Pipeline News June 2015

PIPELINE NEWS Saskatchewan’s Petroleum Monthly

June 2015

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PIPELINE NEWS June 2015

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PIPELINE NEWS Saskatchewanâ&#x20AC;&#x2122;s Petroleum Monthly

July 2015 Focus

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A3

TOP NEWS ŝƌ ŵŽŶŝƚŽƌŝŶŐ ƐƚĂƟŽŶƐ ůŝŬĞ ƚŚŝƐ ŝƌƉŽŝŶƚĞƌ ũƵƐƚ ƐŽƵƚŚ ŽĨ tĞLJďƵƌŶ ĂƌĞ ƵƐĞĚ ƚŽ ǁĂƚĐŚ ĨŽƌ ƚŚŝŶŐƐ ůŝŬĞ ƐŽƵƌ gas. Photo by Brian Zinchuk

Government gets serious on H2S

By Brian Zinchuk Pipeline News Regina – If you have sour gas, or H2S, be it a well or facility, you can expect an inspection this year. After an alarming series of inspections that found the majority of sites inspected failed to pass muster, the government is clamping down.

The province is putting sour gas inspection and enforcement very high on its agenda this year. This past spring CBC reported on suspected calf deaths in addition to a related workplace fatality in recent years in southeast Saskatchewan, and that may have put some feet to the flare, so to speak.

This also comes at a time when the province’s S-10 directives will come into full force on July 1 of this year.

Pipeline News spoke to Ed Dancsok, assistant deputy minister for the Petroleum and Natural Gas Division in the Saskatchewan Ministry of the Economy, during the Williston Basin Petroleum Conference in Regina. In this April 29 interview he outlined the government’s concerns and intended course of action.

Pipeline News: There’s been some concern raised in the media about sour gas issues in southeast Saskatchewan. It’s been our understanding the province has brought in a number of regulations in recent years to deal with gas issues, such as S-10. So what’s going on?

Ed Dancsok: Natural gas, or associated gas with oil, is a fact of life. It comes up with the oil.

With that, at times, in Saskatchewan’s past, and in other jurisdictions as well – Texas, Nigeria, Alberta or Saskatchewan – some of that gas can be sour. Either it’s looked after by full combustion of that gas, if it’s sour, treatment, vapour recovery, or getting that gas either into a pipe and treated to sweeten the gas and remove the sulphur.

P.N.: I understand flaring is one way to get rid of sour gas. If the purpose is to get rid of the sour part, flaring is actually pretty effective in doing it.

Dancsok: Absolutely. But there are fallouts from that. Then you get sulphur dioxide and other

pollutants that generated from the flaring process, of course.

P.N.: And you also get no money for the province, either.

Dancsok: That’s correct. So that is where you talk about the regulations we’ve brought in, it’s around the capturing of associated gas, whether it’s sour or not, that comes up with the oil. That’s our S-10 regulations, that are designed (such that) if you are producing over a certain threshold of associated gas, you have to capture that gas and get it into a pipe and get it to market; or, you have to shut the well in.

That’s really plainly put. It’s much like what North Dakota has been talking about. There’s a threshold. Anyone, any well, producing over 900 cubic metres per day, the S-10 directives apply.

Now, S-10 was introduced July 1, 2012, for any new wells being drilled. We gave a three-year grandfathering period for all existing wells. So July 1, 2015, which is quickly approaching, all oil wells will have to be compliant with S-10 in Saskatchewan.

P.N.: My understanding is these do come into effect on Canada Day, and that this has also driven a substantial amount of gas plant activity in southeast Saskatchewan.

Dancsok: Yes, there have been a few gas plants constructed or proposed. There’s a lot of activity with TransGas of getting more gas into pipelines.

SaskPower has introduced a program of using natural gas to generate power. There’s a whole outline of that program on the SaskPower website.

There’s a number of players and technology companies looking at bringing in (H2S-capable) generators to generate power for SaskPower with associated gas. That’s great.

P.N.: That’s associated gas, but the issue right now is fugitive gas.

Dancsok: That’s correct. S-10 directly deals with the intentional flaring and venting of gas.

Where we will allow that to happen is where these

thresholds are not met, be it under the 900 cubic metres per day, or if it’s economic, they must gather it. Otherwise, they can flare, or they can vent.

We discourage venting. We’d rather see flaring, but there are certain wells that don’t produce enough to keep a flare going. In those cases, there are instances where venting can be allowed. Beyond that, we have fugitive emissions which S-10 does not cover. Fugitive emissions are the release of very small volumes of associated gas through facilities. It could be pipes, connections between pipes, valves, meters, tanks, anywhere there’s a potential connection. There could be unintentional release of small volumes of methane gas, some of which contains hydrogen sulphide.

Another spot where it can happen is where flares go out, and they aren’t relit. That is another spot for potential emissions. Tank hatches are another big contributor.

And, I want to talk about his as well – the loading and unloading of trucks. We get a lot of fugititive emissions from that, and beyond that, things we have no jurisdiction over. That’s the transport of oil in trucks down the highway and trucks that are not properly sealed, and we’re getting emissions from there. And rail cars, perhaps.

P.N.: You had an anecdote about that?

Dancsok: In response to the sour gas concerns, we’ve stepped up our inspection activities.

From 2013, 2014, now 2015, we’re already into it.

This past week, we hit the area where most of the concerns are coming from, the Oxbow-Glen Ewen area. Our inspectors were out there last week for about a week and a half and did a sweep of a number of wells and facilities.

A couple of my inspectors were on their way home and following a tanker, hauling crude oil, down the highway. A car was between them and the tanker, and that car kept backing away and slowing down until they finally passed the car, thinking, "What’s wrong?" ɸ Page A8

A4

PIPELINE NEWS JUNE 2015

BRIEFS Saturn abandons well

Saturn Minerals Inc. says its drill team encountered several successive lost circulation intervals on its operated 9-5 Bannock Creek exploration well in northeast Saskatchewan, which began drilling on May 12, with the technical problems leading the company to abandon the well.

The drilling team did not reached the three targeted zones of the Yeoman, Deadwood and Winnipeg sands, with the drill bit reaching a total depth of 560 metres, approximately 70 metres above the potential oil bearing zones.

Saturn said the lost circulation intervals were due to excessively fine-grained sands. Following the loss of circulation for a fourth time, the use of lost circulation material was employed resulting in the drill bit becoming planted in the hole. Jarring tools were sent to the drillsite but the operation was also unsuccessful.

As a result of the technical problems encountered, the company has decided to abandon the current well and is considering its options, which includes drilling an additional well at the location.

Initial review of the data indicates that a successful second well could be drilled at the location, which would reach the targeted pay zones.

The company will complete a full review with its technical advisors and drilling team and make its decision to proceed with a second well upon completion of the review.

Briefs courtesy Nickle’s Daily Oil Bulletin

TransCanada vice-president John Soini is the person solely accountable to build the Energy East pipeline.

Getting the skinny on TC pipeline projects Energy East, Upland and Cromer lateral all discussed by TransCanada VP

By Brian Zinchuk Regina – TransCanada has a lot of projects on its agenda - $46 billion, if they all go through. To put that in perspective, the entire revenue line for budget for the Province of Alberta for 2015-16 was $45.9 billion, before an estimated $8.3 billion evaporated with the drop in oil prices.

It’s big money, and these are big projects.

This program is comprised largely of a diversified mix of natural gas and liquids projects across Canada, the United States and Mexico, backed by either long-term take or pay contracts with 20 years or longer terms, or a more traditional service model.

The biggest is the proposed Energy East pipeline. The vice-

s

306-482-3558

president responsible for Energy East, John Soini, spoke to the supply chain forum portion of the Williston Basin Petroleum Conference. He highlighted numerous projects in the works, but Pipeline News focused on those affecting Saskatchewan.

Keystone He touched on the contentious proposed Keystone XL project, and said, “Despite best efforts to get a Presidential Permit, the project has moved into its seventh year of regulatory review in 2014.

“TransCanada and our shippers remain firmly committed to building the pipeline and appreciate the support of the majority of Americans who also believe that it is in the nation’s best interest.” ɸ Page A11

Bigger Fleet s Bigger Service s No Delays s Reliable Experienced Drivers

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PIPELINE NEWS June 2015

Williston Basin Petroleum Conference attendance tumbles with oil price

EÇ&#x2020;hibitor space Ç as ĨullÍ&#x2022; but aĆŠendance Ç as doÇ n this year. Photo by Brian Zinchuk

Â&#x201E; By Brian Zinchuk Regina â&#x20AC;&#x201C; The price of oil was down by about half from two years ago, and so was the attendance at the Williston Basin Petroleum Conference.

The event, which started over two decades ago as a primarily a geologistsâ&#x20AC;&#x2122; conference, has grown to become the premier oil and gas conference in both Saskatchewan and North Dakota. It alternates each year between Bismarck, N.D., and Regina. Last yearâ&#x20AC;&#x2122;s Bismarck conference attracted over 4,250 attendees, while the 2013 Regina conference had 2,197.

This year there were 1,181 people registered for Regina.

Despite the marked drop in attendance, conference chair Melinda Yurkowski, Saskatchewansâ&#x20AC;&#x2122;s assistant chief geologist, was her usual upbeat self at the conclusion of the event. â&#x20AC;&#x153;It was awesome,â&#x20AC;? she said, a big smile on her face.

There was a good lineup of speakers, she said, and the mood was upbeat. â&#x20AC;&#x153;Hey, weâ&#x20AC;&#x2122;ve survived seven cycles like this,â&#x20AC;? she said. â&#x20AC;&#x153;It was nice to hear what we do in the basin in a global context.â&#x20AC;?

The Williston Basin itself is a geological basin centred on its deepest point, Williston, North Dakota. Since 2009, that region of North Dakota has seen its oil production grow from 90,000 barrels per day to 1.2 million before falling back to 1.1 million now. It has been one of the hottest oil plays on the planet, literally changing the world and its oil markets.

The Williston Basin includes the western edge of Montana, northwest corner of South Dakota, southwest corner of Manitoba, southeast corner of Saskatchewan and all of western North Dakota. Representatives from most of those jurisdictions spoke at this conference.

While in Canada, much of the conference focuses on Canadian aspects, while the American version does the same. However, the geology does not care about the existence of the 49th parallel, and much of the knowledge shared at this conference is directly applicable throughout the basin.

Next yearâ&#x20AC;&#x2122;s conference is scheduled for May 24-26 in Bismarck. If previous years are any indication, the best time to book a room is as soon as you put down this newspaper.

On the web: Presentations from this yearâ&#x20AC;&#x2122;s conference can be found at wbpc.ca.

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A5

BRIEFS Manitoba land sale attracts just under $700,000

Manitobaâ&#x20AC;&#x2122;s second land sale of 2015 brought in $695,022 in May in what has been an improved year so far in the province, both in terms of bonus revenue and average price per hectare.

Seven lease parcels covering 528 hectares  were sold  at the May 13 sale for a bonus amount totaling $695,022. The average price per hectare was $1,316.33.

Year-to-date, the province has collected $1.33 million in bonus bids on 1,360 hectares at an average price of $979.50. To the same point of 2014, industry had paid $836,868 on 3,471.02 hectares at an average price of $241.10.

Silver Hawk Resources Ltd. paid the highest bonus and price per hectare for a parcel located in the Daly Sinclair area. The firm paid $6,077.77 per hectare and a bonus of $486,221 for the parcel, which included legal subdivisions four, five, 12, 13 and 14 of section 32 at 0928W1. The next sale will be held Aug. 12, 2015. The deadline for posting requests was May 15, 2015.

Briefs courtesy Nickleâ&#x20AC;&#x2122;s Daily Oil Bulletin

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PIPELINE NEWS June 2015

PIPELINE NEWS

EDITORIAL

Mission Statement: Pipeline Newsâ&#x20AC;&#x2122; mission is to illuminate importance of Saskatchewan oil as an integral part of the provinceâ&#x20AC;&#x2122;s sense of community and to show the general public the strength and character of the industryâ&#x20AC;&#x2122;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 R5 -. 0 (5g8ifl8lij8hlkj Cindy Beaulieu Candace Wheeler Kristen Oâ&#x20AC;&#x2122;Handley Deanna Tarnes Teresa Hrywkiw R5 ,&3& 5g8ifl8jki8hkhk Alison Dunning NORTHWEST SASK. & ALBERTA R5 &)3 '#(-. ,5g8mnf8nfn8imfl Krista Thiessen R5 #( ,-& 35g8ifl8jlf8mjgl 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.

Subscribing to Pipeline News: Pipeline News is a free distribution newspaper, and is now available online at www.pipelinenews.ca Advertising in Pipeline News: Advertising in Pipeline News is a newer model created to make it as easy as possible for any business or individual.

Pipeline News has a group of experienced staff working throughout Saskatchewan and parts of Manitoba, so please contact the sales representative for your area to assist you with your advertising needs.

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Published monthly by the Prairie Newspaper Group, a division of Glacier Ventures International Corporation, Central Office, Estevan, Saskatchewan.

Advertising rates are available upon request and are subject to change without notice.

Conditions of editorial and advertising content: Pipeline News attempts to be accurate, however, no guarantee is given or implied. Pipeline News reserves the right to revise or reject any or all editorial and advertising content as the newspapersâ&#x20AC;&#x2122; principles see fit. Pipeline News will not be responsible for more than one incorrect insertion of an advertisement, and is not responsible for errors in advertisements except for the space occupied by such errors.

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Cracking the whip on sour gas fugitive emissions An in-depth discussion with Ed Dancsok, the assistant deputy minister for the Petroleum and Natural Gas Division of the Ministry of Economy made something very clear: fugitive emissions of sour gas are not going to be tolerated any more.

In speaking with the person who is the top bureaucrat in Saskatchewan whose responsibilities are solely the energy sector, heâ&#x20AC;&#x2122;s got the power to do something about it. And ministry will.

It was particularly telling when he related how a couple of Ministry of the Economy inspectors were recently driving down the highway following a tanker semi and another car. The car kept backing off until the inspectors passed the car and now were directly behind the semi. They soon knew why the first car had backed off, so foul were the H2S emissions. They could barely stand it.

Whatâ&#x20AC;&#x2122;s worse has been the horrible record targeted inspections have turned up. Dancsock said, â&#x20AC;&#x153;In 2013 we did full audits, day long, day-and-a-half on a facility, 22 sites, random across southeast Saskatchewan. â&#x20AC;&#x153;We had 21 failures.â&#x20AC;?

While some of those failures were from matters as simple as flare stack positioning or weeds, six of those 21 failures were related to sour gas.

In 2014, they targeted 84 high-concentration sour sites in southeast Saskatchewan. Sixty-four failed. Of those, 29 were shut in and told to fix the matter now because the inspector is coming back tomorrow to see if itâ&#x20AC;&#x2122;s fixed. But 35 were issued a letter from the minis-

ter order a suspension until cleared by the ministry. That is much more serious.

Those numbers are abysmal by any standard. Itâ&#x20AC;&#x2122;s not surprising, then, that CBC took this ball and ran with it a few weeks ago.

You can expect to see additional inspectors added soon. Job No. 1? Inspect each and every sour gas facility in the province this year. Ten thousand inspections are expected to take place this year, and their primary focus will be on sour gas.

Our industry is under a microscope each and every day. We have not been able to build a major interprovincial pipeline in Canada since Enbridgeâ&#x20AC;&#x2122;s Alberta Clipper project in 2009 due to that scrutiny.

Like it or not, social license is now part of the lexicon.

It is part of our lives. Every little slip up here and there cumulatively hurts all of us. Thatâ&#x20AC;&#x2122;s to say nothing of the physical, and perhaps fatal, effects of sour gas.

There is no room for this sort of sloppiness, especially when it becomes clear the majority of sites examined have been sloppy.

The inspectors are coming. But they shouldnâ&#x20AC;&#x2122;t have to, in the sense that a much better job needs to be done with respect to fugitive emissions.

Make no mistake, the assistant deputy minister spending half an hour talking about fugitive emissions to Pipeline News during a major conference was an indication this issue is very important to the government.

And therefore it is now very important to you, if it wasnâ&#x20AC;&#x2122;t already.

PIPELINE NEWS June 2015

A7

OPINION

From the Top of The Pile

By Brian Zinchuk

Rail dreams in the southeast You never know what sort of conversations you might have at a conference, and last month I had two at the Williston Basin Petroleum Conference that got my head’s hamster spinning on its wheel.

One was with a trade official, another was with a consultant on crude-by-rail, James Baker, of Regina.

I have spent more time than I care to admit looking at Google Maps, looking for interesting items and patterns. Some of that time was spent retracing the long-abandoned CN railbed that once ran from most of the way from Lampman to Northgate, and from there onto what is now the BNSF network. It’s not that far from Lampman to Stoughton to make the connection.

What if most of this line, and a short bit of new railbed, was rebuilt, connecting Stoughton to Northgate and the BNSF from there? The largest crudeby-rail facility in southeast Saskatchewan, Crescent Point’s facility, which has been moved and then expanded in recent years, would then have a straight shot into America and dozens of refineries.

Now, I grew up as a farm kid. As a farmer, if it fails to rain, you blame the Canadian National Railway. And if it hails, blame Canadian Pacific.

The reality is that for Crescent Point to ship its oil, it has to be hauled in exactly the wrong direction, back to Regina, and from their either east or west to interconnect with other railways to get to where you want the crude to go. Generally speaking, railways don’t like to play nice with each other, so even if their tracks cross, it doesn’t mean they’ll let you switch tracks to another railway all that easily. That might make common sense to you and me, but you and me don’t run railways.

Now consider the mindset of Crescent Point. It

was stung by pipeline apportionments back in 2010 when Enbridge’s Line 6 spilled into the Kalamazoo River in Michigan. Since then the company has been very keen to ensure there are rail loading facilities of their own or a third party situated near almost every one of their major operating areas. Those facilities are closely matched to local production. If the company wanted to it could theoretically ship almost every drop of Viewfield Bakken oil by rail out of its Stoughton facility instead of pipeline.

So for a shrewd operator like Crescent Point, having the ability to totally forego the Canadian mainlines does several things: They could bypass any Canadian mainline rail strikes (not like those ever happen); it gets them off the congestion of the Canadian mainlines, especially at winter (which our railways seem to have forgotten how to operate in); it cuts the distance to most, if not all, U.S. markets by hundreds of track-miles, which means lower shipping costs; it opens up easier access to almost all U.S. markets; and finally it gives them to option to tell any one of their shipping options to stick it.

What do I mean by that? It’s a very good bet that Crescent Point will eventually have the ability to ship oil on the proposed TransCanada Energy East pipeline. It already has this ability on the Enbridge mainline. It currently has the ability to ship crudeby-rail via shortline Stewart Southern Rail onto the Canadian Pacific mainline via Regina. Conceivably it could also find its way onto Canadian National from there. But by connecting directly to BNSF via Northgate using rebuilt rail, conceivably run by SSR, Crescent Point could play all the others against each other for price. They could tell any one of them, or all of them, to pound sand, if they so choose.

I imagine there are a lot of farmers who wish they had that option.

There are other possibilities, too. For instance, that old railbed runs right past the BP Steelman gas plant – which could make use of rail to ship NGLs. I can make out the old rail loading spur in the satellite images.

The Enbridge Steelman terminal on its Westspur system is only two miles away from the BP plant.

Could there be a pipeline/crude-by-rail opportunity there?

Crescent Point has its own large gas plant, with NGL production, near Stoughton. How hard would it be to run a pipeline from that plant to its Stoughton facilities for NGL loading?

There are some logistics in rebuilding that rail bed. Someone might have to talk nicely to Mel Grimes about moving some things around in his yard for Grimes Sales and Service. It looks like the runway at the Lampman airport might have once been the railbed. There’s been something of a lake north of Lampman for several years where the old railbed ran.

There might need to be some dirtwork improvements and a few new bridges. But compared to how much work might go into a pipeline with the capability of 70,000 barrels per day (a unit train), this is easy peasy.

I never thought I would see a real rail line, bigger than a spur track, built in my life. But it just might happen.

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

Lee Side of Lloyd

By Geoff Lee

Investing for recovery a good sign

If robins are an early sign of spring, could new infrastructure projects like storage tanks and pipelines be early signs of a recovery in oil and gas prices and activity levels?

The answer could be yes. What else would explain why a major pipeline company like Kinder Morgan is going ahead with the construction of a new $342 million 12-tank crude oil storage facility in Edmonton?

The project is a joint 50-50 venture with Keyera Corp. that is supplying the land for the project in anticipation of growing volumes of oil produced in the oilsands in northern Alberta.

Gibson Energy is thinking the same thing by continuing to expand its crude storage capacity at the Hardisty Terminal.

They are building two more tanks there to accommodate new oil supplies from the Fort Hills bitumen project north of Fort McMurray.

Those two tanks are part of a nine tank expansion that Gibson began in 2012.

In the Kindersley and Kerrobert area of Saskatchewan, pipeline companies are sticking with capital plans to build new pipelines.

These investments are clearly an indicator of their optimism in the future to move more oil.

Inter Pipeline Ltd. is spending $60 million this year on its $100 million Mid-Saskatchewan expansion 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 KindersleyKerrobert 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.

Projects like these are considered the best indicators that growth in the region will continue.

Enbridge Inc. is also continuing to plan to replace its existing 34-inch diameter Line 3 pipeline with 36-inch pipe from Hardisty Alberta to Gretna Manitoba where it crosses into North Dakota.

When the $4.9 billion project for the Canadian section is approved, the upgraded pipeline will route through the Kindersley-Kerrobert area giving a boost to the regional economy.

Teine Energy completed its Plato Clean Oil pipeline to the Dodsland Battery in 2014.

Plains Midstream is also going to be enhancing its pipeline systems in the Kerrobert area.

In the Lloydminster area, Husky Energy is also proceeding with the expansion of its south Saskatchewan gathering system to transport sales oil from the Husky Edam Battery, and the Edam East, Edam West, Vawn, and Rush Lake thermal oil facilities to a main sales oil pipeline distribution system in the region.

Another sign of optimism for the future comes from the federal budget tax measures announced in April to support investment in liquefied natural gas facilities in Canada.

Industry also welcomes the funding increase to the National Energy Board this fiscal year to better engage with Canadians relating to energy transportation infrastructure.

The Canadian Association of Petroleum Producers responded to the news by stating that “with improved transportation infrastructure Canada can reap the benefits of helping meet global energy needs through safe, responsible development and delivery of its natural resources.”

Despite industry cuts to capital investment this year due to low commodity prices, CAPP reported overall capital investment by industry in 2015 is expected to be $49 billion.

That’s the highest of any sector in Canada and higher than the next two largest sectors combined which bodes well for future growth as commodity prices recover.

Another recent sign of optimism was the turnout at this year’s Williston Basin Petroleum Conference held in Regina April 28-30.

The organizers of the upcoming Bonnyville & District Oil and Gas Show June 17-18 reported better than expected sales of exhibit space as another sign of confidence.

Most importantly, the price of oil has lifted from its low point this year to give the industry a sense that the worst is over.

There are many signs led by infrastructure investment pointing to a recovery. All that’s missing to confirm it are more help wanted signs?

A8

PIPELINE NEWS June 2015

Each and every sour site to be inspected this year ɺ Page A3 They got up behind the tanker, and they could barely stand it, the odours coming off the tanker.

Obviously, anything that was supposed to be on the tanker to prevent the emission of the gas was not in place.

P.N.: Isn’t that potentially a health concern?

Dancsok: It certainly is. What we inspect is point sources of emissions, fugitive emissions, of wells. That’s a spot where you can go up to it and say, “Let’s fix it.”

But you’ve got a moving source of emissions now, with a truck going down the highway, or a rail car going down a rail, making odours across the whole countryside. It’s affecting a much larger area.

P.N.: Having taken H2S Alive many times myself, the odours are not what’s going to kill you.

It’s the stuff behind it.

Dancsok: The odours are a good sense of where there’s smoke, there’s fire.

We certainly do rely on that.

The odours are what’s causing the public concern. People aren’t calling in, saying people are dying from it. They’re saying, “The odour is a nuisance.

It’s bugging me, it’s affecting my quality of life. It’s making my eyes water;” no serious health issues.

I want to mention there was one fatality, a workplace fatality at a facility, and all I’ll say is that,

because that’s under investigation with OH&S. That’s all I’ll say about that, but it was definitely H2S. P.N.: That’s not the first, and unfortunately, probably not the last, workplace fatality. One of the things that did not come up in the CBC story was the fact that if you want to work in the oilpatch, you have to have this card (pulled out H2S Alive certification ticket).

Dancsok: You know what? Even myself, I don’t inspect wells, but if I want to accompany my inspectors, I need to have this. I’m thinking of doing that, by the way. It’s been a while since I’ve done it, and I need a refresher.

P.N.: This is not a meteor that fell out of the sky. This is something the oilfield has dealt with, essentially, forever.

Dancsok: And certainly residents that live in oilfield areas are aware of the odours that come from the oilpatch and understand that is H2S, and that what we call “sour sites” are properly placarded, saying H2S production, danger, do not trespass.

Still, there’s the odours. There’ the potential.

Ten parts per billion is when we start smelling sour gas. That’s a far cry from what is lethal, and that’s 1,000 parts per million.

P.N.: When I first moved to southeast Saskatchewan in 2008, when I was driving Highways 13 and 18, I really noticed, just in my truck, certain locations. Especially around Glen Ewen, I could smell it. It was quite noticeable. I don’t smell it as much anymore. Is that because of the S-10?

Dancsok: Well, S-10 is really starting to kick in this summer.

I think it’s because we have raised industry’s awareness. I want to tell you this: Industry has responded very well. I’m very pleased with their response. They are taking this seriously, right to the highest level, the CEOs. The (Crescent Point CEO) Scott Saxbergs of the world are aware of this. Perhaps, in the past, that wasn’t really happening. Our inspectors were going out, throughout time, and this isn’t the first sour gas we’ve encountered, our inspectors went to an operator in the field and said, “You’ve got a problem here. Shut this down and get it fixed.”

That message was not getting to the CEOs. So the CEOs were thinking, “Hey, we’ve been compliant. We’ve heard no bad stories from operations.

They must be good.”

Now the CEOs are starting to hear this. The communication is moving up the food chain, so

to speak, and the CEOs don’t want it to be their company that is creating a problem. They are taking it seriously, and they are making sure their staff are educated, trained.

H2S is one. When a vapour recovery unit goes off, you don’t just unplug the alarm, you go out and fix the source, and take corrective action. That whole culture is changing. Just by our increased presence, that’s helping that culture to change.

P.N.: Regarding inspection, can you describe the role of the ministry, your staffing levels, and is that enough?

Dancsok: So, on an annual basis, our inspectors go out and do numerous inspections. Last year alone? Ten thousand. Ten thousand sites were inspected. About 7,700 were wells, but we inspect wells, facilities. We inspect rigs during drilling. We do the BOPS tests. We inspect spills. We inspect pipelines.

We have 16 inspectors in the field, in four field offices, doing that work. They inspect the oil and gas for everything.

P.N.: Don’t we have around 100,000 wells in the province?

Dancsok: We have 80,000 wells, yes.

By comparison, just for example, Alberta.

They have about 280,000 wells. Last year, they did 12,500 inspections. I think our level of inspection, at 10,000 site inspections, compares favourably with Alberta’s level of inspections. Would you agree?

P.N.: Some people would say, “Why not 100 per cent? Why not 50 per cent?”

Dancsok: Okay, right. What you look at is it’s impossible. Not every car that drives through a school zone has a radar gun trained on it. You do an adequate level of inspection and enforcement to modify the behaviour.

That’s efficiency. We’re doing in the order of 10,000 inspections of 80,000 sites. That’s in the order of 10 to 12 per cent. That’s seen as an adequate level of inspection. You know that you’re going to be inspected somewhere along the way, you better be in shape.

P.N.: Do you need more inspectors?

Dancsok: We could always use more inspectors, absolutely.

P.N.: But will you have more inspectors?

Dancsok: We are doing work to get more inspection boots-on-the-ground, absolutely. We’re re-allocating from within the ministry to get head office staff. We’re in the process of building a field presence in Regina. ɸ Page A9

PIPELINE NEWS June 2015 ɺ Page A8

A9

too close to the residence. It was, I am told, that residence actually signed off. It was actuOur biggest challenge is to keep inspecally 300 metres away, and it should have been tors in the field. Our inspectors are some of the 500, but the resident signed off. most educated, technically, as well as regulatory, P.N.: That was three years ago? folks in the patch. They are high targets for Dancsok: Two-and-a-half years ago. In companies to higher, and pay a better salary, too. early 2013, Minister (Tim) McMillan, at the So our challenge is to keep inspectors, for sure. time, wrote a letter to all industry, all operators, P.N.: There are a lot more resumés availsaying, “We are getting growing complaints able today than there were four months ago. and concerns from sour gas, and we want you Dancsok: You’re right. Absolutely. to be mindful there are regulations to follow What we’re doing in the meantime, until and you should be looking at your sites and we get more inspectors, is we are going to focus facilities to ensure they are in compliance. We those 10,000 inspections. Instead of doing will be coming to inspect.” across the board inspections on everything, We followed that letter up with actual we’re going to focus them on sour gas inspecboots-on-the-ground inspections, on sites. In tions.

2013 we did full audits, day long, day-andBetween 2013 and 2014, all of the industry a-half on a facility, 22 sites, random across has sent in gas compositional analysis on their southeast Saskatchewan. facilities. That’s going to help us focus on where We had 21 failures. the next inspections should go. We’ve already That probably is very alarming. Only six of started those inspections in the Oxbow-Glen the failures were due to sour gas, however.

Ewen area. We’ll be moving to Weyburn south A failure on an audit can be your tank is and some of the other areas that are hotspots leaking, your berm has been eroded and hasn’t for sour gas. We want to get to the highest been repaired. You have too many weeds – all emitters and the areas of biggest concern first. the kinds of things that can happen. Your flare Industry has already noticed. We are serious stack is too close to your tank, or something and we mean business. We’re getting a lot of like that. There are all called failures in our incompanies now self-disclosing, telling us they’re spection protocol. Twenty-one out of 22. That’s shutting in their sites voluntarily until they get concerning anyways. them fixed, before we come out and inspect P.N.: I would say so. them. So I think it’s been effective.

Dancsok: And six were concerning sour Ed Dancsok is assistant deputy minister in the Ministry of the EconoP.N.: Has this been driven by those gas failures. my, responsible for the Petroleum and Natural Gas Division. recent stories?

P.N.: As you said, some were weeds, Photo by Brian Zinchuk Dancsok: Oh, no. We started receiving some were flare stack locations. How many increased concerns from citizens back in the of those 21 out of 22 sites were significant fall of 2012. As a result of that we started enough that immediate action needed to be focusing more of our inspections towards sour taken? gas. We had the yearling calf incident near Manor that happened in the fall of Dancsok: Those six. Immediate action. They were shut in, and remained 2012. The source of that was found, and we had that site decommissioned. That shut in until corrective action was taken. was the first site. It wasn’t just shut in and fixed, it was decommissioned. It was ɸ Page A10

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PIPELINE NEWS June 2015

Inspectors followed leaky truck on highway; not impressed Éş Page A9 P.N.: And this was done in 2013?

Dancsok: 2013. In 2014, I talked about the gas compositional analysis for all operators.

Now we have a database so we can focus our future inspections.

In the summer of 2014, we looked at the highest concentration. Now, just because a facility is sour, it doesnâ&#x20AC;&#x2122;t mean itâ&#x20AC;&#x2122;s emitting sour gas. It just has sour production.

It may be fully compliant. But we looked at the enforcement pyramid, where the highest emitters are the smallest numbers. We looked at the critically sour sites, 10,000 parts per million, or more, that are also close to highways, residences, public places.

There were 84 sites in southeast Saskatchewan.

When we inspected those 84 sites, specifically for sour gas, we had a 70 per cent failure rate.

Even by doing that, everyone understands now weâ&#x20AC;&#x2122;re looking at sour gas. There isnâ&#x20AC;&#x2122;t a question about it.

P.N.: Did you shut in any sites at that time?

Dancsok: Yes, we had suspension orders on 35 sites, and 29 sites were shut in, which means when you shut it in, you donâ&#x20AC;&#x2122;t get the minister involved. We just say, Dean (Pylypuk, an inspector) says to the

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guy, â&#x20AC;&#x153;Shut this in, Iâ&#x20AC;&#x2122;ll come back tomorrow to see if you have this fixed.â&#x20AC;?

Thirty â&#x20AC;&#x201C; five and 29, thatâ&#x20AC;&#x2122;s 64 out of 84. Thatâ&#x20AC;&#x2122;s pretty high, for sure. There were 35 where we had the minister sign an order saying this is suspended and will remain suspended until I say you can start it up.

P.N.: If this was a math class, and you had this many failures, your bell curve isnâ&#x20AC;&#x2122;t doing too well. So whatâ&#x20AC;&#x2122;s happening in 2015 now?

Dancsok: We put together a committee with all the agencies; Environment, Health, Occupational Health and Safety, as well as industry, looking at a strategy going forward.

That was a short-term, knee-jerk reaction to get the worst problems looked at.

I think it has improved. If you look at the end of that CBC report, they said no more cattle have died on that farm. I think that problem has been fixed.

I think there has been a better general overall awareness in the industry that we are not going to allow this to happen.

They will be inspected. They will be subject to enforcement actions.

P.N.: Is there anything else you want to say on this?

Dancsok: In 2015, weâ&#x20AC;&#x2122;re going to focus those 10,000 inspections on the sites we know, or suspect, are sour, and weâ&#x20AC;&#x2122;ve already started part of that sweep.

Based on our analysis, only about six per cent of the wells in

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Saskatchewan are sour.

Thatâ&#x20AC;&#x2122;s a pretty important piece as well. Out of the total, itâ&#x20AC;&#x2122;s not a big number, but it certainly has a higher impact because of the odours.

Thereâ&#x20AC;&#x2122;s about 6,000 sites that we know are sour, based on our analysis. Weâ&#x20AC;&#x2122;re planning to inspect 10,000 sites that we know or suspect are sour.

Thatâ&#x20AC;&#x2122;s our mediumterm thing. Weâ&#x20AC;&#x2122;re going to try to get each and every site we know or suspect is sour looked at.

Thatâ&#x20AC;&#x2122;s going to help us where the good players are, the bad players are, that sort of thing. Weâ&#x20AC;&#x2122;re not just going to look at sites that are close to highways. Weâ&#x20AC;&#x2122;re going to look at all sites. Thatâ&#x20AC;&#x2122;s important.

Longer term, weâ&#x20AC;&#x2122;re involved with the (Canadian Standards Association) putting together, across Canada, so all jurisdictions are involved, fugitive emissions guidelines. What is a fugitive emission?

What needs to be done?

What the standards are for measuring that and eliminating it?

A draft of that is coming out. Weâ&#x20AC;&#x2122;ve been working on it, and with them. Weâ&#x20AC;&#x2122;ve been working with AER, the British Columbia Oil and Gas Commission, all of the jurisdictions. A draft for public consumption should be coming out this summer. We are certainly at the table on that.

We are also engaged with AER (Alberta Energy Regulator). Theyâ&#x20AC;&#x2122;ve had a sour gas problem for many years. They conducted a four-year strategy project on how to deal with their sour gas issue, which is large.

I think 20 per cent of their production is sour, and itâ&#x20AC;&#x2122;s big volumes of sour gas. I think ours is a smaller problem, with smaller volumes.

But weâ&#x20AC;&#x2122;re going to look at their strategy and glean from it what we need. Without pushing us down, they are considered one of the best regulators in the world. The best financed regulator, they have a

very large contingency and expertise. Weâ&#x20AC;&#x2122;re going to use that expertise and leverage it to find a Saskatchewan solution to a very similar problem to what they had.

No point in re-inventing the wheel, right?

P.N.: What about the truck? What are you going to do about trucks with fugitive emissions?

Dancsok: Part of that whole strategy around having all the important agencies involved includes Highways, and the need for Highways to get involved for safe transport of products up and down our roadways.

P.N.: You couldnâ&#x20AC;&#x2122;t pull over that truck?

Dancsok: I canâ&#x20AC;&#x2122;t.

We have no jurisdiction over that. We have jurisdiction over the wellsite.

Thereâ&#x20AC;&#x2122;s another thing I want to talk about. You know about the airshed authority.

They are our vehicle for communications to the public. They have the website with 18 Air Pointers (air quality monitoring stations).

You can go on the website and look at any of them in southeast Saskatchewan and some in the Lloydminster area and find out the air quality, based on that live data. It does measure H2S. Another thing, we support the airshed authority financially as well as Gary Ericson and Dean Pylypuk are on the board of directors. Environment does as well. We support them not only financially, but by having people on the board to support them. They go to RM meetings. They go to public places and talk about air quality. And industry supports this.

This is our vehicle for getting out information. I think that was one of the criticisms that was out there â&#x20AC;&#x201C; how are you informing the public of this problem?

We do it through the airshed authority.

On the web: Southeast Saskatchewan Airshed Association http:// sesaa.ca/

PIPELINE NEWS June 2015

A11

If and when Keystone XL is approved ɺ Page A4 The original phase of Keystone, however, has safely transported over 830 million barrels of crude oil from Canada to the U.S. since it began operation in July 2010. With the completion of the Gulf Coast extension in January 2014, the system now provides a direct route for shippers from Hardisty, Alta. to the Gulf Coast refineries at Port Arthur, Texas.

If and when Keystone XL is approved, Soini said it would take approximately three years from granting of that Presidential Permit to completion.

But that timeline depends on the time of year the permit is issued.

“We’ve got the pipe, we’ve got the pumps. We’ve got everything we need to put this together. It’s just a matter of getting over that hurdle to actually get it done,” he said.

Energy East Soini said he is a little biased towards Energy East “being the person solely accountable to build it.”

“It’s a pretty exciting project. It’s, quite frankly, a nation-building project. Basically it’s a Canadian solution to solve a Canadian problem.

“When we went out to the market to test the interest, we were actually overwhelmed by the response to our open season, and received approximately just under one million barrels a day of firm, long-term contracts to transport crude oil from Western Canada to Eastern Canada.”

In October 2014 TransCanada filed the largest regulatory filing in the company’s six-decade history for approval to construction and operate the Energy East pipeline.

The pipeline would have a 1.1 million bpd capacity.

The plan is to commence deliveries by the end of 2020, according to Soini. This is an apparent

slippage from previous dates announced. Previous statements by TransCanada in late 2013 had anticipated it to be in service by late-2017 for deliveries in Québec and 2018 for deliveries to New Brunswick.

That 2018 in-service date is still prominent on the project’s website.

The planned Cacouna, Que., terminal was deleted on April 2 due to concerns about whales in the St. Lawrence River. Potential alternative terminal options in Québec are being reviewed. Québec and New Brunswick refineries would continue to be connected directly to Energy East.

“The project essentially consists of converting 3,000 kilometres of existing natural gas pipelines across the Canadian mainline, and we would construction 1,600 kilometres of new 42-inch pipeline that would see us connect Hardisty to St. John, New Brunswick,” said Soini.

The project is expected to create 14,000 direct and indirect jobs during its development, and some of those have already begun.

One of the key engineering challenges will be the crossing of the St. Lawrence River. This will involve a 4.5 kilometre tunnel 3.5 to 4.5 metres in diameter under the river.

Upland Soini said, “The Upland pipeline project is a $600 million pipeline that would provide crude oil transportation from multiple points in North Dakota and interconnect with the Energy East Pipeline at Moosomin, Saskatchewan.

“When constructed it will have the capacity of roughly 220,000 barrels per day and run approximately 370 kilometres.”

An open season for Upland in November 2014 successfully contracted 70,000 bpd in capacity on the proposed Upland pipeline. Subject to regulatory approvals, they expect this pipeline to be in service

John Soino, spoke about Keystone XL, Upland and the Cromer lateral projects. Photo by Brian Zinchuk

by 2020.

(Previous statements by TransCanada in February 2015 to Pipeline News have stated the capacity of the 20 inch line would be 300,000 barrels per day at full usage. Soini did not explain the discrepancy in his remarks.)

“We filed a DOS application for this pipeline just last week,” he said, referring to the United States Department of State.

As for the actual layout of the pipeline in Canada, he said to Pipeline News after his presentation, “We’re in the process of defining the Canadian portion, whether or not it’s going to go to Cromer, or it’s going to go to Moosomin. We’re in the process of determining that right now. I can tell you that pipeline is going to go to Northgate, Saskatchewan. ɸ Page A12

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Cromer lateral could carry almost all SE Sask oil production to Energy East ɺ Page A11 “We’re actually doing consultation activities right now on both routes. In terms of connection, we’re not going to be 100 per cent sure of that connection until we develop it fully.”

Cromer to Moosomin lateral Pipeline News asked about the Cromer to Moosomin lateral, part of the Energy East project which would allow southeast Saskatchewan and southwest Manitoba oil to be shipped on the Energy East pipeline.

Soini said, “It’s actually going to be a complex system. When you look at Energy East, it’s a backbone system. It’s essentially a bullet line, so to speak. It’s going to be feeding refineries in Quebec and New Brunswick.

“But the feed into Energy East, one feed is Cromer. As we all know, there’s a hub there. There would be connections. We would obviously look for opportunities to connect to other pipelines with our pipeline system. That’s our business.

“At the end of the day, we continue to provide a service, and that’s to transport product for customers. If there’s interest to actually tie into these pipelines to transport that product to Eastern Canada, or for other markets, for that matter, we would be interested in doing that.

“That the same for Upland as well. The Upland system will also potentially connect to different intrastate pipelines and other market opportunities.

That’s really key to our business.

“Cromer’s going to connect directly to Energy East,” Soini said.

The current filing for the Cromer lateral calls for a 16-inch pipeline. However, when asked by Pipeline News if a common pipe, larger might be used from Cromer to Moosomin, combining this lateral with the Upland pipeline, or running two pipes to Moosomin, he said, “We’re developing both (ideas) right now. What is the best thing here?

What is the best alternative when you take everything into consideration?”

There will be connection points to the existing Cromer facilities, he said.

That 16 inch pipeline is also the same size as the Enbridge Westspur system, the only pipeline gathering system currently in place in southeast Saskatchewan. Asked about the possibility of shipping everything gathered on the Westspur system onto Energy East instead of the Enbridge mainline, he replied, “The way we size our pipelines is we go out with an open season. We determine what the level of interest is. From there we take that capacity and we identify potential spot capacity, and that’s how we size our pipeline.

“All the sizes of our proposed pipelines have to be justified, and that’s why it’s justified in our application in terms of size.”

When it was pointed out to him that the Cromer lateral, at 16 inches, would have the capacity to theoretically ship almost every drop of oil produced in southeast Saskatchewan, Soimi said, “That is the capacity (225,000 bpd) of that pipeline.

“I’m not able to actually go into detail due to the commercial sensitivities and confidential sensitivities of those discussions, other than what’s been filed in the applications and we’re developing the Canadian portion of that.”

Opposition Addressing the strong opposition to proposed pipeline projects, he said, “If the 12 per cent of folks who actually opposed the industry have such a stronghold and such an impact, that at the end of the day, there was a day when ‘silence meant support.’ Today, silence means you actually oppose it.

“If you’re not out front, actually supporting the oil and natural gas industry visibly out there, quite frankly, your message is not getting out there. The opposers and activists are taking a stronghold on us and having an impact,” said Soini.

“Quite frankly, they’re having an impact on major developments, major pipelines, that, to be honest with you, would significantly help this industry if we were able to safely build and operate these pipeline systems.”

He encouraged people to sign up as supporters of the project on the Energy East website.

Safety Touching on safety, Soini said, “There’s nothing more important to TransCanada. It’s that simple.”

He added that pipelines are by far the safety means of transporting product, including oil and gas.

Concerns about water crossing are also among their biggest concerns, he added.

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PIPELINE NEWS June 2015

Donâ&#x20AC;&#x2122;t expect $100 oil for a long time Â&#x201E; By Brian Zinchuk Regina â&#x20AC;&#x201C; If you have been hoping for the days of US$100 crude to return soon, donâ&#x20AC;&#x2122;t hold your breath.

A prominent analyst for a major Canadian bank sees crude prices around $65 for the next year or two, then $75 three-tofour years from now.

Patricia Mohr, developer of the Scotiabank Commodity Price Index, was a keynote speaker on April 30 at the Williston Basin Petroleum Conference in Regina.

It is the first index designed to measure price trends for Canadian commodities in export markets.

As such, there was a strong crowd in attendance for the last speech of the conference, when people would otherwise be packing up or leaving. They wanted to hear what Mohr had to say on oil prices. â&#x20AC;&#x153;Oil and gas accounts for almost 40 per cent of Canadaâ&#x20AC;&#x2122;s net exports of all commodities,â&#x20AC;? she said.

Overall commodity prices were lower now, in March 2015, than they were in January 2007, Mohr noted. Thatâ&#x20AC;&#x2122;s even lower than the bottom of the 2008-09 recession.

Some of this has to do with a lackluster global economy. She pointed out how iron ore has dropped about 70 per cent in price in the last year, the result of four major mining compa-

nies dropping prices and increasing production. â&#x20AC;&#x153;Recently we have seen in this very competitive market a fight for market share in oil and the iron ore industries,â&#x20AC;? she said. â&#x20AC;&#x153;Oil isnâ&#x20AC;&#x2122;t exactly the same, but definitely a market share war between Saudi Arabia, the major Gulf Cooperation Council Members, and the U.S. shales, a very interesting development.â&#x20AC;? â&#x20AC;&#x153;I am optimistic we are close to the bottom of the downdraft in commodities. We see a slow recovery in international oil prices, which I believe is now getting underway,â&#x20AC;? she said. â&#x20AC;&#x153;Unfortunately weâ&#x20AC;&#x2122;re probably going to have some added volatility in the international oil markets, a bit of a zig zag â&#x20AC;&#x201C; improvement, down, improvement, for the next couple of years.â&#x20AC;?

If you had to pick one indicator of global commodities, she said, it was the purchasing manager index for manufacturing in China. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s been a lot jitters about of global economic activity for a while now,â&#x20AC;? she said. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s a lot of jitters over the pace of growth in China.â&#x20AC;?

While China may have 7 per cent growth, thatâ&#x20AC;&#x2122;s weak for China, she explained.

She expects a spring rally for China.

The decline in oil

A13

In three or four years we might see $75 oil, according to Patricia Mohr. Photo by Brian Zinchuk

prices have taken a toll in the shale and conventional crude areas of the U.S., with associated losses of employment.

However, they are still calling for 2.6 per cent GDP growth in the U.S., with a positive outlook for the U.S. economy.

Western Europe, which has been in near-recession for years now, is slowly recovering. Auto sales last year shifted from decline to growth. That will improve diesel demand, as well as overall petroleum product demand after a slow year last year, Mohr said.

Coming back to China, she noted that Chinaâ&#x20AC;&#x2122;s industrial activity never went negative in 2008-09. China also dominates material markets. China is almost 49 per cent of global demand for base metals, while the U.S. is nine per cent. Yet now its current growth is the lowest it has been since 2008. ɸ Page A14

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A14

PIPELINE NEWS June 2015

Forecast expects $65, then $75 ɺ Page A13 “I do think growth is slowing to 6.5 per cent in China,” she said, noting this impacts commodity prices.

“In global oil consumption, the United States is still dominant, with almost a 21 per cent share of world oil consumption. China is only 11 per cent, but in recent years, is growing more rapidly than the U. S.” Mohr displayed a chart showing car ownership per 1,000 people. In the United States, it was 792.

In China it was 88, and in India it’s 26.

“Every customer in China wants a motor vehicle. They don’t want e-bikes anymore,” she said.

“Is it going to be gasoline or electrically driven?”

Mohr thinks some of those Chinese vehicles will be powered by electricity, but the rest will be gasoline.

China is now 60 per cent of the world’s auto market. She said, “They love SUVs.” Mohr said China’s potential for growth is slowing down, probably to five per cent per annum into the next decade.

She expects a “massive summer driving season in the U.S.” and a revival in the U.S. housing market.

Russia is in recession due to its involvement with Ukraine.

Oil Shifting to oil, Mohr said, last November Saudi Arabia and the Gulf states decided not to cut production to shore up prices. This would allow prices to drop to whatever level it may take to slow development of U.S. shales.

“The Saudis have actually been quite open

about this. I just think that’s kind of the way it is,” Mohr said.

North Dakota, the Texas Permian Basin and Eagle Ford added 1.28 million barrels per day production from January 2014 to January 2015.

“That increase, I have never seen anything that big in my entire career, and I have been working a very long time,” Mohr said. “You would have to go back to the early 1980s or 1970s in the Middle East to see that kind of oil production expansion.”

That directly contributed to a glut of light sweet crude, particularly in Atlantic basin markets. Nigerian oil backed out of the U.S., and ended up going to Northern Europe.

“It became quite obvious to oil trader the market for light crude was oversupplied.”

Mohr thinks the bottom for WTI was $43.75 in mid-March of this year. It had picked up to $59 by the day of her presentation.

She said she has not been willing to forecast $40 oil, saying it is not sustainable.

“Only a few regions in the world can consistently produce oil at $40 a barrel and still make money. Forty is not sustainable for any more than perhaps a month,” she said.

The average for this year, she forecast, would be $58. Mohr expects the price of oil to reach $65 by the fourth quarter of this year and level off at that price for 2016.

The reason for that forecast levelling off is U.S. shale drilling is down but there are at least 3,000 uncompleted wells waiting to be brought onto production.

Mohr went to say she expects a flattening of U.S. oil production.

“The market is responding very positively to

this. It’s one of the key reasons we’ve been getting a spring rally in prices. The market globally is looking towards a slowdown in production in U.S. shales to help restore balance in global crude oil markets.

“I think we’re just on the cusp of that. I know it’s a difficult thing to endure. But at least we have the satisfaction of knowing oil prices are starting to respond positively.”

Brent oil, according to Mohr, will likely be $63 for 2015 and $70 for 2016.

In Western Canada, she noted capital expenditures are down. Spending by oil and gas producers in Canada is expected to be down about 35 per cent.

“It’s quite a dire situation for a lot drillers,” Mohr said.

She pointed out that Saskatchewan’s Bakken was at the bottom of the North American cost curve.

Service costs are down 20 to 30 per cent. She expects wages to be down as well.

At what price can the industry really survive, she asks, in making forecasts.

“Forty is too low. Fifty is marginal. I think $60 to $65 is doable, for a couple of years. I think the $65 mark is where I would put things for the next couple of years. Long-term, I think prices will move up, but in a very zig-zag fashion. I wouldn’t be surprised to see $75 crude in three-to-four years, but it’s going to take a while to happen,” she said.

In the forecast there is an assumption that international capex will drop 30 per cent and there will be slower production gains around the world are going to lead to restoration of oil market balance. ɸ Page A15

PIPELINE NEWS June 2015

Éş Page A14 Mohr thinks Russian production will fall and she doesnâ&#x20AC;&#x2122;t have a lot of confidence in Iraq. â&#x20AC;&#x153;I am the one at the bank who actually does price forecast the for all credit. I have a little bit of say in the bank reserve lending aspect of things, so letâ&#x20AC;&#x2122;s hope I am right,â&#x20AC;? she laughed.

Asked by Pipeline News, â&#x20AC;&#x153;How many countries does Saudi Arabia have to bomb for oil to go up?â&#x20AC;? she replied, â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s quite interesting, isnâ&#x20AC;&#x2122;t it? â&#x20AC;&#x153;Recently Brent prices have received a little bit of an uplift because of Saudi strikes in Yemen. I think the problem there is theyâ&#x20AC;&#x2122;ve also blockaded all the ports in Yemen. There had been some fear that tankers moving from the Persian Gulf, around Yemen and up through the Suez Canal, that those tankers might be impeded. I think itâ&#x20AC;&#x2122;s quite doubtful that will be the case. â&#x20AC;&#x153;Last June, June 2014, when Brent was $117 a barrel, I would have guessed at that time the geopolitical risk premium might have been $15 a barrel.

Recall prices skyrocketed in June last year because that was the time ISIS first moved into Iraq, threatening the oilfields in Iraq. â&#x20AC;&#x153;The minute the U.S. decided to launch oil strikes against ISIS, you found that geopolitical risk premium fell back a lot,â&#x20AC;? she said. â&#x20AC;&#x153;I think the fact thereâ&#x20AC;&#x2122;s so much shale development in the United States and the Alberta oilsands in Canada, and a lot of the worldâ&#x20AC;&#x2122;s growth in actual oil production is now occurring in North America, in a very steady environment. So the geopolitical risk premium, a month ago, was virtually zero. â&#x20AC;&#x153;I think thatâ&#x20AC;&#x2122;s the reason why. Now, it can always blow out again. Thereâ&#x20AC;&#x2122;s all sorts of geopolitical risks in the Middle East. In fact, the situation recently has been the most intense, politically, that weâ&#x20AC;&#x2122;ve seen in a long time. But right now that geopolitical risk premium is extremely low.â&#x20AC;?

A15

Patricia Mohr, the person who decides what oil price ScoĆ&#x;abank will use in its lending, was keynote speaker at the tilliston asin Petroleum Conference on pril ĎŻĎŹ. Photo by Brian Zinchuk

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PIPELINE NEWS June 2015

Aquistore now injecting CO2

Itâ&#x20AC;&#x2122;s third and goal, and the three-minute warning has sounded for the Aquistore Project. If not the quarterback, you could probably call PRTC president and CEO Ken From the general manager of the team. Photo by Brian Zinchuk

Â&#x201E; By Brian Zinchuk Regina â&#x20AC;&#x201C; After several years on simmer, things are now on full boil with the Aquistore project.

Aquistore is a $30 million research project which is currently studying the concept of taking carbon dioxide compressed to a liquid state and then injecting it into deep saline aquifers for permanent geologic storage. If it works, and works well, this could be a major

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step forward in global carbon dioxide reduction strategies.

Aquistore takes carbon dioxide produced by the Boundary Dam Integrated Carbon Capture and Storage Project. That CO2 is normally shipped to the Cenovus-operated Weyburn Unit 70 kilometres away for enhanced oil recovery.

Aquistore has two wells, the deepest in Saskatchewan, two kilometres west of the Boundary Dam Power Station. One is for injection, and is 3,396 metres deep, while the second is an observation well 3,400 metres deep â&#x20AC;&#x201C; the deepest in the province. The two wells go right down to the Precambrian sedimentary basement. The injection takes place just above that basement, into the Deadwood and Winnipeg formations.

The Petroleum Technology Research Centre has run the project from the get-go.

On April 30 PTRC president and CEO Ken From said, â&#x20AC;&#x153;The Aquistore well is being commissioned. Itâ&#x20AC;&#x2122;s receiving pipeline CO2. That actually started on April 16.

What weâ&#x20AC;&#x2122;re doing right now is injecting various amounts of CO2 and looking at the responses of instruments downhole. â&#x20AC;&#x153;All instruments appear to be working

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correctly. We have a number of researchers on the site.

One of the most important points of research will be determining when the injected carbon dioxide first reaches the observation well 150 metres away. â&#x20AC;&#x153;It is an extremely thick zone, over 100 metres. So the CO2 is going to where it can go the fastest, the easiest. Thatâ&#x20AC;&#x2122;s just how it works.â&#x20AC;?

The CO2 will first appear where if flows preferentially, and their instruments may or may not record it there where they are sampling, but they have logs that will detect CO2 concentrations. Pulsed neutron logging will detect changes in chemistry in the fluid properties. It is used periodically on a wireline, running a log on the wells. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s an expensive process,â&#x20AC;? he said.

In the near term they are trying to image the plume of CO2, to see when there is break-through to the observation well. They want to see how CO2 is going on a vertical scale as well, into different zones.

A logging tool called a spinner is used to determine where the fluid is going, and how fast. Other tools can determine how far it is going horizontally. ɸ Page A17

PIPELINE NEWS June 2015 Éş Page A16 Logs are being run every two or three days. Initially they started at 250 tonnes of CO injected per day, then lower it to see a pressure response, then up it again, to better characterize the reservoir. The Energy & Environment Research Center (EERC) of the University of North Dakota is doing the reservoir modelling. â&#x20AC;&#x153;All governments and regulators want to be able to say they have a computer model to know where itâ&#x20AC;&#x2122;s going, so after 20 years, we can have confidence their model is working right, because itâ&#x20AC;&#x2122;s been working right for the first three years, letâ&#x20AC;&#x2122;s say. It gives confidence in numerical simulation,â&#x20AC;? From said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re also doing the sampling of fluids in the observation well. That sampling will tell when CO2 is coming in. The University of Alberta is doing that.â&#x20AC;?

Dr. Rick Chalaturnyk and Dr. Ben Rostron of the U of A are looking into that.

The researchers on site are doing 24-hour operations monitoring the site. Itâ&#x20AC;&#x2122;s pretty heady times for those doing ground-breaking research. â&#x20AC;&#x153;On those fluid samples, you get one shot.

Itâ&#x20AC;&#x2122;s not like you can go back and replicate it. If you are not taking it right, youâ&#x20AC;&#x2122;ve lost that sample. What if that sample was the one with the change in it?â&#x20AC;? From said. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re working those students hard.â&#x20AC;?

The U of A designed the fluid sampling system, which runs outside the casing. It was strapped to the

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There are also two universities from the United Kingdom with representation on site. â&#x20AC;&#x153;Right now itâ&#x20AC;&#x2122;s â&#x20AC;&#x2DC;Can we see it? Is it there? Weâ&#x20AC;&#x2122;re looking at the microseismicity of injecting right now.â&#x20AC;?

The permanent seismic array is not being used yet, because that can only detect much larger volumes.

The injection capacity of the well is pretty high, but now the question is how many tonnes a day the reservoir can take.

The CO2 being used is residual that Cenovus is not taking. Otherwise, the general intention is for all the CO2 to go to the Weyburn Unit. â&#x20AC;&#x153;What weâ&#x20AC;&#x2122;re finding out, and

SaskPower is finding out, is that fullscale carbon capture is complex,â&#x20AC;? he said, noting a short turnaround was expected in the coming days on the capture plant.

There will be on and off times, and they will see how the reservoir behaves. Thatâ&#x20AC;&#x2122;s important information for the researchers.

There was some angst about the length of time between the installation of the Aquistore monitoring hardware and the commencement of operations. But that angst has proven to be unfounded, according to From. â&#x20AC;&#x153;Everything is working as planned.

Theyâ&#x20AC;&#x2122;re getting good readings, theyâ&#x20AC;&#x2122;ll have good data.â&#x20AC;?

From noted they are monitoring the underground component, the near

A17

surface and above the surface. â&#x20AC;&#x153;Right now weâ&#x20AC;&#x2122;re focusing on the underground and the short-term underground effects,â&#x20AC;? he said.

Medium term Medium-term they will look at visualizing the plume to the observation well. There will be frequent testing for CO2 at the observation well until it is detected, then that monitoring will be scaled back.

There are plans for cross-well seismic work to see the plume. â&#x20AC;&#x153;Once we get past that observation well, which most people think is measured in days, not in years, then we need to start visualizing how does the plume change? Where is it doing.

Thatâ&#x20AC;&#x2122;s when we get into the permanent seismic array, doing a 3D shot to see the concentrations. In each one of these things we have a variety of instruments to test and see how they work,â&#x20AC;? From said.

(Three-dimensional seismic done in the same area over time is sometimes referred to as â&#x20AC;&#x153;4D seismic,â&#x20AC;? with the fourth dimension being time. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s not a snapshot, but more like a movie,â&#x20AC;? From described.)

From said a lot of press around the world pine for an â&#x20AC;&#x153;at scaleâ&#x20AC;? project. â&#x20AC;&#x153;Well, this is â&#x20AC;&#x2DC;at scale.â&#x20AC;&#x2122; It is at a commercial, operating power plant, at full scale. Itâ&#x20AC;&#x2122;s working. The research will be applicable to the real world, not just a lab or bench.â&#x20AC;?

SaskPower will be launching the Shand Carbon Capture Test Facility soon, he added, but PTRC is not part of that project.

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A18

PIPELINE NEWS June 2015

Saskatchewan’s natural gas drilling is all but dead

Melinda Yurkowski is assistant chief geologist for Saskatchewan. Photo by Brian Zinchuk

By Brian Zinchuk Regina – Picking up on a line of questioning to previous speakers, Melinda Yurkowski, assistant chief geologist for Saskatchewan began her presentation on the petroleum geology of Saskatchewan 101 with this sobering statement: “Truthfully, the gas industry has been really, really quite in the province. I do believe last year we only had 10 wells that were targeted for (natural) gas.

“Right now, oil is king.”

Yurkowski acts as host of the Williston Basin Petroleum Conference on the years that it is held in Saskatchewan. On alternating years the conference shifts to Bismarck, N.D. Each year Yurkowski provides an update on what is happening in this province, geologically speaking.

“Waters are a little choppy, I agree. We’ve seen

that in our delegate numbers,” Yurkowski noted.

While the numbers were smaller, that was not reflected in the quality of the conference.

On the science side, she said there are close to 92,000 oil and gas wells in the province, of which approximately 52,000 are currently operating.

There are about 35 formations that produce in the province, but the Mannville Formation around Lloydminster (heavy oil) and the Mississippian in southeast Saskatchewan (light oil) are the “bread and butter” producers.

There were 3,665 wells drilled in Saskatchewan in 2014. In 2015 from Jan. 1 to March 31, there were 575 wells drilled in Saskatchewan. Of those, 484, or 84 per cent, were horizontal.

A new record was set for horizontal wells in 2014. ɸ Page A19

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PIPELINE NEWS June 2015

A19

The Viking play near Kindersley have been increasingly growing outward in what has been someĆ&#x;mes referred to as the Í&#x17E;halo,Í&#x; a region where the target formaĆ&#x;on may not have been economic with verĆ&#x;cal wells, but are with horizontal wells. Graphic courtesy Ministry of Economy, Province of Saskatchewan

Éş Page A18 Viking grows in importance Saskatchewanâ&#x20AC;&#x2122;s Viking play is increasingly where itâ&#x20AC;&#x2122;s at when it comes to drilling activity, according to Yurkowski.

In 2014 the Viking led all formations in the number of wells drilled, far outstripping the Bakken (light oil) and Manville (heavy oil) plays.

Viking horizontal oil production has been on the rise, with essentially a hockey stick graph from late 2010 onward. By the end of 2014, the Vikingâ&#x20AC;&#x2122;s horizontal production (not counting vertical production) totalled 53,000 barrels per day, up from 7 barrels per day in 2007. By Dec. 31, 2014 there were 3,842 horizontal Viking oil wells. â&#x20AC;&#x153;You can see the Viking is playing a major role now,â&#x20AC;? Yurkowski said, noting it is accounting for over one-third of all wells drilled in the province. â&#x20AC;&#x153;The Viking is becoming a major story last year in terms of drilling for the province.â&#x20AC;?

In contrast, the Saskatchewan Bakken formation has started seeing an overall decline in production from its peak in 2012. At the end of 2014 the Bakken produced 61,420 barrels per day. Itâ&#x20AC;&#x2122;s hockey stick graph, when production took off, started slowly in 2006 then shot up in 2008 before leveling off and then peaking in 2012.

Torquay production takes place in two areas â&#x20AC;&#x201C; the Flat Lake area along the U.S. border near Oungre, and the Ryerson area near the Manitoba border. Itâ&#x20AC;&#x2122;s the Flat Lake area thatâ&#x20AC;&#x2122;s seen the most attention. After a slow start in 2005-2006, production started to jump in 2012 and has kept rising from there. â&#x20AC;&#x153;The newer play is the Flat Lake and Northgate, and thereâ&#x20AC;&#x2122;s about 181 producing wells there.

About 77 were drilled in 2014, and about five so far this year,â&#x20AC;? she said.

The Viking is a Cretaceous section and fairly shallow, with wells about 600 to 700 metres deep.

It produces a light 36 degree API oil. There are approximately 14 million barrels reserves recoverable at 9 per cent recovery, â&#x20AC;&#x153;And that number is going to change,â&#x20AC;? she said.

It is unconventional in the manner that it is difficult to produce from.

The oil is so light, Viking cores donâ&#x20AC;&#x2122;t look oily, as it bleeds off easily. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s hard to see the oil staining, because itâ&#x20AC;&#x2122;s so light,â&#x20AC;? she said.

Out of the Viking, Lower Shaunavon, Torquay and Bakken (in the southeast), only the Bakken dropped in horizontal (unconventional) production compared from 2013 to 2014. The other three formations grew.

This map shows the important producing oil pools in Saskatchewan. The Torquay, in the southeast along the U.S. and Manitoba borders, and the Viking, on the western side of the province, are growing in importance. Graphic courtesy Ministry of Economy, Province of Saskatchewan

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A20

PIPELINE NEWS June 2015

Thereâ&#x20AC;&#x2122;s a full slate of exhibitors at the upcoming Saskatchewan Oil and Gas Show. File photo

Get in your truck and get to Weyburn Â&#x201E; By Brian Zinchuk Weyburn â&#x20AC;&#x201C; Read this story, put down this paper, get in your truck and head to Weyburn. The Saskatchewan Oil & Gas Show, sometimes referred to as the Weyburn Oil Show, takes place June 3-4 at the Weyburn exhibition grounds and Crescent Point Place.

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.

If you havenâ&#x20AC;&#x2122;t got your tickets for the meals, check out oilshow.ca right away and see if you can grab some before they are sold out.

Estevan OTS golf teed up right after oil show

Partner with us to achieve your goals.

By Brian Zinchuk Estevan â&#x20AC;&#x201C; When the Saskatchewan Oil and Gas Show, also known as the Weyburn Oil Show, finishes on June 4, donâ&#x20AC;&#x2122;t pack up and head home just yet. Turn southeast and go the 88 kilometres to Estevan, where the Estevan Oilfield Technical Society will be hosting its 58th Annual Oilmenâ&#x20AC;&#x2122;s Golf Tournament.

The event will take place June 5-7 at the TS&M Woodlawn Golf Club, south of Estevan in the Souris River Valley.

There will be a choice of 18-holes on Friday or Saturday, or 36-holes which include a qualifying round on Friday or Saturday and a shotgun start on Sunday.

As usual there is a steak or lobster barbecue at 6:30 p.m. on Saturday,

June 6. The cabaret will kick off at 8 p.m. featuring Wonderland. The cabaret is open to the public, but no minors are allowed.

Blair Wilchynski, spokesperson for the OTS, said, â&#x20AC;&#x153;We will take registration right up to the last minute, unless we are full, but they, have to be in the oil and gas industry.â&#x20AC;?

Wilchynski works in sales with a rentals company, and as a former Estevan Bruin player in the 1980s, he personally found the OTS to be a good way to get to know the community. The connections he made back then are one of the reasons he came back to the community.

Indeed, the OTS golf tournament is known as the one of the social highlights of the season, and it is typically well-attended.

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PIPELINE NEWS June 2015

A21

CAPP and NDP to talk jobs Tim McMillan is president of the Canadian AssociaƟon of Petroleum Producers.

File photo

Calgary – The oil and gas industry has accepted a post-election invitation from incoming Alberta NDP premier

Rachel Notley to work with business leaders and unions in the best interests of the province.

The Canadian As-

sociation of Petroleum Producers (CAPP) has announced that they will form an industry group to work with Notley and her team on priorities to protect and grow jobs and investment in the province and in Canada.

“Albertans voted for change and we are prepared to work with the new government to explore and embrace the best change possible,” said CAPP president Tim McMillan in a news release on May 14.

The NDP won 53 of the province’s 87 seats in the May 5 election with a party platform of increasing corporate taxes by two percent and

reviewing oil and gas royalty rates.

The defeated PCs that won just 10 seats and the official Opposition Wildrose party with 21 seats said in their campaign they would do neither.

Notley has conĮrmed that a review of roy-

alty rates for oil and gas producers will take place during the party’s current term in office in collaboration with industry leaders and stakeholders.

McMillan said the industry and the government share a common interest in the industry’s success.

“The best way to protect jobs and invest-

ment is through improved market access – building new pipeline, rail and marine transportation infrastructure – while maintaining a strong fiscal regime that allows the industry to compete in the global market,” he said.

“Improved market access and fiscal strength will allow Canada to reap the benefits of helping meet global energy needs through safe, responsible development and delivery of its natural resources.

“With a 50 per cent drop in global oil prices since last summer, these are challenging times and Canadians across

the country are feeling the impacts of reduced oil and gas industry activity.”

Oil and gas industry capital investment is forecast to be down $23 billion in 2015.

To date, companies have announced more than 4,500 layoffs, with an additional 23,000 jobs lost as a result of lower drilling activity.

“To grow the oil and gas industry – creating more jobs and increasing public revenues to improve our quality of life – we must continue to keep Alberta and all of Canada attractive for oil and gas investment,” McMillan said.

EVRAZ announces temporary layoffs

By Brian Zinchuk Regina – The downturn in the oilpatch has directly affected steel-making workers in Regina.

On May 15, EVRAZ Regina provided the following statement to Pipeline News. Melodie Ruse, EVRAZ spokewoman, said, “EVRAZ Regina announced a temporary layoff effective May 17, of 40 to 50 employees in our steelmaking operations in order to align crew levels with production activity, which is currently lower due to reduced steel demand, associated with substantially lower oil drilling activity. We are constantly monitoring the oil market and will bring these employees back to work as soon as possible. In addition, the laid off employees are being considered for open positions across the Regina operations.

“The investment we recently announced to install a new two-step large diameter pipe mill and make related upgrades to our steelmaking operation and

EVRA Regina staī levels are being aīected by the downturn in the oilpatch. This photo, taken in ϮϬϬϵ, shows their steel rolling mill in Regina. File photo

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rolling mill is moving forward. Demand for large diameter pipe used for energy (oil and gas) distribution remains strong.”

Formerly IPSCO, EVRAZ Regina’s mills on the north end of the city have produced both mainline pipe and oil country tubular goods for decades.

The recent $200 million investment in large-diameter pipe-making capability was announced in step with planned major pipeline projects in the coming years. This was highlighted by the presence of Enbridge president and CEO Al Monaco, at the recent announcement of the mill expansion.

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PIPELINE NEWS June 2015

Productivity improvements will come out of this downturn: CAPP Â&#x201E; By Brian Zinchuk Regina â&#x20AC;&#x201C; â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve come off the bottom,â&#x20AC;? Brad Herald, vice-president of Western Canada operations, Canadian Association of Petroleum Producers, told the Williston Basin Conference in Regina on April 28.

Herald was the first at bat in the supplier forum that took place on the first day of the conference. â&#x20AC;&#x153;It can be a little bit gloomy, but there are some bright spots on the horizon,â&#x20AC;? Herald said.

Regarding forecasting, they usually do one in June, but this year they put out a revised version. In No-

vember CAPPâ&#x20AC;&#x2122;s members asked the organization to look at it again.

The last time CAPP did that was during the downturn of 2009. â&#x20AC;&#x153;The picture has changed very dramatically,â&#x20AC;? he said.

He noted that the picture darkens and there is â&#x20AC;&#x153;maximum pessimismâ&#x20AC;? usually when things turn around. â&#x20AC;&#x153;It was heartening to see the bounce. There were forecasters saying (the price of oil) would be $12 or $18 as we got down to that $40 range.â&#x20AC;? â&#x20AC;&#x153;The oil market is notoriously unpredictable,â&#x20AC;? Herald said, but added there hasnâ&#x20AC;&#x2122;t been a fundamental

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change in the oil market.

There were many years when whatever the price the Saudi oil minister said oil would be, that was it.

But now things have changed. â&#x20AC;&#x153;What started to happen was the Saudis would withdraw the supply to keep that price in that bandwidth. But they started losing market share. This fall, when the Saudi minister stood up and said, â&#x20AC;&#x2DC;Why donâ&#x20AC;&#x2122;t we produce the low cost oil first?â&#x20AC;&#x2122; That was a really marked difference in the way that market had worked. â&#x20AC;&#x153;Everybody is trying to figure that out. Economies with big surpluses; but (they are) burning through them at a really fast rate. The pessimism around our board was really around the duration â&#x20AC;&#x201C; how long is this going to go? I like the conversation I heard: â&#x20AC;&#x2DC;Is it a V or a U?â&#x20AC;&#x2122; â&#x20AC;&#x153;One of our guys said, â&#x20AC;&#x2DC;It feels like an L.â&#x20AC;?

Their â&#x20AC;&#x153;reworked capital investment numbersâ&#x20AC;? put together in January are now on the â&#x20AC;&#x153;rosey side,â&#x20AC;?

Herald said.

The more recent forecast from another organization looked at a 50 per cent drop in capital investment, he noted. Oilsands projects already underway will likely continue, however. â&#x20AC;&#x153;You will see some of the newer

projects potentially being shelved.

Productivity gains Herald said, â&#x20AC;&#x153;The undulations in the conventional business will be a bit choppier. Youâ&#x20AC;&#x2122;re going to see a lot of that chop in production. Weâ&#x20AC;&#x2122;re going to get better at it. The productivity gains that a downturn drives through the market are really important for long-term sustainability.â&#x20AC;?

As an example, he said, â&#x20AC;&#x153;Three years ago, it was a big story if we did a 20-stage frac on a horizontal. I was reading an article a couple months ago; they did an 84-stage frac on one of the Montney wells. Technology continues unabated in this industry.â&#x20AC;? â&#x20AC;&#x153;We were 20 per cent of the Toronto Stock Exchange. That fell to 12 per cent. It tells you how much capital has fled out of the public markets.

Youâ&#x20AC;&#x2122;ll see that on the capital deployment side.â&#x20AC;?

Even so, itâ&#x20AC;&#x2122;s still the largest industry in the country, Herald said.

The Bank of Canada has been bearish on the impact of low oil prices on the Canadian economy, but Herald added that it can turn around quickly.

Production will start to decline in Western Canada, he noted. That decline is forecast to be around 65,000 bpd from forecast in 2015 and 120,000 bpd in 2016. ɸ Page A23

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PIPELINE NEWS June 2015 year, over half a million barrels a day. There were 3,400 wells drilled last year, but CAPP expects that number to drop. â&#x20AC;&#x153;I will say I think this will be one of the most resilient jurisdictions on the conventional oil sides. You have an attractive and stable oil royalty regime, very prospective geology.â&#x20AC;?

Thereâ&#x20AC;&#x2122;s still a lot of optimism and drilling locations for Saskatchewan, Herald said.

Herald added, â&#x20AC;&#x153;It is a very challenging environment. Your statistics and forecasting are out of date in a month now.

But it looks like the market has found a bottom. Weâ&#x20AC;&#x2122;ve seen WTI at $57, Western Canadian Select at around $45.

Weâ&#x20AC;&#x2122;d like to close that price differential with some new pipe. â&#x20AC;&#x153;The overhang in global markets is only one to two million barrels on a 95 million

A23

barrel a day system.

It doesnâ&#x20AC;&#x2122;t take much interruptions. Yemen right now is in tumult.

Thatâ&#x20AC;&#x2122;s some of the takeup weâ&#x20AC;&#x2122;ve seen in pricing. Theyâ&#x20AC;&#x2122;re a small producer, but theyâ&#x20AC;&#x2122;re close to the Suez Canal.

Weâ&#x20AC;&#x2122;ve seen some piracy risk. It really moves on some, it seems to us, whimsical geopolitical risk markets. Itâ&#x20AC;&#x2122;s not a big overhang and it can change suddenly. ɸ Page A25

HUTTâ&#x20AC;&#x2122;S TRUCKING LTD. rad ,erald was the ÄŽrst speaker at the tilliston asin Petroleum Conference, talking about where the Canadian AssociaĆ&#x;on of Petroleum Producers sees things going.

Photo by Brian Zinchuk

Éş Page A22 â&#x20AC;&#x153;The Saudis are looking for that production to come off before they blink in this price war,â&#x20AC;? he said.

Yet the North American production outlook is still a favourable one, with 30 to 40 year highs in U.S. production and lots of growth opportunity.

As an example he said the Marcellus shale produced about a billion cubic feet a day of natural gas. â&#x20AC;&#x153;Today, itâ&#x20AC;&#x2122;s producing twice as much as we do nationally, from a natural gas perspective.â&#x20AC;?

The tight oil story has been similar. â&#x20AC;&#x153;The oilsands growth will continue

for decades. We could produce at this yearâ&#x20AC;&#x2122;s production rate, with no advances in technology, for another 300 years.â&#x20AC;? â&#x20AC;&#x153;That resource is substantive. It will be here for generations.

Pipelines The pipeline story is still critical to the Canadian industry and continental markets, he said. â&#x20AC;&#x153;We want to get the best price for the product, and that means getting it to tidewater, all compass directions â&#x20AC;&#x201C; down to the Gulf Coast, Energy East, the West Coast.

Pointing to the shale revolution and Russian geopolitics, he said, â&#x20AC;&#x153;You donâ&#x20AC;&#x2122;t know what coast youâ&#x20AC;&#x2122;re going

to need that secure supply off of. Those options for us really have to grow to unlock the full potential.â&#x20AC;?

Saskatchewan had record production last

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A25

Not a lot of hope for Sask. natural gas â&#x20AC;&#x153;The oilsands growth will continue for decades. We could produce at this yearâ&#x20AC;&#x2122;s production rate, with no advances in technology, for another 300 years.â&#x20AC;?

- Brad Herald, vice-president of Western Canada operations, CAPP Éş Page A23 Production declines will catch up, he noted.

There will be opportunities. He noted with shale gas, there was an expectation prices would come back up to $4 to $6 per gigajoule, but it stayed around $2.50 because there was so much more new productivity. â&#x20AC;&#x153;This whole thing we are going through will drive cost efficiencies.

They are painful to go through. But weâ&#x20AC;&#x2122;ll emerge from this, continentally, as a much stronger oil and gas sector,â&#x20AC;?

Herald said. â&#x20AC;&#x153;I think the other thing is weâ&#x20AC;&#x2122;re seeing a lot of consolidation.â&#x20AC;? â&#x20AC;&#x153;I think thereâ&#x20AC;&#x2122;s going to be golden opportunities for juniors, for that next Crescent Point or CNRL to come from out of sight.â&#x20AC;?

Sask natural gas Pipeline News asked about Saskatchewanâ&#x20AC;&#x2122;s decline of natural gas drilling which went from several

thousand wells a year to just a handful.

Herald responded, â&#x20AC;&#x153;Gas production has been consolidated in really high prolific plays continentally. The Montney which straddles northern British Columbia and Alberta is liquids-rich. With low gas price, a lot of those dollars have gone into plays where the liquids help the economics. â&#x20AC;&#x153;The Marcellus in the U.S. is so close to those big consuming U.S. markets and has very little transportation (costs). Weâ&#x20AC;&#x2122;ve seen your view of how scalable that play is, approaching 20 billion cubic feet a day. Canadaâ&#x20AC;&#x2122;s around 12 now. Weâ&#x20AC;&#x2122;ve seen the capital go to the big, prolific plays.

The productivity, profitability and efficiency of those wells have really been tremendous strides for them.

That has left a lot of the other gas production, (particularly if you were dry), a conventional opportunity with vertical wells, not only here in Sas-

katchewan, but that shift in provincial and national numbers, it masks a lot of the impact. A few years ago, 70 per cent of our activity in Alberta was on conventional gas wells in the southern part of the province. All that production has shifted geographically to the north and west. Thatâ&#x20AC;&#x2122;s very impactful for those communities. â&#x20AC;&#x153;Will that trend continue?

Probably. Is there a story on gas in Saskatchewan? Youâ&#x20AC;&#x2122;re seeing a lot of critical mass around oil development and youâ&#x20AC;&#x2122;re going to get more solution gas, so you are going to see your numbers tick up from the critical

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mass of solution gas from some of the oilfields. But thereâ&#x20AC;&#x2122;s probably cheaper production from neighbouring fields.â&#x20AC;?

Being careful with forecasts, Herald â&#x20AC;&#x153;doesnâ&#x20AC;&#x2122;t see it in the cardsâ&#x20AC;? of a pickup of natural gas production in Saskatchewan. Pointing out that Canadian natural gas production has dropped from 17 billion cubic feet per day to 12 billion, weâ&#x20AC;&#x2122;ve lost market shares to the Americans. â&#x20AC;&#x153;If the LNG story starts to turn, if any of those projects come to term â&#x20AC;Ś they will help that picture. If you saw a turnaround in prices, I would be a lot more optimistic.

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A26

PIPELINE NEWS June 2015

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A27

North Dakota sees $4 billion drop in oil revenues

By Brian Zinchuk Regina – Ron Ness has spent several years as president of the North Dakota Petroleum Council talking about the good times.

Each year for the past six years Pipeline News has interviewed him about the ever-booming state to the south, which, in that time, caught up to Saskatchewan’s daily production, doubled it, and then added more on top of that. This year, our annual chat with Ness was a little more muted.

Pipeline News: How are things going in North Dakota now that the price of oil has dropped essentially by half ?

Ron Ness: Well, the Bakken in North Dakota continues to be a world-class resource.

We were at 186 drilling rigs in December.

Today we’ve lost about 100 drilling rigs. The big thing is we have over 900 wells that have yet to be completed. That’s kind of the inventory, or grain in the bank, for the operators.

We’ve had pretty significant impact on the exploration side, in terms of employees and various things. But we’ve still got 1.1 million barrels of production per day. We’ve had two months in a row where it’s decreased.

That’s tremendous activity. A million barrels of oil everyday, a BCF of gas every day, a million plus barrels of water that needs to be moved, a tremendous build out of infrastructure going on …

Of course the rail and loading facilities are going strong.

P.N.: The state put out numbers a year ago saying if we had X number of rigs going, we’d produce this much. If we had Y number of rigs, we’d produce that much.

You’ve now fallen below the threshold of maintaining production. If you stay at 86 rigs, where do you see production going six months down the road?

Ness: Our estimate for this year is hopefully we would remain flat from the 2014 number, somewhere around 1.1 million. We were a little over 1.23 million barrels per day. When we get past some of the road restrictions in June hopefully we’ll see some more of the wells being completed.

Of course, the companies have high-graded their rigs into their best assets, so you get highgraded in terms of production volumes. Some of the flaring issues have stymied production a bit.

I think we’re still bullish throughout 2015 we can remain flat, if this price deck continues into 2016 and you don’t see those budgets increase in the fall for the next drilling year, I expect we’ll see production drop a bit.

P.N.: One of the terms we’re seeing in the media now is a “fracklog.” You referenced that, saying a number of wells hadn’t been completed. Can you explain what this phenomenon is?

Ness: When you look at a typical North Dakota Bakken well, it’s eight to 10 million dollars to drill the well.

Companies had drilled the wells – you can drill that well in 18-20 days, but the extremely expensive portion is the completion, to bring it online. Those companies that have backed off on their fracs, or completions, have really built themselves and inventory. That’s what they’re holding as reserves. As cash becomes available, they can go back and complete that well and cover costs.

Others that don’t have the capital constraints are going to hold onto them and complete them at better prices. So, it’s a lot of different strategies.

It really depends on what are your obligations, what’s your debt ratio. And yet, I think industry has been trying to maintain a steady enough flow of completion crews so that we can ramp up if price recovers. That’s one of the concerns. We were losing so many of the frac companies, they were beginning to have to let people go, let crews go, they’re going to be hard to get back. We don’t want to devastate our workforce.

P.N.: What has been the impact on the workforce? Can you actually find an apartment in Williston now, without breaking the bank?

Ness: We were talking this morning, the folks from Minot,

saying the vacancy rate is beginning to grow.

You’ve got a lot of units coming online.

In Williston, we hope the price, the cost per unit for a rental unit or home begins to slide.

I think it’s moderated, it’s flattened, it’s dipped a bit. Not quite sure. A lot of people built those on the expectation that

they were going to have ‘X’ amount of a return.

So they’re going to try to hold on as long as possible. But I think, just as with the service costs in the industry, sooner or later, you’re going to see the tipping point and you’ll see those costs fall. Those costs are critical to getting people back here.

P.N.: Have enough people left that there’s such a thing as an empty, vacant room?

Ness: I would think that there is. You’ve certainly see that with hotels. I think the purchasing of houses has slowed. My guess is you’re going to see that continue to tip. ɸ Page A28

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PIPELINE NEWS June 2015

6WDWH DGRSWV Ă DW RLO WD[ WR VWDYH RII Éş Page A27 The crew camps are all trying to see their path forward. Some are still doing well. Others are going to have to adjust. It will be interesting.

P.N.: When things turn around, and we all know they will turn around, where will North Dakota be positioned at that point?

Ness: As weâ&#x20AC;&#x2122;ve tried to explain to our legislature, which is just leaving town today, this is a really big machine. And you donâ&#x20AC;&#x2122;t just turn it around on a dime.

It took us four or five months, really, on the low price side to get things ratcheted down because of the forward spending and the contracts. When you try to turn around the other direction quickly, I think itâ&#x20AC;&#x2122;s going to be hard. I think itâ&#x20AC;&#x2122;s going to be hard to attract people back.

Companies now have been able to highgrade their workforce, but we all know weâ&#x20AC;&#x2122;re going to need more people back here. The economy in other parts of the country has improved. Thereâ&#x20AC;&#x2122;s jobs for them at home. ɸ Page A29

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PIPELINE NEWS June 2015

A29

devastating drop in income ɺ Page A28 In fact, there was a story yesterday. A guy had walked into the Dickinson job service.

He had been laid off from his job on a drilling rig. They asked him, “Well, what are you looking to do?”

He said, “Well, I don’t know. I’m looking for a job that pays $35 an hour, guarantees me 50 hours a week, pays for all my housing, and I get a $150 per day diem.”

She laughed at him, and said, “Good luck with that.”

Those are the type of jobs the oil industry brings to the region.

You don’t just replace

those overnight.

P.N.: Alberta is looking at a $7 billion deficit. Saskatchewan is looking at a $700 million decline in revenues from oil royalties. What’s North Dakota’s impact? Are they, financially as a state, going to be in a bit of a bind?

Ness: North Dakota was looking at about a $4 billion reduction out of the anticipated $9 billion in oil tax revenues, maybe a little more. Our legislature had done a tremendous job of ensuring there were a lot of different reserves and accounts.

They’re going to make it through this next biennium.

They did restructure the oil tax. There was a significant tax incentive that would have kicked in, in June, if prices were below a certain threshold. There was a compromise reached to flatten that tax now and get rid of that trigger which would have been somewhat devastating to the state.

It was an antiquated tax structure that needed to be changed.

We’ve gone to a flat tax structure now that will provide more stability to the state.

It’s a reduction on the top end. It will allow the industry to plan forward. It’s a compromise.

P.N.: Is there any

Will Lightstream sell its Bakken unit?

(Daily Oil Bulletin) - While sorting out its financial position, the company that once was called PetroBakken might end up selling its Bakken unit. The company’s annual general meeting was May 14.

Analysts have suggested the company sell its flagship Bakken properties in southern Saskatchewan. (Averaging 13,811 boepd in the first quarter, the Bakken is Lightstream’s No. 2 property after the Cardium, which averaged 17,661 boepd in the same period.)

“We’ve talked about the fact that we would look to, at some point, monetize, or sell, our Bakken business unit. And that’s something we could do to be

transformational for the company,” John Wright, president and chief executive, said. “It’s not something we have to do. It’s not something we’re looking forward to doing. But do have an opportunity to do it at a point in time.”

“And in the event that that transaction were to occur, it would obviously have a huge impact on our balance sheet and on our business plan going forward, and change the tenor and tone of the company as prices increase,” he added.

In response to a shareholder question, Wright declined to speculate on whether selling the Bakken asset would eliminate Lightstream’s entire debt. He

suggested that naming a price could affect bid amounts.

“We don’t want to play poker with our cards facing out,” the CEO said.

The company has completed its operated drilling program for 2015 and suspended its drilling program for the second half of the year.

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things pick up?

Ness: We do have the North Dakota

Legacy Fund, which we put 30 per cent of our revenues into.

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PIPELINE NEWS June 2015

PSAC forecasts dramatic decrease in wells for 2015 Â&#x201E; By Brian Zinchuk Regina â&#x20AC;&#x201C; Four months of low oil prices have led to significant declines in drilling activity, according to the Petroleum Services Association of Canada (PSAC).

In its mid-year update to the 2015 Canadian Drilling Activity Forecast, released April 30, PSAC is now forecasting a total of only 5,320 wells drilled (rig releases) across Canada for 2015. This dramatic decrease of 4,780 wells from PSACâ&#x20AC;&#x2122;s original 2015 drilling forecast, released in October 2014, represents an astounding 47 per cent drop.

PSAC is basing its updated 2015 forecast on average natural gas prices of C$2.50/mcf (AECO), crude oil prices of US$53/barrel (WTI) and the Canadian dollar averaging C$0.77 per US dollar.

In a release PSAC president and CEO Mark Salkeld explained, â&#x20AC;&#x153;Oil prices dropped from an average of US$84.40 in October 2014, to an average of US$47.83 in March 2015. Itâ&#x20AC;&#x2122;s no surprise that an almost 44 per cent drop in oil prices has led us to forecast a similar decline in drilling activity for the year, compared to our October 2014 forecast.â&#x20AC;?

On a provincial basis for 2015, PSAC now estimates 2,976 wells to be drilled in Alberta, down from 5,740 wells in the original forecast. In Saskatchewan, the expected well count is now 1,507 wells, less than half of the 3,365 wells in the original forecast, while Manitoba is forecasted to drill 270 wells, down by 160 wells from the original forecast. The outlier is British Columbia, which is expected to have a marginally increased 2015 well count, from 555 wells to 560 wells. ɸ Page A31

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Petroleum Services AssociaĆ&#x;on of Canada president and CEO Mark Salkeld spoke at the tilliston asin Petroleum Conference supply chain forum on April ĎŽĎ´, in Regina.

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PIPELINE NEWS June 2015 ɺ Page A30 “The interesting outcome from this downturn will be the innovative actions taken by companies to lower costs and create efficiencies that will better position Canada in the world of energy services, extraction and production,” continued Salkeld. “When prices rebound, these companies will be more than ready – no doubt about it.”

Two days prior to this release, Salkeld was one of the speakers at the Williston Basin Petroleum Conference in Regina, where he took part in the supply chain forum.

In that presentation, Salkeld noted, “Even in a low-growth scenario, we still need people.”

Salkeld said there is less competition for labour now that the oilsands are slowing down. “The oilsands are always tough to compete against, because it is like a factory up there. It’s 24/7, 365 days a year, whereas on the conventional side, it’s cyclical.”

He pointed out, “Eighty per cent of our folks are in the field. Our folks are the service companies in small towns in Western Canada. We don’t get any cashflow from production; we have to work. So we need the producers to be successful, so we can be successful. We are seasonal and cyclical employment, but we do get into developing technologies and innovation.”

Canadian service firms have experience from 30 C below to 30 C above, in a wide range of different formations, so we have a lot of experience which is now seeing more international exposure.

“We say if it can work in Canada, it can work anywhere in the world,” he said.

Oil companies are no longer vertically integrated, operating their own drilling rigs and production. Rather, they employ service firms to do that. That shift 30 years ago has led to the growth of our oilfield services industry.

“A lot of the time, the well becomes the laboratory,” Salkeld noted.

Oilfield services are the second largest contributor to national gross domestic product, second only to the producers they work for, he noted.

He referenced a new phenomenon some people are calling a “fracklog,” where companies drill the wells, but hold off on spending the money on completing them (via hydraulic fracturing).

This means the peak production of the well will (hopefully) not take place when the price of oil is low. Salkeld had read that there were, in late April, some 2,000 wells like that in the United States and 1,000 in Canada.

Talking about the drop in drilling, he said, “It’s not pretty out there.”

There’s been a substantial shift in how we drill wells. Around 2005, we drilled about 24 million metres. In the past few years, we’ve drilled a similar distance, but about half the number of wells. That is due to the adoption of horizontal drilling and longer, deeper wells.

“The likelihood of going back to vertical wells is slim to none.”

“Somebody once told me, ‘I wish they had told me I was in a boom cycle,’ in 2014,” Salkeld said. Labour supplies and labour were tight, but it was

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Salkeld related a recent conversation he had with long-time PSAC member Ray Frehlick of Estevan, in which Frehlick didn’t paint a pretty picture in that neck of the woods.

“He was actually more concerned about getting seeds in the ground than drilling wells, because there was nothing happening around Estevan and Weyburn,” Salkeld said.

“It is tight. No doubt about it.”

Salkeld noted that technology is continuing to improve. Newer rigs don’t have five diesel engines, but one, and the rest of the rig is run off AC power. That generator can also be run off natural gas in addition to or instead of diesel. “You have your driller sitting in a cyber chair running all your pumps and top drives to the roughneck. The whole nine yards.”

PSAC represents all of the fracking companies in Canada. It’s not that fracking is new, but the technology has gotten so much better, he said.

“Our members have our own research centres,” he added. In years past, it was the big oil companies that did research.

“Our members have their own labs, their own engineers, their own scientists. They’re buying downhole testing equipment for testing heat and vibrations. The producers are

coming to the service providers for this information.”

He spoke of holographic 3D theatre rooms in Calgary for examining formations.

New microseismicity and real-time data while performing directional drilling is

having an impact, he noted. “You can have (horizontal) six wells off a vertical (well).”

The Petroleum Services Association of Canada is the national trade association representing the service, supply and manufacturing sectors within the

A31

upstream petroleum industry. PSAC represents a diverse range of over 230 member companies, employing approximately 70,000 people and contracting almost exclusively to oil and gas exploration and production companies.

A32

PIPELINE NEWS June 2015

(IĂ&#x20AC;FLHQF\ LQ SURGXFWLRQ LV ZKHUH LW¡V DW Â&#x201E; By Brian Zinchuk Regina â&#x20AC;&#x201C; â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve basically chosen not to participate in the downturn.â&#x20AC;?

Those were the words George Sutherland, a geologist, said in winding up his presentation to the Williston Basin Petroleum Conference supply chain forum on April 28 in Regina.

You see, heâ&#x20AC;&#x2122;s been through these things before, and has learned a thing or two.

For instance, being a geologist, you need to be an optimist. And that means looking for opportunities where you havenâ&#x20AC;&#x2122;t found any before.

Sutherland is the president of the Petroleum Training Institute, and formerly was the head of the Petroleum technology department at the Southern Alberta Institute of Technology for eight years.

He started his presentation with greetings in several languages. â&#x20AC;&#x153;You may say, â&#x20AC;&#x2DC;Why would you start that way?â&#x20AC;&#x2122; Well, weâ&#x20AC;&#x2122;re looking for opportunities,â&#x20AC;? Sutherland said. â&#x20AC;&#x153;Opportunities are not whatâ&#x20AC;&#x2122;s in front of your nose, what youâ&#x20AC;&#x2122;ve been looking at the same way for the last 15-20 years! Opportunities are something that may be in front of your nose, but you didnâ&#x20AC;&#x2122;t realize it.â&#x20AC;? â&#x20AC;&#x153;Opportunities are something you didnâ&#x20AC;&#x2122;t perceive as an opportunity before.

The issue is how to realize itâ&#x20AC;&#x2122;s an opportunity.â&#x20AC;?

He picked up on a Newfoundlander expression. â&#x20AC;&#x153;Stay where ur to and Iâ&#x20AC;&#x2122;ll come where ur at.â&#x20AC;? â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s where weâ&#x20AC;&#x2122;re at! You are there, and I am going to stay where I am to, so you, as a group of suppliers, better figure out where I am at, or youâ&#x20AC;&#x2122;re going to have difficulty in this market being successful.â&#x20AC;? â&#x20AC;&#x153;If you donâ&#x20AC;&#x2122;t know where youâ&#x20AC;&#x2122;ve been, I donâ&#x20AC;&#x2122;t know how you are ever going to map where you are going to.â&#x20AC;?

And that would be to increase their business, he said. â&#x20AC;&#x153;We know the industry is sometimes up, and sometimes down.â&#x20AC;?

He recalled the summer of 2008, when oil got into the $140 a barrel range, but by October it wasnâ&#x20AC;&#x2122;t looking that good. â&#x20AC;&#x153;The past industry picture, back to when I started my career, was â&#x20AC;&#x2DC;find more oil and gas,â&#x20AC;&#x2122;â&#x20AC;? he said. That included Lloydminster in 1934, and Leduc in 1947. â&#x20AC;&#x153;Wherever it is, weâ&#x20AC;&#x2122;ve got to find more of this stuff. And the only way to do it is to drill more wells.â&#x20AC;?

Basically companies keep drilling and let the good times roll. He recounted the famous bumper sticker calling for God to grant one more oil boom and I promise not to screw it up today. ɸ Page A33

Georg Sutherland says you need to ÄŽnd ways to be more eĸcient, parĆ&#x;cularly in producĆ&#x;on, to survive this downturn. Photo by Brian Zinchuk

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PIPELINE NEWS June 2015 ɺ Page A32 “Everybody in this room is more than aware exploration activity is down. How many geologists and geophysicists would you like to hire today? It wouldn’t take too much effort to get a room full of them.

I don’t mean they’re not good people, there’s just simply not that activity. If you don’t get a big exploration picture, we know the number of drilling rigs that are operational (will be down).

“Drilling activity is down. So if you are a company that is in the oil and gas business, what do you make your money from? Production. So production, historically, just rode along. Profits were great. We watched closely our exploration budgets, our drilling budgets, and we made profits. But, I just took the first two off the table, so now we’re on the production cycle.

That’s where you’re going to get your money from.”

“What is the trigger for this to go another direction? WTI is higher lately, a positive thing? What does the sheik in Saudi Arabia think? What’s on the table? We won’t get into what’s under the table.

I think that has a bit to do with it today also, but that just may be my opinion.

“Right now we have a huge supply and lower prices. Pretty much anybody who’s got more than a one-litre or one-gallon bucket has it full (with oil), because you can buy it at a really good price. That’s where we’re at. That’s what we have to deal with. It doesn’t matter how long you’ve been in this industry. You have to put up with, right now, lower rates of exploration, lower rates of drilling. So who is it that’s doing anything?

That’s where you are going to get your work,” Sutherland said.

“The current focus is on production, because that’s where cashflow comes from. But since the first two are off the table, companies have a cost reduction strategy, particularly for production and operations. They want more for less.”

He noted anyone who sells from pencils on up has had companies have been asking for price reductions.

Companies granting those reductions are, in turn, asking for long term contracts to make up for it, so they can ride this out. “That’s a possible option,” he said.

Shale gas in Sask?

As a geologist, Sutherland suggested there might be a possibly of development of shale gas in western Saskatchewan.

“Is it economically viable? Does it have the light liquids with it like northeastern B.C.? But if you look at a geological map, there’s quite an area that might have some potential.”

Better mousetrap “If you invent a better mousetrap, you can’t be putting a lot of capital in it,” he said, adding you will have to charge more for it.

That is problematic in an environment where clients are demanding paying less, so you have to be careful.

He laid out a graphic of the cost of production in various basins (including Lloydminster at US$47/ barrel for heavy oil).

“Whether we like them or don’t like them, that’s the way it is.”

“Can you do it more effectively, more efficiently? Can you lower your costs? Or can you come up with a new trick of how to do it? We need more efficient, longer lasting pumps. So, do we need a new mechanism, an different metal, a different packer, a different something that, all of a sudden, makes it better?” he said.

Faster and less costly pump replacement is another possibility he suggested.

“More effective and less costly emulsifying is another area of potential interest. Reduction of transportation costs is another.”

Using steam as a recovery and drive mechanism is another area. Producing that steam above ground means losing a lot of energy on the way downhole. Some companies are looking at pumping the water, air, and gas underground,

creating combustion at the reservoir face, and producing the steam underground, he said.

This is being done in Saskatchewan, he noted.

He added this was not a toe-heel air injection or fireflood concept.

One company, in particular, is hoping to move into a full-fledge pilot scheme this fall, he said. “They have made it work, here in Saskatchewan.”

North Dakota has new environmental regulations in place, and those regulations are not optional.

“Do you have methodologies to help companies address these new environmental requirement, keeping the cost down and addressing the requirement?

For gas recovery, Sutherland said the rules basically are now in North Dakota, “No. 1, don’t flare. No. 2, didn’t you read No. 1?

And No. 3, you must be really dumb, please go back and read No. 1 and get out of the business.”

Summing up, Sutherland said, “We need operational and logistical efficiencies.

It is time to refocus.

The industry is not focused on exploration and drilling. I don’t mean forget everything you knew about that, but you need to focus on production, which produces money. Environmental requirements are stricter and stricter and there’s technology and services and people required to do that.”

His company is training many people who are now laid off.

A33

George Sutherland used this graph to represent the producƟon costs are in diīerent basins. It’s important to ensure you oīer a service that allows oil producƟon below the current price of oil, he noted. 'ƌĂƉŚŝĐ ƐƵďŵŝƩĞĚ

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A34

PIPELINE NEWS June 2015

Fall arrest is not fall prevention Regina â&#x20AC;&#x201C; When loading rail cars or trucks, itâ&#x20AC;&#x2122;s important to do it safely.

Thatâ&#x20AC;&#x2122;s where Northern Platforms Ltd. comes in. The Leduc, Alta. based company was one of the exhibitors at the Williston Basin Petroleum Conference in Regina April 28-30.

Matt Secord, whose job include insides sales and field services support, said their products are primarily used on loading racks and loading arms to access the tops of rail cars and trucks. They specialize in fall protection. â&#x20AC;&#x153;If you have rails, you donâ&#x20AC;&#x2122;t need a rope,â&#x20AC;? he noted, referring to the harnesses and associated tether worn when workers are at height without a railing.

Scott Wareham said, â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a better solution, we feel. When you have fall arrest, youâ&#x20AC;&#x2122;re actually falling. When you have fall prevention, you are prevented from falling.â&#x20AC;?

Wareham added that a harness system cuts off circulation to the legs if the person is not cut down promptly. That also means theyâ&#x20AC;&#x2122;re likely going to need assistance getting down.

Northern Platforms has units in Saskatchewan, North Dakota and Al-

Grant ,erbig, leĹ&#x152;, ScoĆŠ tareham and MaĆŠ Secord were in the Northern PlaĆ&#x17E;orms.

berta. They can be seen on transloading units and full-on terminals right across Canada. Northern Platforms units have been fielded from New Brunswick to Vancouver and down into Washington state.

With the drop in oil prices, the economic incentive to ship crude-by-

rail, and thus implement crude-by-rail loading systems and their associated fall prevention equipment is low. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;ll definitely be coming back,â&#x20AC;? Wareham said.

He noted that six to eight years ago they were building condensate facilities. Then there was the ethanol boom before crude-by-rail. Propane and butane facilities are now on the rise.

Greg Herbig said that US$65 for West Texas Intermediate â&#x20AC;&#x153;is a good

numberâ&#x20AC;? for activity to pick up again in their business.

Wareham pointed out that refineries are still going, and people still use gasoline and diesel.

One product the sales team were talking about was their mobile transloader. It can be removed from the trailer and put on piles, creating a permanent installation. â&#x20AC;&#x153;Just plumb it in,â&#x20AC;? Wareham said, adding that with one call, they can put together a complete package.

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A35

Riprap replacement used near Dafoe Regina – If you drive near Dafoe in central Saskatchewan, you will find the region affected by the flooding of the Quill Lakes. It appears the highway has been raised similar to what was done near Macoun on Highway 39. But instead of conventional riprap, large rocks put along the ditches to prevent erosion, there’s something different.

There are sheets of concrete lumps in what looks like a giant version of bubble wrap. That product, Flexamat, was highlighted by Brock White Construction Materials in their booth at the Williston Basin Petroleum Conference April 28-30.

Flexamat is a riprap replacement.

“We’re a construction supply house,” said Dave McLeod, of Brock White.

One of the projects they are supplying is the waterproofing and forms for the new Mosaic Stadium under construction in Regina.

Flexamat is made up of tied concrete blocks, an erosion control blanket with concrete attached. It’s tied together with high-strength geogrid.

Grass can be seeded below it.

“Grass can grow through it,” McLeod said. Once it does, you would hardly notice it from the side or a distance.

It weighs approximately 10 pounds per square foot.

He showed one example where it had been applied and that very day a major rain event hit. The Flexamat withstood it.

“It stays there permanently,” he said.

There’s also a significant advantage to riprap. If a vehicle does leave the roadway and end up on the

Fleximat, the effect is like driving over a cobblestone road. But if you hit the large rocks of riprap, it’s probably done for.

Another product Brock White featured for oilfied use was their Combigrid. It is a geotextile with a geo grid incorporated into it. It looks like the strapping used for large cardboard boxes or newspaper bundles. The squares are about 1.5 inches in size.

The product provides reinforcement, filtration separation and drainage. McLeod noted it was used in a subdivision in Weyburn.

That grey paƩern is actually lumps of concrete aƩached to a geogrid. This is on ,ighway ϲͬϭϲ just north of Dafoe, where Ňooding has been a serious problem.

Photo by Brian Zinchuk

Southeast College brand refresh Weyburn – Southeast College announced on May 13 that it has undergone a brand refresh and is switching to a new logo. The college is celebrating its 40th Anniversary throughout 2015 and the brand refresh is part of many exciting initiatives through this anniversary year and beyond.

“Everyone could use a little makeover when they get to forty,” said Dion McGrath, president and CEO of Southeast College. “The themes of the creative work in the logo represent energy and movement, and it’s a great representation of the responsiveness and flexibility of Southeast College.”

The College’s new colours are a fresh blue and green, and will include a flag icon celebrating the 40th Anniversary through the remainder of 2015.

The logo was at the College’s Weyburn Campus.

“There are a lot of new and exciting things happening at the college, and we felt it was time to reflect that in our own brand,” said McGrath. “We’re very pleased to share this work with the communities that support us.”

One of the developments for Southeast College in 2015 include students enrolling in the fall of 2015 Full Time programs could be eligible for up to $1,500 in entrance scholarships. This would significantly reduce the financial hardship of pursuing post-secondary education.

The Weyburn campus will be opening in its new location, connected with the Comprehensive School.

The target date is late 2015 A recently completed economic impact study found that the College is a significant contributor to the region’s economy, including $36.3 million contributed to the provincial GDP in the year 2012-13.

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PIPELINE NEWS June 2015

0DQLWRED H[SHFWV VLJQLĂ&#x20AC;FDQW GHFOLQH LQ DFWLYLW\ Â&#x201E; By Brian Zinchuk Regina â&#x20AC;&#x201C; Manitoba has been growing its oil production for several years now, but thatâ&#x20AC;&#x2122;s expected to change this year, with the dramatic drop in oil prices.

Keith Lowdon, director of the Manitoba Petroleum Branch with the Manitoba Mineral Resources ministry, spoke to Pipeline News on April 28 during the Williston Basin Petroleum Conference about how things are going in

that province. â&#x20AC;&#x153;For the beginning of the year, itâ&#x20AC;&#x2122;s been pretty good, for 2015, from January to the end of March. Weâ&#x20AC;&#x2122;re down about 15 per cent from the year before in drilling. Itâ&#x20AC;&#x2122;s not as bad as I thought it would be, considering the price and everything thatâ&#x20AC;&#x2122;s going on,â&#x20AC;? he said.

For production, he said, â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re down.

Weâ&#x20AC;&#x2122;re probably about 47,000 barrels per day. â&#x20AC;&#x153;We were up to

52,000 barrels per day for a little bit, but the annual production was about 50,000.â&#x20AC;?

In 2014 Manitoba drilled 464 wells with up to 21 rigs working, but the provinceâ&#x20AC;&#x2122;s outlook for 2015 is much lower. The Petroleum Branch anticipates 280 wells. To April 29, drilling was down 25 per cent over last year.

Expenditures are also expected to be down to $700 million.

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significant events of the last year was Tundra Oil and Gas buying out EOG Resourceâ&#x20AC;&#x2122;s Waskada property. The two biggest players in the Waskada play have been EOG and Penn West Exploration, but Penn West has had corporate trouble of its own for a while now.

Tundra took possession of the EOGâ&#x20AC;&#x2122;s assets on Jan. 1, 2015. â&#x20AC;&#x153;We donâ&#x20AC;&#x2122;t know what their plans are.

EOG will have some drilling commitments, Iâ&#x20AC;&#x2122;m sure, but we donâ&#x20AC;&#x2122;t know what Tundraâ&#x20AC;&#x2122;s plans are. EOG and Penn West had basically quit drilling by the end of last year. The last quarter, they didnâ&#x20AC;&#x2122;t do much drilling anyway,â&#x20AC;? said Lowdon.

Similar to what

happened in the early 1980s, Waskada went boom, and now it has largely gone bust, until activity picks up.

Penn Westâ&#x20AC;&#x2122;s property is up for sale at Waskada, and EOGâ&#x20AC;&#x2122;s sold.

Tundraâ&#x20AC;&#x2122;s wholly-owned subsidiary, Red Beds Resources Limited, is another producer in the Waskada area.

It is very slow in Waskada, Lowdon said.

Not much is happening in the nearby Pierson area, either. CNRL has licensed a few wells in that area. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re pretty consistent. They just keep doing what theyâ&#x20AC;&#x2122;re doing,â&#x20AC;? he said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s been pretty quiet in that country,â&#x20AC;? he said of the extreme southwest corner of the province. ɸ Page A37

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A37

ɺ Page A36 The main drilling areas in Manitoba of late have been the Daly-Sinclair field, Virden, Manson and Birtle (the Birdtail field). The last two are north Highway 1 on the west side of the province, northwest of Virden.

The area around Cromer was quite busy in January. Indeed, when Pipeline News did a story on fracking near Cromer in early January, the activity in that area looked more like oil was at $100 a barrel, not $47. So what does that mean for this summer?

“Honestly, we don’t know what’s going to happen. We’re waiting for road bans to lift. I think they (the oil companies) made their decisions and finished their expenditures. We were expecting a bigger drop than what we had,” said Lowdon.

Manitoba has seen some activity in the Virden area, but more to the northwest of the province’s long-time oil capital. Elcano has been drilling south of Miniota.

“They’re finding production where there wasn’t any before,” he said.

“In the Birdtail area it’s been mostly Tundra working. As by far the largest oil company in the province, he noted, “There’s less and less that isn’t Tundra.”

Recompletions can be really important, he said.

Lowdon noted that in some cases, companies have perforated other zones from their original targets.

As an example, he spoke of Lodgepole wells which have since been perforated in the Upper Virden or Flossy Lake formations. Companies have found this a cost effective way to improve production.

In some cases, the horizontal portion of the well is not even being used anymore, and the vertical portion has been put on production.

Is comingling production from different formations an issue? Not really, the director said. Some tests are needed, but he said, “Comingling is not the ugly word it was before.”

There were 64 recompletions in 2014. The Virden/Daly field was the prime area for this activity.

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A38

PIPELINE NEWS June 2015

Advance Engineered Products Ltd. expected to be sold Competitors looking over books for possible purchase

Pat Boeker is vice-president of sales and markeĆ&#x;ng with Advance Engineered Products Ltd.

Regina â&#x20AC;&#x201C; They may be going through difficulties, but Advance Engineered Products Ltd., based in Regina, has not thrown in the towel yet. Despite having filed for protection from its creditors in Court of Queenâ&#x20AC;&#x2122;s

Bench on April 10, the company was pushing its product at its booth in the Williston Basin Petroleum Conference on April 28-30.

Pat Boeker, vicepresident of sales and marketing, told Pipeline News they are presently

owned by the bank, and that Ernst & Young, an accounting firm, is the monitor. The previous owner was a private equity company. â&#x20AC;&#x153;Ernst & Young will make an application in May to sell Advance to pay off bank debts,â&#x20AC;?

Boeker said on April 29.

A number of industry competitors have been in, looking over the books, in the interest of purchasing it. Some private equity firms have also expressed interest.

Boeker said he was confident they would be under new ownership by mid-summer. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re a going concern. Weâ&#x20AC;&#x2122;re worth more alive than dead.

We took a lot of orders in the last three weeks,â&#x20AC;? he said.

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company operates parts and services operations, under the brand name Advance Tank Centers, in Saskatchewan, Alberta and British Columbia.

Customers are expressing confidence, he said. Some laid-off workers have been recalled. In April, Ad-

vance laid off it production workers.

A year ago, more than 60 per cent of the companyâ&#x20AC;&#x2122;s product was sold to the upstream oil and gas industry. â&#x20AC;&#x153;I am very confident we will be sold,â&#x20AC;? Boeker said, adding there was a lot of interest from big players.

Peter Cartmell of Galvanic Applied Sciences walks past and Advance tanker on display in the outdoor booths of the Williston Basin Petroleum Conference. Behind the tanker, cranes work on the new Mosaic Stadium, under construcĆ&#x;on. Photo by Brian Zinchuk

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PIPELINE NEWS

SECTION B June 2015

Bid spotting thrills Ritchie helmsman LeĹ&#x152;Í&#x2014; Ritchie Bros. sold over 7,7ĎŹĎŹ lots at its largest aucĆ&#x;on ever unreserved public aucĆ&#x;on in Canada as its Nisku complex. The aucĆ&#x;on sold more than $ĎŽĎ­5 million of heavy equipment and trucks in the companyâ&#x20AC;&#x2122;s ÄŽrst four day aucĆ&#x;on.

RightÍ&#x2014; Randy Wall, president of Ritchie Bros. Canada loves nothing beĆŠer than spoĆŤng bids for his aucĆ&#x;oneers and customers. ,e got into the acĆ&#x;on during the ÄŽnal day of his companyâ&#x20AC;&#x2122;s largest aucĆ&#x;on ever unreserved public aucĆ&#x;on in Canada held in Nisku April ĎŽĎ´ to May Ď­.

WĹ&#x161;Ĺ˝Ć&#x161;Ĺ˝Ć? Ä?Ç&#x2021; 'Ä&#x17E;Žč >Ä&#x17E;Ä&#x17E;

Â&#x201E; By Geoff Lee Nisku â&#x20AC;&#x201C; Randy Wall, president of Ritchie Bros.

Canada likes to roll up his sleeves and spot bids at company auctions.

Thatâ&#x20AC;&#x2122;s what he did for part of the day during a media tour and photo op at his companyâ&#x20AC;&#x2122;s largest unreserved public auction in Canada held in Nisku from April 28 to May 1.

The four day auction sold more than $215 million of heavy equipment and trucks and attracted a record 14,000 registered bidders from more than 55 countries.

The auction also drew a record 8,150 online bidders, 3,200 buyers and 1,850 online buyers.

Wall caught bids for auctioneer Wayne Yoos on the final day when excavators, compactors, forestry equipment and oil and gas drilling equipment went up for bid inside the auction theatre packed with customers. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a fun business. Most of us have been here for quite a while. It gets under your skin. Itâ&#x20AC;&#x2122;s exciting for us. Itâ&#x20AC;&#x2122;s exciting for the bidders,â&#x20AC;? he said at the Nisku site.

Bids were made in person at Nisku, online in real time at companyâ&#x20AC;&#x2122;s auction website and by proxy.

More than 6,000 people physically attended the auction to bid on over 7,700 lots. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s an energy here and when those machine roll across the ramp in front of us and thereâ&#x20AC;&#x2122;s thousands of people around, itâ&#x20AC;&#x2122;s tremendous,â&#x20AC;? said Wall.

Only the highest bidder wins explained Wall whether itâ&#x20AC;&#x2122;s a customer in Saudi Arabia, in Texas or in Alberta. â&#x20AC;&#x153;They are all competing against each other. The prospect for a bargain is the lure that brings them here,â&#x20AC;? he said. â&#x20AC;&#x153;When there is 14,000 people bidding against each other there are very few bargains, but they can and do happen, and we donâ&#x20AC;&#x2122;t shy away from that because that sells the next one. â&#x20AC;&#x153;If somebody went to sleep on that particular item, then that just wakes them up for the next go around, so itâ&#x20AC;&#x2122;s very cool system.â&#x20AC;?

During the final day the mostly non mobile auction lots and live bids were projected on overhead monitors inside the theatre, prompting the bid catchers to bring their A game.

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Wall eyed the bidders like a hawk pointing and gesturing each time he caught a bid facing the seated audience. â&#x20AC;&#x153;I enjoy what I do and itâ&#x20AC;&#x2122;s a wonderful business. Body language helps,â&#x20AC;? he said. â&#x20AC;&#x153;You create a relationship actually with those bidders in the area of the theatre that each one of us is responsible for,â&#x20AC;? he explained.

Wall noted there is a healthy rivalry going on not only among the customers, but between the bid spotters as well. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s our job to look after them. We fight hard so that they win that machine â&#x20AC;&#x201C; not the fellow sitting in the next section over,â&#x20AC;? he said. â&#x20AC;&#x153;If the auctioneer picks my colleague to the right or to the left, Iâ&#x20AC;&#x2122;m on to my own guy because I want him to win that high bid. â&#x20AC;&#x153;So we do everything we can to help our customers and those 500 that are sitting in my section to succeed.â&#x20AC;?

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PIPELINE NEWS June 2015

Ritchie yard manager a go-to guy

By Geoff Lee

Jake Bumgarner, yard manager at Ritchie Bros. in Nisku had to know the locaƟon of thousands of aucƟon items in the yard and where they needed to move onto the aucƟon ramp during their largest unreserved public aucƟon in Canada from April Ϯϴ to May 1. WŚŽƚŽƐ ďLJ 'ĞŽī >ĞĞ

Nisku – One of the unsung heroes of Ritchie Bros.’ largest ever unreserved public auction in Canada held in Nisku from April 28 to May 1 was Jake Bumgarner, yard manager.

He and a his team of experienced hands helped the company sell more than $215 million of heavy equipment and trucks by knowing where everything was in the yard and when to move it onto the auction ramp.

“Basically, at Ritchie Bros., I take care of the yard setup and the logistics – so picking the item, where they go,

the setup of the show and the sale day activity – getting all the stuff to the ramp,” said Bumgarner during a media tour.

“It’s just the day-today operations here and moving this equipment around for the auction.”

The four day auction sold 7,700 lots including at least 240 excavators, 225 crawler tractors, 200 compactors, 100 articulated trucks, 80 wheel loaders, 70 motor graders, 40 motor scrapers, 50 farm tractors, 195 truck tractors and more.

Every item was sold to the highest bidder on auction day with no minimum bids or reserve prices.

Bumgarner’s yard

motto is “a place for everything and everything in its place” with similar pieces of equipment and machinery grouped together covering the 150 acre site.

Knowing where everything is job one for Bumgarner who doesn’t rely on memory or luck, but “lot and lots of computers” to find what he’s looking for.

“We have it specifically formulated out which order it goes in.

I’ve got lots of guys helping me,” he said.

“We have about 110 here right now.”

Two-way radios and cellphones are essential tools of the trade in the yard. ɸ Page B3

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B3

Jake Bumgarner, yard manager at Richie Bros. in Nisku gives the thumbs up while operaĆ&#x;ng a scissor liĹ&#x152; to provide Pipeline News reporter GeoÄŤ Lee an aerial view of the thousands of pieces of equipment up for aucĆ&#x;on during a media tour on May 1.

Dozens of crawler excavators were included in Ritchie Bros.â&#x20AC;&#x2122; largest Canadian aucĆ&#x;on held in Nisku, AB from April ĎŽĎ´ to May 1. The event aĆŠracted over 1Ď°,ĎŹĎŹĎŹ registered bidders.

Éş Page B2 During the auction week, Bumgarner and his team helped to direct up to 6,000 visitors to inspect various pieces of auction equipment before they bid on it. â&#x20AC;&#x153;You can walk around and look at the equipment. We were open for the preview weekend,â&#x20AC;? he added. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s huge with customer service just helping out with customer boosts, finding items, helping them figure out if they donâ&#x20AC;&#x2122;t know how to start it â&#x20AC;&#x201C; with mechanics,â&#x20AC;? said Bumgarner. â&#x20AC;&#x153;We also take care, before the sale, getting the equipment ready whether itâ&#x20AC;&#x2122;s washing, painting or putting tires on it, or detailing. â&#x20AC;&#x153;We do refurbishing to these units at the customerâ&#x20AC;&#x2122;s request, so we take care of that, as well. â&#x20AC;&#x153;We have a key room up front where they can grab the keys, sign out with a driverâ&#x20AC;&#x2122;s licence and come and check the equipment out. â&#x20AC;&#x153;Some the equipment has the key ready to go on sale day, but with cranes and stuff,

you have to sign it out with a proper certificate,â&#x20AC;? he added.

About 80 per cent of the equipment for auction came from Alberta with additional pieces from Saskatchewan, Ontario and British Columbia.

The auction also attracted a company record of more than 14,000 registered bidders from 55 countries. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s been a very busy week,â&#x20AC;? said Bumgarner on the final day. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s been a lot of fun to see all the customers coming from everywhere to see all of our work come together â&#x20AC;&#x201C; my team put together this work â&#x20AC;&#x201C; and to see the customers liking it, itâ&#x20AC;&#x2122;s fun to see.â&#x20AC;?

The end of the auction also means that all the sold lots have to be moved off the site and shipped to the highest bidders around the world, but thatâ&#x20AC;&#x2122;s not the job of Ritchie Bros. â&#x20AC;&#x153;We aid with them in finding the people that do that for the moving,â&#x20AC;? said Bumgarner. â&#x20AC;&#x153;We donâ&#x20AC;&#x2122;t specifically arrange it, but we aid with arranging the contacts and things like

that. â&#x20AC;&#x153;We donâ&#x20AC;&#x2122;t move it ourselves, but we have a great list of vendors that we can refer to customers so they can move it themselves. â&#x20AC;&#x153;We just stay in touch to make sure thatâ&#x20AC;&#x2122;s working out.â&#x20AC;?

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PIPELINE NEWS June 2015

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Â&#x201E; By Geoff Lee Nisku â&#x20AC;&#x201C; Guy Turnbull, owner and president of A-1 Rentals stared down the oilfield downturn at Ritchie Bros.â&#x20AC;&#x2122; mega spring auction in Nisku without a blink.

He was confident going into the sale, held April 28 to May 1 that he would get premium prices in a realignment auction of oilfield rental equipment, and he did. â&#x20AC;&#x153;We did very well.

I am very, very happy. I had a guarantee coming into this from Ritchie,â&#x20AC;? he said. â&#x20AC;&#x153;They come and look at your equipment and they give you a guarantee and they gave me a very good guarantee I felt. â&#x20AC;&#x153;I thought if things

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go right weâ&#x20AC;&#x2122;ll get over the guarantee and everything will be groovy, and I think weâ&#x20AC;&#x2122;ve done that.â&#x20AC;?

The record-breaking unreserved public auction sold more than $215 million of heavy equipment and trucks for more than 760 sellers like Turnbull. â&#x20AC;&#x153;Well, weâ&#x20AC;&#x2122;re getting down in numbers because of the oilpatch â&#x20AC;&#x201C; weâ&#x20AC;&#x2122;re not covering it as much,â&#x20AC;? he said about his reasons for entering the auction. â&#x20AC;&#x153;There are not enough rentals going out, so we decided to disperse a bunch of stuff and buy some newer stuff and less of it. â&#x20AC;&#x153;This isnâ&#x20AC;&#x2122;t the first time Iâ&#x20AC;&#x2122;ve done this. I did in â&#x20AC;&#x2122;08 when that turn-

down happened, and Iâ&#x20AC;&#x2122;m doing it again now.â&#x20AC;?

A-1 Rentals, based in Camrose and Wetaskiwin, Alta., rents everything from tools and light equipment to heavy equipment, forklifts and zoom booms. â&#x20AC;&#x153;We were geared up for the pipeline companies and the oilpatch in general. Itâ&#x20AC;&#x2122;s just slow, so we put 475 pieces in,â&#x20AC;? said Turnbull A-1 Rentals also services Fort McMurray where Turnbull has based his growing portable rental toilet business called A-1 Portables. â&#x20AC;&#x153;Our porta potty business is still doing probably as much as we ever did up there,â&#x20AC;? said Turnbull. ɸ Page B5

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PIPELINE NEWS June 2015

B5

In a company realignment aucƟon, A-1 Rentals put over 1ϬϬ cerƟĮed pieces of aerial equipment up for bids at Ritchie Bros.’ mega spring aucƟon in Nisku April Ϯϴ-May 1.

ɺ Page B4 “Our main business is porta potties. We have about 2,000 porta potties up there about 400 heated Job-Jons.

“We’re number one in the number two business you might say,” he said with a laugh.

He said equipment rentals to area pipeline companies like OJ Pipeline and Sommerville Pipeline dropped off with the downturn.

“Of course, they are finished up now, so if wasn’t for McMurray right now – the porta potty business is very good – and the rental business was about 50 percent,” he said.

“Our porta potty business will carry us

through his hopefully.”

The A-1 Rentals realignment auction included the sale of big loaders, skid steers, mini hoes, generators, light towers, manlifts, zoom booms and big heaters.

“Since December, we had over half of our stuff sitting in the yard so we just decided it was time to bring it to the auction and buy some new buy stuff,” said Turnbull “Instead of buying 10 of something, we’ll have two or three until things pick up.

“We’ll get some cash flow and new iron back into the fleet because some of the stuff was getting a few years old.”

The A-1 Rentals auction equipment was

among the record 7,700 lots sold by Ritchie Bros. with a record 14,000 bidders and 8,500 online bidders from around the world to keep prices high.

“I think everybody’s that’s selling anything here should be pretty happy. I haven’t seen much on the low side. Prices are up there,” said Turnbull, who attributes that to doing business with Ritchie Bros. before.

“They know your equipment. They know how well they did in ’08. I think they look at that and our equipment is very good.

“It’s clean and it’s well maintained. The last time, we got premium prices too. ɸ Page B6

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PIPELINE NEWS June 2015

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ɺ Page B5 “It looked pretty good so they know it’s probably good equipment and not just something people are bringing to the auction because there is something wrong with it.”

A-1 Rentals also had about 100 pieces of aerial equipment for auction with fresh certification on every item.

“That was the deal that Ritchie wanted and it is a good selling feature,” said Turnbull who also spoke about what makes his A-1 Portables tick despite the downturn.

“I started the porta potty business 13 years ago, and I bought a company out. I thought this would be good for a little bit of cash flow,” he explained.

“I built it from 110 toilets that I bought

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with that company to over 4,000. We’re probably the biggest in Alberta. It’s a growing business because you got to have it.

“Every construction site you have to have a porta potty or you can’t work in Alberta.”

Turnbull used to a B-pressure pipeline welder 20 years ago when he said there was no such thing as a toilet out in the right of way.

“Now, when you go on the pipeline right of way – we do a lot of pipeline companies – all the toilets are on the right of way, and they’ve got one every kilometre or two,” he said.

“Sometimes there’s two in one place because there are women working on the line. We’ll get them serviced once or twice a week.”

He bought out a rental toilet business from Waste Management in Fort McMurray about nine years ago and has never looked backed.

Turnbull just bought three acres of land near Highways 881 and 63 in Fort McMurray for a $6 million expansion of A-1 Portables that has grown to 18 employees.

The company also rents disposal bins and wash cars and provides liquid waste removal services.

“The reason we started the garbage business was because every time someone called for a toilet they asked ‘do you have a bin?’ so I knew it would be easy to build a business,” said Turnbull.

“We’re on every site up there now, and we’ve got a good safety record.

We got all the tickets you need to do the job.”

Companies in Fort McMurray can also contact A-1 Rentals for quick delivery of rental oilfield and industrial equipment.

“We bring it out of Camrose. We don’t keep it up there. I deal with a lot of people down here because they like the service or whatever and we’ll get it to them,” he said.

“Because we don’t have a mechanic up there, if there’s an issue with a piece we will change it out. We will send a truck. We’ve got our own semis.”

The Ritchie Bros. auction attracted strong bids for heavy equipment and trucks from over 55 countries including every province in Canada, two territories and 48 U.S. states.

The industrial auctioneer reported that 51 per cent of equipment was purchased by buyers from Alberta.

The rest was sold to buyers from around the world including the United Arab Emirates, Malaysia and the Netherlands.

“That was the big thing coming in to this sale with all the talk on the street. You don’t know how much money is out there,” said Turnbull.

Having more than 1,850 online buyers at the auction helped to drive the success of the Ritchie Bros.’ auction.

“It doesn’t matter how many people are standing here – the Intenet’s out – and how many thousands of people are on the Internet now? They are selling worldwide.

“These people are the best in the business and they’ve got their stuff together.

Jeff (Beaver) Bayliss

306-339-7136 iohl@sasktel.net Box 144, Carnduff, SK S0C 0S0

PIPELINE NEWS June 2015

B7

Inter Pipeline expanding Kerrobert hub

By Geoff Lee Calgary – Inter Pipeline Ltd. is spending $65 million this year on a crude oil storage tank expansion at the Kerrobert Terminal on their Mid-Saskatchewan pipeline system.

The project will include the construction of three new tanks totalling approximately 400,000 barrels of storage capacity.

The expansion is expected to ready for service in late 2016 at a total cost of $100 million.

“The project has strong customer support and is in direct response to increased demand for new operational and merchant storage infrastructure at the Kerrobert oil hub,” said Chris Bayle, Inter Pipeline’s president.

Bayle spoke to investors about the project during a conference call on May 11 as one of the highlights of the company’s strong first quarter performance despite low oil and gas prices.

“We are very pleased to report another highly successful for Inter Pipeline both operationally and financially,” he said.

“Operating cash flow for this period was the highest in our history led by the oilsands transportation and conventional oil pipeline business segments.

“Collectively these two segments transported a record 1.3 million barrels per day and generated approximately 80 per cent of quarterly funds from operation before corporate cost allocations.”

Inter Pipeline moved a record 1.1 million barrels per day in the quarter on their oilsands pipeline systems.

They also transported over 214,000 bpd on their three conventional oil gathering systems, the highest quarterly total in eight years.

“Our conventional oil pipeline business particularly our Mid-Saskatchewan system continues to enjoy strong growth,” said Brent Heagy, chief financial

officer.

Throughput volumes on the system rose nearly 12 per cent year over year to a record 76,000 bpd per day during the first quarter of 2015.

“Drilling activity in the Viking formation surrounding the Mid-Saskatchewan pipeline system continued to be strong during the quarter,” said Heagy.

Inter Pipeline spent $130 million of its $400 million capital program for 2015 in the quarter on projects predominantly related to expansions on their oilsands and conventional oil pipeline systems.

“Future growth capital in 2015 will be directed for expansion of our Mid-Saskatchewan systems, pipeline and storage construction and pump station work on our Cold Lake pipeline system, as well as completing diluent connections on our Polaris pipeline system,” said Heagy.

He noted the ongoing expansion of the Mid-Saskatchewan system at Kerrobert is anchored by five oil producers who have entered into take or pay contracts for terms of up to 10 years.

“The expansion includes constructing additional capacity on the system to accommodate future growth to potential new third party transportation connections,” said Heagy.

Production growth in the region is attributed to strong horizontal drilling and multistage fracturing activity in the Viking light oil play surrounding the Mid-Saskatchewan pipeline network.

Inter Pipeline’s long-term outlook for their conventional oil pipelines segment remains positive despite the current weak crude oil price environment.

“In this environment, Inter Pipeline continues to be well positioned to grow and provide stable returns to shareholders,” said Bayle.

“We have a strong balance sheet, visible long-term growth and a cash flow stream that is largely underpinned by stable cost of service contracts.”

“The project has strong customer support and is in direct response to increased demand for new operational and merchant storage infrastructure at the Kerrobert oil hub”

- Chris Bayle, Inter Pipeline’s president

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PIPELINE NEWS June 2015

Could Stoughton one day be connected by rail to Northgate? Â&#x201E; By Brian Zinchuk Regina â&#x20AC;&#x201C; If you spend enough time looking at the satellite photos on Google Maps, one might realize that there was once a rail line that ran from Lampman, near Stoughton to

Northgate and connected to the BNSF. Thatâ&#x20AC;&#x2122;s an important consideration when you realize that the largest crude-by-rail loading facility in southeast Saskatchewan is Crescent Pointâ&#x20AC;&#x2122;s Stoughton facil-

ity, located on the Stewart Southern Rail shortline, and thereâ&#x20AC;&#x2122;s been a new commodity hub getting its feet under it at Northgate owned and operated by Ceres Global Ag. Ceres, by the way, owns a quarter of Stewart

This sign shows the old rail right-of-way running from Stoughton to Northgate is sĆ&#x;ll for sale. The quesĆ&#x;on is, could it end up being rebuilt to haul crude-by-railÍ? Coincidentally, this old railbed crosses an operaĆ&#x;ng CP branch line adjacent to Frobisher.

Photo by Brian Zinchuk

Southern Rail.

Pipeline News spoke to James Baker, a Regina railway consultant, who

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worked with Ceres on crude-by-rail plans for Northgate. He was one of the speakers on April 29 at the Williston Basin Petroleum Conference.

Pipeline News: Since Ceres actually owns a chunk of Stewart Southern Rail, they could (rebuild that line), or Crescent Point could. Is there anything to that? Are you tied into Ceres at all?

James Baker: Iâ&#x20AC;&#x2122;m just a consultant. Iâ&#x20AC;&#x2122;m a consultant to them, and a lot of my work was on the oil draw. So when you talk about is there the potential to move oil from any place south of Stoughton, and say within 100 miles and east-west, that makes sense (to ship to Northgate). When you look at trucking costs and NGLs, that makes sense.

P.N.: What about connecting that gap there?

Baker: Absolutely.

There have been many conversations by many different companies, including rail companies. One of the biggest deterrents is the cost of that â&#x20AC;&#x201C; to rebuild that 90 kilometre section.

P.N.: Compared to the cost of building a new pipeline, the rightof-way is already there.

All you basically have

to do, pack a bit more, and put rail on it. Compared to how much infrastructure costs in the oil patch, itâ&#x20AC;&#x2122;s actually pretty cheap, especially if youâ&#x20AC;&#x2122;re moving a unit train a day.

Baker: Absolutely.

If youâ&#x20AC;&#x2122;re asking if Iâ&#x20AC;&#x2122;m involved with something like that? My answer is no. Have I heard conjecture that other people are involved in looking at that, I would have to say yes I have heard that.

P.N.: If something did happen, and I realize youâ&#x20AC;&#x2122;re not actually doing that, what would be the impact by being able to short circuit the Canadian mainlines and go straight to the BNSF, bringing Canadian oil out of the southeast?

Baker: Letâ&#x20AC;&#x2122;s put it this way: I forget the exact number of miles BNSF has in the U.S., but is probably 235,000, and access to 40 different refineries.

I would say that happening would be good for everybody. Canadian oil having access to U.S. refineries, as opposed to backhauling to a CN line, heading east, heading south, getting caught in congestion, crossing the border, youâ&#x20AC;&#x2122;re absolutely right. ɸ Page B9

PIPELINE NEWS June 2015

B9

James Baker spoke about crude-by-rail out of southeast Saskatchewan. Photo by Brian Zinchuk

Éş Page B8 P.N.: At $100 a barrel, if it costs, letâ&#x20AC;&#x2122;s say $15 to move on rail, okay, we can eat that. A month ago, when it was $44 a barrel, that hurts. So what are the economics of crude-by-rail now?

Baker: In my estimation, the economics do not work. Having said that, rail companies or logistics companies never build a rail facility with the market as it sits today. Theyâ&#x20AC;&#x2122;re looking to the future. These are 50 year facilities, or whatever they are. Maybe longer. Look how long Canadian National Railway has been there. So theyâ&#x20AC;&#x2122;ll wait for the opportunity.

In the meantime, they will look at other oppor-

tunities to create revenue â&#x20AC;&#x201C; loading grain, NGLs. Theyâ&#x20AC;&#x2122;re loading propane already. You name it. Bring frac sand back in, maybe fertilizer. Thereâ&#x20AC;&#x2122;s other opportunities while you wait.

P.N.: What WTI price do we need to see crude-by-rail make sense?

Baker: I havenâ&#x20AC;&#x2122;t made that calculation, but Iâ&#x20AC;&#x2122;m guessing $70 a barrel, to make it work, depending on your end destination.

P.N.: Iâ&#x20AC;&#x2122;ve heard $15 a barrel for crude-by-rail?

Baker: It varies. I would say $10 to $15, $12.50 to $15, Canada to the U.S. Those numbers vary. I think what youâ&#x20AC;&#x2122;ll see from the rail companies is if

they see theyâ&#x20AC;&#x2122;re revenues drop, theyâ&#x20AC;&#x2122;ll drop their prices to compete with the pipelines.

P.N.: Do you think, by doing a short-circuit down to BNSF, you could cut that by 10, 20 per cent?

Baker: The possibility exists, for sure. I think with the capital costs initially, maybe not. But over time, certainly you could have cost efficiencies.

P.N.: What sort of efficiencies could there be?

Baker: All you need, sometimes, is $3 or $4 a barrel and youâ&#x20AC;&#x2122;re in the game.

P.N.: Could this do that?

Baker: Could happen.

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PIPELINE NEWS June 2015

Kerrobert street paved in black gold Kerrobert â&#x20AC;&#x201C; Asphalt will be Kerrobertâ&#x20AC;&#x2122;s version of black gold during the summer of 2015.

Kerrobertâ&#x20AC;&#x2122;s rough, unfinished mainstreet known as Pacific Avenue is getting a needed lift of asphalt thatâ&#x20AC;&#x2122;s been nearly two years in the making.

The Ministry of Highways expects to wrap up paving the 1.5 kilometre thoroughfare to a primary weight

standard by the end of June to the relief of Kerrobert mayor Erhard Poggemiller. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a long time coming,â&#x20AC;? he told Pipeline News on May 19.

The town tore up the street from one end to the other in the fall of 2013 to replace waterlines in preparation for the repaving that got underway the week of May 11. â&#x20AC;&#x153;They were going to rebuild the road so

they told us to make sure we had the work done underground so thatâ&#x20AC;&#x2122;s what we did,â&#x20AC;? said Poggemiller.

That initial work was completed by Rev Energy Services Ltd. in 2013 with a gravel topping suitable for light vehicles only. â&#x20AC;&#x153;It was dusty. We put a fair bit of town money into keeping that road so at least it was half drivable,â&#x20AC;? said Poggemiller.

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Rev Energy Service Ltd. crews dug up Kerrobertâ&#x20AC;&#x2122;s mainstreet and installed new waterlines in ĎŽĎŹ1ĎŻ in preparaĆ&#x;on for paving that is currently underway by Ministry of ,ighways contractors. File photo

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This work is expected to be finished this summer. Â Also, grading work will be completed on about 20 kilometres of road west of Kerrobert. â&#x20AC;&#x153;It desperately needs to be redone,â&#x20AC;? said Poggemiller about the two projects.

He also noted the volume of oilfield traffic that took a toll on the old pavement hasnâ&#x20AC;&#x2122;t slowed down that much in the downturn.

Poggemiller said a lot of oilfield projects are finishing while others are ramping up which will put more trucks on the roads. ɸ Page B11

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The work through Kerrobert is part of two summer highways projects valued at $21.4 million.

Highway crews will be in the area all summer rebuilding 35.6 kilometres of road from Highway 21 through Kerrobert west to the Major access road on

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PIPELINE NEWS June 2015 Railway.

The facility is located on Pipeline Road across from the proposed $100 million crude-by-rail project proposed by Torq Transloading in August 2013 to carry up 168,000 bpd of crude oil. â&#x20AC;&#x153;I havenâ&#x20AC;&#x2122;t talked to the Torq guys lately, but the last I heard they were still planning on moving ahead with their project later on this summer or early fall,â&#x20AC;? said Poggemiller.

In the meantime,

the town continues to work on tackling its housing shortage to accommodate the expected influx of oilfield construction crews in the area. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re looking at developing some more lots in town for sale and develop a new subdivision,â&#x20AC;? said Poggemiller. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve been doing a fair bit of work on that subdivision towards the south and west of town.â&#x20AC;?

Poggemiller also said the repaving of the main street will trigger

B11

the immediate construction start of a new motel to begin in June on Pacific Ave. He expects to hear more in the coming weeks about the status of hotel and commercial development proposed in September 2013 by Al-Sask Ventures at the west end of town. â&#x20AC;&#x153;There is talk financing came through for another hotel,â&#x20AC;? he said noting that could mean a fall construction start if it comes true.

22

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2IÂż FH &HOO Kerrobert Mayor Erhard Poggemiller, owner of Kep Industries Ltd., is excited to ÄŽnally see his townâ&#x20AC;&#x2122;s mainstreet being paved aĹ&#x152;er two years of gravel surface and detours by oilÄŽeld truck traĸc.

Éş Page B10 Inter Pipeline Ltd. will spend $65 million this year on a crude oil storage tank expansion at the Kerrobert Terminal on their MidSaskatchewan pipeline system.

Plains Midstream Canada has been hiring instrumentation technicians, rail engineers, loaders and supervisors for the expected mid 2015 start-up of its crude by rail facility near Kerrobert Terminal. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re still work-

ing at the rail hub and probably will be for a little while,â&#x20AC;? said Poggemiller.

The initial capacity of the terminal will be one unit train or 70,000 barrels of oil per day with the capacity to expand to 140,000 bpd.

Plains currently operates a one million barrel storage facility in Kerrobert The rail terminal will connect into Plainsâ&#x20AC;&#x2122; Manito Pipeline system and the Enbridge Inc. system, and be served

by Canadian Pacific

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PIPELINE NEWS June 2015

B13

All eyes and ears on pipeline safety

Kinder Morgan Canada, TransCanada CorporaĆ&#x;on, and Enbridge Pipelines Inc. have signed a Joint Industry Partnership agreement to evaluate aerial-based leak detecĆ&#x;on technologies, possibly including forward-looking infrared technology pictured here, for use with crude oil and hydrocarbon liquids pipelines. WĹ&#x161;Ĺ˝Ć&#x161;Ĺ˝ Ć?ĆľÄ?ĹľĹ?ĆŠÄ&#x17E;Ä&#x161;

Edmonton â&#x20AC;&#x201C; Pipeline giants Enbridge Pipelines Inc., TransCanada Corp. and Kinder Morgan Canada have signed on as partners in research into aerial-based leak technologies.

The three companies announced their new joint industry partnership ( JIP) on April 28 with the aim of improving all aspects of pipeline safety.

The JIP follows a decision by the National Energy Board (NEB) to conduct a public review into how much pipeline emergency response information can be withheld from the public by energy companies.

Spill response from Canadaâ&#x20AC;&#x2122;s Coast Guard came under public scrutiny in early April when the MV Marathassa spilled thick, toxic bunker fuel into Vancouverâ&#x20AC;&#x2122;s English Bay. The Coast Guard was criticized for what was perceived as a slow initial response to the fuel spill and the fact it took roughly 12 hours for the City of Vancouver to be notified.

The NEB is currently reviewing Kinder Morganâ&#x20AC;&#x2122;s proposed Trans Mountain expansion of its existing Trans Mountain pipeline system between Edmonton, AB and Burnaby, B.C. for export by ocean going tankers.

During a speech to the Vancouver Board of Trade on April 27, NEB chair Peter Watson said, â&#x20AC;&#x153;Canadians deserve to be consulted on the transparency of emergency management information for NEB regulated pipelines. â&#x20AC;&#x153;At its conclusion, the NEB will respond in a meaningful and measured way that reflects what weâ&#x20AC;&#x2122;ve heard and what is in the best interest of all Canadians.â&#x20AC;?

NEB will receive public comments electronically, by fax or letter until June 25 with a report to follow.

Meanwhile Enbridge, TransCanada and Kinder Morgan have each committed $200,000 to the JIP to identify technologies capable of detecting small pipeline leaks to

improve pipeline safety.

The project will involve laboratory research and field trials to evaluate commercially available aerial-based leak detection technologies.

Data analysis will be conducted by Alberta Innovates-Technology Futures with testing by C-Fer Technologies Inc. in Edmonton.

Potential technologies to be tested may include infrared camera-based systems, laser-based spectroscopy systems, and flame ionization detection systems, with sensors suitable for mounting on light aircraft or helicopters.

Representatives of Enbridge and C-FER are currently surveying commercial vendors of these airborne leak detection technologies to validate their feasibility for liquid hydrocarbon pipelines.

Project research and trials are expected to begin during the third quarter of 2015. â&#x20AC;&#x153;The challenge with airborne leak detection systems is not with the aircraft, but with selecting appropriate sensors to detect liquid hydrocarbon leaks before they reach the surface,â&#x20AC;? said Brian Wagg, director of business development

and planning for CFER in a news release. â&#x20AC;&#x153;This program helps operating companies understand which technologies are best suited for detecting these leaks, and will provide vendors with unique information on what leaks actually look like. â&#x20AC;&#x153;This information will help those vendors fine-tune their systems to detect leaks with greater reliability.â&#x20AC;?

A previous JIP between Enbridge and TransCanada now joined by Kinder Morgan has already yielded ground-breaking leak detection research.

That research was based on using a pipe-

line simulator called the External Leak Detection Experiment Research (ELDER) test apparatus.

Enbridge and TransCanada have each committed $1.6-million to the ELDER project, while Kinder Morgan has committed $1-million.

The project has a total funding commitment of more than $6-million.

Tests in 2014 focused on four external leak-detection technologies â&#x20AC;&#x201C; vapor sensing tubes, fiber-optic distributed temperature sensing systems, hydrocarbon-sensing cables and fiber-optic distrib-

uted acoustic sensing systems.

All engineering and test data is shared among committed project partners.

The ELDER program has carried out four tests since 2013 and collected data from the 13 participating vendors, representing hundreds of recorded leaks in the ELDER apparatus.

Data analysis is ongoing, but some participating vendors have already reviewed test results with the intention of using them to improve their systems.

The ELDER program is expected to continue into 2016.

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B14

PIPELINE NEWS June 2015

Trican cuts 2,000 jobs, salaries Calgary – Trican Well Service Ltd., founded in Lloydminster, has reduced its Canadian workforce by 35 per cent after cutting 2,000 employees from its North American operations due to prevail-

t

ing weak demand for its oilfield services.

All Canadian operations and corporate employees have taken a second pay cut of 10 per cent to this year along with reduced benefits.

The latest cutbacks

for Canadian workers took effect on April 15, and are expected reduce quarterly costs by about $5 million.

The Calgary-based company said the cost cutting measures will remain in place until de-

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mand and activity levels in Canada improve.

Meanwhile, Trican is currently in negotiations to sell its Russian and Kazakhstan pressure business after receiving an unsolicited purchase offer.

Trican said the sale of the business would be in the best interest of shareholders if accepted terms and conditions can be negotiated.

Trican also expects to park 35 per cent of its Canadian equipment over the remainder of the year with customer demand expected to remain well below 2014 levels.

The company does, however, expect Canadian industry activity to increase from June onward.

Trican’s focus going forward is to continue to reduce costs in difficult current and future

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market conditions as Canadian pressure pumping activity is down substantially from 2014 levels.

To that end, the company has stopped paying dividends to its shareholders as of May 12, when they released their first quarter financial report for the three months ending March 31.

Trican issued a $22.4 million dividend in the quarter, but reported further payouts have been suspended indefinitely to preserve capital as a result of weak economic conditions.

The number of wells drilled in Canada was down 46 per cent relative to the same quarter in 2014.

Trican noted that many Canadian producers opted to defer well completions during the first quarter of 2105 which negatively affected the demand for its fracturing services.

The average Canadian pricing declined by 10 per cent in the quarter compared to the fourth quarter of 2014 when the industry was hit by a steep drop in oil prices that took hold in November.

The steep decline

in utilization and prices has set Trican on a mission to reduce its cost of sales in 2015 for consumable products and transportation costs that make up half of their total costs.

The company reported a $35.7 million loss in the quarter and a $60.3 million adjusted loss as the demand for their services plunged with oil and gas prices.

Total revenue in the quarter was $476.1 million, compared to $643.2 million for the same period in 2014.

The company’s Canadian operations generated $222 million of revenue, down from $353.3 million a year earlier.

Trican expects to cut approximately $115 million from fixed annual costs with workforce and salary cuts, but the savings in the first quarter were offset by severance costs.

Most of the employee cuts in Canada occurred in mid-March, too close to the end of the quarter for savings to be realized.

Severance costs were $5.5 million in Canada, $2.9 million in the U.S. and $1 million for the corporate division.

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PIPELINE NEWS June 2015

B15

BlackPearl steaming Onion Lake Calgary â&#x20AC;&#x201C; BlackPearl Resources Inc. plans to begin steam injection at its 6,000 barrels per day Onion Lake thermal project by June 1.

Steam will be injected in the first well pad of seven wells with first oil production expected in three to six months in the first phase project.

Oil from the Onion Lake project will be produced by steam-assisted gravity drainage or SAGD. The update was included with Black Pearlâ&#x20AC;&#x2122;s first-quarter financial and operating report, issued May 6 that revealed the $223 million thermal project was completed ahead of schedule and on budget. â&#x20AC;&#x153;This is an important milestone for BlackPearl.

Our first thermal project has been completed successfully and it is the largest project the company has undertaken,â&#x20AC;? said John Festival, president of BlackPearl. â&#x20AC;&#x153;Production from the Onion Lake thermal project should be some of our lowest cost production, which is critical in this lower oil price environment.â&#x20AC;?

This phase of the project includes 13 horizontal production wells on two well pad sites.

All of these wells were drilled in late 2014 and were completed during the first quarter of 2015 along with the completion of 35 vertical steam injection wells.

The steam generation facilities are designed to generate approximately 17,000 barrels of steam per day.

No new conventional drilling occurred during the first quarter of 2015 due to low oil prices. â&#x20AC;&#x153;Low crude oil prices made for a challenging Q1 for BlackPearl and most of industry,â&#x20AC;? said Festival.

The companyâ&#x20AC;&#x2122;s realized oil price was just $32.05 per barrel compared to $73.23 for the same period in 2014.

Revenue declined 63 per cent to $22.1 million compared with $59.6 million in the same quarter of 2014.

The decrease in revenues is attributable to a 57 per cent decrease in Black Pearlâ&#x20AC;&#x2122;s average sales price for oil during the quarter.

Revenue also declined due to a 12 per cent de-

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crease in production to 8,269 barrels of oil equivalent per day compared to 9,363 boepd a year earlier.

Total production included heavy oil from its Mooney and Blackrod projects in Alberta.

The lower production volumes also reflect the companyâ&#x20AC;&#x2122;s decision to shut in 40 conventional wells that were producing approximately 1,000 barrels of oil a day.

Festival said the wells that were shut-in during

the quarter were wells with high operating costs that required well servicing.

He explained they were shut-in to save the expense of bringing them back on production while oil prices were low. â&#x20AC;&#x153;We plan to put these wells back on production when oil prices recover to a level that they can contribute positive cash flow to our operations,â&#x20AC;? he said.

Pipelining

This pipeline crew was working near Midale on April 28, just north of Highway 39. Photo by Brian Zinchuk

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PIPELINE NEWS June 2015

n to Lake in Vermilion liste ol ho Sc s eâ&#x20AC;&#x2122; m ro Je from St. gy program.

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Â&#x201E; Story and photos by Geoff Lee Lloydminster â&#x20AC;&#x201C; The 6th annual Try-A-Trade Career Expo in Lloydminster fed more than 1,800 high school students with as much as information about careers in the trades as they could ingest in single day.

Students from Saskatchewan and Alberta got their fill taking part in demos, talking with young journeymen and exploring learning paths to apprenticeships at the Lloydminster Exhibition Grounds on May 6.

Try-A-Trade is the brainchild of the Lloydminster Construction Association based on the idea that the best way to learn about the trades is to try them out. â&#x20AC;&#x153;We are trying to promote it as a first career and itâ&#x20AC;&#x2122;s succeeding,â&#x20AC;? said Dorothy Carson, executive director of the association. â&#x20AC;&#x153;We definitely have a lot of commitment from the school divisions. They are always anxious to get their kids registered early and be made aware of the event.â&#x20AC;?

Eric Rio, a Grade 9 student from Holy Rosary High School gets a lesson in crimping a pex water line from Colson Brown, a third year apprenĆ&#x;ce plumber with Guardian Plumbing Î&#x2DC; HeaĆ&#x;ng Ltd. at a Try-A-Trade demo.

Lakeland College, one the main perennial exhibitors, came to run demos for just about all of their trades programs including welding, carpentry, steamfitting, pipefitting and electrical. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s actually very exciting. Itâ&#x20AC;&#x2122;s kind of a crazy day. Thereâ&#x20AC;&#x2122;s lot of kids and lots of activity, but I think it represents the trades really well,â&#x20AC;? said Mark Agrey, Lakelandâ&#x20AC;&#x2122;s chair of trades and technology.

The college also set up a demo of its newest street rod technology program. â&#x20AC;&#x153;We always get questions about it. Itâ&#x20AC;&#x2122;s a great program,â&#x20AC;? added Agrey, who knows what to expect when it comes to student engagement at Try-A-Trade. â&#x20AC;&#x153;I think the older kids that are soon to be out of school are the ones more interested and have more pointed questions as to what weâ&#x20AC;&#x2122;re doing,â&#x20AC;? he said.

Terry Barnett, the owner of K& L Electric Inc. in Lloydminster set up a wiring challenge to interest as many students as he could in becoming electricians like him. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re going to show them how to wire up a light switch just to show them how electricity actually works,â&#x20AC;? he said. â&#x20AC;&#x153;If the light comes on and a bell rings, they did a good job. If they didnâ&#x20AC;&#x2122;t, they try again,â&#x20AC;? he explained affirming itâ&#x20AC;&#x2122;s a fun day for him with a lot of bell ringing. â&#x20AC;&#x153;Absolutely, the kids are always informative and ask a lot of questions,â&#x20AC;? he said, adding that most of students that try the electrical trade demo are females. â&#x20AC;&#x153;I think the guys are too cool, afraid of failing, where the women they want to know. Itâ&#x20AC;&#x2122;s a great learning curve for them just to get their hands wet.â&#x20AC;?

Barnett is also the president of the northeast chapter of the Electrical Contractors Association of Alberta that is the provincial voice and information centre of the electrical industry. â&#x20AC;&#x153;We are kind of an information centre to students, trades people and contractors â&#x20AC;&#x201C; kind of a go between us and the government,â&#x20AC;? explained Barnett. â&#x20AC;&#x153;If they have questions that the local guys canâ&#x20AC;&#x2122;t answer, we can point them toward the provincial body on which is the best way to get started in the trade.â&#x20AC;?

Students were also free to learn about the electrical trade by speaking with apprentices like Emile Dombrowski at the young apprenticesâ&#x20AC;&#x2122; booth at Try-AEvent.

Dombrowski is now a 3rd year electrical apprentice at Harris Electric Co. Ltd. in Lloydminster who encourages more students to take up the trade. â&#x20AC;&#x153;When I was young, I never considered the trades when I was in school, but they should, especially girls,â&#x20AC;? she said referring those at Try-A-Trade.

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Neil Napora, a Lakeland College carpentry instrucĆ&#x;on, writes the name of the fastest student of the hour to complete a Í&#x17E;walk the wallÍ&#x; carpentry challenge at Try-A-Trade.

PIPELINE NEWS June 2015

B17

Shyndal Crane, le Ĺ&#x152;, and Jazara LiĆŠl ewolf, right, from ion Lake watch Ru Eagleview Compr ss Lorenz, a jour ehensive High Sc neyman sheet m a press before th hool in Onet al mechanic out eir turn at the Tr a press a piece of y-A-Trade demo.

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â&#x20AC;&#x153;They would never think of going into the trades so to get them more aware thatâ&#x20AC;&#x2122;s a good option.

She said she when she was in high school, she was really was interested in it but never thought it about after she got out of high school. â&#x20AC;&#x153;Then I just starting working and I didnâ&#x20AC;&#x2122;t like what I was doing, and all of a sudden one day I just thought I could go into the trades,â&#x20AC;? she said. â&#x20AC;&#x153;I found a trade I thought I would like, and I went into it and I love my job now. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s fun and youâ&#x20AC;&#x2122;re always learning and youâ&#x20AC;&#x2122;re always active.â&#x20AC;?

Dombrowski will complete her fourth year of classroom learning next year at Lakeland along with her journeyman ticket. â&#x20AC;&#x153;You just go for two months every year,â&#x20AC;? she said adding thatâ&#x20AC;&#x2122;s the part that she gets asked about the most from students. â&#x20AC;&#x153;They always ask if the schooling is hard, if the math is hard and all that.

There is some complicated math in it, but itâ&#x20AC;&#x2122;s definitely doable.â&#x20AC;?

Caleb Biensch, a Grade 10 student from Neilburg Composite School, came to Try-A-Trade with an interest in carpentry and â&#x20AC;&#x153;building stuff â&#x20AC;? as he put it and was excited to learn more. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s pretty fun,â&#x20AC;? he said, telling Pipeline News that he just got there and hadnâ&#x20AC;&#x2122;t tried any demos yet.

He said his dad works in the oilpatch and â&#x20AC;&#x153;fixes a lot of stuff â&#x20AC;? and that he might want to follow in his footsteps.

Aaron McCabe, a Grade 12 student from Lloydminster Comprehensive High School was also excited to learn about trades as his dad is a heavy duty mechanic at Midwest Truck Centre. â&#x20AC;&#x153;My teachers were talking about it in school, and I was really interested in coming out and seeing what the trades have to offer,â&#x20AC;? he said adding that he tried the Atco Electric demo.

For those students interested in carpentry, Gary Oâ&#x20AC;&#x2122;Shea, site supervisor for Craftex Builders, was the go-to guy for information on that trade. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re going to demonstrate different ways to deal with framing on small jigsaw type puzzles. Itâ&#x20AC;&#x2122;s easy and fun,â&#x20AC;? he said.

Students who step up for the demo are given a drawing just as an apprenctice would on the job, and they have to piece everything together based on the drawing. â&#x20AC;&#x153;If they complete the task, we give them a Craftex T-shirt,â&#x20AC;? said O-Shea. â&#x20AC;&#x153;Last year, we were very impressed with the amount of uptake on the

puzzles. â&#x20AC;&#x153;The kids seem to like the interaction with the puzzle based thing because itâ&#x20AC;&#x2122;s something they can actually do to get their hands dirty and get into when they get here.â&#x20AC;?

The task can pay off as Craftex took on an apprentice who showed an interest last year while a second student who worked last summer is returning this summer.

Craftex hires carpenters, project managers and architects with more openings coming up. â&#x20AC;&#x153;We are busy at the moment and we are looking â&#x20AC;&#x201C; thatâ&#x20AC;&#x2122;s the reason we are here, to see if we can interest young students in to take up trades especially in the carpentry end of things,â&#x20AC;? said Oâ&#x20AC;&#x2122;Shea. â&#x20AC;&#x153;We do an awful of carpentry based things like framing and concrete work.â&#x20AC;?

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PIPELINE NEWS June 2015

Ritchie Bros. sets downturn on its ear

A record seĆŤng four-day unreserved aucĆ&#x;on in Nisku, AB from April 28 to May 1 aĆŠracted more than 1Ď°,ĎŹĎŹĎŹ bidders from over 55 countries. Ritchie Bros. industrial aucĆ&#x;oneers sold more than $215 million of heavy equipment and trucks.

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Nisku â&#x20AC;&#x201C; Despite the oil and gas downturn, Ritchie Bros. industrial auctioneers sold more than $215 million of heavy equipment and trucks at its largest ever unreserved public auction in Canada.

The auction was held in Nisku from April 28 to May 1 and beat last yearâ&#x20AC;&#x2122;s sales record of approximately $143 million when commodity prices were much higher than today. â&#x20AC;&#x153;Pricing has been solid, in fact, above expectations. Itâ&#x20AC;&#x2122;s been very good,â&#x20AC;? said Randy Wall, president of Ritchie Bros. Canada during a May 1 media tour in Nisku.

That was when excavators, compactors, forestry equipment, and oil and gas and drilling equipment went on the block, but Wall noted everything in the yard can be or is directly or indirectly related to the energy sector. â&#x20AC;&#x153;But most of it as well can be used in multiple applications,â&#x20AC;? said Wall. â&#x20AC;&#x153;So it could be used in forestry. It could be used in transportation with heavy trucks. It could be pushing dirt in the oil patch or it could be pushing dirt on the farm or in the U.S. on a housing subdivision. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s lot of different applications, but today does have some specialty oilfield drilling equipment, but itâ&#x20AC;&#x2122;s a very small portion of what we have here for sale.â&#x20AC;?

Those final auction items helped Ritchie Bros. set a company of a record 7,700 plus lots sold and a record number of 14,000 registered bidders. â&#x20AC;&#x153;As you can see from the amount of equipment here and the number of people weâ&#x20AC;&#x2122;ve had registered, thereâ&#x20AC;&#x2122;s a tremendous amount of interest and a lot of money out there,â&#x20AC;? said Wall. â&#x20AC;&#x153;Surprising as some people might find that, it doesnâ&#x20AC;&#x2122;t surprise us. ɸ Page B19

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PIPELINE NEWS June 2015 ɺ Page B18 “We believe with all these industries playing on top of each other as well as international buyers – Americans – offshore, that there is tremendous strength globally still in the industrial sector.”

More than $192 million or 89 percent of the equipment was purchased

by Canadian buyers, in Nisku including 51 percent purchased by buyers from Alberta.

The rest of the equipment was sold to buyers from around the world, as far away as the United Arab Emirates, Germany, Egypt, Malaysia, Thailand, Poland and the Netherlands.

“The vast majority of this equipment actually stays in the province of Alberta,” Wall said.

“Despite what people think about weakness, there is still a lot of work here.”

Earlier this year, industry analysts forecasted Alberta would lose over 30,000 jobs in the energy sector in 2015 due to companies cutting capital expenditures in the low commodity price environment.

“A lot of these companies that play specifically in the energy space have been watching their fleets and managing them for well over a year with what they expect to see coming up in terms of work,” explained Wall.

“Some of the bigger contractors actually have been buying here at the auction. “ Wall said there is a complete range of reasons why people put their equipment up for auction or place bids especially during the spring Nisku event.

“It’s a great time for contractors and alike to dispose of their gear for the winter season and get ready for the busy summer season. It’s a great time and a great sale,” he said.

“There could be a small contractor who just needs to upgrade and get a newer machine.

“It could be jobs that are finishing and they need to dispose of their fleet – they don’t need it all for the next job. Perhaps, they need a different mix of equipment for the next job.

“Summer work and winter work are quite different, so we traditionally have our biggest auction right now, and that tends to be the winter season product being sold. Then companies gear up for more of the dirt jobs in the summer.

“We have a lot of dispersals here in this auction.”

Ritchie Bros. sold equipment for more than 760 sellers, including a complete dispersal for Earth & Iron Inc. and a fleet realignment for A-1 Rentals, two Alberta-based companies.

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market it. Together we sent Earth & Iron equipment to new buyers around the world,” said Dean Gray, president of Earth & Iron in a news release.

“I’m very pleased with the results. There is no other company in the world that can do what Ritchie Bros. does. I watched the sale online and saw bidders participating from all around the world.”

“This is the third time we’ve done realignment through Ritchie Bros., and we keep coming back because returns have been so strong,” said Guy Turnbull, owner and president of A-1 Rentals in a statement.

Turnbull also spoke with Pipeline News in a separate story in this edition about his company.

“While there is certainly less work for some sectors in Alberta, there’s still money here and people are still buying equipment,” added Turnbull.

He was one of 6,000 people that attended the auction in person at Ritchie Bros.’ 150 acre yard in Nisku.

“A lot of people come in advance of the event. They do their inspection. It’s such a large array of product that they can choose from, so they come and do their shopping selections early,” said Wall. ɸ Page B21

Ritchie Bros. aƩracted a record 1ϰ,ϬϬϬ registered bidders to its four day aucƟon in Nisku from April 28 to May 1 with premium prices paid for most of the equipment. Many bidders came in person to the company’s live aucƟon theatre to see the items and bids shown on a monitor.

PIPELINE NEWS June 2015

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B21

Lots to do after sale ends

Éş Page B19 The record-setting selection of heavy equipment and trucks included more than 240 excavators, 225 crawler tractors, 200 compactors, 100 articulated dump trucks, 80 wheel loaders, 7 motor graders, 40 motor scrapers, 50 agricultural tractors, 195 truck tractors and more.

Every item was sold to the highest bidder on auction day, with no minimum bids or reserve prices.

The oil and gas auction on May 1 included projected images of the equipment and live real time bids on monitors inside the auction ring. â&#x20AC;&#x153;Depending on the day and the type of product we have, it will either be live or the items will be driven across the auction theatre or the ramp in front of the bidding crowd,â&#x20AC;? said Wall. â&#x20AC;&#x153;Today, because of the nature of the items â&#x20AC;&#x201C; some of them are nonmobile â&#x20AC;&#x201C; such as some of the specialized drilling equipment, so thatâ&#x20AC;&#x2122;s sold always by screen.â&#x20AC;?

The auction set additional company records for online sales of over $105 million, the number of online bidders (8,150) total buyers (3,200) and online buyers (1,850).

Bids were made in person at the Edmonton auction site, online in real time at Ritchie Brosâ&#x20AC;&#x2122; auction web

site and by proxy. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a tremendous week. Itâ&#x20AC;&#x2122;s fantastic. Itâ&#x20AC;&#x2122;s exciting,â&#x20AC;? said Wall as he put it into perspective for his company. â&#x20AC;&#x153;It sets another bar for us to try to do better and exceed next time.â&#x20AC;?

There will be celebration of sorts he suggested that night, but it would be a short lived one. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ll have a nice meal tonight and maybe a beer or a glass of wine, but weâ&#x20AC;&#x2122;ll also be looking at what we did well, where the equipment went â&#x20AC;&#x201C; we want to look after our customers,â&#x20AC;? he said. â&#x20AC;&#x153;Just because the last item sold today it doesnâ&#x20AC;&#x2122;t mean that the sale is over. â&#x20AC;&#x153;We still have to collect the funds.

We have to report back to the owners and now we also have to release all this equipment. â&#x20AC;&#x153;We have about 8,000 items that have to get back on trucks and leave the yard. Weâ&#x20AC;&#x2122;re far from done.â&#x20AC;?

The Ritchie Bros. auction calendar currently features more than 80 unreserved public auctions around the world, including their next unreserved public auction in Edmonton, AB, from June 9 â&#x20AC;&#x201C; 10.

The company will also hold equipment auctions in Saskatoon in June 22-23 and in Regina on July 14.

Ritchie Bros.â&#x20AC;&#x2122; aucĆ&#x;oneer Wayne Yoos did a lot of fast talking inside the aucĆ&#x;on ring on the ÄŽnal day of the companyâ&#x20AC;&#x2122;s largest unreserved public aucĆ&#x;on in Nisku, Alberta.

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PIPELINE NEWS June 2015

Husky rolls with price punches Calgary â&#x20AC;&#x201C; Husky Energy continues to reinvent itself with structural changes and cost initiatives to respond to prevailing low oil and gas price challenges.

The company is positioned to rebound after reporting a 71 percent profit drop in the first quarter.

Huskyâ&#x20AC;&#x2122;s average realized price for its upstream production was just $40.84 a barrel in the quarter compared with $72.21 last year.

The company earned $191 million in the quarter, compared with $662 million in the first quarter of 2014. Earnings including a $203 million deferred tax recovery, Total production rose 9.2 per cent to 356,000 barrels of oil equivalent per day for the quarter compared with 326,000 barrels in the same quarter last year.

The company also generated cash flow from operations of $838 million in the quarter.

Husky CEO Asim Ghosh said the results reflect the resilience of the companyâ&#x20AC;&#x2122;s portfolio in a low price environment thanks to structural changes made since 2010.

He reminded a quarterly conference call on May 6 that a prior decision to remain an integrated

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and diversified company will continue to yield benefits when commodity prices improve. â&#x20AC;&#x153;We began to progressively position the company as a low sustaining capital business that would be resilient in a lower price environment,â&#x20AC;? he recalled. â&#x20AC;&#x153;We require less capital today to sustain a larger base of production. A significant portion of our earnings and cash flow is not directly exposed to the commodity price challenge we are facing today. â&#x20AC;&#x153;For example, our gas from Liwan is sold on a fixed price contract, and our downstream business is a margin business rather than a pure WTI or Brent price benchmark business.â&#x20AC;?

As an added point he said, â&#x20AC;&#x153;We have the ability to stage our projects, which means we can adjust timing to available cash to manage the risks associated with the investment and still deliver high margin production growth.â&#x20AC;?

Progress continues to be made to lower Huskyâ&#x20AC;&#x2122;s overall costs through efficiencies.

A cost reduction program initiated five years ago has achieved more than $1.3 billion in cumulative supply and procurement savings.

A further $400-600 million in cost savings targeted for 2015 has locked in $475 million in savings to date mainly from rate cuts from suppliers. â&#x20AC;&#x153;After working on rate reductions, weâ&#x20AC;&#x2122;re now looking at a lot of good ideas that have been brought forward in terms of increasing the efficiency of the work. So thatâ&#x20AC;&#x2122;s kind of the next wave of delivering cost savings,â&#x20AC;? said Rob Peabody, COO, in response to a question. â&#x20AC;&#x153;We are treating our suppliers as partners in this exercise,â&#x20AC;? added Ghosh. â&#x20AC;&#x153;We find that when we take that approach, the suppliers are stepping up to the plate. â&#x20AC;&#x153;This is not a blunt â&#x20AC;&#x2DC;you take a haircut, Iâ&#x20AC;&#x2122;m transferring costs from me to youâ&#x20AC;&#x2122; type of approach.

There are methods savings that are yielding real

results.â&#x20AC;?

The company reported it reduced its costs per barrel by 13 per cent to $14.87 in the quarter from $17.21 in the first quarter of 2014.

Husky attributes the cost savings to lower cost production coming on stream and lower energy input costs.

The company had $3.2 billion in undrawn credit facilities at the end of the quarter.

Cost efficiencies will also accrue from Huskyâ&#x20AC;&#x2122;s ongoing development of a new suite of heavy oil thermal projects in the Lloydminster region.

These facilities are built with modular, repeatable designs and are expected to require low sustaining capital once brought on line. â&#x20AC;&#x153;Construction is nearing completion on the 10,000 barrel per day Rush Lake project which is on track to produce first oil in the third quarter this year,â&#x20AC;? said Peabody.

Work is continuing on three other thermal developments in the area. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re making good progress at the two 10,000 bpd thermals at Edam East and Vawn as well as the Edam West project,â&#x20AC;? said Peabody. â&#x20AC;&#x153;Edam West is an example of how we are generating additional value from our thermal expertise. â&#x20AC;&#x153;It was originally designed as a 3,500 bpd development based on our successful Sandall thermal model. â&#x20AC;&#x153;However, with design and efficiency improvements, weâ&#x20AC;&#x2122;ve been able to increase its capacity to 4,500 bpd.â&#x20AC;?

Peabody also replied to an investor question about what was done to increase the capacity of Edam West. â&#x20AC;&#x153;We just continued to evolve the design. We found we were able to increase steam capacity without increasing costs with adjustments to the types of generators we are putting in there,â&#x20AC;? he explained. ɸ Page B23

PIPELINE NEWS June 2015 Éş Page B22 â&#x20AC;&#x153;We continue to refine the design of these plants going forward.â&#x20AC;?

All three of these newer thermal projects will come on line next year starting with Edam East in the third quarter.

Total heavy oil thermal production from the Lloydminster region has grown from 18,000 bpd in 2010 to an average of 45,500 barrels per day in the first quarter of 2015. â&#x20AC;&#x153;With the four new projects we have in flight, we are adding about 35,000 bpd of new production by the end of 2016,â&#x20AC;? said Peabody. â&#x20AC;&#x153;Our thermal operating costs in the first quarter were $9.53 a barrel including energy costs.â&#x20AC;?

Husky is continuing to scale down some of its heavy oil CHOPS (cold production) and horizontal drilling projects for additional cost savings. â&#x20AC;&#x153;These are developments that we can bring back up again very quickly once oil prices improve,â&#x20AC;? said Peabody, who noted other projects are being scaled back in their Western Canada resource plays. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve dialed back on some projects as weâ&#x20AC;&#x2122;ve identified further savings opportunities across the portfolio,â&#x20AC;? he said.

The Ansell liquids-rich gas resource play remains a priority, with first quarter activity including drilling, completions and facility construction.

Production volumes at Ansell in the first quarter averaged 19,300 boepd compared to 17,000 boepd in the first quarter of 2014.

Husky is advancing several other resource plays that offer good returns in a low price environment, with low finding and development costs.

Production from the Strachan, Wapiti, Kakwa and Stolberg plays in Alberta averaged about 8,000 boepd in the first quarter.

Husky plans to advance these resource plays at a measured pace in line with market conditions. â&#x20AC;&#x153;Overall, we drilled 12 gross wells and completed 9 wells over the quarter across our liquids rich resource play portfolio,â&#x20AC;? said Peabody. â&#x20AC;&#x153;Husky had five of the top 10 best performing Cardium gas wells in the 12 months up to the end of February.â&#x20AC;?

Husky also reported first production at its Sunrise Energy project in midMarch with steaming underway on 34 of 55 well pairs.

Peabody reported production was on target a little over 4,000 bpd on May 6 with volumes continuing to build. â&#x20AC;&#x153;The built-in efficiencies at Sunrise are continuing to deliver value as we move forward with current operations and commissioning work on the second processing plant,â&#x20AC;? he said.

Husky continues to realize a number of efficiencies including the use of a

B23

new custom mobile rig that provides for closer spacing of wellheads, smaller drilling pads and fewer pad facilities. â&#x20AC;&#x153;All together, we expect to realize wellpad savings from the rig in the neighborhood of 30 per cent compared to the initial pad,â&#x20AC;? said Peabody.

In downstream news, Husky continues to work on expanding its Saskatchewan gathering system in preparation for increased heavy oil thermal production from the new plants.

Huskyâ&#x20AC;&#x2122;s two new 300,000 barrel storage tanks are now in service in Hardisty and provide further flexibility to the business.

Huskyâ&#x20AC;&#x2122;s 10,000 barrel per day Edam heavy oil thermal project is due to come on line in the third quarter of 2016. The company will add about 35,000 bpd of thermal oil producĆ&#x;on by the end of 2016. WĹ&#x161;Ĺ˝Ć&#x161;Ĺ˝ Ä?Ç&#x2021; 'Ä&#x17E;Žč >Ä&#x17E;Ä&#x17E;

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B24

PIPELINE NEWS June 2015

Edam open to house SAGD families

The year round Drop Anchor RV Park is home to oilĮeld workers. Crews working on four new heavy oil thermal projects in the area commute to the park and are bussed to the project sites. WŚŽƚŽƐ ďLJ 'ĞŽī >ĞĞ

By Geoff Lee Edam – The village of Edam located on Highway 26 about 60 kilometres north of North Battleford is hoping to tap into growth from the construction of four thermal heavy oil plants in the area.

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Plans are underway to provide more housing for young families to offset the effects of the current downturn in oil and gas prices.

“There is high unemployment right now.

A tremendous number of people are laid off,” said Mayor Larry McDaid on an April 24 tour of the community.

“Most people have employment insurance so they have some income. Most haven’t left, but I would say some have.”

The priority project is the development of a 28-lot subdivision on the northwest end of Edam to accommodate families that will be employed at the new thermal plants.

“Each plant is supposed to have about 20 full-time employees.

Those could end up living here,” said McDaid.

“The status is that we’re probably putting in the sewer system, the power, phone and gas in this summer.

“We are not sure yet whether we are going to do it through a developer or whether we’re going to do it on our own.

It’s very expensive.”

The village could even seek some financial assistance from the Rural Municipality of Turtle River where the new steamassisted gravity drainage (SAGD) plants are located.

“It will make no difference to the taxation of Edam, but to the RM of Turtle River it will be a huge tax base,” said McDaid.

“That should roughly translate into 80 full time jobs.”

Husky Energy is constructing two 10,000 barrels a day thermal facilities called Edam East and Vawn and a 3,500 bpd steam Edam West project.

All of these SAGD projects are slated to start up throughout 2016.

In addition, Husky’s 10,000 bpd Rush Lake SAGD project near Paynton is set to begin commercial operation by the end of 2015.

A 6,000 bpd SAGD project by Serafina Energy Ltd. near Vawn is also being constructed south of Edam and is expected to come on stream in 2016.

All of these new SAGD construction projects are within a 12 kilometre radius of Edam.

“It`s bringing workers into the area. I don`t know how many from our area are working there though,” said McDaid.

“It’s a boom to somebody obviously, but I don’t know anybody local working there.”

The Edam East and Vawn projects south of the village would each require up to 400 workers at peak construction according to a report by Husky in Jan. 2014.

“It is very specialized construction. It has meant work for the sand and gravel people – the earth movers,” said McDaid.

Local oilfield service companies like Garry’s Construction, Arnold’s Sand & Gravel, Severs Oilfield Services and Racken Enterprises are vying for a share of work while hoping the boom times return soon.

“There have been times when we’ve had over 100 workers going out of Edam every morning,” recalled McDaid about the past couple of years.

“They’re not all living in Edam, but they come from North Battleford and Glaslyn.

“They come to the shops here then head out every morning, so they are eating here and a lot of them are banking here so it’s a big thing for the town.”

Existing worker accommodations include the Rendezvous Hotel and the year-round Drop Anchor RV Park for oilfield crews.

“A lot people drive out from North Battleford and they park their vehicles at the park and they get on a bus. They are not allowed to take their vehicles on the sites,” said McDaid. ɸ Page B25

PIPELINE NEWS June 2015 â&#x20AC;&#x153;They may be shutting down a lot of wells and just concentrating on the small areas where they are injecting. We don`t know,â&#x20AC;? he said.

Right now, he says

heavy oil is being lifted by progressive cavity (PC) pumps and trucked to batteries.

Husky is expanding its south Saskatchewan gathering system to pipe

B25

thermal oil from the new SAGD plants to a main sales oil pipeline distribution system in the region that could impact services. ɸ Page B26

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Any Colour Long-serving Edam Mayor Larry McDaid is hoping the village will start to service a new 28 lot housing subdivision this summer to accommodate future growth.

Éş Page B24 There are rumours of a work camp being set on in the area, but no one has taken out permit at the village office.

The village sold its last four housing lots this year and is hoping a new 26-unit assisted living home called Edam Enriched Manor will free up some housing.

As of April 24, only seven units had been rented since the facility opened in December as a non-profit corporation. â&#x20AC;&#x153;The thinking was that as people move out of their homes into the assisted living home, that all of those houses would come up for sale,â&#x20AC;? said McDaid. â&#x20AC;&#x153;Of course, with the downturn it`s a bad time to be selling your house. We havenâ&#x20AC;&#x2122;t attracted many seniors yet, but weâ&#x20AC;&#x2122;re hoping itâ&#x20AC;&#x2122;s going to happen.â&#x20AC;?

There is a marketing push underway since the village and the RM are paying for the operation of the available units for 55-plus adults until they are rented out.

The project fits the character of Edam as being a great place to live, raise a family and retire. â&#x20AC;&#x153;There are a lot of young families in Edam.

The school population has actually gone up a bit,â&#x20AC;? said McDaid.

Itâ&#x20AC;&#x2122;s also somewhat of a bedroom commu-

nity. â&#x20AC;&#x153;For years, weâ&#x20AC;&#x2122;ve had people whoâ&#x20AC;&#x2122;ve worked in Battleford and driven home every night,â&#x20AC;? said McDaid.

He said the current volume of oilfield traffic on Hwy. 26 is putting pressure on the Ministry of Highways and Transportation to rebuild it. â&#x20AC;&#x153;The big trucks have an awful time getting any speed on it,â&#x20AC;? said McDaid.

A committee is working on a bridge proposal to take the place of the Paynton ferry as a short cut south to Highway 16. â&#x20AC;&#x153;It would really save these roads as well,â&#x20AC;? said McDaid.

The ferry hasnâ&#x20AC;&#x2122;t run for two years after the road on the Paynton side of the North Saskatchewan River slumped down the hill.

They started rebuilding it late last summer and it slumped again.

The village has its own truck bypass for heavy oilfield and construction traffic that is on the rise as the SAGD projects ramp up. â&#x20AC;&#x153;There are rumours CN Rail has thought about putting some track back in to move some of this oil,â&#x20AC;? said McDaid, who is a retired high school teacher.

He has been in Edam since 1970 and has seen a lot of ups and downs in the oil and gas industry over the years.

â&#x20AC;&#x153;It was going in the 80s. It`s just gotten bigger and bigger as the years have gone on,â&#x20AC;? he said. â&#x20AC;&#x153;I personally worked for Arnold`s Sand & Gravel in the early 2000s and it was hard to get enough men to keep up. â&#x20AC;&#x153;Then, of course, we had the downturn in 2006, not like this one, but it was a downturn, and then it picked up again.â&#x20AC;?

He fears what impact the SAGD facilities might have on service companies in town.

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PIPELINE NEWS June 2015

ConstrucƟon is proceeding at Husky Energy’s 10,000 barrels per day Edam East heavy oil thermal facility located 7 kilometres south of the village of Edam.

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SAGD near Edam ɺ Page B25 “When you have the oil wells scattered all around, every one of them needs a road,” said McDaid.

“The roads have to be built so we’ve got people here who can build the roads and gravel the roads.

“In the wintertime they have to be plowed. In the spring and fall when it’s wet, trucks have to be towed so it`s a big business.

“Of course, every one of these wells has to be checked every day, so there are the operators going out every day.

“Once it’s concentrated in four or five steam injection sites, a lot of that might disappear. We don’t know of course, but it’s logical to think that.”

McDaid points to support from local oil companies for helping to raise funds for a $3 million rebuild of the curling and hockey rink into the Edam Community Centre a few years ago.

“We sold naming rights to the kitchen, bar, the hall itself. A lot of windows have people’s names on them,” said McDaid.

“We’ve done a lot of things that

other towns our size just don’t have the money to do.

“We’ve had some big projects in the past like a new fire hall.

“We’ve been able to tap into the local businesses which have been very generous – oil companies, chemical companies – ag is big.”

The Edam Fall Fair is the second largest cattle show in Saskatchewan in the middle of grain country.

“We had a few years of pretty good prices for grain and now it’s down a bit,” said McDaid.

“What the oil activity has done has kept a lot of people on farms.

They stay living on the farm and work off the farm in the oilpatch.”

As for his take of where oil and gas prices and activity levels will go, McDaid said, “We’ve seen three or four downturns in my time here, and it will come back.

“I just hope that too many people don’t get hurt too bad for lack of money. If you’ve got a big mortgage you could lose things.

“Once it’s up and running again those 28 lots will go and we’ll just be bigger.”

PIPELINE NEWS June 2015

B27

Maidstone golf in the bag June 5 good bang for your buck for most guys.â&#x20AC;?

The event includes two nine-hole matches, sponsored beer holes, hole prizes and door prizes.

The entry fee is $150 per player. â&#x20AC;&#x153;Everybody seems to have fun. Itâ&#x20AC;&#x2122;s nothing too strenuous or too stressful, so it usually goes pretty smooth,â&#x20AC;? added Watt.

This yearâ&#x20AC;&#x2122;s tournament could be played in much dryer conditions than on previous occasions, but donâ&#x20AC;&#x2122;t take Wattâ&#x20AC;&#x2122;s word on it.

When contacted on May 13, Watt joked that heâ&#x20AC;&#x2122;s not much of a golfer and hadnâ&#x20AC;&#x2122;t been on the course yet. â&#x20AC;&#x153;I hit two golf balls all last year,â&#x20AC;? he said, but he knows itâ&#x20AC;&#x2122;s been playable since it reopened for the season. â&#x20AC;&#x153;As soon as they opened up, they pulled the tarps off â&#x20AC;&#x201C; they were on them right away. Everything is bright green out and itâ&#x20AC;&#x2122;s looking really good,â&#x20AC;? he reported. â&#x20AC;&#x153;This year is really dry. Weâ&#x20AC;&#x2122;ve barely had any rain this year. Hopefully, they get a little bit of rain before the tournament. It will green things up again. Other than that, we should be good to go.â&#x20AC;?

Watt is the operations manager at TWB Construction in Maidstone where the downturn has made it harder to nail down event sponsorships this year. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re still trying to round up some sponsorships, but it should run on the level,â&#x20AC;? said Watt who noted business is slow for everyone including his own company. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re like everybody else. Everythingâ&#x20AC;&#x2122;s slowed down. Weâ&#x20AC;&#x2122;re probably down 70 per cent, but it is what it is on this turndown, so weâ&#x20AC;&#x2122;ll ride it out.

As for generating prize donations he said, â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re down a little bit, but normally we do a progressive draw for prizes. â&#x20AC;&#x153;If we donâ&#x20AC;&#x2122;t pull it this year, we are not too worried. Everybody is pretty understanding, but weâ&#x20AC;&#x2122;ll do the best we can.â&#x20AC;?

On the plus side, he said with all this idle time in the oilfield more golfers were available to get their entries in early. â&#x20AC;&#x153;Everybodyâ&#x20AC;&#x2122;s a little slower. They are only working eight hours rather than 12 hour days so itâ&#x20AC;&#x2122;s a little easier to get into (the tournament) this year,â&#x20AC;? he said.

Could the 2015 Maidstone oilmenâ&#x20AC;&#x2122;s golf tournament be played in shorts weather as it did back in 2011 when TJ Heck from Tryton Tool Services Ltd. was photographed working on his game and his tan? The answer will be revealed on June 5 at the Silver Lake Golf Club. File photo

Maidstone â&#x20AC;&#x201C; Only at the Maidstone Heavy Crude Menâ&#x20AC;&#x2122;s Golf Tournament can your entry be drawn to for a chance to win $500 on your first shot of the day.

The popular chip-for-dough where 10 chosen players will once again crank up the fun dial to start this yearâ&#x20AC;&#x2122;s 26th annual tournament to be played at the 9-hole Silver Lake Golf Club on June 5.

The starting contest, the laid back match play format for teams of four, and the pre-event steak barbecue led to an early sellout this year with 72 players in 18 flights. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re already on the waiting list, so it should be a good turnout again,â&#x20AC;? said Jeff Watt who heads the organizing committee. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a popular event. Itâ&#x20AC;&#x2122;s easy going and itâ&#x20AC;&#x2122;s a

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PIPELINE NEWS June 2015

Rec-Tech embraces mud baths Lloydminster – Let there be mud, muck, and water aplenty.

That’s the mantra of Rec-Tech Power Products in Lloydminster to pitch seasonal sales of Can-Am ATVs and side-by-sides to oil and gas companies and consumers.

“Normally spring is the busiest time of the year for us. Everyone’s thinking of getting into something, either upgrading or getting something new,” said Brody Belsheim, sales consultant.

“The 2015s are in.

We even have some 2014s that we’re blowing out the door.

“We carry both the Commander which is kind of the sport-ute and we carry the fullout Maverick for the avid sports guy.”

The Can-Am Commander side-by-side is a best seller for oil and gas companies looking for a rugged and reliable vehicle to power

through wet and muddy lease roads.

“Definitely, the Commander would be more of a utility vehicle. It’s got the box in the back. It’s more of a workhorse,” said Belsheim.

“They come in a 2-up and also a four seater version so there’s something for everyone out there.”

The Maverick X ds 1000R turbo with 121 horsepower could be the ultimate rocket UTV for 2015.

It’s the first factoryinstalled OEM turbo in a side-by-side on the market.

“If you want to go somewhere quick, it will get you there,” said Belsheim.

Rec-Tech kicked off the spring season with a product display at the Lloydminster Showcase tradeshow held in late March with a lot of interest from attendees.

“It’s nice to see the feedback we get from

our customers – hearing the feedback on how they like the products that they’ve bought from us,” said Belsheim.

Rec-Tech, owned

by Alan and Belinda Lorenz also sells SeaDoos, Epic boats, Scarab boats, Kipor generators, Cub Cadet landscaping products and KTM dirt and road bikes among a growing product list.

“We have three techs that do all the servicing so we do everything in-house,” said Belsheim.

Customers are also thrilled to hear the dealership is undergoing a major expansion at its location on Highway 16 West at Range Road 20.

“Our customers deserve a nice place to see our product,” said Belsheim.

“We’re adding a huge brand new showroom, parts and service area, change rooms – everything. It’s going to be absolutely beautiful.

The Can-Am Commander XT side by side is one of the most popular UTVs for oil and gas companies working on road leases and wet and muddy terrain. Rec-Tech sales rep Brody Belsheim can walk you through the features.

“We need a place to show our product inside where it’s clean and it’s warm.

“The grand opening will be a huge sale. It will be late summer or early fall probably.”

The ongoing construction includes a new cold storage room for

equipment.

“We’re hoping if everything takes off and it gets to where we want to be, that will turn into our ag side for tractors and mowers and all the attachments and implements,” explained Belsheim.

Rec-Tech also sells

a broad line up of ATVs and UTVs made by CFMoto for business or pleasure.

“It’s a great little company out of China that makes a really nice product at very affordable prices,” said Belsheim. ɸ Page B29

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PIPELINE NEWS June 2015 Éş Page B28 â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a lower price point but still a great warranty â&#x20AC;&#x201C; you get a five year warranty. Thatâ&#x20AC;&#x2122;s almost unheard of in the quad industry. Theyâ&#x20AC;&#x2122;re a little sportier and a little bit of a smaller unit.â&#x20AC;?

The turn of the season from winter to spring couldnâ&#x20AC;&#x2122;t come soon enough for RecTech following an off year for its sled business in the region. â&#x20AC;&#x153;It was a rough winter, but I think it was more to do because of the low snow fall than anything else,â&#x20AC;? said Belsheim. â&#x20AC;&#x153;Overall sales have been good even with the downturn. I think the guys who want their toys will always want to have fun. Everyone wants to have fun â&#x20AC;&#x201C; usually make it work one way or another.â&#x20AC;?

Belsheim has been selling power equipment at Rec-Tech for just over two months since the downturn cost him his former job as operations manager at Murland Projects Energy Services.

He said he wel-

comes the change at Rec-Tech and has been contacting former buddies as sales leads since day one. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve made a few phone calls here and there,â&#x20AC;? he said with a laugh adding his previous experience with UTVs in the oilfield gives him a leg up to meet the needs of oilfield customers. â&#x20AC;&#x153;You kind of know what the guys are looking for and what they need,â&#x20AC;? he said.

He says the wetter the better too for sales and service of RecTechâ&#x20AC;&#x2122;s line of Outlander ATVs and their inventory of used off-road vehicles and equipment. â&#x20AC;&#x153;With the lake season coming up, there are lots of quad rallies.

Weâ&#x20AC;&#x2122;ve seen a definite increase in that. Even before the snow went, there were guys in here just constantly,â&#x20AC;? said Belsheim.

That got him thinking that the lack of snow for sledding this past winter might have helped their sales of side by sides and quads that can be used year-round.

â&#x20AC;&#x153;Even if there is a lot of snow you can still use your quad or side-by-side to plow or you can put tracks on it.

Thereâ&#x20AC;&#x2122;s always options,â&#x20AC;? he said. â&#x20AC;&#x153;We sell lots with plows and cabs. You can get heaters put in them and everything.â&#x20AC;?

The arrival of spring and summery weather is also when families or couples shop for a new or used ATV to rip around trails at the lake or cabin. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s a couple of models we have that are a narrow design in the side by the sides that will fit down any trail a quad will,â&#x20AC;? said Belsheim. â&#x20AC;&#x153;For hunting, we actually have a quad that is full camo with a gun rack, so itâ&#x20AC;&#x2122;s ready to go up there and pull out a moose or a deer.â&#x20AC;?

In the meantime, Rec-Tech is gearing up for its Spyder motorcycle demo day to be held on site June 28.

The Spyder is a three-wheeled motorcycle manufactured by BRP or Bombardier Recreational Products. Â

B29

â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;ve been very popular as well. We carry all the full riding gear as well as the helmets,â&#x20AC;? said Belsheim.

Rec-Tech Power Products in Lloydminster is undergoing a major expansion of its faciliĆ&#x;es with a new showroom with an expanded parts and service department and an adjacent cold storage building.

Sales rep Brody Belsheim expects the grand opening will take place in late summer or early fall.

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PIPELINE NEWS June 2015

Ride for a memorable Devin burger

Eugene Seguin, an inventory control employee at Rec-Tech Power Products in Lloydminster has generated a lot of support from oil and gas companies and business to host his second annual Devin Seguin ride in memory of his son who died from cancer in 2013. The event will take place at his acreage on June 27. WŚŽƚŽ ďLJ 'ĞŽī >ĞĞ

Lloydminster – A human foosball tournament will be part of the second annual Devin Seguin memorial ride on June 27 to celebrate the life of the former Lloydminster oilfield worker who died from cancer in 2013.

The come one, come all memorial event is also a fundraiser for local families with medical needs.

It’s organized by Devin’s dad, Eugene Seguin, who works in inventory control at Rec-Tech Power Products in Lloydminster.

“It’s just about keeping his memory alive,” explained Eugene who is hosting the ride at his acreage on Highway 619 near Mount Joy. “What we do is we have all types of vehicles, motor bikes, and cars, trucks – everything – he was into vehicles – so we have everything come out and we do a 250 kilometre ride.”

“It’s a $25 entry per vehicle. Last year, we had three limos in it.”

The inaugural event raised $21,000 from a silent auction and a ride from Eugene’s property to Elk Point and back.

When interviewed on May 22, he had yet to decide if he’ll ride one of Devin’s trucks or motorcycles or his own this time around.

For certain, though he said, “It will be good, rain or shine.”

The ride and a growing list of festivities are generating a lot of support from local oil and gas companies and businesses.

“We’re probably 10 times bigger than we were last year,” Eugene said.

“There’s a lot of interest. I was looking for 20 teams for the human foosball, and we’ve got over 30, so I have to eliminate some people.”

New this year will be a food concession, a live band, a 50/50 raffle, a beer garden and foosball competition.

The barbecue will serve special ‘Devin burgers’ or ‘suicide sausages’ with all of the food donated by TJ Altman from Investors Group.

“We’ve got shirts from First Truck Centre for sale and hats donated by CDR Welding,” said Eugene.

“RJ Hoffman is building one of the arenas for the foosball and Sabre Machining is building the other one.”

Eugene noted that Devin last worked at Sandpiper Services Ltd. that continues to operate his semi-vac to generate money for his widow.

His other son Branden who is 23 just got a job at Target Safety Services Ltd. in Lloydminster doing industry safety watches.

PIPELINE NEWS June 2015

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Lakeland head now permanent Vermilion â&#x20AC;&#x201C; Alice Wainwright-Stewart quit acting as president of Lakeland College when the position officially became hers on May 4.

Lakeland College Board of Governors appointed her president and chief executive officer of the collage, a position she excelled at on an interim basis during a six month executive search for a new leader. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a tremendous honour for me to be named the president of Lakeland College. I look forward to working with our board, employees, students, alumni, the communities weâ&#x20AC;&#x2122;re connected to, and our many partners to help Lakeland College thrive,â&#x20AC;? said Wainwright-Stewart in a statement.

The search for a new leader began following the resignation of past president Tracy Edwards on Oct. 27, 2014.

Wainwright-Stewart was one of more than 30 people who applied for the position with the Lakeland search firm completing in depth interviews with 13 candidates.

The boardâ&#x20AC;&#x2122;s search committee interviewed four candidates before choosing Wainwright-Stewart to lead the Vermilion and Lloydminster campuses. â&#x20AC;&#x153;We wanted to be absolutely certain that we chose the best person available, and I am confident that we have done that,â&#x20AC;? said Darrel Howell, chair of the board of governors.

He praised Wainwright-Stewartâ&#x20AC;&#x2122;s record of more than 30 years of experience and her demonstrated success at Lakeland College, her passion for the college and her performance as interim president. â&#x20AC;&#x153;Alice is a very proactive person and a collaborative leader. I believe that we will have many successful years ahead of us under her leadership,â&#x20AC;?

added Howell. Â Wainwright-Stewart was hired by Lakeland in the early 1980s as a sessional instructor, teaching evening classes in the early childhood development program.

In 1985, she became chair of the program.

Within the next 10 years she became chair of three additional programs and then took on the dual role of dean and chair of the human services programs.

In 1998, she created the School of Health and Human Services and guided its growth to 10 programs.

Wainwright-Stewart has served as the vice president, academic at Lakeland since 2005.

During her tenure as a vice president, the college became actively involved in applied research and added a number of new programs including heavy oil power engineering, renewable energy and conservation, street rod technologies, western ranch and cow horse, and sign language interpretation.

At this time in her career the college increased enrolment, retrofitted the Trades Centre mezzanine at the Vermilion campus to accommodate more students, and completed the construction of the Energy Centre at the Lloydminster campus.

Currently, Wainwright-Stewart is working on a doctorate in higher education from the University of Liverpool in England and has successfully completed all course work.

She is now in the research phase of the program and expects to complete her doctorate in 2016.

Wainwright-Stewart attended California State University of Northridge where she earned a bachelorâ&#x20AC;&#x2122;s degree in liberal arts with a teaching certificate, and a masterâ&#x20AC;&#x2122;s in early childhood education.

Veteran Lakeland College employee Alice WainwrightStewart is the new president and chief execuĆ&#x;ve oĸcer of the college aĹ&#x152;er ÄŽlling the posiĆ&#x;on on an interim basis during an execuĆ&#x;ve search period. WĹ&#x161;Ĺ˝Ć&#x161;Ĺ˝ Ć?ĆľÄ?ĹľĹ?ĆŠÄ&#x17E;Ä&#x161;

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PIPELINE NEWS June 2015