Oil & Gas Inquirer May 2010

MAY 2010 � $6.00

AUTOMATING HORN RIVER

To cut shale gas costs and gain reservoir insights, Apache pours millions into wellsite automation

280

Canadian Publication Mail Product Agreement #40069240

280 200 130

85

40

Working Overseas Canadian oil and gas specialists are on the job from Argentina to Azerbaijan

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

A Dynamic Duo Significantly re-engineered with more strength, stability, comfort and standard features.

The new KX057-4 and U55.

There’s no stopping you now.

Carriers

Wheel Loaders

Kubota Dealers of Alberta www.kubota.ca/

Super Series Excavators • Standard & Zero Tail Models • Up to 8-ton size • Proven performance, reliability and durability • Interim Tier IV engines

Loader Backhoes

Table of Contents

Keeping readers regionally informed

F E A T U R E S

12

Automating Horn River

by Mike Byfield To cut shale gas costs and gain reservoir insights, Apache Canada's Karl DeMong and his completions team are pouring millions into automation

20 35

Working overseas

by Jim Bentein Canadian oil and gas specialists like Shane Proteau are on the job from Argentina to Azerbaijan. These days, many overseas assignments involve teaching the job as well as performing it.

The hunt intensifies for a break through oilsands solvent

by Pat Roche N-Solv, Imperial Oil, Cenovus, and Suncor are each seeking a solvent capable of dramatically reducing natural gas consumption in steam-driven bitumen recovery

As the economy strengthens, look for stories with the Recession to Recovery logo to help you through uncertain times. And be sure to check out junewarren-nickles.com/r2r for Recession to Recovery stories from all JuneWarren-Nickle’s publications.

6

M ay 2010 • O I L & G A S I N Q U I R E R

Table of Contents

R E G I O N A L

27

N E W S

British Columbia

45

• B.C. First Nations coalition opposes Enbridge oilsands pipeline

activity all surge in early 2010

• Fort Nelson North gas plant application

• Ensign launches a build program

proceeds without NEB hearing

31

Northwestern Alberta

despite lower revenues for 2009

51

• Early drilling results in Wilrich play

Northeastern Alberta

outlines drilling plans

53

• The hunt intensifies for a breakthrough

Central Alberta

project gets delayed until 2013

55

• Industry responds positively to Alberta’s

Central Canada • Conference Board forecasts higher

retreat on royalty rates

profits for the gas industry

• Bellatrix Exploration updates its Cardium drilling results

Northern Frontier • Decision on Mackenzie pipeline

oilsands solvent

41

Saskatchewan • PetroBakken pegs FD&A cost and

encouraging

35

Southern Alberta • Well count, metres drilled, and rig

• Feds penalize Chinese OCTG imports

57

International • Xtreme Coil lands a Saudi contract but suffers a setback in Mexico • BlackWatch announces foreign acquisition

I N

10

E VE R Y

I S S U E

Statistics at a Glance

61

59

On the Job • For years, Graham Fletcher has been providing Internet services far and wide.

Now he’s fighting the feds to get more than 260 small communities linked to the Alberta Supernet

Tools of the Trade • Departure Energy Services Inc. manufactures the G-Force TM Vertical Guidance Drilling System, which will maintain a wellbore in a vertical attitude while rotating at any rate of penetration

• Completions data, spot gas prices, gas storage, drilling activity, and more

62

Political Cartoon

Cover Design: Aaron Parker

O I L & G A S I N Q U I R E R • M ay 2010

7

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. 5 President & ceo Bill Whitelaw | bwhitelaw@junewarren-nickles.com

Mike Byfield | mbyfield@junewarren-nickles.com

Your mom had a point

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

Laura Blackwood, Janis Carlson de Boer, Samantha Kapler, Marisa Kurlovich proofing@junewarren-nickles.com Contributors

Jim Bentein, Pat Roche, 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 ART DIRECTOR

Ken Bessie | kbessie@junewarren-nickles.com CREATIVE SERVICES SUPERVISOR

Tamara Polloway-Webb | tpwebb@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 SENIOR ACCOUNT MANAGER

Diana Signorile | dsignorile@junewarren-nickles.com ACCOUNT MANAGERS

Jerry Chrunik | jchrunik@junewarren-nickles.com Nicole Kiefuik | nkiefuik@junewarren-nickles.com David Ng | dng@junewarren-nickles.com AD TRAFFIC COORDINATOR—Magazines

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

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

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

2nd Floor, 816 – 55 Avenue N.E. | Calgary, Alberta T2E 6Y4 Tel: 403.209.3500 | Fax: 403.245.8666 Toll-Free: 1.800.387.2446

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

During the early 1990s, a Canadian rig manager went to work in Texas. Some of his company’s drilling rigs were manned by Tex-Mex workers, but no American toolpush wanted to run those crews. (All of the supervisory staff was Caucasian.) “I wound up being assigned to the Mexicans, and I really enjoyed working with them,” this fellow told me.

Why didn’t the American managers want to deal with Hispanic crews? How did the Canuck get along with them? For a petroleum specialist working overseas—the subject of a feature story in this issue of Oil & Gas Inquirer—those are useful questions.

My acquaintance answered with a story, reportedly true. A gringo toolpush was backing up in his rig’s parking lot and accidentally struck a car belonging to one of his Tex-Mex roughnecks. Surveying the damage, the rig manager saw that he’d made a minor dent in a vehicle that was already covered in dents and rust. Thinking no harm had been done, the man jumped back in his pickup and went about his business.

A few evenings later, that toolpush was drinking in a bar. Several of his crew members were in the same bar. Suddenly, without any warning at all, the car owner attacked the supervisor with a knife. Fortunately, others intervened and no one was seriously hurt. But that sort of unpredictable incident made Texan rig managers leery of Tex-Mex roughnecks.

So why did the rig hand attack his boss over a trivial dent?

Because his boss had not apologized, the Tex-Mex roughneck had brooded about the apparent lack of respect. Given time and alcohol, his smouldering over the perceived insult mutated into a violent thirst for revenge.

When the Canadian toolpush arrived in Texas, he knew nothing about the local culture, either white or Latino. Even so, my acquaintance would have apologized to that roughneck for denting his car. Canadians, after all, are famously polite. Due in part to his ingrained personal courtesy, the rig manager got along fine with the Tex-Mex crews.

Texas has its own good manners. Another friend of mine, a young woman in medical school, worked one summer for NASA is Houston. On returning to Calgary, she informed me that Texan men are exquisitely polite to women, and more so to older ladies. She adored them.

In many foreign nations, courtesy is a more valuable social tool than back-slapping friendliness. Although I’ve never had a foreign job in the patch (unless Wyoming is considered foreign), I have travelled to, taught, and been employed in quite a few other countries. In my experience, showing respect rarely hurts and usually helps.

Oilpatchers working overseas today are teachers more often than not. Their tasks typically include training local citizens to perform the same job. No doubt there are dozens of tricks to the foreign petroleum trade. Courtesy alone certainly doesn’t guarantee success. Even so, bear in mind that your mom was right: Always be polite. Otherwise, you just might get knifed.

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 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.

N E X T

I S S U E

Global champions

If you know an admirable person to profile in

With the Global Petroleum Show in Calgary,

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

Oil & Gas Inquirer asks successful exporters

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

what it takes to secure and turn a profit on

please give me a call at (780) 784-4251, or

foreign sales. Also, the magazine takes a look at

email mbyfield@junewarren-nickles.com.

the activity outlook in northwestern Alberta.

In fact, feel free to sound off about any concern at all—that’s a personal invitation.

O I L & G A S I N Q U I R E R • M AY 2 0 1 0

9

Stats

FAST NUMBERS

$10

AT A GLANCE

C$5

million

Average cost to drill and complete a natural gas well in Quebec, which could drop by 50 per cent due to greater activity and rig availability

per Mcf

Price at which Quebec natural gas is commercially viable, equivalent to C$4 in Alberta due to lower pipeline costs

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

Apr 2009 May 2009 Jun 2009

111 71 36

344 187 143

140 53 42

595 311 221

Apr 2009 May 2009 Jun 2009

111 71 177

342 187 211

61 46 45

12 35 27

526 339 460

Jul 2009 Aug 2009 Sept 2009

79 101 146

178 212 155

77 80 78

334 393 379

July 2009 Aug 2009 Sept 2009

79 250 146

31 267 155

6 36 45

3 37 9

119 590 355

Oct 2009 Nov 2009 Dec 2009

132 169 121

160 212 127

77 116 35

369 497 283

Oct 2009 Nov 2009 Dec 2009

331 382 283

196 244 138

32 68 34

12 10 13

571 704 468

Jan 2010 Feb 2010 Mar 2010

253 144 264

324 308 579

62 114 198

639 566 1,041

Jan 2010 Feb 2010 Mar 2010

429 147 548

343 143 681

55 20 109

13 5 20

840 315 1,358

Wells Drilled In British Columbia

Wells Drilled In Saskatchewan

Source: B.C. Oil and Gas Commission

Cumulative to April 1, 2010 Source: Saskatchewan Energy & Resources

MONTH

WELLS D R I L L E D

CUMULATIVE *

Apr 2009 May 2009 Jun 2009

33 26 19

350 376 395

Jul 2009 Aug 2009 Sept 2009

34 36 38

429 465 503

Oct 2009 Nov 2009 Dec 2009

29 39 45

532 571 616

Jan 2010 Feb 2010 Mar 2010

65 98 71

65 163 234

*From year to date

OIL

GAS

OTHER

D RY

T O TA L

Vertical Wells

Lloydminster Kindersley Swift Current Estevan

151 5 14 28

7 1 54 0

5 1 1 8

5 5 3 28

168 12 72 64

16 59 28 244

0 0 0 0

0 0 0 6

0 0 1 0

16 59 29 250

167 64 42 272

7 1 54 0

5 1 1 14

5 5 4 28

184 71 101 314

Horizontal Wells

Lloydminster Kindersley Swift Current Estevan Total Wells

Lloydminster Kindersley Swift Current Estevan

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

10

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

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 $3.75/GJ Total vol.: 1,664 TJ Transactions: 182

4.0

2.00

1.76 Tcf Year ago: 1.69 Tcf 5-year avg: 1.51 Tcf

1.75

3.5

3.0

in the United States

Mar 17

Cdn$/GJ

Mar 24

Mar 31

Apr 7

1.50

Apr 14

Mar 12

Tcf

Source: Natural Gas Exchange Inc.

Mar 19

Mar 26

Drilling Rig Count by Province/Territory

Drilling Activity: Oil & Gas

Western Canada April 13, 2010 Source: Rig Locator

Alberta March 2010 Source: Daily Oil Bulletin

ACTIVE

DOWN

TOTAL

ACTIVE (Per cent of total)

Western Canada Alberta

72

479

551

13%

British Columbia

54

56

110

49%

0

15

15

0%

13

110

123

11%

139

660

799

17%

0

1

1

0%

Manitoba Saskatchewan WC Totals Northwest Territories

Apr 2

OIL WELLS

Alberta

GAS WELLS

Mar 10

Mar 09

Mar 10

Mar 09

Northwestern Alberta

46

50

170

375

Northeastern Alberta

65

88

8

14

Central Alberta

124

145

76

196

Southern Alberta

29

41

325

377

264

324

579

962

TOTAL

Service Rig Count by Province/Territory

Drilling Activity: CBM & Bitumen

Western Canada April 13, 2010 Source: Rig Locator

Alberta March 2010 Source: Daily Oil Bulletin

ACTIVE

DOWN

TOTAL

ACTIVE

Western Canada Alberta

437

674

35%

British Columbia

8

24

32

25%

Manitoba

2

7

9

22%

Saskatchewan

81

105

186

44%

328

573

901

36%

0

2

2

0%

WC Totals Quebec

COALBED METHANE

Alberta 237

Apr 9

Source: U.S. Energy Information Administration

BITUMEN WELLS

Mar 10

Mar 09

Mar 10

Mar 09

Northwestern Alberta

11

4

3

6

Northeastern Alberta

0

1

61

81

Central Alberta

33

84

60

48

Southern Alberta

30

98

0

0

TOTAL

74

187

124

135

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.

O I L & G A S I N Q U I R E R • M AY 2 0 1 0

11

Blank Page for duplexing

Photo: Jack Cusano

Feature

Karl DeMong, completions manager at Apache Canada Ltd. 12

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

by Mike Byfield

A

unique partnership and rivalry has sprung up in the Horn River Basin of northeastern British Columbia.

In 2007, Apache Canada Ltd. and Encana Corporation formed a 50/50 partnership in the then-emerging shale gas play, pooling more than 400,000 acres. Unlike other oilpatch joint ventures where one operator is elected, in this joint venture, each producer operates its own sites. In 2009, Encana drilled 19 wells and Apache drilled 23. Financially, both companies share equally in all of those wells. Operationally, however, their teams compete with and ultimately learn from each other.

“There’s a big learning curve involved in figuring out how to economically develop a huge shale gas resource like Horn River. Our guys do their absolute best to get better results than Encana, and naturally they do the same,” says Karl DeMong, completions manager for

Apache Canada. “It’s pretty intense, like good hockey. In our game, however, everyone wins. Each company tries out its own innovations and we both get the benefit of learning what works best. ” Until March, DeMong headed Apache’s well completion team for the Horn River. Multi-stage horizontal well completions in northeastern British Columbia are massive operations, involving about 280 workers on site, split in two shifts. Also on site are some of the largest fleets—pressure pumpers, wireline trucks, cranes, coiled tubing service rigs, and other vehicles—ever assembled on site in Canada’s oilpatch.

Frac proppant, chemicals, and other material needs are equally enormous. “When you’re pumping water at the rate of 100 barrels per minute, you don’t want empty surge tanks,” DeMong says.

Between January 7 and March 18, Apache pumped about 500 million litres of water at Horn River, with 95 per cent being brought in O I L & G A S I N Q U I R E R • M AY 2 0 1 0

13

Feature

Photo: Apache Canada Ltd.

“on the fly” during the fracs. By the end of March, DeMong’s crew conducted 193 frac intervals (or stages) and placed 33,000 tons of sand. Although the company has not released budget figures, DeMong’s team is spending tens of millions.

An Apache Horn River frac interval typically takes five to six hours. Supervision of a Horn River frac comes from three points: 1) t he pumping company’s horsepower control centre on site, 2) A pache’s frac command centre on site, and 3) t he frac control headquarters in Apache Canada’s head office in Calgary.

The torrent of data that’s essential to tight coordination between these centres moves via satellite within two seconds.

Each centre has its specific duties. The frac command centre, for example, directs the actual fracture pumping operation and monitors safety, and can shut down the entire operation for safety reasons at any time. The Calgary team usually mandates pressure and flow rates during the frac.

Horn River, just south of the Northwest Territories, ranks as the most geographically remote commercial-scale gas field now producing in North America. Apache and Encana will be competing with gas from big shale plays in the United States that sit far closer to market. To bring costs down, DeMong recognized two challenges. First, more work had to be performed in less time by fewer people. Second, the company had to learn the complexities of reservoir fracturing in this basin. On both counts, the team leader turned to innovative automation.

A mechanical engineer from the University of Saskatchewan, DeMong credits his personal enthusiasm for technical challenges to

Apache spaces its wellhead manifolds as close as 10 feet apart.

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 EFC_ADVERT_oil-and-gas-Inquirer4.indd 1

14

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

Toll Free 1-888-511-0554 11/13/2009 9:36:31 AM

Feature

his father Leroy, a labourer who severely fractured both arms at age 19. “Dad had one artificial limb and limited rotation in his remaining wrist,” the 41-year-old Calgarian recalls. “Every day, we kids watched him figure out innovative ways to shovel grain, hoist bales, and perform other tasks that would be routine for most people.”

A high school stint at Saskatchewan’s famed Athol Murray College of Notre Dame taught DeMong another lesson: “As a philosophy, ‘everything matters’ beats the hell out of ‘nothing matters.’” After the 180-pound teenager enrolled at the University of Saskatchewan, he packed on an additional 60

Horn River, just south of the Northwest Territories, ranks as the most geographically remote commercial-scale gas field now producing in North America. pounds of muscle (from “two years of 20 hours of pumping iron per week, no steroids”), then served as an offensive lineman on the football team.

His first job came from PanCanadian Petroleum. “I didn’t realize it until later, but they hired me mostly because I was big.

In those days, the field supervisors [who’d risen from the ranks] tended to pick on the young engineers from headquarters. They’d ball your engineering program up and throw the paper in the wastebasket, saying they’d always done it their way,” DeMong says. The neophyte won over these hard cases by integrating their operational understanding in his engineering programs.

He subsequently worked for both senior producers (Wascana Energy Inc., Nexen Inc.) and juniors (Calahoo Petroleum Ltd., Intensity Resources Ltd.).

In 1998, Sperry-Sun Drilling Services posted the Canadian to Dubai, eventually promoting him to manager of global multilateral operations. “I’m basically a downhole tools guy with experience tying together multiple wellbores below the surface on high-value well pads. Initially, this involved challenging all the engineering done on the project,” DeMong says.

In 2006, the experienced manager became an independent consultant, gravitating toward Apache Canada (who later brought him on staff). DeMong encourages high-energy discussions that he calls “happy yelling,” prompting his staff members to debate divergent opinions in the search for solutions. “You can tell by the smiles that the team is really enjoying tackling these challenges,” he says.

At Horn River, Apache drilled its 70-K pad with 16 wells, divided into two pods of eight wells apiece for working purposes.

The 52-L pad has 14 wells, while 34-L is scheduled to have 22.

“Pressure pumping [for fracs] is the critical path item in the whole operation,” DeMong says. “People were doing one thing at a time in sequence and it wasn’t efficient.” To help prepare a better work program, the engineer brought his supervisors to head office for four months. “I regard their 200 years of field experience as gold and we definitely tap into that,” he comments.

A key component of his technical strategy focused on automating the fracture manifold (an assembly of actuated and manual valves plus piping) that sits astride each wellhead. “The frac supervisor

O I L & G A S I N Q U I R E R • M AY 2 0 1 0

15

We’ve got you covered

Hot off tHe press!

The Heavy Oil and Oilsands Guidebook and Directory is the authoritative annual source for information on Canadian unconventional oil. From economics to technology and environmental sustainability, focusing on the people on all sides, the fifth edition offers the details about this important yet challenging industry.

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

1 ➡

2 ➡

3 403.293.7333 www.HeX-Hut.com 16

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

Contact us at 1.800.563.2946 or email tjohnstone@junewarren-nickles.com for your copy. heavyoilguidebook.com

Feature

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

Photo: Jack Cusano

[on site] swings the valves and keeps the pump program on track during the frac interval,” DeMong explains. “Simultaneously, the pumpdown supervisor can do work on the other pod like placing the plug and perforating gun or pulling out of the hole. Due to automation, we’re reducing cycle times and doing it safely.”

Through redesigning its fracture manifolds, Apache has shrunk wellhead spacing to an industry-leading 10 feet. Smaller manifold shelters and shorter trunk lines are easier to maintain and cost less, while rig-up cranes can do their tasks with fewer movements, reducing risk and expense further.

The smaller overall footprint for each pad harmonizes with the environmental concerns of regulators, First Nations, other neighbours, and the industry itself. Responsible use of water is another priority for all stakeholders. “We are in the process of moving over to employing non-potable [formation] water for our fracturing,” DeMong says. “This will enable us to avoid using surface water supplies.”

During a fracturing operation, Apache’s completion specialists can watch pumping pressures along with proppant concentrations and flow rates in real time on screens in the frac-control headquarters. This technology is the norm among major producers in Horn River. Uniquely, however, Apache’s specialists can access another 18 screens of data from SCADA (supervisory control and data acquisition) sensors placed on wellsite equipment at Horn River.

This automation gear is transferable to a new pad when the drilling and completion operation moves on. Critical performance and safety information is available at the team’s fingertips to support decision making.

Apache VP Rob Spitzer helps harmonize two different corporate cultures.

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

O I L & G A S I N Q U I R E R • M AY 2 0 1 0

17

Feature

“We have real-time information and a historical record of every pressure event, valve position, temperature, and other data that’s generated during frac intervals,” DeMong says. “This information enables us to diagnose successes and problems as they occur. This is the most demanding project that Apache’s SCADA specialists have ever worked on. Our guys are really excited; they keep offering us new ways to do more.”

Earlier in this decade, Calgary-headquartered Encana stunned its industry peers by investing billions in marginal resource acreage, effectively betting the company on prospects previously considered almost worthless.

On a conventional oil or gas well, most of the budget is spent on drilling the well and installing production facilities. For shale gas projects, however, completions comprise the majority of the capital cost. DeMong hopes that the use of SCADA will improve the efficiency of the hydraulic fracture operations, which absorb billions of dollars on an annual basis. To date, Apache has invested over $10 million in new automation technology at Horn River, including about $1 million for SCADA.

Apache acknowledges that it’s a risky ploy, and its partner may not be willing to help fund the investment. “We have strong management support to go ahead with the innovations, even if we had to do it on our own,” DeMong says. He credits John Crum, Apache’s Co-COO for North America, and Tim Wall, president of Apache Canada, for that decision. Apache has long specialized in wringing more oil and gas from known reservoirs through engineering advances. This is a natural progression to wringing gas out of previously unproducable rock in the Horn River Shale.

Not that Encana lacks boldness. Earlier in this decade, the Calgary-headquartered producer stunned its industry peers by investing billions in marginal resource acreage, effectively betting the company on prospects previously considered almost worthless. Other independents followed that lead. Now Exxon Mobil Corporation and Royal Dutch Shell are investing heavily in North American tight gas, a strong signal that the gamble is paying off.

“Encana has a completely different culture than us,” the Apache Canada completions manager comments. Fortunately, he says, the partners’ expertise tends to be complementary. The two producers meet for a regular weekly project review and constantly share data.

Rob Spitzer, Apache’s VP of new ventures, helps the teams lever off each other’s strengths rather than bicker over operational differences.

Spitzer’s steady fence mending pays off. “It is really Rob’s positive attitude toward the partnership that helps make this all work,” says DeMong, adding that the dual operator configuration “creates a stronger project. We were the first two companies to grasp the potential of the Horn River Basin, and Encana has a great team.

Almost as good as us—hey, I’m just kidding, right?”

YOU’RE PROUD OF YOUR SKILLS AND KNOW-HOW. You want to work where you can be proud of your employer too. At Suncor Energy, we aim to earn your respect by providing you with the tools and support that enable you to do quality work.

Ready to be proud of your workplace?

Put yourself in our picture.

When you join Suncor, you enter a working environment where how you get the job done is as important as the goals you achieve. You’ll be part of a company that’s guided by strong values and beliefs; that demands a high standard for safety, integrity, responsibility and always strives to exceed expectations – real reasons to take pride in saying, “I work for Suncor.”

Put yourself in our picture by applying at www.suncor.com/careers © 2010 NAS (Media: delete copyright notice) 18 M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

Oilweek, Oilsand Review, Oil and G

TUBING CASING

PLUNGER 1

MULTI-STAGE TOOL

Hit tHe road, jack.

At around one-tenth the cost of a pumpjack, our PCS Multi-Stage Plunger Lift System™ requires significantly less time and capital for installation. It’s a highly effective artificial lift method that is much less expensive to operate and maintain over the life of a well. In fact, it might just reduce your lifting cost so much, you’ll want to say goodbye to “jack” forever.

To learn more, call 403.477.5515.

www.pcslift.com/canada PLUNGER LIFT

/

GAS LIFT

/

PCS Canada Offices

PLUNGER 2

➤ Calgary, AB ➤ Claresholm, AB ➤ Consort, AB ➤ Drayton Valley, AB ➤ Edson, AB ➤ Grande Prairie, AB* ➤ Red Deer, AB ➤ Fort St. John, BC*

BOTTOM HOLE BUMPER SPRING

* Authorized PCS representative

NITROGEN GENERATION

PCS Canada is certified by Partnerships in Health and Safety.

/

AUTOMATION

Feature

WORKING OVERSEAS

Grande Prairie's Shane Proteau on site in the Caspian Sea (above), a Nexen facility in the Yemeni desert (right), and a jungle wellsite in

Photo: Nexen Inc.

Papua New Guinea (opposite page).

20

M aY 2010 • O I L & G A S I N Q U I R E R

Feature

Canadian oil and gas specialists are on the job from Argentina to Azerbaijan

by Jim Bentein

S

hane Proteau began working overseas out of economic necessity.

The 32-year-old resident of Grande Prairie, Alta., has five children, aged 2 to 14. When northwestern Alberta’s gas patch crashed two years ago, his alternatives were unemployment or a foreign assignment. Fortunately, as a completions specialist with Halliburton Completion Tools, he soon landed a job in the West African country of Cameroon.

“You make more money if you’re busy year-round in Canada, but the downturn really slowed us down,” Proteau says.

Halliburton’s rotation schedule called for 35 days out of country and 35 days at home. “I’m fortunate because I have an understanding wife and understanding kids,” says the eight-year industry veteran.

Photo: InterOil Corporation

Eve n work i ng i n C a n ada , he ’d spent plenty of nights in hotel rooms.

“I’ve never been one for an office job.

Halliburton covers a big area from our Grande Prairie office,” Proteau says. “I go to Zama City, Red Earth, and Norman Wells. We’ve had guys who went to Alaska. I put an average of 15,000 kilometres a month on my truck.”

After Cameroon, his next assignment was Azerbaijan, a central Asian nation that previously belonged to the Soviet Union.

Proteau happened to speak some Russian, learned from a former girlfriend, which came in handy. “The coordinator there is from Canada, and he and I get along,” he comments. The oilfield specialist is also a history buff who enjoys reading about his foreign locations.

O I L & G A S I N Q U I R E R • M ay 2010

21

Feature

Halliburton offers its overseas rotational workers online training in language and culture, outlining local social customs, and religious beliefs. Even so, Proteau found himself shaken emotionally by the drastic poverty of Cameroon.

“I was def i n itely not prepa red for Africa.” In his experience, foreign jobs are often technically interesting, but the dangers are greater than in Canada. “A helicopter could crash and there’s some political risk, too,” he says. All in all, though, this Albertan has enjoyed being an expatriate worker.

In important respects, Duane Mather did not relish his time as an expat worker about 40 years ago. In that era, entire families normally went overseas.

While his wife and three children lived in Tehran, Mather himself worked 300 kilometres from the Iranian capital. “We had problems finding schools for the kids and there were medical and other family issues,” recalls the president of Nabors Canada, a division of Nabors Industries Ltd. Too many of his colleagues wound up divorced. Mather worked in half a dozen countries and eventually ran the

international operations of Nabors, the world’s largest land drilling contractor.

His division operated across 25 nations around the globe. To ease the burden on families, the Albertan initiated the modern oil and gas pattern of rotating expat workers in and out of country on a schedule that typically spans 28 to 35 days out with an equal time at home.

O verseas operators also rely far more heavily now on homegrown talent in their foreign operations. For the most part, Nabors only has senior employees, suc h as e x per ienced r ig ma nagers or drillers, working on rotation.

“In exploration, where you don’t have much margin for error, we have more expats,” Mather says. Employing locally normally saves money in salaries and travel, and creating local employment wins political approval.

Tom Boleantu, president of T he Expatriate Group Inc., provides financial and lifestyle advice to 2,000 Canadian clients who work outside their own country.

“I’m a geologist by training and I worked overseas from 1961 to 1968 [in Morocco, Iran, and elsewhere],” the Calgarian says.

He launched his present business during the 1980s, when troubles in the domestic petroleum sector drove many Canucks to foreign lands.

The financial rewards can be excellent, Boleantu says. For instance, Saudi Aramco currently plans to add 1,000 expat employees to its staff. Its pay scales tend to be more attractive than similar jobs in the Canadian energy sector. In addition, the Saudi Arabian national oil company provides subsidized housing and other generous benefits, a practice that some other overseas employers also offer.

Then there are tax advantages, particularly for Canadians who live elsewhere. T h i s c ategor y c a n i nc lude rotational employees who make their permanent home outside Canada. For instance, an expat may work in several nations but reside in Mexico when off duty. If a Canadian proves to the Canada Revenue Agency that he no longer resides in this country, no personal income taxes are owed in this country. Foreign countries often have lower tax rates, and some governments do not collect taxes from foreign residents.

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

YEAR ROUND INDUSTRIAL & COMMERCIAL INSTALLATION

A DIVISION OF TRANS PEACE CONSTRUCTION

_\O^RKXO ZKXOV]

Urethane Injected Panels Extruded Aluminum Channels Sheet Metal

• 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

22

M aY 2010 • O I L & G A S I N Q U I R E R

CALGARY

(403)259-5155

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

1-888-220-2525

Feature

Saxon Energy Services Inc. knows all about expatriate and foreign-based workers. The Calgary company operates 54 drilling rigs and 11 workover rigs in seven countries, but none in Canada.

Schlumberger, the global oil and gas services giant, holds a 49 per cent interest in the operation, whose staff totals 1,850.

The vast majority are local employees, a pattern that increasingly prevails in the world’s oil and gas industry.

Kathy Marasco, Sazon’s VP of human resources, says its Canadian and American specialists working overseas act primarily as a “training pool” for their future local replacements. “We have 90 employees who rotate from their Canadian homes,” she says. “We also have a small group, perhaps 15 or 20 senior people, including country managers or controller positions, who are resident expats.”

At the moment, the majority of those senior executives work in Mexico. The well-paid contracts are typically for two to three years. After that, Saxon plans to have Mexicans in most of those positions.

The warm climate is a bonus for Canadians accustomed to working outside in long,

Nexen's Ashif Noorani found that rotating overseas actually gave him more quality time with his son.

EW 350HP CAT DIESEL-POWERED TEST FACILITY N OPEN & CLOSED LOOP PUMP TESTING ➤ MOTOR DYNAMIC LOAD TESTING ➤ HYDROSTATIC TRANSMISSION TESTS MOTOR & PUMP TOGETHER ➤ ➤

STATE-OF-THE-ART DIGITAL ELECTRONIC INSTRUMENTATION ➤ COMPUTER-BASED DATA ACQUISITION SYSTEM ➤ TEST DATA WITH FULL PRINT REPORTS ➤ CAPABLE OF TESTING ANY HYDRAULIC COMPONENT UP TO 350HP ➤

(Since 1984) ®

new hydraulic test bench

24 Hour Service 1-403-347-9770 Red Deer (403) 347-9770 | Edmonton (780) 430-9359 | Calgary (403) 263-7207 | Grande Prairie (780) 539-9939 O I L & G A S I N Q U I R E R • M ay 2010

23

Feature

Ne xen’s produc t ion i n t he A rab country has expanded to 56,000 barrels a day since it began operating there in 1993. It’s partnered with the Yemeni state oil company. Today, 90 per cent of its field staff and most of its managers in Yemen are local citizens. Cann prefers to send Canadians who’ve already worked overseas. “That isn’t to say we wouldn’t hire people without foreign experience,” he says, “but in that case we look for people with cultural sensitivity and flexibility.”

Employees are carefully groomed for a foreign assignment, especially in Yemen, Africa, and Colombia. “We give them a security briefing so they know what they’re getting into,” Cann says.

“We also give them a two-day intercultural session.” For Yemen, that briefing includes Muslim practices, such as daily prayer routines.

Nexen also offers a “pre-decision trip” to the country of assignment for the staffer and his family. Once the job begins, the company pairs the newly assigned rotational or expat worker with someone who already has

Photo: Xtreme Coil Drilling Corp.

cold winters. “We encourage them to take classroom language training [which the company pays for],” Marasco says.

Paul Beswick, a 38-year-old rig manager with Saxon, spent the last two years rotating between Calgary and Mexico.

He’s now switched to Pennsylvania, where Saxon is drilling in the Marcellus shale gas play. The father of two boys, aged 14 and 15, plans to continue this way of life as long as possible. “Working in Alberta is feast or famine,” he says. “Now there’s structure in my life. It’s nice to know I’ll have 28 days in the field and 28 days at home. And I’m seeing the world on someone else’s dime.”

Nexen Inc., a Calgary producer with 4,200 employees, operates in Yemen, West Africa, Colombia, the North Sea, and the Gulf of Mexico. The company has 61 expatriate employees and 120 who are on rotation to Yemen (down from 300 at the peak). “We hire people who can mentor, so that ultimately the Yemenis can take over their roles,” says Jeff Cann, a senior recruiter who worked in Yemen.

Western Canadian oil and gas service companies and workers have found work in Mexico.

24

M aY 2010 • O I L & G A S I N Q U I R E R

experience working there. The pay is attractive. “You receive an uplift to your base salary and a daily living premium,” Cann says. “It’s a fairly significant number.”

Ashif Noorani has worked for Nexen as a systems analyst for 18 years, half of them in Yemen. As a single man, the Calgarian was happy to accept an initial expatriate position in Yemen. After getting married and having a son, he switched to a 35-day rotation between 2003 and 2009. “It’s hard when you’re away that long,” says the 45-year-old father. On the plus side, “I found I could spend more quality time with my son.”

The biggest advantage of expat and rotational work is financial, according to the Nexen systems specialist. In Yemen, his work camp lifestyle included free room and board plus amenities like laundry, satellite television, and Internet services, all free of charge. Although he maintained Canadian residency rather than opting for full expatriate status, his income tax rate fell to 10 per cent. Noorani, who’s now working in Calgary, says he would gladly accept another foreign assignment.

Electrical ElectricalProducts Productsthat thatmeet meetyour yourneeds needs Electrical Products that meet your needs

Automation Automation Automation

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

Wire Wire Handling Handling Wire Handling

With With over over 8080 years years in in business, business, Brews Brews knows knows what what thethe oilpatch oilpatch needs needs from from over 80 yearscompany. incompany. business, Brews knows what the oilpatch needs from anWith an electrical electrical supply supply an electrical supply company.

bb t ho htob hot

vi vi vice ce ce

rr r

B BB

ss 22 ew ew 4 4 hh r rews 24 h r

Need NeedititFast?

Fast?

Need it Fast?

Ask Ask About About our our “Hot “Hot button” button” Service Service Ask About our “Hot button” Service

Distribution Distribution Equipment Equipment Distribution Equipment Heating Heating Equipment Equipment Heating Equipment Safety Safety Safety Industrial Industrial Control Control Industrial Control Utility Utility Products Products Utility Products

utut rr tn seser on utto ton se

Enclosures Enclosures Enclosures

AA full full breadth breadth of of pushbuttons pushbuttons A full breadth of pushbuttons for for every every application. application. for every application.

Designed Designed for for global global applications, applications, thethe M22M22 Pushbuttons Pushbuttons meet meet IEC/EN IEC/EN 60 947, 60 947, UL,UL, CSACSA standards standards Designed global applications, theand M22 Pushbuttons meetWith IEC/EN 60protection, 947, UL, CSA as well as well as certifications as for certifications for for shipping shipping and marine marine requirements. requirements.

With IP66IP66 protection, M22standards M22 devices devices as well certifications forenvironments. shipping and marine requirements. With IP66 protection, M22 devices thrive thrive in harsh inasharsh industrial industrial environments. thrive in harsh industrial environments.

TheThe M22M22 innovative innovative andand ergonomic ergonomic design design is ideal is ideal for for OEMs, OEMs, end-users end-users andand system system integrators integrators M22 innovative andaesthetics, ergonomic designflexibility, isflexibility, ideal forand OEMs, end-users and system integrators whoThe who value value front front panel panel aesthetics, maximum maximum and highhigh quality quality construction. construction. who value front panel aesthetics, maximum flexibility, and high quality construction.

M22M22 affords affords thethe ability ability to provide to provide efficient efficient machine machine communications, communications, reduce reduce signal signal paths paths andand M22 affords the abilitythetothe provide efficient machine communications, reduce signal paths and wiring wiring costs costs by utilizing by utilizing cost-effective cost-effective Actuator-Sensor Actuator-Sensor Interface Interface (ASI) (ASI) network. network. wiring costs by utilizing the cost-effective Actuator-Sensor Interface (ASI) network.

TheThe M22M22 reflects reflects Eaton’s Eaton’s commitment commitment to provide to provide products products thatthat deliver deliver increased increased reliability, reliability, The M22 reflects Eaton’s commitment to provide products that deliver increased reliability, functionality functionality andand time time savings, savings, while while raising raising thethe industry industry standard standard in quality in quality andand versatility. versatility. functionality and time savings, while raising the industry standard in quality and versatility. www.brewssupply.com/eatonpushbuttons www.brewssupply.com/eatonpushbuttons www.brewssupply.com/eatonpushbuttons

isisreliability reliabilityimportant importantto toyou? you? is reliability important to you?

Reliability.

Reliability.

It’sIt’s as as important important to Eaton to Eaton as as it isitto is you. to you.

Reliability. It’s as important to Eaton as it is to you.

Uninterruptibility Uninterruptibility from from Eaton Eaton isn’tisn’t a new a new offering. offering.

It’s It’s an iron-clad an iron-clad promise, promise, backed backed by aby$15B a $15B global global ® Uninterruptibility from Eatonwith isn’t apower newprotection, offering.

It’s an iron-clad backedexpertise. byexpertise. a $15BThat global organization organization and and a century-long a century-long heritage heritage with power protection, distribution distribution andpromise, and management management That ® ® ® ® organizationexpertise andexpertise a century-long heritage with power protection, distribution and management expertise.

That , BladeUPS , BladeUPS , Evolution , Evolution UPS,UPS, andand 9130 9130 UPS UPS products. products. hashas grown grown to include to include Eaton Eaton ePDU ePDU expertise has grown to include Eaton ePDU®, BladeUPS®, Evolution UPS, and 9130 UPS products.

Eaton Eaton designs designs andand engineers engineers innovative innovative power power management management solutions solutions to meet to meet thethe demands demands of the of the most most powerpowerEatonenvironments designs and engineers innovative power management solutions to meet the demands ofassets. theassets. most powerintense intense environments in the in the industry industry andand protect protect the the critical critical security security systems systems watching watching overover youryour When When it it intense environmentscomes incomes thetoindustry and in protect the critical security systems over your assets. experience to experience power in power protection, protection, distribution distribution andwatching and management, management, Eaton Eaton hashas itWhen all. it all.it comes to experience in power protection, distribution and management, Eaton has it all. power power through through . .

Learn Learn howhow Eaton Eaton solutions solutions solve solve power power challenges challenges so you so you cancan Learn how Eaton solutions solve power challenges so you can power through. ®

®

www.brewssupply.com/eatonups www.brewssupply.com/eatonups www.brewssupply.com/eatonups

BREWS BREWS Supply Supply Ltd. Ltd. Toll TollFree Free1.800.661.6884 1.800.661.6884 www.brewssupply.com www.brewssupply.com BREWS Supply Ltd. Toll Free 1.800.661.6884 www.brewssupply.com Calgary Calgary (Head (Head Office) Office) 12203 12203 40th 40th St.St. S.E. S.E. PHPH 403.243.1144 403.243.1144 Edmonton Edmonton 18003 18003 111th 111th Avenue Avenue N.W. N.W. PHPH 780.452.3730 780.452.3730 Calgary (Head Office) 12203 40th St. S.E. PH 403.243.1144 Edmonton 18003 111th Avenue N.W. PH 780.452.3730

British Columbia

Photo: Kinder Morgan, Inc.

B.C. First Nations coalition opposes Enbridge oilsands pipeline

Despite past pipeline successes, opponents say Enbridge’s oil export plan creates environmental risks.

Dozens of orcas, hundreds of thousands of seabirds, and millions of salmon were wiped out when the Exxon Valdez oil tanker spilled 40 million litres of crude oil into Alaskan waters. Twenty-one years later, a coalition of British Columbia First Nations says such a disastrous oil spill can never be allowed to happen again, and declared it will do whatever it takes to stop a proposed pipeline from the Alberta tar sands to the B.C. coast.

More than 150 First Nations, businesses, environmental organizations, and prominent Canadians have signed on to the campaign to stop the pipeline proposed by Calgary-based Enbridge Inc. The majority of the landscape to be covered is traditional B.C. First Nations land. The Coastal First Nations, who are heading the declaration, are an alliance of communities on B.C.’s north and central coast, including the islands of Haida Gwaii.

The Northern Gateway Project would see two 1,170-kilometre pipelines stretching from the tar sands near Edmonton to the northern B.C. coast town of Kitimat.

Crude would flow, crossing more than 1,000 streams and rivers, mountain ranges, avalanche-prone terrain, and rainforest ecosystems before being loaded onto upwards of 150 tankers annually for export.

“We all believe the Enbridge Gateway pipeline project is a threat to the very existence of our culture and our way of life,” Art Sterritt, executive director of the Coastal First Nations, said on March 23. “There are some who believe the Enbridge project is a done deal. It isn’t. It would be both unwise and irresponsible for Enbridge to ignore us or our constitutionally protected rights and title in British Columbia.”

Enbridge is in the final stages of a regulatory application to the National Energy Board. The company has touted

the benefits of the project, saying more than 4,000 construction jobs and thousands more indirect jobs would be created, while generating hundreds of millions in tax revenue for both provinces.

The company has said ships have safely carried petrochemicals out of the Kitimat port for 25 years, and they will, in fact, make safety improvements. Oil and gas have long been piped over the Rockies without incident. In an email, Enbridge said it must still undergo a “comprehensive and rigorous regulatory review process to ensure the project is in the interest of the Canadian public.”

But Sterritt said after five years of scientific research and community consultations, the groups that have signed onto the campaign believe “no good” can come from the project. “We don’t... make this declaration blindly or lightly, we make it from an informed position,” said Gerald Amos, a director of Coastal First Nations.

Amos said a blockade on the water is possible if the project goes ahead. Along with 28 B.C. First Nations, the Union of B.C. Indian Chiefs and some aboriginal groups from Alberta, environmental groups including the David Suzuki Foundation, and the Pembina Institute also signed on to the campaign.

Environmentalist Vicky Husband said she believes two additional pipelines would allow an increase in production in the Alberta tar sands of up to 30 per cent.

“If we actually believe in taking steps to deal with climate change, the tar sands need to be phased out,” she said.

Premier Gordon Campbell said the project will not proceed if it’s deemed too dangerous for the environment. He said the government wants to build an economic future for B.C. First Nations, “in a way that meets all of our environmental standards.”

—CANADIAN PRESS

BRITISH COLUMBIA WELL ACTIVITY

MAR/09

MAR/10

WELL LICENCES

68

75

▲

MAR/09

MAR/10

WELLS SPUDDED

27

73

▲

MAR/09

MAR/10

WELLS DRILLED

59

92

▲

Source: Daily Oil Bulletin

O I L & G A S I N Q U I R E R • M ay 2010

27

British Columbia

Fort Nelson North gas plant application proceeds without NEB hearing The National Energy Board is continuing to review an application from Westcoast Energy Inc. (Spectra Energy Transmission) for a new plant to process Horn River natural gas after cancelling a public hearing on it. In a letter to Westcoast, the board said that when it asked for comments on the proposed cancellation, it received one letter of support and no objections.

The Dene Tha’ First Nation, which initially had requested the hearing later withdrew its request. Westcoast had emphasized the need for an expeditious regulatory process for the proposed Fort Nelson North processing facility as “time is of the essence.” The project schedule requires that tree and brush clearing work for the 250 million cubic feet-per-day facility adjacent to Westcoast’s Cabin Lake booster

station be completed this spring prior to the restricted activity period for migratory bird nesting, from May 1 to July 31.

The proposed facility 75 kilometres northeast of Fort Nelson is underpinned by long-term expansion service agreements that provide for a targeted in-service

2012 and, subject to certain adjustments, they increase to the 250 MMcf per day maximum inlet design of the plant. Sales gas from the proposed facility will flow east on the Alberta system.

Encana received regulatory approval for its proposed Cabin gas plant approximately

The facility is supported by a number of producers with gas rights in the Horn River basin. date of May 1, 2012. “While manageable, the project schedule is tight and requires diligent construction management by Westcoast and its vendors and contractors,” said the company.

The expansion service agreements provide for initial contract volumes of 55 MMcf per day of raw gas beginning in May

6.7 kilometres from the proposed Fort Nelson North processing facility. It will have an initial processing capacity of 400 MMcf per day and a final capacity of 800 MMcf per day when fully developed in 2013. The facility is supported by a number of producers with gas rights in the Horn River basin.

—DAILY OIL BULLETIN

B.C. puts up a further $120M through infrastructure royalty program The British Columbia government has put up $120 million in the latest installment of cash through its infrastructure royalty-credit program. The ministry is now accepting requests for applications from companies to participate in the 2010 program. Energy Minister Blair Lekstrom expects the program will continue to draw strong interest.

“We expect to [receive many applications],” Lekstrom said. “These are always good incentives to try and get new infrastructure put in place, access new plays or parts of plays that aren’t as economical as some of the others.”

Since 2004, the B.C. royalty-credit program has allocated more than $485 million in infrastructure royalty credits to natural gas and petroleum companies operating in the province, resulting in 71 new road-based projects and 83 new pipeline projects. This represents new total capital investment in B.C. of almost $1 billion.

The province gets an approximate return on investment of $2.50 for every dollar invested, it was estimated, which is revenue that would not have been collected otherwise. The program is designed to reflect the competitive challenges of

enabling year-round activity and providing infrastructure that allows natural gas activity that would otherwise not take place. Companies can apply to the ministry with proposed road or pipeline infrastructure projects and compete for these royalty credits.

As in previous years, all projects applying for credits under the infrastructure royalty credit program will undergo an evaluation and ranking process and only those that ensure the highest economic benefits for B.C. will be approved.

—DAILY OIL BULLETIN

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

28

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

M aY 2010 • O I L & G A S I N Q U I R E R

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.

All you need to know about HYUNDAI Electric Motors

See us at Booth 5147 Global Petroleum Trade Show

HYUNDAI – the definition of trouble-free.

HYUNDAI’s electric motors are designed for the most demanding manufacturing and production applications.

Cold, hot or dirty, whatever the application, HYUNDAI has a motor to meet your needs with years of troublefree operation.

in rugged TEFC enclosures, from 1HP to 250HP. Compliant with MG1-Part 31 VFD duty and IEEE-841 requirements.

HYUNDAI medium voltage induction and synchronous motors up to 30,000 HP meet international standards that include CSA, NEMA, IEC, API, IEEE, and ATEX.

Available in NEMA or IEC frames, low voltage motors

Crown Triton Premium Efficient Motor

MV TEFC

MV WP2

MV TEAAC

Vertical Motor

Calgary Phone No: 403-236-9428 Email: mark@hyundai-elec.ca

Conference & Exhibition — July 20–22, 2010 Calgary TELUS Convention Centre, Calgary, Alberta, Canada www.OilSandsTechnologies.com

Expanding Sustainability INVITATION TO EXHIBIT Oil Sands and Heavy Oil Technologies Conference & Exhibition is a unique annual event for the industry which combines a world class conference and exhibition, attracting key decision makers from across the spectrum of oil sands professionals.

• Attendees from over 20 different countries • 31% of attendees from Operators • 42% were CEO, President, VP, Partner, Director or Manager • 70% held responsibility or directly influenced purchasing decisions.

Source: Oil Sands Exhibition & Conference 2009

If you want to showcase your technologies and solutions to a powerful and influential audience find out more about exhibiting at: www.oilsandstechnologies.com or contact Kristin Stavinoha Tel: +1 713 963 6283 Owned & Produced by:

Peter Cantu Tel: +1 713 963 6213 Flagship Media Sponsors:

Bob Lewis Tel: +1 918 832 9225 Media Partners:

Northwestern Alberta/Foothills

Early drilling results in the Wilrich play are encouraging

Photo: Brian Zinchuk, Pipeline News

by Paul Wells

Alberta royalty reforms helped spark drilling success this winter in the Wilrich tight gas formation.

In 2009, Fairborne Energy Ltd. pioneered horizontal drilling in the Wilrich formation, an emerging resource play in the Marlboro/ Pine Creek area. Three horizontal probes (1.6 net to the company) into the tight sand reservoir all tested between five million and six million cubic feet (MMcf) per day. This year, Fairborne contracted two rigs during the first quarter to drill three Wilrich horizontals in the Marlboro area.

Throughout 2009, Fairborne added to its land base in the Marlboro area—midway between Edmonton and Grande Prairie, Alta.—and now controls 37 (28 net) sections that are prospective for Wilrich. With current plans to drill up to three wells per section, the company estimates its potential drilling inventory at 107 wells.

Steve VanSickle, Fairborne’s president and CEO, notes that its Wilrich wells benefit greatly from provincial drilling and royalty incentives because the formation

lies at a depth just below 2,500 metres.

“You do get the maximum benefit from a depth standpoint and then you really get a significant benefit from going horizontal from there, so it really does make a material difference on the economics of those wells,” he says.

“The horizontal wells cost approximately $5.4 million to drill and complete, and they benefit from all three components of the Alberta government royalty incentives that include 0.5 Bcf [billion cubic feet] of production at five per cent royalty and approximately $4.4 million in deep gas credits and drilling incentives,” VanSickle says.

Aside from the drilling and royalty incentives, the Fairborne CEO praises the provincial government for recently expanding areas in the Deep Basin where automatic downspacing is allowed. “We used to have to apply for that [to the

Energy Resources Conservation Board] but now it’s encompassed in the changes announced and we’re quite appreciative of that,” he comments.

VanSick le says the company has improved its drilling and fracturing techniques, enabling its latest well to average 4.6 MMcf per day over 60 days, a 25 per cent improvement over its first well’s production.

Two of the three Wilrich wells (2.3 net) scheduled by Fairborne for the first half of this year will be drilled from a single pad. Completion operations will commence after both wells have been drilled.

Although this approach will delay the start-up of production relative to drilling and completing single wells, the “cost efficiencies will significantly enhance already robust economics,” VanSickle says.

The oldest Wilrich horizontals have been on production for less than 290 days, still too soon to project their ultimate recovery. “Initial indications are those wells are quite economic in today’s price environment and that we are generating double-digit rates of return with these wells in this commodity price environment,” VanSickle says. His company’s capital budget includes seven horizontals.

Darren Gee, president and CEO of Peyto Energy Trust, plans to ramp up drilling this year in several emerging Deep Basin tight gas plays, most notably the Wilrich, Notikewin, and Bluesky reservoirs. In its Nosehill project area in Greater Sundance, Peyto has Wilrich rights on 125 sections.

Gee says a number of past vertical producers proved the potential of the Wilrich play. “The average vertical well comes on the first month at about 1 MMcf per day and quickly declines down to about 200 Mcf [thousand cubic feet] per day,” he says.

Initial results from the application of horizontal drilling and multi-stage frac treatments have been encouraging. “The first

NORTHWESTERN ALBERTA/FOOTHILLS WELL ACTIVITY

MAR/09

MAR/10

WELL LICENCES

51

127

▲

MAR/09

MAR/10

WELLS SPUDDED

30

116

▲

MAR/09

MAR/10

WELLS DRILLED

97

204

▲

Source: Daily Oil Bulletin

O I L & G A S I N Q U I R E R • M ay 2010

31

well [drilled during the third quarter of 2009], as we slowly opened it up over time, we got it up to about 4 MMcf per day. Then in the next few months it declined to about 2.5 MMcf per day,” he says.

Although horizontal wells cost about $5 million compared to about $1 million for a vertical, Gee says horizontal drilling increased original gas in place three

PICK UP—PURGING—DISPOSAL

IBC (TOTE) RE - CERTIFICATIONS

Diversified Glycol svs inc 1-888-242-7270 Red Deer, AB

PRESSURE VESSELS BY

diversifiedglycol@yahoo.ca

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

32

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

“Daylight has the flexibility to re-allocate capital depending on the commodity price outlook for oil versus natural gas, and certain of our liquids-rich natural...."

– Steve Nielsen, CFO, Daylight Resources Trust

to five times per well, initial production rates were three to four times higher, and estimated ultimate recovery was improved four to six times. Rate of return for the horizontals was between 87 and 113 per cent in the low- and high-case models respectively, compared to 33 per cent for vertical wells.

The trust plans to drill five or six Wilrich horizontals this year, “which doesn’t sound like a lot relative to the inventory, but it’s still $25 million to $30 million [at about $5 million per well],” Gee says. “If they continue to perform as well as we expect and as we’ve seen in some of the early results, we’re going to continue to probably ramp up our activity there a little more and try to drill even more wells there in 2011.”

Steve Nielsen, Daylight Resources Trust’s CFO, says his company will spend $300 million ($275 million net of drilling credits) on its 2010 capital program to drill approximately 60 to 80 locations. In the Deep Basin at Elmworth and Wapiti, Daylight will commit 25 to 30 per cent of that capital to drilling for Cadomin and Nikanassin gas.

A similar amount of capital has been allocated to Daylight’s west central Alberta properties of Pine Creek, Kaybob, and the like, where the trust will drill for Wilrich natural gas, Bluesky liquids-rich natural gas, Cardium liquids-rich natural gas and light oil and Notikewin natural gas.

“Daylight has the flexibility to re-allocate capital depending on the commodity price outlook for oil versus natural gas, and certain of our liquids-rich natural gas targets provide desirable exposure to both commodities,” Nielsen says. “With our significant resource plays in inventory, we are looking

forward to a very active 2010 drilling program to bring these opportunities on to production and recognized in our reserves.”

At its emerging Wilrich play, Daylight has participated in three horizontal multistage fractured wells in the zone. Wells came on production between 3 and 5 MMcf per day and first well production to date has produced about 600 MMcf in six months. Daylight has over 24 net sections of lands with Wilrich rights in the area and Neilsen notes that similar developments have used between two and three wells per section. In 2010, the trust plans to drill six to eight Wilrich/Cardium/Notikewin horizontal gas wells and a similar number of multi-zone vertical gas wells in the area.

Lyle Michaluk, CFO for Open Range Energy Corp., says his company has begun to identify potential sweet spots that would be “attackable” on a horizontal basis in its core Ansell/Sundance area. The firm drilled its first horizontal at Ansell/Sundance during the first quarter of 2009. Targeting the Bluesky formation, the well was completed in July with a total of six fracture stages and production averaged about 2 MMcf per day for the first six months.

Open Range followed that well up with its initial foray into the Notikewin, where it punched a well in December that was drilled to a total measured depth of 4,100 metres, including a 1,250-metre horizontal leg. That well was cased by mid-January and flowed at initial cleanup production rates of up to 5.4 MMcf per day after 60 hours.

Open Range’s first-half 2010 capital program is $30 million. The company plans to drill three (2.6 net) horizontal and two wholly owned multi-zone vertical Deep Basin wells at Ansell/Sundance as well as one (0.4 net) horizontal Cardium oil well at Pembina.

At its still untapped Wilrich horizontal play, Michaluk says the company has identified 15 horizontal locations after reviewing the results of the initial wells punched into the zone by other operators in the Marlboro area just north of Ansell/ Sundance. Open Range plans to drill its first Wilrich horizontal later this year.

“In the past year, seeing some of the success the guys to the north of us have had in the Wilrich has really got us encouraged as to the potential of this horizontal drilling in our area, and we’re going to do a Wilrich horizontal sometime in the second half—that’s our plan in the shorter term,” Michaluk says.

— DAILY OIL BULLETIN O I L & G A S I N Q U I R E R • M AY 2 0 1 0

33

Northeastern Alberta

The hunt intensifies for a breakthrough oilsands solvent

by Pat Roche

MAR/09

MAR/10

MAR/09

MAR/10

WELLS SPUDDED

55

96

WELLS DRILLED

64

105

Photo: Joey Podlubny

John Nenniger, CEO of N-Solv Corporation, says the poor SOR progress stands in stark contrast with strong gains in other sectors such as computer technology during the same period. “Outcomes like this, in a competitive business environment, are very unusual,” he comments.

“There is a heck of a lot of money just going up in smoke.” Discovering a superior alternative could be worth billions of dollars a year, benefiting bitumen producers, federal and provincial taxpayers, and other oilsands stakeholders.

In a bid to command a share of that massive prize, N-Solv is promoting its own solution. Like SAGD, N-Solv uses two parallel horizontal wells—an injector wellbore is placed above a bitumen collector wellbore. Instead of injecting steam to heat the in situ bitumen, however, N-Solv would inject propane vapour into the reservoir.

Nenniger, a chemical engineer who earned his doctorate at the Massachusetts Institute of Technology, believes N-Solv’s process would be twice as profitable as SAGD. Bitumen output from comparable reservoirs could be tripled, fuel cost could plunge by 90 per cent, and the oil would be higher quality. As a major bonus, eliminating water usage and reduced carbon dioxide emissions would help allay environmental concerns.

The Calgary-based company is tackling a technical challenge that has defeated plenty of contenders, some of them highly qualified. Hopeful inventors have been patenting solvent-based bitumen extraction processes since the mid-1970s without a game-changing breakthrough. The only current commercial-scale application of solvents in bitumen recovery occurs at the Cold Lake project operated by Imperial Oil Limited in northeastern Alberta.

Imperial is Canada’s largest steamassisted bitumen producer. Its in situ production relies mainly on cyclic steam stimulation (CSS), not SAGD. CSS involves injecting steam into a well, then recovering the heated bitumen within the same wellbore. The company is testing a technology called LASER, which stands for liquid addition to steam for enhancing recovery.

LASER adds a small amount of solvent— in this case, natural gas condensate, or diluent—to the steam that’s being injected into mature CSS wells. Imperial began piloting LASER on one well pad at Cold Lake in 2002 and the first production cycle was completed in 2004. While the company isn’t disclosing results, it has expanded LASER to 10 well pads over the past two years. (Each pad has roughly 20 wells.)

Cenovus Energy Inc. is another operator experimenting with solvent technology. The company, which was created last fall from the oil operations of Encana Cor porat ion, i s Ca nada’s biggest

Imperial has expanded NGL solvent injection to 200 CSS wells at Cold Lake over the past two years.

When steam assisted gravity drainage (SAGD) was first piloted in the 1980s, one project achieved a steam to oil ratio (SOR) of 2.4—meaning 2.4 barrels of water were converted to steam for every barrel of bitumen produced. Today’s commercial SAGD projects have not achieved significantly better SORs, and many are worse. Granted, that early SOR was a small pilot test with 25-metre well spacing, one-quarter of the usual commercial spacing for SAGD well pairs. Even so, why hasn’t more progress been made?

It’s a crucial question. For in situ bitumen operations (as opposed to strip mining at surface), steam stimulation remains the overwhelmingly dominant technology. Extracting Alberta bitumen consumes roughly one billion cubic feet of natural gas per day, much of it to boil water to produce steam. By 2020, that daily gas consumption is forecast to triple to a staggering three billion cubic feet.

NORTHEASTERN ALBERTA WELL ACTIVITY

MAR/09

MAR/10

WELL LICENCES

189

112

▼

▲

▲

Source: Daily Oil Bulletin

O I L & G A S I N Q U I R E R • M ay 2010

35

Northeastern Alberta

made when the company decides whether to proceed with the project.

Cenovus and Imperial are both adding solvent to steam. Imperial has tried solvent-only processes but then reverted to steam usage due to the high cost of solvent, the fact that not all of the solvent could be recovered with the bitumen, and the complexity of pure solvent processes compared to steam. Even so, Imperial’s steam-plus-solvent operation at Cold Lake involves significant losses of high-cost

diluent into the formation, and the process is far from simple.

The best-known previous attempts at using solvent without steam focused on a process called vapour extraction, or VAPEX. This technology utilizes solvent vapour at dew-point conditions.

After several unsuccessful pilots, industry interest waned. Nenniger argues that N-Solv’s patented pure solvent technology will succeed where VAPEX failed for two key reasons: Photo: Joey Podlubny

SAGD producer. Cenovus is currently doing a third field pilot test of its solventaided process (SAP). This technique adds a small amount of solvent—butane— to the steam injected into SAGD wells.

Cenovus says the butane greatly reduces its steam requirements.

Natural gas is expensive. Even though Cenov us has achieved steam to oil ratios that are second to none, its SAGD operations consume about 100 million cubic feet per day of gas. As production expands, the company expects consumption to reach the range of 200 million to 250 million cubic feet. Its previous two SAP pilot tests took place at Christina Lake in northeastern Alberta and Senlac in southwestern Saskatchewan.

Cenovus says the third SAP pilot, again at Christina Lake, is going well.

The heavy crude producer is now considering commercial use of SAP at its proposed Narrows Lake project on a lease near Christina Lake. The company plans to outline two options—SAP and straight SAGD—when it files its Narrows Lake regulatory application later this year.

Once the regulatory process is finished, a decision on whether to use SAP will be

Cenovus is piloting two more butane solvent injection projects.

? ion t c u prod r u o ffect y a e d o e r n d r i o s l c t e e p e a i l p t e l fford to a u o y Can

36

Ma AY Y 2010 • OIL & GAS INQUIRER

Northeastern Alberta

1. N -Solv’s process removes methane that is naturally present in raw bitumen. Nenniger says methane greatly impedes the effect of solvent and thus impedes bitumen production.

2. N -Solv uses the heat from the condensing solvent vapour to heat the in situ bitumen. The company says this relatively low-cost form of heating is sufficient to achieve an eight-fold increase in bitumen flow if a suitable solvent is present.

The second point lies at the heart of N-Solv’s technology. “You don’t need to increase the temperature by 230 [degrees Celsius] to mobilize the oil and get it flowing.

With solvent, 20 or 30 degrees of temperature rise is sufficient to achieve SAGD-type production rates,” argues Nenniger. He believes a 500-metre well pair in 20 metres of pay could achieve production of 440 barrels per day using N-Solv’s technology, compared to 50 barrels with SAGD. In a SAGD horizontal well pair, the injected steam creates a heated zone referred to as a “chamber” between the two wellbores. Conceptually, only liquids should exit that chamber (flowing downward due to gravity). Steam and solvent

vapour should remain trapped rather than escaping into the formation or to surface.

To help achieve that result, the production well is placed low in the chamber— and submerged under a pool of liquid—to ensure only liquids are produced to surface.

The problem, according to Nenniger, is that methane—which is relatively insoluble in oil—is also trapped in the steam chamber. The more methane accumulates in the chamber, the less room there is for steam or solvent. “In our experiments, one per cent methane contamination in our solvent reduced the extraction rate by a factor of four,” he reports.

Like N-Solv, VAPEX involves propane vapour injection into the reservoir. As part of the VAPEX dew-point recipe, however, between two and four cubic metres of methane were co-injected for every cubic metre of propane vapour. Nenniger postulates that the methane filled the chamber, leaving little room for propane. His conclusion: all of the VAPEX field projects “were doomed to fail right from the beginning.” Conceptually, N-Solv eliminates this problem by continuously removing methane from the propane before it is recycled back into the chamber.

N-Solv also hopes to address the pressure problem faced by SAGD and CSS. Many steam-assisted projects operate at pressures far above the original reservoir conditions. That pressure helps force steam into the bitumen. However, Nenniger warns, high pressure can also induce loss of steam and bitumen to thief zones or lean zones, and steam may even break through to the surface.

An extreme example of SAGD pressures compromising overburden integrity occurred in May 2006 when the caprock was breached at Total E&P Canada Ltd.’s Joslyn project in northeastern Alberta.

The resulting explosion hurled rocks hundreds of metres into the air and left a huge crater in the ground. After a regulatory investigation that lasted nearly four years, Total recently decided to abandon the Joslyn SAGD project.

N-Solv’s low-pressure injection would resolve such issues. Beyond its extensive lab work, the company has drilled three exploratory wells at the underground test facility (UTF) site in northeastern Alberta.

Nenniger feels the facility at Dover can provide a convincing benchmark comparison since SAGD was originally piloted at that

Using Flexpipe Linepipe to remediate corroded steel lines is the fastest and most economically effective way to permanently restore your pipeline production. Go to: www.flexpipesystems.com/rehabilitation to see how.

It Pays To Be Flexible

O I L & G A S I N Q U I R E R • M ay 2010

37

Northeastern Alberta

site (originally developed by the provincial government). “We want to validate the technological assumptions at a scale that’s relevant to a commercial development,” he says.

Several heavy hitters are backing N-Solv.

Enbridge Inc. invested $15 million. Hatch Ltd., a global engineering firm based in Ontario, invested $15 million and supplied

Neil Edmunds is VP of enhanced oil recovery at privately held Laricina Energy Ltd., a well-financed oilsands lease holder that doesn’t yet have any production.

Edmunds was process development coordinator at the Dover UTF for Alberta Oil Sands Technology and Research Authority during the early SAGD work.

“We think solvent additives are the lowest-hanging fruit in terms of making a material improvement in the performance without a huge change in the engineering.”

– Neil Edmunds, VP of Enhanced Oil Recovery, Laricina Energy Ltd.

engineering talent. (Hatch patented a solvent vapour extraction process for bitumen in the 1970s and continued to do research and development work through the 80s.)

Nenniger says Suncor Inc. made an in-kind contribution of $25 million in providing the Dover site for a field pilot.

Sustainable Development Technology Canada, which funds development of clean technologies, invested $9 million on behalf of the federal government.

Meanwhile, a thermal oil veteran who worked on several SAGD projects is planning two steam-solvent field tests.

38

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

Laricina hopes to start an 1,800-barrelper-day pilot at Saleski—which is about 80 kilometres northeast of Wabasca in northern Alberta and 100 kilometres southwest of Fort McMurray—before year’s end. The target at Saleski is the Grosmont, a karsted, bitumen-bearing carbonate formation that has never been produced commercially.

Hard on the heels of the Saleski pilot, Laricina hopes to do a 5,000-barrel-perday demonstration project at Germain, about 130 kilometres southwest of Fort McMurray and 40 kilometres northeast of Wabasca. The main target at Germain

is the Grand Rapids, a conventional oilsands formation that has had little attention compared to the McMurray formation (which accounts for most of Alberta’s current bitumen output).

Laricina’s projects are designed to add solvents (such as propane or butane) to injected steam, a process it calls solventcyclic SAGD. The idea is the solvent would run ahead of the steam front, providing more oil recovery from a bigger volume than steam alone. “We think solvent additives are the lowest-hanging fruit in terms of making a material improvement in the performance without a huge change in the engineering,” Edmunds says.

Laricina’s twist is the use of genetic algorithms. This technique harnesses the computational power of computers to mimic nature’s process of natural selection to find the most robust solution to a problem. The company will use genetic algorithms to find the optimum proportions of steam and one or more solvents. In his long research career, Edmunds has long operated on a basic principle: It’s probably easier to find new technology suitable to the reservoir than reshape the reservoir to existing technology.

— DAILY OIL BULLETIN

From 1980.....

....to 2010, how we’ve grown

www.cgis.ca VANCOUVER • PRINCE GEORGE • EDMONTON • CALGARY • FORT MCMURRAY • AUSTRALIA • CHILE • RUSSIA

Electrical Supplies when you need them Electrical Supplies when you need them

Automation Automation

Brews Supply Ltd. – offering a broad range of electrical products, Brews Supply Ltd. –tooffering in stock and ready ship! a broad range of electrical products, in stock and ready to ship!

Wire Handling Wire Handling

s 24 ew r ws 24 h e h r

b b ho htot

vi vi ce ce

r r

BB

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

Need it Fast?

Need it Fast?

Ask About our “Hot button” Service Ask About our “Hot button” Service

Distribution Equipment Distribution Equipment Heating Equipment Heating Equipment Safety Safety Industrial Control Industrial Control Utility Products Utility Products

ut er utton s r ton se

Enclosures Enclosures

Weidmuller’s new power supplies Weidmuller’s new power supplies ensure reliable startups – with ensure reliable startups – with no hesitation no hesitation The NEW high-performance T-SERIES Power Supplies offer: The NEW high-performance T-SERIES Power Supplies offer: • 125% power boost feature for high inrush applications • • 125% power boost feature for high inrush applications Cold start-up at full load at -25°C • • • • • • • •

Cold start-up at full load at -25°C Output voltages of 12, 24 and 48VDC Output voltages of 12, 24 and 48VDC Small form factor – from 35mm wide

Small form factor – from 35mm wide MTBF (Mean Time Before Failure) rating of >900,000 hours MTBF (Mean Time Before Failure) rating of >900,000 hours -25°C to +70°C operating temperature range

• -25°C to +70°C operating temperature range

www.brewssupply.com/weidmuller www.brewssupply.com/weidmuller

Rittal’s Climate Control Solutions Rittal’s Climate Control Designed to beSolutions cool and Designed to be cool and save you money! save you money!

With one of the largest selections of enclosure cooling solutions, Rittal With one of the largest selections of enclosure cooling solutions, Rittal can help keep your enclosure cool and protect your components can help keep your enclosure cool and protect your components from airborne contaminants. from airborne contaminants.

We haven’t just perfected the art of making enclosures, We haven’t just perfected the art of making enclosures, we’ve also perfected the art of cool. we’ve also perfected the art of cool. www.brewssupply.com/rittal www.brewssupply.com/rittal

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

Central Alberta

Industry responds positively to Alberta’s retreat on royalty rates

Photo: Government of Alberta

by Paul Wells

Premier Ed Stelmach, seen here, says the province will take a smaller slice of a growing revenue pie.

The A lberta government rolled out changes to its royalty regime on March 11, a move that oil and gas industry leaders said was a strong move toward mending fences that were damaged by the New Royalty Framework (NRF) announced in 2007. Premier Ed Stelmach and Energy Minister Ron Liepert unveiled the results of the province’s long-awaited Competitiveness Review at Calgary’s McDougall Centre.

Royalty changes include the reduction in the maximum royalty rate on conventional natural gas wells to 36 per cent from 50 per cent, while the maximum rate for conventional oil wells would decrease to 40 per cent from 50 per cent.

The province will also permanently entrench a temporary incentive it introduced last year that reduces the royalty on new natural gas and conventional oil wells to five per cent for one year

(to a maximum 50,000 barrels of oil equivalent or 500 million cubic feet equivalent). The government said the permanent incentive takes effect immediately, while the new royalty curves

Stelmach also said the province will launch a cross-ministry task force that will look to simplify a cumbersome regulatory system. The task force has been directed to report back within 90 days on regulatory advancements, changes to support innovative technologies, and how to proceed with a comprehensive review of the regulatory system. Also, the Energy Resources Conservation Board will develop new processes around well spacing and confidentiality of date.

The province estimates that with the changes, oil and gas companies will increase cash flow reinvestment by two percentage points. A two percentage increase will be worth about $700 million a year, the government said. “One of the things that we’ve committed to industry is that we wanted to provide certainty and stability, and we’ve done that,” Liepert said.

The government said that the new rules will reduce its overall royalty take by at least $828 million over the next three years, but it expects to make back roughly half that amount in increased land sales and corporate taxes. “We believe that…by the third year of our

"…by the third year of our fiscal plan, activity, and spinoff from activity will offset any revenue losses projected."

- Ron Liepert , Energy Minister

will be finalized by May 31 and made effective on Jan. 1, 2011.

The proposed measures are designed to re-stimulate investment in Alberta’s oilpatch, but they will also see the government’s royalty share shrink. “The best way to look at this and the best way I can describe it is that the piece of the pie may be smaller, but we’re growing a much larger pie,” Stelmach said.

fiscal plan, activity, and spinoff from activity will [help] offset any revenue losses projected,” Liepert said.

Gary Leach, executive director of the Small Explorers and Producers Association of Canada, viewed the changes in a positive light, noting that the junior sector had been hit particularly hard by the NRF, as well as the fallout from the credit crisis and global recession. “We’re pleased

MAR/09

MAR/10

MAR/09

MAR/10

WELLS SPUDDED

62

146

WELLS DRILLED

74

175

CENTRAL ALBERTA WELL ACTIVITY

MAR/09

MAR/10

WELL LICENCES

59

181

▲

▲

▲

Source: Daily Oil Bulletin

O I L & G A S I N Q U I R E R • M ay 2010

41

Central Alberta

to see that the low front-end royalty is entrenched because that’s a really critical requirement when you’re investing risk capital. You get return on that capital sooner,” he said.

“We’re also pleased to see that the government’s given us some certainty on where the upper end of the royalties are going to be capped because that’s a return on your investment, and the smaller oil and gas companies are trying to attract investment into A lberta. I think it’s really important to be able to say to investors, ‘Here’s some certainty on what that will be.”

Dave C ol lye r, pr e side nt of t he Canadian A ssociation of Pet roleum Producers, was also pleased. “I think they got a lot of it right. Certainly on the fiscal side there was some significant movements that are consistent with the kinds of things we’ve been talking about for some time,” he said. “And I think they also very tangibly recognized this is more than fiscal terms—it’s regulator y framework, it ’s technolog y and

innovation, it’s about how to talk about the industry collectively.”

Collyer added that he’s encouraged that all aspects of competitiveness are being addressed, in particular the government’s commitment to address regulatory competitiveness in a timely manner. “A better regulatory framework will provide greater certainty for industry while continuing to deliver responsible environmental performance.”

Both Collyer and Leach agreed that the province has opened the door to an improved relationship with industry, which was highly critical of the NRF and showed its dissatisfaction with that royalty regime by diverting investment out of Alberta to neighbouring jurisdictions.

“I don’t think you restore credibility and trust overnight. That’s a process and that’s going to take a little while,” Collyer said. “But I would say that both the substance of what’s been announced and t he tone w it h which it ’s being announced are both very positive steps in that direction.”

Leach agreed that the province has taken a positive step, saying the development of Alberta’s petroleum resources should be a “partnership” between industry and government. “From what I’ve heard today and talking to a number of companies in the industry and the financial community, I think the sentiment is this has gone a long way toward restoring a level of trust with the government, and I also think both sides acknowledge they need to keep the door open in terms of dialogue,” he said.

Although changes announced in the Competitiveness Review bode well for industry, Leach said there are still some outstanding issues that need to be ironed out, most notably establishing the parameters for when the high-end royalties kick in. “We’ve got quite a bit of work to do around drawing those curves. The details around where those curves will be drawn between the low front-end and the upper is still a piece of business we have to work out with the government in the next couple of months,” he said.

— DAILY OIL BULLETIN

Bellatrix Exploration updates its Cardium drilling results Bellatrix Exploration Ltd. reports that its most recently operated Cardium well at Willesden Green (0.71 net) was successfully stimulated utilizing the multi-stage fracturing technique. After all of the load oil was recovered, the well was flowing at 735 barrels of oil per day and a natural gas rate of 1.05 million cubic feet per day for a combined production rate of 910 barrels of oil equivalent per day.

To date in the first quarter of 2010, Bellatrix says it has drilled and completed 11 gross wells (6.01 net) and the company is currently drilling one gross well (0.85 net) at Ferrier (Notikewin horizontal) and one gross well (one net) at West Pembina (Cardium horizontal). On the Cardium play in westcentral Alberta, the company is drilling its seventh gross well (5.46 net). These wells were drilled and are being drilled at Willesden Green, Lodgepole, West Pembina, and Norbuck.

At Lodgepole, the company’s second wholly owned well was drilled and completed, and placed on stream in midFebruary at an initial production rate 42

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

of 375 barrels of oil equivalent a day.

The company is currently drilling a wholly owned well at West Pembina, which it anticipated being tied in before spring breakup. A second well (0.5 net) has been completed and is currently recovering load fluid.

Bellatrix has a total ownership in 133 gross sections (81 net) in the west-central Alberta Cardium oil play.

On the Notikewin play in the Ferrier area, Bellatrix has drilled and completed a wholly owned multi-staged horizontal well. The well was placed on production in February at an approximate initial rate of 3.5 million cubic feet per day with 35 barrels of liquids per million cubic feet. A second Notikewin horizontal well (0.85 net) is currently

At Lodgepole, the company’s second well was placed on stream at an initial production rate of 375 BOE a day.

At Norbuck, the company has drilled a total of three Cardium wells on its 2.5 gross sections (1.15 net). Production from two wells has lowered reported initial production rates each of 100 barrels of oil equivalent per day. Bellatrix said these lower rates are believed to be a factor of the more distal setting at Norbuck, where thinner net oil pays and lower permeabilities are more common.

drilling in the Ferrier area. The timing for the completion and tie-in will be dependent on road restrictions during spring breakup.

In addition to this activity, Bellatrix participated in drilling four gross (0.55 net) nonoperated McLaren oil wells in the Lindberg area. These wells have been completed and are currently being put on production.

— DAILY OIL BULLETIN

ECOQUIP Hydraulic Pumpjacks

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

Desiccant DehyDrator Typical Specs:

Reliable...

Flexible...

Powerful...

Mobile...

Efficient...

Better.

❖ 8” Diameter ❖ 48” Height ❖ 285 PSIG ❖ 1” or 2” Manifold ❖ Hammer Union Closure Comes Complete With: Prebed & Initial Salt, Bypass Manifold, Vent & Drain.

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

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

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

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

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

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

WANTED

ELECTRICAL MATERIAL O I L & G A S I N Q U I R E R • M AY 2 0 1 0

43

microbial solutions WWW.DPSMICROBIAL.COM

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

THE ENVIRONMENTALLY FRIENDLY ALTERNATIVE.

Red Deer, AB

403.990.1582

Calgary, AB

403.686.7020

Frobisher, SK

306.486.2110

Exclusive Authorized Distributor

ISO 9001-2000 CERTIFIED

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.

Custom solutions…

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

44

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

From a custom manufacturer.

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

Southern Alberta

Photo: Brian Zinchuk, Pipeline News

Well count, metres drilled, and rig activity all surge in early 2010

Alberta employed 366 drilling rigs for the first two months, up 34 per cent from a year earlier.

Operators drilled 35 per cent more wells in February than a year earlier, while metres drilled surged 54 per cent with more wells being drilled horizontally. Daily Oil Bulletin (DOB) records show 1,491 new wells were rig released in Canada during February compared to 1,106 for the same month last year, but still far fewer than in 2008 when industry drilled 3,952 wells.

In fact, metres drilled in February (2.29 million) were only down 11 per cent from February 2008 and were 54 per cent above the 1.49 million metres of hole drilled in the second month of 2009. Part of the rise in metres drilled this year has been due to horizontal drilling in tight formations.

DOB records show 440 horizontal wells rig released last month, up from 191 a year ago.

In the first two months of 2010, operators rig released 2,772 new wells, up by 420 wells or 9.5 per cent from the same two months in 2009. Metres

drilled reached 4.25 million to the end of February this year, 31 per cent above the total for January and February 2009.

Operators drilled 462 new wells in Saskatchewan over the first two months of 2010, up nearly 40 per cent from a year earlier. In Manitoba, 88 wells have been drilled versus 38 to the end of February

chasing natural gas deposits (according to licence data). Wells targeting natural gas in Alberta were down more than two-thirds from the peak of gas drilling in 2006.

Rig activity also surged by 31 per cent during the first two months of 2010. A DOB survey for the first week of March found 232 more rigs at work than in the same week last year. The 547 active rigs represented 68 per cent of the available fleet of 806 rigs.

A year ago, Canada’s oilpatch was hit hard by plunging commodity prices and the credit crisis that began in the fall of 2008. Only 232 of Canada’s drilling rigs were at work in the first week of March 2009, which represented 37 per cent of the available fleet of 853 rigs.

Through the first two months of 2010, the Rig Locator showed an average of 543 active units, up from 416 in the first two months last year. Provinces with good oil prospects got a solid start this year.

Saskatchewan and Manitoba almost doubled their rig counts from a year ago with 75 active in the former province through the first two months of 2010 (versus 39 last year) and 12 at work in the second province (up from six in 2009).

Alberta employed 366 drilling rigs for the first two months, up 34 per cent from a year earlier but still well below the 455 active in the winter of 2008 and the 475

Operators drilled 462 new wells in Saskatchewan over the first two months of 2010, up nearly 40 per cent from a year earlier.

2009. Alberta operators finished work on 2,067 new wells, about eight per cent more than last year’s 1,911 wells. British Columbia operators only drilled 150 wells, down 39 per cent from 246 wells a year earlier.

Of all the wells rig released in Alberta and Saskatchewan in the January-February period, 1,180 were targeting crude oil or bitumen formations, while 1,177 were

rigs at work in the first two months of 2007.

The 2006 peak year saw 542 active rigs.

While British Columbia’s rig count was down to an average of 89 units so far in 2010 from 96 employed a year ago, it was fairly consistent with rig counts for the past three years, although well below the 2004 peak of 155 active rigs.

MAR/09

MAR/10

MAR/09

MAR/10

WELLS SPUDDED

55

27

WELLS DRILLED

65

40

— DAILY OIL BULLETIN

SOUTHERN ALBERTA WELL ACTIVITY

MAR/09

MAR/10

WELL LICENCES

182

128

▼

▼

▼

Source: Daily Oil Bulletin

O I L & G A S I N Q U I R E R • M ay 2010

45

Southern Alberta

Ensign launches a build program despite lower revenues for 2009 Ensign Energy Services Inc. has begun a new build program that will result in six new proprietary ADR-1500s (automated drilling rigs) for delivery starting in early 2011. While no specific regions have been targeted for these new builds, Ensign said the rigs will likely be contracted for natural gas shale plays within North America before construction is completed.

The expansion is proceeding though Savanna’s fourth-quarter net income was down 69 per cent to $22.64 million in 2009 from $73.83 million for the same period in 2008 due to lower levels of demand for oilfield services and reduced margins resulting from a general oversupply of oilfield service equipment, particularly in North America. Net income for 2009 fell by 52 per cent to $125.44 million from $259.96 million a year earlier.

Despite the market turbulence experienced in Canada and throughout the world in 2009, Ensign said it continued to achieve acceptable operating margins of 31.3 per cent for the year compared with 32.8 per cent in 2008. Its geographic diversification and strong balance sheet

allowed the firm to take advantage of opportunities to continue to grow in 2009.

The 14 ADR and seven well servicing–rig new-build program that began in 2008 was completed in December 2009.

In Canada, Ensign recorded revenue of $112.4 million in the fourth quarter of 2009, a 38 per cent decrease from $180.2 million recorded in the fourth quarter of 2008. Canadian revenue was $425.9 million for the year, down 43 per cent from $743 million recorded in 2008. Canada accounted for 40 per cent of the company’s revenue in the quarter (39 per cent in 2008) and for 37 per cent of its revenue for the year, down from 44 per cent in 2008.

Drilling rig utilization in Canada in the fourth quarter was 28.8 per cent versus 33.8 per cent in 2008, while rig utilization for the year averaged 20.3 per cent compared to 36.5 per cent the previous year.

Ensign’s 112 well servicing rigs/units averaged a 29.8 per cent utilization rate in the fourth quarter (31.3 per cent in 2008) and 26.5 per cent for the year (33.7 per cent in 2008).

The number of drilling days recorded by the company’s U.S. segment in the fourth quarter of 2009 was down 45 per cent while drilling days for 2009 decreased by 51 per cent. Late in 2009, Ensign began operating in the unconventional shale gas plays of Haynesville and Marcellus with one rig in each area. A second rig began operating in the Haynesville area in the first quarter of 2010.

Ensign’s international operations struggled in a few key areas during the second half of 2009, as it worked through a significant reduction in operating activity in Africa and Latin America. These negative events were partially offset by the expansion of the company’s international drilling rig fleet in 2009.

During 2009, the company completed the international component of its newbuild program that resulted in six new ADR drilling rigs successfully deployed into the international market. Additionally, it transferred four ADR rigs from its Canadian fleet to its international operation to capitalize on additional opportunities in existing markets, although the financial contributions of

No matter what the print requirement, we always strive to exceed our customers’ expectations.

We offer award-winning print communications to help our customers succeed. PrintWest is known for our quality and ability to get the job done and delivered on time and on budget.

Francis Lefaivre | National Sales Director | email: f.lefaivre@printwest.com direct: 403.516.3487 mobile: 403.463.0962 toll-free: 1.800.387.2446 ext 3487

46

M aY 2010 • O I L & G A S I N Q U I R E R

www.printwest.com

Southern Alberta

these transfers will not be realized until the first half of 2010.

Ensign said its Canadian operations have had a decent start to 2010, with winter utilization being slightly better than expected, particularly for the deeper drilling rig classes. However, financial contributions from Canada in 2010 are expected to be reduced from the prior year as margins for the winter drilling season reflect revenue rates associated with the lower levels of demand for oilfield services that persisted through much of 2009.

The company’s U.S. operations also started the 2010 fiscal year better than expected, bolstered by the positive impact from the addition of seven ADR drilling rigs and two new well servicing rigs added to the fleet. Additionally, Ensign was able to modestly improve its margins on operating equipment in the face of better-thanexpected levels of demand for certain equipment classes. While the margins remain below peak levels attained within the last couple of years, the slight improvements indicate the level of customer acceptance and demand for the company’s newer high-technology drilling rig fleet.

— DAILY OIL BULLETIN

Trican acquiring U.S. assets Trican Well Service Ltd. has agreed to pay $46 million for the assets of a private U.S.based company that provides stimulation services used in the development and completion of oil and gas wells in Oklahoma, Texas, and Arkansas.

The acquired assets, which were put into service mid-2008, consist of 56,250

Trican said it intends to integrate the acquired equipment into its current U.S. fleet and operate out of the acquired base in Shawnee, Oklahoma, providing another base from which to service customers active in the Woodford shale.

Despite some very challenging market conditions for most of 2009, Trican said its

Despite some very challenging market conditions for most of 2009, Trican said its U.S. operation positioned itself well in some of the most active shale plays. horsepower (hp) fracturing capacity and the necessary ancillary equipment to operate two fracturing crews. In addition, the company acquired two acidizing pumpers and ancillary equipment, and an established base of operations in Shawnee, Oklahoma, which includes some rail assets.

This transaction brings Trican’s worldwide fracturing fleet to 515,850 hp and will increase the U.S. fleet to 267,750 hp.

Based on the allocation of the cash consideration and assumed debt to the fracturing assets acquired, Trican estimates the cost of the acquisition to be approximately $773 per unit of hp.

U.S. operation positioned itself well in some of the most active shale plays. Activity has recently rebounded in these regions, which has had a positive impact on equipment utilization and operating margins. This additional equipment will help Trican meet the increasing demand for services from its customers.

Trican said it is committed to growing its geographic presence and service offering in the United States, and believes that this acquisition will make a significant contribution to this long-term strategy.

Currently, demand for its services in the United States is robust.

— DAILY OIL BULLETIN

Global Petroleum Show

the ultimate energy experience.

June 8 - 10, 2010 Calgary, Alberta, Canada Stampede Park

REGISTER NOW Enter Invitation Code: GPS3D For Your FREE Ticket

Major Exposition Sponsor

Official Media Partner

globalpetroleumshow.com

O I L & G A S I N Q U I R E R • M ay 2010

47

Southern Alberta

Alberta is well on the way to surpass its 2009 Crown land bonus revenue dollar terms, “so I think the trend is healthy and shows growing optimism about future investment trends in Alberta. It is certainly possible that uncertainty over the details of the government’s policy response on royalties was a bit of a brake [for] some bidders,” he said.

Britt Resources Ltd. tendered the bonus high of $21.4 million for a 4,096 ha licence parcel in the Deep Basin west

Land & Lease Ltd. The broker acquired the rights to a 64-hectare parcel for $2.3 million in the northwestern quarter of section 16 at 50-11W5. The second parcel, totalling 128 ha, went for $4.6 million for the eastern half of section one at 51-12W5.

Daily Oil Bulletin records show Vero Energy Inc. rig released an oil well on March 1 in the Westpem area at surface location 4-16-50-12W5 with the Cardium

"It is certainly possible that uncertainty over the details of the government’s policy response on royalties was a bit of a brake [for] some bidders."

– Gary Leach, Executive Director, Small Explorers and Producers Association of Canada

of Edson. The broker paid an average of $5,226/ha for a total of nine tracts and several sections at 53-18W5, 53-19W5, 54-18W5, and 54-19W5. The area has been heavily drilled by industry.

The per-hectare high in the sale was $36,239, which was produced on two separate lease parcels picked up by Scott

M

MPI

C AR IN MIT PLASTICS

.

Alberta’s land sale auction on March 10 generated $167.6 million in bonus bids, the highest after four sales this year, as producers continued to post and purchase lands containing tight formations that are now considered economic to produce with new drilling and completion technologies.

Year-to-date, the government has raised $378.6 million from 2010 land sales on 628,714 hectares (ha) for an average price of $602.18/ha, already past the halfway point to equalling the full calendar year total for 2009 of $741.6 million. To the same point in 2009, the province had collected $52.9 million on 443,774 ha for an average of $119.26/ha.

The March 10 auction sold 323,661 ha of Crown rights for an average of $517.71.

During the first sale of March last year, the province brought in just $10.6 million on 110,870 ha at an average of $95.40.

Gary Leach, executive director of the Small Explorers and Producers Association of Canada, pointed out that each land sale in 2010 has been progressively larger in

formation listed as the terminating zone.

The well had a total depth of 3,150 metres and was drilled horizontally.

Also during the sale, seven parcels at 45-5W5, which combined for a total bonus of $12.6 million, each produced per-hectare averages of $15,162.

— DAILY OIL BULLETIN

100 Gallon and 150 Gallon Double Wall Chemical Tanks

PROUDLY SERVING THE OIL & GAS INDUSTRY SINCE 1985

Having a Hard time finding replacement parts for your Heat excHangers?

Joule Technical SaleS inc. offers spare parts and complete replacement units for all major brands.

TOLL FREE : 1.800.461.2788 TEL : 403.239.3477 FAX : 403.241.0148

sales@joule.ca 48

M aY 2010 • O I L & G A S I N Q U I R E R

• Double Wall 100 Gallon 61 L x 33.5 W x 21.5 H • Double Wall 150 Gallon 61 L x 33.5 W x 31 H

• 7” Vented Threaded Cap • Stainless Steel 1” Bulkhead Fitting • Grounding Wire and Containment Cleanout • Optional 4 ft Stand

888-868-2658

C

A

N

A

D

A

ISO 9001:2000 RE G I S T E R E D F I R M

Southern Alberta

Savanna more than doubles its 2010 capital budget to $97M Savanna Energy Services Corp. is expanding its capital program in 2010 in the light of improving prospects, international expansion, and its improved financial position. Late last year, the company outlined a $46-million capital program.

Including maintenance capital and an expansion focused on Australia, the company’s 2010 capital commitment is now approximately $97.3 million.

Savanna plans to expand its fleet of ultra-heavy double drilling rigs by two, retrofit a further two hybrid drilling rigs for deployment to Australia, and enhance the conventional depth capacity of two of its hybrid rigs to enable them to drill to depths exceeding 3,000 metres. While none of these rigs is currently contracted, management said it’s confident that they will be prior to delivery.

The company will also add an additional flush-by unit to its well servicing fleet. In addition to these commitments, Savanna also aims to further expand its portable top drive fleet by four, to upgrade the capacity of two shallow conventional double drilling rigs for deployment from

Canada to the United States, and to marginally increase its rental fleet.

In 2009, the company reported a lower net loss of $27.9 million compared to a $280.6-million loss the previous year. Savanna’s challenges mirrored those of the industry in 2009. With about 80 per cent of its drilling rigs and 90 per

rig from its Canadian operations to North Dakota in the fourth quarter of 2009, increasing the total U.S. drilling rig fleet to 17 rigs.

During the fourth quarter, Savanna concluded a joint technology–development agreement with a private, government, and operator-backed technology

In 2009, the company reported a lower net loss of $27.9 million compared to a $280.6-million loss the previous year. cent of its well servicing fleet based in Canada during the year, the company was negatively affected by the industry conditions in Canada to a greater extent than those with broader geographic operations.

Savanna, however, is on a diversification strategy. In December 2009, the company entered into a five-year contract to initially deploy two hybrid drilling rigs from its Canadian fleet and two builtfor-purpose service rigs to Queensland, Australia. Savanna also moved a drilling

group directed at the development and expansion of coil-drilling capabilities in directional and horizontal wells, focused primarily in the United States.

On a year-to-date basis, Savanna operated an average fleet of 100 net rigs compared to 2008, when the average deployed drilling fleet was 96 net rigs. Since the first quarter of last year, Savanna has taken measures to reduce operating costs to more closely align these costs with the decreased operating activity.

— DAILY OIL BULLETIN

RESOURCES EXPO 2010 Making the business-to-business connection…

June 3-5, 2010 Prince George, BC Canada www.BCResourcesExpo.com Phone: 250-563-8833 Toll free: 1-877-562-5668

O I L & G A S I N Q U I R E R • M ay 2010

49

Gibson Energy—part of Saskatchewan’s past, present and future…

advertisement

A

lthough Gibson Energy, a premier North American midstream oil and gas company for over 50 years, is headquartered in Calgary, its roots began and continue to grow in Saskatchewan.

In fact, Gibson’s first sale in 1953 was for 365 barrels of crude oil that was loaded onto two tank cars in Gull Lake, Saskatchewan, headed for the Suncor Edmonton refinery (then known as British American). Today, the company moves millions of barrels of energy products to market through an infrastructure of facilities, terminals, pipelines, tank storage and a fleet of over 1,400 truck transportation units.

The yellow Gibson trucks, or “moving billboards” as they like to call them, have long been a familiar sight on Saskatchewan’s highways. The brands of Gibson’s affiliates—including Moose Jaw Refinery, Bridge Creek Trucking, Johnstone Trucking and Canwest Propane—are also very recognizable to both the business and the non-profit sectors in many communities. In addition to Gibson’s reputation as an employer of choice, its longstanding practice of being socially responsible and giving back to the communities in which it operates has been acknowledged and appreciated by the University of Saskatchewan, the Moose Jaw Multiplex, the Lloydminster Fire Department, the Gull Lake Recreation Complex and many other service organizations.

The Moose Jaw Refinery, which refines and markets a variety of petroleum-derived products, including several grades of road asphalt and roofing flux, has been in the Gibson family of companies since 2002. The refinery, when first purchased, operated six to seven months of the year. Because of Gibson’s capital investment, today the facility runs year-round. Gibson is a significant purchaser of crude oil in the Shaunavon, Gull Lake, Kerrobert and Lloydminster areas, which provide feedstock to the refinery. Under Gibson’s management, several new products have been developed and sold, both in Canada and the United States. These markets are served by a fleet

of 750 railcars as well as truck transportation units supplied by Gibson. Being in close proximity to both CP and CNR rail lines at Moose Jaw allows for efficient deliveries to customers.

In addition, the refinery produces drilling fluid and fracturing fluid for the oil and gas drilling industry, which are also distributed by truck and rail across North America. With the recovery of oil prices and the development of shale gas, the demand for both fluids is expected to grow in the future.

The acquisition of Bridge Creek Trucking in the spring of 2009 provided two truck unloading terminals located just outside of Gull Lake. Oil received into these terminals is delivered into the South Saskatchewan Pipeline System.

Another affiliate, Johnstone Trucking, primarily transports crude oil and operates a well service business out of southeastern Saskatchewan and Manitoba, with over 50 units in these areas.

Johnstone recently added a new office and shop complex to its base in Frobisher, and has additional facilities and trucks in Estevan, as well as trucks based out of Arcola, Saskatchewan. This was a strategic acquisition for Gibson, as Johnstone is located in the fast-developing Bakken oil play.

Canwest, the propane marketing/distribution arm of Gibson, provides innovative propane solutions to customers throughout Saskatchewan. Its services are used by a wide variety of sectors (industrial, commercial, residential, etc.) and industries.

Gibson’s Saskatchewan footprint was also enhanced with the 2009 purchase of a 39% ownership interest in Deepwell Energy. As Gibson’s Saskatchewan-born-and-raised President Stew Hanlon stated when the two companies initiated an alliance, “Our strategic relationship will

enable Gibson to optimize crude oil marketing opportunities with Deepwell’s facilities, capitalize on Gibson’s trucking fleet to move additional volumes of oil and water and increase Gibson’s presence in the Bakken play region.”

Another intrinsic contributor to Gibson’s business in Saskatchewan is the marketing department.

The marketing function touches almost every component of the oil and gas industry. The department: ■ purchases crude oil from the producer’s wellhead to supply oil to many Gibson terminals and the Moose Jaw Refinery ■ buys crude for transport on a Gibson truck or pipeline and ships the oil on various crude oil pipelines to refineries across Canada and the United States ■ sells the drilling and fracturing fluids so producer/ drillers can drill and complete new wellhead production ■ buys and sells natural gas liquids.

One could say that marketing is the grease between the wheels of the Gibson machine that offers a wide array of products and services to Saskatchewan’s upstream and downstream oil and gas industry.

Gibson excels at bundling its services—marketing, transportation, distribution and processing of energy products—for the specific demands of customers.

The company intends to reinforce its enviable reputation in Saskatchewan, as a responsible employer and as a corporate citizen. In Mr. Hanlon’s words: “We’re proud to be an integral part of the Saskatchewan economy today as well as the growth and success we all expect to see throughout the province for decades to come.” ■

www.GibSonS.com

Saskatchewan

Photo: Brian Zinchuk, Pipeline News

PetroBakken pegs FD&A cost and outlines drilling plans

PetroBakken plans to build two more major oil batteries and expand its existing Midale gas plant.

PetroBakken Energy Ltd. calculates its proved-plus-probable reser ve cost at $32.11 per barrel of oil equivalent (boe), rolling in its finding, development, and acquisition expenses along with reserve revisions and future development charges.

Its proved-plus-probable reserves at the end of 2009 totalled 143.6 million barrels.

On Aug. 4, 2009, Petrobank and TriStar Oil and Gas Ltd. agreed to combine assets into a Saskatchewan-focused producer named PetroBakken Energy Ltd. The new company is a 64 per cent owned subsidiary of Petrobank Energy and Resources Ltd. The net present value of its reserves was estimated at $3.7 billion (before tax, discounted at 10 per cent) at the end of 2009.

PetroBakken suffered a negative revision of 4.8 million boe to its proved-plus-probable reserves when Sproule Associates Limited applied its reserve assessment standards and

methodology to a portion of TriStar’s assets in southeastern Saskatchewan.

PetroBakken said its enhanced bilateral drilling approach in the Bakken tight oil formation has demonstrated its ability to increase primary recoveries from the reservoir and expand the economic limits of this resource play. The ongoing modifications and improvements to fracture stimulation techniques result in fractures that are statistically less likely to break out of zone, resulting in wells with lower water cuts in areas where the bounding shale zones to the Bakken are thinner.

Since July 2009, PetroBakken has been implementing the use of long bilateral horizontal wells with 51 bilateral horizontal wells now on production. Bilateral horizontal wells have generated on average greater than a 50 per cent increase in productivity compared to offset single-leg Bakken horizontal wells.

PetroBakken noted that its January 2010 production averaged 43,600 boe per day, after the disposition in December 2009 of approximately 2,000 boe per day.

The company said it expects further dispositions of non-core producing assets in the first quarter of 2010 totalling 3,800 boe per day. Including assets sold prior to year end, the company anticipates selling a total of 5,800 boe per day for gross proceeds of approximately $315 million.

PetroBakken’s 2009 average production was 26,333 boe per day. In the fourth quarter, PetroBakken production averaged 45,621 boe per day. In December 2009, company production averaged 45,900 boe per day, of which 38,200 boe per day were produced from core properties in southeastern Saskatchewan and British Columbia.

PetroBakken drilled 157 gross wells (152 oil wells, three gas wells, and two dry and abandoned wells) and 117.3 net wells (113.3 oil, 2.5 gas, and 1.5 dry and abandoned) in 2009. All of these oil wells were in southeastern Saskatchewan, while all of these gas wells were in the Monias and Horn River unconventional gas plays in northeastern British Columbia.

PetroBakken currently has 12 rigs drilling in southeastern Saskatchewan, 10 rigs working in the Bakken, and two rigs in its conventional Mississippian plays.

The company plans to build two more major oil batteries and expand the existing Midale gas plant from 8 million to 13 million cubic feet per day to handle the additional solution gas volumes.

Following spring breakup, the company’s 2010 drilling program will be realigned to take advantage of an expanded drilling inventory in the Cardium play of Alberta. Current plans anticipate an 8 to 10 rig program in the Bakken and conventional plays of southeastern Saskatchewan and six drilling rigs operating in the Cardium.

— DAILY OIL BULLETIN

SASKATCHEWAN WELL ACTIVITY

MAR/09

MAR/10

WELL LICENCES

157

287

▲

MAR/09

MAR/10

WELLS SPUDDED

47

142

▲

MAR/09

MAR/10

WELLS DRILLED

68

197

▲

Source: Daily Oil Bulletin

O I L & G A S I N Q U I R E R • M ay 2010

51

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

Invalco

www.nait.ca/cit

www.pem-controls.com

invest in your experts corporate training for the real world

Pressure & Temperature Instruments Needle Valves & Manifolds • Accessories

As innovation continues to change how people interact with technology, analyze data and move business forward, there’s never been a better time to invest in training for your employees. NAIT Corporate and International Training can help — delivering relevant, timely training designed to meet your needs.

Our expertise includes certificate programs and customizable courses in Project Management, Leadership, Office Technology and Accounting, Team building, Trade-specific training and much more.

Develop your future leaders. Call us today. ph (780) 378.1230 email cittraining@nait.ca

corporate and international training

Toll Free 1.800.661.9039 • www.gaugetech.ca

52

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

Northern Frontier

Photo: Joey Podlubny

Decision on Mackenzie pipeline project gets delayed until 2013

First proposed in the 1970s, the Mackenzie Valley pipeline project still faces a long road ahead.

The proponents of a proposed Mackenzie natural gas pipeline will not decide whether the project should proceed for nearly four years—and then it would be another five years before gas would be flowing. In that case, the earliest possible start-up date for the proposed Mackenzie natural gas project is late in 2018, four years later than the 2014 possible onstream date forecast three years ago.

“This revised start-up timing reflects regulatory delays, lack of a fiscal agreement, project re-staffing requirements, and seasonal constraints,” Imperial Oil Resources Ventures Limited says in a filing with the National Energy Board (NEB).

“Timely action by all parties, including the proponents, governments and regulators, will be essential to achieve this schedule.”

The NEB is to hear final arguments on the Mackenzie project April 12–24 in the Northwest Territories. In its filing, Imperial says the proponents believe that by late 2013 they could be in a position to decide whether to proceed with the project. Assuming they decide to proceed, facilities and site work would begin in mid-2014 with commissioning and start-up in the first quarter of 2018.

This schedule is based on the assumption that by Sep. 1, 2010, the board has approved the principal project and sufficient progress has been made on fiscal terms, says Imperial. These requirements will allow for a decision to be made in September of this year to re-staff the project team and re-start the activities required to enable the proponents to decide whether to proceed.

The NEB had directed the project proponents, Imperial, the Mackenzie Valley Aboriginal Pipeline Limited Partnership, ConocoPhillips Canada (North) Limited, Shell Canada Limited, and ExxonMobil Canada Properties, to file an updated project schedule, as well as on markets and economic feasibility.

In an update for the board, Imperial said that there have been confidential discussions between the federal government and the project proponents on the subject of fiscal terms for the project. “However, more progress is needed to allow for a re-staffing of the project team and for resuming engineering, permitting, and fieldwork,” it said.

As for regulatory-related activities, Imperial noted the Joint Review Panel concluded its hearings in late 2007 and

issued its report Dec. 30, 2009. The company said it has obtained an improved understanding of the regulatory review and approval process associated with permits required for construction and operations activities. Benefits and access agreements also have been negotiated, ratified, and executed with aboriginal groups in all regions except the Deh Cho, where further negotiations are planned, said Imperial.

Imperial said it has no new evidence to file for the Mackenzie Valley pipeline regarding long-term gas supply, contractual commitments, and project financing.

However, in relation to gas markets, it filed an updated gas market demand and supply analysis for Canada and the U.S. Lower 48.

The study by Angevine Economic Consulting Ltd. concluded that market conditions in Canada and the Lower 48 states would allow gas from the Mackenzie Delta to be absorbed if the pipeline project is constructed to be in service by 2018. The northern gas would be needed because natural gas consumption will continue to grow, spurred by the increasing demand for power generation and for industrial purposes, especially for oilsands bitumen production and upgrading, the study found.

The Angevine study forecasts that total gas demand in Canada and the Lower 48 states will climb to 92.81 billion cubic feet (Bcf) per day by 2030, up from 73.35 Bcf per day this year.

In Canada, Alberta oilsands’ demand for gas is forecast to rise to 2.01 Bcf per day by 2030, from 800 million cubic feet per day in 2010, while gas-fired power generation demand would increase to 2.48 Bcf per day, of which 1.42 Bcf per day would be in Alberta.

The study acknowledges that the growth of shale gas in both Canada and the United States will help to meet total domestic requirements. “However, even with the delivery of gas to the North American pipeline grid via pipelines from the Mackenzie Delta and Alaska, LNG [liquefied natural gas] imports will still be needed to balance supply and demand,” it says.

— DAILY OIL BULLETIN O I L & G A S I N Q U I R E R • M ay 2010

53

INNOVATIVE SOIL STABILIZATION SOLUTIONS for YEAR ROUND MUD FREE ACCESS

CARES Ltd.

(403) 262-2737 info@caresltd.ca

Reduce borrow pits by 50%, eliminate need for matting, reduce gravel required by 90%, use any insitu sand, silt or clay soils, improve construction safety and save money!

“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 Interested in Alberta’s energy future?

A new publication, Energize Alberta links agricultural, rural and urban Albertans through a unique approach to petroleum, power, and renewable coverage.

Watch for

Energize Alberta

coming this May! For more information, contact Rhonda Helmeczi at 403.516.3475 or rhelmeczi@junewarren-nickles.com

Brought to you by: JuneWarren-Nickle’s Energy Group, Great West Newspapers, and Farm Business Communications, members of Glacier Media Inc.

54

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

We’ll help make sense of the areas where energy, the economy, and the environment intersect.

Central Canada

Conference Board forecasts higher profits for the gas industry

Photo: Brian Zinchuk, Pipeline News

Feds penalize Chinese OCTG imports

Gas industry costs are expected to rise this year, but not as rapidly as natural gas revenues.

Higher average natural gas prices this year will more than offset falling production in Canada’s natural gas industry, according to the Conference Board of Canada.

“Although prices have nearly doubled in less than six months, drilling activity remains sluggish as Canada continues to ride out the remaining effects of the recession,” says Todd Crawford, an economist with the Ottawa-based think tank.

Natural gas prices are expected to average $5.44 per thousand cubic feet at AECO, up 36 per cent from last year’s low, but down from the 2008 average as high inventories continue to weigh on the effects of any growth in North American demand, says the board in its report, Canadian Industrial Outlook: Canada’s Gas Extraction Industry—Winter 2010.

Prices will continue to rise throughout the forecast period to $9.30 per thousand cubic feet by 2014 due to a rising demand for a relatively clean and inexpensive source of fuel along with falling North American supply, which should help keep inventories in balance, the report predicts.

After falling by nearly 65 per cent last year, profits in Canada’s gas extraction

industry are forecast to more than double to nearly $5.9 billion in 2010 as revenues rebound by more than 20 per cent. “Profits responded quickly to low prices in 2009, falling 65 per cent to $2.1 billion,” says the report. “The result would have been even worse were it not for the industry’s ability to curtail investment spending and cut costs in a timely manner.”

While costs will also rise this year, they are not expected to expand as rapidly as revenues due to continued weak investment for at least one more year. Costs, though, will nearly double over the full forecast period, limiting the average annual growth in profits to under 10 per cent between 2010 and 2014.

The Conference Board of Canada completed the forecast before the Alberta government released the outcome of its Competitiveness Review. Although changes to Alberta’s royalty framework are expected to have little effect on this year’s forecast, the reduction in royalties proposed by the government offers some upside potential to the forecast starting in 2011, says the board.

— DAILY OIL BULLETIN

The dumping by China of subsidized well casing and tubing has harmed Canada’s domestic industry, Ottawa’s senior trade tribunal said on March 23. As a result, the Canadian International Trade Tribunal (CITT) said the Canada Border Services Agency (CBSA) will collect anti-dumping and countervailing duties on the goods.

The exception will be pup-joints up to 12 feet long, which will not be affected by the finding.

In February, the CBSA ruled that the oil country tubular goods (OCTG) in question had been dumped and subsidized, but it was up to the CITT to decide to what degree, if any, those actions had injured Canada’s domestic industry.

As it turned out, while the CITT decided Canada’s domestic industry was injured by Chinese casing and tubing imports, it ruled that the industry was not harmed by the dumping and subsidizing of Chinese coupling stock, another class of OCTG. Last November, the CBSA began collecting preliminary duties on Chinese casing and tubing, on the grounds that it had earlier made a finding of dumping and subsidization of the goods in Canada

by China. Duties will not be collected on imports of coupling stock from China.

The most recent ruling affects casing and tubing with an outside diameter from 2 3/8 inches to 13 3/8 inches (60.3 to 339.7 millimetres), meeting American Petroleum Institute specification 5CT or equivalent, in all grades, but excluding drill pipe and seamless casing up to 11 3/4 inches (298.5 millimetres) outer diameter.

The complainants in the case before the CITT were Canadian makers or importers of steel, including Evraz Inc. NA Canada of Regina; Lakeside Steel Corporation of Welland, Ontario; and Tenaris Canada (including Prudential Steel Inc., Tenaris Global Services (Canada) Inc., and Tenaris Algoma Tubes) of Calgary.

O I L & G A S I N Q U I R E R • M ay 2010

55

hazardous duty solutions

4

WAYS TO GET

COSSD

Safety and peace-of-mind for your people, plant, and processes Reliable safety shut-off (ESD) valves offer global approvals, SIL-3 capable with partial stroke testing.

Trusted operation in low temps to -40°C. Precise digital flow control systems offer advanced diagnostics.

Visit www.maxoncorp.com for more information ©2010 Honeywell International Inc.

AGI Storage Tanks 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

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:

1-800-746-6646

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 56

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

Stay Informed. Stay Connected.

cossd.com

International

Xtreme Coil lands a Saudi contract but suffers a setback in Mexico

Photo: Xtreme Coil Drilling Corp.

BlackWatch announces foreign deal

Xtreme has 10 idle CT rigs in Mexico at least for now due to the operator’s budget constraints.

X t r e m e C oi l D r i l l i n g C or p. s a y s Christensen Saudi Arabia Limited, an affiliate of Baker Hughes Incorporated, has awarded the two-year contract to Xtreme (Luxembourg) S.A., a wholly owned subsidiary. The contract requires two fit-for-purpose drilling rigs to perform underbalanced coiled-tubing drilling on re-entry wells in the natural gas fields located in southern Saudi Arabia.

The first of the two rigs under contract is expected to commence drilling early in the second quarter. The project involves re-entering existing wells and drilling horizontally into untapped reservoirs that are critical to overall reserves recovery.

The target wells are deep and technically challenging, have multi-lateral well profiles, and require underbalanced drilling.

Rod Uchytil, Xtreme Coil’s president and CEO, noted that his company customized its most recent drilling rig design, the XTC 200DTR(PLUS), specifically for the technical requirements and challenges presented by this project. The first XTC drilling rig arrived in Saudi Arabia in December 2009 and is preparing to move to the first location. Customization to the

second rig is in the final stages and it’s expected to begin operations toward the end of the second quarter.

In mid-March, Xtreme also announced a collaboration with Suhayl Bin Abdul Mohsin A l Shoaibi & Sons Holding Company Limited. This business collaboration will promote and provide Xtreme contract drilling services and products in the Kingdom of Saudi Arabia and Algeria.

On March 19, Xtreme said that it learned there is no remaining budget for contract work on the Chicontepec oil project in Mexico. As a result, the operator (Pemex) doesn’t expect to drill the total number of wells initially planned for the project. That information came from a customer, which Xtreme didn’t name but described as a “global integrated oilfield services company.”

Xtreme’s Mexican subsidiary provided the services company with 10 drilling rigs for work on the project. It is now “evaluating how this situation might affect future rig activity to determine the appropriate next steps regarding operations in Mexico.”

— DAILY OIL BULLETIN

BlackWatch Energy Services Corp. has announced an agreement to acquire two drilling rigs in its new Middle East and North Africa (MENA) region, along with an option to acquire up to an additional three drilling rigs in the region, a related acquisition facility, and the appointment of senior management personnel.

The company has entered into an agreement to acquire two drilling rigs, related equipment, associated contracts, and operating infrastructure in Libya for a purchase price of US$21 million. The drilling rigs are 1,000-horsepower triples with a depth capacity of up to 4,000 metres, constructed in 2008.

This agreement is subject to closing conditions typical for acquisitions of this type, including the transfer of drilling service contracts with the national oil company with a remaining term of two years.

Management expects the Libyan acquisition will close in April and anticipates financing will be provided by an acquisition facility as well as incremental senior bank facility capacity. Libya had been targeted by management as a key market in the MENA region. The vendor of the assets operates the most significant oilfield well-service business in the region, aside from the large multinational service companies. “ T h i s m a rk s t he ne x t s te p i n BlackWatch’s corporate strategy to expand our geographic reach outside of North America,” said John King, the Calgarybased company’s president and CEO. “This is a unique opportunity for BlackWatch to initiate our business in the region and to leverage key relationships from our past.”

BlackWatch has also executed a binding memorandum of understanding with the vendor of the Libyan assets to provide BlackWatch with an option to purchase up to three additional drilling rigs located in the MENA region.

O I L & G A S I N Q U I R E R • M ay 2010

57

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

N New Truck Route

11

9

10

8

7

6

2 5 3

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

CLIENT: Prostate Cancer Canada one of the high-level JOB:PCC F D W R international multi-energy DATE: March 15, 2010 gatherings of 2010, after May and 2010 PUB INSERTION: g8/g20 before coP16.

SIZE: 3.43 x 4.62 in (1/4) responding now COLOUR: CMYK to: global challenges FINAL OUTPUT transition ARTIST:Energy Glenn, in pix@istar .ca for a living planet*

egister now at >>>rwecmontreal2010.ca

XXIst World Energy Congress September 12 to 16

Hosted by

Premier World EnErgy EvEnt 3,500 leaders from all EnErgy sEctors 300 EXHIBItors | 5,000 vIsItors over 200 sEssIons and EvEnts

Exhibit managed and sold by

* Authorized by the WWF. Sponsored by

GDF SUEZ Logotype version Pantone 11/07/2008 82, bd des Batignolles - 75017 Paris - FRANCE Tél. : +33 (0)1 53 42 35 35 / Fax : +33 (0)1 42 94 06 78 Web : www.carrenoir.com

RÉFÉRENCES COULEUR

PANTONE 425 C

PANTONE 3285 C

58

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

onthe

JOB Careers in the Oilpatch

Graham Fletcher Age: 59 Title: President

Company: The Internet Centre Inc. Location: Edmonton

What do you do?

In 1994, I launched the Internet Centre as Alberta’s first commercial Internet service. We’ve accomplished quite a lot, working with the Government of Alberta to roll out both Alberta Supernet connections and high-definition (HD) televideo conferencing for taxpayersponsored literacy and volunteer groups. For the first time, there’s now a truly affordable solution for HD video transmission over a standard Internet connection. With a large-screen monitor, you can see and hear in more detail than you’d experience in a regular meeting. The camera can easily and quickly pan onto a whiteboard, or right into the pupils of someone’s eyes. Also, you can simultaneously sync people and computers onto the same monitor.

What significance does HD video conferencing have for the oilpatch?

It’s a breakthrough technolog y for staff meetings and consulting of all kinds, for group training, for distance education courses, for certain types of medical emergencies, even for workers who want to enjoy close contact with their families. On screen, you see every facial expression, every gesture—you can sense everything but smell. The savings in travel time and expense often pay for the equipment very quickly. Because transmission is over the Internet, there is no per-minute charge for the actual calls.

In the past, video conferencing has been either expensive or low-definition—what’s the cost for HD technology now?

A company that needs to handle multiple calls concurrently on one screen—for instance, a meeting that includes people from seven locations—will pay about $8,000 for a 50-inch flat screen monitor, an HD camera, and related equipment at each location. We’re now moving to 48 concurrent calls. A home model with fewer bells and whistles sells for well under $2,000, and it still provides full HD quality. I think we’ll see this gear for sale in the big electronics retail stores in a year or so.

What are the limitations of this technology?

People who live beyond fibre optic transmission networks still have fewer options. In remote areas, some oil companies are installing towers and radios that can handle high data transmission volumes.

Today’s consumer-grade Internet radios still don’t have enough capacity for HD video conferencing. Also, a recent regulatory ruling means that Telus can legally deny access to its existing copper telephone lines. In more than 260 communities, that “unloaded copper” represents the only economical link between the customer’s home or of fice and the Alber ta Supernet [a fibre-optic net work that spans the province]. Amazingly, the federal ruling applies only to the four western provinces, not to Ontario and Quebec. Our company is asking the federal government to reverse this decision from Industry Canada. We’d like to provide affordable video conferencing services now that Telus doesn’t offer to smaller communities.

O I L & G A S I N Q U I R E R • M ay 2010

59

www.oilandgasinquirer.com

This is what we do.

Vertigo Theatre thanks its corporate partner

Access for Young Audiences Sponsor

Better than anyone else!

Phone: (403) 279-6615 Fax: (403) 236-4249 Toll free: (800) 708-7453 CompassBending.com Additional Services: • Insulation, taping and coating, including YJ bends • 3D and 5D bends • 10” and 12” bends

Experience, Quality & Service.

3

7320 30 Street S.E. Calgary, Alberta T2C 1W2

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 ”

The Oil & Gas indusTry frOm

EvERY PERSPECTIvE

ANNUAL SUBSCRIPTIONS

FOR ONLY

YOUR SUBSCRIPTION BUNDLE INCLUDES:

60

• • • •

125

$

subsCribe online at

www.Junewarren-niCkles.Com

CDN +GST ($175/year outside Canada)

12 issues each of Oilsands Review, Oilweek and Oil & Gas Inquirer 24 unique wall maps & charts (available to subscribers only) Additional annual features Online member access to Oilsands Review and Oilweek

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

Tools of the Trade

TOOLS

OF THE TRADE A LOOK AT NEW TECHNOLOGIES

Departure Energy Services Who is Departure Energy Services Inc.?

Departure is a customer-focused, mid-sized directional drilling and MWD [measurement-while-drilling] service provider working in western Canada, the northwestern United States, and the Middle East. The company is owned and operated by a group of highly experienced directional drilling, MWD professionals who are dedicated to introducing innovative technology to the industry. Departure owns all of its own directional drilling equipment, most of which is designed and manufactured in house by Departure Energy in Alberta. The company is headquartered in Leduc, Alta., with offices in Calgary, Casper, Wyoming, and Dubai.

What is the G-Force TM Vertical Guidance Drilling System?

G-Force is a vertical drilling system that utilizes a uniquely stabilized downhole motor and a conventional positive pulse MWD tool. The assembly is configured to simulate a rotary pendulum assembly. The tool will maintain the wellbore in a vertical attitude while rotating at any rate of penetration. If the well deviates for any reason—for example, excessive formation dip angles— the tool may be oriented to guide the well back to vertical. This system can be run with on-site supervision supplied by Departure or remotely operated.

What are the competitive advantages of this product?

The G-Force system is designed to run on most any well in western Canada in a cost-effective manner. The tool drills extremely high-quality, full-gauge wellbore that is free of “high-frequency wellbore spiralling” commonly caused by rotating bent housing mud motors. The tool can be configured with any power section to harmonize bit/PDM combinations aimed at optimizing ROP [rate of penetration] performance for the intervals being drilled. The stabilized system significantly reduces wellbore tortuosity and improves performance and longevity of PDC bits. The tool eliminates “fanning” often required to maintain verticality and the resultant smooth wellbore improves trip times, hole cleaning, and log responses. Run cost for this tool is low compared to the closed-loop vertical drilling systems (that is, rotary steerable tools) available today. The lost-in-hole cost is also very low due to the fact the MWD tool can be configured to be retrievable.

What are your future plans for the G-Force TM Vertical Guidance Drilling System?

The system is presently available in 156 mm, 159 mm, 171 mm, 200 mm, 222 mm, and 311 mm. Departure Energy Services has built 20 G-Force Systems to date, and is in the process of launching the tool into the northwestern United States and the Middle East. The company expects to double the G-Force fleet size by the end of 2010. The system has just completed its 100th well in Canada. The newly manufactured 311 mm G-Force tool has generated considerable interest from operators in western Canada and the Middle East for deep vertical well applications, and the company expects to design and manufacture a 444 mm G-Force system before the end of the year, to be deployed to the Middle East.

Answered by Bruce Bond, sales and marketing manager of Departure Energy Services.

O I L & G A S I N Q U I R E R • M ay 2010

61

Political Cartoon

Advertisers' Index 1174365 Alberta Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . 58 AGI-Envirotank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 All Weather Shelters Inc . . . . . . . . . . . . . . . . . . . . . . 33 Annugas Compression Consulting Ltd . . . . . . . . . . 25 BC Resources Expo . . . . . . . . . . . . . . . . . . . . . . . . . 49 Bear Slashing Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Belzona Western Ltd . . . . . . . . . . . . . . . . . . . . . . . . 44 Bilton Welding and Manufacturing Ltd . . . . . . . . . 44 Brews Supply Ltd . . . . . . . . . . . . . . . . . . . . . . . 26 & 40 Brother’s Specialized Coating Systems Ltd . . . . . 54 Canadian Enviro-Tub Inc . . . . . . . . . . . . . . . . . . . . . . . 11 CARES Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 CG Industrial Specialties Ltd. . . . . . . . . . . . . . . . . . 39 Compass Bending Ltd . . . . . . . . . . . . . . . . . . . . . . . . 60 Contain Enviro Services Ltd . . . . . Inside Back Cover Continental Electric Motor Services Ltd . . . . . . . . 29 Crompton Western Canada Inc . . . . . . . . . . . . . . . . .17 DaimlerChrysler Canada Inc . . . . . Inside Front Cover Dean’s Pump Service Ltd . . . . . . . . . . . . . . . . . . . . . 44 DFI Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

62

M AY 2 0 1 0 • O I L & G A S I N Q U I R E R

Diversified Glycol Services Inc . . . . . . . . . . . . . . . . . 32 dmg world media . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Ecoquip Artificial Lift Ltd . . . . . . . . . . . . . . . . . . . . . 43 Falvo Electrical Supply Ltd . . . . . . . . . . . . . . . . . . . 43 Flexpipe Systems . . . . . . . . . . . . . . . . . . . . . . . . . 36-37 Gibson Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Hex-Hut Shelter Systems Ltd . . . . . . . . . . . . . . . . . . 16 Joint Economic Development Initiative . . . . . . . . . . 15 Joule Technical Sales Inc . . . . . . . . . . . . . . . . . . . . . 48 Kubota Canada Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 LJ Welding & Machine . . . . . . . . . . . . . . . . . . . . . . . . . 7 Lloydminster Heavy Oil Show . . . . . . . . . . . . . . . . . 34 LoTech Manufacturing Inc . . . . . . . . . . . . . . . . . . . . 43 Maxon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 MDI Industrial Sales Inc . . . . . . . . . . . . . . . . . . . . . . . 52 MPI-Marmit Plastics Inc . . . . . . . . . . . . . . . . . . . . . 48 NAIT Corporate and International Training . . . . . . 52 Northstar Energy Services Inc . . . . . . . . . . . . . . . . . 4 OilPro Oilfield Production Equipment Ltd . . . . . . . 28 Oil Sands and Heavy Oil Technologies . . . . . . . . . . 30

Pembina Controls Inc . . . . . . . . . . . . . . . . . . . . . . . . . 52 Penfabco Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Phoenix Fence Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 PrintWest Communications . . . . . . . . . . . . . . . . . . 46 Production Control Services . . . . . . . . . . . . . . . . . . 19 Propak Systems Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Prostate Cancer Canada Network . . . . . . . . . . . . . 58 Pumps & Pressure Inc . . . . . . . . . . . . . . . . . . . . . . . . 23 RTS Services Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Suncor Energy Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Systech Instrumentation Inc . . . . . . . . . . . . . . . . . . 10 TARM Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Trans Peace Construction (1987) Ltd . . . . . . . . . . . . 22 Tundra Boiler & Instrumentation Ltd . . . . . . . . . . Outside Back Cover Vertigo Theatre Society . . . . . . . . . . . . . . . . . . . . . 60 World Energy Congress . . . . . . . . . . . . . . . . . . . . . . 58

DynaPump

Old Pump Dynapump Linear Hydraulic Lift System • Can Move the Same Amount of Fluid in 3 Strokes as 9 Strokes of a Traditional Pump Jack With up to a Third Less Horse Power on the Engine.

• Up to Three Times the Life Span on All Down Hole Equipment Due to Lower SPM’s and The New Soft Stroke Technology.

• 2 -1 Pulley System Doubles the Stroke Length, Significantly Lowering your Power Consumption.

• Long Stroke and Variable Speeds Up and Down Reduces Rod Stretch and Gas Locking!

• One Tenth the Weight of the Competitor’s Unit, Allowing Quick Site Moves With Up To 40% Savings on Shipping and Installation.

• Built in Pump Off Control.

• SCADA Ready to Allow Monitoring and Operation from Any Computer.

• Nylon Composite Pulley Instead of Metal Reduces Weight and Wear on the Pulley System.

• Closed Air Dryer System, Removes All Moisture From the Hydraulic System.

Simply the Best Solution for All Your Rod Lift Needs

WELL OPTIMIZATION

Edmonton Office | Phone: (780) 482-3444 | Fax: (780) 451-6422 | #100, 17866 – 106A Avenue Edmonton, AB T5S 1V3 | edmonton@tundrasolutions.ca Calgary Office | Phone: (403) 255-5222 | Fax: (403) 253-4448 | 7523 Flint Road S.E. Calgary, AB T2H 1G3 | calgary@tundrasolutions.ca

www.TundraSolutions.ca

Vancouver Office | Phone: 1-800-265-1166 | Fax: (604) 733-945 3 | vancouver@tundrasolutions.ca

www.DynaPumpInc.com