PSAC 35th Anniversary 2016

THE VOICE OF THE CANADIAN OILFIELD SERVICES SECTOR FOR OVER 35 YEARS

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Congratulations to PSAC for 35 successful years of serving Canada’s service and supply industry

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A bright future is all about collaborating today

Other partners include the Government of Alberta,

PSAC and JWN (formerly

BDC, EDC and CGEF.

JuneWarren-Nickle’s Energy Group) have partnered closely for 35 years to bring

The first Going Global: Helping Canadian Companies Navigate International Opportunities report provides service and supply companies with: • Insider knowledge from 100+ industry leaders; • Practical advice and tools for overseas business growth; and • Intelligence and analysis on select market opportunities.

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the Information, Insight and Intelligence service and supply companies need to stay informed and grow their businesses. JWN looks forward to working with PSAC for the next 35 years to help oil and gas service companies to evolve and be successful in a continually changing marketplace.

EDITORIAL

Editor Darrell Stonehouse | dstonehouse@jwnenergy.com Staﬀ Writers R.P. Stastny, Paul Wells Contributing Writers Gordon Jaremko, Dale Lunan Editorial Assistance Manager Tracey Comeau | tcomeau@jwnenergy.com Editorial Assistance Laura Blackwood, Sarah Maludzinski, Jordhana Rempel CREATIVE

Creative Services Manager Tamara Polloway-Webb | tpwebb@jwnenergy.com Creative Lead Cathlene Ozubko Print Coordinator Janelle Johnson Graphic Designer Teagan Zwierink Creative Services Paige Pennifold, Genevieve Ongaro SALES

TABLE OF CONTENTS 11.

ALL ABOUT THE PEOPLE

37.

HELP WANTED

PSAC puts a human face on the

PSAC’s workforce development work

petroleum industry

has improved the sector’s visibility and safety

16.

PSAC: A TIMELINE

35 years of advancing the interests

39.

of oilfield service companies

Oil and gas service sector grows into

KEEPING WORKERS SAFE

a culture of safety

22.

35 YEARS, TWO LEADERS

AND ENTRENCHED LEGACY

Senior Account Executives John Hedley, Diana Signorile

42.

PSAC’s leadership, like the

Governments continually need to be

Sales Chad Carbno, Ken McPherson, Paul Sheane, Blair Van Camp, Patrick Yee

association itself, has been rock-

reminded of the importance of the oil

solid and has evolved with the

and gas services sector

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changing times

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Manager, Marketing Program Maggie Anne J. Taylor | mtaylor@jwnenergy.com CIRCULATION

Manager, Product Distribution Jackie Dupuis | jdupuis@jwnenergy.com DIRECTORS

President & CEO Bill Whitelaw | bwhitelaw@jwnenergy.com Senior Vice-President, Energy Intelligence Bemal Mehta | bmehta@jwnenergy.com Vice-President, Sales Operations Donovan Volk | dvolk@jwnenergy.com Vice-President, Digital Strategies Gord Lindenberg | glindenberg@jwnenergy.com Director, Daily Oil Bulletin & Editorial Products Stephen Marsters | smarsters@jwnenergy.com Director, Production Audrey Sprinkle | asprinkle@jwnenergy.com

25.

THE TIMES THEY ARE

44.

AT THE TABLE

INVESTING IN

THE FUTURE

A-CHANGIN’

PSAC’s scholarship program builds

The oilfield service sector has

future leaders

undergone a lot of change in the last 35 years. Here are two views on the key changes that have happened.

48.

BRIDGING THE

CREDIBILITY GAP

28.

In its next 35 years, PSAC—and

MARKET INTELLIGENCE

other industry associations—will

PSAC studies and forecasts a

have to work even harder to earn

valuable resource to members,

public trust

government and the public

Director, Government & Stakeholder Relations Chaz Osburn | cosburn@jwnenergy.com Director, Advisory Services Anupam Sharma | asharma@jwnenergy.com Director, Strategic Partnerships Wendy Ell | well@jwnenergy.com OFFICES

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32.

CROSSING BORDERS

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PSAC 35TH ANNIVERSARY 2016

Message from Trevor Haynes and Mark Salkeld for PSAC’s 35th anniversary The Petroleum Services Association of Canada (PSAC) is still going strong at 35 years because of the exceptional past, current and ongoing efforts of PSAC volunteers, staff and directors. Our collective voice is as strong as it’s ever been, building off a solid foundation. But change is inevitable and PSAC is not immune to this fact. PSAC is facing the challenges of change head-on with a strategic directive to advocate on behalf of our members and Responsible Canadian Energy. PSAC members are changing as they must to remain current with the technologies available to help their customers deliver oil and gas to a market demanding more efficient and clean-tech solutions. Our pride and satisfaction of what we have accomplished to date propels us forward toward a future with a far more diverse energy mix and it will be petroleum that fuels that change for generations to come. Therefore it is of utmost importance that while PSAC changes to remain of significant value for its members, we do not forget our roots and all the world-leading efforts of our members. With such a dynamic and progressive membership base, it is with a strong sense of commitment and pride that PSAC advocates diligently to ensure as our members change we too change, remain relevant and add value where only an association with a solid collective voice can, for the next 35 years. Sincerely,

Trevor Haynes, PSAC 2015–2016 chair

PSAC 35TH ANNIVERSARY 2016

Mark Salkeld, PSAC President

Congratulations to the Petroleum Services Association of Canada on the occasion of your 35th anniversary. For many years, your association and its members have worked hard to build the Canadian petroleum industry, which in turn has contributed to Canadaâ&#x20AC;&#x2122;s economic development and energy security. As the voice of Canadaâ&#x20AC;&#x2122;s upstream petroleum services, supply and manufacturing sectors, your leadership has contributed to our economy and communities while building an industry that values innovation, public safety and environmental protection. As global demand for petroleum products increases, this work will help position Canada as a reliable, secure and responsible supplier of energy to global markets well into the future. There are profound changes underway in the energy sector. During these times, effective cooperation is necessary to respond to challenges and opportunities that ensure the sector remains a source of jobs and prosperity. The Government of Canada will be engaging more with Canadians and Indigenous Peoples on energy issues, and we look forward to continued collaboration with your association in making the sector more resilient over the long term. I wish you continued success in your important work and contributions to Canada.

Jim Carr, P.C., M.P. Minister of Natural Resources, Canada

PSAC 35TH ANNIVERSARY 2016

On behalf of the Government of Alberta, congratulations as you celebrate the Petroleum Services Association of Canadaâ&#x20AC;&#x2122;s 35th anniversary. I thank you for your commitment to strengthening the collective voice of Canadaâ&#x20AC;&#x2122;s petroleum services, supply and manufacturing sectors. Together, through collaboration with associations such as yours, we have a wonderful opportunity to advance one of the most progressive energy economies in the world. When faced with challenges, Canadians come together with optimism. By working together to build a diversified energy economy, we will make Alberta and Canada stronger and more resilient to future commodity price shocks. Congratulations on your wonderful journey of success. I wish you all the best in the next 35 years to come.

Rachel Notley, Premier of Alberta

PSAC 35TH ANNIVERSARY 2016

Over the past three and a half decades, the Petroleum Services Association of Canada and its members have gained heartfelt respect and appreciation from Albertans for building a stronger province. Day in and day out, your member companies set the bar for people across Canada and your peers internationally, demonstrating the skills, innovations and technological advances that help industry succeed and make Albertans so proud. Your commitment to protecting the environment, and to the operational excellence and well-being of Albertaâ&#x20AC;&#x2122;s most vital industry, cannot be understated. Congratulations on 35 years of excellence and for your invaluable role in keeping Albertaâ&#x20AC;&#x2122;s economic engine running.

Margaret McCuaig-Boyd, Minister of Energy, Alberta

PSAC 35TH ANNIVERSARY 2016

On behalf of the Ministry of Energy and Resources and the Government of Saskatchewan, I extend my congratulations to the Petroleum Services Association of Canada on your 35th anniversary. Oil and gas plays a significant, even critical, role in the Saskatchewan economy, accounting for about 15 per cent of our GDP. It is largely one of the enablers of the progressive, economically prosperous society that we enjoy—and it is something we do not take for granted. Consequently, Saskatchewan is a jurisdiction of choice for Canada’s conventional oil producers. We have done our best to create an operating environment that is highly competitive. We have established a stable royalty and tax regime that is globally recognized. We are continuing to ensure there is a good business and regulatory environment for investment. We are also being especially mindful of removing unnecessary barriers to development and enable the industry to operate at its fullest potential. The motive for this is simple—whether commodity markets are in a slow cycle or whether they are breaking records, you want to be the place where the industry goes to invest. Saskatchewan is that place. We have seen the results of this approach; in 2014, we had a record year for production and drilling, with the value of our oil and gas production totalling approximately $16 billion. Saskatchewan still has exactly what we had then—the resources, the solution-driven supply chains, the innovative technologies and the rationale for good collaborative policy-making. Government does not create jobs and wealth by itself, but we can set the tone and create the conditions to support and encourage their growth. If we have done our jobs well, the private sector can do what it does best—generate economic activity and prosperity. The bottom line is that the real work then falls on your organization and its members. The Petroleum Services Association of Canada is the voice of Canada’s petroleum service, supply and manufacturing sector. You advocate for your members to enable the continued innovation, technological advancement and in-the-field experience they supply to the industry—helping to increase efficiency, improve safety and protect the environment. Our service and supply sector has, in fact, been a major source of technical ideas and innovation that have helped lead to record oil production and unlock reservoirs that previously were uneconomic to access. Saskatchewan has created one of the most diversified economies in Canada. Our resource industries are the legs of Saskatchewan’s trade-based economy, and by encouraging their development we reinforce local businesses and economies across Saskatchewan, and add to our overall economic growth and security in a productive way. The Petroleum Services Association of Canada is a contributor to this process and vital to our success. Thank you for your decades of valued work, and best wishes for continued success in the future. Sincerely, Dustin Duncan, Minister of Energy and Resources, Saskatchewan

PSAC 35TH ANNIVERSARY 2016

On behalf of the Province of British Columbia, I am pleased to congratulate the Petroleum Services Association of Canada on your 35th anniversary. As the voice of more than 250 companies employing over 70,000 people, your association performs an invaluable role in representing Canada’s upstream petroleum services, supply and manufacturing sectors. Through your ongoing work in advocacy, government relations, public education and health and safety initiatives, you have increased the profile of the oil and gas services sector and tirelessly promoted the contribution it makes to our economy. Canada’s ability to compete in the global energy market is enhanced by our reputation for reducing costs and improving productivity and profitability, in spite of periodic economic hardship. As global energy demand increases, particularly in oil and gas, we are well positioned to capture this market. The Petroleum Services Association of Canada will undoubtedly prepare your members for future changes so you can continue to be successful. Congratulations again on serving Canada’s oil and gas services sector for 35 years. Sincerely yours, Rich Coleman, Minister of Natural Gas Development and Deputy Premier, British Columbia

PSAC 35TH ANNIVERSARY 2016

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CARDLOCK

PSAC’s founding members on their way to Ottawa in 1981

All about

THE PEOPLE PSAC puts a human face on the petroleum industry BY GORD JAREMKO

he entrepreneurs’ rally in 1981 started PSAC and

In six months of intense negotiations, the federal,

put a human face on an industry that, until then,

Alberta, B.C. and Saskatchewan governments assem-

had been viewed as a realm of faceless international

bled the Western Accord on Energy. The agreement

corporations driven only by profit.

ended the “energy wars” of the ’70s and ’80s by inau-

But that doesn’t mean PSAC was initially successful in

gurating a transformation.

repealing Pierre Trudeau’s National Energy Program (NEP)

Out went the old regime’s NEP of central planning stud-

that, along with low oil prices, was decimating the industry.

ded with price and export regulations, stiff taxes, subsidies

“We went nowhere until Brian Mulroney got elected,”

for drilling in federally owned Arctic and offshore areas, and

recalls PSAC founding president Roger Soucy. But then recognition came fast.

rewards for takeovers of foreign-controlled companies. In came global market prices, freedom to focus drilling

Nearly three years after the association was formed,

and production activity on the most economic locations,

its view of the oil and gas industry became national pol-

largely unrestricted trade with the U.S., open pipelines

icy when Mulroney led the Conservatives to victory in

able to grow on demand and improved relations with

the federal election of September 1984.

international energy interests.

Mulroney and his energy minister, Pat Carney, christened

The oil and gas officer class in management,

the petroleum sector Canada’s “engine of growth” and

engineering, earth sciences, law and finance had a hand

made a new national deal that worked as an accelerator.

in the transformation. 

PSAC 35TH ANNIVERSARY 2016

“

Industry is in a time right now where there are going to be dramatic changes. There is going to be a turnaround, but we’re not going back to $100 oil any time soon, if ever again.”

—Roger Soucy, founding president, PSAC

Provincial counterparts to federal grant schemes distorted activity by setting artificial schedules and deadlines. “At the end of the day, they just moved work from one time to another. They didn’t change the volume of work,” he says. Western entrepreneurs saw eastern-style local content rules as just more interference. “Our guys didn’t want that,” Soucy recalls. “They wanted to let the market decide. It was better not to let the government mandate stuff that shouldn’t happen. They just wanted an opportunity to compete.” PSAC outlived the NEP by developing a cluster of support for the oilfield service, supply and manufacturing arena as member firms grew and the roster lengthened from 143 founders into more than 250 employers.

But Soucy does not claim PSAC credit for complex

The association swiftly became a collective govern-

policies and regulation adjustments that implemented

ment and public affairs department for its members.

the new regime.

A structure of specialized committees grew out of the

The alliance of blue-collar oilfield employers played a down-to-earth role by injecting the human element

spokesperson role as demands on the industry grew and policy makers sought practical help.

into energy politics. PSAC gave Mulroney and Carney

Occupational health and safety emerged as an endur-

justification for making the policy change by spreading

ing priority, heightened by a rash of mishaps among novice

awareness of the people and communities that bene-

recruits during an oilfield rush to earn expiring drilling grants

fited from the industry.

and keep pace with pent-up activity when the NEP ended.

“One of the critical factors was to show the labour

A template for industry collaboration on improvements

side of the oil and gas industry,” Soucy says. “It wasn’t

emerged after Alberta’s occupational health minister at

just the old Seven Sisters [BP, Chevron, Exxon, Gulf,

the time, Jim Dinning, declared that he didn’t want any

Mobil, Shell and Texaco]. This was important ground-

more telephone calls from mothers of dead sons. He

work. It started to soften the face of the industry. The

gave oilfield leaders a choice: stop the carnage with eco-

Mulroney government was able to show the public the

nomically workable reforms or take government orders.

thousands of people that worked in the field and asso-

In response to Dinning and with PSAC in a promi-

ciated Canadian companies. That made the transition

nent role, all oilfield branches formed the Upstream

out of the NEP easier.”

Petroleum Industry Task Force on Safety. Scores of

The NEP legacy includes bad memories that reinforce

recommendations were made and adopted by employ-

the new streak of independence, competitive zeal and resis-

ers. The Petroleum Industry Training Service, supported

tance to government interference in the PSAC membership.

by PSAC, began growing into today’s Enform, the

Veterans still swap horror stories about waste and

education, information and skill practice agency with

misconduct in drilling on frontier moose pastures for fed-

Edmonton and Calgary campuses. Developing stan-

eral grants instead of oil or gas likely to reach markets.

dardized job qualifications, training and evaluation

Service firms were asked to inflate work bids by 20 per

procedures also grew into a major PSAC initiative.

cent as cash for prospector firms to pocket. “All kinds of

Prolonged collaboration with other industry groups

BS went on just to get government money,” Soucy says.

has led to recognition of occupational groups that

PSAC 35TH ANNIVERSARY 2016

The founding members of PSAC

makes specialists swiftly mobile and able to respond

materials means companies have to stay in touch with

to regional employer needs from B.C. to Newfoundland.

an array of agencies such as Atomic Energy Canada,

Business demand for efficiency during the 1980s oil price

which keeps track of trace radioactivity sources in indus-

slump spawned a PSAC technical information service. The association was besieged with requests from exploration and production companies for information on well costs.

trial instruments. After 29 years as PSAC’s president, Soucy retired in 2010, but he keeps in touch with business conditions in

At first Soucy could only give the standard expert

a less onerous role as founding executive director of the

response: it depends on multiple variables such as loca-

Manufacturers Association for Relocatable Structures (MARS).

tion, depth, targets and equipment types. A senior oilfield consultant who served a term as

The view from MARS prompts him to warn western Canadian employers to stay alert and tap collective knowledge.

PSAC’s chair, Dale Tufts, provided answers. He orga-

“Industry is in a time right now where there are going to

nized large volumes of data into precise, evolving regional

be dramatic changes. There is going to be a turnaround,

portraits of field activity that continue to serve as an

but we’re not going back to $100 oil any time soon if ever

industry bible.

again,” says Soucy.

The association created standing specialist commit-

Oilsands projects used to account for four-fifths of

tees to deal with technical matters that sometimes took

MARS’s member activity. Reduced construction has left

years to resolve.

surplus inventory and production overcapacity.

“There are a myriad of issues,” Soucy says. “Most are

Portable dwelling firms have to ask themselves, “What

not sexy. They’re operational, and you just grind them out.”

are we going to do?” says Soucy. “Oil people face the

As highly mobile teams of personnel and heavy equip-

same thing. The industry has shrunk. The world is chang-

ment, service and supply contractors had to iron out

ing. Technology is changing. We’re one invention—a

jurisdictional differences in provincial and federal road

good storage battery—away from replacing fossil fuel–

and driver rules. Pay practices in the mostly non-union-

fired machinery. We didn’t leave the Stone Age because

ized energy industry take a lot of effort to fit into uneven

we ran out of stones. We’ve known this since I got into

labour laws. The wide variety of oilfield technologies and

the industry. We always realized there was a horizon.”

PSAC 35TH ANNIVERSARY 2016

“The operating companies recognized it was in their best interests to help us initiate a lobby based on jobs and job losses. They saw value in the service companies,” Pollock says. In the Ottawa corridors of power, “we were pretty well received and pretty effective.” Relationships, as replacements for old hierarchies, matured into a Canadian label. The habit of cooperation spread across areas of identifiable common interests, outside arenas of commercial competition, such as health, safety, environmental protection, trade training and qualifications, and oilfield activity and cost BOB POLLOCK, PSAC chair 1987–1988

ONE OF A KIND Collective action sets apart Canadian oilfield employers

data banks. “We were able to accomplish broad, industry-wide standards, recognized by the operating companies and raising the quality of the service companies,” Pollock says. He continues to see results in a retirement career as a consultant that includes contributing to blowout insurance ratings. Canada has the world’s most regulated, disciplined oilfields. “From an insurance standpoint we are one of the lowest-risk areas in the world,” he says.

As a veteran of international industry from central Alberta to

At the PSAC helm he also strived to maintain another hall-

Africa and the North Sea, Bob Pollock calls PSAC one of a kind

mark of the Canadian industry: an open oilfield supply and

on the planet.

service market where merit rather than nationality wins orders

the original purpose of self-defense, Pollock says.

Pollock belongs to the generation that built the modern Canadian oil industry by learning from and adapting international

Even after the demise of the National Energy Program (NEP)

knowledge, technology and practices. He started with Halliburton

that triggered the coalition, the fiercely independent oilfield entre-

in 1956, working in the bush southwest of Edmonton at Alder

preneurs saw strength in numbers. “It really made a strong,

Flats as an engineering graduate from the University of Alberta.

competitive service and supply and manufacturing sector—the

Although Halliburton is renowned as a Texas-based global

strongest in the world,” Pollock says.

supply and service giant, nicknamed Big Red after the colour of

As president of the global Halliburton conglomerate’s Canadian

its equipment, it has Canadian roots too. The firm has worked in

arm during his early-’80s term as chair of PSAC, Pollock made a pro-

Canada since 1929, when it was a 10-year-old oilfield fledgling.

ject of seeking a fair balance of power within the oil and gas industry.

Pollock worked for the international conglomerate for a quarter-

The NEP opened up an opportunity to change a tradition of

century by the time PSAC came together. “We employed many

exploration and production companies behaving like generals, directing service, supply and manufacturing firms as foot soldiers on all fronts from contracts to training. In the battle to survive the NEP’s controls and taxes—and the crossfire that federal central economic planning ignited with

and contracts.

Canadians. I thought of us as being Canadian,” he recalls. The NEP included a powerful undercurrent of economic nationalism, including government participation in takeovers of foreign-controlled companies and assets by Petro-Canada as a federal Crown corporation.

resource-owning provinces—oil and gas producers learned that

Within the service and supply sector, business leaders and

the way to catch government ears was to talk about employ-

elders wanted no part of politically inspired divisions. “I tried

ment, Pollock says.

to emphasize that a level playing field for everybody was best

The Canadian energy wars were really rough on all concerned,

for everybody,” Pollock says. “It was best for us to look at the

he says. But livelihoods rooted in oilfield activity, from western

important things for all of us, like contracts with the operating

contractors to eastern equipment manufacturers, were the worst

companies. It was best for us to speak together from a position

and most obvious casualties.

of strength.”

PSAC 35TH ANNIVERSARY 2016

PHOTO: JOEY PODLUBNY

The collective impulse of 143 firms to form PSAC in November 1981 forged a unique tool that turned out to have more uses than

fiery Dave Barrett led the New Democratic Party to its first victory over the old, staid Social Credit government in 1972. Industry paused to await the new regime’s intentions toward the resource-rich region along the Peace River. The lull hit Schreiner’s equipment supply house hard. “We had just built a new distribuAL SCHREINER, PSAC chair 1981–1982

tion facility in Fort St. John. Our first monthly gross sales would not have paid the power bill,” Schreiner says. Under the 1980-85 NEP, “we had a made-in-Canada problem,” he says. PSAC was an organizational counterpart to Canadian

SHOCK TREATMENT Canadian industry’s structure and value a revelation that needs to be repeated

adaptations of international oilfield technology and operating practices. The association founders belonged to a generation of improvisers that transferred rural and small-town skills from farm communities to industry after the 1947 Leduc gusher launched modern Canadian oil and gas development.

Al Schreiner had a sudden awakening when he switched to work-

When machinery broke down on the homestead frontiers, the

ing for an oilfield hardware dealership after spending three years

manufacturers were too far away to provide repairs or replace-

as an engineer with an exploration and production company.

ments quickly or cheaply. Western settlers did the fixing, made

“The shock treatment was seeing how little I knew about equipment and how much I needed to learn in order to be competitive at selling,” Schreiner recalls. That experience was only the beginning. After rising to the top of Dominion Supply by giving himself crash courses in the

PSAC counterparts to the technical creativity include innovations in public communications, on-the-job safety and training standards, and compilations of deep knowledge about oilfield work rhythms and costs.

practical oilfield arts, he set out to sound a wake-up call on a

Humboldt, Sask.–born Schreiner personified the heritage. The

national scale as chair of PSAC for its first full year of life in 1982.

role that his prairie home turf played became legendary. Sons of

“We had no voice anywhere with industry or governments,”

Saskatchewan filled top jobs from chief executives of the biggest

Schreiner says. By filling the gap, PSAC changed the cartoon image of western resource development as just ruthless gouging by faceless, for-

oil and pipeline firms to the chair of the National Energy Board. Schreiner says an old inside joke describes the legacy: “What do you call people from Saskatchewan? Boss.”

eign Big Oil, a stereotype that had inflamed the eastern political

Fewer 21st-century bosses have farm roots. But outside the

majority who supported the 1980 National Energy Program (NEP).

corporate and financial citadels of downtown Calgary, Schreiner

Canadians could now relate to the human face presented by

says the oil and gas sector is still studded with homegrown entre-

the association’s founding 143 employers, providing thousands

preneurs and blue-collar trades that learn as much on the job as

of family livelihoods, says Schreiner. “We did a lot of govern-

from formal education. Advanced technologies such as horizon-

ment visitations around the issue that they should know we were

tal drilling and hydraulic fracturing amplify the roles of service and

out there.”

supply specialists but also make understanding field activity as

The effort concentrated on sowing accurate information about the energy industry structure and especially the uneven effects of investment and development slumps. PHOTO: AARON PARKER

improvements and filled gaps with inventions.

Oil companies could wait out blows like the NEP controls and

much of a shock as ever. Although the industry’s current problems arise from global market and environmental issues, “the association is probably as important now as it ever was,” Schreiner says.

taxes by surviving on established production. “But if they’re not

“It’s a continuing process of education,” says Schreiner. Our

working in the field, the service and supply industry is just dead.

industry is not well known by the general population or the people

There is no income,” he says.

that need to know it. Our new governments are not very knowl-

Field activity reacts to political instability at all levels. Schreiner’s education included economic drama in northeastern B.C. when

edgeable. It’s very important that somebody helps to educate those guys.”

PSAC 35TH ANNIVERSARY 2016

1980

• The National Energy Program (NEP) is instituted in October.

PSAC:

35 years of advancing the interests of oilfield service companies

1981 Pierre Trudeau’s NEP spurred the creation of PSAC

• PSAC is incorporated as an

association to support the petroleum industry’s battle to change the NEP.

• A delegation of PSAC representatives,

ince its founding in 1981 to battle the National Energy

including many of the 143 founding

Program, PSAC has served as the lobbying arm for

members, flies to Ottawa to present

the people who do the work in oilfields across the coun-

alternatives to the NEP.

try. Over the years, PSAC grew into an organization that also provides its membership with services and marmore efficiently.

1982

Here is a timeline of its key lobbying efforts and introduction of services and intelligence products over the last 35 years.

1983

• PSAC lobbies for Alberta incentive programs like the Oil & Gas Activity program, introduced as a follow-up to the 1981 energy agreement as a short-term aid to the devastated petroleum service industry. • PSAC holds a series of 15 meetings with senior federal government officials to introduce them to the petroleum service industry. • PSAC lobbies the Alberta Workers’ Compensation Board (WCB), resulting in $300,000 immediate savings to the petroleum service category.

PSAC 35TH ANNIVERSARY 2016

PHOTOS: WIKI COMMONS

ket intelligence to operate their businesses safely and

• PSAC has custom tariff rates restored to Free Harmonized System rates for fishing tools, electrical power sources, electrical actuators and other parts used in conjunction with an oil well or drilling rig.

1989

1988

1987

• PSAC introduces a membership agreement and Silver Seal program.

• PSAC releases position paper “Fundamentals of a Policy for Conventional Oil and Gas,” designed to address the effects of government policies and incentives on the service industry.

• PSAC makes Minimum Standard Insurance program a criteria for membership. • PSAC accepts a position on the board of the Petroleum Industry Training Service (PITS).

1986

• PSAC establishes minimum standards for safety, operating skills and business conduct via sectorial committees.

1990

• Iraqi troops invade Kuwait and seize petroleum reserves, setting off the Gulf War and spiking oil prices to US$40/bbl.

• PSAC gains major victory with Canada Customs and Excise (a precursor to the Canada Border Services Agency) by lobbying federal members of parliament, resulting in estimated tariff savings of $5 million for member companies importing pressure maintenance and improving equipment.

• PSAC celebrates its 10th

anniversary with a new

logo and membership directory.

• PSAC develops a Transportation of Dangerous Goods program, which includes training manuals and specialized shipping documents.

• PSAC holds

first open forum

• PSAC becomes the official endorser of the National Petroleum Show.

1985

safety-related

AN N I V E R S

• PSAC enters into an agreement with the federal Department of Employment and Immigration (now the Department of Immigration, Refugees and Citizenship) to facilitate the sharing of statistical information regarding the services industry.

(now the Petroleum

Safety Conference). The end of the 1991 Gulf War saw oil prices plummet

• Oil prices plummet from

US$32/bbl to US$19/bbl as a United Nations air

bombardment liberates

Kuwait and eliminates Iraqi

• PSAC merges with the Canadian Oilfield Manufacturers’ Association.

1984

Petroleum Industry

Safety Seminar

1991

• PSAC members—and the entire petroleum industry—celebrate the Western Accord, an energy pricing and taxation agreement between the Government of Canada and the producing provinces, which signalled a return to free markets for the petroleum industry and an end to the NEP.

• PSAC negotiates significant Alberta WCB rate reduction for members, effective in 1985, resulting in $2.1 million in savings.

issues at the

Y AR

• OPEC crumbles and oil prices collapse by 50 per cent to US$10/bbl; 50,000 jobs in Alberta are lost.

for exchange of

threats to Arab nations’ petroleum supplies.

1992

• PSAC adds data vendors to its membership to resolve its problem with the Alberta government’s plan to compete with land information services. • PSAC adds a safety coordinator position and begins actively promoting the development of basic safety programs for member companies.

• Terra Nova and White Rose oilfields discovered off Canada’s east coast. PSAC 35TH ANNIVERSARY 2016

1994

• PSAC launches Petro-Trade to provide international marketing assistance to the service industry. • PSAC negotiates with the federal government for new transportation of dangerous goods permits for its members. • PSAC establishes new Oilfield Trucking Safety program.

1997

• PSAC sees dramatic results from endorsing and participating in the Alberta Occupational Health and Safety Partnerships (now Partnerships in Injury Reduction) program. • PSAC initiates Saskatchewan Petroleum Awareness Week as a joint effort with several industry associations.

1998

• PSAC launches the Petroleum Services Industry Competency Assessment and Certification system. • PSAC holds first Oilfield Services Investment Symposium for nine publicly traded member companies.

1999

• PSAC works to harmonize employment standards across western provinces.

• PSAC hosts first Financing Alternatives Forum, providing options for petroleum service companies seeking capital in difficult marketing conditions.

• PSAC introduces new sectorial committee: pipeline and oilfield construction.

• PSAC introduces new sectorial committee: snubbing services.

• PSAC updates its master service agreement. • PSAC lobbies for changes in federal transportation regulations.

• PSAC holds the first Oilfield Transportation Conference & Trade Show to provide an opportunity for the service industry to discuss common transportation-related issues. • PSAC launches the Petroleum Credit Information Exchange to provide members with better customer credit data. • PSAC signs on to Canada’s Climate Change Voluntary Challenge and Registry program, signalling the service industry’s willingness to participate in finding an economically viable solution for global warming. • PSAC logo is affixed to two STARS helicopters to recognize its contribution of more than $300,000 from three annual fundraising dinners. • PSAC successfully lobbies for changes to B.C. hours of work regulations. • PSAC develops a new long-term drilling activity forecast. • PSAC participates in the World Petroleum Congress in Beijing, China.

1995

PSAC 35TH ANNIVERSARY 2016

• PSAC website averages over 10,000 unique visits per month. • In conjunction with the Alberta Energy and Utilities Board (a precursor to the Alberta Energy Regulator) drilling and completions committee, the PSAC well testing committee assists in the development of the Industry Recommended Practice for the Canadian Oil and Gas Industry. After raising over $300,000 for STARS, PSAC’s logo is affixed to two rescue helicopters PHOTO: JOEY PODLUBNY

1993

1996 • PSAC signs a strategic alliance with the Canadian Association of Petroleum Producers (CAPP), demonstrating the new age of partnership and communication between petroleum-producing companies and their suppliers. • PSAC signs a strategic alliance with the Newfoundland Ocean Industries Association with Newfoundland and Labrador Premier Brian Tobin’s support, establishing a new support system for PSAC members starting operations on the east coast. • PSAC dramatically expands fee-for-service activities, providing additional revenue sources to the association to assist in meeting the expanding needs of member companies. • PSAC lobbies for changes to Alberta Labour regulations. • PSAC launches its website. • Federal-provincial agreement on oilsands royalty and tax incentives leads to $60 billion in projects. In 1996, PSAC targeted the emerging east coast offshore industry for new membership

2000

ANNIV E RS

A RY

2001

• PSAC celebrates its 20th anniversary. • PSAC raises more than $16,000 from the PSAC Education

Fund Golf Classic.

• PSAC surpasses $1 million in fundraising for STARS, • PSAC signs an affiliation agreement with the Northern Society of Oilfield Contractors & Service Firms (now Energy Services BC) formalizing cooperative efforts between the two trade associations. • PSAC raises over $10,000 for the PSAC Education Fund Scholarship program through the Golf Classic tournament. • PSAC holds first Retail Investment Symposium, showcasing 11 member companies. • PSAC participates in the World Petroleum Congress in Calgary.

making PSAC its largest corporate sponsor.

• PSAC announces the implementation of occupational

competencies.

• In conjunction with Human Resources Development

Canada (now Employment and Social Development

Canada), PSAC launches the Virtual Career Fair pilot

project to attract young people across Canada to the service sector of the petroleum industry.

• In conjunction with Crime Stoppers, the RCMP and other

industry associations, PSAC launches the Oilfield Theft

program, aimed at reducing theft and vandalism in the oil and gas industry.

• PSAC successfully brings about changes to the Alberta

Builders’ Lien Act.

• PSAC introduces the Safe Driving & Carrier Safety awards. • PSAC presents a paper to the Alberta government concerning

2002

• PSAC signs a memorandum of understanding with the Alaska Support Industry Alliance. • PSAC successfully launches the Virtual Career Fair nationally. • PSAC finalizes details for the administration of the Education Fund Scholarship program. • PSAC acts as a key driver in the formation of the Petroleum Human Resources Council (now Petroleum Labour Market Information). • PSAC convinces the Alberta government to let the existing Tax Exempt Fuel Users (TEFU) program remain in its present format. • PSAC successfully delays Alberta government’s move on WCB tribunal on “longstanding contentious claims.”

the lack of research and development expenditures in the conventional oil and gas industry and how that lack will negatively impact both the industry and government.

PSAC 35TH ANNIVERSARY 2016

2003

2004

• PSAC, the Canadian Association of Geophysical Contractors (CAGC), the Canadian Association of Oilwell Drilling Contractors (CAODC), CAPP and the Alberta and B.C. governments jointly commission the “Western Canada Drilling Cycle Optimization” study to provide practical recommendations on how industry members can better use financial, human and equipment resources outside the traditional first-quarter drilling period. • PSAC participates in discussions with federal and provincial transport authorities on proposed changes to the Commercial Vehicle Drivers Hours of Service Regulations and a resulting Oil Well Service Vehicle Cycle Exemption Permit. • PSAC hosts a meeting with representatives of the four western provinces, the territories, the National Energy Board and Human Resources Development Canada to discuss proposals for the harmonization of first aid training for the oil and gas industry. • PSAC and some of its members work with Alberta Revenue (now Alberta Treasury Board and Finance) to simplify the process of applying for tax refunds, clearly define who will qualify for refunds, establish clear consumption rules (idle and work time), and specify rules relating to refunds and criteria for refunds. • PSAC hosts two seminars to give members insight into the compliance regulations and impacts of Alberta’s Personal Information Protection Act. • PSAC hosts a two-day Corporate Strategy & Alternative Financing Conference to provide service company decision makers with an overview of numerous sources of capital and various corporate strategies to increase shareholder value. • For the first time, a total of $14,000 in PSAC Education Fund scholarships and grants is awarded to increase student awareness of and interest in careers in the petroleum service industry.

2008 • The PSAC Public Perception program, the largest initiative ever taken on by the association, seeks to address and improve the long-term relationship with the service sector, the producing sector and the general public. • Representatives of PSAC meet with the Saskatchewan government in July 2008 to discuss proposed changes to the Employment Standards Act, occupational health and safety legislated requirements for the securement of treating iron, a COR program for Saskatchewan and the formation of an industry safety association. • In June PSAC launches an index of its top 30 member companies (determined by market cap) that are publicly traded in Canada. • In November PSAC organizes an industry day for the Government of Saskatchewan. The day includes an Oil and Gas 101 session with presentations made by PSAC, CAODC, CAGC and CEPA to government representatives from various ministries.

PSAC 35TH ANNIVERSARY 2016

2009

• PSAC mandates that as of January 1, all regular members with Alberta operations are required to have a Certificate of Recognition (COR) to prove their safety program meets provincial minimum standards. • After years of lobbying by PSAC, Alberta Energy introduces the $200-million Innovative Technologies Royalty Program. • PSAC spearheads the drop-and-vibration testing of jet perforating guns, required by Natural Resources Canada to support applications for obtaining licences, certificates and permits for the purchase, possession, manufacturing, importation and transportation of the perforating gun systems used by the petroleum industry. • PSAC board members and staff meet with the premier and resources minister of the Northwest Territories to familiarize them with the role of the petroleum service sector. • PSAC convinces Alberta Revenue to simplify the TEFU program processes and agree on consumption factors for a number of operations in the service sector. • PSAC holds first-ever fall conference.

2010 • PSAC releases the results of two studies on the economic impact of the oil and gas services sector on the Canadian economy to help government better understand the sector’s importance.

• A global financial crisis cuts capital investment in Canada’s oilpatch, resulting in major layoffs. Early in 2009, PSAC begins efforts to press the Government of Alberta to take swift action to mitigate the effects of rapidly declining industry activity levels in the province. Following this, the Alberta Ministry of Energy announces a temporary threepoint energy incentive program that offered a drilling royalty credit, a new well incentive program and a $30-million investment into the province’s orphan well fund.

2005

2007

2006

• Alberta Premier Ed Stelmach announces a royalty review. PSAC lobbies against changes.

• PSAC celebrates its 25th anniversary. • The federal Conservative government announces plans to change the taxation system for energy trusts. PSAC responds through lobbying efforts.

• New federal hours of service rules come into effect limiting the number of hours workers can drive in a day. PSAC works with governments and industry to find ways to meet new standards.

• PSAC presents revised master service agreement to CAPP. • PSAC spearheads a dinner presentation to 23 Alberta members of the legislative assembly, including nine ministers, with the participation of four other industry associations—CAPP, the Small Explorers and Producers Association of Canada, CAODC and the Canadian Energy Pipeline Association (CEPA). • PSAC negotiates substantial improvements in the B.C. Employment Standards Act, which are of immediate and solid benefit to members. • PSAC’s benefit gala for STARS raises a record $325,000, bringing PSAC’s total raised for STARS to over $2 million. • PITS and the Canadian Petroleum Safety Association merge.

2011

• PSAC recommends changes to federal immigration and

temporary foreign

worker programs to ease the shortage of skilled workers PHOTO: JOEY PODLUBNY

Alberta Premier Ed Stelmach launches a royalty review—PSAC responds by launching a fact-based effort to explain to the government how the proposed changes will affect oilfield services and the communities they operate in

ANNIV E RS

A RY

• PSAC and other industry stakeholders meet with Human Resources and Skills Development Canada (now Employment and Social Development Canada), Service Canada and Citizenship and Immigration Canada (now Department of Immigration, Refugees and Citizenship) in Calgary in June to discuss the Temporary Foreign Worker program.

and the introduction of a new Lease

Lighting Guideline

after eight years of collaboration with industry.

2012

• PSAC Education Fund Golf Tournament raises nearly $50,000 to support the Education Fund Scholarship Program.

2013

• PSAC launches the Working Energy Commitment and conducts community engagement sessions to gather feedback and input into a Petroleum Services Hydraulic Fracturing Code of Conduct. It talks with more than 70 individuals, including landowners, local government and other community leaders.

2014

2015

• The association’s Working Energy Commitment sees the launch of the Hydraulic Fracturing Code of Conduct, which has now been endorsed by all Canadian fracking companies. • The STARS & Spurs Gala to fund air ambulance service raises a staggering $1.1 million. • PSAC participates in more than 250 meetings with government officials.

• PSAC presents a submission to Alberta’s climate change advisory panel outlining its members’ concerns with proposed new legislation. • PSAC responds to Alberta’s royalty review advisory panel, suggesting ways the royalty review could improve industry activity.

PSAC 35TH ANNIVERSARY 2016

35 years, TWO LEADERS AND AN ENTRENCHED LEGACY PSAC’s leadership, like the association itself, has been rock-solid and has evolved with the changing times B Y PA U L W E L L S

rom its inception, PSAC has fought the good fight. It was the early 1980s, and the nose-to-the-grindstone types that are now

PSAC’s member companies, and their employees, had an axe to grind. In 1980, the federal Liberal government under then prime minister Pierre Trudeau launched the National Energy Program (NEP), a stifling and ill-advised energy policy that brought the western Canadian oilpatch to its knees and Alberta’s economy to a standstill. Canada’s service sector was hit particularly hard as tax measures imposed by the NEP and the resulting massive decline in drilling Within a year of the introduction of the NEP, PSAC estimates that some $1 billion of economic activity had left Canada for the more stable and friendly industry environment in the U.S. Industry statistics show that 175 drilling rigs and 78 service rigs made the move south, while another 189 drilling and 161 service rigs were idled. More than 8,000 western Canadians lost their jobs.

PSAC 35TH ANNIVERSARY 2016

PHOTO: JOEY PODLUBNY

activity had a crippling effect.

Desperate times called for desperate measures. And so the PSAC journey began. The service sector, represented at that time by the Canadian Association of Oilwell Drilling Contractors (CAODC), felt its collective voice was being buried and unheard. They decided to change that and, in October 1981, opted to spin out from the CAODC to form PSAC. And some 35 years later, the association is arguably the second-most influential and effective industry lobby group in the nation behind only the Canadian Association of Petroleum Producers. In its 35-year history, PSAC has had but two leaders— Roger Soucy was at the helm for 29 years and was followed by Mark Salkeld, who took the reins after Soucy’s retirement in 2010.

ROGER SOUCY, PSAC president for 29 years

THE ARCHITECT OF PSAC In 1979, Soucy began working for CAODC and was soon named general manager of the service and supply division of the association. And it wouldn’t be long

came in in 1985 and eliminated the NEP, that was a big

before he was thrown into the fire as member compa-

victory for the whole of the industry, in particular PSAC.

nies under his leadership fought for survival in the wake

We worked pretty hard for three or four years getting

of the disastrous ramifications of the NEP.

that changed,” Soucy says.

“I was the manager of CAODC’s service and supply

“In the meantime there were some programs that

division, and when the NEP first came out, obviously it

the provincial government brought in that we helped

hit the industry hard. There was a lot of discussion as to

initiate and delineate that were designed to help cre-

what the various industry associations should do,” he said.

ate some activity in the field. Those were busy times

According to Soucy, the service and supply group grew increasingly restless and had some “difficulties

Post-NEP, PSAC continued to evolve. Already estab-

and concerns” with the approach the CAODC was tak-

lished as a strong and respected lobbying force for its

ing as it lobbied against the NEP.

members, the association began to branch out.

“There was also some concerns about the gover-

“The association had to sit down and re-evaluate

nance of the association as the service companies felt

what it wanted to do. We understood that we had a

under-represented on the board and so forth and asked

good position from a lobbying standpoint and that we

for changes, but the drillers decided they didn’t want to.

represented a lot of the field jobs and all that sort of

So a combination of those things resulted in the forma-

thing that was important to government,” Soucy says.

tion of PSAC. The split was amicable,” he says.

PHOTO: AARON PARKER

for us,” he says.

“In the ensuing years we also started dealing more

In its formative years, PSAC’s focus was on lobbying

with the issues that the members had—health and safety

against the NEP, in conjunction with other industry asso-

issues and transportation issues were a couple of the

ciations, while also working with the Alberta government

major areas where we focused on and set up various

to establish programs that would help re-energize the

committees. Safety became an important focus.”

industry in the province and kick-start drilling activity. Eventually, those efforts would pay off. “Certainly, the NEP was the major issue. I think the fact that when the Brian Mulroney [Conservative] government

The bottom line regarding his tenure and the lasting importance of PSAC? “We gave a voice to a sector of the industry that didn’t have one before,” Soucy says. 

PSAC 35TH ANNIVERSARY 2016

THE TORCH IS PASSED

were also very much controlled by the various industry

While the current downturn has been an immense chal-

associations as they were dealing with governments

lenge for PSAC and its battered membership, Salkeld

directly and then would share information to member

credits Soucy and the solid foundation he built as being

companies. It’s a different world now.

key to the current and ongoing reliance and strength of the association.

“Networking today is Facebook and Instagram and LinkedIn, and it’s a whole different kind of expectation

“I more or less came into a rock-solid organization

that members have from associations. The new demo-

with respect to how Roger had set it up with his team. He

graphic or generation of oilfield service companies want

built a solid governance model, and he built a solid, solid

an instant return on investment—what are my dues get-

association,” Salkeld says. “Everything was in place.”

ting me now?” Salkeld says.

Salkeld began his stint as president of PSAC in

“A lot of people don’t realize that it can take PSAC

November 2010, just as the industry was recovering

five or six years to get a regulation changed on their

from the fall-out of the 2008-09 global financial cri-

behalf. Now they can just get on Facebook or Twitter

sis. And while the NEP was in many ways the hallmark

and start complaining about the government themselves and changes can happen. The impact of social media is huge, and it’s made for an interesting time for me to be here,” he says. Prior to the global financial crisis, PSAC’s membership had topped out at 265. When Salkeld started, that number had been eroded somewhat to 235 members, a number that was essentially maintained until the current down-

MARK SALKELD, PSAC president since 2010

turn wrecked havoc. Membership now sits at 167 companies. “We’ve seen our membership numbers decrease, and the employee headcount has gone from about 60,600 to about 32,000 because

of Soucy’s tenure, industry-transforming technologi-

companies have laid off or shut down and all the rest of

cal advancements that began to truly take hold in the

it. So it’s pretty tight out there right now,” Salkeld says.

early part of this decade have been the highlight under PSAC’s current leadership. “The most significant thing I’ve seen in the six years

some tough choices as the downturn’s grip continues to

I’ve been here are the technological changes. That’s what

be felt. PSAC has downsized its office space, renegoti-

we’ve had to deal with on a couple of fronts,” Salkeld says.

ated rents and laid off some staff.

“In 2008-09 we thought we were in peak oil territory

“We’ve cut back on a number of fronts to manage

and then we came out of the global economic crisis and

our costs, just like our members have,” Salkeld says.

the new technology—like multistage hydraulic fracturing,

“PSAC will get through this. We’re solid. Like I said, it

directional drilling and real-time downhole data—really

was a well-managed, well-organized association under

took hold.”

Roger, and we’ve got a reserve fund that is designed to

Salkeld says that the expectations of member companies have also evolved. He notes that 35 years ago, networking and advocacy were incredibly important but

But, as is its history, PSAC will continue to be resili ent. Much like the sector it represents, PSAC’s making

PSAC 35TH ANNIVERSARY 2016

carry us through if we’ve got to tap into it,” Salkeld says. “We’ll continue to be there for our membership. Just like we have been for the past 35 years.”

AL HUEHN and TRAVIS STRUBE of Topco Oilsite Products

The times they

ARE A-CHANGIN’ The oilfield service sector has undergone a lot of change in the last 35 years. Here are two views on the key changes that have happened. BY ELSIE ROSS

anada’s oil and gas industry has seen a lot of change

focused on growth and investment strategies: where it

since 1981. Oilfield service companies have con-

could develop more business, how fast it could grow a

PHOTO: JEFFERY BORCHERT

tinually re-invented themselves. Topco Oilsite Products,

company and how it could employ more people.

a PSAC founding member, has survived and prospered

These days, it’s just the opposite, says Al Huehn, pres-

through the ups and downs. President and chief exec-

ident and chief executive officer of privately held Topco

utive officer Al Huehn and Travis Strube, the manager

Oilsite Products, one of the founding members of PSAC.

of Topco’s thread compound plant in Calgary, tell the

“It’s how do we downsize? How many more people do

story of how they have seen the industry adapt to the

we lay off? Where can we cut costs if possible?” he says.

boom and bust cycle.

AL HUEHN

“A lot of time is being spent by a lot of people in this industry in firefighting,” he says. Through his work, Huehn is involved with a lot of the

For most of the past three decades, despite some ups

majors, mostly in the service industry, and is amazed

and downs, the Canadian oilfield services industry was

at what he’s hearing. 

PSAC 35TH ANNIVERSARY 2016

“Instead of saying, ‘We are absolutely excited. We are working on business plans and strategies to increase our business and offer more value added to our customer base,’ companies are now saying, ‘How do we downsize and where do we go next?’ because the investment dollars are leaving this province at an incredible rate,” he says. “I’ve never seen anything like it, and I’ve been in this business for 36 years.” Huehn, whose company manufactures and distributes premium quality equipment and products for the upstream energy industry, has seen first-hand the effect of cost-

AL HUEHN

cutting on his company’s ability to develop relationships with its customers as a lot of experienced employees are

or a senior person in field ops,” he says. “Six months

being laid off while others are constantly being transferred.

later or 12 months later, those people are in a differHuehn is also concerned about the effect current

business, the way you build a business is through trust,”

changes in pay structure that eliminate base salaries

he says. “The guy on the other end of the line knows that

for oilfield services employees will have one the indus-

you are there for him, not just from 7:30 in the morning until

try once the market recovers.

six o’clock at night, but that you are there 24 hours a day.”

“If you are 35 years old and you have three little kids

The customer wants to know that if they are having

at home and you have a mortgage and two car pay-

difficulty on a wellsite, there is someone on standby who

ments and have groceries to buy every week, you can’t

will pick up the phone and respond to their call, deliver-

live on maybe next month I’ll make $10,000 or maybe

ing a critical piece of equipment out to the site even if

I’ll make $2,000,” he says. As a result, Huehn fears that

it’s midnight on a Saturday. “That’s what it is all about:

many workers with eight or 10 years of experience as a

a huge trust factor,” says Huehn.

roughneck or a driller or perhaps in the hydraulic frac-

However, that sort of relationship-building takes years; it doesn’t happen overnight, he says.

ent position or have moved on or have been laid off.”

turing business will not be prepared to go back because they need more stability in their paycheque.

“When times are really good, relationships are all

“So what we are going to be doing is hiring a lot of

right, but it’s in hard times where your relationships really

younger people straight out of high school and saying,

matter, and you know who’s there and who’s not there,”

‘Here is your $20 or $25. Come and work for us,’ but these

says Huehn. “What I see is that a lot of the companies

will be all green hands,” he says. “I worry about the safety,

are changing out and a lot of the experience is going,”

and I worry about the training, and I worry about the rush-

he says. “The people who are left in the industry, the

ing to try to get staffed up to take care of business.”

senior people that have had the relationships, are so

As an Enform board member for a number of years,

incredibly busy trying to manage with fewer staff that

Huehn saw the importance of an emphasis on safety

they don’t have the time for that relationship-building.”

and proper training within industry. “This province in

At the same time, the younger workers who are coming

particular has one of the best safety training programs

in are more or less transient, according to Huehn. “We

of any jurisdiction in North America, and I have seen

have seen this in some of our really big customers where

that as a very positive, proactive change over the years,”

you build a relationship with somebody, say in quality

he says. “Enform has done a tremendous job, as has

control or procurement or supply chain management

PSAC. They have been all over this.”

PSAC 35TH ANNIVERSARY 2016

PHOTO: JEFFERY BORCHERT

“Our customer relationships have always been incredibly important in the energy industry, and as it is in any

TRAVIS STRUBE

“We have a lot of teleconferencing and video-con-

For Travis Strube, the manager of Topco’s thread com-

ferencing instead of travelling,” says Strube. “When I

pound plant in Calgary, one of the biggest changes during

was in sales, every quarter, all the sales guys would go

his 13 years at the company has been in how his com-

to Red Deer, and we would have a meeting,” he says. “I

pany uses technology to do its business.

know our sales guys meet in person much less often.”

“When I started, Topco had cellphones for a few

There also have been changes in the relationship

employees but hadn’t yet gone to a smartphone,” he

between Topco and its customers, says Strube, who in

recalls. It now uses iPhones and Android mobile devices.

his job at the company spent a lot of time on the road

The former Saskatchewan farm boy joined the com-

in southern Alberta and southeastern Saskatchewan.

pany as a salesman in 2003, shortly after it went private.

“When I first started, relationships were not about cold

As one of the younger employees (he was 24) and a grad-

calling, although there will always be some of that, but

uate of the electronics engineering technician program

more about managing existing customers and always

at the DeVry Institute of Technology, Strube was seen

staying in front of them,” he says. That included getting to

as the tech expert and was asked for advice on what

know his customers socially, going for dinner with them,

mobile device the company should buy for its employees.

learning about their families and at some point, perhaps

“I recommended BlackBerry, and it worked out really well for years until RIM [the former name of BlackBerry’s manufacturer] started having their struggles,” he says. Over the years, Topco has also looked to other means of communication to connect its Calgary head office with its customers and vendors as well as its own employees throughout Alberta.

also meeting their spouses. “It wasn’t just in and out.” However, it appears that today’s salespeople may need to take a different approach as a lot more turnover within the companies makes it more difficult, says Strube. “When I was doing sales calls, for years I would go see the same people at those companies, and now those

The company, which manufactures and distributes

people are all gone,” he says. “It’s hard to make those rela-

premium quality products used by the drilling contractors

tionships when people are here one week, gone the next.”

and the well-servicing industry, is in four other centres in

When it comes to Topco products, the company is

the province and has three distribution centres in the U.S.

seeing more requests from customers looking for environ-

Topco also provides services for the inspection, repair

mentally friendly products and is fielding more questions

and recertification of oilfield fluid control equipment.

about whether they meet certain specifications, says Strube. Topco started blending compounds and specialty

TRAVIS STRUBE

sealants in 1959 and today has a full range of conventional, environmental and thermal products for the oil and gas industry. Topco prides itself on its quality products, and while customers may pay a bit more, the service company believes those costs are justified and quality is important for the companies it deals with, says Strube. “So if we want to deal with Shell, Schlumberger, Precision Drilling, we need to jump through whatever hoops they

PHOTO: JEFFERY BORCHERT

need us to and have the certifications.” There’s also more focus and discussion today about employee safety, both in the field and in the plant, he says. “We’ve got a good safety record, but with more employees, there also are increased [Workers’ Compensation Board] rates to consider.”

PSAC 35TH ANNIVERSARY 2016

Market

INTELLIGENCE PSAC studies and forecasts a valuable resource to members, government and the public

fter Brian Mulroney’s conservative government

Then a three-year strategic plan was drawn up. Part

took office in 1985 and scrapped the National

of that strategy was to become an information resource

Energy Program (NEP), PSAC found itself at an exis-

to its members, the industry and the wider public. That

tential crossroads. Its founding mandate in 1981 was to

mandate sowed the seeds for the organization’s intel-

do something about the NEP foisted on the oil and gas

ligence services.

industry by the federal Liberals of the day.

“We kept getting requests—primarily from the media—

“We were sitting around the board table saying, ‘Now

asking how much it cost to drill a well, which is kind of

what?’” former PSAC president Roger Soucy recalls.

a how-long-is-a-piece-of-string question because it

“We had to consider even basic questions, such as ‘Are

depends on where the well is drilled, the type of well, the

we really needed? If so, for what?’”

geology and a whole series of other factors,” Soucy says.

PSAC 35TH ANNIVERSARY 2016

PHOTO: JOEY PODLUBNY

B Y R . P. S T A S T N Y

THE CONTRIBUTION OF OILFIELD SERVICES TO THE CANADIAN ECONOMY IN 2009 OIL & GAS SERVICE SECTOR GDP CONTRIBUTIONS TOTAL: $75 BILLION

A PSAC board member at that time, Dale Tufts (now deceased), had a drilling consulting company and offered

Manufacturing and construction

11,661

PSAC access to the data he had collected. “Dale started working on that, and it became the genesis for the well cost study,” Soucy says. “The CAODC

Other

21,706

[Canadian Association of Oilwell Drilling Contractors] had the well count, and we had the well cost. Our study also

42,128

Direct

kept some measure of media interest in the organization.” Out of the well cost study came PSAC’s annual Canadian

10,000

20,000

drilling activity forecasts. Various other studies followed,

members struggling to find enough people to hire.

40,000

50,000

($ million)

typically in response to member demands. The PSAC total compensation survey, for example, came in response to

30,000

OIL AND GAS SERVICE SECTOR TAX CONTRIBUTIONS TOTAL: $17.3 BILLION

“Knowing what the industry was paying was an important part of attracting and hiring people,” Soucy says. Selling intelligence reports would go on to become a revenue source for the organization, but the primary pur-

Provincial tax

1,801

pose of PSAC’s studies was always to provide benefits to its members. There are direct benefits such as help making better business decisions and better budget

Federal tax

4,300

plans. There are also indirect benefits through studies such as “The Contributions of the Canadian Oil and Gas Services Sector to the Canadian National Economy”

Corporate tax

and “International Revenue of Canadian Oil and Gas

11,462

Services Sector Companies,” which form the basis of

2,000

4,000

Canadian services and supply sector. “We use some of those PSAC reports,” says Quinn

8,000

10,000

12,000

($ million)

PSAC’s lobbying efforts while, at the same time, raise the visibility and prestige of the association and the

6,000

OIL AND GAS SERVICE SECTOR EMPLOYMENT CONTRIBUTIONS TOTAL: 685,000 JOBS

Holtby, founder, president and chief executive officer of Katch Kan. “I’ve always felt the organization is extremely important for the growth of the Canadian side of the

Manufacturing and construction

141,127

industry but also internationally. If you take a look at how we bring new members on, two existing members have to say, ‘Yeah, I know the guy. They’re a good company,

Other

143,346

and there’s no issues.’ So it’s not that you can just sign up and be a PSAC member tomorrow. You need to be scrutinized and be squinted at, as I call it, to make sure your company lives the values of PSAC.”



384,837

Direct 0

50,000

150,000

250,000

350,000

number of jobs SOURCE: STATS CANADA

PSAC 35TH ANNIVERSARY 2016

CORNERSTONES PSAC’s Canadian drilling activity forecasts are widely referenced in the industry, and they estimate the number of wells that will be drilled (rig released) each year across Canada. It’s published annually and updated quarterly. Each activity forecast also provides five years of historical data for context. Well data is further broken down in each region and reported by operator (top 20 in each area), status (gas, oil, service or dry), class (development, exploratory or re-entry), type (vertical, directional or horizontal) and depth. The PSAC Well Cost Study provides financial, geological and technical data on approximately 40–50 typical wells drilled across Canada. The study includes more

PSAC board member DALE TUFTS supplied the original data for the well cost study, which is now one of PSAC’s most valuable intelligence products

than 100 categories of costs and detailed wellbore graphics for each well.

“The well cost study comes out twice a year and is

of detail focused on all the specific field positions. The

actually used more by producers than services com-

study provides medians and percentiles for positions,

panies—especially if they plan to drill in a new area. It

so companies can see what, on average, these posi-

answers what it would cost to go and drill in a new area,”

tions are being paid.”

says Elizabeth Aquin, senior vice-president of PSAC. “For

Petroleum Labor Market Information is a forecast

PSAC members, the benefit can be in marrying the drill-

of workforce requirements done at an arm’s length

ing activity forecast with the well cost study so that they

from PSAC.

can evaluate the areas of expected drilling and consider

“We had always worked with the Petroleum HR

the costs being predicted for drilling the types of wells

Council—in fact, we were instrumental in having that

in those areas, and then weigh that against their market

established back in 2000-01,” Aquin says. “The federal

share in those regions.”

government funded the sector council program but ended

The total compensation surveys are only available to

that funding in 2013, so Enform more or less took over

PSAC members who must participate by providing their

the labour market information part of that organization.

own data in order to purchase the final report. The work is

They have been doing that work, and our members have

outsourced to a firm that aggregates the data, and PSAC

contributed the information as part of the data that they

produces the report to help its members with budgeting

collect and use to make their forward-thinking statements

and providing competitive pay structures.

on the industry’s workforce requirements.”

“There are a lot of groups that do pay surveys,” Aquin

In late 2013, PSAC recognized the need for a more

says. “We specialize in the service sector with a level

accurate picture of workforce requirements specifically

PSAC 35TH ANNIVERSARY 2016

PSAC’S 2013 HORIZONTAL DRILLING WORKFORCE STUDY RESULTS

NORTHEASTERN

WEST CENTRAL

SOUTHEASTERN

BRITISH COLUMBIA

ALBERTA

SASKATCHEWAN

TYPE 1

TYPE 2

TYPE 3

Natural Gas

NGLs

Oil

6,000

3,800

3,000

FRAC STAGES

INDIVIDUALS EMPLOYED

302

270

239

2,900

1,700

1,400

TARGET

MEASURED DEPTH (METRES)

PERSON–DAYS OF EMPLOYMENT SUPPLIERS REQUIRED

SOURCE: PSAC 2013 HORIZONTAL DRILLING WORKFORCE STUDY NOTES: TYPE 1: A HORN RIVER DEEP TIGHT GAS WELL TYPE 2: A NATURAL GAS LIQUIDS WELL FROM CENTRAL ALBERTA TYPE 3: A TIGHT OIL WELL FROM SOUTHEAST SASKATCHEWAN.

in resource plays, so it put together a “Horizontal Drilling

Another interesting statistic to come out of the horizon-

Workforce Study.” The target audience of this report is

tal well report is that, in 2013, the total workforce needed

government officials, but it is also useful for media and

in horizontal well development across western Canada

educators. It details the labour needs of multi-fracked

amounted to about 60,000 full-time equivalent positions

horizontal wells and discusses the types of workers and

(not including SAGD wells in the oilsands).

PHOTO: JOEY PODLUBNY

skills required to sustain resource play development.

And as mentioned, PSAC’s “The Contributions of the

“When the industry was drilling mainly vertical wells,

Canadian Oil and Gas Services Sector to the Canadian

we always quoted 75 people per well over the course

National Economy” and “International Revenue of Canadian

of a couple weeks that it took to drill and complete,”

Oil and Gas Services Sector Companies” have become

Aquin says. “In the horizontal well study, we look at

the sharpest arrows in the PSAC’s lobbying quiver since

three different types of wells—Horn River deep tight

Alberta’s 2007 royalty review. Thanks to this work, gov-

gas wells in northeast B.C., wet gas wells in central

ernments across Canada today can quantify the services

Alberta and tight oil wells in southeast Saskatchewan—

sector’s value to the economy and understand that its

and tally all the people involved. The numbers range

hundreds of companies and tens of thousands of services

from 239 for the shallower wells in Saskatchewan to

workers are an integral part of what Suncor, Canadian

302 people in the Horn River. So it’s a huge difference

Natural Resources and the myriad other exploration and

from a vertical well.”

production companies do.

PSAC 35TH ANNIVERSARY 2016

Crossing

BORDERS Canadian service and supply companies are racking up the air miles to win global opportunities BY DALE LUNAN

anadian oilfield service (OFS) companies have been active globally for nearly as long as there’s been a modern oil and gas industry here in Canada, but in

the last half decade—and particularly in the last couple of years—an increasing number of providers of all sizes are looking abroad for enhanced revenue opportunities. And they’re getting help on that front from PSAC. Since 2010, the Association has hosted an oil and gas representative from Global Affairs Canada, formerly Department of Foreign Affairs, Trade and Development (DFATD), in its Calgary headquarters. “Our member companies can glean information from Carine Graziano, the current representative, on any number of things related to export trade,” PSAC president Mark Salkeld says. “The trade-off is that they get to keep their finger on the pulse of Canadian oil field services; for us, we get access to trade commissioner services around the world.” Salkeld says Canada’s OFS sector’s interest in export opportunities increased significantly when crude oil prices—and activity in Canada and elsewhere— began to slide more than two years ago. 

PSAC 35TH ANNIVERSARY 2016

AMERICAS

Argentina Bolivia Brazil Colombia Ecuador Mexico Peru United States Venezuela

ASIA China Georgia India Indonesia Malaysia Russia Singapore Thailand

EUROPE Albania Italy Luxembourg United Kingdom

AFRICA Algeria Egypt Libya

MIDDLE EAST Iran Iraq Kuwait Oman Pakistan Qatar Saudi Arabia United Arab Emirates

AUSTRALASIA Australia New Zealand Papua New Guinea

INTERNATIONAL REVENUE–COUNTRY OF ORIGIN

To understand the export market, PSAC’s International Export Study looked at 42 Canadian headquartered OFS companies involved in selling to the world. Companies reported revenue from a total of 35 countries, representing a variety of countries around the world. Of the 42 companies in the study, 39 had revenue from the U.S. The other predominant sources of revenue are other countries in the Americas and Australasia (primarily Australia). Revenue from Asia and the Middle East was also common. In fact, for 50 per cent of the companies, the U.S. was the only source of international revenue.

SOURCE: PSAC 2015 INTERNATIONAL EXPORT STUDY

PSAC 35TH ANNIVERSARY 2016

PSAC INTERNATIONAL EXPORT STUDY REVENUE CONTRIBUTION BY SECTOR 2014 TOTAL: $42.5 BILLION Canada

International

29.6 24.9

C$ billion

20 6.0 4.5

3.6 2.9

10.6

4.4 3.2

2013 2014

Contract drillers

2.0

1.1 2.5

20.1

21.8

13.7

1.5

2013 2014

Manufacturing

Oil & gas services

2013 2014

Pipeline infrastructure processing

SOURCE: PSAC 2015 INTERNATIONAL EXPORT STUDY

“There’s always been a percentage of our membership

Newalta. Together, the group had international revenue

that looks to international markets to help supplement

of just over $6 billion in 2014, up from $4.5 billion in 2013.

their revenue streams during our natural peaks and val-

Seven drilling contractors were in the study group, earn-

leys,” he says. “Now that we’re in this long, drawn out

ing $4.4 billion internationally in 2014, up from$3.6 billion in

downturn beyond just our seasonal valley, more com-

2013, while nine manufacturers were represented, account-

panies are looking to South America, they’re looking to

ing for $2.5 billion of international revenue in 2014, up from

the U.S., looking overseas for opportunities to generate

$1.99 billion the year before. Pipeline, infrastructure and

revenue that will help them offset what they’ve lost here.”

processing companies (Enbridge, Keyera and TransCanada)

According to a PSAC export study completed in the

rounded out the study group. It was the smallest sector,

summer of 2015, a selection of 42 Canadian headquar-

but it accounted for the bulk of the international revenue:

tered OFS companies generated about $42.5 billion of

$29.6 billion in 2014 and $24.9 billion in 2013.

revenue from international work in 35 countries in 2014,

Ever since crude prices began to slide in late 2013,

up from just over $35 billion in 2013. By comparison,

it appears that Canadian OFS companies have been

those same 42 companies generated $40.2 billion in

focusing their attentions mainly in the western hemi-

domestic revenue in 2014, up from $34.6 billion in 2013.

sphere, with the U.S., Colombia and Mexico as favoured

And it’s not just the big boys who are moving over-

targets, Salkeld says. Services most in demand are

seas: OFS companies with less than $100 million in annual

production improvement, multistage fracking, micro-

revenue (11 in the PSAC study) registered the largest per-

seismicity and real-time data gathering, but with more

centage growth in international revenue between 2013

companies looking abroad, gaining a foothold on for-

and 2014 at 65 per cent, compared to the study aver-

eign soil is becoming tougher, he adds.

age of 21 per cent. In 2014, international revenues for

Since it was formed in 2011, Blue Spark Energy, which

companies offering oil and gas services accounted for

has developed a Wireline Applied Stimulation Pulses

the bulk of the study group at 23 of the 42. Among them

(WASP) tool that converts, compresses and discharges

were some of Canada’s largest OFS companies, including

electrical energy as high-power hydraulic pulses to improve

Calfrac Well Services, Trican Well Service, Gibsons and

connectivity between a well and the reservoir, has focused

PSAC 35TH ANNIVERSARY 2016

“

Because each cycle affects every area of the world differently, sometimes you’ll see a downturn in one particular market and recognize that it means there might be opportunity in other markets.” —Todd Parker, chief executive officer, Blue Spark Energy

its marketing efforts mainly outside Canada, says Todd

with operations spread throughout Canada, the U.S.,

Parker, the company’s chief executive officer.

Colombia, Mexico and Ethiopia. Joe Hickey, a Kodiak

“One of the things you realize if you’ve been in the industry a while is that there’s cycles, there’s ups and

for at least the near to medium term.

downs, and one of the best ways to try and protect yourself

“We’re pretty focused on the international side,”

from those cycles is to spread your footprint out as much

he says. “Canada, when it does recover, we’re seeing

as possible,” Parker says. “Because each cycle affects

it’s going to be a slow recovery and will be a bit softer

every area of the world differently, sometimes you’ll see

market than we’re used to. We’re trying to get into other

a downturn in one particular market and recognize that

markets to ease the pain of the big swings.”

it means there might be opportunity in other markets.”

Like Blue Spark’s Parker, Hickey admits that the current

In recent years, WASP has been deployed in more

downturn has affected all regions of the world, but others,

than 300 wells, from B.C. to Romania, from California

he says, are still better off than Canada. “Look at Europe—

to the North Sea.

you’re still getting between eight and 10 bucks for an mcf

Up until 2014, Blue Spark’s revenue had been split

of gas; Argentina has a fixed rate per barrel of $67.50.”

about 60-40 between Canadian and international sources.

That has led Kodiak to leave no stone unturned for

“I look at our revenue this year, [and] we are almost 90

future international expansion. Argentina is a target,

per cent international,” Parker says.

so is Ethiopia’s potash sector, which offers Kodiak the

Although the global price collapse has affected virtually every producing region in the world, Parker has

opportunity to diversify both geographically and outside the volatile oil and gas sector.

noticed that other countries are handling the collapse

And for the most part, Hickey says, it’s doing it on

better than Canada, which is why opportunities abroad

its own—no partners and no agents on the ground,

are better than they are at home, especially for compan

only the odd alliance, a key one of which is with Roke

ies in the production optimization space, like Blue Spark.

Technologies, a private Canadian company with a Quad

“What we’re seeing in places like the Middle East,

Neutron tool, a nuclear measurement tool specially

to some extent Europe and even now the States, is that

PHOTO: BLUE SPARK ENERGY

partner, says international will be the company’s focus

designed for through-pipe reservoir evaluation.

there is a lot of focus on optimizing existing assets, opti-

Kodiak is the exclusive service provider for Roke in

mizing existing production to get lower costs or a smaller

Colombia and Mexico, and has access in other regions. “As

footprint or whatever the trigger is,” he says. “Here in

we find our markets, we make exclusive deals for [these]

Canada, it’s amazing. We talk a lot about optimization,

regions to represent Roke, and this allows us to stand

but very few industry people are actually engaged in any

out in the crowd of the Big 4 [Baker Hughes, Halliburton,

kind of optimization program. We have a million exist-

Schlumberger and Weatherford],” Hickey says.

ing wells, and we’re intent on keeping drilling, whereas

And standing out is what any Canadian OFS com-

other markets have slowed the pace of drilling and are

pany needs to do on the international stage, he stresses.

really focusing on extracting as much hydrocarbon from their existing infrastructure as they can.” Part of the Kodiak Services Partnership, Kodiak Services International is a full-service wireline company

“If you just offer run-of-the-mill services, there is really no chance of you getting anything, in my opinion. You have to offer something that the majors can’t,” Hickey says.

PSAC 35TH ANNIVERSARY 2016

Help

WANTED PSAC’s workforce development work has improved the sector’s visibility and safety R . P. S TA S T N Y

mid this protracted downturn and its dour parade

on the job. There were no post-secondary courses,

of layoffs, it’s easy to forget that the oil and gas

no career paths to follow to attract youth. PSAC’s

industry has struggled to attract enough workers to fill

competencies program set about bringing greater

its ranks for most of the last two decades. When oil-

visibility to these skills while, at the same time, iden-

sands development kicked in, workforce shortages and

tifying gaps in training.

labour-cost escalation were even considered a threat to further industry expansion. Governments and industry scrambled to develop suffi-

system. That program comes down to demonstrated

cient workforce capacity with training and apprenticeship

competence,” Aquin says. “Unlike some of the traditional

programs, while PSAC helped it members cast a wider net

trades where you write tests and go to school and accu-

to find workers—targeting retiring military people, explor-

mulate a certain number of hours before you’re good

ing opportunities with First Nations, engaging new Alberta

to go, in this industry, where you have so many people

immigrants and negotiating with the federal government to

learning on the job, it doesn’t matter where you learned

create suitable temporary foreign worker rules to fill the gap.

your skills. The real question is ‘Do you know what you’re

Out of the worker shortages also came a PSAC study

PHOTO: JOEY PODLUBNY

“We worked according to a model that we found in the U.K., which was its National Vocational Qualification

doing?’ So it’s demonstrated competence.”

identifying labour pools within Canada with skills that

In 1995, a Petroleum Competency Board was formed

could be transferred to the oilpatch and an effort to raise

to run the competencies program. Then in 2001, the board

the visibility of certain skill sets within the services sec-

was taken over by the Petroleum Human Resources Council

tor through its Occupational Competencies Program.

of Canada (PHRC), which revised several of the compe-

“We realized that the service sector is an invisible

tencies and implemented a Standards Management Plan

industry,” says Elizabeth Aquin, PSAC’s senior vice-pres-

and established the Petroleum Competency Program

ident. “People know about teachers and lawyers and

(PCP) nationally.

doctors and accountants, but who knows what a snub-

Today, Alberta Apprenticeship and Industry Training

bing person does? Who knows what a wireline guy does?

recognizes the worker competencies in oil and gas trans-

If you’ve never heard of these guys, how could you ever

portation services, snubbing services and well testing as

want to become one?”

designated occupations equal in status to a journeyman’s

Many roles in the oilpatch require highly specialized skills, but those skills are almost entirely learned

certificate in a trade. Cathodic protection was approved as a designated occupation 2013. 

PSAC 35TH ANNIVERSARY 2016

To date, over 30 competencies have been developed

PSAC’s competencies program helped to standard-

for the petroleum services industry. The people who work

ize industry knowledge and led to improved safety and

in these jobs developed and approved the competencies.

better worker mobility.

Pumping services, snubbing, transportation and specialized

“With the competencies, everyone has the same oppor-

trucking, well testing and wireline services are all repre-

tunities to advance their careers. It doesn’t matter which

sented in the positions already developed, which include:

company you work for,” says Cindy Wright, quality assur-

Cased hole services:

ance manager with Calgary-based Grant Production

• Driver/operator

Testing Services. “It used to be that Weatherford had

• Supervisor

the training program and no one else did. So all the

Oil and gas transportation services:

but also as a company in hiring people. Now that we

• Boom truck operator

have this well testing program, everyone can develop

• Bulk haul truck operator

their profession as far as they want to go. We offer it to

• Multi-wheel truck operator

our employees to help them advance their careers and

• Trucking supervisor

it also helps us hire people because they see they can

• Winch tractor operator

get the same accreditation working for us as they could

Slickline services:

working for a much bigger company.”

• Assistant operator

The PHRC ran the competencies program until 2013,

• Slickline operator

when through consultation with industry and other stake-

Snubbing services

holders it was folded into Enform, the upstream oil and

Well testing services

gas industry’s training arm.

FALL

2016

ISSUE

Weatherford guys had an advantage in finding work,

• Bed truck operator

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Keeping

WORKERS SAFE Oil and gas grows into a culture of safety B Y R . P. S TA S T N Y

afety is so woven into the fabric of the oil and gas

repurposed the mission statement of one of its lon-

development today that it’s difficult to imagine a

gest-standing organizations, the Petroleum Industry

time when newspapers ran stories about “the killing

PHOTO: JOEY PODLUBNY

fields of Alberta.”

Training Service (PITS). “PSAC and CAPP [Canadian Association of Petroleum

But in the late 1980s, it was a different story.

Producers] were instrumental in expanding PITS’s training

“There were so many accidents that the govern-

mandate to include safety,” recalls the former president

ment put together the Upstream Petroleum Industry

of PSAC, Roger Soucy, who led the organization from

Task Force on Safety,” says Elizabeth Aquin, senior

its founding in response to the National Energy Program

vice-president of PSAC. “Out of that task force came

in 1981 until his retirement in 2013.

some 93 recommendations to help the industry improve its safety standing.” Faced with the threat of government-legislated safety regulations, the industry buckled down and

PITS went on to become today’s Enform, which continues the evolution of the oil and gas industry’s culture of safety through collaboration with industry, associations and governmental and regulatory bodies.



PSAC 35TH ANNIVERSARY 2016

INDUSTRY RECOMMENDED PRACTICES (IRPS)

Enform provides the innovative training, certifications, services and resources needed to get the job done safely, but safety in the oil and gas industry is a bigger direc-

The Drilling and Completions Committee (DACC) is responsible for

tive than just training. PSAC also does a lot of advocacy

the development of recommended technical operating practices

work around safety.

for the upstream oil and gas industry in the areas of drilling, com-

“There’s also all the legislation and regulation work

pletions and servicing of wells. The primary focus of DACC is to

around safety with federal and provincial governments

develop technical industry recommended practices (IRPs), where

in Canada that requires a lot of advocacy work,” Soucy

the objectives include technical optimization, productivity, safety

says. “Most of PSAC’s safety work is done with the

and environmental performance.

regulators. Probably 80 per cent of it is dealing with

PSAC and its members participate in the development of IRPs.

standards and things along that line.”

IRPs provide guidance or best practices to conduct operations in

To leverage its credibility and influence with govern-

a safe and technically acceptable manner. They must be developed

ment, PSAC has been proactive in raising the safety

to meet, or exceed, the minimum intent of the applicable legisla-

standards of its members, which account for about

tion in each member’s jurisdiction.

80 per cent of the revenue generated by the service and supply sector. Some of the PSAC initiatives it has

Here is a list of current IRPs:

championed are the development of Certificates of

IRP Volume #1 – Critical Sour Drilling

Recognition (COR), performance standards and indus-

IRP Volume #2 – Completing and Servicing Critical Sour Wells

try recommended practices (IRPs).

IRP Volume #3 – In Situ Heavy Oil Operations

“In 2003, we implemented a requirement for all of

IRP Volume #4 – Well Testing and Fluid Handling

our members to have either COR or a SECOR [Small

IRP Volume #5 – Minimum Wellhead Requirements

Employers Certificate of Recognition for companies

IRP Volume #6 – Critical Sour Underbalanced Drilling

with less than 10 employees],” says Patrick Delaney,

IRP Volume #7 – Standards for Wellsite Supervision of Drilling,

PSAC’s vice-president of health and safety. “You can’t

Completion and Workovers IRP Volume #8 – Pumping of Flammable Fluids

be a regular member of PSAC without it.” COR or SECOR are issued by government agencies

IRP Volume #13 – Slickline Operations

and are audited externally every three years. This cer

IRP Volume #14 – Non-Water Based Drilling Fluids

tification is also now available in B.C. and Saskatchewan,

IRP Volume #15 – Snubbing Operations

and is an acknowledgment that a company’s safety man-

IRP Volume #20 – Wellsite Design Spacing Recommendations

agement system meets a minimum standard.

IRP Volume #21 – Coiled Tubing Operations IRP Volume #22 – Underbalanced and Managed Pressure Drilling Operations Using Jointed Pipe Interim IRP Volume #24 – Fracture Stimulation: Interwellbore Communication IRP Volume #25 – Primary and Remedial Cementing (Under development)

“And I don’t mean ‘minimum’ in a bad way,” Delaney says. “It is the view of our board that you should at least be able to meet the minimum requirements as an employer, whose obligation it is to ensure a safe worksite. The worker’s obligation is to ensure their own safety and the safety of others on the worksite.” Another safety initiative supported by PSAC is Industry Recommended Practices (IRPs), developed by the Drilling and Completions Committee, which is made up of CAPP, the Canadian Association of Oilwell Drilling Contractors (CAODC), the Explorers and Producers Association of Canada (EPAC) and PSAC. IRPs provide guidance on how to best conduct operations in a safe and technically acceptable manner in order to meet, or exceed, applicable legislation in each member’s jurisdiction.

PSAC 35TH ANNIVERSARY 2016

HEALTH AND SAFETY

“

It is the view of our board that you should at least be able to meet the minimum requirements as an employer, whose obligation it is to ensure a safe worksite. The worker’s obligation is to ensure their own safety and the safety of others on the worksite.”

— Patrick Delaney, vice-president of health and safety, PSAC

One of the four strategic pillars for PSAC is health and safety. The strategic directive is to strive for continuous improvement in the industry’s health and safety performance. Its objective is to: • cooperate with the other industry associations and their members and regulatory agencies on initiatives designed to reduce the number of fatalities and injuries in the upstream petroleum industry; • champion the development of best practices, performance standards and industry recommended practices (IRPs); and • engage with regulators and other oil and gas industry sectors on initiatives designed to achieve harmonization of occupational health and safety (OH&S) regulations in the western provinces. PSAC requires all PSAC Regular Member companies to have a basic safety program (Certificate of Recognition [COR] or small employers COR [SECOR]) in place. An employer must: • take every reasonable precaution to ensure the workplace is safe; • teach employees potential hazards, and train them in how to

“While the industry is strongly encouraged to utilize [IRPs], they’re not mandatory. Legislation and regulations take precedence over IRPs,” Delaney notes. Safety is a core value of Strathmore, Alta.–based K&S Oilfield Hauling. Its owner, Janine Snortland, does her part to be onside with safety training and best practices, but as a trucking operation that crosses provincial borders, there are a host of regulatory issues that arise and need to be resolved in the course of doing business. In this, PSAC plays a key role. “I think the most important aspect of PSAC’s safety work is that it saves companies time and resources,” Snortland says. “PSAC is already established with government entities and municipal entities and various departments, so instead of me calling in to these bodies

safely use, handle, store and dispose of hazardous substances and how to handle emergencies; • supply personal protective equipment and ensure workers know how to use the equipment safely and properly; • immediately report all critical injuries to the government department responsible for OH&S; and • appoint a competent supervisor who sets the standards for performance and who ensures safe working conditions are always observed. Employee responsibilities include: • the duty to refuse unsafe work; • the responsibility to work in compliance with OH&S acts and regulations; • the responsibility to use personal protective equipment and clothing as directed by the employer;

in various provinces regarding issues around crossing

• the responsibility to report workplace hazards and dangers; and

[Canadian Pacific] rail tracks crossings or faded truck

• the responsibility to work in a manner as required by the employer

logos, I can call PSAC who knows who to contact to get the answer right away. As a company, if I’m calling government, I’m lucky if I get a response in three days.” As an entity that operates in the space between oilfield services companies and governments, PSAC serves as a resource to both and actively takes a role in shaping the evolution of practical, real-world safety rules that benefit the industry and the public.

and use the prescribed safety equipment. Employee(s) have the following three basic rights: • the right to refuse unsafe work; • t he right to participate in the workplace health and safety activities; and • the right to know or be informed about actual and potential dangers in the workplace.

PSAC 35TH ANNIVERSARY 2016

At the

TABLE Governments continually need to be reminded of the importance of the oil and gas services sector B Y R . P. S TA S T N Y

hen Prime Minister Justin Trudeau came to Calgary in February,

The Conservatives eventually backtracked on their royalty

he met with some of the country’s most powerful oilsands

changes, but not before companies and capital fled to Saskatchewan,

executives but also with the owners of some smaller energy sector

B.C., the U.S. and international hot spots. PSAC realized it needed

companies and their representing body, PSAC. But who wasn’t invited

to step up its lobbying efforts and decided that facts speak loud-

to the meeting was just as interesting.

est. It produced a study called “The Contributions of the Canadian

“He didn’t meet with CAPP [Canadian Association of Petroleum

Oil and Gas Services Sector to the Canadian National Economy.”

Producers] or CAODC [Canadian Association of Drilling Contractors]

That work quantified, for the first time, the economic contribution

or any other industry group,” says PSAC president Mark Salkeld.

of services separate from that of the E&P companies.

PSAC’s invite might have been because it represents the aver-

“In 2009, the services sector alone contributed $75 billion to the

age middle-class Canadian worker, which aligns with both the

Canadian GDP. It employed 685,000 people across the country, directly

federal and provincial political goals. Or it might have come about

and indirectly but not induced. It also paid $17.3 billion in taxes. So

because of PSAC’s years of diligent work to position itself as a

some very significant numbers,” Aquin says.

credible resource for helping Canada’s politicians understand the

If these numbers are extrapolated to the high-water mark of

economic value of the oil and gas services sector. Whatever their

oil and gas activity in western Canadian in 2013-14, the economic

reasoning, what mattered was that PSAC got an hour of face time

contribution of services jumps to $91 billion, representing about

with the prime minister, Alberta’s Premier Rachel Notley and the

five per cent of Canada’s total GDP.

energy ministers of both governments who wanted feedback on how

PSAC also did an “International Revenue of Canadian Oil and Gas

to best spend infrastructure money promised during their election

Services Sector Companies” study highlighting the diversification

campaigns. “That was significant,” Salkeld says.

that services bring to the economy and how these products, ser-

Lobbying government has always been a core function of PSAC’s

vices, technologies and expertise are exported worldwide. In 2014,

existence, but after the National Energy Program was scrapped

a sample of 42 Canadian headquartered service companies alone

in 1985 and PSAC grew into a multifaceted organization over the

generated $42.5 billion in exports.

ensuing decades. Alberta’s Our Fair Share royalty fiddling in 2007 forced it to reconsider how it talked to government.

“When we started taking these facts to government, for the most part, they were astounded. They just weren’t aware,” Aquin says. “So

“The world changed for the services sector when the govern-

we’re saying that, if governments are thinking about changing policies

ment of the day did its royalty review in 2007,” says Elizabeth Aquin,

and coming up with new regulations such as royalties for producers,

senior vice-president of PSAC. “The government at the time was

there is a very symbiotic relationship between producers and the ser-

only focused on the E&P [exploration and production] companies

vice and supply sector and the government should also talk to us.”

and their economic rent when raising the royalties. We tried to help them understand the impact that it was going to have on the oil-

AT THE TABLE

field services sector and on the economy in Alberta if they did that,

Both the federal and provincial governments have responded favourably

but they either didn’t understand or they didn’t really listen to us.”

to PSAC’s factual approach to lobbying. The association is routinely

PSAC 35TH ANNIVERSARY 2016

invited to round tables and policy-planning discussions. But this cur-

attended by over 50 members of the legislative assembly, the asso-

rent downturn, which is now considered worse than that of the early

ciation was able to continue the discussion in a less formal setting.

1980s, is taking a toll on the industry, and some PSAC members would like to see their association exert more influence.

At the national level, PSAC also conducted a Day on the Hill in Ottawa in May, where it met with over 20 members of parliament and minis-

“I got a little bit of pushback from our members saying they wanted

ters and senior government staff. PSAC intends to repeat these events

to see PSAC be more aggressive, hammering the table a little bit harder

annually, but for now, Salkeld believes PSAC delivered its message and

for the oil and gas services sector,” Salkeld says. “But when I met with

the ball is in the government’s court. “Now it’s time to see if they act

those members, it came across that they didn’t necessarily want us to

in our favour or if they’ve just been nodding politely,” Salkeld says.

be more aggressive and antagonistic. They said, ‘We want you to make a difference. We want to know that you’re getting these meetings and

ADVOCACY

they are listening to you and there is a takeaway.’”

Anti–oil and gas passion and social media are a potent combination

Educating politicians about the significance of the services sec-

that can overshadow reason and facts. As Scott Van Vliet, president

tor to the Canadian economy is probably PSAC’s most important role,

of Environmental Refuelling Systems and PSAC member, puts it, “It’s

says Ian McConnell, vice-president, corporate, at Core Laboratories

difficult when you are fighting on the facts while others are fighting

Canada. But as the voice of reason governments have come to trust,

on story, but you just have to keep getting the message out there.”

PSAC can also leverage these relationships and expand the discussion.

Beyond government lobbying, PSAC is also active at the grass-roots

Developing renewable energies is important for Canada and the world,

level on issues such as hydraulic fracturing. A few years ago when a

but renewables cannot completely replace oil and gas. Canadians need

wave of anti-fracking sentiment swept across eastern Canada, PSAC

to be aware of not only the advantages, but also the potential challenges

reached out to its sister organization in Quebec, the Oil and Gas Services

of renewable energy. Let’s make informed, educated decisions based

Association of Quebec, and helped it organize a trip to Alberta for a

on awareness of all the advantages and disadvantages. We can look

group of Quebec farmers to conduct their own research on fracking.

to recent history from renewable energy projects in Europe, such as

“The whole intent was to have the [Quebec farmers] meet up with

Denmark and Germany, where the costs of power are 2.5 times higher

their counterparts in Alberta, just to kind of show Alberta’s experience

than the rest of Europe, with no decrease in greenhouse gas emissions,

with respect to the development of oil and gas over the last 60–70

and for every green job created, there were 3.8 existing jobs lost. “These

years, and how it has integrated well with the farming community and

kinds of discussions are taking place,” Salkeld says.

the local businesses,” Salkeld said at the time.

The Alberta and federal governments, however, are relatively new

The importance of fracking in the modern oil and gas industry has

and it takes time to get through to all the departments. To speed the

also brought together PSAC pressure-pumping member companies

process, PSAC did a government outreach day in Edmonton in April for

to develop and follow a Hydraulic Fracturing Code of Conduct based

the first time. In one day, it conducted over 40 meetings with elected

on best-in-class operating practices. This work came out of many

officials and senior government staff. Then, at a PSAC-hosted reception

consultations that PSAC held with communities across Alberta where

“

I got a little bit of pushback from our members saying they wanted to see PSAC be more aggressive, hammering the table a little bit harder for the oil and gas services sector. But when I met with those members, it came across that they didn’t necessarily want us to be more aggressive and antagonistic. They said, ‘We want you to make a difference. We want to know that you’re getting these meetings and they are listening to you and there is a takeaway,’”

—Mark Salkeld, president, PSAC

hydraulic fracturing takes place. That kind of collaboration helps send the message to regular people that the industry is listening to their concerns and acting responsibly.

DOWN BUT NOT OUT With PSAC’s staff count down by half compared to better days, the organization feels the pain of its member companies. In an effort to help the industry get back to work, PSAC is talking to the Alberta government about a well decommissioning program. “We feel that decommissioning wells would be a great way to get services back to work because it involves a lot of different services, and it would help the environment and the industry’s reputation,” Aquin says. “There are about 800 orphan and legacy wells in Alberta alone, plus pipelines and facilities that need to be decomissioned and the land reclaimed. This would be a great initiative to get people working in these difficult times.”

PSAC 35TH ANNIVERSARY 2016

Investing IN THE FUTURE PSACâ&#x20AC;&#x2122;s scholarship program builds future leaders BY DALE LUNAN

SAC, through its Education Fund Scholarship program, provides scholarships for students pursuing post-secondary education, including students connected to PSAC regular member companies

and students at technical colleges enrolled in petroleum-related or trades programs, especially those who could be interested in a career in the petroleum services sector. Currently, the fund awards 10 PSAC Regular Membership Scholarships of $1,500 each and one PSAC Roger Soucy Legacy Scholarship funded by KPMG of $2,500 to a PSAC regular memberâ&#x20AC;&#x2122;s child who is heavily involved in the community and pursuing an education in a petroleum- or trades-related program. The fund also supports scholarships for students at technical schools in petroleum-related and Polytechnic. Since its inception, the fund has awarded more than $320,000 in scholarships and grants to deserving recipients. Here are some past winners.

PSAC 35TH ANNIVERSARY 2016

PHOTO: SANJEL

trades programs at Northern Lights College, Keyano College, NAIT, SAIT Polytechnic and Saskatchewan

Brenna Stang Bachelor’s degree, geological engineering Queen’s University A 2016 graduate of the geological engineering program

accurately what knowledge you can potentially bring to

at Queen’s University, Brenna has her sights set on a

their company.”

career in the oil and gas industry, but she’s entered the

Secondly, consider participating in extra-curricular pro-

job hunt at perhaps the most inopportune time in the

grams related to your career aspirations. In Brenna’s case,

last 30 years.

she’s still wishing she had participated in the American

For now, she’s content to stay close to the industry by working as a customer service agent for Executive Flight Centre, attached to Canadian Natural Resources’ Horizon oilsands program in Fort MacKay, Alta.

Association of Petroleum Geologists’ Imperial Barrel Award (IBA) program. “These are really beneficial since they show prospective employers that you have an interest in the field that

She received her PSAC scholarship in 2012, a timely

goes beyond completing the mandatory workload,” she

award since it allowed her to apply to post-secondary

says. “I really wish I had done the IBA in my final year.

institutions she thought might give her the best educa-

My classmates who did won the Canadian region award

tion, rather than focus only on those in her home province

in my final year!”

of Saskatchewan.

Finally, Brenna says to use post-secondary education

“Universities located out of the province often pos-

for what it is intended: a jumping-off point for a lifelong

sessed both higher application fees and higher tuition

career in a field of study about which you’re passionate.

expenses, but they also had more desirable program oppor-

“Study hard! University isn’t about cramming to pass

tunities for my personal interests,” she says. “Queen’s

an exam; it’s about lifelong learning that will benefit you

offered a geological engineering program, which is a

in your future career. A passion for the industry and a

relatively unique degree program that I found desirable,

strong work ethic will go a long way,” she says.



so that’s where I wanted to go. The PSAC scholarship allowed me to select a university and a program based purely on the potential educational opportunities rather than on cost.” It also helped relieve financial pressures, especially in her first year, which was “extremely demanding,” and Brenna says she wouldn’t have made it through if she’d had to work to cover her expenses while studying. Although she’s yet to land her first job in her chosen career, Brenna is still thankful for the opportunities she’s had by being a PSAC scholarship beneficiary. And she’s got some sage advice for other students interested in a career in oil and gas, beginning with making a careful selection of courses that directly relate to the oil and gas industry. “Employers don’t just look at your transcripts to see your grades,” she says. “They also want to know what classes you took; it helps them determine more

PSAC 35TH ANNIVERSARY 2016

Brody Hanson Consultant, energy management Siemens Canada Brody began feeling the financial pressures of a post- secondary education early on while studying for his bachelor’s degree in computer engineering at the University of New Brunswick (UNB) in 2000. For much of his post-secondary career—which extended over 15 years and resulted in two more degrees—those pressures had him caught between a rock and a hard place. “If you work to pay for school, you have less time for school,” he says. “But if you don’t work for school, you take out loans and spend the next decade paying them back.”

Brody began his career along traditional lines, accepting a job as a systems engineer for Delcan—a multidisciplinary

A happy middle ground is the Holy Grail for most

engineering firm specializing in rail and transit, roads and

post-secondary students, and for Brody, earning a PSAC

highways—where he was also responsible for business

scholarship in 2003 helped him move closer to the ideal

development. Over his four-year career with Delcan, he

of spending all his time on his studies, which ultimately

brought in more than $4.2 million of new contracts, a

resulted in better marks. By achieving that middle ground,

success that cemented his desire to continue as a con-

Brody was able to go on to earn a master’s degree in trans-

sulting engineer.

portation engineering in 2007 and a master’s of business administration in 2015, both from UNB. While the funding bridge offered by the PSAC scholarship was important to Brody more than a decade ago,

Now with Siemens Canada in an energy management role, Brody works with utilities across Canada, advising executives and directors on the development and implementation of transformational business strategies.

he’s convinced that it is even more critical for students

While many observers of the oil and gas industry may

today, when government policy is failing to keep pace

suggest the industry is in its twilight and failing to attract

with the accessibility gap.

new students in the numbers required, Brody is firmly of

“There’s always been this notion that the high costs of

the opinion that now is perhaps the best time to look to oil

post-secondary education are justified because graduates go

and gas for a career, especially if you can bring an innova-

on to earn more in their careers,” he says. “This was undoubt-

tive bend to the business.

edly true for a long time, but the numbers just don’t add up

“My career over the past decade has been one of

any more, and since governments don’t appear willing to help

applying technology in non-traditional contexts,” he says.

make post-secondary education more accessible, support

“For example, in one project, we used data from Bluetooth

from corporations and industry associations like PSAC will only

readers installed on the side of the road to calculate and

increase in importance. I really applaud PSAC for continuing

predict delays at international border crossings. We didn’t

this scholarship program, especially in today’s environment.”

invent Bluetooth nor was it built for this purpose, but we

While the PSAC scholarship helped with funding his

did understand the technology enough to leverage it in

post-secondary education, it also didn’t hurt him in his post-

this unique and important application.”

graduation job hunt: it’s notoriously difficult for students

Oil and gas, he says, offers similar enormous potential

to set themselves apart from the horde of graduates—the

to those who understand the industry’s legacy problems

PSAC scholarship was one of the things that helped Brody

and can leverage existing and emerging technologies to

differentiate himself, he says.

solve them.

PSAC 35TH ANNIVERSARY 2016

Bridging the

CREDIBILITY GAP In its next 35 years, PSAC—and other industry associations—will have to work even harder to earn public trust BY DALE LUNAN

ack in 1981, amid the darkness of the National Energy

But battling those green groups for the attention

Program (NEP), PSAC was created out of the service

and support of the Canadian public is a hugely diffi-

division of the Canadian Association of Oilwell Drilling

cult proposition, and it’s a war that has been fought,

Contractors. Its stated mission at the time was to focus

and mostly lost, by all sectors of the Canadian oil

the attention of federal and provincial governments on

and gas industry for the last several years, at least

the plight of small service companies—mostly mom-

since the Keystone XL project to deliver more oil-

and-pop shops—devastated by the NEP and the flight of

sands crude to the U.S. Gulf Coast was announced

capital from the Western Canadian Sedimentary Basin.

and, seven years later, rejected by President Barack

Fast forward 35 years and PSAC’s mission today is

Obama on enviro nmental grounds.

this: focus the attention of federal and provincial poli-

A major reason that the environmentalists are win-

ticians on the plight of a service sector laid waste by a

ning the war, PSAC president Mark Salkeld says, is

combination of low global oil prices, the lack of access

that the Canadian public, despite more than 75 years

to world markets, and an increasingly onerous litany of

of hydrocarbon production in virtually every region of

environmental policies aimed at placating environmen-

the country, simply doesn’t trust the industry, for any

tal groups—many funded by American interests—intent

number of reasons. And without trust, there is little

on keeping the rest of western Canada’s rich resource

chance that the industry’s elusive “social licence” will

endowment firmly locked in the ground.

ever be granted.

Getting the attention of politicians is one thing—in

“We as an industry won’t win a binary argument or

addition to a vast array of meetings with ministers, offi-

conversation,” Salkeld says. “Pipelines: yes or no—we

cials and staff of all political stripes and at all levels of

won’t win that. Fracking: yes or no—we won’t win that.

government, PSAC held a roundtable discussion ear-

We need to invite the detractors into our offices; we

lier this year with Prime Minister Justin Trudeau; James

need to find where the middle ground is.”

Carr, Minister of Natural Resources; Kent Hehr, Minister

The oilsands industry has started that process.

of Veterans Affairs (one of four Alberta Liberals in Ottawa,

Tzeporah Berman—a co-founder of ForestEthics (now

and one of only two in Trudeau’s current cabinet); Alberta

called Stand), a former co-director of Greenpeace

Premier Rachel Notley; and Margaret McCuaig-Boyd,

International’s global climate and energy program and

Alberta Minister of Energy.

one of the strongest and most vocal opponents of

Getting the attention of environmentalists is just as

bitumen production—is co-chair of the Government of

easy: all that’s needed is the announcement of another

Alberta’s Oil Sands Advisory Group. Conventional pro-

pipeline or another oilsands project, and they come out

ducers and the oilfield services sector represented by

of the woodwork, calling for a halt to any development

PSAC haven’t started finding that middle ground yet,

that might lead to increased crude production and green-

but Salkeld hopes to change that as his association

house gas emissions in western Canada.

moves into its second 35 years.

PSAC 35TH ANNIVERSARY 2016

“At the end of the day, even the strongest opponents of oil and gas, if you can get them to stop and think about it, have to admit that they cannot live their lives here in Canada without oil and gas, and nothing is going to change that any time soon,” he says. “There are things coming, but you cannot shut down oil and gas or leave it in the ground and expect to have the quality of life here in Canada you get today because of oil and gas. Plain and simple.”

PETER TERTZAKIAN

STARTING THE CONVERSATION What is needed is some way to get them in a room, admit to

“The whole point of the strategy session was to help

that key reality and say, “Okay. How do we work together?”

my board wrap their heads around where associations

Only then can the conversation begin, Salkeld says.

fit in the world today and what we will have to do in the

“That’s the future of PSAC. If we’re going to remain relevant and give value to our members for the next 35

future to remain relevant to the industry we represent,” Salkeld says.

years, we have to be cognizant of what has changed,

And what PSAC, and indeed most of today’s busi-

change with the times, get those groups into the room

ness associations, needs to do is change, Nelson and

and start those conversations.”

Paton each told the board.

To lay the groundwork for PSAC’s next 35 years, Salkeld

“We live in a world that is changing in ways that are

convened a March visioning with the association’s board

both profound and subtle, and because they are subtle,

of directors and three key consultants—futurists, for lack

you don’t really notice the changes,” Nelson says. “Take

of a better word—to help show what would be needed for

seriously that we normally miss the signals [of change]

the industry in general, and PSAC in particular, to win the

until we are actually run over. Part of the message is that

trust of the Canadian public and, in turn, invite its detractors

you are in way more trouble, particularly because you

into the room for those conversations so sorely needed.

don’t know the kind of trouble you’re in.”

In an intense day-long session that included a panel

Paton was slightly less forceful in advising PSAC

discussion and several break-out sessions, PSAC and its

that it had to change its ways, but his message was, in

board received advice from Peter Tertzakian, chief energy

essence, the same.

economist and managing director at ARC Financial; Richard

“The compelling message is that any association

Paton, former head of the Chemistry Industry Association

faced with serious economic change and changes in

of Canada (CIAC), which fought environmental groups on

government and society needs to find a way to adapt,”

similar grounds three decades ago; and Ruben Nelson,

he says. “The status quo won’t work.”

executive director of Foresight Canada, which offers futures

That, Paton says, wasn’t too difficult for the PSAC

research and strategic foresight consulting services to

board to understand. What was a little more difficult

governments and corporations across Canada.

to grasp was what PSAC and its members could do to move a needle that’s been stuck for so long on the distrust side of the social acceptance gauge. Drawing environmental opponents to oil and gas development into a conversation, as Salkeld would like to see happen, is not going to be an easy process, Tertzakian says. “The situation as it stands has deteriorated into highly polarized positions on both sides, so it’s getting tougher

RUBEN NELSON

by the day,” he notes. “The hydrocarbon industry could be carbon neutral and have the best [corporate social responsibility] policies imaginable, and detractors would still not care.”

PSAC 35TH ANNIVERSARY 2016

CHEMISTRY LESSON At the visioning meeting, Paton drew on his past experience with the CIAC, which answered a Greenpeace-led movement against chlorine by developing the Responsible Care® program in 1985. Responsible Care® is a United Nations–recognized sustainability initiative that ensures CIAC member companies not only do the right thing but are seen to be doing the right thing through a verification

RICHARD PATON

process that every three years subjects member companies to rigorous independent inspections to ensure they are living up to the standards of the Responsible Care® program. Nearly three decades later, the Forest Products

PSAC alone can’t make those determinations—all indus-

Association of Canada adopted much the same tactics,

try sectors have to be part of the solution since all industry

aligning with its old environmental foes to create the

sectors, from oilsands producers to refiners and proces-

Canadian Boreal Forest Agreement, which sets a global

sors, are seen by environmentalists as part of the problem.

precedent for the integration of economic and environ-

In a perfect world, an industry-encompassing associa-

mental values to ensure the sustainability of the boreal

tion would take up a challenge like this, but the Canadian

forest and the Canadian forestry industry.

oil and gas industry isn’t part of a perfect world. Too

“You basically have to embrace a set of principles

many governance issues are involved with too many sec-

that make you part of the environmental solution and in

tors, but there is still a way for the sectors to collaborate

which your stakeholders see you as part of that solu-

while maintaining their separate governance structures.

tion,” Paton says. “Your critics, who you should engage

“[The Canadian Association of Petroleum Producers]

in this, also need to be able to see you as a link to the

has to serve its members. The pipeline guys, who are

future and linked to the government’s agenda.”

also relevant in this, have to serve their members,” Paton

While that may have worked for the chemical indus-

explains. “But they do all have a common challenge, eco-

try, Tertzakian says the oil and gas industry has a much

nomically and environmentally, and I think it would be fair

greater challenge in even defining what a sustainable

to say that a fair number of policies in the last several

hydrocarbon industry might look like.

years haven’t been very helpful to them on the environ-

“It’s a broad concept—Canada has the fifth-largest

It won’t be an easy process, he says. Government must

on,” he says. “Does that make it sustainable in the eyes

be engaged; other associations must be engaged. “It’s

of the industry or those environmentalists?”

labour-intensive, it’s time-consuming, but you don’t have

Does sustainability mean growing Canada into the number four or number two rankings? Or does it mean something more?

mental front, and it’s a good chance there’ll be more.”

hydrocarbon industry in the world that continues to carry

to win it all on the day—you just have to start somewhere.” In a leadership role, Nelson says, PSAC could start the process by convening a meeting of significant people

“Does sustainable mean that the industry delivers rea-

in the oilpatch to discuss whether the broad spectrum of

sonable profitability to investors, royalties to the state,

industry associations want to create some sort of shared

minimal emissions, all within the bounds of societally

capacity, contribute something to that capacity and start

acceptable environmental and social norms?” Tertzakian

the conversation.

muses. “All this stuff needs to be characterized even

“You can jump into this in a whole variety of ways,”

before the middle ground on which to hold a conversa-

he says. “You can bite it off in whatever size chunk you

tion can be defined.”

want, but for God’s sake, bite off something!”

PSAC 35TH ANNIVERSARY 2016

On behalf of the PSAC board of directors and staff,

thank you to all of PSACâ&#x20AC;&#x2122;s 35th anniversary Sponsor a Year supporters!