Pipeline News July 2010

PIPELINE NEWS Saskatchewan’s Petroleum Monthly

July 2010

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Volume 3 Issue 2

Province to overhaul O&G interactions Page A3

Lloydminster Oilmen's golf Page B1

Focus Edition:

Landmen

CanElson buys Totem Page C1

Landman Aron Streifel of Prairie Land and Investment Services, left, discusses two new leases with landowners Marj and Lester Laird. The Lairds live Àve miles southwest of Stoughton, and have numerous leases on their land.

Photo by Brian Zinchuk

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PIPELINE NEWS July 2010

News

Notes

Bilaterals for PetroBakken PetroBakken Energy Ltd. plans to have two rigs working in the conventional plays of southeast Saskatchewan where it hopes to have 35 wells drilled by year's end.

In the Bakken, PetroBakken plans to boost its infrastructure by adding two facilities to the north and expanding its main facility.

"We will be increasing (the main facility's) capacity to handle natural gas as we tie in more batteries and wells – conserving natural gas, but also pushing our operational costs lower," Gregg Smith, president and chief operating officer, said.

"Every well we drill now in the Bakken play is a bilateral, and bilaterals continue to both outperform the single-leg horizontal neighbours as well as the expectations from our reserve auditors," he said.

WestFire drilling near Dodsland WestFire Energy Ltd. has a drilling program in west-central Saskatchewan that provides for 11 Viking horizontal wells for the balance of 2010.

In the Dodsland/Kerrobert area of westcentral Saskatchewan, WestFire has entered into a lease option and drilling agreement that provides access to approximately 40 sections of undeveloped land with Viking light oil potential. The company currently has approximately 242 (220 net) sections in its Viking land base, representing a future drilling inventory exceeding 500 potential horizontal development locations.

Viking drilling of 13 wells at Redwater, Alta., over the past nine months saw an average gross production rate of 80 bbls of oil per day, per well for the first month with individual well rates ranging from 26 to 124 bbls of oil per day, per well.

Eight of the 13 wells were drilled as monobores and three with intermediate casing and liners while two were completed using open hole packer systems.

Briefs courtesy Nickle’s Daily Oil Bulletin

The call of the drill beckons Saskatchewan for 2010

By Geoff Lee Pipeline News Calgary, Regina – Drilling rig activity in Western Canada will be twice as nice for the rest of the year as previously predicted by the Canadian Association of Oilwell Drilling Contractors.

CAODC now expects rig utilization to average 50 per cent in the third and fourth quarters of the year in the region.

That equates to an average of 400 active rigs for both quarters – double the prior forecast of 200 rigs for the months of July, August and September.

The improved forecast is based on oil price of $82 U.S per barrel this year, a gas price of $4.55 Cdn. per million cubic feet and an average of 10.3 days to drill a well in Canada.

In the final quarter of 2010, the association expects active rigs to rise to 400, from a previous projection of 256 deployed rigs. As of June 18, there were already 295 rigs active in western Canada, according to Nickle’s Rig Locator. Several drillers in southeast Saskatchewan report they would have been going full bore, except for the extraordinarily wet weather so far this quarter resulting in reduced utilization levels.

The uptick in projected rig activity is also expected to raise the number of wells completed in 2010 to 11,587. That’s 3,000 more wells than the previous forecast for 8,523 made in October, 2009.

These numbers are in line with a revised forecast

for 2010 from the Petroleum Services Association of Canada which currently projects operators will drill 11,250 wells in Canada this year, a 35 per cent increase over 2009.

CAODC meanwhile, says the higher numbers will also mean the number of rig technicians at work will jump to 8,500 from the 5,500 expected last October.

Workers employed on the drilling site will average over 25,000 this year, running 337 rigs with approximately 45,000 workers employed in the field.

In the first quarter of 2010, Alberta’s rig utilization was 50 per cent, compared to 56 per cent for Saskatchewan and 57 per cent for British Columbia.

During the same period, rig utilization averaged 54 per cent in Western Canada, or 35 per cent higher than CAODC's 2009 projection, with an average of 431 active rigs, up from the 320 that was anticipated.

The first quarter strength in activity was based on higher commodity prices and investor expectation that revisions to Alberta’s fiscal regime would be favourable following the government’s competitiveness review.

The good news from CAODC follows directly on the news of Alberta’s latest energy investment program and Saskatchewan’s new incentive to boost natural gas exploration and production using horizontal drilling techniques. ɸ Page A6

Cutting red tape while modernizing

By Brian Zinchuk Pipeline News Regina – The project has been four years in the making, will take several years to implement, but it promises to make life easier for all oil and gas producers in Saskatchewan.

The Saskatchewan Ministry of Energy and Resources is embarking on a comprehensive project to modernize business processes affecting all areas of interaction with the oil and gas industry. There are a number of initiatives that will take place in the coming years, all under the banner of PRIME – Process Renewal and Infrastructure Management Enhancements.

Jeff Ritter, the director of the PRIME project, reports it has been 25 years since Energy and Resources updated their business processes, at a time when the World Wide Web didn’t exist. Four years ago, they recognized the need for the updates, and after some study, the government got serious about it in the 2009-2010 fiscal year.

It will take another three to four years to fully implement. It’s a complete overhaul of how the ministry deals with the oil and gas industry, touching every area of interaction.

“We didn’t want to be constrained by existing legislation and regulation,” Ritter said, explaining that there will be changes coming in those areas to enable the implementation of the project. “There’s a big regulatory modernization component,” he said.

One of the guiding principles is industry selfservice. The producers have this information in their computer systems already, so why copy it to a form and re-input it? Ritter offered.

Thus, electronic submission is going to be a major component.

Petroleum Registry The most prominent component of the overhaul is Saskatchewan joining the Petroleum Registry of Alberta, something Ritter said industry was “clamouring for.” It was created several years ago, and allows for electronic submission of well and facility infrastructure data, production and pricing data and

royalty tax payer data and ties into production accounting software. Data can also be entered directly via a web-based interface.

The system was devised with specific protocols for other jurisdictions to join. Several months ago the province announced it would be joining. Saskatchewan is the first, and other provinces, like British Columbia and Manitoba, are looking into it, according to Ritter.

It goes with the pan-Western Canada co-operation initiative, what Premier Brad Wall calls the “New West,” and will be a demonstration of that cooperation. On April 30, Saskatchewan, Alberta and British Columbia signed the New West Partnership Agreement in Regina, committing the three provinces to working together on ways to make it easier to do business between the three provinces.

Companies that work in both Alberta and Saskatchewan will see efficiencies in that their staff will be able to use common business processes. Ritter said it will be a central, shareable, secure system. Production accounting will see the most impact.

For companies that work in Saskatchewan exclusively, they will see the most change with the implementation of the Petroleum Registry. For small Saskatchewan producers, Ritter said, “This is something brand new.”

The new reporting system is scheduled to go online in the fall of 2011, at which point that will be the only system accepted for this form of reporting.

There will be open houses held this July as part of a broad communications strategy to get the word out on impending changes. The first will be held at the Estevan Days Inn on July 7 at 2 p.m. The second will take place in Regina on July 8, at 10 a.m., at the Verdi Room of the Delta Regina Hotel. Both sessions will take two hours.

The model the ministry is following is for each producing company to have a “change leader” identified. Ideally, these leaders should attend the open houses. ɸ Page A7

On April 30, Saskatchewan, Alberta and British Columbia signed the New West Partnership Agreement in Regina, committing the three provinces to working together on ways to make it easier to do business between the three provinces.

PIPELINE NEWS July 2010

News

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Notes

Diaz builds with Lloyd program Diaz Resources Ltd. has acquired oil and gas leases on four additional prospects in Saskatchewan, resulting in the company's heavy oil prospect inventory increasing to seven projects.

At Lloydminster, Alberta, Diaz has a 50 per cent working interest in seven heavy oil wells. The Lloydminster field is the primary development focus of the company. Seven are currently on production, after three came onstream in May. Diaz believes the Lloydminster heavy oil play may support up to 35 wells on its section, with initial production rates of approximately 60 BOE per day, per well. The company currently plans to continue development drilling at the Lloydminster field starting in the summer of 2010.

The company said it has acquired an interest in 14,208 acres in Saskatchewan on the Birdbear, Shaunavon, Viking and other heavy oil developments.

Crescent Point waterÀooding Crescent Point Energy Corp. President and Chief Executive Officer Scott Saxberg noted that the company currently operates two waterflood pilot projects in the Bakken field and has received regulatory approval to implement another. With more than 18 months of production data from the first pilot, and more recent data from the second, Crescent Point is becoming increasingly confident in the potential for broader application of a waterflood throughout the Bakken resource play.

"We're going to continue to push the technology here. We're continuing to move more towards cement liners versus the Packer's system. We're moving more towards development of the waterflood then just focusing on primary drilling," Saxberg said, adding that initial results indicate that waterflood has the potential to increase recovery factors in the Bakken from about 10 per cent to 30 per cent.

Saxberg said that by this time next year, Crescent Point will have about six waterflood pilots up and running in the Bakken and that the company will "be in a position to further expand that."

Briefs courtesy Nickle’s Daily Oil Bulletin

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EDITORIAL

PIPELINE NEWS July 2010

Pipeline News Publisher: Brant Kersey - Estevan Ph: 1.306.634.2654 Fax: 1.306.634.3934

Mission Statement: Pipeline News’ mission is to illuminate importance of Saskatchewan oil as an integral part of the province’s sense of community and to show the general public the strength and character of the industry’s people.

Editorial Contributions: SOUTHEAST Brian Zinchuk - Estevan 1.306.461.5599 SOUTHWEST Swift Current 1.306.461.5599 NORTHWEST Geoff Lee - Lloydminster 1.780.875.6685

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Editorial It’s raining, it’s pouring, the drillers are snoring Rain, rain, go away. We want to drill a well today.

By mid-June, the level of frustration in Saskatchewan’s oilpatch due to the incessant rain became palpable.

While visiting Oxbow for our monthly community profile, the words on everyone’s lips were, ‘We’re going to be really busy, as soon as it dries up.’

That was followed by, ‘If it ever stops raining.’

Terry Gunderman of Redhawk Well Servicing of Oxbow noted that June is usually a dry month. Not anymore. “The last three years, June’s turned into our wettest month,” he reported.

Following spring breakup, Saskatchewan’s rig count skyrocketed, and then promptly dipped, because rigs couldn’t move to their next hole. The sporadic onagain, off-again rain has meant a substantially lower rig count than was otherwise expected. Everyone from service companies to camps has felt it.

Pipeline News spoke to a number of drilling companies in the southeast, and they repeated the refrain of expecting a lot of work, if it ever dries up.

One Totem crew was just completing their rig recertification when we visited. They thought they could move the next day, but expected to be rained out, again. A large boomer had poured buckets of rain over Carnduff and Oxbow the night before.

Other projects are more soup holes than leases.

A dozer could be seen near the Boundary Dam Reservoir, parked. There were some berms on the lease put back, but only about half. The lease was halfcovered in water, however. That dozer wasn’t going

anywhere.

If there was ever a justification for owning a 4x4 in the oilpatch, this spring is it. Don’t go anywhere without a tow chain or sling. Throw in a spade for good measure, and not the plastic, snow-kind, either.

It can cost $10 just to clean out the wheel wells on a pickup at the local carwash after adventures on leases.

Not only has rain put a serious crimp on getting going after spring breakup, it’s also hampering regular servicing. One producer told us, “We can’t get in to repair with service rigs. It’s impaired production, and impaired the drilling program as well.”

A blow to the transportation infrastructure was dealt when all the westbound lanes and a chunk of the eastbound lanes of the TransCanada Highway were washed away near Maple Creek. Routing traffic up to Highway 7 is an awfully long detour, especially if you are moving larger items. Soon, there will be temporary repairs in place, and the delay will be slight, but in the meantime, it will be no picnic for those in the southwest who rely on Alberta suppliers and labour.

With all the flooding in the southwest, it’s likely operations have slowed to a crawl for much of June, at least until a break in the weather.

Now, we’re a Saskatchewan paper. A good chunk of oilpatch men got their start as farm boys, and haven’t forgotten their roots. This is dry land farming territory. Therefore, it’s not in our nature to curse the rain, because you never know when it might come back.

But that said, it’s getting hard to bite our tongues.

PIPELINE NEWS July 2010

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Opinion Growth in the patch limited by personnel, accommodations From the top of the pile Brian Zinchuk

Things are looking up in the patch.

Several months ago, I made a crack to a government official that we might see a $200 million land sale in April for Crown mineral rights. He kind of chuckled, indicating it would be nice to see, but was not expected. As it turns out, we brought in $190.1 million.

In June, the land sale was $46.2 million. That’s after a strong February sale of $39.5 million. To date, that’s $275 million. Not too shabby, and the year is only half done. It means good things for the patch in the coming years as this land is developed.

If it weren’t for all the rain, we’d be seeing drilling take off like a rocket. If and when it should ever dry up, look out.

A discussion with Ensign Big Sky Drilling pointed out one thing, however. We’re rapidly reaching our limits in terms of qualified personnel and the

support industries to back them up.

A strong pace of activity is welcomed, but craziness doesn’t do anyone any favours.

When the job application is a check of a person’s pulse, you don’t necessarily get a lot of quality people. And even if they are good workers, the lack of experience will shine through at times, and quality will suffer.

Even if you find the people, accommodations continue to be an issue. Labour and accommodations are a thread in almost every story I seem to do, not because I like being a broken record, but because they are a long way from being resolved.

There was a time when a camp job was something you did in northern Alberta after freeze up.

Now camps are popping up all over the south. It’s a welcome relief valve, absolutely necessary for the work to continue. As the mayor of Waskada, Manitoba, put it, “We have to be realistic. We need that service.” Waskada recently saw a camp pull in a few miles down the road.

Camps, however, do not engender long-term lifestyles, or families. Pretty much anyone staying in a camp is going to be sending their hard-earned income elsewhere.

Southeast Saskatchewan is unique in that it is quite isolated. It’s too far from Alberta, and yet compact enough that you can get to pretty much anywhere in the local patch within a two hour drive.

That’s why most of the drilling crews who live and

work in the region work eight hour shifts instead of 12s. They may make less, but they get to go home almost every night. And that home is usually not in a camp.

What we need are more apartments – lots of them, and all over the southeast. However, the economic model for rental apartments is broken. Developers would rather build for-sale condos and cash out their investment quickly. Besides, even if you were building apartments, it would be next to impossible to find someone to build them. Yet again this month I reported on a project being built by a firm a long ways from here, because they couldn’t get anyone local to build for them. Local contractors have a hard time getting subcontractors, because they are competing with the oilpatch for manpower.

It’s a vicious cycle, one that is continuing to be fuelled by a hot oilpatch.

I don’t know how, or if that problem is going to be solved. If the oilpatch slowed down, there would be no demand for new rental accommodations, but there would be workers to build them. If it picks up, no workers, and no new residences.

Therefore we are going to need the camps, and more of them, as time progresses. But let’s eventually try to find homes for these hard-working men and women.

Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@sasktel.net

Better to invest locally, not globally In the past few months there have been several Asian investments in Western Canadian oil and gas interests that have occurred with little question from the media.

China Investment Corp. recently invested $817 million into a joint venture with Penn West Energy Trust to develop oil sands properties in Alberta with Penn West holding a 55 per cent interest.

That was preceeded by an announcement by the state-owned China Petroleum and Chemical Corp., better known as Sinopec, to purchase ConocoPhillips’ nine per cent ownership in Syncrude Canada for about $4.65 billion.

This deal expected to close later this year follows on the heels of Sinopec raising its stake in the Northern Light oilsands project last year along with PetroChina’s purchase of a majority stake in two Athabasca Oil Sands Corp. leases.

For much of our history Canada has had, for good or bad, the highest level of foreign ownership of any country in the world—particularly high for a developed and industrialized nation.

On the good side, it generates investment and employment but on the bad side a large share of the revenues and profits are funneled back to the home country – or at worst, we are held hostage but that country’s political or economic policies.

The latest figures from Statistics Canada for the

Lee Side of Lloyd Geoff Lee

year 2007 indicate that oil and gas assets under foreign control rose 24.1 per cent, more than double the 10.1 per cent increase in assets under domestic control.

In 2007, the U.S. was the dominant player among foreign owned controlled enterprises in Canada. Although we like to balk at U.S. economic dominance, the U.S. is also our biggest trading partner and ally.

The same can’t be said about ownership of our companies or resources by countries whose politics and policies we don’t agree with – most notably communist China.

The Saskatchewan government makes repeated trade missions to China and other more friendly Asian regimes to encourage investment in Saskatchewan’s oil and gas sector as if Chinese investment is

so important.

“Additional interest and investment will serve to advance the oil industry in Saskatchewan,” reported Energy and Resources Minster Bill Boyd following his January trip to China and other Asian countries.

“We know the oil is here and we believe that the more companies that are active in our oil fields, the more technology will be brought to bear, thereby expanding production and increasing recoverable oil reserves.”

If resource investment is the ultimate goal, it may be more expedient to continue to seek minority investors from our economic friends to the south.

The U.S. needs our energy to become energy independent so demand is guaranteed as supplies dwindle. With our relatively strong dollar, we come out ahead.

Selling larger stakes in our companies and resources to dictatorial regimes whose policies are distasteful will do little to lessen our trading dependency with the U.S. – if that is a goal.

The way to accomplish that is to take the exact opposite approach – invest Canadian dollars in the Chinese economy and export our expertise and value-added manufactured products to the world’s largest market – for our economic gain and independence.

IF YOU ARE INVOLVED WITH THE CLEAN UP OF THE GULF COAST OIL SPILL - WE WOULD LIKE TO HEAR YOUR STORY. PIPELINE NEWS INVITES OPPOSING VIEW POINTS. EDITORIALS AND LETTERS TO THE EDITOR ARE WELCOME. Email to: brian.zinchuk@sasktel.net

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PIPELINE NEWS July 2010

CAODC boosts 2010 forecast ɺ Page A2 This technique is widely credited with the continued growth and development of the province's crude oil resources and more recently, the Bakken light oil play in southeast Saskatchewan The Alberta government has made final adjustments to its royalty formulas for conventional oil and gas, and launched an Emerging Resource and Technologies Initiative to boost exploration and production of unconventional oil and gas resources.

A modification of the royalty rate in Alberta for deep high-cost natural gas wells, coalbed methane, shale gas and horizontal oil and gas wells will stimulate investment in research and technology.

Saskatchewan’s new gas exploration and production incentive will encourage the application of horizontal well drilling in Saskatchewan’s proven and potential natural gas pools. No horizontal drilling for gas is currently done in the province.

“Horizontal drilling is expected to account for the bulk of natural gas wells drilled in future in North America,” Energy and Resources Minister Boyd said in a news release.

“We've been at the forefront of using this technology to drill for oil here. By encouraging it on the gas side, we are sending a signal to the industry to invest and replicate some of the success it has enjoyed with oil.”

The volume-based incentive establishes a maximum Crown royalty rate of 2.5 per cent and a freehold production tax rate of zero per cent on the first 25 million cubic metres of natural gas produced from every horizontal gas well drilled starting June 1, 2010 to March 31, 2013.

“Saskatchewan has great potential for further development of our natural gas resources, but that potential needs to be realized through the application of newer technologies,” said Boyd.

“Horizontal drilling and multi-stage fracturing are prime examples of such technologies.”

Boyd notes the new incentive is similar to one already in place for initial volumes of oil produced through horizontal drilling.

In Saskatchewan, roughly one-third of oil wells drilled in a given year are horizontal, and more than 10,000 horizontal oil wells have been drilled since 1987.

In the first four months of the year, 394 horizontal wells were drilled in the province compared to just 136 horizontal for all of 2009.

The new drilling incentives follow on the news that natural gas drilling in the province has declined over the past seven years as a result of market changes brought on by the emergence of large shale gas plays in other jurisdictions that compete with conventional natural gas.

Nickle’s Daily Oil Bulletin reports that 241 gas wells were drilled in Saskatchewan in 2009, the lowest in many years.

From January to May of this year, only 71 wells targeting gas were drilled in the province.

Price declines have also dampened enthusiasm for natural gas drilling in the province over the past two years.

The new incentive was developed in consultation with industry associations. There will be no cost to the provincial treasury as a result of this threeyear incentive.

Saskatchewan’s remaining marketable conventional natural gas resources are estimated at just over 150 billion cubic metres according to a report released by the National Energy Board and the Ministry of Energy and Resources in November 2008.

Saskatchewan has a new incentive program promoting horizontal drilling to explore, develop and produce more natural gas.

File photo

The oil and gas industry is a major part of Saskatchewan’s economy accounting for about 18 percent of provincial GDP. Alberta’s new Emerging Resource and Technologies Initiative aimed at stimulating unconventional oil and gas exploration and production is buoyed

by Energy Resources Conservation Board estimate of potential natural gas resources of 500 trillion cubic feet from coalbed methane and 850 Tcf of shale gas.

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PIPELINE NEWS July 2010

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Get ready for PRIME time ɺ Page A3 With the existing business processes and systems in place, Ritter said they had a few options. They could have done nothing, which wasn’t much of an option, since the existing processes and systems have been patched over many times and are outdated and inefficient. They wanted to update those processes and systems before the staff members who are intimately familiar with the old systems all retired.

Saskatchewan could have built its own system, or bought a copy of the code. That, however, would

have led to an eventual divergence from the Alberta system as time progressed since updates would be handled differently. Finally, they could join the existing registry, and become part of the governance. The final option was the best for industry, according to Ritter.

The governance structure now includes the Alberta Department of Energy (DOE), the Alberta Energy Resources Conservation Board (ERCB) and the Saskatchewan Ministry of Energy and Resources (ER). Industry is represented by the Canadian Association of Petroleum

NuLoch proving up Three Forks/Sanish NuLoch Resources Inc. continues to prove up its Bakken and Three Forks/ Sanish prospects in both Saskatchewan and North Dakota. Based on initial drilling success the company could increase its currently planned $44 million capital budget.

“Some of the things we’re looking at for the balance of the year would (include) increasing our drilling capital program,” President and Chief Executive Officer Glenn Dawson said at the company’s annual meeting in late May. “The planning phase we’re working on (16 wells) ... would be incremental capital to our existing capital execution plan.”

At its program at Tableland, Sask. Dawson said the company is also in the planning stages for the construction of a battery and an injection well to further reduce operating costs.

Producers (CAPP) and the Small Explorers and Producers Association of Canada (SEPAC).

Asked about how much it will cost for producers to implement, Ritter didn’t offer specific numbers, but said the oil and gas industry believes there is a positive net-present value in quantifiable benefits, and that there are substantial benefits that are not quantifiable. “They’ll save more than this will cost,” he said.

Other initiatives While the Petroleum Registry handles well and facility infrastructure, production, pricing, and royalty tax payer data reporting, it does not encompass all Energy and Resources business processes such as royalty calculations. There are numerous other PRIME related initiatives the ministry will implement in the coming years. One is a revenue management/billing project that is contemplated to go online around the same time as the Petroleum Registry. That’s more governmentthan producer-oriented, however.

The Ministry of Energy and Resources will also be implementing a new monitoring and reporting system within the ministry. This initiative will include monthly and long term data monitoring and analysis,

development of new reports for industry and fiscal forecasting.

Then there’s a compliance and regulatory project that will deal with enforcement of regulations and knowledge management.

Two of the larger projects will deal with Infrastructure Information. The first will deal with well and facility licensing and potentially well spacing. It will all be electronic, meaning things like hotshotting a paper well licence to the rig before drilling can commence will be a thing of the past. This project will also deal with submission of information into the ministry, facility licensing and new interfaces for the liability management system.

The second Infrastructure Information project will deal with reservoir, liability/environmental, and pipeline/flowline management.

Again, this will be an effort to electronically modernize the paper train for day-to-day operations.

Finally, one of the last projects will be petroleum tenure and subsurface. This will deal with land sales, disposition management and mineral ownership.

For more information contact Jeff Ritter, Director PRIME Project, at 306-787-0999 or e-mail jeff. ritter@gov.sk.

Truck Cell: (306) 823-3512 Cell: (306) 823-7111 Res: (306) 823-4309 Fax: (306) 823-4663

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PIPELINE NEWS July 2010

Don’t pass us by

Landman Aron Streifel of Prairie Land and Investment Services, centre, presents two new leases to sign for landowners Marj, right, and Lester Laird.

Photo by Brian Zinchuk

By Brian Zinchuk Stoughton – There’s one thing Lester and Marj Laird definitely do not want landman Aron Streifel of Prairie Land and Investment Services to do: drive past their door.

Streifel will have been working as a landman with Prairie Land and Investment for 14 years this October, and has dealt with the Lairds, who farm five miles southwest of Stoughton, from his early days.

Pipeline News accompanied Streifel on a visit to the Lairds to finalize two drilling leases for Crescent Point Energy, which has a core area near Stoughton. The two new leases bring the Laird’s total to 14, all with Crescent Point.

“I do Manitoba and Saskatchewan surface leases,” Streifel explains on the way to the farmyard. “We do surface leases and pipelines, the biggest things as a surface landman. When I sit down with a landowner, I look at the lease with them, go over it, talk about cattle issues, farming issues, and proximity to things. It’s the same on the pipeline side.”

Warm welcome Lester and Marj, who have been married nearly 50 years, warmly welcome Streifel as he comes in the door.

Soon, the three are sitting at the kitchen table, the quintessential meeting place for landmen.

The talk, however, does not immediately get to business. “I sit down and yak first. People want to get comfortable with who you are,” Streifel explains later.

Streifel can talk turkey about pretty much everything going on nearby, and knows all the neighbours.

There’s lots to talk about. With the advent of Bakken drilling in the area, Streifel has gotten to know nearly all the landowners in the Stoughton area.

The Laird’s land is within a couple miles of the wells that started the whole Bakken play in the southeast Saskatchewan.

The money from drilling can cause friction in families, and between neighbors. Freehold mineral rights in particular can bring in a lot of money to the rights-owner. It can cause considerable consternation in some cases,

they point out, with all the dollars involved. “It’s not all sunshine and roses.

Everyone thinks it’s phenomenal. It’s not,” Streifel said.

For the Lairds in this case, however, the land in question is strictly surface rights.

Ongoing revenue Most landowners prefer drilling leases over pipeline right of ways, according to Streifel. That’s because there is a payout for drilling the lease. Once the well is completed, there is ongoing payment for having the well site each year. A pipeline right of way, on the other hand, is paid out just once, plus any damages, e.g. for lost crops.

The landowners can also receive a payment if they accept drilling mud to be spread over their land.

The Lairds welcome the practice of land spreading. It does away with the old pits on leases which inevitably would turn into soft spots for years. “I had a lot of Cats buried in old pits,” Lester said.

The revenue is typically welcomed by the farmers. It comes in each year, regardless of the farming situation.

This spring, for instance, saw a lot of unseeded or flooded acres in Saskatchewan. Those who have revenue-generating oil and gas leases will be in a better position financially than those without them. “It makes things a lot easier,” Streifel said, adding about 95 per cent of landowners are very receptive.

It can be frustrating for the oil companies, too. Lester mentions a man named Todd who looks after pipeline development in the area for the producer. “Poor Todd was here, pulling his hair out over the wet conditions,” Lester said, just an hour before another cloudburst makes it nearly impossible to see while driving.

Knowledgeable landowners The Lairds are very knowledgeable about the leasing process, and are well versed in discussing geological formations and drilling pattern. They already have a dozen leases on their land, seven of which have been drilled. In the last three and a half years, things have really picked up.

There’s no hard-nosed negotiating.

It’s all quite amicable. ɸ Page A9

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PIPELINE NEWS July 2010

A9

Landman’s visit welcomed ɺ Page A8 Lester worked in drilling for around 20 years in the 1950s, 60s and 70s, and then operated an earthmoving company building leases and roads until just a few years ago. They speak of wells drilled in the area 50 years ago, and one which Lester saw as a child back in the 1940s.

The family has seven quarters of land. They sold off a similar amount a few years ago, and still rent four quarters.

Streifel and the Lairds talk about local water issues. The Lairds provide water for drilling. Farmers who have water to sell often want to see their water resources used for well drilled on their land. It’s an added revenue stream for them.

“We used to have a bunch of cattle. Now we don’t have cattle any more, but we sell water the oil company,” Lester said.

Marj added, “We’re nice. We gravel it in for the trucks.”

“If I can get free money, I’ll take it,” Lester said, laughing.

Marj piped in, “We’ll take all the money Aron’s got.”

“It’s a gift from heaven for me, the way I put it,” Lester added.

Make room for lease The Lairds have four children, including one son who works in the oilpatch, hauling water. He sold his house down the road the day before, and will be building a new house near his parents. However, Marj says if there’s a lease planned for his intended building site, he’ll have to adjust his plans. “They can build anyplace on the section,” she smiled.

Getting down to business, they look over flow line right of ways and temporary work space. A lot

of trees are killed to provide the paper for the thick stack of documentation. All forms are signed four times. Streifel says agreements for Crown land leased out for grazing to ranchers require eight copies.

Once the documents are signed, Marj served coffee, sugar cookies and a delicious muffin she calls “jam buns,” her mother’s recipe.

Do they get more money if there’s cookies on the table?

Streifel said while laughing, “I’ll never tell.”

One the paperwork is signed, it’s a waiting game to see how soon the lease is developed. Action could happen within a week, or up to a year. “A lot of times, I’ll sign people up, and it can be up to a year before they start to drill,” Streifel said.

Streifel keeps busy, and there’s a lot on the go.

“I’ve got a bazillion other guys I have to see,” he noted.

Saskatchewan’s home for Prairie Land Regina – Many of the land firms operating in Saskatchewan have Alberta homes. However, Prairie Land and Investment Services Ltd. is one of those proud to call this province home.

Prairie Land has been around for close to 25 years. It was Don Pontius who founded the company and brought Terry Jordan on board in 1996.

They’ve been around long enough that landmen they’ve trained are subsequently training the next generation, which is how they like it.

“One of our goals has been to employ and develop local employees,” Pontius noted. All their employees are Saskatchewan people, trained in house. “Our preference is to teach them the proper way, the Prairie Land way” “We have over 30 years experience in the land business in the oil industry,” said Pontius. “Our head office is in Regina.”

The company has over 20 employees, almost all based in Saskatchewan. They also have landmen working in Calgary and Edmonton. Manitoba is covered from the Regina office. The majority of their work is in Saskatchewan.

The company covers a broad range, including negotiation for mineral rights, surface leases, pipeline right of way acquisitions, damage reimbursement, wind power generation and potash acquisition.

One of their larger projects was over 5,000 km of rural natural gas distribution right of ways in Saskatchewan. That was for SaskPower in the early 1990s, before gas became the purview of SaskEnergy.

Their client base ranges from major producers to small juniors.

For their future, the partners say they are continuously growing, fuelled by diversification. “As Saskatchewan’s resource base develops, it will provide more and more opportunities,” Jordan said.

“We are really home-based in Saskatchewan. Our intent is to keep everything local. We pay our taxes in Saskatchewan,” Pontius said.

Jordan added, “We’re sort of an anomaly. Most companies are headquartered in Calgary, and have a satellite office in Saskatchewan. We are proud to call Saskatchewan home.”

A10

PIPELINE NEWS July 2010

Slide blind simple, yet ingenious

By Geoff Lee

Chris Webb holds a sales sample of a 3-inch slide blind manufactured in Lloydminster and marketed globally.

• • • • • •

Full Service Maintenance Completion of Well Setups Welding Construction Hotshots Portable Tank Insulation

Lloydminster – Hot Tools is living up to its name with the sales launch of a new quick operating slide blind designed to replace the existing spectacle blind as the tool of choice for turnarounds in the oil and gas industry.

“It‘s a major timesaver,” said Chris Webb general manager of the Lloydminster company.

“It will cut the time of a typical spectacle blind flip by less than half.

“The time savings comes from not having to loosen and remove all

of the studs in a flange.”

The purpose of a blind is to blank or stop any flow or leakage through a flange during maintenance operations.

“It’s ideal for a turnaround situation where you need to pressure-check systems or do pressure checks on lines,” said Webb.

“If there are any mechanical issues with compressors and such, and you need to isolate the compressor from the rest of the facility, that’s when you need a blind.”

Used in conjunction

Phone# (780) 874-9900 Desi Latimer Cell : 780-214 - 8311

with a stud flange, the Hot Tools slide blind simply requires the operator to loosen all studs, remove the studs that are outside of the slide section, slide the blind, and replace and tighten the studs.

The simple fourstep process also makes gasket changes easier as the gasket will roll out during a changeover.

“You will get substantially less fluid leakage with this because you are not totally opening the flange. That’s a major advantage,” added Webb.

It’s also safer to work with in overhead installations and tight spaces. It and comes in sizes from 2-inch to 12inch in various pressure ratings.

“We currently have the engineering in the works to take it from 12 inch through 24 inches with RTG gaskets,” said Webb.

Hot Tools is a supplier of innovative technology and products to the petroleum industry including pumps, rod clamps and torque rings.

The company has teamed up with Metaltek, who will manufacture the patented slide blind to Alberta Boiler Safety Association and ASMI quality control standards for an international market.

“The first order was for 1,600 with a portion going to CE Franklin and RMC Midfield, but the sky is the limit,” said Webb in mid June.

“The market potential is huge. Some of our first order is going to BP in Sarnia, Ontario.”

“We have an order going to Conoco Philips in Indonesia, and we are getting good feedback from every company we talk to.

“We had meetings with Conoco Philips in Indonesia, and they will be able to do away with costly nitrogen purges on their systems every time they have a hiccup on their compressors on offshore drilling platforms.

“They told us our slide blinds would save them about $500,000 that it costs them for a spectacle blind flip.

“Now they can depressurize their system, slide the blind to the blank position and tighten it without purging.”

Hot Tools has signed a marketing agreement with Federal Hardware in Singapore to distribute the slide blind throughout Asia.

“There is a huge market potential for the petro chemical industry in the east coast of the U.S.” said Webb.

“We have it engineered for 26 different materials that all apply to the petro chemical industry.”

When asked why no one else thought of the idea before, Webb laughed and said, “That’s the reaction we have been getting from a lot of people that have been in the industry their whole lives.

“Engineering groups are particularly excited about, and we’ve been getting good feedback from people like Worley Parsons.

“I am excited but cautiously optimistic.

You don’t want to get ahead of yourself.”

There is also a market for the slide blind for companies doing turnarounds on CO2 systems.

“With our slide blind, they can de-pressurize the system and blank without having to purge their system since the flange is not open to the environment,” said Webb.

“It would be very similar to what Conoco is getting us to do for their nitrogen systems.”

PIPELINE NEWS July 2010

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A12

PIPELINE NEWS July 2010

PIPELINE NEWS July 2010

A13

Nexen unloads its Lloydminster heavy oil properties

By Geoff Lee Calgary – Nexen Inc. is confident that most its approximately 150 employees in Lloydminster will keep their jobs under the leadership of Northern Blizzard Resources Inc. That’s the expectation of Pierre Alvarez, Nexen’s vice-president of corporate relations, responding to questions about the $975 million sale of Nexen’s heavy oil properties in Western Canada to Northern Blizzard on May 19.

The properties which comprise 750 heavy oil wells are mostly located in Saskatchewan and currently producing about 16,000 barrels of oil equivalent a day.

“The purchaser has expressed a great interest in all of our employees, but at the end of the day that’s a decision that they will have to make,” said Alvarez at the time.

“They are a small company and have expressed tremendous interest because we have some first-class employees.”

Alvarez noted Nexen officials met with staff in Lloydminster immediately after the purchase to discuss employment options and what happens after the June 30 closing date.

At that point, said Alvarez, Northern Blizzard becomes the operators of the project and the owners of the production.

“It won’t be a Nexen office but operations will continue up there,” he said from Calgary. “The operator will need staff and will need good field people.”

Northern Blizzard is a private company based in Calgary backed by Natural Gas Partners, a $7.2-billion family of investment funds organized to make direct investments in private energy enterprises.

The sale of unconventional heavy oil will allow Nexen to focus on its conventional exploration, oilsands and shale gas programs throughout the world.

“At this stage, heavy unconventional oil no longer fits with our strategic focus,” said Alvarez.

The sale properties have proved reserves of 39 million barrels of oil effective Dec. 31, 2009.

The proceeds from the transaction will result in a significant reported gain of over $700 million for Nexen that still expects to meet its original 2010 production goals.

The cash flow will allow Nexen to focus on three growth strategies: oilsands and unconventional gas in Western Canada and conventional exploration and development primarily in the North Sea, offshore West Africa and deep-water Gulf of Mexico.

“This transaction represents excellent value realization for these non-core

Nexen employees in Lloydminster are affected by the company’s sale of Lloydminster area heavy oil properties to Northern Blizzard Resources Inc. of Calgary.

assets,” said Marvin Romanow, Nexen’s president and CEO during the sale announcement.

“With this sale, we have achieved our target of generating $1.0 billion of proceeds from the sale of non-core assets.

“We now expect to generate over $1.5 billion of total proceeds and net debt reduction from all asset sales, once we complete the expected sale of our interest in Canexus over the next 12 to 18 months.”

Canexus has manufacturing plants in Canada and Brazil that produce chemicals used to manufacture many consumer goods such as paper, steel, oil and plastic.

“Canexus is one of our legacy assets,” explained Alvarez. “We have a residual interest that no longer fits with our plans.”

A14

PIPELINE NEWS July 2010

BPC partners with Devon Canada on trenchless pipe pilot

By Geoff Lee La Corey, Alta. – Call before you dig has new meaning for BPC Services Group that offers oil and gas customers a trenchless pipeline sys-

tem at less cost and environmental disturbance than conventionally excavated pipelines.

BPC is a division of Bandit Pipeline and offers a package trenchless pipe system ranging

This reamer has a lot less impact than digging a bucket.

Photos submitted

from integrity testing and management, facility construction and maintenance contracts to pipe maintenance and repairs and consulting.

The Lloydminsterbased company teamed up with Devon Canada to pilot the system in June with an 840-metre trenchless pipeline to feed casing gas from a separator at Devon’s Wolf Lake multi-well pad heavy oil lease with a gas compressor.

The site is located on Range Road 60 north of La Corey in Alberta.

The challenge was to run and tie in a 3-inch

These tracks are all the surface disturbance the length of a 840m trenchless pipeline produced.

composite flex steel pipe from the compressor under a landowner’s field, a road, and a forested area to a separator building in five days including final integrity testing.

“What we are doing is proving the cost effectiveness of putting in a trenchless pipeline over a conventional open cut system where we would be stripping, brushing and trenching, then putting all the ground back in after we are done,” said Martin Campbell, BPC’s trenchless system supervisor at the site.

“Devon was quite receptive to partner with us to see if this is something they would like to pursue in the future as a viable alternative to open trenching on these small tie-ins."

The project was originally designed as a conventional pipeline system where the pipeline had a

couple of side bends in it where they routed around different issues.

Devon also saw the trenchless pipeline pilot as an opportunity to reduce the environmental impact of pipeline construction and to do it in a cost effective manner.

“The trenchless method allows us to reduce the length of the pipeline, and in the end, we expect to see no surface disturbance along the pipeline right of way,” said Mike Kelly, Devon’s facilities manager.

The pipeline crosses a paved highway, a wooded area, an overhead power line, some buried telephone lines and a third party pipeline.

Campbell says the biggest cost saving at the pilot site was from not having to spend time and money to hire crews to cut, block and pile the forested area along the

pipeline.

“That would be about four day’s work for a fourman crew to knock that down,” he said.

The trenchless option is also safer and limits surface acquisitions and conflicts with landowners who don’t want their land or crops disturbed.

“Going forward, we recognize from what we are seeing, the largest ground disturbance in Alberta is not from the oilsands. It’s the actual upstream petroleum industry,” said Campbell.

“If we can mitigate surface disruptions for our customers, that will be viewed as more environmentally friendly on applications and permits, and the public will be a lot more receptive to pipeline development.”

With BPC’s trenchless system, the entire pipeline can be installed with only a bell hole on the lease and a tie-in point, eliminating the need for trenchers, excavators, graders and other heavy equipment.

“We realize our biggest competition to this is conventional pipeline systems where the ground is dug up,” said Campbell.

“This is where we gain on savings, so we can utilize it on the directional boring side.

“What we’re showing is that on an extended five-year term, this is probably considerably less expensive that conventional pipeline systems.”

Big Bore Directional Drilling Ltd. was contracted to do the pilot drilling and pull pipe at a depth of approximately 10 feet, using a 140,000 lb directional boring machine. ɸ Page A15

PIPELINE NEWS July 2010

A15

"A non-invasive way of doing it" This horizontal directional drilling rig installed an 840m pipeline, eliminating the need for surface clearing and excavation along the right of way.

Photo submitted

ɺ Page A14 “Most of the time we are just drilling rods now that we’ve leveled out,” reported Dustin Leask.

Leask walked a locator to help the operator to steer the drill bit as the drilling got under way from the compressor station.

“We ‘fraced out’ a couple of times, but we got ’er all cleaned up,” he said, and explained a frac out here is when water comes out of the ground where it shouldn’t be.

“We just basically clean it up and ream out the hole so we try to close up the frac,” he noted.

An environmental representative from Pioneer Group was also on site to test and verify the purity of the Tru- Bore drilling mud and returns used by Big Bore.

Des Ross, Big Bore’s operations manager, was

also available for questions about the pilot project and commented, “I think it’s great. It’s a glimpse into the future, I think.

“For us it means, I think we should be busier in the future. Martin asked us to do the work here. We are following his direction and his lead.”

The plans were for the pilot and subsequent projects to end with an external line inspection or XLI as part of BPC’s integrity management package.

“After the directional boring is complete, we’ll come in and provide the depth of cover, the elevation survey, and GPS coordinates for the entire length of the line that can be plugged into a GPS mapping system that most companies use nowadays,” said manager Max Rivett.

“It’s part of the integrity package. If this were a

steel pipe, we would also provide a coating integrity survey to verify the coating is still in intact, and that are no bare spots where the coating came off the pipe due to rocks or anything else.”

The system saves money for clients by maintaining the product that’s in the line and provides them with accurate pipeline mapping data to upload to the Alberta Energy and Utilities Board.

“This is great stuff. This is our first pilot project with this. This is another place where we can use this new software that we have,” said Rivett at the pilot.

The BPC XLI survey is a digital software system the company also uses to inspect existing pipeline systems for quality control and compliance purposes.

“This is a non-invasive way of doing it,” said Campbell.

SIZES

INTRODUCING THE

AVAILABLE

KEY FEATURES

The Slide Blind does not have to be removed to complete the blanking process.

The Slide Blind enables a slide action to change from the tow to the blind position.

The Slide Blind makes gasket changes easier as the gasket will roll out during a changover.

The Slide Blind reduces fluid and gas emissions during the blinding operation.

EASY STEPS USED IN CONJUNCTION WITH A STUD REQUIRES THE OPERATOR TO:

The Slide Blind allows for gaskets to remain in position and removal is not required.

1) LOOSEN ALL STUDS

The Slide Blind is available in all standard sizes.

2) REMOVE STUDS WHICH ARE OUTSIDE OF SLIDE SECTION

Canada Patent #2,604,074 USA Patent #11/861,041

NOTE

THE SLIDE BLIND REPLACES THE EXISTING SPECTACLE BLIND

E9L=JA9D MK=< >GJ KDA<AF? DAF= :DAF< EYl]jaYd

?jY\]

A 515 A 516 A 203 A 204

GR. 60, 65, 70 GR. 60, 65, 70 GR. A, B, D, E GR. A B, C GR. 304, 304H, 304L, 316L, 321, 321H, 347, 347H, 348, 348H, 309H, 310H, 309S, 310H

A 240

Note: Additional plate material listed in Table 1A (ASME B 16.5) may also be used for line blank.

8” x 150#

2” x 300#

8” x 300#

2” x 600#

8” x 600#

2“ x 900#

8“ x 900#

3” x 150#

10” x 150#

3” x 300#

10” x 300#

3” x 600#

10” x 600#

3“ x 900#

10“ x 900#

4” x 150#

12” x 150#

4” x 300#

12” x 300#

4” x 600#

12” x 600#

4“ x 900#

12“ x 900#

FLANGE, THE SLIDE BLIND SIMPLY

Blinding is made faster, safer and easier to operate in overhead installations and areas of limited work space.

The Slide Blind is ABSA approved and falls under ASMI 16.48B

2” x 150#

3) SLIDE THE BLIND 4) REPLACE THE STUDS & TIGHTEN

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NOTE THE SLIDE BLIND REPLACES THE EXISTING SPECTACLE BLIND

6“ x 900#

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A16

PIPELINE NEWS July 2010

PIPELINE NEWS July 2010

A17

Summer sizzle returns to provincial land sales Regina – Summer has put the sizzle back into sale of petroleum and natural gas rights.

The June sale generated $46.2 million in revenue, making it the second-highest June land sale on record.

Land sale revenue for the 2010 calendar year now stands at $275.8 million, well ahead of the $36 million at the same time in 2009.

While the June sale historically has been one of the quieter sales for the year, the 2010 edition more than doubled the amount raised in June 2009.

“Saskatchewan land sales continue to raise interest,” said Energy and Resources Minister Bill Boyd in a news release.

“It looks like the June sale picked up where the April sale left off. Not only was this second largest June sale ever, but the average price per hectare was more than $1,200. Industry continues to place a premium on Saskatchewan oil and gas properties.”

Leading the pack again is the EstevanWeyburn area of the Bakken play where the sales of $34.5 million accounted for nearly three-quarters of the total revenue.

“This remains our poster boy, although there was interest in other areas as well,” Boyd said.

“The overall picture looks promising. We're already comfortably ahead of last year's pace on land sale revenue.”

The Lloydminster

area was next at $5.8 million, followed by the Swift Current area at $3.2 million and the Kindersley-Kerrobert area at $2.7 million.

The June sale included six petroleum and natural gas exploration licences that sold for $21.4 million and 172 lease parcels that attracted $24.8 million in bonus bids.

The highest price for a single parcel was $10.4 million, paid by Scott Land & Lease Ltd. for a 1,912-hectare exploration licence near Corning in southeast Saskatchewan.

The highest price on a per-hectare basis was $62,222. Mammoth Land Services Ltd. bid $4 million for a 65-hectare lease parcel near Stoughton.

The $1,200 per hectare from the June sale

once again compares favourably to both Alberta and British Columbia.

The most recent sales there averaged $800 per hectare and $1,700 per hectare respectively.

The next sale of Crown petroleum and natural gas dispositions will be held in August.

The following is an area summary of provincial sales with numbers rounded off.

Weyburn-Estevan area The total bonus received in the area was $34.5 million an average of $2,221/hectare.

This compares to $139 million, an average of $2,042/hectare at the last sale.

The top purchaser of acreage in this area was Scott Land & Lease Ltd. who spent $19.5 million to acquire 12 lease parcels and two licences.

The top price paid

for a single lease in this area was $4 million paid

by Mammoth Land Services Ltd. for a 65-hectare parcel situated 3 km south of the Heward South Frobisher Beds Pool, 44 kilometres east of Stoughton. This is the highest dollar per hectare in this area at $62,222 per hectare.

The top price paid for a single licence in this area was $10 million paid by Scott Land & Lease Ltd. for a 1,912 hectare block situated adjacent to the Flinton Tilston Beds Pool, 6 km east of Corning.

Lloydminster area The total bonus received in the area was $5.8 million, an average of $1,058 per hectare.

This compares to $2.9 million, an average of $834 /hectare at the last sale.

The top purchaser of

acreage in this area was Croverro Energy Ltd. who spent $1.5 million to acquire a 64-hectare lease parcel situated within the Lashburn West Sparky Sand (Oil) Pool, 22 km southeast of Lloydminster. This is the highest dollar per hectare in this area at $23,485/hectare.

Swift Current area The top purchaser of acreage in this area was Silver Hawk Resources Ltd. who spent $2.5 million to acquire eight lease parcels.

The highest price paid for a single lease in this area was $544,890 paid by Silver Hawk Resources Ltd. for a 259-hectare parcel situated 6 km east of the Leon Lake Shaunavon (Oil) Pool, six km southeast of the town of Shaunavon. This is the highest dollar per hectare in this area at $2,104 hectare.

Kindersley-Kerrobert area The top purchaser of acreage in this area was Standard Land Company Inc. who spent $724,929 to acquire six lease parcels and one licence.

The top price paid for a single lease in this area was $219,325 paid by Standard Land Company Inc. for a 259 hectare parcel situated 2-km south of the Loverna Viking (Oil) Pool, 24 km north of Alsask.

This is the highest dollar per hectare in this area at $847/hectare.

The highest price paid for a single licence in this area was $412,339 paid

by Sandstone Land and Mineral Company Ltd. for a 907-hectare block offering deep rights and situated partially within the Hoosier Bakken Sand (Oil) Pool, 22 km northeast of Alsask.

A18

PIPELINE NEWS July 2010

Major Husky turnaround to boost Lloydminster

Sher Follett, Husky’s manager of environmental midstream and downstream operations, provided information to the public on Husky’s CO2 projects during an open house in Lloydminster.

Lloydminster – Labor Day in Lloydminster will have added meaning this year as Husky Energy Inc. plans to launch one of its largest turnarounds on the Lloydminster Upgrader from September to the end of October.

Approximately 700 tradespeople have been contracted to work 10 hour shifts, seven days a week alongside 300 employees from Husky.

“We have a turnaround superintendent who is leading the activities,” said a company spokesperson at Husky’s open house in Lloydminster June 15.

“We’ll be doing our inspections, cleaning equipment and doing some upgrades and replacements. It’s all for the safety and the reliability of the plant.”

Several Husky specialists were on hand at the Lloydminster Exhibition Grounds to update the public about carbon dioxide capture and storage projects, the construction of the new office building in the city, and the upgrader turnaround.

“We will be taking things apart checking them out and doing any necessary repairs,” added the official.

There will be a large number of mobile cranes and other large equipment expected on site to support the project, according to Husky.

Husky printed a brochure about the turnaround advising residents to expect increased activity on the plant site and increased traffic flow on city roads.

The brochure also alerts residents to expect added noise and odor levels for brief periods of the shutdown and startup stages.

Flaring may also be visible from the site as hydrocarbons and removed from various units.

The brochure also includes a statement from Bob Baird, vice-president of Upgrading and Refining who said, “We are committed to minimizing disruption the turnaround may have on the community.

“These activities are necessary to maintain our high focus on safety and asset integrity and to ensure ongoing reliable operations.”

What Baird and brochure don’t say is for businesses to brace for an economic mini-boom.

“There is a big economic impact on the community and the surrounding area,” said the Husky official at the open house.

“We have been involving our contact partners and businesses that we engage. They are well aware of the activities.”

The current upgrader was built in 1992 and undergoes major maintenance about every three years.

The upgrader has a production capacity of 82,000 barrels of crude a day. The plant also produces approximately 120,000 tonnes of sulphur per year and 300,000 tonnes of petroleum coke.

The upgrader also produces more than 3,000 barrels per day of high quality diesel fuel.

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of The Battlefords Independently Owned and Operated

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PIPELINE NEWS July 2010

A19

A20

PIPELINE NEWS July 2010

SAGD pilot planned

Contiguous Lands (As at May 17, 2010)

British Columbia

Alberta

Saskatchewan

Fort McMurray

Edmonton Saskatoon

1 Township (6 x 6 miles, or 9.6 x 9.6 kilometres)

Vancouver

Calgary

Regina

Victoria

Oilsands Quest latest map of contiguous lands shows the area of permits and licences covering 651,565 acres of its 100 per cent-owned land in Saskatchewan and Alberta

By Geoff Lee Lloydminster – When economic opportunity knocks, open the door.

That was the overriding message Oilsands Quest officials delivered to communities in northern Saskatchewan in May and June as their proposed Axe Lake oilsands projects edge closer to approval.

Open houses were held in La Loche, Turner Lake, Buffalo Narrows, Beauval and Meadow Lake under the direction of Cal Clark, corporate manager for environmental and regulatory affairs.

“These communities are quite enthusiastic about the project,” said Clark, speaking from the Oilsands Quest office in Calgary.

“Capacity building is a key thing. People want opportunities for jobs, and they need to start preparing for that. We are giving the communities a bit of a heads up.”

Buffalo Narrows Mayor Bobby Woods told Pipeline News the Oilsands Quest project “will have a huge impact on our community socially and economically.

“Throughout the years, because of the fishing industry and the mink ranch industry that was centralized in Buffalo Narrows and in the surrounding area, we have always been a leading community on the northwest side.

“We doing whatever we can to build capacity in our community. We want to invite new residents and new businesses. We are paving the way for the northwest side.

“There is quite a bit of unemployment around here. There

are some First Nations communities around here that will certainly benefit.”

“This project is certainly going to be an asset to our community. The spin off that they’re going to get – people want to live closer to their work.

“There will be people working from here hopefully, and others will be moving in. Our community is an ideal place for people to make their future.”

Buffalo Narrows has a population of about 1,500 located one hour south of La Loche on Highway 155.

Oilsands Quest expects to get the goahead to proceed with a steam-assisted gravity drainage or SAGD test at Axe Lake this October as a key step toward a commercial project to produce 30,000 barrels a day of bitumen.

The latest information tour is timely given Oilsands Quest has recently filed submissions for environmental approval of both projects with the Ministry of Environment.

“By filing the application, that triggers the environmental impact assessment,” said Clark.

“We are starting the environment assessment application now for the regulatory process toward the commercial project.

We still have a lot of work to do before we get there.

“Over the next year, we plan on running a SAGD test to demonstrate the effectiveness of our containment formation above our bitumen, and whether we have containment to hold the steam chamber in SADG.” ɸ Page A21

PIPELINE NEWS July 2010

Sask oilsands development edges closer to reality ɺ Page A20 The test plan will use one 100-metre long horizontal well pair with five metre spacing and make use of existing surface facilities.

Quest plans to submit an application for the planned commercial project to the Ministry of Energy and Resources following the success of its upcoming SAGD test to be determined by mid 2011.

“We caution people that we still have a long way to go,” said Clark.

“If everything goes right and the infrastructure is in place we may be starting construction around 2013 at the earliest.

“There are always the risks associated with that – oil prices, world economics, finding other investment partners – there are a lot of caveats on that.”

Clark says one of the major economic concerns for northern communities hoping to benefit from the oilsands project is the need for a safe and reliable road linking Axe Lake with La Loche and other northern communities.

The end point of the existing Cluff Lake Road from La Loche to Axe Lake is nothing more than a goat trail according to Clark.

“There is virtually no infrastructure in that part of the world,” he said.

“Constructing access to our facility is one of the key issues that people in these communities need to talk with the government about.

“There are various options. We know we need to move west into Alberta for certain things, like tying in a product pipeline and a natural gas line, and quite possibly road access as well.

“The question is do we develop road access to northwest Saskatchewan as well or instead of linking with La Loche?”

“These communities could be supply points, but if we end up tying in to Alberta, then they would lose out on some of those opportunities. The road is the main link for the communities.

“Those are some of the issues communities need to get involved with. That was one of the messages I was delivering. The infrastructure needs to be there before we start construction.”

Mayor Woods has already started lobbying the Saskatchewan government for road links and upgrades that he says are vital to reap economic benefits from the Oilsands Quest project.

“Without the road we would definitely be cut off,” he said. “We don’t want to see the road going out the back way into Alberta.

“We emphasize if there is going to be any oil developed in our province here going north to south, it needs to be refined in our province.”

Woods wants the government to replace a couple of bridges including one in Buffalo Narrows and one spanning the Clearwater bridge on route to the Axe Lake property.

“With our government the magic word seems to be capacity,” he said.

“We have to have the capacity to provide for the industry that’s going to be coming. We have to have the proper property development and the infrastructure to be able to build a future on.”

Axe Lake has a 5,000 ft airstrip and a 200-man camp that housed only two employees early in June, but that will change as the oil company ramps up for the SADG test this fall.

“A lot of the work goes on in the winter and a lot of other work that takes places are these test programs,” said Clark.

“We periodically test the reservoir and evaluate the results to determine what the next procedure is going to be.”

A21

Saskatchewan predicts bumper crops of people Saskatchewan is not just growing wheat. It’s growing in population defying previous predictions of negative growth.

In 2005, Statistics Canada released its 26-year population estimates and projected that the number of people living in Saskatchewan would actually drop from its 2005 level of 994,000.

There are now more than 1,038,000 people who call Saskatchewan home and a new report released

by Statistics Canada projects that number to grow by anywhere from 82,000 to 260,000 over the next 26 years.

Advanced Education, Employment and Labour Minister Rob Norris said the dramatic turnaround is one more sign of the growing strength of the province and its economy.

“Five years ago, people were moving out of Sas-

katchewan by the thousands and a lot of people expected it to stay that way,” Norris said.

“Today in the new Saskatchewan, there are more people moving in than moving out, and this latest report predicts that will be the case for many years to come.”

The report presents three different scenarios for population growth in Saskatchewan. The highgrowth scenario projects Saskatchewan’s population to grow to 1,298,200 by 2036.

The medium-growth scenario would see Saskatchewan’s population jump to 1,207,000 by 2036 while even the low-growth scenario projects the population to grow to 1,120,000 in that same period.

“Saskatchewan is moving forward and it’s going to keep moving forward over the next several decades,” Norris said.

A22

PIPELINE NEWS July 2010

Husky building CO2 processor for enhanced oil recovery

Reservoir engineering specialist David Fong points out of the key points about Husky's CO2 new carbon capture projects.

Photo by Geoff Lee

By Geoff Lee Lloydminster – Husky Energy will be adding carbon dioxide (CO2) to the list of petroleum based commodities produced at the Lloydminster Upgrader by the end of the year.

Construction is al-

ready under way on a new processing plant to dehydrate, compress, liquefy and store purified liquid CO2 to be trucked and injected into select Husky reservoirs for enhanced oil recovery (EOR).

Husky held an open house in Lloydminster

June 15 to update residents on the scope and benefits of the ethanol plant carbon capture project.

The project will cut CO2 emissions currently produced by the fermenting of ethanol by 75 per cent or nearly 91,000 tonnes a year.

“The objective is to use the CO2 as an EOR tool,” said Sher Follett, manager of environment for midstream and downstream operations.

“CO 2 is a commodity, and we are currently purchasing it, and it’s a cost to the company.

“We have a source, so why not use the source that we are venting in another part of the business to improve oil recovery?”

Husky is currently able to recover about eight percent of oil in the ground with existing practices, and hopes to boost that rate by an addition eight to 12 per cent by injecting CO2 in the reservoir.

Husky is a member of the Integrated CO 2 Network of companies leading carbon capture and storage policy development and tech-

nical evaluations in Western Canada since 2005.

Husky reported previously that it will partner with Petroleum Technology Alliance of Canada (PTAC) to reduce greenhouse gases and capture CO2 for EOR at Lloydminster.

The company plans to launch two new CO 2 injection pilot projects on numerous reservoirs in the Tangleflags and Lashburn areas following the success of a four-year pilot in Edam and a two-year pilot in Mervin.

“We looked at the process over the past four years and we learned a lot,” said David Fong, reservoir engineering specialist.

“We made lots of progress and the results were encouraging. That’s why we are planning an expansion

and new projects as well.”

Fong says the objectives of the initial two CO2 pilots were to test whether the process works and to develop a strategy “for the best way to recover more oil with a solvent.”

He reports the process is applicable to the type of thin reservoirs in the Lloydminster area where there is sand two to seven metres thick.

“For this type of reservoir in the Lloyd area, we believe cold solvent is the way to go,” said Fong. “For really thick reservoirs, thermal could be a process.”

By adding a blended solvent to the injection, the reservoir pressure increases and the viscosity is further reduced, allowing the oil to drain to the production well. ɸ Page A23

PIPELINE NEWS July 2010

EOR leads to 75 per cent cut in ethanol plant CO2 emissions ɺ Page A22 “We will store CO2 in bullets and truck them to the well site where we will vaporize the CO2 and inject it into a reservoir,” explained Fong, who suggested propane as a possible cold solvent.

“Under the right conditions it will dissolve into the oil.”

The CO2 processing plant will be located at the south end of the upgrader near the salt caverns with all facilities built above ground.

“What we are going to do is tie into the ethanol absorber and capture the CO2 off of the fermenter at the ethanol plant,” said Melanie Wyman project engineer.

“Then we are going to build a 24-inch pipeline to bring it over to the new facility. It’s essentially going to be a refrigeration and compression technology.

That’s a process skid.”

The process equipment will be assembled on a pre-fabricated base and mounted onto a frame or skid structure.

The project also calls for the construction and assembly of three, 280 cubic metre CO2 storage bullets. Trucks will transport the liquid CO2 to the field sites for injection.

Pipelining was ruled out due the capital cost and distance from Lloydminster to the treatment areas.

“We have a schedule to have CO2 ready by the end of the year,” said Wyman.

“The construction of the facility will be ready by the end of this year, and our supply of CO2 may come a little bit later.”

The project is part of Husky’s sustainable development program and promises to provide short and long term economic benefits to all project communities.

“The construction is starting now and definitely with the trucking, and the more people needed on the construction side of the project – it will definitely be a boost,” said Follett.

“Also, if the pilots work out as well as we anticipate, we would have much longer longevity in a reservoir so that would mean future jobs continuing.”

A23

A24

PIPELINE NEWS July 2010

Ladies warm to charity golf on a cold day

Jodi Denham, Tracey Kimmel, Jennifer Jory and Carrie Munro are proof that a bad day of golf beats a good day at work.

Lloydminster – Rain, cold and laughs were the order of the day during the 5th annual Ladies of the Patch golf tournament held at the Lloydminster Golf and Country Club.

“Mitt, hats, toques, you betcha – it’s a cold day,” said Rhonda Burns from Pyramid Corporation with a shiver and a smile. “The weather could have been better but I am enjoying it anyway.”

“I have been coming every year for the last

four years. It’s a good tournament.”

For her the enjoyment is meeting new friends. “I am golfing with two ladies, one from Bonnyville and one from Edmonton.

You get to meet people from different walks of life,” she said.

This year’s event drew 156 golfers on May 28, one day before it snowed, wiping out final day of the Oilmen’s Tournament in Wainwright.

“Is it cold enough

for you?” was a handy question to engage some ladies in conversation including organizing chair Debbie Horbach who answered, “It didn’t seem to deter any of the golfers.

“Everybody was having a great time.

There was lots of fun and lots of good fellowship. It’s a great day,” she beamed.

“Sometime, I thought the swings would be hurt a bit by the layers people were wearing, but it didn’t

stop the fun.”

Tracy Kimmel from Husky was also nonchalant about the chill in the air when asked how she was enjoying her day and the best ball format.

“It couldn’t be better but it could stop raining,” she said after posing for a photo with her foursome.

“I am not expecting it to be hot. It’s the end of May. It’s great socializing and networking.

The sponsorship is wonderful, and it’s really nice to see everybody out.”

Ditto the thrill for Randi Wenzel from Midfield Supply/Europump Systems who was in a hive of several happy-go-lucky golfers buzzing around a refreshment tent sponsored by Kudu Industries Inc. “It’s a blast,” she said while sipping her drink. “It’s a good time to shoot some balls and meet some new girls, and see who is all in the oilfield.

“The cold weather doesn’t mean anything. I

am pretty content right here having a few drinks and having a good time.”

One of those responsible for the extensive loitering at that watering hole was volunteer Paul Petter who is a new product development team leader at Kudu.

“Today we had some drinks and some smokies and some food for the ladies,” he said while gripping a burger flipper in one hand.

“We’ve been sponsoring since year number one. It’s great. It’s good to see the ladies enjoying themselves.

It’s always the guys who seem to have a golf tournament or something.

It’s good to have a day for the ladies for sure.”

The 2010 Ladies of the Patch tournament raised $25,000 for the Lloydminster Sexual and Information Centre, bringing the five year total to more than $60,000. Last year’s event raised $20,000.

“We decided when we formed this committee that the Lloyd sexual assault centre would be the charity or choice,” said Horbach. “We are very proud of it.”

“They have had a

lot of their funding cut back from different government agencies.

They depend heavily on donations from the community.

“We have become one of their major sponsors to keep that operation up and running. We are proud and happy to say we are doing a good job at it.”

Tournament sponsorship signs were everywhere too, leading Horbach to comment, “We just can’t say enough about our sponsors. We have the same sponsors year after year.

“I think they are proud and happy to be able to sponsor the women who work in the oilpatch because without the women the oilpatch wouldn’t run.

They have come back every year.

“Some of the hole sponsors held mini putting or chipping contests, and the proceeds from that are donated to the sexual assault centre as well.”

Muriel Ralston, the executive director of the sexual assault centre was on hand to accept the cheque and applaud the ladies of the patch for their generosity. ɸ Page A25

Melissa Martens and Randi Wenzel warmed up to the camera and the golÀng with a lengthy stop at a sponsored watering hole.

PIPELINE NEWS July 2010

A25

Braving the cold

Jackie Verner (left), Kayla Bilyk, Shelley Green, Jessica Lazerte and Karyn Lebeau showed what to wear on a cold day of golf.

Muriel Ralston (centre), executive director of the Lloydminster Sexual Assault and Information Centre, accepts a donation cheque for $25,000 from tournament reps Sheila McFadzen (left) and Debbie Horbach (right).

ɺ Page A24 “We are always pleased with what the ladies of the patch do for our agency,” she said. “The amount is important but the passion these women put into these events is worth that money too.”

Ralston says the money goes toward the funding of the centre’s publication education program that has reached more than 3,000 students and teachers since the previous tournament.

“This is a huge factor in supporting our agency, and what the ladies do for our agency we can’t thank them enough” she said.

“I just have nothing but appreciation for the women who come out and golf in this weather, and the women who work hard to get it up and running every year.”

Ralston doesn’t golf but she and her staff volunteer behind the scenes

so there are no hiccups come game day.

Horbach thinks the charity helps to attract golfers and she may be right as players from all points of the oilpatch including Calgary, Red Deer, Grande Prairie and Saskatoon and Regina.

Despite the chill, Tracy Pavka from Triton Equipment and Services was draped in a Hawaiian Lei handed out at the Brightling Equipment Ltd. sponsored tent.

“They are serving Hawaiian drinks and handing all the girls leis,” she gushed. “You have to warm up the day somehow.

“If that wind wasn’t so bad it wouldn’t be as bad, but it’s good conditions. The course is really nice and the greens are fast.”

Carla Penny a coowner of Penny Holdings chipped onto a green wearing a ski jacket prompting yet more conversations about the

weather for the record.

“It’s been good. It’ been lots of fun. We were ready for it, “she said. “We live in Canada.

Last year was pretty cold too.”

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A26

PIPELINE NEWS July 2010

Maidstone oilmen’s lucks out

Mike Miske from Baker Hughes drives for show at the Maidstone Oilmen’s Golf Tournament.

Photo by Geoff Lee

Maidstone – With sports, timing is everything, and that includes the scheduling of the 21st Maidstone Oilmen’s Golf Tournament that lucked out with fair weather on June 11, one day after steady rain fell.

“Thank God the weather broke otherwise it would have been like yesterday, and we’ve had to cancel it other times,” said tournament organizer and player Vaughn Sharp.

“It’s not fun when it’s pouring rain. The course is as green as it’s ever going to be.”

The threat of rain had little effect on the turnout at the 9-hole Silver Lake Golf Club which was somewhat of a surprise to Sharp.

“We usually have a couple of no shows – especially with the rain yesterday – but we had all 72 spots filled,” he said.

This year was the second year in a row for the tournament as a one day affair, and Sharp says it will take time to rebuild interest levels back to the two-day format in use before the downturn took a toll on entries.

“We usually have 128, and with the oil turndown we thought we wouldn’t get the sponsors or the golfers,” he said.

“We found even this year with the deadline, we still hadn’t filled it with 72. It hasn’t quite come back to where it was a few years ago.”

On the bright side, the one day event is easier to organize and find sponsors.

“Our sponsors have been very good. The oil service companies are very supportive,” said Sharp who works as a construction consultant for Husky.

Sharp is keeping his day job despite a good showing on the first nine holes where he was happy to be up a hole in the match play format.

“It’s whoever gets the least on a hole wins. I’m up by one on the first nine,” he said, but when the dust settled, he was not one of the flight winners.

The player with most glory was Chris Hartman who won the championship round. Nathan Blanchette was the winner of the 1st flight followed by 2nd flight winner Tyson Mohrbutter and 3rd flight champ Ron Falcon.

Other flights winners are: (4th flight) Luke James, (5th flight) Chris Oman, (6th flight) Butch Bailey, (7th flight) Jeff Taylor, (8th flight) Walter Kohuch, (9th flight) Adrian Hume and (10th flight) Mike Miske.

Rounding out the winners’ list are: (11th flight) Bill Pike, (12th flight) Terry Anderson (13th flight) Quinton Blanchette, (14th flight), Ron Spence, (15th flight), Barry Taylor, (16th flight), Glen Leroy, and (17th flight) Rick McMahon.

Walter Kohuch was voted the Most Sportsmanlike Golfer earning him the Ernold Priest Memorial Trophy donated by Wesco Services /Hardy Excavating.

This marks the 10th year the trophy has been awarded in memory of a long time oilman Ernold Priest who lived in the Maidstone area.

PIPELINE NEWS July 2010

A27

Ps and Qs key for LandSolutions in heavy oil country

Land manager Aron Klassen says he’s more of a deskman these days overseeing regional operations and a staff of four landmen in Lloydminster and Edmonton.

Photo by Geoff Lee

Lloydminster– How’s the weather and how are the crops?

Small talk with landowners is a key part of the job for landmen with LandSolutions Inc., in Lloydminster, where the task of negotiating land and mineral rights in heavy oil country can generate many follow-up handshakes.

“Rapport with the landowner is critical,” said land manager Aron Klassen.

“We like to have a relationship with the landowner because it helps in the negotiation. If there’s a level of trust then the negotiation is going to be a lot easier.

“You try to maintain that relationship for as long as you are in the business. It helps smooth the process

related facilities on private land to dispute resolutions and pipeline dig sites.

The phone calls and visits focus on negotiating with the landowner over compensation for access which can differ slightly in both provinces.

In Saskatchewan, compensation can cover land value, severance use and it’s adverse effects and loss of use, while Alberta adds compensation for general disturbance.

There is also the initial compensation for a well site and pipelines in both provinces and an annual compensation for wells sites only.

Klassen says close spacing of heavy oil wells can make land and mineral acquisitions more lucrative for landowners in his area looking to boost their incomes.

“It’s more lucrative because if you have 16 well sites on a quarter section of land, there is a lot more initial compensation and a lot more in annual rent coming in,” he said.

“With conventional oil, there may be one well per quarter section, so you don’t have anywhere near the initial surface disturbance or the initial compensation or annual rent.

ɸ Page A28

with the land agents, the land owners and the oil companies.”

That rapport takes on added dimensions working on both sides of the border in Alberta and Saskatchewan where heavy oil wells can be spaced at a ratio of one well per 10 acres or 16 wells per quarter section.

“We will quite often make several calls. There’s the initial contact for a well site and contact again for a pipeline,” said Klassen.

“There may be more contact for more wells and more pipelines. We will make a lot of visits.”

Each visit could be on behalf of a different oil and gas company for a range of services from acquisition of surface leases for well-sites, access roads, and other

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PIPELINE NEWS July 2010

How’s the weather? How are the crops? ɺ Page A27 “Some guys want to see 16 wells per quarter because they see it as good revenue. Others think it’s a pain because they have 16 locations to farm around.

“If you completely cut off an acre, you may have to negotiate with the landowner that you will seed it to grass so it doesn’t become a weed patch.”

Klassen says concerns of farmers can range from wanting assurance from oil companies to keep their gates closed so cattle don’t wander off to environment and reclamations issues.

“We represent our clients which are the oil companies, but it’s a bit of a balancing act,” said Klassen.

“We try to go out to the landowner armed with the best available information we have so we can present a true picture of what’s going to take place.

“You also have to mind your Ps and Qs. You have to watch your language so you don’t offend people.”

Hostilities can arise occasionally and Klassen admits to being threatened in the past, and once had his hat knocked off by an irate client.

“Sometimes you meet people who are walking a bit on the wild side but 99.9 per cent of the people are great,” he said, adding he has been offered apple pie, too.

“Some people insist you come by at lunch time because they want to make sure you’re fed,” he said.

“We are there at their convenience. If they can only see us in the evenings or on weekends, that’s when we meet landowners. A lot of farmers work off the farm today, so a lot of our meetings are in the evenings.”

Farmers also not available during spring seeding and fall harvest times but other that those two periods, LandSolutions is busy year-round. There are two landmen in Lloydminster and two in Edmonton reporting to Klassen.

“We are pretty busy. It’s doing well,” he said. “We are pretty intense within a one hour radius of Lloydminster mainly in the surface area.

“Our minerals are mostly handled out of our Calgary office. Freehold mineral owners may own minerals rights around Lloydminster but they might live in New York City now. It’s something that’s been willed on.

Many mineral owners have scattered to the four corners of the earth.”

As for Crown land sales of mineral rights, Klassen says the Lloydminster area is “nowhere near the Bakken in land sales, but we pretty well hold our own.”

He says the heavy oil industry is continuing to ex-

plore in the area.

“You look at a lot of the land and you thought it was drilled out 30 years ago, and you see new wells put back in the same land,” he said.

“With a Crown block, companies will tell us what they want to bid, and we submit a bid to the Crown and wait and see if the company is successful.”

Klassen has more than 16 years of experience as a landman, and he says the profession is growing quickly, especially in Alberta, to keep pace with the growing regulatory requirements from the ERCB. “There is a lot more paperwork that has to be done in Alberta,” he said. “In Saskatchewan, you are typically dealing with just the owner of the well site.

“In Alberta you might have to go and knock on the doors of all of the neighbours as well. That’s increased the number of landmen that are required in Alberta. It’s a growing industry.”

LandSolutions, based in Calgary has offices throughout Western Canada and has broken new ground providing land management solutions to petroleum and renewable energy industries, power generation, transmission and public infrastructure.

“Right now, we are a company of about 70 strong in mineral and surface landmen and administrators, and we are a pre-eminent company with regards to wind power as well,” said Klassen.

“We do a lot of land acquisitions for wind turbines.

We’ haven’t done any here in the Lloydminster area.

“We are the leading company in Canada regarding land for wind turbines. We negotiate for the surface rights of that land. That part of the business will continue to grow.”

PIPELINE NEWS July 2010

A29

Snow shortens play for Wainwright oilmens Wainwright – White greens led to a blackout of the final day of play at the 2010 Wainwright and District Oilmen’s Golf Association tournament scheduled May 2829, but no one had the blues.

“We just made it a one day tournament,” said organizer Dean Olson, owner of Olson Construction and Consulting Services Ltd. and the first flight champion.

“The course was unplayable due to snow. It was chilly on Friday too, but we got through it.”

“It’s only the second time in 24 years we had to resort to a one day tournament. We cancelled it the next morning.

“Everybody came out for breakfast and we made a decision to cancel it. Sunday wasn’t looking any better, and there were no alternative dates.”

As for a suggestion to change the date next year, Olson replied, “We will not change our dates. It’s been that way for 24 years.”

Prizes were handed out Saturday morning at the whitened Wainwright Golf Club. Olson reports oil companies were generous as usual with donations and sponsorships.

“We always get very good support and very good sponsorship,” he said.

“Our tournament is growing from a very small tournament to one of the largest in the area.”

This year’s event was the first time in nearly 10 years that the entries didn’t max out at 168, a hiccup that Olson attributes to “a few things going on in the economy,” more than weather issues.

Still, 154 players came for the fun to compete in 19 flights including former Wainwright native Sean Mills, who drove from Calgary where he works for Weatherford to successfully defend his championship flight title in the shortened affair. Nipping his heels was the official runner up Brad Kropinski.

The first and second place in the top five flights are: 1st flight: Dean Olson and John Milton; 2nd flight: Ross Perkins and Keray Cumberland; 3rd flight: Cody Foley and Kevin Emter; 4th flight: Dan Szoke and Greg Gosselin and 5th Flight: Cole Gosselin and Tony Costa.

The next five flight winners and runners-up are: 6th flight: Troy Belik and Raymond Jackson; 7th flight: Stan Pioker and Jamie Ruptash; 8th flight: Benjie Caouette; 9th flight: John Muise and Cal Corland; 10th flight: Lionel Cornet and Stu Hines.

The list of prize winning golfers continues as follows: 11th flight: Mac Dodd and Beau Myer; 12th flight: Terry Latta and Cory Mardian; 13th flight: Craig Quinn and Ashton Lee; 14th flight: Darcy Rutledge and Denis Benoit; 15th flight: Hector Munoz and Ryan Rinas.

The last group of flight winners is: 16th flight: Todd Schnieder and Wayne Turzanski; 17th flight: Bob Tyler and Ray Hill; 18th flight: Troy Walker and Land Sandberg

Course manager John Tomlinson looks to the skies, while standing on a snow-covered 18th green. The weather forced the cancellation of the annual Oilmen’s Golf Tournament prior to the start of its second day, only the second time in the tournament’s history that it has been canceled.

Photo by Rod Oracheski, Star News Inc.

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PIPELINE NEWS Saskatchewan’s Petroleum Monthly

B-Section July 2010

All eyes are the Áight of the ball for the million dollar hole-in-one contest. The money is safe for another year.

Fair weather, sponsors and good spirits shine at Lloydminster golf-fest Story and photos by Geoff Lee Lloydminster – Birdies, eagles and mosquitoes were the order of the day during the 32nd annual Lloydminster Oilmen’s Golf Tournament held June 18-19.

The weather also deserves a mention as no rain or snow fell at the Lloydminster Golf and Country Club as it did during other June oilmen’s tournaments.

“We had some great weather and a full tournament again so it was good,” said Kevin Smart this year’s tournament chair.

“We had 240 golfers and 12 on our committee to make it 252. Sponsorships were up this year as well.”

As per usual, the tournament was loaded with sponsored hole prizes, refreshment holes and holein-one events with proceeds going to support improvements to the golf course and various non-profit community organizations.

“The oilpatch is a huge driver of revenue for our golf course,” said club pro Kyle Mulligan.

“No question, without the oilpatch, the oilmen’s

and the oilmen’s society, we wouldn’t have the golf course that we have.

“Some funds go to the golf course in greens fees and cart revenue. Outside of that, the oilmen’s pick their charities, and they give us some of the funds for course improvements. It’s a good fundraiser for everybody.”

Assistant pro Jeff Graham had no problem raising charity money from oilmen at the “beat the pro” closest drive to the pin challenge from the 6th tee.

He was 16-1 off the tee before raising the bar to 17-1 when Mike Ridsdale from Grit Industries stepped up. Ridsdale flopped his drive, but nothing could ruin his day.

“I’m just loving it. You couldn’t ask for better weather,” he said.

Morley Sebree used the age card to excuse his errant drive to the youthful and more accurate 21year old Graham who found the green.

“Well, it’s age. It’s just an age thing,” joked Sebree, who has played here for the last three years and provided the best sound bite of the day.

This man in motion is Grant Bexson photoɸ Page B2 graphed dispatching his ball downwind.

B2

PIPELINE NEWS July 2010 Shawn Cameron putted in from the fringe of the 9th hole.

Scorekeeper Doug Moore checks the leaderboard.

Cam Zarowny congratulates Dwayne Keichinger who won a 50-inch TV in a charity putt-off.

MacNab wins in playoff over Simonar ɺ Page B1 “He’s younger and better looking. I didn’t have much chance. We’ll try again next year, but he will probably smoke me again.”

Fun was on the mind of Gary Munro from Baytex Energy Trust who has played in all 32 Lloydminster oilmen’s tournaments and keeps coming back for the fellowship.

“It’s a good tournament and there are a lot of good guys, so it’s nice to come back,” he said adding he has won a few contests and flights over the years too.

“It’s always a challenge. It’s been really good.”

Among the non-golfers was Charlie Chisholm was who in his seventh year flipping burgers on behalf of Reliance Industrial Products at a feeding station sponsored with Champion Technologies

and Rockwell Servicing Partnership.

“It’s just good PR and you get to meet the guys in the field,” he said.

While no one won the grand prize $1 million dollar hole-in-one-contest on the final day, everyone went home with something tangible.

There were oodles of Calcutta payouts, flight prizes, auction payouts, hidden hole prizes, door prizes and gift bags stuffed with freebees.

Dwayne Keichinger from Heavy Crude Hauling needed help to cart off the Samsung 50-inch TV he won in a putt-off challenge sponsored yearly by Noralta Technologies in aid of KidSport Canada.

“It’s a great cause and we have supported it for the past few years and we will continue to,” said Cam Zarowny CEO of Noralta.

“I think we raised about $2,000. That was our target.”

This year’s tournament included 29 flights of golfers who competed in match play competition and a medal round championship flight won by Blair MacNab in a rare playoff with runner-up Myles Simonar. Corey Dennett placed third.

The flight winners are as follows: Flights 1 to 5: Nevin Anderson, Shawn Franklin, Garnet Zarowny, and Bob Sullivan.

Flights 6 to 10: Greg Nolin, Steven Breen, Cory Bourassa, Andy Hannah and Andy Vanderlee.

Flights 11 to 15: Sean Corcoran, Jamie Jeannotte, Logan White, Dale Appleton and David Greenway.

Flight 16 to 20: Bob Denny, Wayne Johnson, Denis Prefontaine, Glen Martinka and Howie Staniforth.

Flights 21 to 25: Dave Hurley, John Matemisz, Wayne Muir, Bob Dansereau and Rod McDonald.

Flights 26 to 29: Ron Spence, Ron Mazerolle, Barry Williams and Dwayne Lundquist.

PIPELINE NEWS July 2010

B3

New royalties rates to stimulate investment

By Geoff Lee Edmonton– The Alberta government has made final adjustments to its royalty formulas for conventional oil and gas, and launched a new program and royalty rate to stimulate exploration and production of unconventional oil and gas resources.

“The final adjustments to royalty formulas will help industry make important investment decisions for the fall and winter drilling season and maintain Alberta as a competitive jurisdiction for investment,” said Energy Minister Ron Liepert.

The new royalty rates for conventional oil and gas and modifications to rates for unconventional oil and gas follow a competitiveness review report on royalties in March.

A new Emerging Resource and Technologies Initiative unveiled in the news package of May 27 modifies the royalty rate for deep high-cost natural gas wells, coalbed methane, shale gas and horizontal oil and gas wells.

“This initiative to unlock Alberta’s unconventional resources offers the potential for decades of employment and community benefits” said Liepert.

The new program will be reviewed in 2014, and aims to strengthen a producer’s ability to invest in additional wells and in research and development.

Alberta Energy Minister Ron Liepert announces new royalty rates and incentive programs for unconventional oil and gas resources.

To promote stability, Alberta will provide industry with three years notice if it decides to discontinue the incentive.

“These rate modifications are a long-term investment in Alberta’s future,” added Liepert.

Over the next 25 years the Canadian Energy Research Institute forecasts that oil and gas development in Alberta has the potential to add $2.5 trillion in new economic activity.

Alberta is also undertaking two studies to expand the mapping, geological and resource knowledge of shale gas in Alberta and the enhanced oil recovery potential of conventional

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oil pools in Alberta.

The following is a summary of Alberta’s royalties for conventional oil and gas.

Natural gas royalty rate The maximum and minimum rates for natural gas are 36 per cent and five per cent respectively, as per the Alberta government’s announcement on March 11.

The royalty rate is the sum of a price component and the quantity component. The quantity component of the formula remains the same as under the existing gas royalty framework. There are changes to the price component of the gas royalty formula

to moderate the increase in the rate at prices higher than $5.25/GJ. The new formula will be applied to all Alberta Crown production including production from existing wells effective Jan. 1, 2011, with the exception of production from wells that choose to remain on the Transitional Royalty formulas.

Wells that remain on the Transitional Royalty formulas will receive those rates until Dec. 31, 2013.

Conventional oil royalty rate The maximum and minimum rates for conventional oil are 40 per cent and 0 per cent respectively, as per the Alberta government’s announcement on March 11.

The royalty rate is the sum of a price component and the quantity component. The quantity component of the formula remains the same as under the existing oil royalty framework. There are changes to the price component of the oil royalty formula to moderate the increase in the rate at prices higher than $535/m3.

The new formula will be applied to all Alberta Crown production including production from existing wells effective Jan. 1, 2011, with the exception of production from wells that choose to remain on the Transitional Royalty formulas.

Wells that remain on the transitional royalty formulas will receive those rates until Dec. 31, 2013.

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B4

PIPELINE NEWS July 2010

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PIPELINE NEWS July 2010

B5

HEATING LIGHT OIL Innovative technology eliminates the need for pressure heaters and treaters

A

ssisting the separation of oil often requires three things chemical, time, and heat. In the light oil regions of Saskatchewan, the application of heat into tanks using conventional fire tubes has been impossible. Now, thanks to the Grit Industries Inc. Cold Weather Technologies (CWT) heater, that problem has been solved.

Using their patented Heat Driven Loop (HDL) technology, Grit has been working with producers in Saskatchewan to bring heat to light oil treating. The HDL works by generating steam, and then using that steam to transfer heat to the oil.

The steam can be generated outside restricted areas, and then piped in to bring the heat to the oil - thereby keeping the flame outside that restricted area.

The first installation of a CWT heater in Saskatchewan for a light oil application was with Marble Point Energy in the Coleville area in 2009.

“Installation was quick, and done in half a day,” said Marble Point operator Andrew Long. “On the grand scale, this was a small thing.”

Once up and running, the heater quickly proved itself, allowing the facility to turn over an average of 60 to 100 cubic meters per day, and more heat was available if required.

Trent McDonald, Saskatchewan Production Foreman with Marble Point Energy

are seeing clean oil consistently.”

Operators also enjoy the peace-ofmind that comes with the heater.

“You don’t have to worry about turning the burner off if the tank dips down,” Long said. “I used to sit at home worrying that something is going to go wrong, but not now.”

Wozniak and Long added that the heater has a long list of other benefits, such as the low maintenance, easeof-use, reliability, and safety features.

Additionally, the heater requires no outside electricity, no firetubes or pressure vessels, and does not use electric pumps, float switches or control panels.

Marble Point operators stressed how effortless and reliable the heater is.

“The heater is great,” said lead operator Trent McDonald, Marble Point’s Saskatchewan Production Foreman. “Oil is getting clean and it’s very efficient. Since we installed the heater we are saving on fuel gas by half. It’s incredibly operator friendly.”

“Once it is set it runs properly,” operator Brad Wozniak noted. “There is just not a lot to play with. And we

McDonald noted that the only stumbling block he found when it came to the heater was the up front

The Cold Weather Technologies heater hard at work near Coleville.

capital cost, but the savings they are now seeing has more than alleviated that concern.

“It’s just common sense,” he noted.

Saskatchewan Ministry of Energy and Resources Saskatchewan Ministry of Energy and Resources has decided to allow the installation at Marble Point as a trial, and are still overseeing the installation of additional CWT heaters in Saskatchewan on a site-bysite basis. The group noted that they are encouraged by the results Marble Point is seeing, and by the dependable and safe operation of the heaters.

History of the CWT heater The CWT heater was originally created by Grit Industries Inc.’s president and CEO, Wayne King, as a way of heating heavy oil inside tanks.

It was originally intended as a method to generate heat that could burn the casing gases from the heavy oil production process.

Not finding an immediate market for the heater back then, Grit was able to commercialize and market the heater into the natural gas industry through a partnership with Sask Energy.

The CWT heater has become a reliable method of heating natural gas in distribution pipelines, and is used throughout Canada and the United States.

Grit Industries Inc. The Cold Weather Technologies heater is designed and manufactured

by Grit Industries Inc. out of Lloydminster.

The heater offers an innovative solution to the light oil industry, in that it can transfer heat to a fluid without flame having to be near said fluid. This means heat can be transferred to light oil, facilitating the separation of the oil, with the actual heat source being well outside the radius of certain divisions.

Marble Point Energy operators Brad Wozniak and Andrew Long.

The heater is practically silent, and allows producers and operators to enjoy a significant reduction in fuel gas consumption and corresponding greenhouse gas emissions - over that of conventional heating methods.

B6

PIPELINE NEWS July 2010

No one knows the lay of Swift Current â&#x20AC;&#x201C; The grass is greener in Saskatchewan than elsewhere for Millennium Land Ltd. The company has its plate full providing land and environmental services to oil companies from oďŹ&#x192;ces in Eatonia and Swift Current managed respectively by Troy Becker and Donny Duncan.

In fact, their website states, â&#x20AC;&#x153;Saskatchewan is a province with as much opportunity as wide-open prairieâ&#x20AC;? to partly explain their preference for sticking close to home. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s enough work in Saskatchewan to keep us hopping,â&#x20AC;? said Duncan, who is the only landman in the company licensed to work in Alberta. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s mostly oil and itâ&#x20AC;&#x2122;s mostly the lower Shaunavon. Thatâ&#x20AC;&#x2122;s a busy play right now. We have quite a few clients who are drilling lot of new wells this summer and the remainder of 2010.

â&#x20AC;&#x153;We are spread out. We do stuďŹ&#x20AC; right into southeast Saskatchewan and southwest Manitoba.

I havenâ&#x20AC;&#x2122;t done any work in Alberta.â&#x20AC;?

Acquiring surfaces leases for oil and gas clients for new wells and associated pipelines tops the land acquisition activities in Eatonia where usually busy gas ďŹ elds have slowed, prompting a shift in gears. â&#x20AC;&#x153;The gas ďŹ eld is pretty much shut right down, so itâ&#x20AC;&#x2122;s mostly oil we are doing right now,â&#x20AC;? said Becker. â&#x20AC;&#x153;We donâ&#x20AC;&#x2122;t do a bunch of work right around Eatonia. Most of it would be in the Shackleton ďŹ elds on both sides of the South Saskatchewan River around Kyle, Success and Sceptre and down in that area. â&#x20AC;&#x153;Oil is going pretty good now. The Kindersley area is pretty busy too. We have a little bit of work there but not a whole bunch. We do some work up in the Macklin area too.â&#x20AC;?

Crescent Point Energy Corp. is one of Millenniumâ&#x20AC;&#x2122;s blue chip customers who values how the land company works with landowners to negotiate compensation. â&#x20AC;&#x153;Their rates are very reasonable and they do great acquisition work, and their prices are fair to the landowners. They are top notch all the way around,â&#x20AC;? said Rae-Lynne Mills, surface land manager for Crescent Point in Calgary.

Millenniumâ&#x20AC;&#x2122;s menu of services includes environmental assessments and monitoring that are helping the company to gain a foothold with new oil and gas customers in the market for a full service shop.

â&#x20AC;&#x153;Most of our guys are local and a couple of our guys have environmental degrees, so we are branching out and we are doing environmental work as well,â&#x20AC;? said Duncan. â&#x20AC;&#x153;We do pre-site assessments for well site pipelines and battery sites, and monitoring well drilling and that kind of stuďŹ&#x20AC;.â&#x20AC;?

Millennium also outsources any required archeology studies from the government particularly in the southwest corner of province that is rich with Indian artifacts. â&#x20AC;&#x153;We are dealing lots with PFRA (Prairie Farm Rehabilitation Administration) and native prairie grasslands,â&#x20AC;? said Becker in Eatonia. â&#x20AC;&#x153;Our environment people do environmental assessments and monitoring on grasslands. They also do wildlife and vegetation assessments. The environment laws are always getting tougher.â&#x20AC;?

The biggest environmental concern of farmers according to Becker is â&#x20AC;&#x153;they want their land in good shape and they donâ&#x20AC;&#x2122;t want any big messes.â&#x20AC;?

Negotiating land acquisitions with farmers is second nature for Becker who worked for the Saskatchewan Wheat Pool for 13 years.

A buddy of his named Brad used to own Millennium and told Becker if he wanted a job to come and talk to him. â&#x20AC;&#x153;One day I talked to him and he said you can start tomorrow if you like. I gave my two weekâ&#x20AC;&#x2122;s notice 10 years ago, and Iâ&#x20AC;&#x2122;m still giving â&#x20AC;&#x2122;er,â&#x20AC;? he said. ɸ Page B7

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PIPELINE NEWS July 2010

B7

the land like Millennium Large or small land acquisitions are helping to drive business in the southwest section of the province.

Photo submitted

all local hires.

“Having local em“The challenge was ployees helps. They know getting to know the oil the area and the lay of and gas industry. I didn’t the land, and know a lot know much about it at of the landowners. Havall. Most of the land- ing local guys, I like it. owners are farmers, and They are not as prone to I dealt with farmers ev- packing up and working ery day when I worked in Calgary.” for the Wheat Pool.

Ditto the enthusi“The biggest thing asm for Millennium’s is your communications local connections from skills and your people Jay Brown, surface land skills, and how you come coordinator for Husky seeks land for oil proacross to people.

Duncan hails from duction in the southwest Athabasca, and he says part of the province the day after he gradu“I get really good ated from a two-year quality work out of land agent course at those guys,” said Brown Olds College, he moved in Calgary. to Saskatchewan. He is “Because they live th into his 11 year with in the area they know a lot of those landowners Millennium.

“In 2000, we were a firsthand and they have two-man outfit, and now great relationships with we have 10 employees,” them.”

Duncan, Becker and he said, noting they are

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rate of 2.5 per cent and a freehold production tax rate of zero per cent on the first 25 million cubic metres of natural gas produced from horizontal wells. The program is in effect until March, 31, 2013.

“With this incentive, and if gas prices creep back up, you could see more influx of activity, but not in existing areas. You may see more new areas pop up,” said Duncan.

“Most of the gas stuff we look after is shallow gas. I can’t foresee horizontal technology going into shallow gas, but I am not a geologist.”

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“A lot of the work is infield stuff with lots of horizontal drilling,” said Becker. “It’s bringing new life into old fields.

It’s good for us for sure.”

Saskatchewan’s new gas well incentives to stimulate horizontal gas production could also generate business for Millennium.

“It’s going to be interesting to see how that pans out because there is not a lot of unconventional gas wells being drilled in Saskatchewan,” said Duncan.

The incentive is volume-based and sets a maximum Crown royalty

40249211•06/25/10

ɺ Page B6

and aside from last year’s slowdown; the business has been growing steadily.

The company is starting to get more into freehold mineral rights and they also do power line easements.

“We would do acquisitions for wind turbines if the opportunity arose,” said Becker. “We would do just about anything if the client wanted us to on the surface side of things.

Also helping to drive growth at both locations is technology and incentives to drill unconventional wells and horizontal wells that have made

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PIPELINE NEWS July 2010

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B9

Road access and traf¿c top issues for retired landman Story and photos by Geoff Lee Retired surface landman Bob Day was eager to participate in a question and answer interview about the challenges and changes he encountered during his career as a surface landman.

Day worked for the past 11 years as a surface landman for Canadian Natural Resources Ltd. in Lloydminster.

Previous to that, he worked as a surface landman for Murphy Oil Company Ltd. for about 12 years, and more than five years for Renton Land Services (1983) Ltd. where he got his start.

Day was born and raised on a farm near Lloydminster and after completing high school, he became a journeyman machinist which he still works at today on a hobby basis.

He is currently an active with the Lloydminster Oilfield Technical Society and hasn't ruled out returning to work as a landman in some capacity in the future.

In his spare time, Day shows and shines his newest vehicle acquisition, a Pontiac GXP made in Australia

by Holden GM Ltd. Day began the interview telling Pipeline News that the job he did for years as a coordinating surface landman was completely different when he left the business compared to how it was at the start of his career.

Q: What was it like being a landman when you first started?

A: Things actually moved in surface land quicker than they do now. We would often get a phone call to pick up a new well location in the morning, and I would pack up my documentation, and do a land title search at the land title office in Saskatchewan, jump in my vehicle and go look for the owner.

I would drive to Kindersley or to Saskatoon or to anywhere in between down to Macklin country – Provost – and we’d find the guy, and “pull him off ” his tractor, have a conversation with him and tell him where we wanted to the drill the well.

Q: What did it take to complete a deal with the landowner in those days?

A: We would do what was called a hand sketch.

You would draw the location of the well site more or less to scale, and you would scale off where the road was going to go. You would roughly calculate the acreage of that, and sit down and negotiate payment with the landowner right there.

I would call the surveyors when I got back to the office. This was in 1980, before there were cell phones.

We very seldom called ahead to land owners. We just went and found them and talked with them and got the work done.

In that system, you could have the lease requested in the morning, have it leased by night fall, have the surveyors out the next day, spend the rest of that week getting your crossing permissions for approvals for power lines and gas lines and municipal approvals (roads etc). You could probably have the package ready by the end of the week.

Q: How long does it take today to complete a surface land acquisition?

A: Before I left CNRL, they would give us say, 50 locations and ask “what is the average length of time for you to acquire 50 locations?” From the time they gave us the go-ahead to acquire the location to the time we delivered a complete package with a drilling licence -

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Q: What was the regulatory process when you started?

A: There was some regulatory stuff in the Alberta insofar as I had to have a landman’s licence.

I had to take a package of information to each landowner and explain his rights under the Surface Rights Act. He had a right to object through the Surface Rights Board or the EUB (Energy Utilities Board) about where the well was located or that type of thing.

I could get a written waiver from the land owner saying he waved his waiting period and we would go ahead and get the lease signed.

Nowadays, when you go out and see a landowner, you’d be lucky to have 50 per cent of landowners signing on the first visit. Everybody wants their 24 hours and everybody’s got outside concerns.

Q: What’s changed in the oilfield?

A: There are a lot more wells now than there once was. The easy oil has all been found and our technology is improving. We are able to go back into some of these older fields and infill drill. That means where there were two wells on a section, we might go back and drill five wells in between those two wells.

The ability to get heavy oil out of the ground has improved so we are able to do that. ɸ Page B10

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B10

PIPELINE NEWS July 2010

Five days has become 30

Bob Day likes fast sporty cars. The retired landman recently acquired this made in Australia rocket – a Pontiac G8 GXP made by GM Holden Ltd.

ɺ Page B9 Q: What does that mean for the landman?

A: A lot more work because he has to go back to those landowners. Most land owners who live in an area where there is a lot of oil and

have seen a lot of landmen. It never goes quite as easy. They have more questions to ask and more concerns that need to be attended to.

Q: What land issues area specific to heavy oil?

A: Heavy oil by its thick, viscous nature can’t be piped in its raw form so you pump it out of the ground into a tank and it has to be hauled by truck to a plant. Salt water produced with the oil has to be hauled

separately. Occasionally, sand settles in the storage tank, and you have to clean that out and haul it.

Seeing as the oil is where we find it, a lot of the time it's where there's no roads. We have to go

to a municipality, and say "we want to open up this particular road allowance" and there is nobody living up there so there are great expense involved. Sometimes the municipality is not keen to open more roads.

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Q: Is road access one of the biggest issues for landowners and landmen?

A: Road access is a huge issue. The roads in heavy oil are the pipelines through which we move our heavy oil.

When I started there wasn’t near the number of oil wells that are now, so the traffic was not as big of a deal. Trucks got bigger, and then got really big, and then the technology improved, so that we are servicing more wells, more often with more service rigs – we are hauling sand and water and oil in huge trucks.

One of the major concerns with not only the landowner whose land the well is on, but the landowners in the community is the condition of the roads, dust, noise and the volume of traffic.

Q: What kind of soft skills are important to be a successful landman? ɸ Page B11

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More complexity for the landman ɺ Page B10

A: People skills are tremendously important in surface land. You must work to maintain your integrity and your reliability and trustworthiness because you have to earn people's trust. When you are dealing with a landowner he has to trust you. You may be the only public face he will meet from the oil company.

Q: Is being a landman a good job today?

A: It’s a good job. You meet all kinds of people.

I often wonder about going back to work for a small company and being an acquiring landman and seeing landowners again. In the coordinating role you manage service providers doing the day to day work.

This allows you more time to be an integral part of how the locations are selected.

PIPELINE NEWS July 2010

B11

Q: What say does a landman have in the location of oil or gas facilities?

A: We have a tremendous amount of input into the process of selecting locations. If you get into an area where you have bad terrain, no access, or landowners who are not willing to work with you, this can add a tremendous cost to drilling that well or in some cases affect a whole drilling program.

The geologist who is picking locations in a Calgary office doesn't know what's on the ground or the local conditions. He would have no way to know about the two year fight we just had to open this one mile of road so we can get to our one new well and now he is telling me he wants to put 20 more wells down that same road and double the traffic. I have to go to him and say, "That's not going to happen, we'll have to find a different way."

Retired landman Bob Day says in the old days it could take as little as Àve days to complete a surface land acquisitions package compared with up to 30 days today.

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B12

PIPELINE NEWS July 2010

Hot shot startup entrepreneurs Lloydminster – Meet a couple of happy hot shots.

Greg Pollard from Hardisty and his partner Melinda Nicodemus from Lloydminster have teamed up to launch Anytime Hot Shot for night or day deliveries to all points in the oil patch in Alberta and Saskatchewan.

The ink on their business cards was still wet when the entrepreneurs got together in Lloydminster for an interview putting their enthusiasm for the business into overdrive.

“We are open for business,” exclaimed Pollard.

“We plan to provide a great service and a safe service to everyone.”

Anytime Hot Shot will deliver supplies such as pipes and pumps anywhere in Alberta and Saskatchewan in a 30-ft gooseneck trailer towed by a dodge pickup.

Pollard picked up a winch for the startup and

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plans to add a ‘rocket launcher’ pipe rack to the hot shot truck to haul longer lengths of pipe.

The diesel truck is equipped with positive air shut down, a first aid kit, a fire extinguisher and a GPS navigation system.

The game plan calls for Pollard to do all the driving from his farm in Hardisty or from Lloydminster where they will park their trailer. Rates are based on kilometers and time to complete the delivery.

Nicodemus will manage the books, pay the bills and market the business along with her regular fulltime job in the optical field in Lloydminster. All calls to the company cellphone will be answered by Pollard.

“There is no point in the two of us having the cell number, because then you are confused as to who is doing what,” explained Nicodemus.

Pollard and Nicodemus arrived at the conclusion that a go anywhere, anytime hot shot business could fly when Pollard lost his job with Gibson Energy at the Hardisty Terminal in January after 25 years of service.

“I am 54 years old and I was looking at doing something where I could be self employed,” said Pollard.

“I was in the courier business when I was younger, and I enjoyed it and I like driving. If I have to go somewhere for a week at a time, I have no problem with it.”

Nicodemus was also sold on the idea of being an entrepreneur from her conversations over the years with clients and their oilfield jobs.

“I am interested in things and how you can make money in different ways,” she said.

“This is something that’s been in my mind for a

few years. I just couldn’t do it on my own because I have a full-time job.

“It just happened that opportunity came and Greg was out a job. We had a discussion and decided to go with that.

“It can be a viable business if we work at it. It’s going to take some time. You have keep at it and be persistent and keep advertising and pretty soon, little by little, it’s going to build.

“We are willing to go night or day. A lot of people don’t like getting up in the night but Greg has worked shift work most of his life.”

In his last position at Gibson, Pollard was a control room operator receiving and shipping oil.

He also ran the LPG (liquefied petroleum gas) plant and dispatched trucks.

“I was with the LPG plant for eight years before they amalgamated with the oil terminal and put everything on a SCADA system,” he said.

“I also worked on a reclamation business while at Gibson on my days off. I had a friend in the reclamation business so I ran a dozer for him for four or five years. In addition, I was a foreman in a road building outfit for 10 years.”

Pollard has his H2S, first aid, WHMIS and dangerous goods tickets and is orientated to the Cold Lake Air Weapons Range.

His drove there to check out how to deliver drills bits to drilling rigs in the military zone as part of the business research that included the idea of buying an existing business.

“We researched it but we felt with the price being asked for these businesses, it would be a lot riskier that going it alone,” said Pollard. ɸ Page B13

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Phone for pricing with your individual requirements!

PIPELINE NEWS July 2010

B13

cross their ¿ngers ɺ Page B12 “One business we saw was a nice setup, but once we got looking into it, it was mismanaged and too much money for nothing. We decided to start from scratch and build up our clientele.”

“We have been sending out lots of business cards with rate sheets. We have an ad in Pipeline News and we are going in the Yellow Pages and we are setting up a web page.

“We have the ability to deliver small quantities. I have no idea the rates are for larger transport trucks, but a lot of the big trucks can’t get into the lease sites.”

In his spare time, Pollard tends to a herd of white

tail deer ranging on his 80-acre farm south of Hardisty where he has lived for over 27 years.

“I acquired them for hunting, but the government put the kibosh to it, so we have been feeding them and watching them grow for over 12 years,” he said with a laugh.

Aside from hunting and fishing Pollard also coaches hockey.

Melinda Nicodemus and Greg Pollard are partners in Anytime Hot Shot that will operate from Lloydminster and Hardisty.

Photo by Geoff Lee

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B14

PIPELINE NEWS July 2010

Bakken oil now has its own index Bismarck, N.D. – You know you’ve arrived when you get your own index. That’s the case with Bakken oil, which saw its own price index launched to coincide with the recent Wil-

liston Basin Petroleum Conference.

John Kingston, director of news for Platts, spoke of the new Bakken assessment, launched on May 3 during the conference. Platts purports

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to be the “world’s largest source of energy pricing information: oil, natural gas, electricity, petchems, coal and metals,” according to Kingston.

The price will give the price on the ground in North Dakota, he explained. “Five days a week, you’ll be able to track what is the value of Bakken crude.

“Bakken Blend exGuernsey, Wy.,” will have an API gravity of 38-40 degrees and 0.2 per cent sulphur, same stream sometimes associated with the name “North Dakota Light Sweet.” It

will be delivered into the Platte line.

“Bakken Blend exClearbrook, Mn.” will have an API gravity of 38-40 degrees and 0.5 per cent sulphur, same stream sometimes associated with the name “North Dakota Light Sweet.” It will be delivered into the Enbridge lines.

They are being reported in two fashions in order to provide consumers, producers and the trading community with a fixed price value and a means to compare with a competitive crude

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oil with similar properties.

Trades will have a minimum 1,000 bpd quantity taken into account for assessment, with smaller volumes to be normalized. Both assessments will reflect injection in the first forward month, and roll over will be on the 20th of each month to the next forward month.

Platts had plenty of interest in a Bakken index, Kingston noted.

“It’s going to ease a lot

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of disputes over valuation and taxation.”

Matthew Cook did much of the market research behind the new index for Platts. He told Pipeline News, “It wasn’t easy to sort out.”

“I think it’s going to become a significant source of crude for this part of the country,” he added referring to the Bakken. “The key for us it to liquefy. Guernsey and Clearbrook are the most liquid in the market.”

Cook noted all of Saskatchewan and North Dakota production that travels through Enbridge lines ends up going through Clearbrook.

The region is logistically constrained, he said, referring to pipeline and rail capacity. Shipping costs are the biggest factors.

Prices will change every day, and traders will adjust differentials, he said.

The benefit to Saskatchewan producers is transparency, both for the producers and government he said.

Kingston added they can’t say the index is going to make the price for Bakken oil higher.

PIPELINE NEWS July 2010

B15

13th Annual Oilwomen's Golf Tournament July 16, 2010

Good Luck Golfing!

CLIFF NANKIVELL Trucking Ltd. WATER & CRUDE VACUUM TRUCK SERVICE

Have Fun Golfing!

89 Escana St., Estevan • Phone: 637-2121 Toll Free: 1-866-332-2121 • Fax: 637-2124

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Have Fun!

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Welcome Oil Women!

Welcome to the Tournament Best of luck golÀng!

Welcome Oil Women & Good Luck GolÀng!

DISTRIBUTION INC. Estevan OfÀce Phone: (306) 634-2681 Fax: (306) 636-7227

Good luck & have fun!

Phone: (306) 634-7007 Fax: (306) 634-7006 P.O. Box 1595 Estevan • dartservices@sasktel.net

Have Fun Golfing!

Design 9 solutions

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WELCOME OIL WOMEN!

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Welcome Golfers and Good Luck!

Phone: 634-7334 or 634-4797

Good Luck Golfers

ESTEVAN OFFICE

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634-7627

453-6494

Welcome to The Tournament & Good Luck!

New solutions for your ParafÀn and Corrosion Problems Website: www.design9solutions.com E-mail: d9s@design9solutions.com or canada@design9solutions.com

Or call our Canadian central ofÀce: 306-262-0007 International OfÀce: Calgary, Alberta, Canada Canadian OfÀce: Saskatoon, Saskatchewan, Canada

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1120 6th Street, Estevan • Ph: 634-2255 • Fax: 634-1227 Toll Free: 1-800-214-8848 • choice.srv@sasktel.net

Drop by our showroom at 405 Kensington Ave. or call

634-9846 • www.crownad.ca

B16

PIPELINE NEWS July 2010

Best of Luck Golfing

Kohaly & Elash Law Firm 1312 4th Street • Estevan • 634-3631

• Competitive Prices • Quality Products • Great Service

Welcome Oilwomen Golfers!

Have Fun! ESTEVAN 134 4th Street

637-4370

L&C Trucking Ltd. Girard Bulk Service Ltd.

OXBOW 483-2826

ALIDA 443-2466

CARLYLE 453-2262

REDVERS 452-3216

General OilÀeld Hauling

24 Hour Personalized Service

Phone: 634-5519 or 634-7341

Good Luck!

Welcome and Good Luck!

Locally Owned and Operated

Phone: 634-7892 • www.ipc-sk.ca Proud to be an active part of the community

104 - Hwy. 47 South, ESTEVAN, SK

Bay #1 - Hwy. 13, CARLYLE, SK

Ph: 634-5588

Ph: 453-2519

Best of Luck Golfing

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#1-1104 5th Street, Estevan Phone: 1-306-634-7311 Toll Free: 1-866-284-7496

1209 - 4th Street Estevan • 634-8384

Good Luck Golfers!

Bulk Agency 912 6th Street Estevan 634-7275

Have Fun GolÀng!

Have fun golfers!

BORDER TANK RENTALS LTD.

93 Escana St., Estevan, Sk.

Ph: (306) 634-9056 Fax: (306) 634-9058

Welcome Golfers Good Luck!

Don's Tire Shop 101 4th St., Estevan 634-3637

GOOD LUCK

GOLFING!

634-7700 - ESTEVAN, SK

Estevan 238 4th St. 634-6276 Weyburn 150 16th St. 842-6274

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GOOD LUCK OIL WOMEN!

Good Luck Golfers

“We Dispatch for the Oilpatch” 24 Hour Service 7 Days A Week!

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738 5th Street, Estevan Phone: 634-3522

Creelman, Sask.

Good Luck in the Golf Tournament!

Cory Bjorndal District Manager

93 Panteluk Street Kensington Avenue N. Estevan, SK Canada S4A 2A6 Phone: 306-634-8828 Fax: 306-634-7747 cory.bjorndal@nov.com www.nov.com

Best of Luck Golfers!

Penta Completions Supply & Services Ltd. BUS: (306) 634-7399 FAX: (306) 634-6989 58 Devonian Street

P.O. Box 667 Estevan, Saskatchewan S4A 2A6

website: www.pentarods.com

.

Trucking Estevan Ltd.

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PIPELINE NEWS July 2010

Good Luck Ladies!

Welcome to the Energy City.

Enjoy your stay!

PRAIRIE PETRO-CHEM 738 6th Street, Estevan Ph: 634-5808

Have Fun Golfing!

PRAIRIE MUD SERVICE Designing One Room at a Time 1305 6th Street, Estevan Phone: 636-2444

• Free Delivery • Interest Free Financing Available O.A.C.

Welcome Golfers & Good Luck!

738 6th Street, Estevan Ph: 634-3411

Welcome Oilwomen!

B17

Percy H. Davis Customs Brokers Ltd. North Portal • Phone: 634-5454

Good Luck Ladies!

Good Luck Golfing!

“Packing Quality and Service into Everything We Do”

634-7966 • 106 Perkins Street, Estevan, SK www.xtremeoiltools.com E-mail: cmcgillicky@xtremeoiltools.com

Highway 39 East, Estevan

Phone: 637-2060 Fax: 637-2065

Welcome Golfers, good luck!

#6-461 King St., Estevan • 637-3460 www.petrobakken.com

Welcome Golfers & Good Luck!

Have fun golfers!

Southern Range Well Servicing Ltd.

216 Souris Avenue, Estevan

634-7209

Box 895, Weyburn, SK, S4H 2L1 southernrange@sasktel.net Bus: (306) 842-3401 Fax: (306) 842-3402

Good Luck Golfers!

P.O Box 1266 Weyburn, SK S4H 2L5

Fax: 306-842-2403 Email: unitedcentrifuge@sasktel.net Shop: 1560, Hwy. 39

GOOD LUCK GOLFING!

WOOD COUNTRY

Good Luck Golfers!

ESTEVAN

ArtiÀcial Lift Systems Cell: 421-3726 or 421-3676

Good Luck Golfers!

WORK WEAR RON’S THE STORE LTD.

Phone: 637-6055 Fax: 636-2606 400 Kensington Ave., Estevan

Good Luck Golfers!

1210 - 4th Street, Estevan • Ph: 634-8232

202 Main Street Carlyle 453-6167

112 2nd St. N.E. Weyburn 842-3006

Have Fun & Good Luck in the Tournament!

Senchuk

Box 935 Hwy #39 West Estevan, SK. S4A 2A7 Fax: 306-634-0071 Office: 306-634-0070

Welcome Golfers

Ford Sales Ltd.

118 Souris Ave. N., Estevan • 634-3696

68 Souris Ave. N. • 634-2654

MCLEAN

TISDALE

Ph: (306) 634-5111 • Fax: (306) 634-8441 407 Kensington Avenue, Estevan Mon. - Fri. 8:00 a.m. - 5:30 p.m.; Sat. 8 a.m. - 5 p.m.

Welcome & Good Luck

Three Star TRUCKING LTD. 443-2424

FAX: 443-2433 BOX 160 ALIDA, SASK. S0C 0B0

Welcome Golfers & Have Fun!

68 Souris Ave. N. • 634-2654

B18

PIPELINE NEWS July 2010

All Aspects of Electrical Construction • Oilfield, Industrial, Commercial, Residential, Agricultural • Fully Equipped Field Units • GPS Equipped for Faster Response Time • Knucklepickers • Excavation Equipment • Generators – 50-200 KW • Directional Boring • Trenchers, Skidsteers, Mini Hoes

Ph: 306.453.2021 Fax: 306.453.2022 Cell: 306.577.7880

Email: southeastelectric1@sasktel.net Box 1238 Carlyle, SK S0C 0R0

PIPELINE NEWS July 2010

B19

Pursuing heavy oil in new area

By Brian Zinchuk Saskatoon – There has been a question floating around the Battlefords for many years: “When is the oilpatch coming here.”

Soon, they may have their answer.

Saskatoon-based Rallyemont Energy Inc. was busy earlier this year securing a sizable contiguous land position around the Battlefords in two areas. The primary area is north of North Battleford, centred around the hamlet of Prince, just south of Jackfish Lake. The second is a little farther away to the southwest, in the Wilkie-Kerrobert area.

When Pipeline News originally spoke to Rallyemont on March 10, CEO Corey Giasson said, “Today, the rig is leaving our site. We sent the core off to Weatherford labs for analysis.”

Whatever they found, it must have been encouraging.

Since then, the company announced a brokered private placement to raise up to $10 million with an anticipated closing date of June 30.

Giasson, 32, grew up on a farm in southwest Saskatchewan, near Shaunavon. “That’s oil country, too,” he said.

He holds an agriculture economics degree and masters of business administration, both from the University of Saskatchewan.

“After completing my MBA, I was with Potash Corp. for two years as manager of market research,” Giasson said.

He left in 2007 to join a junior potash company, Anglo Potash Ltd. It was bought out

by BHP Billiton Diamonds Inc. for $285 million in 2008. The company had amassed just about 720,000 hectares of potash permits, before potash was the hottest thing going in this province, and numerous companies were acting on expansions or talking about green field mines.

“We basically surrounded the mines as first movers,” Giasson explained. “I was vice-president of business development and investor relations, and was lucky enough to be in the right place at the right time. The model used with Anglo, which is use the first movers advantage to go after a large resource and prove it up is something that we are applying to Rallyemont.”

Giasson and several other resource oriented entrepreneurs from Saskatoon founded Rallyemont and incorporated it in July, 2009.

“With Anglo, I was at the top. Now, I’m back at the bottom. This is a start up,” he said.

Corey Giasson was part of a major potash deal in 2008, and is now pursuing heavy oil north of the Battlefords.

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“Things are moving at the speed of light. Six months ago, this was an idea. We didn’t have any assets. We bought our first assets in December of 2009,” Giasson said in March.

That gave them 10 Crown sections, and about four freehold sections.

The company was very active in the February, 2010 land sale.

“We now have over 50 sections and two focus areas,” he explained.

“After the February land sales, we moved from being an exploration company to a delineation company planning to prove up the resource.”

Two areas One area is in the

Wilkie-Kerrobert area, where they are following a channel. It is known as “Bagration” and also has multi-zone potential.

The larger area is being called “Prince,” which is north of North Battleford and very close to the hamlet of Prince, not too far from a 1970-90’s “huff ’n’puff ” (also called cyclic steam stimulation) that produced over a million barrels of oil.

In the Prince area, they now have over 30 contiguous sections where heavy oil is the target. As one travels east from Lloydminster, the oil is known to get progressively heavier. ɸ Page B20

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PIPELINE NEWS July 2010

Rallyemont establishes land position near Battlefords

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ɺ Page B19 Historic core samples show significant cap rock, with historic geological information on the Sparky Formation showing over 20 metres of pay, with McLaren Formation core drilled by the company showing over 14 meters of pay.

Both zones show in fine, consolidated beech sand that is very saturated – basically sand suspended in oil.

The primary use of the private placement funds will be for delineation of the Prince focus area, focusing on the McLaren and Sparky formations. This will include 3D seismic, drilling and coring, detailed core testing and reservoir stimulations, and a 51-101 report Couldn’t get it before Steve Halabura is co-founder and chair of the company. “He’s professional geologist that

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has got heavy oil exploration experience dating back to the early 1980s,” Giasson said. “He knows where to find the elephants. Steve directed us to this area. He sat on some of those rigs in the early 1980’s that were in search of heavy oil. They found lots, but much of it didn’t economically flow with conventional production.

“I’m a peak oil theorist, but there’s lots of oil out there. It doesn’t mean we’re running out of oil, just the easy to get at oil.”

Giasson notes the development of the Bakken is a prime example – where horizontal, multistage fracs have opened of reservoirs that were previously uneconomical.

As for having a block of land all together, he said there is a reason for this. “We’re applying a mining strategy. We’re wanting to lock up a very large resource of heavy oil that was previous uneconomic, or technology was not in place to extract the oil. Now the

economics may have improved with higher oil prices and technologies that have been proved in the oil sands, minus surface mining because our deposit is too deep.

“We’re not going after the oils you can get with cold production.

We’re more interested in in-situ,” he added.

That could come in the form of steam assisted gravity drainage (SAGD), cyclic steam stimulation (CSS) or possibly Petrobank’s toe-heel air injection (THAI). “Our whole objective is to prove-up our resource based on a proven technology that will be the most economic,” he said.

The reservoirs they are targeting are over 400 m in depth.

While 21st century recovery techniques are interesting, Giasson said, “We’re not interested in a science experiments,” and that they are looking at established techniques. There are 30 years of experience with SAGD and cyclic steam, he pointed out.

“We have to do the delineation work and geology work, and link it to technology that works.

We’re looking at proving up the resource, first.”

The next step is to monetize the resource, seeking development partners. “We’re looking at everything,” he said.

The location is advantageous, he explained.

“You don’t have to develop an airport to get in here. We’re not way up in northern Saskatchewan. All the infrastructure needed is nearby.

We’re within roughly 70 miles from the Husky Upgrader at Lloydminster. We’re not far off the beaten path here.”

“There’s a lot of oil.

The questions are, how large is it? How continuous are the geological properties and can we get it out?”

In late May, the company put out a release noting, “After completion of the second 2D seismic program, Rallyemont is now quickly moving toward delineation of the Prince focus area.”

PIPELINE NEWS July 2010

B21

New ownership, same established company Estevan – Watson Land Services of Estevan has new ownership, with its operations manager taking over the firm along with her brother.

Sheila Guenther and Garth Hoffort formally took over operations of Watson in February.

Guenther had been with the firm for 15 years before taking over. She worked as office manager, and then operations manager, a position she still holds now. Hoffort is now land manager and president. His background includes many years as a consultant on service rigs.

The company was founded by Lloyd Watson in the early 1980s.

“This company has been in existence for almost 30 years, the longestestablished land company based in Estevan,” Guenther said.

Asked about the motivations behind the purchase, Guenther said, “We can provide reliable service to our clients in the area. We have the advantage of living in the area, where the construction is taking place.

“Our location makes it more cost-effective for our clients in most cases.”

Hoffort added, “We know a lot of the local people.”

Both have lived in the Estevan area most of their lives. Hoffort said, “This knowledge helps on land issues.”

“We can provide better service to our clients because of our understanding and knowledge of people and issues in the area,” Guenther added.

The company has 10 employees, including four landmen. Hoffort is one of them. All are local people to southeast Saskatchewan. While the company does do some work in southwest Saskatchewan and Lloydminster, southeast Saskatchewan, along with southwest Manitoba

is where their primary work is. The company also does work in central Manitoba for pipeline right of ways.

“We get almost all of our business from referrals from clients,” Guenther said. “They like the work that we do. We recognize what’s fair for our clients and for the landowners in the area.”

When it comes to surface rights, industry standards for payment are closely followed.

“You have to treat them all equally in an area.

Our clients recognize this.” Guenther said.

For freehold mineral rights, there is some variability in payments, however. “Sometimes it gets like an auction, an email auction,” Hoffort

said of the occasional bidding war. That depends on how much interest there is in that particular area.

When mineral rights are negotiated with a freehold rights holder, it is typically for all formations. Crown mineral rights, on the other hand, sometimes target specific formations.

The negotiating process for freehold rights takes longer than putting in a bid at a Crown land sale, they note.

“Part of the issue with freehold is track-

Sheila Guenther, left, and her brother Garth Hoffort, took over Watson Land Services in February.

ing down mineral owners who don’t live in the area or are deceased,” Guenther said. That could mean tracking down estates, or finding

people out of province or in other countries. If we can’t find them, we keep trying, she explained. The Internet has been a great help in recent years.

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PIPELINE NEWS July 2010

The answer is blowing in the wind Lampman – LandSolutions’ bread and butter may be in providing landman services for the oilpatch, but they also have a specialty that few other land companies have – wind power.

Indeed, Ron Vermeulen, president, founder and senior partner with the firm, noted there are only two land companies that he knows of in Canada that specialize in wind, and they are the largest, he said.

“We’re a big name in wind in land.”

The company has been involved in wind since its early days. Ten years old, LandSolutions’ first client was Suncor, and they had just finished building their wind farm at Gull Lake, Sask. Eight years ago, LandSolutions worked with them on their first Alberta wind project.

It was pioneering

Ron Vermeulen, president of LandSolutions, Inc., at their Lampman ofÀce.

work. While oilpatch land acquisition has a long history and estab-

lished practices, that was not the case for wind. “We assisted in

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drafting of lease agreements, because there were no precedents,” Vermeulen said during a visit to their Lampman office.

In some ways, it is similar to mineral leases, but there are distinct differences.

For instance, in about 90 per cent of cases, payment is based on a royalty on the power generated by the entire wind farm, not particular wind turbines.

Vermeulen said it’s almost like having them become a partner in the project.

And while a typi-

cal surface lease for an oil well might be in the $2,500 to $3,000 per year range, a typical wind turbine might pay $4,000 to $10,000 per year. It will also have a substantially smaller footprint, typically 25 m x 25 m. One might see two or three turbines on a particular quarter of land.

While there is substantial traffic with large, heavy loads coming in during construction, once in place, the traffic drops considerably. It is usually pickup trucks, as opposed to tridem semis haul-

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ing crude, or service rigs.

Placement of oil wells is very particular, and the difference of a few metres can count.

But with wind, one would think it blows everywhere, so placement of turbines isn’t that precise, right?

Wrong.

Vermeulen said there’s a lot of science involved in setting up a wind farm, and developers typically don’t want to displace a turbine more than 100 m, which coincidentally about the height of one of these machines.

But in the land acquisition phase, no one knows yet exactly where those turbines will be placed. This leads to one of the frustrations in the wind resources land acquisition – speculators.

The professionalism in land acquisition in the oilpatch has yet to come to the wind business, according to Vermeulen. When there’s word of a possible wind development, it’s not uncommon to have speculators swoop in, trying to tie up the land, to flip it to a developer. The problem is, the land owner can frequently be left out in the cold when development time comes. ɸ Page B23

PIPELINE NEWS July 2010

B23

Wind turbines are often welcomed, but not always ɺ Page B22 Vermeulen recalled one instance where they had a landman speaking to a farmer, and the farmer’s phone rang. On it was a speculator, who promised the man two turbines, which is not appropriate if there have been no studies completed, according to Vermeulen. He decided not to go with LandSolutions, which had already locked up most of the land around him. As a result, the wind farm was developed, and that farmer got nothing.

The big difference between them and speculators is that they represent large, established firms with proven track records of following through with developments, according to Vermeulen. Not all projects go ahead, indeed, many don’t, but their clients are the ones who will actually show up with cranes and wind turbines down the road if they do decide to proceed.

“Our clients are some of the largest wind developers,” he said, listing Acciona of Spain, NextEra, a

division of Florida Power and Light, and Shell.

“We’ve optioned close to 70 wind projects, or areas. But only a fraction become wind farms,” Vermeulen said.

Shell in working on a proposed project at Bow Island, Alberta, called “Wild Steer Butte.” If operational today, it would be just a few megawatts short of being the largest wind development in the world.

It’s slated for 775 MW of generation at maximum output. That’s the output of a substantial coal plant, or small nuclear plant. “We’ve been working on that for

years,” he noted.

It’s one of three projects LandSolutions is working on right now that is moving towards construction. Another is at Trochu, Alta.

In Saskatchewan, they’re working on business development in wind. “Nobody’s asked us,” Vermeulen said. In this province, most of the land acquisition is done by the company itself. So far, the largest developer of wind here has been SaskPower.

Alberta was once the Canadian leader of installed wind generation, but Quebec and Ontario have stepped up, he ex-

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While wind is regarded as clean power, it is not always welcome. Vermeulen recounted one instance, where a developer wanted to install turbines on Gabriola Island, a Gulf Island near Vancouver. It was a small wind farm, with four turbines.

The populace was largely retired, or artists. The facility would have gone on 700 previously logged out

acres. It had the potential to produce enough power for the island and even export some power off the island.

“The backlash was incredible,” Vermeulen said. “They basically said, ‘Not a chance.’”

In other areas, people are excited about wind development, but around Pincher Creek, Alta., there is so much wind development, people are

getting tired of them, he explained. “There are many reasons that people may object. Some are fact- based, and some are not.

“We deal with perceptions,” Vermeulen said. “We have to respect people’s opinions.”

Asked what prospects for wind development are in Canada, Vermeulen said, “There’s going to be a great deal more.”

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A crew works on setting up Redvers House, a camp on the edge of Redvers, operated by PTI Group.

Waskada, Redvers now host camps Redvers; Waskada, Man. – PTI Group Inc., a major camp provider in Alberta and British Columbia, has spent the spring setting up shop in Manitoba and Saskatchewan.

About 14-km north of Waskada, Man., the 98- room Waskada Lodge has been set up, close to the increasingly-busy Waskada oilfield.

In Saskatchewan, the company has opened up Redvers House, a slightly smaller facility.

Both camps are “open camps,” meaning that anyone can rent rooms, like a hotel.

“That camp’s probably going to grow, but it depends on the work activity,” explained Bob Holowaty of Waskada Lodge on June 11. Holowaty is the sales lead for PTI Group in Saskatchewan and Manitoba. ɸ Page B25

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B25

PTI moves into Sask, Man. ɺ Page B24 Redvers House has 76 rooms, including 15 VIP rooms. The VIP rooms are meant for engineers, supervisors and the like. They include private washrooms and have more desk area.

Waskada Lodge does not have VIP rooms as of yet.

The demand is evident, as Redvers House was fully occupied except for VIP rooms the day before Holowaty met with Pipeline News.

The VIP rooms were not ready at the time.

“I came out here in January and February and did research on the area,” he explained of the camps’ genesis.

“There’s a definite need for housing for the workforce. It’s all over Saskatchewan,” he said.

While he’s been focusing on the southeast, other communities, like Regina and Prince Albert, have accommodation problems, according to Holowaty.

There are three pipeline projects for the region, but he added, “It’s not just drilling. It’s construction, pipeline. For us, we’re looking at the activity.”

Seismic is another area where Holowaty has seen lots of activity, counting as many as 70 seismic trucks at a time.

“Everything we’ve looked into here, they’re talking five, 10 years,” Holowaty said of the activity level driving the need for camps. “These are long term projects.

If everyone thinks what is coming is temporary, I don’t see it.”

In deciding to set up these camps, PTI officials, including a vice president and the Calgary office manager, met with town councils, Holowaty explained. “They had a meeting and de-

cided to go for it.”

Two weeks from the decision being made, Waskada Lodge was being mobilized.

“You want to be in the right location,” Holowaty said.

The Waskada Lodge shares a yard on the east side of Highway 452 with another company working in the area.

They truck everything in, and currently run on propane. However, there is a possibility of running a water line in from Melita, Man., and tying into grid power. “The camp is all self-sufficient,” he said.

Waskada Mayor Gary Williams, the local insurance broker, said it’s interesting in a village of 200 people to now see more people on the street that you don’t know than those you do know. “It’s quite a transition our little village is going through. We’re preparing for activity we haven’t seen in a long time.”

Waskada had a drilling boom in the early 1980s. The small village is only a few blocks in each direction in size.

As such, there aren’t a lot of options for accommodations. “The lodge is going to address a need we can’t address,” Williams said. “It’s helping us meet a need.”

While he’d like to see the town’s business used much as possible, he noted, “We have to be realistic. We need that service.”

“From people in the industry, we hear we don’t know what crazy is yet.”

In Redvers, PTI took up several industrial lots in the community’s new subdivision along Highway 13. Albert Martin, a local farmer, bought the land from the town, and encouraged PTI to set

up shop.

“He called me in November last year and said there was so much activity, we should do something,” Holowaty recalled. Martin toured him around, and got some ribbing from the locals, sceptical about a camp’s prospects. “Then it happened,” Holowaty said.

PTI had hoped to have the facility ready for the Redvers Oil Showcase in early May, but wet weather caused delays. They had to compact the site, Holowaty explained. “We started setting the first week in May.” Waskada Lodge had been open for just over a month, while Redvers had opened in midMay. They were still in the process of setting up the VIP unit there as of mid-June.

PTI Group has been operating camps for over 30 years, and has numerous large facilities around Fort McMurray.

“Our facilities are dry. We don’t allow alcohol whatsoever,” Holowaty said. “Safety is such a big thing now. If there’s a problem with alcohol, they contact the employer, and it’s dealt with.”

Holowaty said they

A camp on the edge of Redvers, operated by PTI Group.

use premium products for their food. Each camp provides three meals a day.

Housing has been a major issue in southeast Saskatchewan and southwest Manitoba.

During busy times, finding hotel or even campsite accommodations can be difficult.

Camps relieve some of that pressure, according to Holowaty. “When campgrounds and hotels are tied up with workers, the tourists have no place to stay.”

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B26

PIPELINE NEWS July 2010

Infrastructure and manpower puts limits on drilling Oxbow – There are some changes in the air at Ensign Big Sky Drilling in Oxbow. Brian Chicoine, the long-serving general manager, is stepping back, and is “basically retired” now, although he still helps out a bit. Rick Mann, operations manager, will continue keeping an eye on things on the ground as operations and general manager. Darryl Maser, the general manager of Ensign Champion Drilling out of Brooks will be taking Big Sky under his wing.

Big Sky has the largest fleet of drilling rigs in Saskatchewan, with 24 rigs plus two more rigs they supply labour for. That’s up by four, with the additions having arrived in January, 2009. The division of Ensign Energy Services has around 500 employees, spread all over southeast Saskatchewan. They come from all over, from Newfoundland to British Columbia.

Big Sky started in 1983 with one rig, and was purchased by Ensign in 2003, with eight rigs at that point.

This year has been above average for drilling, according to Chicoine. They’ve had about a 60 per cent utilization rate through the bad weather, but are booking into the 90 per cent range “as soon as you can build a lease.”

The wet weather of this past spring has held up region, particularly in housing. “In the past, people lease building and transportation of rigs. here tended to be cautious. When It looks like evFour rigs and two crews are servicing the potash eryone’s getting really crazy, it’s near the end.” industry right now, and are all active.

Asked about the challenges of being the largest driller in the province, Mann said it’s in found in manning the rigs. “Guys leave. Guys come back.”

“The grass is not always greener on the other side,” Chicoine added.

They’re not short on labour yet, but Mann says as it gets busier, “We’re running out of qualified personnel.”

“You still have people, but you’re working with green guys,” Chicoine commented. “We become a training ground for smaller operators.”

Other companies in the region have been expanding by building new rigs. Chicoine said if they need to, they can draw additional rigs from Alberta.

However, despite the growth in drilling in the southeast, there’s a limit to how much can be done. “I don’t think there’s enough people to run more,” he said, citing the need for accommodations and support services like tong hands and casing crews.

“I think people are over-confident right now,” Mann said, explaining some of the inflation in the

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PIPELINE NEWS July 2010

B27

Deputy minister one of Top 40 Under 40

Kent Campbell represented Saskatchewan at the Williston Basin Petroleum Conference in Bismarck, N.D., in May. Photo by Brian Zinchuk

By Rose Ditaranto Carlyle – Kent Campbell’s work has not gone unnoticed as one of the leading figures in Saskatchewan’s energy sector was recognized as one of Canada’s Top 40 Under 40.

The Top 40 Under 40 recognizes the achievements of 40 Canadians who have served in the private, public, and not-for-profit sectors and have reached a significant level of suc-

cess before the age of 40.

Campbell, Saskatchewan’s Deputy Minister

of Energy and Resources, said he was honoured to be recognized for the work he completes as his second nature.

“It is quite an honour, it is a little bit humbling.

I just try to go into work each day and do a good job, and I have a job that I really enjoy,” he said.

Campbell’s favourite part of his job would have to be working with all the various economic sectors, from oil and gas to forestry. He said it is rewarding to see new projects come into development, however, transitioning from one sector to another has its difficulties.

“The oil and gas and mining stuff was all new

to me, so there’s a lot of challenges just getting up to speed, but there is such strong resources that made it quite easy for me to transition from forestry to oil and gas,” said Campbell.

This award tags Campbell as a role model for youth across the nation, something he said he will use as the ample opportunity to get more people interested in pub-

As for future plans, Campbell said he is content right where he is, and does not anticipate a move.

“I certainly have no plans to move. My wife and I bought a new house in Regina and did some major upgrades to it, so I’m pretty happy being here and working this job. But you never know what may be down the road,” he said.

lic service.

“I’m going to take this award as a bit of an opportunity to promote young people’s interest in the public service.

The public service has an aging demographic so there will be retirements coming up over the years.

There is plenty opportunity for those who want to work in the oil, gas, and mining workforce,” said Campbell.

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B28

PIPELINE NEWS July 2010

Q & A with CNRL landman Estevan – Ryan De Leeuw is an Estevan-based landman for CNRL. He offered some insight into being a landman for a major

oil producer.

Q. What is your position with CNRL? A. My position with CNRL is as a surface landman.

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Ryan De Leeuw and his seven-year-old daughter Adah get ready to go camping on a June weekend. During the week, De Leeuw is a landman with CNRL in southeast Saskatchewan.

Q. What area do you cover?

A. I cover mainly southeast Saskatchewan and all of Manitoba, mainly the W2 and W1 Meridians.

Q. As a landman for a large oil company, how does your job differ from the third-party land agent companies? In other words, what do you

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do?

A. The main difference with working with an O & G company as opposed to a land broker is that I have more exposure to other internal aspects of the O & G process. For example, I now work closer with our geologists, exploitation and production teams to name a few. With that said, we rely heavily on our brokers and they play a very important role in our day-to-day

business.

Q. Do you in turn deal with the third party land agents, or do you do deal directly with land holders?

A. Both. I work with closely with our brokers and also directly with landowners. I feel it is important to be available to the local landowners, occupants or stakeholders and feel fortunate to be able to meet with them either at our office or if invited to their homes. Without a doubt this is the most enjoyable part of my job.

Q. Is most of your time spent dealing with operations, or is it in acquisitions?

A. My time is closely divided between the two.

Q. Is most of your work land-rights or subsurface rights based?

A. Many landmen have experience with both surface and mineral. My experience is mainly with surface only.

Any mineral questions or inquiries I refer to our mineral landman based in Calgary.

Q. What is a typical

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A. I spend a lot of time on the phone and working on the computer working emails and such, however I get out of the office fairly often to meet with landowners or with CNRL production. Usually these meetings are table-top but often we conduct site visits of our facilities and/or the landowners farming operations. I have a good balance between field and office.

Q. How did you become a landman? How long have you done this?

A. I have a resourcerelated background and spent three years in BC’s forestry sector in/around Fort St. John, B.C. At the time the forestry industry was very slow and the gas drilling bustling so moving to the O & G sector seemed like a good decision. I have always enjoyed working with people so the landman position naturally appealed to me.

I have worked surface land for 11 years with six of those spent working with a land broker and the other five with CNRL. Q. Did you work in the oilpatch in another capacity before becoming a landman?

A. Yes, prior to land I spent some time working with an environmental consultant mainly soil testing, monitoring and sampling sites of existing or proposed O & G activity. I also worked with a geomatics outfit surveying wells, pipelines and facilities.

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PIPELINE NEWS July 2010

B29

Weatherford "mini-oil show" However, continuous rod, what Weatherford refers to as CoRod, will not likely be housed in that facility when its first unit is located in Estevan.

Asked why Weatherford is investing the area, Armstrong said, “We made a commitment years ago. We tried to hire local people. We’ve been here to support this area and will grow with it.”

For instance, Weatherford had donated $100,000 to the new arena currently under construction in Estevan.

Armstrong used to work in Estevan for a number of years. “I used to run the shop down here for twelve and a half years,” he said, describing it as “a great area – one of the best places I ever worked.”

Roy Armstrong, Canadian regional business unit manager for several Weatherford product lines.

Estevan – An open house on June 3 allowed Weatherford to show off a number of new capacities in Estevan. Roy Armstrong, the Canadian regional business unit manager for several Weatherford product lines, explained there are several expansions or new capabilities. He said it was a “Weatherford mini-oil show,” displaying many of the diverse product lines within the global company “We over doubled in size,” said Armstrong of the expanded facility on Mississippian Drive. The project was completed in February. Despite a windstorm during construction and weather delays, he said, “We ended up with a good product.”

The shop expansion has allowed fishing to expand, as well as pipe recovery. Thru Tubing has also moved to the site. Its work is largely going to be tied to new wells, with drill outs of frac equipment

on horizontal wells.

“A lot of these horizontal wells are using coil for cleanouts and stimulation,” Armstrong said.

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B30

PIPELINE NEWS July 2010

Five years for Eagle Drilling Robert MacCuish, right, presents a painting to Eagle Drilling president Derrick Big Eagle on behalf of the company’s 49 shareholders at the Àfth anniversary celebration.

Carlyle – The numbers keep growing for Eagle Drilling Services – five years in operations, 1.2 million man-hours without a lost time accident, and Rigs 7 and 8 are under construction.

Their rig utilization hit 99.3 per cent in February.

So on June 16, it was time to celebrate. The company held an open house and barbecue at

their Carlyle headquarters, with about 250 people attending.

Addressing the crowd, Derrick Big Eagle, general manager and president of the company, said, “It is the public that gives us such great support, more support than I would have imagined.”

Robert MacCuish, chair of the company, thanked the staff, saying, “The staff is really key for

use at Eagle Drilling.”

He added the company has 160 employees and has a payroll of approximately $2 million per month.

“We’ve got a lot of employees that have been with us since day one.”

The company has incorporated a lot of their safety ideas into the designs of their rigs.

Currently, Do-All Metal Fabricating of Estevan is building Rig 7 and Rig 8 for Eagle. Rig 7 is anticipated to be in operation in August.

Each time Eagle Drilling commissions a new well, it typically heads out to the Weyburn area, where it punches a hole for Elswick Energy Ltd. That was the case for Rig 1, spudding its first well on June 3, 2005, and will be the case for Rig 7. ɸ Page B31

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PIPELINE NEWS July 2010

B31

Eagle Drilling now building Rigs 7 and 8 ɺ Page B30 “I can’t get a rig to drill, so we keep building rigs,” MacCuish said with a smile. “I get Rig 7. I think I have three wells to drill.”

Elswick Energy is a 15-well 500 BOEpd company owned by MacCuish. He was named Earnst and Young’s Entrepreneur of the Year, 2010, for the prairie provinces.

Eagle has also racked up a number of awards, including an Abex business of the year award, and a new venture award in 2006. Big Eagle was a finalist for businessman of the year in 2008.

Genesis The genesis of the company came in January, 2005.

“Derrick and I are both action-oriented,” MacCuish said.

They came up with the vision, and a five-year business plan, envisioning three rigs. The pair went up to Nisku to look at rig components.

Big Eagle started on drilling rigs at the age of 15, and built two rigs while he worked at Big Sky Drilling. MacCuish said Big Eagle was one of the youngest toolpushes and drilling consultants in his day, and he acted as MacCuish’s drilling consultant.

The design of the rig focused on safety. The new rig would have a driller’s slideout for the doghouse and a hydraulic catwalk, items typically seen on Foothills-type super-deep rigs.

“We tried to be innovative in applying the tech that was there,” he said.

It cost more initially, but the payoff has been highly efficient with safer rigs.

“It’s made us more efficient. I think we’re the fastest driller in the southeast, as well as the safest driller,” MacCuish said, adding they hold a number of Saskatchewan and Manitoba drilling records. The company can do a typical onemile deep, one mile across Bakken well in about 10 days.

The rigs are designed to drill any horizontal or vertical well in southeast

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Saskatchewan or southwest Manitoba, with 3,500 m vertical and 4,500 horizontal ratings. All the rigs are of common design, allowing them to keep common critical parts on hand. The newer rigs have upgraded pump capacities, however, starting with rig 6, built last year.

Good timing The company was founded just before the Bakken play was getting serious.

“Bison had drilled a few vertical wells in the Viewfield area,” he said.

The southeast was still busy, but with the advent of Bakken drilling, more rigs moved into the area. “The Bakken has definitely helped us.”

As of mid-June, they had three rigs deployed with Crescent Point Energy, one with PetroBakken, another with Painted Pony, and the last one split between Fairborne and Enerplus. All are long-term bookings. Adding new rigs allows them to pick up new clients and service old clients, MacCuish explained.

When asked why build two at the same time, MacCuish pointed out that Do-All had built part of one rig on spec already. They went to the bank and pointed out that oil prices are strong, Bakken results are strong, and there were a lot of Mississippian wells to be drilled.

“Eight is enough for use right now.

“We’ll add 50 new employees, taking us to 210,” MacCuish said.

Despite their growth, the company is still small enough to be agile. The three directors – Big Eagle, MacCuish, and Brian Heikkinen, can sit down and make a decision, according to MacCuish. There are 49 shareholders.

Heikkinen spends half of his time as a sale rep with Eagle, and the rest with Millenium Directional Service Ltd., a Carlyle-based directional drilling firm.

It’s yet another part of the “buddy network,” as MacCuish puts it, of Carlylebased businesses with close ties.

“This area should be really proud of the industrial entrepreneurs and individuals they’ve produced,” he concluded.

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B32

PIPELINE NEWS July 2010

PIPELINE NEWS Saskatchewan’s Petroleum Monthly

C-Section July 2010

CanElson buys Totem Drilling Story and photos by Brian Zinchuk Carnduff – Technically, it’s an acquisition. But nearly all those who were bought out opted to keep their shares in the company, making CanElson Drilling Inc.’s acquisition of Totem Drilling Ltd. more of a merger than a buyout.

Totem Drilling is based in Carnduff, while CanElson calls Calgary home.

Totem has five telescoping double rigs, and a sixth in the final stages of completion, all deployed in southeast Saskatchewan.

CanElson has four tele-double rigs in Alberta, another three in west Texas, two subcontracted drilling rigs and two service rigs in a Mexican joint venture.

The sixth Totem rig is anticipated to be ready for drilling by Sept. 1.

Totem’s ownership included Hugh Borgland as president, Bob Betts as operations manager, and Jim Thorogood, a major shareholder. The management staff also had ownership stakes.

Betts reported that 97.5 per cent of Totem shareholders reinvested their shares into CanElson. “Realistically, we joined forces with CanElson,” he said.

The whole deal was worth $40 million in shares and cash. Totem shareholders were given an option of cash, shares in CanElson, or a 50/50 mix of the two. A maximum of $10 million could have been taken in cash. Nearly all of it ended up as shares in what turned into a largely stock deal. All of Totem’s tool pushes, field superintendent, and mechanic all remained and kept their shares.

The company has a staff of about 110 employees, while CanElson’s staff totalled about 130 before the acquisition.

Totem was privately held, while CanElson is traded on the TSE Venture exchange, meaning those Totem shares will become much more liquid, now.

“Our market cap will be about $120 million post closing of this,” explained Terry Kuiper, CanElson vice president and general manager, Canada, while in Oxbow on June 15, the day after the deal closed.

Grew quickly Totem grew a lot faster than initially anticipated, according to Betts. “Our business plan was to build around five rigs, and build a small drilling company for southeast Saskatchewan.

“Industry wanted us to be bigger,” he said.

The company started in 2006, and had three rigs in its first year. It added a rig every year since. “I

Crews put the Ànishing touches on CanElson Rig 10, formerly Totem Rig 1, after recertiÀcation in Estevan.

member for that period.

Kuiper noted about southeast Saskatchewan that “it’s an oil market. Oil prices being what they are, it’s a lot more stable compared to gas.”

While the slowdown in 2009 hit the drilling industry hard, Totem still showed a profit that year, according to Betts. When the crunch came, the crews voluntarily took a cut in wages to reduce day rates in an effort to keep busy.

“That enabled us to get a chance at the contracts available when things were slow,” Betts said. That cut was restored in May, 2010.

“Totem’s success is all the hands we have, all dedicated, family oriented. I’m going to try really hard to keep that going,” Betts said. “I don’t want to lose the connection with the men.

It’s the guys who make Totem, not the office.

“Typically, smaller companies have a more hands-on approach, a more personable relationship,” said Kuiper. All management employees, “other than the bean counters,” have field experience, he said. ɸ Page C2

would have never thought in four years we would build six rigs and sell it for a profit,” Betts said. He noted all the investors did well on their investment.

Totem had a 76.8 per cent rig utilization rate in the first quarter of 2010, while CanElson ran at 86 per cent. The company states it was the highest reported utilization by any Canadian Association of Oilwell Drilling Contractors’ (CAODC)

They’re going to have to change the sign. Terry Kuiper, Canada vice-president and general manager for CanElson Drilling, left, and Bob Betts, operations manager for the now-former Totem Drilling, meet in Carnduff before heading on a scouting trip to North Dakota.

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Swift Current Warehouse: Evan Myers - Cell: 306-741-2447

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C2

PIPELINE NEWS July 2010

Lightning strikes battery An oil tank located south of Stoughton blew up June 16 after it was struck by a bolt of lightning. Although a crew was working at the battery site, no injuries were reported and damage was contained to the tank.

Photo by Chad Saxon, Estevan Mercury

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Four years from launch to buyout ɺ Page C1 “We try to keep close relations with the field hands. We can get the first job.

It’s up to them to get the next one.”

In the southeast, it’s common for locally based rigs to operate with four crews working eight hour shifts, instead of three crews working 12 hour days.

That way, the rig hands can make it home most days. That will remain the case even after the changeover.

Crossing borders No sooner had the companies come together they were scouting out the possibility of drilling across the border, in North Dakota. With CanElson already working in Texas, the burgeoning North Dakota drilling market is a natural progression.

Kuiper said the company is working on visas for staff to work in the United States and Canada. “We’re currently working on a plan to expand into North Dakota,” he said.

Betts noted Rigs 7 or 8 could be built in North Dakota and stay there.

There won’t really be number 7 or 8. Totem’s rigs will be renumbered, with Totem Rig 1 becoming CanElson Rig 10, and so on. However, there won’t be a Rig 13. They’re skipping that one.

Kuiper and Betts both agree 13 is an unlucky number to give a rig.

L & C Trucking Phone: 634-5519 or 634-7341 24 Hwy. 39 E. Estevan

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PIPELINE NEWS July 2010

From massive oilsands jobs to bumper cranes: Saskarc Oxbow – In a small town like Oxbow, Saskarc Industries Inc. makes mighty big things.

The shop, which is substantial in size, is filled with very large projects underway. Currently, most of the production is going towards a massive expansion of the PCS Rocanville potash mine, but most of the company’s work goes north, way north, to Fort McMurray and area. But while most of their products are large, one recent addition is small enough, you wouldn’t even know it’s there.

Saskarc has been around for 19 years, according to Roberta Taylor, who looks after administration and human resources for the company “Most of

what we do is big,” Taylor said. “Our primary focus has been in the petro-chemical and mining sectors.

About three quarters or more ends up around Fort McMurray.

One of the larger projects in 2009 was a giant 306-ft. tall flare stack that ended up at the Albian Sands mine in northeastern Alberta. It shipped in four sections. Logistics and shipping can be as difficult as manufacturing, according to Taylor.

To be selling into that market, your product has to be top notch. Taylor said their products have as many as five inspections before being accepted. As such, quality assurance is a key part of the business.

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“Quality control is a huge, huge thing,” she said.

Large shop A large facility was built in 2006-07 to accommodate the out-size projects, a far cry from their garden-shed beginnings. The intricate staircase rail in the atrium was built by their own fabricators.

When you walk in, you definitely don’t get the impression it’s a fabricating shop, and that’s by design. “When you walk through the doors, you don’t get that dusty, dirty feeling,” Taylor said of their immaculantly kept facilities. “Cleanliness, organization are huge factors, part of the culture.”

Paul Lesage took Pipeline News on a tour through the facility. One thing you won’t see is a lot of inventory piled up. “Now we just cut as we need,” Lesage said, noting the neat appearance of the shop floor. Two years ago, they used to keep much more cut steel inventory. ɸ Page C4

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PIPELINE NEWS July 2010

Cranes fold into box on back of truck

Welders at Saskarc work on large components for a potash mine.

ɺ Page C3 The bins and chutes under construction are in some cases the size of a small cabin.

“We have quite a bit on the go for PCS Rocanville,” said project manager Larry Krane.

The projects include two 200 tonne, two 100 tonne, four 70 tonne and four 30 tonne bins. The project is almost done, as of mid-June.

But while potash is the focus of the current construction, it won’t be long before more Fort Mac work fills the building.

When asked how a company based as far from the oilsands as you

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can get and still remain in Saskatchewan can get such work, he said, “The pricing structure in Saskatchewan is a little better than Alberta.”

They recently did a large conveyor system whose largest component was 109-ft. long.

“They like to modularize everything as much as possible,” he said, explaining the preference is for large modules, manufactured elsewhere, away from the project sites. That saves time and money in the field.

Bumper cranes In one corner, you find a production line that is building something a little out of the ordinary.

That’s because they are building Bumper Cranes, and the work like Transformers, literally. A new product, called the Cobalt Bumper cranes, does

a disappearing act, not unlike the giant robots of film. The outside is a rectangular steel box, which replaces the rear bumper on a one-tonne truck or van. The top opens, and out folds an hoisting arm with a 1,500 lbs capacity.

It can reach 8-ft. high.

It took two years of testing to settle on a final design. The secret, according to Scott Hodgson who developed it, is making the hoist out of aluminum. “I picked it up when everyone else gave up,” he said, when asked how he came to lead the project.

The first order is already sold out, to a Minneapolis-based company.

“We feel very good about continuing to grow through recessionary times. The future is bright,” Taylor concluded.

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PIPELINE NEWS July 2010

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Courage to ¿ght cancer Oxbow – When Courage Oilfield Services of Oxbow decided to get into the catwalk rental business, they made the conscious decision to donate a portion of the proceeds from each unit to charity. With that in mind, the company ordered

its first unit early this year, having it painted pink in support of the Canadian Cancer Society.

Pink is the colour that is often associated with fighting breast cancer.

“We picked it for the Cancer Society. We were looking for a charity to do,” said Lorne Bremner, who heads up Courage Oilfield. “We know it’s the colour of breast cancer, but we wanted it to stand out.”

There was quite a bit of consternation when Bremner saw in the June edition of Pipeline News that a welding rig from the Lloydminster region was painted pink for the same purpose. Courage had already locked in their colour choice in February. Even so, they stuck with it, and will be donating a portion of each day’s rental for that unit to cancer research. “We thought we could do something to help out. Cancer affects everyone,” Bremner said.

“We’re building some more, and we’ll pick some other charities. That’s our first catwalk. We have another coming in July. We’ll probably have three by Christmas.”

Renting catwalks is a new line for the company, whose diversification efforts have included steaming and hydrovac, in addition to their rod rigs. The catwalks are manufactured next door, at Irwin’s Machining and Welding Ltd.

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PIPELINE NEWS July 2010

Signs, signs, everywhere are signs

This large sign will soon be announcing a new business in Oxbow. The sign was made by Wayne Taylor, of Screaming Eagle Signs, in Oxbow.

T&C OILFIELD Maintenance Ltd. Box 566 • Oxbow, Sask. • S0C 2B0

Office: 483-2883 Tony: 483-7605 Serving SE Sask for 27 years!

With a unique and always expanding list of services, Courage OilÀeld’s goal is to serve you fast, and cost effectively.

All of our Vac, Combo Vac, and Steamer Units are equipped with industry leading dry steam packages. Our 980,000 BTU boiler systems can produce dry steam for all your defrosting needs. In addition, our pumps are capable of producing 10 gallon/minute wash water at 3,000 PSI. As one of the few Saskatchewan companies having received ENFORM’s CertiÀcate of Recognition Àve years in a row, our safety program meets the highest standards in the industry.

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Also providing down hole services, pump changes and broken rod retrieval using our single and double rod rigs.

Oxbow – Wayne Taylor has been so busy making signs for other people, he hasn’t has enough time to make one for himself.

Taylor runs Screaming Eagle Signs, a small sign business based in Oxbow. It’s actually the third name for the business, which at one time was All That Glitters Signs and Things, and then Rentals Plus.

The business started as a sign shop over a de-

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cade years ago, run by Taylor’s wife, Roberta.

She is now in administration at Saskarc Industries, on the west side of Oxbow. Roberta and her late husband Phil Bentson, an oilfield consultant, owned the place.

After Phil passed away, Roberta and Wayne eventually married, and the business began doing rentals as a major part of it.

More recently, they sold all their rental hardware to focus on signmaking.

Wayne was born and raised in Toronto, and found his way to Oxbow to work in maintenance with Saskarc Industries,

where he worked for a little over five years. He has a number of trade tickets, including industrial painter, electrician, welder/fitter, and autobody. He used to own his own autobody shop.

“And now I’m a signmaker,” he said.

“We’ve been making signs for nigh on 14 years,” said Wayne, showing one of the sign orders to advertise industrial lots for sale.

A substantial portion of the business is providing signage for oilpatch-related business. A large sign he recently completed was for Conquest Equipment, a new local company in

Bill Niles

Phone: 306-485-7878 24 HR SERVICE

Oxbow.

The display board on the bay door shows numerous oilpatch companies and their logos, some of which Wayne has designed.

While he does some wellsite location signs, he would like to do more.

The next thing on the agenda is trying to break into the Alberta market, Wayne said. “I know I can be competitive with location signs,” he added, explaining he has very low overhead.

“I can be competitive as hell.”

“I got rid of the rentals so that I could get outside of the box.”

The company just recently acquired a 30inch wide carriage vinyl printer, complimenting a 30-inch laminator. They also have a 60-inch vinyl cutter, along with smaller models.

He’s been spending his weekends working on the building, reconfiguring it to focus on sign work. He’s been too busy with jobs during the week to work on renos at that time.

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PIPELINE NEWS July 2010

New home soon for Safe-Tee Management Oxbow – After 14 years working out of their picturesque home, Shirley Galloway and her husband Jim will be moving their business into Oxbow.

Safe-Tee Management will settle into the former True Value hardware location this fall. Shirley heads up the occupational health and safety consulting group.

“We’ve outgrown this. It’s just too small,” she said.

After extensive renovations, the new location will allow for added capabilities. They will have a small retail space for a small selection of personal protective equipment as well as fire extinguishers. They will add fire extinguisher servicing, providing a local option for nearby businesses.

Gas monitor calibration is another new line, and Galloway said they are looking into refilling air packs, providing a quick turnaround. The training room will also be larger.

The company will also have a medical office for pre-placement medical assessments, providing mini-physicals to ensure employees have the physical capabilities for the job they are being hired for.

A Lloydminster oilpatch company will also be setting up shop in the facility.

“I’m trained as a nurse practitioner,” she said, although her nurse practitioner licence is not current. She is licensed, however as a registered nurse. Galloway used to have a nurse practitioner practice in Winnipeg, and was a hospital administrator in Montana, before setting up shop in Oxbow. In the 1990s, nurse practitioners may have been common in other jurisdictions, but in Saskatchewan, “They didn’t even know what they were,” she said.

Her experience as a hospital administrator led her into the safety field. “I started doing courses, and it led to this,” she said.

The majority of Safe-Tee Management’s work is in the oilpatch,

although they do a fair bit in the agriculture sector. “Our base is here in the oilfield,” she said, adding that she has also become a coroner within

“

see the dark side of dangerous driving, and its results. “I’ve been up to my ankles in blood. There is nothing more disturbing than being in a vehicle

I’ve been up to my ankles in blood. There is nothing more disturbing than being in a vehicle crash

”

- Shirley Galloway the past two years. It provides a different perspective, bringing her experiences full circle of having provided trauma care, workplace safety, and the results if safety is not followed.

In particular, she’s

crash,” she said.

“Statistics in the oilfield show that’s where deaths occur, driving to and from work.

“Everyone is in a hurry to go nowhere, shaving three minutes off for oil that has been

here for millions of years.”

Safe-Tee Management manages health and safety for about 11 companies of various sizes, including drilling and service rigs, and those in construction.

“They rely on our expertise,” she said.

The company has a bank of medical professionals. Galloway will only hire people who carry professional certification, like registered nurses or Canadian registered safety professionals. There is a registered nurse on staff 24/7.

They have three units for medic services, and a mobile hearing testing lab.

Shirley Galloway heads up Safe-Tee Management of Oxbow. The Àrm will soon be moving to downtown Oxbow.

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PIPELINE NEWS July 2010

You won’t miss this rig

Oxbow – If you’ve seen his unit rolling down the road, you won’t soon forget it. It’s probably the biggest, baddest hotshot truck in the southeast.

And getting noticed was a large part of the reason Bill Niles picked up a bright yellow 2005 International CXT medium-duty truck for his hotshot business – Double Barrel Hotshot.

He’s based in Alameda, but lives on the edge of Oxbow. Niles came to hotshotting in a roundabout way, after an injury while working on a drill-

ing rig put that career to an end.

“I worked on drilling rigs all my life. I quit high school and worked on drilling rigs when I was 16 years old. I had to lie about my age,” said Niles who is now 45. “I was a driller by the time I was 22 years old.”

“With the ups and downs in the oilfield, I was also in concrete construction all my life. Any time the big crunches came along, I always fell back to pouring concrete.”

Niles sustained a

substantial back injury in 2001 that would put him out of commission for two years. The injury caused serious financial and personal hardship for him.

“It was just phenomenal what I went through when I got hurt,” he said, pointing out that going on light duties instead of workers compensation didn’t work out well for him. He had to rebuild his life. “Starting over at 40, I know what that’s all

about.” he said.

“That’s when I started the landscaping, because I already had the equipment from concrete.”

His landscaping company is called Green Acre Maker. He enjoys operating

Bill Niles

a Bobcat so much, he had a large Bobcat logo tattooed onto his right shoulder blade. “I can run a Bobcat with my eyes shut,” he said.

As his health improved, he started doing concrete work again, but couldn’t find help to assist him. “No one wants to do it, no one wants to learn it,” Niles said.

While landscaping kept him busy during the summer, you can’t landscape in winter.

“That’s why I started the hotshot, to see if I could break into it.”

He began at an opportune time, February, 2008. “I was in it already when i t re-

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ally got rockin,’” he said.

Niles started with a used one-tonne he bought from Ohio, pulling a trailer he bought online from Texas. He hit a deer with that first truck, then bought a Dodge one-tonne. However, he kept running into overweight issues, so he resolved to fix that with his next unit, the eyecatching International CXT, or “Commercial Extreme Truck.”

He had to get a hitch installed, and his trailer extensively modified, but he got away from problems being overweight.

Now he can haul casing that is really long on the 38-foot, tridem trailer.

He also built a top deck on the trailer “for small stuff.”

While it’s bigger than a one-tonne, it’s still four-wheel drive, Niles said, “and it stands out. I want people to remember.

“I went to Regina.

The police pulled up when I stopped, and asked questions about the truck.

“It works.”

Niles explains to his landscaping clients that if he gets a hotshot call, he has to go right away, and he will be back. He said they are understanding.

“If I get a call, and I’m in a Bobcat, I shut down the Bobcat and go.”

In the meantime, Niles has been building his retirement nest egg – a car and truck wash at Alameda. It’s taken a while, with the usual hang-ups trying to get sub-trades in, especially plumbers.

The carwash has two small bays, and one truck/trailer bay. Niles hopes to have it open by this fall. It’s positioned close to the road coming from the Alameda dam.

Since that road is gravel, he expects a lot of RVers will want to clean their units once they are back on pavement.

The carwash will be called Pistol Grip Carwash.

“Lots ask, will I stay hotshotting and landscaping after the carwash is going? Yeah, probably,” Niles said.

“Basically, hotshotting is my survival, landscaping fills in the gaps, and the carwash is my retirement.”

PIPELINE NEWS July 2010

Quantum well cleanouts could corner a market Â&#x201E; By GeoďŹ&#x20AC; Lee Calgary â&#x20AC;&#x201C; Oh, the wonder of traďŹ&#x192;c lights. More than two years ago, Steven Winkler stopped at a light in Medicine Hat on his way home to Calgary when an idea how to run a pump on coiled tubing popped into his head.

Eureka! Quantum Downhole Systems Inc. was born June 15, 2009 in partnership with CJS Coiled Tubing Supply Ltd. in Lloydminster and Source Rock Energy Partners Ltd. in Calgary. Job orders are steadily on the uptick as word spreads.

The new technology allows gas and oil exploration and production companies to economically clean out wellbores without the damage often associated with swabbing, ďŹ&#x201A;uid circulation and gas cleanouts in low pressure reservoirs.

The applications for Quantum range from Class 1 and Class 2 vertical and horizontal wellbore cleanouts to frac sand recovery, drilling ďŹ&#x201A;uid recovery, and production testing. â&#x20AC;&#x153;We are very cost competitive on class 2 oil wells because you donâ&#x20AC;&#x2122;t need nitrogen,â&#x20AC;? said Winkler. â&#x20AC;&#x153;Nitrogen can cost up to $25,000 per cleanout.â&#x20AC;?

The system utilizes produced or fresh water to run the pump and virtually no gas is vented to the atmosphere. â&#x20AC;&#x153;There are a ton of customers interested,â&#x20AC;? said Winkler, who was pitching the technology at the Global Petroleum Show in Calgary June 8-10.

Winkler has a solid background in the development of downhole tools, well optimization and wireline services. â&#x20AC;&#x153;I have never seen a response from the industry like this with any of the technology I have worked for in my 14 year career,â&#x20AC;? he said. â&#x20AC;&#x153;This is technology to not only cleanout wells, but to gather information about whatâ&#x20AC;&#x2122;s coming in from various parts of these horizontals. This can help exploration and production companies optimize the well design such as horizontal length and determining the optimal number of fracs for a reservoir. There is no technology like this.â&#x20AC;?

Quantum proved its technology works on cleanouts for shallow gas wells in 2009. Tigers Coil from Medicine Hat runs shallow systems to 1160 metres.

Photo submitted

Itâ&#x20AC;&#x2122;s touted as an excellent system to evaluate wells that are in a two-phase ďŹ&#x201A;ow regime.

Quantumâ&#x20AC;&#x2122;s ďŹ rst generation JetPak system was ďŹ eld tested last year by companies throughout Alberta, mostly for vertical, shallow gas well cleanouts. â&#x20AC;&#x153;Out of the 220 wells that we have done, 185 of them have been shallow gas wells. We were successful doing that last year through a seven-year low gas price,â&#x20AC;? said Winkler.

A JetPak trial by Husky last November led to the launch of a similar JetVak system for horizontal oil wells earlier this year. â&#x20AC;&#x153;We tested the JetVak pump in late April on a

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test bench,â&#x20AC;? said Winkler. â&#x20AC;&#x153;Then, we sold some jobs and ran it for Connoco, Husky and Harvest. â&#x20AC;&#x153;We ran the JetVak in Lloydminster for Harvest in that new horizontal play south of Lloyd, and it was a huge success. â&#x20AC;&#x153;The main challenge with heavy oil is viscous ďŹ&#x201A;uid. With heavy oil, we are going to be using hot ďŹ&#x201A;uid and oil water dispersants. â&#x20AC;&#x153;We have been successful in the area both with the JetPak and the JetVak in eight to 12 API wells.

I am conďŹ dent.â&#x20AC;?

Both Quantum systems incorporate Flatpak coil tubing from CJS and an engineered jet pump from Source Rock.

The well cleanout operation requires the use of a pressure truck and a ďŹ&#x201A;ow back tank or pressure tank vessel.

The cleanout jet pump assembly is run on the Flatpak string, using one side for power ďŹ&#x201A;uid injection and the other side for ďŹ&#x201A;uid returns.

At the desired depth, water is pumped from the pressure truck through one of the coil conduits in the Flatpak with the task of liquefying the solids as well as creating a suction in the pump.

The JetPak is conďŹ gured to run in either in a jet mode or a pumping mode, while the JetVak system performs both functions simultaneously. â&#x20AC;&#x153;There is going to be a lot of work for both.

When designing the job application, we will decide which process is going to be the best for the job,â&#x20AC;? said Winkler. â&#x20AC;&#x153;We can run the JetPak and the JetVak on any length of coil, depending on the application.â&#x20AC;?

Winkler notes the JetVak system overcomes the limitations of the JetPak system tested on sand clean outs on some of Huskyâ&#x20AC;&#x2122;s vertical wells in the Lloydminster area. â&#x20AC;&#x153;If you ran the JetPak into a horizontal well, and jet it and vacuum it, and jet it and vacuum it; some of the solids you jet will settle on top of the coil as you move into the hole, and it will get stuck in the hole,â&#x20AC;? said Winkler. ɸ Page C10

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PIPELINE NEWS July 2010

New system jets and vacuums simultaneously

A T-Rock coil unit from Vermillion deploys the Quantum system to a depth of 1050 metre.

Photo submitted

Wild Stream in Shaunavon, Viking Wild Stream Exploration Inc. spent $32.1 million on exploration and development capital in the first quarter of 2010 compared to $1.4 million

last year.

During quarter, the company drilled a total of 11 (9.4 net) wells resulting in 11 (9.4 net) crude oil wells, representing a success rate of

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100 per cent. Drilling was concentrated in the Dodsland and Shaunavon areas in southwest Saskatchewan and in the Garrington area of west central Alberta.

Wild Stream’s second quarter drilling program commenced in early May, with ten wells planed by the end of June. The first three successful wells included two Upper Shaunavon horizontal wells in the Shaunavon area and one Viking horizontal well in the Dodsland area.

The company said that its first upper

Shaunavon horizontal well continues to produce significantly above expectations. Its average rate for its first 60 days of production is greater than 120 bbls per day of oil. Based on its current rate of 150 bbls per day, Wild Stream said it is confident that the first phase of the waterflood is showing encouraging early results.

Applications to expand the upper Shaunavon waterflood have been submitted with expectations that phases two and three of the waterflood will be operational by August.

ɺ Page C9 “The key point is, this system jets and vacuums at the same time. It’s like a steam cleaning vacuum cleaner that is jetting out hot fluid and steam, and right behind it is the vacuum.

“That’s the best way in the world to clean out a horizontal well. It’s is really a significant breakthrough in technology.”

Since the well is in an underbalanced state during the cleanout, the wellbore fluid and fluid built up near the wellbore are removed in higher volumes than conventional techniques.

Quantum and its technology partners have signed a joint venture with Technicoil in Calgary to run coil into horizontal oil wells as deep as 3,500 metres.

Local suppliers will be hired for flowback equipment or pressure services.

“We plan on going to Waskada in Southwest Manitoba, Kindersley with the Viking, and some of the Shaunovan wells – Lloydminster – anywhere where there are wells having difficulty getting cleaned out or to production test them,” said Winkler.

Quantum will also target under pressured wells in the Glauconite, Manville Group, Cardium, Banff and Three Forks-Sanish formations.

“This is a scalable business,” said Winkler who is currently the only employee. “With the problem we are solving, the company is going to get bigger and bigger. We need to make sure our field operations go as smooth as possible, and that will ensure growth for us.

“I dream there will be 20 or 30 coil tubing units running this stuff.”

As for gas applications, Quantum says they will continue to grow that business but their focus is on under pressured horizontal oil wells.

“We’ve got a good position where a lot of companies know about us, and we’ve worked with a lot of companies,” said Winkler.

“With gas, they like the technology. It works, but the cost is too much because we have technology on location and because of the commodity price.

“We are going to do okay on gas this summer, but we are not going to be doing the 50 to 100 well programs there used to be back in 2004, ’05 and ’06.

“Oil prices are very good. The upside on those wells we work on makes the payout very quick.”

With Quantum’s systems, multiple wells can be cleaned out in one day without disassembly of the pump from the coil tubing between wells.

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PIPELINE NEWS July 2010

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C13

Weatherford launching continuous rod in SE

Weatherford is launching its continuous rod service in southeast Saskatchewan. Some of the people behind it are, from left, Darrin Hankey, Lawrence Trachuk, Mark Day and Greg Anderson.

Estevan â&#x20AC;&#x201C; Weatherford is launching a new continuous rod service for southeast Saskatchewan.

The company calls their product â&#x20AC;&#x153;CoRod.â&#x20AC;? â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a new business opportunity for us, even though the product was developed in 1965,â&#x20AC;? noted Greg Anderson, North American business unit manager for CoRod. Anderson was present at a Weatherford open house in Estevan on June 3.

Mark Day, the product line manager for CoRod in Canada, said the drilling in the Bakken shale is driving this launch. â&#x20AC;&#x153;The type of oil and wells does lend itself to CoRod,â&#x20AC;? he said.

In particular, horizontal wells can lead to wear and tear of both rods and tubing, particularly in the build section where the well bends from vertical to horizontal. With the lack of couplings wear on the tubing and rods is extremely

reduced, Day explained.

Continuous rod still has some friction and wear, but instead of it being on individual points at each coupling, the wear is spread along the entire length of the rod.

Anderson added that not all wells are drilled perfectly, leading to more side loading.

The pair said it is a cost eďŹ&#x20AC;ective solution.

While rod coupling failures are more common that tubing failures, tubing can be expensive to

ďŹ x.

The company also produces a semi-elliptical rod, which Anderson said is ideal for use in reciprocating applications.

Without the couplings, continuous rod allows for a higher annular area, allowing for interventions like coil tubing or chemical injection, Day said. â&#x20AC;&#x153;Youâ&#x20AC;&#x2122;ve got more room to work.â&#x20AC;?

Anderson said they have plans to bring in one continuous rod unit

into the southeast in the near future, likely within months. Currently, the closest Weatherford rigs are in Williston, North Dakota, and Swift Current. The Williston rig was on display for the open house.

Day said there has been some local interest. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve gone in and done a market survey,â&#x20AC;? he said, adding there is enough interest to utilize the product and service.

Ideally they want to pursue initial installation over retroďŹ ts, Anderson said.

With a new product in the area, there is the issue of serviceability. â&#x20AC;&#x153;All these rigs can pull conventional rod strings.

None can pull continuous rod,â&#x20AC;? Anderson said, pointing across the road to a service rig company.

However, a continuous rod rig has a smaller manpower component, with just two workers.

And their equipment is fairly new, with lots of preventative maintenance. â&#x20AC;&#x153; â&#x20AC;&#x153;The idea is to build a critical mass of work,â&#x20AC;?

Day said.

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PIPELINE NEWS July 2010

Bold prediction of North Dakota growth Bismarck, N.D. – His forecast of North Dakota production in the coming years had even the CEO of Marathon oil talking.

But David Hobbs, head of research for IHS CERA, had a lot more to say about producing unconventional oil while speaking at the this year’s Williston

Basin Petroleum Conference in May. IHS CERA says they are a leading advisor to international energy companies, governments, financial institutions, and technology providers.

“By 2018, the Bakken could be producing 900,000 to 1 million barrels a day,” said

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Hobbs, noting it depends on the price of oil. The state currently produces 260,000 barrels a day, and projected by the state government to reach 300,000 bpd in the coming months.

“The world moves in incredible erratic patterns,” he said.

“When we look forward, we try to tell you, it’s now a prediction, but a plausible future, one of many.”

And example he gave is the “drill, baby, drill” slogan.

“Drilling goes up, prices drop, then you stop drilling, and prices rise.”

Hobbs spoke of scenario planning.

“How am I going to deal with $30 oil or $100 a barrel, and everything in between?” he asked.

He noted that in

2002, there was a supply disruption from Venezuela. Then from 2002 to 2007, supply outstripped demand.

Brownouts were expected in China. But then China bought a bunch of diesel power generators, and there were no brownouts, but oil demand spiked.

Peak oil, he said, “became self-fulfilling.”

“The world was convinced price didn’t matter anymore,” he said, in describing what he called the “nightmare of peak oil.”

“Then prices dropped to $30.”

“Everyone underestimates the impact of innovation,” according to Hobbs, pointing to shale gas. “In 2009, Washington, D.C. discovers shale gas. Every month, records are set.

Shale gas went from

high cost supply to low cost supply.

“I think you’re going to find the unit costs will go down,” he added, noting there will be a need for fewer rigs, but that those rigs will be producing more.

Think of the cost of military deploy to protect one million barrels a day production overseas, he offered. “U.S. production will begin to grow,” he forecast, saying there will be a temporary turn around as innovations bring costs down.

Hobbs said there will be demand side changes, too. He asked the room how many people felt compressed natural gas (CNG) will become prevalent. Very few people raised their hands. Yet in Italy, the government greatly subsidizes CNG, he

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“I think natural gas is going to be enormously important as a transportation fuel, but through gas turbines to charge electric cars,” Hobbs predicted.

New fuel efficiency mandates for vehicles will remove 1.5 to 2 million barrels a day of demand from the U.S. market over the next decade, he declared.

Hobbs spoke of attitude changes, and how children affect their parents. Citing how many people have stopped smoking, he said, “It was often your children who changed your attitude.”

The next generation is virulently antiexcess, he said. “The result will be efficiency like you wouldn’t believe.

“The real impact will be when girls don’t date guys who drive SUVs. “We’re probably going to see a period of oil prices much lower than what you’re currently planning. Don’t panic. You’re going to produce your well through three or four economic cycles, and there’s nothing you can do. The only think you can do is control your costs.” Hobbs said.

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PIPELINE NEWS July 2010

C15

Heavy oil uptick drives Pioneer landmen “In 2009, we were one of the busiest offices in the company with land ac Story and photos by Geoff Lee quisitions.”

Lloydminster – Meet land agent quarterback Paul Norman.

Pioneer operates land, environmental and vegetation management groups Norman is the land division manager of Pioneer Professional Services Group with offices throughout Western Canada under the corporate umbrella of Pioin Lloydminster who likens his job to that of a football field general.

“You can describe a landman as a kind of quarterback because you are han- neer Land and Environment Services.

Mineral acquisitions are usually handled dling a project and calling the different from the head office in Calgary. service companies into play as they are Helping to drive business in Lloydminneeded,” he said. ster is the fact most of the heavy oil wells in “You are the project lead who makes the area are development wells that get resure everything falls in place. You are the visited with new drilling techniques and well guy who is connecting the communicaoptimization technologies. tion line between the landowner, the sur“Technology changes and that’s a good veyor and the constructors of the lease.” thing. They will drill a well, and 10 years later It’s the landman’s role, working on go back in a drill it again in the same locabehalf of an oil company, is to successtion,” said Norman. fully negotiate a land acquisition deal “We find ourselves dealing with the same with a landowner for well sites, pipeline landowners – sometimes weekly. Companies routes, highways and utility right of ways are re-drilling old wells or optimizing them.” and alternate energy sites.

Horizontal and directional drilling is The task is played out on a regular helping to revitalize old wells along with a basis by Norman and his reporting agents trend toward the construction of wellbores on Tyler Laberge and Jayson Tetz who focus multi-well pads with close well spacing. their attention on the acquisition of land “Establishing a good rapport with the for oil and gas facilities. landowner is important just to keep the door The office has anywhere from 200 open so you can go back and deal with him in to 300 projects on the go for heavy oil the future,” said Norman clients in Alberta and Saskatchewan inThe goal of a land agent is to work with cluding more than 150 jobs in Saskatchlandowners to arrive at mutually beneficial ewan. solutions to the acquisition of land, address “Most of our work is on the Sastheir concerns and negotiate fair compensakatchewan side of the border,” said NorReading maps and surveys is a key part of the job for Pioneer tion for use of the land. man from his office in Lloydminster, landmen such as Tyler Laberge.

“One of the biggest things landowners Alberta. “That area just seems to busier are concerned about is the location of the well in the last year and a half with heavy oil site and how easy it is to farm around it,” said development and drilling.

“Heavy oil looks good for the next little while here. The oil industry has been Norman.

“You don’t want to leave an area in the corner of a field that he can’t access pretty steady. We didn’t real slow down in the last couple of years. Our clients with equipment because the well site is cutting it off.” ɸ Page C16 were busy in heavy oil. It’s good for us.

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C16

PIPELINE NEWS July 2010

Landowners usually sign on the ¿rst visit ɺ Page C15 A typical land acquisition for a well site in the Lloydminster area will be anywhere from three acres to 10 acres plus an access road.

Compensation rates are negotiable for loss of use and adverse effect for the inconvenience of farming around a well.

Rates for loss of cultivated land go for around $300 an acre and about $50 less for loss of pasture land.

The amount for adverse effect can range from $1,500 to $2,500 depending on the location of the well. The loss of use added to that makes up the annual rent.

“A lot of farmers are businessmen so they realize it’s pretty good money,” said Norman.

“If it gets to the point where you have enough wells, the money may not be the issue.

It’s more of an inconvenience for some people.”

Norman says 80 per cent of landowners sign on the first visit from a landman.

Pioneer agents also have about 30 to 40 land acquisition projects on First Nation reserves working with Indian Oil and Gas Canada that regulates oil and gas activity on federally administered lands.

Fortunately for Norman and his staff, Pioneer has software to track the progress of each of their active projects in both provinces.

“You have to report to the client when they can expect to have it finalized so they can license it,” he said of the need for a good tracking process.”

Norman has been working for Pioneer for five years and entered the business years ago after taking a land agent program at Olds College in Alberta.

The two-year diploma course offers handson training in the classroom, and lab and field work in surface land acquisition, land administration, mineral leasing,

government procedures, and liaison between the energy and the agricultural industries.

“You get a good background of the whole industry and the knowledge base you need to do your job,” said Norman who relishes the variety of his job.

“There is always something new coming up. It’s an interesting line of work to be in,” he said.

“You have a sense of freedom where you are setting your own schedule to some degree. You do have the ability to juggle things a little bit.

That’s nice so it’s not so structured. You kind of set your own pace.”

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PIPELINE NEWS July 2010

C17

Blackstock takes his second OTS win

By Brian Zinchuk

Garth Hoffort, of Estevan smiles for the camera during Fridays round.

Estevan – Brett Blackstock took home the Estevan OTS Men’s Golf Tournament on June 6, scoring a 71. However, it wasn’t a cut and dry win, as he tied last year’s winner, Nolan Rohatyn, who also carded a 71.

Blackstock won the tie-breaker with a 10-foot putt for a birdie.

It was Blackstock’s second win of the event, which took place June 4-6 at Estevan’s Woodlawn Golf Club.

The event had 340 in attendance, about an average year, according to Brett Campbell, one of the organizers. Last year there were 460 present for the 50th anniversary edition of the tournament.

“The weather was beautiful. We really lucked out,” Campbell said.

On the Saturday, there was the traditional steak and lobster supper, with a band to follow.

The winners of each flight (36 holes) were as follows: Championship – Brett Blackstock, 71; first – Paul Grimes, 74; second – Mark Herpenger, 79; third – Bill Halkyard, 81; fourth – Cody Grimes, 73; fifth – Barry McFadden, 79; sixth – Brad Dutton, 82; seven – Conrad Meili, 83; eighth – Norm Mack, 86; ninth – Cory Poss, 84; 10 – Nick Bourassa, 92; 11th – Myles Haukenss, 99; 12th – Derrick Helm, 99.

For 18 holes, the championship flight winner was Tim Lequyer, 74.

In the masters, Bill Stanley came in at 80.

James Collopy, of Calgary, connects with a drive on hole 16.

Danny Blackburn tees off on the par 5 third.

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C18

PIPELINE NEWS July 2010

Growing through automation and expansion

Cutting pipe threads is a major part of Irwinâ&#x20AC;&#x2122;s Machining and Welding business. The automated CNC lathe in the background has provided a big boost in productivity. On left is a recut sub, the centre is a new sub, and the right is a blank.

Oxbow â&#x20AC;&#x201C; With about 17 per cent of the provinceâ&#x20AC;&#x2122;s drilling rig ďŹ&#x201A;eet and eight per cent of the service rig ďŹ&#x201A;eet based in Oxbow, itâ&#x20AC;&#x2122;s not a bad place to run a machine shop.

Irwinâ&#x20AC;&#x2122;s Machining and Welding Ltd. spends much of its time supporting drilling and

service rigs. â&#x20AC;&#x153;We recut drill pipe, collars and subs, and casings,â&#x20AC;? explained Cory Irwin, owner.

The company has nine employees now, half of which work in the new welding shop, and the rest in machining and oďŹ&#x192;ce. They have four machinists, including

Irwin, two of which are journeymen. There are two journeyman welders, and one apprentice.

Irwin personally went to Assiniboine Community College in Brandon, initially for welding. He discovered he liked machining better. He graduated in 1996.

â&#x20AC;&#x153;I worked in Estevan for about a year, then set up my own shop,â&#x20AC;? he said.

Irwin grew up in Oxbow. â&#x20AC;&#x153;There were no other machine shops in Oxbow at the time, and lots of service and drilling rigs here.â&#x20AC;?

The company has a manual lathe for cutting threads, and has recently acquired a CNC lathe to cut pipe. It was installed last year to keep up with demand. â&#x20AC;&#x153;Our manual machine is always ďŹ&#x201A;at out,â&#x20AC;? Irwin said. While a CNC lathe may be common for that purpose in Alberta, Irwin said they have the only one in southeast Saskatchewan doing pipe. â&#x20AC;&#x153;You can output just about twice as much work in a day,â&#x20AC;? he said.

The lathes have rams that bring in pipe from racks on the outside.

Thereâ&#x20AC;&#x2122;s also an overhead crane in the machine shop.

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ITâ&#x20AC;&#x2122;S ABOUT TIME

Last year a 40 x 80ft. welding shop was added, and includes a ďŹ ve-tonne crane which is still being completed.

In the welding shop youâ&#x20AC;&#x2122;ll ďŹ nd men building catwalks for service rigs, a product they began to make about a year and a half ago. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re heavy duty, built for Bakken areas. Theyâ&#x20AC;&#x2122;re certiďŹ ed and engineered; our design,â&#x20AC;? Irwin said. â&#x20AC;&#x153;Most of the rigs are started to head to portable catwalks now,â&#x20AC;? he explained. Their design has tandem wheels, can be pulled by a one-tonne truck, and has two air rams. One lifts the pipe, and the second pushes it onto the rig ďŹ&#x201A;oor.

The old style of catwalk required a semi to move.

Several of the catwalks have been picked up by local ďŹ rms. Theyâ&#x20AC;&#x2122;ve sold eight so far. â&#x20AC;&#x153;They take about a month to build each,â&#x20AC;? Irwin said.

One of the cat-

walks nearing completion is painted pink. Itâ&#x20AC;&#x2122;s destined for next-door neighbour Courage OilďŹ eld Services, who will be donating a portion of the unitâ&#x20AC;&#x2122;s rentals to cancer research.

The company has been in business for 12 years, the last three of which have been growth years, according to Irwin.

Even though 2009 was slow for most people, he reported a steady year. â&#x20AC;&#x153;This year is going to be busy, once the rain stops,â&#x20AC;? he said on June 10, after weeks of onagain, oďŹ&#x20AC;-again rain that slowed down the sector in southeast Saskatchewan. â&#x20AC;&#x153;Road bans are our busy time, doing repairs.

Most work is done in house. We do have two portable trucks.â&#x20AC;?

Irwin went to a meeting in May talking about the potential of the mining sector. Now they are looking into expanding into that area.

Cory Irwin has been in business in Oxbow for 14 years.

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Renewable energy needed Bismarck, N.D. – It’s not expected from the CEO of a massive oil company like Marathon Oil Company, but Clarence Cazalot says renewable energy has got to be a part of the energy mix.

Speaking about America’s energy security as the final keynote speaker of the Williston Basin Petroleum Conference in May, Cazalot talked about how difficult it will be to wean the country off oil as an energy source.

The challenge, he said, is far greater than putting man on the moon, with no quick fixes, and being inherently long term.

The tough realities, according to Cazalot, are that global demand for energy will increase, driven by population growth, and there is a strong desire for economic prosperity. A 40 per cent growth in energy demand is the equivalent of adding two United States to world consumption.

“Today, 1.5 billion people still lack daily access to electricity,” he said.

Current oil production is 85 million barrels a day, and that will rise soon to 95 million or 100 million. To do so, you would need to “add the supply of four more Saudi Arabias in the next 20 years.”

“Renewable energy is an essential part of our energy mix.”

There are no technology silver bullets in the near future for renew-

Clarence Cazalot, CEO of Marathon Oil Company, spoke at the Williston Basin Petroleum Conference on May 4.

able, he said. “If we were to replace today’s global transportation system, all planes, trains, ships, with zero carbon solutions, we would only reduce greenhouse gas emissions by 15 per cent.”

That number would rise another 25 per cent if you included all power generation. That still only makes up 40 per cent, a long way from the 87 per cent GHG reductions being spoken about.

Energy efficiency is the least expensive and easiest greenhouse gas emissions reduction, he said. The new fuel efficiency standards for vehicles are a right step, he added.

Diversity equals security, in forms of energy and where it comes from, according to Cazalot. Wind, solar, oil, natural gas and coal are options he listed. Fossil fuels may be thought of as yesterday’s energy, but biofuels are

not ready yet, and there are long lead times in the energy business. The Gulf of Mexico oil spill will mean the industry will have to redouble its efforts, he said.

The United States now has 50 to 100 years of natural gas reserves at current rates of consumption. They could increase utilization of installed gas capability and reduce emissions.

Coal is, and will continue to be an important fuel, Cazalot said. Coal has to be either cleaned up through carbon capture and storage (CCS), or reduced, he said. Marathon intends to use CCS in its Fort McMurray upgrader. The company owns 20 per cent of the Scotford upgrader.

Canada’s oilsands are another option. As for the opposition linked to carbon dioxide intensity from oilsands production, Cazalot said, “Technology can, and will, solve that problem.

“Nuclear must play a larger role in a reduced carbon future.

“These are daunting challenges.”

Speaking to reporters after his speech, Cazalot spoke of large reserves on their North Dakota acreage. “We believe we have 4.5 billion barrels in place on our acreage alone,” he said, but there are only able to achieve two per cent recovery with current methods.

As of early May, Marathon had six active drilling rigs in North Dakota.

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C20

PIPELINE NEWS July 2010

Don’t miss it Checking out the lay of the land Lynn Baerwald of Absolute Locating of Oxbow performs a locate for a new lease, just south of the community.

Photo by Brian Zinchuk

P.E. FUSION Canada Inc.

Bismarck, N.D. – When it brings in about a tenth of your business each year, you don’t miss that particular trade show.

When Pipeline News last saw Isobrine Solutions Inc. of Edmonton, it was at 2009 Williston Basin Petroleum Conference in Regina. This last May, they were in Bismarck, N.D., at the same conference. It was their fifth or sixth time taking part in the conference.

“More than 10 per cent of our business comes as a result of coming here,” said Serguey Arkadakskiy.

“Williston is our bread and butter, because we have the database that makes us successful.

Isobrine uses stable isotopes in water and natural gas to identify the source formations of water or brine and natural gas. The company is made up of Serguey Arkadakskiy, Ben Rostron, and Greg Rose.

“It’s been picking up,” Rose said. “The economy seems to be bouncing back.”

Last year was a down year for most business in the oilpatch, but not Isobrine. “We still saw growth,” Rose said, noting they are a unique company and the only one doing what they do.

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C21

Oil companies on hand to cheerlead for Thorpe fundraiser

Wayne King, owner of Grit Industries, was pleased to explain his company’s $100,000 Leaderhip Donor support toward the construction cost of the new Thorpe Recovery Centre in Lloydminster.

Photos by Geoff Lee

Lloydminster – It rained, giving the Thorpe Recovery Centre or TRC the opportunity to use its host tent to kickoff the public round of its Building Hope capital fundraising campaign.

The event took place June 10 at the construction site of the new $16.25 million, 72-bed detoxification and addictions treatment facility, west of Lloydminster on Highway 16.

The Alberta government is funding $10 million of the construction cost with additional funding from the Saskatchewan government anticipated.

The Building Hope campaign, launched last year with a Leadership Donors and Major Gifts program has raised more than $1 million of its $3 million target.

The list of guest speakers included several TRC reps with words from board chair Stan Parke, Building Hope campaign chair Richie Davies, executive director Craig Featherstone, and former client and treatment staffer Nikki Allen.

Also making remarks were Wayne King, owner of Grit Industries and Grithog Sand Control Systems that contributed $100,000 to the TRC earlier

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Former addictions client and Thorpe Recovery Centre staff member Nikki Allen gets a hugs from centre fundraiser Danika McCullogh at the end of the launch of a public fundraising campaign at the construction site of the new addictions treatment facility.

this year under the Leadership Donors program.

Husky Energy Inc.’s Dabir Naqvi, general manager of Lloydminster production operations, also spoke about the importance of the facility to employees and how they fully supported Husky’s recent $125,000 donation as a Leadership Donors member.

Canadian Natural Resources Ltd. is also listed as a Leadership Donor with Major Gifts from oilrelated companies such as Beretta Pipelines, Holt Powder River Sales, L & L Oilfield, Universal Consulting Group and Bob Jack’s Sheet Metal.

Alderman Allan Park and Nikki Allen also spoke about the importance of the TRC that has been treating addictions for nearly 35 years.

The new TRC to open late next year will offer an expanded suite of services including detoxification, residential treatment, outpatient and prevention services, post-treatment programs and family programs.

The facility will also offer a youth residential treatment program and boast amenities such as a gym, walking paths and a full-service cafeteria.

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C22

PIPELINE NEWS July 2010

Derek Sibley (left) and Dave Townsend spent their early years of owning a service rig and working on that very rig.

Owners worked on their own rig Oxbow – Ex-cel Well Servicing’s owners spent a lot of time

doing the grunt work on their own rig before their company grew to

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few years, they were one third of the crew on their only rig.

Dave Townsend and Derek Sibley worked together with Precision Well Servicing before setting off on their own. An Oxbow company, Ex-cel was founded in November, 2005. Since then, the fleet has grown the four service rigs. “Our latest was added in January,” said Sibley.

There are two double-doubles, and two single-doubles.

The model years are all current – with the oldest being a 2007, and two being 2009s. The first three are B W Rig and

Repair units, while the most recent is an Irontech. All are from Edmonton manufacturers.

Derek’s wife Nicole is also a partner in the business. She has been doing the admin work from home, where the company is currently based, but will soon be moving into new digs as the company sets up its new shop on the south side of Oxbow.

Derek acts as general manager, while Dave is the field supervisor.

“We took this over June 1,” Derek said. It was formerly a Naka Welding location. Nicole’s grandfather ac-

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tually worked in the building many years ago, when it was a mud supply store. It was renovated in 2010, adding offices. Move day will be some time in July or August.

However, don’t expect to see the service rigs parked there. They have a yard on the edge of town. The new headquarters will be an office and shop.

The company reports a high utilization rate, around 95 per cent.

“We’ve been blessed,” Derek said. The recession had minimal impact. It meant they could have weekends off last summer. This year, so far, is looking great.

Rigs 1 and 2 are following drilling rigs.

Rig 3 is focussing on fracing near Pierson, Man., and Rig 4 is working on production and re-entries. Three of the larger companies have been keeping them busy for the most part, not leaving a lot of time to work for smaller ones.

Ex-cel shoots for six men per rig. Nicole said they are always looking for people.

Housing is an issue.

“Our guys helped us out,” Dave said regarding accommodations, which are in short supply in most of southeast Saskatchewan. ɸ Page C23

PIPELINE NEWS July 2010

C23

The smaller company that provides much better service ɺ Page C22 “They support us in our safety. We just got our COR renewed,” Derek said.

Noting the staff ’s dedication, he added, “They’re a good workforce for us.”

They’re at the size they want to be, for now. They promote internally, and like to train the men their way.

I can burn anything Becoming rig owners wasn’t plan A, at least for Dave. “I was a chef for four years. I have my papers and everything. I can burn anything legit.”

He hates cooking now. “I cooked 473 turkeys from the beginning of November until Christmas. For Christmas dinner, I went to Burger King and had a Whopper.”

“I came down here for what I thought was six months. I wanted to buy a jet ski, and then get out. That was 12 years ago, and still no jet ski.”

There have been two quads, however.

Dave, 35, was an air force brat, born in P.E.I., while his father served at CFB Summerside. His family ended up in Moose Jaw, where dad retired, which led Dave to Regina.

Derek was born in Thompson, Man., but grew up in Oxbow. He worked in parts at the local Chev dealer, but found, “I wasn’t making the money everyone else was.”

He had even begun an apprenticeship in parts management before changing his mind. Derek’s father and uncle worked in the oilpatch, so for him, it was a family thing. Now 38, he started roughnecking at the age of 21.

Both Dave and Derek worked their way up to rig manager. “Opportunity came around, and we jumped at it,” Dave said. They had had enough of bigcompany politics.

A rig came about, a turn-key package. It was a used Trinidad rig on a 1976 carrier. “Refurbished,” they described it as. “She was rough around the edges, but it got us going,” Dave said.

“It got us going to what we are now,” Nicole added.

They added a second rig and replaced their first rig in 2008.

Dave said clients find better service from smaller companies like theirs.

The companies they work for have local offices, and hire locally, Derek added. “Connections help.”

The company has been active in the community, sponsoring a stock car, softball teams, community events, fish derbies, you name it. “Our kids are involved,” they said, noting it was good advertising.

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C24

PIPELINE NEWS July 2010

Halliburton’s “frac factory” Lloydminster– A holistic approach to well drilling and completion optimization is helping clients of Halliburton Energy Services get the most bang for their buck in tight gas plays in low permeability sandstone.

The approach centres on drilling and completing multiple wellbores

from a single pad location to economically produce gas from multiple pay locations.

The technique is also helping to boost oil production in the Williston Basin in North Dakota according to Mike Eberhard Halliburton’s technical manager of the Rocky Mountain

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He calls it a “frac factory” approach for drilling and completing a large number of wells that require hydraulic fracturing to be economic.

“The advantage is not having to move the equipment and setting yourself up with a drilling program that allows you to treat multiple wells from a single location,” he said.

“It can take from six to eight hours to rig up and rig down frac equipment, and with not moving and just keeping that equipment going, it’s much more efficient. You don’t have the safety risk as you do when you are rigging up and down.”

Eberhard spoke to the SPE Lloydminster chapter technical lunch in May about the ‘frac factory’ in a presentation titled “Multiple Pay Tight Gas Sands” with case studies in sandstone formations in Wyoming and Colorado.

In the Pinedale Jonah area of Wyoming, Halliburton worked on a project to drill and complete up to 40 wellbores from a single pad and Eberhard says that makes it economic in that formation.

“We are also looking at similar operations in the Williston Basin with the Bakken play that’s going on,” he said calling the formation on both sides of the border as the Bakken in his presentation.

“We do it in some of the shale locations across the U.S. also,” he said.

“It’s primarily for hydraulic fracture stimulations that require a large number of stages to complete. If you have a single wellbore with a single zone you are tied to the traditional type of completion.

“By economy of scale you are making it so much more efficient. We equate it to building a house.

“If you have all the contractors lined and you build one house it will cost you so much. Ten houses will cost you less per house than one house. It takes a lot of planning and coordination.”

The frac factory approach to economic production relies on a systemic or holistic analysis including determining well performance and reservoir properties.

Eberhard also favours the development of a petrophyscial model of the formation to help assist with determining how to stage the wells.

“A petrophysical model helps to understand the formation of the rock and where the production is coming from and the quality of the rock,” he said.

“Key things are permeability and core pressure. The logs don’t do a very good job of giving you that. That’s why you need to calibrate it with different processes.”

Those processes include a core analysis and a diagnostic frac injection test.

He also stressed the need to incorporate reservoir potential into frac design considerations and to evaluate production results and make improvements.

The pitfalls he says of applying the frac factory method can lead to making well costs the priority while ignoring the reservoir and allowing “cookbook frac designs” to become the norm.

“The biggest problem is making sure you have all of your materials and being able to get them on location,” he said. “You go through a lot of materials very fast. You have to have a good infrastructure.” ɸ Page C25

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applicable to Bakken area wells with 30 stages, so you are looking at 120 stages to complete off of one pad. That lends itself to this operation very nicely.

“There is a lot of interest in what’s going on both sides of the border because there are different completion techniques being done.

“Canada is looking at what the U.S is doing and the U.S is looking at what Canada is doing. Some of the key differences are the formation is a lot shallower in Canada than it is in North Dakota.”

Eberhard noted the completion tools being used including the Bak-

ken are the use of composite flow-through frac plugs and swell packer technology along with coil tubing deployment and continuous pumping operations.

Eberhard was introduced as the second SPE international distinguished lecturer of the season invited to Lloydminster and the final speaker before a summer break in chapter lunches.

Eberhard has worked for Halliburton for 29 years in pumping services including cementing, acidizing, and hydraulic fracturing. He has also worked in the Williston Basin.

It is newsworthy to note that Halliburton completed the cementing of the final production casing string for the Deepwater Horizon drilling rig in the Gulf of Mexico.

The work was completed in accordance with the well design nearly 20 hours prior to the rig explosion on April 20 that killed 11 workers and ruptured an underwater pipeline spewing thousands of barrels of oil a day into Gulf waters.

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Mike Eberhard made his 23 presentation as a SPE distinguished lecturer at the season Ànale of the SPE Lloydminster chapter technical lunch series.

Photo by Geoff Lee

ɺ Page C24 Eberhard says the technique started in Bakersfield California and in the last four or five years “is kind of catching on” including the Bakken on both sides of the border.

“It’s applicable to anyway where you have

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In the Bakken, we are doing 20 to 30 stages in a well on the U.S. side.

“You may have two wells in the same location and they may go in two different directions.

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C26

PIPELINE NEWS July 2010

Red Hawk builds own support units Oxbow – Red Hawk Well Serving Ltd. could be a phoenix, because it’s been reborn. The company, headed by Terry Gunderman, is in

its second incarnation, and is the third well servicing company he has owned.

The whole Gunderman family has

been involved at some point with the business.

Terry’s wife Shelly, coowner, does accounting for the firm. Daughter

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A new doghouse for Red Hawk Rig 6 is nearing completion. Red Hawk Well Servicing builds its own doghouses and pumphouses. Terry Gunderman is the general manager, and owns the Àrm with his wife Shelly.

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• Hot Oiling • Flowline Cleaning • Tank Cleaning • Dry Steamer Boiler

ate six service rigs in all.

Wheeled catwalks are a new addition in recent years. “We built our first mobile one four years ago,” Gunderman said, pointing out it was one of the first in the area.

The company builds its own pumphouses and doghouses. “We build them the way we like them,” he said.

There’s a strong core of service rig firms in Oxbow. Gunderman explained it has a lot to do with a company known as Widney Well Servicing in the 1960s. “That’s where I got my start.”

He has been involved in several companies over the years.

“There are ties that go back 25 years,” he said.

He bought Red Hawk Well Servicing Ltd, a one rig company in Estevan, and built it up to several rigs before selling it in 1997. It was sold again, and eventually became part of Precision Drilling.

The current business version of Red Hawk is Inc., instead of Ltd. It was started in 2000.

“We bought one rig, and built two in the first year,” Gunderman said.

The most recent addition was in March, 2009.

Most of their work is in southeast Saskatchewan. Despite their proximity, not often do they cross the border into Manitoba. “We stay busy enough in our corner around here. We rarely get west of Weyburn,” he said.

“With all the Bakken activity, there’s a lot of prepping for fracs, and the cleanup for production.” ɸ Page C27

• Flowline Jetting • Frac Fluid Heating • Back Pressure Trucks • Steam Heaters

Phone: (306) 634-4797 or 634-7334

PIPELINE NEWS July 2010

C27

When it dries up, Red Hawk will be humming ɺ Page C26 Their bread and butter is production work

like rod changes, tubing leaks and pump changes.

“We don’t do many well

abandonments anymore.

People are holding onto wells, waiting for new

Heath Mathison is the second in command for Red Hawk Well Servicing. He’s been a little frustrated with all the rain they’ve seen over recent weeks.

WE RENT

technology,” he added.

They do some reentries, converting vertical wells into horizontals.

“We’ve drilled about eight re-entries, going in, kicking off, and making horizontals out of them.”

Those have been for shorter laterals. It’s not an area they’ve actively pursued.

There’s growth in new well completions, according to Gunderman, who said the drilling activity is pretty high right now.

“We’re content. Our goal isn’t to be a 20 rig company. That’s not what we’re about. We would rather stay small and provide better service. Most of our employees prefer to work with a smaller company. The majority of our employees, I see them daily.”

There are about 50 full-time employees with Red Hawk.

“Our guys are home every night. This is one of the greatest places to work in the oilfield. Ninety per cent of the work we do

is within an hour of our doorstep. It’s all about the people. There’s lot of good rigs, equipment-wise,” he said, indicating the people are more important than the equipment.

“Most of us worked together with previous companies. Our supervisors are all 15-20 year men, plus some have previous experience.”

Most of their staff

lives nearby, with a few employees in Carnduff or Estevan. One crew is based at Parkman, where the same company, same field, has kept a rig going for over 20 years. “That’s a pretty good run. They’ve been very good to us,” Gunderman said. “Most of the people we work for are long term friends and clients.”

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OfÀce: (306) 634-5150 Cell (306) 461-9946 Fax: (306) 634-5148 www.brentgedakwelding.com

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24 Hr Service (306) 483-8697

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C28

PIPELINE NEWS July 2010

Spearing squares off the tank question Oxbow – When you see water tanks for frac jobs in southeast Saskatchewan, they are usually cylindrical in nature and require a bed truck to haul. Spearing Service LP of Oxbow is looking to change that, dramatically increasing their fleet of horizontal axle mount 500 barrel tanks.

They started with

20, and will have 150 by the end of June, according to Ken McClement, operations manager for Spearing.

Spearing Service LP is a business unit of the Mullen Group Ltd, and has been since 2006.

Their primary focus is fluid-hauling: crude, salt water, emulsion, fresh water and natural gas

liquids.

“We run the full gambit. We have pressure trucks, vac units, combo units, steam units, hot oilers, frac super-heaters and frac tanks,” McClement explained.

“We’re the only guys here with horizontal frac tanks.” ɸ Page C29

Horizontal tanks like this are going to be seen in increasing numbers in southeast Saskatchewan, as Spearing Service LP increases its Áeet to 150 units.

Ken McClement is the operations manager for Spearing Service LP in Oxbow.

Career Opportunities Employment Opportunity

Total OilÀeld Rentals in Midale and Carlyle is hiring

is an industry leader in Safety Services and is currently seeking

-Picker Operators -Bed Truck Drivers

Safety Personnel to keep up with increasing customer demands.

If you are interested in becoming part of the Target Team and enjoying our growth with us, let us know!

Please forward resume with copies of tickets to: resumes@targetsafety.ca or fax to 780-870-5359

Field Technician – Estevan, Saskatchewan MAXXAM Analytics is the largest privately owned analytical laboratory network in Canada and one of the largest in North America.

With over 30 years experience and service, we provide quality analytical testing services to government and major companies in the environmental, oil and gas, food and health, forensics and genetic industries through North America.

Description: • To collect oil & gas samples from various customer sites throughout southern Saskatchewan • To fulÀl customer requirements regarding handling of these samples until delivery to analysis facility; • To work in a safe manner and follow all environmental requirements.

Ideal candidate will have: • Chemistry Technology Diploma or equivalent preferred • Experience in the oil industry a strong asset • Skills: listening, superior customer service, problem-solving, planning & organizing, mathematical ability, strong communication skills • Must be willing to frequently travel out of town overnight, some overtime will also be necessary • Must possess a valid Class 5 Driver’s License with no more than 3 demerits on abstract • WHMIS, H2S training will be provided

Application instructions: Please forward resumes by email to amy.lee@maxxamanalytics.com or by fax to 780-450-4187 quoting job # FT-SK

Fax resume to: Midale Carlyle Jason Green: Evan Meisner: 458-2811 453-4401 Fax: 458-2813 Fax: 453-4402

Required Immediately

Crew Foreman Pipeline Foreman & Labourers Crew Foreman must have 5 - 10 years experience in facility and general maintenance. Clean drivers abstract and all safety tickets required.

Pipeline Foreman must have 5 - 10 years experience in fiberglass pipeline installation. Clean drivers abstract and all safety tickets required.

We offer competitive wages & benefits.

Please apply in person with resume to:

Mike Brasseur, 403 Kensington Ave, Estevan or call

Mike Brasseur - 461-8111 or Brad Alberts - 461 8153

(A Division of Total Energy Services Ltd.)

Career Opportunity Dispatcher • Dispatch 60+ oilÀeld trucks in SE SK, SW MB & ND • Strong multi-tasking abilities • Excellent telephone etiquette & communication skills • Top wages & beneÀt package

Please submit resume to: Spearing Service L.P. Box 83 Oxbow, SK S0C 2B0 By e-mail: ssl@sasktel.net By fax: 306-483-2910

PIPELINE NEWS July 2010

C29

More tanks, different tanks ɺ Page C28 The design has a v-bottom, an internal manifold and sump, and is plumbed with four valves on the front.

It set up with an internal mix and heating line. “When you heat in the winter, you need to circulate the tank,” he said.

They offer ease of use, and a smaller footprint.

They’re also a lot easier to move from lease to lease. You just need a straight winch tractor. “We’ve got four of them,” McClement said.

“There’s no matting required, zero ground disturbance, and they’re easy to wash out. The way they’re set up, they keep the heat longer, and all the valves are set up on the same side.”

This form of configuration is common in North Dakota, where frac jobs can involve as many as 100 tanks.

“We offer it as a package right now – our tanks, heaters, water haulers, manifolds and winch trucks.

We’ve been very successful with that package. We grew it to fill a service. There’s a tremendous amount of fracing in the area.”

The company also has a couple fresh water sources to supply water from.

“It’s definitely a different angle for use, a little bit different service. Maybe we can help them out with one call,” McClement said.

The super-heaters are a big part of the frac, he noted. Spearing has five units, varying from 16 million to 35 million BTU. “There’s a couple more on the way,” he said.

Manitoba expansion The company is also setting up a Waskada, Man., operation. In January, a small five-truck company called Forsyth Trucking from Waskada was purchased.

“We’re running about 10 trucks there right now,” he noted.

“We’ve made an offer to purchase some land. We’ll build a shop on that land. We’ll be in there by the time the snow flies.”

Asked about the delays that have plagued nearly all

building projects in the region, McClement smiled and said, “It might be a late winter.”

The company already has about 40 units working out of Pipestone, Man. They have other locations in Carlyle and Oxbow, plus trucks stationed all over southeast Saskatchewan and southwest Manitoba. They’re currently just under 150 employees in strength.

North Dakota hauling With pipeline capacity maxed out in North Dakota, Spearing has been hauling oil from the Stanley, N.D. field, as well as Crosby and Noonan to Saskatchewan terminals. “We’re in that 8,000 to 10,000 bbl per day range,” McClement said. “We’ll probably get to what we were in 2008, about four times what we are now – 30,000 to 40,000 bpd.”

While Enbridge is working to reverse the Portal Link pipeline to bring North Dakota Bakken production into its Saskatchewan system, McClement doesn’t see its 30,000 bpd capacity as much of a threat. “When that line is done, there will be another 30,000 bpd.

They’re bringing on wells at 2,000 bpd.

“Trucking is a short term solution. There will always be pipelines. But [trucking is] a good solution to get it done in a short time,” he said.

Career Opportunities

We are currently accepting applications for the following positions in our Well Servicing Division in the Estevan Area:

Experienced Floorhands Tickets required: First Aid H2S and must possess Valid Driver’s Licence - Class 1A or 3A. Sun Country Well Servicing is a local Service Rig company out of Estevan, we offer competitive industry standard wages, and an exceptional employee benefit package.

Unlimited opportunity for advancement.

Fax: (780) 872-5239

Red Deer: 8022 Edgar Industrial Cres.

Red Deer, AB T4P 3R3 Fax: (403) 314-3332

Medicine Hat: 117 Elbow Drive NE Medicine Hat, AB T0J 2P0 Fax: (403) 526-5286

Please send resume to: lbrown@suncountrywellservicing.ca Or Fax resume to: 306-634-1200.

Or call Lanette Brown: 306-461-8320

Cement, Fracturing and Acidizing Operators Class 1 & Class 3 licenses with a clean driver’s abstract will be considered.

Heavy Duty Mechanics Journeyman; applicants must possess a Red Seal Certification. A CVIP Endorsement is preferred.

Fracturing Supervisors Minimum two years experience is preferred.

Fracturing Operators/Drivers – All Positions All drivers’ class licenses with a clean driver’s abstract will be considered.

Bulk Plant Operators All drivers’ class licenses with a clean driver’s abstract will be considered and pneumatic bulker experience is preferred.

Heavy Duty Mechanic Journeyman; applicants must possess a Red Seal Certification. A CVIP Endorsement is preferred.

Brooks: 390 Aquaduct Drive Brooks, AB T1R 1B9 Fax: (403) 362-3813

Lloydminster: 6013–52 Avenue Lloydminster, AB T9V 2S7 Fax: (780) 875-7416

Coiled Tubing and Cement Operators Class 1 & Class 3 licenses with a clean driver’s abstract and class 5 license will be considered.

Cement Bulk Drivers All drivers’ class licenses with a clean driver’s abstract will be considered and pneumatic bulker experience is preferred.

C30

PIPELINE NEWS July 2010

Trevor Spearing, the owner of Extreme Excavating, has found over the years that you can never build a big enough shop.

Build big.

Youâ&#x20AC;&#x2122;ll need it Oxbow â&#x20AC;&#x201C; Thereâ&#x20AC;&#x2122;s a new shop rising on the northwest corner of Oxbow, soon to be home to Extreme Excavating.

Trevor Spearing, who used to own Spearing Service with his father and brother, started Extreme Excavating in the spring of 2007.

They have four hydrovac units. â&#x20AC;&#x153;I had enough of

trucks. Tank trucking is a 24 hour a day, seven day a week job,â&#x20AC;? he said.

However, the shop looks like overkill for four hydrovacs. Itâ&#x20AC;&#x2122;s 80 x 130 ft, with a two story 80 x 28 ft. oďŹ&#x192;ce section.

Spearing explained he and his brother Don still own Great Northern Trucking, a North Dakota trucking ďŹ rm with 10 trucks. They will be able to do servicing in Oxbow, eventually with their own mechanics.

Besides, itâ&#x20AC;&#x2122;s always better to build big, he feels.

â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve noticed over the last 30 years building shops you never build them big enough. Iâ&#x20AC;&#x2122;m not sure this is big enough,â&#x20AC;? he said. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s always people wanting to park something indoors.â&#x20AC;?

To get the location built, he had to pull in a contractor from the other side of Brandon. â&#x20AC;&#x153;I couldnâ&#x20AC;&#x2122;t ďŹ nd anyone who would subcontract or complete the thing around here,â&#x20AC;? he said.

This will be a turnkey completion, Spearing added.

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PIPELINE NEWS July 2010

Bus: 306-453-2728 Cell: 306-577-8085 Cell: 306-482-7755 Fax: 306-453-2738 mel.fitzpatrick@midfieldsupply.com www.midfieldsupply.com

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C31

Resources Guide OIL / INDUSTRIAL / AGRICULTURAL / AUTOMOTIVE

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Specializing in well site and pipeline surveys Yorkton 306.783.4100

Swift Current 306.773.7733

Edmonton 800.465.6233

Weyburn 306.842.6060

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Regina 800.667.3546

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Cell: 483-8024, Home: 486-2143 Fax: 486-4855 Box 12 Frobisher, SK. S0C 0Y0 merv_and_deb@xplornet.ca

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JUSTIN WAPPEL - Division Manager

Owners/Managers 6506 - 50th Avenue Lloydminster, AB

Phone: (780) 875-6880

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401 Hwy. #4 S. Biggar, Saskatchewan PO Box 879 S0K 0M0 Ph (306) 948-5262 Fax (306) 948-5263 Cell (306) 441-4402 Toll Free 1-800-746-6646 Email: jwappel@envirotank.com www.envirotank.com

C32

PIPELINE NEWS July 2010

Rest Easier (The oil patch is looking better, but at the end of a long day this bed looks fantastic)

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