating cash low from oil production was $915 million, 40% higher than in the same period a year earlier. The increase was driven primarily by a 56% increase in operating cash low from oil sands. Cenovus’s oil sands operations bene ited from a $13.61 per barrel (bbl) increase in the average price of benchmark West Texas Intermediate (WTI), a 20% narrowing of the WTI to Western Canadian Select (WCS) differential to an average of US$17.48/bbl and a 6% increase in volumes compared with the third quarter of 2012.
Strong performance from Cenovus’s oil operations helped reduce the impact of a 75% year over year decline in third quarter operating cash low from its re ining operations to $133 million. The commodity price changes that led to higher realized prices for the company’s oil in the third quarter also resulted in higher feedstock costs for its re ineries. At the same time, market crack spreads fell by more than half from nearrecord highs reached in the third quarter of 2012. The gross margin from re ining was also negatively affected by costs for renewable identi ication numbers (RINs), which increased to $55 million, net to Cenovus, in the third quarter compared with $10 million in the same period a year earlier. Re ineries that do not blend renewable fuels such as ethanol into their gasoline and diesel are required to purchase RINs in the open market to comply with the Renewable Fuel Standards set by the U.S. Environmental Protection Agency (EPA). The EPA is reported to be considering a reduction to biofuel blending requirements next year,
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which has led to a signi icant drop in the cost of RINs recently. Operationally, the Wood River and Borger re ineries performed extremely well in the quarter, processing more oil, including record levels of heavy crude, and producing more re ined products than in the third quarter of 2012. The company anticipates fourth quarter re ining operating cash low of $100 million to $200 million excluding inventory adjustments, based on a crack spread assumption of US $10.50 per barrel. The stronger results from oil operations were largely driven by a signi icant increase in production at the company’s Christina Lake oil sands project. Christina Lake volumes increased 63% in the quarter compared with the same period a year earlier as a result of phase D reaching full capacity in the irst quarter of 2013 and phase E commencing production in mid-July. The Christina Lake increase helped push combined average oil sands production to nearly 102,000 bbls/d net in the third quarter, a 6% improvement over the same period in 2012. At Foster Creek, quarterly production decreased 22% year over year due to a variety of factors. A planned major turnaround reduced production by approximately 4,400 bbls/d net during the quarter. The turnaround is now complete and Foster Creek is producing about 54,000 bbls/d net. Cenovus has also been catching up on a backlog of well maintenance that was deferred from 2012. Most of the deferred maintenance is now complete, although the facility experienced minor treating issues when some wells were being brought back on in July, which had a slight impact on production. In addition, Cenovus is developing new operating procedures to address changes to the steam chambers as they mature in the initial areas of the project. Foster Creek is the irst commercial project of its kind in the oil sands industry and the initial
wells at the operation are entering a new stage of development. The company is assessing how best to manage this change in order to optimize production. The company anticipates gross production at Foster Creek to be between 100,000 and 110,000 bbls/d for the irst half of 2014 and steam to oil ratios (SORs) in the range of 2.4 to 2.5 as the company continues to optimize its operating procedures. Total conventional oil production, including Pelican Lake, averaged more than 75,000 bbls/d in the quarter, essentially lat compared with the third quarter of 2012. This re lects the July sale of the company’s Shaunavon tight oil assets in Saskatchewan, partially offset by increased production from the company’s horizontal well program in southern Alberta. Cenovus’s heavy oil operations at Pelican Lake increased production by 5% in the quarter, compared with the same period a year ago, as the company brought on more in ill wells and saw increased response from its polymer lood program. In the third quarter, Cenovus generated $189 million in free cash low, above what it invested in its operations. Cenovus invested $743 million during the quarter, nearly half of which went towards expansion phases at Christina Lake and Foster Creek. In August, the company also began plant construction for the irst phase of Narrows Lake, its next major oil sands development in northeastern Alberta. First oil production from Narrows Lake is expected in 2017. “We are expanding our oil sands operations with some of the best capital ef iciencies in the industry,” said John Brannan, Cenovus Executive Vice-President & Chief Operating Of icer. “Over the next decade, we expect to more than quadruple our current oil sands production to about 435,000 barrels per day net to Cenovus.”
TheDrumhellerMail.com | November 2013
Celebrating Alberta’s Energy 2013-2014 | 19
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