Pipeline News September 2012

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PIPELINE NEWS Saskatchewan’s Petroleum Monthly

September 2012

Canada Post Publication No. 40069240

FREE

Volume 5 Issue 4

See you at the Lloydminster Heavy Oil Show Sept. 11-13

Shake'N Bake:

Frac & Thermal Stimulation Element Technical Services supervisor Josh Hoīman bleeds oī the valves on the manifold during a job in southeast Saskatchewan. Element is a new player in the hydraulic fracturing arena, starƟng operaƟons in Carlyle in March. See story on Page B18. Photo by Brian Zinchuk

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PIPELINE NEWS September 2012

INSIDE SECTION A 4

Co-op Apologizes For ReĮnery Fire

17 Husky TransiƟons To More Thermal

6

Editorial

19 Lakeland College Pumped For Fall

11 Minister Of Economy One-on-One

25 Convoy For Hope

14 Economist Tackles Nexen Sale

29 Kerrobert THAI Ramps Up

SECTION B 1 4 8

11 Panther Drilling Adds Rig 4

Lloydminster Would Like To Host More Events

15 Do You Believe Climate Change Is Occurring?

Aquistore Holds Open House At Well Site

18 Element Technical Services: New Frac Company In Carlyle

"Scooter" Boyes and His Boys

SECTION C 1

Carnduī Oilmen's Golf Tournament

8

3

Torq Launches Bromhead Transloading Site

13 ShiŌing Gears: Honouring Tim Floden

5

Shortline May Haul More Crude Than Kernels

Crescent Point Resumes Drilling

15 Trican Establishes Manitoba Beachhead

PIPELINE NEWS Saskatchewan’s Petroleum Monthly

Oct. 2012 Focus

OIL SHOW COVERAGE & TOP JOBS IN THE PATCH

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PIPELINE NEWS September 2012

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TOP NEWS Early applause for Lloyd symposium

Mark Bacon, who is pictured at the 2011 Heavy Oil Symposium, is the chair of this year’s Heavy Oil Technical Symposium being held in conjuncƟon with the Lloydminster Heavy Oil Show Sept. 12-13. Bacon’s commiƩee has lined up four speakers who will address heavy oil producƟon in their talks. File Photo

By Geoff Lee Pipeline News Lloydminster – The 19th annual Heavy Oil Technical Symposium organized by the Lloydminster Society of Petroleum Engineers could go into the history books as the most well attended. For the first time, the symposium is being held in conjunction with the Lloydminster Heavy Oil Show Sept. 12-13, a fact that should attract a large audience for presentations in the Prairie Room at the Lloydminster Exhibition Grounds. “I am actually surprised we haven’t done it before,” said symposium chair Mark Bacon. “In the past – I wouldn’t say we compete – but we would run them at similar times and that likely caused the attendance at some of our events to go down.” Bacon credits the anticipated success of both events to the double-duty role of Mike McIntosh who is the chair of the oil show and a member of the symposium committee. “It just made sense that we should be running these together and having Mike on the committee

for both events makes it extremely helpful to do it this way,” said Bacon. Bacon will handle the introductory remarks at the two-day symposium and introduce all four speakers.. “What it means is that we can get more specific speakers,” said Bacon. “When people know there’s a much larger audience, we can get speakers that are much specific to the Lloydminster area. It will appeal better to the general public and the people in the area.” Attendance is free for all sessions in the Prairie Room. The symposium will kick off on Sept. 12 with a 2 p.m. talk titled Rodless Lift Solution for CHOPS by Tommy Kulak, gas lift and hydraulic lift operations manager at Weatherford. The opening day will wrap up with a 3 p.m. presentation called Improved Solids Handling Using a New Demulsifier by LaFrance Rhone, a senior chemist from Baker Hughes. Michele Tesciuba, project manager at Schlumberger, will kick off the final day of presentations on Sept. 13 at 9 a.m. Her presentation is titled Innovation and Collaboration in Heavy Oil: To take the industry further and deeper into heavy oil recovery. The symposium will wrap with a 10 a.m. presentation by Brett Davidson, president and CEO of Wavefront Technology Solutions titled, An Introduction to Powerwave for Improved Flooding and Stimulation Approaches. Bacon said the agenda was confirmed in early July after receiving good response to calls for technical submissions. “We actually had a very good response this year. We had nine or 10 submissions at least for only four slots,” said Bacon who is counting down the days. “There’s quite a bit of interest. We’re expecting a lot of turnout. It’s worked out really well and we’ve got good quality speakers lined up. “It’s been running for a quite a long time, so there’s a lot of public interest in it as well.” Attendance at some leading oil and gas shows in 2012 has reached record levels including 63,000 attendees to the 2012 Global Petroleum Show in Calgary June 12-14. The 20th annual Williston Basin Conference held this year in Bismarck, North Dakota, attracted a record 4,033 registered attendees, representing 46 states, seven provinces and nine countries.

Next year, the show moves to Regina where Canadian attendance records could be set due to the continued growth of Saskatchewan’s oil and gas and resources economy. “I think a lot of it is people recognize that things are going to pick up – 2014 and 2015 are going to be very big years,” said Bacon. “Anybody who is the industry recognizes that, and they want to get a jump-start on it as much as possible.” Bacon works for Champion Technologies in Calgary and was interviewed in Aberdeen, Scotland, where Champion has its United Kingdom regional headquarters. “Aberdeen is all based on North Sea so everything is offshore,” said Bacon. “We are trying to collect best practices from all around the world from within our company. “We are getting hold of what they are going in the North Sea and trying to figure out what we can take from that and bring to places like Cold Lake and Lloydminster. “It’s a good trip and to see how people do things slightly different. There is always a lot you can learn.” Bacon said his trip was well timed as there is nothing left to do to get the symposium up and running except show up, introduce the speakers and lead the applause.

Mike McIntosh kicked oī the 2010 Lloydminster Heavy Oil Show banquet and will likely do so again as the chair of this year’s organizing commiƩee. The guest speaker at the Sept. 11 evening banquet will be Kevin Casper vicepresident of producƟon for Devon Canada CorporaƟon.

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PIPELINE NEWS September 2012

BRIEFS

Co-op apologizes for reÀnery Àre

Invicta completes six-well drilling program

Invicta Energy Corp. announced the completion of its second-quarter six (3.3 net) horizontal light oil well drilling program at Kindersley, Saskatchewan. Due to wet weather conditions in the quarter, four of the wells were still in initial flow back as of Aug. 7, but at favourable rates. The first two wells of the program have been producing for two months at an average rate of 45 and 75 bpd, respectively. Based on the initial production rates of the six wells, Invicta expects these wells to outperform the company’s forecasted type curve. Current net field production is estimated to be over 400 boepd (85 per cent light oil). As these wells stabilize they will be tied into the company’s production facilities. In addition, Invicta said it has added over 10 sections of 100 per cent land through Crown land sales and acquisitions and now has 53,232 net acres of land in Alberta and Saskatchewan. From this developing land base, Invicta has the potential to develop a second core resource base to complement its current development on lands in Kindersley.

Briefs courtesy Nickle’s Daily Oil Bulletin

The Co-op ReĮnery Complex had a substanƟal Įre on Oct. 6, 2011 that injured several workers. This photo was not taken on that day. File photo

By Brian Zinchuk Pipeline News Regina – It all came down to corrosion. That was the conclusion of the report by the Regina Fire and Protective Services into the explosion and fire at the Co-op Refinery Complex last fall. The report was released on Aug. 16. Scott Banda, CEO for Federated Co-operatives Ltd., apologized for the explosion and fire at the Regina Consumers’ Cooperative Refineries Limited (CCRL) complex that injured a number of workers. At 2:06 p.m. on October 6, 2011, a fire began in the process area of the middle distillate unifiner. The CCRL fire and emergency response team controlled and extinguished the fire with mutual aid support on standby from the Regina Fire and

Protective Services. The fire caused major damage to the compressor building, pipe rack east of the compressor building, and adjacent components. Thirteen people were transported to hospital, 10 by emergency medical services, and another three by a contractor working on the site, according to Vic Huard, Co-op vice-president of corporate affairs, who spoke with Pipeline News last October. Of the 13 taken to hospital, 10 were treated and promptly released. One was treated and released shortly thereafter. A further 23 people reported injuries to Occupational Health and Safety, but none of these required medical treatment at a hospital, according to Huard. ɸ Page A5

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is a 640 acre site with 33 process units and over one million feet of piping. The area affected was half an acre in size. “On behalf of everyone in the Co-operative Retailing SysCorrosion inspection is typically done visually, via cuttem, we regret what happened last October and apologize to ting and inspecting the pipe, or through X-rays inspection. the citizens of Regina and surrounding area who we consider “In this particular part, in 2010, corrosion at the end of our neighbours and who we have grown up with since 1935,” the line was replaced. We missed a part further up the line. said Scott Banda. “October 6, 2011 was a dark day for all. We We apologize. We simply missed some,” Banda said. are recovering. We are rebuilding. And we are moving forward The 2011 fire was the second major incident in the 75 thanks to the dedication and efforts of all our employees as we year history of the refinery. “We’ll get better,” Banda promwork to ensure overall operational integrity in order to regain ised, adding there have been 19 changes made in processes the trust of the community.” and inspections. The investigation reveals a high-pitched whistle was heard “We have to improve and we will improve. We are better by numerous witnesses immediately prior to the fireball which than we were a year ago. enveloped the east pipe rack. This was followed by two and pos“That area of the fire has been completely removed and sibly three explosions after the initial fireball. rebuilt. Eighty per cent of the piping in the area has been The generation of overpressure from the initial fireball or changed, the rest inspected.” release was enough to cause the boom of a crane located ap“It’s been very tough on our people. That (safety) is our proximately 40 metres away to sway violenty. The crane operator culture.” fell from the machine to the ground. There has been a lot of counselling as well as group sesThe concrete pad east of the compressor building was found sions. to have solidified aluminum alloy on it that had previously meltThe refinery is a huge complex critical to the economy of ed. On top of this they found masonry building materials from Western Canada, he noted. the compressor building, indicated the compressor building east Asked about those who were injured, Banda said he was dislodged after the initial failure. couldn’t comment on them. They were employees of contracBanda spoke with Pipeline News by phone on Aug. 17. tors, and there is a workers’ compensation process in place. “It was accidental in terms of categorization. Their conclu- He added, “We have no information.” sion was it was a reactor effluent line that blew apart.” When characterizing the dollar value of the damage and The culprit was a six-inch line on a straightaway that con- business interruption, Banda said, “$100 million is a good tained half-processed diesel, hydrogen, and hydrogen sul- start. fide. “We’re down on our diesel production.” “There was a 7.25 inch rupture in that line where it blew,” Those impacts were felt last winter, when a diesel shortBanda said. age on the prairies had truckers scrambling to fuel up. Diesel The pipe was located in the MDU. Built in 1961, the fuel production won’t be restored until November this year. MDU was being prepared for extensive renovations at the The refinery is just nearing completion of Section 5, its lattime of the fire. est addition. Banda noted it is a few weeks away from startup. As for the ignition source, Banda said there were mul- Mechanically, the construction is basically complete. tiple possible sources, but it was most likely set off by a static A number of revamps are also underway and nearing comdischarge due to pressure. pletion. The addition of Section 5 and the revamps cost over $2 “It was just a matter of time,” he said. billion, “and we’re not done yet,” Banda said. Putting into context the scope of the refinery, he noted it ɸ Page A8

How did it blow? The report of the Regina Fire and Protective Services stated: “The reactor effluent line ... located within the middle distillate unifiner 5, 6, 7 suffered a catastrophic failure to a small portion of the line. The rupture area was located in a pipe rack adjacent to the east side of the compressor building. This failure is defined as a mechanical explosion. Data recorded indicates that the system was functioning as expected immediately prior to the failure, with no anomalies recorded in the hours leading up to the failure. Given the processes involved in that area of the facility, coupled with the numerous ignition sources and abundance of ignitable liquites, the fire that ensued would have been inevitable. “The initial blast overpressure was experienced immedi-

ately following the ignition of the combustible liquid leaving the ruptured reactor effluent line is classified as a combustion explosion. These explosions are frequently characterized by the presence of fuel with air and an oxidizer. In combustion explosions, overpressures are caused by the rapid volume production of heated combustion products as fuel burns. Given the large volume of product under pressure leaving the rupture, explosions of this nature are common in this circumstance. “All the damage sustained in this portion of 5, 6, 7 is as a result of the ruptured reactor effluent line. Direct flame contact or radiant heat from the initial fire caused a number of hydrogen product lines to breach, thus intensifying the ensuring fire on other portions of the affected area.”

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BRIEFS MB land sale draws $565,005 in bonus bids

The Manitoba government collected $565,005 at its August land sale, and has one sale left this year to try to break its all-time annual bonus revenue record. A total of 1,738.33 hectares exchanged hands this week at an average price of $325.03. Year-to-date the province has attracted $11.13 million in bids on 17,049.18 hectares at an average price of $652.73. To the same point of 2011, the government had brought in $10.1 million as 17,798.03 hectares were sold at an average price of $567.60. Last year, Manitoba set an all-time calendar year bonus revenue record of $13.14 million. Highlights of the August sale included EOG Resources Canada Inc. paying the highest price per hectare for a parcel located in the Waskada area. The firm paid $1,052.62 per hectare and tendered a bonus of $16,841.92 for the 16-hectare parcel. The company picked up the rights to legal subdivision two of section 11 at 2-25W1. Fire Sky Energy Inc. picked up two parcels, which combined for $444,444. Each 256-hectare parcel tied for the land sale bonus high of $222,222, producing an average price each of $868.06. One parcel included all of section 20, the other all of 29 at 6-29W1. This was the third of four sales scheduled for 2012. The next sale will be held on Nov. 14. Briefs courtesy Nickle’s Daily Oil Bulletin

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PIPELINE NEWS September 2012

PIPELINE NEWS

EDITORIAL

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. Publisher: Brant Kersey - Estevan Ph: 1.306.634.2654 Fax: 1.306.634.3934 Editorial Contributions: SOUTHEAST Brian Zinchuk - Estevan 1.306.461.5599 SOUTHWEST Swift Current 1.306.461.5599 NORTHWEST Geoff Lee - Lloydminster 1.780.875.5865 Associate Advertising Consultants: SOUTHEAST • Estevan 1.306.634.2654 Cindy Beaulieu Candace Wheeler Kristen O’Handley Deanna Tarnes Teresa Hrywkiw CENTRAL Al Guthro 1.306.715.5078 al@prairieng.com SOUTHWEST • Swift Current 1.306.773.8260 Stacey Powell NORTHWEST • Lloydminster Randi Mast 1.780.808.3007 MANITOBA • Virden - Dianne Hanson 1.204.748.3931 • Estevan - Cindy Beaulieu 1.306.634.2654 CONTRIBUTORS • Estevan - Nadine Elson To submit a stories or ideas: Pipelines News is always looking for stories or ideas for stories from our readers. To contribute please contact your local contributing reporter. Subscribing to Pipeline News: Pipeline News is a free distribution newspaper, but is now available online at www.pipelinenews.ca Advertising in Pipeline News: Advertising in Pipeline News is a newer model created to make it as easy as possible for any business or individual. Pipeline News has a group of experienced staff working throughout Saskatchewan and parts of Manitoba, so please contact the sales representative for your area to assist you with your advertising needs. Special thanks to JuneWarren-Nickle’s Energy Group for their contributions and assistance with Pipeline News.

Published monthly by the Prairie Newspaper Group, a division of Glacier Ventures International Corporation, Central Office, Estevan, Saskatchewan. Advertising rates are available upon request and are subject to change without notice. Conditions of editorial and advertising content: Pipeline News attempts to be accurate, however, no guarantee is given or implied. Pipeline News reserves the right to revise or reject any or all editorial and advertising content as the newspapers’ principles see fit. Pipeline News will not be responsible for more than one incorrect insertion of an advertisement, and is not responsible for errors in advertisements except for the space occupied by such errors. Pipeline News will not be responsible for manuscripts, photographs, negatives and other material that may be submitted for possible publication. All of Pipeline News content is protected by Canadian Copyright laws. Reviews and similar mention of material in this newspaper is granted on the provision that Pipeline News receives credit. Otherwise, any reproduction without permission of the publisher is prohibited. Advertisers purchase space and circulation only. Rights to the advertisement produced by Pipeline News, including artwork, typography, and photos, etc., remain property of this newspaper. Advertisements or parts thereof may be not reproduced or assigned without the consent of the publisher. The Glacier group of companies collects personal information from our customers in the normal course of business transactions. We use that information to provide you with our products and services you request. On occasion we may contact you for purposes of research, surveys and other such matters. To provide you with better service we may share your information with our sister companies and also outside, selected third parties who perform work for us as suppliers, agents, service providers and information gatherers.

Betting on upgraders in the ’80s paid off. Will B.C. make the same move? On Aug. 17, Western Canada newspaper baron David Black threw the entire Northern Gateway Pipeline debate and the associated oilsands production on its ear when he proposed a massive refinery be built at the Kitimat terminus of the pipeline. It’s a bold suggestion, the very definition of visionary, and it deserves serious consideration. First off, Black heads up the privately held Black Press, which owns and operates 150 newspapers in Canada and the United States. Pipeline News, however, is not one of them. It is owned by Glacier Media, Black Press’ main competitor. Secondly, when most people hear the name “Black” and word “newspaper in the same sentence, the usually think of Conrad Black, the recently returned former Canadian who had a substantial stay at Club Fed in Florida. This is not the same man. David Black’s proposal is this: process every barrel of bitumen that comes through the Northern Gateway Pipeline on Canadian soil. The primary resulting products – gasoline, diesel and kerosene, are light in comparison to heavy crude. They float, and evaporate, which is key should the unthinkable happen and a tanker have a spill in pristine B.C. waters. Along the way, you would be building one of the top 10 refineries in the world, capable of processing 550,000 barrels a day, easily the largest in Canada. It would be state of the art, employing 6,000 people in its construction, and 3,000 in its operation. Black would like construction to start in two years. To say it’s an ambitious plan is an understatement. No one has built new, greenfield refinery in Canada since the 1980s, and you have to go back another decade to find the newest one south of the border. As the press has noted, refineries are a lowmargin business. However, they are absolutely key economic infrastructure. We have seen ample evidence of that in Saskatchewan. In the 1980s, the Grant Devine Conservative government invested heavily in both what were once known as the NewGrade Upgrader (Regina) and BiProvincial Upgrader (Lloydminster). For many years,

they were slogged as being uneconomic at best and boondoggles at worst. The 2005 Encyclopedia of Saskatchewan stated, “The NewGrade refinery received substantial financial investment from both the federal and the Saskatchewan governments, which has not been recovered as of 2004 because of initial operational difficulties and because the price differential between heavy oil and light synthetic oil was often too small during the 1990s to cover the cost of the upgrading process.” Yet now, with several decades of experience behind us, we realize they were some of the smartest moves Saskatchewan made. The ability to process heavy oil here in Saskatchewan strongly supported the growth of the heavy oil industry. This September the industry will gather in Lloydminster for that city’s biennial heavy oil show. Ask those attending if they would have a job today if Husky didn’t have an upgrader on the east side of town. Most likely wouldn’t. Lloydminster, itself, would be a shadow of what it is today. That upgrader was a result of a provincial government taking a bold strategic bet on its energy future, and it has paid off in spades, long after the province divested itself. As for Regina, we see a similar story at what the public refers to as the “upgrader,” but Co-op officials refer to as an integral part of the “refinery.” Long after the province divested itself of its investments in the refinery, Co-op is now putting the finishing touches on a $2 billion expansion and revamp. So it is in this context, not only industry players, but perhaps the province of British Columbia itself, should seriously consider Black’s proposal. They may find that in order to make the pipeline palatable on the environmental side by reducing risk, and to the B.C. government by creating jobs and indeed a whole new industry in the region, they may have to take a bet on it. And while we are loath to encourage governments getting into business, the Conservative megaprojects of the 1980s were, in the end, good for the province of Saskatchewan. British Columbia Premier Christy Clark said she wants to see more benefits from the pipeline flow to her province. Maybe she will need to put her money where her mouth is.

PIPELINE NEWS September 2012

From the Top of The Pile

A7

OPINION

By Brian Zinchuk

Will there be big land sales numbers in 2014? In 2008, the Bakken play put a lot of money in the pocket of the Saskatchewan government via Crown land sales. The big question now is, will that happen again in 2014? Last month, I wrote: “In 2008, Saskatchewan blew all previous land sales records out of the water with $1.12 billion in Crown land sales. The vast majority of that, $915.7 million, was in southeast Saskatchewan, driven by the push to explore and develop the Bakken play. During the 2011 Saskatchewan Oil and Gas Show, Oilman of the Year Scott Saxberg, CEO of Crescent Point Energy Corp., revealed that Crescent Point was behind $700 million of that year’s land acquisition, buying both Crown and freehold permits and leases. “In August 2011, Saskatchewan hit an active drilling rig record on 122 rigs. In the meantime, North Dakota’s Bakken play has seen its oil production shoot past all other states except Texas. “Now, four years after those phenomenal land sales, the 2008 leases are nearing their expiries. In June, Pipeline News asked the Ministry of Economy what the results have been, and what to expect. Ed Dancsok, assistant deputy minister of petroleum and natural gas for the Saskatchewan Ministry of the Economy, spoke on behalf the ministry.” The long and short of it is this: •As of late June, 85 per cent of the land leased in the 2008 rush does not have a well on it, meaning only 15 per cent has been developed. •Oil companies have until March 31, 2014 to prove it up. •The historical trend is for 20 per cent to be developed and 80 per cent to revert to the province.

To reach that 20 per cent level, we are going to need record drilling over the next 19 months There is going to be a LOT of land left over come April 2014. My interpretation of this is that we could possibly see another big land sale year in 2014. Not as big as the 2008 perhaps, as the premium land has already been developed. This is the leftovers. There will be a lot of land to develop, but there are a lot of factors to consider first. In a follow-up e-mail, Dancsok told me, “We have monitored the reposting of lands after they revert back to the Crown and found that statistically it took two to three years for industry to request the reverted lands to be posted in a land sale. This range varies greatly on a case by case basis and in the case of hot plays like the Bakken reposting may not follow that statistical average.” He added, “Certainly it does take some time to work up a play concept and convince upper management within a company to pursue your exploration model by posting land. Also within companies there certainly is competition for exploration budget dollars amongst the different regions that any one company may have interests in, not to mention competition for budget dollars for drilling, production facilities, secondary and enhanced recovery projects and any other costs that companies need to prioritize. “Also, I would suspect that any rights that revert back to the Crown in the southeast Bakken play will likely or naturally be the less prospective areas so that future interest in acquiring these rights may be more tempered. All we need is another big discovery or another sweet spot or technology breakthrough

to turn that around in a hurry.” The big players that have emerged from the Saskatchewan Bakken play have focused on the best prospects first. Based on the number of wells you see along the highway, the Stoughton/Forget/Kisbey areas have proven there was a reason these parcels went for premium dollars. The other thing to remember here is all the players have referred to the Bakken as a “resource play.” As opposed to small pools that might be a couple sections here and there, this is a widespread play. That probably means a lot of the undeveloped land still has a lot of oil. The big question revolves around Crescent Point. In speaking with Ryan Gritzfeldt, their vice-president of engineering for their eastern area, i.e. southeast Saskatchewan, I asked if expiries were a pressure for them. He said, “No. We’re not feeling pressure. A lot of those leases had a five-year term. “When you look at the detail, we know what we have to drill two to three years out. We know what our expiry situations are. We build all that into our current drilling program. There’s always a small portion of our corporate drilling program that handles that.” With whatever land is left over, will this turn into an opportunity for juniors to scoop up parcels and develop it? Or will a large player, such as one of the existing Bakken producers, make a big grab? One way or another, 2014 will be an interesting year when it comes to Crown land sales. Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@sasktel.net.

Lee Side of Lloyd By Geoff Lee

Pent up interest in Lloyd oil show

Excitement is building on a number of fronts for the 2012 Lloydminster Heavy Oil Show that will be held Sept. 12-13. The show is billed as the world’s premier showcase for heavy oil knowledge and technology that benefits a number of stakeholders from organizers and exhibitors to the local hospitality industry and the reputation of Lloydminster as a heavy oil centre. More than 6,000 people are expected to attend the two day show at the completely renovated Lloydminster Exhibition Grounds. For exhibitors, the show is a fantastic opportunity to network with new and existing customers face-toface in a highly competitive field. It is also an opportunity for the general public to learn more about the industry that is driving the rapid economic growth and prosperity of Lloydminster and other heavy oil communities in the area. While some people may not think of the public as a customer, it is important for the industry to gain the public’s confidence and to demonstrate how heavy oil can be produced in an environmentally sensitive and profitable manner.

Some of the visitors will be new and returning oil and gas students from Lakeland College who are scouting the show for potential job leads as power engineers in the industry. Show organizers from the Lloydminster Oilfield Technical Society have teamed up with the Society of Petroleum Engineers to host the Heavy Oil Technical Symposium in conjunction with the heavy oil show for the time. The new dual purpose show is in keeping with the trend to keep the show as innovative and relevant to many heavy oil audiences. A couple of the technical presentation topics that should draw a crowd are Rodless Lift Solution for CHOPS and An Introduction to Powerwave for Improved Flooding and Stimulation Approaches. Organizers have added a couple of luncheon speakers as well this year that will give the show more of a conference look and feel modelled after other successful shows such as the Williston Basin Conference that alternates annually between North Dakota and Regina. This year’s 20th annual show in Bismarck, North Dakota attracted a record 4,033 registered attendees, representing 46 states, seven provinces and nine countries.

Oil and gas shows have never been so popular, with 63,000 attendees at the 2012 Global Petroleum Show held in Calgary June 12-14. The 2012 Oil Sands Trade Show & Conference in Fort McMurray will be held Sept. 10 which should free up visitors from that show to take a look at the 368 inside and outside booths in Lloydminster. The direct economic impact of the Lloydminster Heavy Oil Show is unknown, but organizers report all available motel and hotel rooms were booked months ago. Restaurants and retailers will also reap the economic spinoffs of the oil show held during the traditional shoulder season for the hospitality industry. The show will serve to strengthen Lloydminster’s reputation as the heavy oil capital of the world and for staging large scale events with long lasting economic benefits. It helps that this year’s show is being held in a period of relative strength for the oil and gas industry compared to 2010, the first year of economic recovery from the downturn in 2008-09. Two years can be a lifetime when it comes to the development of new technology and products that can keep companies ahead of the game and determined to meet the key players once again at this show.

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 2012

SpeciÀc actions taken by Co-op ReÀnery Complex ɺ Page A5 In addition, the following specific actions, beyond normal programs, have been completed at Co-op Refinery Complex since the incident: 1. An integrity assessment has been completed for all hydroprocessor reactor effluent lines (the type of process line that failed on Oct. 6) within the Complex. Additional inspection on these circuits was completed in May 2012. All reactor effluent lines were found to be in good condition with the exception of one line. That portion of line was replaced and full due diligence was completed on the balance of the line. 2. An audit of the entire corrosion monitoring program has been undertaken. 3. A written procedure has been developed that outlines how pipe wall thickness monitoring locations are determined. This procedure is in alignment with the principles out-

lined in American Petroleum Institute’s 570 – Piping Inspection Code. 4. A written procedure has been developed and implemented that outlines the actions, and additional inspection, that must be completed if the Corrosion Monitoring Program detects high corrosion rates. 5. Communications have been significantly enhanced between the process and inspection departments. In addition to a weekly meeting that had been occurring since 2010, a regularly schedule monthly meeting is now being held amongst process, inspection, maintenance and engineering, the groups that form the cornerstones of CCRL’s Equipment Integrity Program. 6. The equipment inspectors have attended a three-day risk-based inspection training course. 7. The initial risk-based inspection assessment has been completed for three process units. The inspection plans on certain equipment was

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modified based on the results of these assessments. 8. Integrity operating windows have been developed for three process units. 9. An inspection of piping circuits within the heavy naphtha unifiner (HNU) and the platformer unit have been completed to verify that correct materials have been installed in circuits at high risk for high temperature hydrogen attack. A further 10 additional activities have been undertaken to further strengthen the CRC equipment integrity program, including: 1. Continue with the further development and evolution of the CRC risk-based inspection program. 2. Continue with development of integrity operating windows being completed in conjunction with the RBI assessment. 3. Complete the audit of the corrosion monitoring program. 4. Form a reliability engineering group that will be focused on identification and resolution of equipment reliability issues. In the past this function has been divided between the maintenance engineering group and the plant engineering group. 5. Reinforcement of existing quality control system for fabrication and installation of piping systems to include additional field verification steps.

6. Continue with development of the process safety management system that addresses equipment integrity, documentation, training, management of change, procedures, incident investigation, emergency response, contractor safety, process hazard analysis, pre-start up safety review, and audit. 7. Continue with the development of written procedures and documentation to formalize and reinforce equipment integrity programs. 8. Additional management staff will be added to the equipment integrity group. 9. Plans are currently being developed to restructure the equipment integrity group that will include additional staff dedicated to rotating equipment condition monitoring. 10. Continue to complete a process hazard analysis on all existing process units. In addition, the refinery is working with a number of third party companies such as American Petroleum Institute, National Petroleum Refiners Association, various risk consultants and inspection contractors related to process improvements. It also has been working with DuPont Sustainable Solutions since 2008 that is providing full-scale process safety management program support to the refinery.

PIPELINE NEWS September 2012

A9

Imperial’s Kearl, Nabiye on schedule „ By Geo Lee Calgary – Imperial Oil Limited expects to start producing bitumen by the end of 2012 from its $10.9 billion Kearl oilsands open pit mining project northeast of Fort McMurray. The company is also on schedule to complete the construction of its $2 billion Cold Lake thermal expansion, called the Nayibe project, that will use cyclic steam stimulation (CSS) to produce bitumen. Imperial allocated more the $2.4 billion of its 2012 capital expenditure budget to its growth projects at Kearl and Cold Lake in the ďŹ rst six months of the year according to its second quarter report on July 26. The Kearl project, jointly owned by Imperial Oil (operator) and ExxonMobil Canada will be one of Canada’s largest open-pit mining operations with regulatory approval for up to 345,000 barrels a day of production. The Kearl project will recover a total of 4.6 billion barrels of bitumen over its estimated 40-year lifespan. The project is the largest in Imperial’s history. Ongoing construction of the initial 110,000 barrels a day phase project was 94 per cent complete at the end of the second quarter. “That’s on an overall project basis. Actual site construction is about 90 per cent complete,â€? said Imperial spokesperson Pius Rolheiser during a follow-up interview on Aug. 20. “We expect to start up as planned by the end of 2012. That will be the initial development of 110,000 barrels per day,â€? he said. “That will increase to about 145,000 barrels in the ďŹ rst several years with increased mining capacity.â€? The Kearl project was sanctioned in 2009 as a three-phase development. The execution plan was reconďŹ gured in mid2010 to include an initial development, followed by an expansion phase and then by a debottlenecking of both phases. The $8.9 million Kearl expansion project, scheduled for start-up in late 2015, will have a similar production proďŹ le – initial production of 110,000 barrels per day, increasing to 145,000 barrels per day over the ďŹ rst several years. The debottlenecking of both phases will increase total production from Kearl to its licensed capacity of 345,000 barrels per day by about 2020. It is the largest ongoing project in the oilsands with a camp-based workforce of 4,000 to 5,000 workers in August, just o the peak construction force of more than 5,000 workers in 2011. ɸ Page A10

Site construcĆ&#x;on at Imperial Oil’s Kearl oilsands project (ÄŽrst phase) northeast of Fort McMurray is 90 per cent complete. The company expects to produce bitumen from open pit mining by the end of 2012. The ÄŽrst phase is designed to produce 110,000 barrels per day, rising to 145,000 a day. A second phase expansion will also produce 110,000 bpd by the end of 2015, eventually rising to 145,000 bpd. The design capacity of 345,000 bpd could be reached by 2020. Photo submiĆŠed

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A10

PIPELINE NEWS September 2012

Fly-in, Ă y-out operation Éş Page A9 “Our long-time operational workforce – the guys who will actually work at Kearl once it’s up and running, will live in camp as well. Our plan was always to have it as a y-in, y-out operation,â€? said Rolheiser. Crews are continuing to reassemble giant size modules on site that were constructed in South Korea and transported to Edmonton through the United States. Construction at Imperial’s Nayibe project located at the northeast section of Imperial’s leases at Cold Lake stood at 22 per cent complete by the end of the second quarter. The project, sanctioned by Imperial in February 2012, is on target to produce more the 40,000 barrels of day of bitumen with a start-up by the end of 2014. “We actually started the preliminary site work even before we formally sanctioned the project,â€? said Rolheiser. “In the summer of 2011, we did some preliminary site clearing and some excavation.â€? The company also built the access road to the site that is a new development area for Imperial. The Nabiye expansion will access 280 million barrels of recoverable reserves of bitumen. Nayibe will include a central steam generation and a bitumen processing plant which will also have a 170 megawatt electrical co-generation plant incorporated in it.

Between 4,000 and 5,000 construcĆ&#x;on workers camped at Imperial’s Kearl oilsands project have an opportunity see the sunrise over the froth treatment plant at the open pit mining site northeast of Fort McMurray. The company is also on schedule with the expansion of its Cold Lake thermal operaĆ&#x;ons at its Nabiye project that will use cyclic steam sĆ&#x;mulaĆ&#x;on to produce bitumen. Photo submiĆŠed

Imperial operates the largest and longest running in situ oilsands operations in Canada at Cold Lake. That includes four steam generation and bitumen production plants. Gross production of Cold Lake bitumen averaged 152 thousand barrels a day during the second quarter, versus 158 thousand barrels in the same period last year. The lower volumes were primarily due to planned maintenance activities at the Mahkeses plant as well as the cyclic nature of production at Cold Lake. Rolheiser says the decision to produce bitumen with open pit mining at Kearl or to use CSS or SAGD (steam assisted gravity drainage) at Nabiye

is primarily due to reservoir characteristics. “The open pit mines are all north of Fort Mac because the bitumen zone is close enough to the surface,â€? he said. “At Cold Lake and even further south of Fort Mac, and even further northeast of Fort Mac, the bitumen oilsands ore is buried so deep it’s just not practical to surface mine it, so you employ thermal technology. “The reason we use CSS at Cold Lake is because in that particular reservoir SAGD simply wouldn’t be as eective as CSS because of reservoir conditions. “SAGD requires uniform reservoirs with higher bitumen saturation to be eective.â€?

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A11

Boyd tackles A-Z media questions „ By Geo Lee Minister of the Economy, Bill Boyd was on hand for the oďŹƒcial opening of Kerrobert’s upgraded water treatment plant in his provincial riding of Kindersley on Aug. 3. Boyd spoke to Pipeline News about a number of oil and gas topics following the ribbon cutting, including the roles of his new umbrella Economy Ministry including the Ministry of Energy and Resources now headed by Tim McMillan. The Ministry of the Economy, created during a cabinet shue on May 25, brings together a number of economic functions of the government, including Enterprise Saskatchewan, Innovation Saskatchewan,Tourism Saskatchewan, employment, immigration, trade, energy and resources. Bill Boyd is also the minister responsible for SaskPower and minister responsible for the Global Transportation Hub in Regina New Energy and Resources Minister Tim McMillan is also minister of Tourism Saskatchewan and Trade within the Economy ministry and minister responsible for SaskEnergy. Depending on their schedules, Boyd and McMillan could both be at the Lloydminster Heavy Oil Show in Lloydminster Sept. 12-13. PN: How is the oil and gas economy of Saskatchewan right now? Boyd: The oil economy is pretty good. We’ve seen a bit of a pullback in oil prices in the last 50 or 60 days which is a bit concerning. The oil economy though, still remains strong. We’ve got some strong drilling activity in Saskatchewan. Gas, on the other hand – there are very low prices, and as a result of that, there is not much activity there. Fortunately, gas isn’t a big component of our provincial revenue base – oil certainly is. We still are on track, but obviously, a little bit concerned about the prices right at the moment. ɸ Page A12

Minister of the Economy Bill Boyd helped to oĸcially open Kerrobert’s newly upgraded water treatment plant in his Kindersley consĆ&#x;tuency on Aug. 3. The province contributed $1.32 million in provincial infrastructure sĆ&#x;mulus funds plus $250,000 under the Municipal Rural Infrastructure Fund.

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PIPELINE NEWS September 2012

Questions answered Éş Page A11 PN: How important is heavy oil thermal recovery becoming to the province? Boyd: Any of these enhanced oil recovery projects are very important. The enhanced beneďŹ ts are very real – much higher recovery rates than normal production so they are a very positive generator of additional oil and revenue for the province. PN: Is this why the Saskatchewan Research Council is focusing more research on heavy oil recovery? Boyd: Ongoing work at the SRC as well as the Petroleum Technology Research Centre – always with respect to enhanced oil recovery methods or other technology – that’s being looked at – these are very good projects that create signiďŹ cant wealth for our province. PN: Is there a speciďŹ c heavy oil strategy in the works? Boyd: I don’t know if there’s a strategy necessarily coming up. There is ongoing work all of the time with respect to enhanced oil recovery types of opportunities here in Saskatchewan. They are important for the province and there will be ongoing work. PN: What impact does the lower rig count in July and early August this year compared to the summer of 2011 have on the province? Boyd: The drilling numbers are still pretty good here in Saskatchewan right now. The weather has been much more co-operative this year than last year, particularly down in the southeast part of the province where they were ooded last year. Drilling activity is pretty strong though, across the province. PN: The March budget was based on a barrel of oil at $100. Is the lower oil price aecting programs? Boyd: Revenues are o a little bit recognizing we are only four months into the ďŹ scal year of the province starting April 1. We are a few months into it – we don’t see our projections are o that much. Most analysts would agree that they are expecting prices to strengthen in the fall and the winter months. PN: Will you or Energy Minister Tim McMillan be attending the Lloydminster Heavy Oil Show Sept. 12-13? Boyd: Tim is the actual minister, so I am sure he will there. I am not sure about my schedule at the moment, but I am looking forward to it if I get the opportunity. ɸ Page A13

Economy Minister Bill Boyd, leĹŒ, chats with Kerrobert Mayor Erhard Poggemiller during a tour of the upgrades to the town’s water supply and water treatment plant. Boyd was on hand for the oĸcial opening on Aug. 3.

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A13

ɺ Page A12 PN: How important is this heavy oil show to the oil and gas industry? Boyd: I think these shows are very important to the industry. It showcases the latest technology. It certainly is a good opportunity for interaction between the companies and the consumers of their products. It’s a wonderful opportunity for the industry to get together and talk and showcase the new technologies. Husky Energy is a great example (more than 24,000 barrels of oil from thermal in Q2). A number of other companies across the province as well have enhanced A proud stocking distributor of Canadian oil recovery projects and many of them working out very well. Manufactured Oil Country Tubular Goods (OCTG) Any time we can increase the recovery rates it dramatically affects the amount of production as well as the royalties that are ‘thrown’ from that. Global Steel Ltd. is a private corporation founded in 1990. From modest beginnings Global Steel PN: How would describe your new Ministry of the Economy? has grown to become one of North America’s Boyd: The Ministry of the Economy has the economic functions of govmost trusted distributors of premium Canadian ernment all involved in it now. I think that sort of makes sense. We had them Manufactured Oil Country Tubular Goods (OCTG). Today, this Calgary-based company before in about four or five ministries. enjoys an unmatched reputation for product This change is a good change. It provides companies that are looking to quality, innovation and customer service. do business with more of a one-stop opportunity to address any problems or concerns about setting up a business in our province. Global Steel maintains key relationships with PN: Most of the issues pertaining to energy and resources fall on Tim several major domestic steel mills. Strategic McMillan’s plate? alliances with each mill guarantee reliable and secure access to a full range of high-quality ERW Boyd: I am still obviously involved in it as the minister of the Economy. OCTG, Seamless OCTG and Line Pipe products. One call to Global Steel provides customers We have a joint role in some respects with energy. We are committed to providing oil and gas with competitively priced products and PN: How important is the upgraded treatment plant for Kerrobert to producers with exceptional service, high-quality efÀcient , safe dispatch to the job site. Global oil Àeld tubular goods and personalized logistical attract new oil and gas companies or workers? Steel currently maintains 18 inventory stock support. points strategically located across Canada. Boyd: I think it’s very important. One of the things we all take for granted Each stock point is supported by veteran is good quality water and sewer infrastructure. You never really think about trucking companies specializing in oil Àeld until you turn the tap on and nothing comes out. This is important for the transportation and providing 24 hours service. ongoing operations of Kerrobert and the growth of Kerrobert and the area in An unwavering focus on operating and service the future. excellence is what separates Global Steel We are very pleased as a province to be involved in this. It provides stable from everyone else. It is a commitment that funding for the community here and a good water source going forward. shows in our products and services. At Global PN: What is your take on the amount of oil and gas activity in your Steel we are focused on your business. Kindersley riding? Boyd: There is very strong activity in this area. We are seeing new technology – the horizontal wells of course, taking over more and more – production increasing – a lot of very good jobs and a lot of investment is taking place in Kerrobert and area. The oil activity in this constituency represents a big part of our economy, and as a result of that, a lot of people in Kerrobert and Kindersley and other places in the constituency have very good jobs from it. PN: Have you visited Petrobank’s THAI thermal oil project near Kerrobert? Boyd: I have about 18 months ago or so near Kerrobert. It’s a very leading P: 403.237.8108 • F: 403.237.8392 1600 Sunlife Plaza (West Tower), edge project that is showing very strong results. That project is involving a lot E: info@globalsteel.ca 144 - 4 Avenue SW of very good people – a lot of investment – clearly communities like Kerrobert www.globalsteel.ca Calgary, Alberta T2P 3N4 are benefiting from it. PN: Do you see any new companies getting involved in the Saskatchewan oilsands? Boyd: There are a couple of companies involved in it. Unfortunately it’s slow progress. One of the companies (Oilsands Quest) had some financial difficulty. I hope they are working their way through the process with respect to that. There certainly is a very large deposit there, and there are some engineering and technical challengIf you have a specific problem on an application, we’ll help you design & develop novel es that have to be met and can be met in the future. production optimization equipment. I suspect we will see production there sometime in the future. PN: Is heavy oil in this area going to play a FEATURING: PREMIUM WEIGHTED INTAKE ROD PUMP GAS SEPARATOR bigger role in the province? Boyd: I wouldn’t say more. I would say it’s a The Premium Weighted Intake Rod Pump Gas Separator is similar to our Rod Pump Gas Separator consistent significant player in the oil here in west with an added feature that allows it to be installed in highly deviated Ro Rod Pumping wells. central Saskatchewan with more sweet or lighter crudes in some other places. This has been a stable area for production for a long time. 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A14

PIPELINE NEWS September 2012

Economist seeks review on Nexen takeover

Economist Erin Weir wants the Saskatchewan government to launch its own review of the proposed U.S. $15.1 billion takeover bid of Nexen Inc. by the China NaĆ&#x;onal OÄŤshore Oil CorporaĆ&#x;on. Photo submiĆŠed

„ By Geo Lee Regina – The Saskatchewan government should undergo its own review of the proposed U.S. $15.1 billion takeover of Nexen Inc. by the China National Oshore Oil Corporation announced July 23. That’s the belief of potential provincial New Democratic Party leadership candidate and economist Erin Weir, who is currently a Regina-based economist for the Canadian Centre for Policy Alternatives. Weir fears CNOOC could drive down oil and gas prices to supply Chinese consumers with cheap Canadian energy at the expense of Saskatchewan where he says Nexen operates more than 1,300 producing gas wells. “I think a company like Nexen tries to sell oil and gas at the highest possible price,â€? he said. “I think the risk for Saskatchewan is that the Chinese National Oshore Oil Corporation may have an interest in supplying Saskatchewan resources to the Chinese economy at lower prices which would reduce Saskatchewan’s royalty and tax revenue.â€? Nexen began in Saskatchewan following the 1986 privatization of SaskOil, a Crown corporation, and has gone on to become an international energy giant. The Nexen deal would extend CNOOC’s global presence in Western Canada, the U.K. North Sea, the Gulf of Mexico and oshore Nigeria – focused on conventional oil and gas, oilsands and shale gas. Nexen posted an average production of 207 million barrels of oil equivalent per day (after royalties) in the second quarter 2012 including produc-

tion from its Saskatchewan operations. Weir said the main dierence between Chinaowned CNOOC and SaskOil being a former Crown corporation is that SaskOil’s interest was to make money for the people of Saskatchewan. “SaskOil tried to sell oil and gas at the highest possible prices,â€? he said. “CNOOC belongs to a government that is an energy consumer, so it has the opposite interest. It would want to lower those prices.â€? The CNOOC bid for Nexen will require federal government approval under the Investment Canada Act, which requires some foreign takeovers of Canadian companies to pass the “net beneďŹ t testâ€? of being a positive contributor to Canada's economy. CNOOC’s last major deal in Canada was a $2.1 billion acquisition of oilsands developer OPTI Canada that received federal approval. Weir thinks more is at stake with the Nexen deal, and he favours an open debate similar to the one over the hostile takeover bid for Saskatchewanbased PotashCorp by Australia’s BHP Billiton Ltd. in 2010. The federal government eventually disallowed the foreign ownerships of PotashCorp due to strong pressure led by Saskatchewan Premier Brad Wall. “It is quite striking that the government of Saskatchewan has said nothing at all about the proposed Nexen takeover given Nexen’s signiďŹ cance in the provincial economy, and given how vocal it was about the proposed PotashCorp takeover,â€? said Weir. ɸ Page A16

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PIPELINE NEWS September 2012

No public process

Economist Erin Weir, leĹŒ, has become on of the leading spokespeople for the NDP on economic policy. Photo submiĆŠed. Éş Page A14 “I think there’s a need for a much more open and thorough review of the proposed Nexen takeover through the Investment Canada Act. “In the past, these reviews have taken place behind closed doors and usually resulted in foreign takeovers being rubber stamped. “PotashCorp. was only one of two exceptions to that since the Investment Canada Act was passed in 1985. “The process changed precisely because there was so much public debate and political pressure on the federal government to reject that proposal.â€? Weir will continue to urge the government to be more transparent about the proposed Nexen sale to

CNOOC as he ponders his next career move. He said he will announce whether he plans to run for the NDP leadership in September in advance of the leadership vote next March at the NDP convention. He has also taken a leave from his job as an economist for the United Steelworkers Union’s national oďŹƒce. “I did a lot of my commentary with the United Steelworkers, but since I am on leave, I am not oďŹƒcially speaking for the United Steelworkers right now,â€? he said. In a comment posted on rabble.ca on July 25, Weir said CNOOC’s promise to establish its North American headquarters in Calgary wouldn’t be good for British Columbia where Nexen is expanding shale gas extractions, nor would it be good for Saskatchewan. He said that’s due to a real risk of CNOOC under pricing their provincial resources. Burnaby NDP MP Peter Julian, the oďŹƒcial B.C. opposition critic for Energy and Natural Resources, said last month he is seeking a “transparentâ€? review of the transaction by a parliamentary committee on natural resources. He wants to examine whether the deal would cost Canadian jobs by driving raw bitumen from Nexen’s oilsands projects to China that could otherwise be reďŹ ned domestically. Alberta’s Minister of Energy Ken Hughes said his province welcomes investment with required compliance from all oil and gas companies. “Today’s potential transaction is further evidence of the vital importance of Alberta’s oilsands to meet global energy demand,â€? said Hughes in a new release. “Foreign investment beneďŹ ts Albertans, and Canadians, putting Canadian ďŹ rms in a better position to

compete globally. “Nexen itself is a Canadian company that maintains operations around the world including in the Gulf of Mexico, Africa and the North Sea. “The investment required to develop oilsands resources is signiďŹ cant. “The oilsands have already drawn investment from China, the United States, Norway, Japan, South Korea, France, Thailand and the United Kingdom. The result is jobs for Canadians here and abroad, and competitive products on an international market.â€? Weir is mied that the Saskatchewan’s Brad Wall government has been conspicuously silent on the proposed takeover and its potential economic impact. “I hope there is a rigorous review of the proposed Nexen takeover, and I would like to see the government of Saskatchewan speaking out in favour of such a review and play an active role in that process,â€? said Weir. Weir is also critical of the fact there is no timeframe on when a decision will be made by the federal government. “That’s the whole problem that there are really not public hearings,â€? he said. “There is really no public process or timeline. The process just occurs behind closed doors and we won’t know until Industry Canada comes forward and announces it has either approved or rejected the proposal. “That’s the problem with the process being so secretive.â€? The U.S. review is being conducted by the Committee on Foreign Investment, an interagency panel chaired by Treasury Secretary Timothy Geithner that examines deals for national security risks. The U.K. government is also conducting a review with Nexen’s extensive assets in the North Sea at stake.

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Husky increases thermal output, focus By Geoff Lee Calgary – Husky Energy Inc. continues to transition its heavy oil operations in Western Canada to thermal production and horizontal wells while reducing the number of cold heavy oil production (CHOPS) wells in the Lloydminster area. Only three CHOPS wells were drilled in the second quarter of 2012 compared to 60 such wells in the second quarter of 2011, as thermal proves to be a cost-efficient alternative. “We’ve been making good progress in transitioning our heavy oil portfolio towards more thermal production and horizontal drilling.” said CEO Asim Ghosh during a second quarter conference call on July 25. “We achieved first oil in the second quarter at both the Pikes Peak South and the Paradise Hill thermal projects ahead of schedule, and product is now shipping from both sides. “To accelerate this program, we have now sanctioned the Sandall thermal project, and are looking at the early stages of examination of four additional thermal projects. “We'll be developing these projects with a proven modular approach, which should give us cost and operational efficiencies,” Ghosh said. Production from all of Husky’s thermal projects averaged 24,000 barrels a day including 4,500 barrels a day from new Pikes Peak South and Paradise Hill thermal projects near Lloydminster in the second quarter of 2012. Production from the, 8,000 bpd capacity Pikes Peak South and 3,000 bpd capacity Paradise Hill thermal projects will continue to ramp up by the end of the year. “These projects, the two of them, were delivered in aggregate slightly under budget and in about 13 months and 15 months respectively, so a very good performance by the business unit there,” said chief operating officer Rob Peabody. The 3,500 bpd Sandall thermal project near Paradise Hill was sanctioned during the quarter with commissioning expected in 2014. Design work continued in the quarter on an 8,000 bpd commercial project at the Rush Lake thermal development, which is expected to begin production in 2015. Fifty horizontal wells were drilled during the first half of 2012, out of a planned 140 to 150 well program this year, as heavy oil production continues to favour thermal over CHOPS. Only 72 CHOPS wells were drilled in the first six months of 2012 compared to 121 in the same period of 2011. “It’s quite simple really,” said Peabody, in response to an investor question about the economic and strategic rationale of thermal projects such as Pikes Peak. ɸ Page A18

Ed Connolly, senior vice-president of heavy oil, oĸciated at the grand opening of Husky’s new CO2 Capture and LiquefacƟon Project that was held in the second quarter. Four solvent enhanced oil recovery pilots were operaƟonal in the second quarter, using CO2 recovered from the Lloydminster ethanol plant.

ProducƟon began in the second quarter of 2012 at Husky’s 8,000 barrel a day Pikes Peak South thermal project located 40 kilometres east of Lloydminster. Thermal producƟon also began at the 3,000 bpd Paradise Hill project on June 16 with producƟon levels at both sites conƟnuing to ramp up. Pictured are thermal pumpjacks at the Pikes Peak site. File photo

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PIPELINE NEWS September 2012

Husky ɺ Page A17 “First, CHOPS has been a great driver of our production heavy oil over the years, but the quality at the margin of those wells is declining, and meanwhile, with the efficiencies we’re seeing in executing the thermal projects, we’re able to replicate the economics of the really good CHOPS wells now through thermal projects,” explained Peabody. “And, in essence, what we see there is we’re able to achieve the same operating costs with similar F&D (find and development costs).” Peabody said that based on just the capital efficiency of Pikes Peak South and Paradise Hill, the projects “were delivered between, on average, at about $33,000 - $35,000 a flowing barrel, so very competitive overall in the portfolio.” During the first six months of 2012, Husky spent $245 million on capital expenditures for heavy oil projects related to thermal projects compared to $232 million in the same period of 2011. The first phase of the Sunrise Energy Project in the Athabasca Oil Sands using steam assisted

The Lloydminster upgrader achieved record monthly producƟon, throughput and shipments following a successful three week turnaround during the second quarter. File photo

gravity drainage (SAGD) advanced on schedule in the second quarter with first production planned in 2014. “Looking at the subsurface side, all 49 SAGD well pairs are finished, and most importantly, we’ve confirmed the quality of the reservoir,” said Ghosh. “On the surface side, the biggest component is the central processing facility, which is about 30 per cent complete. And construction of the other feed facilities, including the pipelines, is about half complete. “So to summarize, it’s been a steady quarter, with progress against each of the elements of our business.”

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Husky achieved significant milestones across its other growth pillars with the completion of the shallow water platform jacket at the Liwan Gas Project in the Asia Pacific Region. The company also awarded contracts in the quarter to evaluate potential extension options at the White Rose field in the Atlantic Region. Due to weaker commodity prices, Husky ended the quarter with a profit of $431 million compared to $669 million in the second quarter of 2011. The average realized price for the company’s production as a whole was $51.98 per barrel of oil equivalent in the quarter, compared to $66.33 per boe a year ago and $65.26 per boe in the first quarter. The average realized crude oil pricing was $71.61 per barrel, down from $87.87 per barrel a year ago and $87.11 per barrel in the first quarter. On the production side, Husky averaged 282,000 boepd per day in the quarter compared to 325,000 boepd in the first quarter and 311,600 a year ago. The lower number includes a 34,000 boepd reduction due to maintenance of off-stations in the Altantic region. “We continue to benefit from a strong downstream operational performance and reliability and these have partially helped offset lower commodity prices and refined product margins,” said chief financial officer Alister Cowan. The Lloydminster upgrader contributed $42 million to quarterly profits, compared to $48 million in the last quarter and $20 million a year ago. A planned three week turnaround at the upgrader in April was completed on time and on budget and led to significant milestones for record monthly production and shipments.

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PIPELINE NEWS September 2012

Lakeland pumped for fall energy upgrades

Kara Johnston dances on the site of the Ďrst phase of the new Lakeland College Petroleum Centre. The sod-turning ceremony will take place Sept. 11 – the opening day ceremonies of the Lloydminster Heavy Oil Show.

Lloydminster – Back to school will have special meaning for Lakeland College oil and gas students with new power engineering programming, upgraded lab facilities and the construction start of a new Lakeland College Petroleum Centre. Orientation takes place Aug. 28 at the Lloydminster campus for heavy oil and gas students who may be in shock and awe over the changes. The fall semester marks the start of another one-year heavy oil operations technician or HOOT certiďŹ cate course for fourth class power engineering with 46 students enrolled and many more on a waiting list.

The new academic year also heralds the start of the ďŹ rst two-year heavy oil and power engineering diploma course for third class power engineering students. “We are launching that program this fall, so we will have students in the ďŹ rst year of the diploma program as well as students in the second year of the diploma program,â€? said Kara Johnston director of Energy, Entrepreneurship & Saskatchewan Programming. “We have 25 students from our current group of HOOT students that just graduated that are coming back to do their second year and complete their diploma. “Interest is picking up through the roof with the two year diploma. Our waiting list – we have never seen a waiting list like this. We easily have over a 100 people who are awaiting entry. “Our new facility can’t open fast enough so that

we can accommodate all these students,â€? Johnston said. Five of the new heavy oil power engineering students are returning to class with $22,000 scholarships from Husky Energy. Husky oers students practicum work placements and full time employment oers upon graduation. Lakeland also wrapped its ďŹ rst Introduction to Heavy Oil and Gas program at the Onion Lake First Nations Reserve in July with ďŹ ve students from that program entering the HOOT program this fall. Students in both one and two year program streams will beneďŹ t from the installation of a new $700,000 teaching boiler in the existing lab and new equipment upgrades for third class power engineering studies. ɸ Page A22

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PIPELINE NEWS September 2012

PIPELINE NEWS September 2012

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PIPELINE NEWS September 2012

Construction will be underway ɺ Page A19 “Our lab is currently a four class lab. We have a new boiler coming to create a third class lab,” said Johnston in early August. “It’s currently being shipped from Oklahoma along with a new deaerator (to remove oxygen in boiler feedwater) and a new blow-down tank.” The new boiler could be fully installed and operational by Oct. 1. “This fall, these students will get to see something really special because they will be there when the boiler is started,” added Johnston. “What that means for our diploma students who are doing their third class, is they can do all of their steam time in-house.” Students may also take part in the sod turning for the construction of the $15 million first phase of the new Lakeland Petroleum Centre on Sept. 11 – timed for the start of the Lloydminster Heavy Oil Show. “We’ll have lots of people in town and we have invited some provincial dignitaries – the Alberta government particularly. They contributed almost $10 million to this project,” said Johnston. The dignitaries will include representatives from sponsoring oil and gas companies including Husky, and Canadian Natural Resources. Husky donated $1.1 million to Lakeland in May with $750,000 toward expansion and upgrades and $360,000 to student scholarships and financial support for power engineering students. CNRL contributed $500,000 this year toward the new centre and facility upgrades and CIBC donated $125,000 for general academic scholarships in January.

“So we’re going to dig the hole and construction will be underway,” said Johnston who has renderings of the new wing posted in the HOOT lab. “They are just finalizing their plans right now and it looks phenomenal. We are pretty excited. “We are still looking a bit more support from our industry sponsors. We are not quite at our $15 million goal yet, but we are really confident that our industry will come to the table,” added Johnston. “We have a really phenomenal investment team that is out there now meeting with those investment partners.” Husky, Cenovus and Keyera Corp. are among the industry partners that funded the development of the new heavy oil power engineering curriculum. The programming is also benefiting from a $1 million donation that is being paid over four years from Calgary philanthropist Allan Markin. The donation was made in 2009 through Markin’s Healthy Learners Fund. Lakeland is looking for funding to acquire some specialized heavy oil equipment for the new wing including a once-through boiler, a distillate tower and some SAGD and upgrader simulations. “It’s important to have the latest technology. You can simulate the entire upgrading process,” said Johnston. “Students can go in and they can break it down and see how it works. Simulation is going to be the key to the future which is why it is important for us to have those tools for our students. “We actually installed symtronics simulation (boiler simulation) this summer so students will have some simulation for a boiler. That’s pretty awesome. We are pretty excited about that,” John-

ston said. The new Petroleum Centre will eventually house three steam boilers, two large theatres, change rooms, offices and numerous class rooms when both phases are complete. The first phase will feature four 60-seat classrooms, a faculty suite, some staff offices and the third class lab. A grand opening for this phase is timed for Lakeland’s centennial year wrap up in November 2013. The City of Lloydminster has contributed $50,000 to the Lakeland Centennial Campaign that kicks off Nov. 10 in Lloydminster with the Great Prairie Steak Cook-off sponsored by the City of Lloydminster and Lakeland College alumni. Despite the historic investments and increased enrolment this year, student housing may not be an issue in Lloydminster. All of the available rental accommodations in the Husky Energy Residence Village will be available to students this fall. Students will also be greeted by new faculty members who will welcome the new third class and fourth class power engineering students on orientation day. “I am very excited. We’ve worked so hard this past year,” said Johnston. “We’ve worked so hard on the program and these lab upgrades, and we are finally starting to see the results of all that hard work. “We’ve got a couple of new faculty members. We have the biggest faculty that we’ve ever had; we have five which is unheard of in this program. “Now it’s nice to put in all into place and to implement it.”

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PIPELINE NEWS September 2012

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Pipeline spills prompt safety review Edmonton – Three major oil spills in Alberta this summer have prompted a safety review of the provincial pipelines regulated by the Energy Resources Conservation Board. Alberta Energy Minister Ken Hughes has asked the ERCB to retain an independent third party to review pipeline safety in the province. The ERCB, in conjunction with an independent third party to be contracted, will review how pipeline integrity is managed, how safety of pipelines crossing waterways is ensured, and how responses to pipeline incidents are handled. “As leaders in energy production and regulation, our pipeline integrity standards must be among the best in the world. If changes are needed, Albertans can rest assured that we will make them,â€? said Hughes on June 20. “The energy industry is the economic lifeblood of our province, and at the same time we want to ensure that Albertans have clean water, clean land and clean air. Today we are taking signiďŹ cant steps to ensure this will be the case for decades to come.â€? The call for a review was time, with an announcement by Enbridge Inc. to spend $500 million to change the design of its Northern Gateway pipeline in a bid to address safety concerns of aboriginal groups and others. The proposed $5.5 billion project has been the focus of heated debate among local communities, environmental groups and politicians. The request for pipeline safety review came two days after the spill of 230,000 litres of oil from an Enbridge pumping station on the Athabasca pipeline near the town of Elk Point on June 18. On June 7, approximately475,000 litres of oil spilled from an old Plains Midstream’s Rangeland pipeline near Red Deer in central Alberta. Some of the leaked oil owed into the Red Deer River from a reservoir. In late May, a Pace Energy Oil and Gas oil leak near Rainbow Lake in the northwest of the province spilled about 5,000 barrels. The new pipeline safety review will run in conjunction with the current incident-speciďŹ c investigations the ERCB is conducting. The pipeline safety review will be broader in scope, and will look at existing

regulations and industry best practices from Alberta and around the world. At the conclusion of the review, a report will be submitted to Minister Hughes. Alberta has almost 400,000 kilometres of provincially-regulated pipeline. The number of incidents has been steadily declining, from 885 in 2007 to 641 in 2011 said the government. All incidents, ranging from contact with a pipeline that does not cause a release to a spill, must be reported to the ERCB.

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PIPELINE NEWS September 2012

August land sales revenue doubles up Regina – The August sale of Crown petroleum and natural gas rights generated $23.3 million in revenue for the province, which was more than double the $10.5 million from the June sale. The proceeds from the August land sale help to push the total revenues for the year to $78.9 million with the next sale scheduled on Oct. 1. Minister responsible for Energy and Resources Tim McMillan said the August sale not only provided a healthy return for the province, but also reected the strong, ongoing interest by the industry in Saskatchewan's oilpatch. “Saskatchewan oers a competitive, attractive environment for exploration and development and companies are placing a premium on our oil and gas resources,â€? said McMillan. “That’s reected in the average dollars per

hectare received in these sales, and so far in 2012 our average dollars per hectare price is tracking well ahead of that of the country's other major oil producer, Alberta.� Petroleum and natural gas rights in August sold at an average of approximately $500 per hectare, slightly lower than the $542 per hectare price in June. Alberta’s lease and licence totals averaged just $176 per hectare in their bi-monthly sale of Aug. 8. The August sale in Saskatchewan included 237 lease parcels that brought in $22.9 million in bonus bids and two petroleum and natural gas exploration licences that sold for $366,109. The Weyburn-Estevan area received the most bids with sales of $10 million. The Swift Current area was next at $6 million, followed by the Lloydminster area at $5.5 million and the Kindersley-Kerrobert

area at $1.7 million. The highest price for a single parcel was $2.4 million. Standard Land Company Inc. acquired this 1,036-hectare lease southeast of Gull Lake. The highest price on a per-hectare basis was $11,151. Ranger Land Services Ltd. bid $180,533 for a 16-hectare lease parcel northeast of Turtleford. A special exploratory permit block on oer southwest of Assiniboia received a work commitment bid of $492,166 from Standard Land Company Inc. Weyburn-Estevan summary (numbers rounded up) The top purchaser of acreage in this area was Stomp Energy Ltd. that spent $1.8 million to acquire 14 lease parcels. The top price paid for a single lease in this area was $1.1 million by Silver Hawk Resources

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Southeast Saskatchewan led the land sales again in August, with total sales at $10 million. This wellsite is near Benson. Photo by Brian Zinchuk

Medicine Hat Gas Pools, three kilometres northwest of Fox Valley. Lloydminster area The top purchaser of acreage in this area was Maverick Land Consultants 2012 Ltd. that spent $1.5 million to acquire 10 lease parcels. The top price paid for a single lease in this area was $900,742 by Ranger Land Services Ltd. for a 259 hectare parcel situated adjacent to the Turtleford Waseca and Sparky Sands Oil Pools, one kilometre east of the town of Turtleford. The highest dollar per hectare in the sale was received from Ranger Land Services

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Ltd. that paid $11,151 per hectare for a 16.19 hectare parcel located nine kilometres northeast of the Turtleford Waseca and Sparky Sands Oil Pools, 10 kilometres northeast of the town of Turtleford. Kindersley-Kerrobert area The top purchaser of acreage in this area was Standard Land Company Inc. that spent $460,543 to acquire six lease parcels. The top price paid for a single lease in this area was $204,443 by Lane Land Services Ltd. for a 261 hectare parcel situated ďŹ ve kilometers southeast of the Court South Bakken Sand Oil Pool, eight kilometres south of Fusilier. The highest dollar per hectare in this area was received from Standard Land Company Inc. that paid $2,340 per hectare for a 64.75 hectare parcel located eight kilometres north of the Hearts Hill Bakken Sand Oil Pool, four kilometres southwest of Denzil.

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PIPELINE NEWS September 2012

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Cancer convoy raises money, lifts spirits

A convoy of 28 trucks weaved its way on a new route through the streets of Vermilion before heading east on Highway 16 for Lloydminster. This year’s convoy raised more than $30,000 for the Cross Cancer InsƟtute in Alberta.

By Geoff Lee Vermilion, Alta. – The third annual Tony’s Convoy for Hope will be remembered as an emotional event for organizer Tom Jack and the 28 truckers who made the ride from Vermilion to Lloydminster to fight cancer. More than $30,000 was raised for the Cross Cancer Institute by donations from 40 registered trucks and supporters of the cause in memory of Jack’s brother in-law, Tony Rossi from Toronto who died from cancer in 2010. Among the supporters for the July 21 event were members of Jack’s family including his sister Pat Rossi, Tony’s widow. It made for some heartfelt opening comments from Jack at the Vermilion Arena. “The very first year when we pulled out from the weigh scale, all you truckers – I had my brother in-law on the phone and you guys had the air horns blowing for him,” said a tearful Jack to onlookers. “Last year, I had my sister on the phone and you guys blew the air horns for her. This year let’s just blow them to make some noise, eh.” Jack, who is also known as Trucker Tom, was overcome by the presence of his sister, Pat and his niece Sherri along with his aunt and uncle Gloria and Ray Jack who arrived from Scotland. “I’m super excited about it. It’s very emotional,” said Jack as registered trucks rolled in for a 7 a.m. breakfast provided by the Vermilion Rotary Club. “I have 40 trucks registered, and I am hoping to hit 50. If we get 50, the money will be there.”

ɸ Page A26

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PIPELINE NEWS September 2012

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Tom Jack, with his sister Pat Rossi at his side, makes an emoĆ&#x;onal speech before the start of Tony’s Convoy for Hope as other family members look on.

Rob Vankosky, an operator with OpĆ&#x;mus Transport, sprays his Ć&#x;res in preparaĆ&#x;on for the start of the Tony’s Convoy for Hope ride for cancer on July 21 from Vermilion to Lloydminster.

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Éş Page A25 “I have 40 trucks registered, and I am hoping to hit 50. If we get 50, the money will be there.â€? The event raised more than $47,000 in its ďŹ rst two years, a fact that continues to amaze and delight Amber Williams from the Alberta Cancer Foundation who celebrated her birthday at the convoy. “This event is fantastic. Tom Jack has a lot of passion and he just wanted to do something to help and, man does he help,â€? she said. The event was also an eye opener for Pat and Sherri who made the trip out west to experience the convoy for the ďŹ rst time. “It’s quite the thing to see. The support that is given from the community is fantastic. Tony would have been very proud,â€? said Pat. Ditto the enthusiasm of Sherri who said, “This is the third year and every year my uncle says it’s getting bigger and better. We wanted to see it for ourselves this year and be here in honour of my father, and take it all in and experience it for ourselves. “We are all going to be in the truck with my uncle leading the convoy.â€? Jack hauls uid for W-K Trucking in Mundare with his red 2006 Western Star truck that led the convoy on a new route through downtown Vermilion before heading east on Highway 16 to the Lloydminster Exhibition Grounds. In the pack was Darryl Huber from King’s Husky Petroleum Agency in Lloydminster who decorated his bulk diesel truck with purple balloons representing a rare type of cancer. “King likes to be involved in the community,â€? said Huber. “This event is particularly in touch with us because we had a co-worker (Richard Czuchro) died of mesothelioma earlier this year. “I was asked by Darren Schneider (client relations) to come out. I was actually hired as Richard’s replacement, so I am new to the company and new to the event.â€? Vermilion resident Perry Pottle who hauls produced water for Stanchuk Trucking in Lloydminster drove in the convoy for the ďŹ rst time with pink ribbons on his truck. “My wife had breast cancer so she wanted the pink on there,â€? said Pottle. “She did it." ɸ Page A28

PIPELINE NEWS September 2012

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PIPELINE NEWS September 2012

Convoy Éş Page A26 “I ďŹ gured I’d been doing this because my wife had breast cancer. It’s my day o so I ďŹ gured I’d come out and join the convoy. “This is my ďŹ rst year in it, but I’ve been supporting it since he started it. It’s a good turnout. There are quite a few people here.â€? The event is well promoted by Alberta sponsors that include 106.1 FM The Goat in Lloydminster, W-K Trucking in Mundare, Simply Signs and Tom Jack Trucking in Vegreville, and Action Towing & Recovery in Lloydminster. John Buhnai and his wife Ginette, who own Action Towing, entered two of the largest trucks in this year’s convoy including their yellow Tow Mater, one of the largest tow trucks in North America. They also bought a partially restored 1981 W900, one of two such antique trucks in the lineup. “It’s a project that we’ve been working on for a few months,â€? said Buhnai. “We’re not anywhere near done, but we thought we were done far enough along with it that we would bring it along and show it o a bit. “I am looking to raise money to help the Cross Cancer clinic cancer out. It’s awesome. “The oil patch is booming this year, and we’ve had some oilďŹ eld trucks show up here today, so that’s good to see. They are supporting the convoy better this year than they have in the last two years.â€? The event included a fundraising barbecue in Lloydminster with Sumo wrestling suits and a bounce castle for kids. Prizes were also awarded for the best three decorated trucks. Rob Vankosky, an operator with Optimus Transport, took ďŹ rst place for decorating in 2011 and he his wife Stacy pulled out all the stops with truck cancer banners and ribbons in keeping with

This year’s cancer convoy was an emoĆ&#x;onal aÄŤair for organizer, Tom Jack who, was joined by a number of family members for the event. Back row (l-r) wearing blue shirts are John Harold (Tom’s stepson) and his wife Kiersten Harold, Sherri Rossi (Tom’s niece), Ray Jack (Tom’s uncle) Janice King (Tom’s wife), and Sarah Jack (Tom’s daughter). In the front row are: Tom Jack, Katelyn Harold (daughter of Tom’s stepson), Mandy Jack (Tom’s mom), Pat Rossi (Tom’s sister), Gloria Jack (Tom’s aunt) and Ashley Harold (oldest daughter of Tom’s stepson).

the cause. “I had lots of people from my family who have died from cancer,â€? said Vankosky who hauls oil and water for CNRL in Lloydminster. “This the third year and I have been in it every year. I can’t wait every year for it to happen. It’s a great time. It’s nice to see everybody out. “I think it’s supposed to rain, but all the victims ‘up there’ are going to hold the rain o for us today.â€? Nothing short of running out of gas could keep Earl Cleland and his wife Lisa away behind the wheel of a loaner B&R Eckels Transport truck. “This is my third event. I was involved in the very ďŹ rst one and it was such an emotional day I just had to come back again and again,â€? said Cleland, who currents works as shop foreman for Leading Manufacturing Group (LMG). “I will be coming back every year as long as I can possibly keep driving these things. I love it and

my wife loves it. “My mom survived breast cancer and there is a long history of cancer in parts of my family so it is a cause that’s dear to me and a very worthwhile cause even if it I hadn’t known anybody with cancer.â€? Cleland notes LMG made a donation to the cancer convoy last year when he worked for B&R Eckels without knowing much about him. “They sent a donation through my boss at B&R at the time for me to make the donation,â€? said Cleland who believes what goes around comes around. “I get along really well with the B&R manager in Vermilion so he said come work for me for a couple of days and you can have a truck in the convoy. So I took him up on his oer, and away we went. “B&R Eckels made a large donation again this year and last year. My ďŹ rst event, I was with Lakeland College and they made a donation that year.â€?

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A29

Kerrobert THAI project ramping up By Geoff Lee Kerrobert – Petrobank continues to ramp up upgraded heavy oil production at its toe-to-heel air injection, or THAI project, near Kerrobert using a balanced operating protocol. Production was approximately 400 barrels a day by mid-August. That’s a significant improvement from the 193 bpd in the first quarter and the 236 bpd produced in the second quarter due to an operating plan to steadily increase production of upgraded THAI oil. “The objective of our operating plan has been to balance air injection and produce gas rates across the field in order to actually build up the combustion fronts,” said senior vice-president and chief operating officer Chris Bloomer during a second quarter conference call on Aug. 14. “We also optimized the configuration and the performance of the production pumps to help in achieving a balanced injection versus production rate, and to extend the operating run time to reduce costs. “This operating protocol has enabled more consistent operations overall and improved well performance. To achieve this performance, we have kept air injection at reduced rates,” he said. “With improved performance we expect to bring up air injection rates, and at the same time, continue to maintain a balanced approach to operations to continue to improve production rates.” Bloomer also noted the site experienced minimal intervention and well downtime in the quarter due to improved pump operations with all surface production equipment running smoothly. The THAI wells were pre-steamed to heat and pressurize the formation before air was injected into vertical injectors to ignite the oil in the reservoir. That created a combustion front meant to push the oil into horizontal production wells where it could be pumped to surface. The THAI project became operational in September 2011 with 12 producing wells after 15 months of an initial two well demonstration to prove the technology works and upgrades recovered oil. “The average quality of our sales oil is consistently upgraded at 14 degrees API versus native oil at 10 API,” said Bloomer. The current Kerrobert Phase II project has four production well pads, two air injector pads and four compressors that can generate more than 100,000 cubic metres of air per day. ɸ Page A30

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PIPELINE NEWS September 2012

Hot spot breakthroughs complicate THAI ɺ Page A29 The company is currently injecting air at only eight per cent of design capacity with plans to increase the rate of air injection to build the THAI combustion front. The balanced approach to air injection versus the push for production is a lesson learned from the pilot demonstration wells on how to create a uniform combustion front on all of the producing wells for THAI to function to its potential. “We’ve moved toward a balanced approach, spreading the air injection across the whole field generating a consistent burn in the combustion

front and minimizing the drawdown, and minimizing the opportunity for ‘point breakthrough’ of combustion gas into the production wells,” said John Wright, president and CEO. “We have been very cautious in this process, and we are starting to see what we consider to be very good results. We are now seeing consistently upgraded crude produced across the field.” Wright noted the cautious approach is due to that fact not all 12 wells are producing at the desired rate as a result of “hot spot breakthroughs” from the combustion gas. “We’ve tapered off on the air injection and re-

duced the drawdown on those wells to avoid having kind of a fingering effect for the combustion front actually going through to the horizontal well,” said Wright who told an investor the balanced strategy is working. “Really, the single biggest thing that has happened in recent times is the combustion front is starting to act like a much more elastic homogeneous burn front. “It’s not a series of individual points. It’s starting to join together and link up,” he explained. “This is the stage we are looking forward to – ramping up air injection rates – ramping up withdrawal rates, and starting to really get going with the full implementation of the THAI process. ɸ Page A32

Saskatchewan is full of energy opportunity. We have over 40 billion barrels of conventional oil in place and exciting potential in heavy oil, oil sands, the Bakken Formation and other tight oil plays. We’re also on the leading edge of new research into enhanced oil recovery and carbon dioxide capture and storage. Explore investment opportunities in your next energy destination, Saskatchewan. Stop by booth 262 at the Lloydminster Heavy Oil Show and visit us online at www.economy.gov.sk.ca

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Chris Kennedy, instrumentaƟon technologist at the Kerrobert Phase II site is dwarfed by this giant size producƟon wellhead at the facility near Kerrobert.

PIPELINE NEWS September 2012

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PIPELINE NEWS September 2012

Being cautious Éş Page A30 “There is no question we’ve taken it slowly. We have been perhaps overly cautious, but I think we have some history with our pilots of creating point breakthroughs and very high ow rates which are what these wells are capable of – but not necessarily creating a full reservoir application of the combustion front that allows for the best recovery and the best sweep of the ďŹ re front itself. “We are looking forward in this

next phase to ramping things up,â€? he added. Petrobank received regulatory approval in August to initiate cold production on its two well THAI demonstrate pilot at Dawson in the coming weeks. The plan calls to cold produce the wells for a period of time to order to condition the reservoir prior to THAI operations. “We believe the placing of two horizontal wells on cold production in producing conventional heavy oil will Control panel operator Richard Schmalzbauer keeps tabs on the computer funcĆ&#x;ons of various producĆ&#x;on faciliĆ&#x;es at the Kerrobert Phase II THAI project located 20 kilometres south west of Kerrrobert.

create a broader drawdown area along the horizontal well,â€? said Bloomer. “There is the potential for a signiďŹ cantly faster start up and ramp-up under THAI.â€? Petrobank completed three CHOPS wells (cold heavy oil production with sand) near Luseland and three CHOPS wells in the Kerrobert area in the Q2 with more to more to come on line in the foreseeable future. Luseland is also a potential expansion site for THAI as noted in Petrobank’s corporate presentations. Wright told the conference that he expects the second half of 2012 to a be a productive period for Petrobank and its oil light entity, PetroBakken. “I am pleased to report that both

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PIPELINE NEWS September 2012

Kerrobert Mayor Erhard Poggemiller, with scissors in hand, waits for the cue to cut the ribbon to celebrate the completed upgrades of the Town’s water supply and water treatment plant. Poggemiller is Ňanked by town Councillor Monica Knorr, leĹŒ, and Saskatchewan Minister of the Economy Bill Boyd and Councillor Wayne Mock on the right. The treatment plant lies in Boyd’s riding of Kindersley.

Kerrobert turns on taps for growth

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Kerrobert – The town of Kerrobert is poised to add new oil and gas workers to its population of 1,100 now that it has ushed its reputation for producing brown drinking water down the drain. The Town celebrated the completion of $5.4 million in upgrades to its water supply and water treatment plant Aug. 3 with Saskatchewan Minister of Economy Bill Boyd on hand for the ribbon cutting. “One of the things we all take for granted is good quality water and sewer infrastructure. You never really think about it until you turn the tap on and nothing comes out,â€? said Boyd. “This is important for the ongoing operations of Kerrobert and the growth, a new reverse osmosis water ďŹ ltration system, a new well, and a new lagoon to contain additional waste produced by the water treatment process. “Kerrobert has had a reputation for brown water and that has been a big deterrent for people moving to town,â€? said Mayor Erhard Poggemiller. “Now, we have a water system where we have clear water, and we have a lot more of it. We’ve allowed for growth for the community. We could easily accommodate growth to 1,500 people without doing any more work to our water treatment system. “If we had businesses come in that want to develop in the oilďŹ eld or for manufacturing they would deďŹ nitely be tied into our water system.â€? The project was completed with approximately $4.9 million in funding from the federal, provincial and municipal governments. The government of Canada contributed more than $1.32 million to the project under the Infrastructure Stimulus Plan and the Municipal Rural Infrastructure Fund (MRIF). Boyd told the audience that the province of Saskatchewan also contributed more than $1.32 million in matching stimulus funds, $500,000 in MRIF funding and $325,000 in an interest deduction grant. “We are very pleased as a province to be involved in this. It provides stable funding for the community here and a good water source going forward,â€? said Boyd. ɸ Page A35

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PIPELINE NEWS September 2012

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Mark Knorr, public works superintendent of Kerrobert, explains some of the electronic controls at the Town’s new reverse osmosis water treatment plant during the grand opening on Aug. 3

ɺ Page A34 The balance of the funding comes from customer billing to recover the cost to the Town including ongoing maintenance. “You have to show the province that your water billing system will eventually pay for whatever indebtedness you have, and that’s what we’ve done,” said Poggemiller. “The cost of our water to the user is probably higher than most communities around us, but those communities around us are also finding out that they need upgrades. Pretty soon we will all be in the same boat.” The upgrades will help to open the doors to new business startups and entice more younger families to move to the area for jobs in the busy oil and gas fields around Kerrobert. “The oil and gas companies that I have talked to are very happy and very pleased that we finally have clear water that they can rely on. However, the cost is a factor,” he said. “The water has always been an issue in this town and that was one of the determinants in holding the town back as far as population goes. “People came to town and they would look at the water fixtures in a house or a motel or hotel and they would know that immediately we had that brown water problem. “That was a big deterrent and that’s gone. We don’t have that now,” he said. “There was a huge cost to clean that and there are also ongoing maintenance costs for the reverse osmosis system that needs filters. “Those filters need to be replaced on a three to five year basis and that’s a budgeted cost in that time span of anywhere from $40,000 to $70,000 depending on how bad the filters are.”

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The new water treatment upgrades are well timed with the construction start this summer on the $23 million Kerrobert & District Integrated Health Centre that should add to the town’s workforce and population. “What we are looking for is new families coming to town – a younger population,” explained Poggemiller prior to the water treatment plant ceremony. “Some of the things we get asked about are schools, health care and what we have for utilities. “This is one of the biggest investments that we have done in the last 50 years. “Next, I would like to see a major paving program in town. We are working with highways (Ministry of Highways and Infrastructure) to try to get the highway through town upgraded and we are also doing upgrades to our water pipeline.”

Thank you The City of Lloydminster values all industry players in our oil and gas sector for the strength and diversity they provide our local economy.

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PIPELINE NEWS September 2012

CWC posts strong Q2 with TWS takeover Calgary – CWC Well Services Corp. has boosted its original capital spending budget of $8.7 million for 2012 by $5 million to build two new service rigs by the end of the year. The new service rigs will bring the CWC fleet count to 68 by year-end and position the company to expand its area of operations into the north central region of Alberta this coming winter. The Calgary based company released the news with its second quarter and year-to-date highlights of 2012 with revenue of $56 million for the first six months, a 33 per cent increase compared to the same period of 2011.

The bulk of the revenue gains resulted from the acquisition of 22 service rigs from Trinidad Well Servicing (TWS) in June. Without the TWS purchase the company would have made a 3 per cent revenue gain over 2011 for the second quarter ending June 30. The company said further increases reflect the general recovery in the oil and gas sector and stronger demand for CWC’s equipment and services. The service rig acquisition from TWS makes CWC the sixth largest well servicing company in Western Canada with its well servicing and snubbing and testing activities.

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The service rigs provide completions, workovers and abandonments with depths ranging from 1,500 to 5,000 metres with operating locations in Grande Prairie, Red Deer, Lloydminster, Provost and Brooks in Alberta and in Weyburn Saskatchewan. CWC also operates 8 coil tubing units to a maximum capacity of 2 inch coil and depth rating from 1,500 to 4,000 metres. The company has one of the largest snubbing and well testing divisions in Western Canada with 8 rig assist and standalone snubbing units seven of which operate at 5,000 psi. CWC operates 12 well testing packages ranging from 200 to 285 psi trailer-mounted pressure tanks and 18 metre freestanding flare stacks. Major capital expenditures in Q2 included $800,000 to complete the construction of a new double service rig, and $700,000 toward the construction cost of a new Class III, 2-inch coil tubing unit. The company also spent $200,000 to free stand two double service rigs. The company reports it will continue to focus on providing services to better capitalized and financed senior and intermediate companies with higher exposure to oil opportunities instead of dry natural gas plays due to stronger prices for oil. CWC said 99 per cent of its work is currently derived from oil related activities. Field activity levels picked up in July and August compared to an extended spring breakup and rainy weather in the second quarter that prevented the company from getting its equipment to the field. CWC shifted its sales and operations focus towards maintenance, workover and abandonment activity as opposed to completions oriented work in its service rig division in Q2 resulting in better activity levels in July and August. The strategy was in response to volatile oil prices due to a global economic slowdown that led some exploration and production companies to reduce their capital spending. The company said it doesn’t expect to experience any pricing pressure in its service rig from its key exploration and production customers or incur any hourly rate reductions in the second half of 2012. Despite the potential for a slowdown in global economic activity, CWC said it is confident that its well servicing division will experience good utilization and activity levels for the rest of the year. The well servicing division accounts for approximately 90 per cent of its annual revenue. The company also made the TSX Venture Top 50 Companies list in 2012 for its strong performance in the areas of market capitalization growth, share price appreciation, trading volume and analyst coverage.

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PIPELINE NEWS September 2012

Chamber digests feds’ resource policy Saskatoon – Federal Minister of Natural Resources Joe Oliver extolled the benefits of the government’s plan called Responsible Resource Development for Saskatchewan during an address to the Greater Saskatoon Chamber of Commerce on Aug. 9. “Responsible Resource Development achieves the balance we need now to unleash the potential of our country’s natural resources,” said Oliver. “It will create good jobs and economic growth here in Saskatoon and across Canada, while strengthening environmental protection and enhancing consultations with Aboriginal peoples.” While in Saskatoon, Oliver met with Bill Boyd, minister of the Economy, and Tim McMillan, minister Responsible for Energy and Resources, to discuss the benefits of the resource development plan to Saskatchewan’s economic growth. In 2011, the natural resource sectors employed nearly 800,000 people in communities across Canada. Natural resources represent 11 per cent of

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Zargon resumes drilling Following a quiet summer, Zargon Oil & Gas Ltd. will resume horizontal drilling for oil this fall at Bellshill Lake (three wells), Hamilton Lake (three), Taber South (three) and for Williston Basin Frobisher targets (four). Each of these locations target increased oil recoveries from existing oil pools. Field activities in the second quarter of 2012 were mostly limited to the completion and tie-in of wells drilled last winter. Reflecting spring

breakup, the second quarter of 2012 drilling program was restricted to 0.2 net oil wells that had a 100 per cent success rate. For the year, Zargon has drilled 9.8 net oil wells. Zargon is developing a tertiary recovery alkaline surfactant polymer (ASP) oil exploitation project at Little Bow, Alberta. This ASP project entails the injection of a dilute chemical solution into a partially depleted reservoir to recover incremental oil reserves.

PIPELINE NEWS September 2012

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PIPELINE NEWS September 2012

PIPELINE NEWS

SECTION B September 2012

Lloyd oil show incubates event hosting By Geoff Lee Lloydminster – The Lloydminster Heavy Oil Show Sept. 12-13 fits plans by the City of Lloydminster to make event hosting a major industry. Event hosting could be part of Mayor Jeff Mulligan’s re-election campaign for the Oct. 24 municipal election, based on the success of the heavy oil show as an economic generator. “Since I got elected, I said that we wanted to make our third industry event hosting,” said Mulligan. “The reason I was confident in saying that is because of events like the heavy oil show and its success, not just on a regional scale, but on a national and This new apartment complex on the Alberta sidee international scene. of Lloydminster should help to alleviate the hous-“Every time we host ing shortage in the city due to rapid growth led byy the heavy oil industry. something here, I am left with another relationship that we can leverage as a city – another source of information, another potential investor. “Often time when we talk about the heavy oil show, we get an opportunity to meet people who have access to energy ministers both in this country and other countries. Those contacts are invaluable,” said Mulligan. “This heavy oil show brings people that aren’t just interested in heavy oil, but they’ve got to figure out where to put regional offices and where they can get people. “I think we can do a really good job of starting to leverage those opportunities.” Lloydminster will also have the opportunity to sell itself as a great place to live, work and play when it hosts 2013 Scotiabank Hockey Day in Canada events Feb. 5-9. The city will also host the Women’s Volleyball Nationals March 7-9 at Lakeland College during their centennial year celebrations. The city committed $50,000 for Lakeland’s centennial, a donation that Mulligan calls a no-brainer. “What they’ve put into this economy in terms of people and talent and what it means to have a college of that calibre in our city – is hard to explain how valuable that is,” he said. The city and oil and gas companies can also expect to reap valuable exposure and sponsorship opportunities from CBC television coverage of Hockey Day in Canada.

“There will be an opportunity for us with CBC to have the oil story told and have it told in a positive manner,” said Mulligan “They always do over 12 hours of prime time television. They feature what’s different about your community. “They’re going to spend some time getting underneath the oil industry and

really showing in a light that we probably could never do.” Mulligan will begin his pitch during the Sept. 11 banquet to kick off the heavy oil show at the newly renovated Lloydminster Exhibition Grounds with a message that Lloydminster is a world class centre for heavy oil. He said he’d be telling an international audience that “we have world class innovation; we have the best entrepreneurs; we have some of the most talented experts in the industry, and that we continue to stake our claim to be the heavy oil capital of the world.” Mulligan said the most important impact of the oil and gas industry on the development of the Lloydminster in the past two year is the rapid rate of new construction in the Hill Industrial Park. “The buildings are popping up like carrots, and it’s all to support oilfield services,” he said. “I would say there is probably 30 per new development and 60 to 70 per cent are either guys who are trading up or consolidating.” Construction is also underway on the City’s new $40 million Infrastructure Services Operations Centre in the Hill Industrial park. Mulligan said the high level of industrial development means the oil and gas industry is still very strong in Lloydminster. “We continue to export more than ever our technology,” he said. “We are continuing to attract businesses Lloydminster Mayor Jeī Mulligan is over the moon because it’s clearly eviknowing CBC television will air more than 12 hours of dence there is marginable ccoverage from Lloydminster during the 2013 ScoƟa(profitable) business to be bank Hockey Day in Canada event acƟviƟes Feb. 5-9. done here at a reasonable price point.” The city set a building permit record of $180 million in 2011, and is on track for its second best year in 2012 with more than $82 million in permits in the first six months of the year. ɸ Page B2

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PIPELINE NEWS September 2012

Affordable housing ɺ Page B1 “We’ve got some big stuff going on as we speak,” said Mulligan, referring to the ongoing construction of the new $13.3 million RCMP building due to open sometime in 2013. Planning is proceeding on a new Synergy Credit Union building expected to be under construction in 2013 and a new high school could also be announced in 2013.

Construction is also proceeding on two new schools in keeping with Lloydminster’s status as one of the fastest growing cities in Western Canada and one of the youngest in terms of demographics. “The oil and gas sector requires a goodly number of people that are under 45 years old for the type and style of work that’s been done,” said Mulligan. “We continue to attract those people who are starting their lives and trying to get a higher than average disposable income so they can make a difference in their lives.” Affordable housing remains a key issue as new and existing rental properties can price families out of the entry level market. “There is no ability to save the down payment,” explained Mulligan, alluding to the high rental rates in the city. “We’re blessed to have some wonderful developers in our city. Some have actually turned their focus to building affordable entry level homes both in the rental market and in the purchase market. ɸ Page B3 A city block of Highway 16 (44th Street) through Lloydminster is undergoing rehabilitaƟon and repaving just three years aŌer it was rebuilt. Traĸc issues have come to the fore in recent years with the rapid growth of the oil and gas industry in Lloydminster.

Visco DemoliƟon Contractors are using a crusher to recycle concrete from the rubble of the former Nelson Lumber buildings at the corner of Highway 16 (44th Street) and Highway 17 (50th Avenue). The demoliƟon and recycling of all site materials is being managed by Fillmore ConstrucƟon. The property is currently owned by Loblaw.

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PIPELINE NEWS September 2012 ɺ Page B2 “It takes some time for those to come on stream. We have three really good projects started right now in apartments, apartment/condos and row housing condos. “I think within the next 18 months, we will alleviate some of this, but the pressure right now is on. Basically it’s moved from $52,000 to about $72,000 in family income to be able to move into home ownership.” Mulligan hopes Lloydminster can follow the Saskatoon model that’s taking advantage of the Saskatchewan government’s Headstart program to build new entry level homes in partnership with credit unions, developers and municipal governments. “We think we can do some things in that area. We’re working with the credits unions that are involved in that project with the government of Saskatchewan,” said Mulligan. “We’re pretty excited that in 2011 we could announce that we had the same number of ‘residential doors’ built on both sides of the border. “Now, there are different styles of housing in some cases or different values, but we are really pleased to say last year, we were about 50-50 for the first time in anybody’s recent memory.” The downside of rapid growth and construction in Lloydminster is traffic flow including tie-ups from the rehabilitation and repaving of a city block on the Highway 16 corridor that was rebuilt in 2009. The city is also in the planning stages for the staged twinning of Highway 17 downtown including ongoing water and sewer replacements on the corridor route that could take five to seven years to complete. “Really you won’t eliminate the gridlock on Highway 17 until you’ve got the twinning end to end,” said Mulligan, who estimates the total cost between $37-40 million. “There is an expectation in Lloydminster that you can get anywhere in five minutes. We may to recalibrate that to anywhere to anywhere in 10 minutes as the city grows. “Obviously, the white elephant in the room is what about the train tracks and what about an overpass and what about those things? “Those take the co-ordination and the support of the railway companies who have rights that pre-date our city.” The industrial ring road will also require a sizeable investment from three or four levels of government to engineer and construct better corners for large oilfield and agricultural vehicles to navigate safely.

Lloydminster is one of the fastest growing ciƟes in Western Canada. ConstrucƟon of new housing was equal on both sides of the border in 2011 for the Įrst Ɵme in recent memory.

All of these planning issues will come to light with the release of the City’s draft E4 long term strategic plan next spring that may have more to say about event hosting for economic development. “I like to see us start thinking again about a number of sporting events that are on a national stage,” said Mulligan. “We’ve got the best facilities. We’ve got the best organizations; we’ve got the cash, so I think there is a lot of good to come from positioning ourselves as an event host. “Things like the heavy oil show every second year putting Lloydminster best foot forward puts me in a great platform in which to talk.”

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PIPELINE NEWS September 2012

Aquistore holds open house during drilling of injection well „ By Brian Zinchuk Estevan – When it comes to special wells, there aren’t many like the new Aquistore injection well that was drilled during July and August near Estevan. To that end, it’s not often you have an open house on a drilling rig, but that’s what happened on July 24. “It went pretty well. We had the mayor of Estevan, the reeve, (MLA) Doreen Eagles and Mike Monea as the man in charge of building the CO2 capture on the power plant,â€? said Dr. Malcolm Wilson, CEO of the Petroleum Technology Research Centre. Aquistore is a project of PTRC. Aquistore is an independent research and monitoring project which intends to demonstrate that storing liquid carbon dioxide (CO2) deep underground (in a brine and sandstone water formation) is a safe, workable solution to reduce greenhouse gases. The project will take carbon dioxide from the nearby Boundary Dam Power Station and inject it into the Deadwood formations just above the Precambrian basement. A bus came from Regina carrying about 35 people to the open house. Another half dozen were picked up in Estevan. A presentation took place at Boundary Dam Power Station, the source of the CO2 for Aquistore, but due to construction activity they were unable to visit the capture facility beyond driving past. There were people in attendance from the United States, South Korea and Japan. Wilson noted the Koreans spent about a week with the PTRC, talking to engineers and geologists. There was also interest in Aquistore from South Africa. South Africa has a unique role in the history of carbon dioxide capture and storage. The nation took a process initially used by wartime Nazi-Germany to gasify coal and built the largest coal gasiďŹ ers on the planet. They were the model for the Dakota GasiďŹ cation plant at Beulah, North Dakota, which supplies the 20-inch pipeline feeding carbon dioxide to the Weyburn-Midale project. The PTRC provided the scientiďŹ c study for that project. The South African Sasol coal-to-liquids plant is the largest single emitter of carbon dioxide in the world, Wilson said. ɸ Page B6

A geologist chips oÄŤ the ends of core samples before the tubes were sealed.

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Coring is pricey Éş Page B4 Now things have come full circle, with Wilson saying the South Africans are interested in repeating the Aquistore project by 2017. The South African Energy Development Institute is in charge of developing a carbon capture and storage project for their nation. “They have no background at all. It’s a country that is heavily involved in mining,â€? he said regarding South African experience in drilling. “Any time you’re working with a gasiďŹ cation facility, your ability to capture CO2 is improved.â€? The South Africans are looking at sites, he said. “They won’t be as big as Aquistore. They’ll be trucking in CO2,â€? he said. Indeed, that nation’s best locations for large scale storage are oshore. However, the test well will be done onshore. The PTRC has had a continual ow of tours pass through the Aquistore site. Later in August a group from the United Kingdom visited, as did SaskPower executives. In mid-August the ďŹ rst of two holes was nearing completion. Three pieces of core were taken from the well. “It’s horrendously expensive doing core,â€? Wilson noted. After the open-hole logging and some side wall coring, the next stage was the installation of the special casing, equipped with sensors. Following completion of the injection well, a second well will be drilled nearby. The purpose of this well is for observation. “The observation well has more jewelry,â€? Wilson said of the sensor package. The PTRC has also launched a new website dedicated to Aquistore. It can be found at aquistore.ca. The grey tube is the inner core barrel as it was removed. The barrel contained the second piece of core taken from the Aquistore injecĆ&#x;on well. Photo by Brian Zinchuk

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Making off like a Bandit „ Story and photos by Brian Zinchuk Carndu – Trucking is in the blood of the Boyes family of Carndu, owners and operators of Bandit OilďŹ eld Hauling. The company is headed up by Scott “Scooterâ€? Boyes and his wife Sherry. Their sons are involved as well, with Jason, more commonly known as “Jake,â€? and Shawn, who goes by “Gump,â€? both driving. Bandit specializes in light and heavy oil-

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ďŹ eld hauling. They have ďŹ ve of their own trucks and one leased-on unit. Their wheels include winch trucks and a Texas bed tri-drive. The trailer eet includes hiboys, 50- and 60-ton scissor-necks, trombone lowboys and jeeps. “We’ve hauled substructures, derricks, pipe – any aspect of a drilling rig,â€? Scott said. To that end, they work with both rig movers in the southeast, Fast Trucking and Circle D. They could ďŹ nd themselves haul-

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B8

ing tanks one day and wellsite trailers the next. Loaders, excavators and dozers are also commonly carried. There aren’t any pickers, though. “There’s only one person in this outďŹ t with a picker ticket, and he doesn’t want to run it. That would be me,â€? Scott said. “We started in 1976 with Fast Trucking. I swamped for Tony Day. He drove it, I swamped. He had two trucks,â€? Scott said. “There was about 10 of us there. I worked with him o and on for 18 years. I truck pushed for ďŹ ve years,â€? Scott said. A truck push is the supervisor on a rig move who co-ordinates all the action. “I was taught by one of the best, and that was Tony Day. He taught me a lot about work skills and ethics. I have a lot of respect for him and Vi. If I had an idol, that would be him,â€? Scott said. It explains a close working relationship with the Fast Trucking group of companies that continues to this day. ɸ Page B9

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PIPELINE NEWS September 2012

“Other people go on Facebook. I go on Ritchie Brothers or Kijiji. I just bought two trailers and my last truck off Kijiji.”

B9

Sherry and ScoƩ “Scooter” Boyes stand at the site of their soon to be constructed shop for Bandit OilĮeld Hauling. Day ConstrucƟon did the dirt work.

-Scott “Scooter” Boyes ɺ Page B8 “I used to be partners with a rental company for, oh, two-and-a-half, three years,” he said. “Apex came along and bought us out in 2007. We had wellsite trailers, tanks and pumps. We had one truck and trailer.” “That’s when my son and I bought a truck and leased it on with a company out of Estevan. He drove and I managed and dispatched.” Scott also truck pushed for Bar-D out of Nisku, and was stationed at Handsworth, north of Stoughton, moving rigs. Bandit was incorporated in 2008. Sherry noted, “Our youngest, Jason, who everyone calls ‘Jake,’ said we should go out on our own. We started with one truck, and then added a second truck.” In the meantime, Sherry spent her career in the financial industry. “I worked for the credit union for 30 years. I took early retirement two years ago to become the full-time bookkeeper for Bandit,” she said. Prior to making the jump, she was working four days a week at the credit union. “I was finding it was too much work. Now I’m full-time office manager,” she said.

She’ll soon have a new office to manage, too. The company is the first to build on one of the eight sites the Town of Carnduff has recently opened up for commercial development on the northwest corner of town. “We ran out of yard space where we’re at,” Scott said. Their current facility is south of Highway 18 on the west end of town. Day Construction of Carnduff is doing the dirt work. The new shop will by 60 by 120 feet, with six bays. “I added an extra bay just in case I buy another truck,” Scott said. With a laugh, he added, “If you can’t fine me in the oilpatch, you’ll find me at Ritchie Brothers. ɸ Page B10

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PIPELINE NEWS September 2012

Carnduff trucking outĂ€t a family affair From leĹŒ, Scooter, and his sons Jake and Gump, pose around their tri-drive truck.

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Éş Page B9 “Other people go on Facebook. I go on Ritchie Brothers or Kijiji. I just bought two trailers and my last truck o Kijiji.â€? That extra bay will also have wash bay capabilities. But the company has been making use of the new truck wash in Oxbow operated by Courage OilďŹ eld. The company has doubled its eet since December. Scott noted, “When guys started walking through the doors, looking for jobs, I said, ‘If you want to work here, I’ll buy more trucks.’ “So I did. “I can buy all the iron in the world, but if you don’t have the people to run it, it just costs you money. “I still drive every day when we don’t have an extra driver,â€? Scott said, characterizing himself as chief mechanic and dispatcher for the seven-person outďŹ t.â€? Shawn went to Wyotech in Wyoming, where he got a diploma that focused on automotive collision and reďŹ nishing, street rod and chassis fabrication, high performance engines and custom painting. As for Jason, he wanted to drive truck right out of high school. When they’re not behind the wheel, the Boyes family can be found on the links, such as at the Carndu Oilmen’s Golf Tournament. “We usually spend about six weeks in Mesa, Arizona and golf every day,â€? Sherry said. “We’re golf fanatics.â€? The pace for the company this year has been down compared to last year, when they had people out every day and there was no time o. “We went non-stop until March 22. I think we took Christmas o,â€? Scott said. This summer has been slower, but he expects things to pick up in September. “We like what we’re doing. We know what we’re doing and we’ve been doing it since 1976,â€? Scott concluded.

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PIPELINE NEWS September 2012

B11

Panther Drilling repeats a good thing By Brian Zinchuk Weyburn – When you’ve got a good thing going, you probably don’t want to mess with it. So when it came time for Weyburn-based Panther Drilling Corporation Ltd. to add a fourth rig to its fleet, they made a carbon copy of Rig 3. Rig 3, completed in September 2010, was a departure from their previous two rigs. Solidifying the company’s approach to operating some of the deepest-rated rigs in the southeast, the new rig is built a bit beefier. “Rig 3 was a Range 3 double. In effect, it’s like a triple-sized derrick, but we run Range 3 tubulars which are 14 metres in length as opposed to 9.6 metres in a Range 2. We have two stands of pipe when you rack your pipe in the derrick, as opposed to three,” said Jim Kopec, general manager of Panther. The result is a dramatic reduction in pipe connections, reducing them by a third compared to the same length of pipe using 9.6 metre joints. If everything’s going well, and in normal drilling conditions, it can result in a day to a day and a half reduction in drilling time per hole. “The clients like it. It saves them time in tripping and surveying,” he said. Rig 4 was nearing completion in August at their yard along Highway 39, just a few kilometres southeast of Weyburn. Parts of the rig have been coming from “all over,” according to Kopec. “We tried to do as much locally as we could.” The combination building, doghouse and pumphouse were sourced from Stewart Steel of Weyburn. The only real difference between Rig 4 and its predecessor is the use of a Caterpillar transmission on its draw works. “All our engines and clutches were from Southern Industrial,” he said. Southern Industrial and its sister company, Rouse Industries, located on the west side of Weyburn, specializes in power packages for drilling rigs. ɸ Page B12

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Driller Corby O’Byrne, in the black shirt, and roughneck Jason Shelly, in the red, use a telehandler to adjust the alignment of a mudpump engine to its pump. When the engines are this big, you need something bigger than a ball peen hammer to give it a love tap. In this case, they had to use chains.

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PIPELINE NEWS September 2012

Rig 4 added to Panther’s Ă eet Éş Page B11 “This is the ďŹ rst time this transmission has been used with this engine combination on a drilling rig application,â€? Kopec said, referring to the Caterpillar transmission on the draw works. It is attached to a C27 Cat engine rated at 900 horsepower. This conďŹ guration had been considered for Rig

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3, but that didn’t come to pass. The derrick, substructure and draw works came from Nisku, with Hyduke providing the derrick and sub. Revolution did the draw works, in a conďŹ guration similar to Rigs 2 and 3. There’s one 450 kilowatt gen set. The mud tank and catwalk were built by Cenarius Industries of Calgary. Rig 4 will have two mud pumps, each rated at 1,000 horsepower. “The second is basically insurance,â€? said Bernie Bjorndalen, who handles sales for Panther. “It’s a bonus to the client,â€? Kopec added. A “jackknife tripleâ€?, the rig is rated for 4,500 metres of vertical, the same as the rest of the eet. That greater capacity is useful for areas right along the U.S. border, where Panther has been seeing much of its action in recent years. Panther’s orange rigs could often been seen south of Outram, Torquay and Radclie. Kicking o the horizontal leg of a well at around 2,000 to 2,200 metres, that drilling hotspot is deeper than the areas around Stoughton, for instance. Tentatively the ďŹ rst hole is planned for Weyburn-based Caprice Resources.

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Recruiting hasn’t been an issue, since for the ďŹ rst time since Rig 3 went out two years ago, they have a rig sitting. The company had seen nearly 100 per cent utilization from Sept 2010 until this past July. Southeast Saskatchewan’s drilling activity has slowed considerably compared to the same time in 2010, when things were still relatively dry, and 2011, when record drilling numbers were set even after the ooding in the area. In early August 2012, there were over 50 rigs sitting in Saskatchewan, whereas at the same time last year, that number was less than 20. “The U.S. has a surplus. You hear stories of pipeline capacity,â€? Kopec said. “Some guys are tired of soft lease conditions,â€? Bjorndalen added. Despite a relatively dry July, Kopec noted, “It’s wet underneath. You dig down and it’s wet.â€? Bjorndalen said, “It only takes half an inch of rain, and it’s soft again.â€? The pair also noted there is some nervousness in the world economy that may be having an impact on drilling activity. Panther Drilling is locally-owned and operated.

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PIPELINE NEWS September 2012

When work slowed down, he beat the bushes and found more Carndu – Jason Miller has hauled a bit of everything in the patch, but now, with a couple of partners, he’s working with his own outďŹ t. Miller is one of the partners in Mil-Lar Trucking Ltd. The other partners are Al and Shawn Larson. Shawn’s wife Carla does books for the operation. “Al has SLR Rentals, with about ninety 400 barrel test tanks,â€? Miller said. “That’s why we bought (the truck) for moving them around. SLR has about a half dozen treater buildings and a lot of production equipment, he said. The operation ďŹ red up in October 2011. They’ve got one truck and two scissor neck trailers. The newest one, a 2012 Doepker, comes with a ip-over roll, making it more universal for moving

equipment. Miller, 39, is originally from Ninette, Man., 45 miles southeast of Brandon. “Once I got out of high school, I worked for the odd farmer and worked at MTS burying ďŹ bre optic cable,â€? he said. He moved to Carndu in 1993, saying, “When I ďŹ rst moved to Carndu, I didn’t know what the patch was about. I wanted to ďŹ nd some consistency in work. In Manitoba, there was nothing. “I started out with Fast Trucking. I had my Class 1 before I moved down here. I worked as a swamper for six months, then started driving.â€? Miller was with Fast until things slowed down substantially in the late 1990s. He found work hauling gravel at Creelman, then returned to Carndu two years later. Like many others in

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his generation, he found work in Alberta when there wasn’t work here. “I had gone to Alberta and worked for Calnash at Lac La Biche. They were doing a lot of gas work. That was the only oilpatch working at the time. I spent ďŹ ve winters doing that,â€? he said. His summers were spent at Fast Trucking until 2003, when he started working for a rental outďŹ t that eventually became Peak Energy Services. He spent ďŹ ve years there, the last three-and-a-half as sales representative and rental co-ordinator. ɸ Page B14

B13

Jason Miller comes in at the end of the day aĹŒer hauling tanks for a service rig near CarnduÄŤ.

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B14

PIPELINE NEWS September 2012 Originally from Manitoba, Jason Miller came to Saskatchewan aĹŒer high school to ÄŽnd work. Now he’s got his own trucking ouĆžit, which he owns with two partners.

Dealing with slowdowns Éş Page B13 In 2008 he was back in a truck, driving for Carndu-based B&B OilďŹ eld Hauling until this opportunity came up in 2011. “I’ve always wanted to do it,â€? he said of going on his own. “Last September, Shawn and Al approached me.â€? The Larsons have a shop in Carndu which is helpful for storing the truck in winter. Last winter things slowed down come January 1, Miller said, and a lot of tanks came back in. “I have friends whose rig shut down the 15th of March and still haven’t gone back to work yet,â€? he said. As for this summer, things started o not too badly, he said, but when Crescent Point Energy Corp shut down all but one drilling rig, he said, “Uh-oh.â€? While there was work chasing two service rigs, he started beating the bushes and found additional work hauling equipment for a general oilďŹ eld maintenance company and matting for local outďŹ t Easyrider. “It has been really good ever since,â€? Miller said.

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PIPELINE NEWS September 2012

B15

Canadians overwhelmingly believe climate change is occurring Regina – Only two per cent of Canadians believe climate change is not occurring, a new important survey released Aug. 15 by IPAC-CO2 Research Inc. concluded. The survey comes on the heels of Alberta Premier Alison Redford’s recent push for a national energy strategy, which would address the future of Canada’s oil and gas industries, and its approach to carbon management. “Our survey indicates that Canadians from coast to coast overwhelmingly believe climate change is real and is occurring, at least in part due to human activity,â€? explained Dr. Carmen Dybwad, CEO of the environmental non-government organization. “These ďŹ ndings have been consistent from 2011 and 2012. Canadians care about issues like extreme weather, drought and climate change.â€? Opinions about the cause of climate change and how to combat it are, however, sharply divided among the provinces and by region. “Canadians most commonly (54 per cent) believe that climate change is occurring partially due to human activity and partially due to natural climate variation,â€? said Briana Brownell of Insightrix Research, who conducted the survey for IPAC-CO2. “Residents of Quebec (44 per cent), Atlantic Canada (34 per cent) and British Columbia (32 per cent) are more likely to believe climate change is occurring due to human activity than those on the Prairies (Alberta and Saskatchewan 21 per cent, Manitoba 24 per cent).â€? Canadians are also divided on what they

believe should be the priorities to ďŹ ght climate change. A total of 35 per cent of Canadians believe the priority should be to promote cleaner cars running on electricity or low-carbon fuels while only 13 per cent favoured a tax on carbon dioxide emissions from the whole economy. Support for a carbon tax is lowest in B.C. (6 per cent) and highest in Quebec (24 per cent). A key solution cited by Canadians is carbon capture and storage, or CCS, which involves capturing carbon dioxide from an industrial source of greenhouse gases, transporting it, and storing it deep in the Earth’s subsurface. A majority of Canadians agree that capturing and storing carbon dioxide should be compulsory when building a new coal (59 per cent) or natural gas (57 per cent) power plant, though Canadians are concerned about the risks associated with CCS. Quebec residents

(71 per cent) would be the most concerned if carbon dioxide was stored underground within 1.5 kilometres to three kilometres from their home, while Saskatchewan residents (43 per cent) were the least worried. Residents of British Columbia (60 per cent) are most likely to believe that the storage of carbon dioxide represents a safety risk in the future. Again, Saskatchewan residents (48 per cent) are signiďŹ cantly less likely to hold this belief. “CCS is not the “magic bulletâ€? solution to combat climate change, but the development of CCS technology represents a necessary step in reducing Canada’s emissions,â€? said Dybwad. For a second consecutive year, IPACCO2 contracted Insightrix Research, Inc. to conduct an online survey of Canadian residents. Survey responses were collected from 1,550 Canadians between May 29 and June 11.

The percentage of Canadians who are unsure whether or not they would beneďŹ t from CCS has increased notably from 42 per cent in 2011 to 48 per cent in 2012. Residents of Ontario are more likely to believe that it would (33 per cent) benefit them, while in Quebec the reverse is true, where 30 per cent believe they would not benefit from the technology. The proportion

of Canadians who are unsure of the effectiveness of carbon capture and storage has increased notably from one-quarter (24 per cent) in 2011 to one-third (35 per cent) in 2012. Despite the concerns many Canadians have about the technology, Dybwad remained optimistic about the future of CCS and its impact on Canada’s environment. “Canadians are concerned about the

risks and benefits involved with CCS, but IPAC-CO2 exists to ensure that carbon dioxide is stored safely and permanently in the ground by providing risk and performance assessments of carbon dioxide storage projects.� The 2012 survey on Public Awareness and Acceptance of CSS in Canada now is available on IPACCO2’s website at: www.ipac-co2.com/ research.

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PIPELINE NEWS September 2012

Some of Calfrac’s à eet jumped the border to stay busy

Calfrac sent some of its equipment to work in North Dakota during a slow period in Canada. This is the Calfrac base at Bienfait.

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„ By James Mahony (Daily Oil Bulletin) – While posting record revenue thanks to high levels of pressure pumping in Western Canada and the United States, a $9.8 million foreign exchange loss spoiled the party for Calfrac Well Services Ltd., creating a net loss in the second quarter. The loss attributable to shareholders was $11.86 million or 27 cents per share, down from earnings of $12.07 million or 28 cents per share in last year's quarter. But for the foreign exchange loss, the net loss in the period would have been only about $4.3 million or 10 cents

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a share, the company said. Management said fracturing and coiled tubing activity in Western Canada saw “reasonably highâ€? equipment utilization during spring breakup, which was bolstered by several projects in the Montney and Horn River Basin. Still, June's poor weather dampened activity and ďŹ nancial performance, preventing crews from completing scheduled work, much of which was delayed to the third quarter. To maximize equipment utilization, the company has temporarily sent a fracturing eet and deep coiled tubing unit from Canada to North Dakota, where demand has been more resilient. In the second quarter, Calfrac was in on many of Western Canada's emerging liquids-rich natural gas and oil plays, such as the Beaverhill Lake, Duvernay, Slave Point and Montney. Initial data from the plays is favourable and Calfrac expects further development of such plays to drive expansion of its Canadian division. Calfrac's U.S. operations continued to expand into oil-producing plays in the second quarter, including North Dakota's Bakken. In the Marcellus shale play, Calfrac's operations increased from ďŹ rstquarter levels, despite customers trimming capital spending due to gas price weakness. Through its presence in the liquids-producing region of the Marcel-

Photo by Brian Zinchuk

lus, the company was able to realize relatively high levels of equipment utilization during the second quarter. The industry's shift to unconventional oil basins has driven high demand and costs for some proppants, guar and other chemicals, which continue to squeeze service companies' operating margins. Calfrac was able to avoid a more signiďŹ cant negative ďŹ nancial impact in the second quarter by buying its guar earlier in the year, cutting its exposure to the volatility in guar pricing seen in the second quarter. In the year to date, Calfrac booked record revenue of $809.89 million against $606.86 million in last year's period, led by higher year-over-year activity in Canada, the U.S. and Latin America. Net income attributable to shareholders rose to $58.99 million or $1.32 per share, including a $4.1 million foreign exchange gain, compared to earnings of $61.15 million or $1.38 per share in the 2011 period, which included a $10.5 million foreign exchange gain. Capital spending rose to $159.40 million from $137.80 million in the ďŹ rst six months of 2011. In the three months ended June 30, 2012, revenue advanced to $335.78 million from $269.46 million in the earlier period. Capital spending rose to $75.29 million in the second quarter from $72.05 million a year ago.

PIPELINE NEWS September 2012

B17

These transloading units at Stoughton were built by Hall Technologies. Photo by Brian Zinchuk

A new market in building transloading units Calgary – When you see a new market pop up, it’s time to get into it while the getting’s good. Hall Technologies Ltd of Calgary specializes in custody transfer metering. Barry Hall, who heads up the company, has a background in instrumentation and controls. Hall Technologies has been in business for seven years. Transloading crude from trucks to rail cars has really taken o in the last two years, according to Hall. “More and more people are doing it now.â€? That’s true in Western Canada and North Dakota. He said, “We’re seeing a lot of interest in the Bakken ďŹ eld and all over.â€? In Saskatoon they have a system set up for Kleysen Transport that pumps biodiesel from rail cars onto B-train semis for transfer to Suncor’s distribution terminal. It’s the reverse process of what’s done in crude-by-rail transloading. They’ve done a similar blending transloader for Central Manitoba Rail in Winnipeg. The company also builds ďŹ xed systems. In Edmonton, they have installed long headers that connect with each rail car. Anyone driving past Stoughton on Highway 33 can ďŹ nd six examples of Hall’s transloaders working for Crescent Point Energy Corp. The oil producer established its own, in-house crudeby-rail facility earlier this year, and has been expanding its capabili-

ties since then by adding additional transloaders. “We’re doing some for Enbridge in North Dakota. They wanted pumps on those,â€? Hall said. Their transloaders come in two varieties – those with their own pumps, and those which use the pumps on the trucks. The ones without pumps don’t require high-voltage power supplies. Even a small inverter in the back of a truck will power them. A transloader is essentially a metering package with an Envirobox for spill protection where the truck hooks up. Hall noted they have a bulk air eliminator to prevent air from being metered. A meter determines density and mass ow of the product. The systems are designed to monitor for rail car overďŹ ll. They also have electrical grounding to prevent sparks due to static differentials. They typically have a stair case and platform to access the hatch at the top of the rail car. One design has an articulating platform that can be lowered with a screw-jack so that it is low enough to get under powerlines while travelling on the road. Most of their systems load from the top of the rail car, which Hall said is preferred as it is easier to work with. “They’re very user-friendly. Training doesn’t take long,â€? he said. The control systems are common to those used by truckers throughout the industry. The company has

had a lot of interest in their transloaders, with order sizes coming in two, three or even ďŹ ve units at a time. Hall noted it’s easier and quicker to set up a transloading facility than other options such as building a permanent site. “As long as the pipelines are having issues, rail will be popular,â€? he said.

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B18

PIPELINE NEWS September 2012

PIPELINE NEWS September 2012

B19

Element Technical Services established in Carlyle

The data van, right, is the control centre of a frac job.

This is the view from the blender, looking at two pumpers on the leĹŒ, and the coil tubing unit on the right.

Frac supervisor Patrick Spagrud keeps an eye on the numerous computer monitors as the frac progresses.

Tyrell Olson keeps an eye on things from the blending unit. The heavy-duty earmuÄŤs are necessary on the loud site.

„ By Brian Zinchuk Carlyle – The strength of the Carlyle business community has shown itself again this year with the establishment of a new hydraulic fracturing company – Element Technical Services. Approximately 70 per cent of the investors are from southeast Saskatchewan, with a strong background in growing local companies. An independent operation, Element joins a marketplace that is dominated by some of the largest players in the industry – Baker Hughes, Schlumberger, Halliburton, Trican and the like. But by taking a targeted approach at their speciďŹ c area, the Williston Basin area of southeast Saskatchewan and southwest Manitoba, the company is seeking to carve out its own share of the market. The company launched operations in March. “It’s really been ignored by frac companies for a long time,â€? Mike Grossman, Element’s technical sales manager, said of southeast Saskatchewan and southwest Manitoba. “Other companies weren’t sending their top level equipment or guys. “We’ve gathered signiďŹ cant crew experience to bring to the table.â€? Grossman said. The location also puts Element a step closer to the Sinclair and Waskada ďŹ elds in Manitoba, the two areas that have seen the most growth in that province. Grossman is from Carlyle, and handles sales both in Calgary and southeast

Saskatchewan. Element’s new shop and oďŹƒce is located right next door to Canadian Energy Service’s campus south of Carlyle which includes PureChem, Moose Mountain Mud and Equal Transport. “We’re right beside one of our key suppliers with lab support and blending facilities to complement our Calgary laboratory,â€? Grossman said. Whereas of other companies need to have supplies trucked in, they are literally a forklift load away. It also means they can keep product storage to a minimum. The new 15,000 square-foot shop has ďŹ ve bays plus a wash bay. With 29 acres, they have lots of room for more equipment. Frac methods a mixed bag Completion techniques have been rapidly changing in the southeast throughout the Bakken development. “We’ve been thrown a mixed bag. We’ve seen every completion style in the southeast,â€? Grossman said. Those include the ball drop system, open hole inate packers, and a new trend – sliding sleeves. “Those are the three that win the day,â€? Grossman said. “The vast majority in our area are sliding sleeves. “We need to be well-versed in how these systems work. At the end of the day, we’re pumping the same uids and rates, it’s largely how fast we execute the

jobs. Second spread coming Element started o with one frac spread – a complete setup for one frac job. Grossman said that to run one frac spread, you need three crews – one day, one night, and one on days o. Typically there are eight to 10 workers on a crew. “We’ll be coming out with another frac spread in November 2012,â€? Grossman said. Therefore the company will be hiring approximately 30-40 people in the future. Their current frac spread is made up of two 2,500 horsepower trailer mounted pumps, a body-job truck-mounted blender, chemical addition trailer, hydration unit, truck-mounted data acquisition van, and iron truck. When it comes to sand storage and cartage, there are also two 45-tonne trailers, one 100 tonne trailer storage, and ten 40 tonne sand bins. The second spread will be slightly larger with the addition of a third pumper. “We have three more (pumpers) we’re about to take delivery on,â€? Grossman said. Coil tubing planned To round out the eet, Element is adding its own coil tubing unit, expected in January. “We’re looking at 4,400 metres of 2-7/8 inch coil,â€? Grossman said. “It’s a deep unit. It’ll cover most of the deep work in the area.â€?

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Having an in-house coil tubing unit will makes it easier logistically, he said, explaining, “You’ve got a unit dedicated to your best interests.â€? Even so, they have strong relationships with the coil providers they are working with now. New equipment Element has brand new equipment suited to the area. That’s important, because as opposed to fracturing operations in northeastern British Columbia or western North Dakota, the fracs in this area tend to be smaller in nature. “In North Dakota, you’d be pumping ďŹ ve to six cubes (cubic metres) per minute. In our area, we’re really close to the Lodgepole (formation), so you have to keep it under one cube per minute. Otherwise you risk fracking into the Lodgepole which comes with a lot of water. In Williston, they don’t have that overlying Lodgpole so close. They can pump faster and create larger fracs.â€? This is where ďŹ tting their equipment to match local conditions has been a key strategy. Grossman said a lot of the competitors’ equipment from Medicine Hat’s shallow gas areas was moved into Saskatchewan, but it was suited for pumping at higher rates. “We have a lot smaller pumps,â€? he said. “Everything is sized for the lower pump rates of our region.â€? “I would almost call it pinpoint fracking. The industry has gone to smaller tonnages and more zones.â€?

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B20

PIPELINE NEWS September 2012

Energy strategy possible without national consensus, says „ By Pat Roche (Daily Oil Bulletin) Calgary – The best way to craft a Canadian energy strategy is in discrete pieces that don't necessarily involve all governments, says an industry group that spent two-and-a-half years drafting such a plan. The Energy Policy Institute of Canada (EPIC) released its 151-page Canadian Energy Strategy Framework at a news conference in Calgary on Aug. 2. The report makes recommendations in ďŹ ve areas: regulatory reform; market diversiďŹ cation; energy “literacyâ€? and conservation; innovation; and carbon management. “It's not the end-all. It is a beginning. But we think it's a very constructive beginning to move us forward to where we net to get,â€? EPIC president Doug Black told a news conference. EPIC is a policy advocacy group for key energy producers, transporters and consumers as well as entities ďŹ nancing energy projects. Members include the Canadian Association of Petroleum Producers (CAPP), and companies such as Canadian Natural Resources Limited, Imperial Oil Limited, Suncor Energy Inc., TransCanada Corporation and Enbridge Inc. Separating the drafting of a Canadian energy strategy into manageable goals would prevent any one province from derailing the entire process.

A recent attempt by Alberta Premier Alison Redford to convince other Canadian premiers to work towards a Canadian energy strategy was derailed by British Columbia Premier Christy Clark. Facing a general election in May and badly trailing the provincial New Democrats in the polls, B.C.'s Liberal premier recently declared she wants no part of Redford's plan – or Enbridge's proposed Northern Gateway pipeline to ship Alberta oil the West Coast – unless B.C. gets a cut of Alberta's energy revenue. Asked how a Canadian energy strategy could be built without B.C., Black said, “We are continuing [our] work, the other premiers are continuing to work. And we're saying to British Columbia, ‘When you're ready to join our deliberations, we welcome you.’â€? Black believes B.C.'s opposition to Northern Gateway is a temporary problem, and until it's overcome, oil can be shipped by other means, such as rail. “But our work cannot stop ... we have to continue to look at diversiďŹ cation. I think it's fair to say at EPIC we’re optimistic and we believe this problem will be resolved,â€? he said. EPIC believes a Canadian energy strategy can be crafted without a national consensus or an omnibus framework. “Some people, I think, felt that at the end of the day we were going to prepare an overall document encompassing absolutely every element of energy in the country. That's not the case,â€? said Gerry Protti, vice-chair of EPIC. “What we did was identify ďŹ ve areas (but not) the magnum opus of Canadian energy strategy,â€? Protti continued. “But if we could work on each of these ďŹ ve areas and make improvements, we're going to move some distance (towards) realizing our energy goals as a country.â€? He added, “Each province has its objectives in terms of its energy strategies and energy potential and capability. I think what this document tries to do is bring that national pan-Canadian framework, saying this is important for every part of the country.â€? Protti noted Ottawa, Alberta, British Columbia and Nova Scotia have already moved individually on regulatory reform. EPIC's report groups its recommendations into these ďŹ ve areas where it believes change is possible and necessary. Regulatory reform “While Canada has a strong environmental regulatory system that has protected Canadians for years, it has become a maze of duplication and inefďŹ ciencies that has led to a drawn-out approval process unappealing to energy investors,â€? said Protti. ɸ Page B21

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PIPELINE NEWS September 2012

B21

industry group urging regulatory reform, market diversity Éş Page B20 “From the beginning of our discussions, our recommended course of action was evident: Bring more certainty to the regulatory process by establishing fair rules and timelines, better deďŹ nition of the scope of environmental assessments, what government bodies should act as the regulatory lead and ďŹ rm deadlines for stages of the process,â€? he said. EPIC commended the federal government for already acting on some of these recommendations through legislative changes that streamline the regulatory process. Innovation In EPIC's view, becoming a global energy leader isn't just about increasing production – Canada must continually invent technologies to improve the economic and environmental performance of its energy sector. To spur technology development, the group recommends creating “innovation clustersâ€? – collaborations of a wide range of industry players, including producers, academics, suppliers, service providers and “non-governmental organizations.â€? Energy "literacy" and conservation EPIC is urging the federal and provincial governments to develop a shared vision on “energy literacyâ€? and conservation, and to actively promote this vision to businesses and individuals. “To assist in promoting energy understanding among our citizens, EPIC has also recommended the development of a Canadian centre for energy learning that will serve as an energy educator for all Canadians,â€? Protti said. Market diversiďŹ cation “Globally, the world has never known a time of such energy demand. In fact, this was part of the rationale for creating EPIC and an energy strategy to help take advantage of this opportunity,â€? said Protti. EPIC recommends taking all necessary steps to capitalize on growing overseas energy markets – including worldwide promotion of Canada's energy resources, and upgrading and expanding infrastructure and transportation networks. “To help diversify (Canada's energy) markets, ... our recommendations rely heavily on the involvement of Canadian governments to promote our energy through trade missions, and to put trade agreements in place with other nations to ensure the rules of the game are clear and to solidify our market access,â€? Protti said.

Carbon management On the question of how to deal with carbon emissions, EPIC recommends more time and study. “Our working group studied the dierent approaches of the provinces and the federal government and how they're evolving with time. As well, we looked at developments in the United States and globally,â€? said Protti. “And what we need to do at this point is to synthesize the very dierent myriad approaches that are occurring in Canada and around the world." To that end, he said EPIC recommends creating a joint federal-provincial committee of energy and environment ministers “to continue to study the issue, begin to synthesize these developments and develop a carbon management framework for review in 2013.â€?

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PIPELINE NEWS September 2012

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Husky CEO Asim Ghosh, pictured talking on his cellphone at the grand opening of Husky Place in Lloydminster in May, said the company will conduct a winter exploraĆ&#x;on program this upcoming season at its Slater River Project in the Northwest Territories. File photo

Calgary – The Northwest Territories will become the next oil frontier in Western Canada for Husky Energy Inc., which has planned a winter exploration program this upcoming season. Husky’s plans for its Slater River Project in N.W.T. include the construction of an all-season road along with further evaluation of the two vertical wells drilled in the ďŹ rst quarter of 2012. “We will have a better sense of this resource after we do our winter exploration plan this upcoming season,â€? said CEO Asim Ghosh in response to an investor question during the company’s second quarter conference call on July 25. ɸ Page B23

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PIPELINE NEWS September 2012 ɺ Page B22 The planning is subject to a lot of approvals. Those plans include evaluating an over 200-kilometre 3D seismic in the area. “So, it’s a sequential process, and the results are being assessed, but there’s much work still to do and in parallel we are continuing consultations with community and officials,” added Ghosh. At its property in the Saleski carbonates, south of Fort McMurray, Husky continued to evaluate the vertical stratiographic test wells drilled in 2011 in the quarter. In response to an investor question about the game plan and size of the resource, Ghosh said Saleski is at a very early stage, however. “We gave you guidance last time about the resource evaluation that we did, which was massive,” said Ghosh. “And we are advancing the early work of the pilot plan and the initial environmental monitoring, which will support a regulatory application for our pilot plan development. “But that’s about all it is. We don't see this as a project that will make a difference to Husky in the first five-year timeframe. It’s something that we will look at for the future.” Husky also continues to evaluate and advance its large pipeline of projects in Western Canada as it expands its focus to unconventional resource plays. The company targeted its second quarter activity at the Viking, Lower Shaunavon and Oungre projects in southern Saskatchewan and the Redwater and Alliance Viking plays in Alberta. A total of eight (gross) horizontal wells were drilled in the second quarter, resulting in a total of 34 (gross) horizontal wells and two vertical wells drilled in the first half of 2012. In the northern Cardium resource play at Wapiti in west-central Alberta, two of three horizontal wells drilled in the first quarter were brought on production, with results as expected. “At the Rainbow Muskwa play in Northwest Alberta, we drilled and cased two additional horiTRUCKING zontal wells and brought one on to production,” • Pickers said chief operating officer Rob Peabody. • Bed Trucks “We're looking to complete four wells over the • Winch Tractors summer that were drilled earlier this year on the • Texas Beds play, along with one carryover well from last year.” Husky continues to focus on liquids-rich gas opportunities in Western Canada. Drilling and completion activity at Ansell in West Central Alberta was limited over the quarter due to spring breakup. A total of three wells were drilled, including one multi-zone vertical well, one vertical Cardium well and one Woolrich horizontal well. “The horizontal well was drilled to the intermediate casing point before the rig was laid down for spring breakup,” said Peabody. “We’ve now drilled a total of 12 wells in the first half of 2012 and completed 31 wells at Ansell.” Four horizontal wells were drilled at Kaybob to evaluate the liquids-rich Duvernay gas play, with one completed and placed on production in the second quarter.

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PIPELINE NEWS September 2012

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Fairborne disposes of most of its Sask. and Manitoba production Calgary – Fairborne Energy Ltd. reported a loss in the second quarter, production remained at with the previous year, and the company says it will focus on its highest netback properties for the remainder of the year. The company reported a net loss of $44.72 million in the second quarter compared to a proďŹ t of roughly $652,000 during the same period last year. Oil and gas production was roughly at with last year, averaging 13,956 boepd in the second quarter, compared to 13,915 during the same three-month period of 2011. Fairborne maintained its production level despite property dispositions, production interruptions and the continued shut-in of production due to low natural gas prices. Transactions completed in the second quarter generated $91 million in gross proceeds on the disposition of approximately 800 bpd of oil production, representing the majority of the company’s properties in Saskatchewan and Manitoba. Production averaging 1,000 boepd from the company’s Wild River property remained shut-in throughout the second quarter in response to continued low natural gas prices. Current production is approximately 13,000 boepd, with an additional 1,000 boepd that remains shut in due to low natural gas prices. Capital spending in the second quarter was limited to about $4 million, which included drilling one (0.7 net) natural gas well on the company’s Marlboro property. Second quarter 2012 production was impacted by several factors including property dispositions, production interruptions and economic decisions to shut-in certain natural gas properties. The company disposed of the majority of its producing properties in Saskatchewan and Manitoba (approximately 800 bpd of crude oil) through two separate transactions, both of which closed during the second quarter. Fairborne’s production was also impacted by several third party turnarounds including the Keyera Nevis gas plant and the Semcams K3 gas plant. ɸ Page B25

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PIPELINE NEWS September 2012

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Éş Page B24 With no measurable recovery in natural gas prices, approximately 1,000 boepd of production from Wild River was shut-in at the end of the ďŹ rst quarter and will remain shut-in until commodity prices improve. Fairborne’s ability to generate cash ow to support a second half capital expenditure program is a result of the company’s focus on its highest netback properties, including the liquids-rich Cardium play at Harlech in the Deep Basin of westcentral Alberta. The company has drilled two Cardium horizontal wells to date with the second well, which reďŹ ned and advanced both the drilling and completion techniques, continuing to deliver strong performance with an initial production rate of 1,000 boepd and current production of 420 boepd, which includes a consistent liquids yield of 50 bbls per mmcf, of which 35 bbls per mmcf is high-value condensate. The high liquids yield present in the Cardium wells generates a strong netback of approximately $25 per boe, even in the current low gas environment. With a current land position of approximately 65,000 net acres and the previously released resource study at March 31, 2012, supporting 131 million boe of economic contingent resource (best estimate), attributable to the company’s working interest share, the company has an extensive inventory (330 gross locations, best estimate) of exploration and development opportunities on this high-netback property. Fairborne’s focus for the remainder of 2012 will continue to be on areas that generate the highest returns in the current environment. Maintaining a cash ow based capital expenditure program of $20 million for the balance of 2012, Fairborne will concentrate spending on its highest netback properties, including liquids-rich Cardium production at Harlech and high netback/low operating cost development opportunities at Marlboro.

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PIPELINE NEWS September 2012

PetroBakken see SE Sask production drop due to disposition Calgary – PetroBakken Energy Ltd. boosted production in the second quarter but recorded a net loss during the period of $21.51 million, which includes a $61-million non-cash impairment on its natural gas assets in northeast British Columbia. Second quarter production averaged 38,715 bbls of oil equivalent per (83 per cent light oil and liquids), a 10 per cent increase over the second quarter of 2011 though lower than ďŹ rst quarter of 2012 due to reduced ďŹ eld activity on account of seasonal weather and the divestment of non-core properties. Capital expenditures before dispositions totalled $109.76 million in the second quarter, resulting in nine net wells drilled in the quarter and 56 net wells drilled in the ďŹ rst half of 2012, with approximately 75 per cent of PetroBakken’s wells to be drilled in the second half of the year. In southeast Saskatchewan, the Bakken business unit averaged 14,819 boepd of production during the second quarter. A signiďŹ cant portion of the decrease from the ďŹ rst quarter was the result of the 2,900 boepd non-core Bakken disposition, which occurred near the end of the ďŹ rst quarter. In addition, spring breakup resulted in moderated ďŹ eld activity and shut-in production due to limited access

to wells. Activity levels resumed towards the end of the quarter, with six net wells drilled and four net wells brought on production. As of mid-August, PetroBakken had seven drilling rigs operating in this business unit and has drilled 12 net wells since quarter-end, with 11 net wells waiting to be completed or brought on production. The company continues to develop its assets in the Cardium, with production averaging 15,912 boepd in the second quarter, representing a 71 per cent increase over the second quarter of 2011. Production decreased slightly from the ďŹ rst quarter of 2012 due to downtime related to spring breakup and facility turnarounds. PetroBakken brought 11 wells on production during the second quarter and, since then, has drilled another 10 net wells and brought two net wells on production, leaving a current inventory of 13 net wells waiting to be completed or brought on production. The company currently has seven drilling rigs operating in the Cardium. The remainder of PetroBakken’s production came from the southeast Saskatchewan conventional and Alberta/B.C. business units. The southeast Saskatchewan conventional business unit continued to provide a low decline, light

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oil-rich production base. Production averaged 5,134 boepd in the second quarter, and the company drilled one net well in the area with one additional well waiting to be brought on production. One drilling rig is currently operating in this area and new wells drilled, combined with further additions to infrastructure, are expected to grow production through the balance of the year. In the Alberta/B.C. business unit, the company has 2,850 boepd of production and has assembled over 190 net sections of land that are prospective for new oil resource plays in one or more of the Nordegg, Montney, Duvernay and Swan Hills zones. Activity was minimal during the second quarter but there are plans to drill four wells in the second half of the year to further evaluate these opportunities. In northeast B.C., the company’s approach in recent years has been to maintain its lands that are prospective for natural gas. However, given the inventory of oil-weighted prospects that compete for capital and the current price outlook for natural gas in North America, the company has elected not to allocate capital to this area and consequently will let 45 net sections of lands that were prospective for natural gas in the Horn River area of northeast B.C. expire and revert to the Crown, resulting in a $61 million non-cash impairment charge. In terms of an overall outlook, the company currently has 27 net wells waiting to be completed or brought on production and 14 drilling rigs operating within the core Bakken and Cardium areas. With approximately 75 per cent of PetroBakken’s wells yet to be drilled in its $875-million capital program for 2012, production growth will gain momentum in the second half of the year as the company brings new and existing wells on production. The company is still expecting 2012 exit production rates of 52,000 to 56,000 boepd. The monthly dividend of eight cents per share has remained constant since the company’s inception, resulting in total dividends of $45 million for the second quarter.

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B27

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• Shops • Offices • Warehouses • Custom Homes • Blueprints • Management PSAC believes Saskatchewan’s well count for 2012 will be relaĆ&#x;vely unchanged from the previous year. However, with roughly 30 fewer drilling rigs working in Saskatchewan this summer compared to last summer, there’s going to have to be a lot of catch up to meet those numbers.

PSAC lowers forecast Calgary – The Petroleum Services Association of Canada expects 650 fewer wells will be drilled this year than it forecasted in April due to low natural gas prices, the European debt crisis and declining demand from Asia. PSAC, which represents about 260 oilďŹ eld service and supply companies, predicts 12,500 wells will be drilled this year compared to its previous prediction of 13,150 wells. The new three per cent decline in forecast drilling activity is reported in the third-quarter update of PSAC’s 2012 Canadian Drilling Activity Forecast released on July 30. The updated 2012 drilling forecast is based on average natural gas prices of $2.50 a gigajoule at AECO and West Texas Intermediate oil prices of US$90 a barrel. “Commodity prices on the natural gas side of things have had a big impact on activity levels so far this year,â€? said PSAC president Mark Salkeld. “As well, activity has been impacted by key shifts in the global economy, including the European debt crisis and the decline in demand coming from Asia.â€? “We are cautiously optimistic about activity levels staying at or around the 2011 well count, with activity more weighted towards liquids-rich gas and oil,â€? he said. “PSAC member companies continue to be busy and the demand for their services in Western Canada seems to have steadied following a late breakup and some persistent wet weather. “Our forecast update includes positive numbers with regards to eďŹƒciency in the patch,â€? he added. “The average [metres] per well is up over 2,000 metres, but we are forecasting that the average operating days per well will decrease by seven per cent this year.â€? PSAC expects the greatest increase in well count to take place in Manitoba with 663 wells, an increase of 14 per cent over 2011 numbers. PSAC is forecasting that Alberta will see a decline in the number of wells drilled in 2012 by four per cent to 7,795 wells and British Columbia will see a decrease in the number of wells drilled by 22 per cent to 485 wells. PSAC believes Saskatchewan’s well count for 2012 will be relatively unchanged from the previous year.

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PIPELINE NEWS September 2012

Southern PaciÀc steams McKay SAGD Calgary – Southern Pacific Resources Corp. is circulating steam through all 12 of its steam assisted gravity drainage well pairs at its STP-McKay thermal project with bitumen production expected before the end of 2012.

The STP-McKay Phase 1 SAGD project, located north of Fort McMurray, began July 1 with the circulation of steam to the first pad of six well pairs followed by the second pad of six well pairs on July 15. Southern Pacific

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said it took only three days for steam to reach the ends of the wellbores in the first pad, with subsequent consistent circulation, temperature and pressure performance within the well pairs as expected. The Athabasca oilsands project is the only new SAGD project coming on stream in Alberta in 2012 and was completed at $468 million, just $18 million over budget. Southern Pacific announced plans to expand Phase 1 to 18,000 barrels a day of bitumen in May to reduce future capital

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Southern PaciĮc started up its STP-McKay SAGD project north of Fort McMurray in July with Įrst producƟon expected before the end of 2012. The company conducted core evaluaƟons of the site in February 2011 prior to construcƟon of Phase 1. File photo

costs and boost production. Byron Lutes, president and CEO of the Calgary-based company told BNN on July 24 that the four cent cost overrun of Phase 1 was reasonable given the scope of oilsands projects. “We were hoping to be slightly under budget – we were fortunate – we were one of the only projects that was in construction most of 2011,” said Lutes. “A lot of our costs were done over a period of time when they wasn’t

a lot of industry activity, Only in the last months we really noticed an increase in activity levels and some stress on our costs, so that’s how we wound up slightly over budget.” Lutes said construction of the Phase 1 expansion won’t begin until 2014 when activity and labour and materials costs could be higher. “We have noticed industry activity picking up, and that is definitely a concern that we have to manage as we move

forward,” added Lutes. The Canadian Association of Petroleum Producers estimates oil companies will spend around $20 billion in 2012 in the oilsands with SAGD costing less than bitumen mining. “There’s lots of activity. We’re a relatively small component of that, but there is a lot of activity and companies in Alberta are not slowing down. Oilsands projects – you can’t just stop and start them,” Lutes told BNN. ɸ Page B29

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PIPELINE NEWS September 2012 Southern PaciÄŽc also has thermal operaĆ&#x;ons at Senlac Saskatchewan. Pictured are processing and steam buildings at Senlac. The company started its Phase 1 STPMcKay SAGD project with the ÄŽrst steam circulaĆ&#x;on on July 1. File photo

Éş Page B28 “It’s back to the fundamental belief that there is an overall supply shortfall in the world for our products and we have a very large neighbour to the south who consumes a lot of our oil products. “As long as that keeps going, I think there is going to be lots of activity in Alberta in terms of oilsands development.â€? Lutes said Southern PaciďŹ c avoided the high cost of camp labour and transportation at McKay by fabricating equipment for the central processing facility in Calgary and trucking the components to the construction site. “They are basically put together like a very large Lego kit,â€? explained Lutes. “You can save a lot of your steel costs. Your steel costs are by far your most expensive in terms of labour – you’re probably paying 60 per cent more for somebody to work in the ďŹ eld, having to pay for their camp costs and their access in and out of the campsite, so that’s where the savings can be fundamentally dierent from a mining project. “We watch costs very carefully. If you go back to the big boom that happened in 2007-08, I don’t think we are going to experience that type of cost increase again. “Number one, a lot of us, as producers, learned a lesson from that. The large majors are spacing themselves out. They are working together to manage the labour force. “Secondly, there’s not as many mines being put on stream today as there was a few years ago. I just think the overall demand for labour is going to be a little bit less.â€? All components of the McKay facility have been commissioned and are in

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use. The central processing facility is generating all of its own power from two to three cogenerators. In addition to steam being circulated, the return uids from the wellbores are being separated. Produced water is treated onsite and recycled for steam generation. Southern PaciďŹ c plans to proceed with its 6,000 bpd Phase 1 expansion before it constructs its Phase 2 expansion to boost overall production to 36,000 barrels a day of bitumen at McKay. The company ďŹ led its application for the 18,000 bpd Phase 2 expansion in November 2011. Approval for the Phase 1 expansion will be incorporated into the Phase 2 approval process. Regulatory approval for the projects is expected in the fourth quarter of 2013. Phase 2 will be a separate facility located approximately ďŹ ve kilometres east of Phase 1 and will include a central processing facility, well pads and associated well pairs. The Phase 2 project will also require the construction of a distribution and gathering system and access roads.

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B30

PIPELINE NEWS September 2012

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PIPELINE NEWS September 2012

B31

Ministers tour oilsands monitors Edmonton – They came, they saw and they applauded the early improvements for a three-year oil sands monitoring program between the federal and Alberta governments. The joint program will set up a series of environmental monitoring sites for air, water, land and biodiversity in the oilsands region of Alberta. Canada’s Environment Minister Peter Kent, and Alberta’s Environment and Sustainable Resource Development Minister Diana McQueen toured several of the new oilsands monitoring stations in July. Both ministers were pleased with the progress they saw, noting that the monitoring enhancements for the ďŹ rst year of the joint plan are well underway, that the joint approach is working well, and that initial results from the new enhanced monitoring are expected this year. “The Alberta oilsands are a key driver of the Canadian economy. They are currently responsible for over 400,000 jobs,â€? said Minister Kent. “In February, Minister McQueen and I launched one of the most transparent and accountable oilsands monitoring systems in the world. “Today, it is clear to see that this system is on track for full implementation in 2015. We challenge others in the international oil producing community to match Canada's commitment to environmental monitoring.â€? By the time the three-year plan is fully-implemented in 2015, the number of water sites will increase from 21 to 40 and the number of air sites will increase from 21 to 30. The number biodiversity/wildlife contaminant sampling sites will increase to 25 from three to 25 and biodiversity monitoring will increase to more than 70 locations from 35. “The enhanced monitoring program for the oil sands region provides assurance to Albertans, Canadians, and the world that this critical resource is being managed properly,â€? said Minister McQueen. “I’m conďŹ dent that these enhancements are setting the stage for a truly state-of-the-art environ-

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PIPELINE NEWS September 2012

Panther Drilling tops out rig utilization numbers Members of the Canadian Association of Oilwell Drilling Contractors booked 51,565 operating days in the ďŹ rst six months of 2012, Rig Locator records show, down from 54,565 days booked in comparable period last year. But total metres rose to 10.02 million in the January-to-June period from 9.38 million metres to the end of June 2011. The average length/depth per well for CAODC members continued to be greater than 2,000 metres. In the ďŹ rst quarter of this year, it rose to 2,011 metres per well, and in the second half lifted slightly to 2,013 metres per well. It took CAODC members an average of 10.40 days to drill a well over the ďŹ rst six months of 2012 compared to 10.20 in the January-to-June interval last year. Including oilsands evaluation holes and experimental wells, the top contractor of the half was Precision Drilling. The contractor drilled 1,650 wells and ďŹ nished 2.51 million metres of hole. Second-place ďŹ nisher Ensign Drilling Inc. rig released 1,302 wells and drilled 1.73 million metres. Precision’s main customer during the half was Canadian Natural Resources Limited, which accounted for 540 of its wells (32.7 per cent). Husky Energy Inc. (126 wells, or 7.6 per cent) and Encana Corporation (115 wells, or seven per cent) were the following top customers for Precision. Canadian Natural was also the main customer of Ensign Drilling (216 wells, or 16.6 per cent), followed by Cenovus Energy Inc. (147 wells, or 11.3 per cent) and Suncor Energy Inc. (139 wells, or 10.7 per cent). Savanna Energy Services Corp. was the only other contractor to drill more than one million metres during the half. The company drilled 787 wells and ďŹ nished 1.23 million metres of hole.

Ranked by wells drilled, Trinidad Drilling Ltd. rig released 434 wells during the ďŹ rst six months of the year, compared to 347 for Nabors Drilling, although Nabors drilled more metres (888,818) than Trinidad (843,604 metres). Excluding test wells, Precision’s share of the market declined to 26.88 per cent in the ďŹ rst half of 2012 from 27.91 per cent in 2011. Ensign’s market share rose to 17.86 per cent from 16.92 per cent. Precision was the top contractor for horizontal wells during the half with 702 wells rig released and 1.83 million metres of hole (excluding test or experimental wells). Ensign was second with 502 horizontal wells (1.22 million metres), followed by Trinidad with 303 horizontal wells (749,408 metres), AKITA Drilling Ltd. with 212 wells (461,267 metres) and Savanna with 202 wells (643,724 metres). Rig utilization during the second quarter for CAODC members stood at 35.78 per cent, up from 21.73 per cent in last year’s second quarter. As usual, smaller contractors dominated rig utilization and most metres drilled per rig categories. Panther Drilling Corp.’s three rigs had a 59.16 per cent utilization rate. AKITA’s 38 rigs booked a 55.1 per cent utilization rate, while Fox Drilling Inc.’s two rigs had a 53.3 per cent utilization rate. Ironhand Drilling Inc. ranked ďŹ rst in metres drilled per rig (29,727 metres), followed by Betts Drilling Ltd. (21,883 metres) and Lasso Drilling Corporation (19,894 metres). Savanna’s rig 412 drilled drilled 64 wells to the end of June, the highest count for a rig. Excluding test wells, Savanna had the biggest year-over-year jump in operating days for the half, reaching 7,520 days from 4,837 in the ďŹ rst half of 2011. Western Energy Services Corp.’s operating days lifted to 3,673 in the half from 2,608 in the comparable period last year.

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PIPELINE NEWS September 2012

B33

Blackbird to acquire Ruger Blackbird Energy Inc. is buying Ruger Energy Inc., an Alberta junior oil and gas exploration and development company with 100 per cent working interest in 680 acres in the Alsask area on the Alberta/Saskatchewan border. Blackbird entered into a non-binding letter of intent Aug. 2 for the acquisition of Ruger, whose assets consist of cash as well as oil and gas, and plans to build on the strength of its Bigstone liquids-rich Deep Basin gas play. The company is now in a position to capitalize on the assets where it is the operator and will focus on making additions, said Garth Braun, CEO of Blackbird. Blackbird's Bigstone project is comprised of lands and licences covering 5,120 (1,120 net) acres in Township 60, Ranges 22 and 23W5 at Bigstone, Alberta. By completing the terms of a farm-in agreement with Donnybrook Energy Inc., Blackbird earned 25 per cent of Donnybrook's interest in the Bigstone lands and in any future operations within an area of mutual interest. The acquisition, an arm's length transaction, will be subject to the approval of the TSX Venture Exchange. Ruger's Alsask property has three producing Mannville oil wells and one glauconite water-disposal well that takes water on vacuum at 150 bbl. of water per day. Current production is 20 bbls of 15-degree API oil per day. The Mannville pool is an outlier to the large Conoco Marengo pool six miles east. Other outlying pools have been discovered in the area as well. These wells have produced in excess of 230,000 bbl. of oil to date. Proved and probable producing remaining reserves are 29,000 bbl. Present value before taxes discounted at 10 per cent is $1.01 million. If the acquisition is completed pursuant to the terms of the letter of intent, Blackbird will acquire Ruger by issuing common shares of its capital stock to Ruger at a deemed price per share of 12 cents, based upon the net asset value of Ruger at closing. The net asset value of Ruger as determined at closing may not represent fair market value. The acquisition is subject to a number of conditions that include completion of due diligence reviews by the parties, successful negotiation of a deďŹ nitive purchase agreement, and receipt of all required regulatory and stock exchange approvals. As a result of the issuance of the acquisition shares, Ruger will become an insider of Blackbird. “We are very pleased with the development of Blackbird and the addition of two very experienced operators to the team,â€? said Braun. “We feel that adding this tremendous operational expertise will enhance shareholder value, as value achievement for our shareholders must be created both through the development of our existing project and also with the origination of new projects that are oil-weighted.â€?

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PIPELINE NEWS September 2012

Edge discovers new oil pool at Primate Primate – After beginning the ďŹ rst phase of its summer drilling program early, Edge Resources Inc. has successfully drilled, cased and completed two wells in Primate, Saskatchewan, southeast of Macklin, one of which has resulted in the discovery of a new pool. Both wells will begin production testing and pressure buildup analysis simultaneously. Additionally, the company acquired 100

per cent of the land it posted at a recent Crown land sale, adding 395 net acres of contiguous property to its existing Grand Forks oil asset. In Primate, the company had secured the drilling rig, which was between wells on a nearby program for another operator, on a short-term window. This allowed the company to start drilling earlier than it had planned. The wells were

successfully drilled to the primary target, the McLaren formation, at less than 850 metres, having passed through several other potentially hydrocarbon-bearing sandstones. On-site geological analysis and logs indicate no less than 12 metres of McLaren formation sands were encountered in both wells. The company is now equipping the wells for pressure buildup analysis and production.

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Production testing commenced in mid-August and will likely require four weeks, but possibly up to three months, before a stabilized production regime can be established, as is normal with all CHOPS (cold heavy oil production with sand) wells. “We are very happy with the initial geological results from these wells,� Brad Nichol, president and CEO, said in a news release. “We are especially pleased with the well drilled in the eastern section, which was

Curly’s Pick

previously given zero value on our reserve report. Our Primate asset continues to represent a wonderful opportunity to increase both oil production (and associated cash ow) and asset value. It was nice to drill the ďŹ rst two wells early and establish production in the eastern section before drilling the rest of the program.â€? The ďŹ rst well was drilled in an eastern section of the company’s property at Primate. This section is a nonproducing section that immediately osets a

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very actively-drilled area. As this section did not contain any producing wells, it was previously allocated zero value in the company’s reserve report and balance sheet. This new pool, described as a mid-Mannville heavy oil accumulation, is osetting a similar, but separate, pool to the east, which is believed to be currently producing over 2,000 bbl. of oil per day. The second well was drilled into the company’s existing, producing pool and encountered approximately 15 metres of net pay. This was the southernmost location into the existing pool to-date, which helped to further delineate and deďŹ ne a relatively undrilled area of the existing pool. After being perforated, the well was shut in to begin a multiday pressure buildup. Production testing started after several days of collecting pressure data.

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PIPELINE NEWS September 2012

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PIPELINE NEWS September 2012

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PIPELINE NEWS

SECTION C September 2012

Carnduff Oilmen’s Golf Tournament Results:

Ken Bayliss gets evaluated on his swing. The ladies in the back all gave the boss a 10. The crew from Easyrider Trucking, is, from leŌ, Natasha Bevan, Randi Thiry, Pamela Miller and Fay Myers.

Kent Kirkhammer through a tee oī.

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Carnduff Oilmen’s a success By Brian Zinchuk Carnduff – The three-day Carnduff Oilmen’s Golf Tournament was a success, with 120 golfers taking part on the 9-hole course. The tournament took place Aug. 10 to 12 at the Carnduff Golf Club. The par 3 event on the Friday, Aug. 10 had all its slots taken, with 27 teams participating. Saturday saw the end of the qualifying round, completed with a Calcutta and a horse race. In the horse race, 12 golfers start on the 4th hole, and two are dropped on each subsequent hole. Only two are left on the last hole. Sunday was a shotgun start. “The money we raise, the majority of it goes back to the golf course,” said Al Larson, president of the event. “One of the bigger things we support is our junior golf program.” “It’s a good secret we have here. Guys come back until they die,” Larson laughed. “It’s just a good bunch of guys. There’s a lot of hard work that goes into it. “It’s a lot of fun. The guys can sit back and relax.” ɸ Page C2

Par 3 Winners: 1st Nolan Rohatyn Brett Blackstock Shawn Boyes Wilson McKinnon 2nd Jeff Pratt Dustin Wilson Devon Carrington Lorne Tytlandsvick 3rd Wayne Carley Bill Halkyard Colin McInnes Clayton Jahn Horse Race 1. Nolan Rohatyn 2. Jeff Mosely 3. Darin Trimble Championship Flight 1. Kris Carley 74 2. Brett Blackstock 75 3. Darin Trimble 77 First Flight 1. Jamie Didrick 73 2. Cory Anderson 77 3. Dustin Wilson 82 Second Flight 1. Lorne Tytlandsvick 84 2. Keith Hamilton 84 3. Scott Haliday 85 Third Flight 1. Terry Theil 91 2. Laurier Carriere 93 3. Sam Bachorick 93 Fourth Flight 1. Wilson McKinnon 88 2. Brad Dutton 89 3. Al Walker 91 Fifth Flight 1. Gerry Naka 93 2. Trevor Davies 100 3. Arnold Marcotte 100 Sixth Flight 1. Thayne Giroux 93 2. Tony Thompson 97 3. Nick Shier 99 Seventh Flight 1. Jim Trimble 93 2. Curt Ermantraut 100 3. Ben Dizzarri 103 Eight Flight 1. Brad Meyers 94 2. Graham Ball 103 3. Bob Hahn 106 Ninth Flight 1. Ian Taylor 113 2. Ken McClemment 116 3. Josh Bayliss 126

C2

PIPELINE NEWS September 2012

More Golf Action

Above: Spearing Service’s Ken McClement watches his ball Ňy down the fairway.

Jason Miller of Mil-Lar Trucking connects on the tee.

Right: Mike Fowler of Baker Hughes serves up some souvlaki. They were so good, you couldn’t stop at just one.

Right: Thayne Giroux of Peak Energy at Lampman knocks his put in the hole.

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PIPELINE NEWS September 2012

Torq Transloading facilities popping up everywhere By Brian Zinchuk Bromhead – The move away from pipeline shipping and toward crude-by-rail is gaining steam, as yet another transloading facility has begun operating in southeast Saskatchewan. Torq Transloading announced in early August they would being shipping crude-by-rail just west of the hamlet of Bromhead, approximately 55 kilometres west of Estevan. The facility makes use of a new shortline railway – Long Creek Railroad (See related story page C5) Jarrett Zielinski is president and CEO of Torq Transloading, as well as one of the owners. Torq got its start in May 2011, and since then has been establishing crude-by-rail facilities throughout Saskatchewan and Alberta. “We are a sister company of Goulet Trucking,” Zielinski said. Both operations are owned by parent company Torq Capital Partners. It’s a privately held company with four owners. ɸ Page C4

Crude-by-rail is conƟnuing to gain tracƟon in Saskatchewan. Torq Transloading now has faciliƟes near Shaunavon, Unity, Lloydminster and, most recently, Bromhead.

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C3

C4

PIPELINE NEWS September 2012

Bromhead location out of town, and close to border Éş Page C3 “Goulet is a 52-year-old business we purchased over a year-and-a-half ago,â€? he said. Their transloading sites are popping up all over. “We have six in total,â€? Zielinski said.

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One is at Instow, just outside of Shaunavon. “We oer our customers a portfolio of loading facilities in order to capture the best economic arbitrage opportunities,â€? he said. Their objective it to be diversiďŹ ed across a cross-section of crude

types and to freely move about dierent areas to take advantage of price dierentials between two markets. “We also operate two facilities on behalf of CP Rail,â€? Zielinski explained. One is at Tilley, Alta., east of Brooks, while another

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is at Lloydminster. “We have one in Unity and another in Whitecourt, Alberta,â€? he said. “The one in Whitecourt we operate on behalf of CN.â€? The Unity facility, using trackage at North West Terminal, started in April. “We can load up to 40 cars per day in its current status,â€? he said. “That facility is fairly busy. We are loading 15 to 20 cars per day there.â€? “We load ďŹ ve to seven cars per day. We have a 27 car spot,â€? Zielinski said in reference to the Instow site where Torq has one transloading operation. Torq has one transloading system there. They load from the bottom and use closed-loop vapour recovery systems. Asked why they got into the crude-byrail business, Zielinski said, “The demand is there. Pipeline apportionment is more frequent. It leads producers to make a decision between shutting in or exploring alternatives that increase their netback. “In addition, all the producers we work for are looking to achieve greater economics for their products. “We’re not marketers. We’re a

fee-for-service transloader. We follow the crude markets and understand the arbitrage opportunities. By shipping crude to areas underserviced by pipelines or accessing large amounts of waterborne crude, reďŹ ners and terminals ďŹ nd an advantage by receiving crude by rail. Zielinski noted there are opportunities between the Brent and West Texas Intermediate dierential, between WTI and Western Canadian Select, and Maya and Western Canadian Select. As for where it all goes once this crude hits the rails, Zielinski said, “Typically about 50 per cent of our shipments go to the eastern markets. Forty per cent is southbound, and 10 per cent is westbound.â€? “We don’t own any cars. We expect cars from marketers, producers and reďŹ ners. There is a shortage of cars right now. It’s 18 months delivery for new cars. We’ve seen asphalt cars moved to crude service. Every day it seems more cars are coming online. It’s substantial. “Our business has seen increased volumes and demand year over year.â€? Bromhead The Bromhead location is called South-

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hall. They chose it in part because there was already a loading facility in Estevan, one that got a cool reception from city hall. “It’s a sensitive topic. That is part of the decision of choosing the location we did. It mitigates trucking and environmental impacts,â€? he said. Zielinski pointed out Southhall is an isolated location, with low population density. There is a “Yâ€? turnaround track at the site, roughly where the loading will take place. They are starting with a 10 car spot. The track to Oungre from the “Yâ€? has long been abandoned and pulled up. “We have the ability to move cars,â€? he said, adding they can load up to 20 cars a day in its current phase. “In later phases there are designs for us to load unit train volumes, between 100 and 120 cars,â€? he said. “Looking at some of the licensing activity in that area, we felt it would provide an opportunity as the area continues to develop.â€? There’s no small coincidence that the Bromhead site is practically within spitting distance of the U.S. border. There are two ports south of Bromhead. A key target market is attracting North Dakota oil to come north across the border to be loaded onto Canadian trains. Another issue with crude-by-rail sites has been damage to roads. Torq has worked out a road maintenance agreement with the rural municipality for the portion of RM roads needed to access the site. The company’s expansion plans aren’t over yet. “We’re certainly looking in northern Alberta, and some smaller things in southern Alberta, and another opportunity in west central Saskatchewan,â€? Zielinski said. “We are looking at a couple of opportunities that are pipelined with ďŹ xed infrastructure.â€?

PIPELINE NEWS September 2012

C5

Shortline was planned for grain, but may end up hauling more crude than kernels „ By Brian Zinchuk Estevan – It took seven years for farmers west of Estevan to get to the point where they have their own railroad. Now that they have it, a new opportunity has been thrown into the mix – shipping crude-by-rail, in quantities a lot larger than they were initially expecting. Long Creek Railroad starts just east of the KFC in Estevan and runs 41 miles west to Tribune along a line that has seen little use for many years. Glenn Pederson is president and a shareholder. He’s one of about 25 farm producers in the area who are involved in the new shortline. He spoke to Pipeline News via cellphone while combining on his farm north of Bromhead. Pederson farms 7,500 acres with his father, Dallas. “There’s no oilďŹ eld money in the purchase or maintenance of the track,â€? he said. “Back in 2005, Canadian PaciďŹ c listed it on their three-year abandonment plan. We felt the Canadian Transportation Agency miscalculated the net salvage value. They didn’t include land reclamation and statuatory payments. We took that to court and made an application.â€? The result was a settlement on net salvage value, but it took until 2011 to achieve. “Then we had a ďŹ nal price,â€? Pederson said. The ďŹ rst year was a tough one for the edgling railroad. “Last year we ooded out and had no crop, so we had no traďŹƒc,â€? he said. The line was washed out in some spots, and they had no grain to haul. Indeed, before the handover, a key portion of track within the city of Estevan near the overpass over Highway 39 subsided several feet. Canadian PaciďŹ c took care of that. There’s one elevator at Outram owned by a farmer, two at Torquay and two at Bromhead. Two of the three owners of elevators are also are investors in the railroad, but Pederson is unsure if those elevators still have the capacity to load rail cars. The sidings are still in place, however. “We have all our sidings and switches intact,â€? he said. As a shortline, they can spot cars on sidings or their mainline. The decision to set up a short line came down to a matter of economics, he explained. It’s a lot cheaper to haul grain ďŹ ve miles away than to Weyburn. It costs an additional $5 to $7 per tonne to truck grain to Weyburn. When you factor in the charge for using the elevator, the costs for Pederson personally can be up to $20 to $25 per tonne. “That’s where we see the value. The oil was an afterthought,â€? he said. “I strongly believe it will beneďŹ t everyone bargaining with the elevator.

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“Our distance from the ocean has not changed. The grain will still be loaded on rail, despite the demise of the Canadian Wheat Board.â€? Opportunity knocks Coincidentally, the past year has seen an upsurge in crude-by-rail in southeast Saskatchewan. And it so happens that Long Creek Railroad runs along one of the most active drilling spots in the province, right along the U.S. border south of Highway 18. “Currently we are working with Torq Transloading period. We’ve built a loading site at Southhall between Bromhead and Tribune,â€? Pederson said. (See related story page C3). Torq told Pipeline News they initially are looking at loading 20 tanker cars per day, and are considering expanding that to unit train capabilities. A unit train can be 100 to 120 cars. That’s a fair bit more than the “conservative numberâ€? of 500 grain cars per year the railroad initially planned for. He noted that several years ago, the idea of shipping crude-by-rail had been brought up, but it was “nothing we could put in our business plan.â€? “They contacted us,â€? he said of Torq. “We’ve had half a dozen interested parties. “I believe there’s two or three more waiting to see if they want to invest. We never advertised.â€? ɸ Page C6

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PIPELINE NEWS September 2012

They may end up hauling a lot more than initially planned Éş Page C5 “There’s a tremendous amount of oil business to be had. Pipelines are only so big, and they can only move so much.â€? Indeed, while Canadian PaciďŹ c had divested itself of the rail line, their website now lists Long Creek Railroad as a partner. “I must say, CP has been good to work with,â€? Pederson said. He pointed out that the line to Radville, which had been slated for abandonment, is not being torn up, despite all the conditions for abandonment having been met. As for pulling the trains, Long Creek does not have its own engines, at least, not yet. “We hired the services of Central Canadian Rail from Manitoba to pull cars for us.â€? They have one locomotive, freshly painted blue, which is in Estevan now. Another can be added in the future. Pederson said they are going to take a wait-and-see approach to engine power. They had initially considered a Brandt road-railer, a half truck/half rail engine. That might have been suitable for moving some producer cars of grain, but woefully inadequate for large oil shipments. Now he said they are glad they didn’t go down that route. In the long term, he said, “We’re considering getting our own locomotive.â€? Pederson said perhaps we need to looked at the mindset of 100 years ago, a mindset of development. “This whole Western Canada – let’s get at ’er and ďŹ nd ways to solve problems. Today there’s a lot of negative talk,â€? he concluded.

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The owners of Long Creek Railroad are glad they didn’t buy a road-railer, as it looks like they may end up pulling more cars then they iniĆ&#x;ally planned. Photo by Katrina Zinchuk

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SUZANNA NOSTADT Vice President of Operations Tel: 306-842-6100/Fax: 306-842-6101 nostadts@tremcar.com

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PIPELINE NEWS September 2012

Crescent Point resumes drilling By Brian Zinchuk Calgary – The rumour flashed around the Estevan OTS Golf Tournament in June like wildfire: Crescent Point Energy Corp. had shut down their drilling program and released their rigs. That’s a big deal in a town where the active rig count is a leading economic indicator. When one of the most active drillers shuts down activities, there are impacts. In this case, the rumour was true. Saskatchewan’s second largest oil producer, which had 15+ drilling rigs working in Western Canada, mostly in Saskatchewan, had dropped to just one active rig for much of June and July. That one rig, CanElson Rig 23, could be found working in their core Viewfield Bakken play. By early August, things began to turn around. The company had three rigs working in southeast Saskatchewan and one in a new area in southwest Manitoba. Soon more would be at work in southwest Saskatchewan and in Alberta. By Aug. 17, that number was up to eight. Crescent Point vice-president of engineering east Ryan Gritzfeldt explained to Pipeline News the reasoning behind the companies deferral, and then resumption, of much of its drilling program. “The production results we had in first and second quarter were well ahead of target,” he said. As a result, the company was in no hurry to ramp up spending right after breakup, especially given the volatile price of oil and the

pipeline differential. Another major factor was the declining price of oil, which in recent months had fallen into the $70 range for WTI before climbing back to the $90 range seen in mid-August. Gritzfeldt said, “If you combine that with the current volatility in the pipeline differentials, it actually put realized wellhead prices not far off of the low 2009 price levels.” At that time, oil prices were somewhat lower, but the difference in the exchange rate made up for it. The pipeline differential is the difference between what the going WTI price is and what you are getting paid. It has been in a discount situation due to the shortage of pipeline shipping capacity. “They were as high as $20,” he said of the differential per barrel. “This approach keeps our balance sheet strong, a key attribute of our corporate strategy since our inception of our company. Now we’re well-positioned financially in Q3 going into Q4, which enables us to capture any opportunities that come along. They usually do come along in lower, volatile price commodity cycles,” he said in reference to their delaying the drilling program. ɸ Page C9

For much of the summer, a sole CanElson rig, similar to Rig 21 seen here, was the only drilling rig working for Crescent Point. The company usually has over a dozen.

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PIPELINE NEWS September 2012 ɺ Page C8 There were other factors as well. The Canadian dollar exchange rate with the U.S. dollar has an impact. Exporters, like Crescent Point, see more of a return when selling in U.S. dollars when the Canadian dollar is worth less than the American buck. The loonie has recently been floating near par with the Greenback. Gritzfeldt noted, “Out Bakken formation (wells) are economic at $30.” The delayed drilling allowed the company to build up cash. An average Saskatchewan Bakken well runs around $1.8 million to $2 million to drill, complete and tie in, but in North Dakota and Alberta’s Swan Hills, the prices are higher. After having delayed their drilling program, things are set to resume. Noting the company is well positioned financially, Gritzfeldt said, “Now we’re executing the rest of our program as planned. “It’s about our sustainable growth targets. We analyze them weekly,” he explained, adding that during a low price commodity cycle, they can hold back a little bit. Now prices has stabilized somewhat. Crescent Point has normally had over a dozen rigs operating during active drilling seasons, many of which were working in the Bakken, but also in southwest Saskatchewan and in Alberta. The company is also drilling in North Dakota’s Bakken play as well. During the first quarter of 2012, the total number of rig was 15 or higher. “We’ll be back up to that 15 company-wide,” he said. “We still have a lot of locations to drill in southeast Saskatchewan,” Gritzfeldt said. One new field for Crescent Point is just across the Manitoba border, north of Highway 1, known as the Elkhorn, with some south Kirkella and Birdtail in for good measure. The land was acquired as part of the deal for Reliable Energy. Gritzfeldt said, “We’ll probably have a rig going there for the rest of the year.” One of the things Crescent Point has done over the past year to address the pipeline differential is to shift some shipping to rail. Earlier this year it established its own crude-by-rail transloading facility just west of Stoughton and a few miles north of its key Viewfield facility. “When pipeline differentials are at it’s peak, we do a lot better on rail,” Gritzfeldt said. “If pipeline differentials come down, we’re doing better on pipe. He noted that Enbridge’s line 14 closure in late July meant they were restricted 30 per cent in shipping capacity by that method. It’s no surprise, then, that the shortline between Stoughton and Regina has seen constant activity with oil tanker cars at most of the sidings and frequent trains in motion. The company is also looking into rail at Shaunavon, where they could go with their own facility like Stoughton, or use a third party. “We’re looking into Alberta as well,” Gritzfeldt said. Expiries not an issue At the 2011 Saskatchewan Oil and Gas Show in Weyburn, Crescent Point president and CEO Scott Saxberg noted how they did $700 million in 2008

deals that year. The company was the largest player in that record-breaking year for Crown land sales. Now many of those leases are coming closer to their end. The Saskatchewan Ministry of the Economy told Pipeline News in late June that much of the Crown leases purchased in 2008 will expire April 1, 2014, just 19 months from now, and that 85 per cent of the land leased that year (by all players, not just Crescent Point) had not yet been proven up. Asked if Crescent Point is feeling pressure to prove up land before it expires, Gritzfeldt said, “No. We’re not feeling pressure. A lot of those leases had a five-year term. “When you look at the detail, we know what we have to drill two to three years out. We know what our expiry situations are. We build all that into our current drilling program. There’s always a small portion of our corporate drilling program that handles that.”

Bristow Projects

Bristow Projects was doing some pipeline work near Benson on Aug. 10. Photo by Brian Zinchuk

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PIPELINE NEWS September 2012

A service rig can be seen working on Crescent Point land near Stoughton on Aug. 9. Photo by Brian Zinchuk

Crescent Point sets production record

JACK!

IT’S ABOUT TIME

Calgary – In second quarter 2012, Crescent Point Energy Corp. achieved a new production record and averaged 96,972 boepd, weighted 92 per cent to light and medium crude oil and liquids. This represents an overall growth rate of 47 per cent over second quarter 2011. Second quarter 2012 production also represents growth of more than 6,500 boepd over ďŹ rst quarter 2012. As a result of strong 2011 and ďŹ rst half 2012 drilling, acquisitions completed year to date and a spring breakup that was less severe than expected, the company is upwardly revising its 2012 guidance. Crescent Point’s average daily production in 2012 is expected to increase to more than 95,000 boepd from 88,500 boepd and its 2012 exit production rate is expected to increase to 100,000 boepd from 97,500 boepd. In second quarter 2012, the company spent $188.4 million on drilling and development activities, drilling 75 (34.8 net) wells with a 100 per cent success rate. Crescent Point also spent $47.6 million on land, seismic and facilities, for total capital expenditures of $236 million. On June 1, 2012, the company closed an agreement with a senior oil and gas producer to acquire certain assets in the Shaunavon area of southwest Saskatchewan for cash consideration of $343 million. The Shaunavon assets acquired include production of approximately 2,500 boepd, 98 per cent oil-weighted, from three operated legacy units and one non-operated unit in which the senior producer had a minor working interest. These assets are adjacent to and contiguous with Crescent Point’s existing Shaunavon land base and solidify the company’s dominant position in southwest Saskatchewan. ɸ Page C11

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2012 exit production expected to crack six Ă€gures Éş Page C10 Crescent Point continued to increase oil deliveries through its Stoughton rail terminal, providing access to diversiďŹ ed reďŹ ning markets and improving netbacks. In late second quarter, Crescent Point completed an expansion to the facility, increasing capacity to more than 16,000 bpd. Current throughput exceeds 16,000 bpd, with an additional 1,000 bpd also being delivered to third-party sites. To provide a hedge against price dierential volatility, Crescent Point plans to continue to increase crude oil deliveries through its new Stoughton rail facility, which is providing access to new markets. Crescent Point announced on Aug. 10 it had entered into an agreement, on a bought deal basis, with a syndicate of underwriters for an oering of 13.42 million Crescent Point shares at $41 per share to raise gross proceeds of approximately $550 million. The maximum gross proceeds raised under this oering will be approximately $633 million, should this option be exercised in full. Closing was expected to occur on or about Aug. 30, 2012. Net proceeds of the ďŹ nancing will be used to reduce indebtedness and for general corporate purposes. “We’ve signiďŹ cantly outperformed in the ďŹ rst half of this year, relative to expectations. Spring break-up was better than expected but, more importantly, we’ve had strong drilling results in 2011 and the ďŹ rst half of 2012. Our waterood programs in the Bakken and Shaunavon, as well as facilities’ optimizations, have also contributed to our results,â€? said Scott Saxberg, president and CEO of Crescent Point. “We’ve executed a successful drilling program, our oil production is well-hedged and we are well positioned as we move into the

second half of the year, all of which has allowed us to upwardly revise our production forecasts.â€? Given the company’s signiďŹ cant production gains in second quarter 2012, Crescent Point delayed capital projects until the middle of third quarter 2012, allowing it to optimize the remaining 2012 budget. With reduced industry activity, Crescent Point also expects cost pressures to be alleviated in the second half of 2012, which will help improve operating costs and capital eďŹƒciencies across all areas. (See related story page C8) The company will also continue to expand the waterood programs in the ViewďŹ eld Bakken and Shaunavon resource plays, which continue to show positive results. Southeast Saskatchewan and Southwest Manitoba In second quarter 2012, Crescent Point participated in the drilling of 23 (13.9 net) wells in

southeast Saskatchewan and Manitoba, achieving a 100 per cent success rate. Of the wells drilled, 12 (10.0 net) were horizontal wells in the Bakken light oil resource play. the Company also participated in the drilling of 11 (3.9 net) horizontal oil wells in conventional zones. During the quarter, the company converted 2 additional ViewďŹ eld Bakken producing wells to water injection wells. By end of second quarter 2012, the company had converted a total of 35 producing wells to water injection wells in the play. Production performance from water injection patterns in the ViewďŹ eld Bakken resource play continues to exceed Crescent Point’s expectations and has demonstrated the ďŹ eld wide applicability of waterood to the play. Discussions with potential unit partners and the Saskatchewan government to implement a unitwide waterood are advancing. ɸ Page C12

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PIPELINE NEWS September 2012

Crescent Point’s North Dakota drilling numbers similar to SE Sask Burning bright

This Ňare near Benson is bright during the day, but even more so at night, visible for many miles. Photo by Brian Zinchuk

ɺ Page C11 Southwest Saskatchewan During second quarter, the company participated in the drilling of 8 (5.3 net) oil wells in southwest Saskatchewan, achieving a 100 per cent success rate. Of these wells, 3 (2.9 net) were drilled in the Shaunavon area. During the quarter, Crescent Point integrated the senior producer’s operations

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in the Shaunavon area. Integration of the assets is now largely complete. The company is currently injecting water into seven horizontal injection wells in five pressure maintenance programs in the Lower Shaunavon zone. Crescent Point continues to be encouraged by results to date in all programs. Plans to convert up to four wells in the Upper Shaunavon zone to water injection wells in 2012 are also underway and are expected to bring the total number of injection wells into the play to 11 by year-end 2012. Crescent Point completed construction and commissioned one of three new batteries planned for 2012. Construction on the remaining two is underway, with commissioning anticipated by fourth quar-

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ter 2012. Also during the quarter, the company’s new gas processing plant became operational. The gas processing plant has a capacity of 6 mmcf/d and is expandable to 12 mmcf/d. Alberta During second quarter, 20 (10.2 net) oil wells were drilled, achieving a 100 per cent success rate. Of the wells drilled, 14 (5.8 net) were in the Beaverhill Lake light oil resource play. The company’s plans for its first waterflood pilot in the play are well underway, having begun reservoir modelling and facility design. Crescent Point expects the pilot to be operational in early 2013. Crescent Point has access to a significant land base in southern Alberta and has been pursuing several exploration projects in the area. During second quarter, the company drilled 1 (1.0 net) well to follow up on previously drilled unconventional exploration

wells in the Alberta Bakken play and 2 (2.0 net) horizontal wells in conventional zones in southern Alberta. Plans for 2012 include drilling up to 14 net conventional and unconventional wells on these lands. United States During second quarter, the company participated in the drilling of 24 (5.4 net) oil wells, of which 12 (2.6 net) targeted the Three Forks formation, achieving a 100 per cent success rate. In total in 2012, the Company expects to drill up to 18 net wells targeting the Bakken and Three Forks zones. Crescent Point has secured adequate drilling, service and fracture stimulation equipment to complete its current 2012 capital program. For the remainder of 2012, the company expects to continue to develop its emerging plays in Beaverhill Lake, North Dakota Bakken/Three Forks and southern Alberta.

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PIPELINE NEWS September 2012

Shifting Gears

One Woman’s Perspective on Life, Liberty and the Pursuit of Land Locations By Nadine Elson Although I had only met him on a half dozen occasions, Tim Floden’s death in July of 2011 from lung cancer at the age of 52 years aected me deeply. At the time of his death, Tim was working for Crescent Point in the completions division of the company as a completions technician. Many of the tickets I had written up for Crescent Point in my job as a hot shot driver prior to his diagnosis of cancer were directed to his attention in the Weyburn oďŹƒce. I did not know him well, but we shared a number of things in common. We were the same age, we had lived for a time only a couple of blocks apart in Estevan, we had a similar hard work ethic, we loved our families intensely, and we adored pie. To be speciďŹ c, we both adored lemon meringue pie and we both adored Sweetie Pie. Lemon meringue pie needs no introduction – the sweet but tart lemon avored pie topped with uy melt in your mouth meringue. But you may need an introduction to Sweetie Pie – Iris Elena Floden, born in March 2010. Tim and I shared a deep and instant love for one sweet little girl born as a result of the marriage of the Floden’s son, Ryan, to the Elson’s daughter, Monica. Tim’s diagnosis of lung cancer took him by surprise. He had been on top of the world ďŹ guratively and literally only six months before. He and his wife Deborah had been in Switzerland on a mountain peak (proudly wearing his Saskatchewan Roughrider colours) as part of a European trip in June 2010. He had the world by the tail. After years of hard work on service rigs in

Alberta, Saskatchewan and Russia and consulting for 12 years in his own company, he was recruited by Crescent Point in 2008 for his dream job. His wife, Deborah, maintained a daily blog, a memorial love story, from his diagnosis of cancer in January to his ďŹ nal day of life on July 29, 2011. It allowed his friends and family members a glimpse into the couple’s daily journey of cancer and death, witnessing beauty and joy along with messiness, fear, and sadness. Crescent Point closed down their service rigs on Wednesday, Aug. 3 to allow Tim’s friends and co-workers to attend his memorial service in Regina. Chad Lundberg, team lead completions engineer for Crescent Point in Calgary, and Tim’s boss and friend was the emcee for the service. He held a football and spoke of Tim’s love of the Saskatchewan Roughriders. He told us about Tim’s hard work ethic. He said that Tim had more knowledge in his head about the Crescent Point leases than Crescent Point had in their computers. He told us about Tim’s love

C13

Honouring Tim Floden’s life with pie for his family and that Tim was inuential in getting Crescent Point to close down their service rigs every second weekend as a matter of course so the guys could spend time with their families. Tim had missed a lot of family time as a result of his work so he knew how hard it was on the men. He also spoke of their friendship and how he would miss Tim. I had wondered in the months leading up to Tim’s death about his spiritual needs. He had attended church with us when the kids were married and for Iris’ baby dedication, and in the months leading up to his death, did not rebu oers of prayer, but still I had wondered. I got my answer when Chad announced that the musical selection to be played next in the service was Tim’s favorite hymn – It Is Well With My Soul. â€œâ€Ś Though Satan should buffet, though trials should come, Let this bless assurance control, That Christ has regarded my helpless estate,

And shed His own blood for my soul! ... Refrain- It is well, it is well with my soul!� And so on Sunday, July 29, 2012 I marked the one year anniversary of the death of Tim Floden with two kinds of pie – Sweetie Pie and lemon meringue pie. I cut a small piece and served it to her. “This is pie,� I said. “Pie� she repeated in her clear sweet little voice. “Mmmm!� “Grandpa loved pie!� I said. “And you,

too!� Nadine lives in Estevan with her husband and family, and works as a hot shot driver in the oil patch regularly delivering goods in and around Estevan and Shau-

navon, and Sinclair and Waskada, Manitoba. Her mission, beyond delivering the goods quickly, is to have every interaction be a positive one. She can be reached at missiondriver@ hotmail.ca.

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PIPELINE NEWS September 2012

Trican establishes Manitoba beachhead By Brian Zinchuk Brandon, Man. – In the oil business, the usual pattern is to go to where the resource is. Towns flourish near active fields, and some places, like Fort McMurray, would hardly exist otherwise. But in southwest Manitoba, Trican Well Service is turning that on its head. It’s going to where the resource is, but in this case, it’s human resources. As such, in January, the company established a base in Brandon, Manitoba. Down the road from Virden, Manitoba’s long-time oil capital, Brandon’s still quite a way from where most of its services are currently needed, including the fields around Cromer and Waskada. But it’s a little closer than Estevan, and more importantly, it has two things other centres lack: housing and people. A shortage of both has been a continual issue for southeast Saskatchewan businesses that typically service the southwest Manitoba oilpatch. Other places were considered, but Brandon was the choice.

Mechanic Dwaye Woytkiw is originally from Swan River, Man. He was oīered a transfer back home to Manitoba aŌer working in Alberta for several years. It’s a story oŌen heard in Saskatchewan – where locals went to Alberta to Įnd work, only to return once more work became available at home. Here Woytkiw changes an air intake pipe.

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Brandon base manager Curtis Nerlien said, “We are just over 50 (employees). Fifty-four was our last count.” “A lot of our guys are from western Manitoba. A few are from this area and have worked for us out west and have transferred back.” Some are from eastern Saskatchewan as well. “The biggest thing is we need to be in a place with a population big enough to draw from,” Nerlien said. They also needed truck services to support the fleet. As Manitoba’s second largest city and being located on the TransCanda Highway, there are plenty of truck servicing outfits, from Fort Gary Industries to Peterbilt. Nerlien said that as a larger centre, Brandon offers more attractions for employees. In the shop you can find mechanic Dwayne Woytkiw. He’s originally from Swan River, Man. Woytkiw went to work for Trican at Clairmont, Alta., in 2006, having moved to Grande Prairie. He was offered a transfer to Manitoba, which brings him closer to family and the opportunities for future promotion. “Lots of guys who are from Manitoba working out west can now move back home and work,” Nerlien said. Nerlien, himself, started with Trican as a bulk cement hauler in Lloydminster 12 years ago. Originally from Porcupine Plain, Sask., the former farm boy brought his wife and three children with him to Brandon. It’s closer to family for him as well. “We deal with fracturing and cementing right now,” he said, but there are plans in the works for expansion into coil tubing, nitrogen and acid. The company has begun hiring for those positions already. “We’ve got guys in training,” he said. ɸ Page C15

PIPELINE NEWS September 2012

C15

Currently one frac crew is based in Brandon. They will soon be joined by coil tubing, nitrogen and acid operaƟons. The new base is a beachhead for the oilpatch in a city more known for agriculture.

ɺ Page C14 Before the end of the year, most of Trican’s pumping services will be offered in Brandon. “We’ll be around the 70 employee mark,” according to Nerlien. His office is currently in a rental trailer. That will soon change, as there are plans for a newly constructed building to be located on their campus just east of Brandon. “We’re going to be building on this site soon. The contractor is flagging out the yard this week,” he said Aug. 1. “It’ll be a five-bay shop with a cement bulk plant and chemical warehouse. There will be offices as well. Their closest frac job is about 115 km from Brandon. That’s shorter than the distance from Estevan, where Trican also has a base. With the flooding last year and a bridge still out west of Waskada because of it, their service area can be more accessible from the new base, especially in spring. In establishing its Brandon base, Trican also created a beachhead for the oilpatch in a city whose hockey team is known as the Wheat Kings. It’s the first large oilpatch venture of its type in the city. It comes at a time when Manitoba has been setting records for drilling and production. As of Aug. 1, there were 27 rigs in Manitoba, with 16 active. Those numbers were unheard of until the past year-and-a-half. Riglocator.ca actually had to adjust its graph to allow for a higher number of rigs for Manitoba. “We managed to find a good crew of guys, a good solid bunch,” Nerlien concluded.

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C16

PIPELINE NEWS September 2012

Nearly 80 golfers attend Estevan Oilwomens’ tourney

Trudy Firth lines up a put during the Estevan OilĮeld Technical Society 14th Annual Oilwomen’s Golf Tournament on July 20. Photo by Josh Lewis/Estevan Mercury

By Josh Lewis Estevan - The Estevan Oilfield Technical Society held its 14th Annual Oilwomen’s Golf Tournament on July 20. The tournament, which resumed after a one-year hiatus due to flooding, took place at both the Estevan Woodlawn Golf Club and

Hidden Valley Golf Resort, due to the current redesign taking place on Woodlawn’s back nine. Just under 80 women participated in the one-day event. The winning team was comprised of Trudy Firth, Tami Kofoed, Maggie Stephen

and Darlene Sens. The second-place foursome included Shelley Naka, Shannon Knibbs, Mary Jane Pineo and Shelly Big Eagle. Coming in third was the team of Jennifer Moore, Brandi Day, Arliss Schindel and Shelli Schlingmann.

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PIPELINE NEWS September 2012

C17

Allstar to farm-in Riverside wells Saskatoon – Allstar Energy Ltd., a 100 per cent owned subsidiary of 49 North Resources Inc., plans to develop its heavy oil properties on its Riverside lands near Leader, Sask. with a farm-in agreement with Westcore Energy Ltd. Westcore will spend up to $1 million to complete a 3D seismic survey at Riverside with a planned drilling program to follow. Under the terms of the agreement announced July 25, Westcore will earn up to a 60 per cent working interest in certain wells drilled on the Riverside lands under that drill program. Westcore has also been granted an ongoing right of first refusal to participate in additional wells on Riverside lands. The Calgary-based Westcore can fund up to 100 per cent of drilling, completion and equipping costs (to a maximum amount of $1 million) for up to a further 60 per cent working interest in such wells. The transaction is subject to the review and approval of the TSX Venture Exchange. The farm-in agreement follows news that Allstar completed its second re-entry well at Riverside with a combined two well production of 160-170 barrels of oil per day by July 20. “After removing the abandonment plug and equipping the well bore for pumping, the targeted formation has been performing above initial expectations,” said Ashley Drobot, president and CEO of Allstar. “Much like the first re-entry well in the program, the second well had initial 24-hour pump tests in excess of 100 barrels of oil per day.” Drobot said the second well was restricted and produced at a stabilized rate of approximately 6070 bpd in excess of 30 days up to the news update

in July. Given favourable pressures and fluid levels evident in the wellbore, Allstar was able to increase the pump rate on the second well to approximately 100 bpd. Allstar is a potential major player at Leader with title to approximately 31,360 acres at Riverside. The company acquired an additional 16,000 acres of property at Riverside from third party producers in May following the purchase of 15,360 acre in a Crown sale in October 2011. The neighboring Mantario oilfield 20 kilometers north of Allstar’s Riverside property has been producing heavy oil since the early 1990s with cumulative production in excess of 47 million barrels of oil.

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Those fields continue to produce oil with the help of secondary recovery methods such as water and polymer flooding. At Riverside, Allstar has successfully incorporated new pumping methods and equipment that have shown to vastly improve operations and production over previous activities in the area. In total, Allstar now owns or has exclusive exploration and development permits covering approximately 58,000 acres of highly prospective Viking oil, Viking gas and heavy oil lands all located in west central Saskatchewan. 49 North is a Saskatchewan focused resource investment company with strategic operations in financial, managerial and geological advisory services and merchant banking.

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C18

PIPELINE NEWS September 2012

Sidebooms What do you call a group of sidebooms? A Ňock? A Ňeet? A herd? There’s got to be a joke in there somewhere. These sidebooms will be working with Surerus on the Enbridge Bakken Pipeline. They were sighted at the Frobisher boneyard. Photo by Brian Zinchuk.

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National Oilwell Varco completes acquisition of CE Franklin NOV Distribution Services ULC, a wholly-owned subsidiary of National Oilwell Varco, Inc., has completed its previously-announced acquisition of CE Franklin pursuant to a plan of arrangement as of July 23. The arrangement resulted in NDS acquiring all of the issued and outstanding common shares of CE Franklin for cash consideration of $12.75 per share. The arrangement was approved by the shareholders of CE Franklin and by the Court of Queen’s Bench of Alberta on July 16, 2012. Articles of arrangement have been ďŹ led by CE Franklin with the Registrar of Corporations for the Province of Alberta, pursuant to Section 193 of the Business Corporations Act (Alberta). Pursuant to the arrangement, NDS paid an aggregate of approximately $239 million to acquire CE Franklin, which is now a wholly-owned subsidiary of NDS. The common shares of CE Franklin are expected to be voluntarily delisted from the TSX and NASDAQ by the end of July.

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634-6081

PIPELINE NEWS September 2012

C19

New pipelines would generate upstream beneĂ€ts „ By Elsie Ross (Daily Oil Bulletin) – Alberta will be the largest beneďŹ ciary of upstream oilsands development resulting from new projects spurred by additional pipeline capacity to export markets, says a new study. Of the cumulative GDP growth of $2.82 trillion in Canada between 2011 and 2035, nearly 95 per cent or $2.67 trillion (2010 C$) would accrue to Alberta, according to the Canadian Energy Research Institute study, PaciďŹ c Access, Linking Oil Sands Supply to New and Existing Markets. The various cases in the report are based on the eect of the addition of the Keystone XL, Trans Mountain expansion and Northern Gateway pipelines. Alberta also would see the economic impact of $551.6 billion in taxes paid by citizens and businesses and 13.55 million person-years of employment with the three new pipelines in operation. That shouldn't be surprising, given that the oilsands are in Alberta, Dinara Millington, co-author of the report with Jon Rozhon. With its manufacturing base that can provide products for the oilsands and its large population, Ontario would see GDP growth of $83.3 billion and taxes of $27.4 billion, followed by British Columbia with $36.8 billion in GDP growth and another $9.8 billion in taxes paid. The study was the ďŹ rst of three that CERI would be releasing over a twoweek period. The second study due out Aug. 9 would look speciďŹ cally at the economic impact of the construction of Northern Gateway and Trans Mountain expansion while the third study, released Aug. 14, looked at the impact in British Columbia related to natural gas development for the oilsands and for LNG export markets. The results of the ďŹ rst study indicate that Kinder Morgan Canada's Trans Mountain expansion would have the lowest economic impact on Canadian GDP at $307.9 billion compared to $617.4 billion for TransCanada Corporation's Keystone XL and $373.5 billion for Enbridge Inc.'s Northern Gateway. This could be due to the fact that TMX has the lowest capacity addition to the total export capacity and hence the bitumen production volumes that will be transported via TMX are the lowest among the cases, the study suggests. In the case of Keystone XL, which opens up new markets to the United States Gulf Coast, the incremental GDP impact in Alberta would be $583.2 billion in Alberta, $18.6 billion in Ontario and $8.3 billion in British Columbia. In contrast, TMX would result in incremental GDP of $291.3 billion in Alberta and $9 billion and $4 billion in Ontario and B.C., respectively. The Northern Gateway case projects incremental GDP of $352.3 in Alberta, $11.4 billion in Ontario and $5.1 billion in B.C. Apart from existing pipelines, Keystone XL would spur the largest incremental tax revenue of $131 billion ($121 billion from Alberta), followed by $80 billion for Gateway and $65 billion for Trans Mountain. The same pattern holds for employment with the largest beneďŹ ts under Keystone XL, apart from existing pipelines, followed by Northern Gateway and TMX. Excluding the existing pipeline operations case, royalties collected by the Alberta government are the second highest under the Keystone XL case, followed by Northern Gateway and then TMX.

On an annual basis, total royalty revenues from all cases will increase signiďŹ cantly to just over $35 billion in 2035 from $3.4 billion in 2010. Cumulatively, Alberta will collect $585.7 billion in oilsands royalties over the 25-year period. Under CERI's reference case scenario, oilsands production is projected to increase to 3.3 million bpd by 2020 and 5.3 million bpd in 2030 from 1.5 million bpd in 2010. In 2010, non-upgraded bitumen and synthetic crude production accounted for 52 per cent of total Canadian crude production and 76 per cent of Alberta total production, versus 54 per cent and 77 per cent, respectively, in 2011. Over the 25-year projection period, the total initial capital required for all oilsands projects is projected to be almost $281 billion under the realistic scenario. New investment dollars start to drop o by 2030. This does not reect a slowdown in oilsands investments but instead CERI's assumptions for project start dates and announcements from the oilsands proponents as CERI does not include in its scenarios any future projects unless publicly announced by the companies involved. Ongoing investment, in the form of sustaining capital, will take place on an annual basis. The annual sustaining capital required for the oilsands (excluding royalty revenues, taxes, and ďŹ xed and variable operating costs) grows to almost $5 billion by 2035 from the current amount of $2 billion, with an annual average of $4 billion per year. Total operating costs account for the largest share of total oilsands costs. Between 2011 and 2035, total operating costs will be $759.6 billion, with an annual average of $30.4 billion.

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C20

PIPELINE NEWS September 2012

CCS101.ca sees a revamp Regina – It’s hard to make arguments either for or against an idea without background knowledge. CCS101. ca has recently been revamped to do just that. CCS here refers to carbon capture and storage. CCS101.ca’s purpose is to explain the basics about the process. “It’s really our attempt in Canada to put

up an informational website good for Grade 5 to Grade 12 students, and linking to places for materials for teachers,” said Dr. Malcolm Wilson, CEO of the Petroleum Technology Research Centre (PTRC). The PTRC is behind the CCS101.ca website. The website also provides basic informa-

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tion for people who want to know what carbon capture and storage is. Wilson said they are trying to do it in a manner that is “in an unbiased fashion as possible.” There’s is a more detailed section called CCS Pro, where Wilson said they “dive into more detail.” The website is designed to be digestible by the public as well. The site has a new version of a teachers’ page with a new international curriculum guide for teachers produced in Australia. Its resources are varied from “six-hat thinking” to an argument map about the pros and cons for carbon capture and storage. CCS101.ca also introduces younger students to the carbon cycle.

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PIPELINE NEWS September 2012

C21

Manitoba only bright spot in Western Canada licence count Drilling licences were down in July, in keeping with a trend for lower acĆ&#x;ve drilling rig numbers for the same month. Here a crew clears mats from a drilling site near Sinclair, Man. on Aug. 5. Photo by Brian Zinchuk

(Daily Oil Bulletin) – Operators across Canada licensed 907 new wells in July, as Manitoba was the only western province to see a lift in well authorizations from last year. The 907 well permits represent a 32 per cent decline from 1,341 licences approved in July 2011. Manitoba granted 64 well authorizations in July – a record for that month – and up 25 per cent over 51 well permits issued in the year-ago period. Over the ďŹ rst seven months of the year, Manitoba authorized a record 397 new wells, up from 333 wells to the end of July last year, and close to British Columbia's tally through the January-toJuly period. B.C. assigned 57 new licences in July, while 63 were approved (input). To the end of July, the province had assigned 411 new permits (o from

641 a year ago). In Alberta, the 517 well authorizations in July were o about 41 per cent from last year's 872 permits. The province had licensed 5,333 wells to the end of July, down over 1,000 wells from last year, or 16 per cent, from 6,358 permits in the ďŹ rst seven months of 2011. Saskatchewan granted 265 well permits in July 2012 compared to 342 in July 2011, and to the end of July has authorized 2,669 licences compared to 3,027 a year ago. Operators in Western Canada licensed 643 oil and bitumen wells in July, down from 893 a year ago. Over the ďŹ rst seven months of the year, 6,111 oil and bitumen wells were permitted compared to 6,687 a year ago. Gas permitting in Alberta, B.C. and Saskatchewan continued to decline. In July, only 199 gas

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wells were licensed compared to 311 a year ago. To the end of July, just over 1,000 gas wells have been authorized (1,049), o about 44 per cent from 1,864 in the comparable period of 2011. Only four oilsands evaluation holes were licensed in July, down from 27 a year ago. Operators have licensed 774 oilsands evaluation holes to the end of July compared to 1,083 a year ago. Through the ďŹ rst seven months of the year, operators licensed 4,614 horizontal wells, o almost 12 per cent from 5,217 horizontal wells permitted to the end of July 2011. The top ďŹ ve licensees of new wells in July, excluding experimental and oilsands evaluation holes, were Encana Corporation (88), Husky Energy Inc. (80), Royal Dutch Shell plc (52), Canadian Natural Resources Limited (49) and Cenovus Energy Inc. (46).

C22

PIPELINE NEWS September 2012

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U.S., Mexico boost CanElson's revenue (Daily Oil Bulletin) – CanElson Drilling Inc. saw earnings in the second quarter rise 43 per cent, more than doubling in the ďŹ rst six months, thanks in part to sharply higher revenue from the United States and Mexico. Income in the quarter rose to $3.88 million or ďŹ ve cents per share from $3.33 million or ďŹ ve cents per share reported in last year’s period, while yearto-date earnings leapt to $19.48 million or 26 cents per share from $10.07 million or 15 cents a share in last year’s period. “Our expanding, modern drilling rig eet and operations in key oil-weighted basins across North America enabled us to generate strong ďŹ nancial results ... even though it is a period of seasonal slowdown in Canada and North Dakota,â€? Randy Hawkings, CanElson president and chief executive, said in a statement accompanying the secondquarter report. Revenue in the drilling contractor’s foreign division, consisting of the U.S. and Mexico, grew 62 per cent, to $26 million, representing 69 per cent of total revenue in the second quarter. Total revenue in the period jumped 49 per cent, to $37.49 million, from $25.14 million a year ago. On May 15, 2012, CanElson acquired the shares of CanGas Solutions Ltd. in exchange for about 2.05 million of CanElson’s own common shares. CanElson’s management believes CanGas is the only provider of compressed natural gas (CNG) transportation services by truck-hauled CNG trailers in Western Canada that is positioned for rapid, proďŹ table growth and potential cost-savings to customers. Looking ahead, the company expects its 2012 capital program to be about $89 million, of which $57.9 million should be incurred in the second half, with a signiďŹ cant amount funded by cash ow. Key parts of the second-half capital program are drilling services, at $38.3 million, with $25.8 million for construction of four tele-doubles, longlead items for one tele-double, and other growth capital investment. The company will also spend $12.6 million for spares, shop upgrades and maintenance capital, management said. ɸ Page C23

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PIPELINE NEWS September 2012 In Mexico, management expects its customer to move to a production-sharing contract with PEMEX in the next six months. The change may cause a “minor and temporary� lull in activity later this year in the transition

CanElson Driling Inc. is conĆ&#x;nuing its rig build program. This is CanElson Rig 21, working near Benson in early August. It was formerly an Eagle Drilling Services unit before the company was purchased by CanElson. Photo by Brian Zinchuk

of contracts, but should provide CanElson with an opportunity to expand service and increase its exposure to performance-related contract terms in 2013 and beyond, management said. At Nisku, Alberta,

C23

CanElson is building three more small-footprint, ultra-heavy-duty, telescoping double drilling rigs at an estimated cost of $8 million each. The company will deploy these new rigs with long-term contracts in the second half.

` ɺ Page C22 For CanGas, the company plans to spend $19.6 million in the second half to convert the primary diesel engines on 14 of its drilling rigs to bi-fuel capability by the end of 2012, so that the engines can operate on a mixture of natural gas and diesel fuel; to expand its eet of truckhauled CNG delivery trailers to more than 50 from six currently; to expand the portable compression units by four to six units; and for further research and development associated with the company’s proprietary small-scale, raw gas conditioning technology to employ por-

table, small-scale ďŹ eld facilities to condition raw stranded natural gas so that it would be suitable for consumption in engines. Also in the second half, CanElson plans to deploy 27 per cent of its eet to crude oil-

directed drilling in the Permian Basin in Texas, where management believes its equipment is likely to achieve utilization over 90 per cent in 2012, similar to 2011, with the only non-utilization being attributable to rig move intervals.

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C24

PIPELINE NEWS September 2012

Low prices gouge ARC earnings, as budget pared By James Mahony (Daily Oil Bulletin) – While posting healthy production increases in the second quarter and year-to-date, ARC Resources Ltd. saw earnings in both periods drop sharply, due to continuing low commodity prices. In the second quarter, net income fell 75 per cent to $38.10 million or 13 cents per share from $150.10 million or 52 cents per share in last year's period, while earnings in the first half

dropped 63 per cent to $79 million or 27 cents per share from $215.30 million or 75 cents per share in the first half of 2011. Higher production had a positive affect on netbacks and funds from operations in both the quarter and first half, but these gains were eroded by sharply lower natural gas prices and higher crude oil differentials during the first half of 2012, the company said. ARC saw combined oil and natural gas liq-

uids (NGL) volumes rise 19 per cent in the second quarter, advancing 14 per cent in the year-todate, while natural gas volumes rose 11 per cent in the quarter and 25 per cent in the first half. In releasing second quarter results, the company said it had decided to keep some Montney land in northeast British Columbia that it had put on the block back in February. The land represented about one-tenth of ARC's B.C. land base, and in pulling it off the

market, management said it had only planned to sell the assets if an offer representing "superior value" materialized. ARC also said it would issue stock to raise about $300 million, which will be used to increase working capital and fund ongoing capital development programs. Under the bought-deal agreement, about 12.7 million common shares at $23.65 per share will be issued. The underwriters have been granted an over-allotment option to buy up to 1.90 million common shares on the same terms as those sold under the offering, to cover overallotments, if any. The company also confirmed it will cut its 2012 capital budget from the original $760 million to $600 million, due to low gas prices and volatile oil differentials in the year's first half. ARC will continue to invest in its oil properties at Ante Creek and Pembina in Alberta, Goodlands in Manitoba and southeastern Saskatchewan as well as in liquids-rich gas plays in B.C.'s greater Parkland area. It recently submitted an application to build two 60 mmcf per day gas processing plants at Parkland with capability of up to 130 bbls of oil

and liquids per mmcf. Preliminary estimates for the company's 2013 capital budget call for about $800 million in spending, which would see commissioning of Phase 1 of the Parkland gas and liquids processing facilities late in 2013. ARC's second quarter production was 93,997 bbls of oil equivalent per day, up 14 per cent from the second quarter of 2011. In the first half, production of 94,484 boepd was 21 per cent higher than the 2011 period. ARC's drilling program in last year's second and this year's first half, the commissioning of the new 30 mmcf/d Ante Creek gas plant in February and smooth operations at ARC's Dawson facilities contributed to the higher production. The company's second-quarter liquids production of 36,125 bpd rose 19 per cent from the second quarter of 2011. Strong production results from new wells at Pembina and Goodlands and expanded processing capacity at Ante Creek have contributed to the significant increase in oil, condensate and NGLs production in 2012. Capital expenditures, prior to acquisitions, in the second quarter totalled $97.9 million, as ARC drilled 18 operated wells, comprised of 14 oil wells and four liquids-rich gas wells. In first half, ARC spent $284.8 million of capital (prior to acquisitions),

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drilling 77 gross operated wells, comprised of 67 oil wells, nine liquidsrich gas wells and one gas well. ARC said it would continue to focus on oil and liquids-rich opportunities at Tower, Ante Creek, Pembina, Goodlands and southeast Saskatchewan in 2012. The company's anticipates it will drill approximately 150 gross operated wells this year. The 2012 capital program will prioritize the highest return projects, mainly focused on oil and liquids projects. In the three months ended June 30, 2012, funds flow fell to $169 million or 58 cents per share from $236.70 million or 83 cents per share in last year's second quarter. Capital spending in the quarter dipped to $103.30 million (including acquisitions) from $157.90 million in last year's period. Revenue in the quarter fell to $317.80 million from $374.90 million in the 2011 period. In the six months ended June 30, 2012, funds flow declined to $353.50 million or $1.22 per share from $428.80 or $1.50 per share reported in last year's first half. Capital spending in the first half fell to $308.50 million (including acquisitions) from $329.60 million posted in last year's half. Year-to-date revenue fell to $684.60 million from $699.60 million reported in the first half of 2011.

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Box 4 • Midale, SK S0C 1S0 Phone: (306) 458-2367 Fax: (306) 458-2373 email: 247enterprisesltd@sasktel.net

PIPELINE NEWS September 2012

C25

Box 312 Carlyle, SK S0C 0R0 Office: 306.453.2506 Fax: 306.453.2508

Leading g The Wayy

Suite 700, 808 - 4th Avenue SW Calgary, AB, Canada T2P 3E8 Phone: 403.266.3922 Fax: 306.266.3968 TSX: CDI Offices in Calgary, Nisku, and Carlyle, as well as Midland, Texas and Mohall, North Dakota

Setting new standards for performance Since it was established in late 2008, CanElson Drilling Inc. has grown quickly to become one of Canada’s premier drilling contractors. In addition to building its own drilling rigs, the company is expanding its Àeet of drilling and service rigs through acquisition. CanElson now operates a Àeet of 37 rigs (34 net). With operations in Western Canada, West Texas, North Dakota and Mexico, CanElson Drilling Inc. is setting new standards for rig utilization. With right-sized, purpose-built rigs built for horizontal and resource play drilling and experienced, well trained crews, the company is achieving new records for cost-effective, ef¿cient drilling operations.

Fast Growing Company

Opportunities On Our Rigs CanElson Drilling Inc. is currently looking for hard working individuals that are looking for challenging and rewarding work on top-of-the-line equipment in Saskatchewan. We provide competitive wages and bonuses, stock options for Drillers and Rig Managers. Interested individuals can drop off resumes in person at our Carlyle Office or fax to 306-453-2508.

www.

CanElsonDrilling.com

C26

PIPELINE NEWS September 2012

Osum opts for SAGD and CSS at Taiga Cold Lake – Osum Oil Sands Corp. could be in a position to steam ahead with the development of its 45,000 barrel a day Taiga thermal bitumen project in the Cold Lake oilsands region in early 2013.

The privately held company hopes to receive regulatory approval from Alberta’s Energy Resources Conservation Board for the 23,000 bpd ďŹ rst phase project by the end of 2012 with ďŹ rst production expected in 2016. The ERCB began public hearings in Cold Lake in mid-July with news Cold Lake First Nations have withdrawn their objection to the $2.9 billion project. ɸ Page C27

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PIPELINE NEWS September 2012 Éş Page C26 “We are very pleased with Cold Lake First Nations’ decision to withdraw their objection, and we’re excited to move forward and deliver an outstanding project that will beneďŹ t the region for decades to comeâ€? said Rick Walsh, Osum’s CEO. “We’re conďŹ dent that we have a ďŹ rst-rate project that will raise the bar for our industry, and we take great pride in sharing the Taiga story, how it will beneďŹ t the community and how oilsands development beneďŹ ts all Canadians.â€? Osum has already spent approximately $3 million on pre-approved contracts with Aboriginal businesses with more economic opportunities to follow once the ďŹ rst phase of the project gets the green light. Osum plans to recover oil from bitumen in the Clearwater formation using a combination of steam assisted gravity drainage (SAGD) and cyclic steam stimulation (CSS). CSS is a popular recovery method utilized in the formation by competing companies in the area such as Imperial Oil because shale layers within parts of the formation have low vertical permeability. SADG requires high vertical permeability for horizontal well pairs to operate eectively by producing steam around the upper

well to drain bitumen into the lower producing well by gravity. Imperial’s Cold Lake thermal oil production in Cold Lake has been ongoing for more than 30 years, yielding approximately of 160,000 barrels of bitumen a day. Osum plans to use SAGD on the portions of the Clearwater that have good vertical permeability and CSS on areas with limited permeability. Osum’s Clearwater property north of Cold Lake is well suited to SAGD because “it’s laterally and vertically permeable,� said Walsh in response to a question at a TD Securities’ Energy Conference in Calgary in mid-July. “There is a portion of the lease that has more limited vertical permeability, and that is where you want to apply cyclic steam stimulation

to kind of open up the rock a bit,â€? said Walsh. Osum’s application for a two phased in situ thermal project will include a cogeneration unit, making the project among the most energy eďŹƒcient of its kind. The company initially applied for approval from the ERCB in January 2010 with a central processing facility that would occupy 30 hectares of land on the east side of secondary Highway 897. Based on feedback from the community, Osum determined a site three kilometres to the west on the west side of Highway 897 was a more suitable location. The new location is the old Norcen pilot site which is an already impacted area. Osum has also reduced the number of project well pads from 69 in its original plans to just 36 to reduce

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ground disturbance. The project will also be built in two construction phases instead of three as previously planned to reduce the number of days of heavy traďŹƒc ows in a shorter construction schedule. The Taiga project will be one of the ďŹ rst thermal developments to use zero fresh water

for steam generation. The water will be recycled using the latest water treatment technologies. Osum is also partnered with Laricina Energy Ltd. in an ongoing pilot and potential commercial development of bitumen in the Grosmont carbonate trend at

C27

Saleski. The joint venture project to test optimal recovery factors using SAGD and exploring the potential of solvents began in 2010. Osum’s net stake in the Grosmont carbonates represents an estimated 2.3 billion barrels of recoverable resources.

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PIPELINE NEWS September 2012

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Canyon is the fastest growing fracturing company in North America. We deliver quality customized pressure pumping and service solutions to the oil and gas industry, improving our industry one job at a time. If you’re looking for a career with a leading organization that promotes Integrity, Relationships, Innovation and Success, then we’re looking for you. Now hiring Canyon Champions for the following positions:

Operators: Fracturing, Nitrogen, Coil, Cement & Acid Class 1 or 3 Drivers Supervisors: Fracturing, Nitrogen, Coil, Cement & Acid Applicant Requirements: f Self-motivated f Willing to work flexible hours f Safety-focused

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PIPELINE NEWS September 2012

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Sun Country Well Servicing Inc. is currently seeking experienced Service Rig Personnel. Preference will be given to Class 1A and 3A applicants.

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CAREER GuĂ—de

Interested individuals can submit a resume via email or fax to Shannon Leibel at: (PDLO RU )D[ 5HVXPH ‡ YHUQ F#VRQLFRLOÀHOG FRP

Email: sleibel@suncountrywellservicing.ca Fax 306 634 1200 • Cell 306 421 3418

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C30

PIPELINE NEWS September 2012

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Warehouse/Yard Assistant for our Estevan operation.

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Submit resume including references to: Penta Completions Supply & Services Ltd. 58 Devonian Street P.O. Box 667 Estevan, Sk. S4A 2A6 Fax: 1-306-634-6989 or Email: lhaukeness@pentarods.com

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Over 50 years strong, Arnett & Burgess Oilfield Construction Limited safely provides quality pipeline construction, facility installation, pipeline integrity, custom fabrication, maintenance and related construction services to the energy industry.

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We’re hiring for various projects throughout Southern Saskatchewan

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Duties Include

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• CONSTRUCTION MANAGER

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• Shipping & Receiving • Inventory control • Invoicing • Some on call work is required

• Valid Class 5 drivers licence • Computer experience would be an asset • Successful candidate will earn a current WHMIS and TDG certiÀcate

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COME JOIN OUR TEAM!

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Requirements

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- Candidates must have previous leadership/managerial experience within the Pipeline Construction industry (mainly underground lines max 16�). This position’s home base is in Regina. - The ideal candidate will have a CSO designation. This position will oversee pipeline construction projects in southern sk with a home base in Regina

• PIPELINE CONSTRUCTION LABOURERS • FOREMEN • HEAVY EQUIPMENT OPERATORS

-Employee & Owner Operators with Pipeline Construction Experience

All positions require previous experience in Pipeline Construction. Previous experience on Pipeline Integrity projects is an asset.

Compensation: Competitive wages Overtime Daily Subsistence /Living allowance

Preferred Certifications

We require the following:

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Matrix Well Servicing

H2S Alive Standard First Aid & CPR

Required Certifications Driver’s License Ground Disturbance – (Heavy Equipment Operators only)

Please submit your resume to : For more details and other career opportunities please visit: email: hr@abpipeliners.com • Fax:403.265.0922 www.abpipeliners.com For Inquiries please call: 780.384.4050

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Do you want to work for a progressive company that takes safety seriously and uses today’s newest technologically advanced equipment? If your answer is “yesâ€?, we are interested in talking to you! We are currently seeking to ďŹ ll the following positions in the Provost, Consort and Lloydminster areas.

Well Servicing Division

Tool Pushes Drillers Derrickhands Floorhands All applicants must have a valid driver’s license, as well as all of the required industry training for the position they are applying for. We offer higher than industry standard wages, an exceptional employee beneďŹ ts package, several employee incentive programs and unlimited opportunity for advancement. If you want to grow with a company where you are known by your name and not your employee number, please forward your resume to: Central Well Services Corp. Box 1360 3803 52nd Ave Provost, AB T0B 3S0 E-mail: vanessahahn@cwcwellservices.co

Quality people delivering quality service.

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PIPELINE NEWS September 2012

Equal Opportunity Employer All applications are welcome Currently seeking

CAREER Gu×de

• Cathodic Protection Technicians • General Labourers • Journeyman Electricians Experience an asset but willing to train Competitive wages

Apply today with resume at: 937 Henry Street, Estevan, SK S4A 1N5 Ph: 306-634-1917 Fax: 306-634-1918

Be Part of &$7 7(.·6 TEAM!

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CAREER GuĂ—de

PIPELINE NEWS September 2012

EMPLOYMENT OPPORTUNITY PERMANENT FULL-TIME HYDROVAC OPERATORS • Require class 3 or class 1 licence • Safety tickets HYDROVAC SWAMPERS • Require safety tickets Offering competitive wages, benefits available after 3 months. Offering living accomodations.

Email resumes to: extremeexcavating@hotmail.com or fax to: 306•483•2082

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/RRNLQJ IRU &DUHHU *URZWK" :H¡YH *RW -XVW WKH )LHOG IRU <RX Tundra Oil & Gas Limited is Manitoba’s largest oil producer, currently exceeding 4UNDRA /IL 'AS ,IMITED IS -ANITOBA S LARGEST OIL PRODUCER CURRENTLY EXCEEDING 25,000 barrels of light, sweet crude per day. Our oil and gas exploration company BARRELS OF LIGHT SWEET CRUDE PER DAY /UR OIL AND GAS EXPLORATION COMPANY OPERATES operates over 95% of our production, with core properties located within the OVER OF OUR PRODUCTION WITH CORE PROPERTIES LOCATED WITHIN THE 7ILLISTON "ASIN IN Williston Basin in southwestern Manitoba and southeastern Saskatchewan.

PowerTech Industries Ltd. in Estevan is seeking Journeymen Electricians and Apprentices for work in the Estevan and Carnduff areas.

SOUTHWESTERN -ANITOBA AND SOUTHEASTERN 3ASKATCHEWAN

This is a very exciting time to be part of the Tundra team as continued growth 4HIS IS A VERY EXCITING TIME TO BE PART OF THE 4UNDRA TEAM !S CONTINUED GROWTH AND and expansion has created new opportunities in our Virden, Manitoba location. EXPANSION HAS CREATED NEW OPPORTUNITIES IN OUR VARIOUS OFlCE AND lELD LOCATIONS

Take a closer look at these available opportunities:

WE ARE NOW ACTIVELY RECRUITING SKILLED PROFESSIONALS TO JOIN US IN THE FOLLOWING POSITIONS

Drilling Field Superintendent • High school diploma is required with an #ALGARY !LBERTA equivalent of 10-15 years specific job related s !REA ,ANDMAN experience; or s $EVELOPMENT %XPLORATION 'EOLOGISTS • Technical school/college diploma in Petroleum s %XPLOITATION %NGINEER Technology with an equivalent of 7-10 years s %XPLOITATION 4ECHNOLOGIST specific job related experience; or s 'EOPHYSICIST • An undergraduate degree in Petroleum s -IDSTREAM /PERATIONS &ACILITIES Engineering with an equivalent of 5-8 years specific %NGINEER job related experience. s 0ETROPHYSICIST

Completions Engineer / Technologist s 3ENIOR %XPLOITATION %NGINEER • Undergraduate degree in Engineering or a s 3ENIOR 0RODUCTION %NGINEER diploma in Petroleum Technology s 3IMULATION 2ESERVOIR %NGINEER • 5-10 years completions experience working in oil

Production Engineer / Technologist • A sound knowledge of production engineering, 5 – 7INNIPEG -ANITOBA 10 years of relevant experience. s ,AND !DMINISTRATOR • Exposure to rod pumping artificial lift systems; well s 3TAFF !CCOUNTANT completions and workovers; waterflood facilities and monitoring. 6IRDEN -ANITOBA • Oil production facilities exposure an asset. s #OMPLETIONS %NGINEER 4ECH

Maintenance Manager s $RAFTING $ESIGN 4ECHNICAL 3UPPORT • Post-Secondary 4ECHNICIAN education • Preventative Maintenance programming s $RILLING &IELD 3UPERINTENDENT • Requires extensive technical knowledge of facilities s &IELD /PERATORS n ,EVEL )6 and equipment. s &IELD 3AFETY #OORDINATORS /PERATIONS • Requires 8 or more years of experience in s (UMAN 2ESOURCES 'ENERALIST maintenance, manufacturing support, or production. s )NSTRUMENTATION 4ECHNICIAN

s 0RODUCTION %NGINEER Drafting/Design & Technical Support Technician • Engineering / CAD Technology Diploma. )F YOU ARE INTERESTED IN JOINING OUR RAPIDLY GROWING TEAM VISIT THE %MPLOYMENT SECTION • New grads are welcomed. OF OUR WEBSITE WWW TUNDRAOILANDGAS COM FOR DETAILS ON THESE AND OTHER POSITIONS

If you are interested in joining our rapidly growing team, please visit the 0LEASE SUBMIT YOUR COVER LETTER AND RESUME ALONG WITH YOUR SALARY EXPECTATIONS TO Employment section of our website at www.tundraoilandgas.com and to submit CAREERS TUNDRAOILANDGAS COM BY THE INDICATED APPLICATION DEADLINE your cover letter and resume, along with your salary expectations. 7E WISH TO THANK ALL CANDIDATES FOR THEIR INTEREST HOWEVER ONLY THOSE BEING CONSIDERED FOR INTERVIEWS WILL BE CONTACTED

Journeymen Electricians and Apprentices

!BOUT 4UNDRA /IL 'AS ,IMITED About Tundra Oil & Gas Limited 4UNDRA /IL 'AS ,IMITED IS A WHOLLY Tundra Oil & Gas Limited is a OWNED SUBSIDIARY OF *AMES 2ICHARDSON wholly-owned subsidiary of James 3ONS ,IMITED A PRIVATE FAMILY Richardson & Sons, Limited, a private, OWNED COMPANY ESTABLISHED IN family-owned company established WITH OPERATIONS IN AGRICULTURE FOOD in 1857 with operations in agriculture, PROCESSING lNANCIAL SERVICES

PROPERTY food processing, financial services, MANAGEMENT AND ENERGY EXPLORATION property management and energy 4UNDRA S CORPORATE HEAD OFlCE exploration. Tundra’s corporateIS head office is located in Winnipeg, LOCATED IN 7INNIPEG -ANITOBA WHERE Manitoba, where we commenced WE COMMENCED OPERATIONS IN /UR operations 1980. -ANITOBA Our field office lELD OFlCE INin6IRDEN

OVERSEES in Virden, Manitoba oversees the THE OPERATION OF WELLS WHILE OUR operation of 1,800 wells,PROVIDES while our OFlCE IN #ALGARY

!LBERTA

OUR office in Calgary, Alberta, provides our GEOLOGICAL GEOPHYSICAL AND RESERVOIR geological, geophysical and reservoir ENGINEERING SUPPORT 4HE 4UNDRA FAMILY engineering support. The Tundra OF COMPANIES ALSO INCLUDES 2ED "EDS family of companies also includes Red 2ESOURCES ,IMITED AND 4UNDRA %NERGY Beds Resources Limited and Tundra -ARKETING ,IMITED 4O LEARN MORE Energy Marketing Limited. To learn ABOUT US WE INVITE YOU TO VISIT WWW more about us, we invite you to visit TUNDRAOILANDGAS COM www.tundraoilandgas.com.

Experience: Safety Certificates are needed. 1st Aid/CPR, H2S. Applicants must have a valid driver’s license. Full benefits packages and RSP plan. Duties: Day to day electrical construction and maintenance in the oilfield. Wage/Salary Info: Depending on experience & qualifications. To Apply: Fax: (306) 637-2181, e-mail sschoff.pti@sasktel.net or drop off resume to 62 Devonian Street, Estevan, SK.

C34

PIPELINE NEWS September 2012

CN Transloading

CN is conĆ&#x;nuing to expand its Bienfait transloading facility. This packer was making several runs along the north side of the site on Aug. 11. Photo by Brian Zinchuk

RESOURCE Gu×de Lloyd Lavigne • Kirk Clarkson Owners/Managers 5315 - 37th Street Provost, AB T0B 3S0

6506 - 50th Avenue Lloydminster, AB

Phone: (780) 875-6880

Phone: (780) 753-6449

Fax: (780) 875-7076

24 Hour Service

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Specializing in Industrial & Oilfield Motors

Your best choice for accommodations

in Carlyle, Sk. JUSTIN WAPPEL - Division Manager RICK CORMIER Manager

Box 609 Carlyle, SK S0C 0R0 www.truetorq.ca

Bus: (306) 634-8084 Cell: (306) 577-8833 Fax: (306) 453-6075 ttorq@hotmail.com

lancew@aspentrailer.com www.aspentrailer.com Aspen Custom Trailers 6017-84th Street S.E. Calgary, AB T2C 4S1

Lance Wotherspoon Regional Sales Manager

[T] 403 236 2244 [F] 403 236 8829 [C] 403 813 6319

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

BIG D’S LEASE SERVICE Backhoe Towing Mowing Fencing Snow Removal Road Grader Gravel Supplies & Hauling

• Full kitchen and upscale extended stay • Complimentary continental hot breakfast • Free high speed internet • Meeting room

Reservations: 306-453-2686

LECLAIR TRANSPORT General OilďŹ eld Hauling

Lyle Leclair Cell: 306-421-7060

[Toll Free] 877 236 2244 P.O. Box 544 Stoughton, Sask. S0G 4T0

(306) 457-7033 (306) 457-7673

a l t u s g e o m a t i c s . c o m

Cordell Janssen 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

District Manager Downhole

93 Panteluk Street, Kensington Avenue N Estevan, Saskatchewan PHONE: 306-634-8828 • FAX: 306-634-7747 cordell.janssen@nov.com • www.nov.com

PIPELINE NEWS September 2012

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

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PIPELINE NEWS September 2012

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