Canadian Well Construction Journal - June 2011

The Official Publication of the Canadian Association of Drilling Engineers

Canadian Well Construction Journal Volume 3 | Issue 6 | June 2011

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Canadian Association Of Drilling Engineers

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June 2011

Table of Contents Feature Stories Best Choice

10

Rigging Up

15

Enform Safety

17

Departments

President’s Message This will be my last President’s Message for the Canadian Well Construction Journal, as Eric Schmelzl will be the president for the 2011-2012 year starting in September. I would like to take this time to thank all of the current executives at CADE—there have been many changes in the association and without the support of the executives, your association would not have had the successful year that is has.

One of the highlights for CADE this year included developing a strong relationship with both the University of Calgary and SAIT Polytechnic, relationships I will continue to strengthen as the past president of CADE. I have also invited a graduate from each school to work with me as liaison with their respective schools to establish a legacy with CADE. This year CADE has worked hard to involve student groups as much as possible. The first CADE/U of C/SAIT student industry mixer was held in January and by all accounts was a huge success. The event was organized by the students and, in particular, Ramez Hanna Alla did a lot of work on the project and should be congratulated.

The incoming executive from the Petroleum and Energy Society at U of C (Joseph Lagasca, Ben Russell, Omar Moussa and Allison Yuen) asked me what benefits CADE garners from a relationship with our student members and vice versa, what benefits do our student members receive. In my opinion, as a professional engineer, I have to pay it forward and mentor the people entering our industry so the same mistakes that I made in the past are not repeated in the future. Sort of knock the sharp points off of the learning curve.

CADE has the ability to educate our membership with the monthly technical lunches and other events such as the Drilling Conference. When I meet and talk with our student members, they are keen on the drilling and completion side of the business, but I believe it is CADE’s responsibility to introduce our membership to the different and varied aspects of the business. Not everyone will be as interested or as fortunate as I have been in my career, and run drilling and completion operations. There is a multitude of opportunities existing in the entire field, from pumping, to tools, to rig design. The list goes on and on, and we need to introduce our members to these opportunities.

CADE benefits with a first look at the new crop of engineers and technologists as they prepare to graduate. With upcoming shortages of technical people, this represents a definite advantage for operators in particular as they find themselves having to market themselves to attract talent.

Again, thanks to the CADE executives for their support in the past year, never dull and always dynamic. Thanks to the members for their support in attending the luncheons, the drilling conference and the other functions hosted by CADE. And thanks also to all the volunteers who have made the past year so successful. I am looking forward to the next year and the direction your association is taking.

John Garden, P.Eng. President, Canadian Association of Drilling Engineers

Association News

4-5

Upcoming Events

4

Student Profile – SAIT: Jade Schick

6

Student Profile – U of C: Joseph Lagasca

7

Member Profile: Don Herring Stats At A Glance

9 18

On the cover: Patterson Drilling’s Rig 17E on location near Hinton, Alta.

Photo: Aaron Parker Follow us on

@CADE_CAN

Canadian Association of Drilling Engineers (CADE) 800, 540-5 Ave. SW, Calgary, Alberta T2P 0M2 Phone: 403 264-4311 | Fax: 403 263-3796 www.cade.ca Managing Editor: Christian Gillis Advertising Sales: Nick Drinkwater Published by: JuneWarren-Nickle’s Energy Group CADE’s mandate is to provide high-quality technical meetings to promote awareness of the drilling & well servicing industry. Through CADE, members and the public can learn about the technical challenges and experience gained from our speakers, who are most often CADE members themselves.

We invite you to join CADE and further your professional development.

Past issues of CADENews are available online.

Current issues of Canadian Well Construction Journal are available via email, to CADE members only. CADE is not responsible for any opinion or statement expressed in this publication.

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Canadian Well Construction Journal

June 2011

Association/Membership News Editor’s Note Welcome to the June issue of the Canadian Well Construction Journal. Well, breakup is done, depending on where you are working, and summer is right around the corner, hopefully. Road bans are coming off, equipment is moving and field staff can’t get hold of office staff as they are all rushing to the golf course. The summer, it seems, is gearing up to be just as busy as predicted going into breakup, which given where we were two summers ago is a relief for most.

This is our last issue until September and we have an article from Godfrey Budd relating to a huge driver of activity in the western Canadian oil and gas industry, horizontal drilling and completions.

We are continuing to review ideas for the 2011 technical luncheon presentations, as well as story ideas for the journal. Please don’t hesitate to contact us if you have any ideas for upcoming topics or issues you’d like to see presented at the luncheons or in print. We hope you, the members, will participate and continue to make these events interesting and successful. If you have any issues you’d like to see covered, please email me and we will do our best to get the story.

Don’t forget, we would like to publish any of your information and announcements on new products, new technologies and senior personnel changes for publication each month. Please forward any announcements to us, as we would be excited to run them in our new feature section.

We appreciate your continued support and look forward to seeing you at the upcoming luncheons.

Christian Gillis, Managing Editor, Canadian Well Construction Journal

christiang@deadeye.ca | phone: (403) 265-4973

CADE Technical Luncheon Date Tuesday, June 14, 2011

Place

The Westin, Calgary

Time

11:30 a.m.—Reception 12:00 noon—Luncheon 12:30 p.m.—Presentation

Speaker: David Collyer, CAPP, and Don Herring, CAODC Topic: CAPP/CAODC—Joint Presentation Don Herring: Education: Bachelor of Commerce (University of Alberta, 1970); Master of Arts, Economics (York University, 1973) Experience: Accountant, Amoco Canada Petroleum (two years); Economist, Energy Resources Conservation Board (three years); Senior Economist, Alberta Energy & Natural Resources (five years); Director, Resource Economics, Alberta Energy & Natural Resources (three years); President, CAODC (29 years)

David Collyer: Education: Petroleum Engineering and MBA, University of Alberta Experience: David Collyer was appointed president of the Canadian Association of Petroleum Producers (CAPP) on Sept. 15, 2008, after serving as president and country chair for Shell Canada. In his current position, Collyer is responsible for leading CAPP’s activities in education, communications and policy/regulatory advocacy on behalf of its members, representing over 90 per cent of the upstream petroleum production in Canada.

Why Become a CADE Member?

For drilling and completions specialists, CADE currently offers one of the best networking and knowledge sharing opportunities in the Canadian petroleum industry.

As of 2011, CADE has been active for 37 years. With more than 500 members from more than 300 companies, CADE represents a large spectrum of experience in all areas of operations and technologies. The skills and knowledge obtained by your participation in CADE will benefit you and your employer, with direct application to your professional career.

CADE offers various means for members to connect and share their insights. Monthly technical luncheons are held with technical and other topical industry presentations. Other membership benefits include our monthly publication the Canadian Well Construction Journal and a membership directory with the who’s who in the Canadian drilling industry. Our website at cade.ca is an excellent focal point for industry events, blogs and news. We are also active on linkedin.com.

Upcoming Events CADE Technical Luncheon Tuesday, June 14, 2011 The Westin, Calgary

CADE Technical Luncheon Wednesday, September 28, 2011 The Westin, Calgary

CADE Technical Luncheon Wednesday, October 26, 2011 The Westin, Calgary

Canadian Association Of Drilling Engineers

June 2011

Association/Membership News Welcome New Members NAME

COMPANY

TELEPHONE

EMAIL

Bill Bohdan

Parex Resources Inc.

403-237-1700

bb2831771149@shaw.ca

Jody Denis

Birchcliff Energy Ltd.

403-213-4830

jdenis@birchcliffenergy.com

Mark Franks

Conestoga Pipe Supply Corporation

403-513-3385

mfranks@polycore.ca

Sonja Houston

Student

403-606-0883

houston.sonja@gmail.com

Garret Madell

ConocoPhillips Canada

403-532-5217

garret.madell@conocophillips.com

Trent Marx

Resource Energy Solutions Inc.

403-245-0220

tmarkx@resourceenergysolutions.com

Leon Prebeau-Menezes

University of Calgary

403-714-9200

leonsworld@gmail.com

Danny Procter

Synerchem International

403-470-0065

danny.procter@synerchem.com

Devendra Rajcoomar

M-I SWACO

647-890-2338

devendrarajcoomar@gmail.com

Brian Renaud

ModuSpec Risk Management Services Ca. Ltd.

403-235-4007

brian.renaud@moduspec.com

Vanessa Sayers

587-999-7712

sayersv@shaw.ca

Gabriel Soo

Ryan Energy Technologies

403-697-6721

gabriel.soo@ryanenergy.com

Jordan Tanaka

Student

403-831-2266

jbtanaka10@gmail.com

Geoff V Thio

Enerplus

403-693-5079

gthio@enerplus.com

Tarang Tushar

Student

91-997-560-7977

tarang_tushar@yahoo.com

Robert Ulrich

Insight Downhole Tools

403-466-2161

r.ulrich@insightdownhole.com

Bradley Virginillo

Beleven Corp

403-860-3378

beleven@telus.net

Robert Wanjoe

Layfield Environmental Systems

403-236-4726

wanjoe@telusplanet.net

CADE Membership Renewals 2011-2012 CADE’s membership year is September to September. Over the summer, CADE members will receive an email and link to the renewal process and site. Please remember that the benefits of being a CADE member include APPEGA’s professional development hour, staying abreast of technological and industry advances, drilling conferences and great opportunities to network. All renewals/applications received on or before November 4, 2011, will be included in the CADE 2011-2012 Annual Directory (unless otherwise requested). Thank you for your support!

Members On The Move NAME

COMPANY

TELEPHONE

EMAIL

Bryan Lang

Black Swan Energy Ltd.

403-875-7800

blang@blackswanenergy.com

Lisa Woods

Sicotte Diamond Drill

403-237-6777

lisa.woods@sicottedrillingtools.com

CADE Membership/Change of Address Log on to cade.ca to become a member or update your address using our online form.

CADE Executive Team 2010/2011

TITLE

NAME

TELEPHONE

President Past President Vice-President Secretary Treasurer Membership Chairman Education Chairman Social Chairman CWCJ Editor Technical Chairman IT Chairman Drilling Conference. Liaison Executive Member CAODC Liaison Marketing

John Garden Patrick Murphy Eric Schmelzl Tammy Todd Cecil Conaghan John Burnell Mike Buker Dan Schlosser Christian Gillis Jeff Arvidson Graham Evans Kim Barton David White John Pahl Shannon Bowen-Kelsick

403-265-4973 403-266-7383 403-862-0870 403 613-8844 403-667-9812 403-265-4973 403-213-3615 403-531-5284 403-265-4973 403-232-7100 403-808-9002 403-693-7576 403-699-5160 403-292-7966 403-992-4142

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Canadian Well Construction Journal

June 2011

Jade Schick

Student PROFILE – SAIT

Petroleum Engineering Technology, SAIT Polytechnic Secretary, SAIT Petroleum Society (SPS) Jade Schick recently completed his first year in the Petroleum Engineering Technology program at SAIT Polytechnic. He has six months’ experience working on a drilling rig in northeastern British Columbia, and is expecting to return this summer. Jade has worked in several industries including agriculture, water and sewer.

Jade is secretary of the SPS, and is looking forward to helping SPS reach its goals in providing resources to future industry leaders. He is interested in biochemistry and would like to work with the integration of biochemistry into the oil and gas industry. He spends his free time reading and staying active with activities such as hiking, golf and hockey.

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Canadian Association Of Drilling Engineers

Student PROFILE – Uof C

June 2011

Joseph Lagasca President, University of Calgary Petroleum & Energy Society and active CADE member Joseph is currently completing an internship in his fourth year of Chemical Engineering with Petroleum Minor at the University of Calgary. With experience in field operations, reservoir engineering, and oilsands facilities research and development, Joseph is eager to establish a career in the oil and gas industry.

This student believes that with the intergenerational gap, environmental issues and economic turbulence in Alberta, the petroleum industry needs reinvigoration from the youth. To that end, Joseph looks forward to leading the Petroleum & Energy Society (PES), the official student chapter of the Society of Petroleum Engineers in Calgary. Last year he was the director of sponsorship for PES, and was the lead sponsorship chair of the Alberta Student Energy Conference.

Joseph also allocates great significance to academic engineering principles. As a Schulich Scholar, he has maintained a near-perfect GPA in engineering, has received more than 15 scholarships and has perfected the International Baccalaureate program.

He promotes excellence amongst his peers, and strives to raise awareness about opportunities and challenges in the Alberta energy industry.

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Canadian Well Construction Journal

June 2011

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Canadian Association Of Drilling Engineers

June 2011

Photo: Joey Podlubny

MEMBER PROFILE

Making a difference During his 30-year career with the CAODC, Don Herring has led the development of Canada’s drilling and completions industry

By Jacqueline Louie After nearly three decades at the helm of the Canadian Association of Oilwell Drilling Contractors (CAODC), president Don Herring is retiring.

“I believe it’s a stronger, more cohesive industry today than it has ever been, and I think it will continue to strengthen,” says Herring, 64, reflecting back on his tenure at the CAODC, which represents drilling contractors and service rig contractors in Canada.

CAODC’s connection with CADE goes back to 1974, when a group consisting of drilling engineers from operating companies, and from CAODC’s board of directors, formed CADE. Founding members included Dale Christensen, with Gulf Oil; John Niedermaier, a drilling contractor with Commonwealth Hi-Tower Drilling, who served on the CAODC board; Rod Edgecombe of the Energy Resources Conservation Board (ERCB); Sid Robertson of Pajak Land & Offshore Ltd.; Jack Williams, a drilling contractor with Adeco Drilling and Engineering, and also a member of the CAODC board; Helmut Rath, of Shell Canada; Leroy Field, of Amoco Canada; and Vince Purdy.

“We have had a strong relationship with CADE ever since,” Herring says, noting that a volunteer from CAODC—often a member of the CAODC board of directors—has always sat on the CADE board.

CAODC has served as CADE’s secretariat, providing administrative support, since September 1991.

In 1985, the two associations established the biennial CADE/CAODC Drilling Conference. When it first started, the technical conference received direct financial support from the ERCB, but over time that support was not necessary, so the ERCB has stepped back. Since 2008, the CADE/CAODC

Drilling Conference has been held every year, with an average attendance of 350.

A trade association with responsibility for lobbying various levels of government, CAODC is focused on finding solutions to problems. These would include tax issues or operational problems—for example, transportation of dangerous goods matters, or health and safety legislation.

“We have worked to establish standards that make it a little easier for people to compete and conduct business,” Herring says. “My real focus is on trying not only to improve the standards by which drilling companies work, but also to try and influence the cost base, to make it a little more efficient for them to conduct business, and to make noticeable differences in how they can actually operate.”

As an example, CAODC has been very focused on such things as workforce training, safety issues and technical issues—such as how equipment performs, ensuring that it meets regulatory requirements—and in many cases, trying to lead the regulations.

Among the hallmarks of Herring’s time with the CAODC has been the establishment of the rig technician course as a trade for drilling contractors, and the establishment of a competency program that is also an industry standard for service rig contractors.

“There have been a number of things like that, that make the Canadian industry

9

unique and a standard setter for drilling operations in the world,” Herring says.

“What makes the CAODC stand out is that it has a very dedicated and knowledgeable group of volunteers on the committees and on the board of directors,” Herring says. “That, combined with a talented and supportive staff, makes the organization’s accomplishments noteworthy.”

Born in Calgary, Herring grew up in Alberta and Saskatchewan, and obtained a Bachelor of Commerce degree from the University of Alberta and a Master’s degree in economics from York University.

He worked for Amoco Canada as a tax accountant; for the federal government in Energy, Mines and Resources; for the ERCB as an economist; and for Alberta Energy and Natural Resources a senior economist and director of resource economics doing oil policy. During the National Energy Program, he was involved in negotiating pricing agreements with Ottawa. In 1983, he joined the CAODC. The CAODC expects to have found a replacement for Herring by the first week of June.

“I very much enjoyed the individuals and the challenges of working with [the CAODC], and trying to help out in addressing their concerns,” Herring says.

After his retirement at the end of August, Herring plans to travel to Europe, do some woodworking, and eventually do more travelling around the United States.

10 June 2011

Canadian Well Construction Journal

Best Choice

Feature Story

Amid plenty of debate, unconventional resource developers search for the best way to drill and complete horizontal, multifrac wells

By Godfrey Budd

By the end of 2009, United States natural gas proved reserves had increased by 11 per cent over 2008 to 284 trillion cubic feet, the highest level since 1971, according to the U.S. Energy Information Administration (EIA). A climb in shale gas reserves from 34.4 trillion cubic feet at year-end 2008 to 60.6 trillion cubic feet at yearend 2009 accounted for the lion’s share of the increase.

The increased importance of shale gas within the U.S. energy reserve/production picture and, in Canada, the success of shale plays in the Montney and Horn River, would have remained mostly a pipe dream were it not for advances in horizontal drilling, hydraulic fracture stimulation and completion technologies. Now that the tools and technologies are being widely applied, sometimes with the help of microseismic mapping and monitoring, petroleum engineers are working to figure out ways to make the best use of them.

This is no simple challenge. Experts agree that there is a need for better understanding of the geomechanical effects of unconventional well fracking, and the performance of individual frac stages, increased data gathering, sharing and integration, and new predictive software.

What is already clear to many shale specialists is that good fracture design can play a pivotal role in a successful completion program, even though, as some say, “hydraulic fracturing is a very forgiving technology.”

Completion road map Despite its limitations, the currently available data can be distilled into some helpful principles for completions in shale plays, according to a

paper presented at the Canadian Unconventional Resources & International Petroleum Conference in Calgary last October. Based on the history of 16,000 frac stages in the Barnett, Woodford, Haynesville, Antrim and Marcellus shales, the paper proposed “a road map for effective completion practices for shale stimulation.”

The paper lists factors that it says operators should consider when planning a well in a shale formation. The first three (of nine) are: • Each shale play is unique, and therefore the completion design evolves during the reservoir cycle.

• Each shale play is heterogeneous, so a normal variation in reservoir quality and production outcome will exist even in a closely-spaced area.

e

Canadian Association Of Drilling Engineers

• Hydrocarbon storage and production mechanisms are unconventional and not well understood; therefore, the completion strategy and outcome are complicated.

Principles like these certainly appear to be in line with the thinking of some petroleum engineers and frac specialists.

“The Barnett is the most well-known shale play, and quoted around the world. It was the first time that shale showed real potential. Where the industry has run into problems is in adopting a factory approach, in effect dumbing down the [existing] technical competence,” says Dan Themig, a petroleum engineer and chief executive officer of Calgary-based Packers Plus Energy Services Inc. Minimizing the number of technical people on frac jobs, along with a one-size-fits-all approach, resulted in horizontal fracking practices that were inefficient and ineffective on some completions in the Barnett, Haynesville and other shale plays, he says.

Themig has advanced the view that high-density, open-hole (OH) fracturing systems that “allow more than 20 fracture treatments in a single, seamless operation” can address some of these problems, as well as cut costs and improve recovery.

There are two main methods for multistage fracking. The more traditional one involves first cementing the casing in the horizontal wellbore and then running a “plug-and-perf” stimulation for the desired number of stimulations.

Themig says that one of the problems with this is that to really make sure the perforation, and therefore the frac, is optimally placed in the wellbore, “sophisticated log data for where to perforate” is usually required. This, he notes, is costly, but is locating perforations based on assumptions, or according to a one-sizefits-all approach.

The open-hole multistage (OHMS) method, which was first used in 2001, doesn’t involve cementing the casing, but instead uses external packers that can create

Illustration: Packers Plus Energy Services

June 2011

11

a seal between the casing and the wellbore, with two or more packers along the casing isolating sections of the annulus for fracturing.

OHMS might obviate some of the need for costly, sophisticated log data, and the thinking on how far apart to space the packers has been evolving as a result.

In the early days of multistage fracs in the Bakken play, Themig says, “people said you must frac a small area [at a time], have the packers close together and force the frac out into a narrow area. But then people found that a frac on a wider area, with packers, say, 100 metres apart, not 10 metres…fracs did better. The pressure found the weakest rock, the sweet spot.”

OHMS fracking In the Bakken, Packers Plus has provided equipment and frac services for some very long laterals, including one in North Dakota that was 12,500 feet long with 47 frac stages.

Fracs in the Bakken, whether in North Dakota or Saskatchewan, have been more successful than was expected five years ago. But some gas shales have not delivered as expected, prompting operators in the Barnett, Haynesville, Marcellus and Montney to switch to OHMS fracking, which Themig believes will improve their production.

A paper by Themig published in the May 2010 Journal of Petroleum Technology included a comparison of three-year cumulative production data from two direct offset wells in the Barnett shale: one was cased cement, the other OH. According to one of the charts in the paper, recovery over a three-year period was about 50 per cent greater for the well that had used the open-hole method.

“In part, the differences in ultimate recoveries are due to the preferential increase in productivity in OH versus cased-hole completions.

In addition to this, however, a return to good fracturing practices that the industry had accepted 10 years ago may also be responsible for the stark contrast in ultimate recovery data,” Themig wrote.

For some operators, the tide of debate around the best completion methods for shale plays is turning in favour of OHMS. In the Anadarko Basin’s Granite Wash formation, a tight gas reservoir that has shown excellent rates of return, the best way to complete wells there has also been a subject of some debate, according to Jason Edwards, the completions manager for Jones Energy Ltd. Located in the northern Texas Panhandle and western Oklahoma, the Granite Wash’s tight sand gas reservoir occurs in thick, stacked sequences of sand separated by shale. It is

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in several zones at depths from 9,000 to 12,500 feet, with productive intervals of up to 400 feet in some areas. Gas from the Granite Wash has been successfully produced with both vertical and horizontal wells, but Edwards and his colleagues at Jones Energy have analyzed 25 wells, all drilled horizontally over the last three years, with about half of them cement-cased and the other half open-hole. Some high-rate wells in the Stiles Ranch area are producing in the 20 million cubic feet per day range, while elsewhere, initial production rates range from a few million cubic feet per day to 10 million cubic feet per day.

“Economically, these wells compete head-to-head with those in the big shale plays,” says Edwards.

“In part, the differences in ultimate recoveries are due to the preferential increase in productivity in open-hole versus cased-hole completions.”

— Dan Themig, President, Packers Plus Energy Services

The Jones Energy study found that OHMS had a big cost advantage over plug-and-perf with a cemented liner. A frac completion with OHMS cost on average US$1.12 million, compared with US$1.58 million for plug-and-perf.

“Most of the difference in cost is made up from the time involved with plug-and-perf,” Edwards says. “It takes three to five days on 10 stages, with three perforation clusters per stage for a total of 30 fracs.

But with ball-drop OHMS, 20 fracs can be done in 24-36 hours.”

The study suggests that up-front costs are higher using OHMS, but are offset by reduced costs associated with the amount of time saved and by the prospects of increased production performance, based

Canadian Association Of Drilling Engineers

June 2011

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According to the study, the OHMS completion method outperformed the plug-and-perf method by 33 per cent over 12 months of production.”

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Adding reserves Multistage horizontal fracking (MSHF) looks set to bring much more exploration and production activity to the fringe areas of the Cardium formation, a somewhat-neglected horizon in the conventional oil sector, which is now attracting interest.

The Cardium has an estimated 10 billion barrels of original oil in place (OOIP), of which about 1.75 billion barrels have been produced since the start of production in 1957. Until recently, production has been with primary, secondary and tertiary recovery from vertical wells.

Since late 2008, however, MSHF has been hugely successful in opening up parts of the Cardium that were previously considered to be uneconomic to develop with vertical wells, according to a recent Society of Petroleum Engineers (SPE) paper.

“The thickness in the fringe areas is from one to 10 metres. The pay zone in the main pool has about the same thickness range, but the fringe areas are mostly at the low end, with less permeability, but fairly good porosity, although not as good as the main area. But horizontals can make the fringe areas economic,” says Ese Omatsone, a petroleum engineer at Sproule Associates Limited, and principal author of the SPE paper.

The fringe areas hold an estimated one-to-three billion barrels of OOIP. “This is above the 10 billion OOIP of Cardium. Assuming 1.5 billion OOIP, developing 70 per cent of that would produce 126 million barrels, based on 12 per cent recovery,” she says.

In this, as in many of the shale plays, there is an ongoing need for strategic data gathering and information, and it is possible that costs could rise in the Cardium, as they have in the Bakken shale-oil plays. When Cirque first drilled the Bakken in 2008, it cost about US$4 million to drill and complete a well. Today, it can be as much as US$5.5 million.

(Reprinted with permission of JuneWarren-Nickle’s Energy Group.)

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14 June 2011

Canadian Well Construction Journal

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Check the sponsor package details at www.cade.ca or contact Nick Drinkwater at ndrinkwater@junewarren-nickles.com or by phone at 403-516-3484.

June 2011

Photo: Precision Drilling

Canadian Association Of Drilling Engineers

15

Rigging up Precision Drilling confident of future, launches plans for another 16 new rigs

By James Mahony

Precision Drilling is building three new Super Singles like this one for its Canadian fleet, and 13 Super Triples that will go to work in the United States.

Canada’s largest contract-driller will add 16 more rigs to its fleet, raising capital spending 54 per cent in the process.

At its annual meeting in Calgary in mid-May, Precision Drilling Corporation executives said the company would expand its new-build program for 2011 to 28 Super Series drilling rigs from the 12 rigs announced earlier. At the same time, the contractor will boost this year’s capital spending to $790 million from the $514 million previously announced.

Of the 16 new rigs in May, three are Super Singles destined for Canada, and 13 will be Super Triples headed for the United States.

In the broader group of 28 new rigs planned, 17 are contracted while the company has “firm commitments” for most of the other 11 rigs.

Higher spending on rig iron is underpinned by Precision’s optimism about the near-term strength of the North American onshore drilling market.

“We expect summer activity to look very good,” Kevin Neveu, Precision’s president and chief executive officer, told shareholders, adding that he expects this summer’s drilling season to be the busiest in several years.

“I am particularly pleased to see strong market demand for the Super Triple rig in the Bakken and Eagle Ford plays, with 13 of [the] announced new builds slated for those oil and natural gas liquids-rich plays,” he said.

South of the border, rig counts are near historic highs, with many producers targeting oil, he said. As recently as 2006, three-quarters of Precision’s drilling rigs were targeting natural gas, while just over half were pursuing gas in 2009. About 80 per cent of the company’s rigs drill horizontal or directional wells today.

This year’s capital spending, which includes $121 million for sustaining and infrastructure spending, is based on currently expected activity levels for 2011. Another

$458 million is slated for expansion capital for new-build rig programs.

This year’s total capital expenditures also include the cost of upgrading eight to 12 rigs and the purchase of long lead-time items for future rigs or upgrades at an expected cost of $211 million. Certain rig upgrades will depend upon the completion of term contracts before incurring planned spending.

Precision expects most of the $790 million total expenditures will go to its contract drilling division, while $72 million will be directed to its completion and production services division.

To complete its 2011 new-build rig program and the planned upgrades, Precision expects there will also be an additional $152 million of capital expenditures incurred in 2012.

(Reprinted with permission of JuneWarrenNickle’s Energy Group.)

16 June 2011

Canadian Well Construction Journal

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Canadian Association Of Drilling Engineers

June 2011

17

SAFET Y

Safety Alert (#05—2011)

Injury During a Truck Bed Loading Procedure Worker’s Hand Caught between Sling and Live Roll Incident Type: Equipment Malfunction Truck Driver

Release Date: June 28, 2010

Tractor Cab

Winch

Location: Alberta, Canada

Trailer: approx. 16 m long Cable

Sling

Desired position of sling

Description of Incident:

Pinch Point

➤ During a rig move, a truck and trailer unit was positioned to lift and

load a drilling rig pipe tub using a winch, cable and sling system.

After a swamper put the cable sling around the lifting points of the pipe tub, the truck and trailer driver activated the winch and lifted the pipe tub onto the trailer. ➤ The pipe tub came into contact with a guide pin on the passenger side of the trailer. This indicated that the load and trailer were misaligned. ➤ It was then decided to lower the load back on the ground and to “walk the load over.” The practice of “walking the load over” aims at repositioning a misaligned load by shifting it a few centimetres in the desired direction. ➤ “Walking the load over” consists of unrolling the winch cable and sling to obtain some slack and then push or pull the slings over the live roll in a direction to reposition them. Pulling is done using hands and pushing may involve either hands or feet. ➤ Once the sling is repositioned, the winch is activated to take out the winch cable slack and a side pressure is applied on the sling using hands or feet. This will cause the sling to be positioned in the desired location on the trailer live roll. ➤ The shift in the sling position over the trailer live roll causes a slight shift of the load as it lifts off the ground. ➤ As the winch cable and sling tightened, the swamper quickly removed his right hand from the sling but his left hand was caught between the sling and the trailer live roll. The swamper’s left hand was crushed and the wrist sustained a fracture.

Figure1: Top view of truck/trailer and load (drawing not to scale).

Pinch Point

Guide pin initially contacted by load

Guide Pins Truck push

Live Roll

Swamper shifting sling

➤

What Caused It: ➤

A swamper was standing between the pipe tub and the back of the trailer trying to re-position the sling. The worker was holding a section of the sling beneath the trailer live roll with his left hand.

Misaligned load

Pipe Tub

The worker lifted his right arm and grabbed the upper section of the sling to help him pull more cable out of the winch. ➤ As the driver saw the swamper’s hand motion, he understood this to be an instruction to lift. The driver activated the winch to lift the load.

Corrective Actions: Workers must always stay away from loads and lifting gear. The practice of “walking the load over” is hazardous to the swamper.

The following alternatives may be used in case of load misalignment: ➤ The truck shall pull forward and manoeuvre, while reversing, so that the trailer can be better aligned with the load. Workers shall use extended hooks to adjust the position of the sling on the live roll and apply needed pressure when the load begins lifting. ➤ During lifting operations, one competent person shall be clearly designated as a “signaler,” and workers involved in the job must be made aware. The signaler is to be the only person to direct the movement of equipment. The only signal that can be given by any other worker is the “STOP” signal when a situation arises. ➤ The signaler shall always wear high-visibility clothing for ease of identification. ➤ When an unplanned event occurs during a job, the team must stop the job to reassess the hazards and define a plan forward. ➤

Contact: Enform | 1538 – 25 Avenue NE | Calgary, Alberta, Canada T2E 8Y3 | E: safety@enform.ca | T: (403) 250-9606 | www.enform.ca DISCLAIMER: This Safety Alert is designed to prevent similar incidents by communicating the information at the earliest possible opportunity. Accordingly, the information may change over time. It may be necessary to obtain updates from the source before relying upon the accuracy of the information contained herein. This material is presented for information purposes only. Managers and supervisors should evaluate this information to determine if it can be applied to their own situations and practices.

18 June 2011

Canadian Well Construction Journal

Stats At A Glance Drilling Rig Activity May 19, 2011

Canadian Wells Rig Released

629

802

22%

Quebec

-

1

1

0%

New Brunswick

-

2

2

0%

Newfoundland

1

1

2

50%

Eastern Canada Total

1

4

5

20%

174

633

807

22%

Canada Total

Service Rig Activity May 19, 2011 ACTIVE

DOWN

259

389

648

40%

99

95

194

51%

British Columbia

4

22

26

15%

Manitoba

1

13

14

7%

363

519

882

41%

Northwest Territories

-

1

1

0%

Northern Canada Total

-

1

1

0%

Quebec

-

1

1

0%

Eastern Canada Total

-

1

1

0%

363

521

884

41%

Alberta Saskatchewan

Western Canada Total

Canada Total

TOTAL % ACTIVE

2009

2010

Dec

173

Western Canada Total

Nov

0%

2011*

* information updated to April 2011

Active Drilling Rigs in Canada 700 600 500 400 300 200 100 0

2009

2010

Dec

10

Oct

10

Nov

-

Manitoba

Sep

46%

Oct

87

Aug

47

Sep

40

Jul

British Columbia

Aug

27%

Jun

143

Jul

104

May

39

Jun

Saskatchewan

3,500 3,000 2,500 2,000 1,500 1,000 500 0

May

17%

Apr

562

Apr

468

Mar

94

Mar

Alberta

Feb

% ACTIVE

Feb

TOTAL

Jan

DOWN

Jan

ACTIVE

2011*

* information updated to April 2011

Active Service Rigs in Canada 1,000 800 600 400 200

2010

* information updated to April 2011

Dec

Nov

Oct

Sep

Aug

Jul

Jun

Apr

Mar

Feb 2009

May

Information in this publication may be sourced through a variety of contributors. Members are encouraged to email their suggestions regarding articles, general content and statistical graphs and charts to Dale Lunan at dlunan@junewarren-nickles.com.

0 Jan

Journal Content

2011*

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