Pipeline News May 2015

Pipeline News Saskatchewan’s Petroleum Monthly

May 2015

Canada Post Publication No. 40069240

FREE

Volume 7 Issue 12

Getting it right before it goes to work through

Inspection

A3 New digs for Crescent Point

A4 Viking a silver lining

B1 New pipe inspection plant

A crew from Frontier Inspection went through drill pipe in the CanElson Drilling yard in Carlyle on April 9. See story on Page B26.

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A2

PIPELINE NEWS May 2015

INSIDE Section A 4

10 WorleyParsons flies heavy oil flag

Viking a silver lining in oil cloud

5 Not as busy as Q1, but Crescent Point

plans to keep drilling 6 Editorial

20 Workforce charter shuttles to expand 23 Lady golfers take a mulligan

7 Opinion 8

17 Try A Trade rite of spring

24 Chevron studies formation fines

Letter to the Editor

Section B 1

New $4 million inspection plant built near Estevan

14 ARKK Tubing Inspection now has

Goodwater shop

4

Sask. Oil Show update

16 Estevan OTS Bonspiel

5

Could this be the bottom?

18 Inspecting with Guardian

8 EVRAS announces $200 million

pipe mill expansion in Regina

21 Where has the money gone, asks NDP 26 Frontier Inspection

11 Advance Engineered Products Ltd.

seeks creditor protection

29 Sonar Inspection

12 Level III inspection on a service rig

Pipeline News Saskatchewan’s Petroleum Monthly

June 2015 Focus

Contact your Sales Rep to be a part of the focus edition

Williston Basin Petroleum Conference/Mud

Estevan Office: SE & SW SASK. & SW Manitoba • Phone: 306.634.2654

Krista Thiessen

krista@pipelinenews.ca

Deanna Tarnes

Kristen O’Handley

Teresa Hrywkiw

Alison Dunning

observer@sasktel.net

East Central Sask.

Phone: 306.715.5078

West Central Sask.

Phone: 306.460.7416 KINDERSLEY

SE Sask.

Phone: 306.453.2525 CARLYLE

LLOYDMINSTER

NW Sask. & AB Phone: 780.808.3706

Candace Wheeler

cwheeler@estevanmercury.ca dtarnes@estevanmercury.ca kohandley@estevanmercury.ca thrywkiw@estevanmercury.ca

REGINA & SASKATOON

Cindy Beaulieu

cbeaulieu@estevanmercury.ca

Al Guthro

al@prairieng.com

Harland Lesyk labean@sasktel.net

PIPELINE NEWS May 2015

A3

Top News

Crescent Point will soon be moving into this, its new field office in Carlyle. Photo by Brian Zinchuk

New digs in Carlyle for Crescent Point  By Brian Zinchuk Pipeline News Calgary, Carlyle – That new office building at the corner of Highways 13 and 9 in Carlyle will be opening in June as the new field office for Crescent Point Energy.

It will replace the company’s current office which has proved inadequate for the evergrowing company’s needs.

Ryan Gritzfeldt, Crescent Point’s vice-president of engineering and business development east (southeast Saskatchewan and southwest Manitoba) spoke to Pipeline News on April 10 by phone from Calgary about the new Carlyle office.

Pipeline News: What is this new facility you’ve built in Carlyle? What is its purpose?

Ryan Gritzfeldt: It’s basically going to be our new Carlyle office. It’s a 20,000 square foot facility that has two floors. It’s going replace our existing, old one, which is long overdue for a makeover. I worked in that office as a student in ’95 and for three years in the early 2000s and let’s just say it was probably due for a makeover at that time.

With our successful growth we’ve outgrown that space and are excited about that new office which I think we’re probably going to move into in June.

The current schedule is to open in June and we’ll be hosting a grand opening and a barbecue and coffee for the community, similar to our Weyburn office in 2010.

P.N.: How many people will work here?

Gritzfeldt: It can seat close to 70 staff. Upon move-in, it’ll probably be close to 40 people working in that office. Definitely ,it was designed for growth.

I go back to our Weyburn office. When it opened in 2010, it was half full at that point. Five years later we’re pretty full in that office as well.

P.N.: How much did it cost?

Gritzfeldt: We were able to obtain a long-term lease with the building’s owner, T.L. Penner Construction, so I won’t speak to costs. That’s probably a question for the owner. We basically took out a long-term lease on that, similar to our office in Weyburn.

P.N.: It’s our understanding your previous Carlyle field office was getting very cramped. What’s the difference with this new building?

Gritzfeldt: It’s bigger, it’s new. It’s going to give our employees a bright, spacious atmosphere.

Our old building was just getting by. This will have all the cool technology that we need.

It’s not a shop, it’s an office to have our staff work out of. It’s not a me-

chanic’s shop or a yard to store stuff.

P.N.: Can you describe how this new facility interplays with your Weyburn field office? Will this essentially split much of the Viewfield area? Or will Weyburn, with the growth of the Flat Lake play, start focussing more in that direction and offload some of Viewfield region to Carlyle?

Gritzfeldt: As it turns out, both offices will work the Viewfield area. For example, half of the Viewfield foremen have desks in Carlyle, and half of the foremen that work Viewfield have desks in Weyburn.

For us it’s never a strategy to ever isolate a specific area or project to one office. We never think of an area or project as a “Carlyle project” or a “Weyburn project.” It’s a Crescent Point southeast Sask. team initiative. As it turns out, for Viewfield, it will be worked out of both offices.

P.N.: What about Flat Lake?

Gritzfeldt: Same. Right now our Flat Lake foremen are out of Weyburn, but our support staff support all of our areas. Again, there’s going to be a lot of initiatives for Flat Lake that deal out of the Carlyle office and a lot that deal out of the Weyburn office. It’s always a team effort.

P.N.: Why build in Carlyle as opposed to say Stoughton or Estevan?

Estevan is a lot closer to the Flat Lake region.

Gritzfeldt: With our current office in Carlyle, this would not change where our staff works a whole lot. When you look at a map, Carlyle is fairly central. We have properties to the north, we have our Manitoba properties to the east. Carlyle was already central, and it was the location of our old office.

P.N.: You don’t want to move 40 staff, either.

Gritzfeldt: No, we don’t want to uproot (them). Based on our operations, there’s lots of staff driving, whether to Carlyle or Weyburn. Carlyle is a good central location pick.

P.N.: Are you transferring any staff to Carlyle as a result of this new facility?

Gritzfeldt: No, not really. With our current, old office being so full now, there were probably some staff sitting at other, temporary spots. Now having this new, big office, there will be room. But no, there’s not going to be anyone moving specifically from Weyburn to Carlyle now that we have a bigger space.

P.N.: Was this facility planned with growth or expansion in mind?

Gritzfeldt: We basically always design for growth in everything we do, especially in southeast Saskatchewan.

P.N.: Is there anything you would like to add?

Gritzfeldt: Stay tuned for an announcement for our grand opening and a chance for the community and our service providers to check it out.

A4

PIPELINE NEWS May 2015

Briefs Viking a silver lining in oil cloud Husky hires new finance chief After going more than nine months without a full time chief financial officer, Husky Energy has appointed Jonathan McKenzie to the position effective April 27.

Darren Andruko had been acting CFO after Husky’s former CFO Alister Cowan left the company last July to assume a similar role with Suncor.

As Husky’s new CFO, McKenzie has more than 20 years of professional experience, including about 15 years in the Canadian oil and gas industry.

He most recently served as chief commercial officer of Irving Oil Ltd., based in Saint John, New Brunswick.

Prior to joining Irving in 2011 as CFO, he held senior executive roles at Calgarybased Suncor Energy and also worked with Crestar Energy.

He is a chartered accountant with Bachelor of Commerce and Bachelor of Arts degrees from the University of Alberta.

At Husky, McKenzie will be responsible for the company’s finance division, including controllers, corporate accounting, treasury, tax, planning and internal audit.

Briefs courtesy Nickle’s Daily Oil Bulletin

 By Geoff Lee Pipeline News Edmonton – Despite the current low oil price environment facing the oil industry, there is an air of optimism in the area near Kindersley, Sask., over the Viking light oil play.

It’s where most of the lower cost horizontal drilling and multi-stage fracking in the province has been taking place over the past year.

A total of 186 wells have been drilled in Viking this year as of March 1, compared to 303 wells for the same period a year ago, according to provincial data.

In 2014, a total of 1,346 wells were drilled in the Viking formation or 37 per cent of all wells drilled in the province.

This year’s well count represents 39 per cent of the wells drilled in the province.

That number jumps to 42 per cent when considering the entire Kindersley area which includes some heavy oil pools as well.

“In Kindersley it’s a tight oil play; it’s a well established play. We know the oil is there so the risk is lower,” said Ed Dancsok, assistant deputy minister of the Petroleum and Natural Gas Division in Regina.

“It’s the shallowest oil in the province so your upfront costs are much reduced.

“You can drill a horizontal well for a third of the price of drilling one down in the southeast. So when the economics are better, the rate of return is going to be better.

Companies have been drilling that.

“The break-even point for Viking oil is much lower than other types of oil.”

Viking producer Teine Energy Ltd. focused in Dodsland area, pegged the breakeven point at US$49.40 a bar-

Some of the 1,000 delegates at the World Heavy Oil Congress held at the Shaw Conference Centre in Edmonton made their way to an exhibition that included representatives from the Saskatchewan government and researchers from the Petroleum Technology Centre in Regina and the Saskatchewan Research Council. Ed Dancsok. assistant deputy minister from Petroleum and Natural Gas, Ministry of Economy in Regina spoke to Pipeline News about the strong Viking light oil play. Photo by Geoff Lee

rel WTI in February.

Dancsok spoke about the potential for the area at Saskatchewan’s information booth at the World Heavy Oil Congress held at the Shaw Conference Centre in Edmonton from March 24 to 26.

Officials from the Petroleum Technology Research Centre in Regina and the Saskatchewan Research Council joined Dancsok to attract investments in Saskatchewan’s oil resources and technology.

Dancsok has spoken with

a lot of people over the past year who are interested in what Saskatchewan has to offer, but he noted the conversation is changing lately.

“It’s not so much about how to get the oil out of the ground,” he said.

“It’s more about what to do about the oil when it’s out of the ground, so partial upgrading, transportation, getting that oil to market, and finding new markets – all that sort of thing.

“It’s been very produc-

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In the Kindersley area, he said another good indicator of the prevailing optimism is that companies are sticking with capital plans to build new midsteam pipelines this year.

“That gives me encouragement that the pipeline companies are seeing a future and preparing by building more infrastructure to bring that oil to market,” said Dancsok.

“That’s one of the best indicators you can have that growth is going to continue.”

Inter Pipeline Ltd. is spending $60 million this year on its $100 million Mid-Saskatchewan Expansion project announced last July when throughput volumes had doubled to over 70,000 barrels per day over the previous two years.

The $100 million expansion in the Kindersley-Kerrobert area will involve the construction of over 50 kilometres of new mainline pipe, 40 kilometres of new pipeline laterals and associated pumping and metering facilities.

Enbridge Inc. is also planning a massive $7.5 billion Line 3 replacement program of its existing 34-inch diameter pipeline with 36-inch pipe from Hardisty, Alta., to Gretna, Man., where it crosses into North Dakota.

The Canadian portion of the pipeline will cost approximately $4.9 billion.

Public hearings on the replacement pipeline that passes through the Kindersley-Kerrobert area will be announced soon by the National Energy Board.

The NEB deemed the application complete on Feb. 5.

“Plains Midstream is also going to be enhancing their infrastructure in the area to keep oil flowing in the area,” said Dancsok. ► Page A8

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PIPELINE NEWS May 2015

Not as busy as Q1, but Crescent Point plans to keep drilling  By Brian Zinchuk Calgary – Over the winter drilling season Crescent Point Energy Corp. not only led drilling activity for Saskatchewan, but also for the entire country, with as many as 25 rigs working at a time.

Ryan Gritzfeldt, Crescent Point’s vice president of engineering and business development east (southeast Saskatchewan and southwest Manitoba) spoke to Pipeline News on April 10 by phone from Calgary about what their plans are for Saskatchewan after road bans end.

Pipeline News: Where is Crescent Point going after spring breakup? Are we expecting much activity from you folks on the drilling side?

Ryan Gritzfeldt: We’re staying active. Activity levels won’t be quite as high as Q1 (the first quarter of the year).

We had a really busy Q1 in southeast Saskatchewan. After breakup, we’re staying very busy, not quite at the levels as Q1, but similar levels to what we’ve had in other years.

We’ve been working hard with our service providers to reduce costs. We want to keep companies busy in the areas we operate, but not at the sake of hurting our balance sheet.

We’ve been working hard to reduce costs to get through this downturn together and come out the other side strong so we can continue on into the future with active programs.

P.N.: There obviously was some resentment that Crescent Point, the big player, would say, “Hey, you’ve got to cut rates.”

But the flip side of that is at least you guys kept working, because all the other

Ryan Gritzfeldt

companies pushed back from the table and said “We’re not doing anything.”

At one point you had 18 of 25 rigs working in this area.

Gritzfeldt: I know. It will be interesting to see what that stat will be after breakup, too.

We were kind of through it in 2009, when say, for example, our Bakken wells cost about $2 million. Through the downturn we were able to work with our service providers to get those down to $1.5, $1.6 million a well. We’re looking to do the same thing here so the balance sheet stays strong so that when prices do rebound, we’re still strong and we can keep everybody working, just as we have for the

past several years?

P.N.: Have you heard of the term of a “fracklog?”

Gritzfeldt: A fracklog?

P.N.: It’s something that’s happening in North Dakota right now. A lot of Bakken and Three Forks producers there are drilling the well, but because of the surplus of oil, and no one wants give away oil at $50 a barrel, they are drilling them, but not completing them. They have a backlog of fracking.

They’re putting a hole in the ground. They’re not completing it. When things pick up, then they will go in and complete it and put that well into service.

Gritzfeldt: Yup, I’ve heard of some companies do-

ing that.

P.N.: Have you been doing that?

Gritzfeldt: No. We haven’t been doing that, and we won’t be doing that. By doing that, you’re stranding a lot of capital without getting your production on and helping the payout period, right?

You have to remember, too, in North Dakota, their netbacks are a lot lower because of higher royalty rates.

We’re drilling in Saskatchewan where the economics still meet our hurdle rates. We choose to bring our wells on production as soon as we can to help with that payout period and keep our production growing.

P.N.: (In Q1) You had a total of 25 drilling rigs active Canada-wide, which was, by the way, the highest in all of Canada. Did you think about that much at all?

Gritzfeldt: In 2014, we were the top driller by metres drilled. It’s kind of an interesting stat. It speaks to the assets we own. We’re fortunate we’ve consolidated great assets with good economics, high netback. But with the downturn in oil price here, we have to stay disciplined. We’re well-hedged, and try to keep the balance sheet strong.

P.N.: Do you ever think, “Hey look we’re ahead of everyone else! Oh crap! We’re ahead of everyone else?

Maybe they know something we don’t?”

Everyone else has pulled back. Have you ever had second thoughts that, “Maybe we shouldn’t be at such a high activity level, when all the other people have pulled back? ► Page A9

A5

Briefs Kinder Morgan terminal

Kinder Morgan Inc. is building a new crude oil storage terminal in Edmonton, Alberta in a joint venture project with Keyera Corp that owns the land.

The 50-50 partners have entered into long-term, firm take-or-pay agreements with strong, committed customers to build 4.8 million barrels of crude oil storage at a new facility called the Base Line Terminal.

Kinder Morgan will spend CDN $342 million to construct an initial 12 tank terminal with commissioning expected to begin in the second half of 2017.

The terminal announced on March 31 is now under development on land owned

by Keyera and will be operated by Kinder Morgan.

Kinder Morgan will spend an additional $69 million exclusive to the joint venture for connecting pipelines and related infrastructure, bringing the total investment in the Base Line project to about CDN$411 million.

Base Line will be connected via pipeline to Kinder Morgan’s Edmonton terminals.

The new terminal will store oil for delivery to multiple destinations via Kinder Morgan’s Trans Mountain Pipeline and two Edmonton rail terminals, and other major export pipelines.

Briefs courtesy Nickle’s Daily Oil Bulletin

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PIPELINE NEWS May 2015

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 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: Saskatchewan & Manitoba • Estevan 1.306.634.2654

Cindy Beaulieu

Candace Wheeler

Kristen O’Handley

Deanna Tarnes Teresa Hrywkiw • Carlyle 1.306.453.2525 Alison Dunning Northwest Sask. & Alberta • Lloydminster 1.780.808.3706

Krista Thiessen • Kindersley 1.306.460.7416 Harland Lesyk CENTRAL Al Guthro 1.306.715.5078 To submit a stories or ideas: Pipelines News is always looking for stories or ideas from our readers. To contribute please contact your local contributing reporter.

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Special thanks to JuneWarren-Nickle’s Energy Group for their contributions and assistance with Pipeline News.

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About that sovereign wealth fund…

The opposition NDP has been asking the governing Saskatchewan Party where all the money has gone from the good fiscal times we’ve had in recent years.

Given how Alberta has gone from boom to bust and is now in a provincial election as a result, that’s a good question, not just for our province, but also for our neighbours to the west.

Brad Wall said the money’s gone to health care and infrastructure and all sorts of other things. That may very well be the case. But looking at how provincial oil revenues are expected to flatline in this province this year, our so-called “balanced budget” is reliant on borrowing a big chunk of money. That’s not balanced. Instead we find ourselves looking back longingly and wondering, “What if ?”

Specifically, what if Saskatchewan had, at some point in recent years, established a sovereign wealth fund? This was a key election platform plank of former provincial NDP Leader Dwain Lingenfelter, who lost in spectacular fashion to Brad Wall’s second campaign for government. Wall had argued one pays off the mortgage (provincial debt) before socking money away in the bank.

What if Alberta, once Ralph Klein declared it debt-free and in the black, poured money back into its sovereign wealth fund instead of spending willy-nilly (Ralph Bucks, anyone?). Where would that province

be today? If ever there has been an example of profligate spending, Alberta would be it. How helpful would the $1.4 billion in Ralph Bucks doled out in 2006 be today, given the fiscal disaster Alberta is facing now?

The example often used is that Norway’s sovereign wealth fund, arguably the most successful on the planet.

It’s on its way to a trillion dollars. It was modelled on Alberta’s, so the story goes. CBC quoted Rolf Wiborg, a petroleum engineer who recently retired from Norway’s public service, on March 23, saying, “For the last 10 years, when nothing went into the Alberta fund, and we put a lot of money aside, the profit went out of Canada.”

Saskatchewan has had some surpluses in recent years, the most notable being in 2008. And that big year, a large portion of which came from Crown land sales.

The newly elected Saskatchewan Party did pay down the mortgage instead of putting the money in the bank, or mattress. Maybe it was the right thing to do at the time.

But one can’t help but wonder where Alberta and Saskatchewan would be if we had taken a more disciplined stance and put a substantial portion of nonrenewable resource revenue away over the past several decades. It would have meant having to say “no” a lot more at budget time. But maybe we’d be in a better place now.

You can bet that Alberta is going to be shifting gears in that direction very soon after this election is done.

PIPELINE NEWS May 2015

A7

OPINION

From the Top of The Pile

By Brian Zinchuk

Looking for good news Some people are, by nature, positive and perky people. I wish I was one of them.

Try as I might, my own personal nature tends to be more on the pessimistic side rather than the optimistic. This may be because I have spent my entire life intently watching (or writing) news, and most “news” tends to be negative. The one house burning down leads the nightly news, not the 10,000 houses standing just fine, thank you.

This spring marks the beginning of my eighth year writing for Pipeline News. Our paper, by its very nature, has tended to be very, very positive. We try to write about the new businesses, the expansions, the new ideas, rather than bankruptcies and layoffs. We’ve also been fortunate to be reporting on the oilpatch during very strong times. Even when the rest of Canada’s oilpatch was suffering in 2009, Saskatchewan was spared most of that. This was due to the growth of the Bakken and Saskatchewan’s steady hand at the royalty tiller when former Alberta premier Ed Stelmach was sending his province through the rapids.

This downturn, however, it’s been much, much harder to keep everything positive. Last month was, I hope, the bottom of the emotional roller coaster, when I had precious few good news stories to write about. Some people even asked me after reading it, “Where was the good news?”

I had nothing to give.

Not wanting to put anyone who is in a tough

spot, looking for work, under the microscope, I decided to do a job search myself, based on my previous experience as an excavator operator. I came up empty.

Nearly every company I have spoken to since the beginning of the year has laid off staff.

After it went to press, I thought to myself, “I need to dig up more good news.”

I don’t have a lot this month, but I do have some.

I was fortunate enough to sit down at the Dayman Trucking table during the Estevan Oilfield Technical Society Bonspiel banquet. The Dayman family was being honored for lifetime achievement.

That was a good thing to hear.

Sitting beside me was Clayton Jahn. Not only did he have an inspection company for several decades (and inspection was our focus for this upcoming May edition), but he and his stepson partner were completing a brand-new $4 million inspection plant just outside the city. That, indeed, was good news.

In fact, there was a huge smile on Estevan Mayor Roy Ludwig’s face when I told him about the new plant a few weeks later. It looks like he was looking for good news, too.

Another positive discussion was the one I had with Ryan Gritzfeldt, Crescent Point Energy’s vice-president of engineering and business development for southeast Saskatchewan and southwest

Manitoba. Not only are they about to move into a new multimillion field office in Carlyle, they also intend to keep busy after spring breakup.

Crescent Point has kept the lights on in much of southern Saskatchewan when other companies have been turning them off, or at least dimming them. Yes, they demanded substantial cuts in rates from their vendors. But they have kept working.

From what I gathered from Gritzfeldt, they intend to keep working. It may not be at the pace of drilling they had in the first quarter of the year, when Crescent Point led the entire country, but it will likely be substantial.

That, my friends, is good news.

Lastly, MNP’s David Yager, the accounting firm’s national lead on oilfield services, stuck his neck out and declared that we have found a bottom to oil prices. If you are at the bottom, that means the next direction you are heading should be up.

In 2009 it seemed that April was rock bottom of the cycle, not only in prices, but in the collective mood of the industry. Let’s hope it’s all up from here.

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

Lee Side of Lloyd

By Geoff Lee

Election budgets upset balance

Robbing Peter to pay Paul seems to be the way oil-rich Saskatchewan and Alberta took to tabling their new fiscal year budgets in March.

Both provinces chose to borrow money to cover up gaping holes in their coffers due to a steep decline in oil revenue that totals $661 million in Saskatchewan and about $7 billion in Alberta.

Saskatchewan is borrowing about $700 million this year to spend on roads and schools while Alberta is borrowing $5 billion this year.

Both governments claim this has enabled them to create balanced budgets.

On a personal level, that’s like paying for your phone bill with a high interest credit card. The bill is paid, but your overall debt keeps going up.

The rationale for borrowing to make up for lost oil royalties is that these are both election budgets so common sense goes out the window.

Saskatchewan Premier Brad Wall will likely go the polls in 2016 while Alberta Premier Jim Prentice used his budget to call an early May 5 election with opposition parties in disarray. (Saskatchewan would go to the polls this fall, except that it’s fixed date election law shifts our election back if a federal election occurs at the same time.)

If budgets were left to financial experts, a drop in revenue from oil would result in a decline in spending, but politicians are short-term thinkers.

So, in Alberta the burden for fiscal mismanage-

ment is being passed on to consumers by way of tax increases with negligible cuts to spending.

Saskatchewan didn’t raise taxes, but borrowing money to maintain spending suggests they should have.

With oil revenue shortfalls facing both provinces, spending cuts would be the logical best way to balance budgets.

It seems as if both provinces are holding out hope that oil revenues will quickly rebound to enable them to cover their borrowing tracks.

Counting your eggs before they hatch is a bad way to budget as it could take years before oil prices return to the $100 a barrel level as they were last summer.

Saskatchewan’s economy is more diversified than Alberta’s, so the impact of lower oil revenue is less dramatic, but the shortfall still led the province to borrow against its losses.

Alberta is just beginning to talk about a diversified economy as the reality of losing $7 billion in oil royalties sinks in.

Continued diversification would go a long way to helping both provinces curb their reliance on oil revenues that go and down with the price of oil which is out of their control.

What they can their control is the ability to cut spending and set priorities.

Does Saskatchewan really need to spend $700

million of borrowed money on roads, schools and hospitals this fiscal year?

How about selecting one or two priority projects and putting the rest on hold until the money is there?

Does Alberta need to continue to spend half of its budget on public sector wages when the revenue isn’t there to support all the province’s spending programs?

This year 31,000 oil workers in Alberta are expected to lose their jobs while their budget assumes it is business as usual with oil prices at rock bottom.

An election isn’t going to change the budget either since the Alberta PC party is in no danger of losing power and it’s their budget.

Likewise for Wall when voters go to the polls in 2016. There is little chance the Saskatchewan Party will be ousted and the province will be still be on the hook for $700 million of borrowing, plus interest.

The definition of a balanced budget is that revenue at least matches expenses without the borrowing card tricks that politicians like to play when elections loom.

Ten years ago Albertans celebrated the elimination of the provincial debt with Ralph Klein.

Such celebrations are a long way off for both provinces without that brand of tough love to balance the books.

Pipeline News invites opposing view points. editorials and letters to the editor are welcome.

Email to: brian.zinchuk@sasktel.net

A8

PIPELINE NEWS May 2015

Letter to Editor

Government failed to diversify economy Dear Editor,

During years of record revenue that were brought on by our resource sector, not only has this government failed to diversify Saskatchewan’s economy, but it also wasted the windfall on misplaced priorities and pet projects.

At a time when the government should have been bolstering areas of the economy such as local fabrication, processing, construction and manufacturing, millions of dollars were being wasted on the John Black version of Lean and dangerous smart meters.

I’ve spoken with and listened to many manufacturers, steel fabricators and construction companies over the last couple years – and have pushed for changes to the government’s flawed procure-

ment policy. It’s disappointing to hear that many are in layoff mode. Meanwhile because of this policy, government and Crown Corporation contracts are constantly being sent out of province, sending a whole lot of cash into the pockets of companies from Quebec, Ontario and the United States.

This government has dismissed this concern for too long and that’s hurting the bottom line of many Saskatchewan companies and not getting best value for taxpayers. Action is required to fix this flawed procurement policy to ensure a level playing field for Saskatchewan business and best value for taxpayers. This would be a good thing for our economy and our public finances.

Despite forecasting an overall increase in revenues this year, it is alarming to many that this

government is choosing to dig the province into a deeper hole by borrowing $1.5-billion this year, increasing our debt to $13.2-billion and draining the rainy day fund. Despite governing through a period of record revenues, this government has increased debt by $5-billion dollars since 2011, has increased our debt to GDP ratio by 47 per cent in just five years and hasn’t saved a penny for the long-term.

After nearly a decade of record revenue, Saskatchewan shouldn’t have overflowing classrooms, crumbling hospitals and a seniors care system in crisis, but unfortunately that’s the case. The reckless spending on pet projects and habit of pushing debt and financial burdens down the road needs to stop.

Trent Wotherspoon NDP Deputy Leader

Pipeline projects for Kindersley area ◄ Page A4 Plains’ existing Manito is a dual pipeline system comprised of the Manito pipeline, the North Saskatchewan pipeline, and the Bodo/Cactus Lake pipeline near Kerrobert.

Each system consists of a blended crude oil line and a parallel line that delivers diluent to upstream locations for blending with heavy crude oil.

The diluent lines originate at the Plains’ Kerrobert Terminal, where the blended crude oil also delivers.

Teine Energy meanwhile recently completed its 50 kilometre Plato Clean Oil pipeline from the

Plato battery to the Dodsland battery.

Dancsok said there is a lot more potential in the area for growth for producers using secondary production techniques like waterfloods.

“We’ve seen a drop in drilling so far, but that’s kind of on the primary side of things. Industry is going to bounce back and they are very resilient,” he said.

“Even the Bakken field in Saskatchewan, they are already trying technologies around waterflooding or gas injection to try to increase or maintain production for those fields.”

Teine Energy is one of several Viking producers using secondary recovery methods including

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waterfloods, pilot waterfloods and increased well densities.

“There’s been waterfloods in the Viking in the past, but as more production is coming out that means you have to replace that energy,” said Dancsok.

“So the next logical step is waterflooding and keeping the pressure in the reservoirs so the oil keeps flowing to the wells. ”There’s been a lot of oil out of there, but really only 10 per cent of the original oil in place is out.

“There is a lot of oil left to get, and we just have to keep that reservoir energy to keep the oil flowing.”

PIPELINE NEWS May 2015

A9

Viewfield, Shaunavon, Flat Lake, now Kindersley ◄ Page A5 Gritzfeldt: I don’t know. Obviously we are cognizant of that. We have a five-year plan where we have our drilling activities planned out. We always shock the plan not just $90 or $100 oil like it was a year ago. We always look at it if it was $60 or $50 or $40 oil. We’re trying to stick to our five year plan.

We have to be cognizant of prices, but also remember we are well-hedged, which is different than a lot of companies. For example: even though oil is at $50, we have half of our production locked in at $90. So that helps us get through the downturn.

P.N.: How long is that for?

Gritzfeldt: We always hedge out three years. As of right now, a different percentage of our total production is hedged out every year. Since the inception of our company, we’ve always had a very active three-year hedge program.

P.N.: At some point that’s going to run out, though.

Gritzfeldt: Yeah, but as time goes on we keep layering on hedges where we try to have 50 to 60 per cent of current year production hedged at a certain price.

P.N.: Have you been maintaining your production levels around 150,000 barrels per day?

Gritzfeldt: Yes. Our target production guidance for 2015 is 152,500 boepd corporately.

P.N.: You’re also drilling near Kindersley. Can you talk about that?

Gritzfeldt: Kindersley? The Saskatchewan Viking play? You bet.

We got into that several years ago now, and there have been great results.

We’ve done acquisitions there now for the past couple years. We’ve been increasing our drill program. It’s definitely an area we’re excited about and hopefully (we’ll) continue looking for consolidation opportunities and applying all the technology that we’ve learned fracking wells in different areas. What we’ve learned in different areas, we’re applying there now as well. Looking forwards, (we’re) looking at that property to be an opportunity to consolidate and increase our drill activity.

P.N.: Are you drilling in the “halo” of the Viking (the outer edge of what was developed decades ago with vertical wells)?

Gritzfeldt: I think that’s what you’re finding. A lot of plays, this multistage, horizontal fracking technology has opened up a lot of areas that were previously undeveloped because it wasn’t proven to develop on verticals. Now with horizontal, multi-stage fracking you can access these reservoirs that were previously uneconomic.

P.N.: Is that a tight reservoir you frack?

Gritzfeldt: Yeah, you frack that as well.

P.N.: Crescent Point has locked up most of the Viewfield Bakken, most of the Flat Lake play, almost all of the Shaunavon play. Are you looking for the same thing in Kindersley?

Gritzfeldt: I think same with every other play we get into, we look for opportunities. If we’re happy with our own drilling results and we think we can apply the technology we’ve learned from other areas into the area we’re operating in and get better results, those are always areas we’re going to look to consolidate as per our long-standing company strategy of acquiring large resources in place assets with high netbacks and lots of upside, whether it’s through in-fill drilling or waterflooding, or applying new technology.

P.N.: I noticed when you had 25 rigs going, only one was in Manitoba, only one was in Alberta. Why so much in Saskatchewan? Was it our royalty regime or our fiscal regime? There’s obviously a reason almost all your eggs were in the Saskatchewan basket.

Gritzfeldt: That’s a good question. We started out with conventional properties in southeast Saskatchewan. There are still lots of conventional opportunities, too. When you get a good conventional well, it’s still the best economics in the company.

But we got into the Viewfield, got into the Shaunavon, consolidated those properties. Definitely Saskatchewan attracts a lot of investment because of the royalty holidays and royalty regime. But that’s a great thing. Look at the capital investment the province has attracted over the past several years. I would say it’s a combination of all those.

P.N.: I’ve been saying to a lot of people that Saskatchewan was largely spared the 2009 downturn for two reasons: One, the Bakken play was still very hot, and that was largely due to you guys, and I spent two years writing stories about what I called “refugees from Stelmach.”

Gritzfeldt: Look what happens when you do change a regime. Part of our planning is if you can plan out your programs where you know what your economics are going to be, whereas Alberta changed their royalty regime and look what happened.

Also, too, again the Bakken, Shaunavon, Viking, Flat Lake, all the conventional pools – they’re not super-deep, either. There a million to two million bucks to drill, which is what most of our inventory is. It’s not the $10 million drills in northern Alberta, B.C. or North Dakota. It’s kind of the assets we look to in our inventory.

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PIPELINE NEWS May 2015

WorleyParsons reps (l-r) David Childs, Amanda Chapman, Connie Duniece and Dave Burfitt chat at a company exhibit during the World Heavy Oil Congress in Edmonton. Photo by Geoff Lee

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WorleyParsons flies heavy oil flag Edmonton – WorleyParsons may have done itself a world of good by having an exhibit during the 2015 World Heavy Oil Congress held in Edmonton from March 24-26.

The global engineering, procurement and construction (EPC) company did a lot networking with some of the 1,000 delegates from 20 countries to generate new business leads.

WorleyParsons finds itself in the same

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boat as many other companies during the current downturn and is looking for new heavy oil customers to keep busy.

“I think we’re where everybody else is. It’s definitely softened a bit,” said Connie Duniece wearing a director and consulting badge representing the Edmonton office.

She explained their goal during the event was to “definitely make some connections, see what’s new and interesting. A lot of new technologies are going on and being presented.

“I think with all the presentations that we’ve seen, technology is what’s going to help us get through some of the price pressures.

“WorleyParsons is a global organization, so we are definitely interested in meeting and seeing what’s going on in the world.

We are definitely active all over the world.”

The company also has a resource and energy office in Lloydminster that Duniece spoke about.

“From Lloydminster, we have a mechanical piping division that supports the local operations there,” she said.

“So they do a lot of brownfield maintenance work (upgrades) – valve change-outs and such.”

“Then, if we have

projects that require a multi discipline team, we engage either the Edmonton or the Calgary office.”

WorleyParsons is known to be a provider of full EPC services to the heavy oil heavy oil industry.

“We do full project development and product delivery so everything from front-end engineering, design feasibility, all the way through to construction,” explained Duniece.

“We do commissioning support as well.”

The company also provides full lifecycle EPC services to minerals, metals, chemicals and infrastructure sectors.

Their corporate commitment to deliver EPC services with cost efficient and predictable results helped Duniece explain how that approach fit the event theme “Producing More with Less.”

“We, particularly myself, work with the frontend division – a lot of the front end projects. So we’ve worked for a lot of our customers optimizing designs, how to do things more efficiently.

“We’ve been working in heavy oil for over 40 years so we definitely have a lot of experience and lot of smart ways to support doing more with less.”

PIPELINE NEWS May 2015

A11

Cloverdale coats heavy oil infrastructure Edmonton – The beat goes on for oilfield maintenance including the need for protective coatings during the current low oil and gas price environment.

The industrial protective coatings division of Cloverdale Paint is keeping active with its corrosive resistant coatings in the heavy oil and gas industry.

Pipeline News got up to speed on Cloverdale’s industrial coatings division during a visit to their exhibit during the 2015 World Heavy Oil Congress held in Edmonton from March 24-26.

“We manufacture heavy industrial coatings, so anything from internal paint linings, pipeline coatings, structural steel, automotive coatings – anything to do with heavy industrial and corrosion-related protection,” said Trevor Newell, industrial sales manager for Alberta.

For the heavy oil industry, Cloverdale provides an array of powder coatings, epoxies, urethanes, and tank linings for the internals of pressure vessels, process piping and transmission piping.

“For any new site builds of course, we’ll be painting the structural steel for them, as well as partnering with the oil companies on their specifications,” said Newell.

“We manufacture the coatings, and we will sell those to applicators that would go in turn to bid for that business and do that work for the oilfield.”

Cloverdale markets coatings to the heavy oil industry in the Lloydminster to Bonnyville corridor from its paint and coatings store in Lloydminster.

The company has also locations in Grande Prairie and Fort McMurray to serve the oilsands markets, but note quite at the level when oil was over $100 a barrel last June.

“We’re still busy

right now. A lot of the projects – obviously in oil and gas – some of them are being stalled, tenders are waiting until the price of a barrel of oil rises up again,” said Newell.

“But no matter what, there is still maintenance that needs to be required in the oil and gas field and we still service that right now through applicators and direct sales to the oil companies.”

The industrial coatings are formulated to protect the infrastructure of the oil and gas industry from corrosion whether it’s in concrete or steel.

High temperatures inside of oil and gas vessels, for example, can be very abrasive and corrosive to steel.

“Those linings that are in the inside of tanks protect the steel.

So the oil companies now have a longer term for those tanks, those vessels, before they get corroded and need to be replaced,” said Newell, who is a Nace certified coating inspector.

“Basically, we are trying to alleviate their pain, so they can just have their equipment, and all their products will still be useful down the road without corrosion attacking them.”

Newell said the company’s goal at the heavy oil congress was to speak with engineers of oil companies to determine what their needs are and where they are experiencing corrosion-related issues.

That way he said, “We can sit down with them, write specifications with products that will meet their needs.”

Cloverdale is a member of the Canadian Paint & Coatings Association that represents paint manufacturers and their industry suppliers.

The CPCA works with government on legislation and environmental issues to create greener paint and coatings products with

Trevor Newell, with the industrial protective coatings division of Cloverdale Paint, manned an exhibit aimed at heavy oil delegates during the 2015 World Heavy Oil Congress in Edmonton. The company has a full range of powder coatings, epoxies, urethane and tank linings for the heavy oil industry with a store in Lloydminster.

Photo by Geoff Lee

fewer VOCs or volatile organic compounds.

“Basically, it’s solvent that is emitted out of the paint. Solvent is the vehicle to get it to spray properly,” said Newell.

“Reducing that solvent is the greenhouse gas effect in making it cleaner and greener for environment.

“We’re not only trying to protect the infrastructure and stop corrosion from concrete and steel in the oil and gas industry – we’re also being fiscally responsible to our environment, to our children, to our families years down the road to make sure those products aren’t affecting the environment as well.”

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A12

PIPELINE NEWS May 2015

Dancsok sells heavy oil delegates on Sask.  By Geoff Lee Edmonton – Come to Saskatchewan to invest in thermal processes and

enhanced oil recovery (EOR) and emerging technologies.

That was one of the messages that industry officials from Regina and Saskatoon were making to some of the 1,000 global delegates at the World Heavy Oil Congress held in Edmonton March 24-26.

“We always come to the heavy oil congress to try to raise the profile of Saskatchewan’s oil and gas resources – in this particular case – the heavy oil resources of Saskatchewan,” said Ed Dancsok, assistant deputy minister with the Petroleum and Natural Gas Division in Regina.

Danscok teamed up with representatives from Saskatchewan’s Petroleum Technology Research Centre (PTRC) during the exhibition portion of the heavy oil congress held at the Shaw Convention Centre.

“We are next to Alberta, a big heavy oil producer, but we want to make sure we’re noticed and we can attract investments for our resources as well as investment into our technology,” explained Dancsok.

The Saskatchewan Research Council (SRC) was also on hand promoting

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Consultant David Cadrin, left, speaks with Regina’s Petroleum Technology Research Centre CEO Ken From and senior project manager, Erik Nickel at the World Heavy Oil Congress exhibition on March 26. On the right is Ed Dancsok, assistant deputy minister from the Petroleum and Natural Gas Division in Regina. Dancsok and the PTRC reps were at the event to promote investment in Saskatchewan’s heavy oil research and development programs.

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its heavy oil and gas research and development projects focused on EOR. Steam-assisted gravity drainage, or SAGD, commonly used to produce heavy oil in the Lloydminster and Kerrobert areas, fits Saskatchewan’s plans for economic growth according to Dancsok.

“We are looking to use innovation and technology to carry on with better recovery of our oil resources, increase production and continue the growth of Saskatchewan,” he said.

“It’s not only finding new oil with old ideas; it’s finding old oil with new ideas and that is technology.

“We have folks from the PTRC right here. They’ve seen a lot of traffic during the show – a lot of people talking about new ideas.”

Some of the emerging technologies discussed during the technical conference ranged from electromagnetic heating of heavy oil reservoirs to combining solvent injection, electromagnetic heating and hydraulic fracking for multistage oil recovery in horizontal wells.

SRC is also researching microbial and enhanced waterflooding for heavy oil EOR. ► Page A13

PIPELINE NEWS May 2015 ◄ Page A12 “It’s not only steam anymore; it’s using carbon dioxide; it’s using solvents or any sort, polymers and combinations of all of them, and finding out what’s the best recipe and the best recovery,” said Dancsok.

“We are seeing really good results out of our SAGD with some areas recovering close to 60 per cent of the oil in place.”

Despite the current low oil price environment, Dancsok is stoked over the potential for continued growth of heavy oil production in the province.

“Our major heavy oil producer, Husky, still has plans to carry on with the projects that they have approved. They are either in mid-construction or about to start construction,” he said.

Construction is under way at Husky’s 10,000 barrels per day Rush Lake heavy oil thermal project with first oil scheduled for the third quarter of 2015.

Work is also proceeding at the 10,000 bpd thermal projects at Edam East and Vawn, with first oil planned in the third and fourth quarter of 2016.

The 3,500 bpd Edam West thermal development remains on track for start-up in the fourth quarter of 2016.

“Those are in order of $100 million projects,” said Dancsok.

“We have a couple of other projects approved for Northern Blizzard. They’re in the $100 million range as well. They are planning to carry on with those. Those are thermal projects.”

In 2015, Northern Blizzard plans to commence Phase 3 of its Kerrobert Bakken polymer flood expansion, at Cactus Lake, west of Luseland with completion expected in early 2016.

Phase 3 is expected to add 69 producers and 29 injectors.

The low viscosity oil in the Mississippian Bakken formation responds well to infill drilling and waterflooding.

The company is currently expanding its SAGD project at Plover Lake, east of Kerrobert to bring an additional horizontal well pair on stream.

First oil from this expansion is expected during the second quarter of 2015.

Serafina Energy Ltd., a private equity funded thermal developer and producer is in the process of building their first 6,000 bpd SAGD project in Edam.

“There are probably five projects worth $100

What downturn? Hundreds of people checked out the display of recreation equipment from Rec-Tech Power Products in Lloydminster during the Showcase 2015 spring tradeshow held March 27-29 at the Lloydminster Exhibition Grounds. Photos by Geoff Lee

Oil and gas workers and their families were among those who purchased new RVs at the Sellers RV annual indoor sale held in conjunction with the Lloydminster Showcase 2105 tradeshow March 27-29. Sales rep Landon Becotte was a happy camper reporting stronger sales than last year when oil prices were much higher. The company sells Jayco and Coachmen products.

Richard Starke, Alberta MLA Vermilion-Lloydminster, centre, did some early campaigning at the Lloydminster Showcase 2015 tradeshow March 27-29. On the left is Starke’s wife Alison and to the right is Kelly Raslar, the Alberta franchise rep.

million of investment each, and all of them are planning to carry on with them,” said Danscok despite the downturn.

“So that’s pretty good news.”

He also said the theme of the 2014 heavy oil congress, Producing More with Less, “fits Saskatchewan to a tee” when it comes to research and development of EOR technologies.

“It’s a very good example of what we do in pragmatic and innovative ways to get the oil and gas that Saskatchewan has out of the ground,” explained Dancsok.

“Saskatchewan has set another production record in 2014. We are producing over 500,000 barrels a day now, which is triple what we were producing 30 years ago.

“We are continuing that growth. We just inched past Alaska into fifth place in all of North America for all oil.”

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A13

A14

PIPELINE NEWS May 2015

Hampton Inn checks in to Lloyd  By Geoff Lee Lloydminster – The oil industry’s pain could be the construction industry’s gain with plentiful labour.

That’s the way is seems judging by the fast pace of retail and commercial construction going on at the Hampton Square development on the west side of Lloydminster just off Highway 16.

The 122-room Hampton Inn by Hilton held its grand opening there on March 26 with a lot of excitement generated by the hive of construction activity out front.

Work is quickly progressing on a Co-op gas bar and a mini mall with a Rock Creek Tap and Grill restaurant as an anchor tenant in 5,600 sq. ft. of leased space.

Construction is also under way on 3,600 sq. ft. Browns Socialhouse restaurant directly in front of the Hampton.

“It’s going to be very beneficial to us,” said Clare Janitz, Hampton’s general manager, at the grand opening.

“It’s exciting to get to stay at a hotel – it will really benefit from having a selection of restaurants and shops and also having a gas bar.

“The location is ideal especially being at the edge of town.”

Dave Jarvis, a realtor from Mus-

grave Agencies Ltd., brought a site plan to the grand opening to explain the Hampton Square project.

“We are hoping in the next two or three months to have this first building finished in front here,” he said pointing to the complex that houses the Rock Creek eatery.

“We have about 11,000 square feet left to lease in that building. That will be our focusing goal,” he said.

“There are three other buildings that we won’t start construction on until we either have a tenant or somebody who wants to own. We are looking at either leasing or ownership of a couple of these sites.

“Up until now, we’ve had just a leasing opportunity, but now we’ve opened up so there could be some ownership opportunities.

“It’s going to be a really exciting project going forward this summer.”

APX Hotels Group that operates the Hampton Inn also bought the rights to run a new Holiday Inn Express That hotel will be built next to the Meridian Inn & Suites on land adjacent to Hampton Square sometime in the future.

The Hampton Inn was the first commercial building to open for business with a soft opening during the Christmas holidays.

“Being surrounded by a construc-

Lori-Jennison, director of sales and marketing for APX Hotels Group was ready to help welcome guests to the grand opening of the Hampton Inn by Hilton in the great room of the 122-room hotel. The new hotel is in Lloydminster. The event held on March 26 was well attended. Photos by Geoff Lee

tion zone, I’m sure there are a lot of people who are not aware the hotel is open, but as you can it is really a beautiful facility they have here,” said Jarvis during the grand opening.

Jarvis said more than 150 new jobs will be created at the site including jobs at the Hampton, the two new restaurants and the gas bar.

“If you go across the highway there is another 300 new jobs being

constructed over there as well,” he said referring to the ongoing expansion of the Lloydminster Power Centre by Brentwood Developments.

“There’s a lot of real positive things happening here in Lloyd and this is just one of them.”

About 70 jobs will be needed at the Rock Creek Grill and Tap when it opens its doors as early as Sept. 1. ► Page A15

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PIPELINE NEWS May 2015 ◄ Page A14 The restaurant is co-owned by Gary Young, a 3G Equity Inc. ownership stakeholder in the Hampton and the Holiday Inn in Lloydminster, and by Jim Spenrath, the former chief operations officer for Grit Industries.

“It was time for a new challenge and Rock Creek Tap and Grill came along at a good time for me businesswise and in my life,” said Spenrath at the hotel opening.

“I’m an emptynester now, so I’ve got time to work seven days a week if I have to.

“It’s very exciting to be part of this new development. It’s going to be a beautiful development when it’s completed.

Spenrath describes the franchise business as “an upscale casual restaurant” with a southwestern feel to the menu.

“It’s a niche that we believe is a good fit for the city and also the development out here adjacent to the hotel project,” he said.

As for the downturn in the oil industry, Spenrath said, “It’s an interesting time because it’s helping on the construction side.

“People are available to do the build and on the staffing side, we are getting lots of applications from people who are looking for work at the end of summer.

“A year ago, I don’t think the market would have supported it the same way.”

The grand opening guests included Lloydminster Mayor Rob Saunders and new Chamber of Commerce president John Winter who welcomed the hotel to the business community.

Speaking for the Hampton Inn were Lori Jennison, director of sales and marketing for APX hotels who confirmed occupancy rates are picking up as the word spreads.

“It’s been going really well. We are really pleased with how it’s turned out and we’re slowly starting to get busier – so far so good,” she said.

“We are excited to show off the hotel.”

Ditto the enthusiasm for the grand opening by Janitz who was pleased by the grand opening good turnout.

“We’re excited to have everybody here and show off the property and thank all my staff and everyone who’s contributed to the hotel, so it’s a great opportunity to do that,” she said.

Also on hand for the celebration was Robin Cumine, the newly hired vicepresident of operations for APX Hotels Group based in Edmonton.

“I actually don’t start this job until April 13,” he told Pipeline News.

“This is the first

time I have had the pleasure of being here, so I am going to spend some time to see the hotel and I am getting to meet some of my new team.

“You only get one chance to see the grand opening. That’s exciting for me. What a great way to start your career with a company.”

There are eight hotels in the APX Hotels Group including the two in Lloydminster that are owned by a group of 3G Equity investors.

“I think this is going to be a centre piece for Lloyd to celebrate for years to come,” said Cumine who offered his take on what the Hampton means for Lloydminster.

“I think it means two things. One, it shows a company like APX truly believes in the future of Lloydminster in what you can see is the beginning of a pretty important complex,” he said.

“Number two, it means short-term and medium-term some good jobs and some more economic development for the community.”

A15

The new 122-room Hampton Inn by Hilton officially opened on March 26 as part of a new retail and commercial development at Hampton Square on the west end of Lloydminster.

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A16

PIPELINE NEWS May 2015

Network at the Bonnyville Oil and Gas Show  By Geoff Lee Bonnyville – If you can’t be working due to the downturn, be networking by exhibiting or visiting the 2015 Bonnyville & District Oil and Gas Show to be held June 17-18.

The registration deadline for exhibitors is May 8 to be eligible for full show advertising benefits and networking with producers at the oilmen’s room function at the host Centennial Centre venue in Bonnyville.

“We are still looking for exhibitors. We are just over 70 per cent sold

out,” said Megan Naylor, event chair, in an April 15 update.

“We have 229 booths including indoor and outdoor booths and we have just over 160 booths sold.”

Naylor is the executive director of the Bonnyville & District Chamber of Commerce that runs the biennial event. She teamed up with show chair Robyn Ducharme to rally exhibitors to the cause.

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Osum Oil Sands will once again host a registration night barbecue at Shaw House on June 16 to kick off the 2015 Bonnyville & District Oil & Gas Show in Bonnyville.

File photo

tacts,” said Naylor.

“When the market does come back, then you’ll have those great contacts that you’ve made.”

Only exhibitors have the opportunity to network with local producers in the popular oilmen’s room and potentially secure service and supply contracts.

“We do have procurement and contract reps that are available for what we call ‘speed dating.’ This is exclusive to exhibitors,” said Ducharme.

Canadian Natural Resources, Osum Oil Sands, Imperial Oil, Devon and Husky Energy have confirmed their participation in the oilmen’s room with one or two more producers yet to be named.

“You have the ability to book an appointment to actually go around and talk to all our oil and gas producers and make a connection – not necessarily promising that there are contract opportunities available right now,” said Ducharme, referencing the downturn.

“But the point is – to actually make that connection – talk to these companies about their contracting procurement process and kind of a get a little bit of a better idea of how you can do business with those companies in the future.”

Ducharme is a financial advisor at Edward Jones and she tells potential exhibitors that by the time the show rolls “We could be in much different situation that we are today” with oil prices, so don’t the miss the chance to network.

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“We’re just hearing a lot of good comments about the fact we’ve got the show still happening and it’s still going to be a great to make those connections,” she said.

“That’s what I’ve been hearing from most people is that they are just really gung-ho to be networking. Now is the opportune time to do so.”

Ducharme said she can think of plenty more good reasons why exhibitors and visitors should attend the show especially during a downturn.

“I can’t think of any better time to be networking then when oil has taken a little bit of a tumble that is has,” she said.

“You want to make sure that you’re making connections now more than ever, because when things get busy again, as we all know they will, you want to make sure you are first and foremost in the minds of the people you are networking with.

“I can’t think of a better time to come down to an oil and gas show when we might be a little bit slower, when you can take the time to really network, and get to know people.”

Naylor is optimistic the show will be nearly sold out with a good mix of local and regional exhibitors on hand.

“We get people as far as Ontario and we have companies as far down as Texas so it’s a wide range,” she said.

The event will kick off with the usual registration night barbecue June 16 at Shaw House hosted by Osum Oil Sands for the third time since the first show in 2011. ► Page A17

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PIPELINE NEWS May 2015 ◄ Page A16 The banquet however, has been cancelled as the some of the event sponsors have scaled back due to the economy.

“We decided just based on the economy right now, we’re just to pass on doing that this year and hopefully revamp it for 2017,” said Naylor.

“We do have a very good exhibitors’ lounge and we provide a very good breakfast and lunch and then snacks throughout the day.”

The loss of the banquet will be to the benefit of local restaurants and lounges, many of whom are members of the chamber that aims to attract investors to the area with the show.

“It will also help our region be-

Try A Trade a rite of spring Lloydminster – The annual Try A Trade Career Expo in Lloydminster is becoming a rite of spring for regional high students in Alberta and Saskatchewan to learn about careers in trades.

At least 1,800 students are expected tour the exhibits and try out some trades during the sixth annual Try A Trade at the Lloydminster Exhibition Grounds on May 6.

The event is organized by the Lloydminster Construction Association that sees no let-up in the demand for it by schools and students.

“There is still a lot of interest in the school divisions in bringing students to the event,” said Dorothy Carson executive director of the association.

“Basically our goal is to let students know that a trade is a first option when they are considering their classes going into the high schools or taking classes that they may be interested in.

“This was our goal and our objective and we found that the

teachers and students found value out of the event, and they just keep bringing back their students to take a look at what exhibitors and schools (for trades) have to offer.”

Representatives from North West College in North Battleford, Lakeland College in Vermilion and Saskatchewan Polytechnic in Saskatoon will be on hand to outline their schooling streams for trades.

“We always have the young journeymen booth that provides students access to talk to some young people that have made it through the trades and ask them some questions,” said Carson.

The impact of the downturn in oil prices has resulted in a refreshed list of exhibitors as some companies pulled out while others stepped up, with the total number of booths relatively the same as last year.

“With the slowdown there are some companies that have found the time to come

in a join us,” said Carson.

Among new exhibitors are the County of Vermilion River, Edmonton Police Service and the Alberta Motor Transport Association Road Knights.

“We’ve got a couple of exhibitors that we are speaking with that are new. We just haven’t got the registrations. They should be coming in the next couple of days,” said Carson in an April 15 update.

“We are getting a crane back again, so Platinum PumpJack Services will be providing the crane to show all the students basically how to operate a crane.”

Kristen Cumming from Insight Career Consulting has been invited as a breakfast speaker to prep exhibitors and those conducting demos how to engage students.

“As some of the exhibitors have been with us for the full six years, their exhibits do get a little better every year with better ideas on how to engage the students,” said Carson.

cause when the show hours are done, exhibitors can go elsewhere and take their clients out for supper and help our local restaurants,” said Naylor.

“Just in general, by having the show, we’re bringing in people from all over in the area so all our hotels fill up; our restaurants are going to get used, so it’s very good for our area.”

The next task of the organizing committee is to ramp up marketing aimed at bringing in as many attendees as possible including job seekers.

All of the producing companies will set up human resources and public relations booths in the hub area of the Centennial Centre that is free to

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A17

attend.

“Anyone can go into that area, but if you want to go into the show, you can pre-register for free on our website,” said Naylor.

“At the door it’s $20 and all those proceeds goes towards STARS (air ambulance).”

The show is also open from 10 a.m. to 7 p.m. on first day to allow those who work to attend the show, and from 10 a.m. to 4 p.m. on the final day.

Once again, shuttle service will be mandatory for exhibitors and sponsors to and from hotels and the venue due to limited parking.

A18

PIPELINE NEWS May 2015

Lethal unveils to die for eye candy  By Geoff Lee Lloydminster – Lethal Motorsports in Lloydminster held a public launch as the new authorized Yamaha dealer at the local 2015 Home, Garden, Sport and Leisure Show held March 27-29.

Leading the celebration was Mavrick Young, the company owner and his helper dad Darren Young who retired from the oilfield seven years ago.

A display of new Yamaha snow bikes,

sleds and a side-by side attracted a lot of potential buyers which put Mavrick’s crew into smile mode at the Lloydminster Exhibition Grounds.

“That’s why we’re here; get it out in the public’s eye,” said Young, who acquired the dealership at the beginning of March.

“We also bought some generators down too because we are doing the full line Yamaha – so outdoor marine, generators, side by sides, sleds, quads – dirt bikes

in everything.”

The dealership follows the recent relocation of the business to a larger shop formerly occupied by The Cat Rental Store on 62nd Street.

The changes have repositioned the company from being a go-to service shop for automotive, motorcycle and powersports repairs to include sales of Yamaha products.

“It’s something new for us and who knows where we’re going to stop,” added Darren

Mavrick Young, owner of Lethal Motorsports is stoked to be a new Yamaha dealer after relocating his business to new larger location on 62nd Street in Lloydminster. Young displayed some Yamaha powersports products at the Lloydminster Home, Garden, Sport and leisure Show March 27-29.

who helps out part time.

“We’re adding more supply companies all the time and more products so whatever the customer wants I am sure we can find it.”

The new roomier location makes expanding into products and new services possible.

“We’ve always had that diversified shop for sure. We’re into anything with an engine we always tell guys,” said Mavrick.

“So far, so good with the new yard and stuff – it’s got a big compound to keep all these units.

“People are dropping boats off. We`re touching into marine this year so we`ve got boats starting to be dropped off.

“We`ve always had good techs and the knowledge; we just

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haven`t had the space.”

Darren notes none of this would have been possible had Mavrick taken the like-fatherlike-son career path into the oil and gas industry.

Darren worked 28-and-a-half years in the oil industry and told Pipeline News that he didn’t want Maverick following in his footsteps.

“I decided that my son would be better off getting into the trades rather than getting out in the oil industry and avoid the ups and downs of the oil industry,” he said.

Mavrick graduated from the Fairview campus of NAIT in 2011 as a Red Seal motorcycle mechanic while working for the previous business owner.

He bought the business named Scorpion Cycle in 2012 and renamed it Lethal Motorsports after two years “just because it describes more of what we did,” he said.

Mavrick’s brother Dalton also took his dad’s advice and works at Lethal Motorsports in marketing.

The company has evolved to include a Lethal Racing division for dirt bikes and a Lethal Racing Motorsports Facility built with Darren’s

oil money at the family farm north of Waseca.

“I spent my own money. I build a pro national motocross facility at my farm. I host Alberta provincial races,” said Darren.

Darren said he left the oil industry almost seven years ago.

He began operating wells, and got into running a treating facility and doing rig consulting and eventually owned some oil wells in his last couple of years of work.

The racing facility which includes a stadium will host the Canadian Motorsport Racing Corp. or CMRC Alberta Provincial Series Round 3 June 27-28.

“We get roughly 350 to 400 riders show up on that race weekend so it’s quite an event,” he said.

As for why he left the high-paying oil industry Darren said, “It’s a great place to make money but there comes a time in your life when you just decide you want to try something different and move on,” he said.

“I went back to the family farm and I help the boys a little bit with their dealership. With the way it’s growing it’s taking more people. ► Page A19

PIPELINE NEWS May 2015 ◄ Page A18 “I look after the accountants the lawyers and do all the odd jobs that normal operations don’t have time to handle,” he said while handing out a business card.

He noted that current downturn in the oil and gas industry has slowed down automotive repairs at his son’s shop more than the powersports end of the business.

“People tend not to spend money by not purchasing new in a downturn, but they repair the old,” he said.

“They still like to have their enjoyment days and enjoy their toys.”

Mavrick is stoked by excitement over the Yamaha powersports products for sale and the reaction to his exhibit inside the Lloydminster Exhibition Grounds.

The eye candy included a decked out 2015 Yamaha Viking EPS SE sideby-side.

“We brought down the special edition silver one. We’ve got a bit of lift kits on it, bigger tires, stereo – we dressed it up a little bit for the show,” said Mavrick.

“So far at the show, the interest has been anyone from the ages of 18 to 70 years old.

“We’ve had a few older fellows in their 60s come by and say ‘I have one not big rims and stuff but I love it’. We’re getting interest all over.”

He said his main customer is anyone who is into motorsports including the new sport of snow biking.

Companies like C3 Powersports in Edmonton make kits that convert a dirt bike into a snow bike with a track similar to those on snow sleds.

“The next big thing is with snow bikes – that new C3 Yeti snow bike kit – all carbon fibre, all titanium and 43 pounds less than competitors. It‘s catching a lot of attention,” said Mavrick.

“For snow biking this year there’s going to be a limited quantity. C3 out of Edmonton, they’re hoping to make 300 kits this year, so it’s going to be tight.”

Mavrick said now is a good time to order a new sled or a snow bike kit with what’s called “snow checking” or pre-ordering industry deals.

“There’s good incentives out right now with the snow checks. Yamaha is throwing a lot of free stuff in when you put your name to the sled,” said.

“You know. $500 gives you your name on the sled. It will be in your hands on October when they’ve be arriving.

“Same thing with all the snow bikes. There’s snow checking on those – $500 on those also.”

A19

World Heavy Oil Congress

Raul Soto, left, a Calgary-based technical sales representative from Kudu, a Schlumberger company, and Kris Kykkanen, sales manager in Lloydminster speak to a visitor about artificial lifts during an exhibition at the World Heavy Oil Congress held in Edmonton March 24-26.

Networking was the order of business during the exhibition and technical presentations at the 2015 World Heavy Oil Congress held at the Shaw Conference Centre in Edmonton March 24-26.

Photos by Geoff Lee

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A20

PIPELINE NEWS May 2015

Workforce charter shuttles to expand

Steve Gutknecht, sales and marketing manager from North Sands, a workforce logistics company in Kelowna, B.C., shared an exhibit at the World Heavy Oil Congress in Edmonton with affiliate R1 Airlines Ltd. in Calgary. Both parties were at the Shaw Conference Centre to promote their transportation charter flights and service for oilsands workers in Northern Alberta. Photo by Geoff Lee

Edmonton – R1 Airlines Ltd., a workforce transportation charter aircraft company based in Calgary, is gearing up for the eventual upturn in oil and gas activity in northern Alberta.

The company set up a booth at the 2015 World Heavy Oil Congress at Edmonton’s Shaw Conference Centre to let everyone know they plan to expand in the coming months to better serve their oilsands clients.

“We are adding some aircraft and some capabilities on the smaller side, so typically we have 30 or 50-seat aircraft,” said Richard Pollock, R1’s business development manager.

“We’re adding some 19-seat aircraft and our purpose here is to let people know that we are expanding our capabilities.”

The expansion follows the news that Avmax Group Inc., along with a joint venture partner, plans to reacquire full ownership of R1 that they previously operated as a subsidiary.

Under Avmax management, R1

Airlines can address the unique needs of the competitive resource sector market including the demands from their clients in the peacekeeping, humanitarian, corporate and leisure sectors.

R1 Airlines has access to the world’s largest private fleet of Dash 8 and CRJ series aircraft with a base in Chad where they operate Dash 8s as well.

In Alberta, they have planes in Calgary and Edmonton to serve their oilsands clients in their core natural resources development sector.

“We are primarily an air charter company operating Dash 8 aircraft based in Calgary and Edmonton doing crew change work – for the most part oil and gas related,” said Pollock.

“We have five aircraft Dash 8s and CRJ aircraft. We fly all over northern Alberta and a little bit out in British Columbia and Saskatchewan.

“Here in Alberta, it’s almost exclusively all oil and gas related flying. ► Page A21

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formed by Flair Airlines Ltd. in 2013 in Kelowna.

North Sands and Flair Airlines shared booth space with R1 during the exhibition from March 24-26 with Steve Gutknecht sales and marketing manager as their spokesperson.

“We provide workforce transportation solutions for several clients and we draw on the resources of R1 Airlines and their aircraft to move employees in and out of the oilsands in northern Alberta,” explained Gutknecht.

In their affiliated business relationships, North Sands holds the end user client contract and Flair Airlines and R1 Airlines provide the flights.

North Sands also develops and coordinates aircraft and crew schedules with a client’s workforce utilization requirements.

The company also collects and analyzes data to enable longer term transportation management and control and to integrate chartered flights with commercial flight services.

There has been growth in the industry during the last few years according to the Gutnecht with the current low oil and gas price environment having an impact.

“Of course, with the downturn in the last few months we have seen some clients scale back, but we are still busy in the industry,” he said.

North Sands’ goal at the heavy oil congress exhibition was to “make

“Our business model is built around moving people from around major centres to remote locations.”

One of the advantages of using R1 dedicated chartered flights is that clients get crews to where they need to be and when they need to be.

“I would say they use it because the major carriers don’t go to the places they want to go,” said Pollock.

“The aircraft is chartered by the end users and the timetables are set by them.

“In our case, using dedicated aircraft that crew change takes two or three hours on the client’s schedule and on their discretion, so if they want a crew change at 8 a.m. we can be there at 8 a.m.”

The major selling point though is the guarantee of more time on tools with chartered services versus time wasted connecting to commercial flights.

“So time on tools is really important. You can really improve the turnaround on your crews if you are using dedicated aircraft,” said Pollock.

“The major advantage for the end user is the time on tools. We really see a benefit where, if people are driving or using the scheduled carriers that crew change might take all day.”

RI works closely with North Sands, a workforce logistics company

some new business contacts and new in, one-week-out and 10-and-10 as clients and potentially offer workwell,” said Gutknecht.

North Sands can draw on a force transportation solutions to them,” said Gutnecht. diverse range of aircraft from small “The fly-in fly-out model is what 9- seat plans to 158 passenger jets it’s called, and it’s a great way to get including those operated by Flair large groups of workers up to the Airlines.

“We work together on a lot of oilsands in northern Alberta and P r es e n t e d by Z i g m a g r o u n d s o lu t i o n s a n d P r a i r i e g r o u n d s o lu t i o n s projects,” added Pollock about R1. throughout British Columbia much faster, obviously much faster than “So in the event we need larger driving.” gauge aircraft we can always call on Flair Air and vice-versa if they need Chartered flights are timed for shift changes and projects. a smaller aircraft – maybe they’ve “Every company is different only got 50 people – they will conWe are pleased to invite you to our demo day!

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Lady golfers take a mulligan Lloydminster – The 2015 PWM Steel Petroleum Golf Classic for women is taking a mulligan until next May. Ladies of the Patch tournament organizers have deferred the spring event until 2016 when it will return to the Rolling Green Fairways course in Lloydminster.

The hiatus comes with a tip of the hat to their loyal oil and gas tournament sponsors and donors with the rationale being the downturn in oil prices.

“Just because of the downturn in the economy, we just didn’t think it was fair to burden our supporters. I’m sure they have enough issues going on right now,” explained Debbie Horbach the lead organizer.

“We just thought it would be responsible to back off a year.”

She clarified the decision to cancel wasn’t because they couldn’t get donations, but that it just didn’t feel right

The Ladies the Patch committee has deferred their popular PWM Steel Petroleum Classic golf tournament for women until next year due to slumping oil prices. This is a photo of the 2013 committee taken at Rolling Green Fairways in Lloydminster after presenting a charity cheque to Muriel Raltston, executive director of the Lloydminster Sexual Assault & Information Centre wearing the red jacket. File photo

to ask with companies scaling back.

Scaling back was not an option given the event had grown to 256 golfers since the introduction of the par 3 format in 2013 “Do you want to be the one to decide how you cut 256 golfers in half ?” asked Horbach.

“We always have

such a big waiting list. It was all or nothing, and we just decided that’s the way we’d go this year.”

The event is known for its fabulous hole prizes that, in 2014, included 18 pairs of diamond earrings for closest to the hole competitions on every hole.

Last year’s event

was held just weeks before oil peaked at over $100 a barrel last June.

Horbach said the reaction to the postponement by sponsors varied from disappointment to relief.

“Some of the major sponsors were disappointed that we didn’t go ahead with it because they were prepared,” she

said.

“We really appreciate that and said we’ll be back next year. For the most part, I think everybody was relieved.

That’s one more stress on their budget they don’t have to deal with.”

The decision to hold what would have been the 10th annual tournament was made in early

on in the organization phase when oil prices tumbled below $45 a barrel earlier this year.

Horbach said most of the golfers took the news in stride given the economic lull.

“We had a lot of responses from golfers that had golfed in the past that they were disappointed, but they understood and they’ll be back next year,” she said.

The tournament is a major fundraiser for the Lloydminster Sexual Assault & Information Centre. Last year’s event raised $26,900 for the centre’s programs.

The charity cheque plus good weather last year prompted this comment posted on the centre’s web page that will act as a reminder it will be missed in 2015.

“The 2014 golf tournament was a wonderful success on a beautiful sunny day – a wonderful success for the agency!”

Jay Dzuba Manager 306-421-2446

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A24

PIPELINE NEWS May 2015

Chevron studies formation fines on – not of mineral composition but of size compoLloydminster – There is no definitive solution sition,” he said. yet to preventing migrating formation fines in Underdown noted fines production is becoming heavy oil production, but David Underdown who has a PhD in physical chemistry is helping to make a major issue in the Gulf .and other places where a breakthrough.

Chevron operates like in Duri Sumatra that proUnderdown is a research consultant with Chev- duces over 1 million lbs. of solids a day with heavy oil. ron Energy Technology Company in Houston, “They cut off chokes, they fill up separators, Texas, who presented a research talk at the April 14 they fill up flow lines and then, if you do separate technical luncheon of the Lloydminster Society of them from a production standpoint, then you’ve got Petroleum Engineers (SPE). to do something with them,” said Underdown.

His lecture titled, “A Holistic Approach to In Sumatra, the solids were once used for Understanding the Impact and Cause of Fines Production” is part of the SPE distinguished lecture building roads, but they leached contaminants, so series Underdown has delivered around the world. now they are put into pits to settle and reinjected at a high cost to Chevron. That includes the trucking.

In Lloydminster, he covered the consequences Underdown said Chevron is a frac pack compaof fines production, sources of fines, dealing with ny in the Gulf of Mexico where horizontal wells are fines and some of the lessons learned and best experiencing increased skin or reduced permeability practices. near the wellbore due to fines migration.

Most of the research in his talk was specific to “They are coming from the crushing of the mafines in deep water Miocene rock in the Gulf of trix rock near the wellbore or coming from actual Mexico where Chevron has horizontal wells. clays that are deposited in the pore throats. Those As for what exactly fines are Underdown said, “There’s a geological definition and that’s a size. are probably the two biggest sources,” said UnderHORIZONTAL DIRECTIONAL Get ready to work. down. DRILLING That could be anything from 65 microns on down.

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A gravel pack is a steel screen placed in the wellbore to prevent the passage of formation fines whereas frac packing involves simultaneous hydraulic fracking with the placement of a gravel pack.

Migrating fines can plug up the sand control screens as they have in the Gulf which led Chevron to initiate a single phase core flow test to look for sources of fines.

Fines can also lead to a loss of fracture width and conductivity.

How to mitigate migrating fines into the wellOffice bore has yet to be determined.

“That`s what we’re trying to find out. We don’t know yet,” said Underdown who advocates having a good 3D calibrated model of the formation.

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PIPELINE NEWS May 2015 ◄ Page A24 An organic polymer for example, won’t work on silica fines he said.

As for lessons learned Underdown said, “The most important thing we found was the orientation of the wellbores with respect to the principle stresses in the earth.

“This is for deep water Miocene in the Gulf of Mexico.”

Getting good connectivity between the wellbore and the reservoir is the second most important thing he said in reference to wellbore perforations.

He said it is also important to put together a dedicated cross functional team to address complex

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Brenda Noble, right, of Fire Sky Energy was on hand with CJ 1150 morning show host Lyle McGilivray on April 13 for the Estevan St. Joseph’s Hospital Foundation Radiothon for Life. Noble presented two donations, one on behalf of Fire Sky for $3,500, and another on behalf of Fire Sky vice-president of operations and COO Tom Copeland for $2,500. Fire Sky also hosts its own golf tournament each year with about 80 people attending. Last year their donation to SMILE services from that tournament bought a new van.

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issues of fines production.

“That’s actually most important,” he said on second thought.

“It’s getting all the silos (isolated work groups) to go away in order to have the facilities, the reservoir engineers, the modellers, the drilling engineering all talking to another.”

For the Lloydminster audience Underdown said, “What it is important for them to learn is there are certain questions they need to ask the service providers when they start looking at sources for dealing with fines.

“They need to understand which chemicals the service companies are providing.

“They need to understand the consequence of fines, in say flow lines, because they’ve got heavy oil out here.

“If they understand how to better ask the service providers to do core testing for formation damage testing, those things would be very important.”

Underdown began his distinguished lecture last October in countries like Russia, India, China and parts of Southeast Asia.

“I’ve been gone from home for about six months,” he said with two stops left to go including Edmonton on April 15 followed by Grand Junction in Colorado.

Underdown’s technical presentation at the Lloydminster SPE was the last one of the season.

The series will resume in the fall.

A26

PIPELINE NEWS May 2015

Top Analysis mines SAGD data Top Analysis employees Tanya Fagnan, left, a business development rep, and Trevor Phenix, a production consultant, check the quick view menu on the monitor for available data on every thermal heavy oil operation in Alberta and Saskatchewan.

Photo by Geoff Lee

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Edmonton – In a nutshell, Top Analysis is a data mining and processing company with software tools to help producers optimize their heavy oil thermal operations and wells.

The Calgary-based company purchases raw data on thermal projects from the Alberta and Saskatchewan government and presents it to clients on a web-based format that makes sense.

The company focuses on providing useful data relating to thermal heavy oil operations in Alberta and Saskatchewan utilizing steam-assisted gravity drainage or SAGD technology.

Their Top Analysis software and regulatory software generated a lot of inquiries from cost conscious operators in Western Canada during the World Heavy Oil Congress in Edmonton March 24-26.

The software products fit the show theme “Producing More with Less” during the current global low oil price downturn.

“What we actually do is we supply data for every single thermal oil sands operation in Alberta and Saskatchewan that’s operating SAGD wells,” said Trevor Phenix, Top’s production consultant at the Shaw

Conference Centre.

“So we have drilling and completion data, fully metric operational data and all regulatory applications.”

Top Analysis software is touted as a multi-discipline tool designed to eliminate the obstacles encountered when evaluating thermal projects.

“We allow you to quickly and easily access any of that data for your own personal use to develop other properties, whether you’re looking at your own internal properties, or external properties,” said Phenix.

The available well data includes all production and injection volumes, observation well pressures and temperatures, operating pressures and temperatures and directional drilling and completion details.

“We manipulate it and add value to it, so that when you actually view it, it’s in a manner that actually makes sense and allows you to quickly and easily to do your internal evaluation,” said Phenix.

Top Analysis software organizes data and links SAGD wells to pairs, pairs to pads and pads to projects in a tree view computer menu for quick analysis at various levels of any project. ► Page A27

PIPELINE NEWS May 2015 ◄ Page A26 Quick view volume charts, drill profiles, well counts and mapped drilling paths are available and clients can export data and produce customized charts in Excel.

Data is also available to view on types of enhanced oil recovery fluids used in SAGD applications.

“It’s extremely valuable. What we allow clients to do is basically take a look and see what they are doing, potentially, and what they could be doing to improve the overall process,” said Phenix.

“We have a lot of clients who look at their own internal data because we present it in a manner that may make more sense than they have it internally.”

Clients can also compare any number of companies, projects, pads and infill wells.

“We also allow you to look at what other companies are doing, like some of the enhancements they are doing to their operations, how successful they’ve been and the associate timelines for regulatory approvals,” added Phenix.

“Then you can actually look at all of their individual regulatory applications to help you build your own regulatory applications to eventually submit, and potentially proceed with that type of operation.”

The Top Analysis regulatory software is a searchable in-situ application database with a user friendly

interface for finding and reviewing regulatory applications.

“We are software as a service, so you simply subscribe to an annual subscription that you pay for. You log into our site to get the data,” said Tanya Fagnan, a business development rep about the company’s business model.

Top’s advantage is that it is too difficult and costly for companies to produce their own useful data from the government sources.

“If they did it themselves they would have to pay probably double by the time they paid all the licences for all the subscriptions, and then they would pay an engineer to do the sorting and organizing that we do,” added Fagnan.

The Top Analysis team has extensive experience with SAGD in areas of operations, engineering, regulatory processes, production accounting and custom petroleum analysis software.

“The biggest thing is the data itself comes in a very difficult format to utilize. You typically need third-party software to extract it in a way that it makes sense,” said Phenix.

“If you were to go access the data itself, it’s in a more programmable type format where you need to extract it and manipulate it. We do all that work for you.

“We do a lot of value-add in terms of getting wells into pairs and specific groupings.

“We’ve built the reports and the

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Top Analysis’s store of data includes historical data dating back to 2001 with new data and files updated on a daily basis on their servers.

New volumetric data is about three weeks behind real time.

“In terms of regulatory we have it – every single night – we update individual files so it’s very recent,” said Phenix.

“It’s not real-time like a field data capture system, but it’s about as close

A27

as you can get.”

Despite the current low oil price environment Phenix said they’ve been as busy as ever in Calgary.

“We are busy because we are one of the tools that allow companies to optimize their current and existing operations,” he said.

“We don’t just help long term development we help real time so we haven’t really seen much of a slowdown yet.

“That being said, I can imagine if this carries on too long we may have some difficulties getting some new bigger clients but for the most part it’s been business as usual.”

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A28

PIPELINE NEWS May 2015

EOR Alliance out to flood market Edmonton – At the EOR Alliance, three heads can be better than one when it comes to determining the best solution for enhancing heavy oil recovery on a reservoir specific basis.

The group’s mission is to bring the latest innovations to reservoirs around the world from the lab to the field in the most efficient manner.

“EOR Alliance is a consortium of three companies that have been put together to do reservoir studies and pre-feasibility for enhanced oil recovery projects,” explained Patrick Dwyer during the World Heavy Oil Congress in Edmonton from March 24-26.

Dwyer is the EOR Alliance business development manager for the Americas from IFP Canada in Calgary.

He said the three parent partners in the international EOR Alliance are IFP Energies Nouvelles, Solvay and Beicip-Franlab.

“Solvay has the chemicals, basically the surfactant; Beicip-Franlab brings the software modeling for the reservoir, and IFP brings the petrophysics for the testing,” said Dwyer.

“We determine which technology would suit the producers – most economic, most feasible for chemical, polymer, CO2, surfactant and steam

foams.

“Your reservoir will dictate whether you use steam, whether you need to use polymer, whether you need to use surfactants. So it’s not either-or in most cases. It’s reservoir specific.”

Dwyer spoke to Pipeline News about what the EOR Alliance does during the oil congress exhibition at the Shaw Conference Centre.

“We specialize in polymer flooding which is the tertiary stage of recovery in the oil field,” he said. Tertiary follows primary production and waterflooding to recovery heavy oil.

Polymer is a gel material that is added to water to increase its viscosity.

The higher viscosity water pushes the oil more uniformly through the fine-grain sands of the formation, increasing oil recovery.

Dwyer said the EOR Alliance has yet to do any flooding in the Lloydminster region, but he noted there is a lot of alkaline surfactant and polymer flooding going on near Provost, Alberta, and east into Saskatchewan.

He named North Blizzard, Rock Resources, ConocoPhillips and Penn West among the participating players in the region.

“Most of our work has been in northern Alberta in the Pelican Lake

Left to right from the EOR Alliance are: Nelly Buitrago, business development executive, IFP Canada; Eric Delamaide, principle reservoir engineer IFP Canada and Patrick Dwyer, business development manager IFP Canada at the World Heavy Oil Congress in Edmonton. Photo by Geoff Lee

oilfield area and in southern Alberta, and in the United States with CO2 floods, and in Columbia,” said Dwyer.

Cenovus and Canadian Natural Resources Ltd. are successfully using

polymer floods to boost the recovery of heavy oil in the Pelican Lake area of the Wabasca oil field in northern Alberta. ► Page A29

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PIPELINE NEWS May 2015 ◄ Page A28 “You can see in the Pelican Lake area most of the polymer flooding going on there has restarted those fields,” said Dwyer.

“For the past 10 years they’ve really upped their productions and sustained production in that part of Canada.

“If you go down into southern Alberta, Husky has alkaline surfactant flooding down there – CNRL as well in the southwest part of the province.”

The low price of oil kept many producers from

attending the heavy oil congress, but Dwyer said thermal production and enhanced oil recovery projects still need to carry on.

“They have to keep those projects going. It’s not like you can turn a switch off and walk away from a steam flood. It has to be a continuous operation,” he said.

“It’s the same with the polymer flooding and surfactant flooding, too. It has to be maintained.”

The EOR Alliance advantage is having access to one of the largest groups of experts dedicated to enhanced oil recovery in the world.

Their research and development investment

Hardisty – Gibson Energy Inc. isn’t waiting for oil prices to sharply rebound to further expand its crude oil storage capacity at the Hardisty Terminal by 900,000 barrels.

The Hardisty terminal and pipeline hub is Canada’s equivalent to the hub and storage terminal at Cushing, Okla. It is Canada’s largest crude oil storage facility and the kickoff point for numerous pipelines, including the Enbridge mainline.

The company has received committed shipper support to proceed with the construction of a 400,000 barrel and a 500,000 barrel storage tank to handle expected production growth in oilsands volumes.

The 500,000 barrel storage tank is backed by a long-term agreement with Teck Resources Ltd., a new customer for Gibson.

Teck is a partner with Total E&P in the Suncor operated Fort Hills oilsands bitumen project located approximately 90 kilometres north of Fort McMurray and operated by Suncor.

“The recent contract with Teck, in support of their Fort Hills project, illustrates the resiliency of PipelineNews_February_Layout 1 1/20/15 9:33 AM Page 1 our customers’ growth plans and highlights the in-

dustry leading connectivity and optionality benefits associated with our terminal in the Hardisty area crude oil hub,” said Rick Wise, Gibson’s chief operating officer in an April 13 announcement.

“Despite today’s depressed oil price environment, a robust growth profile remains in place for oilsands related production volumes.

“We have confidence in our ability to capture the associated demand for terminal services through the diversified offerings we can provide our customers at the Hardisty Terminal.”

The two new storage tanks, expected to be inservice by the middle of 2017, are part of Gibson’s nine-tank expansion at the Hardisty Terminal that began in 2012.

To date, the company has commissioned four of the nine tanks totaling 1.7 million barrels of additional storage capacity.

The remaining five tanks including the two new ones under construction will add an additional 2 million barrels of capacity.

When complete, the expansion will increase Gibson’s total crude oil storage capacity at Hardisty to 8 million barrels.

A29

helps them address the most challenging reservoir conditions, including high temperature, high salinity, heavy oil and fractured carbonates.

“I think in our case –the glass half full scenario is the existing fields need to be enhanced,” said Dwyer.

“So with the drilling being cut back and the geophysical work being cut back, the producers need the cash flow.

“They need to be able to enhance what they have. With these technologies there is probably a cost advantage as well in their production strategies.”

Gibson to expand storage at Hardisty terminal

This 2011 satellite image from Google Earth shows the scale of the Hardisty terminal. Several additional tanks have been built since this image was taken, and more are in the works. Photo courtesy Google Earth

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PIPELINE NEWS May 2015

Petrospec dialed into thermal recovery Edmonton – Petrospec Engineering’s reservoir monitoring instrumentation technologies and production optimization solutions for thermal oil recovery can cut costs during the current low oil and gas price climate.

That was one of the timely selling pitched by Scott Penny, Petrospec’s technical services manager during the World Heavy Oil Congress held in Edmonton from March 24 to 26.

“Definitely the one thing you hear time and again is reducing costs.

Reducing costs doesn’t necessarily mean the cheapest though,” he said at Petrospec’s exhibit inside the Shaw Conference Centre.

“If you can use technology to reduce costs in another area to make your process more efficient or to increase production, that’s a way of driving costs down as well.”

Petrospec achieves that goal with its turnkey solutions for thermal oil customers including instrumentation

monitoring, engineering downhole solutions and data interface and user application tools.

“Our core business is reservoir monitoring for global downhole thermal producers,” said Penny, who works from the head office in Sherwood Park.

“Primarily, we are providing pressure and temperature monitoring.

This would be permanent, continuous downhole monitoring.”

Petrospec’s instrumentation technologies are designed for steamassisted gravity drainage (SAGD), cyclic steam stimulation (CSS), steam flood, and in-situ combustion applications as well as conventional low temperature reservoirs.

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Scott Penny, technical services manager for Petrospec Engineering in Sherwood Park spoke about his company’s thermal reservoir monitoring instrumentation products and services during the World Heavy Oil Congress exhibition held at the Shaw Conference Centre in Edmonton March 24-26. Photo by Geoff Lee

Prior to the downturn in oil and gas prices, Petrospec had been relatively busy in the Lloydminster area, but Penny noted, “Things are definitely slowing down a little bit. You can see that.

“We’ve had a lot of work in the Lloyd industry over the last five years.”

Penny was eager to inform any of the 1,000 delegates from around the world that he spoke to in Edmonton about Petrospec’s global market growth.

“Petrospec has an aggressive growth plan from expanding our base in Sherwood Park to the Middle East, Latin America and other international geo-markets,” he said.

Petrospec currently has an operational centre in Oman.

“Additionally, we continue to try to add to our product line with new

technologies for both reservoir monitoring as well as production optimization technologies,” said Penny.

“That’s kind of our key growth driver is technology – finding, developing and bringing those technologies to market.”

Their new Hot Tube electric heating power line is touted as having the potential to generate annual returns of over 200 per cent for operators by increasing production and lowering operating costs.

Penny also explained how their growing line of products and services fit the event theme ‘Producing More with Less.’

“I think it goes back to if you can operate as efficiently as possible, understand your processes, mitigate problems, and increase production that will help you do more with less,” he said.

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Pipeline News

SECTION B May 2015

New $4 million pipe inspection plant built near Estevan This graphic show the layout of the new CJ-CSM Inspection plant that is being completed northeast of Estevan. Graphic submitted

 By Brian Zinchuk Estevan – In real estate, they say location is everything. If that’s the case, the brand new pipe inspection plant being built northeast of Estevan just might have everything going for it.

The new $4 million facility for CJ-CSM Inspection Ltd. is adjacent to the new Bert Baxter Transport yard, which is itself just off the new Estevan truck bypass. That bypass is expected to go into operation this fall. Just down the road, about a mile to the south, are the main pipe yards of L & C Trucking. Combined, Bert Baxter and L & C do most of the pipe custodian work in southeast Saskatchewan.

Thus they are a forklift drive away from one massive pipe yard, and a short drive down the road from another.

Clayton Jahn is the CJ in CJ-CSM. His stepson, Chris McClelland, is the CSM. Clayton has been in the inspection business for decades, while Chris is a petroleum engineering tech.

Clayton’s wife Shelley does most the human resources work for the company, and Kristol Nagy, her daughter and Chris’ sister, is the office manager in the family-owned and operated business.

Originally from Roche Percee, Clayton started working on rigs in 1986, then went to Esso Resources in 1987. “We went through transitions and were purchased a few times,” he said.

He started in the inspection world in 1996.

“It started with a pickup truck in the field with a small inspection unit,” he said.

Clayton linked up with Steve Papadimitriou for use of the latter’s first 3D magnetic inspection unit.

“He was the engineering manager for Baker Hughes USA,” Clayton said of Papadimitriou.

Indeed, Papadimitriou’s name is listed on numerous U.S. patents for non-destructive inspection, method and apparatus for measuring defects in tubular members, method and apparatus for measuring defects in tubular members, autonomous remaining useful life estimation and autonomous fitness for service assessment, to name a few.

“He started doing offshore in 1991 in the North Sea. We are the sole operator of his equipment. We’re doing Europe and the U.S.” CJ-CSM is in the process of expanding to Denver. They are currently working now in North Dakota, Montana, Utah and Texas. A new branch is planned for Navisota, Texas, this year. Midland, Texas, is also on the horizon.

In Europe Clayton said, “We work in France and German. We’re stationed in France.”

In Africa, they work in Nigeria, Angola, Brazil and are bidding on work in Cameroon.

Worldwide, CJ-CSM Inspection was running at over 30 staff members. With the decline in oil prices, that number has dropped to the high 20s.

“Everyone is an operator except for administration staff,” Clayton said in his new Estevan office.

Operators Their operators specialize in inspecting pipe.

But what does it take to be an operator?

“A lot are former rig hands or have worked with tools,” he said.

“I like to try to understand people. I don’t have a secret recipe. One managed a movie store in Nova Scotia. Another was a rig supervisor.”

A work ethic is important. “We don’t need Harvard grads, but you do have to have an aptitude to run a unit,” Clayton said.

What they are looking for is someone who is morally and ethically strong. That’s especially important for Shelley, who spent many years working with the Estevan Police Service, initially as a stenographer and eventually as the chief ’s assistant.

Clayton’s father worked in the oilpatch in the 1960s and went to work at the local coal mine when oil hit a downturn. Clayton and Shelley now hang their hats in Red Deer, but that can be a rare occasion. “I was home 30 days last year, but that’s where I reside,” Clayton said. ► Page B2

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PIPELINE NEWS May 2015

Highly automated plant to reduce physical interaction with pipe ◄ Page B1

Being adjacent to one of the largest pipe yards in the region and just down the road from the other large yards will make a big difference for CJ-CSM Inspection’s new Estevan plant.

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New plant The new pipe inspection plant near Estevan is their own investment. “If this goes down, this is it,” Clayton said.

While he started in southeast Saskatchewan, in retrospect he feels they could have kept more of the market share. This investment is an effort to regain that market share.

“I felt we weren’t getting our market share on the well inspection side,” he said.

Customers also told him they wanted a yard, so they bought the land two years ago and scratched dirt last year. They have 10 acres, and can expand to another 10 more. Similarly, the building has been designed to accommodate a machine shop at a later date should the need arise, but for now machining will be outsourced.

The 200 by 60 foot building is now complete, but the internal pipe handling apparatus is not expected to arrive until early May. He anticipates the plant will be operational by the end of May, initially with one of their conventional inspection units until the new one comes in.

The requirements of a pipe inspection plant mean certain adaptations have to be made during building construction. There are two long but narrow ports on each side of the building, allowing pipe to be brought to and removed from the internal pipe handling equipment.

Additionally, there are smaller ports for pipe to enter and leave the end of the building. All told, pipe can come in and out six different ways.

“We can process 137 joints an hour on the main door, and 90 on the second rack,” he said.

The ultimate plan would be to run two eighthour shifts, but it would have to get back to a boom for that activity level, he said.

They are focussing on working for a few smaller oil companies for now.

He is cognizant of opening a new facility at a time when many companies are pulling back.

“We’re not panicking. It’s an opportunity to do this right,” Clayton said. ► Page B3

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Clayton and Shelley Jahn are originally from southeast Saskatchewan, and now they’ve built their new world headquarters near Estevan. Clayton and their stepson Chris McClelland are partners in the venture.

◄ Page B2 There are benefits of slower times, too, like having a much wider range of potential staff to choose from.

“What makes us different is our equipment. We didn’t mess around.

We went to Rockford Engineering of Regina. It’s all (engineer) stamped.

“We kept it local. We have a

Wil-Tech bucking unit. Jim Wilson (owner of Wil-Tech) said, ‘Clayton, do it right.’”

All-told, “doing it right” probably added half a million dollars in cost.

Automated The plant will be highly automated. One person can run the whole plant. By using multiple pneumatic pipe rollers and pipe shakers, they

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can minimize human interaction and human error. Letting machines handle the pipe instead of people also reduces pinch points, a major safety concern.

The main inspection unit will be installed in the northwest corner of the building. As pipe enters the plant, it will be fed through the inspection unit and then sorted by class.

The inspection unit itself is made

by Stylwan, and uses magnetic flux principles. It uses 2D sensor configurations set up in arrays creating a 3D setup, allowing for much higher fidelity of readings. “We can tell a hole from a notch,” Clayton said.

This setups also allows for finite element analysis.

“A lot of people would say, ‘Who cares? An indication is red (junk classification) anyhow.’ Our unit can give feedback on the shape, size and geometry of the defect. Our plant unit will mark them all.”

An analogy would be the difference between from 1D seismic to 3D seismic.

“We are three-dimensional. Just detecting an indication isn’t enough.

It’s about analyzing it and categorizing.”

One of the biggest benefits is this system allows for the inspection of dirty pipe. “Ours doesn’t pick up wax or scale. Gamma can’t do that.

You have to clean it or live with false indications,” Clayton said.

“Our plant will be a dual-field 3D unit, the first I know of in the world.”

B3

Clayton likened it to an MRI, but for pipe.

This system will not be restricted to round pipe, either. “We can do square kellys, rods, tubing, coil. Other units can’t do odd shapes because the sensors are at a strict distance.”

It will also be possible to inspect tool joints.

The limiting factor on inspection heads wasn’t so much the sensor heads themselves, but the computer power to process the data. Newer computers will allow their fourthgeneration unit to make 16,000 recordings per second.

Clayton said they will be using the Estevan plant for research and development, and will look at processing tube ends and collars. When a bad joint goes through, they want to see what differences are highlighted, and build a knowledge base from there.

“I’m excited about our shop and plant,” Clayton said, adding it was important they spent the money on engineering.

“We’re the only real local company,” he said, pointing out other similar operations are part of larger companies not based in Saskatchewan.

“This is the head office for all our world operations.”

One senior operator, a few yard staff and one office person are expected to work at the Estevan plant when everything is up and running. An additional five field staff, including Clayton, will work out of Estevan.

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B4

PIPELINE NEWS May 2015

Boyd, Krawetz, Gormley to speak at oil show Hall of Famers and SE Sask.

Oilmen of the Year revealed  By Brian Zinchuk Weyburn – Despite the slowdown in the oilpatch, the upcoming Saskatchewan Oil & Gas Show is expected to have a full slate of exhibitors.

The event, sometimes referred to as the Weyburn Oil Show, takes place June 3-4 at the Weyburn exhibition grounds and Crescent Point Place.

Tanya Hulbert, show manager, said on April 9 that they have confirmed Minster of the Economy Bill Boyd will be speaking at the noon luncheon on Wednesday, June 3. That is when the Oilman of the Year and Saskatchewan Oil Patch Hall of Fame recipients will be presented.

The Hall of Fame recipients have been selected by the Board of Governors and the 2015 recipients are Bonnie Dupont, retired senior vice-president of Enbridge Canada, originally from Swift Current; Bill McCaffrey, chairman and CEO of Meg Energy and Jim Bertram, executive chairman of Keyera Corp.

The Oilman of the Year is also chosen by the board of governors and will be announced at the Wednesday awards luncheon.

The Hall of Fame launched its new website two years ago. It can be found at saskoilpatchhof.com.

Two Southeast Saskatchewan Oilmen of the Year have also been

chosen by the Weyburn Oilshow Board and the 2015 recipients are Terry Gunderman, Red Hawk Well Servicing Inc. and Dempsey Laird, Dempsey Laird Trucking Ltd. They are picked locally. That event will take place at the 7 p.m. prime rib dinner on June 3. Deputy Premier and Minister of Finance Ken Krawetz and Weyburn Mayor Debra Button will be making remarks at the opening ceremonies.

CKOM/CJME talk radio host John Gormley will be the guest speaker at the industry luncheon at noon on June 4.

Some exhibitors have pulled out, but the long waiting list meant that all slots have been filled. Some withdrawals were due to mergers, while others chose to spend their dollars in other areas.

“Some people feel this is really the time to talk to your customers,” Hulbert said. She noted that attendance is sometimes lower when the oilpatch is going flat out.

“You want to be visible to appeal to customers, to tell them you are here for the long haul.”

Because exhibitors have been more fluid for this show than in the past, it’s meant more work for organizers. A lot of items that would have been sorted out months ago are being dealt with now.

“Even with the economic adver-

Saskatchewan Oil and Gas Show manager Tanya Hulbert holds an invitation to this year’s show June 3-4 in Weyburn.

Photo by Brian Zinchuk

sity we’ve faced, we’ve still had people calling about our event. Our show touches the industry in a social sense.

Companies can show appreciation to their customers and clients,” Hulbert said. “I think that’s what makes our show viable. It’s networking. In downturns, your business skills come out.”

The VIP hosting tent adjacent

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B5

Could this be the bottom?  By Brian Zinchuk Calgary – Have we seen a bottom to oil prices? David Yager, MNP LLP’s national leader for oilfield services, says yes.

Yager wrote about that in his weekly newsletter, where he stated, “Somebody’s got to do it. So this writer is hereby declaring a floor for North American oil prices, within the usual parameters of market volatility of course. Which means the basement price is US$50 a barrel for WTI plus or minus 10 per cent within a given five-day trading week.”

He spoke to Pipeline News on April 16 via phone from Calgary.

Pipeline News: When do we break out the champagne?

David Yager: (Laughs) The first step for oil prices to go up is to quit going down.

I’ve been reading a lot of conjecture about U.S. production and U.S. storage, Iranian nuclear peace and all this oil – a lot of very bearish articles in the trade press by seemingly knowledgeable financial institutions that we might see $20 a barrel before we see $100.

So I just felt, with the measurable decline in production from certain U.S. shale fields like North Dakota, the Bakken, the Eagle Ford, and the fact the build in oil storage was slowing down and refineries quit their shutdown season, some pop in

demand, some further analysis of the Iranian settlement showing that even if they agreed to everything, it would be some time before Iranian oil would be back on the market…

Then I actually looked at the numbers. I looked up the closing price for WTI on the spot market for first three months and two weeks of the year and the average was $48.88. It seemed to be that $50 a barrel, plus or minus 10 per cent, would appear there’s a firm basement set up under the oil price. That’s based on the price we’ve seen over the last four months.

P.N.: I was surprised to see oil was $56 yesterday. Do we celebrate now that we actually saw something over $55?

Yager: When I look at the dramatic drop in capital spending worldwide, the dramatic cut in the rig count, the fact there’s really no oilsands projects under construction once the current round is built; when I look at all these factors, what surprises me is not that oil is at $56, but the number of people who think it should be at $40 or less.

This buildup of U.S. storage – what does it mean? It’s quite normal when you get a situation where its worth – this contango as they call it – where you can buy it today for $45 and sell it tomorrow for $55, that’s an easy way to make a living. All of these

things same to make sense and are quite predictable.

It seems with the media these days it’s a hot story. As soon as anybody says anything negative on oil prices, whether it’s fact-based or not, it gets printed.

Short sellers have had a field day, really, with the price since OPEC said in November they were not going to support the price by shutting in. The short sellers have had a field day with no resistance from the long. At the end of the day, supply and demand has to work out.

The other thing that I never agreed with was people talking about demand being inelastic. I just don’t believe that, when you’re producing

93 or 94 million barrels a day and the price goes down by half, we’re not going to burn any more.

I was more surprised when oil hit $44 than $56.

P.N.: Inelastic?

Yager: Yeah, it’s called the elasticity of demand. If you cut the price of pies in half, can you sell twice as many? Everybody thought the demand for oil was inelastic, meaning I could cut the price in oil by half and it’s not going to change demand. I just don’t believe that.

P.N.: How many wars does Saudi Arabia have to get into and how many countries does it have to bomb for oil to go up? ► Page B6

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B6

PIPELINE NEWS May 2015

When do we break out the champagne?

Yager declares a floor to North American oil prices ◄ Page B5 Yager: I can’t answer that question. But I will say what is curious is the risk premium that is not being afforded to the Middle East. You’ve got a military outbreak between Saudi Arabia and Yemen. You’ve got the insurgency in Iraq.

For some reason, there’s no risk premium, or not much of one, built into the price of oil. Having new crude supplies in North America changes it somewhat, but that’s only four million barrels

a day against OPEC’s 30 or Saudi Arabia’s 10.

As for commenting on potential or future insurgencies, I’ll pass on that.

P.N.: Where I’m going on that is this: Isn’t Saudi Arabia involved in the anti-ISIS campaign? We’re looking at Saudi bombers or support in Iraq, in Syria and Yemen. The only direction they’re not shooting so far is Iran.

Yager: The fact the Shiites and Sunnis are having a quiet little

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war in the Middle East and this hasn’t affected the price of oil is quite surprising.

P.N.: From the MNP side, have you seen a rise of companies in serious financial straights?

Yager: I don’t want to answer that specifically because I don’t want to be seen speaking about our clients.

But there’s no question that the oilfield service business in general is experiencing a tremendous pressure on revenue, business and pricing. That’s just the way it is. Whether you’re an MNP client or not, every service business is under pressure. There’s less business, and what business there is, the anticipation is that you’ll perform that business at lower prices than the last year. There’s pressure in the whole sector.

P.N.: In the past few months, I’ve only encountered a handful

David Yager

of businesses that have not had layoffs. You keep a sharp eye on the oilfield service sector.

How many companies have not enacted some form of layoff ?

Yager: Few to none.

There may be a few small companies with new technology or new product or great order book that are stable or hiring. But certainly, anybody that’s involved with this sort of activity in your part of the world that might be a construction project might be stable.

P.N.: So almost everyone has had layoffs?

Yager: Be careful with that. If you’re working on a large capital project or a plant, you’re not going to lay anyone off until you’re done the project.

Depending on what you do, if you’re building a pipeline, you might be hiring. You can’t say everyone fits in that category. But if you’re doing what a lot of folks do in your part of the world, chasing rigs, then a lot of the business you do is related to the number

of wells being drilled and the number of rigs running every day. Then there’s no question your business is down and you’re probably sending people home.

You have to be careful with the business, because there’s the production side of the business and pipeline side and so on. It’s not quite one-size-fits-all. Certainly for conventional spending, on drilling and exploration, every company in that space is materially affected. ► Page B7

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PIPELINE NEWS May 2015

B7

Dayman family honoured Estevan – The late Lorne Dayman and his family were honoured with a lifetime achievement award at this year’s Estevan Oilfield Technical Society 56th Annual Open Bonspiel banquet.

Ray Frehlick, who had known Lorne for many years, as well as his sons (who carried on the business after

Lorne retired) spoke of the family’s numerous contributions to the community.

“He had an ambition, and that was to work,” Frehlick said of Lorne, who also joked that he was, “As cranky as hell.”

They raised six sons and one daughter. Five of those sons reformed the business in the early

Southern Sask. likely first to go back to work

1980s a few years after Lorne and his wife Iris retired.

“Lorne and his wife were tremendous in this community,” he said, recalling much larger OTS celebrations they hosed in the past, back when the boys were still young.

Frehlick said Lorne and Iris taught their children work habits and accountability.

Lorne himself was a competitive car racer.

Frehlick said, “Thanks to the Dayman family and the people of this community who helped achieve that goal, a new

Kip Dayman, right, accepted a plaque for the lifetime achievement award for the Lorne Dayman family. Ray Frehlick, left, made the presentation. Photo by Brian Zinchuk

track.”

Estevan, he noted, was “fortunate to have people dedicated to the cause of a better community.”

He said, “They don’t want a lot of recognition, but they deserve recognition.”

One of Estevan’s landmarks, a retired drilling rig derrick, was obtained from a bankruptcy in 1974 when oil was $5 a barrel. “The Dayman family with their first crane set up that derrick,” Frehlick said. “They didn’t want

any recognition.”

“I want to thank them for all they’ve done,” he said, pointing out the Daymans had made a $100,000 donation to the local nursing home, just one of their many charitable donations.

Weir Oil & Gas welcomes the employees of Metra to the team.

◄ Page B6 Oil companies getting 50 cents on the dollar for their product are sure to ask their service providers to share the pain.

P.N.: Have you seen the projections the Saskatchewan provincial government had for oil, and that their budgeting is not expecting a return to $100 oil at all for the next five years? I think it was $55 for this year?

Yager: I’ve seen the Alberta government’s. I haven’t seen Saskatchewan’s. It was in my newsletter a couple weeks ago. That’s pretty discouraging. I think for their fiscal year end for March 31, 2016, they’re looking at $55 or something.

I pray they’re wrong.

Sixty-two bucks for the year after. All they’ve done is reproduce the forecasts of financial institutions. But in the end, I’m certainly hoping they’re wrong. I suspect they are.

P.N.: What if they’re not?

Yager: Well, it’s going to be a tough, real long patch going ahead.

I’m trying not to be excessively negative. I put out a news story that I think is positive, but all your questions were really negative. (laughs) P.N.: I’ve been looking for positive news stories and I have very few.

Yager: The other thing is that your area will be the first place to come back. If there’s some stability in prices and these prices hold through spring breakup, the first place they‘re going back to work is southern Saskatchewan, period.

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B8

PIPELINE NEWS May 2015

EVRAZ announces $200 million pipe mill expansion in Regina Regina– EVRAZ North America announced on March 31 that it will make its largest single investment – approximately $200 million – at its Regina, Sask., facility.

Premier of Saskatchewan Brad Wall, Saskatchewan Minister of the Economy Bill Boyd, Regina Mayor Michael Fougere, EVRAZ and Enbridge executives, and local dignitaries participated in the announcement event.

“This investment will secure our position as the highest quality, lowest cost integrated producer of large diameter pipe in North America,” said Conrad Winkler, EVRAZ North America President and CEO. “We greatly appreciate the Government of Saskatchewan’s role in working with us on issues facing primary steel production, in helping to create a favourable business environment, and in providing an important tax incentive for new investment in the recent provincial budget. It also allows EVRAZ to provide stability and long-term viability for more than 1,000 employees at the Regina mill as we continue to meet increasingly stringent industry standards and supply our customers with 100 per cent ‘Made in Canada’ pipe.”

“Not only did the budget avoid any tax increases, we also wanted to provide an incentive for new job creation in export manufacturing and processing and so we are very pleased to see EVRAZ respond to these revenue neutral incentives with a $200 million investment that will create about 40 new jobs,” said Premier Brad Wall.

Spanning the next two years the investment, which is being entirely funded by EVRAZ North America, will include installation of a new two-step large diameter line pipe mill (primarily from assets recently purchased from United Spiral Pipe LLC). It will enable the production of larger, thicker-wall pipe and increase annual production capacity by over 100,000 tons. EVRAZ is also making state-of-the-art upgrades in steelmaking including degassing and the ability to make larger steel slab sizes.

Additionally, the power and size of its rolling mill will be increased to make thicker, wider steel coils.

EVRAZ and Enbridge also announced that the two companies will partner on a joint research and development program to enhance pipeline performance. Along with industry and academic institutions, EVRAZ and

Uncoiled steel is wrapped in a spiral, forming pipe.

File photo

Enbridge will help drive continuous improvement with the ultimate aim of optimizing industry-wide safety and reliability.

“EVRAZ has the largest pipe research and development centre in North America and it has played

an important role in Canadian steel advances since 1982,” Winkler said.

“Now we will combine our experience with that of Enbridge to further augment the performance of large diameter pipe.” ► Page B9

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Monaco told reporters, “We make an order for the pipe to EVRAZ in a certain amount of time prior to the project beginning, and they guarantee delivery of that pipe. It’s very flexible to us. To us, that’s the key here.

EVRAZ’s mill, with it’s quality and its ability to adapt to what we need on a very short term basis is what makes them a

4

primer partner for us.”

Enbridge has two major large-diameter pipeline projects in the works for Western Canada in the next few years, including the Line 3 Replacement project and Northern Gateway.

Large diameter line pipe is integral to oil and natural gas distribution, and EVRAZ has produced more than 51,000 kilometres (32,000 miles) of project

B9

pipe from millions of tons of recycled metal over its 59 years in Regina. The Regina site and its employees currently contribute about $30 million per year to the federal and provincial economy in direct taxes. EVRAZ also creates another $600 million per year in economic benefit through the purchase of raw materials, goods and services.

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◄ Page B8 Al Monaco, president and CEO, Enbridge Inc., said, “The pipe we put in the ground is at the heart of our business. Over the next three years, we’ll build more than $22

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PIPELINE NEWS May 2015

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Advance Engineered Products Ltd. seeks creditor protection  By Brian Zinchuk Regina – On April 10 Advance Engineered Products Ltd., based in Regina, filed with the Court of Queen’s Bench of Saskatchewan, Judicial Centre of Saskatoon, for protection from its creditors under the Companies’ Creditors Arrangement Act. 1343080 Alberta Ltd. operating as Dumur Industries, a wholly owned subsidiary of AEPL is not affected nor included in the CCAA proceedings commenced on that day.

“After making significant production improvements and progress over the last six months across our manufacturing operations, a sharp and sudden downturn in the energy market in Western Canada has resulted in customers cancelling or deferring sales orders which has materially reduced our manufacturing backlog,” said AEPL CEO Darrell Zwarych in a press release. “Like many companies reliant on a strong Canadian energy sector, AEPL is unable to continue operations unabated without a material reorganization of its business.”

“The CCAA process, with the support of the senior lenders and other major stakeholders, provides AEPL an opportunity to restructure its financial obligations in conjunction with its major stakeholders and right-size its operations to reflect the current reality of the energy sector,” said Zwarych.

AEPL is one of Canada’s largest manufacturers of tank trucks, trailers and vacuum truck equipment with manufacturing operations in Saskatchewan, Alberta and Quebec. AEPL operates under the brand names: Advance, Lazer Inox and Westech. In addition, the company operates parts and services operations, under the brand name Advance Tank Centers, in Saskatchewan, Alberta and British Columbia.

While staff reductions have occurred at its manufacturing facilities, the Advance Tank Centres in Edmonton, Lloydminster, Calgary, Regina and Surrey will continue to operate normally. The continued operations will focus on providing superior service to its customers.

“We believe that this protection will provide the stability, as well as, the breathing room necessary to restructure the business. AEPL is a great Canadian business with a rich history. It has gone through challenging times in the past, but by focusing on developing a prudent cost structure and delivering value for its customers, it will ultimately, and once again, demonstrate its proud heritage and meet the needs of its valued stakeholders,” said Zwarych, adding, “We are confident about our future”.

Pipeline News was unable to reach Zwarych by press time. However, Hugh Wagner, general secretary for the Grain and General Services Union, spoke to us on April 21.

The union represented 185 workers at the Regina plant, one over several. There are eight other

manufacturing plants are based in British Columbia, Alberta, Saskatchewan, Ontario and Quebec.

Wagner’s union only represents workers at the Regina plant, but he said workers in various other manufacturing plants had also been affected.

Prior to recent events, GSU had approximately 185 members working at the Regina plant. Initially there was to be a round of layoffs on April 17; affecting 64 people, and then a second one on May 29 affecting 88. Instead there were terminations announced on April 10, that pre-empted the initial planned layoffs.

The terminations were all in manufacturing.

The company’s service centres were not included, he noted.

The union was called to a meeting on April 10 which included a court-appointed monitor, the accounting firm Ernst & Young. There was no opportunity for the union to offer concessions or other measures.

“We offered to meet and discuss,” Wagner said,

but the application for the court order had already been processed.

Wagner noted this move seemed to be market driven, as orders had declined dramatically. The employer was optimistic they could keep on going, but things became tight with creditors.

“Can it be a viable, going concern? Abosolutely,” he said.

“Best case scenario, they restructure, get their financies in order, maybe get a partner, and get back to work,” Wagner said.

He expects a lean period, and is under no illusion Advance will resume business as usual in the next month or even in the early summer.

As of April 21, there were 24 members in manufacturing continuing work-in-progress and another 33 in service. On April 10, 135 were terminated, but four have since been called back, for a net job loss of 131.

The Regina plant’s production of tankers was “almost 100 per cent petroleum related,” he said.

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B12

PIPELINE NEWS May 2015

Level III inspection on a service rig explained Weyburn – If you run service rigs, part of your yearly maintenance regimen is the Level III visual inspection.

It’s a key part of the operations of a service rig company, not only for maintenance purposes, but also for safety.

Aaron Well Servicing has done these inspections more than a few times, as Aaron Cugnet, president, said, “We’ve been working Rig 1 for eight years.”

In early April they had Rig 4 undergo its Level III inspection.

“Every year, every rig has a Level III,” Cugnet said. It’s a Canadian Association of Oilwell Drilling Contractors (CAODC) requirement.

A Level IV is a more intense inspection that takes place every 1,000 operating days or 24,000 hours.

The Level III is in-depth, but it’s a visual inspection, whereas a Level IV will involve things like magnetic particle inspection or X-rays of welds.

Aaron Well Servicing rotates its five rigs as needed to complete their individual inspections. A sixth rig is complete in Nisku and was expected be picked up soon.

The company has some work lined up for the summer season. “You always hope you’ll have work.

Things can change,” he said. As a result, other inspections will be done around that work.

Like most other oilfield service companies, Aaron Well Servicing has had to cut its rates.

A Level III inspection is a detailed visual inspection that includes items like the derrick, crown section, substructure and drawworks. It also includes a visual inspection of all overhead equipment like block, bails, tubing elevators, rod elevators and rod hook. Cracking is the key thing they are

Kyle “Otis” Rudnitski, left, and Shelby Rudnitski clean up some power tongs on an Aaron Well Servicing rig.

Photo by Brian Zinchuk

looking for. That would normally be found in a weld or joint.

In comparison, a Level IV inspection means the

derrick has to come off. It’s split and sandblasted to bare metal. Every weld is inspected. ► Page B13

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B13

preSSure TruCK SerVICeS Serving Southeast Saskatchewan and Southwest manitoba Aaron Well Servicing just had its Level III inspection in early April.

preSSure TruCK SerVICeS ◄ Page B12 A Level IV inspection is done by a third party, whereas a Level III can be done in-house by qualified, trained personnel such as a toolpush or driller.

Cugnet, along with his managers, have the Level III inspection course under their belts.

“The inspection is usually myself, the field supervisor, toolpush and driller. If all goes well, you burn half a day if you’re doing it right.”

“The longest part is the cleaning,” he said.

It typically means eight to ten hours at a truck wash to do all the units in a service rig crew, plus five workers and a whole lot of cleaning product. He said, “It’s probably $2,500 all in.”

That time in the truck wash includes the rig itself, pump truck, utility/picker truck (which pulls the doghouse) matting trailer, crew truck and push truck. All of those units are gone through with a fine-toothed comb. All but the pickups also go through their regular commercial vehicle inspection, which is usually done at an SGIaccredited shop.

There aren’t usually

a lot of structural issues found, but he noted “There’s a lot of moving parts. You might find a sheave with a little wobble.”

“A lot of years we’ll do brakes and chain on the drawworks. Your pump has to be gone through. It’s often torn down to nothing. Valves, springs and packing are changed out.”

Then there are repairs on the pump manifold.

“Every oil you can think of gets changed.

Engines, transmissions, right angle drives, drop boxes, pumps, chain cases, differentials, wheel seals.”

All this preventative maintenance should result in a unit able to handle a full year’s work. Cugnet said, “Cross your fingers, it should only see the shop once a year.”

Other items are also gone through, including the blowout preventer system, tongs, and every other piece of equipment imaginable. Fire extinguishers get sent in for inspection, and air packs get a yearly flow check and inspection. Four-head gas monitors are also

serviced.

Once all the commercial vehicle inspections are done, it’s time to load up the fleet and head for scale.

“We get everything loaded up as if to go to work and go to scales to get proper weights.

We reapply to SGI for annual overweight permits.”

This June Aaron Well Servicing will have one of its service 3Saskatchem3, rigs at the wan Oil and Gas Show.

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B14

PIPELINE NEWS May 2015

ARKK Tubing Inspection now has Goodwater shop

Randy Labrecque looks after ARKK Tubing Inspection’s operations in southeast Saskatchewan.

This pipe is lined for C02 usage.

Photo by Brian Zinchuk

Goodwater – ARKK Tubing Inspection Services Ltd. has made the step from in-field to in-shop inspections.

While they still offer on-site tubing inspection services, including setting up a test head on a service rig floor, they now can do substantially more work by having set up an inspection shop.

ARKK is now using five of seven bays in the Gibson Welding shop near Goodwater, approximately one mile west of the main Cenovus plant which acts as the nucleus for the Weyburn Unit.

Randy Labrecque looks after ARKK’s operations in southeast Saskatchewan. He explained they moved into their new building in the start of 2014.

“We had been working outside, and it wasn’t pleasant to work outside at times. We do a good job, but it’s hard on the guys,” he said.

One thing that was ever-present was the wind. The last time Pipeline News caught up with them, working at a nearby yard, the wind was so strong it was hard to talk.

“As a result of our onsite supervision and work procedures we have in place, safety is a big focus for us. We are proud we haven’t had a hand injury yet,” he said. Now, with a plant based system, there is zero lifting required thanks to the automated pneumatic cylinders.

ARKK Tubing also has their own loader to move pipe around.

With a setup that allows for inspection to take place indoors, weather and its influence on workers becomes less of an issue. All told, there’s a dramatic increase in capability.

Labrecque said, “We can turn out pipe a lot quicker. Fully staffed here we can run 400 to 500 joints a day.”

That’s up from about 200 joints on a nice day before they had a building.

The building has a capacity to hold 300 joints, about two full typical 150 joint strings.

“We have recently bought a 4 1/2” (88.9mm) tubing inspection sensor head and magnetic coil for our in plant and field units” he added. ARKK has two field units in the region. ► Page B15

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PIPELINE NEWS May 2015 often the culprit when it comes to tubing wear.

“Corrosion is another,” Labrecque said. This can result in pitting caused by sour gas or CO2.

“A big part of what we do is look after injection pipe. It’s different, with a CO2 lining inside,” he said. A bushing is used on each

connection so that no steel is exposed inside the pipe.

Labrecque noted their business partnerships with Hunting Oilfield of Nisku, Alta. and Rice Engineering of Edmonton. “We work together. They provide us with training and support to run, inspect

B15

and repair this product, DuoLine 20 injection pipe,” he said.

In addition to pipe, ARKK also performs a care and handling service on sucker rods.

“Our rig floor units stay busy. When this facility is busy, it’s absolutely rockin,’” Lebrecque concluded.

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Most of ARKK’s work at Goodwater can now be done indoors.

◄ Page B14 The majority of their work at the Goodwater site is from the surrounding Weyburn Unit. However, the location is also not that far away from what is turning into the next big play in southeast Saskatchewan, the Torquay Formation along the U.S. border near Oungre. Crescent Point Energy refers to this area as their Flat Lake area.

To that end, ARKK has land on Highway 35 near Colgate that it can develop into its own facility should the need arise.

Fully staffed, the Goodwater facility would have five people working there. There are three at the present time. Labrecque said they have every intention of bringing back the other two workers when things pick up.

Software An important tool in ARKK’s service is its inventory reporting.

“We built an online website for reporting inventories,” Labrecque said. “All the pipe on the rack is in the system online – one hundred per cent.

“It is unique. We

looked at other industry programs, but they were cookie-cutter. We designed our own. It’s viewable on any desktop, Apple and Android devices and it’s a protected site.”

The online inventory is useful for field operators, consultants and inventory management staff.

“We promote the real-time reporting quite a bit,” he said.

Inspection Pipe or rods are dropped off on racks west of the building, accompanied by an email requesting what is to be done with it.

“We mark the pipe as it comes in.”

A feeding mechanism takes pipe from the loading rack outside and sends it into the building through a small port. As it enters it goes through the inspection sensor which uses the principles of magnetism to determine imperfections in the pipe.

As pipe is inspected it is marked by colour for designating how much wall loss it has sustained. Yellow means zero to 15 per cent wall loss, blue is 16 to 30 per cent, green is 31 to 50 per cent, and red is 50

to 100 per cent. A 100 per cent loss indicates a hole in the pipe. Red is also referred to as junk, and often ends up being made into things like cattle fencing or corrals or simply being recycled.

If a pipe is rated as junk then it proceeds on a straight line right through the building and exists via a small opening on the opposite wall. The remaining pipe is sorted by colour.

The ends of the pipe are also inspected, and a mandrel is passed through the pipe or “drifted” to ensure clearance. Threads are washed, pins are cleaned, and Inspectors look for defects on threads and collars.

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PIPELINE NEWS May 2015

PIPELINE NEWS May 2015

B17

56th Annual Estevan OTS Open Bonspiel 1.

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If they’re curling, Tony Naka will probably be there.

Magna Scope third Mike Ricard is intent on throwing his rock.

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Brian Fitzpatrick, curling for C&N Oilfield, shows off his golf and curling wear.

They were probably the loudest pants of the bonspiel.

Magna Scope’s Roxy Mutton releases her stone.

The winners of the 56th Annual Estevan OTS Open Bonspiel were Kent Mehler, Bruce Ehrmantraut, Lyle Dame and Fedor Rudnitski from Owen Oil Tools. They accept the championship plaques from Estevan Oilfield Technical Society president Brett Campbell.

Photo by David Wilberg, Estevan Lifestyles

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PIPELINE NEWS May 2015 Cam Northrop has been with Guardian in Estevan since 1990. He’s the area manager now, having worked his way up from the bottom.

Guardian offers several methods of inspection Estevan – Guardian, a ShawCor Company, has been inspecting pipe in Estevan for a long time, and is still going strong.

Cam Northrop is the area manager. He showed Pipeline News around their facility on April 9.

Guardian is a pipe inspection company.

Northrop explained, “We inspect drill pipe, heavyweight, drill collars, tubing, casing, subs, and various other things.

Every type of inspection is different, whatever

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We are also looking at getting a hardband unit in Estevan.

“We have a machine shop also. We thread all the above – both ends, boxes and pins.”

They added a large lathe in their machine shop five years ago.

Guardian has been in Estevan since 1989, and Northrop has been with the company since 1990, about six months after the facility opened.

He started out as a hand and worked his way up to area manager.

Estevan is Guardian’s only location in southeast Saskatchewan.

They also have operations in Lloydminster, Edmonton, Red Deer, Nisku, and Grande Prairie, Alta.; Fort St. John, B.C. and Texas.

“We cover from Shaunavon and Swift Current to Manitoba,”

he said.

On that day they had a crew working on a potash site 20 miles from Regina.

Busy Time Spring time is busy, as is Christmas time, when pipe is inspected during the down time for rigs. Some companies have their inspections done from November to December as opposed to Christmas time.

Drill pipe in inspected depending on how many metres are drilled. It depends on the drilling company and the oil company.

When a rig moves from one oil company to another, they might split the bill.

While they have a plant on the east side of Estevan, Northrop said, “We probably work 60 per cent in the field.” ► Page B19

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B19

Journeyman machinist Geoff Belitski has been working with Guardian for five years.

He’s been doing this sort of work for 17 years.

A loader finished moving pipe around the Guardian yard and goes onto the next project.

◄ Page B18 Their drill pipe truck runs in the field and yard, at about an 80/20 per cent split.

Guardian has 26 people on staff, and that has been pretty consistent. Companies have asked for discounts, but he noted they are “holding their own” on activity.

When service rigs start up again after breakup, the tubing will start coming in again.

A minimal amount of tubing comes in from March to June during spring breakup, but that gives the company time to work on its backlog from before.

“You’ve got to have service rigs going,” Northop said with respect to new tubing work.

For drill pipe, he said it can take four to five days to complete one complete string,

including normal pipe, heavy wall and collars.

“We usually inspect 380 pieces of pipe,” he said.

“In the field, sometimes it’s a rush, sometimes not. We set up on the side of the lease to inspect. The forklift brings it over.”

Northrop added, “A lot of our operators are cross-trained, i.e. on drill pipe, tubing and inspecting collars. I like to have four on a crew, but lately it’s been three.”

That allows them to smooth out the highs and lows of activity.

“We do have a lot of long-term employees.

People try to make this a career and a living. Six employees have been here over 14 years,” he said.

“Guardian’s number one focus is safety!

Safety overrides everything. At the end of the day we want our em-

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“I have met and worked with a lot of great people over the years. There is nothing I would rather be doing than this type of work.

“In order to be hired at Guardian, you have to pass a drug and alcohol test plus meet physical requirements,” Northrop concluded.

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B21

Where has the money gone?  By Brian Zinchuk Regina – This spring the opposition NDP has been asking where all the money has gone with reference to Saskatchewan’s recent good fiscal years.

Saskatchewan NDP deputy leader, finance critic and critic for the economy Trent Wotherspoon spoke to Pipeline News by phone from Regina on March 31 about the NDP’s take on the March 18 provincial budget.

Pipeline News: The 2014-15 budget set oil revenues at $1.564 billion, but those revenues are forecast to actually end up at $1.3 billion. Now the 2016-16 budget is pegging oil revenues at $902 million. How significant is a decline of $662 million in one line item to the entire budget?

Trent Wotherspoon: Any reduction of oil revenues is a concern for Saskatchewan. But if you look at the actual budget, the actual impact yearover-year is $400 million from last year from what was actualized as opposed to what was predicted for this year.

Government is predicting higher revenues in other areas. In fact, this government is projecting an increase of 1.25 per cent on its revenues coming in.

Certainly there’s a pressure felt by lower oil revenues, but government is suggesting its revenues will actually increase this year, so certainly that’s not a crisis for this treasury.

I would like to say there were measures this government could have taken through a period of the boom that we’ve experienced to put us in a stronger position today, from diversifying our economy to fixing our flawed procurement policy that sells out a fair shot for Saskatchewan companies to be engaged in public-sector procurement projects across Saskatchewan. That hurts us economically. It also hurts us fiscally. Those are the very companies that are investing and hiring and maintaining a workforce as well.

P.N.: Are you referring to a sovereign wealth fund?

Wotherspoon: No, I’m referring to the flawed procurement policy of this government which doesn’t provide a level playing field for Saskatchewan companies to be engaged in construction, in building projects across Saskatchewan. It’s been identified by Saskatchewan businesses as highly

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unfair, and by taxpayers as not providing the best value.

What we should have is a procurement policy built around the best value for taxpayers and a fair shot for Saskatchewan companies to be engaged in those projects. When we have Saskatchewan companies being a direct part of delivering and building infrastructure, we have a stronger economy then, and we also have more revenues flowing back to government.

P.N.:The Saskatchewan Party is calling this a balanced budget, yet they are borrowing approximately $700 million for infrastructure projects. Is it truly balanced then, or is this a deficit budget?

Wotherspoon: Good question. Most people

across Saskatchewan have come to realize this government boasts and pretends one thing on budget day, and then just fails to deliver throughout the year.

Every year this government pretends to have a budgetary balance, and throughout the year, that changes. The provincial auditor weighs in, and has pointed directly to the deficits this government has run in very good times in Saskatchewan.

Certainly, this isn’t a balanced budget. The total debt it adds is $1.5 billion. It drains the rainy day fund almost entirely at this point in time, and adds $700 million in debt, specifically for promises this government has made but hasn’t funded in previous ► Page B22 years.

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PIPELINE NEWS May 2015

This budget is a deficit, says NDP ◄ Page B21

P.N.: The amount to be borrowed coincides very closely with the shortfall in oil revenues expected for this upcoming year. What are your thoughts on that?

Wotherspoon: What I think government has actually done is not being transparent with the public as to the full impact of the full budget. The reality is with this budget, the government is projecting they’re going to have 1.25 per cent higher revenues this year than in previous years. Now they’re adding a whole bunch of debt for projects and promises they’ve made in years previous but haven’t funded.

I know oil prices is a more challenging place right now. It is, or should be, adding an element of constraint

Trent Wotherspoon. File photo

onto our budget. We’re hopeful in time that oil price will improve.

It’s important to the industry. But we know the debt this government is piling on will be paid by generations in this province. This is a government that has added $5 billion in debt since 2011. They’re adding $1.5 billion in debt in this year alone. Their debt-to-GDP ratio over five years has grown 47 per cent.

P.N.: Natural gas revenues are expected to decline from a 201415 budget of $16.5 million and forecast $19.1 million to only $11.3 million in 2015-16. Gas prices have been slowly going up from lows a few years ago. What do you see happening in Saskatchewan’s gas industry?

Wotherspoon: This is important to track. Of course, this is an important industry as well.

Although it isn’t the big dollars to government that oil directly is, it’s still important. Certainly we’ll be following up with government to have a full understanding as to what’s contributing to this decline in revenues.

It seems some of their assumptions on natural gas may be rather consistent with some of the private sector forecasters. We also know there’s a significant change in the industry, a very dynamic industry in the United States, for example. We understand that our exports to the United States are on the decline.

We want a full understanding of what’s happening to this industry and we’ll be following up both with government and we’re interesting in hearing from industry partners. ► Page B23

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PIPELINE NEWS May 2015 ◄ Page B22 P.N.: With recent venting and flaring regulations coming into full effect this July and new gas plants in the southeast coming online, shouldn’t we expect an increase in gas revenues?

Wotherspoon: We would certainly be hopeful to see a gas industry that allows an increase in revenues. Certainly, this is one we’ll be following up with government.

It’s difficult to assess what impact some of the regulations and changes have had on revenues.

We’ve put forward a host of written questions to the government on how implementation of these regulations has been going. I know the government has failed to provide answers on that front. It’s an area I know we will be looking for answers from government.

We’ll also be listening to industry on this front.

P.N.: The province has, on occasion, been too optimistic with its WTI forecasts and has been burned in the past. Last year’s WTI forecast was $92.85. The 2015 forecast is now $53, 2016 is $67, 2017 is $77, 2018 is $85 and 2019 is $88. Is the government being cautious, prudent or bleak in these low number forecasts for the next several years? Does this mean we don’t see a return to $100 oil for at least five years? If this plays out in that manner, what impact will this have for the industry and the province?

Wotherspoon: I think it’s critical a government is cautious on their forecasts for oil. That’s important on any of the revenue fronts that build the foundation of a budget.

We’ve urged a more cautious approach in the past on this government. They’ve been quite reckless and irresponsible on this front, pegging rosy, sky-high assumptions on various revenue sources, only then to have a much more negative outcome from that.

It’s important to have a cautious foundation to

a budget. Government hasn’t been cautious in the past. I’m not sure that they’re being that cautious even with their number this year for WTI. And I know they’re not being cautious when it comes to the large increases on the potash side of the equation this year again, and also uranium, where they’re projecting a doubling of revenues from that industry.

We believe the base of a good budget is strong foundation based on realistic assumptions. That’s critically important in a resource economy like ours and allowing us to establish a responsible budget.

What we need to make sure is done better in the future, what this government has truly failed at, is capturing the benefits of windfall. We’ve seen the government preside over a decade-long boom here on many, many revenue sources. This is a government that has added debt during that time, that hasn’t saved a penny, that drained the rainy day fund. I think Saskatchewan people deserve a longer-lasting benefit than that.

Certainly, we see a more challenged environment for the oil industry in this lower-priced environment. Certainly the oil industry has and will continue to pull its weight in Saskatchewan. It’s an impressive industry. It’s an important industry to Saskatchewan and the future of our province.

Certainly we’re hopeful for pricing circumstances that allow for the success of that industry and the important employment it provides, and revenue back to government that should be allowing a responsible government to ensure a better quality of life for all Saskatchewan people.

We certainly know we’re into a more challenged environment on the price of oil right now.

Certainly it’s a mug’s game to predict how long we’ll be experiencing this lower-pricing environment, but we’ll be listening and working directly with partners in the oil industry. (We’re) certainly hopeful for an economic environment that allows for their continued success. Certainly we recognize

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it’s a much more challenging environment for the oil industry in our province.

P.N.: Just so you are aware, almost every business I’ve spoken to in past two months has laid off staff or will lay off staff.

Wotherspoon: I’m aware of that. I have family that are laid off in Weyburn right now, and I’ve heard from a whole bunch of folks I know through your neck of the woods, through Estevan and across through Weyburn. It’s had a big impact already.

P.N.: Is there anything you would like to add?

Wotherspoon: I’d like to note we recognize this is a much more challenging environment for the oil industry in Saskatchewan. We also know it’s a challenge for those workers and their family that have been laid off through this period of time.

What we need is to work towards in this province is ensuring we have security for all families and affordability for all families. That will certainly be a focus.

I think it’s critically important, when you look at the tighter fiscal environment, that … we have to expect our government to do a better job managing windfall resources and managing through booms. It’s frankly disappointing to so many and not good enough to look at a government that’s managed through a 10-year run for the province of Saskatchewan on the side of revenues, and have not put away a penny for the long term, to have loaded on debt, and to have drained the rainy day fund. It certainly has not taken care of infrastructure as well.

This is an important reminder that we have to manage responsibly during the good times, and certainly we’ll be looking towards that.

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PIPELINE NEWS May 2015 This is what a derrick looks like from the crown end with the crown removed.

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Level IV rig inspection detailed Carlyle – In the yard just behind their Carlyle office, CanElson Drilling Rig 27 was lying in pieces in early April. It wasn’t the usual racked posture a rig takes when it’s not working. Rather, the derrick was off and disassembled, ready for experts to pore over every inch of it.

“We’re doing what’s called a Level IV 1,000 day inspection,” said Lloyd Bendtsen, operations manager, on April 9.

A Level IV inspection is a Canadian Association of Oilwell Drilling Contractors (CAODC) recommended practice to ensure quality control and safety.

“A thousand days will wear down anything,” Bendtsen said. As a result, the rig is looked over with a finetoothed comb.

In the “good old days” of high activity, it might be three or four years between Level IV inspections, but that can be longer when the activity level of the industry and Mother Nature take their toll on drilling days.

Rig 27 had a decent 2014, so it’s due for its inspection now.

Bendtsen came over from Big Sky Drilling to Eagle Drilling, and toolpushed Eagle Rig 3 (now CanElson Rig 23). He was heavily involved in building Eagle Rig 4 and then came into the office as a field superintendent.

When CanElson purchased Totem Drilling and Eagle Drilling in short order, that set up the Calgarybased company with 14 rigs in southeast Saskatchewan.

“Our fleet is 13 now. We moved

Inspectors go over the derrick with a finetoothed comb.

one rig to the North Dakota division,” Bendtsen said. That was Rig 15, formerly Totem Rig 5. There it joined five other rigs to form a fleet of six.

The company has five drilling rigs in British Columbia, 11 in Alberta, 13 in Saskatchewan, six in North Dakota, 15 in Texas, and two drilling and two service rigs in Mexico.

This is the first Level IV inspection for Rig 27. Rigs 28, 10 and 16 are getting close, but Bendtsen said, “With (current) utilization, we should be able to get another year out of them.

“The one drawback to this slowdown is things pile up. It could be three or four rigs next year.”

As for this project, he said, “We stretch it over road ban. A lot of the overhead equipment is sent away.”

At that point they are at the mercy of the machine shops. “If you have a one-month turnaround, you’re doing good.”

But with the slowdown in activity in the oilpatch overall, Bendtsen expects a quick turnaround.

CanElson is doing as much inhouse work as it can, and is contending with tighter budgets than in recent years. For instance, when Rig 23 came in for its Level IV inspection, it got the “full meal deal,” including a fresh paint job in Canelson’s tan and burgundy company colours. Rig 27 will not be seeing new paint at this time, and will be keeping its legacy Eagle Drilling colours for now.

“We’ll fix what has to be fixed and that’s it,” he said. ► Page B25

PIPELINE NEWS May 2015 said. Indeed, he took a break from shop work to speak to Pipeline News.

He added, “Regardless of the economic times, there are no corners cut on a Level IV.” One of the realities of slowdowns is that more experience rig hands will tend to displace less experienced ones. If you have a large fleet like CanElson and only half of your rigs are working, the tendency is to keep the experienced

The derrick for CanElson Drilling Rig 27 has been disassembled laid out for inspection.

Photo by Brian Zinchuk

◄ Page B24 The derrick gets particular attention during a Level IV inspection. It’s removed from the drawworks, set down, split and stripped down.

“Our inspectors will identify any deficiencies and repair work will take place,” Bendtsen said.

This includes using magnetic particle inspection to look for any defects in welds. It can take the inspector a whole day just looking at the derrick. The substructure and drawworks skid also get special attention.

Inspectors are qualified engineers, he noted.

Other items looked at include the block, swivel, bails, elevator and crown.

“A lot of this stuff has bearings. Sheaves are checked for cracks, excessive grooving. The block is taken apart and

inspected. Your hook is all checked,” said Bendtsen.

The block will be getting fresh paint in this instance.

“Mechanically and structurally it will be a new rig, back to new standard,” Bendtsen said.

Engines get a “D check,” where a computer is hooked up to it and it is given a once-over.

It’s usually around the second Level IV recertification that engines are starting to get long in the tooth, around 40,000 to 50,000 hours.

“We’ll have budgeted an engine replacement,” he said of those instances. The engine might run like a top, but it may be easier to do when the entire rig is in for maintenance than risk it going down in the field. The whole exercise is meant to limit field repair as much as possible.

“When we see an engine hit 35,000 hours, we start budgeting for a replacement,” he said.

“All of our (Saskatchewan) engine packages come from Southern Industrial in Weyburn.”

As for reducing costs, he noted, “In a normal year, we try to utilize the rig crews.

This year, we’re utilizing upper management, which would explain my coveralls,” Bendtsen

B25

staff, like toolpushers, drillers and derrickhands, working, even if that means working at a lower pay grade.

“Rank means something,” Bendtsen said.

“It’s easier to find motormen and roughnecks when things get busy.”

The net result is the rigs that are working actually become more efficient because they are crewed with the mostexperienced workers the company has.

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 By Brian Zinchuk Estevan – To say the staff at Frontier Inspection of Estevan are around for the long term would be an understatement. Tony Fedyk, supervisor and plant manager, has been around since day one, in 1996. Kevin Daae, operations manager, has been around since 2002. Their staff have also been around for the long haul.

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Daae said, “Most of our operators have seven to 20 years experience.”

Over that time Frontier was purchased

by Flint, which was then in turn acquired by URS and now AECOM, the current parent company.

Frontier’s focus is principally pipe inspection. “We do drill pipe, tubing, casing and sucker rods,” said Daae.

They do magnetic particle inspection (MPI) on items like derricks and pipe. Small particles are sprinkled on the item in question, which has been magnetized, and they will adhere to imperfections.

“It will migrate right to it and stick to it,” he said.

There are wet and dry variations of MPI. The wet version uses ultraviolet light to identify problem areas.

“We have done whole derricks,” Fedyk said. Indeed, the following week they were

providing workers to assist with an inspection of a CanElson Rig at Carlyle.

“We’re not a certified derrick inspector.

We’re there to assist,” he said.

“We do a lot of drill pipe, casing, tubing and sucker rods.”

Drill pipe needs to be inspected at regular intervals. It depends on the company, but the range is usually 18,000 to 25,000 metres. Some drilling rigs will have their pipe inspected before they switch oil companies.

Fedyk said 90 per cent of their drill pipe inspection is done in the field. Part of the reason for that is it costs money to truck that pipe into the plant. Pipeline News visited a crew working in the CanElson yard at Carlyle going through drill pipe. This is a common occurrence during spring breakup. ► Page B27

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PIPELINE NEWS May 2015 ◄ Page B26 “A lot of times we inspect on a rig move,” Daae said. That allows the Frontier personnel to take advantage of the downtime of the rig.

Frontier covers an area from Shaunavon and Gull Lake to southwest Manitoba. That includes potash mining, which borrow a lot from the oilpatch. Daae noted they had a unit up at Esterhazy inspecting pipe. Potash mines drill through road bans, he noted.

Frontier has 15 people on payroll. They had been running with 25 to 26 a few years ago.

Daae said, “Our numbers are down due to the tapering down this fall.”

Like pretty much every other oilfield service company, they’ve been asked to cut their rates. “We’ve been asked to be competitive in the market, for sure,” Daae said. “When it was good, we haven’t been up and down with our prices. We’ve been within four per cent the last five years.”

Inspections look for pitting, wear, cracks and washouts on the inside.

“Most of your issues come from the inside out, drill pipe or tubing,” said Daae. “You’ll still have wear on the outside for drilling.”

Testing is done using electromagneticbased equipment. Using a radiation source is less common these days, they noted. Detectors can find anomalies as the pipe passes through a special coil. The results are output on a computer screen and recorded.

When an indication of a possible defect does

appear on screen, they will go out and physically look at it to “prove it true.”

Magnetic powder is used to find the defect, as well as an ultrasound wall thickness gauge.

Measurements are made in thousandths of an inch.

The whole reason for this sort of inspection is to find potential failure points and remove them from the system before deploying the assets in the field, be it casing, tubing, drill pipe or rods. It’s much easier and cheaper to discard a pipe or rod that is likely to fail than to contend with it in the field. That’s often when a fisher becomes needed.

Fedyk said, “If they got a failure downhole while drilling, it can cost millions.”

He noted the “fancy equipment” used in directional drilling bottom hole assemblies, saying, “You twist off and how much money falls down the hole?”

Thus preventative maintenance is key.

Tubing Tubing wear mostly is caused by rod wear. It can come from deviated wells as well. Rod guides can help prevent rod wear, they noted.

The connections on the rods are what rub against the inside of the tubing. Continuous rod, with one brand known as COROD, is one way to reduce that wear substantially, since there are no bulbous connections to rub against the inside of the pipe. But it never really caught on in southeast Saskatchewan. “There’s not much COROD in this area,” Daae said.

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wells can result in more tubular and rod wear as well. “Today’s market is ‘Stroke it hard,’” Daae said. That correspondingly leads to more wear issues.

In some fields, corrosion is more of a factor on wear. “Sour gas definitely plays a role in it,” he said.

While most pumps use a reciprocating linear action to drive the pump, progressing cavity pumps, sometimes referred to as “screw pumps,” use a rotational motion. This can result in cracked threads under the collars of tubing, Fedyk pointed out.

The quality of pipe can be another factor.

Some of the pipe used comes from all around the world, and some of that has been of questionable value in the past. Daae said, “We’ve seen stuff three months old that’s garbage.”

Fedyk added that Canada, as a whole, has seen quality control improve.

While they have portable units used on service rig drilling floors, tubing inspection is typically done indoors, in the extensive Frontier plant. There are numerous long doors about waist high that run along the side of the building, allowing pipe to be sent in and out.

“Some companies like the rig floor, others want it to come in,” said Fedyk. ► Page B28

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B28

PIPELINE NEWS May 2015

Ultrasound can find detect more than babies  By Brian Zinchuk Estevan – There are several different methods of non-destructive inspection including radiographic (a.k.a. X-ray), magnetic particle and ultrasound.

While there are numerous companies in southeast Saskatchewan that specialize in magnetic-based inspection, Sonar Inspection Ltd. of Midale and Estevan specializes in ultrasound.

The company is owned and operated by Wayne Naka and his stepson Taylor Gardiner, both partners in the enterprise. They initially had a third partner, but he left in 2010.

There are five people in total. T. J. Babyak is

their third inspection operator and Jay Martel is a trainee. Nicole Gardiner, Taylor’s sister and Wayne’s stepdaughter, takes care of the office administration work.

Taylor Gardiner met with Pipeline News on April 16.

“We started in August 2008,” he said, noting the oilpatch was very busy at the time. However, a few months later the global financial crisis had taken hold. “By November, everything had dropped, but we kept going.

“Wayne and I both started at Hitachi, in Saskatoon. He was a welder there, and he had me apply to Hitachi. At first, I was a sandblaster. Then an op-

portunity came up in the quality assurance department. Wayne joined me in QA a few months later.”

Both soon became lead hands in the department, where they worked with ultrasound, magnetic particle and liquid penetrant inspection.

(Liquid penetrant involves using a special red dye sprayed onto the item, then allowing it to soak for 20 to 30 minutes. A chalk which draws out the dye is used to identify defects. This is mainly used for non-magnetic materials like aluminum and stainless steel.)

A few years later they formed Sonar Inspection Ltd. ► Page B29

In-plant inspection is way more thorough ◄ Page B27

In-plant inspection is “a way more thorough inspection,” Daae said, whereas rig floor inspection saves time and

shipping.

Individual joints pass through a sensor unit which uses magnetic fields to detect wall thickness. The pipe handling apparatus

throughout the plant is designed to bring pipe in, pass it through the sensors, then separate it into various grades of pipe.

Tubing can be

repaired, and they have tong units in the shop as well as a laythe for rethreading.

“We do sell product, new and used tubing and a poly-lined tubing useful for water injection and disposal wells,” Daae said.

“We inventory for our customers. The bulk of this pipe (in their large yard) is owned by our customers. We store and inventory manage it.

Rods Similarly, sucker rods are only done in-shop. Pitting, wear, damaged threads, crack (primarily in the threads) and stretching are some of the defects that can arise.

After rods have been cleaned, and run through the inspection unit, they are rebundled

Operator James Garling, in the yellow hardhat, checks out a defect detected by the sensor mounted on the pipe. Photo by Brian Zinchuk

like new and dipped in a corrosion-inhibitor tank.

Casing When it comes to casing, Daae noted, “Frac strings are the bulk of the casing we inspect.”

Casing will be used

multiple times in fracking operations. Thread and drift inspection are key in this case.

Frontier has a cross-roll straightener, a machine with the ability to straighten drill pipe, tubing and casing.

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PIPELINE NEWS May 2015 most of their oilfield work was on the maintenance side, but now it is split between maintenance and construction.

“I’ve been at Saskarc for about a year now,” Gardiner said.

The work at the Oxbow-based manufacturer includes inspecting welds on large-scale oilsands and mining projects.

Sonar Inspection’s work sometimes takes them to mines themselves, including underground. “It’s not the most fun place to be, especially if you’re not used to it. I’ll never turn down work, but I don’t like it,” Gardiner said.

They do work at local surface coal mines quite a bit, too.

Technology “Our primary inspection is UT (ultrasound testing). We also do MP and NPI. We never got into RT (radiographic testing).

Other companies focus on other technologies, but not ultrasound as far as southeast Saskatchewan, to Gardiner’s knowledge. “Not that I know of down here,” he said.

Naka and Gardiner are certified on UT, while Babyak is expected to take his exams soon.

“He’s close,” Gar-

B29

diner said.

“Our main focus is the pressure vessel side,” he said. That includes pressure vessel maintenance. “We’re involved when they do the repairs.”

Pressure vessels like treaters, separators and free water knockouts are often on a two or three year inspection cycles.

“We can do it while it’s onstream and running and check for internal corrosion. We do a lot of turnarounds, we do a lot of batteries,” Gardiner said.

Indeed turnarounds are often contingent on the results of their inspections. ► Page B30

Your Home Away From Home

T.J. Babyak of Sonar Inspection Ltd. applies an ultrasound probe to a piece of pipe.

Photo by Brian Zinchuk

◄ Page B28 “We did a lot for SaskPower,” he said.

That included small one-inch diameter steam pipes as part of the recent Boundary Dam Integrated Carbon

Capture Project, working as a sub-contractor.

On that, he noted, “Wayne did quite a bit torqueing bolts as a third party contractor.”

There were hundreds and hundreds of

flanges to torque, he said.

About 10 per cent of their work is SaskPower. The majority of their work is in the oilfield.

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PIPELINE NEWS May 2015

Ultrasound testing can be done while vessels are in operation ◄ Page B29 “A lot of their turnarounds are based on our findings during the winter, especially if you find a battery with corrosion issues. It might be added to the summer turnaround schedule. If we do a site that wasn’t scheduled and it has a lot of corrosion, they might add it.”

The ultrasound testing is used to determine the expected lifespan of the vessel. Factors such as hydrogen sulphide and carbon dioxide can have an impact.

Markers that look like coins are placed on various points around the vessel. This is typically done early in the life of the vessel in what’s called a “baseline survey.” That provides the equivalent of “as-built” blueprints, showing what the actual thickness is of the steel as opposed to what it was planned as. Gardiner noted that up to plus-orminus 12 per cent of wall thickness is allowed in construction. Their surveys allowed for the true wall thickness to be determined.

It’s important to have that initial thickness, because subsequent inspections will then be able to

indicate wall loss as time goes on.

As for inspection locations, often there will be a top strip, bottom strip and side strip of inspection points. Other areas include where pipes connect to the vessel. An area to be inspected might be four by 20 inches in area.

The probe itself and its operation are very similar to the ultrasound diagnostics used in the medical field, including those used in gynecology.

However, instead of a visual image, the readout is a specialized graph on a screen. The device is handheld and very mobile.

“It’s identical in concept to pregnancy ultrasound, just different frequency,” Gardiner said. “It gives a readout on the wall thickness.”

The speed of sound varies by material. Sound travels much faster through steel than air, for instance.

Only so long you can delay The economic realities of oil at half the price it was a year ago has impacted maintenance budgets, but that can only be sustained for so long. Gardiner noted there has been a reduction in activity on the

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corrosion survey side, but there’s still steady work.

“Our work doesn’t go away, it just gets pushed back,” he said, adding there will be added need for their services, eventually.

“It’s going to explode (in demand). By law, they have to get them done. A leak costs ten times as much to clean up compared to the cost of an inspection. It’s cheaper to inspect than clean up.”

He added no one pushes it to the point where they are in trouble. Companies will often cherrypick known problem areas.

It’s difficult to hire technicians, he noted, ones that can be certified. “We are looking for technicians,” he said.

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On one side, this steel looks find. But when you see the other side, the loss of wall thickness is apparent. That’s why ultrasound testing is important – to identify problem areas before they wear through.

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PIPELINE NEWS May 2015

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