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Volume 5, No. 02 >> Supplement, Canadian PLANT >> June/July 2010
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STILL BIG BUSINESS
Oil sands development will be smarter and leaner HIGHLIGHTS Avoid costly plant shutdowns 5 A new reality for natural gas 7 Sustainable Energy Technologies powers up 8 Oil sands ethics questioned 10
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Editorial
COVER PHOTO:
Taking trade to the next level
SHELL’S ATHABASCA
6
OIL SANDS PROJECT 3
A
n RBC provincial outlook offers a note of interest. The western provinces that suffered the most during the recession are projected to grow the fastest in 2010, which is a good omen for Alberta. The recession caused its economy to contract for the first time since 1986. Exports took a major hit, declining 42% over the year, but an Export Development Canada (EDC) report sees Alberta experiencing the second strongest rebound with 16% growth this year. Canadian exports are forecast to rise 11% and 7.6% in 2011, but peeking behind the trade numbers reveals all is not as well as it should be, according to the Conference Board of Canada. It contends Canada’s trade in real terms has been flat over the past decade, and that future success depends on doing much more to be truly competitive in a tough international marketplace. We certainly have been missing out on opportunities in China and other Asian countries but other sins noted by the Conference Board include: a lacklustre performance in the increasingly important services trade; relatively slow adoption of the ascending international business mode of integrative trade; and a poor showing in climate-friendly goods and services. The report calls for more deliberate action in a number of areas including adapting to a higher dollar, being more competitive, removing competitive obstacles and significantly, diversifying trade. Canada is presently negotiating a free trade deal with the European Union (EU), which is inciting the usual protectionist rhetoric about loss of sovereignty, industry and jobs. These are the same concerns expressed during free trade and NAFTA negotiations in the latter 1980s and early 1990s. For the record, bilateral trade increased 52% with the US. Employment has showed steady gains over the years, rising from 14.9 million jobs to 15.7 million by the early 2000s, and manufacturing managed to hold steady throughout this onslaught of prosperity. Currently 87% of our exports go to the US, while a paltry 4.7% go to the EU, a marketplace that is similar to our own in many ways and consists of 27 countries, 500 million people and $19 trillion in gross national product. Although Canada’s trade relationship with the US has been lucrative, the events of the past year have demonstrated the folly of placing too many of our market-board protected eggs in one basket. Exports to the US plummeted last year by 35% and America’s ongoing domestic and international difficulties make Canada’s diversification of trade all the more necessary and urgent. Canadian officials see a potential $12-billion gain for our export coffers by 2014 if a deal is concluded, but the Europeans would like to see an end to our protectionist marketing boards and they’d like to have a fair crack at public sector procurement. To what degree would manufacturers benefit or suffer if municipalities and provinces had to abandon policy tools such as local procurement requirements? How would this balance against having open access to European markets? These are questions Canadian negotiators will have to weigh against any deal they hope to secure, but as an exporting nation, we should reject protectionism out of principle and be prepared to compete and win in expanded, open export markets. Joe Terrett, Editor Comments? E-mail joe.terrett@plant.rogers.com.
Vol. 5, No. 02, June/July, 2010
A supplement to Canadian PLANT
Editor: Joe Terrett 416-764-1546 joe.terrett@plant.rogers.com Features Editor: Noelle Stapinsky 416-764-1449 noelle.stapinsky@rci.rogers.com Contributing Editors: Ron Richardson, Steve Gahbauer Art Director: Kathy Smith 416-764-1542 kathy.smith@rci.rogers.com Junior Web Producer: Jessica Mirabelli 416-764-1316 jessica.mirabelli@rci.rogers.com Director of Sales, Marketing and Customer Service: Laura Goodwin 416-764-1492 laura.goodwin@rci.rogers.com District Sales Manager: Dean Walter 416-764-1776 dean.walter@rci.rogers.com Advertising Representative: Jason Lofkrantz 416-764-1521 jason.lofkrantz@rci.rogers.com
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5
6
7 Features
>> OPERATIONS
5 MAINTENANCE Planning far enough in advance, strict scheduling and an adequate budget will result in more efficient, less costly plant shutdowns.
>> INDUSTRY
6 ENERGY There’s still plenty of opportunity in the oil sands, but development will be phased in, smarter and there will be a much sharper eye on costs. 7 A new era for natural gas means industry suppliers will have to adjust to lasting supply and lower prices.
>> SUSTAINABILITY
8 SOLAR POWER The sun is shining on Sustainable Energy Technologies as it pursues solar energy opportunities.
Departments
4 Industry View PLANT Pulse 5 Labour Relations 9 Product Showcase Events 10 Postscript
Mail: Canadian PLANT, Circulation Dept. 7th Floor, One Mount Pleasant Road, Toronto ON M4Y 2Y5 Subscriber Services: To subscribe, renew your subscription or to change your address or information, please visit us at www.rogersb2bmedia.com/plnt. Mail Preferences: Occasionally we make our subscriber list available to reputable companies whose products or services may be of interest to you. If you do not want your name to be made available, please contact us at rogers@cstonecanada.com or update your profile at www. rogersb2bmedia.com/plnt. Canadian PLANT—established 1941, is published by Rogers Publishing Limited, a division of Rogers Media Inc., One Mount Pleasant Road, Toronto, Ontario, M4Y 2Y5. Montreal Office: 1200 avenue McGill College, Bureau 800, Montreal, Quebec, H3B 4G7. Subscription Price: Canada $69.00 per year, Outside Canada $141.00 US per year, Single Copy Canada $5.50. Plant is published 8 times per year except for occasional combined, expanded or premium issues, which count as two subscription issues. Printed in Canada, contents of this publication are protected by copyright and must not be reprinted in whole or in part without permission of the publisher. Publications Mail Agreement #40070230. Return undeliverable items to: Canadian PLANT Circulation department., 8th Floor, One Mount Pleasant Road, Toronto ON M4Y 2Y5. U.S. periodicals registration no. 0010-881 at Lewiston, N.Y. US Postmaster: Send address changes to Rogers Media, PO Box 4541,
8 Buffalo, New York, 14240, USA Performance claims for products listed in this issue are made by contributing manufacturers and agencies. No responsibility for the accuracy of these performance claims can be assumed on the part of Canadian PLANT or Rogers Media and its agents or distributors. Contents copyright© 2010 by Rogers Publishing Limited, may not be reprinted without permission. Canadian PLANT receives unsolicited materials (including letters to the editor, press releases, promotional items and images) from time to time. Canadian PLANT, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. This statement does not apply to materials/pitches submitted by freelance writers, photographers or illustrators in accordance with known industry practices. Our environmental policy is available at www. rogerspublishing.ca/environment. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund (CPF) for our publishing activities.
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ISSN 1915-7541
Canadian PLANT WEST 3
Departments
>> Industry View Agri-paper project gets $400,000 boost
Economic developments and trendS N&L Sask Ont Canada BC Que Alta Man PEI NB NS
REAL GDP GROWTH 2010
% change
0.0
0.5
1.0
0.5
2.0
2.5
3.0
3.5
4.0
4.5
Source: Statistics Canada: RBC Economics Research
The largest upward revisions of GDP from March were for Quebec (3.5% from 2.8%) and Alberta, up from 2.5% to 3.1 per cent.
Alberta rebounding 2010
A
lberta’s economy is expected to rebound this year and next, with growth projected at 3.1% and 4.2%, according to the latest forecast by RBC Economics. “The recession was particularly tough for Alberta’s economy, which contracted for the first time since 1986,” said Craig Wright, RBC’s senior vice-president and chief economist. “However, the recovery now looks to be taking shape, with a sharp rise in home building activity and renewed interest in the oil and gas sector combining to fuel growth in the province.” The report noted a drop in residential construction, oil and gas services, machinery manufacturing and retail trade were particularly damaging during the recession, causing Alberta’s economic performance to lag most other provinces. More recently, the oil and gas sector has been boosted by improved market conditions and recent changes to Alberta’s rules on royalties. However, the unemployment rate still sits near the highest point in 14 years. Wright said this has limited the inflow of Canadians from other provinces, although steady gains in jobs are expected to restore positive immigration patterns as the economy improves. According to the report, retail sales rose strongly in the first quarter of 2010, with new car dealerships posting their biggest advance since mid-2006. Alberta is now forecast to show the fastest growth in retail sales among the provinces, after suffering the sharpest decline last year.
LA SALLE, MAN.: A consortium led by Prairie Pulp and Paper is assessing the potential of producing paper products from agricultural crop byproducts and has received a $400,000 investment from the federal and Manitoba governments. The consortium, which includes Bannatyne Financial, the Manitoba Straw Producers Co-op Ltd., the Manitoba government and SNC Lavalin Engineering, is employing an agricultural pulping process to produce letter-sized paper for computer printers, fax machines and photocopiers. Winnipeg-based Prairie Pulp and Paper has just finished testing the first 3,000 sheets of prototype paper with commercial paper buyers across North America and will use the government investment to produce up to 200,000 sheets of paper for further testing with customers. The consortium’s long-term goal is to build North America’s first commercial scale non-wood pulp and paper mill in rural Manitoba, which would require a capital investment of approximately $600 million. The mill would produce 200,000 tonnes of paper annually, create employment for 300 to 500 people.
BC offers smarter power incentives VANCOUVER: A new BC Hydro program could help BC’s industrial sector save about 400 gigawatt hours of electricity annually over the next four years, enough to meet the annual power needs of close to 20,000 homes. The Power Smart Partners Transmission program offers incentives and rebates to help companies in the pulp and paper, mining, solid wood, manufacturing and oil and gas industries manage and reduce energy use.
BC’s Clean Energy Act directs BC Hydro to meet 66% of the province’s incremental electricity needs through efficiency and conservation by 2020. PHOTO: STOCK
It offers up to 100% funding for energy efficiency projects under $1 million and up to 75% funding for energy efficiency projects over $1 million. The program will also promote an integrated energy management approach consisting of auditing energy use, setting targets, monitoring energy use and increasing employee awareness and education. Link to www.bchydro.com.
day4 begins work on German PV plant BURNABY, BC: Day4 Energy Inc., a Burnaby, BC supplier of solar electric products, has started construction of a turnkey 1.8-megawatt ground mounted photovoltaic (PV) power plant in Niedereschach-Fischbach, Germany. The project is being built for an unnamed private investor group. The plant is expected to use approximately 9,800 48MC Day4 modules.
NG plant for Dawson Creek CALGARY: Spectra Energy is building a new 200-million cubic feet per day (mmcf/d) natural gas processing plant west of Dawson Creek to meet growing demand in at its Montney play in northeast BC. “The new plant is an important part of our growth strategy and our now about $1.5 billion investment
opportunity in northeast BC,” said Doug Bloom, president of Spectra Energy Transmission West, a natural gas infrastructure company based in Houston. He said the new plant, its capacity fully contracted, will be built in two phases with the first 100 mmcf/d of processing capacity available in late 2011. The remaining capacity will be available in early 2013.
Alberta exports surging in 2010 CALGARY: Alberta is forecast to have the second strongest export rebound among the provinces in 2010, growing by an expected 16%, according to an Export Development Canada (EDC) report. “Following a punishing 42% decline last year, energy exports are forecast to rise 21% in 2010. Overall, however, export levels still remain well-below previous peaks, with exports of agrifood and drilling equipment remaining depressed in 2010,” said Peter Hall, EDC’s chief economist. EDC’s provincial forecast also noted that export growth will rise by a further 7% in 2011. The energy sector accounts for 68.3% of the province’s export total. A key sub-sector, crude and petroleum products, is forecast to grow by 18% this year and 9% next year. The industrial goods sector accounts for 11% of Alberta’s exports, and EDC forecasts that the sector will grow by 17% in 2010 and a further 7% in 2011. Petrochemicals represents the majority of Alberta’s industrial goods exports, where recovering US industrial activity will drive demand for ethylene and its derivatives through 2011, raising prices. While higher feedstock costs are forecast to contribute to upward price pressures, the increase will be mitigated by a significant expansion in global capacity.
IBC to distribute CN8 alloy VANCOUVER: IBC Advanced Alloys Corp. has signed a binding memorandum of understanding with Swissmetal Industries Ltd. for exclusive Canadian distribution of its CN8 high performance alloy. IBC will be introducing the advanced copper nickel tin alloy, UNS C72900, to the oil and gas sector as well as the aerospace market. CN8 is a high-performance material for mechanical applications with highly demanding specifications, such as aerospace bearings or oil drilling tools. Rousseau Modular Drawer System Rousseau offers products with premium quality, reliability and a Lifetime Warranty on their drawer rolling mechanism! Innovative design, flexibility of dimensions and accessories, allows for total organization. Reclaim workspace with Rousseau Drawers in Shelving with a 400 lb capacity and fit into over 35 brands of shelving. CONTACT INFORMATION:
Carolyn Cuke Marketing Communications Agent Toll Free: 866-463-4270 Email: info@rousseaumetal.com www.rousseaumetal.com
4 Canadian PLANT WEST
June/July 2010
Maintenance << Operations
Avoid the costly shutdown
blues
Plan, schedule and budget to achieve better turnarounds By Robert Robertson
S
hutdowns can be a high-stakes game for oil producers and other Alberta manufacturers. Having production down longer than the approved and budgeted time frame will lead to increased costs, poor labour use and lost revenue. The good news is maintenance departments can improve turnaround performance. FT Services turnaround manager Darren Truscott and his team in Fort McMurray, Alta. are focused on improving reliability and shutdown management performance. Key turnaround factors include planning, scheduling and budgeting, but he also advocates re-thinking shutdown contract strategies. “I believe traditionally when scheduled shutdowns aren’t planned and scheduled well, there’s about an 80% chance the budget will be overshot by some variance,” says Truscott. “It takes discipline, channel and scope to kick it [turnaround] out into the maintenance world. The shutdown needs to be planned properly. As well, oil companies must embrace incentive-based contracting to improve turnaround performance.”
Calgary-based Cenovus Energy was formed late last year when Encana Corp. split into two highly focused and independent publicly traded energy companies: integrated oil and pure-play natural gas. With more than 3,000 staff, Cenovus operates a steam-assisted gravity drainage (SAGD) production facility at Christina Lake, which is located approximately 120 kilometres south of Fort McMurray. Shane Tebb is CMT construction supervisor, Christina Lake Construction, for Cenovus Energy. Taking on the new construction job role in December 2009, Tebb had been more heavily involved in company shutdowns. And working 10 years on site at Christina Lake, Tebb knows what it takes to plan, budget and implement a successful turnaround.
Staying on schedule “You can’t really allow anything to slip away. And if you don’t stick to the schedule, you’re going to get bit,” says Tebb. “Obviously, there are critical paths and some exceptions to the rule. The more you can stay with the schedule, however, the better you’re going to be.” Tebb says a company shutdown was to be held over eight days in September
Harness 25 tons of lift with a C25,000
E
verything is big in Canada’s west: the mountains, the grizzlies and industry, so naturally in the manufacturing, forestry and construction sectors, there’s a lot of big stuff to move around. Combilift Ltd., the Irish long-load handling specialist, has added a 25-ton lift truck to its line up that will handle big lifting jobs such as large fabricated components, large-diameter pipes, timber and even building modules. Its C25,000 model, recently unveiled at its headquarters and plant in County Monaghan, A C25,000 lifting two Combi-CB forklifts weighing Ireland to journalists it flew in from 30 world almost 12 tons. PHOTO: COMBILIFT markets (PLANT among them), is powered by a 170 hp John Deere 6068 HF engine and measures 5 by 5 metres, with a 3.2-metre-high cab. The company has carved out a niche for itself in the world’s forklift market by producing machines that can deftly handle long or awkward loads. One of the unique features of its trucks is three-wheel, four-way manoeuvrability. It allows an operator to pick up a load, back up, turn the wheels 90 degrees and head out, thus eliminating the need for the wide turning space arc other forklifts require. However, putting proportionate single wheels on the C25,000 would have resulted in an unworkable platform height, so Combilift’s engineers put double wheels on the front and back ends to keep the height of the 2,600 millimetre platform to 1,150 millimetres. Manually adjusting the forks, which have a 4-metre reach, would also be a challenge, so the trucks sport hydraulic fork positioners. Combilift has a C25,000 in operation at Bladeroom Group’s plant in Cinderford, Gloucestershire, in the UK. The company uses it instead of costly overhead gantry cranes or a gigantic counterbalance truck (too big for the manufacturing area) to move around the 18-ton, 14 by 4.2-metre modular data centres it manufactures. The cost of one of these babies? Martin McVicar, managing director and one of Combilift’s founders and owners, puts the Canadian price at about $500,000. For specs link to www.combilift.com/En/PRODUCTINFORMATION.aspx and click on “C-Series.”
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Canadian PLANT WEST 5
Testing oil at Cenovus Energy's Foster Creek facility. PHOTO: CENOVUS ENERGY
last year. There were things that went well with this shutdown. For example, turnaround milestones were laid out in advance and the engineering department met them, but the shutdown was extended to 11 days and costs doubled. “Maintenance managers need to know every second of the day what’s going on. Because it’s such a short duration and busy time, you have to know the shutdown like the back of your hand,” says Tebb. “Make sure you have the right people in the right place at the right time. Safe execution, regulatory compliance, restoring capacity and continuous improvement should be the main focus of any shutdown.” Terry Wireman, senior vice-president, CPMM and CMRP with US-based Vesta
Partners LLC, says the biggest mistake manufacturers and their maintenance departments make is not knowing the true financial impact that shutdowns have on profitability. This involves understanding the value of the shutdown process, which takes into account both the expense and cost side of the corporate ledger. “During shutdowns and turnarounds, companies can decrease their costs by focusing on optimizing the productivity of each tradesperson (internal and contractor) involved in the work activities,” says Wireman. “This is accomplished through the use of good planning and scheduling, shutdown project management and resource balancing. The most Continued on page 6
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So choose the pressure sensors you can always count on. Ask for ASCO.
For product information: www.ascovalve.ca/sensors Tel: (519) 758-2700 ascomail@asco.ca
Industry
Struggling with shutdowns Continued from page 5
important consideration is to research the costs and timing involved with any shutdown.” The way Al Johnson sees it, smaller oil companies and other types of manufacturers are the ones that struggle the most with shutdowns. The senior asset management consultant with Calgary-based Clearpass Inc. believes a lack of proper planning is the biggest mistake that organizations make with their shutdowns. He also said management has a role to play, which will drive effective turnarounds. “The big guys with large facilities have a lot more experience and … dedicate the time and resources necessary to the planning of the shutdown. Smaller operations, however, don’t give themselves enough time to plan it properly,” says Johnson. “This includes trying to do too much work in the time they have allocated for the shutdown. Another mistake is made when you don’t dedicate someone to plan the turnaround.”
Plan in advance He says no less than six months is needed to start the planning. It’s also important to set a date after which you can’t include additional work without approval or a cost benefit analysis being done. Joel Levitt, president of US-based Springfield Resources, says planning should include a checklist for each phase of the turnaround. Remaining involved with contractors is one way to better manage shutdown costs. He further urges oil companies to know where their shutdown equipment rental dollars are going. “You have to take a long-term view towards shutdowns. For example, you’re planning the next one, completing the prior one or executing the current one, you record the lessons learned and place them into a checklist,” says Levitt. “Depending on the complexity and level of hazard, you should be spending around 5% of the direct labour hours in planning. If you have a 100,000-hour event, you really need 4,000 to 5,000 hours to plan it [shutdown]. How you handle contractors is important. Levitt notes they will generally give you a schedule, but you have to be on the ground. Inputs of hours must also be properly planned. “When I was on site at Syncrude, they had 141 rented cranes. Know when you no longer need rental equipment, especially if it’s just sitting around.” Rob Robertson is a freelance business writer and editor based in Burlington, Ont. E-mail three_r_ media@cogeco.ca. Comments? E-mail joe.terrett@ plant.rogers.com.
6 Canadian PLANT WEST
>> Energy
Oil sands are still booming But development will be phased in, smarter and leaner By Nordahl Flakstad
W
hile activity in northeast Alberta may not be as red-hot as a few years ago, the oil sands will Suncor oil sands plant in Fort McMurray, Alta., where hydrotransport pipelines are used to deremain an important source of business for Caliver crushed and sized ore to primary extraction. PHOTO: SUNCOR ENERGY nadian manufacturers and suppliers. That was the message driven home to representatives of more than 400 national and international businesses who attended the recent development and technological innovation are being applied in 10th National Buyer/Seller Forum in Edmonton. Organized by the more measured ways than in the past. Alberta government and Canadian Manufacturers & Exporters Jess McConnell, ConocoPhillips Canada’s vice-president for (CME), the forum allowed manufacturers to show what they have Capital Projects, described the Surmont Phase 2 project (owned to offer and gave oil sands firms a chance to explain where they 50-50 with Total Canada) being developed 60 kilometres southare headed and what goods and services they’ll need to get there. east of Fort McMurray. Procurement for the project’s central and Woven into the optimistic assessments were cautions against field facilities are occurring under an EPC (engineering, procurerepeating overruns and excesses of the past, plus calls for smartment and construction) agreement but ConocoPhillips, as the er, leaner and “smaller-bite” approaches to development. operator, will do all the subsurface work. Don Thompson, president of the Oil Sands Developers Group, Of ConocoPhillips’ Canadian production (290,000 bbd), 73,000 a non-profit organization representing oil sands operators and bbd already come from oil sands, a figured expected to reach developers, told the forum that while the past year was challeng90,000 bbd by the end of this year (including production from its ing for the Canadian economy and the energy sector, “I’m feeling existing Surmont Phase 1). In 20 to 30 years, with more than one pretty optimistic about where we are heading.” million acres in the Athabasca region, ConocoPhillips anticipates Noting that during the next 25 years, the oil sands are capable its oil sands production will reach 900,000 bbd. Given its longof generating $1.7 trillion in wealth while creating 456,000 jobs term capital commitment, McConnell observed, “the downturn across Canada, Thompson stressed the industry will remain a last year did not materially affect our strategy for oil sands.” “cornerstone of our economy and energy security.” Surmont 2, which uses steam-assisted gravity drainage (SAGD) Almost 400,000 barrels of bitumen a day (bbd) of new capacity in-situ recovery and has regulatory approval for 110,000 bbd of under construction will be added to 1.8 million bbd of existing caproduction, is targeted for start-up in 2015. Its proven reserves pacity. Close to 2 billion bbd of projects already have regulatory could support up to 400,000 bbd of production. approval and a similar capacity is under regulatory review. About ConocoPhillips will invest $350 million over the next five years $4 billion annually are channelled into new construction. Howon heavy oil technologies, especially on advances to reduce ever, ongoing demand for goods and services at already operating steam used per barrel produced. This will curb water requireoil-sands facilities is often overlooked. ments and reduce the release of greenhouse gases. Maintaining existing oil sands output requires $18 billon a Suppliers tapping into those opportunities must meet Conocoyear—about a third of it for MRO-related goods and service supPhillips standards for safety, environmental stewardship, busiporting current production. And, Thompson emphasized, “this ness transparency and predictability—including costs. goes on for the entire life of this resource, which in some cases Although a global company, ConocoPhillips remains committed to stretches out 40 or 50 years.” local content and aboriginal communities. It expects the same of its “While capital and new construction tends to get the headlines, suppliers. (For more on supplier requirements, log on www.conocothe real flywheel of this economy is that we are building the phillips.ca and click “vendor relations”). long-term, sustainable operating requirements of the oil sands Ian Young, Cenovus Energy’s vice-president of new resource infrastructure. Every time a piece of equipment is built, it must be plays, discussed the Foster Creek and Christina Lake in-situ proprepaired and maintained. Every time that happens, the opportuerties, which came under the wing of the oil-focused company nity exists to make it more reliable, cheaper to operate and to when it was spun off last year from natural-gas giant Encana improve its environmental performance.” Corp. Foster Creek and Christina Lake, which produce respecRather than employing open-pit mining, the predominant techtively about 100,000 and 15,000 bbd (soon to increase by 40,000 nology to-date, 80% of Alberta’s oil sand reserves that are more bbd), are jointly owned with ConocoPhillips (which provides USthan 200 feet underground will require in-situ production. The latbased refining) but operated by Cenovus. Plans call for increasing ter has only emerged in the last decade as commercially viable for Foster Creek capacity to 210,000 bbd, which will be combined coaxing bitumen to the surface without disturbing that surface. with production from other Cenovus leases. In-situ relies on a mix of established and emerging technolo“Historically, we have focused our work in manageable phases gies—among others, underground combustion, solvents-assisted of about 30,000 barrel per day,” Young said. processes to reduce energy and water requirements, toe-to-heel Working with an approved manufacturers’ list (check www. air injection, electrical stimulation and using geothermal energy cenovus.com and “contractor connection”), Cenovus emphasizes as a heating source. a low-cost structure that utilizes repeatable designs and smaller, While there is commitment to expanded production, questions ongoing initiatives that spread out demands on the supply chain. linger about how much of the bitumen will be upgraded in AlIn this way, Young suggested: “We plan to keep our contractors berta. Answers, Thompson suggested, “will depend very much on and suppliers busy for a very long time.” the spread between bitumen and light oil. There is a little more constraint when it comes to new projects. I don’t think you will Nordahl Flakstad is an Edmonton-based freelance writer. ever see the return to the large number of projects at one time E-mail nordahl@flakstad.edmonton.ab.ca. that you saw before.” Several presentations highlighted how new approaches for Comments? E-mail joe.terrett@plant.rogers.com.
June/July 2010
A new era for natural
gas
Industry suppliers must adjust to lasting supply and lower prices
By Nordahl Flakstad
T
echnical advances in natural gas extraction and new discoveries of deposits are poised to radically alter the fuel’s production, processing and delivery in North America. As explorers and developers adapt to vast new unconventional gas finds, those who supply to the producers, processors and pipelines also face changes in where and how they do business. The challenges and opportunities arising from these changes for manufacturers and service providers were covered at the National Buyer/Seller Forum for Alberta energy producers and suppliers, held in Edmonton in March. Speaking to delegates at a forum seminar, Brad Hayes, president of Calgary-based Petrel Robertson Consulting Ltd., outlined recent transformations in the natural gas scene and their ramifications. “The message is that the unconventional gas resource is huge and it’s in many different parts of the country,” he said. The upshot is shortages and risingprice scenarios predicted just a few years ago won’t come to pass. North America has entered an era of abundant natural gas and lasting, lower gas prices. Another seminar speaker, Kevin Heffernan, vice-president of the Canadian Society for Unconventional Gas, urged manufacturers and service providers to adjust to these new market conditions. Historically, the Western Canada Sedimentary Basin (WCSB), which covers portions of Alberta, Saskatchewan and northeastern BC, has held most—some 226 trillion cubic feet (tcf)—of Canada’s marketable natural gas reserves. These WCSB reserves are tied in to distribution networks and currently account for most of Canada’s 6.9 tcf of annual natural gas production. However, the last decade has seen increased focus on tapping tight, or low permeability gas sands in the Deep Basin of Western Alberta and the Montney area, straddling northwestern Alberta and northeastern BC. While existence of those tight-gas formations were known, the gas couldn’t be captured until special hydraulic fracturing technologies were applied to them a few years ago. Shale gas, another source of unconventional gas, is prevalent in a current “hot” play, the Horn River Basin north of Fort St. John, BC. All this may sound like good news; however, numerous shale gas discoveries have been made elsewhere in North America, and some of them, notably in Texas, already are producing. Shale gas resources are also confirmed in the eastern parts of the US and Canada. Fields include Utica (with 150 tcf in place) in southeast Quebec, Nova Scotia’s Horton
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Natural gas production for use at Suncor Energy’s oil sands and refining operations.
Bluff (130 tcf) and large discoveries in the Marcellus shale formation centred in Pennsylvania. Many of these new-found resources in Central Canada, the US Mid-West and Northeast, lie close to existing large markets for Western Canadian conventional gas. Conceivably, these new shale gas regions, which have been net importers—including Western Canada—could themselves become major gas producers and even exporters. This could seriously impact Western Canadian gas production, which faces longer and costlier hauls (of possibly $1 or more per 1,000 cubic feet) to major markets. This, in turn, could impact manufacturers and suppliers positively and negatively.
Major developments Though far from major markets, large tight-gas resources in Alberta’s Deep Basin (430 tcf) and Montney (700 tcf) are near existing gas-processing and gathering facilities. In contrast, observed Hayes, “places like Utica would be starting from scratch.” Furthermore, unlike the vast, open tracts where much Western Canadian production occurs, eastern fields often are near major population centres and therefore may not be well-suited for major gas developments. This could favour Western Canadian gas production. On the other hand, milder climates in shale gas production areas such as Texas facilitate easier year-round operation and give them competitive advantages relative to Canada. Drawing major volumes of gas from areas such as BC’s Horn Basin will require new processing and gathering infrastructure. These new Western Canadian finds could present opportunity for manufacturers, but developing areas such as southeast Quebec also could generate
Canadian PLANT WEST 7
PHOTO: SUNCOR ENERGY
demand for production and processing infrastructure, compression equipment, chemicals and other materials. New gas finds also herald changing player line-ups. Conventional gas wells
were generally drilled at least a mile apart, and this allowed entry by small and junior companies. In contrast, Hayes noted tight-gas and shale resource plays require much closer well spacing and more horizontal drilling, calling for higher investment. Therefore, it’s likely only major players can access the funds and know-how for such developments. This could force suppliers of goods and services to work within a larger and more sophisticated supply-chain regimes, akin to those adopted by oil sands operations. Although the playing field is changing, developing this more abundant, somewhat cleaner energy resource presents opportunities to manufactures and service providers who can adapt to the challenges. Nordahl Flakstad is an Edmontonbased freelance writer. E-mail: nordahl@flakstad.edmonton.ab.ca. Comments? E-mail joe.terrett@plant. rogers.com.
Sustainability
>> Energy
Powering up for
solar
Sustainable Energy targets the Ontario market
By Joe Terrett, Editor
C
limate change is hot right now— pardon the word play—creating opportunities for innovative companies ready to tackle a growing global market for cleaner energy technologies. Solar power is looking particularly promising, specifically photo voltaic (PV) technology—an area that Sustainable Energy Technologies Ltd. is, ahem…shining. The Calgary-based developer and manufacturer of power inverters for gridconnected solar PV systems is making global deals and expanding operations to Ontario where it expects to do some significant business under the Ontario Power Authority’s Feed In Program.
The company, formed about 12 years ago, has developed innovative and unique power inverters commercialized under its SUNERGY trademark (and part of the PARALEX line of solar generator products and systems) that increase the energy yield of individual solar modules. The technology is based on nine US and Canadian patents (additional patents pending) and was originally applied to inverters for attaching fuel cells to the power grid, said former president and CEO Ron Bucher (who resigned and left in May after assisting with Sanjay Razdan’s transition to the executive position). “Basically we’ve changed solar cells so they can operate at a lower voltage, which is a unique technology in terms of efficiency because it has solved a lot of
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Sustainable Energy's solar panel installation in San Lorenzo de Morunys, in Catalina.
problems acquiring and harvesting solar energy,” says Bucher. The inverters used with solar cell arrays on institutional and commercial rooftops or on the ground, handle rapid power fluctuations to maintain a continuous connection to the grid. Sustainable Energy’s technology is based on parallel wiring rather than the more conventional serial wiring commonly used in the industry. Serial operates like a line of old Christmas tree lights. One light goes out, the whole line is down. In a parallel series of solar cells, if one malfunctions the rest continue to operate. Bucher says a parallel system increases efficiency by 5% to 15 per cent. The system also addresses a safety issue. Most rooftop installations are high voltage (600 to 1,000 volts), which makes installation and access a more highly charged affair. Sustainable Energy’s system is 100 volts or less, and below the 120-volt extra low voltage threshold of the International Electro-Technical Commission.
Right place, right time The company appears to be in the right place at the right time. The PV industry is the fastest growing segment in the world, says an ARC Advisory Group study. The Boston firm says the solar inverter market was $3.1 billion in 2008 and it’s forecasting more than $12 billion by 2014. “This is a very dynamic market that is going against the tide of the remnants of the global recession, and while Europe has been a leader in PV solar farm implementations, China and the US are racing to take over the lead,” said Steve Clouther, the author of ARC’s Solar Inverter Worldwide Outlook. “But trying to sell a component into established markets is like trying to paddle upstream in a canoe,” says Bucher. Ontario represents its first opportunity for a steady revenue stream, which is why Sustainable Energy is moving its manufacturing there. Bucher says software engineering will remain in Calgary but inventory, assembly and testing will be moved to the Ontario location likely in the Niagara Peninsula region. The company currently employs about 30 people, but when the 80,000 to 90,000 square-foot plant is operational, 300 to 400 people will be added to the payroll.
8 Canadian PLANT WEST
PHOTO: SUSTAINABLE ENERGY
With the feed in tariff, a manufacturer with a 100,000 to 120,000 square feet of roof could put in an installation and be paid a guaranteed 71 cents per kilowatthour of power hooked up to the provincial grid. Bucher says a250-kilowatt generator using Sustainable Energy’s equipment will cost about $1.25 million. “You get the feed in rate guaranteed for 20 years, [so] the system will be paid off within two and half years and you will make back between $4 million and $5 million over the remaining 17 ½ years.” He notes solar power is lagging in the US, but it will certainly take off. If business is good in Ontario, the company will extend its reach in North America and to other export markets. But that’s not to say the company hasn’t been busy. Included among a steady release of announcements, the company has secured a deal for next generation SUNERGY inverters for its two PARALEX rooftop systems in Germany totalling 400 kilowatts in rated capacity. And it’s teaming up with two other players in the solar power sector— Mitsubishi Electric Sales Canada Inc. and Voltaire Power Company Ltd.— to market its low-voltage inverters for residential and commercial markets in Ontario; and provide a training program for solar dealers and integrators. Another collaboration involves Morrison Hershfield Ltd., a North American engineering and management firm that will provide complete project design and installation services for commercial and institutional installations under the feed in tariff program. It’s also partnering with Plexus Corp., a contract electronics manufacturer, to manage the electronics supply chain for all markets and to manufacture SUNERGY inverters for the European market. And its SUNERGY ELV (extra low voltage) and LV (low voltage) inverters have been certified for interconnection with the power grid in Germany, as well as France, Belgium and the Czech Republic. Sustainable Energy’s next step? Build out its manufacturing capabilities as distribution and development projects come on line and demonstrate and position itself to be player in global climate-friendly trade. Comments? E-mail joe.terrett@plant. rogers.com.
June/July 2010
Product Showcase << Departments >> SenSors Monitor tanks via internet LOE ultrasonic level sensors from Automation Products Group Inc. (APG), a sensor supplier based in Logan, Utah, monitor liqLOE-2126 uids or solids in remote or local tanks using a simple internet hook-up. ultrasonic level Wiring is easy using the Power Over Ethernet (POE) feature with the sensors. easily programmed and configured AutoSense software. Data is transmitted to a dedicated website that uses an open-source MySQL database format to ensure user data is available in any application format. The LOE-2126 model provides a detection range of one to 25 ft., the LOE-3136 covers 1.5 to 40 ft. and the LOE-6126 detects from 4 to 180 in. with a blanking distance of just one inch. Sensor readings are uploaded to a database via a standard ethernet (TCP/IP) connection where the level or volume information is viewed from any computer with internet access, via a passwordprotected web page. Programming the sensor and/or web-server triggers the website to send an e-mail, text message or both when a predetermined level or volume is reached. www.apgsensors.com
Distance measuring, regardless of surface VDM28 distance measurement sensors from Pepperl+Fuchs provide readings from 200 mm up to 8 m with repeatable accuracy of <5 mm, resolution of 1 mm and a response time as fast as 10 ms, regardless of target surface. The 88 x 26 x 54-mm sensors feature pulse ranging technology, which provides more precise measurement than phase correlation and time-of-flight techniques. Pepperl+Fuchs, a global manufacturer of factory and process automation products based in Twinsburg, Ohio, says short pulses of light are emitted and reflected off the target, then received back to the sensor. This procedure is repeated up to 250,000 times per second. The power of a single pulse is up to one thousand times more intense than the pulses generated by sensors that emit permanent light beams. As a result, PRT-based sensors deliver far more accurate, reliable and repeatable results. The sensors feature a simple onetouch “teach” process, they’re immune to cross-talk and provide reliable operation in temperatures ranging from -30 up to 50 degrees C. www.pepperl-fuchs.us
>> Events Tank Storage Symposium Canadian Institute July 7-8, Calgary Get the latest information available on critical tank issues. Visit www.canadianinstitute.com/tankstorage.htm. ISA Automation Week ISA Oct. 4-7, Houston The International Society of Automation’s (ISA’s) technical automation conference will present techniques and solutions for creating more efficient, productive and economical manufacturing processes. ISA training courses and standards meetings will also be held concurrently. Visit www.isa.org. COMSOL Conference 2010 COMSOL Group Oct. 7-9, Boston The COMSOL Group, a multiphysics modelling software provider, is hosting this gathering of engineers from a broad spectrum of industries for state-of-theart multiphysics simulations. Visit www. comsol.com/conference2010/usa.
www.plant.ca Canadian PLANT WEST 9
Detect transparent targets at high speeds Baumer has redesigned its FRDK 14 retro-reflective photoelectric sensor, adding a teach-in button for programming. Reprogramming in just 20 ms allows rapid, on-the-fly changes in sensing tasks that include the detection of glass, PET and transparent packaging in response times as short as 0.1 ms. It emits LED light to a reflector to detect the presence, placement/orientation or size of the transparent object and provides reliable data whether the object is positioned directly in front of the sensor or closer to the reflector. The IP67-rated housing was redesigned to include a transparent rear panel for easy viewing of the operating and reception LEDs from any angle, simplifying installation and operation. Two new connector styles are now available: a moulded M12 (S14) connector and a new metal four-pin M8 connector (S35A) that provides improved resilience and increased torque values. The Baumer Group is a Frauenfeld, Switzerland-based manufacturer of sensors and sensor systems with offices in Burlington, Ont. www.baumer.ca FRDK 14 retro-reflective photoelectric sensor.
Departments
>> Postscript
Oil sands projects: a question of ethics By Janet Keeping
T
he unfolding disaster in the Gulf of Mexico has prompted attempts to exonerate what’s happening in northern Alberta’s oil sands. Does the massive oil spill in the Gulf of Mexico make the oil sands look good by comparison? Actually it doesn’t, for even if it’s true that development of the oil sands wouldn’t do as much harm as the current fiasco in the Gulf, it doesn’t follow that oil sands projects are ethically acceptable. An analysis of how, at what pace and
Sometimes, we are faced with only bad alternatives, “and then we have to choose the least damaging,… ” even whether the oil sands should be developed entails careful consideration of a broad range of ethical factors. For example, is it appropriate to burn relatively clean natural gas to produce dirty synthetic crude? Or, can a development strategy that imperils the Mackenzie River in the Northwest Territories, part of a globally significant watershed, be justifiable? As importantly, is it acceptable to let one of the greatest institutions
ever developed—the Rule of Law—be eroded in pursuit of the oil sands? Unfortunately, no such ethical analysis has been done. Indeed, when ethical considerations are raised—such as, is it justifiable to wreck an ecosystem to fuel over-sized, over-powered and inefficient vehicles—the people raising them are too often told, (by those NY Times columnist Tom Friedman recently described as “petro-determinists”), that
#1 FOR A REASON With 35 years of experience across all levels of the welding and cutting industries, Tom Wermert still has the same devotion for work as he did at age 20. “I just love the industry and what I do,” he says. As Product Line Manager for Thermadyne® Welding Products, Tom insists the products go through rigorous testing to ensure only the highest quality product makes it to the market. “Our customers expect the best performance and the most dependable welding and cutting products, and it’s my job to see that they get it.” As a former lab employee, testing new welding products and processes, Wermert understands what it takes to make professional-grade tools. “Take the Arcair® AngleArc® K4000® Manual Gouging Torch for example,” he says. “It didn’t become the industry standard by accident.” The K4000 is used to scarf or remove defective welds and defective metal blemishes from castings or weldments. It’s made for heavy-duty metal removal applications, ideal for weld preparations in fab shops and shipyards. “Products like the K4000 are why Arcair remains the number one name in air carbon arc manual torches,” he says. TOM WERMERT Product Line Manager, Welding Products Thermadyne Industries Tom carries the torch – will you? THERMADYNE, A GLOBAL CUTTING AND WELDING LEADER, joins the American Welding Society in encouraging individuals to practice the art, craftsmanship and professions of welding, metalworking and fabrication. Victor, Thermal Dynamics, Thermal Arc, Arcair, Tweco, Stoody, Cigweld and TurboTorch are among the Thermadyne family of brands that you can count on for safety, reliability and quality.
escaping our addiction to oil is “impossible—so don’t bother.” Instead of careful consideration, we too often get PR-speak from the industry. Who hasn’t heard such proclamations as the oil sands industry is not failing to protect people and the environment but rather failing to communicate effectively the good job it’s doing in protecting people and the environment. Even assuming that full development of the oil sands would not wreak havoc equal or greater to what we are seeing in the Gulf, less bad—even if true—doesn’t make it OK. A project that leads to the extinction of 10 species is worse than one that leads to the extinction of five, but that doesn’t mean the extinction of five is OK. There are gradations of bad, but all are still bad. Sometimes we are faced with only bad alternatives, and then we have to choose the least damaging, but our first ethical obligation is to avoid ending up in such a dilemma in the first place. The developed and developing economies have missed many opportunities both to avoid succumbing to an oil addiction and then, once hooked, they have missed more opportunities to kick the habit. But now is not the time to dwell on missed opportunities but to inquire, à la Friedman, how we can react to the catastrophe in the Gulf so as “to break our addiction to oil.”
Did you plug the hole yet, Daddy? We have to reason clearly if we are to learn anything from the Deepwater Horizon horror on how to reform our behaviour at home. But it’s also important that we not lose sight of the ethical heart of the issue while making our decisions. Friedman credits US President Barack Obama’s 11-year-old daughter Malia with the requisite moral clarity when she asked her father recently, “Did you plug the hole yet, Daddy?” Friedman wrote: “Kids get it. They ask: Why would we want to stay dependent on an energy source that could destroy so many birds, fish, beaches and ecosystems before the next generation has a chance to enjoy them? Why aren’t we doing more to create clean power and energy efficiency when so many others, even China, are doing so?” The parallel with the oil sands is simple: Why are we destroying the earth (committing “ecocide” as one writer puts it) before we have even begun to explore the many more benign alternatives available and thus before we know such a hazardous course actually needs to be pursued? Surely, our guiding principle should be “the oil sands if necessary, but not necessarily the oil sands.” Janet Keeping is the president of the Calgary-based Sheldon Chumir Foundation for Ethics in Leadership. E-mail info@chumir.ca.
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Comments? E-mail Joe.terrett@ plant.rogers.com.
www.thermadyne.com 10 Canadian PLANT WEST June/July 2010
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