Pipeline News September 2010

PIPELINE NEWS Saskatchewan’s Petroleum Monthly

September 2010

FREE

Volume 3 Issue 4

Focus Edition: Reclamation

See us at the Lloydminster Heavy Oil Show & Symposium Sept. 15-16

A probe that tests for electrical conductivity can indicate the presence of brine in soil or water. It’s a standard tool of the trade for environmental consultants like Dean Tenold of Astrum Consulting, based in Estevan. In this case, the probe is being inserted into the ground in a small wetland near a Áare pit.

Photo by Brian Zinchuk

Responding to Gulf spill disaster Page B1

Lakeland reclamation classes full Page C1

Coal & carbon dioxide special report Pages D1 - D11

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PIPELINE NEWS September 2010

News

Notes

Enerplus drilling at Oungre Enerplus Resource Fund is injecting $60 million into this year’s capital spending program with the majority on light oil projects. The fund is also lowering its production guidance and cost expectations for this year. It also plans to sell some of its non-core properties.

Enerplus has allocated additional capital to its Bakken/tight oil resource play in Saskatchewan, Montana and North Dakota, and now expects to invest more than $170 million of its $485 million capital budget in this play in 2010. This additional capital will be spent on drilling 10 to 14 assessment wells on its Bakken lands at Freda Lake, Neptune and Oungre in Saskatchewan plus increased activity at Fort Berthold, N.D. due to the additional interests acquired in late June.

The fund expects to have up to three rigs running in Saskatchewan and one rig operating in North Dakota in the second half of the year. It expects this additional capital to add approximately 2,200 bbls per day of initial production, the majority of which will be realized in the first quarter of 2011.

Compass updates Viking plans Compass Petroleum Ltd. began drilling operations on the next four wells in its Viking horizontal program on July 9. Two of these wells have now been drilled and cased, the third well is drilling and the fourth was expected to finish drilling in the first half of August. Completion operations on the first two wells commenced the week of Aug. 15. The last two wells were expected to be completed in mid-August, weather permitting.

A fall 2010 round of Viking horizontal drilling is scheduled to commence in late September.

The board of directors of Compass has approved a fiscal 2011 capital budget, which authorizes aggregate expenditures of approximately $29.55 million, with approximately $23 million allocated to the drilling of up to 19 Viking horizontal wells on its Lucky Hills property by June 2011.

Briefs courtesy Nickle’s Daily Oil Bulletin

The 2010 Lloydminster Heavy Oil Show Sept. 15-16 is a sellout once again. The show to be held at the Lloydminster Exhibition Grounds is open to the public at no charge. Here we see the 2008 Lloydminster Heavy Oil Show.

File photo by Brian Zinchuk

Lloyd Heavy Oil Show set to go

By Geoff Lee Pipeline News

“Everything is going as planned. The speakers and the agenda are set,” said symposium chair Mike McIntosh, who notes registration is limited to the Lloydminster – Boothes for the 2010 OTS Lloy- first 200 participants.

This year’s speaker agenda includes three presendminster Heavy Oil Show has been sold out since tations a day Sept. 15 and 16th breaking at noon each March, and thousands are expected to attend.

“I am looking for another good show this year,” day.

“The information will be just as valuable as it was said show chairman Scott Black as the clocks wind last year with longer days,” said McIntosh. “It gives down to show time Sept. 15-16.

“I am looking for close to 6,000 to 7,000 people people the option to take in the oil show too.

“The symposium and the oil show are two sepacoming through. The show is open to the public. It’s rate functions run by two separate groups.” a no admission show.

The theme of both events is “Challenges, Op“It’s going to be good for Lloyd. Every hotel is booked up. It’s good for the whole Lloyd industry portunity, Change” and is reflected in the lineup of – the oil industry and private businesses like hotels symposium presenters.

“There are a couple of presentations that will and restaurants.”

Black notes there are 224 registered exhibitors key on problems people are trying to overcome like with 20 to 30 businesses waiting to get in if there is workover issues,” said McIntosh.

“It’s looking at trying to overcome challenges spot open at the Lloydminster Exhibition Grounds.

This year’s show is being held in conjunction and looking at new ways of doing things.”

A couple of sample topics are “Under balance with the 17th annual Heavy Oil Technical Symposium organized by the Lloydminster chapter of the wellbore cleanout and production evaluation techSociety of Petroleum Engineers (SPE) at the adja- nology” and “Innovative methods for debris clearance in wellbores using wireline.” ɸ Page A6 cent Stockade Convention Centre.

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PIPELINE NEWS September 2010

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Oil show banquet speaker Murray Cobbe News Notes to key on services

By Geoff Lee Lloydminster – The 2010 Lloydminster Heavy Oil Show Sept. 15-16 will be a homecoming of sorts for Murray L. Cobbe, executive chairman of Trican Well Service Ltd. based in Calgary.

Cobbe is the guest speaker at this year’s kick off banquet the evening of Sept. 14 at the Lloydminster Stockade Convention Centre, not far from where his own role in the company began.

Cobbe and a group of investors purchased the former cementing and acidizing services company from private owners in 1996 and grew it into a public company with multiple services and operations internationally.

From his Calgary office Cobbe reports he plans to talk a bit about Trican in his speech but only as it pertains to his topic.

“I will be talking about the service industry and how it interacts with all the other industries that are

built around it – customers, employees, legislators and the public,” he said.

“Then I will touch on a little bit of the evolution of the industry – the private companies, the public companies.

“I will talk about Trican Well Service but just as it relates to what I have already said.

“Trican started in Lloydminster as a private company. It was part of the movement from private to public companies. It was part of a generational thing. That’s exactly what happened to Trican.”

In the company’s 1996 annual report when Cobbe was president and CEO, he stated his vision for how the company would grow as a publicly owned oil and gas services organization.

“One of the goals for 1997 is to continue to increase the utilization of the existing equipment through focused sales efforts and improved operations management,” wrote Cobbe. ɸ Page A7

Freehold to drill in SE

During the second quarter, Freehold Royalty Trust drilled three (0.5 net) Dina oil wells at Hayter, two (0.9 net) Bakken oil wells in southeast Saskatchewan, and one (0.1 net) Cardium oil well at Pembina Cardium Unit No. 9. It also participated in one (0.2 net) natural gas well at Willesden Green. All were drilled using horizontal drilling technology, and four of the seven wells were completed using multi-stage fracture stimulation techniques. These wells will add to production in the last half of the year.

Capital investment in the first half of 2010 amounted to $7.4 million.

Capital investment in 2010 is expected to total $24 million. Expenditures will be higher in the last half of the year as the trust focused on oil development in its three core areas: southeast Saskatchewan, Hayter, and Pembina Cardium Unit No. 9.

Whitecap active in southwest

Trican is enjoying proÀtable growth in its Canadian operations thanks for new horizontal drilling and multiple fracturing driving demand for well and production services. This is a photo of a Trican operation in Horn River, B.C. Photo submitted

Whitecap Resources Inc. drilled three successful vertical wells (one well in its Valhalla North Montney pool and two wells on its recently acquired assets in southwest Saskatchewan) during the second quarter as well as starting the drilling of a third horizontal well at Valhalla North.

Whitecap completed a reverse takeover of Spitfire Energy Ltd. in the second quarter. The "going public transaction" with Spitfire was announced on June 1 and closed on June 25.

The transaction brings to Whitecap 380 bbls of oil equivalent per day of primarily shallow decline, high working interest operated assets in southwest Saskatchewan with a significant amount of development drilling upside.

Whitecap said it expects that combining its Valhalla North Montney oil asset with Spitfire's southwest Saskatchewan oil properties will provide an additional asset from which to grow and diversify its oil growth portfolio of opportunities.

Briefs courtesy Nickle’s Daily Oil Bulletin

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EDITORIAL

PIPELINE NEWS September 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.

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Editorial Carbon capture forced into prime time On June 23, federal Environment Minister Jim Prentice made a speech that most people probably ignored. However, it’s not often that a speech in the National Press Gallery will, if fully implemented, have a wide-ranging effect on each and every Canadian, literally for the next two generations.

Prentice outlined Canada’s future coal strategy. In a nutshell the plan states that starting now, all new or replacement coal-fired power generation must bring its greenhouse gas emissions level down to that that of a combined-cycle natural gas power plant.

And if you think they’ll be able to weasel their way of it by buying hot air in some other country, guess again.

“Our regulation will be very clear-when each coal burning unit reaches the end of its economic life, it will have to meet the standard or close down. No trading.

No offsets. No credits,” Prentice said. It’s not often you get an unequivocal statement like that from a politician.

A line in the sand has been drawn, and that’s it.

This is going to have profound implications on Saskatchewan. It means that the Boundary Dam Unit 3 (BD3) retrofit will have to go through with its planned carbon capture strategy. It also means that any further retrofits will need carbon capture, too.

Indeed, the current plans for BD3 might not be ambitious enough. Will the slipstream of exhaust they plan on capturing be enough of a reduction to meet the standard?

NuCoal Energy Corp has acquired large coal exploration permits in southern Saskatchewan. A company executive told Pipeline News that the announcement was widely expected. He was somewhat indifferent when asked if it will hurt or help their efforts. His response was that it was widely expected. In other words, the new rules will be the way things go, and that’s that.

Indeed, this is the new norm. Consider cars these days, comparing say, a 1967 Chev Camaro to a 2010 model. If you popped the hoods on both, you would

find the ’67 really simple and straightforward, kind of like your old coal-fired plant. The engine on the new model is unrecognizable in comparison, with all the numerous hoses and emissions controls. So, too, coal-fired plants will become much more complex due to emissions controls. That doesn’t mean anyone stopped making cars, and they won’t stop using coal. They will just adapt and overcome to the new regulatory challenges.

The new regulation will, however; make natural gas much more enticing. Down the road it will impact natural gas prices, and promote drilling. Natural gas plants are also a lot simpler - build a plant, connect a pipeline, and turn it on – no mine needed, no dragline to build. Unlike coal plants, which are typically located beside coal mines to reduce transportation costs, natural gas can be easily and inexpensively shipped pretty much anywhere via pipeline. It means you can put them close to your load centres. That’s why a base load natural gas power plant is in the works for North Battleford.

While natural gas is proven technology, even with the breakthroughs in shale gas recovery, will there be enough natural gas available to accommodate a large scale shift to natural gas production? Probably not.

We’re still going to need coal, in a big way.

The trick is going to be making those big changes.

The differences between the two example Camaros are decades of refinement in the making, with incremental improvements to each model every four or so years. This change in coal tech is supposed to happen in one fell swoop. Indeed, we’re still at the demonstration stage with BD3, yet to be built. Basin Electric is looking at a demonstration project at its Antelope Valley Station at Beulah, N.D. The technology may be there, and some may feel it’s ready for prime time, but so far, it hasn’t happened yet.

There’s nothing like a little necessity to be the mother of invention. Prentice’s announcement is going to put the screws to the coal industry – get this sorted out, now.

PIPELINE NEWS September 2010

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Letter to the Editor The Lloydminster Chamber of Commerce has lent its support to the Northeast Alberta Information HUB Ltd. as well as two other Regional Economic Development Alliances (REDA’s) in eastern Alberta, (Palliser & Battle River) on the development of a plan to promote an Eastern Alberta transportation corridor as a complimentary alternative to the Calgary-Edmonton Queen Elizabeth corridor. (highway 2).

The Lloydminster Chamber presented a policy resolution to the delegates of the Alberta Chambers of Commerce policy session in May and the resolution, which endorses and supports the Ports-toPlains Trade Corridor Alliance initiative, encourages

the Province of Alberta to commit to an ongoing membership in the alliance. In addition, the resolution advocates for a commercial 24 hour port of entry at Wild Horse. The resolution was passed and will now be taken forward to the provincial government by the Chamber of Commerce.

The main routes in the eastern Alberta corridor are Highways 41, 36 & 63 with links to the Edmonton-Calgary corridor to the west, as well as links east to Saskatchewan. This will serve to move products within Alberta, as well as to and from the US; serve Alberta, other Canadian and US tourists; and attract investment for existing and new businesses.

I believe an eastern Alberta transportation cor-

ridor will assist in growth in eastern Alberta and western Saskatchewan and balance the economy by utilizing the capacity that exists in these communities. Right now there is only one commercial 24 hour port of entry and this can add time and costs for truckers travelling to the U.S. The Chamber of Commerce is asking the Alberta Government to lobby the federal government to work with the US to ensure that these initiatives are progressed.

Respectfully, Pat Tenney, Executive Director Lloydminster Chamber of Commerce

Opinion Where are we going? Higher!

From the top of the pile Brian Zinchuk

I like to keep a sharp eye on the rig counts, particularly for drilling rigs, on Nickle’s Rig Locator official online publisher of the Canadian Association of Oilwell Drilling Contractors (COADC).

It’s a quick way to feel the pulse of the industry.

Drilling drives much of the industry, from completions to pipelines to environmental. When drilling grinds to a halt, or at least to a crawl, like it

did in 2009, the rest soon follows.

So it is with this in mind that I’ve been watching Saskatchewan’s drilling rig counts mirror almost exactly the 2008 graph for much of the year.

Indeed, from Jan. 1 until spring breakup, the rig count was consistently about 20 rigs higher than the banner year of 2008, and way above 2009.

Since May, the numbers have been closer to the 2008 curve. August, however, has been interesting.

In early August, the count rose to 91, then promptly dropped to the low 70s, before inching its way back up. On Aug. 18, the count for Saskatchewan was 74. For a while there, it was looking like we would hit 100 before September, but as I write this, it’s not likely now. I don’t anticipate it going much lower, either. In 2008, too, there was a similar dip of about 20 rigs going into September.

It must be a cyclical thing.

Manitoba has seen a large boost. Their rig

count as of Aug. 18 was 22, way more than the graphs have indicated for the last three years. They even had to adjust the graph, making it taller. Indeed, it’s nearly double the 10 to 12 total drilling rigs you’ll usually have in Manitoba. On that day, 19 of those 22 were working. Most of those rigs probably hopped the border from Saskatchewan, resulting in the declining Saskatchewan count.

All the while, oil has been hovering in the $70s and $80s range. As long as it doesn’t go any lower, we should see a strong fall and winter for Saskatchewan drilling. This goes hand in hand with recent reports from the Ministry of Energy and Resources that we’re having a strong drilling year. A total of 1,253 wells were drilled in the first 6 months of this year, nearly double the previous year. Horizontal wells are also on the rise, up 16 per cent over the horizontal well record-setting 2008.

Now if only gas prices would pick up, maybe we could get things hopping in the southwest, too.

So far, 2010 is the year of the oil spill The year 2010 might go down in history as the year of the ocean oil spill. The news-making spills to date include the Gulf of Mexico oil spill, an oil pipeline spill into the Yellow Sea in China and the Great Barrier Reef oil spill last spring.

With reclamation being the focus of this month’s edition, it’s time to wonder if it is possible to physically reclaim damaged marine life, ecosystems, beaches water quality – and reputations from these oil spills.

Judging from the observations of experts, the short term answer is no, but Mother Nature should eventually re-work the environment to a suitable state to renew life.

Restoring the reputation of the industry could take longer.

The tragic part about oil spills is that it doesn’t take a lot of oil to do irrevocable long-term harm to some marine environments despite booms and containment systems and dispersants.

The Great Barrier oil spill occurred on April 3, when a Chinese coal carrier ran aground on a coral reef in Central Queensland spilling, only three to four long tons of heavy fuel oil.

It was the ground scar of the ship’s hull scraping

Lee Side of Lloyd Geoff Lee

the reef that did most of the damage leaving the affected area completely devoid of life.

The Deepwater Horizon oil spill that began on April 20 has become the largest in U.S. history with hundreds of millions of gallons spilled.

Even though BP has stopped the leak, oil continues to cause extensive damage to marine and wildlife habitats as well as the Gulf 's fishing and tourism industries.

An oil pipeline explosion at the Dalian Xingang oil port in China on July 16 led to a second pipeline explosion spilling more than 300,000 tonnes of crude oil into the Yellow Sea. Dalian, in Liaoning Province, is a popular beach

getaway during the summer, but many of the beaches were closed after the pipeline explosion.

The growing concern over the potential for further port disasters in China came the same week as the International Energy Agency’s announcement that China had surpassed the United States as the world’s top energy consumer.

These disasters also follow news from the U.S. National Oceanic and Atmospheric Association that 2010 is on track to be the warmest ever as the Earth continues to heat up from rising levels of carbon dioxide in our atmosphere.

What all of this means, is that it’s time to stop refueling our oceans and our atmosphere with the very oil and we seek to keep our economy and our lifestyle alive.

Remedies will likely include tighter regulatory laws and regulations, restrictions of when and where to drill, and more emphasis on prevention at all levels of the industry.

There also has to be a continued commitment to cut carbon dioxide at all levels.

Let’s hope by the time the year ends, we can celebrate an end to major oil spills along with the reclamation of the reputation of the industry.

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 September 2010

Renovations won't impact show ɺ Page A2 McIntosh will kick off the symposium with some opening remarks with SPE chapter board members Dale Luedtke and Hart Golbeck sharing the master of ceremony roles.

“Our vice-chair John Hutchings will be doing the closing remarks,” noted McIntosh.

Participants at both events will be pleased to learn the ongoing renovations to the Lloydminster Agricultural Exhibition Facilities will not affect exhibit space or the stockade banquet.

“The construction won’t be 100 per cent completed but it will have no impact on the flow of the show,” said Mike Sidoryk, general manager of the Lloydminster Agriculture Exhibition Association (LAEA).

“Nothing will be interrupted for the show. All of the other facilities that the show is in are totally intact.”

The LAEA renovation and expansion project will add 24,700 sq ft to the existing 115,000 sq ft of facilities.

The project includes new meeting and banquet rooms, concession and food services, a gathering area, washroom facilities, a main entrance foyer and hallway linkages throughout the facility.

Sidoryk cautions that the expansion will not make much more exhibit space available for future heavy oil shows and exhibits.

“In future years there will be additional banquet rooms and a show office area, but there is not going

to be a lot of extra space for trade show exhibits,” he said.

“We are not increasing the size of the main buildings. We are just adding to the front of them so we will have a more easily accessible walkway and connection points between all of the buildings.”

As for parking, Sidoryk said, “We aren’t impacting the parking area very much. There’s a minimal impact there.”

lloydminsterchamber.com phone: 780.875.9013

fax: 780.875.0755 lloydchamber@lloydminsterchamber.com

Check out the fastest growing job market in Canada www.lloydjobs.com

The 2010 OTS heavy oil show is being held at the same time at the Heavy Oil Technical Symposium organized by the Lloydminster Society of Petroleum Engineers. This was the 2008 symposium, with speaker Karl Miller.

File photo by Brian Zinchuk

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PIPELINE NEWS September 2010

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Trican executive chairman keynote speaker ɺ Page A3 “I believe that opportunities exist to expand the business geographically as the company currently operates in a small area of the Western Canadian sedimentary basin.

“In addition, significant potential exists to enter into new service lines and expand the technical reach of the coil tubing business. I would like to welcome Trican’s new shareholders as we enter this exciting period of growth for the company.”

Today, Trican’s well and production services range from acidizing and production enhancement to cementing, fracturing and CBM services utilized in the drilling, completion, stimulation and reworking of oil and gas wells. The company also has a full range of industrial cleaning and pipeline services.

Trican has established a footprint throughout North America, Latin America, Europe, Africa, the Middle East and Russian and Kazakhstan.

Trican reported record revenue during its second quarter results in August and Cobbe sees more blue sky ahead for the rest of the year especially for Trican’s Canadian operations.

Approximately 24 per cent of Trican’s Canadian fracturing revenue was generated from oil-directed activity compared to four per cent in the first quarter of 2009.

“Because of the new innovation with horizon-

Lloydminster construction activity

A crane hoists a steel beam applied to ongoing renovations of Lloydminster Agriculture Exhibition facilities at the site of the Lloydminster Heavy Oil Heavy Show and the Heavy Oil Technical Symposium Sept. 15-16. The construction will be not impact these show venues however.

Photo by Geoff Lee

Crews put the Ànishing touches to the repaving of 12th Street in Lloydminster in August. The rebuilt road will form part of a new ring road for heavy oilÀeld and industrial trafÀc.

Photo by Geoff Lee

tal drilling and multiple fracturing on both oil and gas wells we expect we are going to see an extremely time for the rest of this year,” he said.

Cobbe is also past director of the Petroleum Services Association of Canada (PSAC) the national association of Canadian oilfield service, supply and manufacturing companies.

“That was a good role,” he said. “It gives you a good insight into all of the different kinds of service companies from two man shops to 1,600 people and what the problem each one of them has. They all have their unique problems.”

Asked for his take on the health of the service industry companies Cobbe said, “I think if they are good business people they are successful.”

Cobbe’s introduction at the dinner banquet will also note he currently serves as a director of Pason Systems Inc. in Calgary.

As for how he got the nod to be this year’s speaker, Cobbe joked, “I think everyone else said, ‘No’ and one of the other fellows in the office here said yes for me – I was “volun-told.”

Heavy Oil show chair Scott Black offered a different take on Cobbe’s selection.

“We left it up to our venue guy,” he said. “We thought Trican – Trican first opened up in Lloyd so we thought since they’ve been in this area and they are still in this area, that Murray would be a good person to chat with.”

Black also reports the banquet is sold out.

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PIPELINE NEWS September 2010

Quarterbacking the cleanup Story and photos by Brian Zinchuk Pipeline News

As far as Áare pits go, this one in southeast Saskatchewan is tiny, according to environmental consultant Dean Tenold of Astrum Consulting. The pit is in the process of being remediated.

Estevan – Reclamation in recent decades has cleaned up a lot of old messes that were the result of obsolete and poor practices.

Quarterbacking such efforts are the environmental consultants.

Astrum Consulting provides environmental services, or as owner/ operator Dean Tenold explained, “Everything necessary in the oilpatch, from pre-construction site assessments to final abandonments and reclamation.”

His Estevan operation is a small one. He and Sheena Aitken, who is based in Weyburn, work full-time, while his two sons spend their summers working for the firm. Kohl Tenold, 22, is taking environmental science at the University of Victoria, while Brandon Tenold, 25, does the summer work to support his career as a musician in Austin, Texas.

“Our specialty is spill response and cleanup,” Tenold said. Win-

ters are a little slower, because you can’t do most reclamation work then. It’s a good time to catch up on courses and new technology.

The summers, on the other hand, are very busy, at least, when it’s not raining. “Most oil companies have an environmental budget.

You have to get as much done as you can for that budget, giving them the biggest bang for their buck,” he said.

“Technically, reclamation is when a site is put back to its pristine state. What a lot of people think is reclamation is actually remediation, cleaning a site.”

“When it’s clean, you re-contour, re-seed it. That’s reclamation.”

Abandonments When it comes to abandonments, the life of a well bore can be stretched by new technologies. An old vertical wellbore can be converted into a horizontal well and multistage fraced, bringing new life to an old well.

But that’s not always the case. There comes a time to simply call it quits and reclaim the site. “There’s still a lot of wells that have no possibilities at all,” Tenold explained. “They like to leave that wellhead and take a good look at it for any other possibilities.”

A common issue is flare pits, which are largely out of vogue now. Not only were they used to flare off gas, they often became dumping grounds for all sorts of items, from brine to solvents. If the well ‘burped’ oil over an extended period, it ended up in the pit. Tenold has seen them all.

“You can have a tremendous mess. They were the garbage dump of the battery.”

“That’s why they call you, to look for the things they would miss.

If there were 30 cubes of product, it had to go somewhere. Where is it? With experience, you know what to look for.”

He added, “You always have to be cognizant of anything that might have gone offlease.” ɸ Page A9

PIPELINE NEWS September 2010

Flare pits are full of surprises ɺ Page A8 Companies are generally publicity shy when it comes to reclamation, according to Tenold, “even if it’s done right, and they’re proud of what they have done.”

“Nowadays companies are very diligent about spills and cleanups.”

And for those who aren’t he pointed out that the Ministry of Energy and Resources soon tell them where they are falling short.

That attitude is a relatively recent thing. “It’s very much a 90s-forward type of thing,” he said.

In recent years, the Ministry of Energy and Resources required flare pits to be cleaned up, a process that has caught most, but not all of them. “Any being done now weren’t known about,” Tenold explained.

Liability Liability is a major concern, especially when properties change hands and companies are bought and sold. “When they do their due diligence for property assessment, a lot of this old stuff is discovered. Either it’s cleaned up, or there’s a discount in the price. No one wants to pick up a huge liability,” said Tenold.

That, in turn brings in the cleanup. As an example he pointed to flare pits that have been long forgotten, and a company can buy a facility and not even know it was there. “That can be the biggest cost to them. They can spread so far. You can have a quarter million dollar cleanup like that,” he said, snapping his fingers. They’re not the most common, but can be very costly.

At a flare pit or a spill site, Tenold notes hydrocarbons always look worse than brine, because you can see the spill. However, salt water can be insidious. Electrical conductivity testing, using a probe stuck into either soil or water, is one of the ways you look for saltwater contamination.

When digging up a site, the environmental consultant is always present, checking. “You don’t want to miss anything, but you don’t want to take anything that is not impacted,” he said.

Sample flare pit Tenold took Pipeline News to a site not far from Estevan that was having a flare pit remediated. The typical process starts with an oil company calling, saying they have to deal with a flare pit. Astrum will go out and do a site assessment.

Line locates are necessary before the environmental consultants can start probing with their ‘Dutch augers,” a standard tool that looks like a narrow post hole auger.

In this case, the flare pit was quite obvious. A little depression followed the flare line, and the pit was the standard 30 m from the treater. Good vegetation at a site indicates production brine was not likely an issue. A smell indicates BTEX – benzene, toluene, ethyl benzene and xylene, which are quite prevalent in flare pits. It will often stain the soil a distinctive greenish-blue. “You want to get under that green-blue, to the stuff that smells and tests okay,” Tenold said.

The sample pit has been excavated, and the spill is on a poly sheet, so that it doesn’t leach into more ground. The excavated soil needs to be sampled by a third party accredited laboratory before the industrial landfill will accept it.

There’s now water in the pit. It will have to be vacuumed out. You don’t want to add fresh fill clay to it, because it will form a “gelatinous goo,” according to Tenold. ɸ Page A10

Certain species, like these black-eyed susans along a ditch, increase tremendously in disturbed soil. It’s one indicator environmental consultants keep an eye out for when analyzing a site, according to Dean Tenold of Astrum Consulting, Estevan.

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PIPELINE NEWS September 2010

Liability issues drive remediation ɺ Page A9 The hole in this case was approximately 10 m by 8 m and 3 m deep, about six truckloads worth.

“This flare pit was tiny, one of the smallest I’ve ever done,” he said. It might cost around $30,000, all in, to do right. It’s possible to spend an awful lot more. In 2005, $100,000 was a mean, if not average, flare pit remediation. When someone asks how much a flare pit project might cost, Tenold’s response is, “I say I can’t tell you.”

There are some cases where you dig up half the lease. “They’re a catastrophe. That’s what you call them. They’re pretty much all gone now,” he said.

“I never know until I start digging. I’ve been waiting to find Jimmy Hoffa in one of these someday.”

The wellsite, with two wells and a small battery is right in the middle of a wetland, something that wouldn’t happen today. Fortunately, nothing reached the wetland. He recounted one spill that had his crew going out in chest waders and snipping thousands of cattails, by hand, with garden shears. It was horribly labour-intensive over three weeks.

Catch issues early A lot more emphasis is being placed on pre-construction site assessment for new leases, including preserving heritage items and native prairie. “Western Canada is one of the most altered landscapes in the world,” he said, explaining the need to preserve what little native prairie remains. Heritage items or species at risk can cause several months of delays.

“They really have to plan ahead, and be careful how they spot wells,” he said.

Spills For a spill, Tenold said, “The first thing is contain it. Wherever it is, stop it right now.”

“The most important thing is to get the free

“I never know until I start digging. I’ve been waiting to find Jimmy Hoffa in one of these someday.”

- Dean Tenold

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product off the ground as quickly as you can, like yesterday! Now! By recovering it, you stop the spread of it.”

Vac trucks and tank trucks are important. Tenold’s sons do a lot of the “muscle work,” squeegeeing the spill to the vac trucks. You’ll often see Tenold putting his back into it, too. He’s not the type to sit in the truck and watch.

Calcium amendments, or treatments, can be used to deal with sodium chloride. Alfalfa pellets from a pellet plant near Norquay as well as straw might be mixed with the soil. However, Tenold said the trend is to simply excavate the affected material, instead of trying to treat it in-situ.

Some oil companies have a preference for certain contractors like vac trucks and excavating. Others leave it up to the environmental consultant.

Tenold, 52, was born and raised on a farm near Shand, before there was a power station there. Ironically, that land is now a spill pile, and will eventually be reclaimed. He studied history strategic studies in university, and minored in biology and geology.

Those minors helped out a great deal when he decided to call it quits in agriculture and work as an environmental consultant.

Good feeling Driving past a site that had to be cleaned up due to a recent fire, Tenold talks of the satisfaction that comes with getting a job done. “You know, that place looked pretty bad,” he said, noting that was no longer the case after 500 tonnes of material had been removed. “This is what makes a guy feel good about his job.”

A ‘Dutch auger’ is a standard soil sampling tool for environmental consultants like Dean Tenold of Astrum Consulting.

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PIPELINE NEWS September 2010

Lakeland trades school applauds new heavy oil tank maker

By Geoff Lee Vermilion, Alta. – Bert Samuelson, dean of the School of Trades and Technology at Lakeland College in Vermilion, was no doubt smiling when he learned a new company called Leading Manufacturing Group Inc. will set up shop in town and hire new welders.

That’s the business plan of Leading Manufacturing president and CEO Lee Gottschlich, who will start construction of an $8 million tank fabrication plant this year, and hopes to eventually em-

ploy as many as 65 workers.

“We are going to specialize in the manufacturing of heavy oil tanks from 400 and 750 to 1,000 barrels with the emphasis on 750 and 1,000 barrels,” said Gottschlich.

“I am sure there’s a number of trades people who live in Vermilion and work in Lloydminster, Kitscoty and Wainwright, so I will be looking at hire as many local trades people as I can.”

Some of those hires could be new welding apprenticeship students enrolled in a 16 week preemployment program that includes 12 weeks of

A new heavy oil tank fabricator called Leading Manufacturing Group Inc. will build an $8 million plant in Vermilion this year. The company chose Vermilion for its transportation links to Highway 16 and Highway 41 and to access skilled pre-employment apprentices at Lakeland College.

class and lab instruction and a four week work practicum.

“It will be perfect for our pre-employment program,” said Samuelson. “People can come in and take the pre-employment class, and then they will have some place to go to work.”

Town council convened July 20 to approve the sale of a 7.1 acre parcel of land for the new plant to be located east and north of Fountain Tire in the industrial sector.

“The town was very cooperative,” said Gottschlich on July 22. “Nobody countered the price I offered.

“Maybe I paid too much, I don’t know. There was no counter back. The land is serviced, but it’s just raw land, really. It was a subdivision on paper but it was never completed.

“I am trying to fast track the plans. I have the plant design complete. I would start up hopefully close to the end of the year.

“I am still working on who will build it. I’ve got the site plan, but the engineering on the building has to be done,” he said.

Gottschlich knows a lot about heavy oil tank manufacturing as one of the principle founders of G.L.M. Industries LP with headquarters in Nisku.

He is no longer with G.L.M, but he owns and operates other oil and gas related businesses in the Nisku area.

“I started G.L.M. 34 years ago, and I left the company two years ago, and now I need something to do, so I am going to back in the same business,” he said, noting he is bullish on the long-term outlook for the tank market.

“Oil goes in cycles. I have been in the business for many years,” he said. It hit $10 a barrel in June of ’98 then it came down from a high of $148 in 2008 to $40 dollars in 2009. ɸPage A13

PIPELINE NEWS September 2010

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Transportation hub draws new manufacturing company ɺ Page A12 “Oil is very much supply and demand, and I think our demand is going to increase. I read in the paper this morning that China is a bigger energy user than the [United States]. Oil and gas is going to be with us for several more generations.”

Gottschlich says what drew to him initially to establish his new manufacturing company in Vermilion was the town’s transportation hub to heavy oil operations in all directions.

“It’s the crossroad of Highway 16 and 41 with good access to the heavy oil leases,” he said.

“It will cut quite a bit off on the cost of finished trucking, mainly because we have companies like B & R Eckels right in town who can put a tank trailer in.

“The product that we build is usually sold FOB (free on board) to the customer. The customer arranges their own trucking. It will be a benefit to the end user oil company.”

Gottschlich says another main factor that led to him to base Leading Manufacturing in Vermilion is the available welding apprenticeship programs at Lakeland College “They put about 150 welding apprentices through there a year I think,” he said. “I plan to meet with the head of the apprenticeship program.”

Lakeland’s website notes a welding apprenticeship period is three years including a minimum of 1,500 hours of on-the-job training and eight weeks of technical training each year.

“We would put through 150 to 200 apprentices a year, but they already have jobs, so I won’t allow anybody to come in and solicit them,” said Samuelson.

“That’s not to say you can’t put a poster up.

“We’ve had ‘Fort Mac’ and Suncor and some of those guys come down and want to solicit and speak to all of our apprentices. I can’t do that because it’s not

fair to the local area.”

Samuelson notes, however, the new pre-employment apprentices looking for on the job training however, are fair game to speak with recruiters.

“Sometime we will run 16 pre-employment welding apprentices to a program, and if we are lucky, we will get a couple of them a year,” said Samuelson. “We put the program on depending on what the interest is.”

Samuelson says the new tank plant “is a great thing” and he expects enrolment in pre-employment welding will pick up when the plant is operational.

“There must be a reason he is building that, so the rest of the economy should be picking up too,” he said.

“Universal and Corlac will be looking for more help too. What’s it going to do for housing? It’s going to help everything here.”

Gottschlich says Leading Manufacturing will

create spinoffs for supply stores like Napa whom he spoke with.

“We are always looking for fittings that maybe machinery dealers might have. We are always going to need shop supplies. If we can support businesses locally we will do our best,” he said.

It’s early days, but Gottschlich expects at least three or four families from his Nisku operations will relocate to Vermilion.

“It’s a beautiful little town,” he said. “I come from a small town – Lacombe where I was born. I talked with some of the people and councilors here and they are just genuine people.”

Gottschlich will commute from his home in Edmonton for the time being, and enjoy the hour and a half drive to Vermilion.

“It’s a nice drive. I’m just at the stage where I am putting people together who want to work for me and I will play that by ear,” he said.

Leading Manufacturing Group Inc. will build a new oil tank manufacturing facility east and north Fountain Tire in Vermilion this year.

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PIPELINE NEWS September 2010

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Bakken play leads Saskatchewan Regina – The Bakken play continues to be the top revenue generator for sales of Crown petroleum and natural gas right in Saskatchewan.

The August sale brought in $95.8 million in revenue for the province, the second-highest total for an August sale with sales from Bakken-prone lands in southeast Saskatchewan accounting for more than three-quarters of total revenue.

The total land sale revenue for the 2010 calendar year now stands at $371.6 million, a significant improvement from the $50.8 million at the same time last year.

“After a slower 2009, our industry has picked up the pace this year with increased drilling, spinoff economic activity and, of course, the new investment that’s represented in the acquisition of these oil and gas rights,” said Energy and Resources Minister Bill Boyd in a news release.

“It all speaks to the continuing attraction by the industry to both our resource base and the supportive business climate we have here in Saskatch-

August saw yet another strong land sale this year. The southeast again led the way, which is where this rig could be found on July 7, north of Bienfait.

Photo by Brian Zinchuk

ewan.”

August’s sale included nine petroleum and natural gas exploration licences that sold for $44.9 million and 274 lease parcels that attracted $50.9 million in bonus bids.

On the strength of the Bakken play, the Weyburn-Estevan area received the most bids with sales of $79.3 million.

The Lloydminster area was next at $10.4 million, followed by the Kindersley-Kerrobert area at $3.6 million, and the Swift Current area at $2.5 million.

The highest price on a per-hectare basis was $46,512. Petrobakken Energy Ltd. bid $9.1 million for a 195-hectare lease parcel, also near Arcola.

The $1,433 per hectare average from the August sale again compared favourably to the average per hectare prices recorded in the most recent land sales in Alberta ($375) and British Columbia ($1,462).

The next sale of Crown petroleum and natural gas dispositions will be held on Oct. 4.

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PIPELINE NEWS September 2010

PIPELINE NEWS September 2010

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A18

PIPELINE NEWS September 2010

Quality trumps growth

By Geoff Lee

X-Terra specialists conducted a botanical assessment at an oil and gas site in a sensitive area of the Manitou Sand Hills south of Neilburg.

Photo submitted

Lloydminster – Curtis Riou was born and raised in Saskatoon and is doing his part to help keep the west Riders’ green.

Riou is the president and CEO of X-Terra Environmental Consulting Ltd., based in Lloydminster, with field offices in Meadow Lake and Anzac, Alta.

In the Lloydminster area, the focus of operations is the Frog Lake and Onion Lake First Nations where X-Terra takes its big picture approach to the planning and approval of drilling, construction, production and reclamation.

“Our objective is to not just make a reclamation plan, but to make an environmental protection plan or an environmental management system,” said Riou.

“What that is, is helping an oil and gas company or a seismic company plan construct, operate and eventually monitor or audit their wellsites.

“The goal is to ensure the wellsite is constructed in a manner that will aid reclamation in the future and abate any spills or problems that would result in a larger remediation project.”

One of the key points to X-Terra’s environmental management system is wellsite selection that can make or break a project at the government approval level and save companies clean-up costs.

“Well location is important to make sure we are not affecting any species at risk or having any hydrology issues with wetlands and rivers and what not,” said Riou.

“By showing the government that your wellsite selection is ironclad or that we are mitigating any problems that may arise for a specific well, it saves you money in the long run.”’

“All of a sudden you are building a trust with the government with wellsite selection, and it results in facilitating large projects with no issues or hold ups.”

X-Terra is able to walk both sides of the fence and get the job done for the oil or gas company that needs to drill while meeting all of the regulatory approval protocols on private land, Crown land or federal lands that First Nations occupy.

“Companies may have large grandiose ideas for oilsands projects or horizontal wells on multi pads developed at Onion Lake and Frog Lake,” said Riou. ɸ Page A19

Curtis Riou president of X-Terra likes to get out in the Àeld as much as possible. Riou hails from Saskatoon and graduated from the University of Saskatchewan.

PIPELINE NEWS September 2010

A19

X-Terra’s reclamation services ɺ Page A18 “Our view of responsible planning aids those companies and those large grandiose ideas.

“When you are doing that much work you are going to have people asking about the environment.

They may ask, ‘Are you sure that what you are doing is reversible and not damaging to the environment?’

“First Nations do have strict guidelines, and they do have an all-encompassing view on environmental protection.”

Oil and gas activities on First Nation land are subject to the regulatory authority of Indian Oil and Gas Canada (IOGC) and the Canadian Environmental Assessment Act (CEAA).

Companies are required to conduct an environmental assessment on First Nation land and any projects that trigger the CEAA. Those authorities require an environmental audit too on oil and gas wells on First Nation land in their first year of operation and every five years in existence.

“We work closely with First Nations,” said Riou.

“Onion Lake is a great example. They have their own land administration that works with our consultants on a daily basis to implement the large projects there, and ensure that we can safely drill those wells.

“There are also aspects regarding cultural reviews between us and the Onion Lake land administration. There are a few more aspects as well like cultural concerns and residents’ concerns and public consultations.”

The environment assessment that X-Terra creates reflects the Species at Risk Act (SERA), the Environmental Protection Act and all regulatory acts and documents for the planning, construction, monitoring and auditing of oil and gas and pipeline facilities.”

Riou says X-Terra will have a booth at the Lloydminster Heavy Oil Show to promote its management system approach and expertise.

“We will have a presence. I want to put my face out there,” said Riou. “The show is just an introduction to the environmental aspect of things when it comes to oil and gas. We sell people.”

X-Terra has a staff of up to eight specialists in Lloydminster and up to 20 in peak season working on waste management oilsands projects in Anzac, Alberta, and northern Saskatchewan.

Further expansion is possible for X-Terra, but Riou fears that could mean sacrificing the quality of work the company is known for. ɸ Page A20

In environmentally sensitive areas such as the Manitou Sands Hills in Saskatchewan, X-Terra’s prescription called for a layer of woodchips to stabilize a sand dune access trail.

Photo submitted

EfÀcient planning by X-Terra’s consultants means ensuring clients separate and stockpile top soil and subsoil when the site is ready to be reclaimed. This site prep work took place near Celtic, Sask.

Photo submitted

A20

PIPELINE NEWS September 2010

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Éş Page A19 “Do you grow and lose the quality or keep the high quality and the perseverance through slow times?â€? he asks. “This last year and a half of slow times proved to me that I would rather keep a high quality focus on the client than growing. “There are large opportunities for me in Swift Current and Estevan to get those pockets of Saskatchewan going, but there’s a hesitation I have. “I don’t want to reduce my quality. Other wise men that had companies before me told me to keep it simple and keep it strong.â€?

Riou also wants to ensure his company does its part to keep his home province green and avoid major environmental disasters such as the U.S. Gulf Coast oil spill as more companies eye exploration and development in Saskatchewan. “Everybody is calling oďŹƒces in Lloyd to see how they can get into Saskatchewan,â€? said Riou. “That spill has upped the proďŹ le of Saskatchewan. “The province is aware of this, and they have strict environmental guidelines. I am proud to say I am part of that environmental philosophy that Saskatchewan has. “Saskatchewan is hard and fast with their environmental guidelines.â€?

In fact, the guidelines of the Saskatchewan Petroleum Industry/Government Environment Committee or SPIGEC are designed to ensure the continued growth of the oil and natural gas industry in a manner that minimizes adverse environmental effects.

X-Terra has extensive experience working with oil and gas companies in environmentally sensitive areas such as the Manitou Sand Hills, near Neilburg which comprises 105,000 acres of Crown grazing land, sand dunes and some rare and endangered species. “It’s a highly sensitive area when it comes to rare and endangered species with mineral resources that are sought in the area,� said Riou. “These area gives me the most power so to speak to be sure the oil companies follow every environmental guideline. I have worked in that area for eight years. “I have worked on seismic activity through there, and lots of natural gas development pipelines, and now lots of oil development. “You strive for minimal impact but it’s never zero. We have to push trees, we have to move soils.

We have to aect the environment. How much depends on what’s coming.�

Riou says an example of that would be building and sizing a road with the minimal disturbance based on the size of the truck accessing the area. “With my company we know what’s coming.

We have experienced construction personnel.�

PIPELINE NEWS September 2010

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Heavy oil power load drives $370 million transmission plan Calgary – Rapid growth and escalating electrical power demands from heavy oil operations in the central-east region of Alberta are behind a proposed $370 million upgrade of the region’s transmission system.

“We have no significant upgrades in Alberta for 20 years for a portion of the transmission infrastructure,” said Alberta Electric System Operator (AESO) spokesperson Dawn Delaney.

“Currently, the system is 100 per cent constrained.AESO forecasts by 2012, the upgrades will be required. These things don’t get built overnight. It’s urgently needed.”

AESO is responsible for transmission system planning and is waiting for the Alberta Utilities Commission (AUC) to approve its power needs identification document (NID).

The NID was submitted to the AUC on May 20 favouring the $370 million option to rebuild the aging 138/144 kilovolt line from Battle River near Provost to Buffalo Creek northeast of Wainwright as the best option of three alternatives.

Two other alternatives rejected would have cost from $417 million to $521 million to construct with higher land impacts.

In its application, the AESO reports a transmission boost in the Central East region is driven by an estimated annual winter peak growth rate of 6.4 per cent in a projection period from 2009 to 2018.

That rate is twice the average growth rate in Alberta with demand “largely fueled by oilsands, pipeline development and associated infrastructure,” according to the application.

The NID notes the need for transmission upgrades is also being driven by planned 255 MW cogeneration fa-

cilities in the Cold Lake area (Imperial Oil) and 280 MW wind projects in the Provost area that need to be connected to the grid.

An excerpt from the application states, “system studies indicate that the Central East region transmission is near its capacity and without any system upgrades, the present system will not be able to reliably supply projected load and connect proposed generation projects.”

“There is growth and demand in that part of Alberta,” commented Alberta Energy spokesperson Bob McManus.

“It is driven in large part by industrial growth.

“Transmission facilities are paid for according to use. If industry is using the transmission system then industry will pay a share according to the amount it uses.

“We support having a transmission infrastructure in place that supports growth in Alberta and the economic well-being of Albertans.”

Demand for power in Alberta has increased 14.4 per cent from 2002 to 2008 with peak demand forecasted to average 3.4 per cent over the next 20 years as the province grows.

The AUC held open houses in Wainwright and Bonnyville Aug. 4-5 to outline the application process and receive public objections that could trigger a public hearing prior to approval.

The AUC set a deadline of Aug. 17 to receive submissions for a possible hearing.

Most residents in the region received a brochure from AUC about the NID application process with a map of planned transmission upgrades.

The $370 million proposed project includes a lengthy list of local power improvements serving heavy oil centres near Provost, Wainwright, Cold Lake, Bonnyville and St. Paul, and the Lloydminster

and Battle River planning areas.

The full list of local transmission improvements noted in the brochure is common to all three alternatives studied. ɸ Page A23

Numerous electricity transmission lines serving the heavy oil industry in Provost, Wainwright, Bonnyville and St. Paul and Cold Lake and Lloydminster will be upgraded as a part of a $370 million project.

File photo

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PIPELINE NEWS September 2010

PIPELINE NEWS September 2010

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Electrical supply not optional ɺ Page A21 The target date for completing most of the upgrades during the first stage of construction is before the fourth quarter of 2012 with further projects coming online

by the fourth quarter of 2017.

The construction of the recommended transmission lines would require a separate facilities application from a transmission facility operator

selected by AESO. The NID application deals only with the need for the transmission upgrades or reinforcements as the AUC calls them.

“Electricity isn’t one of those things that you

can have some of the time. Electricity is something that you need all of the time,” said McManus, who notes the planned cogeneration and wind power projects in the application will help to ease the power load.

“To allow cogeneration onto the grid is a good thing because it’s an efficient use of resources and of course, wind power is a good thing to have

on the grid as well,” he said.

“It provides a clean source of energy when the wind is blowing. It needs access to the grid in order to be available to Albertans.

“Of course, it has to be backed up by other forms of generation.

It also helps to reduce greenhouse gas emissions.”

AESO conducted

a technical, social and economic analysis of the three alternatives following a public consultation process.

They determined the Battle River to Buffalo Creek option has the lowest relative net cost with favourable technical performance and land impact assessments. The choice was also influenced by feedback from public consultations.

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The Alberta Electric System Operators is waiting for approval from the Alberta Utilities Commission of its preferred $370 million transmission power upgrade option in the heavy oil area of the Central East region of Alberta. The AUC held public information sessions on the needs identiÀcation document application process in Wainwright and Bonnyville Aug. 4-5. A decision is expected soon. An additional application is needed to begin construction.

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PIPELINE NEWS September 2010

TransCanada to use Keystone

By Geoff Lee Calgary – TransCanada Corporation views the U.S. State Department’s decision in July to extend the review of the proposed Gulf Coast expansion of the Keystone XL pipeline by 90 days as a further opportunity to explain the benefits of the project to U.S. energy security.

“The fact is the U.S. economy relies on oil imports and Canada provides a friendly reliable and secure supply for our neighbours to the south,” said Russ Girling, president and CEO of

TransCanada during a conference call on second quarter results July 29.

“The U.S. will continue to rely on imported oil for many years to come.”

The Gulf Coast expansion will boost the capacity of the Keystone system from 590,000 bbls per day to approximately 1.1 million bbls a day of crude from Alberta’s oilsands via Hardisty to the Texas Gulf Coast.

The project will involve the construction of approximately 529 kilometres of new pipeline and related facilities in Alberta and Saskatchewan.

The National Energy Board of

Canada approved the construction of the Canadian portion of the Gulf Coast expansion in March but no work in taking place pending U.S. approval.

Girling is confident the Keystone XL project will receive U.S. regulatory approval despite the latest critical submission from the Environmental Protection Agency calling for more study of the greenhouse gas emissions created

by Canada’s oilsands industry.

“Canadian heavy oil greenhouse gas emissions are the same as other sources of heavy crude oil that are currently re-

fined in the Gulf coast,” said Girling.

Despite the spill of over three million litres of crude oil into the Kalamazoo River in Michigan by a ruptured Enbridge pipeline, Girling says pipelines “by order of magnitude” are the safest mode to transport oil.

“The U.S. State Department concluded this spring in its draft environment impact statement, and after two years of public consultation, that the Keystone expansion would have limited impact on the environment,” he added. ɸ Page A25

TransCanada expects its Àrst shale gas pipeline in B.C., called the Groundbirch pipeline, will come online between 2011 and 2014. The second one at Horn River is progressing through the regulatory process. The new lines will make up for production declines in other parts of the Western Canadian Sedimentary Basin (WCSB).

Image submitted

PIPELINE NEWS September 2010

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XL delay to sell energy security ɺ Page A24 “TransCanada will continue to work with the department of state (State Department) through the 90 day extended comment period following the release of the final environment impact statement.”

Girling says the delay in regulatory approval until the first quarter of 2011 would have limited impact on construction of the Keystone XL pipeline as TransCanada has built-in contingencies to meet its schedules.

Meanwhile shippers have signed contracts for 75 per cent of the line’s initial capacity. When combined with main Keystone pipeline, TransCanada has signed contracts with producers and refiners to transport crude oil for an average of 18 years at a volume of 910,000 bbls a day.

That’s 83 per cent of the 1.1 million bbls per day capacity of the entire system.

“These contracts demonstrate that Keystone is very much needed by the marketplace,” said Girling.

“The U.S. refines about 14 million barrels of oil a day and consumes about 18 to 20 million barrels per day.

Over nine million barrels a day are imported.”

Construction of the Keystone XL is also projected to provide a $20 billion boost to the U.S. economy, and generate more than $500 million in state and local taxes during the con-

TransCanada now expects U.S. approval of the Gulf Coast expansion of the Keystone XL pipeline in the Àrst quarter of 2011. The Canadian portion will run from Hardisty Alberta to Monchy Saskatchewan and cross the U.S. border into Montana.

Photo submitted

struction period.

“We will develop the project in a responsible manner as we have with all of our projects in the past six years with the focus on safety and respect for the environment and the communities where we work,” said Girling.

The Keystone XL project is part of TransCanada’s $22 billion capital investment program in gas pipelines, oil pipelines and power generation aimed at driving earnings growth for the company through 2014.

“This program is the engine that will drive much of our earnings growth through 2014,” said Girling, who noted $12 billion has been invested to date

in projects throughout North America and Mexico.

“Progress toward completing the projects on time and on budget continues,” said Girling.

TransCanada celebrated the start of the commercial operation of its Keystone pipeline near Hartford, Illinois, on June 30 with the first shipment of oil flowing to refineries in Wood River and Patoka, Illinois.

Construction on a previously approved section of the Keystone pipeline down to Cushing, Oklahoma, continues and is now about one third complete.

Girling reports this portion should

• • • • • • •

be operational in the first quarter of 2011 and will increase the capacity from about 435,000 bbls a day to 591,000 bbls a day.

“Firm binding contracts are in place for 530,000 bbls of crude to the U.S. Midwest including Cushing, Oklahoma,” said Girling. “ That’s approximately 90 per cent of the initial Keystone line’s capacity.”

In British Columbia, TransCanada has firm contracts in place for 1.1 Bcf/d of natural gas (shale gas) on its new Groundbirch pipeline which will come online between 2011 and 2014.

Meanwhile, the nearby Horn River natural gas (shale gas) pipeline continues through the regulatory process with 540 MMcf/d of contracts in place.

“This will offset the Western Canadian Sedimentary Basin decline that we have seen recently on all of our pipeline systems,” said Girling.

“We also have interest in about 1 Bcf/d, and we expect that interest to turn into contracts in the coming months. Between now and 2014, we can expect to ship about 2.6 Bcf/d a day through BC.” Girling also reported that an anticipated move away from coal to less carbon intensive sources of energy in North America would present TransCanada with further opportunities for natural gas fired power plants, renewable and nuclear.

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PIPELINE NEWS September 2010

PIPELINE NEWS September 2010

A27

Convoy for a Cure raises more than $16,000 for cancer

By Geoff Lee

a different name.

The Convoy for a Cure name is registered to an all female-driven truck conVermilion, Alta. – Maybe all it takes to find a cure for breast cancer is to honk voy based in Ontario that raises funds for the Canadian Breast Cancer Foundation. a horn.

No matter what the convoy is called, local interest will be strong as just about Approximately 35 truck drivers leaned on the horn with hope for a cure while taking part in the Convoy for a Cure from the Vermilion Vehicle Inspec- everyone interviewed at the staging point for the inaugural event had a friend or relative affected by cancer. tion Station to the Lloydminster Exhibition Grounds.

In fact, Jack sold his wife on the convoy idea as an empowerment exercise An additional 20 trucks were registered for the convoy but were not able to to help them and others fight back after standing by and witnessing their loved join the parade of vehicles on July 24. ones die from the disease.

The convoy was led by “We’ve decided to stand organizers Tom Jack and together and fight these insurhis wife Janice King. They mountable odds. There must be own and operate Tom Jack a cure, and with your help, we Trucking in Vegreville, can beat cancer one mile at a where they haul heavy crude time,” wrote Jack on the conoil and produced water. voy website to reach out to felJack told the Pipeline low truckers.

News those drivers who were “It really means a lot to me unable to attend deserve being a cancer survivor,” said to toot their own horns for Jody Mayer who got behind contributing money to the the wheel of a special pink and ride for a cure. white ‘breast cancer cure’ fuel The campaign raised truck supplied by his employer more than $16,000 for the Superior Propane.

Alberta Cancer Founda“As soon as I heard about tion in support of the Cross this, I said ‘I have to be part Cancer Institute, surpassing of this.’ It means so much to the target of $10,000 that me, and I just want to show organizer Jack and King had my support and let everyone in mind. know – you know – that it can “It’s really amazing,” said Jack, who plans to make Tom Jack, also known as Trucker Tom, was excited by the turnout of trucks at the Vermil- be beaten.” ɸ Page A28 it an annual event, but with ion Vehicle Inspection Station for the start of a Convoy for a Cure ride to Lloydminster.

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PIPELINE NEWS September 2010

"I've fought a 40 year battle with it, and I've won so far." ɺ Page A27 Mayer had a malignant tumor removed from his brain in 1970 and said, “I fought a 40 year battle with it, and I’ve won so far.”

“I want to keep moving ahead, and I want to prove to people that cancer can be beaten.”

Mayer is a bulk fuel driver for Superior Propane who hauls propane from Lloydminster mostly to heavy oil leases around Frog Lake and Vermilion.

He was joined in the convoy by co-workers Steve Foster, who drove a semi and trailer, Dwayne Vig, who got behind the wheel of a company triaxle and Brad Douglas, who rode along in a picker truck.

“Everybody at our shop was pumped and wanted to get involved in this,” said Mayer. “I am really glad to see the show of support we have from the truck drivers.”

It was thumbs up for a cure from Fred Pendelton who drove Gibson Energy’s driving simulator from Lloydminster to the staging centre and couldn’t wait to honk his horn.

“I am overwhelmed how many truck drivers came out for this,” he said.” "It’s a great event. It’s a good cause and it’s great to see the support of the trucking industry.

“It’s for a cure for cancer. My mom was touched by cancer along with some other family members.

It’s important to me.”

Pendelton is a health, safety and environmental specialist for Gibson in Lloydminster where the simulator was booked for three weeks for driver safety training exercises.

“With the simulator, we put our drivers through different scenarios that hopefully they never face in the real world,” said Pendelton.

“But if they do face it, they’ve learned it in the simulator, and they know what to do when they come across that event.”

Gibson deploys about 150 trucks or power units at work hauling heavy oil from well sites to batteries in the Lloydminster area.

“Company-wide we probably have more than 1,000 power units,” said Pendelton.

Grant Redl who drove a Husky Logistics truck to the Vermilion inspection station has his own cancer story that led him to take part in the convoy.

“I lost my mom to cancer a few years ago, so this is a good support for me to kind of give back,” he said. “It’s something that everyone deals with every day. Hopefully, we can find a cure.”

Redl’s father in-law Larry Short borrowed a Mac truck from Redhead Equipment Ltd. with the okay from truck sales manager Glyn Dobson who says Short is one of his customers.

“It’s actually him who came to see me about putting a truck in. His truck is out working today,” explained Dobson.

“It’s going to be a really good day. It’s an excellent cause. As you can see, we got a really good turnout of trucks. Redhead came forward and helped us out with this.”

As more and more trucks pulled into the vehicle inspection station, so did the confidence of Jack and his wife that they would meet or surpass their fundraising expectations.

“We are going to surpass our goal,” said King, who posed for a photo wearing the Convoy for a Cure T-shirt with Jack’s alias “Trucker Tom” printed on the backside.

“It’s amazing,” she said with 10 minutes to go to start time. “We plan to honk all the way in so people know we are coming.”

She revealed that when Jack first told her about the idea she thought maybe Jack and 10 of his trucker buddies would show up. ɸ Page A29

Redhead Equipment Ltd. truck sales manager Glyn Dobson brought his Àve year-old son Michael along for the ride for cancer in a new Mac truck.

PIPELINE NEWS September 2010

Mercy sakes alive, looks like we got us a convoy ɺ Page A28 “This is way more,” she said while rubbernecking the incoming trucks.

Ditto the surprise from Jack himself, who greeted the driver of each truck that pulled in to join the convoy.

“I am major excited. This has come out better than I ever thought it would,” he said. “It’s one of the most gorgeous days we have had all this week.”

Jack explained the game plan was to head west on Highway 16, loop over the overpass on Highway 41 with a police escort and drive east toward Lloydminster.

“We will have a police escort when cross highway 41. They will block the highway,” he said.

“The police escort will pick us near the John Deere dealership in Lloyd and escort us right to the exhibition grounds.”

Asked if he thought he would reach his $10,000 goal he said, “From what I see here this morning I believe we will.”

Additional funds were raised by an on-air radio auction hosted by the Goat 106.1 FM in Lloydminster, an online auction on Facebook and a wrap-up barbecue sponsored by Superior Propane at the exhibition grounds.

A29

Grant Redl drove a Husky Logistics truck during the Convoy for a Cure July 24.

The Convoy for a Cure had a police escort as it looped over the Highway 41 overpass on route to Lloydminster via Highway 16.

A30

PIPELINE NEWS September 2010

PIPELINE NEWS September 2010

A31

Keystone XL to withstand higher pressure Calgary – TransCanada has bowed to public and political pressure in the United States to lower the operating pressure of its proposed Gulf Coast expansion Keystone XL pipeline.

The company reports it withdrew its request to the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) for a special permit to allow the Keystone XL to ship oil at a slightly higher pressure than federal regulations allow for.

The permit was subject to TransCanada building the pipeline using stronger steel and operating under additional safety conditions.

The company announced on Aug. 5 that it made the decision to withdraw the permit application after listening to safety concerns from the American public and various political leaders.

Despite announcing the permit withdrawal on Aug. 5, TransCanada intends to build the Keystone XL using the proposed stronger steel, but will operate it at a lower level of pressure, consistent with current U.S. regulations.

The permit withdrawal recognizes the need for TransCanada to step up efforts to assure the public and stakeholders that the parameters of the special permit would result in a safer pipeline.

TransCanada’s major selling point is the new Keystone Pipeline that went into operation June 30 – with a special permit.

In a news release, TransCanada notes that in issuing the special permit for Keystone, PHMSA concluded the permit would provide a level of safety equal to or greater than that provided if the pipeline were operated under the current standard.

The Calgary-based company says the Keystone XL will be able to meet all of its initial commercial commitments to serve Gulf Coast refineries without the permit.

The Keystone XL project will increase the commercial capacity of the overall Keystone pipeline system from 590,000 barrels per day to approximately 1.1 million barrels per day.

The $12 billion system is 83 per cent subscribed with long-term, binding contracts that include commitments of 910,000 barrels per day for an average term of approximately 18 years.

The Keystone XL project received approval in March 2010 from both the South Dakota Public Utility Commission and the National Energy Board in Canada.

Pending receipt of additional U.S. permits, construction is planned to begin stateside in 2011 followed

by construction in Alberta and Saskatchewan.

Meanwhile, Keystone officials continue to work with U.S. producers in the Bakken and broader Williston Basin area to provide needed oil transport for growing production in Montana and the Dakotas.

Keystone XL is a planned 3,134-kilometre, 36-inch crude oil pipeline stretching from Hardisty, Alberta and moving southeast through Saskatchewan, Montana,

South Dakota and Nebraska where it will connect with the Keystone main line.

The next section of the Keystone is currently under construction from Nebraska and Kansas to Cushing Oklahoma is expected be operational in 2011.

The pipeline will then continue on through Oklahoma to a delivery point near existing terminals in Nederland, Texas to serve the Port Arthur, Texas marketplace.

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A32

PIPELINE NEWS September 2010

PIPELINE NEWS Saskatchewan’s Petroleum Monthly

B-Section September 2010

ESSI's products going to work in Gulf oil spill

By Geoff Lee Pipeline News Irma, Alta. – Who would have thought recycled tires could be used to reclaim land and water contaminated by oil and gas?

Wayne Bennett from Irma, Alta., did after years of research and development with Sentry Molding, renamed Environmental Sentry Services International Inc. or ESSI, in 2006.

Bennett is the founder and chair of ESSI. They manufacture recyclable oilfield clean-up products using reprocessed tire by-products that absorb oil but repel water.

ESSI has helped to keep more than 1.5 million tires from landfills in Alberta.

The essential ingredients processed by ESSI technology are a fine rubber powder called Smart Crumb for land-based spills, and a fibre/rubber mix called Aqua Fiber to filter hydrocarbons from water.

“We get our raw materials from several different companies,” said Bennett. “We use our own technology to separate it into Smart Crumb and Aqua Fiber.”

The materials are used in ESSI-made products such as commercial filtration systems, wellhead and containment bags, and truck spill response kits and bagged absorbent powder.

“We call the technology the New Way – saving tomorrow, today,” said Bennett, who noted he has always been an inventor and an entrepreneur.

“We have proprietary rights to the technology. I have seven patents in Canada.

“We actually have the ability to recover our materials two to three times. When they have completely used up their ability to absorb oil, we wash them for the final time, and we put them into a flexible patented rubber concrete that doesn’t require sand or gravel.”

Product sales have shot to the moon since Bennett set up a new business in Louisiana called LA Recovery Group to manufacture containment booms filled with Aqua Fiber for use in the cleanup effort in the Gulf Coast.

“We are in the process of fulfilling a $600,000 order, and as of this morning, there is another that is the same size,” reported Bennett from his new plant in Port Sulphur, LA, in early August.

“Our first boom should be going out the door in a week, then we will be going into full swing. What we are making is booms that we will be selling to various contractors for the oil spill.”

Bennett plans to produce the same full product line in Louisiana as the Irma plant in the coming months, but the demand for booms in the Gulf Coast opened a new door for him and his investment partner. ɸ Page B2

Randall Bennett handles a containment boom snake Àlled with oil absorbing Aqua Fibre.

Photo by Geoff Lee

B2

PIPELINE NEWS September 2010

ESSI successfully treated the groundwater on the abandoned lease site to allow for a residential development. Approximately 91.5 per cent of the contaminants were removed.

Photo submitted

ESSI used its commercial Àltration system to remediate hydrocarbons from contaminated groundwater from this abandoned lease site for the City of Red Deer.

Photo submitted

Possibly 15 years of work in Louisiana ɺ Page B1 “What we are making is booms that we will be selling to various contractors for the oil spill,” said Bennett.

“BP was bombarded with 100,000 different guys wanting to get their products on the water. You have to fight your way out of that mixture and rise to the surface,” he said.

“We decided we could be more useful by creating products they could use without them being bothered by us guys.

“The big issue is everyone has depleted their supply of booms. We have plans to do our part to resupply the lower part of the U.S. “We took it upon ourselves to come down here at the point of the spill.

“We came down and started feeling our way around. We realized there is a huge market here for future business. We purchased a building, and we have put up a boom manufacturing plant, a boom washing plant and a concrete plant.

“We are looking at 10 to 15 years of work in Louisiana. Anyone who can assist down here has got to feel good about it. It’s a win-win situation for every-

one.”

Bennett has also received a return e-mail invitation to visit a prince in Saudi Arabia who toured the Irma facility in 2009. That prince wants to purchase a complete system to produce rubberized concrete for housing.

The concrete products, which can be used for patio stones or building blocks, have an R12 insulating value and are fireproof, flexible, durable and light weight.

“Until I get the Louisiana plant on the ground, all my concentration is going to be here,” said Bennett, who noted he does plan to be at the Lloydminster Heavy Oil Show Sept. 15-16.

“We are going to bring a full range of emergency products and services,” he said. “I believe the old way of responding to oil spills is now a thing of the past.

“I have designed and developed new ways of attacking an oil spill, whether it is in a spill form or whether it’s in the marshes. I want to expose that so oil companies in Canada can get a look at the way we do things now.” ɸ Page B3

PIPELINE NEWS September 2010

B3

"We take on all challenges" ɺ Page B2 Bennett says some of his spill response employees in Irma were on alert for the Enbridge oil pipeline spill cleanup in the Kalamazoo River in Michigan in July and noted, “We have a positive future with that company.”

Bennett says the overall oilpatch market in Canada for ESSI products is grow-

ing and further expansion in Canada is in the business plan.

“We don’t want to be bombarded with a $10 million order. We want to grow at a controlled pace and it’s working very well,” he said.

“As I have said many times, we take on all challenges and challengers. That’s a pretty bold statement but our product is pretty good.”

During his research, Bennett proved the Smart Crumb and Aqua Fibre materials are effective at cleaning different types of spills such as glycol coolants, gasoline and diesel and acid spills.

“We can also take out iron and heavy metals out of water. The deeper I got into the research the more I found out about the product,” said Bennett.

ESSI has sold more than 500 truck spill kits to Gibson Energy that comes with a bag of Smart Crumb to clean up surface spills of diesel fuel and other truck fluids.

“The thing with our Smart Crumb is no oil will leach out of it so when you are moving it you are not risking another spill because it is contained in our products,” said Randall Bennett, who is holding the sales fort in Irma for his dad.

“There are so many different aspects on what we can do with this product.

Right now, we are getting most of our business from the oil reclamation. The sky is the limit.”

ESSI also sells filtration systems including a 2,200 gallon dual filter tank to remove contaminates from water using the Aqua Filter as the filter agent.

“We suck oil off the water and put a skimmer in, and it goes into our filter container,” explained the younger Randall. “The water goes out into another holding tank and that gets pumped into another tank with our product in it.

“So we are never depleting the level of the water. Basically, we are just circulating it and cleaning up. It avoids digging and dumping.”

The wellhead and containment bags are also filled with Aqua Fiber and come in various shapes and sizes to prevent hydrocarbons from contaminating soil on lease sites or around stuffing boxes, etc.

The company also produces a bilge pump filter for boat owners to prevent hydrocarbon contamination of aquatic ecosystems.

ESSI will remove, resupply and recycle all of its products to remove the liability from the client, and to ensure none of the contained contaminants or packaging ends up in a landfill.

Randall Bennett an ESSI representative holds a clump of Aqua Fiber, a byproduct of recycled tires used to absorb oil spills on water. The recyclable product can be added in a boom or used on its own to absorb oil with wave action.

Photo by Geoff Lee

B4

PIPELINE NEWS September 2010

Husky looks to gas for short term production gains Calgary – Husky Energy is rebalancing its energy activities toward more natural gas production for the rest of the year to boost short-term production growth and profitability.

That’s the word from new CEO Asim Ghosh who says the oil and gas producer is taking a course toward low-cost, high return projects with the focus on growing production with the acquisition of natural gas properties.

Ghosh unveiled the new short-term strategy with second quarter results on July 28 in a bid to shore up Husky’s profits that dipped to $266 million compared to $430 million for the same period a year ago.

The new strategy is also in response to a projected lower 2010 total production estimate to between 285,000 and 295,000 barrels of oil equivalent per day from an earlier estimate of 306,000 to 330,000 boepd.

“Husky’s business strategies have historically delivered strong results for shareholders and the company has a tremendous portfolio of assets to fuel mid to long-term growth and continue delivering shareholder value,” said Ghosh in a his quarterly statement.

“However, a key goal is delivering near-term production growth. We are rebalancing Husky’s portfolio to direct a measure of capital to low cost, high return projects to achieve this near-term goal while maintaining the integrity of our long-term objectives.”

Husky’s lower total 2010 production estimate

Husky CEO Amin Ghosh says his company has signed a letter of intent to acquire new natural gas properties in Alberta to boost short term production.

Photo submitted

is based on delays and a slower-than-forecasted ramp-up of production from the North Amethyst offshore project in Eastern Canada and a higherthan-projected decline at the White Rose offshore field.

Weather related issues in Western Canada were also cited for lower production in the company’s heavy oil operations during the second quarter.

Husky has identified several near-term growth opportunities in its Western Canada and heavy oil portfolio and has initiated a program to accelerate projects to commence production in 2011.

The company has signed a letter of intent to purchase unidentified natural gas properties in Alberta that will boost production by more than 10,000 boepd.

The new properties are expected to contribute 37 million barrels of oil equivalent of proven reserves and 11.7 mmboe probable reserves to Husky’s resource base once the agreement is finalized this fall.

Husky refers to the purchase as an “important synergistic acquisition” that will add natural gas production and reserves in areas with significant gas gathering and processing infrastructure.

In addition, Husky notes the acquisition fits plans to accelerate short-term production in pursuit of core business activities.

The company’s 2010 capital budget is $3.1 billion with spending focused on maintaining production and advancing long-term growth projects as well including those in Western Canada. ɸ Page B5

PIPELINE NEWS September 2010

B5

Husky now has 952,000 acres in nine gas plays

Husky continues to add to its natural gas properties in Western Canada and advance its longer term bitumen projects at Cold Lake and Fort McMurray. Poor weather is cited for production declines in the second quarter at Husky’s Western Canada and heavy oil operations that include the Lloydminster Upgrader.

Photo submitted

ɺ Page B4 During the second quarter, Husky continued to grow its portfolio of natural gas properties in Western Canada that now covers 952,000 acres in nine gas resource plays.

Husky acquired additional land in Bivouac, located in northeast British Columbia as well as land in the Ansell area of the deep basin.

The latter acquisition includes 30,240 acres of land in the Komie area of the Horn River shale gas play located in northeast B.C. Additional production is on track at Husky’s Tucker Oil Sands bitumen projects, 30 kilometres northwest of Cold Lake.

Three new well pairs are being steamed at the site with production expected to commence during the fourth quarter of 2010.

Husky also reports tenders for major engineering and construction contracts for the Sunrise Energy Project 60 km north of Fort McMurray were issued earlier this year.

The company started negotiations in the second quarter regarding the transportation support of diluent to the Sunrise site and the movement of diluted bitumen to the refinery.

The Sunrise Energy Project is planned for sanction by the Alberta government in late 2010 with first oil expected in 2014.

In the second quarter, Husky's total U.S. and Canadian refinery throughput was 253,700 barrels per day compared with 230,400 barrels per day in 2009.

There was no mention in the quarterly report of the possible impact on overall refinery output in the next quarter with the fall turnaround of the Husky Lloydminster Upgrader.

However, Husky cautioned that given the challenging operating environment its entire downstream division, it is continuing to evaluate its output and product mix to ensure financial returns are optimized.

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B6

PIPELINE NEWS September 2010

Heavy Oil Science Centre will be a Lloydminster – If trolling the exhibits at the Lloydminster Heavy Oil Show Sept. 15-16 seems too much like work, take a break and sidestep to the OTS Heavy Oil Science Centre at the nearby Barr Colony Heritage Cultural Centre.

The 2010 heavy oil show is open to the public at no charge and is expected to draw up

to 7,000 visitors to the Exhibition Grounds and increase attendance at the science centre located on Highway 16 east at 45th Street.

“If there is a bunch of parents who want to come out – if you are looking for a guided tour, give us a heads up, and we can have someone ready,” said Rochelle Epp visitor services at-

tendant at the centre.

“If it’s just a group that wants to show up, just drop by we will set you up with the basic information and let you look around at your own leisure.”

This year, admission to the science centre could be half price if the museum is still closed for renovations, but the Imhoff Gallery and the

Rochelle Epp, a visitor services attendant, demonstrates the workings of a lighted map showing everything from ancient seas to modern day pipelines. The OTS Heavy Oil Science Centre is loaded with interactive exhibits like this one.

Photo by Geoff Lee

Fuchs wildlife exhibit will be open for viewing at no extra charge during the heavy oil show.

“There are a lot of neat things to see both days on heavy oil,” said Epp. “We have the history of heavy oil here in Lloydminster – everything from the first gas well when they were looking for oil and how that developed within the city, to the wells that we have today.

“The exhibit shows

everything from how the oil was created underground, and what we do with it once we get it out.”

The OTS science centre provides an interactive adventure into geology, drilling, refining and the various uses for the region’s heavy oil reserves.

The science exhibit also fits the “Challenges, Opportunity, Change” theme of the heavy oil show and the Heavy Oil Technical Symposium, being held at the same time in the Stockade Convention Centre.

“It takes people through how things have changed in the industry,” said Epp who recalls greeting a lot of visitors during the 2008 heavy oil show and symposium.

“A whole bunch of people come out,” she said.

This year’s visitors are in for a treat as the science centre has refreshed display information to bring it up to date.

“When the science centre opened in 1999, we had information that

was current up to then,” said Epp. “We’ve updated that recently just because there have been so many developments that have happened.

“The information got updated, the exhibits got face lifts and there are some new things in there – shiny and clean.”

The exhibit is designed to be self-guided with the assistance of an interactive character called “Squirt” the friendly heavy oil droplet who helps visiting students learn the story of petroleum discovery and innovation.

“Squirt is on all of our signage in the science centre. He just provides a quick overview in simple terms what heavy oil is all about,” said Epp. “As kids go through the centre they are also searching for Squirt to see where’s he’s hidden in everything. There is tons of stuff for the kids to do.

“The Science Centre is all hands-on. There are buttons and levers and all sorts of things to sneak in that learning.” ɸ Page B7

PIPELINE NEWS September 2010

B7

must-see during heavy oil show These life-like drilling rig characters always draw a reaction from visitors to the OTS Heavy Oil Science Centre at the Barr Colony Heritage Cultural Centre in Lloydminster.

The display information has been updated in time for this year’s Lloydminster Heavy Oil Show Sept. 15-16. Admission could be half price if renovations to the museum attraction are still ongoing.

Photo by Geoff Lee

ɺ Page B6 The exhibits are ripe with “wow factor” including a pair of life-like rig hands staged on drilling rig set that Epp says generates a shock and awe response.

“Kids come around the corner and the first thing they do is say ‘Whoa what is that? Are they alive?’ I tell them it’s an extension of our taxidermy display!

“The display gives you a close up of the rig that you see from the highway driving by.”

There is also a neat map that lights up showing everything from the location of ancient seas covering Alberta and Saskatchewan to the whereabouts of pipelines, oilsands, heavy oil resources and major oil centres.

“Lloydminster is right in the middle,” said Epp

as she demonstrated what the light switches reveal.

“That sets up how we get oil out of the ground with different techniques. With these techniques come innovations. That’s my understanding of how the heavy oil show sprang up for that need.

“The exhibit will tell you why you are at the oil show. The exhibits show how the industry has progressed here.”

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PIPELINE NEWS September 2010

Story and photos by Geoff Lee Lloydminster – Guest Controls Ltd. in Lloydminster, noted for solving the control needs of the oil and gas industry, aims to resolve its own growing pains with a new building to house its busy divisions under one roof.

The company has purchased a two-acre site in the Hill Industrial Park for a 15,000 sq. ft. facility with construction due to start any day.

Strong sales and service growth of Guest’s burner control systems and steady demand for its commercial and industrial instrumentation, electrical contracting and pressure safety valve products and services justify the need for a new building.

“In the last four years we have started a process to improve or increase business in the area,” said company president Chad Guest.

“We have expanded from about 17 employees to 60 today.”

Guest has also purchased 12 new trucks since last October bringing the fleet to 31 to keep pace with the steady uptick in installations of conventional burners and a forced air burner of their own invention called the Tank Pro Burner. ɸ Page B9

Supervisor Lorne Twerdun gets a close up look at a Áame from a forced air burner built at Guest Controls’ shop east of Lloydminster while contract electrician Ivan Lusask, left, looks on.

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PIPELINE NEWS September 2010

ɺ Page B8 “Demand has gone through the roof,” said Guest, who attributes that to tighter enforcement of CSA B149.3 combustion standards particularly in Saskatchewan, where sale growth is the highest.

“Every well used to be installed by a crew.

They would install the tank, ‘pipe up’ the wellhead and all that stuff, and install the motor and get all that running.

They also used to install the burners. They used to be shipped with the tank.

“Now it all has to be wired and a gasfitter has to do the permitting on it and ‘do up’ the piping.”

More extensive and costly installation hardware is also required to meet the code.

Guest Controls is well positioned in the burner market with its standard Natural Draft Tank Burner product and its special forced air Tank Pro Burner designed in-house.

“We are the only ones that have that,” said Guest. “It’s a forced air burner that runs on 12-volt DC power.

The burner can also be run on casing gas, saving operators propane costs that can range between $5,000 and $7,000 a month in the winter.

“Operators like them because there is very little maintenance to do on them. They just start up and they run,” he said.

Guest says the Tank Pro Burner has higher efficiencies than the standard draft burners when coupled to a multi-pass fire tube. Traditional fire tubes are U-shape and typically made with 24 feet of 10-inch diameter pipe.

“With the forced air, we can use 63 feet of pipe tube and smaller diameter pipe so we get much more heat transfer per surface area,” said Guest who worked with Universal Industries to design the fire tube.

The company plans to take both of its burners to the Lloydminster Heavy Oil Show Sept.

15-16 to generate new sale leads for all business divisions.

Guest Controls also offers a full range of PLC programming, construction, meter

proving, valve repair and coil tubing and flushby unit instrumentation in an A to Z list of products.

Guest is the Canadian distributor for Advance Thermal Canada that manufactures reusable insulation covers for thermal, acoustical, chilled water, cryogenic and personnel protection applications.

“I think the oil show is important to every company if you are in the oilfield business,” said sales rep Greg Buchanan.

“It’s a great avenue to market yourself to other oilfield companies. You have oilfield companies that come to that show from all over Western Canada. It’s a very important two days.” ɸ Page B10

B9

Sales rep Greg Buchanan points to a forced air burner Guest Controls designed and installed for L&L OilÀeld in Lloydminster.

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PIPELINE NEWS September 2010

Éş Page B9 Rapid growth in the burner market has prompted Guest Controls to set up a ďŹ eld shop in Kerrobert to service new and existing customers in that area including heavy oil clients in Kindersley.

Guest has rented storage space and a house to accommodate employees who commute each week. “I have been down to Kindersley basically once or twice a week trying to drum up a little bit of work.

It’s coming along,� said Buchanan. “The work is steady, but you always like to busier than you are.�

Guest says he and sales reps like Buchanan want readers to know that what sets Guest Controls apart from competitors is their attention to customer service. “I believe our customer service is far better than anyone else,� he said. “We have numerous crews and your wait time with us is possibly a day. We have a central dispatch that does all of our scheduling. “We have specialty crews for installs and we have guys that are strictly on service work. They are

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Every burner install involves some electrical work and Guest Controls is hoping to expand the sales, service and calibration of pneumatic and electronic instruments in the region in coming months. “There aren’t too many days when we have any downtime for any of the guys, so that’s a good indication that the burner side has really been progressing well,â€? said Buchanan. “We are also starting to get stronger in the Elk Point and St. Paul/Bonnyville area on the valve side – but not so much the burners. “There are a lot of dierent branches of Guest Controls. We’re not just the burner side. We oer a lot of instrumentation, electrical and PSV valve services.â€?

Guest Controls also provides certiďŹ ed rental test equipment traceable to national standards with daily, weekly and monthly rates. “We want to be as vast as we can in many dierent areas and as strong as we can in all those areas,â€? said Buchanan.

Buchanan is also looking forward to the day when all sta will be based under one roof in the new facility that could be ready early in 2011.

Currently 70 to 80 per cent of employees work at a temporary burner manufacturing and repair shop six miles east of the main oďŹƒce in the city core. “The shop is going to be fantastic to work with, and having everyone under one roof is going to beneďŹ t us in a big way,â€? he said.

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Derek Fischer a burner shop tech shows where a burner control system will be installed on a demo tank to show customers.

PIPELINE NEWS September 2010

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Lakeland reclamation grad ¿nds her calling on a hot line Edmonton – All of those reclamation and remediation courses that Lacey Longworth studied at Lakeland College in Vermilion to earn a Bachelor of Applied Science degree in Environment Management are put to the test each time her phone rings.

Longworth is a compliance officer at the Alberta’s Coordination and Information Centre (CIC) in Edmonton established by the Dangerous Goods and Rail Safety Branch of Alberta Infrastructure and Transportation.

The CIC has evolved to become an emergency response centre manned 24 hours a day. The centre responds to an average of 350 chemical transportation incidents, and 75 natural emergencies a year.

The CIC handles

Second year Environmental Conservation and Reclamation diploma students at Lakeland College in Vermilion go on Àeld trips to study Àeld reclamation methods at a coal mine. The college also offers a third year degree program.

Photo submitted

emergency and compliance calls for the transportation and environment ministries and the ECRB (Environment Conservation Resources Board) and the NRCB (Natural Resources

Conservation Board).

L ongworth’s knowledge of lease reclamation regulations and guidelines comes in handy when calls to the 24 hour hotline involve reports of oil spills,

emissions compliance or other environmental incidents.

“Lots of the calls about spills are from oil companies and a lot are

due to trucking incidents hauling crude and produced water,” said Longworth.

“They are required to report spills over two cubes or spills that could have an adverse impact on the environment.

“They report where it was spilled, how much was spilled and the cause, and what they plan on doing to clean it up.”

The CIC functions to provide assistance and technical information to emergency response personnel throughout the province.

“Sometimes all you do is take down the information,” said Longworth about incoming calls. ɸ Page B12

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PIPELINE NEWS September 2010

Verifying reclamation certi¿cates ɺ Page B11 “If the spill enters a water body or if it would have an adverse effect on the environment then, I would take other steps.

“I might phone the

regional responder for Alberta Environment or ASERT (Alberta Environment Support and Emergency Response Team) and let them know what is going on.

We update them and they update us.

“The other day, I had a call about a tailings spill of over 100 cubes that got into a marsh area. I called both the re-

Former Lakeland College reclamation student Lacey Longworth from Harris, Sask., did her degree practicum with Alberta Environment. In this photo she is working on verifying a reclamation certiÀcate to ensure the detailed site assessment that was submitted is sound.

Photo submitted

gional responder and the ASERT on-call centre.”

Longworth says her Lakeland studies in the two-year diploma program in Environmental Conservation and Reclamation and her degree major in reclamation and remediation equip her to provide accurate information to industry and the general public on compliance issues and incident reports.

“There are people there (CIC) without a reclamation background, but it gives me more of a knowledge base,” she says.

“If someone calls in, I know what they are talking about without having to ask 10 more questions.”

The BA program offer by Lakeland covers everything from remediating sites with

contaminated soils and groundwater and managing reclamation and remediation projects, to writing scientific and technical consulting reports.

“Reporting is a part of remediation,” said Longworth.

“Spills are supposed to be reported immediately, especially into water bodies. If it will have an adverse on the environment you want to respond immediately so you can limit the impact.”

Asked how the recent string of major oil spill disasters in the news has affected her, Longworth replied that it makes her own job responding to spills seem more important.

“You want to make sure they are handled correctly so it doesn’t get

out of hand,” she said.

“Another very important job is all of the environment protection officers with Alberta Environment to encourage industry to have good reporting so things don’t get out of hand.”

Longworth is just a few months into her job and reports she is “happy where I am,” noting the total eight-month practicum motivated her to choose Lakeland and helped her land the right job.

“I really liked the practicum idea of getting some work experience.

It really worked out for me,” she said.

Longworth did her final 16-week practicum last fall with Alberta Environment ensuring all private land sand, gravel, clay or marl pits larger than five hectares were registered under the new Code of Practice for pits.

It helped that her practicum office was just across the hall from the CIC at the Ministry of Transportation, enabling her to do some job networking that led to her current position She left an interim job with an environmental engineering company in time for the end of a hiring freeze at the Alberta government and landed the job she enjoys.

“The way the job is set up, we do get a lot of time off so it’s a real perk,” she said referring to call centre shift schedules. “It would be hard to go back to a Monday to Friday job.” ɸ Page B13

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B13

Lakeland diploma offers a wide range of career choices ɺ Page B12 Looking back Longworth believes the content of the Lakeland diploma and degree program is very relevant to her new career.

“There are a lot of different jobs you can get out of that degree program,” she said.

“Sometime, there was an overlap, but it extended your knowledge base or what you already learned the previous two years.”

The environmental management degree can lead to a variety of careers such as environmental consulting, compliance inspection, conservation and land management and specialist positions in soils and vegetation reclamation.

“One thing I really liked was taking a few classes in range management and riparian area management,” said Longworth who grew up on a farm at Harris, Sask.

She says her second career choice would be “working in prairie grasslands and making sure they are not being overgrazed. I have an agriculture background.”

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Lacey Longworth, far right, took part in a vegetation lab during her Àrst year of studies in Environmental Conservation and Reclamation at Lakeland College in Vermilion.

Photo submitted

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PIPELINE NEWS September 2010

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PIPELINE NEWS September 2010

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ERCB allows Kearl to delay tailings targets for six years Edmonton – Alberta’s Energy Resources Conservation Board will allow the Kearl oilsands project to exceed the new fines tailings reduction targets of its own Directive 074 for the first six years of the development.

The project located 70 kilometres north of Fort McMurray is a joint project of Imperial Oil and ExxonMobil Canada with a first phase start up target of late 2012.

The ERCB approved the Imperial Kearl tailings pond management plan with conditions that excuse Imperial from meeting the fines target from 2012 to 2018 while the company implements new compliance technologies.

The Kearl project will be one of Canada’s largest open pit mining operations with 4.6 billion barrels of recoverable bitumen resources.

The project has an initial production target of 110,000 barrels of oil per day from bitumen and will be built in phases to eventually produce about 300,000 boepd.

Kearl involves one tailings pond, which will be decommissioned by 2038.

Tailings are waste from oil sands extraction processes generally composed of water, sands, silt, clay and residual bitumen.

The ERCB requires Imperial to submit an updated tailings plan by January 2012 that includes measures to accelerate fines capture to meet the Directive 074 standards in the period from 2018 to 2023.

The extra time given to Imperial is part of ERCB’s commitment to allow oil sands operators sufficient time to design and construct necessary industrial facilities which take into account each project’s specific geological and technical requirements in order for them to comply with Directive 074 requirements.

A tailings plan submission is an annual requirement of Directive

074, which will allow the ERCB to continuously monitor tailings operations and provide a means to take enforcement action when necessary.

Imperial says the Kearl project will be built with one external tailings area that will be emptied and reclaimed as soon as space is available to process and return the remaining tailings into mined-out areas of the pit.

The project also features staged development plans for exten-

sions to Kearl Lake that will compensate for the disturbance of fish habitat in the mining area.

The project is designed with one integrated, progressive reclamation plan for the whole lease area that optimizes the balance between developed, undisturbed and reclaimed areas There will also be a comprehensive environmental and socio-economic assessment that addresses the benefits and impacts over the entire life of Kearl.

The main goals of

Directive 074 call for operators to reduce the accumulation of tailings by capturing fine particles that would otherwise remain suspended in tailings ponds, and place them in a deposit that can be walked on.

Compliance with the two main Directive 074 criteria (fines capture and DDA strength – dedicated disposal area) is to be measured by companies annually starting in 2011.

Additional reporting is required on the fluid tailings content of

each pond annually and is scheduled to be submitted along with the

annual tailings plan to the ERCB by Sept. 30 of each year.

Lee Gottschlich, President of Leading Manufacturing Group Inc. is pleased to announce that Kurtis Wandler has joined the company as Account Manager. LMG Inc. is a new company that has the capabilities of building 50 bbl to 400 bbl steel tanks in Nisku as well as providing sales of all tank parts and accessories.

In January, 2011, LMG Inc. will be opening a new 31,000 square foot facility in Vermilion. This plant will be a full service facility specializing in heavy oil tanks up to 3000 bbl. Kurtis has many years experience in the oilfield industry and looks forward to helping you with all your storage tank needs.

Please call Kurtis at 780-214-9444 or email kurtis.wandler@lmginc.ca

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PIPELINE NEWS September 2010

PIPELINE NEWS September 2010

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PIPELINE NEWS September 2010 Drilling numbers are way up this year over last. Here, Lasso Rig 1 can be seen working north of Stoughton.

Photo by Brian Zinchuk

Saskatchewan oil drilling way up year over year Regina – The latest drilling statistics for Saskatchewan show that drilling activity is rebounding after a challenging year in 2009.

Drilling numbers compiled to the end of July by the Ministry of Energy and Resources show that 1,253 oil wells have been drilled so far this calendar year.

That’s a 96 per cent increase over the corresponding figure for 2009, when only 639 oil wells were drilled.

The year-to-date numbers are also tracking favourably when compared to oil well drilling numbers for corresponding periods ( January 1 - July 31) in 2008 (1,400 wells), 2007 (1,241 wells) and 2006 (1,183 wells).

“Our oil industry was not immune to the global economic slowdown that affected all oil producing jurisdictions in 2009, but Saskatchewan’s oil patch has weathered that storm,” said Energy and Resources Minister Bill Boyd.

“We've seen a bounce-back so far this year with these strong drilling numbers and resurgent land sale activity.”

More than 60 per cent of the oil wells drilled to date are horizontal wells.

The 759 horizontal oil wells drilled to the end of July are more than double the number of horizontal wells drilled as of July 2009 (320 wells).

That is a 16 per cent increase over the corresponding figure for 2008, when a record was ultimately set for horizontal oil well drilling.

Horizontal wells now account for almost half of Saskatchewan’s total oil production.

Boyd said that while the Bakken oil play continued to perform strongly, his ministry was also seeing increased interest in horizontal drilling in emerging oil plays like the Lower Shaunavon in the southwest, the Viking in west-central Saskatchewan around Kindersley and the Birdbear in the northwest near Lloydminster.

Interest has also picked up in deeper oil plays in the southeast along the United States/Saskatchewan border.

PIPELINE NEWS September 2010

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Palliser to reap what it sows from new wells

Lots going on Most the renovations taking place at the site of the Lloydminster Heavy Oil Show and Heavy Oil Symposium Sept. 15-16 are focused on new connecting corridors and a new entrance. The Exhibition Grounds and the Stockade Convention Centre are not affected by construction and won’t impact the shows say organizers.

Photo by Geoff Lee

Palliser enters the third quarter with improved heavy oil production prospects from its drilling program in the greater Lloydminster area.

Image submitted

Calgary – Palliser Oil and Gas Corporation expects to reap the rewards this quarter from its efforts in the second quarter to boost production from his heavy oil assets in the Lloydminster area.

The Calgary-based company anticipates significant production gains in this quarter from four new wells drilled in the Lloydminster area in June and brought into production at the end of July.

The company’s current capital program includes the drilling of an additional four wells and the reactivation of two wells in the third quarter, and the drilling of

five wells planned for the fourth quarter.

This capital program is forecasted to realize continued quarter over quarter production growth in 2010 as reported in its second quarter results Aug. 10.

Palliser’s production during the quarter averaged 536 boepd, an increase of 374 per cent from 113 boepd in the second quarter of 2009 with a weighting of 88 per cent to crude oil and strong operating netbacks.

Production in the second quarter was higher by 40 per cent from the first quarter average of 382 boepd.

The company maintains a strong balance sheet and is currently debt free with a positive working capital balance of $2.7 million at the end of the second quarter.

Palliser will maintain a strong balance sheet and is on track with guidance for a yearly production average between 650 to 750 boe/d and 2010 exit production of between 1,100 to 1,250 boepd.

Palliser is emerging junior oil and gas company with two core areas in the greater Lloydminster heavy oil area of both Alberta and Saskatchewan; and a natural gas area located near Medicine Hat, Alberta.

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PIPELINE NEWS September 2010

PIPELINE NEWS September 2010

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Suncor touts its TRO tailings Calgary – Suncor Energy Inc. is using what it believes is a ‘game changing’ technology for the reclamation of tailings ponds that will allow it to meet Alberta’s Directive 074 guidelines on mature tailings fines.

The new trade-marked technology called Tailings Reduction Operations or TRO helps transform fluid tailings into solid landscapes required by Alberta’s tailings directive.

“This is a technology that is changing how we do business. It's a complete game changer for the industry,” said Bradley Wamboldt, director of TRO at Suncor.

“There now is a tool in the tool chest to actually do things like meet Directive 074, to get ahead of MFT (mature fine tailings) volumes, to minimize the number of ponds you have, minimize your terrestrial disturbance and we’re doing it first and that’s really exciting."

Suncor has been researching, developing and testing the TRO technology since 2003. Suncor received approval for its tailing management plan from the ERCB on June 17 allowing the company to take its TRO to a commercial level.

“We expect to invest more than $1 billion to implement our new TRO technology, potentially reducing tailings reclamation time by decades,” said Kirk Bailey executive vice-president, oilsands in the June 17 release.

More news of TRO technology is contained in the Aug. 17 release of Suncor’s 2010 Report on Sustainability – a comprehensive review of the company’s environmental, social and economic performance for the year.

The report highlight’s the company’s four environmental performance goals to reduce fresh water consumption by 12 per cent by 2015; increase recla-

Suncor has developed a new technology called Tailings Reduction Operations or TRO that helps transform mature Àne tailings in oilsands tailings ponds into solid landscape suitable for reclamation. TRO could become the new industry standard.

Photo submitted

mation of disturbed lands by 100 per cent by 2015; improve energy efficiency by 10 per cent by 2015 and reduce air emissions by 10 per cent by 2015.

The TRO is touted by Suncor as a way that could fundamentally change the way oilsands are mined and the pace at which disturbed lands are reclaimed.

Since Suncor opened Canada’ s first oil sands mine in 1967, its operations have disturbed approximately 17,161 hectares of land.

As of the end of 2009, the company had reclaimed approximately 1,182 hectares, or about 6.9 per cent of the total land disturbance to date.

The TRO strategy that Suncor expects to begin implementing on a commercial scale this year will further bolster the cause of progressive reclamation.

Suncor’s nine active tailings ponds account for 30 per cent of the disturbed land Suncor is currently working to reclaim. ɸ Page B22

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PIPELINE NEWS September 2010

Technology is a ‘game changer’ ɺ Page B21 Accelerating the pace at which liquid mine tailings are transformed into solid, reclaimable surfaces is critical to resolving the company’s overall oilsands reclamation inventory.

Tailings are a mixture of fine clay, sands, water and residual bitumen produced through the oil sands extraction process.

When tailings are pumped into holding ponds—often discontinued mine pits—the heaviest material, mostly the sand, settles to the bottom while some of the water rises to the top.

The middle layer, known as MFT, is made up of about 70 per cent water and 30 per cent clay particles.

If left alone, MFT would take many decades – even centuries – to consolidate into a solid enough surface that can then be covered with topsoil, revegetated and reclaimed.

Suncor’s nine tailings ponds near Fort McMurray cover a total of 31.8 square kilometers and contain about 230 million cubic metres of MFT. The technologies Suncor has researched and developed for drying mine tailings will allow the company to significantly reduce their existing tailings inventory, freeing up additional lands for reclamation.

Part of the TRO technology is new drying process that takes MFT material and solidifies it in a matter of weeks, rather than years.

The MFT is mixed with a polymer flocculent and then deposited in thin layers over sand banks with shallow slopes. The polymer flocculent is considered a completely safe class of chemical commonly used in municipal water treatment facilities to settle out solids.

It’s inert and does not react with the environment. What it does do is adhere to the MFT clay particles, causing them to bundle together, and helps separate the clay from the water.

Suncor says with TRO they can shrink the time from initial land disturbance to having a reclaimable surface to about 10 years—a third of what is now the industry standard.

The TRO process will also reduce or eliminate the need for future tailings ponds—removing another key obstacle to progressive oil sands reclamation.

At the end of September Suncor will be the first oil sands company to have a tailings pond with a trafficable surface that has progressive reclamation underway.

The plan is to ultimately transform the company’s 136-hectare Pond 1, es-

tablished in the 1960s, into mixed wood forest and a small wetland capable of supporting a variety of plants and wildlife.

While the 2010 milestone to be reached this month will not result in an official reclamation certificate from the Alberta government, Suncor is working to secure a progressive reclamation acknowledgment. The Pond 1 area is also to be re-named to mark this significant accomplishment.

Under the current regulations companies can only apply for a reclamation certificate when the lands in question are fully functioning ecosystems—and that can take many years to achieve.

For example, even when surface reclamation of Suncor's Pond 1 is well underway in 2010, and after all the trees are planted, it will take at least another 15 years to reach the “free-to-grow” standard required for certification.

In the TRO tailings management process, mature Àne tailings are mixed with a polymer solution and deposited over sloped banks for drying.

Photo submitted

PIPELINE NEWS September 2010

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PetroBakken shifts focus to Bakken and Cardium plays Calgary –The fall will be an active season for PetroBakken Energy Ltd., with 18 drilling rigs in play primarily focused on the Bakken and Cardium light oil resource plays.

Strong oil prices are behind the move by PetroBakken to focus capital spending on light oil production where the potential for growth and profits are greatest.

In its second quarter results released Aug. 10, the Calgary based company reported it would shift funds from its northeast British Columbia natural gas and conventional Saskatchewan and facility programs.

The company plans to drill over 180 (145 net) wells in the Bakken resource play, over 90 (65 net) wells in the Cardium resource play, and over 55 (35 net) wells in its conventional light oil plays in southeast Saskatchewan and Manitoba this year.

Facility expansion at the Midale, Sask. gas plant began in the second quarter and is expected to be completed by the end of August.

This will increase the capacity of the plant to 12 mmcf per day from 8.5 mmcf per day and enable the company to tie-in additional Bakken production and conserve and sell more gas.

For the rest of the year, PetroBakken will also be adding two oil batteries to the facility to optimize Bakken production.

The company is planning an eight rig drilling program in the Cardium light oil play of Alberta for the rest of 2010 following the assembly of 260 (190 net) sections of land from corporate acquisition, land sales and asset acquisitions.

Petrobaken plans to drill a total of 90 (65 net) wells in the Cardium by the year-end, and just 55 (35 net) wells in its conventional light oil plays in southeast Saskatchewan and Manitoba.

Low gas prices have caused PetroBakken to drill only one well in the Monias, B.C., area and delay two Montney wells in the area until early 2011, which will allow it to meet land expiries.

In the first half of 2010, the company drilled a horizontal well in the Horn River basin area in British Columbia that it expects to complete in the third quarter.

In the Bakken, PetroBakken plans to implement 1,400 metre long bilateral horizontal wells with a total of 30 staged fracture stimulations per well on its most of its well inventory following successful trials in 2009.

PetroBakken has drilled over 101 (94.9 net) bilateral wells in the Bakken to date with 42 (39.1 net) wells having over six months of production.

While costs to drill these wells are about $600,000 higher than a single lateral well, the company reports significant increases in production that justify the additional cost.

PetroBakken says compared to the adjacent single lateral wells, on average, the bilateral wells have seen a 30 per cent increase in cumulative production for the same production period.

In addition, the company notes its bilateral wells with the longest production history are demonstrating a shallower decline after the first seven months of production when compared to the offset wells.

The practice of drilling horizontal wells with multi-stage frac technology is relatively new to the Cardium play which has been producing oil since the 1950.

PetroBakken, plans to introduce its proven Bakken model of drilling longer horizontal legs (approximately 1,400 meters) and implementing more fracs (up to 20 stages) during its current eight rig drilling program in the Cardium.

Predecessor wells used a combination of either shorter laterals, or fewer frac stimulations or, in some cases, entirely different completion techniques.

PetroBakken expects to provide initial program results in the fall, when a

meaningful number of wells is on production with at least 30 days of production history.

PetroBakken is also buoyed by positive royalty changes made by the Alberta Government after the company acquired most of their Cardium lands.

More Cardium oil production over a longer period of time will benefit from the initial five per cent royalty rate as the volume of qualifying oil increases with a longer measured depth (vertical depth plus horizontal length) of a well.

The company estimates the royalty changes will add over $1 million of net present value (discounted at 10 per cent) per average Cardium well, and further support their recent Cardium acquisitions and rapid pace of development.

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PIPELINE NEWS September 2010

PIPELINE NEWS September 2010

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Denmax branding opens doors to oil¿eld growth Wainwright – Leveraging is important to Demax Energy Services in Wainwright in its approach to reclamation and marketing in Western Canada.

The company can rely on its experience, equipment and expertise in pipeline and facility construction and specialized hauling and tank moves to back their claims of providing the best in quality, safety and efficiency to reclamation projects.

“What we discovered is we have a lot of skill sets that work with other business lines,” said Jim McKin-

non, safety and quality control manager.

“Our main focus has been pipeline and facility construction as well as specialized hauling and tank moving.

“We found the experience we have in moving earth combined with the experience in the oilfield has led us to diversify into other areas.”

The company can also bring its experience in lease construction and road building, oil battery and gas plant relocation, and civil construction to reclaim

Jim McKinnon safety and quality manager is responsible for marketing the new Denmax Energy Services brand of quality, safety and efÀciency in Western Canada.

oil and gas sites to regulatory and client requirements.

“The type of equipment we have allows us to cultivate, disc, harrow and re-seed,” said McKinnon.

“Again, it’s a complement to our pipeline and facility construction services. When we have to clean up after a pipeline job that involves disking harrowing and putting seed down to bring the land back to its original placement for the farmer. ɸ Page B26

B26

PIPELINE NEWS September 2010

Reclamation crews with farming backgrounds

This photo shows the Áagging of test soil concentrations in the Lloydminster area. Denmax crews separated contaminated soil from clean soil and removed contaminated soil to a controlled area while reclaiming oil gas wellsites.

Photo submitted

ɺ Page B25 “It allows us to leverage the skills and equipment that we already have. We would never enter an area where we couldn’t bring our expertise to play. We don’t want to provide service that we are not going to be good at or competitive at.

“Reclamation allows us to bring those skill sets and leverage the quality people and equipment that we have.”

Leveraging and diversification are keys to Denmax’s corporate image and growth following a restructuring in 2009 and a name change in 2010 under

the leadership of president Trevor King.

King formerly owned Trevor King Oilfield Services and partnered with Kurt Fletcher to purchase Porky’s Oilfield Construction based in Wainwright since 1989.

The deal brought Porky’s shareholder Beau Meyer to the new ownership group as a reclamation specialist.

The structuring has led to the development of a new web site, corporate logos and opportunities to market the Denmax brand.

“We want people to know we are professional.

We are honest and we do a good job and do it on time and safely,” said McKinnon. “We haven’t had a lost time incident for 500,000 hours.

“What makes us standout is the quality of our product and the systems that we employ to make sure it’s the same from one location to the next.

“We are large believers in the franchise system where what happens on one site is exactly the same in another.

“We put systems in place and spread them throughout our workforce to ensure the quality is the same.”

The new corporate identity is also helping Denmax to expand all of its business lines in Western Canada. ɸ Page B27

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PIPELINE NEWS September 2010

B27

Diversi¿cation helps to keep core staff around ɺ Page B26 “We are seeing growth spread throughout,” said McKinnon. “We are not any different than most oil and gas sector companies that we see next year as very busy in the sector.

“Our civil side is growing, our reclamation is growing, and we are seeing a lot of activity on the lease and road building side.”

McKinnon says diversifying into many different oil and services was a deliberate strategy founded in learner time to leverage the experience and the people that they have.

“Diversification for us is not just from an economic standpoint, but from a staffing standpoint so we can ensure we can keep a core group of knowledgeable people with us that we can build on,” he said.

The company has as many as 60 employees at peak periods.

Denmax plans to leverage its pipeline experience in environmentally challenging areas of northern Alberta to gain a business foothold in the northeastern part of British Columbia.

The company also does a lot of heavy oil pipeline work in Saskatchewan where crews are currently laying small diameter flex steel pipeline in the Kindersley area.

“We would trench or ditch the line with a trackhoe and we have a trenching machine as well,” said McKinnon.

Denmax’s heavy equipment fleet includes dozers, skidsteers, gravel trucks and pups, wheeled loaders and graders with smaller specialized farm equipment for reclamation work.

Bale shredders and manure spreaders, rototillers, cultivators, rock pickers, fertilizer speaders and tractors and mowers are some of the farm implements used to reclaim or remediate abandoned

wellsites.

Not surprisingly, many of Denmax’s reclamation crews and employees and have farming backgrounds including Trevor King whose farm backs onto the Denmax complex.

“Having a farmer as the president ensures we put it back the way it should be,” said McKinnon.

“He wants things put back right, the way he would want if it were his farm.

“A farmer dealing with an oil and gas company – there is always a conflict there. A farmer wants to have his land put back to the best way it can.

“We already have that mindset that we bring to everything we do. We bring the farming mindset to the reclamation work we do.”

Denmax used some of its heavy equipment on this reclamation project of oil gas wellsites for Petro-Canada in the Wainwright area.

Photo submitted

B28

PIPELINE NEWS September 2010

Marty Dyckson, a key account manager says the pink and white fuel truck used during the Convoy for a Cure from Vermilion to Lloydminster on July 24 was actually built to raise funds for the Canadian Breast Cancer Foundation.

Superior Propane in the pink over its cancer fund raiser truck Story and photos

by Geoff Lee Lloydminster – Superior Propane’s bulk fuel depot in Lloydminster was in the pink for awhile this summer with the use of a pink and white bulk propane truck made in Ontario.

The special truck is one of several cancer trucks deployed by Superior Propane across Canada to raise funds for the Canadian Breast Cancer Foundation while delivering fuel to customers.

Its first task in Lloydminster was taking part in the Convoy for a Cure parade of oilfield and transport trucks from the Vermilion Vehicle Inspection Station to the Lloydminster Exhibition Grounds on July 24.

That convoy included three other traditional yellow fuel trucks from Superior Propane in Lloydminster, helping to raise more than $16,000 for the Alberta Cancer Foundation.

“We figured there was a lot of excitement here at Superior Propane,” said Marty Dyckson, a key account manager for the Lloydminster area. “We like to be a part of the local community and make a difference if we can.”

Superior Propane also sponsored the rendezvous barbecue in Lloydminster to raise additional funds.

“There was no problem getting people involved or volunteered,” said Dyckson. “It was fantastic to see everybody get excited about the event. We had a good turnout with four trucks.” ɸ Page B29

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PIPELINE NEWS September 2010

B29

Pink is the new colour to be ɺ Page B28 The breast cancer foundation truck was driven in the convoy by brain cancer survivor Jody Mayer who delivers propane to oilfield lease sites.

“He has definitely driven with a lot of pride,” said Mayer. “We know that cancer affects a lot of people across this country, and specifically breast cancer – for what this truck is designed to generate revenue for.”

One third of a cent per litre of fuel delivered by the truck up to $8,000 per region in Alberta will go to the Prairie/Northwest Territories chapter of the Canadian Breast Cancer Foundation while generating priceless exposure for Superior.

“Every region has had its timeframe with the truck and therefore, it’s getting exposure right across Canada,” said Dyckson.

“The truck goes to whatever application is appropriate. In Lloydminster, the focus of propane is the oil patch.

“We will definitely be putting it out there, and getting it dirty working for us in the Lloydminster market,” he added before going to its next stop in Calgary where Superior Propane has its headquarters.

“She’s a beautiful truck and well designed. People right away recognize the pink and white symbol, and almost always there is a little story to be told. It seems to be very positively received right across the country,” said Dyckson.

Having the truck in Lloydminster also helps the company to generate new sales of fuel and oilfield services to the oilpatch in an area from Maidstone Saskatchewan to Provost, Elk Point and Bonnyville in Alberta.

The company has approximately 35 employees and almost as many trucks in its trading area.

“This is a bulk depot. We bring propane in and

then ship it out,” said Dyckson describing the Lloydminster operation and his own role in marketing.

“I am here to drum up new sales on the propane side and the burner side with sales and installations. I also take care of the customers we do have.

“We would love to do more burner sales. We are out there hitting the bricks and trying to get more burner installs.

“We do have a fair chunk of propane that moves through here, but whatever we can diversify the better.

“There is stiff competition out there for burner installs. It keeps everybody on their toes in the Lloydminster area.”

Superior Propane also sells and services specialized well testing equipment and power generation sets.

Included in their menu of oilfield offerings is a propane filtration service, an oilfield picker service, an engine efficiency program and licensed journeyman gas fitters.

The company is Canada’s largest national provider of propane and related services to over 200,000 residential, commercial and industrial customers in more than 180 communities.

“In Lloydminster, we are focused on being in the bulk fuel and service industry,” said Dyckson. “Our main customer is the oilpatch.”

Dyckson says propane is the perfect fuel for the oil and gas industry because it’s easy and convenient to use and is not considered a greenhouse gas.

“Propane in the Lloydminster area is mostly for burners and the gen sets that work the pumpjacks and the screw jacks,” he said.

“They can’t find another source of energy that’s better when you are off the grid. If there is a natural gas pipeline next door, they are going to be using that

of course.”

Dyckson says Superior Propane will be well represented at the upcoming Lloydminster Heavy Oil Show Sept. 15-16 – without the promotional pink cancer truck on site.

Their exhibit will be focused on marketing the business side of the company to heavy oil customers.

“We will have good representation there,” he said.

“We will have a burner assembly there, a gen set there with some tanks – and what not,” said Dyckson.

In late July, however, Dyckson was hoping for drier weather to speed up the delivery of propane in the field including those made by the pink and white cancer truck during its time in Lloydminster.

“For everyone in this industry, the weather has been nothing but a pain in the butt, but we work through it,” he said.

“It’s terribly wet and those lease roads are not always the best engineered and the best designed. They tend to get a little soggy.

“In some lease sites there will be a two foot deep puddle of water and you can’t maneuver around there.”

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B30

PIPELINE NEWS September 2010

PIPELINE NEWS September 2010

B31

NAL to focus production in Mississippian and Cardium plays Calgary – NAL Oil & Gas Trust will continue to fly its drilling rig flag this year throughout its holdings in the Mississippian play in southeast Saskatchewan and the Cardium play in west Central Alberta.

That’s the plan for the remainder of 2010 following the Trust’s successful second quarter results drilling and producing oil in those two core areas.

NAL is holding to its 2010 full year production average in the range of 29,500-30,500 barrels of oil per day with a production exit topping 31,000 boe/d.

The optimism follows the results of a $40 million capital spending program before property acquisitions in the second quarter with 20 (11.5) net wells drilled.

The year-to-date investment compares with $17 million in capital spending for the same quarter in 2009.

The year-over-year increase is directly related to the corresponding increase in wells drilled as well as a continued shift towards horizontal drilling and multi-stage frac completions which significantly increases per well costs.

NAL expects to spend an additional $92 million of exploration and development capital in the second half of 2010, focused primarily on its Cardium and Mississippian oil opportunities.

The second quarter results released Aug. 10 indicate 87 per cent of the capital program focused on drilling, completion and tie-activities with a 100 per cent success rate.

Year-to-date capital spending totals $118 million with 77 percent spent on drilling, completion and tie-in activities and $19 million (16 per cent) on new land acquisition.

The $30 million in year-to-date property acquisitions and dispositions relates primarily to oil focused transactions at Hoffer and Alida/Nottingham, partially off set by the sale of a minor Bakken position earlier in the year.

The company also followed up on the new pool discovery at Hoffer in southeast Saskatchewan by adding 244 gross sections of undeveloped land (50 per cent working interest) at an average cost of $525 per acre which com-

pares favorably with recent Crown sales at over $1,000 per acre.

In the quarter, the company drilled eight (3.7 net) wells in Saskatchewan, primarily targeting Mississippian oil at Alida, Steelman and Hoffer with first month average production rates between 100 - 200 boe/d with a 50 per cent working interest.

The company participated in eight (five net) Cardium wells in the Garrington/Cochrane areas delivering results consistent with forecast type curves rates of 180 - 200 barrels of oil equivalent per day from first month production.

A Wilrich gas well (70 per cent working interest) was also drilled and tested in the Edson area with final test rates of 10 mmcfd at a flowing well head pressure of 1,200 psi.

For the remainder of 2010, the Trust intends to drill 21 (12.8 net) wells in Alberta with 17 (11 net) Cardium, Leduc and Wabamun oil wells and four (two net) liquid rich gas wells in the Edson and Kakwa areas.

In British Columbia, the company drilled one100 per cent working interest gas well in the Firewood area with a first month average production rate of approximately 800 boe/d.

NAL, which will convert to a corporation late this year, reported improved cash flow, net income and revenue in both the three and six months ended June 30, 2010 Cash flow of $63 million was up nearly 21 per cent over $52 million in the comparable 2009 period reflecting a 28 per cent increase in production plus higher commodity prices.

This was partially off set by a higher Canadian dollar and significantly lower realized hedging gains ($5 million versus $22 million in the second quarter of 2009).

The company also successfully completed a $100 million equity financing with proceeds directed primarily to toward 2010 capital program of $35 million ($175 million increased to $210 million), additional Hoffer/Edson land ($50 million) and other tuck-in acquisitions ($10 million).

Courtesy Nickle’s Daily Oil Bulletin

B32

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PIPELINE NEWS Saskatchewan’s Petroleum Monthly

C-Section September 2010

Students in the environmental conservation and reclamation program conduct a site assessment of the recovery of a pipeline in the Wainwright area seeded to native grass.

Photo submitted

“We have some students set up their own companies and are dealing with drilling waste. They are making six figure salaries”

- Mel Mathison Dean of School of Agriculture and Environmental Sciences

Reclamation classes full this fall B Byy Ge Geoff off Le Leee Pipeline News Vermilion, Alta. – Strong employment in environmental sciences in the mining and oil and gas industry has led Lakeland College to put students on a waiting list for the fall semester of its environmental conservation and reclamation program.

The course, now in session, is one four areas of study specialty in a two-year environmental sciences diploma program offered at the Vermilion campus.

Mel Mathison, dean of the School of Agricultural and Environmental Sciences, says the competition for seats is getting tougher every year.

“A lot of students are going into oil and gas reclamation,” he said. “That business is becoming more public now. It’s the strongest demand of the four majors that we have.

“It’s years.

“I It’ t s be been en rea rreally eall llyy strong stro st rong ngg iin n th thee p past pa st ffew ew yyea ears rs.. Fo Four ur years ago, we increased the capacity of the program from 20 to 32 students. We have had as high as 40.

“There has been strong employment. That’s probably been the biggest driver.”

Students who graduate with diplomas can find employment as an environmental consultant, a reclamation field supervisor, an environmental technician or as a drilling waste consultant and soil technician.

“More of the jobs are in the oil and gas industry, but an increasing number of students are working in coal mines and the oilsands,” said Mathison.

“Elk Valley Coal has taken a few of our students, and we have students at Suncor and Syncrude.

“Traditionally, everyone who has been looking has got a job. They have no trouble finding jobs.

“We have some students set up their own com-

waste. panies pani pa nies es aand nd aare re dea d dealing eali ling ng w wit with ith h dr dril drilling illi ling ng w was aste te.. They are are making six figure salaries.”

Asked if recent oil spills and other environment crises in the news have affected enrolment numbers Mathison said in late July, “We don’t see the students until they show up in September. We are not seeing any direct change in applications related to that.

“Environmental awareness is important to the students, but I don’t think it’s the number one reason they come. I think it’s employment.

“They want to do the right thing, but they really want to find a job and have a successful career in that industry.”

Some graduates go directly into Lakeland’s Bachelor of Applied Science program that involves one more year of study ending with an eight week practicum. ɸ Page C2

C2

PIPELINE NEWS September 2010

These second year Lakeland College students learn about reclamation techniques at an old pump station location.

Photo submitted

Lakeland College students visit a coil tubing rig in Strathmore Alberta with the aid of Encana employees.

Photo submitted

College builds on relationship with Husky ɺ Page C1 Others transfer to degree programs at the University of Alberta or the University of Lethbridge before starting a career.

This year’s students in the diploma program will combine lab and field studies to learn about disturbed lands through detailed site assessments on cultivated soils, native grasslands and forests.

They do so with an awareness of oil and gas lease reclamation regulations, guidelines and techniques.

“When I first started instructing in this program 15 years ago, there weren’t a lot of regulations,” said Mathison.

“As new regulations come on, we have to adjust our curriculum to give students that skill set and awareness.

“We try to incorporate them into as many of the courses as we can to make sure they get the whole picture. This will be a strong program for a long time.

“We go through all of the land disturbances. It’s not just oil and gas. There’s linear disturbances as well like pipelines and utility right of ways – anything that needs to be reclaimed.

“We do put a strong emphasis on leases. That’s probably the majority of work that most students would be doing.”

Field studies will get a big boost this fall thanks to the purchase by the college of nearly 10 quarters of land from Barrhill Farms Ltd. in Vermilion, bordering the west side of the campus.

The oil leases, reclaimed land, native grasslands and 120 acres of wetlands on the property will serve as a lab site for all 220 students in environmental science diploma and degree programs.

In previous years, environment students have arranged visits to industry sites and public land to complete labs.

“There was a lot of time and money spent travelling to the sites, and we were finding it more difficult to meet company regulatory requirements to go onto oil leases,” said Mathison in a news release in June announcing the purchase.

“It will be nice to have a place we can go and actively sample without disturbing the land owner or industry representatives. We’ll also be able to do longterm analysis which will be very educational for our students.”

The oil and gas leases include some single well and multi-well pad locations owned and operated by Husky Energy along with some lease roads that Mathison says will eventually need to be reclaimed.

“We have had an absolutely excellent relationship with Husky for the 20 years that I’ve been here,” added Mathison.

“Now that we have acquired the land, we will have to work with Husky to determine what areas we can access on the leases themselves.

“As far as working on range land and native plants, we will move our labs there this fall.”

Mathison says the combination of class studies and hands-on learning has given his students a real advantage in the workforce with their applied skills and know-how.

“They haven’t just read about it or heard about it. They’ve been out there and done it,” he said.

“They’ve done site assessments; they’ve able to see in the field what the soil conditions are that will cause a pass or a fail.”

PIPELINE NEWS September 2010

Alberta releases new Reclamation Criteria for Wellsites and Associated Facilities

By Geoff Lee Edmonton – Oil and gas companies in Alberta must work to reclaim disturbed lands with a focus on re-establishing cultivated lands, forested lands and native grasslands to a productive state in order to receive a reclamation certificate.

New 2010 Reclamation Criteria for Wellsites and Associated Facilities released

by Alberta Environment on July 1, updates the previous 1995 guidelines for wellsite leases, access roads and facilities such as borrow pits, campsites, and offsite sumps.

The new documents also revise a 2007 reclamation update on forested lands.

“Oil and gas companies have been using the 1995 criteria on all disturbed land in order to get a reclamation certificate,” said Kevin Ball a reclamation specialist with Sustainable Resources Development.

“The 2010 guide is certainly an update to those criteria with more of a focus on ecosystem establishment.”

Greater emphasis is placed on assessing crop productivity on cultivated land and re-establishing forest cover and native grassland ecosystems on disturbed forest and grassland sites.

“Operators have to re-establish land to cultivated land, forested land or native grassland if that’s what the prior land use was,” said Ball.

“The goal is to restore sites to the same state or equivalent capability. We measure everything on the disturbed reclaimed area to the adjacent controls.”

For example, the soil colour onsite must be comparable to offsite for cultivated lands. On native grasslands, plants should be healthy and any signs of onsite stress should be comparable to those observed offsite.

On reclaimed forest lands, the soil depth should be 80 per cent of the control area depth for disturbances dating back to 1994.

The new 2010 reclamation criteria were developed by an advisory group representing the upstream oil and gas industry, agriculture producers, the forest industry and provincial agencies.

Ball says the 2010 reclamation criteria also correct some of the shortcomings in the 1995 document particularly regarding forestry.

“In the 1995 guide, the focus was still the same, but measured differently, and maybe not some of the appropriate measurements were being done,” he said.

“They were measuring more to trying to get 80 per cent cover on sites, but we weren’t focusing on 80 per cent cover of the right species.

“Industry is for it with the direction the government has gone with the focus on ecosystem establishment.”

A reclamation certificate releases the surface back to the land owner so it can be used for other activities.

Ball notes the certificate doesn’t release companies from being liable for surface issues for 25 years and subsurface contamination issues for the lifetime of the problem.

A reclamation certificate application form and guideline have been developed for the 2010 criteria. Application fees are $700.

Any sites assessed using the 1995 criteria or the 2007 forested guide must use the 1995 application during a transition period.

Beginning Jan. 1, 2011, all applications must conform to the new 2010 reclamation criteria.

Sustainable Resource Development conducts the site audits on public lands while Alberta Environment handles assessments on private land.

Ball says the workload is equal on private and public lands with most of the seasonal audits underway now until the late fall.

“We have to wait until the vegetation is growing,” he explained.

“Currently, we are auditing the work a company has done as well as the application they have submitted so that means companies won’t be using the 2010 criteria until this field season. ɸ Page C4

C3

C4

PIPELINE NEWS September 2010

Alberta takes an ecosystem approach to wellsite reclamation ɺ Page C3 “Companies using the 2010 criteria – there will probably be about a year lag before the audit. Right now, we would be auditing on whatever criteria was used.”

The 2010 criteria provide a flexible approach that reduces assessment requirements for simple sites with more detailed work required to reclaim complex or difficult sites.

“I think initially some of the native grasslands and the forested criteria will probably take longer for assessment companies to do assessments using the 2010 criteria then was done previously, but speed will increase with more experience,” said Ball.

Ball also thinks the new criteria could lead to companies hiring more forestry specialists for reclamation.

“I think with the new grassland criteria, there will be a need for better grassland identification and native grassland specialists too,” he said.

“Companies have dedicated branches to reclaiming land. There is a big push to get more timely reclamation on disturbed lands.

“There are a lot of people out there watching what goes on. Industry is certainly under the gun. A lot of companies are stepping up for sure.”

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Expansion of the terminal meant the older, shorter, tower had to go.

Going on up It’s a long, long ways up for the builders of this new communications tower.

You can see the next portion being hoisted up along the left side of the tower.

Photos by Brian Zinchuk

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PIPELINE NEWS September 2010

C5

Wind projects shortlisted Regina -SaskPower has now evaluated all submissions to the pre-qualifying phase of its Green Options (GO) Plan, to add 175 megawatts (MW ) of wind power to Saskatchewan’s electricity system.

Wind power developers were invited to respond to a request for qualifications issued by SaskPower late last year. To qualify, interested developers were asked to demonstrate their technical and operational experience, financial capabilities and propose an appropriate site for the location of their project.

Twenty-one companies have qualified to participate in the next phase. “Any new electricity we add to our system needs to meet strict requirements to ensure the safety, security and reliability of the entire grid,� said Guy Bruce, vice-president, Planning, Environment and Regulatory Affairs. “Developers whose projects met the eligibility requirements will be invited to participate in phase two of the program, a request for proposals, later this year.�

SaskPower expects the final projects selected to be in service between 2013 and 2015.

Pursuing emissions-free renewable power was one of the electricity supply options SaskPower identified when the corporation shared its future generation plans with the Legislative Assembly’s Standing Committee on Crown and Central Agencies in late 2009 and early 2010. The Committee endorsed this approach in its final report, which was issued in April 2010.

In addition to the 175 MW through the GO Plan, SaskPower will be adding additional wind generation through the Green Options (GO) Partners Program. When the new wind generation is brought into service, wind power will make up about 8.5 per cent of SaskPower’s total generating capacity – among the highest percentages in Canada. The expansion of wind power will reduce SaskPower’s carbon dioxide emissions by approximately 225,000 tonnes a year.

SaskPower has been laying the foundation for the addition of more wind power by installing new natural gas generation, which provides an ideal backup when the wind isn’t blowing, according to the company.

SaskPower has vetted 21 companies to continue its wind development plans.

This wind farm is near St. Leon, Man.

File Photo by Brian Zinchuk

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PIPELINE NEWS September 2010

Oilsands Quest halts projects to explore ¿nancial options recognize the significant underlying value currently not reflected in our share price and appreciate as we do the tremendous potential for oil sands development in northwest Saskatchewan and northeast Alberta,” Wilson said.

“The time has come to seek a strategic partner, and we believe the best way to do that in the current market environment is to initiate a formal process to explore strategic alternatives.”

The company has formed a special committee to explore its financial options to further advance its projects at Axe Lake and Wallace Creek in northwestern Saskatchewan and Alberta.

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Calgary – Oilsands Quest Inc. has put all of its oilsands projects in northern Saskatchewan and Alberta on hold as it begins an opened ended corporate drill to explore financial options to allow it to proceed.

“We are experiencing the growing pains that are common to smaller oil sands companies with significant opportunities,” said T. Murray Wilson, president and CEO in a news release Aug. 17.

The Calgary-based company held an early morning conference call on Aug. 18 to address shareholder concerns.

“We are confident that upon closer examination of our assets, potential partners will

Quest has retained strated that the glacial project at the site. determine its ultimate TD Securities Inc. as fi- till cap overlying the resAt Wallace Creek, size and confirm its comnancial advisor to assist ervoir is capable of con- the company conducted mercial development viit with this process. taining steam. a successful drilling pro- ability.

The committee will As a result, Quest gram in late 2009 and In recent weeks, the weigh all alternatives planned a steam-assisted early 2010, discovering company also began the to increase sharehold- gravity drainage (SAGD) a high-quality oil sands work required at Axe er value, including Lake to re-abandon strategic financing a number of its earopportunities, asly exploration core set divestitures, joint holes. ventures and/or a News of the corporate sale, mergproject stoppage foler or other business lows on the heels of combination – with the company’s unan open deadline. successful sale of its “We had origioil shale assets near nally planned to Pasquia Hills, Sasproceed on a standkatchewan to Canalone basis until we shale Corp. had completed our Quest reported SAGD pilot project, on Aug. 13 that Canbut in light of the shale was unable to substantial capital raise the minimum we require to proof $12.5 million in ceed both at Axe time to purchase the Lake and at Wallace assets that will conCreek, we have detinue to be owned by termined that this is Quest. the prudent course of The company action,” said Wilson. also noted it received Quest has unother expression of dertaken a substan- Oilsands Quest believes a strategic partner could help interest in the oil tial program of work the company re-start its oilsands projects at Axe Lake shale assets from on its two leading in and Wallace Creek in northwestern Saskatchewan and potential buyers and situ oil sands pros- northeastern Alberta. will investigate these pects over the last few options to determine months. pilot project as the first reservoir. if a sale or joint venture At Axe Lake, a suc- step toward developing The company will of the oil shale assets is cessful overburden test- a 30,000 barrel-per-day need to continue to de- in the best interests of ing initiative demon- commercial oil sands lineate this resource to the company.

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PIPELINE NEWS September 2010

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Putting on the ¿nal touches pipeline contractor.

The equipment is placed on a tarp to collect any weed seeds.

“When we’re done, we fold it up and dispose of it,” Singleton said. “It goes into a containment bag and is dealt with the proper manner.”

Everything from pickups to quads and tractors is washed the same way. “We can’t go in there unless the truck is washed,” he noted of organic land.

Singleton said there is a lot of organic land around, some in pretty much every area. Near where a seeder is parked, Singleton pointed to a

After the tractor makes a pass with the rotospike, the result is soft topsoil, as demonstrated by Parkside OilÀeld Services’ Ken Singleton.

a TransGas line from Kisbey to the Lampman area,” he explained.

“We’re doing all the reclaim, rotospiking, seeding, fencing, and all the washing of equipment from non organic to organic lands.”

Organic farmers take the cleaning of equipment seriously, since they can’t spray if any weed seeds make it onto their land. One of Parkside’s specialties is steam cleaning, and one of their trucks could be

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found nearby, washing down a backhoe belonging to Strike Energy, the

A little down the road, a pair of workers is installing a temporary fence along the right-ofway. It will keep cattle off the right of way until the new grass has had time to recover.

Singleton started in the reclamation game in 1982, selling straw to Shell Canada at Midale.

“Since 1985, we supplied noxious weed-tested straw. We used to bail all the straw ourselves. We probe all the bales, take a core sample, bag it, and send it off for analysis. I knew where every bale of straw came from,” said Singleton. ɸ Page C8

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by Brian Zinchuk Lampman – After a pipeline is completed, good reclamation practices will make it nearly invisible in a few years.

Parkside Oilfield Services Ltd. of Kennedy specializes on making it all happen.

Ken Singleton is the owner. He took Pipeline News to a TransGas right -of-way that his crews were putting the finishing touches to.

“We’re putting back

field of bales. “When people hear ‘organic,’ they think food crop. This is organic hay.”

An interesting piece of Parkside’s equipment can be found next to a backhoe. It’s an “Empire Ultra Packer MPMT Multi-Purpose Management Tool,” built by Empire Welding and Machining Ltd. of North Battleford, but custom modified for Parkside.

“These rings were my idea. We use this for rolling the land, straw crimping, or just heavy harrowing,” said Singleton.

A grass seeder is usually mounted on top, giving it a fourth purpose.

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PIPELINE NEWS September 2010

Parkside focuses on reclamation Edward Mullie of Parkside OilÀeld Services works on a temporary fence along a TransGas right-of-way north of Lampman.

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ɺ Page C7 Straw is important in the reclamation business, where it is used for erosion control. “Last year on the Enbridge [mainline] pipeline we spread over 10,000 round and large square bales,” he said.

In that case, the bales provided a barrier to place ditch spill piles on, since they couldn’t strip the land above the existing pipelines adjacent to the new line.

Singleton said, “We did that from Momartre to Cromer, Manitoba. We did the cover crop seeding from the Momartre area to the Kipling area.

We’re continuing from Kipling to Cromer in late summer and fall of 2010.”

Another specialty tool is the rotospike.

Mounted on a threepoint hitch on the back of a farm tractor, a rotospike is like a garden tiller on steroids, with an attitude. It will pummel compacted soil, providing a nice, soft result.

On a typical lease, the process goes like this: First it is rotospiked or cultivated. Then the land is seeded. Crews use equipment to pick stones and harrow. A bale shredder is then used to spread straw. That straw may be crimped as well.

If necessary, silt fences and ‘geo ridges’ may be installed for additional erosion control.

Pipeline right-ofways are similar. Depending on compaction, they may b e lightly cultivated or rotospiked. In cropland, they will often seed a cover crop like oats for erosion control.

In grassland, it may require a nurse crop for the grass.

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PIPELINE NEWS September 2010

Reclaiming an abandoned well

By Brian Zinchuk Weyburn – Eventually it’s time to abandon old wells that have outlived their usefulness. That’s where you’ll find Matrix Solutions Inc. The environment and engineering company has offices throughout Western Canada, including Weyburn, Oxbow, Swift Current, Regina, Kindersley, and Lloydminster in Saskatchewan.

Trevor McMorris is an agrologist with Matrix Solutions Inc., and heads up the reclamation activity for Matrix in southeast Saskatchewan.

Most of their Weyburn staff are agrologists, engineers, biologists, or environmental technicians. Matrix Solutions has 26 people working out of Weyburn, of which about a third focus on reclamation.

McMorris explained the process of a well abandonment, from an environmental perspective.

“The oil company will call us when a well is [to be] abandoned, cut and capped. In a few years, you wouldn’t know it was there,” he said.

A recent innovation in the abandonment business is the provincial government’s “Acknowledgement of Reclamation,” which formally indicates an oil company is well and truly done with a site. That is their ultimate goal, according to McMorris. It takes the liability for the well off the company’s books. Outstanding wells contributed to the company’s Licensee Liability Rating, part of the Orphan Well Program.

An abandoned well counts against the rating, because it is not making any money.

Before, wells could be kept on hiatus without much loss. But with the changes, old, historical wells eventually bring about the conclusion that it’s time to get rid of them.

“Since this has come into effect, we’ve at least doubled our reclamation department,” McMorris noted. “We’ve picked up a tonne since this has been implemented.” ɸ Page C11

Jason Signarowski is the wizard behind the Matrix Solutions air force of unmanned aerial vehicles.

Photo submitted

This unmanned aerial vehicle may look like a model helicopter, but it is capable of so much more, and is worth about as much as a base-model minivan.

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PIPELINE NEWS September 2010

C11

Seeking an Acknowledgement of Reclamation ɺ Page C10 Steps Once a well is abandoned downhole, the casing is cemented off. “We do a gas migration test to ensure no gas is escaping from the well,” McMorris said.

The earth around the well at the surface is excavated, and the wellbore is cut. A plate is welded on top. “We collect confirmatory samples from the excavation to ensure they meet provincial guidelines,” McMorris said. The hole is then backfilled.

There are a number of steps the company has to go through. Phase I is essentially homework, the desktop portion, looking for potential environmental impacts.

“We go through the company’s well files and surface files, looking for drilling waste disposal and hydrocarbon issues on site. We’re making sure the drilling mud was disposed of correctly. We do spill searches at the Ministry of Energy and Resources for spill records.

We order all available historical aerial photos,” he explained.

Those photos will reveal tank farms, flare pits and the like.

Matrix will also contact landowners and operators for their recollections about the site. “Usually the best is the landowner. They’ll know if vegetation isn’t growing right,” he said.

With all this homework in hand, it’s time do a site visit. GPS units accurate to less than a metre are used to map the site. “We’re looking for hydrocarbon staining on the surface, i.e. around the well centre or lease pad. We’re looking for poor growth areas off the lease pad.”

Subsided areas indicate a historical sump, for instance.

McMorris explained, “You’re trying to prove there is no impacted material on site. If there is, you delineate it to quantify what’s there.”

Delineation of impacts is the Phase II compo-

and 60s. More recent wells are drilled and abandoned dry wells with no crude oil production.

An excavation company is contracted to remove impacted material, which then is hauled to the landfill.

“We co-ordinate the ground disturbance and equipment,” he said. This is Phase III, considered remediation.

During each phase, Matrix has someone present.

“We have a guy on site, ensuring that all safety rules and standard operating procedures are followed in addition to meeting legislated regulations and guidelines.

“We’re on the site 100 per cent of the time.

“Once we’ve got it all out, we’ll backfill it with clean material,” McMorris said. That material usually comes from dugout banks. The site is then recontoured. Topsoil is replaced. If it’s cultivated land, crops are planted. Otherwise, prairie grasses are planted with a native seed blend, using certified seed. ɸ Page C12

A spill site can be clearly seen from above in this photo taken from a helicopter unmanned aerial vehicle.

Photo submitted

nent.

Samples are taken for lab analysis. The testing is necessary for acceptance into an approved industrial landfill. They look for things like the total extractable hydrocarbons and BTEX – benzene, toluene, ethyl benzene and xylene.

“There are wells where nothing goes to a landfill.

Out of a sample of 10 wellsites, six or seven may have some material that requires landfilling,” McMorris noted.

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PIPELINE NEWS September 2010

Sites are overÀown each year and photographed ɺ Page C11 After seeding, the company will monitor the vegetation for the next three years, visiting annually during the growing season. The intention is to have equivalent crop growth within three years.

Part of that monitoring is done from a bird’s eye view, using unmanned aerial vehicles. (See sidebar on this page) “All of our reclaimed sites get flown every year and [the results are] included in the report, said McMorris.

“Once we’re fairly confident we’ve got equivalent vegetation growth, we contact the land owner, meet with him, and show him the photographs. Our ultimate goal is to make the landowner happy.”

Once everything is done, and the landowner has signed off, it is submitted to Regina for consideration for an Acknowledgement of Reclamation.

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routinely uses unmanned aerial vehicles (UAVs) to visually inspect locations like wellsites.

“We found it was something that would give us a competitive advantage over our competition,” explained Trevor McMorris, who looks after the reclamation activity for Matrix in southeast Saskatchewan.

The company has two helicopters and one fixed-wing UAV at Weyburn, and another helicopter in Swift Current.

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be wrong. These birds would be useful for the army in Afghanistan.

The aircraft have GPS autopilots that allow them to fly precise tracks over a pre-planned route.

Cameras are mounted on the aircraft, typically aimed downward, and will snap photos at prescribed intervals. “It will fly and hover over whatever GPS point you tell it to,” McMorris said. The well centre is the usual start point for a helicopter. For larger areas, the airplane UAV is used.

A mosaic of photos is then “photostitched” together. Once on the computer, layers can be added onto the graphic, including data collected on the ground and mapped out by handheld GPS. Jason Signarowski is the wizard behind them. He designed and hand-built the two helicopters in Weyburn, one of which is his own personal helicopter. The price for each is similar to a base model minivan.

They use lithium polymer battery packs and electric motors instead of gas motors. The rotor blades are carbon fibre.

The airplane UAV was purchased off the shelf, however.

While Signarowski is the pilot-in-chief, they are set up so that others within the company can operate them, essentially by programming in the GPS system.

PIPELINE NEWS September 2010

Coming full circle Story and photos by Brian Zinchuk Bienfait – When it comes to reclamation, Ron and Kathy Gibson, owners of Prairie Western Reclamation and Construction, Inc., have come full circle.

Ron used to dig flare pits in the 1960s. Now, 40 plus years later, his company is digging them out, remediating and reclaiming old well sites.

Literally a stone’s throw away from their facility on the east side of Bienfait is an old coal mine. The company specializes in reclamation for both the local coal mines and in the oilfield.

“We’ve been around since 1987. That’s when this company started,” said Ron, noting they had done similar work under a different company.

“Back in the 80s, it was small time. You didn’t spend much time at it,” Ron said of reclamation, both in mining, and in the oilpatch. “In the oilfield in particular, back then, no one was doing it and they didn’t want any part of it.

“We ventured in, got some products, and went from there. We talked to some oil companies, and we got started with some major oil companies.”

The mines came into the picture around the same time. “We were awarded a contract from the coal mines to take care of reclamation work” he added.

Prairie Western has been doing their reclaim work ever since, even though they have changed names several times. ɸ Page C14

C13

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PIPELINE NEWS September 2010

Reclaiming mines and wellsites

No, it’s not bedding for cattle. Straw is used to line the bed of an end dump semi so that the contaminated soil will not stick to the bed.

ɺ Page C13 “They do the base part, hauling the topsoil back with buggies and dozers, and pushing back the spoil,” said Ron. The mines use large equipment, like Cat D10 and D11 dozers, as well as large scrapers.

“Then we come in and pick the rock, and do some finish levelling.”

Prairie Western also fertilizes and seeds the reclaimed land. “The mines have their own blend of seed and fertilizer, so the program is basically set up for us,” Ron said.

“Sometimes we go back when it didn’t catch, or if it was disturbed again.”

A recent innovation in mining has been the two-tone stripping of topsoil and subsoil.

Oilfield reclamation

Ron noted, “The oilfield side is basically the same thing. There’s programs for how much fertilizer you need, and chemicals you use.”

The difference is the scale of equipment.

While mines use very large equipment, reclamation on oilfield sites uses mostly smaller equipment.

Prairie Western also has trucks to haul out contaminated soil from sites like flare pits.

Cleanup of these pits are an important part of their business. “We have found everything in the pits, but mainly hydrocarbons,” he said. “These are old ones from years ago that were just covered up.

“I dug some of those pits in the 60s. Back

then, when you cleaned the treater, you dumped the treater waste, rags, salt water and oil in the pits,” Ron recalled. As the years went on and the environmental side progressed, flare pits fell out of favour.

“Now they’re tested, pre-drilled and are dug out with trackhoes and the contaminated soil is hauled away.”

The excavation is then refilled with fresh clay. Asked where the fill it comes from, he responded they will often dig dugouts and use that as the source. Farmers like to use their own material so they “know what their getting,” according to Ron. Topsoil is put back, and the land is put back into farm production.

Old shale pits, as a rule, are not much of an issue, according to Ron. It’s the flare pits that are the issue. “There’s nothing growing on the real severe ones. You can tell where they are. You can dig out anywhere from 10 to 15 tonnes to thousands of tonnes,” he said.

“We might spend a week or a couple weeks hauling fresh material back in.”

A recent flare pit had approximately 4,000 tonnes excavated.

From start to finish, reclamation of a well site will vary greatly in time.

“It could be a week to two years. Some of the sites, we treat for years, mainly with fertilizer, or redress with new topsoil,” he explained.

“Over time, environmental regulations have tightened up considerably.”.

The company is diversified. For instance, they do a lot of gravel hauling, rentals, dig basements, and the like.

Reclaim is about 60 to 70 per cent of what this company does.

Prairie Western has a substantial collection of equipment including graders, excavators, small six-way blade dozers, packers, trucks, backhoes, farm tractors, and a lot of implements.

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C15

ETI two months behind

By Brian Zinchuk Estevan - When it was announced, representatives of Southeast Regional College acknowledged they were on an extremely tight timeline for the new Energy Training Institute in Estevan. By Aug. 4, the contractor had just arrived on site, and had yet to begin groundwork. Yet all along, the federal government has made clear that they would not be funding work after the end of the fiscal year, March 31, 2011.

That leaves a total of eight months from the start of work until the fiscal deadline for the $7.1 million the federal government signed up for. After that, the federal government has indicated any further funding would be cut off.

“Anything not completed by March 31 is not cost shared,” noted Craig Brown, president and CEO of Southeast Regional College.

“Our target is still that we will be in the building by April 1, or part of the building.”

He acknowledged it won’t be complete by that time, and added they are in ongoing discussions with the provincial and federal government regarding funding arrangements. “I did suggest we spend their $7.1 million first, but they didn’t go for that,” Brown said with a laugh. “I do believe there’s some flexibility.”

“We have a lot of work to do. I am an eternal optimist.”

The contractor, architects and college are all acutely aware of the March 31 deadline as reported by Pipeline News. Compounding concern is the fact nearly all building projects constructed in the region in recent years have been several months over their planned completion dates. The new civic arena in Estevan currently under construction, has seen substantial delays due to weather. ɸ Page C16

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This artist’s impression of the new Energy Training Institute in Estevan was unveiled during the sod turning on Nov. 20, 2009. It took until August, 2010, for actual work to begin. The parking lot is not going to be paved right away, as part of a cost-cutting measure.

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PIPELINE NEWS September 2010

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ETI construction under the gun Foundation work began in mid-August on the new Energy Training Institute in Estevan. The federal government has indicated that they are not paying for any work done on federal stimulus infrastructure projects after the end of the current Àscal year.

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ɺ Page C15 “We are looking at what can be done,” said Brown, when asked if they were looking at throwing more workers at the project.

As of early August, the project was two months behind schedule. Part of that is due to contractors asking for extended time to review the tenders with all of the tenders coming in over budget. The college worked with the lowest three bids, asking for ways to bring it down by $1 million. The second

and third lowest bowed out, leaving Quorex Construction of Regina the successful bidder.

The parking lot will not be paved at this time, and there won’t be curbs installed yet, either. The cladding will be of a more standard type, as opposed to a higher grade as originally envisioned.

“We went through room by room, line by line,” Brown explained. There will be no impacts on the function of the building, he said, and most of the cosmetic changes will be hardly noticeable.

The total budget is $14.2 million, plus the City of Estevan providing land and services worth approximately $1.5 million. Brown said they are putting the finishing touches on a college foundation and fundraising campaign, whose goal is to raise another $3.5 million over the next couple of years.

The drive is scheduled to kick off in September. A director for the foundation has been hired and is on board.

Brown said major companies are interested in helping out. “They want to be a partner with us,” he said, noting naming rights will be part of the fundraising efforts.

While noting he’s an optimist, Brown acknowledged some sleepless nights. “I can’t fix the two months that we lost.

What do we do to get going?” he said.

PIPELINE NEWS September 2010

C17

Bakken growth fueling Enbridge expansion

Carson Energy Services was installing a new 6-inch natural gas liquids pipeline near the BP Steelman plant on Aug. 5. The line is part of system expansions for Enbridge.

By Brian Zinchuk Estevan – Growth of Bakken production, both in southeast Saskatchewan and North Dakota, is fuelling continued expansion of the Enbridge gathering system in the southeast.

Enbridge is currently investing approximately $120 million to expand the gathering system which will result in the construction of new pipelines and the installation of new tankage. There will also be a re-activation of the Portal Link pipeline from North Dakota, in addition to the $120 million, according to Peter Taylor, manager of Enbridge Pipelines (Saskatchewan) Inc (EPSI). EPSI is the localized division of Enbridge that operates the southeast Saskatchewan gathering system and feeds into the Cromer, Manitoba, terminal on the Enbridge mainline system.

The Portal Link had originally been built to allow southeast Saskatchewan oil to flow into the Enbridge North Dakota system, but burgeoning production south of the border means that it now makes more sense to use that pipeline in the opposite direction. After several years of inactivity, the line is being reversed so that North Dakota oil can flow from Berthold, N.D., to Steelman, and then join up with the mainline system at Cromer.

Growing production in the Stoughton area has also been a driving factor. Indeed, on the August long weekend, no less than 10 drilling and service rig derricks could be seen within a 10 km radius of Stoughton.

An eight to 10-inch pipeline was constructed in the fall of 2009, running from northeast of Stoughton to the Bryant booster station, and will be put into service when the rest of Phase 2 is complete.

Two tanks are currently under construction to accommodate the additional flow, both 20,000 bbls in capacity. One is being installed at Benson, and the other at Steelman, along with associated pumping facilities.

The Benson terminal is being relocated, further away from the road. Taylor said the new location will be safer.

One line near Stoughton is being reversed, and facilities in the area are being upgraded.

Much of the work started this past spring, after the appropriate regulatory approvals were obtained.

The two prime contractors are Carson Energy Services of Lampman, who have been doing the pipeline work and a portion of the facility work, while Willbros Canada is doing both the tanks and the facility work. ɸ Page C18

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PIPELINE NEWS September 2010

Working upstream of the ACCE project ɺ Page C17 Taylor noted that the first phase of this “debottlenecking” project was completed in June, 2008, with pipeline construction from Alida to Cromer. It was referred to as the “ACCE project.”

“This is a second phase, upstream of the ACCE project, further debottlenecking capacity,” he explained.

“We’re getting ready to start putting in a new six-inch natural gas liquids (NGL) line from the BP Steelman gas plant to Wilmar, and converting a sixinch crude line between Willmar and Alida to NGL,” Taylor said. That will free up a currently underutilized 12-inch line that is being used for NGLs between our Steelman and Alida terminals. The freed-up line will be repurposed to crude oil usage.

All told, Taylor said, “We’re estimating about a 75,000 bpd increase in upstream capacity.” Most of that is meant to accommodate Bakken production.

Put in perspective, Saskatchewan’s average daily production for the entire

province had been running around the 425,000 bpd mark earlier this year, according to the Ministry of Energy and Resources.

“We’re scheduled to be in service by Q4 (fourth quarter), 2010. Our portal reversal, we’re hoping to have in service Q1, 2011, subject to regulatory approval,” said Taylor.

Engineering work is underway on the Portal Link reversal, he noted. “It has to fall behind the Phase 2 expansion.”

While that Portal Link will allow an initial 25,000 bpd of North Dakota oil to flow north towards Cromer, the line is capable of much more flow with increases in pumping capacity. Taylor called it a “quickly expedited project as a relief valve for North Dakota capacity.”

Further down the road, and subject to confirmation of commercial support, Enbridge will be installing a 12-inch line from Steelman to Cromer to accommodate additional North Dakotan oil.

It is planned for 2012. “Our open season is coming out shortly,” Taylor said.

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PIPELINE NEWS September 2010

C19

Expanding a terminal

By Brian Zinchuk To accommodate the influx of Bakken oil, the Enbridge Steelman terminal has had construction underway since June, and it will continue for much of the year.

As of early August, a new 20,000 barrel tank is under construction, the fourth large tank on the site. Its foundation looks like a giant cement margarine tub, 9-ft. deep, 60 ft. across. According to Scott Moreland, lead inspector, the centre will be filled with compacted gravel and sand, as will the area outside the foundation. On top of it will go the large steel tank.

“There’s a tremendous amount of piping,” he said, walking past two pile drivers that have been installing pilings to support the numerous piperacks.

Four pumps and two boosters will be added to the terminal. “There’s a tremendous amount of electrical work that goes into it,” Moreland added.

This giant concrete tub will be Àlled with compacted gravel and sand, “This whole area will be covered with liners so we have total containment,” forming the foundation for a new 20,000 bbl. tank. Willbros Canada is doing the tank work at the Enbridge Steelman Terminal he said.

The liner itself will be composed of geotech fabric, a lift of sand, more geotech, and a liner on top. Then there will be a lift of bedding sand on top of that.

The whole area will be surrounded by a low concrete wall. “It’s very well protected,” he said.

An earthen berm will go around the new tank, similar to the setup for the other tanks.

A communications tower on the east side of the site will come down once its replacement, on the west side, is completed. On Aug. 5 a crew could be seen assembling the 250-ft. tower, which is substantially taller than the one it is replacing.

A new electrical substation will be added to the east side of the site.

Bringing it all online will be done in such a way as to minimize downtime.

“We’ll have a series of shutdowns in sequence to minimize shutdown time. It’s all laid out methodically,” Moreland explained.

The number of workers varies by the day, but it ranges from around 20 to 35.

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PIPELINE NEWS September 2010

PIPELINE NEWS September 2010

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BlackPearl to drill 60 development wells Onion Lake – Wet weather put a damper on the oil and gas activities of BlackPearl Resources Inc. in the second quarter, but company president John Festival sees blue sky ahead for its heavy oil properties in Alberta and Saskatchewan.

“We had a relatively quiet second quarter in terms of new activity due to spring break-up and wet weather conditions,” he said in the Aug. 10 release of quarterly results.

“However, we will be very active the remainder of the year on our three core areas.

“Short-term production growth will come from continued development drilling at Onion Lake while we proceed with construction of the commercial polymer flood at Mooney and the SAGD pilot at Blackrod.”

No new drilling occurred in the second quarter at Onion Lake north of Lloydminster due to rain, but BlackPearl will begin development drilling of a planned 60 well drilling planning in the third quarter.

BlackPearl completed connecting last fall’s drilling sites into its fuel gas system at Onion Lake which allowed the company to reduce operating costs during the second quarter.

Over the next three to five years, BlackPearl plans to drill over 200 wells in the area and then convert a portion of the Onion Lake field to thermal (SAGD) recovery.

The Onion Lake wells produced an average of 7,100 barrels of oil equivalent a day during the reporting period accounting for nearly all of the total production of 7,163 boepd from the company’s oil and gas operations.

The production total in the second quarter is a 39 per cent increase over the same period in 2009, and a 7.1 per cent gain from first quarter production.

“Third quarter production will be modestly impacted by recent asset dispositions, but we are confident that our planned second half activities will allow us to reach our 2010 exit production target of 8,000 – 8,500 boepd,” said Festival.

BlackPearl is waiting

for regulatory approval to commence construction of facilities for a $25 million single SAGD pilot project at Blackrod in the Athabasca oilsands of northern Alberta.

The capital costs of the pilot facilities and

cilities for the pilot are on-going as approvals are expected soon.

BlackPearl anticipates initiating steam injection during the first quarter of 2011.

The company continued to advance the

Mooney in north-central Alberta.

“We anticipate receiving regulatory approval from the ERCB for phase 1 of the commercial ASP flood during the third quarter,” said Festival.

“Once we receive these approvals, we will commence field construction of the facilities and we expect to be in a position to start ASP injection early in 2011.

BlackPearl also filed an application to the Alberta Department of Energy earlier this year for lower enhanced oil recovery royalties for the project.

“If approved, the

“Third quarter production will be modestly impacted by recent asset dispositions, but we are confident that our planned second half activities will allow us to reach our 2010 exit production target of 8,000 – 8,500 boepd” - John Festival

wells include the construction of a 31-kilometer all weather road to the facility site.

Engineering and design work on the steam and water handling fa-

engineering and design work on the water and chemical handling facilities for an Alkali Surfactant Polymer (ASP) flood at its conventional heavy oil development at

initial royalty rate on the ASP flood project is expected to be approximately 10 per cent,” said Festival.

This compares favourably to the current royalty rate on conventional Mooney production of 23 per cent and the estimated 35- 40 per cent BlackPearl would pay on ASP flood production without any royalty relief.

In the second quarter BlackPearl earned $19.2 million from the sale of some non-core oil gas properties in southern Alberta and a heavy oil property in Saskatchewan.

“We intend to continue selling our noncore oil and gas assets over the next two or three years,” reported Festival.

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PIPELINE NEWS September 2010

Final resting place

To give a sense of scale to the Lomond landÀll, on the top left is a small dozer, on top of the Àll material.

By Brian Zinchuk Colgate – What looks like the base of a large pyramid is slowly rising just east of the hamlet of Colgate, in the South Weyburn Oilfield.

It’s known as the CCS Lomond Treatment Facility (or landfill), named after the Rural Municipality of Lomond, in which it resides. It’s one of a fleet of eight waste disposal facilities CCS owns and operates in Saskatchewan. CCS Midstream Services has a landfill and treatment, recovery and disposals (TRD) at both Kindersley and Gull Lake, salt cavern disposal facility at Unity, and a landfill and water disposal at Marshall. Derek Yockey of Lloydminster is the general manager for Saskatchewan. He took Pipeline News on a tour of their facility on Aug. 12.

“We started this operation in 2004,” Yockey said.

The industrial landfill site got its start from the sister company, HAZCO, which had been doing a

number of cleanups in the southeast region. There weren’t a lot of options for them to haul their material to, according to Yockey.

The RM of Lomond has been very accommodating, he said. The facility uses dedicated haul roads.

When asked why they located the landfill there, a few kilometres off the highway and south of Weyburn, Yockey said it had to do with the geology, particularly the clay that was a major determining factor.

There’s two simultaneous business operations at play on the site, each operating under its own Saskatchewan Ministry of Environment permits. The first is the industrial landfill, which is by far the most prominent. The second is the soil treatment facility, which takes care of material that may not be able to go directly into the landfill.

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category, and about 99 per cent is ‘non-dangerous,’” Yockey explained. Those determinations come from the chemical constituents of the waste. Lomond is a non-dangerous, non-hazardous landfill.

“The waste treatment area can take in spills as they happen, as long as the waste is solid,” he said.

That means no vac trucks, just end dumps. They can take waste that exceeds the BTEX (benzene, toluene, ethyl benzene and xylenes) criteria of the landfill. That criteria is set by the Canadian Council of Ministers for the Environment. (CCME).

Some treated product can be used for alternative uses, such as infield roads within the facility, or the cap.

When things like a spill occurs, the treatment pad allows the oil company to get it up, off the ground. “We can put it somewhere where it won’t do any further damage to the environment,” Yockey said. ɸ Page C23

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PIPELINE NEWS September 2010

C23

Reclaimed solid waste ɺ Page C22

Derek Yockey, regional general manager for CCS Midstream Services in Saskatchewan, points out the welded poly seams of the liner. The people who weld these seams are tested in a manner similar to pressure welders before a job.

Photo by Brian Zinchuk

The treatment pad is composed of one metre of compacted, engineered clay liner, which is overlain with half a metre of sacrificial soil.

A layer of snow fence provides a warning, should any equipment begin to approach the actual liner.

Landfill The landfill is quite large, and growing.

“Our approved footprint is just over 3 million tonnes,” Yockey said. They can go to as many as 10 cells. Three are currently active, and they just finished construction the fourth. As the landfill grows wider, it can eventually grow taller, adding another 7 m in height.

The outside edge of the landfill is composed of a large earthen berm.

The berm rises eight metres above the surrounding prairie, while the cell is dug six metres below. The material that was excavated made up the berm, and will eventually make up the cap, too. “You take out as much as you need to cap it,” Yockey ex-

plained. To the north of the cells, native topsoil and subsoil are saved for eventual replacement.

The cells themselves are built with compacted clay liners, then 60 mil high density polyethylene. On top of that, there is a woven geo-textile fabric with a drainage layer.

“At our current fill rate, we expect to be here for another 43 years. We’re not in the game for the short haul,” Yockey said.

The site is onequarter section, and they have about 60 acres that could eventually be developed into landfill.

Around the top

of the berm there are signs at regular intervals, with letters on one side and numbers on the other. They allow the operators to keep track of which loads go where.

Process It all starts with the ‘generator,’ i.e. the oil company, or the environmental company hired by them.

“They contact us and say, ‘we have this type of waste,’” Yockey said.

CCS sends out a waste approval application in response.

Samples are taken of the product in question, often by the environmental consultant. ɸ Page C24

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PIPELINE NEWS September 2010

Control the water

Water is the biggest concern for landÀll operators. Any rain that falls within the lined area becomes leachate, and must be collected, treated and disposed of. This lined pond captures all the leachate collected within the lined landÀll.

Photo by Brian Zinchuk

ɺ Page C23 In the case of ‘I made a mess, now what?’ material, it cannot be hauled immediately to the landfill.

“Waste needs to be characterized, independently sampled by approved labs,” said Yockey. The labs are typically third party. “We ask for a specific set of criteria, depending on the major constituent of the waste, i.e. a pipeline spill vs. a flare pit.”

CCS Landfill Services does not do the digging or sampling itself, however, HAZCO, a sister company within CCS, does specialize in that line of work.

“HAZCO are experts in that field,” he said.

It typically takes three to five days turnaround for lab testing to come back. Once approved, the material is trucked in.

There’s a ladder at the weigh scale to allow for samples of material coming in.

“We sample here.

We have a hazardous waste gate program,” Yockey said. Random checks are done daily, monthly and by volume.

“We’ve had to reject loads, but not here.”

All CCS loads must have a pre-printed nonhazardous waste manifest.

After weighing in, the truck proceeds into the landfill, either the bottom or top, and dumps its load. They have heavy equipment, like dozers, and excavator and rock truck on site to put the material where it needs to go.

The truck then weighs out and leaves.

Within the landfill, what you see is mostly dirt, but you’ll also find some chunks of plastic. Truckers will use poly to line the bottom of the truck bed so that the load doesn’t stick during unloading.

Some also comes from containment liners removed for various sites.

There might even be a little bit of wood. But it’s not garbage, and you don’t see the seagulls you would at a municipal landfill. There’ no free lunch for the birds here.

The landfill was started just before the “years of the Bakken,” as Yockey put it.

They are just now getting into taking solid non-hazardous drilling waste, i.e. the stuff that is collected in shale bins on drilling sites – drill cuttings and drilling mud. It has to be made into a solid state before it is shipped Water “Water is a landfill operator’s biggest concern,” said Yockey, and also the biggest expense.

Water on site, but outside the cells, goes to a storm water retention pond. Any water that falls within the cells goes to its own, lined pond. “We treat all the water inside,” Yockey said. “Dealing with landfill leachate is the number one priority.

“We monitor the leachate level to where we keep it at the proper, regulated level.”

Having somewhere to take that leachate is an issue.

Consider this: If 12 acres of landfill gets an inch of rain that leads to one acre-foot of water to deal with. That’s the equivalent of 1,233 cubic metres, or 7,755

barrels. While evaporation will take care of some of it, it won’t handle all of it. Ironically, the site that receives solid waste has to truck out its leachate water as liquid waste. They’ve had problems getting approvals from the government to use nearby waste disposal wells, so CCS is hauling that leachate water all the way to its cavern facility in Unity, on the opposite side of the province.

“I haven’t been happy about rain since 1999,” Yockey said with a grin.

Surrounding the site are groundwater test wells to ensure the landfill doesn’t contaminate the local groundwater.

The industrial landfill business is becoming self-regulated, Yockey said. “There is no [specific] legislation, but there is regulation.”

There are now a standard set of permits.

CCS is the largest industrial landfill operator in Saskatchewan, he said. “We’ve got four of them,” he said.

CCS has already put in place the financial insurance to close the Lomond facility, if needed.

PIPELINE NEWS September 2010

C25

Disposing of oil¿eld waste liquids Willmar – In the remediation and reclamation game, there are typically liquids and solids that need to be disposed of. That’s where waste management facilities like Rotex Energy Ltd., located approximately 20 km east of Lampman near Willmar, come into play. Rotex is the most recent entrant to the field in southeast Saskatchewan, having opened for business in January.

“We receive liquid loads and solid loads from drilling and production operations as well as reclamation jobs,” Kevin Baumann, majority shareholder said.

A lot of it comes in by vac or hydrovac trucks, with some arriving via end dumps.

There is a concrete pad receiving area for solids, which are processed and dealt with in short order, according to Baumann.

“We send some of our solids to Plains Environmental’s Melville cavern, or to landfills in the area,” he said.

“Most of our business is from the drilling and completion side. We get some reclamation product and as well we supply hot water for spill clean-up.”

Bauman pointed out that it is the oil company’s responsibility is to ensure waste products are handled appropriately.

“When an oil company takes something to a waste management facility, they need to know they have proper procedures, the proper licensing, and they do the right thing with that product. It’s our job to separate the oil, water and solids and do the appropriate disposal process,” he said.

“We want to deal with it within 24 hours,” he explained. The night shift often deals with separating and disposing of product as well as preparing solids for transport.

Liquid waste is pumped into a deep disposal well on site. A centrifuge separates solids from the liquids, depositing those solids in a storage area beside the solids pad.

One of the crucial parts of the waste disposal business is the recovery of oil from the waste. “We’re paying our customers for a portion of every drop of oil that comes to us. If they want to see a full accounting of their oil credit balances, they can,” said Baumann Rotex has a settlement program to pay for the recovered oil.

“In the past, disposal companies would take product at low rates in order to keep the oil. I think those days are done. We implemented a payback system so that our customers get a full accounting,” ɸ Page C26

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PIPELINE NEWS September 2010

Frac water under utilized

Larry Trowsdale, left, of Rotex Energy Ltd. helps a driver from Cliff Nankivell Trucking, to hook up his tanker to unload at Rotex Energy’s Willmar site.

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ɺ Page C25 “There is a lot of competition,” he said. Asked how they compete, he replied, “Compliance.”

“Our gate is open every day for customers to come visit our facility and conduct inspections and audits. In the end, we feel the oil companies will go to the places that are clean, get it dealt with, all within compliance of provincial regulations.

“Rotex recently obtained approval to add on a larger pad for more solids handling and to add a few process items. We’re going to spend some money to further increase our efficiency,” said Baumann.

The expansion was approved recently, and work was scheduled to start near the end of August, just nine months after the facility went into operation.”

Rotex uses an unload pumping system to offload the fluid haulers, instead of relying fully on the truck’s own pumps. The result is a faster unload. “In and out in approximately 20 minutes. For 30 cubes, that’s pretty good,” Baumann said.

When a load comes in, the driver signs in, and, if it is the driver’s first visit, a site orientation is mandatory.

“We’ll do a waste characterization to determine if it falls within our license, and then we’ll know what to do with it and where it goes,” he added.

Asked about what specifically is done with the various forms of waste, Baumann responded that much of it is proprietary in nature although their business consists of separating and handling oil, water, and solids. ɸ Page C27

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Responding to two requests for proposals in Saskatchewan, Northland Power was recently selected by SaskPower to provide 261 megawatts (MW) of base load power and 87 MW of peaking power. GE will supply its 7FA heavy duty gas turbine for the North Battleford baseload power plant and two LM6000-PF aero derivative gas turbines for the Spy Hill peaking plant.

According to SaskPower, there are two pri-

mary factors causing the need for new electricity supply sources – the need to retire or life-extend select generating units and the growing demand for electricity in Saskatchewan.

Based on the current projected supply gap, SaskPower will have to rebuild, replace or acquire approximately 4,100 megawatts by 2030, resulting in the need for significant new generation and transmission infrastructure.

“Canada is a key growth area due to its commitment to cleaner energy, and our project the Northland Power reinforces GE’s commitment to serving the world’s energy demands responsibly,” said Keith Triginer, country executive – Canada for GE Energy. “The fuel and operational flexibility features of our technology will help Saskatchewan meet its environmental goals.”

The LM6000-PF aeroderivative gas turbines are GE “ecomagination” approved. To earn ecomagination approval, a product is evaluated for its ability to significantly and measurably improve a customer’s environmental and operating performance. The rigorous, multi-tiered review process is concluded with an independent, third-party audit to ensure accuracy and thorough documentation of technological performance.

PIPELINE NEWS September 2010

C27

Combatting competition with compliance

On the left, a vac truck dumps its load on the receiving pad for solid wastes at Rotex Energy’s Willmar facility. On the top right is a centrifuge which spins liquids out of the waste, leaving solids for disposal.

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Éş Page C26 After unloading, plant workers wash out the vac trucks and hydrovacs.

Frac water The Willmar facility was set up not only to process and dispose of waste, but also to provide frac water from a source well located adjacent to the site. Adoption of the frac water supply has been very slow, which is a major disappointment to Baumann. “When we ďŹ rst developed the Willmar facility, we did some exploring for a suitable non potable source well and we were successful,â€? he said.

The abundance of precipitation this year has done Rotex no favours in that there is a lot of easily available surface water. “The industry is using this seasonal abundance of surface water now, but we need to look forward – everyone’s using large quantities of fresh ground water now, but who knows how much there will be in the future? Very few people know what the recharge is. Rotex’s fracturing compatible source water continues to be an environmentally responsible alternative to using this province’s ground water resources,� said Baumann.

Their source well is approximately 1,600 m deep. “This water is not drinking water, this is far below the ground water, yet it’s crystal clear and good for fracturing operations.�

There has been very low utilization of the source water facility since opening in January, being essentially unused, to the point where Baumann is oering heated water for free until the end of the year as an incentive to bring in clients.

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C28

PIPELINE NEWS September 2010

Filling in The Gap Gladmar – Just a few miles north of the U.S. Border, you’ll find The Gap, and no, it’s not the gap between Winnipeg and Calgary. The landfill known as “The Gap” plays an integral part in the reclamation business in southeast Saskatchewan.

When there’s a spill or leak of some sort, or simply poor environmental practice in the past such as flare pits, the result can be contaminated soil. That contaminated soil needs somewhere to go.

The Gap is just a few miles south of a small oil pool, near the western edge of the southeast Saskatchewan oilpatch. It’s not the most obvious place to put such a facility, until you see what’s just over the hill from the landfill – Glenn Pettersen’s house, just a few hundred metres away. He founded the operation in 2001. He has since sold it, but acts as the facility manager. For him, at least, the location was indeed obvious.

“The main thing [is], it was opportunity,” he explained, when asked why he put a landfill so close to his home, when a not in my backyard mentality would have most people screaming for the hills. ɸ Page C29

A truck dumps a load of solid waste at The Gap, a solid waste landÀll near the U.S. border.

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PIPELINE NEWS September 2010

C29

In my backyard ɺ Page C28 “It wasn’t garbage. It’s just an oilfield landfill. I wasn’t worried about it,” he said.

Pettersen has farmland around the landfill site.

“I was familiar with the oilfield previous to this. It would do something for the area,” he recalled.

Indeed, about a dozen people for the nearby area now work as truckers, hauling material to The Gap. This is in an area which gets pretty close to the definition of ‘sparsely populated.’

As for running for the hills, The Gap is in a gently rolling landscape.

“We tried to use the natural contours to start,” he said.

Construction started in the fall of 2001, and they took their first load in the spring of 2002.

From 2004 until recently, the site was owned and operated by Waste Services Inc, until that company merged with BFI Canada on July 2. (see sidebar on page C30). Gord Machon is the market development manager for Alberta and Saskatchewan for the combined company.

At the time the facility was built, the only competing landfill in the region was at Virden, Manitoba, according to Machon, making it much closer to the southeast Saskatchewan oilpatch. That’s since changed with another player in the area in recent

years.

The landfill itself has a dual liner system. There’s a poly liner on top, with engineered compacted clay below that. It is compacted to a certain hydraulic conductivity factor.

“It’s impermeable to water,” added Machon.

“Below the site is an ideal clay formation. It’s extremely thick, and has a lot of integrity. There are no fractures or sand seams.”

The landfill is currently using one of a series of cells. As the landfill grows in width, they can pile it higher.

“We are licensed to accept nonhazardous solid waste,” Machon said. Soils are the primary material, originating in the upstream oilfield sector.

“Incoming wastes are not allowed to contain any free liquids,” he said. It has to pass a paint filter test, to ensure there are no free liquids. In order to determine whether free liquids are present, a sample is placed on a filter which looks similar to a paint filter, and nothing can pass through the filter in a certain length of time. Tests are randomly sampled from every project that comes in.

But before they arrive at the gate, samples need to analyzed by an accredited lab. An environmental consultant often acts as a go-between. ɸ Page C30

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C30

PIPELINE NEWS September 2010

The Gap

A poly liner is above a compacted clay liner. The dozer at the top pushes out the loads into the active landÀll cell.

Photo submitted

ɺ Page C29 “If we approve it, we make arrangements for transport to the site,” he said. It all comes on enddump trailers. “Vac trucks are primarily utilized for liquids, and therefore we do not receive any wastes that could be delivered by vac trucks or tankers.”

Typical waste comes from flare pits, pipeline spills, and drilling cuttings. “That’s 95 per cent of it,” Machon said.

What you see in the landfills looks like dirt, basically, topsoil and clay. You’ll also notice some hay.

That’s because the firm provides square hay bales

to truckers to line the bed of their box, so the load doesn’t stick. It improves unloading time.

“It’s extremely competitive down here,” he said.

Indeed, Pipeline News was not allowed to take photos during a visit on the site, but was instead provided with pictures. “We have many years of ‘airspace’ left,” he said. ‘Airspace’ is the term for unused capacity in a landfill.

When it is eventually completed, a certain amount of compacted clay will be placed on top. The clay will act as a liner. Above that will be topsoil and native vegetation.

WSI and IESI-BFC merge Toronto (MARKET WIRE) IESI-BFC Ltd. and Waste Services, Inc. (WSI) completed their merger on July 2 which establishes North America’s third largest solid waste management company. The combined company, which will be headquartered in Toronto, will continue as IESI-BFC Ltd. The merged company will have more than 6,000 employees serving commercial, industrial and residential customers in 11 U.S. states and the District of Columbia, and in six Canadian provinces. The merger includes The Gap, a solid waste disposal facility south of Gladmar, Sask. just northwest of the Saskatchewan-North Dakota-Montana border intersection The combined company will be led by Keith Carrigan, IESI-BFC’s current vice chairman and chief executive officer. Thomas Cowee, vice president and

chief financial officer of IESI-BFC, will continue in his current role.

The board of directors of the combined company will consist of eight members, including Carrigan, five directors from the IESI-BFC board of directors and two directors nominated by WSI. WSI has nominated Michael G. DeGroote and David Sutherland-Yoest.

“Today, in completing our transaction with WSI, we have advanced to a top-three position in the North American non-hazardous solid waste management industry,” said Keith Carrigan, vice chairman and CEO of IESI-BFC. “We look forward to benefiting from the synergies that will result from our combination and creating additional future value for shareholders. We expect the combination to generate additional free cash flow, giving us the ability

to deliver shareholder value through several avenues, including the ongoing payment of our regular quarterly dividend. We are very excited to begin this new phase for IESI-BFC and remain committed to delivering excellent customer service, environmental stewardship, and community support.”

IESI-BFC Ltd., through its subsidiaries, is one of North America’s largest full-service waste management companies, providing non-hazardous solid waste collection and landfill disposal services to commercial, industrial, municipal and residential customers in eleven states and the District of the Columbia in the U.S., and six Canadian provinces. Its two major brands, IESI and BFI Canada, are leaders in their markets, according to the company, serving customers with vertically integrated collection and disposal assets.

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PIPELINE NEWS September 2010

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D-Section

PIPELINE NEWS

September 2010

Saskatchewan’s Petroleum Monthly

SPECIAL REPORT COAL & CARBON DIOXIDE

This wide shot of the Great Plains Synfuels plant at Beulah, N.D., is about as close as you’re allowed to get with a camera to the gasiÀcation system that turns coal into synthetic natural gas, or ‘syngas.’ From right to left, the crucial hardware are the gasiÀers in the building on the right. The large dome is for ammonium sulphate storage. The towers in the middle include the boiler stack and rectisol plant. The light blue towers area on the left is anhydrous ammonia plant, and the squat building on the extreme left is a cooling facility for the anhydrous plant.

The other end of the pipeline Story and photos by Brian Zinchuk Beulah, N.D. – The world was running out of oil and gas, and something needed to be done to provide alternative energy sources. Sound familiar?

That was the genesis of the Great Plains Synfuels Plant, owned by the Dakota Gasification Company.

It’s a large complex about 75 miles Northwest of Bismarck, North Dakota, at Beulah. It’s cheek-byjowl with the Antelope Valley Station, a coal-fired power plant, and one of a select few of its kind.

In Saskatchewan, a lot is said about the carbon dioxide sequestration program done by Cenovus Energy south of Weyburn and Apache Canada near Midale. However, we don’t hear as much about where that gas comes from. At the other end of the 205 mile pipeline is the Great Plains Synfuels Plant.

Big plans The plant’s founders had grandiose plans during the energy crisis of the 1970s. Their initial water permit request revealed they considered a total of 22 plants for converting lignite coal into natural gas.

Each plant would have been twice the size of the Great Plains Synfuels Plant, meaning that if they had been successful, the scope of gasification would have been 44 times what it is today.

The plant was completed in 1984, going online July 28 of that year. About half the natural gas produced is sold to two major natural gas marketing

companies, while the remainder is sold on the open market.

However, when the energy crisis ended and the bottom fell out of the natural gas market in the mid1980s, the project promptly went bankrupt, owing $1.5 billion U.S. to the federal government. It would end up going for auction, with the federal Department of Energy picking it up in 1985 for $1 billion.

The plant would sell to Basin Electric Power Corp for $85 million in 1988. It cost $2 billion to build.

“We did not build this plant. We bought it three years after the original developers declared bankruptcy,” explained Daryl Hill. He is the media relations supervisor for Basin Electric, and the tour guide for the visit. Hill has been with the company since 1978, and has witnessed the development of the two plants from their beginnings.

Dakota Gasification Company is a whollyowned subsidiary of Basin Electric Power Coooperative.

Lots of coal Just to the north of the gasification plant is the Antelope Valley Station, which generates 900 net megawatts of power in its two-unit facility. The two plants share water treatment systems, and if Great Plains would ever be shut down, it would adversely affect Antelope Valley. (See related story Page D4).

Antelope Valley is one of eight large coal-fired power plants within a 40-mile radius. “There is

enough lignite coal here to fuel every one of those plants for 800 years at today’s consumption rates,” Hill said.

“This plant (the Synfuels Plant) is one of a kind in the United States. The only other plant similar to it is in South Africa.”

That plant, however, is used to create liquid fuels from coal. It is also several times larger.

Approximately 728 people work at the Great Plains Synfuels Plant, another 200 at Antelope Valley Station, and a further 400 or so at the Freedom coal mine which supplies the two plants. The Freedom mine is owned by Coteau Properties, and is a subsidiary of North American Coal Corp.

Model Early on in the tour, visitors are taken to the model room. This is unlike any model you are likely to see again. A flick of the light switch turns on several light pedestals throughout the room in one of those ‘aaaah’ moments you see on TV. It covers 122 tables and took a team of engineers several years to build.

In the days before 3D computer assisted drafting, the model ended up being the de facto blueprint for the designers, allowing them to determine items like pipe layout. Its scale is 3/8 of an inch equalling one foot in real life. “It cost $8 million to build,” Hill said. ɸ Page D2

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PIPELINE NEWS September 2010

Examining the source of ɺ Page D1 The process used for gasification has been around over 80 years.

Nazi Germany was short on petroleum but long on coal, so they used coal-to-liquids gasification to fuel their war machine. Yet the company is still very protective of their technology.

No detailed photos are allowed of the gasifier end of the model, or the real plant, for that matter. On the site, photos of the gasifiers are only allowed from certain angles, and from certain locations, ones that are far, far away.

The plant runs in something of a U-shape, with the bend at the north end of the plant.

Steam and oxygen are on the west side of the U, with gasification on the curve. The east side of the loop sees numerous processes to purify the synthetic natural gas and create marketable by-products.

The entire plant consumes about 100 MW of power, about one-ninth

This model cost millions of dollars and took a team of engineers years to build. It served as the de facto blueprint for the assembly of the Great Plains Synfuels plant. At the very back, in the centre, is the gasiÀers, a system considered so secret, this is the closest photographs allowed of it. Daryl Hill is the media relations supervisor for the parent company, Basin Electric Power Corp.

of the net generation capacity of Antelope Valley Station. Most of that power is consumed by the air separation unit.

Gasification The gasification process itself consumes coal, but does not burn it in the conventional

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feeds the gasifiers via conveyor belts.

In turn, the coal comes from the adjacent Freedom coal mine, so-named as to free the United States of its dependence on foreign energy sources.

There are three ingredients to the process

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– coal, steam, and oxygen. The oxygen must be pure and dry.

Hill explained that steam provides the heat, and keeps the process going. The water is demineralised and filtered, with anti-corrosives added. The water is drawn from Lake Sakakawea, nine miles away. The power station and gasification plant

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way. There is no flame. It is more like coal embers in a barbecue. The coal is eventually consumed, but does not ‘burn.’ It is known as the “Lurgi Mark IV” process.

A large coal bunker, known as “live coal storage,” is just east of the gasifier complex, and

draw 15,000 gallons of water a minute.

The steam plant boilers burn by-products of the process, like tar oils, that they don’t have a market for.

A gasifier is a pressurized vessel. Coal enters from the top, delivered to the hoppers on the top of each gasifier by ‘tripper cars’ which deposit the coal into ‘coal locks.’

Steam and oxygen comes in from the side. The process runs at temperatures of about 2,200 F. Ashes are removed from the bottom.

Both the coal entry and ash removal are done through forms of pressurized airlocks, to ensure the vessel remains at pressure. Each gasifier is 40-ft. high, and there are 14 of them arranged in two rows.

Instead of being pulverized, as is typical with coal-fired power plants, this system works best with fist-sized lumps of coal. The coal fines are used next door at Antelope Valley.

The plant consumes 18,000 tons of coal per day, and produces 160 million cubic feet of gas per day. ɸ Page D3

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the Weyburn-Midale CO2 ɺ Page D2 Raw gas is then refined, removing impurities and enhancing carbon. As the raw gas is cooled, liquids separate out. The raw gas then goes to ‘shift conversion,’ where a cobalt catalyst re-arranges the carbon and hydrogen molecules.

The rectisol plant then uses methanol to absorb CO2 in the gas stream. Its tall distillate towers are always covered with frost, even in the summer.

Methanation uses a nickel catalyst in the final step before the gas is pipeline-quality.

Carbon dioxide The gasification process creates numerous by-products, nearly all of which are marketable.

One of those key by-products is carbon dioxide.

The carbon dioxide sent to Canada is captured at Rectisol plant which uses methanol to strip gasses. The CO2 is captured as it is released from the chilled methanol.

The methanol is then reused in the process.

From Rectisol, CO2 is piped to the compressor building at about atmospheric pressure, compressed eight times, and then pipelined out at 2,700 psi. That is the origin of the carbon dioxide pipelined to Weyburn and Midale.

The air intakes are unassuming, and are not massive by any stretch. Yet they draw in enough air to send oxygen to the gasifiers – about 3,100 tons daily.

The company ships 150 million standard cubic feet of carbon dioxide a day, coincidentally similar to the amount of synthetic natural gas production at optimal operation.

PanCanadian/EnCana/Cenovus was the only customer initially, starting in 2000. In late 2004, Apache Canada came on stream. “We do have taps on that pipeline to deliver CO2 to North Dakota,” Hill added. However, to get more CO2 out of the gasification plant would require more investment.

The carbon dioxide sent to Canada is more than 97 percent pure, containing a small amount of hydrocarbons.

The carbon dioxide travels 205 miles down a 14-inch pipeline to Tioga, North Dakota, and then continuing via a 12-inch pipeline to the South Weyburn Field,

This is the “most photographed pipe” at the Great Plains Synfuels plant. It is the beginning of the carbon dioxide pipeline that terminates at the Cenovus Weyburn and Apache Midale Àelds, supplying carbon dioxide for enhanced oil recovery.

where the terminus of the pipeline can be found, just northwest of the main Cenovus plant. A spur off the pipeline takes some of the production to the Apache Canada plant, north of Midale.

The Apache addition was accomplished by adding a third compressor to the two existing compressors for the pipeline and a booster station near Tioga. It is now maxed out.

Other by-products With financial difficulties in the plant’s early days centred on the depressed price of natural gas, byproducts were seen as an important diversification and source of additional revenues.

Carbon dioxide sales were identified early on in the project, but did not come about until a pipeline was built to southeast Saskatchewan to supply the then-PanCanadian, later EnCana/Cenovus field south of Weyburn.

Another major by-product is anhydrous ammonia, used as fertilizer.

They purchased and relocated an existing anhydrous ammonia plant from Iowa.

Ammonium sulphate is a granular fertilizer, and is a by-product of the sulphur dioxide scrubbing system.

The rare gases come from the air separation units (oxygen plant), and are used primarily in lighting and thermopane windows.

Liquid nitrogen sees use in oil wells and cryogenic storage. It comes off the oxygen plant as well.

Phenol is used to make a resin for plywood and chipboard, paper and industrial coatings, and pipe insulation.

Cresylic acid comes from the same stream as phenol, and is used as a wire enamel solvent, in resins and antioxidantas, and in the manufacturing of pesticides.

Naptha is a gasoline blend stock and solvent. While they sell three-quarters of their production, some is used internally for fuel.

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D4

PIPELINE NEWS September 2010

Antelope Valley could soon be capturing CO2 „ By Brian Zinchuk

The Antelope Valley Station at Beulah, N.D., may soon be the site of a carbon capture demonstration project, similar in scale to the one planned for Boundary Dam Power Station near Estevan. Antelope Valley is a large coalÀred power plant which burns a similar type of coal to Boundary Dam.

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Beulah, N.D. – While its neighbour, the Great Plains Synfuels Plant, has been selling carbon dioxide for a decade now, the Antelope Valley Station just north of Beulah might be the next to join on the bandwagon. It, too, may soon be producing carbon dioxide for use in enhanced oil recovery.

The two plants are side-by-side and have a symbiotic relationship beyond their common ownership by Basin Electric Power Cooperative. Great Plains Synfuels Plant is a coal-to-natural gas gasiďŹ cation plant, while Antelope Valley Station is a 900 Megawatt coal-ďŹ red power plant. They both share coal resources and water supplies, and Antelope Valley supplies power to the gasiďŹ cation plant.

(See related story Page D1).

A front-end engineering and design, or FEED study, is being done to see if Antelope Valley Station should have a post-combustion carbon dioxide capture demonstration system added to it. If the project goes ahead, it would capture the CO2 from just a fraction of that production – the equivalent exhaust gas of 120 MW of power production from unit 1.

Doosan Babcock, and its carbon dioxide capture technology partner, HTC Purenergy of Regina, are working on the FEED study. It began in January, and is anticipated to be completed in late-2010. The study will look at the economics and technology of adding CO2 capture equipment to Antelope Valley. “This gives us the information to say ‘what’s next?’� explained Daryl Hill, spokesperson for Basin Electric Power Cooperative.

The cooperative has a eet of coal-ďŹ red power stations, and regulatory movement on greenhouse gas emissions means the company will have to look at its options. They already have three large coal power plants, and a fourth under construction. “The big challenge is if regulation comes out, there’s no technology to do it,â€?

Hill said of post-combustion capture. There’s no store to buy it at, he said. “How do we do it? What’s it going to cost?� he asked.

While Great Plains Synfuels Plant generates carbon dioxide which is used in enhanced oil recovery in southeast Saskatchewan, that CO2 is stripped out using a processing step called Rectisol. The Antelope Valley project, on the other hand, would have part of the exhaust of unit 1 diverted into a capture system in what’s known as a ‘slipstream.’ It would be after the exhaust goes through the scrubbing process and bag house to capture particulates, but before it goes up the smokestack.

A similar project is being worked on at the SaskPower Boundary Dam Power Station, near Estevan. That project is expected to cost $1.4 billion.

The Antelope Valley demonstration project is estimated to cost $400 million U.S. It would take advantage of existing pipeline infrastructure, and have a one million tonnes per year capacity. ɸ Page D5

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North Dakota demonstration project for CO2 capture ɺ Page D4 The project would mean adding one more compressor to the existing carbon dioxide pipeline, and a booster at Tioga. The pipeline terminates at the Cenovus plant, south of Weyburn.

The additional compression would maximize the pipeline’s capacity. It has taps in North Dakota where carbon dioxide could be used in enhanced oil recovery within the state.

“If regulation comes in, it’s going to have a massive hit on the consumer,” Hill said of the people who buy their electricity. “When it comes to carbon capture, we want to be part of the solution.”

Carbon capture has already been taken into consideration in the design of the new Basin Electric plant, Dry Fork Station, at Gillette, Wyoming. That station uses sub-bituminous coal, a higher grade of coal compared to the lignite coal found at Beulah, where Antelope Valley and Dakota Gasification are situated.

Basin Electric supplies power to electric cooperatives in nine states.

The economics behind post-combustion carbon dioxide capture are more than just potential greenhouse gas credits. What do you do with it, once it’s captured?

Basin already has a track record of selling carbon dioxide in large quantities. The Great Plains Synfuels Plant produces approximately 150 million standard cubic feet of CO2 daily, which is then pipelined 205 miles north into southeast Saskatchewan.

There it is used in enhanced oil recovery by Cenovus Energy and Apache Canada.

Hill wouldn’t say what price is being paid for that carbon dioxide, noting the terms of the contract are confidential.

“It’s a good revenue

stream. Let’s put it that way,” he said.

The price of carbon dioxide is one of the major questions behind the economics of carbon capture and storage.

“What if there’s no market for it?” Hill poses as a possible question. It’s an expensive technology to develop, and if you don’t have a market for the end product, disposing of the CO2 becomes an added expense.

“What we have to concern ourselves with here is the regulation and its impact, not only on us, but our consumers. We’re

strictly wholesale power, we don’t do retail,” he said.

Carbon capture isn’t the only green energy avenue Basin Electric is pursuing. Between Minot and Bismarck, North Dakota, you can’t throw a stick without hitting a wind turbine, and more are under construction.

Basin Electric is nudging 600 MW of wind generation by the end of the year, according to Hill. He said they have a fleet of peaking stations as well that could cover demand when the wind isn’t putting out.

PIPELINE NEWS September 2010

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PIPELINE NEWS September 2010

Prentice lays down the coal law

Federal Environment Minister Jim Prentice, left, and Prime Minister Stephen Harper, attended the December, 2009 Copenhagen United Nations Climate Change Conference.

Photo courtesy the Government of Canada website

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Ottawa - Federal Minister of the Environment Jim Prentice presented a major policy speech in the National Press Theatre in Ottawa on June 23 regarding the future of coal development in this country.

The speech came just before Canada played host to the G8 and G-20 summits. Here is an excerpt from the text of his speech: In addition to taking action on the international front, we are also furthering our commitment to reduce emissions domestically.

I’ve recently alluded to this next initiative, and so I am pleased to be able to announce that the Government of Canada is indeed moving forward to reduce emissions in the electricity sector- specifically in the area of coalfired electricity generation.

Our government is working to introduce regulations that balance the environment, jobs and investment.

Working to regulate coal-fired electricity generation will help reduce greenhouse gas emissions, and help to improve air quality for Canadians from coast to coast to coast.

In addition, today’s announcement positions Canada one step closer to reaching its goal of being a clean energy superpower. We are working with the Obama administration both to develop clean-energy technologies, and take a continental approach to our action on climate change.

That said, while our firm intent is to co-ordinate key environmental decisions and actions with the United States, where Canadian circumstances and American circumstances are not the same, we will not hesitate to pursue a policy direction that reflects our differing circumstances. Electricity is one such case.

Most of Canada’s coal burning electricity plants are both dated and dirty.

The plants consist of 51 coal burning units, housed in 19 individual facilities. All but 18 of those units will reach the end of their forty-five year economic life by 2025. ɸ Page D7

“Canada is serious about climate changeâ€? Éş Page D6 Almost 19 per cent of Canada’s electricity is generated from burning coal. Moreover, these coal emissions constitute 13 per cent of Canada’s overall greenhouse gas emissions.

The approach we are taking creates strong incentives for the industry to invest in cleaner technologies, and reects our discussions with the principal thermal provinces as well as industry.

Going forward, all new coal-ďŹ red electricity units-as well as units reaching the end of their economic life-will have to meet a stringent performance standard. That standard will be based on parity with the emissions performance of high-eďŹƒciency natural gas generation, and will represent

an improvement in emissions of about 60 per cent per gigawatt hour generated.

This policy, coupled with the commitments of the provinces, and companies who have committed to coal closures, will amount to emissions reductions of about 15 megatonnes by 2020.

Our regulation will be very clear-when each coal burning unit reaches the end of its economic life, it will have to meet the standard or close down.

No trading. No osets. No credits.

In order to allow for adequate replacement generation to be brought on-stream, this proposed standard will take effect ďŹ ve years from this announcement. We will guard against any rush to build non-compliant

coal plants in the interim.

And of course we will accommodate exceptional circumstances to prevent disruption of electrical supply.

We will not lose sight of the potential of cleaner coal technologies developing in the future. Our country is a leader in carbon capture and storage and we will maintain that focus. As Prime Minster Harper has said, providing this technology on a commercial scale is key to reducing Canada’s greenhouse gas emissions.

In these regulations, new coal-ďŹ red plants that incorporate carbon capture and storage technology will be exempt from the standard until 2025.

But while the environmental impact of these combined eorts may be dramatic, the eect on the

economy would not be.

This is because our capital stock is at the point, where new facilities must be constructed anyway, and cost-eective technology is available to produce electricity with fewer emissions.

In short, a responsible, clear, phase-out of the electricity sector’s ineďŹƒcient coal-ďŹ red generation will allow ample time for the implementation of cleaner generation technologies.

This will create new jobs in the clean-energy sector, while helping Canada meet its commitment to greenhouse gas reductions.

We have a responsibility as a country to reduce our carbon emissions. ... We are well on our way to meeting our objectives.

One thing is clear. Canada is serious about climate change.

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PIPELINE NEWS September 2010

Does it matter where the CO2 molecule is captured?

By Brian Zinchuk Regina – What does the federal environment minister’s June proclamation that any new coal development has to have the same level of greenhouse gas emissions as a combined cycle natural gas turbine mean for Saskatchewan?

“It basically means coal has to go the way of CO2 capture,” stated Malcolm Wilson, PhD., director of the University of Regina’s Office of Energy and the Environment (OEE). Wilson is Saskatchewan’s de facto point man on carbon dioxide capture and storage. He is currently splitting his time between the OEE and the Petroleum Technology Research Centre (PTRC), where he’s acting executive director until a search committee can find a permanent replacement for the former executive director.

(Carolyn Preston, PhD., left the PRTC this past spring to pursue private sector opportuni-

The Boundary Dam Power Station, seen behind these coal haulers, will eventually need to have carbon capture installed on all of its units as they are replaced, according to a recent federal government announcement.

ties.)

“In Saskatchewan, we’re looking at 1,000 kg of CO2 per megawatthour produced,” Wilson said of current emissions.

That has to be brought down to 400 kg CO2/ MWH. “That certainly challenges. With typical post-combustion capture, we’re looking at down to 150 kg CO2/

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MWH, or 85 per cent capture of the produced CO2. From a technical perspective, we’re certainly capable of reaching those levels.

“The beauty of postcombustion capture is you can build it as you need it, to reach the intended capture targets” he said.

The secondary ques-

tion Wilson poses, however, is, “Are we looking at the right numbers?”

He suggests that CO2 from coal should include the entire life cycle, from the mine mouth, which uses a lot of electrical equipment like draglines and conveyors, to smokestack. “If you look at natural gas as an alternative to coal, you

really need to look at it on a system-wide basis.”

In other words, CO2 emissions should include all the upstream emissions that come into play to produce the natural gas, not just at the burner tip in the power plant.

While technology may be there, so far, Canada has not seen any serious demonstration plants set up yet, let alone full-scale power plant-sized operations.

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demonstration project is expected in the next few months. The Saskatchewan-Montana project, announced in the spring of 2009, appears dead in the water, as to date Montana has not come through with getting its federal government on board. There is still a lot of discussion around a Saskatchewan reference plant, according to Wilson. As for Montana, he said, “They’re moving towards an alternative source of CO2. ɸ Page D9

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PIPELINE NEWS September 2010

D9

Coal is cheap and predictable ɺ Page B8 “If we move ahead, we’re more likely to look at a reference plant and a Saskatchewan-only project.

“We have to get out there with demonstrations, the sooner, the better,” Wilson said. “We really need to understand what the real costs are.

“We need several demonstrations, on lignite, sub-bitunimous and bituminous coal, in Saskatchewan environments and maritime environments. We’re looking at several demonstrations, and they’re coming.”

Coal-fired power generation is important in Alberta, Saskatchewan, Ontario, and to a lesser extent, Nova Scotia, according to Wilson. “Our coal resources are huge. If we look at energy security on a continent-wide basis, coal has to play a significant role, in the U.S. as well,” he said.

“We have a dilemma, yes. We have to reduce CO2, but still need [coal] to make it possible to use our resources.”

Wilson said he is concerned about ‘siloing’ various resources, essentially pillorying ones like coal or oilsands, instead of looking at the whole spectrum of resources available.

Asked if the federal announcement provided some clarity for coal usage, Wilson said yes and no. “Yes, you’ve got a degree of certainty on what the regulations will look like. But it will push development of natural gas. It’s the most obvious [choice], and cheaper.”

Wilson forecasts there will be a lot more pressure on the natural gas system. Natural gas prices are volatile, whereas coal is fairly cheap and predictable, he pointed out.

While shale gas deposits in areas like in the Horn River and Montney plays in British Columbia have dramatically increased reserves, Wilson noted, “There’s an assumption those natural gas deposits will meet demand for replacing coal and meet new [demand] needs. Is it going to stabilize gas prices for 10 years, 20 years? I don’t know.”

He said there’s a possibility of demand spikes in certain regions, such as California experienced in 2001. Regulation could lead to a lack of diversity of power supply.

Prentice said, “Our regulation will be very clear-when each coal burning unit reaches the end of its economic life, it will have to meet the standard or close down. No trading. No off sets. No credits.”

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cap and trade system. “CO2 is global, not [limited to] a particular air shed like sulphur dioxide,” he said.

As for credits, he said, “At the end of the day, I believe we should be cutting emissions.”

He pointed out Canada could be creating multiple standards for different industries. “Does it really matter if that molecule of CO2is reduced in Ontario or Saskatchewan? No.” “We have to get out there with demonstrations, the sooner, the better,” says Malcolm Wilson, PhD., on carbon capture projects.

Photo by Brian Zinchuk

D10

PIPELINE NEWS September 2010

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be changes coming, indecisiveness can be as much of a problem as a difficult change. “The worst thing you can have in ‘undeclared mandates.’ You want clarity of what is required,” said McIntyre.

Prentice was resolute in the government’s position, stating, “Our regulation will be very clear-when each coal burning unit reaches the end of its economic life, it will have to meet the standard or close down. No trading. No offsets. No credits.” ɸ Page D11

As a significant emitter of carbon dioxide, the coal industry is well aware it had to clean up its emissions, according to McIntyre. “I don’t think it’s a huge surprise to the industry,” he said.

Pointing out that half of global electricity production comes from coal, he noted, “You’re not going to eradicate its use overnight.

“Fifty per cent of global electricity today is produced by coal.”

While there have been indications there would

11 B

Saskatoon – On June 23, Federal Environment Minister Jim Prentice announced a major change to the energy industry, particularly coal. All new or rebuilt coal power plants must now meet the greenhouse gas emissions level of a combined cycle natural gas power plant.

Pipeline News asked Jamie McIntyre, chief operating officer for Saskatoon-based NuCoal Energy Corp, what impact the announcement will have.

NuCoal has a massive swath of coal permits in Saskatchewan, primarily in south central Saskatchewan, south of the 50th parallel, known as the “South 50” block.

McIntyre said Prentice’s speech marks the day for coal to demonstrate that it can be used both economically and environmentally appropriately.

m

5400000

Montana 0 10 20 30 40 50 km

5400000

North Portal

REGIONAL LOCATION MAP

Legend

5350000

5350000

SOUTH 50 AOI

NuCoal South 50 Coal Permits Drawn by: Carla Gibson Checked by: Tabetha Stirrett P. Geo. Approved by: Tabetha Stirrett P. Geo.

250k NTS Grid Provincial Boundary 250000

300000

350000

400000

Revision: NA 500000

450000

550000

File No.: SO5009083.mxd Date: November 2, 2009 Scale: 1:2 250 000 Geo. Ref.: UTM Zone 13N, WGS84 600000 650000

700000

NuCoal Energy has staked a huge swath of southern Saskatchewan, where they say 5 billion tonnes of lignite coal is in place.

Graphic submitted

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PIPELINE NEWS September 2010

D11

Spreading Two vac trucks could be found spreading east of Lampman on Aug. 5.

Photo by Brian Zinchuk

Sitting at the apex of things ɺ Page D10 McIntyre responded, “I personally don’t mind.

The industry can now respond appropriately. He’s saying this isn’t about smoke and mirrors. This is about real change that we need.”

NuCoal had done some exploratory drilling it its South 50 block, according to McIntyre. “We have a sense that historical resource is there.

“The future uses of coal have to be in a way that is environmentally appropriate,” he said. That includes how it is mined, transported, and used in power plants, or in other uses like fertilizer production.

“We’re looking at any way,” he said, including gasification. Other technologies out there include direct coal liquefaction, post-combustion carbon capture, and oxy-fuel.

“New gasification technologies are pursuing near-zero carbon dioxide emissions,” he said. There are 10 to 12 gasifier companies now, he said. Carbon capture in the range of 80 to 90 per cent is being done. “It’s very encouraging. It’s incredible what’s happening in the industry. We’re about to transition as we speak.”

Modular gasification has been discussed by Nu-

Coal for its South 50 lands. “That’s the most likely scenario we see in Saskatchewan,” McIntyre said.

The company has had discussions with Chinese energy giant Sinopec, whom McIntyre said “is still working with us. We’re talking to other Chinese companies, too.

“Saskatchewan’s coal resource is not limited to southern lignite. We’re working as diligently as we can, but it’s not that simple. None of this is cheap.

It’s expensive to deploy.”

The federal announcement could be seen as a boon to proponents of natural gas power generation, but McIntyre noted you can’t have a flick of the wrist and switch to natural-gas fired generation. “If we don’t deploy clean coal technology quickly, we’ll see a massive shift to natural gas plants.”

There aren’t a lot of options out there for baseload power generation, he pointed out – coal, nuclear, and natural gas being some of the options. While Canada still has some hydro potential, in the United States, they hydro potential is pretty well exhausted. “None of them are Nirvana. They all have their Achilles heel,” he said.

While power generation may be the first thought when it comes to coal usage, McIntyre noted that

coal can be used as a feedstock for numerous petrochemical products. “Many of those products can be produced with coal as a feed stock, but we have to do it cleanly. Sulphurs, mercury – they all have to come out,” he said.

“Coal is a carbon source, just like petroleum and natural gas.”

“We’re sitting at the apex of all these things. It’s a non resource, but only valuable with the necessary technology. It only becomes valuable if you can add value to it.”

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D12

PIPELINE NEWS September 2010

Ken Mehler knew where he could Ànd a lot of water for hydraulic fracturing – reclaimed coal mines, as seen here.

Using reclaimed mine site for frac water Story and photos by Brian Zinchuk Estevan – The coal mines around Estevan, even after being reclaimed, leave large ponds, collecting copious amounts of surface water. Hydraulic fracturing operations require large amounts of water. Ken Mehler put two and two together, and is now providing frac water from a portion of reclaimed mine directly south of Estevan.

Pongo Holdings has been in operation for about a year now at its current site. The company is a sister operation to KRJ Custom Fabricating, and Ken

Mehler is a partner in both. His counterpart Randy Franke heads up the fabrication shop, while Mehler looks after Pongo.

The operation is straightforward. There’s a pump on the shore of a pond that’s several acres in size.

There are five connections for tanker trucks to hook up to, and an inlet in the water. Drivers basically work on an honour system.

An old dragline can be seen on the horizon to the south, and another is swinging to the southeast.

To the east, across the highway, is the Boundary Dam Power Station.

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The landscape is gently rolling hills after being partially reclaimed. The land has been contoured, but topsoil still needs to be put back.

Pongo has access to two ponds. One is several acres in size, which Mehler calls the baby pond. The second is more like a small lake, with several arms.

Compared to the dugouts that are often used to pull frac water from, this is a monster. If that pond runs dry, Estevan will have endured the deepest drought in ages.

Yet it’s all runoff water, according to Mehler. In getting a permit from SaskWater, the ponds cannot draw from a spring. If they did, they would have not been permitted.

“We have a long-term lease on these ponds from Prairie Mines and Royalty,” Mehler added.

“This has all been tested for fracking by all the frac companies as good for fracking and drilling,” he said.

It took a little trial and error. The first pond they tried was northeast of Estevan. They constructed access to it, but then found that it didn’t meet the stringent criteria for fracking. The second time around, the water was tested first, before setting up the operation. ɸ Page D13

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PIPELINE NEWS September 2010

D13

Large surface water source available

Above: This panorama shows the very large pond that Pongo Holdings has access to for drawing frac water. To get an idea of how big it is, notice the little grey blips on the horizon? Those are draglines, and a power station.

This connection is meant to feed water hauling trucks, supplying frac and drilling operations. The pond in the background is just a fraction of the size of the second pond, both of which are on reclaimed coal mine land.

ɺ Page D12 Asked where he got the idea, Mehler said the Stoughton area has had a high demand for water.

Mehler thought, ‘I know where there’s lots of water,’ and approached the mines.

Many people have asked Mehler how he was able to get access to the mine sites. He notes that he has had a severaldecade long relationship with the mines through various business entities, and that made a big difference.

“This is a good use of reclamation land, another example of the coal and power industry helping out the oil industry,” he noted.

“It’s going good, as long as the rigs stay close to Estevan. Ninety per cent of it is Roche Percee, Estevan and Tableland area [wells]. We’ve gone as far as Oungre.”

The small pond is roughly 16-ft. deep. Over the winter, they drew it

down roughly 8-ft. Most of it has come back with all the rain the region has seen this year.

There are plans to electrify the site, replacing the existing pump.

It would allow for faster loading times for drivers, as well as lights for night operations. The current pump can take as long as an hour to load if all five

connections have trucks on them. The new pump should be able to handle six trucks concurrently within half an hour.

When a frac is complete, there may be additional water left over.

That has to go elsewhere.

“We don’t take any water back. We can’t take a chance on contamination of this water body,”

according to Mehler.

CORRECTION In the related Aug. 2010 edition story “KRJ in third shop in recent years” on page B6, Ken Mehler was incorrectly identified as Mechler.

Also, Halliburton leased, not purchased, the old KRJ Custom Fabricating shop. Pipeline News apologizes for the error.

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D14

PIPELINE NEWS September 2010

Nordic to drill at Preeceville after two year absence Preeceville – Nordic Oil and Gas Ltd. is back in action in the Preeceville, Sask., area this summer drilling its first new oil well there in over two years.

The company announced on July 20 they were getting set to commence drilling a well at Endeavour, 25 kilometres north of Preeceville in area where the company has its largest asset holdings.

“Although we were not successful in bringing a well into commercial production two years ago in Saskatchewan, we are excited about the prospects of our newly identified location and eagerly anticipate getting back into this region and drilling this new well,” said Donald Benson, president and CEO in a July 6 report on upcoming summer exploration.

In that report, Benson described the new drill-

“We are excited about the prospects of our newly identified location and eagerly anticipate getting back into this region and drilling this new well” - Donald Benson, president and CEO ing location in Endeavour as being is offset from a 1950s well, which encountered oil in four different intervals.

The latest announcement notes drilling would occur as soon as the well site survey is complete

along with determining the costs of services.

“We are also working toward securing a rig and hope to commence drilling in the coming weeks,” Benson stated in the July 20 release.

“Our interpretation of the seismic indicated a strong anomaly in both the Red River and Winnipegosis zones, so we eagerly anticipate the start of drilling.”

Nordic has an 80 per cent interest in 31,999 gross acres of petroleum and natural gas leases with rights to the basement at Preeceville, Saskatchewan, an area of “great promise and potential.”

Nordic Oil and Gas Ltd. is a junior oil and gas company engaged in the exploration and development of oil, natural gas and coal bed methane in Alberta and Saskatchewan.

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Carlyle – Baseball-sized hail pummelled Carlyle on July 31, and laid a beating on the head office of Eagle Drilling Services.

Eagle office manager Tina Twietmeyer said they lost several windows, and the north shop doors were extensively damaged. The hail stones were so big, she said one “was in the hallway. When it came in, it ricocheted down the hallway.

“We had baseball-sized hail come in through the windows in the office.

“We probably need to replace our entire metal roof,” she said, reporting the roof got it at all angles.

“Our metal roof looks like someone took a hammer to it.”

The price tag will be high. “We’re probably thinking $150,000, if not more,” Twietmeyer said, noting they had just filed their insurance claim the Tuesday following the long weekend.

Millennium Directional Service, located on the other end of Carlyle, also had a window broken.

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PIPELINE NEWS September 2010

D15

Caverns a Âżnal place for oilÂżeld waste Melville – For certain classes of oilďŹ eld waste, the best place to put it is in a deep hole, where it is never going to be a concern again. Such a place can be found just south of Melville at Plains Environmental Inc., a salt cavern waste disposal site. “We specialize in deep well cavern injection of oilďŹ eld and industrial waste,â€? explained Brian Hillier, sales and marketing manager for Plains Environmental.

It may seem a bit odd, then, that they are located at Melville, which is more than an hour’s drive from the periphery of the southeast Saskatchewan oilpatch. It’s a lot closer than other options, however. The location, it turns out, was driven by geology, in the same way that geology drives the location of the oilpatch. “You need unique geological components. It doesn’t happen just anywhere,� he said.

That formation is an old seabed, known as prairie evaporite.

The facility makes use of two former SaskEnergy liquid natural gas storage caverns, constructed several decades ago.

Hillier explained they were engineered for liquid natural gas. As pipeline systems increased, the caverns were no longer needed for that purpose, and Plains Environmental

took them over. “There are other caverns within a mile of us which are still in use,� he said. “This is an actual salt formation, not potash,� he said. Some facilities are old salt mines, Hillier noted, but said that they don’t meet the same stringent requirements as for storing for liquid natural gas.

Salt, under pressure, has an elastic property to it. Not only will it bend and expand, but it also has the capability to self-heal, according to Hillier. The caverns are egg-shaped, one of the strongest forms in nature, with three pipes going into them at dierent depths. The bottom one injects the waste in.

The middle one returns brine to the surface. The top one draws o waste oil that collects. That oil is then sold. “We can take a range

of waste products from pure liquid to straight dirt. A lot of our exibility in disposal comes from how we process the materials,� said Hillier.

Loads are turned into a slurry with salt water before being pumped into the caverns. “Basically, it’s a big mixmaster,� he said.

The product goes into a trammel to mix the solids, then is pumped into a slurry tank. The saltwater in the cavern is displaced, recovered and re-used.

Asked about the importance of selling recovered oil, Hillier responded, “Environmental responsibility is one of the most important aspects of what we do. Reclaiming and reusing these products, which are often destined for straight disposal, allows us to exemplify this strategy to the beneďŹ t of our clients and the environment.â€? ɸ Page D16

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D16

PIPELINE NEWS September 2010

Oil recovered from caverns, solids remain ɺ Page D15 They have over one million barrels of capacity between the two caverns, he said, and there may be opportunity to purchase more caverns

in the future.

Saskatchewan owned and operated, Plains Environmental fired up in the late 1990s.

Their primary focus then and now is drill-

Welding and Fab Shop

ing muds. However, they accept more than that.

“We have diversified so now we can take natural occurring radioactive materials (NORMs), as well as some industrial wastes. However, the

bulk of our industry still comes from the oilfield,” said Hillier.

NORMs are common in oilfield, fertilizer, and propane operations. “We’re talking about stuff less radioac-

This is a 3-D drawing of the Plains Environmental Inc. site.

Graphic submitted

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tive than your old smoke detector,” he noted.

Larger propane storage bullets can accumulate NORMs over time, according to Hillier, saying it can be like pipe scale.

“NORMs happen all over the place.”

However, there are few places that can handle it. According to Hillier, there are probably under five in Western Canada, and he knows of only two in Saskatchewan. ɸ Page D17

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PIPELINE NEWS

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PIPELINE NEWS September 2010

D17

Cavern disposal ɺ Page D16 Industrial wastes accepted include glycols and solvents, things that aren’t generated from drilling for oil.

“The chemicals people don’t have a home for,” he said.

Some might come from hazardous material collection for municipalities, for example.

There are several types of waste disposal facilities, including disposal wells, landfills, and caverns. “A disposal well is not a disposal cavern,” Hillier noted.

Provincial regulations specify which disposal options are appropriate for differing wastes. For example, they limit how much hydrocarbons can be present in material before it is ruled out for a landfill.

“We often work in cooperation with the other options to ensure that the best option is obtained for all of the waste,” said Hillier.

Asked if they concoct something of a witch’s brew underground, Hillier explained, “Safety is always our primary concern and our licence guidelines ensure we aren’t putting chemicals that react. For example, raw sewage has the potential of being self-generating so it is never accepted. Many oilfield types of material are similar in nature.”

“We’re very careful about what we take. By the time it gets to us, most of this material is pretty inert.”

They have a containment pad for solids. Vac trucks can unload by either pumping off or doing an end dump.

The facility has rail capability, and is close to the major rail yard at Melville. “We have seen drilling muds come to use by rail car from as far as off-shore Newfoundland. It used to be quite common,” Hillier said.

The price of the Canadian dollar and competition from U.S. sites has had an impact on the market, however.

“Most of our material comes from southeast Saskatchewan,” said Hillier.

“We are a last resort in a lot of cases. The types we can take, you don’t want to see somewhere else, or we didn’t have a home for in Saskatchewan before.”

Once the waste is in the cavern, it’s not going anywhere. “We take complete ownership of all the waste that comes into our facility,” Hillier added.

This is a graphical representation of the Plains Environmental sale caverns used for waste disposal.

Graphic submitted

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D18

PIPELINE NEWS September 2010

CAPP gives thumbs up to federal mine tailings data Calgary – The Canadian Association of Petroleum Producers gives thumbs to the publication of the National Pollutant Release Inventory (NPRI) on tailings and waste rock (TWR) for the 2006–2009 reporting years.

In a news release, CAPP says the report provides greater transparency and important context on oilsands mines particularly in Alberta.

CAPP believes reporting of certain substances contained in mine tailings, the by-product of bitumen or mineral extraction, is a well timed requirement of Environment Canada’s NPRI reporting system given increased news focus on oilsands tailings ponds in Alberta.

In 2009, the provincial Energy Resources Conservation Board (ERCB) issued Directive 074, which mandated new industry-wide criteria for tailings management and annual reporting on modified tailings plans.

To date, three tailings plans have been approved under Directive 074 and other plans are being reviewed by the ERCB. Oil sands operators are investing more than $1 billion in tailings research and upgrades to reduce tailings inventories and speed up reclamation in compliance with the directive.

The new federal reporting requirements require mining facilities to re-

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port not only the quantities of NPRI substances released to air, water and land (as before), but also the quantities and concentrations of NPRI substances placed in waste rock and tailings containment areas.

The 2010 reporting deadline for facilities was June 1 based on new mandatory reporting requirements put in place in Dec. 2009.

“Including mine waste rock and tailings in the NPRI enhances the transparency of Canada’s mining industry, including oilsands mines,” said David Collyer, president of the CAPP. “Oilsands mines produced about 10 per cent of the total tailings and waste rock reported from 2006 to 2009, important context for the overall impact of oilsands mining,” Collyer said.

“The fact is all industries have an impact, oil and gas included. Transparency and reporting processes like NPRI are essential to understanding industrial contaminants and balancing our need for environmental protection, economic growth and secure reliable supply from our resources.”

The tailings substances reported to Environment Canada’s NPRI originate in oilsands ore (clay, sand, water and bitumen) or are introduced during processing to improve bitumen recovery.

Tailings are not released to the environment. They are contained in ponds to allow the settling of sand and clay. Clarified water from tailings ponds is recycled and the sand, clay and residual bitumen is later reclaimed.

To protect land and groundwater from seepage, collection systems and groundwater monitoring wells collect and monitor any tailings that migrate through the dykes.

Seepage collected is pumped back into the ponds. Any seepage detected but not collected is reported to the ERCB. Oilsands regulatory approvals mandate groundwater and aquatic monitoring to demonstrate seepages will not cause harm to area streams and rivers.

To date, monitoring shows no evidence of tailings causing harm to streams or rivers, CAPP said.

Substances contained in oilsands tailings are not currently being released or predicted to be released in quantities or concentrations that would degrade or alter the water quality of area streams or rivers.

In addition to acting as storage facilities, tailings ponds are settling basins to enable water recycling, allowing operators to use clarified water over and over.

Today 80-90 per cent of the water used to extract oil from oilsands recycles from tailings ponds, reducing demand for fresh water from the Athabasca River and other sources.

Courtesy Nickle’s Daily Oil Bulletin

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PIPELINE NEWS September 2010

D19

Harvest acquires Alberta oilsands project Calgary – Harvest Operations Corp., a whollyowned subsidiary of Korea National Oil Corporation (KNOC), completed a $374 million acquisition of the BlackGold oilsands project in Alberta from KNOC. The acquisition closure, announced Aug. 6, was financed by Harvest with the issuance of additional shares to KNOC. BlackGold is located 140 km south of Fort McMurray in the Athabasca oil sands.

The BlackGold project has existing Energy Resources Conservation Board approval for a phase 1 project of 10,000 bpd and has made an application for a phase 2 project that would increase production to 30,000 bpd using steam assisted gravity drainage (SAGD).

The area’s resources contain 259 million barrels of oil equivalent of proved plus probable reserves as at Dec. 31, 2009 as determined independently by GLJ Petroleum Consultants Ltd. Project costs for the first phase of the project (10,000 bp/d) during 2010-2012 are estimated at $450 to $500 million which includes drilling cost of 15 SAGD well pairs for start up. The steam generation and fluid processing facility has been committed to at a fixed cost of $312 million.

Harvest’s upstream capital budget for 2010 will in-

crease to $415 million to allow for the 2010 development costs of the project. KNOC has agreed to inject additional capital into Harvest in order to fund the 2010 BlackGold project costs.

The news follows Harvest’s second quarter results also posted on Aug. 6 with a strong performance of the company’s upstream oil exploration and production business.

Harvest’s production volumes over the second quarter averaged 49,597 boe/d. Although unusually wet weather and extended third-party turnarounds had an impact on production volume, the company’s year-to-date performance is on target and on budget Investment activity in the second quarter totaled $52.3 million. Harvest drilled 13 gross wells with a success rate of 100 per cent. Investment activity was focused on tying in wells drilled earlier in the first quarter.

Harvest’s oil-weighted asset base continues to provide ongoing development opportunities for the company utilizing the latest drilling and completion technology.

Harvest is focused on development of productive oil resource plays throughout its asset base including Cardium and Montney plays in west central Alberta, Viking oil in western Saskatchewan and Slave Point

oil and gas in northern Alberta.

These development opportunities complement Harvest’s enhanced oil recovery opportunities in medium and heavy oil pools which together will create a growing production platform with reasonable decline rates that provide sustainability for the future.

The second quarter of 2010 marked the first reporting period under the Harvest Operations Corp. banner.

Harvest Energy Trust and Harvest Operations Corp. reorganized as Harvest Operations Corp under the umbrella of KNOC Canada Ltd. Courtesy Nickle’s Daily Oil Bulletin

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D20

PIPELINE NEWS September 2010

Diaz drills and cases a new oil well in the Lower Shaunavon Calgary – Diaz Resources Ltd., named for Portuguese explorer Bartholomew Diaz, has dropped anchor in the Lower Shaunavon zone.

The Calgary-based oil and gas explorer reports, in an Aug. 6 news release, it has drilled and cased a Lower Shaunavon oil well located in the Chambery field.

The drill cutting samples recovered from the Lower Shaunavon zone had oil staining and the

open hole logs indicate potential oil pay, based on Diaz's interpretation.

The new well is in keeping with Diaz's current focus on oil development and exploration in Alberta and Saskatchewan Diaz is the well operator and has a 45 per cent work interest along with project partners Sharon Energy Ltd. with a 20 per cent stake, and Tuscany Energy Ltd. with a 35 per cent share.

The well was drilled to extend the mineral lease and prove up the Lower Shaunavon in on section of

the property.

An immediate offset Lower Shaunavon horizontal oil well commenced production in January 2010 and had a reported production rate of 179 barrels of oil per day for the month of April with a cumulative production of 13,550 bbls.

Diaz has an interest in seven sections of land in this area.

Diaz plans to complete the well and will monitor the offset production before finalizing its development plan for the area.

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During the second quarter, Freehold Royalty Trust drilled three (0.5 net) Dina oil wells at Hayter, two (0.9 net) Bakken oil wells in southeast Saskatchewan, and one (0.1 net) Cardium oil well at Pembina Cardium Unit #9.

It also participated in one (0.2 net) natural gas well at Willesden Green. All were drilled using horizontal drilling technology, and four of the seven wells were completed using multi-stage frac-

ture stimulation techniques. These wells will add to production in the last half of the year.

Capital investment in the first half of 2010 amounted to $7.4 million.

Capital investment in 2010 is expected to total $24 million. Expenditures will be higher in the last half of the year as the trust focused on oil development in its three core areas: southeast Saskatchewan, Hayter, and Pembina Cardium Unit #9.

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well with July’s field estimate exceeding 4,000 bbls per day of heavy crude.

The company drilled, completed and equipped two infill production wells in May and June on schedule and under budget. The first of these wells has finished its reservoir preheat cycle using steam and has just been placed on

production. The second well is currently into its three week reservoir preheat cycle. The two wells are expected to add about 500 bbls per day to 600 bbls a day of heavy crude to STP-Senlac by the end of August.

Plans for Phase H, the next set of two SAGD well pairs, are currently being finalized.

These two SAGD well

pairs, which should spud towards the end of September, are expected to add about 1,500 bbls a day of heavy crude to the project by the first quarter of 2011.

The STP-Senlac development strategy is to maintain production levels between 4,000 and 5,000 bbls per day on a consistent basis over the next 10 to 15 years.

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PIPELINE NEWS September 2010

D21

Penn West keen on Waskada

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Forwarders & Consultants Export/Import Specialists EDI Networking Penn West Energy Trust has three rigs working in the Waskada area of Manitoba. Manitoba’s drilling rig count has risen to 22 total rigs as of August 18, with all but three drilling on that day, according to Riglocator.ca. That’s more active drilling rigs working at one time in Manitoba than any other time over the last three years. In this November, 2009, Àle photo, Ensign Big Sky Drilling Rig 37 could be found approximately 7 km southwest of Waskada, just 3 km north of the U.S. border. At that time, there were just an average of seven active rigs in Manitoba.

File photo by Brian Zinchuk

Waskada, Man. - Penn West Energy Trust is “very keen” on the Lower Amaranth formation in the Waskada area of Manitoba and plans to bring in additional rigs to ramp up activity towards the end of the year, said Bill Andrew, chief executive officer. It currently has three rigs operat-

ing with plans for 40 to 50 wells this year. About 26 wells have already been drilled and about half of those have already been tied in and there will be almost continuous operations in the area from now until year-end.

“The wells are coming in very well,” he said.

On its last well, Penn West significantly increased the number of stages on its last fracs and the well is performing much better than the other wells which were quite good, said Andrew. “We are very, very pleased with that area.”

Courtesy Nickle’s Daily Oil Bulletin

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D22

PIPELINE NEWS September 2010

Crescent Point drilled record 74 wells in Q2 Calgary - Crescent Point Energy Corp. conducted a record second-quarter drilling program, drilling 74 (48 net) wells with a 99 per cent success rate.

The company spent $189.4 million on development capital activities in the second quarter, compared to only $50.16 million a year earlier. This year’s investment total included $99.1 million on drilling and completions activities and $90.3 million on facilities, land and seismic.

Exploitation activities during the second half of the year are expected to include the implementation of four more waterflood pilot projects in the Bakken resource play, the first of which was implemented in July and the second of which is expected to be implemented in August.

Including the two waterflood pilot projects initiated prior to 2010, the company expects to have six pilot projects on line by year end, each testing different patterns and completion techniques to optimize economics and recoveries.

Crescent Point said it believes results from the pilots are positive and that the waterflood will eventually be applied throughout the play.

The company continues to actively exploit the Lower Shaunavon resource play, with 40 net wells budgeted for the second half of 2010. The area’s further upside is highlighted by the company’s plan to drill eight Upper Shaunavon wells by year end.

The company said it is monitoring early positive results in order to optimize the area’s initial waterflood pilot project. As well, applications for further injection wells have been submitted to have two additional waterflood pilot projects operational by

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early 2011.

Second half activities are also expected to include up to seven net wells in the Flat Lake Bakken play along the United States border, as the company continues to delineate and develop this area.

Crescent Point grew second quarter 2010 average daily production by 33 per cent over second quarter 2009, averaging 54,915 bbls of oil equivalent per day for the quarter. Production was weighted 89 per cent to light and medium crude oil and liquids.

The company said it achieved budget production levels for the quarter and remains on target to average greater than 61,000 boepd in 2010 and to exit the year with production greater than 69,500 boepd.

During the second quarter, Crescent Point participated in the drilling of 56 (36.1 net) oil wells and one (0.7 net) service well in southeast Saskatchewan, achieving a 99 per cent success rate. Of the wells drilled, 34 (25.3 net) were horizontal wells in the Viewfield Bakken light oil resource play and two (1.5 net) were in the Flat Lake Bakken light oil resource play.

Crescent Point also participated in the drilling of 20 (9.3 net) non-Bakken horizontal wells, including four (3.8 net) Viewfield Frobisher wells.

The company tied in 13 existing single well batteries and 14 recently drilled wells in second quarter.

In April, the company completed modifications on existing compression at the Viewfield gas plant that increased inlet capacity to 21 mmcf a day from 18 mmcf a day. Crescent Point continued design work and began ordering equipment to expand the plant’s inlet capacity to 30 mmcf a day during 2011.

Subsequent to the quarter end, in early July, lightning struck a Crescent Point operated facility in southeast Saskatchewan, igniting several crude oil and produced water tanks and shutting in approximately 4,000 boepd. No one was injured in the incident and more than two-thirds of the shut-in production was brought back on production within 72

hours. The remaining shut-in volumes are expected to be back on production by end of third quarter and will not substantially affect production targets, the company said.

The first waterflood pilot project continues to demonstrate positive production response in offsetting wells and the pattern has yet to display definable decline trends after nearly two years of post-fracture stimulation water injection, Crescent Point said. The second pilot project has also shown positive response so far in 2010.

Water injection in Crescent Point’s third water flood pilot project began in July and a fourth pilot project is expected to be initiated in early August.

Two more pilot projects are planned for implementation by year end.

During the quarter, the company participated in drilling 17 (11.2 net) horizontal oil wells in southwest Saskatchewan, including nine (six net) Lower Shaunavon oil wells and five (2.2 net) Upper Shaunavon horizontal oil wells, achieving a 100 per cent success rate. Gas conservation in the area commenced late in the second quarter with non-operated, interruptible capacity of up to 500 mcf a day available.

With continued expansion of the play, the company said it will continue to measure and assess gas plant requirements over the next year for long-term gas conservation.

At Cantuar, three (1.7 net) wells were converted to injection wells into the Success zone, while one (0.6 net) well was converted to an injection well into the Roseray zone. The company’s working interest partners have approved plans to drill eight (4.4 net) wells during third quarter 2010.

At Battrum, five (two net) wells were converted to injection wells, with injection scheduled to commence during the third quarter. The company’s working interest partners have approved plans to drill nine (3.9 net) wells in late 2010.

In June, Crescent Point reached production at Battrum of more than 2,300 boepd, achieving another record interest production level since acquiring the property in 2006.

Crescent Point also drilled three (three net) Viking formation wells in the Plato area to address land expiries. The company plans to bring these wells on production during third quarter. ɸ Page D23

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PIPELINE NEWS September 2010

D23

Crescent Point sees 99 per cent success this year Éş Page D22 During 2010, the company said it will continue to execute a capital development program of $750 million, including approximately $565 million on drilling and completions activities and approximately $185 million on facilities infrastructure investments and

land.

Crescent Point expects to participate in the drilling of up to 331 net wells in 2010. This includes 185 net wells in the Bakken crude oil resource play, 70 net wells in the Lower Shaunavon crude oil resource play and 16 net wells in the Viking crude oil re-

source play.

Sixty net wells are also planned for other Crescent Point areas, including

Battrum, Cantuar and other southeast Saskatchewan.

Courtesy Nickleâ&#x20AC;&#x2122;s Daily Oil Bulletin

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D24

PIPELINE NEWS September 2010

Career

WELL SERVICING

We are currently recruiting in Estevan for a

Opportunities Help Wanted Parts Counter Person Knowledge of heavy duty parts an asset

Apply in person to Wayne 122 Perkins Street Estevan

Field Superintandent Eagle Well Servicing is among the best in the business. With some of the newest service rigs around, small-company feel and higher than average utilization we provide an excellent work environment. If you are looking to become a part of a fast-paced and team-based work environment, we are the place for you.

At Eagle, we offer a small company feel, excellent employee benefits, and opportunities for advancement.

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Estevan location is seeking individuals to Àll the following positions:

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Contact - Dan Beaulieu 634-0551 Or Fax: 634-9448 Email: dbeaulieu@carsonenergyservices.com

WELL SERVICING

WELL SERVICING

BE WELL PAID We are currently recruiting for Floorhands - $27/hour Derrickhands - $30/hour Eagle Well Servicing is among the best in the business. With some of the newest service rigs around, and higher than industry average pay, we have the client base to keep you busy and earning steady income.

At Eagle, we offer a small company feel, excellent employee benefits, and opportunities for advancement

Applicants are invited to submit resumes to sheldon.milford@iroccorp.com or fax to (306) 634-8238. We thank all applicants for their interest, however only those selected for an interview will be contacted.

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SRI HOMES’ Estevan Facility, SHELTER HOME SYSTEMS has immediate openings for

We are currently recruiting in Estevan for

Field Sales Eagle Well Servicing is among the best in the business. With some of the newest service rigs around, small-company feel and higher than average utilization we provide an excellent work environment. If you are looking to become a part of a fast-paced and team-based work environment, we are the place for you.

PRODUCTION PERSONNEL This is a union shop with an excellent benefit package. If you have an excellent work history and are willing and capable of working at a variety of jobs in a fast paced construction environment, email your resume to:

At Eagle, we offer a small company feel, excellent employee benefits, and opportunities for advancement.

Applicants are invited to submit resumes to sheldon.milford@iroccorp.com or fax to (306) 634-8238. We thank all applicants for their interest, however only those selected for an interview will be contacted.

www.eaglerigjobs.com

BULK PLANT OPERATORS – ESTEVAN LOCATION Sanjel Corporation is an experienced, privately-owned leader in the global oilfield service industry offering the ideal place to start or advance your career.

Due to recent local and international growth, Sanjel Estevan is currently looking for Bulk Plant Operators to join our team.

As a Bulk Plant Operator, your duties will include: Blending acid and cement, managing inventory of products and chemicals as well as overall maintenance of the facility.

SANJEL IS PROUD TO OFFER: x Work environment where Safety is our first priority x Industry Leading Wages x Canadian Owned, Private Company x Stability x Outstanding Bonus Package and Benefits Program x Dedication to employee development with Company Paid Training x Regional Increases to living allowance Sanjel offers individuals a dynamic work environment. The driving force behind our organization is the sincere commitment to our people and their focus on exceeding customers’ expectations. For further information on career opportunities or to apply for a position, please email your resume to careers@sanjel.com or check out our website www.sanjel.com or contact our HR department at 1.800.9SANJEL.

Acidizing x Cementing x Coiled Tubing x Fracturing x Nitrogen

Canada x USA x International

Frontier Peterbilt Sales Ltd is looking for full-time Service Technicians in Estevan to work on the premier product in the industry and the newest dealership in the city.

We have opportunities for Service Technicians, from 3rd year apprentices to Journeymen.

Skilled Journeyman Technicians will earn the top dealership wage in Southern Saskatchewan ranging from $32.00 to $39.00 per hour.

Applicants are invited to submit resumes to sheldon.milford@iroccorp.com or fax to (306) 634-8238. We thank all applicants for their interest, however only those selected for an interview will be contacted.

Energy Services Ltd.

HEAVY-DUTY MECHANIC

jobs.shelter@gmail.com or bring it to the factory at # 200 Hwy. 18 West.

We require people that are meticulous, results-driven and customer service oriented.

We offer excellent pay as well as an extensive employee beneÀt package and the opportunity to progress within the Company.

QualiÀed applicants are encouraged to apply in person at the dealership to Jerrod Tedford, Shop Foreman or by email or fax to: Mark Thompson Human Resources Manager E-Mail mthompson@frontierpeterbilt.com Fax 306-664-3386

Gibson Energy is a progressive, growth oriented, North American midstream oil & gas company. We are currently seeking enthusiastic, results oriented individuals for the following areas: throughout Alberta, Southern Saskatchewan and the US.

Contract Carriers The Gibson group of companies operates state of the art, leading edge equipment to meet tomorrow’s needs. These carriers will transport/haul Crude Oil, Asphalt and Condensate products. Operation of a Gibson unit is earning a place among the finest Owner Operators in the industry.

We offer: • Scheduled days off • Competitive rates • Owner Operator insurance program • Fuel cards • Safety Award program • Service Award program

Interested candidates are asked to contact Gibson’s Interested candidates are at asked to 486-2044 contact Gibson’s Owner Operator recruiter (306) or to Owner Operator recruiter at 1-866-420-9395 to fax resumes to (306) 486-2022.

We wish to or thank resumes to We wishonly to thank allfax applicants for1-780-400-5303. their interest, however those all applicants for their interest, however those selected for further consideration will beonly contacted. selected for further consideration will be contacted.

www.gibsons.com

PIPELINE NEWS September 2010

D25

Career

Johnstone Tank Trucking, an afĂ&#x20AC;liate of Gibson Energy, offers quality service for the oil industry, operating a Ă eet of oilĂ&#x20AC;eld tank and service trucks in southeast Saskatchewan. We are currently seeking enthusiastic, results oriented individuals for our Frobisher ofĂ&#x20AC;ce.

Opportunities

Truck Drivers: For oilĂ&#x20AC;eld Ă uid hauling.

Class 1A license required. Training provided. 7-3-7-4 schedule.

Lodging available.

Heavy Duty Mechanic: Duties include repair and maintenance of Ă eet of oilĂ&#x20AC;eld tank trucks.

Johnstone Trucking offers a competitive compensation package.

Interested candidates are invited to apply by August 31, 2010 via our website www.gibsons.com or by Fax at 780-524-4793

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Employment Opportunity

is an industry leader in Safety Services and is currently seeking

Safety Personnel to keep up with increasing customer demands.

Fax: (780) 872-5239

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

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Resources Guide LECLAIR TRANSPORT Lyle Leclair - Cell: 306-421-7060 Larry - Cell: 306-421-7131 Box 208

Estevan, SK

S4A 2A3

461-8471 â&#x20AC;˘ 461-8472 â&#x20AC;˘ 461-8473 Call: Clinton Gibbons

General Oilfield Hauling

Bus: 306-453-2728 Cell: 306-577-8085 Cell: 306-482-7755 Fax: 306-453-2738 mel.fitzpatrick@midfieldsupply.com www.midfieldsupply.com

Midfield Supply ULC P.O. Box 1468 402, #9 Service Road South Carlyle, Saskatchewan S0C 0R0

3D

Maintenance

Cell numbers: 483-8024, 483-7024, 483-8148 Home: 486-2143 â&#x20AC;˘ Fax: 486-4855

Box 12 Frobisher, SK. S0C 0Y0 merv_and_deb@xplornet.ca

D26

PIPELINE NEWS September 2010

Resources Guide

* Cement * Fracturing * N2 * Polybore

Well Service Calgary 403-264-8206

Carlyle 306-453-2533

www.millenniumdirectional.com Horizontal â&#x20AC;˘ Directional â&#x20AC;˘ Well Monitoring

Highway 39 East, Estevan Phone: 637-2060 Fax: 637-2065

Bus: (306) 634-8084 Cell: (306) 577-8833 Fax: (306) 453-6478

912 6th Street, Estevan

634-7275 Toll Free: 1-866-457-3776

lancew@aspentrailer.com www.aspentrailer.com

&DQDGD V OHDGLQJ GLVWULEXWRU RI LQGXVWULDO Ă HHW DQG VDIHW\ SURGXFWV

3URXG WR SURYLGH VHOHFWLRQ TXDOLW\ DQG H[FHOOHQFH WR RXU FXVWRPHUV Box 609 Carlyle, SK S0C 0R0

Bulk Agency

* Acid * Coil Tubing *CO2 * Industrial

Aspen Custom Trailers 6017-84th Street S.E. Calgary, AB T2C 4S1 [T] 403 236 2244 [F] 403 236 8829 [C] 403 813 6319 [Toll Free] 877 236 2244

Lance Wotherspoon Regional Sales Manager

WK 6WUHHW (VWHYDQ Â&#x2021;

Dwight G. Blomander, TERRY DODDS (24 hrs.) (306) 634-7599 Cell. (306) 421-0316

CFP, CLU, CH.F.C., RHU â&#x20AC;˘ Life Insurance â&#x20AC;˘ Disability Insurance â&#x20AC;˘ Critical Illness Insurance â&#x20AC;˘ Employee BeneĂ&#x20AC;t Plans

M.E.T. OILFIELD CONST. LTD.

Tel: (306) 761-7506 â&#x20AC;˘ Fax: (306) 352-9474 E-mail: dwight.blomander@gwl.ca Toll Free: 1-888-495-7275 â&#x20AC;˘ Cellular: (306) 421-1935

â&#x20AC;&#x153;All Your Construction and Maintenance Needsâ&#x20AC;?

SPECIALIZING IN: ENGINES, PUMP UNITS, UNIT INSPECTIONS, PIPE FITTING, TREATERS AND PRESSURE TICKET WELDING

THE

Great-West Life

Box 1605, Estevan, Sk. S4A 2L7 Cell. (306) 421-3174, (306) 421-6410, (306) 421-2059 Fax: (306) 634-1273

ASSURANCE COMPANY

600, 2010-11th Avenue, Regina, SK S4P 0J3

Saskatchewan Owned & Operated

â&#x20AC;˘ Pressure Vessels â&#x20AC;˘ Well Testers â&#x20AC;˘ Frac Recovery â&#x20AC;˘ Wellbore Bleedoff â&#x20AC;˘ Ball Catchers â&#x20AC;˘ 400 bbl Tanks â&#x20AC;˘ Rig Matting â&#x20AC;˘ Complete Trucking Services

Dale (306) 861-3635 â&#x20AC;˘ Lee (306) 577-7042 Lampman, Sask.

Bully Blast & Paint Services Ltd.

Cordell Janssen District Manager Downhole

93 Panteluk Street, Kensington Avenue N Estevan, Saskatchewan PHONE: 306-634-8828 â&#x20AC;˘ FAX: 306-634-7747 cordell.janssen@nov.com â&#x20AC;˘ www.nov.com

JUSTIN WAPPEL - Division Manager 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

a l t u s g e o m a t i c s . c o m

â&#x20AC;˘ Shop & Field Service â&#x20AC;˘ Structural Steel â&#x20AC;˘ Tank Linings â&#x20AC;˘ Spool Coating Your Sandblasting, Painting & Coating Specialists with over 20 yrs. experience in the industry

ISNET, Comply Works and Secor Compliant Cell: (306) 461-9676 â&#x20AC;˘ Bus.: (306) 457-2264 P.O. Box 54 â&#x20AC;˘ Benson, SK â&#x20AC;˘ SOC 0L0 bullyblasting@sasktel.net

Specializing in well site and pipeline surveys Yorkton 306.783.4100

Swift Current 306.773.7733

Edmonton 800.465.6233

Weyburn 306.842.6060

Lloydminster 780.875.6130

Calgary 866.234.7599

Regina 800.667.3546

Medicine Hat 403.528.4215

Grande Prairie 780.532.6793

OIL / INDUSTRIAL / AGRICULTURAL / AUTOMOTIVE

352-7668

TOLL FREE 1-877-778-7460 WEEKDAYS 7:30 A.M. - 5:30 P.M. SATURDAYS 9 A.M. - 1 P.M.

STOCKING ENGINE PARTS

1404 SCARTH ST., REGINA, SASK. website. www.continentalengine.ca FAX 525-8222

continentaleng@sasktel.net

Lloyd Lavigne â&#x20AC;˘ Kirk Clarkson Owners/Managers 6506 - 50th Avenue Lloydminster, AB

Phone: (780) 875-6880

5315 - 37th Street Provost, AB T0B 3S0

Phone: (780) 753-6449

Fax: (780) 875-7076

24 Hour Service Specializing in Industrial & Oilfield Motors

PIPELINE NEWS September 2010

D27

SALES AND RENTALS OF NEW AND RECONDITIONED OILFIELD EQUIPMENT • 100 thru 1000bbl API 12F Monogrammed Steel Tanks • 100-750bbl API 12P Monogrammed FRP Tanks • 28” x 60” 500psi Portable Test Separators • 6’ x 25’ Vert. 75lb Treaters • 8’ x 30’ 75lb Hz FWKOs • 8’ x 30’ 75lb Hz Treaters • Flarestacks • Tubing TRUCKING • Wellhead Equipment • 37.5 Ton Picker with Dual Winch • 33 Ton Picker • 22 Ton Picker • (3) 20 Ton Texas Bed Trucks • (2) Tri-Axle 51’ Oilfield Floats c/w Centre Roll • Tandem and Tri-Axle Hiboys • One Ton Trailers • Sandblaster & Painter

View our website for a complete listing of services and equipment!!

Ph. 306-455-2705 Fax 306-455-2250 codygrimes@eagleoilfieldservices.com m.doty@eagleoilfieldservices.com www.eagleoilfieldservices.com

Box 330 Arcola, SK S0C 0G0

D28

PIPELINE NEWS September 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