Oil & Gas Inquirer - January 2010

JANUARY 2010 � $6.00

Keeping readers regionally informed

OutlOOk Canadian Publication Mail Product Agreement #40069240

2010

HOping FOr better tiMes

Gimme shelter

Fabric buildings evolve into a global architecture

Piping carbon dioxide

Alberta pledges $495M to move CO2 for enhanced oil recovery

ENGINEERS, FABRICATORS & CONSTRUCTORS FOR OIL & GAS PROCESSING

GAS COMPRESSION / GENERATION / PROCESSING EQUIPMENT FOR SALE / RENT / OR LEASE DEHYDRATORS (NEW) Tower Size Design Pressure 12” to 36” Sweet & Sour 1,310 - 1,480 psig HEATERS (NEW) 2 MMBtu/hr Heat Duty, 1500# Preheat Coil AMINE SWEETENING PLANTS (NEW) Plant Size Amine Circulation Rate 15 MMscf/d AMINE 45 USGPM of AMINE SEPARATOR SKIDS (NEW) Separator Size Design Pressure 16” & 24” Sweet 1,440 psig LPG RECOVERY PLANTS (NEW) Plant Size Refrigeration Compressor 6-10 MMscf/d GAS 100 hp Mycom 8-12 MMscf/d GAS 150 hp Mycom 10-15 MMscf/d LEAN GAS 200 hp Mycom 20-30 MMscf/d RICH GAS 450 hp Mycom TURBO-EXPANDER PLANT (USED) 25 MMscf/d EXPANDER C2 OR C3 RECOVERY POWER GENERATION UNITS (NEW) G-300-KW-Dual

Waukesha F18GL

300 KW Generator

G-400-KW-Dual

Waukesha H24GL 400 KW Generator

GAS BOOSTER COMPRESSORS (NEW) C200-S20B 200 Caterpillar G3306 TAW

Sullair PDR20 Gas Booster

C400-S25B 400 Caterpillar G3408 TAW

Sullair PDR25 Gas Booster

C400-S25B 400 Caterpillar G3408 TAW

Sullair PDR25 Gas Booster

C630-A282 630 Caterpillar G3508 TALE Ariel RG282 Gas Booster C1265-A357 1265 Caterpillar G3516 TAW

Ariel RG357 Gas Booster

GAS COMPRESSORS (NEW) Model # hp Engine

Compressor

Model #

C145-JG-2

145

Caterpillar G3306NA

Ariel JG-2 Throw

C810-JGH-3

C195-JGA-2

195

Caterpillar G3306TA

Ariel JGA-2 Throw

W1250-JGK-3 1250 Waukesha 5774 LT

Ariel JGK-4 Throw

W400-JGA-3

400

Waukesha F18CL

Ariel JGA-4 Throw

W1445-HOS-3 1445

Waukesha 5794 LT

Dresser HOS-4 Throw

W400-JGA-3

400

Waukesha F18CL

Ariel JGA-4 Throw

W1445-JGK-3 1445

Waukesha 5794 LT

Ariel JGK-4 Throw

C630-JGJ-3

630

Caterpillar 3508 TALE Ariel JGJ-4 Throw

W1445-JGK-3 1445

Waukesha 5794 LT

Ariel JGK-4 Throw

C630-JGJ-3

630

Caterpillar 3508 TALE Ariel JGJ-4 Throw

W1680-JGK-3 1680

Waukesha 7044

Ariel JGK-4 Throw

C630-JGJ-3

630

Caterpillar 3508 TALE Ariel JGJ-4 Throw

C1775-JGC-3 1775

Caterpillar G3606 TAW Ariel JGC-4 Throw

C810-JGH-3

810

Caterpillar G3512 TALE Ariel JGH-4 Throw

C1775-JGC-3 1775

Caterpillar G3606 TAW Ariel JGC-4 Throw

hp 810

Engine

Compressor

Caterpillar G3512 TALE Ariel JGH-4 Throw

Propak Compression is a distributor of Dresser-Rand & Ariel compressors. Propak Compression is set up to sell units, service and supply parts for reciprocating and rotary screw gas compressors.

See our Web Site for detailed specifications for the stock production equipment.

Phone Sales: (403) 912-7000 Fax: (403) 912-7011 E-mail: sales@propaksystems.com Web Site: www.propaksystems.com

Table of Contents

Keeping readers regionally informed

F E A T U R E S

12

Outlook 2010

18

Gimme shelter

35

Piping Carbon Dioxide

by Graham Chandler

2010 looks like a better year for the oilpatch than 2009

by Mike Byfield

Fabric-over-frame matures as a building technology that’s well-suited to the resource sector

by Paul Wells

Alberta government pledges $495M for CO2 pipeline project

With all the uncertainty about the economy, look for our Recession to Recovery logo for coverage on how companies are handling the downturn, preparing for the rebound, and, in some cases, even thriving.

4

January 2010 • OIL & GAS INQUIRER

Table of Contents

R E G I O N A L

27

N E W S

British Columbia

39

• Nexen sees oilsands as natural market for Horn River gas

to impede profitability

• TAQA North plans to drill three Horn

• CIBC analyst expects better industry

River wells this winter

31

Northwestern Alberta/Foothills

conditions in 2010

43

• Orleans completes two Montney gas

Northeastern Alberta

acquisition binge with TriAxon deal

45

• Suncor restarts third and fourth stages

Northern Frontier • Greenland’s retreating ice fuels

of its Firebag SAGD project

35

Saskatchewan • Crescent Point continues its

wells on western Kaybob lands

33

Southern Alberta • Ensign says over-capacity continues

dreams of hidden resource wealth

Central Alberta

47

Central Canada

• Imperial signs oilsands service

• CSA unveils North America’s first

agreement with Keyera • A JM urges Alberta gas royalty reforms

pipeline security standard

49

International • Enerplus plans to invest $100M in Marcellus shale play • Vast gets ready to drill in Kurdistan

I N

E VE R Y

I S S U E

10 Statistics at a Glance

53 Tools of the Trade

Completions data, spot gas prices, gas

North Rig hydraulic catwalks replace

storage, drilling activity, and more

the traditional ramps used to drag tools from the ground up to the rig floor.

51 On The Job Jeff Schryver is an oil and gas fisherman, one of the elite field workers who are

54

Political Cartoon

called in when tools or pipe get stuck downhole.

Cover Design: Ken Bessie

OIL & GAS INQUIRER • January 2010

5

PILING

D R I V E N & SCREW PILE

BRIDGES

P E R M A N E N T & R E N TA L S

P U M PJAC K

I N S TA L L AT I O N & M A I N T E N A N C E

1-877-539-9222 • www.northstar-inc.com SERVING WESTERN CANADA FROM FO RT ST. JOHN • GRANDE PRAIRIE • CALGARY • REGINA

Professionally Engineered and Designed 12304 – 184 St. Edmonton, AB T5V 0A5

Ph: (780) 930-1551 Fax: (780) 930-1755

Toll Free:

1-888-708-0703 www.allweathershelters.ca

piling

er Open e D w

d No e R nch a

Br

Piledriving Pile Supply Screw Piles Pile Pre-drilling Cranes & Pickers Hydrovac Service CCTV & Flushing Oilfield Hauling

ASTM A252 structural piling made to order.

DFI manufactures piling from 4½” to 16”, up to .500 wall thickness, and made to exact length. Save steel.

Save money.

www.dfi.ca 1.877.334.7453 Edmonton • Red Deer • Edson • Bonnyville • Brooks • Grande Cache • Peace River • Rycroft • Fort St. John

Editor’s Note Vol. 22 No. 1 President & ceo Bill Whitelaw | bwhitelaw@junewarren-nickles.com

Mike Byfield | mbyfield@junewarren-nickles.com

Fabric architecture

Publisher Agnes Zalewski | azalewski@junewarren-nickles.com Associate Publisher Chaz Osburn | cosburn@junewarren-nickles.com Editorial director Stephen Marsters | smarsters@junewarren-nickles.com EDITORIAL Editor

Mike Byfield | mbyfield@junewarren-nickles.com Editorial Assistance

Marisa Kurlovich, Kelley Stark proofing@junewarren-nickles.com Contributors

Graham Chandler, Lynda Harrison, Paul Wells Creative Print, Prepress & Production Manager

Michael Gaffney | mgaffney@junewarren-nickles.com Publications Manager

Audrey Sprinkle | asprinkle@junewarren-nickles.com Publications Supervisor

Rianne Stewart | rstewart@junewarren-nickles.com INTERIM ART DIRECTOR

Ken Bessie | kbessie@junewarren-nickles.com Graphic Designer

Aaron Parker | aparker@junewarren-nickles.com Creative Services | production@junewarren.com

Rachel Dash-Williams, Alanna Staver Sales

DIRECTOR OF SALES

Rob Pentney | rpentney@junewarren-nickles.com SALES MANAGER, MAGAZINES

Maurya Sokolon | msokolon@junewarren-nickles.com ACCOUNT MANAGERS

Jerry Chrunik | jchrunik@junewarren-nickles.com Nick Drinkwater | ndrinkwater@junewarren-nickles.com Michael Goodwin | mgoodwin@junewarren-nickles.com Nicole Kiefuik | nkiefuik@junewarren-nickles.com David Ng | dng@junewarren-nickles.com Diana Signorile | dsignorile@junewarren-nickles.com AD TRAFFIC COORDINATOR—Magazines

Elizabeth McLean | atc@junewarren-nickles.com For advertising inquiries please contact adrequests@junewarren-nickles.com Marketing Senior Marketing Coordinator

Alaina Dodge-Foulger | adodge@junewarren-nickles.com Marketing / Trade Show Coordinator

Ryan Mischiek | rmischiek@junewarren-nickles.com Marketing designer

Cristian Ureta | cureta@junewarren-nickles.com OFFICES Calgary

816 – 55 Avenue N.E. | Calgary, Alberta T2E 6Y4 Tel: 403.209.3500 | Fax: 403.245.8666 Toll-Free: 1.800.387.2446

Calgary North 300, 5735 – 7 Street N.E. | Calgary, Alberta T2E 8V3 Tel: 403.265.3700 | Fax: 403.265.3706 Toll-Free: 1.888.563.2946

Who would have expected the Canadian Prairies—sparsely populated, resource-dependent, far from tidewater—to play a lead role in creating an entire new building technology with global implications? Yet one Calgary-based manufacturer—Sprung Instant Structures—has done just that. In this issue, Oil & Gas Inquirer “covers” (pun intended) fabric architecture.

Within one lifetime, Sprung has developed permanent structures made with fabric skins and aluminum frames. Highly competent western rivals have quickly emerged, pushing forward the technology. Usually on short notice, this new construction sector can deliver low-rise buildings for almost any purpose: industrial, agricultural, residential, commercial, recreational, or religious.

Building erection is strikingly quick, durability measures in decades, the fabric can be readily replaced when worn, labour availability has been excellent, and prices are attractive. Exceptional natural lighting characterizes fabric architecture. Flexibility is another strength. If necessary, big or small buildings can be dismantled and transported without sacrificing structural integrity. (Try moving a “mobile” home a few times and watch what happens.) As building technologies evolve in electronics, heating, plumbing, and so on, fabric structures appear convenient for incorporating new interior systems.

Why not build an entire fabric community? Capital cost would only decline as economies of scale kicked in, and technically the challenge seems feasible. For instance, a self-standing overhead crane can be installed in a fabric industrial shop. It’s true that most people accustomed to wood and brick houses would resist any shift to homes with a tent profile. But add trees and gardens, and hopefully inject real flair into the decor of the exterior fabric, and the new neighbourhoods could at least equal the aesthetic appeal of today’s suburbs.

Of course, cultural evolution normally proceeds at a generational pace. Fabric town planning will take time to claim its share of attention. But humanity is struggling to provide billions of presently poor people with a decent standard of living and touches of elegance. Over the 21st century, perhaps we won’t be able to resist the advantages of fabric architecture.

Edmonton 6111 – 91 Street N.W. | Edmonton, Alberta T6E 6V6 Tel: 780.944.9333 | Fax: 780.944.9500 Toll-Free: 1.800.563.2946 SUBSCRIPTIONS Subscription Rate

In Canada, 1 year $49 plus GST, 2 years $69 plus GST Outside Canada, 1 year $99

Subscription Inquiries

Telephone: 1.866.543.7888 Email: circulation@junewarren-nickles.com Online: junewarren–nickles.com

N E X T

I S S U E

Oil & Gas Inquirer is owned by JuneWarren-Nickle’s Energy Group and is published monthly.

GST Registration Number 826256554RT. Printed in Canada by PrintWest. ISSN 1204-4741 | © 2010 1072125 Glacier Media Inc. All rights reserved. Reproduction in whole or in part is strictly prohibited. Publications Mail Agreement Number 40069240.

Postage Paid in Edmonton, Alberta, Canada. If undeliverable, return to: Circulation Department, 800 - 12 Concorde Place, Toronto, ON M3C 4J2

The Chinese challenge

If you know an admirable person to profile in

China’s manufacturing companies now offer

On The Job—he or she may be a veteran or

a comprehensive range of onshore drilling

apprentice, field or shop, wise or a little crazy—

Made in Canada The opinions expressed by contributors to Oil & Gas Inquirer may not represent the official views of the magazine. While every effort is made to ensure accuracy, the publisher does not assume any responsibility or liability for errors or omissions.

rigs, pumps, and other oilfield equipment.

please give me a call at (780) 944-9333, or

In February, Oil & Gas Inquirer will examine

email mbyfield@junewarren-nickles.com.

how domestic manufacturers compete and

In fact, feel free to sound off about any

cooperate with Chinese firms.

concern at all—that’s a personal invitation.

OIL & GAS INQUIRER • January 2010

9

Stats

FAST NUMBERS

US

AT A GLANCE

$30 billion

US

Price paid by Exxon Mobil for shale gas producer XTO Energy Inc.

$300 million

2011-2012 spending cut proposed by Wyoming governor, a 10 per cent reduction due to low natural gas prices

Alberta Completions

WCSB Oil & Gas Completions

Source: Daily Oil Bulletin

Source: Daily Oil Bulletin

MONTH

OIL

GAS

OTHER

TOTAL

MONTH

OIL

GAS

DRY

SERVICE

TOTAL

Dec 2008 Jan 2009 Feb 2009

496 156 116

1,793 606 899

200 96 120

2,489 858 1,135

Dec 2008 Jan 2009 Feb 2009

917 248 269

2,380 813 1,060

173 70 113

137 47 36

3,607 1,178 1,478

Mar 2009 Apr 2009 May 2009

321 111 71

979 344 187

317 140 53

1,617 595 311

Mar 2009 Apr 2009 May 2009

433 111 71

1,121 342 187

165 61 46

86 12 35

1,805 526 339

Jun 2009 Jul 2009 Aug 2009

36 79 101

143 178 212

42 77 80

221 334 393

Jun 2009 July 2009 Aug 2009

177 79 250

211 31 267

45 6 36

27 3 37

460 119 590

Sept 2009 Oct 2009 Nov 2009

146 132 169

155 160 212

78 77 116

379 369 497

Sept 2009 Oct 2009 Nov 2009

146 331 382

155 196 244

45 32 68

9 12 10

355 571 704

Wells Drilled In British Columbia

Wells Drilled In Saskatchewan

Source: B.C. Oil and Gas Commission

Cumulative to December 4, 2009 Source: Saskatchewan Energy & Resources

MONTH

WELLS D R I L L E D

CUMULATIVE *

Dec 2008 Jan 2009 Feb 2009

79 125 117

919 125 242

Mar 2009 Apr 2009 May 2009

75 33 26

317 350 376

Jun 2009 Jul 2009 Aug 2009

19 34 36

395 429 465

Sept 2009 Oct 2009 Nov 2009

38 29 39

503 532 571

* from year to date

OIL

GAS

OTHER

DRY

TOTAL

403 78 42 57

5 30 183 0

33 7 5 23

22 38 9 47

463 153 239 127

35 34 71 586

0 0 0 0

0 0 0 2

0 0 0 0

35 34 71 588

438 112 113 643

5 30 183 0

33 7 5 25

22 38 9 47

498 187 310 715

Vertical Wells

Lloydminster Kindersley Swift Current Estevan Horizontal Wells

Lloydminster Kindersley Swift Current Estevan Total Wells

Lloydminster Kindersley Swift Current Estevan

“Industry Leading Quality & Service Since 1987” Specialists in internal & external coating applications Epoxies • Metallizing • Fibreglass Linings • Plural Spray Pipe • Tanks • Vessels • Towers • Valves 6150 - 76 Avenue, Edmonton, AB T6B 0A6 Phone (780) 440-2855 Fax (780) 440-1050

• 100% Canadian Owned • www.brotherscoating.com 10

January 2010 • OIL & GAS INQUIRER

S P O T P R I C E S at AECO trading hub in Alberta

GAS STOR AGE

Source: Natural Gas Exchange Inc.

Source: U.S. Energy Information Administration 4.00

5.5

$5.35/GJ Total vol.: 2,002 TJ Transactions: 190

4.5

3.5

in the United States

Nov 18

Nov 25

Dec 2

Dec 9

3.75 3.57 Tcf Year ago: 3.49 Tcf 5-year avg: 3.41 Tcf 3.50

Dec 16

Nov 13

Nov 20

Nov 27

Dec 4

Drilling Rig Count by Province/Territory

Drilling Activity: Oil & Gas

Western Canada December 14, 2009 Source: Rig Locator

Alberta November 2009 Source: Daily Oil Bulletin

ACTIVE

DOWN

TOTAL

(Per cent of total)

Western Canada Alberta

ACTIVE

283

296

579

49%

53

58

111

48%

5

5

10

50%

Saskatchewan

77

57

134

57%

WC Totals

418

416

834

50%

0

2

2

0%

British Columbia

Manitoba

Northwest Territories

OIL WELLS

Alberta

GAS WELLS

Nov 09

Nov 08

Nov 09

Nov 08

Northwestern Alberta

23

53

46

173

Northeastern Alberta

31

51

0

12

Central Alberta

93

154

32

207

Southern Alberta

22

20

134

683

TOTAL

169

278

212

1075

Service Rig Count by Province/Territory

Drilling Activity: CBM & Bitumen

Western Canada December 14, 2009 Source: Rig Locator

Alberta November 2009 Source: Daily Oil Bulletin

ACTIVE

DOWN

TOTAL

ACTIVE

Western Canada Alberta

406

741

45%

British Columbia

17

23

40

43%

Manitoba

8

1

9

89%

Saskatchewan

112

74

186

60%

WC Totals

472

504

976

48%

1

1

2

50%

Northwest Territories

COALBED METHANE

Alberta 335

Dec 11

BITUMEN WELLS

Nov 09

Nov 08

Nov 09

Nov 08

Northwestern Alberta

1

8

6

15

Northeastern Alberta

0

0

31

42

Central Alberta

13

93

50

77

Southern Alberta

15

171

0

0

TOTAL

29

272

87

134

Enviro-Tub… • One complete totally

first class secondary containment protecting the environment, product and primary container Canadian Enviro-Tub Inc. p: 403.742.2967 f: 403.742.5239 e: help@enviro-tub.com www.enviro-tub.com

Enviro-Tub’s sizes for primary containers include 300-500 gal. and also 150 gals. or less.

• • • • •

enclosed portable secondary containment package.

Keeps weather out...snow, rain, water, etc.

Protection and security for primary container, chemical pumps and site glass.

Allows for possibility of total recovery of expensive product.

Permits for use of low cost single wall repairable tanks, plastic or steel.

Exceeds G-55 guidelines.

OIL & GAS INQUIRER • January 2010

11

Outlook 2010

2010 looks like a better year for the oilpatch than 2009

by Graham Chandler

L

ast year proved to be a debacle for most oil and gas industry forecasters.

The Canadian Association of Oilwell Drilling Contractors (CAODC) initially predicted a well count of 14,325 wells for 2009. The Petroleum Services Association of Canada (PSAC) was even more optimistic at 16,750 wells. The Canadian Association of Petroleum Producers (CAPP) initially estimated 14,700. As the global recession slashed energy consumption and prices throughout 2009, the associations repeatedly found themselves forced to reduce their well estimates.

The actual well count for 2009 will likely be little more than 8,000 wells, more than a 50 per cent plunge from 17,043 wells in 2008.

That grim performance was most accurately forecast by Ziff Energy Group, which initially estimated the 2009 well count at 8,000 to 11,000. Within that range, Ziff VP Bill Gwozd leaned toward the more pessimistic figure as early as November 2008. For 2010, the Calgarybased consulting firm—whose thorough evaluations of gas markets are wellrespected in Houston and New York as well as its hometown—ranks among the most optimistic analysts.

Driving last year’s activity decline were natural gas prices that plunged to 12

January 2010 • OIL & GAS INQUIRER

the range of C$3 per thousand cubic feet (Mcf) for months. The Alberta gas price (AECO) is currently about C$4, while NYMEX hovers around US$5 per Mcf— still too low to drive much of a recovery in drilling. For 2010, however, Ziff believes NYMEX gas prices will average US$6 to US$7 this year. “At $6.50, field activity will likely be more robust than it has been in 2009,” Gwozd suggests. Further strengthening the outlook, he adds, are crude oil prices that have already reached activity-generating levels.

T he veteran analyst hesitates to forecast a well count for 2010 because drilling and completion technologies are in a period of extraordinary f lux.

“What’s a well? When you drill a dozen horizontal wellbores from a single pad, you’re in a very different situation than punching shallow gas wells on the prairie,” Gwozd says. “The well count will remain a significant metric because every well needs a wellhead, tubulars, and so forth. However, the well count by itself is no longer a reliable metric for forecasting production changes from year to year.”

On the demand side, Ziff foresees a continent-wide industrial recovery pushing up natural gas sales over the coming year, notably for power generation.

But Cam Gingrich, the group’s manager of gas services, notes that higher gas prices will also make coal more competitive.

Based on normal weather, Gingrich says, “We see a small increase [in demand], but not a massive one.” The analyst does not expect potential climate change laws and regulations to have much effect on gas demand before 2012, if then. “A lot of the legislation is languishing,” he says.

Gwozd anticipates a continuing decline in Canadian gas sales to the United States. “Exports were just a shade over 10 Bcf [billion cubic feet] per day in 2005,” he says, “By 2010 we see exports down to around 8 Bcf per day. And by 2015, we expect that to tilt down towards 7 and by 2020, 6 or 7 Bcf per day.” In part, the Ziff VP believes oilsands producers will be sopping up more gas. “These giant ‘vacuum cleaners’ currently take 1.1 Bcf per day and that will rise to almost 3 by 2020,” he says, “weighted towards the in situ projects.”

Another factor, in his view, is declining gas productive capacity in the Western Canadian Sedimentary Basin.

PSAC does not share Ziff’s belief that times will improve much in 2010 over 2009. Roger Soucy, its president, says the association anticipates about 8,000 wells this year. The annual total includes 5,095

wells in Alberta (down by 5 per cent from 2009), 630 in British Columbia (up by 7 per cent), and 1,935 wells in oil-prone Saskatchewan (an increase of 10 per cent over 2009). PSAC is basing its 2010 forecast on average natural gas prices of C$5 per Mcf (AECO) and crude oil prices of US$72 per barrel (West Texas Intermediate).

“We all know that oil and gas activity is predicated on price,” Soucy says. “In 2010, oil prices will be adequate to sustain conventional oil activity. As a result, we are forecasting an increase in drilling in oil[-prone] areas like Saskatchewan and northeast Alberta. Gas pricing, on the other hand, remains relatively low and we are not expecting any significant gas price turnaround in 2010. That, combined with industry’s focus on shale gas drilling, has led us to forecast a 30 per cent drop in the conventional shallow gas drilling area of southeast Alberta.

“We’re forecasting that [western Canada] will potentially see more oil wells than gas wells drilled in Canada in 2010.” Soucy continues. “And that’s not because we’ve all of a sudden got an abundance of oil plays, it’s just the lack of natural gas pricing levels to generate interest to drill for natural gas.” He also acknowledges that gas prices remain “a wild card.” Oil drilling has not outpaced

gas since the Turner Valley and Leduc plays, back in the heyday of Alberta’s conventional crude discoveries.

Besides its lack of conventional oil exploration targets, Alberta continues to suffer due to its provincial royalty structure. Murray Edwards, vice-chairman of Canadian Natural Resources Limited, reflected widespread industry sentiment when he recently told Toronto’s Globe and Mail: “Without cuts to royalties, which were raised early this year, capital will continue to flow into Saskatchewan oil properties and British Columbia gas assets—but not to Alberta.”

The National Energy Board, in its annual winter outlook, forecasts an average crude oil price between US$75 and US$80 per barrel through the winter 2009–10, while natural gas is forecast at $4 to $5.50 per Mcf for the period. The CAODC estimates the 2010 well count at 8,523, based on US$70 per barrel WTI and C$5.50 per Mcf. The fourth quarter of 2010 is expected to be the strongest, according to the CAODC. CAPP more optimistically pegs western Canadian drilling for this year at 9,500 wells.

Healthy crude values will stimulate oilsands activity, although some bitumen operators remain unconvinced.

In its latest oilsands forecast, the Canadian OIL & GAS INQUIRER • January 2010

13

Photo: Trinidad Drilling Ltd.

Feature

The Canadian Association of Petroleum Producers thinks capital spending will be $40 billion in 2010.

Energy Research Institute (CERI) notes: “While announcements have been made

by Imperial Oil that they are staying course and proceeding with the Kearl oilsands projects, other major producers such as Royal Dutch Shell and Total have raised concerns that current oil prices are insufficient to justify new oilsands projects.”

CERI adds that “as the developed world moves forwards with its economic recovery and the BRIC nations [Brazil, Russia, India, and China] return to high levels of growth, it does not take much of an imagination to see [WTI] oil prices pushing north of US$80 to US$90 per barrel.”

In its 2009 World Energy Outlook, the International Energy Agency (IEA) says crude oil consumption in the developed world is likely to remain nearly flat, with a projected annual increase of 1 per cent for the next two decades. However, the IEA suggests that India’s oil demand is likely to rise by 3.9 per cent annually until 2030, and China’s by 3.5 per cent. The U.S. Energy Information Administration estimates world oil consumption will rebound in 2010, climbing by 1.1 million barrels per day compared with 2009.

14

January 2010 • OIL & GAS INQUIRER

For Canada’s gas services sector, the hot spot this year will be the world-class shale and tight rock prospects in northeastern British Columbia. In the Horn River Basin and Montney plays, producers seem willing to drill no matter what the current natural gas price happens to be. Soucy says the shale plays will fuel demand for horizontal services, “which involves everything from the drilling rig down through to the motors that drive the process at the bit end of the operation.”

Simon Mauger, a technology specialist with Ziff, foresees the potential for an immense supply impact over time from horizontal drilling, multi-stage fracs, and the use of micro-seismic to assess and improve frac techniques. “These technologies have increased in influence over the past four years,” Mauger says. But the immediate effect of these tools on gas supply and prices remains uncertain, he warns. That’s because most of North America’s shale plays, including Horn River, remain at a relatively early stage of development.

A crucial concern with shale gas wells is the potential rate of production decline.

“There are indications already that decline

rates are in that 65 per cent range in the first year, 35 in the second, 25 in the third, and 10 to 20 thereafter. These declines can be quite brutal,” Gwozd says. “So if a well starts off at 18 million, it may be down to 6 [million] after a year then 3.5 [million]—that’s significant.”

The Ziff VP has not forgotten the Ladyfern play, also in northeastern British Columbia, which unfolded in 2001. Within two years, production rocketed to about 700 million cubic feet per day. Today those wells are producing a total of 25 million cubic feet per day. In recent months, some American producers have been promoting the concept of shale gas providing a century of national supply. “When they called it a 100-year supply, that is all the gas in the ground—original gas in place,” explains Gwozd. “What we need to show is at what rate it can be produced until the end of the field. The 100-year number is simplistic, but we concur that shale will comprise nominally 18 Bcf by 2020— that’s triple what it is now.”

PSAC’s Soucy concurs on the unconfirmed production rates for shale. “There is a debate going on,” he says. “Some

Feature Photo: Trinidad Drlling Ltd.

We’ve got you covered

A Trinidad rig drills in B.C.

1 ➡

2 ➡

analysts have been saying the depletion rates are very high, which is being challenged by Devon and some of the bigger companies. In my opinion, we need more time to see what actually does happen.

At this point, it’s a function of waiting to see what does prove out and whether shales will be the saviour for natural gas in North America.”

Even so, multiple fracing in shales is definitely driving demand for more pumping horsepower, and not only in the United States and Canada. “In line with recent trends, we expect pressure pumping to enjoy one of the highest growth rates in the service industry,” writes Jan Cerny, a research analyst for oilfield services at Macquarie Capital Markets Canada.

“We estimate that over the next 12 to 18 months, about one million horsepower [mhp] of pressure-pumping capacity will be retired or relocated from North America to international markets.” This should reduce North American pressurepumping capacity 13 per cent to 5.7 mhp by late next year, with 5 mhp located in the United States and 0.75 mhp in Canada, he calculates.

The best light-weight portable welding shelter on the market.

3 403.293.7333 www.HeX-Hut.com OIL & GAS INQUIRER • January 2010

15

Feature Cerny forecasts that pumping horsepower demand will soar by about 36 per cent over the next 12 months, raising pressure-pumping equipment utilization from 48 per cent currently to roughly 68 per cent by the second half of 2010 and close to 79 per cent by the second half of 2011. Pressure-pumping prices have stabilized recently. However, the Macquarie analyst predicts they will start rising again, picking up momentum in the last half of 2010 and becoming very strong in 2011.

Capital spending by producers is a crucial factor for oil and gas service companies. As of early December, the

Daily Oil Bulletin reported that only 20 Canadian producers had reported their initial capital budgets for 2010. Although many companies are hesitating before placing next year’s investment bets, the spending trend to date has been modestly higher. The 20 producers announced capital projections of $17.3 billion for 2010, $609 million more than the same companies expected to spend in 2009.

According to the Daily Oil Bulletin, most of the mid-size and junior producer budgets that have been announced for 2010 indicate spending hikes of 20 to 30 per cent over 2009. A few—such as Anderson

Energy Ltd., Iteration Energy Ltd., and Arsenal Energy Inc.—have more aggressive increases planned for next year due to extreme cuts to their 2009 expenditures.

CAPP, whose members are mostly large and medium-size producers, predicts that the industry’s capital spending will jump from $34 billion in 2009 to $40 billion this year. (The equivalent figure for 2008 was $54 billion.) “Our update now is kind of with cautious optimism…which is really driven mostly by a recovering level of oil prices,” says Greg Stringham, CAPP’s VP of oilsands and markets.

Penn West applies horizontal multi-frac technology to oilfields

Photo: Brian Zinchuk, Pipeline News

Staged hydraulic fracturing of horizontal wellbores, already progressed from 90 per cent vertical wells to 80 per cent the dominant technology in natural gas, appears poised to horizontal multi-stage frac wells. claim a big a role in oilfields. Among Canada’s leaders in this In Saskatchewan, Penn West is seeing consistent results at emerging strategy is Penn West Energy Trust. This year, the Leitchville with horizontal wells that initially produce 100 to 130 Calgary-based producer hopes to increase production and barrel per day range. Total production per well should average recoverable reserves from its light oil properties at Waskada, 125,000 barrels and possibly up to 150,000 barrels per well in Dodsland, Pembina, and Leitchville. total, according to Bob Shepherd, senior In 2010, the trust plans a capitalVP of exploration and development. The spending program between $800 miltrust is also very encouraged by what it lion and $900 million, according to is seeing in eastern Alberta shallow gas Murray Nunns, its president and COO. with the use of horizontal wells.

That activity will be weighted more Bill Andrew, Penn West’s CEO, towards the second half of the year, says his team is quickly moving elsesays Nunns, adding, “We want to a bit where with the Leitchville concept. At more results in terms of our light oil Waskada, Man., where it has a large plays before we really put the pedal land position, he says initial tests indidown on the capital side.” cate “we are certainly in the guts of the Penn West will focus on six nearoil trend” and the trust will be following term oil projects, five of them oil, which up quickly with horizontal wells. are in the first and second phases of test“The biggest change will be once ing and refining multi-frac horizontal we get into the groove will be Pembina field techniques. Nunns says these pro[Cardium],” Andrew says. “Penn West has a land base that goes through jects will account for 50 to 60 per cent of capital spending with 200 to 225 wells Garrington, up to Sylvan Lake and in 2010, weighted 80 per cent to oil.

Willesden Green, up to Strachan on the The trust’s third-quarter producwest side of the Pembina field” where it tion averaged 178,124 barrels of oil plans to drill this winter. The trust also equivalent per day in 2009, down plans to be active this winter in northfrom 180,601 barrels of oil equivalent central Alberta in the Swan Hills/ per day in the third quarter of 2008.

Mitsue area and further north into the Penn West drilled a total of 36 net Nipisi and Otter areas using the same wells, including 29 horizontal multitype of technology on infill wells and on some of the smaller, tighter plays and stage frac wells, with a success rate of 100 per cent in the third quarter. with good results to date.

Penn West’s drilling programs have This rig is working in Manitoba.

— DAILY OIL BULLETIN

16

January 2010 • OIL & GAS INQUIRER

Photo: Trinidad Drilling Ltd.

Feature

18

JAp a nr uila r2 y 0 0290 1• 0 O •I L O&I LG &A SG AI NS QI U N IQRUE IRR E R

Feature

Gimme shelter

Fabric-over-frame matures as a building technology that’s well-suited to the resource sector

by Mike Byfield

From simple canvas tents, fabric-covered structures have evolved to the point where they can challenge conventional construction for almost any type of low-rise building. Churches and casinos, military bases and manufacturing plants, zoos and hospitals—all of these facilities and more have been made in western Canada, then shipped around the world. In the oil and gas sector, fabric buildings attract customers due to their attractive capital cost, portability, speed of construction, ease of maintenance, and surprising durability. As the industry expands, its products and players are becoming more varied.

The Sprung head office, located south of Calgary, illustrates the growing sophistication of the company's building technology.

O I L O&I LG &A SG AI NS QI U N IQRUE IRR E• R J a • nAp u arril y 200 10 9

19

Feature

Cover-All mushrooms into North America’s largest fabric-and-steel building manufacturer In October, Cover-All Building Systems, Inc. shipped its 35,000th building, all formed with fabric stretched over a steel frame. The longest of these buildings, at 1,700 feet, houses a dairy in Kazakhstan, and much bigger structures are in the proposal stage. These milestones have been achieved by a company launched just 18 years ago by the founder, Richard Quiring, who “wanted to expand his hog operation and didn’t want to put up a Quonset hut, so he came up with his own alternative,”

the steel framework can last, but upwards of 50 years is a reasonable estimate unless the structure is being used to store a corrosive substance like highway road salt.”

Foundation options include concrete piles, floating blocks, concrete or steel walls, and earth anchors.

“The primary use of our buildings is cold storage, protecting vehicles and other goods against sun, rain, and other weather,” the engineering VP says. “Also, many customers use our structures as

In terms of width, a Cover-All building can have a clear span (i.e. without interior columns) as great as 300 feet, although 180 feet is the standard maximum.

20

January 2010 • OIL & GAS INQUIRER

maintenance shops, which can be heated.

Our own manufacturing facilities in Saskatoon are housed in Cover-All buildings, which we heat to 20 degrees Celsius in the winter. Because we use an overhead radiant heating system, we don’t have to heat the entire volume of structure.” When heating is required, a lining is attached to the inner chords (beams) of the steel trusses. The outer and inner skins plus the air trapped between them yields an insulation value of about R5.

The liner can also be insulated to provide any insulated rating.

Photo: Cover-All Building Systems, Inc.

says Mark Antonini, VP of engineering for Saskatoon-based Cover-All. At a casual glance, fabric may seem a tad flimsy for serious construction. To counter that misconception, Cover-All staged a lifting demonstration in August.

A 6,200-pound pickup truck was driven onto a 12 by 24 foot panel of DuraWeave.

The woven polyethylene fabric had been stretched within a tubular steel frame.

While cameras rolled, six forklifts hoisted the truck atop the DuraWeave. Antonini had reason to be pleased with the performance—that pickup belongs to Cover-All’s president, Nathan Stobbe.

In terms of width, a Cover-All building can have a clear span (i.e. without interior columns) as great as 300 feet, although 180 feet is the standard maximum. The fabric is a patented double-stack weave, guaranteed for 15 years, but capable of lasting longer. With a series of 10,000pound winches and zero-stretch belting and/or cables, covers stay tight and secure. Antonini says DuraWeave strongly resists punctures as well as ripping, and the tensioned membrane can be readily replaced when it does eventually wear out.

Cover-All’s galvanized steel frameworks have a patented triple-coated corrosion barrier, and all welds are re-coated.

A ntonini, who heads the company ’s product development and engineering teams, adds, “I really don’t know how long

The interior of fabric buildings often have an airy feel thanks to the combination of massive clear spans and natural light.

“A translucent membrane passes enough sunlight into the structure to eliminate the need for artificial lighting during the day,” Antonini explains. Electricity bills are lower, of course, but there’s also a more intangible benefit. One farmer noticed that his cows, when offered a choice between a conventional barn and a Cover-All building, always headed for the naturally lit stalls.

People, too, typically prefer to work near windows and other sources of sunlight.

The company considers itself North America’s largest maker of steel-frame fabric buildings. It currently has about 400 personnel in Saskatoon and an additional 100 or so in corporate dealerships like Cover-All Alberta. Private dealerships around the world (including CoverAll North Inc., based in Grande Prairie, Alta.) bring its employment total up to 1,200. Cover-All has averaged doubledigit percentage revenue growth since its inception.

Saskatchewan has been a very good place to manufacture over the years because of the solid and experienced workforce. Over the last few years, Cover-All has also brought in highly qualified immigrants to augment that workforce. The company, which sees further growth in its future, is monitoring expnasion opportunities in Europe and the United States.

Feature Photo: Cover-All Building Systems, Inc. Photo: Cover-All Building Systems, Inc.

Photo: All Weather Shelter

Fabric buildings can house virtually any industrial application, although the presence of corrosive substances will shorten a shelter's life significantly.

OIL & GAS INQUIRER • January 2010

21

Feature

All Weather Shelters engineers for the oilsands a non-standard footprint, or needs an unusual door, we’d take a little longer, but normally not much.”

Roger Sims, Craig’s father, began All Weather in 1996. His son, a construction engineering graduate from the Northern Alberta Institute of Technology, specialized in putting up structural steel buildings before taking over the management of the family business. Typically, the Edmonton plant’s payroll stands at about 30, plus a couple of dozen additional workers employed on installation crews. “We’re not a large outfit but the company has plenty of experience. We’re fortunate that many of our employees have stayed with us for a long time,” Sims says.

The All Weather director is blunt about one risk faced by anyone looking to buy a fabric building: “We see a fair amount of fly-by-night manufacturing in this sector.

Someone sets up shop, sells at 15 to 20 per

cent less than responsible competitors, then disappears as their products begin to collapse,” Sims says. “One national retailer actually carried an imported line of poorquality consumer structures sold under the name All Weather. When a building collapses, our whole industry looks bad.”

When a fabric structure collapses, the typical causes are wind or snow load.

The National Building Code includes data on wind, snow, temperature, and seismic activity for every municipality in Canada.

“Our sector has gone through a lot of change over the past five years because the building code was extended to include our class of products. We engineer a building so that it will withstand conditions where it will be set up,” Sims says. “Mickey Mouse operators are forced to comply with the code, which protects consumers, but non-compliant products are still around to some extent.”

Photo: Sprung Instant Structures

Craig Sims targets a specific sector: oi l sa nds. “ T he re sou rce i s on ou r front doorstep,” says the co-owner of Edmonton-based All Weather Shelters.

“It’s a big industry with serious concerns about cost control and labour supply, and we can address those factors effectively.” Because oilsands producers sometimes operate internationally as well, All Weather has shipped its products as far as Asia and North Africa.

Closer to home, the manufacturer has supplied equestrian and ice arenas, bus barns for the City of Edmonton, and a variety of other buildings.

“If an oilsands producer encounters delays in construction of a conventional building, the ripple effect on related developments can be really expensive,” Sims says. “All Weather carries a lot of inventory, so we can usually supply a structure within a week. If a customer requires

Sprung's headquarters boasts architectural features like two-storey glazed windows, a basement gymnasium, and first-class insulation.

Sprung pioneers the world’s most advanced fabric structures While a dozen or more competitors sell fabric buildings in Canada, only one manufacturer has moved far beyond the traditional inventory of industrial storage, shops, and arenas. Just south of Calgary at Aldersyde, Sprung Instant Structures has created a world headquarters with no peer anywhere. The 150,000 square foot complex, erected two years ago, is engineered with an aluminum substructure and architectural membrane. Its facilities include two manufacturing wings, a mezzanine 22

January 2010 • OIL & GAS INQUIRER

administrative centre, a two-storey glass façade, a full gymnasium in the basement, and more.

Sprung VP Jim Avery says his company has its eye on the resource sector, particularly the oilsands. “These projects, big or small, need shelter for personnel and equipment at an affordable price. At the same time, lifestyle quality has to be high if you want to attract and hold good people,” Avery says. “When the energy sector moves back into high

gear and Alberta again finds itself facing labour shortages, oilsands operators must minimize the need for skilled construction workers. They also have to move quickly while maintaining construction quality.

We’ve positioned ourselves to meet all of those requirements.”

For a Calgary outfit, Sprung’s local roots are extraordinarily deep. Started in 1887 by Philip Dorland Sprung, the company manufactured chuckwagon covers, teepees, and other tent-type shelters

Feature

Truss spacing is a critical factor in strengthening a building for local conditions. In Sims’ view, no single-chord steel framework can safely support any but the smallest structures. Sturdier trusses consist of two chords linked by a lattice of smaller steel webs. Besides strength, the double-chord truss provides airspace where All Weather can install fibreglass insulation if required, to a value as high as R20.

What sort of changes does Sims see coming down the road? “I’ve seen fabric with solar cells built in. Wouldn’t it be great if a membrane-type building could provide its own power?” he replies.

“Seriously, though, there’s no way of knowing where the technology will take us in future. I do think the sector will continue to expand as potential buyers become more aware of the benefits built into these products.”

for settlers and aboriginal bands. Philip Donald Sprung, the current president, is the founder’s great-grandson, and several other family members are active managers as well, including Avery’s wife.

This pioneering firm has developed what amounts to a new architectural technology that reportedly works well in virtually every environment. Arctic Watch, the world’s most northerly lodge, sits less than 130 kilometres from the magnetic North Pole. Another Sprung structure, located in the Aleutian Islands, was engineered to meet sustained wind loads as high as 200 kilometres per hour.

Restaurants and mass merchandisers appreciate the hip ‘wow’ factor and large skylights of Sprung structures. The distinctive Sprung building profile not only sheds snow well, but also earns praise from church worship leaders for its acoustic qualities. Casino operators by the dozen have opted for Sprung facilities.

Calgary’s Edge School, which serves 300 student-athletes, reportedly saved millions by having Sprung construct its two hockey arenas and gymnasium.

The company is also proud of a letter from former U.S. first lady Barbara Bush praising its work in speedily supplying hospitals for charity work in Rwanda. On short notice compared to conventional construction, Sprung can put together

ECOQUIP Hydraulic Pumpjacks

Reliable...

Flexible...

Powerful...

Mobile...

Efficient...

Better.

The best rod pumping technology for all applications including SAGD, heavy oil, difficult access sites, well testing and long term applications.

Ecoquip Rentals and Sales Ltd. Leading Edge Sales and Rentals Ltd. (NW Alberta agent and service provider) 6235A - 86th Avenue S.E., Calgary, Alberta T2C 2S4 P: 403.255.5207 • F: 403.255.9150 E: info@ecoquip.ca • W: www.ecoquip.ca

OIL & GAS INQUIRER • January 2010

23

Feature

technology achieves greater strength and precision. One well-known testing laboratory in the U.K. told us that our structures are the most airtight they’ve ever tested.”

T he c ompa ny ’s a lu m i nu m s ub structure allows precise placement of formaldehyde-free fibreglass blankets.

Besides reducing the cost of heating and air conditioning, insulation acts as an effective barrier to vapour and sound.

“Our structures carry a higher initial price tag, but the owner can recover that expense over the building’s life through lower operating costs,” Avery says. “Even for a relatively short-term application, the insulation option usually makes financial sense. The customer that takes proper account of his structure’s full life cycle can benefit from superior reliability, comfort, and aesthetics at little or no additional cost.”

Photo: Sprung Instant Structures

a convention centre, restaurant, ski resort, golf club, bush camp, warehouse, mine processing facility, or other lowrise building. An installation crew can progress as quickly as 1,000 square feet per day.

Innovation, flexibility, and especially reliability, according to Avery, lie at the heart of Sprung’s success. “No one wants their school to blow over,” he points out.

“And don’t kid yourself, it can happen.

I’ve seen two of our buildings standing on either side of a competitor’s product that had collapsed during a storm. We’ve spent a great deal of money designing reliable doors, windows, and other architectural features of many types.

But most important of all is our unique integration of architectural membrane, the aluminum substructure, and insulation technology.”

Sprung’s top-quality fabric consists of five layers, including Dupont Tedlar

"I’ve seen two of our buildings standing on either side of a competitor’s product that had collapsed during a storm."

- Jim Avery, VP, Sprung Instant Structures

24

January 2010 • OIL & GAS INQUIRER

Photo: Sprung Instant Structures

colour film. The combination resists fire, ultraviolent rays, fire, fungus, solar heat buildup, and other ills. Eight colours are available. The light, bright material provides an excellent backdrop for company logos and other decoration. Where most rivals place their fabrics on top of a steel frame (i.e. no ribs are visible from the exterior), Sprung patented the stressed membrane structure: its membrane panels are placed under high tension within the framework.

Another Sprung hallmark is aluminum, which is more expensive than steel but 66 per cent lighter, highly corrosionproof, and readily extruded into virtually any shape and size. “Extrusion allows for fitted and bolted connection points rather than welded connections frequently seen on steel,” Avery says. “Overall, our

Sprung hopes to see its structures used in the oilsands as offices, housing, and industrial workshops.

Electrical Products that meet your needs

Automation

Brews Supply Ltd. – your source for quality Alberta manufactured Eaton products and UPS power systems

Wire Handling

Distribution Equipment

ew

s 24 h

Heating Equipment

Safety

Need it Fast?

hot

vi ce

r

r

B

With over 80 years in business, Brews knows what the oilpatch needs from an electrical supply company.

Ask About our “Hot button” Service

Industrial Control

Utility Products

b

ut r ton se

Enclosures

Brews Supply Ltd Made in Alberta 426015 fp

Edmonton Power Centre / Satellite

Calgary Satellite

Airdrie Low Voltage Control Assemblies

Eaton, manufacturer of Cutler-Hammer® electrical distribution, industrial control, power quality and automation products has long been a manufacturing presence in Alberta.

We employ skilled Albertans producing a wide variety of technically advanced electrical products including: • Medium Voltage Switchgear • Mini Power Centres and Motor Control • Motor Control Centres • Industrial Control Panels • Oil Pump Controllers • Enclosed Variable Frequency Drives • Panelboards / Switchboards • E-Houses Our Quick-Ship Satellite Centres specialize in customized solutions and specially modified products tailored to your exacting electrical requirements.

Premium UPS Solutions from Eaton Power Quality Company Power Protection you can count on

In today’s around the clock business environment, downtime just isn’t an option for your customers.

The need to ensure that mission-critical systems are up and running at all times is paramount for business operations.

Downtime—even a matter of seconds—can carry a staggering price tag.

Studies show that businesses can lose $10,000 to several million dollars per minute when networks go down without warning - a steep price to pay when premium power protection is available for a fraction of what your customer is spending on equipment today.

One of the most successful ways to mitigate the risks associated with power problems is the installation of a Powerware® Uninterruptible Power System (UPS) from Eaton Power Quality Company.

Powerware power protection systems from Eaton Power Quality Company— flexible, modular, scalable, and energy-efficient power quality solutions for all industrial and commercial applications.

BREWS Supply Ltd. Toll Free 1.800.661.6884 www.brewssupply.com Calgary (Head Office) 12203 40th St. S.E. PH 403.243.1144 Edmonton 18003 111th Avenue N.W. PH 780.452.3730

SMART DEADWEIGHT AND PRESSURE HOUND PRODUCTS ECHOMETER SALES AND SERVICE PORTABLE CUSTOM DATA ACQUISITION SYSTEMS PRESSURE AND FLOW CALIBRATION TRACEABLE TO NATIONAL STANDARDS INSTRUMENT RENTALS COR CERTIFIED #1, 1815 - 27 Avenue NE, Calgary, AB T2E 7E1 • Phone: (403) 291-3535 • Fax: (403) 291-3585

1-888-SYSTECH

Visit www.oilpro.ab.ca Sell us your surplus, or ask about our consignment program: ✔ Pumpjacks (sizing help available) ✔ Arrow engines, gensets and fuel ✔ ✔ ✔

gas scrubbers/volume bottles Low and high pressure separators FKO drums and flarestacks Free water knockouts

403·215·3373

Fax:

✔ Treaters ✔ Lineheaters (sizing help available) ✔ Dehydrators ✔ Tanks: single/double, 50, 100, 210, 400, 750, 1,000 and 1,500

✔ Tank heating systems

(HotRod, Envirovault, Firetubes, etc.)

403·216·1571

Toll Free:

888·4·OilPro

✔ Propane/butane storage bullets, 12,000 - 60,000 USWG

✔ Gas plants: sweetening/choke/ ✔

mech. refrigeration Compressors (boosters: recip. and screw units) OILF

I EL D PR O D U C T I O N

EQ UIPM ENT

OilPro Oilfield Production Equipment Ltd.

Introducing Triple D Technologies’ unique new process that uses ice to generate double the pressure downhole to fracture unconventional and mature reservoirs

• Safely and at low cost • Significantly reduced carbon and lease footprint • No proppants required

-22˚C +

H2 O = 30

Slotted Liner, Perforated Casing or Open Hole Completions

0mPa in

situ

Refrigerator Loop Freeze/Frac

115 Advanced Technology Centre 9650-20 Avenue, Edmonton, AB T6N 1G1 26

January 2010 • OIL & GAS INQUIRER

780.440.3348 tripledtechnologies.com

British Columbia

Nexen sees oilsands as natural market for Horn River gas

Photo: Nexen Inc

by Paul Wells

Nexen says Horn River Basin producers must address mounting competition from U.S. shale gas plays.

As Alberta oilsands operators continue to increase production, Nexen Inc. believes British Columbia’s Horn River producers should supply their growing demand for natural gas through TransCanada Corporation’s North Central Corridor pipeline. “With the geographical location of Horn River, we feel it makes sense to come across and feed those volumes over to the oilsands,” said Michelle Rampersad, Nexen’s marketing manager for northeastern B.C. Producers in the Horn River Basin likely will need to find additional markets in response to surging North American shale gas production, Rampersad told a Canadian Institute conference in Calgary on Nov. 24. If the proposed Kitimat LNG (liquefied natural gas) facility, which would export Canadian gas to Asian markets, comes to fruition, Rampersad said the new outlet would also be “real game changer” for pricing of B.C. natural gas.

Kitimat is an export facility. Import LNG projects now face a much bleaker future, the conference heard. “In my view, LNG imports into the United States are actually not required. That is a very sad development, particularly for the companies that have spent billions of dollars building re-gasification plants in the U.S. Gulf Coast, along the Atlantic seaboard, and in Mexico to serve the U.S. market,” said Patricia Mohr, V P of economics and commodity market specialist with Scotiabank Group.

Mohr said that American shale and tight gas development has also lowered the industry cost curve. Scotia Waterous’ estimates indicate t hat t he nat ural gas price required to cover break-even costs (operating, finding, and development costs and royalties/taxes, as well as a 10 per cent return on total capital employed, but excluding land costs) is

only US$3.19 to US$4.45 per million British thermal unit for the Marcellus, Haynesville, Barnett, Eagleford, and Fayetteville shales.

Scotia Waterous believes that prices should rebound further into the first half of 2010, but only modestly. Mohr noted that horizontal drilling allows a more rapid response to higher prices than conventional drilling—“a factor also likely to check prices,” she said. Mohr is forecasting an average NYMEX price of US$5.50 per million British thermal unit in 2010, and in 2011, “I’ll keep the price right at the $5.50 mark, no higher.”

If natural gas does reach the $6 per million British thermal unit mark for an extended period, Mohr said a flood of new supply will follow. “We think if prices move up to $6, the economics of these new shale developments in the U.S. means a tremendous amount of drilling…because they’re very economic, very lucrative at $6,” she said. “So, I think the industry’s cost curves have been lowered.”

Rampersad said Nexen’s break-even mark for Horn River is dropping rapidly and has further upside. She said the project currently breaks even (with a 10 per cent internal rate of return) at US$5 to US$6 per thousand cubic feet and that the company continues to work toward reducing that figure further.

Nexen’s Horn River program is progressing well with the drilling and completion of approximately 10 wells. “Our best guess is we have three to six Tcf [trillion cubic feet] of recoverable reserves.

That’s not gas in place, that’s recoverable reserves,” Rampersad said. “We’ve also had extremely high initial production rates out of the wells. We’ve been very fortunate with that—as have other producers in the basin—upwards of one MMcf [million cubic feet] per day per frac.”

— DAILY OIL BULLETIN

BRITISH COLUMBIA WELL ACTIVITY

NOV/08

NOV/09

WELL LICENCES

243

85

▼

NOV/08

NOV/09

WELLS SPUDDED

68

42

▼

NOV/08

NOV/09

WELLS DRILLED

61

37

▼

Source: Daily Oil Bulletin

OIL & GAS INQUIRER • January 2010

27

British Columbia

TAQA North plans to drill three Horn River wells this winter Anxious to see what its newly acquired exploration licences hold, TAQA North plans to drill three exploration shale natural gas wells in the Horn River Basin of northeastern British Columbia this winter, the company’s top official said on Nov. 11.

Earlier this year, the subsidiary of the Abu Dhabi National Energy Company PJSC (TAQA) spent $63.3 million to acquire 13,000 hectares of land on two blocks north of Fort Nelson.

In Canada, the Horn River basin and tight gas are among the many globa l orga n ic g row t h oppor t u n ities for the parent company as it shifts its focus away from growth by mergers and acquisitions, Carl Sheldon, the recently appointed general manager,

said in a conference call to discuss thirdquarter results.

The company reported a profit of 278 million AED (Arab Emirates Dirham) for the three months ended Sept. 30, 2009, compared to 840 million for the 2008

Bratani (39,700 boe per day), and TAQA Energy (4,500 boe per day).

TAQA North production was down five per cent from 93,000 boe per day in the 2008 period due to decreased capital investment as a result of lower natural

TAQA's global production was 132,600 barrels of oil equivalent per day in the third quarter of 2009, up from 110,500 boe for the same period in 2008. period. Total production was 132,600 barrels of oil equivalent (boe) per day, up from 110,500 boe per day in the third quarter of 2008. Output was split between TAQA North (88,400 boe per day), TAQA

gas prices. The average realized price was US$2.96 per thousand cubic feet, a reduction of 67 per cent from $9.03 per thousand cubic feet in the third quarter of 2008.

Spectra Energy’s $100-million, 95-kilometre South Peace Pipeline, which extends Spectra Energy’s existing raw gas gathering system in the rapidly developing Montney/ Doig/Cadomin plays in northeastern British Columbia, has been successfully placed into service. The 20-inch raw gas pipeline includes pipeline segments south and north of an existing 12-inch line.

“The South Peace Pipeline project represents an important part of Spectra Energy’s significant expansion activities designed to meet the needs and timing of area producers and downstream customers,” says Duane

Rae, VP of field services for Spectra Energy Transmission West. “This pipeline, which has a capacity in excess of 220 million cubic feet per day, provides Montney producers in the emerging South Peace region with access to our vast Fort St. John area infrastructure, including our McMahon gas processing plant.”

Over the past two years, Spectra also completed a turnaround of its processing facilities at the plant, which is now capable of operating at its full design capacity of 740 million cubic feet per day, Rae says.

Photo: Spectra Energy

Spectra South Peace Pipeline expansion comes on stream

McMahon can now process 740 MMcf/d.

Exxon, Imperial boost Horn River acreage at B.C. land sale British Columbia’s land sale for November brought just under $20 million into government coffers at $1,130 per hectare, which included a successful $6.5-million bid for a drilling licence in the Horn River Basin. That licence was scooped up jointly by ExxonMobil Canada Energy and Imperial Oil Limited. The companies picked up 1,597 hectares at an average price of $4,066 per hectare at 94-O-2, north of Fort Nelson.

28

January 2010 • OIL & GAS INQUIRER

“Imperial Oil and ExxonMobil did acquire on a 50-50 basis additional exploration acreage in the Horn River Basin,” said Laura Bishop, a company spokeswoman. “[It’s] close to the middle of what we currently own there, so this acquisition of the additional acreage is a logical follow-up to what we currently have. This brings our…acreage acquired by the companies since 2007 in the Horn River area to 309,000 acres.”

Five leases in the Montney play located at 82-19W6 went for just under $6 million with per-hectare average ranging from $1,574 to $8,662. The land sale brought the province’s year-to-date total bonus revenue to $720.6 million, thanks mostly to two large sales. It’s still off from $2.6 billion the province had collected to the same point last year. Per-hectare averages have also fallen to $2,110 from $3,692 last year.

British Columbia

CCS Corporation and Secure Energy Services have filed proposals to build secure landfills near Dawson Creek, betting on growing volumes of drilling waste from the Montney and Horn River gas plays. “We are in the heart of the new up-and-coming Montney gas play in B.C.,” says Todd Sauve, development manager for landfill services with Calgary-based CCS. “It ’s going to be a fairly significant play in B.C., and we wanted to be there for the customers,” Sauve adds.

Secure landfills are fenced, lined facilities designed to accept wastes, such as contaminated soil, that are banned from municipal landfills. CCS currently operates two secure landfills in British Columbia. Some operators also haul waste to approved facilities in Alberta.

CCS has filed a proposal to build a 65-hectare landfill 15 kilometres west of Dawson Creek, a hub for EnCana Corp. and other producers. CCS’s facility would have an expected life span of 25 to 40 years, with the first stage of the project estimated to cost $2 million.

Secure Energy Services, based in Calgary, has filed a proposal for a 34-hectare, $7-million landfill five kilometres south of Tupper, just 1.5 kilometres west of the Alberta-B.C. boundary. “We’ve been approached by a number of producers in B.C.” says Corey Higham, Secure Energy’s business development manager. The company currently has no operations in British Columbia.

The site for the facility is near the crest of a hill and slopes northward to Swan Lake, about five kilometres away.

In submissions to the Environmental Assessment Office, area residents have raised concerns about the landfill’s potential impact on water, air quality, and property values.

The B.C. Oil and Gas Commission highlighted the issue of proper garbage disposal earlier this year when it sent out a bulletin to oil and gas operators after being alerted that contaminated truck liners were being dumped in municipal landfills.

Top Fill Tank Adaptor VENT LINE - CAN BE EITHER FLEXIBLE OR RIGID - CAN BE ROUTED TO VIRTUALLY ANY LOCATION MPI’S “TOP FILL” TANK ADAPTOR INNER TANK OUTER TANK

SIGHT GLASS - VIRTUALLY NO LAG IN LEVEL INDICATION HOLES IN STINGER TO ALLOW DRAINING OF FILL LINE BY REVERSING THE PUMP & ELIMINATING SYPHONING OF TANK FILL STINGER

FILL LINE - CAN BE EITHER FLEXIBLE OR RIGID - CAN BE ROUTED TO VIRTUALLY ANY LOCATION

SHUT-OFF VALVE

Marmit Plastics Inc. has a safe method for filling tanks in the oil and gas industry. Our TOP FILL TANK ADAPTOR has revolutionized the task of delivering chemical products into plastic and steel tanks. The design features our patent pending design that includes an inlet and vent all in one fitting. The fitting presents an important improvement when considering the safe filling of methanol or inhibitor into tanks. Attach a fill line and a valve to the fitting that is accessed from ground level and the operator has a safe method for filling tanks. A stinger attached at the bottom of the fitting eliminates splash filling, while apertures located near the top of the stinger allow the operator to reverse the fluid pump without disconnecting any fittings. The tank is consistently filled to the same level every time. Retro fit many different styles of tank to achieve the industry’s highest level of safety or order the complete tank, tank stand and TOP FILL TANK ADAPTOR direct from MPI

www.marmitplastics.com

100% Canadian

888-868-2658

Box 366, Grande Prairie, AB, Canada Phone: 780-532-0366 Fax: 780-532-0540

PRESSURE VESSELS BY

CCS and Secure Energy file proposals to build oilfield landfills

Over 11,000 Vessels Built to Date • Separators • Dehydrators • Treaters • FWKOs • Scrubbers • Swab Vessels • Line Heaters • Steam Splitters • Coil Rolling • Drip Pots • External Level Cages • Filter Vessels

5715-56 Avenue, Edmonton, Alberta p: 780.434.0222 | f: 780.436.1467 | e: info@penfabco.com

www.penfabco.com

OIL & GAS INQUIRER • January 2010

29

2010

PSAC Spring Conference April 13 & 14, 2010 Capri Hotel & Convention Centre Red Deer, Alberta

How much do you want to learn?

With the Transportation and Human Resources streams now scheduled on separate days, you can decide how much you want to learn. Choose one day or both with PSAC’s new streamlined format.

You save either way, with single-day pricing or a combined conference cost specially priced for 2010.

Day One – April 13, 2010

Day Two – April 14, 2010

Transportation

Human Resources

Topics to be covered include:

Topics to be covered include:

• Risk Management

• Conducting Performance Reviews

• Fatigue Management

• Using Low-cost Intangible Rewards

• Sling & Cable Testing

• Engaging Employees

• IRP #23 – Lease Lighting

• Stress & Conflict Management

• Hours of Service

• Managing Substance Abuse • Rebuilding the Workforce

Sponsorship opportunities available!

The PSAC Spring Conference is a great opportunity to introduce your company’s products and services to your customers, in targeted, one-on-one conversations. Contact PSAC today for sponsorship information.

Media Sponsor:

Sponsors:

To register, sponsor or request more information, contact the Petroleum Services Association of Canada: Web: www.psac.ca Email: info@psac.ca Phone: 403-264-4195 www.psac.ca

Northwestern Alberta/Foothills

Photo: Orleans Energy Ltd.

Orleans completes two Montney gas wells on western Kaybob lands

Orleans Energy Ltd. has developed a large resource-style drilling inventory on its Kaybob lands.

Orleans Energy Ltd. has drilled and completed two (1.75 net working interest) horizontal Montney natural gas wells on its western Kaybob land block. The first well, a 100 per cent working interest well at 4-1560-19W5, was completed with multi-stage fracture technology as an 11-stage fracture stimulation with an aggregate 198 tons of proppant sand displaced along the 1,343metre horizontal leg.

The 4-15 well recently flowed liquidsrich gas over an 89-hour extended flow test period at a final gross raw test rate of 5.6 million cubic feet per day or 933 barrels of oil equivalent (boe) per day, with a flowing well head tubing pressure of 1,450 pounds per square inch. The well was brought on stream on Nov. 21, 2009, and is currently producing at a similar “flush” rate to its final flow test rate.

The second Kaybob well (75 per cent working interest) was completed and

stimulated with an 11-interval hydraulic fracture encompassing 209 total tons of proppant sand displaced along the 1,144metre horizontal leg. The well recently flowed gas over a 69-hour extended flow test period at a final gross raw test rate of approximately 5.5 million cubic feet per day, or 917 boe per day (687 boe per day net working interest), with a flowing wellhead tubing pressure of 1,420 pounds per square inch. The well is currently shut in for downhole pressure testing The company anticipated that this well would be tied in by mid-December.

These two Kaybob wells represent the initial successful application of horizontal drilling and multi-stage completion techniques on those respective sections of land, which Orleans said validates the repeatable, scalable nature of its Triassic Montney natural gas resource play at Kaybob.

The company has regulatory approval to drill up to five horizontal wells per section across 25 (22.5 net working interest) of its 28 gross sections of land in Kaybob, creating a drilling inventory of up to 100 horizontal locations. Since beginning horizontal drilling in October 2007, Orleans has drilled a total of 16 (14.1 net working interest) Montney horizontal wells at Kaybob, with a success rate of 94 per cent.

At Waskahigan, to the northwest of Kaybob in west-central Alberta, the company intended to commence field operations and spud a 100 per cent working interest Montney horizontal test (12-1763-23W5) on one of its 18 sections of contiguous land. The 12-17 well is programmed to be drilled with a total measured depth of 3,667 metres.

Orleans has used its technical and geological experience garnered with its Kaybob Montney development success to assist in identifying and growing its Montney-prospective land base in the Waskahigan area. Pending exploration success, the Waskahigan area is expected to complement and significantly expand Orleans’ large drilling inventory.

As a result of the flow-though share equity financing, which closed Nov. 12, the company increased its 2009 total capital expenditures budget to approximately $44 million. The revised capital program encompasses the drilling of a total of four (3.75 net) horizontal Montney wells at Kaybob and two horizontal wells involving its new Montney exploration prospect at Waskahigan.

Despite the previously disclosed disposition of Orleans’ non-core Medicine River property the company’s year-end 2009 exit production rate target is projected to remain unchanged at approximately 4,600 boe per day, assuming the second Kaybob well is brought on stream by year-end as planned.

— DAILY OIL BULLETIN

NORTHWESTERN ALBERTA/FOOTHILLS WELL ACTIVITY

NOV/08

NOV/09

WELL LICENCES

296

276

▼

NOV/08

NOV/09

WELLS SPUDDED

220

213

▼

NOV/08

NOV/09

WELLS DRILLED

224

169

▼

Source: Daily Oil Bulletin

OIL & GAS INQUIRER • January 2010

31

now is the time A little slow now?

It’s not going to last!

Rig & sub design, modification, inspection, certification or equipment issues?

You won’t have the time when it gets busy again, so contact us now!

780.483.3436 2nd Flr, 17510-102 Avenue, Edmonton, AB T5S 1K2 email: sales@arneng.ab.ca www.arneng.ab.ca

YEAR ROUND INDUSTRIAL & COMMERCIAL INSTALLATION • Chain Link Fence and Gates • Electric Gate Operators & Access Controls • Pre-Manufactured/Portable Site Enclosures • Industry Leading Health, Safety & Environmental Program

We also offer Safety Fence, T-Posts, Ornamental Fence & Vinyl Fence EDMONTON

(780)447-1919

12816 - 156 St. Fax: (780) 447-2512 edmonton@phoenixfence.ca

1-800-661-9847

CALGARY

(403)259-5155

6204 - 2nd St. S.E. Fax: (403) 259-2262 calgary@phoenixfence.ca

1-888-220-2525

COMMUNICATION MADE SIMPLE Glentel’s wireless SCADA solutions offer reliable high-speed connectivity for voice, data and video communications, enabling a broad spectrum of fixed and mobile network applications. Using the latest terrestrial and satellite technology available, we are able to provide the widest range of coverage for SCADA applications.

Beyond SCADA, Glentel offers turnkey wireless communications solutions that are customized to our clients’ needs. We also offer in-house installation, maintenance and repairs for all our solutions.

Contact Glentel today. www.glentelbusiness.com

S A L E S / R EN TA L S / SER V I C E / 1. 8 0 0.G L EN T E L 32

January 2010 • OIL & GAS INQUIRER

Northeastern Alberta

Suncor restarts third and fourth stages of its Firebag SAGD project

Photo: Suncor Energy Inc.

by Lynda Harrison

Suncor CEO Rick George says its Firebag launch plan "officially restarts growth in the oilsands."

Fuelled with a capital budget of $5.5 billion for 2010, Suncor Energy Inc. is going ahead with Voyageur’s Firebag Stages 3 and 4 in situ project expansions this year, but its proposed Voyageur upgrader and Fort Hills mining project will remain on the shelf. “This actually officially restarts the growth in oilsands,” said Rick George, Suncor’s president and CEO, during a conference call on Nov. 13.

The planned investment level for 2010 is below the budgets set by Suncor and Petro-Canada (before the merger) for 2009. The two companies had originally announced plans to spend over $9 billion in 2009, but that was reduced to $6.4 billion due to low commodity prices. George estimated Suncor and Petro-Canada would have spent a total of $8 billion in 2010 if they had remained separate.

The majority of growth spending in 2010 will be directed toward the Firebag Stage 3,

which was about half complete before being deferred in early 2009. Suncor now expects the project to begin production in the second quarter of 2011, with volumes ramping up toward design capacity of approximately 68,000 barrels per day of bitumen.

Spending on Firebag Stage 4, also with design capacity of 68,000 barrels per day, will support a target of first bitumen production in the fourth quarter of 2012.

Suncor expects oilsands growth to generate a 15 per cent return with a West Texas Intermediate crude oil price of US$70, and the company plans to continue spending about $6 billion over the next two years, said George. It expects to exit 2010 with oilsands production of 350,000 barrels of oil per day and that oilsands output will increase at a rate of 10 to 12 per cent per year up to 2020.

Captial spending plans for 2010 include growth capital of $900 million

on Firebag stage three, $50 million on Firebag Stage 4, $100 million on the Millennium naphtha unit, $390 million on international and East Coast Canada, and $60 million on other, totalling $1.5 billion.

Sustaining capital spending will consist of about $750 million on oilsands base maintenance, $450 million on in situ maintenance (Firebag and McKay River), $200 million on its 12 per cent interest in Syncrude Canada Ltd., $360 million on a 40-day turnaround at Upgrader 2, $450 million on tailings reduction operations, $750 million on International and East Coast Canada, $250 million on natural gas, $670 million on refining and marketing, and $170 million on other for a total of just over $4 billion.

George estimated the natural gas spending is far below what the separate companies would have spent.

“While we’ve seen some improvement in crude oil prices and the overall economy, we believe that a conservative capital strategy remains the best approach for Suncor,” George stated. “We’re looking at a level of capital investment that is supportable entirely from free cash flow at midcycle crude oil prices.”

That spending includes about $550 million to sustain production on the East Coast and North Sea and a little more than $300 million on growth in Syria and Libya, all of which were acquired in the Petro-Canada deal.

Near-term differentials do not support the Voyageur upgrader, but George expects it will be “a great option for us down the road at some point,” he said.

Suncor has spent $3 billion to date on the Voyageur upgrader. George told analysts it can be shelved for two or three years. It would consider taking on a partner for the project, which would take two and a half years to construct.

— DAILY OIL BULLETIN

NORTHEASTERN ALBERTA WELL ACTIVITY

NOV/08

NOV/09

WELL LICENCES

95

114

▲

NOV/08

NOV/09

WELLS SPUDDED

78

85

▲

NOV/08

NOV/09

WELLS DRILLED

69

85

▲

Source: Daily Oil Bulletin

OIL & GAS INQUIRER • January 2010

33

Call Toll-Free 1-877-Pembina (736-2462)

Invalco Manufacturer of: • Water storage tanks up to 12,000 imp. gal.

• Water hauling tanks • Chemical tanks • Secondary containment basins • 300, 500 & 1,000 gallon double wall tanks

®

7520 Yellowhead Trail, Edmonton, Alberta, T5B 1G3 Ph: (780) 474-7440 Fax: (780) 474-3454 Toll Free: 1-888-474-7441

Now Open in Grande Prairie www.norwescocanada.com Email: info@norwescocanada.com

34

January 2010 • OIL & GAS INQUIRER

www.pem-controls.com

Central Alberta

Alberta government pledges $495M for CO2 pipeline project

Photo: Enhance Energy Inc.

by Paul Wells

Energy Minister Mel Knight (left) and Premier Ed Stelmach with Enhance Energy president Susan Cole.

The Alberta government moved its carbon capture and storage (CCS) game plan forward in awarding $495 million in funding for the $600-million Alberta Carbon Trunk Line (ACTL). Beyond its capital budget, the pipeline’s operating cost is estimated at about $200 million over 10 years.

On Nov. 24, the province announced that it has signed a letter of intent with En ha nce Energ y Inc. T he pipeline operator is partnering with North West Upgrading Inc. to build the 240-kilometre trunk line. CO2 will be piped from North West’s proposed new upgrader northeast of Edmonton to depleted oilfields near Clive, in central Alberta, where it will be used for enhanced oil recovery (EOR).

The province’s portion of the funding, which will be paid over 15 years, is coming from its $2-billion carbon capture technology fund. The federal government is contributing $63 million towards the pipeline.

The full project also includes an additional $350 million in capital costs for CO2 capture by North West.

“Upon completion, it will be the first pipeline in the province that will capture large volumes of carbon dioxide from

Construction of the pipeline is scheduled to start in 2011 and be in operation in 2012, initially transporting 5,100 tonnes per day of compressed CO2. The pipeline is expected to take 15 to 20 years to reach full capacity and at its peak will be capable of carrying up to 40,000 tonnes of CO2 per day.

The initial supplies of CO2 will come from the Agrium Redwater fertilizer complex and, once it’s built, from the North West Upgrader in the Industrial Heartland near Fort Saskatchewan. A number of other refineries, upgraders, and chemical plants in the area could eventually access the pipeline, said Stelmach.

“This new pipeline will significantly advance Alberta’s capacity for future carbon capture and storage projects,” the premier said. “The Alberta Carbon Trunk Line will be the backbone of CO2 transportation for Alberta. It will be built with long-term capacity in mind, so as more companies capture CO2, they will be able connect to the line.”

In the future, Enhance foresees lateral lines running off the trunk line to other fields, and CO2 collection lines extended to both Fort McMurray and the coalfired power plants near Lake Wabamun.

Stelmach noted that the oil produced via

" ...it will be the first pipeline in the province that will capture large volumes of carbon dioxide from one area and transport it to another."

- Ed Stelmach, Premier, Alberta

one area and transport it to another,” Alberta Premier Ed Stelmach said in a conference call. “Once complete and operating at full capacity, the Alberta Carbon Trunk Line project will be able to store 14.6 million tonnes of CO2 per year.

That’s equivalent to removing approximately 2.6 million cars from the road.

And it will make this the largest CCS project in the world.”

EOR will be subject to royalties and taxes to both the province and freehold landowners over the life of the project.

“It’s good news for the economy. Every barrel recovered using CCS means more revenues for Alberta, and that means more money in the provincial coffers for things like health care, education, and other programs and services,” Stelmach said.

Enhance president Susan Cole added:

NOV/08

NOV/09

NOV/08

NOV/09

WELLS SPUDDED

320

255

WELLS DRILLED

332

251

CENTRAL ALBERTA WELL ACTIVITY

NOV/08

NOV/09

WELL LICENCES

368

229

▼

▼

▼

Source: Daily Oil Bulletin

OIL & GAS INQUIRER • January 2010

35

Central Alberta

Your #1 Source for Hard to Find Electrical Material

• Circuit Breakers • Motor Control • Industrial Lighting • Explosion Proof

• Transformers • Electrical Supplies • Contactors & Relays • Wire & Cable

5838-87A Street Edmonton AB T6E 5Z1

Ph: (780) 466-8078

Fax: (780) 468-1181 1-800-661-8892

Web: www.falvo.com Email: sales@falvo.com

WANTED

“Alberta will lead the world in CO2 management. The system will access one billion barrels of new oil production that will in turn generate $15 billion of royalties to the province.”

Cole estimated that the price tag to build the pipeline would be about $600 million, with another $200 million for operating costs. She said the project is currently under regulatory review and unopposed by all 400 landowners along the proposed route.

Just as the Alberta Gas Trunk Line built in the 1950s formed the backbone for a network of a natural gas collection lines that laid the foundation of a large and profitable gas export and petrochemical industry, the carbon trunk line is expected to perform a similar role for CCS in Alberta, said Cole.

“It’s a CO2 distribution system that can collect CO2 and move it to mature oilfields and reservoirs that have the potential for

The combined $558 million in provincial and federal funding for the project means a vast chunk of the anticipated $600 million in construction costs will be covered and that the province’s contribution as a percentage of overall project costs exceeds that of two other CCS projects that were previously awarded funding under the provincial CCS program.

Energy Minister Mel Knight admitted as much but said the backbone pipeline is essential if Alberta is to move forward and meet its goal of reducing greenhouse gas emissions by 200 megatonnes by 2050, of which 70 per cent of the reductions are expected to come from CCS. “This was not out of scope with the rest of things that we are doing. If you look at the federal involvement, we have on this one a bit higher content from the

“ We think that what we’re on the verge of here is absolute global scale."

- Mel Knight, Energy Minister, Alberta

ELECTRICAL MATERIAL

Quantitative Fit Testing Using TSI PortaCount® Respirator Fit Tester

AdvAnTAges: Fit Factor | greater than 10,000 Cost savings | saves costs as testing will be done at your place of work

easy | we will provide you with a list of requirements for the testing and give you instructions on how to organize your staff for the day of the fit test secure | liability insurance and WCB documented Certified | fully trained staff C.s.A. | specifically recognizes the PortaCount®

serving AlberTA

Toll Free 1.877.255.0269 info@fitrightinc.com | www.fitrightinc.com

36

January 2010 • OIL & GAS INQUIRER

more oil recovery through CO2 flooding,” she said. “At full capacity, this is a 14.6 million tonnes of CO2 per year. There are only four other projects in the world that move anything greater than one million tonnes per year.”

The pipeline will advance a joint Fairborne Energy Ltd. and Enhance CO2 flood project at Fairborne’s Clive field in central Alberta. Enhance will operate the pipeline and capture facilities. Fairborne will operate the EOR project at Clive, an oilfield that was discovered in the early 1950s and which has produced 70 million barrels of light oil to date from an estimated 166 million barrels of discovered petroleum initially in place.

“The project is being designed to recover additional light oil from Nisku and Leduc reservoirs through CO2 injection and extend the producing life of the Clive field by up to another 20 years,” Fairborne said in a press release. “Internally evaluated best estimate of Fairborne’s working interest contingent resources associated with the CO2 flood is 24 million barrels of oil. Subject to the terms and conditions of a previously announced agreement with Enhance that includes payment of earning capital, Fairborne will retain 60 per cent of its current working interest and contingent resources.”

point of view of provincial money, but it is reasonable,” Knight said. “We think that what we’re on the verge of here is absolute global scale. When these projects open… this will put Alberta in the forefront with respect to this [CCS] technology.”

In early 2009, the Canadian and Alberta governments announced their intent to award $865 million in funding for a carbon capture project at a Royal Dutch Shell PLC refinery near Edmonton.

The Shell Quest project will capture and store 1.2 million tonnes of CO2 annually beginning in 2015 from Shell’s Scotford upgrader and expansion, near Fort Saskatchewan.

The governments also pledged $774 million in funding for a similar system at a power-generation plant owned by TransAlta Corporation when a letter of intent was signed with TransAlta and its partners for Project Pioneer at the Keephills 3 plant west of Edmonton. The project will use leading-edge technology to capture CO2 , which will be used for EOR in nearby conventional oifields, or stored almost three kilometres underground. The project is expected to capture one million tonnes of CO2 annually beginning in 2015.

— DAILY OIL BULLETIN

Central Alberta

Imperial signs oilsands service agreement with Keyera Keyera Facilities Income Fund has entered into a long-term agreement with Imperial Oil Resources Ventures Limited to provide diluent transportation, storage, and rail offload services in the Edmonton/Fort Saskatchewan area for Imperial’s Kearl oilsands project.

This agreement will reportedly provide Keyera with secure, long-term, feefor-service revenues, beginning in late 2012, as well as the potential to generate significant incremental new business opportunities. Imperial will pay a perbarrel fee for the rail offload service.

Under the terms of the agreement, Keyera will transport diluent by pipeline from supply sources in the Edmonton area to a diluent delivery pipeline north of Fort Saskatchewan for delivery to the Kearl site near Fort McMurray. Keyera will also provide diluent storage and rail offload services at its fully owned Alberta Diluent Terminal and the Edmonton Terminal, as well as at the Fort Saskatchewan Fractionation and Storage Facility it operates.

Upon start-up of the 110,000 barrel per day first phase of the Kearl project, Keyera anticipates that operating cash flow from the agreement will initially be in the range of $10 million to $11 million annually,

growing to approximately $16 million as the second and third phases of the Kearl project come on stream.

Under the agreement, Imperial will be provided with transport capacity within existing and new-build pipeline infrastructure to match its expected diluent requirements for its Kearl development.

The transportation portion of the agreement has an initial term of 25 years.

Keyera plans to invest $58 million to construct an 18-kilometre extension to the Fort Saskatchewan pipeline system north from the Fort Saskatchewan Fractionation and Storage Facility, a new pump station at the Edmonton Terminal, and a short pipeline connection to increase diluent supply into Keyera’s Edmonton Terminal.

Imperial will pay an annual capital payment based on a portion of the new capital investment relating to its capacity commitment. In addition, Imperial will pay a per-barrel tariff for volumes it ships on the existing Fort Saskatchewan pipeline system.

The capacity of the new facilities will exceed Imperial’s Kearl requirements and Keyera can use the remaining capacity to provide similar services to other oilsands customers.

Lo Tech® Manufacturing Inc. 7719 - 69 St, Edmonton, Alberta T6B 1V4

Drip pots Typical Specs: ❖ CRN - AB, BC, SASK ❖ 2” x 8”, 12”, 16” ❖ 2500 lbs Standard Service ❖ 1440 lbs Sour Service

Office: (780) 440-5064 Fax: (780) 440-5172 www.lotech.ca

Exclusive Authorized Distributor

ISO 9001-2000 CERTIFIED

AJM urges Alberta gas royalty reforms AJM Petroleum Consultants warns that, without some decisive and proactive interventions to encourage natural gas production in Alberta, the potential for negative impact on the province’s economy is very real. Dave Russum, AJM’s VP of geoscience, points to specific conditions in Alberta—other than the current decline in the natural gas price—that may be accentuating Alberta’s drop in production.

“Reduced production during a time of low gas prices is understandable,” says Russum. “But there’s been a general downward trend for more than ten years, regardless of price and number of wells drilled. And in each of the last two years, Alberta has been shedding production at an alarming rate of greater than 1 Bcf [billion cubic feet] per day.

Current production is about 3.3 Bcf a

day, or 20 per cent below the peak production levels of the late 1990s.”

Even if natural gas prices do climb, Russum says Alberta producers would then be hit with higher royalties as determined by changes to Alberta’s Royalty Program. Furthermore, while unconventional gas is showing promise in other jurisdictions, the dispersed nature of Alberta’s unconventional gas deposits and difficulties with extraction make Alberta plays less attractive than those promoted in other parts of the world.

“Natural gas has been the strength of the Alberta economy for more than 30 years,” Russum says. We need to reassess natural gas royalties to ref lect the maturity of Alberta’s natural gas industry and the real costs and rewards of doing business here.”

BELZONA WESTERN LTD CALGARY, ALBERTA CANADA

PH: 403-225-0474 FAX: 403-278-8898 WEB SITE: www.belzona.ca E-MAIL: belzona1@telus.net

Belzona Polymeric Coatings combat erosion, corrosion and abrasion in high temperature immersed conditions.

Rebuild and line tanks, process vessels and plant equipment.

Contact us for advice on Belzona Know How Solutions and Procedures.

-180˚ C Immersion Temperatures -Safe VOC Free Formulations -Brushable or Sprayable -Resists Rapid Decompressions -Belzona 1111 – 1311 -1391 – 1521 – 1591 -Amine Tower – Strippers -Exchangers – Chemical Tanks -Flare Knock Out Drums -Oil – Gas Separators -Outstanding Cavitation Resistance -Pressure Resistant

OIL & GAS INQUIRER • January 2010

37

advertise today listings start at only $242 for a full year of exposure Est.

Est.

CeleBrating 1980

30 Est.

1980

1980

AGI Storage Tanks

years of

Est.

1980

Business

ONE OF CANADA’S LEADING MANUFACTURERS OF STORAGE TANKS

Above Ground Storage Tanks: Meet All Environmental Regulations Easy to Install & Move Affordable Built to Custom or Standard Specifications • We build ULC, UL, Flameshield, API-650, 620, 12F • 7–2,500 bbl • 2,273–200,000 L Horizontal Contained • 2,273–110,000 L Jacketed Underground • 2,273–120,000 L Vacuum Monitored • 1,250–5,000 L Rectangle • 5,000–200,000 L Single Wall Vertical

With over 12,000 listings in 1,900 categories,

AGI’s innovative design, custom manufacturing process and comprehensive service combine to make ASTs one of the most cost-effective, efficient means of storage available today.

CALL US TO DISCUSS YOUR NEEDS:

we more than double the nearest competition in qualified oil and gas listings, making us the most comprehensive oilfield directory in Canada.

1-800-746-6646

Cossd.CoM the Buyer’s guide for the Canadian oil & gas industry 1-888-563-2946 ext:144

2134-09 DLR_OilGasInq.qxd:2134-09

12/8/09

3:51 PM

401 Hwy #4, PO Box 879, Biggar, SK S0K 0M0 Tel: (306) 948-5262 Fax: (306) 948-5263 Email: info@envirotank.com Website: www.envirotank.com Page 1

INNOVATIVE ALL-SEASON BUILDING SOLUTIONS Offering the widest building model lineup in the industry and providing a number of different color, size and model combinations. Cover-All Building Systems has the solution for you.

“Upon my retirement, the Cover-All building can be easily sold and moved to another location.

Metal buildings don’t provide that type of flexibility and are expensive to move.”

- Ron Knutson, Garrick, Saskatchewan

Building strength and confidence through experience.

COVER-ALL AND TITAN ARE REGISTERED TRADEMARKS OF COVER-ALL BUILDING SYSTEMS, INC./ GATORSHIELD TUBING SUPPLIED BY ALLIED TUBE & CONDUIT

38

7.0625 x 4.625 Publication: Oil & Gas Inquirey-Jan1/2010 • 2134-09/4c/150/mc

January 2010 • OIL & GAS INQUIRER

C ove r-A l l N o r t h Grande Prairie, Albe r t a

1.888.868.2658 www.coverall.net

Southern Alberta

Photo: Joey Podlubny

Ensign says over-capacity continues to impede profitability

Ensign expects its service rig fleet to achieve more than 40 per cent utlization this winter.

Ensign Energy Services is forecasting peak Canadian drilling rig utilization of between 50 and 60 per cent this winter, but the drilling contractor doesn’t expect much of an improvement in margins.

“Competitors with interest payments to make are still bidding as price takers into the winter market,” Bob Geddes, president and COO, said in a conference call.

The over-capacity is generally more pronounced in Canada than in the United States, where Ensign currently operates 80 drilling rigs and 18 service rigs, according to Geddes. In 1980, there were 5,000 drilling rigs in the United States, but today there are 2,000, he said. In contrast, “there were 500 rigs in Canada and now there are 880 and we are drilling wells two to three times faster.”

Ensign’s 150 Canadian rigs account for just over 40 per cent of its total fleet of 350 rigs. The Calgary-based company

reported net earnings of $16.9 million for the third quarter of 2009, down 77 per cent from the same period in 2008. “The fundamental challenge still plaguing the Western Canadian Sedimentary Basin is too many rigs,” said Geddes.

There currently are 880 drilling rigs in Canada capable of drilling close to 40,000 wellbores, said the Ensign COO. “With the peak in the 23,000 range a couple of years back and with the 2009 forecast at 9,000 wells, there is an overcapacity issue that must be rationalized for profitability to come back to the sector,” he cautioned.

Geddes said there appears to be a reasonable market for higher technology drilling rigs geared towards unconventional plays. “The challenge is on the equity between what they are willing to pay and what you are willing to build it for,” he said. “Some operators get that….

Some won’t pay that differential, so that slows down the market a little bit.”

Ensign operates a fleet of about 100 service rigs. Its customer base in heavy oil plays are keeping those units busy, but pricing has reportedly come under pressure. About 40 per cent of the Ensign fleet is currently in operation with some upturn expected this winter.

In the third quarter of 2009, the company purchased 25 relatively new wireline units in Canada at “very attractive prices,” increasing the capacity of its fleet by about one-third, said Geddes. Ensign thinks it likely has the lowest cost operation of any its competitors now, as it has centralized many of its administrative duties.

Although Ensign operates a welltesting business in both Canada and the United States, most of the business now is coming out of the U.S. Rockies and most recently the Marcellus shale in the eastern United States. The company sees growing opportunity for the 30 test units in the United States on top of the 50 test units it runs in Canada. Although margins are compressed, Geddes said, “we see no further pricing degradation at this time and somewhat a levelling off of business there.”

In the United States, Ensign currently operates 80 drilling and 18 service rigs in the Rockies and California with utilization in the 50 per cent range, and “we appear to have the worst behind us,” Geddes said. In the oil-focused California market, activity has remained relatively steady, although pricing came under pressure over the summer.

The company added three new proprietary automated drilling rigs on longterm contracts in the U.S. market in the third quarter. “Operators are willing to pay for the technology, which brings net well costs down,” said Geddes.

— DAILY OIL BULLETIN

SOUTHERN ALBERTA WELL ACTIVITY

NOV/08

NOV/09

WELL LICENCES

459

395

▼

NOV/08

NOV/09

WELLS SPUDDED

599

239

▼

NOV/08

NOV/09

WELLS DRILLED

591

233

▼

Source: Daily Oil Bulletin

OIL & GAS INQUIRER • January 2010

39

Southern Alberta

CIBC analyst expects better industry conditions in 2010 doing the last six months. Since the beginning of July, we’ve seen Canadian-based E&P companies raise over $8 billion in debt and equity capital,” he said.

Fetterly said that in the near term, the majority of that capital will be allocated to debt reduction, debt retirement, and merger and acquisition opportunities, but “ultimately, we believe the E&P community is positioning to increase spending in 2010.

“Fundamentally, what we see in the natural gas markets today supports a gas price of an average of about $6 [per thousand cubic feet at AECO] and a price that moves from the fives to the upper sixes over the course of 2010,” he said.

Based on CIBC’s $6 per thousand cubic feet AECO natural gas forecast for 2010 and an average West Texas Intermediate crude price of $80 per barrel, Fetterly said CIBC is projecting capital spending to increase by about $10 billion in 2010 to $38.6 billion from estimated full-year 2009 spending of about $28.1 billion.

CIBC is also forecasting the 2010 average active rig count will be 294 in a fleet size of 831 for an average utilization rate of 35.5 per cent, compared to an estimated

average active drilling rig count of 204 in a fleet of 826 and an average utilization rate of 23.9 per cent in 2009. Service rig activity will see a 43.9 per cent utilization rate from a fleet of 486 rigs in 2010, compared to 38.6 per cent and 428 respectively in 2009.

— DAILY OIL BULLETIN Photo: Brian Zinchuk, Pipeline News

Spea k i ng at a Pet roleu m Ser v ices Association of Canada (PSAC) event on Nov. 5, 2009, an oilfield services analyst with CIBC World Markets Inc. said recent increases in drilling activity in the Western Canadian Sedimentary Basin should continue. Jeff Fetterly told the PSAC audience that the industry downturn may have bottomed out and a rebound is in the offing, albeit at a modest pace.

“Ultimately, we believe the rig count improves from an average of less than 200 in the third quarter [of 2009] to about 250 in the fourth quarter to a little bit north of 300 in the [first quarter of 2010],” the analyst predicted. “It’s certainly very modest expectations from a historical context, but we believe the industry is starting to show some signs of momentum coming out of this downturn.”

Fetterly noted that with debt and equity markets beginning to open up again, exploration and production companies are gearing up to increase capital spending in 2010, which is obviously positive news for the service sector. “The truly encouraging sign is what the E&P [exploration and production] community has been

CIBC estimates average drilling rig utilization rate at 35.5 per cent for 2010.

LE B I X E E FL B O T l l a a S t t i s o Y n n i A . .

P . r I T e , quick s e c i r er p w o L

40

January 2010 • OIL & GAS INQUIRER

.

Southern Alberta

Cenovus plans to sell $1B worth of non-core assets Cenovus Energy Inc. hopes to sell about $1 billion worth of natural gas and noncore crude assets in the next two years, including $500 million in 2010, a conference call heard on Nov. 12, 2009. “We are going to be targeting about $1 billion in divestiture proceeds over the next two years,” said Brian Ferguson, designated president of Cenovus.

Ferguson hopes that half of that amount will be sold during 2010. Cenovus is the spinoff of EnCana’s integrated oil business, including thermal oil and its 50 per cent upgrading/refining joint venture in the United States. The EnCana split was completed on Nov. 30.

On the spending side, Ferguson said Cenovus has identified unspecified shortterm oil opportunities in the range of $50 million to $150 million. He said that the capital allocation will depend on free cash flow, which will significantly increase after the massive Wood River refinery expansion in Illinois is completed.

“We intend to emphasize the oil opportunities inside Cenovus’s portfolio, and expect over the next three to five years [to be] two-thirds to three-quarters

oil-weighted,” Ferguson said. Cenovus will continue to be an oil-focused company, but Ferguson said it will retain enough of EnCana’s shallow gas assets to provide a price hedge for gas consumed at Cenovus’s thermal oil projects and refineries.

Ferguson expects gas will always be a secondary business for Cenovus. “I certainly do not think of our growth opportunities other than those focused on our oil.” But he added that the shallow gas assets generate a tremendous amount of free cash flow.

Cenovus will be a major gas consumer as well as a producer. At current bitumen production rates, the company’s refineries and steam assisted gravity drainage (SAGD) operations at Foster Creek/Christina Lake now consume about 100 million cubic feet per day of gas. As SAGD production expands, gas consumption is expected to grow to the 200 million to 250 million cubic feet per day range, Ferguson said.

Before royalties are deducted, Foster Creek SAGD production is currently close to 100,000 barrels per day, while Christina Lake is around 15,000 barrels per day, said EnCana executive VP John Brannan. The

company expects the two projects to operate at about 93 per cent of capacity in 2010.

“Our capacity at Foster Creek will be 120,000 barrels [per day], but we won’t reach that capacity until we have some patterns on blowdown,” Brannan said.

He expects Foster Creek will enter 2010 with total productive capacity of roughly 95,000 to 100,000 barrels per day and to exit the year at about 106,000 to 110,000 barrels per day.

Under Alberta’s royalty regime for projects in the province’s designated oilsands regions, Foster Creek is paying a favourable rate because capital costs haven’t yet been recouped.

“Currently, before payout, at $65 oil, we’re paying about 2.2 per cent royalties on a gross basis,” Brannan said. (Half of Foster Creek/Christina Lake production is net to EnCana/Cenovus. Downstream partner ConocoPhillips owns the other half.)

After payout—and at $65 oil—the royalty rate would skyrocket to 27.3 per cent on a net basis, Ferguson said. At current production rates and oil prices, Foster Creek could reach project payout by June 1.

— DAILY OIL BULLETIN

Toll Free:

888-FLX-PIPE (888-359-7473) www.flexpipesystems.com

Flexpipe MAKES Cents.

TM

OIL & GAS INQUIRER • January 2010

41

INNOVATIVE SOIL STABILIZATION SOLUTIONS for YEAR ROUND MUD FREE ACCESS

CARES Ltd. call 403-262-2737 or visit www.caresltd.ca for project details

RESOURCES EXPO 2010 Making the connection…

June 3 - 5, 2010 OIL & GAS

FORESTRY PROFESSIONALS & ENGINEERS

ENERGY/FUEL

Prince George, BC Canada www.BCResourcesExpo.com

RESEARCH & APPLIED SCIENCE

CLEAN ENERGY

Phone: 250-563-8833 Toll free: 1-877-562-5668 Early Bird pricing for booth space available until January 31, 2010

CARBON MARKET

HUMAN RESOURCES

MINING

42

January 2010 • OIL & GAS INQUIRER

CONSTRUCTION

Don’t delay— book now!!

Saskatchewan

Photo: Brian Zinchuk, Pipeline News

Crescent Point continues its acquisition binge with TriAxon deal

Crescent Point will apply its Saskatchewan Bakken expertise to the emerging Viking light oil play.

Crescent Point Energy Corp., which had already spent close to $1 billion on acquisitions in 2009, announced on Nov. 9 a further $250-million acquisition. The Calgary-based producer is buying TriAxon Resources Ltd., which holds oil-prone assets in Saskatchewan’s Viking and Bakken formations as well as the Pembina Cardium field in central Alberta.

Crescent Point will acquire all of the issued and outstanding shares of TriAxon for consideration of 0.18 of a Crescent Point share for each TriAxon share plus the assumption of approximately $17.3 million of TriAxon net debt.

TriAxon’s assets include more than 148 net sections of undeveloped land, including 63 net sections in the Viking light oil resource play in the Plato area of westcentral Saskatchewan. TriAxon also operates the Flat Lake Bakken play in which Crescent Point currently holds a working interest.

TriAxon is currently producing approximately 1,400 barrels of oil equivalent (boe) per day, of which approximately 130 boe per day and 170 boe per day are from the Viking resource play and the Flat Lake Bakken play, respectively, and 1,100 boe a day is from Alberta, which includes 560 boe per day from the Pembina Cardium play.

In the second half of 2009, TriAxon successfully drilled two step-out exploration horizontal wells, one currently on production and one awaiting completion, which significantly increase Crescent Point’s estimates of the size of the Flat Lake Bakken pool.

Crescent Point believes that this drilling success, combined with TriAxon’s large undeveloped Viking land base, provides the potential for significant production and reserves growth from these two plays.

“Over the past few years, TriAxon has aggressively pursued high-quality plays with significant recovery factor upside,” said Scott

Saxberg, president and CEO of Crescent Point. “They have established leading positions in the Viking and Flat Lake Bakken plays in Saskatchewan. These assets complement Crescent Point’s existing Bakken assets very well and provide us with the opportunity to lever our tight oil expertise into a large land base in the emerging Viking tight oil play.”

“Crescent Point shares our strategy of balanced growth through the combination of technology and large resource in place assets,” said Jeff Saponja, president and CEO of TriAxon. “ The boards of directors of Crescent Point and TriAxon both unanimously approved the arrangement.”

The acquisition will bring net tax pools of $99 million to Crescent Point. Reserves being acquired are estimated at 12.4 million boe, proved-plus-probable, and 7.8 million proved, according to a Sproule Associates Limited evaluation as of June 30, 2009.

Excluding undeveloped land value of $49 million, the estimated acquisition metrics are $142,643 per producing boe and $16.10 per boe of proved-plus-probable reserves ($25.60 per proved boe).

Acquisitions and steady drilling in the Bakken and Lower Shaunavon boosted Crescent Point’s production in the third quarter to 46,322 boe, including 40,854 barrels of crude and natural gas liquids. Third-quarter revenue plunged to $45.4 million from $497.8 million for the same period in 2008.

Crescent Point drilled 69 (48 net) oil wells and 2 (1 net) service wells in the third quarter of 2009, with a 100 per cent success rate. The figures include 46 (31 net) Bakken horizontal wells and 7 (4 net) Lower Shaunavon horizontal wells. The company also fracture stimulated 53 (43 net) Bakken horizontal wells.

In August, Crescent Point spent $225 million to buy the Saskatchewan assets of Provident Energy Trust plus another $665 million to acquire Wave Energy Ltd. — DAILY OIL BULLETIN

SASKATCHEWAN WELL ACTIVITY

NOV/08

NOV/09

WELL LICENCES

349

256

▲

NOV/08

NOV/09

WELLS SPUDDED

356

216

▲

NOV/08

NOV/09

WELLS DRILLED

390

230

▲

Source: Daily Oil Bulletin

OIL & GAS INQUIRER • January 2010

43

microbial solutions WWW.DPSMICROBIAL.COM

Custom solutions…

CONTROL & ELIMINATE PARAFFIN, IRON SULPHIDES AND ASPHALTENES IN OILFIELD PRODUCTION AND INJECTION WELLS .

THE ENVIRONMENTALLY FRIENDLY

From a custom manufacturer.

ALTERNATIVE.

Red Deer, AB

403.990.1582

Calgary, AB

403.686.7020

Frobisher, SK

306.486.2110

1-888-227-4923 Phone: (403) 227-7799 Fax: (403) 227 -7796 E -Mail: sales@bilton.ca W ebsite: www.bilton.ca

Eliminate Freeze Off! RTS Services is now the exclusive distributor for Trinity Injection Systems Methanol • Chemical • Soap The most efficient Chemical Injection System available

www.rtsservices.ca

Toll Free 1-888-511-0554

EFC_ADVERT_oil-and-gas-Inquirer4.indd 1

44

January 2010 • OIL & GAS INQUIRER

11/13/2009 9:36:31 AM

Northern Frontier

Greenland’s retreating ice fuels dreams of hidden resource wealth

Greenland has iron, zinc, and other mineable mineral deposits, but its richest potential is petroleum.

Greenland’s frozen world is thawing along the edges, potentially exposing riches.

The retreating ice could uncover potential oil and minerals, which, if successfully tapped, could dramatically change the fortunes of this semi-autonomous Danish territory of 57,000 people.

The U.S. Geological Survey estimates there are more than 18 billion barrels of oil and gas beneath the Arctic waters between Greenland and Canada, and 31 billion barrels off Greenland’s east coast.

“If we find those kind of quantities of oil and gas and the prices remain at current levels, then Greenland would be a very wealthy country, no doubt,” said Joern Skov Nielsen, the director of Greenland’s Bureau of Minerals and Petroleum.

Finding hydrocarbons would be crucial to help Greenlanders realize their long-held dream of cutting the annual 3.4 billion kroner (US$680 million) subsidy from former colonial power Denmark that currently rules out full independence. Under a self-rule agreement that took effect in 2008, Greenland will use any revenue from oil and minerals to slash its annual grant from Denmark,

which currently accounts for one-third of its economy.

Admittedly, it all still amounts to a big “if.” To date, no oil has been found in Greenlandic waters. Even if discoveries are made in new areas under exploration, the most optimistic estimates say commercial production is at least 10 to 15 years away because of the long time-scale involved when developing offshore oil and gas fields.

Even so, local decision makers are getting prepared. Last year, the Greenland parliament approved the creation of a sovereign wealth fund similar to that which Norway uses for its surplus oil income.

Any payoff from minerals would be smaller, but more immediate. The giant island is believed to be rich in base metals such as zinc and iron, precious stones like diamonds and rubies, and precious metals like gold and platinum. It’s also a potential hot spot for rare earth minerals used in electronic gadgets including cellphones and flat-screen TVs. The problem is 80 per cent of the island is covered by an ice sheet that is up to three kilometres thick, which means exploration is only possible in coastal

regions. Even there, conditions are far from ideal due to the long winter with frozen ports, 24-hour darkness, and temperatures regularly dropping below -30°C in the northern parts.

However, as the climate slowly warms, more of Greenland is opening up for exploration. Nielsen said the retreat of Greenland’s massive inland ice sheet has uncovered new deposits of iron on the west coast near the capital, Nuuk.

In northern Greenland, Britain’s Angel Mining PLC said a new deposit of zinc has been laid bare by a retreating glacier. The company plans to reopen an abandoned zinc mine in the area, and eventually link it to the new deposit, CEO Nick Hall said.

Climate change has been “helpful rather than unhelpful” to miners in Greenland, he said, but added that the main stimulus for the mining activity “is that the world is hungry for resources.”

Angel Mining already operates a gold mine in the south. An olivine mine just north of Nuuk also has started production.

Many more are expected soon. The number of mineral exploration licences issued by Greenland’s local government surged from 17 in 2002 to 72 this year.

Officials offer basic courses in geology to amateur mineral hunters, and started a more advanced mining education in Sisimiut in western Greenland in 2008.

The goal is to prepare Greenland’s labour force for jobs in the mining industry.

The only large-scale industry now on the island is fishing, which accounts for about 90 per cent of ex por t s.

“Greenlanders are hunters and fishermen,” said Finn Ly nge, a retired Greenlandic diplomat. He said the mining and oil industries require job skills “for which Greenlanders are not apt at all.”

He noted plans by Alcoa Inc. to build an aluminum smelter and two hydroelectric plants to power it in Maniitsoq, southwestern Greenland. Project leaders say the 600 workers needed for the construction phase would have to be recruited from Europe or China because Greenland doesn’t have that kind of labour.

— ASSOCIATED PRESS OIL & GAS INQUIRER • January 2010

45

MAKE TITAN A PART OF YOUR SOLUTION.

Oilfield Buildings • Pipe Insulation • Utilidors Tank Insulation • Barrel Docks • Noise Barriers

Level and Flow

Flo Pro 9100™ Flow Totalizer/ Rate Meter

Burner Controls

TPZ 3310™

Level Transmitter

FG1 351™

Control Module

A DIVISION OF TRANS PEACE CONSTRUCTION

_\O^RKXO ZKXOV]

Urethane Injected Panels Extruded Aluminum Channels Sheet Metal

Transport Gauging

Finch 5332E™

Outdoor Display

5332™

TD80™

Transmitter and Probe

In-Cab Display

Telemetry and Control

3500™

Level Controller

Head Office: Edmonton, Alberta, Canada | Titan Logix Corp. | Titan Logix USA Corp.

780.462.4085 | Toll Free 1.877.462.4085 | TSX-V: TLA Find us online at www.titanlogix.com | Email us at sales@titanlogix.com

A full range of power and force measurement transducers, protection relays, needle and manifold valves, pressure switches, diaphragm seals and thermometers.

We stock and supply a wide variety of current, voltage, control power and specialty transformers, indoor and outdoor class from 600V to 34.5KV. We carry shorting blocks, selector switches, lockout relays, test switches, circuit protectors and capacitor trip devices.

A complete line of analogue and digital meters, transducer indicators and gauges.

Specializing in power and force inStrumentation #125, 11769-40 St. SE, Calgary, AB T2Z 4M8 | p: 403.257.3080 | f: 403.257.6657 ricks@cromptonwci.com | www.cromptonwesterncanada.com

46

January 2010 • OIL & GAS INQUIRER

Central Canada

CSA unveils North America’s first pipeline security standard

by Paul Wells

The Canadian Standards Association developed its guidelines in response to terrorist attacks.

On Nov. 25, CSA Standards unveiled North America’s first oil and gas pipeline security standard to help prevent acts of vandalism and sabotage the continent’s sprawling transportation networks. The document developed by the Canadian Standards Association (CSA) is expected to be embraced enthusiastically by the pipeline sector.

The new guidelines are not a knee-jerk reaction to recent bombings in northeastern British Columbia, according to the non-profit association. Rather, the initiative is a work in progress, established in 2005 partly in response to the 2001 terrorist attacks on the United States.

“This standard is to help maintain the security of North American energy supply systems as well as provide worker safety.

Attacks on pipelines and oil and gas facilities in western Canada underscore why this standard is a necessity. In just over a year, there have been six bomb attacks in the northern B.C. region alone,” CSA president Suzanne Kiraly said at a news conference at SAIT Polytechnic.

“While not all security risks can be completely prevented, this standard provides a means of identifying, analyzing, and reducing risks through the security

risk management process, and it will help mitigate these risks,” Kiraly said.

Ontario-based CSA Standards is a division of CSA Group, which also includes CSA International and OnSpeX, a provider of consumer product evaluation, inspection, and advisory services for retailers and manufacturers.

Brenda Kenny, president of t he Canadian Energy Pipeline Association (CEPA) agreed. “[The] recent attacks on pipelines and facilities in and around the Dawson Creek area certainly demonstrate the need to implement consistent guidelines and to absolutely ensure the safety of local communities,” she said.

The development of the standard was initiated by a 2005 amendment to the National Energy Board Act to include “securit y ” within the board’s mandate. The National Energy Board (NEB) approached CSA to develop a consensusbased standard that would outline the minimum expected requirements of a security management program.

Kenny expects the majority of CEPA members to adhere to the new standards.

“Attention to security, particularly post 9-11, is absolutely a fact of life we have

to live with,” she said. “It can ultimately help to save money and, while some companies may have an additional cost as they upgrade their management systems, in the long run it will be of great benefit.”

Kiraly wouldn’t speculate what adopting and implementing the standards might cost. “I think it’s hard to put a dollar figure on it. Companies already have systems in place and the amount of work a company would do would be dependent on the size,” she said.

“I think one of the concepts that’s important to remember is the implementation can actually save money,” the CSA president commented. “Instead of looking and doing their own research and relying on a number of consultants, this really provides them with a blueprint for a security system from start to finish that they can rely on and build on what they have already.”

In order to help petroleum and natural gas companies evaluate and respond appropriately to security threats, CSA Standards has worked with security and industry professionals to prepare the standard, CSA Z246.1 Security Management for Petroleum and Natural Gas Industry System.

Gaétan Caron, NEB chair, said the standard uses a risk management and performance-based approach to help identify and reduce threats to oil and gas industry assets. “The world we’re living in is changing; we all know that. Sometimes security events are inadvertent and sometimes they are deliberate,” he said.

Caron said the standard assists in enabling pipeline owners and operators to establish governance, conduct planning, implement security operations (including detection and mitigation practices), and refine the security program through change management and audit processes.

The standard applies to land-based pipeline systems for oil and gas, as well as liquefied gas production, storage and handling facilities, underground hydrocarbons storage, petrochemical installations, oil and gas treatment, production processing, storage operations, and related assets.

— DAILY OIL BULLETIN OIL & GAS INQUIRER • January 2010

47

GLOBAL OIL & PIPE INC.

We’re specialists in shipping your order around the world!

New casing & tubing Used & surplus Production tools Bulk oil sales Contact us for more information:

Ph: 403-581-1712 www.globaloilandpipe.com

PROUDLY SERVING THE OIL & GAS INDUSTRY SINCE 1985

NOW OFFERING CHILLERS, PUMP TANK STATIONS, COOLING TOWERS, FILTRATION, RTDs, THERMOCOUPLES, ELECTRIC HEATERS, AND HEAT PIPES

USED GLYCOL PROCESS FEE

Reducing G-House emissions

403-343-9555 Red Deer, AB

TOLL FREE : 1.800.461.2788 TEL : 403.239.3477 FAX : 403.241.0148

48

January 2010 • OIL & GAS INQUIRER

Ask about our “trade-in” option on replacement glycols!

International

Enerplus plans to invest $100M in Marcellus shale play Vast gets ready to drill in Kurdistan

Enerplus plans to participate in more early-stage growth resource plays like the American shales.

Pennsylvania’s Marcellus shale gas play will be a focus for Enerplus Resources Fund in 2010, the Calgary-based trust’s president and CEO said in a conference on Nov. 16. “We believe this asset will provide tremendous growth potential for Enerplus,” Gordon Kerr told analysts, describing the emerging play as one of the best in North America.

Last summer, the trust acquired an average 21.5 per cent working interest in 116,000 net acres in the Marcellus shale region of the northeastern United States, mainly Pennsylvania. The US$411-million purchase from Chief Oil & Gas LLC gives the trust a solid position in the play, close to northeastern U.S. gas markets.

Kerr estimated the Pennsylvania lands contain about 1.4 trillion cubic feet of bestestimate, contingent natural gas resources (net to Enerplus), and could add about 100 million cubic feet per day in the next few years. “This [asset] would almost double our 2P gas reserves currently booked,” he said, noting that over 2,400 drilling locations have been identified so far.

While the trust plans to put more than $800 million into the Marcellus over the

next five years, the near-term would see about $40 million invested in the play by year-end 2009. Kerr estimated Enerplus could sink US$100 million or more into the play.

During 2010, the trust plans to focus on oil projects on its Bakken lands and waterflood assets, while limiting gas activities mainly to the Marcellus and where it can benefit from the Alberta Drilling Royalty Credit (DRC) incentive. As the trust participates in more early-stage growth plays, it expects to increase its land and seismic expenditures in key areas.

Enerplus is still active in shallow-gas resource play, but due to weak gas prices, it drilled only 12 wells in the third quarter, completing its Shackleton, Sask., program for the year. The trust has chosen not to tie in the wells until gas prices recover. However, it started drilling the first 9 of about 250 shallow gas wells in Alberta to take advantage of the province’s DRC incentive.

The trust plans to use the DRC program primarily at Verger, Bantry, Hanna Ga rden, a nd P r i ncess Spec ia l A rea No. 2, Alta.

— DAILY OIL BULLETIN

Vast Exploration Inc. plans to drill its first exploratory well on the Qara Dagh block in the Kurdistan region of Iraq in the first quarter of 2010. The consortium has completed the acquisition of 355 kilometres of a 2-D seismic program over the surface structure that dominates the block. The seismic data was subsequently processed, interpreted, and integrated with surface and regional geologic models.

Three main prospects were identified along the Qara Dagh structure as three subsurface culminations that extend across multiple horizons. The primary prospective reservoirs have been identified as the main carbonate sequences in the Cretaceous as well as underlying Jurassic and Triassic sections. Based on the seismic data, three well locations were also identified.

The central feature, the Qara Dagh dome, being the largest structure was selected for the drilling of the first exploratory well. It is planned that this well will be drilled to a depth of 4,000 metres and could encounter up to eight potential reservoirs. The first exploratory well is anticipated to be spudded in the first quarter of 2010.

An invitation to tender has been issued to 12 drilling contractors. After technical and commercial evaluation, a company with existing operations in the region was selected to mobilize a 2,000-horsepower rig to the block for drilling of one firm well and three optional wells. Contracts for long-lead items have been awarded and wellsite construction is underway.

Additionally, contracts for drilling support services have been tendered, evaluated, and finalized with various service companies operating in the region. The consortium is in the process of obtaining an independent 51 to 101 prospective resource estimate for the Qara Dagh block, which is expected to be completed in December.

OIL & GAS INQUIRER • January 2010

49

22 21 20 19 18 17 16 15 14 122 13 12 11 10 9 8 7 6 5 4 3 2 1 23 22 21 20 19 18 17 16 121 7 15 14 13 12 11 10 9 8 7 6 5 4 8 25 Kwokullie 18 Outaanet 120 dey Lake Lake Cornwall MEL 119 4 Lake 3Kotch 118 o 2 CREEK Lake 1 + Gas Plants6 2 117 + Refineries 23 KOTCHO LAKE 24-25 116 EAST 13 + Major Pipelines 14 115 15 + Compressor Stations 21-23 1611 Riv 4/ Compressor Station Elevations + Gas Plant er 2 Wentzel Zama Hay 12 Lake Lake 113 Margaret + Batteries 11 Lake HAY RIV ER 10 Lak e 11 + Bitumen Mines 9 2 Ekw + Weigh Scale Locations 111 94I Lakean + Permanent Work Camps 110 Baril 6 e Lake 58 + Well Disposal Sites Peac 7 BIVOU 8 109 AC + Updated Road Systems 58 Lake Claire 108 Mamawi Lake 16 + Major Interchanges 107 3 13 + Emergency Contacts 2 1 106 River + Yukon Territory Richardson Lake 105 + Northwest Territories 14 104 + Western Canada Town Maps Peace 88 15 EttLakhithun e 16+10 Alberta & British Columbia First Nations 3 SHIPPING AND GST NOT INCLUDED + Alberta, British Columbia & Saskatchewan Municipalities 102 16 + Township & Range Road Guide 11 1001 To order, call 1.800.563.2946 10 + Water / Land Feature Index 9 99 94H or atlas@junewarren-nickles.com + Parks & Protected Areas ZAREMB A DAHL 98 MARTIN + Mapping Terminology 6 97 7 8 96 7 MILLIG AN CR Gardiner 95 KAHNTAH EEK 3 Lake 2 McClelland Lake 1 94 Namur Lake 56 93 Bison 92 1CR4EEK BUICK Lake 10 13 15 16 91 CLEAR STOWE PRAIRIE DOIG 90 21 SENEX 89 90 88 63 94A 88 87 20 FORT ODDA RT PLUTO 86 r McMURRAY BEATON te OTTER wa HILL DIXONVILLE Peerless 84 ar 85 EQUISETUM Lake 4 Cle HINES GOLDEN Riv EVI Graham 64 er FORT LUBICON ST. JOHN 84 Lake ce 29 Pea 83 er Gord RED EARTH Riv L SEPIT Cardinal PARKLA IMUS 82 ND Lake TURN 7 2 MICA 81 64 2 GROU NDBIR 80 CH CREEK er BERWY Riv N BRIAR 1 RIDGE 79 North 59 Wabasca 78 Lake 1973-09 DLR_OilGasInq.qxd:1973-09 11/27/09 10:07 AM Pa 2 49 13 77 10 Utikuma Kimiwan 9 76 Lake South Lake 49 Wabasca Swan Sandy Lake Lake 75 Lake Winagami River Lake 7 74 105 47 2 8 59 88 73 39 2 2A 72 Rock Lesser Slave Lake 63 Island HIGH PRAIRIE 2 Winefred Lake 71 2 1 Lake SHELDON GILWOOD 31 19 43 7 46 70 GRANDE 49 KINUSO River STUMP PRAIRIE 69 13 12 2A 43 Snipe Calling 11 10 9 Lake HIDING Lake 8 7 6 5 REDWIL 48 LOW CREEK 68 RIVER 16 4 3 2 1 piti 26 25 24 23 Wa 22 33 21 20 19 18 17 75 16 15 14 13 12 11 10 9 8 7 6 66 Heart 5 4 3 2 1 26 25 24 Lake 23 22 21 a20 sca 19 18 17 16 15 14 13 12 11 10 8 7 6 5 4 9 65 ab

94P

LESSARD

BISTCHO

MARLOWE

TATE

ZEUES

DIZZY

SHEKILIE

Order

Ha y

ZAMA

LARNE

SIERR

SAHTA

IE

KYKLO

yOUr ATLAS TODAy!

AB7 $

FIRE

JUNIO

R

Chinchaga

EKWAN

SOUSA

BLACK

HUTCH

HIGH LEVE

L

STEEN

RAINBOW

TIMBERWOLF

RAINBOW SOUT

KAHNTA

H RIVER

EIGHTH EDITION

H

SHETLAND

RING

2 0 10 - 2 0 11

PYRAMID

ETTHIT

River

HUN

CHARM

BOYER

ca Wabas

HARO

FONTAS

TANGHE

MEGA

VENUS

LAPP

LAPP

SNOWFALL

GUTAH

BIG ARROW

CHINCHAGA NORTH

ARGEN

CHINC HA RIVER GA

ELM

PICKE

LL BEATTO N

HAMBURG

Be

HUNTE VELMA R RIVER WEST BE ATT MILLIG AN CR RIVER ON EEK WE ST MIKE WOOD WILLO RUSH W DR AKE LADY WILDMIN FIREB FERN T IRD OU

BOTHA

EDRA

CHINCHAGA

n to at

NAYLOR

TAR

CRANBERRY

MEARON

BRITS

T

WEAS

EL

HOTCHKISS

OSBORN

River

LAKE

DAWS ON

DOE

E

INE

ce

ORCHID

OAK

LOST

CLAYHURST

GEORGE

S HOWARD

BELLOY

BOUCHER

BREMNER

EAGLESHA

RYCROFT

WOKING

SHANE

NORMANDVIL

LE

M

K

EAST

GROUARD

ok

MCLEANS CREE

y

PUSKWASKAU

er

N

y

ok

Sm

CORNWALL

STURGEON

RED DEER

Directions from Estevan Hwy 39 – 1 mile North or 1½ miles East of Estevan

MCMULLEN

SUNSET

H

MANNY

IOSEGUN

ANTE CREEK LITTLE SMOKY NORTH

CLYDEN

GLOVER

MAX

CHERPETA

SPUR

WIDEWATER

PETER

MOONEY

DECRENE

ADAMS

MITSUE

SWAN HILLS

FRANCIS

PARKER

NIPIN

AMADOU

MCMILLAN

LYLE

TOMATO

SMITH

HONDO

NIXON

ARMITAGE

WAPPAU

LOGAN

KIRBY

GRIST

IPIATIK

CALLING LAKE

BOUVIER

DEVENISH

GROUSE

DUNCAN

CANAL

MEYER

GAMBLER

BAPTISTE

RICHMOND

PHILOMENA

CHARRON

MILLS

FISHER

HEART LAKE

Ath

N New Truck Route

11

9

10

8

7

6

2 5

1

Estevan Town Limits – 1½ miles east to property

4 4

1

5

3 2

1 1

Hwy #39 – 1 mile north to property

For more information please contact Gary at 780-305-9255 1174365 Alberta Ltd. Operating as Gar-Lin Investments garymbr@telus.net

January 2010 • OIL & GAS INQUIRER

GRAHAM

HARDY

LEISMER

DRIFTPILE

DEVIL MCGOWAN

CHARD

DRIFTWOOD

JOUSSARD

CALAIS

3

50

DOUCETTE

MARTEN HILLS

RIE

LAKE SOUT

WAPITI

RESDELN

THORNBURY

PORTAGE

SALT CREEK

WEST PRAI

LAKE

SNIPE LAKE

K

BARNEY

PEERLESS

PELICAN

Riv

STURGEON

KLESKU

ELMWORTH

GOLD CREE

MARTEN

RANDELL

SHADOW

MANIR

BEZANSON

DIVIDE

HOUSE

CORNER

MISTAHAE

GIFT

E

Sm

DIMSDALE

THUNDE MOUNT R AIN

SANDY

HOOLE

DESMARAIS

HEART RIVE R

■ 16 lots for sale in Estevan, SK. ■ SW 29-2-7-W2 New Bypass Industrial Park New Truck ■ Re-zoned for commercial / Route opening in light industrial lots front of quarter ■ Lot sizes vary from in 2010 4.2 acres to 27 acres KELLY

GODIN

NIPISI

LITTLE HORS

GIROUXVILLE

TEEPEE

GRANOR

SHOAL

NEWBY

EAGLESHA

KAKUT

CLAIR

UTIKUMA LAKE

ROXANA

WINAGAMI

WEBSTER

HYTHE WEMBLEY BEAVERLODG E GRANDE PRAIRIE ALBRIGHT

GOODLOW

KIMIWAN

CINDY

PEORIA

SEAL

DAWSON

DAWN

M NORTH

BELLOY CULP

SADDLE HILLS

ATIKAMIK

HANGING STONE

HARMON VALLEY

TANGENT

SALESKI

SLAVE

GRIMSHAW

DUNVEGAN

SPIRIT RIVER

LA GLACE

SINCLAIR

NAMPA

GAGE

WHITELAW

CREEK RING

ROLLA

K

LOON

LEDDY

FAIRVIEW

PINGEL

HAMELIN

CUTBAN

NOEL

TROUT

KITTY

tle

N

VALHALLA GLACIER KNOPCIK

LIEGE

KIDNEY

MUSKWA

CADOTTE

FLOOD

PICA

Lit

SUNDOW

PROGRESS

SWAN LAKE

TUPPER CREEK

JACKP

ROYCE

EARRING

BILAWCHUK

PE SOUTH

EEK

REDFISH

SAWN LAKE

EUREKA

JACK

CECIL

GORDONDALE

POUCE COU

TTE CR

Y

ELLS

MONTAG

MIRAGE

BISSE

BRASSE

JOAN

NINA

OGSTON

BLUEBERRY

FARMINGTON

DEADWOOD

GOODFISH

EXPANSE

BONANZA

ROOK

BUICK

COLORADO

CHARLIE

WORSLEY

MULLIGAN

DOE

POUCE COUP

SUNRISE WILLOWB

ROSSBEAR

er

RAMBLING

PANNY

TRACY

BISON LAKE

SUTTON

OSBO RN RIGEL RIGEL EAS T BOUN SQUIR LAKE DARY REL LAGARD NORTH MUSK E CLEAR HILLS RAT T MONT OA NEY K SIPHO BO N EAST UNDARY SIPHO LAKE OW N NORTHL PINE GOPH SOUTH FLATROCK WE ER ST PARA DISE FLATR OCK EAGLE EAGLE WEST AIRPORT BOUNDARY WILDER LAKE SOUTH FORT ST FORT ST JOHN ALCES SOUTHEJOHN JOSEPHINE AST TW O RIVER S BALSAM

TOWER

DARWIN

HARPER

T LAKE

Riv

DOIG RAP IDS OSPREY BEAVER DAM BULRUS H PEEJA Y CRUSH BEAVER WOLF TAIL CURRAN CURRAN T WEST T

PEEJA Y WEST

SUNSET PRAIR IE

WOLVERINE

Pea

ME SILVER RCURY

Riv er

PEDIGREE

REDEYE

250

POMME

SHEKIL

A

NEH

VIRGO

River

AMBER

SEXTET

At h

YOYO

La ke

PEGGOPESH

TOOGA

River

KOTCHO LAKE

PEAK

SHEKILIE WEST

a

HELMET

E

At ha ba sc

LOUIS

er

CABIN

PETITOT

19

DESAN

Riv

6

Slave

THETLA ANDO A THETLA AN SOUTHDOA

5

INNOVATIVE OIL AND GAS SOLUTIONS Quick availability, rapid installation, and design flexibility make Cover-All® the right building choice for the oil and gas industry.

From maintenance to vehicle and equipment storage, discover why Cover-All® buildings are the right choice for the job.

Building strength and confidence through experience.

C ove r-A l l A l b e r t a 1.866.399.7569 • www.coverall.net COVER-ALL AND TITAN ARE REGISTERED TRADEMARKS OF COVER-ALL BUILDING SYSTEMS, INC. GATORSHIELD TUBING SUPPLIED BY ALLIED TUBE & CONDUIT

3.5 x 4.5 Publication: Oil & Gas Inquirer - Dec 1 • 1973-09/4c/150/mc

On the Job

onthe

JOB Careers in the Oilpatch

What is oil and gas well fishing?

A fisherman recovers wireline tools, drill pipe, packers, tubing, and any other equipment left downhole or stuck during drilling and completion operations. Every major fishing company also has a pipe recovery service since that’s the first thing we have to do on a job. In the field, Hess can do the entire fishing operation starting with the pipe recovery/line truck and finishing it with the proper selection of fishing and rental tools.

How did you get into fishing?

Most fishermen have extensive experience working as rig hands themselves. I’m the exception to that rule. After graduating from high school in Swift Current, I qualified as a welder. I wound up with a company that installed and recovered downhole sand screens. On May 4, 1985, they didn’t have anyone available for a fishing job north of Taber, so I got sent. The work really suited me, and I eventually became Weatherford Canada’s manager of fishing services for Canada. Then I came to Hess.

As Hess’s GM, do you still work in the field?

Definitely. In this line of work, I don’t believe in non-producing management. No two fishing jobs are exactly alike. You stay on your toes all the time, and there’s no such thing as having too much experience.

Tammy Matthews

Why do you like fishing?

Who wouldn’t want to jar loose tonnes of drill string or deploy bromine trifluoride cutters that slice through steel pipe in half of a second? For me, it’s the best job in the world; you have to be alert and on your toes all the time. Because an experienced fisherman is difficult to replace, veterans almost never get laid off. In Canada, there are about 85 guys who fish professionally. Most of us work for Weatherford, Baker Hughes, Command, or Hess. Although the companies compete, it’s a friendly business where a lot of people know each other.

Jeff Schryver Age: 44 Title: General manager and fisherman Company: Hess Fishing & Rentals LP

Age: 43 Training: Production accountant Title: General manager Companies: Petroline Rentals Ltd. and Barracuda Pilot Service

Have you done much work overseas?

Yes. Besides the East Coast and a lot of American states, I’ve fished in Russia, China, Southeast Asia, and Scotland. Canadian fishermen are generally well-accepted around the world. Partly that’s because the West has many different types of geological formations—deep and over-pressured, shallow and low-pressure, heavy oil and bitumen, every degree of sour gas, coalbeds, shales, and tight rock. It’s unusual to find that variety within one region. Fishing here, you acquire a broad range of experience.

Photo: Aaron Parker

Who should consider going into oil and gas fishing?

Our customers hire more on the basis of expertise than price. No wellsite supervisor is likely to listen to someone with less than 15 years of experience in the patch, or at least 10. With fishing, as they say, either send out a guy with grey hair or don’t send anyone. But don’t worry—this business turns your hair grey pretty quick.

OIL & GAS INQUIRER • January 2010

51

Coming marCh 2010

ExpEriEncE thE nExt GEnEration of oil & Gas traininG Enhance your knowledge of the upstream, midstream, and downstream sectors with this new two-day course; a combination of classroom instruction, e-learning, and powerful computer-based training that will lead you and teammates through an interactive and competitive simulation.

Vertigo Theatre thanks its corporate partner

Y Stage Season Sponsor

In our business, you need a good accomplice

“Captivate a new audience!”

Unique sponsorship opportunities are available contact Development at (403) 260-4759

CAUGHT IN THE ACT “GET www.vertigotheatre.com ” 52

January 2010 • OIL & GAS INQUIRER

oilpatchex.com

Tools of the Trade

TOOLS

OF THE TRADE A LOOK AT NEW TECHNOLOGIES

Who is North Rig Catwalk Technologies?

North Rig Catwalk Technologies is an independent, privately owned manufacturing business headquartered in Cochrane, Alta. We design and build a comprehensive range of hydraulic catwalks for both drilling and service sectors.

What is a hydraulic catwalk?

A hydraulic catwalk is a hydraulically powered device which replaces the traditional long steel platform and ramp used to drag tubulars from the ground to the drilling floor using the tugger line. Hydraulic catwalks use a variety of methods to transport the tubulars from ground level to drilling floor. The lift-

North Rig hydraulic catwalk

up mechanism on a North Rig catwalk is securely attached to the V-door at all times and a deep trough holds tubulars securely.

What are the competitive advantages of North Rig catwalks?

We can tailor existing proven designs to clients’ customized requirements.

Wireless controls mean the operators are kept away from the most hazardous part of the drilling operation—pipe handling. All the operations of the catwalk are hydraulically controlled, meaning rapid setup and teardown times, together with dependable, repeatable operability. There is a large, global appetite for the safety and efficiency advantages of this equipment in the industry.

How long have your catwalks been in field service?

The earliest equipment has been running in the field for over three years, operating in both extreme heat and cold climates and has performed in a stellar fashion. The safety record is impeccable.

What future development does North Rig have in mind for this technology?

By watching industry developments closely and responding to clients’ requirements, North Rig will continue to expand its product line, adding more mobile units for the service sector in the future.

Answered by Adrian Prudden, president of North Rig Catwalk Technologies

OIL & GAS INQUIRER • January 2010

53

Political Cartoon

Advertisers' Index 1174365 Alberta Ltd . . . . . . . . . . . . . . . . . . . . . . 50

Cover-All North Inc . . . . . . . . . . . . . . . . . . . . . . 38

Norwesco Canada Ltd . . . . . . . . . . . . . . . . . . . . 34

AGI-Envirotank . . . . . . . . . . . . . . . . . . . . . . . . . 38

Crompton Western Canada Inc . . . . . . . . . . . . . 46

OilPro Oilfield Production Equipment Ltd . . . . . 26

All Weather Shelters Inc . . . . . . . . . . . . . . . . . . . . 7

Dean’s Pump Service Ltd . . . . . . . . . . . . . . . . . 44

Pembina Controls . . . . . . . . . . . . . . . . . . . . . . . 34

Allan R. Nelson Engineering (1997) Inc . . . . . . . . 32

DFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Penfabco Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Annugas Compression Consulting Ltd . . . . . . . . 17

Diversified Glycol Services Inc . . . . . . . . . . . . . 48

BC Resources Expo . . . . . . . . . . . . . . . . . . . . . . 42

Ecoquip Artificial Lift Ltd . . . . . . . . . . . . . . . . . 23

Petroleum Services Association of Canada . . . 30

Bear Slashing Ltd . . . . . . . . . . . . . . . . . . . . . . . . 34

Falvo Electrical Supply Ltd . . . . . . . . . . . . . . . . 36

Belzona Western Ltd . . . . . . . . . . . . . . . . . . . . . 37

Fit Right Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Bilton Welding and Manufacturing Ltd . . . . . . . 44

Flexpipe Systems . . . . . . . . . . . . . . . . . . . . . 40/41

Black Sivalls & Bryson (Canada) Ltd . . . . . . . . . 42

Glentel Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Brews Supply Ltd . . . . . . . . . . . . . . . . . . . . . . . . 25

Global Oil & Pipe Inc . . . . . . . . . . . . . . . . . . . . . 48

Brother’s Specialized Coating Systems Ltd . . . . 10

Hex-Hut Shelter Systems Ltd . . . . . . . . . . . . . . . 15

Canadian Enviro-Tub Inc . . . . . . . . . . . . . . . . . . . 11

Joule Technical Sales Inc . . . . . . . . . . . . . . . . . . 48

TARM Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Phoenix Fence Inc . . . . . . . . . . . . . . . . . . . . . . . 32 Platinum Grover Int. Inc . . . . . . . Inside front cover Propak Systems Ltd. . . . . . . . . . . . . . . . . . . . . . . 3 Prostate Cancer Canada Network . . . . . . . . . . 52 RTS Services Inc . . . . . . . . . . . . . . . . . . . . . . . . 44 Systech Instrumentation Inc . . . . . . . . . . . . . . . 26

Caradan Chemicals Inc . . . . . . Outside back cover

LJ Welding & Machine . . . . . . . . . . . . . . . . . . . . . 5

Titan Logix Corp . . . . . . . . . . . . . . . . . . . . . . . . 46

CARES Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

LoTech Manufacturing Inc . . . . . . . . . . . . . . . . . 37

Trans Peace Construction (1987) Ltd. . . . . . . . . 46

Contain Enviro Services Ltd . . . Inside back cover

MPI-Marmit Plastics Inc . . . . . . . . . . . . . . . . . . 29

Triple D Technologies Inc . . . . . . . . . . . . . . . . . . 26

Cover-All Alberta . . . . . . . . . . . . . . . . . . . . . . . . 50

Northstar Energy Services Inc . . . . . . . . . . . . . . 6

Vertigo Theatre Society . . . . . . . . . . . . . . . . . . 52

54

January 2010 • OIL & GAS INQUIRER

Reduce H2S Scavenging Costs by 20-50%

www.caradanchemicals.com

Largest Canadian owned & operated production chemical company selling worldwide Corrosion Inhibitors Scale Inhibitors Demulsifiers Bacteria Control Paraffin & Asphaltene Control Stimulation Products Foamers/Defoamers High Performance Sulfide Scavengers Most diverse sulfide scavenger product lines available

Proudly Canadian

Field Services Program Monitoring Team Meetings Chemical Program Field Reference Manuals Pipeline Integrity Management Manuals

Mobile test unit for non-invasive treatment confirmation

Head Office

NISKU, AB

1404 - 8 Street T9E 7M1

780.955.3050

Drayton Valley, AB������������������������� 780�542�6832 Edson, AB ��������������������������������������� 780�728�4152 Grande Prairie, AB������������������������� 780�832�4527 Kindersley, SK ������������������������������� 306�460�5609 Stettler, AB ������������������������������������� 403�741�4271 Swift Current ���������������������������������� 306�750�1339 Wainwright, AB ������������������������������ 780�806�8227

COUNT ON