Pipeline News November 2015

PIPELINE NEWS Saskatchewan’s Petroleum Monthly

November 2015

FREE

Canada Post Publication No. 40069240

Volume 8 Issue 7

Coping with the downturn

A3 Lower-for-longer: CAPP

A4 We will come of this, stronger and better: PSAC

A5 Eagle Spirit project seeks social licence first

From Nov. 3-30 the Lloydminster Cultural and Science Centre will be hosting “Oxen to Oil,” a black and white photographic exhibition by Valerie Zink of Saskatoon that captures the transition from agriculture to oil in resource-based communities like Lloydminster. This photo is the RM of Britannia, near Lloydminster. Zink will be present at the LCSC on Nov. 7, from 2 to 4 p.m., to discuss her work. Photo by Valerie Zink

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PIPELINE NEWS November 2015

INSIDE SECTION A 4

We will come out of this, stronger and better: PSAC

5

Eagle Spirit project seeks social licence first

14 Make sure you're relevant: RBC 16 Trying to keep their staff working:

Fast Trucking

6 Editorial

18 Crusader Drilling appears in provincial

promotional campaign

7 Opinion

20 All Panther rigs are ready

11 Estevan truck bypass to open shortly

21 Estevan mayor welcomes bypass

12 Have you cut all that you can?

26 Going further afield and offering rentals 30 Work-Sharing Program limited layoffs

PiPeline news Saskatchewan’s Petroleum Monthly

December 2015 Focus Contact your Sales Rep to be a part of the focus edition

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PIPELINE NEWS November 2015

A3

TOP NEWS

CAPP members dealing with 'lower-forlonger'

Tim McMillan is the president and CEO of the Canadian Association of Petroleum Producers.

Photo submitted

 By Brian Zinchuk Pipeline News Calgary – Fresh off the completion of his “cooling off period” from being a former Saskatchewan minister of Energy and Resources, Canadian Association of Petroleum Producers president and CEO Tim McMillan is now able to talk about Saskatchewan issues to the media. Pipeline News spoke to him on Oct. 7.

Asked if producers are in the black or in the red, McMillan responded, “I think there are companies that have vastly different cost structures and are doing different things. Some are more active than others. They’re taking different outlooks on what the short- and medium-term future is. There isn’t one answer, but I can tell you it is a very challenging time for our industry. (With) current prices and cost structures, it is very difficult time to make the economics work.”

Saskatchewan was down to 17-18 active drilling rigs for part of September, compared to closer to 80 rigs for that time of year in recent years. McMillan commented, “We are seeing the capital investment that drives drilling, pulled back substantially this year. Even in June, when we put out our June annual forecast, we were predicting a 40 per cent annual pullback in spending in our industry. We now see that number starting to creep up towards 45 per cent. The effects are higher on the conventional side than they are on the oilsands.

“That’s just the nature (of the industry). The oilsands projects are multiyear in length, and we’re only seeing about a 25 per cent reduction in oilsands spending, where on the conventional side, the pullback has been quicker and deeper.”

As for what it will take for drilling to pick up again, McMillan said, “I think a few things. We don’t control the world price of oil. That has a large effect on the economics of projects.

“I think we are seeing companies that are realigning their cost structures.

They are looking at how they operate, how they can operate more efficiently, then if we are in a world where there’s going to be lower prices into the future than we may have seen a year ago. Companies are not sitting on their hands, waiting for the price to rebound to as high as a year ago. They’re trying to make sure their company will be successful, that they’ll be productive at lower prices into the future. There’s a lot of work internal to the companies, but I think there’s a lot of work as Canadians.

“We need to look at market access; at some of these big cost drivers. We’re losing substantially on the differential. That has a cooling effect on our industry specific to Canada. We want to and can compete with anyone in the world.

We’re doing the heavy lifting to get our costs in line, but we also have to look at those big pieces as well.”

With vendors having seen numerous rounds of price concessions, how

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McMillan responded, “On that one, we are seeing industry looking really at every aspect of their operations – internal, external, the partners they have, the type of resources they have, land positions they have and those they want to take. It is through looking at everything with an objective eye I think we’re going to be successful into the future. I know that many of the producers have long-standing relationships with the suppliers that they use. There’s no one portion of our industry which is immune to the environment we’re in. Everyone is in this, and everyone is looking to find solutions together.”

The term “lower-for-longer” is seeing a lot more play these days, meaning the price of oil is expected to stay low for a longer period of time than it has in the past. McMillan said, “I think it means the same for CAPP as it does our members, our provinces and our country. We are competitive. We have advanced technology. We have a sophisticated workforce. We have a myriad of geology in our country. We are in a time where it is very challenging and we need to ensure we are operating efficiently and effectively to be successful in a new environment.

“The influx of tight oil in North America as well as growth in the oilsands has really changed the world dynamics, and we’re working our way through that right now. While our productivity in North America has changed the world dynamics, we need to continue to ensure we are the competitive barrel, that we are attracting the investment.”

McMillan’s reference to “market access” includes both pipelines and crudeby-rail. He said, “We’ve found efficiencies in rail we may not have expected a decade ago because constraints in one area, the entrepreneurial spirit has found a solution in another. That, I think, is something we should be conscious of as well. But the big driver is going to be the pipelines, to get the differentials back to competing on a level playing field.”

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PIPELINE NEWS November 2015

BRIEFS We will come out of this, Sask. stronger and better produces more than Libya

“We are coping. We will cut costs. We will innovate and will come up with new technology to compete against our competition to come up with the next best widget. When we come out of this at the other end, we will be stronger.

We will be better. It’s just nobody knows when will come out of it at this point in time.”

According to an Oct. 5 Reuters report, Libyan oil production has fallen to 300,000 bpd, less than a quarter of what it was before the fall of Muammar Gaddafi in 2011.

In contrast, Saskatchewan’s most recent oil production numbers show our province produced an average of 466,000 bpd for the month of June, according to the Ministry of Economy.

That is down from 536,000 bpd average for December 2014.

Manitoba down to two drilling rigs in early October Manitoba’s active drilling rig count continued to spiral downward, dropping to two active rigs by Oct. 5, according to sister publication Rig Locator (riglocator. ca). There were 12 rigs listed as down during that day.

Both active rigs were working for Tundra Oil & Gas, north of Cromer.

Briefs courtesy Nickle’s Daily Oil Bulletin

-Mark Salkeld, president and CEO, PSAC

 By Brian Zinchuk Calgary – Oilfield services companies are taking a lot of the pain when it comes to the downturn in the industry. They’ve been asked repeatedly to cut their prices. Many have had to lay off staff. And as of early-October, there is now end in sight.

That’s when Pipeline News spoke to Mark Salkeld, president and CEO of the Petroleum Services Association of Canada (PSAC), an umbrella organization that represents a large number of oilfield services. He spoke to us on Oct. 6.

Salkeld said, “There’s everything from job-sharing to layoffs to going out of business. It’s even impacting association membership. There still seems to be some hope for the future amongst all that.

“This sector, in these times were’ in right now, even in this downturn, we’re still a significant factor in $18 billion in taxes and 500,000 jobs. Those numbers would be a lot higher if the market prices were performing better.”

“It’s been tough. It’s been really tough. It’s not so much a perfect storm, but our members spend a lot of money on capital equipment to have the latest equipment to keep the jobs and

keep the customers happy. They are borrowing and are spending money to manufacture. With the shut down, the producers shut down operations. A lot of our members have of equipment parked against the fence or they stop building that new rig or put it on hold. They’re laying people off. The little bit they are working, with 50 per cent of the rig fleet working at this time compared to last year, they’re competing against each other. It’s tooth and nail to get that next job,” Salkeld said.

“The producers are just hammering us on our rates.”

“They’ve got money owing or spent on new equipment that’s parked, they’re struggling against their competition to keep working and producers are hammering us on lower rates.

“The whole knock-off effect when they shut down operations is this: I’m pretty sure if I drove down to Weyburn and Estevan, there would be a lot less traffic on the streets there and in Calgary and Grande Prairie and Slave Lake. Charitable giving has dropped. The last thing people want to do is lay people off, so they look at discretionary spending. It’s charitables, supporting local hockey teams, that local stuff that goes on.” ► Page A8

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PIPELINE NEWS November 2015

A5

BRIEFS Could abandoned vehicles be from laid off workers?

In 2008, First Nations people protested the Enbridge Alberta Clipper project near Kerrobert, setting up a teepee on the right-of-way. A new group is now trying to gain social licence from First Nations before building a major pipeline from Fort McMurray to the northern British Columbia coast. File photo

Without social licence, can any pipeline be built?

Eagle Spirit aims to get First Nations support as the first order of business  By Brian Zinchuk Vancouver – One of the most significant roadblocks in the construction of the proposed Enbridge Northern Gateway pipeline project is getting First Nations approval, acceptance and cooperation. “Social licence,” a term to imply that those who have to live with the pipeline are okay with it, has been wanting.

But what if you had social licence in the first place?

That’s the angle that a new proposal, called “Eagle Spirit,” is trying to take. In an industry dominated by pipeline operators who have been in the business for six decades, Eagle Spirit is a start-up with big plans. More importantly, it is a First Nationsled startup.

Calvin Helin is chair and president of Eagle Spirit Energy (the company is in the process of identifying a CEO). He spoke to Pipeline News by phone on Oct. 2.

The initial project would be a 48-inch pipeline with a million barrels per day capacity, much more than the 525,000 bpd 36-inch westbound Northern Gateway., which would have also have an eastbound 193,000 bpd, 20-inch eastbound condensate pipeline.

Asked about the difference between Northern Gateway and Eagle Spirit, both of which would transport oilsands pe-

troleum to the British Columbia coast, he said, “It’s an entirely different route. I think when the big companies came out to British Columbia from Alberta, they just assumed the environment, political and First Nations, would be the same as Alberta.

In B.C., you have 32 completely different languages and a huge number of different First Nations groups, while in Alberta, you have I think three major language groups.

“There are no treaties settled out here. The First Nations in B.C. have taken (to court) almost all the leading cases to consultation and accommodation and it’s the greatest string of legal wins in the history of Canada. I think they’re now up to 250, 275. The result of one of the last ones is they have real leverage and they want their concerns heard.

“Three years ago we teamed up with the Aquilini Investment Group out of Vancouver and started going out and meeting with First Nations and listening to what they might accept, if any, oil pipelines. We then hired the top expertise in the world and built an environmental model and an economic model that would involve the First Nations being part of the project as equity holders and through the innovative development of a chiefs’ committee. They will have initial and ongoing input into the project that way. ► Page A9

P LINE LOCATING

Edmonton International Airport says there are 130 unclaimed vehicles left there, some as long as three years, according to Canadian Press and the Edmonton Sun. The Sun quoted airport spokesperson Heather Hamilton, saying, “What often happens is they buy a vehicle here but when they get laid off or lose their job or something changes in their situation, so they can end up back in Newfoundland or Ireland and leave their vehicle here.”

ND active rigs down by 2/3 North Dakota has had 184 to 195 active drilling rigs in mid-October in the years 2011 to 2014. This year, it’s a lot different.

According to the North Dakota Department of Mineral Resources, there were 67 active drilling rigs working as of Oct. 13.

Briefs courtesy Nickle’s Daily Oil Bulletin

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PIPELINE NEWS November 2015

PIPELINE NEWS

EDITORIAL

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

Publisher: Brant Kersey - Estevan Ph: 1.306.634.2654 Editorial Contributions: EDITOR Brian Zinchuk - Estevan 1.306.461.5599 Associate Advertising Consultants: SASKATCHEWAN & MANITOBA • Estevan 1.306.634.2654

Cindy Beaulieu

Candace Wheeler

Deanna Tarnes

Teresa Hrywkiw • Carlyle 1.306.453.2525

Alison Dunning NORTHWEST SASK. & ALBERTA • 1.306.460.7416

Harland Lesyk

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The world has not ended, we hope Watching reactions on Facebook of people we know in the oilpatch was almost comical on the night of the Oct. 19 federal election.

To sum it up, the world was going to end.

“2015 election. The year we ruined our lives,” said one.

“What are we going to do when the oilpatch and economy stops, just like it did the last time the Liberals were in power?” said another.

Others were jokingly considering a move to southern locales, ones without tax treaties. That might have to do with the planned increase on top income earners from the new Liberal government, as well as a similar move by the Alberta NDP government.

Hyperbole, of course. But there is some justification for this concern.

It was, after all, Prime Minister Justin Trudeau’s father, the late former prime minister Pierre Trudeau, who brought in the National Energy Program. Is this why Alberta went almost entirely Conservative blue, again? Probably not, but it was surely in some people’s minds.

Uncertainty about the moves the Alberta NDP government will make has already stalled investment in that province. Uncertainly about a new federal Liberal government, with plans to take action on carbon dioxide emissions, compound that initial unease.

The most recent boom was a good one, and a relatively long one. But that had much more to do with the world price of oil than who resided in 24 Sussex Drive.

We also have to ask ourselves this: Since the 20082009 Enbridge Alberta Clipper project, how many major pipelines have been built outside of Alberta? If a Conservative government had been so supportive, why haven’t any been built? For a while there it looked like American stalling on Keystone XL meant the Conservatives would have pushed to have Northern Gateway under construction by now. It hasn’t happened. No liquefied natural gas terminals have started construction on the British Columbia coast, either, and recent media reports are now indicating we might have missed the boat on that. The talk of Canada becoming an “energy superpower” was not followed up by a lot of direct action.

Will it be any better under a Trudeau Liberal government? Some might say that the completion of just one of those projects, in particular the Energy East Pipeline, would be more than the Conservatives accomplished.

So we’re going to have to take a wait-and-see approach. The natural instinct of most people in the oilpatch is to recoil in disgust at the idea of a Liberal government. But for the next four years, it’s the government we have, so we’re going to have to make the best of it.

PIPELINE NEWS November 2015

A7

OPINION

From the Top of The Pile

By Brian Zinchuk

Coping with the downturn When you see things like three snowmobiles going up for sale from the same person on a local Facebook “garage sale” page, one wonders if they are just tired of sledding, upgrading, or maybe they can’t make the payments and need to sell off toys, fast.

It’s difficult to tell. But welcome to the world where no one has cash.

This month Pipeline News focused on “Coping with the Downturn.” We were initially going to do stories on tires. This seemed more important.

I tried to speak to a broad variety of people, from addictions treatment in Lloydminster and a Realtor in Shaunavon to a mix of drilling companies. (The Realtor was one of the few upbeat people I spoke to.)

I also called up a number of the industry associations.

From almost all angles, the response has been pretty clear. Everyone’s having a tough go of it.

One drilling company has had good utilization numbers, but most I have spoken to, including some that didn’t have a story this month, have had a very tough year. Watching the active drilling rig activity on our sister publication, Rig Locator (riglocator. ca) has been brutal at times. In mid-September the active rig count dropped to the 17-18 range, as Crescent Point all but shut down its drilling program before resuming about two weeks later.

In the drilling community, there’s been a shakeup of senior management with several companies, with several well-known players now no longer working for those companies. I’ve been expecting some sort of shakeup to occur, it was just a question of who and when. Now it finally did.

I ran into one business owner who shut down his Estevan operations that very day, after decades in this town. I popped into an office building in downtown Estevan and found out that an environmental firm had packed up its office the week before.

Different companies have taken different strategies to deal with the downturn. Some are working further afield. Some have dramatically reduced hours.

The Service Canada Work Share program has been put to good use at others, and is something I would suggest more companies should look into.

Very few companies I have spoken to in recent months have retained all their staff.

Curiously, some companies have not been receiving a lot of resumés. Why is that? Is it because workers in the industry realize there’s not much point, because they know the realities of the situation? Have they found jobs in other lines of work?

Are they sitting on Employment Insurance? Several managers had similar thoughts.

The Mineral Corner

Mineral rights in Canada

Cameron C. Wyatt Freehold Mineral Rights in Canada Oct 2015 column for “The Mineral Corner”

sand, gravel and subsurface water.

Exploring and develPRIORITY: high – column oping oil and gas is technically complex, costly and WORDS: 612 thus a very risky endeavor HEADLINE: for the average individual.

By Cameron C. Wyatt Most owners of freehold COLUMN NAME: The Mineral Corner mineral rights, includWelcome to the first edition of “The Mineral ing government, are not Headline: Corner” where we take an opportunity to dig deep prepared to take the risk in developing their own reinto freehold Mineral rights mineral in Canada right ownership in Canada, sources. In the case of individual owners of freehold specifically related to petroleum and natural gas. mineral rights, most are risk-adverse and very few

By Cwill ameron C. Wyatt current events, trends, ownerWe be discussing have the technical training, experience and typically, ship challenges and some management tips for the financial resources. cases, freehold minWelcome to the first edition of “The Mineral Corner” where wthe e take an opportunity to dIn ig dmost eep into freehold mineral average freehold mineral right owner. right owners rely leasing (contractual obligaright ownership in Canada, specifically related to petroleum aeral nd natural gas. We w ill bon e discussing current events, In Canada, mineral rights are owned by eitheir fmineral rights resource trends, ownership challenges and some management tips for ttion) he average reehold m ineral to right owner. companies for ther government entities (referred to as Crown) the efficient and economic extraction of oil & gas. orIn private to as entities Provincial Canada, individuals/corporations mineral rights are owned by (referred either government (referred to government as Crown) or pentities rivate across Western freehold).

Across all of (Canada, 89 all of Canada individuals/corporations referred tapproximately o as freehold). Across Canada, host approximately 8 9 p er c of land iright s Crown and scheduled crownent mineral aucper cent of land is Crown and the remaining 11 per the remaining 11 per cent is freehold. tions, designed to generate economic activity and CUTLINES: Head shot to come

Western Canada – Mineral Right Ownership in Petroleum Producing Provinces

SW Manitoba Saskatchewan Alberta

Several months ago I wrote that a few who have been in the business for several decades told me this downturn is starting to look like the big one of 1986. Now, that’s almost a universal sentiment, although a few brave souls have expressed otherwise.

With the exception of Trinidad Drilling buying CanElson Drilling this past summer, there really haven’t been a lot of consolidations, mergers or buyouts. There’s no point buying out the competition if there’s no work for either of you, perhaps? Why buy three or four more rigs when you don’t have work for the rigs you already have?

There also haven’t been a lot of companies going out of business, either. That’s been a blessing, but can they last?

In a world where the oil price is expected to be “lower-for-longer,” how long can businesses, and individuals, last?

Thus, we will continue coping. Things will get better, we just don’t know when.

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

British Columbia

Crown Ownership (%)

~ 20 %

78.39 %

81.0 %

~98%

Freehold Ownership (%)

~ 80 %

21.61 %

19.0 %

~2%

Source: Government of Manitoba, Government of Saskatchewan and Government of Alberta

maximum revenues while setting a standardized Freehold mineral rights are an estate in real property and hold the right of the owner to exploit, mine, and/or produce cent is freehold. royalty regime for all resource companies that wish any Freehold or all of the minerals lying bare elow surface of the property. Mineral rights include all organic and inorganic mineral rights anthe estate in real to develop petroleum & natural gas in Western substances that form part of the ith the eto xceptions gravel and subsurface water. property and hold the right ofsoil thewowner exploit,of sand, Canada.

Each provincial entity has the right to mine, and/or produce any or all of the minerals structure their royalty infor a manner of which Exploring and developing oil and gas is technically complex, costly and thus a very risky regime endeavor the average lying below the surface of the property. Mineral they prefer.

In Saskatchewan, the crude oil individual. Most owners of freehold mineral rights, including government, are not prepared to take the risk in royalty rights include all organic and inorganic substances regime is dependent themost typeare ofrisk-­‐adverse fluid beingand developing their own resources. In the case of individual owners of freehold mineral ron ights, that form part of the soil with the exceptions of produced (heavy, southwest designated oil and

non-heavy oil), monthly well production, oil price factors, production tax factor and a Saskatchewan resource credit – all of which are further explained at www.economy.gov.sk.ca. The Saskatchewan government implements royalty incentives (2.5 per cent royalty on a specific volume of oil production) to promote E&P companies and spur on economic activity. Royalty incentives are based on the type of well drilled (horizontal/vertical, developmental/ exploratory, deep/non-deep) whereby the largest incentive of 16,000 cubic metres of production is for exploratory deep horizontal wells. A vertical brian.zinchuk@sa…, 2015-10-15 1:44 AM developmental non-deep oil well does not receive Deleted: R an incentive volume. brian.zinchuk@sa…, 2015-10-15 1:44 AM Freehold mineral owners typically lease Deleted: Mineral Rights right in Canada theirbrian.zinchuk@sa…, mineral rights to E&P companies by execut2015-10-15 1:40 AM ing Deleted: a CAPL1 (Canadian Association of Petroleum brian.zinchuk@sa…, 2015-10-15 1:40 AM is a contracLandman) agreement.

This agreement Deleted: & tual obligation between the freehold mineral right brian.zinchuk@sa…, 2015-10-15 1:41 AM owner and the resource company and define the Deleted: c terms of which each party wishes to work together. brian.zinchuk@sa…, 2015-10-15 1:40 AM CAPL provides a base agreement of which the Deleted: specific terms are then negotiated between the two brian.zinchuk@sa…, 2015-10-15 1:40 AM parties.

Bonus payments, royalty rates and term Deleted: (length of lease) are the three major brian.zinchuk@sa…, 2015-10-15 1:39 AMterms of the % leaseDeleted: agreement; however, don’t pass over all of the brian.zinchuk@sa…, 1:40in AMthe agreement. additional terms that2015-10-15 are defined c TheDeleted: lease agreements is the most critical step to brian.zinchuk@sa…, 2015-10-15 1:40 AM insuring that each party is comfortable working Deleted: % under the terms that are agreed to. If you’re unsure or uncomfortable with the lease agreement terms, please seek professional advice for support.

Watch for next month’s publication – Is my mineral lease offer fair?

Cameron Wyatt is the founder of Homestead Energy Ltd and MineralRights.ca with 15 years’ experience in the industry. He can be reached at cameron@ mineralrights.ca.

very few have the technical training, experience and typically, the financial resources. In most cases, freehold mineral right owners rely on leasing (contractual obligation) their mineral rights to resource companies for the efficient and economic extraction of oil & INVITES gas.

PIPELINE NEWS OPPOSING VIEW POINTS. EDITORIALS AND LETTERS

Email cto: brian.zinchuk@sasktel.net Provincial government entities across Western Canada host scheduled rown m ineral right auctions, designed to generate economic activity and maximum revenues while setting a standardized royalty regime for all resource

TO THE EDITOR ARE WELCOME.

A8

PIPELINE NEWS November 2015

Oil producers still have income, but oilfield services don’t when they park their equipment Salkeld has been looking at the world picture, including tensions between Saudi Arabia, Iran and Russia as well demand in the Asia-Pacific region.

“We’ve been holding seminars on job-sharing, grants that are coming through from different governments to help keep employees. And we’re losing some membership at a time we should be banding together for a stronger voice with government,” Salkeld said.

The losses in memberships are due to mergers and acquisitions, companies not able to keep up with their dues, or are going out of business. Out of the 30 memberships they are down, about five have been to mergers and acquisitions, about 20 to reduce expense lines. In total, PSAC has 205 members.

“Right now it’s kind of like dog-eat-dog… It’s killer. The margins are already tight. They’re driving it down more. We’ve got members just trying to keep their lights on and keep people employed and

◄ Page A4 “Trying to find a positive, we will come through this. We’ve done it so many times before. The PSAC membership banded together 35 years ago, when the NEP (National Energy Program) rolled across the country. We got together and formed an association and fought a good fight. That’s just as important today as it ever was.”

“We are coping. We will cut costs. We will innovate and will come up with new technology to compete against our competition to come up with the next best widget. When we come out of this at the other end, we will be stronger. We will be better.

It’s just nobody knows when will come out of it at this point in time,” Salkeld said.

Asked about the “lower for longer” mantra regarding oil prices, Salkeld said, “Lower, and a slower return to growth, but we will return to growth.”

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survive the storm. That doesn’t last any length of time,” he said.

Alberta also has the uncertainty of a royalty review being conducted by the new NDP government.

“We need to continue to push for diversification as well as access to markets. With Keystone XL, we’re already moving as much oil that Keystone was going to deliver, by rail, by barge, by truck, sort of thing.

“There’s nothing on our indicators, on the association level, seismic, land sales, there’s nothing there to indicate anything’s going to change over the next year. There’s nothing on the global economic situation to indicate anything’s going to change. Saudi Arabia’s still going to be pumping oil. Iran’s going to come online with production in 2016. Russia isn’t slowing down. On a macro level, no indications of changes. On a closer-tohome level, no indication of changes,” according to Salkeld. “We’re not done yet.”

Two years ago, there were seven frac companies working in southeast Saskatchewan. Now there are three fleets still based and operating there. Salkeld attributed that reduction to a tightening up in the industry.

Salkeld pointed out that when an oil producer shuts down their drilling rigs, they still have production, and they’re still making money. He explained, “Our members, they don’t (make money).

They don’t have another revenue source except when they’re on location for the oil company. A lot of people don’t realize that. They’ve still got payroll to meet. They’ve still got some jobs on the go.

They scale back where they can, but they’ve got no money coming in.”

Oil producers still have production, he said.

It may not be great money, but it’s money. Oilfield services, if they’re not working, aren’t making money, plain and simple.

“People kind of miss that point,” he said.

As for survival, Salkeld said PSAC’s members have been creative. They’ve been using job sharing (what Service Canada calls Work Sharing). They’ve had “creative vacations” with an extra week without pay. Backing off on discretionary spending is another method.

They’ve also diversified, looking for international opportunities in Asia-Pacific and Mexico.

“We don’t need the producers to go down to Mexico. We can go down and work for whoever, be it PEMEX or the new startups,” he said.

In some nations with nationalized oil companies, they work year-round.

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A9

A more northerly route than Northern Gateway ◄ Page A5 “We spent some time going to the communities, meeting with the communities and presenting. As a result, we’ve received very significant support from the First Nations for our project, which is completely different from Enbridge and looks at a more northern route than what they’re looking at.”

Eagle Spirit is looking at not just a singular pipeline, but rather an energy corridor which would have room for oil as well as natural gas pipelines, transporting natural gas from northeastern British Columbia to the Pacific Coast for export as liquefied natural gas. It would have to be discussed with the communities, to see if they were open to that.

“We will finance their equity. So far, we haven’t had any shortage of offers for financing the project from various countries, from various groups involved with oil production. The first, most important thing, we recognized had to be done was we had to get the social licence support of First Nations, otherwise there would be no project,” Helin said.

For the initial project he estimated about $14 billion would be needed, originating at Fort McMurray and terminating on the British Columbia coast at Grassy Point, near the First Nations community of Lax Kw’alaams. That community itself is 20 kilometres north of Prince Rupert.

He called it, “The most environmentally safe port to implement something like this, because it’s within minutes of open water.”

One of the criticisms of the Northern Gateway project, with its port at Kitimat, is the requirement of oil tankers to travel hundreds of kilometres each way down the narrow Douglas Channel. The trip is of such concern that Enbridge’s proposal calls for tankers to travel the channel while tied up to a tug boat the whole trip, just in case something happens.

He said Prince Rupert is not a bad place, but involves very narrow channels. “This location is a big open bay shielded by an island. You’re five minutes from open water,” he said.

Could this approach be applied to places like Saskatchewan, where teepees were put on the right-of-way by First Nations in protest during the 2008 construction of the Enbridge Alberta Clipper project?

“What these big companies have done in the past is make all the decisions about what they want to do, and their attitude is ‘it’s the government’s responsibility.’ They wait for the government to ram through whatever they’ve already decided. By the time it gets to First Nations, they have no input into it. There’s lip service to listening to their concerns, but, general nothing is changed very

In 2008, First Nations protesters put up a teepee in protest of the Enbridge Alberta Clipper project. File photo

much.”

Indeed, a Pipeline News file photo from that 2008 protest near Kerrobert show a sign taped to the Techint/Somerville yard sign. It read: “We did not consent, were not consulted, nor are we being consulted.”

“What we’re doing is going to the communities first, listening to their concerns and crafting the proposal to suit the concerns they have. At the top of the list, always, is environmental issues. So we’ve spent a lot of time and effort designing what will be the safest, most environmentally strong model for a pipeline, probably in the world,” Helin said.

At an open house in Regina a few years ago, First Nations protesters called the proposed Energy East Pipeline a “scar on Mother Earth.” How would Helin address such concerns?

He replied, “We’ve probably been to probably 1,000 community meetings in three years. People do have legitimate concerns. When you listen to them and show them the right respect and protocols and so on, they’re often open to looking at other possibilities. At the same time, if you also find a group of people who aren’t open to anything. In one community we were in, there was a handful of people adamantly opposed to anything to do with pipelines. That community, this summer, had a referendum on our project, and voted two-toone to support our project. ► Page A10

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PIPELINE NEWS November 2015

Listen to the people and hear their concerns ◄ Page A9 “Often people only hear the protestors, and very often there’s a large group of people who may be more openminded. You just don’t hear from them, because they don’t want to confront people at public meetings.

“The main thing is to listen to people, and hear what their concerns are. I’m a First Nations person from Lax Kw’alaams. My dad was hereditary chief there, and he was a commercial fisherman. The reason we got involved with this was to bring a better level of environmental protection to our own area, as individuals.

He added that at the same time, we have to recognize, oil production in Canada is growing, Helin noted, “It’s going to come one way or another. First Nations should be involved in

it and protecting the environment and getting more benefits from it.”

There’s still a need for other markets, especially with the discounts Canada is getting for its oil due to selling to just one customer, the United States, he noted.

While Eagle Spirit has not operated pipelines for decades like the other major operators, that doesn’t concern Helin, who says that expertise can be hired. “We’ve got offers from major operators throughout the world and North America. Any expertise we need can be purchased. The chief technical advisor to our project is a fellow that was the former chief operating officer of the Alyeska Pipeline,” he said.

That pipeline, sometimes called the Alaska Pipeline, had to dramati-

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cally improve its environmental performance after the Exxon Valdez spill, he noted.

“A lot of the environmental protection things they are doing are run

by First Nations corporations from Alaska.”

There are some other distinctions as well between Northern Gateway and Eagle Spirit. In a follow-up email, Helin noted they would be shipping an upgraded product, not bitumen (which sinks when it becomes weathered in a water column).

The Eagle Spirit design would include thicker pipeline steel than required at critical locations and double-walled pipeline for major rivers and streams.

Helin added, “There is also great fear from mainland FNs that the Bitumen will be shipped to Prince Rupert by rail (think the Lac Megantic disaster where 47 people were killed) and then be loaded on to ships for exports exposing their communities (and the shores of Haida Gwaii) to this danger to personal life and the environment. Also, given that the Su-

preme Court of Canada in the recent Tsihloqt’in decision clearly stated that aboriginal title could be expropriated given a natural resource project is of “compelling and substantial public purpose” (with the federal government already stating that a pipeline to B.C. tidewater being the most important single economic issue in Canada). This could result in Enbridge’s Northern Gateway project proceeding which would threaten both Haida Gwaii’s western and northern/southern shores with bitumen and a much lower threshold environmental protection.”

To that end, their spill response capacity could be used to protect Haida Gwaii as well, beyond their own project’s responsibilities.

“The assets for this project could be used to protect Haida Gwaii in the event that one of the oil tankers now regularly transiting within 70 kilometres of it shores from Alaska to Washington/California State has a problem.

This will create a new benchmark in the protection of the coastal environment through our project.”

We had two oops in our October edition.

On Page A33, the photo of the big tank made by AGI Envirotank was mistakenly credited to Brian Zinchuk. It was actually submitted by SaskPower.

And another photo had a misspelled name. On Page A15, the photo of Rory Badley of Estevan Meter mistakenly has his name printed as “Bradley.”

We apologize for both of these errors.

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A11

Estevan truck bypass to open shortly

The new Estevan truck bypass is just about ready. Photo by Brian Zinchuk

Estevan – Estevan’s new truck bypass, announced in 2008, is just about ready.

Sonja Orban, communications consultant with the Ministry of Highways and Infrastructure, said completion is expected in early November.

Several businesses and individuals Pipeline News spoke to in the last month expressed concern about the lack of traffic signals on the bypass, which will divert heavy traffic around the north end of the city. Concern was raised especially for the intersection of Highway 47 and the bypass.

Orban said, “Right now there are no plans for traffic lights on the bypass,” she said.

At the Highway 47

intersection, north and southbound traffic will have rumble strips and advance stop signs.

The intersection of Highway 39/18 and the bypass on the east side of Estevan has had acceleration and declerations lanes added.

Similar work was done on the west side.

Canadian Pacific has installed signal arms and lights at each of the two rail crossings. She said there will be warning lights to not make a turn onto the bypass if a train is blocking it.

Weather delayed the project’s progress in 2014, but good weather in 2015 allowed for work to be brought back on track, according to Orban.

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PIPELINE NEWS November 2015

Look in the mirror and ask if you’ve cut all that you can  By Brian Zinchuk Calgary – In one of his recent newsletters, David Yager, national leader of accounting firm MNP’s oilfield services group, put it pretty bluntly. “There’s just no cash.”

He wrote, “‘There’s just no cash.’ That’s the Coles Notes from a senior banker describing the book of oil service loans he manages for one of Alberta’s leading lenders. There’s simply not enough cash flow to support current levels of debt. Bankers and borrowers have kicked the can down the road about as far as they can as more oilfield service (OFS) and exploration and production (E&P) companies default on their loans and seek more relief on lend-

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Yager said, “There’s three stages. The first is shock and awe, ‘Oh my God, what is going on?’

“The second is denial. ‘The clients are just out to grind me.’

“The third stage is a sort of realism. In the end, the oil companies don’t have any money, either.

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vendors. The reality is the product price minus the operating cost has left them with the slimmest of margins. An oil company that produces oil but doesn’t drill and replace reserves is, in fact, going out of business.”

Finding a way to replace reserves at the lowest economic cost is a matter of economic survival.

“There are a lot of guys in the service business who think ‘They’re just beating me up because they can.’

“No, they’re beating you up because they have to. There’s no other choice,” he said.

“Once you get to the reality phase, you look in the mirror and say, ‘Have I done everything I can to run my business as efficiently as possible so I can make a profit, or at least break even?”

Over a year into this downturn, have business’ and personal capital reserves been stretched to the limit?

“The oil companies have been living on hedges.

They pre-sold some of their production at higher prices a year ago which has disguised the adjustment. The guys who have been laid off are living off their severances and employment insurance. The service companies have been living off their balance sheet. It’s at the stage right now where pretty much everyone’s run out of everything. The hedges have expired and you can’t lock in at a higher price.

The service companies that decided to keep their structures intact and decided to just bleed for a while have probably lost as much money as they care to. The workers are, out of necessity, trying to find employment in other industries,” he said.

Yager said one has to look at all the costs in their company, from wages and rent to company benefits and headcount. “Wages got kinda silly here, in the last few years,” he noted.

In the oilsands, the fly-in, fly-out workforce is being phased out. Retention and signing bonuses are also going. “Do you want a job or a company car? There you go.

“Has the owner taken a pay cut? I know in 2009, taking our company (Yager is former CEO of HSE Integrated) through the slump, I took a 20 per cent cut in base pay and no bonus. I took a 50 per cent pay cut. In my years as an entrepreneur in the 1980s, I would go a year at a time without a paycheck to preserve my equity in the business.

Those are the kind of things I’m talking about, unpleasant, almost unthinkable reductions in cost to keep the company going and preserve shareholders’ equity.” ► Page A13

PIPELINE NEWS November 2015

Strategies for coping with the downturn

• Owners willing to work without pay to keep company afloat • Cut waste through project planning, logistics and execution ◄ Page A12

That meant living off his wife’s salary as a teacher.

Beyond cut, cut, cut, he noted oil companies have realized they’ve got what they can out of their suppliers. “It’s now time to look at the way they do their business,” he said.

It could be better scheduling in the operational execution side to minimize any standby time. “That’s not cutting cost, that’s cutting waste,” he said.

Another opportunity is for oil companies to sit down and talk about opera_Layout 10/15/15 9:29 AM Page 1 tions 1with their suppliers to reduce the total cost. The auto business did this the

A13

hard way, and invented just-in-time supply chains as a result, he noted.

“We never had to do that in the oil industry. The oil company knows all, and knows everything that needs to be known and is an expert of logistics and execution. In fact, there’s no evidence of that.”

Oil companies have been reluctant to take advice, he said, but the situation is so dire now, it’s all hands on deck, so to speak. “If oil companies don’t get back to drilling, and replace reserves, they’re going out of business. The service industry is not going to be well-served by having their customers go broke,” Yager said.

All told, Yager said, “It’s not that bad. The last half of the 1980s were just brutal. This is not the worst downturn, by any means. There are still 196 rigs drilling and production is going up in the oilsands.”

“Is the glass half-full, or half empty? I say, for this community, it’s half-full.

For Estevan, activity will pick up with the oil price,” Yager concluded.

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PIPELINE NEWS November 2015

Make sure you’re relevant: RBC Calgary – Roger Straathof, managing director of national client group, Alberta, for RBC Royal Bank, has been busy, and his being busy offers some hope for the industry.

“We just closed syndication of an oilfield services company. I can’t give you the name because it’s private.

But I am telling you things are still happening. This company is based on recurring revenue, and through the cycles they are able to maintain their revenue and profitability because they have a must-have offering. You can’t really do without it,” said Straathof.

“It’s a mixed bag. It’s not all bad.”

In recent years Straathof has been one of Pipeline News’ go-to people in the banking side of the industry. On Oct. 19, he spoke to us via telephone from Calgary.

“The general motto, whether you’re in services or E&P (exploration and production) is ‘lower-for-longer,’ unfortunately. It’s not a quick fix, as in 2009, when OPEC withdrew 4.5 million barrels of then-current production. Now they’re saying the other way, they want to maintain and grow market share.”

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Straathof said, “We just came out with an updated forecast for oil; for 2016, an average of US$57 for WTI, and them moving up to US$65 for 2017. If you asked us six months ago, we were more saying we would be going to the mid-60s for next year. So it’s really lower-for-longer.

“What we’re talking about with clients is to make sure you’re relevant.

Be relevant. If you’re oilfield services and you work with E&P companies, make sure that the services you offer are something they really want and need and can help them be more cost efficient. When you are half the price of what you were 12, 18 months ago, everybody is looking at how to make that work with much better efficiencies and cost reductions.”

As bankers, they don’t tell their clients to lay off staff. Straathof noted, “We see a lot of different things, different solutions. Companies that have always been lean, they have, maybe, looked at salary reduction across the board of maybe 10 per cent, and maybe higher for executives. But there’s also been layoffs. Companies that may have had robust FTE (fulltime equivalent), there’s been several rounds of layoffs. There has been several solutions for E&P. “Oilfield services are always affected because their clients are being dramatically affected by much lower oil prices. The other thing that’s hap-

Roger Straathof is managing director of national client group, Alberta, for RBC Royal Bank.

pening of course is a number of E&P companies have hedges, and those hedges are starting to run off. If they had them, they will be running off, and they can’t get $100 oil anymore.

So it’s really starting to hurt them now. They’re getting a lot less cash flow, and the borrowing bases are lower.

“It’s not that banks are doing things differently; but when you do borrowing base, everybody knows the rules, right? It’s depending on your production and oil price. So when oil prices come down, there’s less available for the borrowing base,” he said. ► Page A15

PIPELINE NEWS November 2015

Strategies for coping with the downturn • Be relevant: offer a service they can’t do without • Those with lower debt levels are doing better than those with high debt ◄ Page A14 They have not had companies in their clientele going out of business.

But Straathof noted, “I should tell you about this phenomena: people having a tough time going into the lower oil price, whether it’s the smaller oilsands companies in a build-up phase, or some of the oilfield services companies, such as a one-product company that had issues around it, I would say people went into the downturn with some balance sheet issues, we’ve seen a number of those throwing in the towel, or being sold, or closing the doors. We’ve seen that.”

“We have been in this business for 70 years. We decided a number of years ago we wanted to be a long-term player. We don’t want to go through the cycles and do the up and down kind of thing. So we are a bit more conservative on the upside, so we can work with our clients and everyone can survive. Our clients can work their way through. We have a few clients that are working through the issues, but they’re not in disaster scenarios. With the prolonged lower oil prices, it’s tougher out there.”

Straathof has frequently talked about doing “stress tests” on companies’ finances.” Given the state of the industry, are the stresses so bad it’s time to get the defibrillator paddles?

A15

“We stress test,” he replied. “We have a number of clients that are good because they didn’t have high debt levels coming in. I would say there are some that are going through a little more stress, but they have strong shareholders.

They can work their way through with us.”

He noted that some oilfield services companies, according to the Petroleum Services Association of Canada, have more geographically diverse businesses outside of Canada. A 2014 survey among 40 oilfield services companies showed export revenues of approximately $42 billion for these companies alone.

“If you’re in the maintenance business, in the oilsands business, there’s still new production coming on from existing projects being completed. The maintenance business is still robust and there’s still work.”

In the prairies, during the good days, Straathof pointed out $75 billion a year were being spent on oilfield services. That’s down to around $40 billion now, but it’s still $40 billion, a large number. “There is still a level of business out there. It’s not totally dire straits. It’s still a robust industry. But there are more suppliers looking for that same work, so margins will come down. The better companies will get the work.”

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PIPELINE NEWS November 2015

PIPELINE NEWS November 2015

Trying to keep their staff working: Fast Trucking  By Brian Zinchuk

This Fast Trucking semi could be seen driving down a primary weight grid road around the north side of Estevan on Oct. 16. Once the Estevan truck bypass opens shortly, trucks like this will be moved onto the new pavement. Photo by Brian Zinchuk

Carnduff – When the number of active drilling rigs drops by over half since January, those companies that are the closest to drilling feel it the most. You don’t get much closer than being a rig-moving specialist, like Fast Trucking Service of Carnduff.

Dennis, general manager of Fast Trucking, explained on Oct. 13 the impact is not from just the volume of work, but the margins.

“It’s got a lot of impact. Oil companies are asking for discounts, discounts.

Everybody’s so hungry and starving for work, I think a lot of people are working on a very thin margin. You take have the work and work on a very thin margin.

Fast Trucking, at the peak of the recent boom, could move seven drilling rigs at the same time.

“We’ve kept a lot of our guys. We can still move five rigs,” Day said. “We’ve got lots of long-term employees, and we’re trying to keep everybody working. And for my guys, there’s not a lot of places they could go to work, because everybody’s in the same boat.”

“There’s more competition for everybody,” he said, including drilling rig companies and service rig companies.

“There’s been so many companies started up in the last three years. With it being slow in Alberta, a lot of Alberta companies are coming here, looking for work,” Day said.

In early September, the active drilling rig count for the entire province hovered around 17-18 rigs for the entire province, including the active Viking play near Kindersley. Crescent Point, which had been running up to 23 rigs in Saskatchewan earlier in the year, was down to one rig, before resuming activity a few weeks later, according to Rig Locator (riglocator.ca).

Day noted. “We’ve got eight weeks to December. The majority of oil companies say they’re shutting down in early December.”

From the beginning of January to Mar 15, the usual start of spring breakup, is just 10 weeks, Day pointed out, adding there’s another 10 weeks or so of sitting during road ban.

“With the rain we’ve been getting, a lot of guys say they’ll be going to work in July,” he said.

Fast Trucking is running leaner now. “We’ve had to cut some staff, and move some around to other companies that are a little bit busier, which has helped a lot. Some have gone over to General Well, some have helped on the farm, some have filled in on our tank trucks,” he said.

It’s very important to the Day family to keep their workers going. “I live in a small community. One guy said, ‘What’s it matter to you?’

“I said, ‘What does it matter to me?’

“I’ve got a whole bunch of people depending on me to keep them working and making payments. That’s part of any boss’ job, to keep the men working so they can stick it out until it does get busier,” Day said.

Management has taken a cut in pay, he added.

Day has been through downturns like this before. “I would say this is kind of like ’86 or ’98.”

Asked what his father, Tony, founder of Fast Trucking, has said about this downturn, Dennis said, “He said it is what it is, and you just have to deal with it.

“I’ve been going out to drilling rigs myself, looking for work for the company.”

Oil will have to hit US$55 to $60 WTI for activity to pick up, Day feels.

He pointed out that wells that used to cost C$600,000 now cost C$450,000.

With the Canadian dollar down, and service costs down, that all comes into play.

“I think oil’s going to steadily go up from here,” he said. “You’re looking at next June. But I thought, in February, that oil would go up. It did go up, but it went back down.”

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When you’re hauling large loads with dozens of trucks every day, a truck bypass makes a difference. Pipeline News asked Dennis Day, general manager of Fast Trucking, what he thought of the soon-to-open truck bypass around Estevan.

“It’ll save us time going through town, worrying about traffic.”

Sam’s Trucking, a sister company to Fast Trucking, based in Estevan, will benefit, according to Day. “It will be easier for Sam’s to get out of town,” he said. “It’s going to be a lot better for the people working in town, because we don’t have to drive through town with our trucks.”

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rigs, would take the gravel roads around Estevan. “Real heavy loads can’t go over the overpass in town,” Day said of the overpass that goes over the Canadian Pacific line on the east side of Estevan.

Day wonders if there should be traffic lights at the major intersections of the bypass, including at Highway 47.

“If you’re loaded with one of those big trucks with a jeep and a booster and two pilot trucks, you need quite a bit of room to get past,” he said.

Day is glad to see the bypass’s completion.

He added their trucks are a lot larger than a typical semi, usually running with a 10-foot wide trailer. A substructure for a drilling rig isn’t small.

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Strategies for coping with the downturn

• Cut back staff, but tried to keep workers busy • Management has taken a pay cut • Workers moved around to other companies as needed

A18

PIPELINE NEWS November 2015

Crusader Drilling rig appears in provincial promotional campaign Strategies for coping with the downturn

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 By Brian Zinchuk Yorkton – It’s hard to miss a drilling rig painted John Deere green.

If you opened up the National Post app on your smartphone in late September or early October, you might have seen a prominent story in the Financial Post section. It was a paid-for story, in other words, an advertisement, something the news business calls an “advertorial.” In this case, the advertorial was paid for by the Saskatchewan Ministry of Economy as part of a series of advertorials promoting Saskatchewan (another piece focused on pipe-maker Evraz).

Posted on Sept.

25, the photo was very distinctive. There was Crescent Point Energy Corp. CEO Scott Saxberg in his red coveralls and white hardhat, with a very distinctive green and yellow drilling rig behind him – Crusader Drilling Rig 2.

Crusader Drilling Rig 2 has been one of Crescent Point’s regular rigs for a few years now, usually drilling within a few miles of Stoughton.

So when it came time to do the photo shoot and filming for the Ministry’s ad campaign, it was a good fit.

Don Rae, president of Yorkton-based Crusader, spoke to Pipeline News on Oct. 8 about that and how things are going in the drill-

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ing business. Rae has recently been appointed to the board of directors for the Canadian Association of Oilwell Drilling Contractors, or CAODC, as the sole Saskatchewan rep on the drilling rig side.

Crusader has three drilling rigs. Rig 1 had been drilling in Manitoba, but has been racked since it drilled a few wells in AugustSeptember. Prior to that, its last well was November 2014.

Rig 2 has been relatively steady with Crescent Point, but it was also shut down briefly this fall when Crescent Point cut its drilling program from 17 rigs to one before resuming again a few weeks later.

Rig 3, since it was built, has worked in Alberta. It was most recently working in the area around Rocky Mountain House last winter and into February. “It hasn’t turned a wheel since,” Rae said.

“Alberta’s grim, with the uncertainty in the political climate out there. It’s a scary scenario.”

Alberta’s change of government has impacted them directly, Rae noted. “I think it’s going to overall benefit Saskatchewan in the long run, but we’re not seeing that effect yet,” he said.

Rae expects the first NDP provincial budget in Alberta, is promised to increase taxes on corporations and higher-income earners, will have an impact.

“I’m happy to be from Saskatchewan, these days,” he said.

Crusader is currently looking to bring Rig 3 to Saskatchewan, where its larger capacities may make it favourable for more demanding holes. “I don’t like the climate out there, and the sooner I can get it out of there, the better,” Rae said of Alberta.

“We’ll see.”

However, all told, all three rigs were idle in mid-October. “We’re waiting to move after the long weekend,” Rae

said, of Rig 2. “It’s definitely been a slow year.

We’ve been fortunate enough, for the most part, since road ban to have one rig running through till September.

We’ve been down with everything for a bit, but we’re hoping to close out the year with a few wells for Rig 1, and one for sure, maybe more for Rig 2.”

Video shoot Asked how a Crusader rig ended up in these government ads, Rae explained, “They did a big film clip on the oilpatch. They chose Crescent Point because of their big footprint in Saskatchewan, and various mining companies.

They’re going to put this all together and use it for promoting investment in Saskatchewan worldwide.” “(Crescent Point) picked one of their rigs, and it happened to be ours. So we were fortunate enough. They filmed for about six hours. Saxberg was there for an hour or more.

It was win-win for us, because our rig is going to be shown all over the world. It’s free promo.

“It was quite interesting. They had drones out there, too. They had us tripping pipe in and out of the hole. We were waiting to tear down the rig. They had the drones up at monkeyboard level and all around the rig.

I’m anxious to see the finished product.”

The shoot took place in early September. Rae had an opportunity to talk with the Crescent Point CEO for about half an hour.

Turned the corner?

“My overall feeling (regarding) the patch in general is we’ve turned the corner. There’s not going to be any skyrocketing price anytime soon; but I do believe we’re going to start edging up,” Rae said.

He expects U.S. product to drop off like a stone, uncertainty about Russia’s involvement in Syria and OPEC is realizing they can’t make money. ► Page A19

PIPELINE NEWS November 2015 ◄ Page A18 “I don’t think a lot of companies are drilling enough lately to keep production at what it was.”

Asked what he will be taking to the CAODC as a board member now and what the state of the industry is, Rae responded, “There’s a couple factors. Utilization is way down, and day rates are way down. I don’t care how you cut the mustard, you can’t run any leaner than we are. If these day rates stay where they are, if you have any debt at all, you’re maybe breaking even, but probably not. It’s a case of you’ve got to really tighten your belt and toughen it up and get through it.

“We’ll get through it. We’re okay, but depending on your debt ratio, anyone carrying much debt, they’re in trouble.”

Will all the smaller drillers in Saskatchewan be able to survive this downturn?

“Some will, I think, depending on what the rates are. If you’re running at a loss, you can only absorb that so long, too. There comes a time where you’re better off having your rig sitting than wearing it out. I believe it’s going to turn the corner gradually. I can see us up to $60 by spring, maybe. We get up to $55, $65 dollars, and look at the discount on all the services, there’s a case to be made for these companies to do some drilling.”

It’ll be interesting to see what the feeling is among the board of CAODC he said, with his first meeting coming up in mid-October.

“I’m hoping I can bring the voice of all our small producers to the table.”

With less than half of the usual number of drilling rigs working, where have all the employees gone?

Rae responded, “Every well creates 100 to 150, probably more, direct and indirect jobs.”

“A lot of them have gone to various jobs, i.e. construction, mines,

the upgrader, wherever they can find work. There will be a lot of them that a guy won’t get back. It’s not that uncommon in a cycle. We’ve tried to keep most of our senior guys around in one form or another, whether they’re working motors or whatever they’re doing.”

“It’s been working well for us.

We’ve told our guys if you’re roughnecking, you’ve got to pull your share.”

It can happen where everyone thinks they’re still the driller, even if they’re working motors, but that hasn’t been an issue for Crusader.

“It’s tough. What’s really going to be the Achilles’ heel is that if this patch does turnaround fairly quickly, all of a sudden everyone starts ramping up, there’s not going to be any people for any of the various services, including rigs. There’s going to be a huge shortage.

“A lot of young ones have never been through a downturn, and now they’ve got a taste of it.

A lot of them are going to have a sour taste in their mouth, and what do you do? It’s going to be hard to get back to where we were when everybody was steady. It’s going to be very, very difficult. It’s going to take a while. You’re going to be attracting new, green people. It’s going to be a re-training program.

“That’s probably going to be the toughest thing of all. Your iron will be there, but the rest is not going to be pretty,” Rae said.

If a drilling company does have a couple wells come up, workers may be reluctant to give up lower-paying, but steady, jobs to come drill a couple

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wells and then be laid off again, he noted.

Resumés are coming from everywhere, but Rae said, “We’re going to look after the guys who have been with us. We’re not hiring anybody new. We’re trying to keep

our drillers and rig managers from all three rigs going. It’s pretty much what you have to do. I’m loyal to my people, and hopefully they’re loyal back.

“If you’ve got your core, your drillers and some of your derrickhands, you can crew up fairly quickly. But holy moley, your frackers, directional drillers, they’ll be screaming for everybody.

“It’s going to be scary when it starts to fire up, I can tell you that,” he said.

On the positive side, Saskatchewan’s political climate and diversity of its economy work in our favour, he noted.

Crusader Drilling’s Rig 2 was the backdrop for a video and photo shoot for the Ministry of Economy.

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PIPELINE NEWS November 2015

All Panther rigs are ready to work Weyburn – Panther Drilling of Weyburn had half of its four-rig fleet working from June until the end of Sep-

tember, but the low rig count province-wide has come home to roost for them, with just one rig at work by mid-

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by roughly half or more ever since January. By early September, there were only 17 rigs working in the entire province. That picked up in the first half of October, running in the mid-30s (and hitting 41 by Oct. 16), but that’s still a long way off from the 79 operating on Oct. 18, 2013 or 89 on Oct. 18, 2014.

When Pipeline News called the Canadian Association of Oilwell Drilling Contractors (CAODC) in Calgary, one of the people they suggested we talk to was Jim Kopec, general manager of Panther Drilling, to get a clearer indication of how things are going in Saskatchewan.

Kopec was working on his farm on Oct. 16. “I’m moving grain to support my oilfield habit,” he said.

“All these years you work in the oilfield to support the farm, so now I’m going the other way.”

The one company they are contracted with for Rig 4 sounds like they will be working until breakup. He noted, “If we could have kept 50 per cent working to the end of this year we would be extremely happy, but one rig is managing to keep everything afloat.

“There are lots of irons in the fire, but the competition is pretty fierce right now. You’ve got a bottom line. You can only go so low.”

“We were quite pleased having half the fleet out.

“We’ve got a very good client (for Rig 4) and they understand you can’t work for nothing.”

Kopec added,

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“You’ve got to keep the pencil sharp, but you’ve also got to maintain your equipment and perform. So far, they’re happy with us, and we’re happy with them.”

Pipeline News has heard two philosophies drilling companies follow when things are slow and there’s only work for part of the staff and fleet. One philosophy sees the company dispatch primarily its senior staff, which has the benefit of keeping the most experienced people working, but also can lead sometimes to issues of too many bosses, as it were.

The other philosophy is to work with the regular crew, which thus reduces the instances of workers butting heads because in other circumstances, they might be the driller, and not the motorhand.

“Our rigs went out with original crews, up to 75 per cent,” Kopec said. “Yes, we’ve lost some people since breakup. Some drillers are working as roughnecks.”

Kopec noted it can be better for the customer when you send out crews that have worked together.

Nikki Dickie, Panther’s office manager, explained that, when fully-crewed with four rigs running, they have around 90 people working. Now they’re down to around 27 to 28, and not all are full-time.

Dickie noted that they have cut back on hours with the office staff to avoid laying people off.

Kopec said they told their staff, “If you find something out there, don’t turn it down.”

He went on, “As much as we need these people, they’ve got bills to pay, and kids going to school. We’d love to have you, but we understand.”

Two got operating jobs with oil companies. Some have found work in potash mines, in apprentice situations working towards journeyman certification.

Others are working full-time for farmers, or in carpentry. Employees have found jobs, he noted, although it may

not be in the oilfield.

“To be honest with you, if we had to crew up four rigs right now, it would be tough,” he said. “ Dickie noted, “Panther still updated all H2S, first aid, first line, second line, fall protection, rig rescue, and other necessary tickets needed for work at break up despite the slow down. Everyone is certified and ready to work when work becomes available and they wish to come back to work.”

This includes the crucial second line well control courses that are lined up three or four months in advance. The second line course is critical for supervisor staff if a rig is going to go to work.

To that end, Kopec said all their iron is ready to go. All the safety equipment and certifications are current, boilers are checked out. They had their staff come in to do everything they could, but there’s only so much make-work projects one can do.

With the active rig count down by over half, one might think there would be a lot of resumés coming in. Not so much, according to Kopec. “You wonder where these bodies are?

We have not got very many people coming in here, looking for work.

You’ve got maybe a couple a week coming in, seeing what’s going on, but there isn’t a lineup at the door. I wonder where all these people have gone?”

Kopec himself started working on drilling rigs in 1968 before spending a large portion of his career working in production. He noted that from the 1960s to 1980s, there were always about 20, maybe 30 rigs in southeast Saskatchewan. There are a lot more now. Similarly, the number of service rigs has exploded compared to several decades ago.

“They’ve got to keep drilling the Bakken,” he said, noting how the decline curves on those wells requires ongoing drilling to keep production up. ► Page A21

PIPELINE NEWS November 2015 Panther Drilling Rig 2 could be seen finishing a well near Macoun in September.

Photo by Brian Zinchuk

◄ Page A20 “This could turn around faster than we think. That’s being real optimistic,” he said, pointing out that production declines could eventually eliminate the oil glut. But otherwise, he doesn’t have much of a prediction for when a turnaround might occur.

His standard response is, “How long is a piece of string?”

In the meantime, Panther is watching costs very closely. They’re not neglecting fixing anything. They’ve asked suppliers to reduce their rates, just as they have, but also realize you can only push so hard on that front.

A21

Safety is first, he noted.

“Panther is a very solid company.

We’re not going to send a rig out for nothing, where it’s costing us money.

We’ve got a very good customer, we’re still visible.”

“This is the worst downturn I’ve ever seen, especially on the drilling side,” Kopec said. “This is the worst one. I think I’ve been through six.”

Despite it all, Dickie noted Panther has kept up its community sponsorships, including the local hospital foundation, baseball and hockey teams.

They haven’t added new ones, however.

Demand for funded treatment beds is up Lloydminster – The fallout of the downturn in the oil economy is being seen by those who help those dealing with addictions.

Teressa Krueckl, executive director of the Thorpe Recovery Centre, just west of Lloydminster, said on Oct. 16, “Last week we’ve had some of the highest volumes of calls for treatment services, looking for funded beds.”

Thorpe Recovery Centre has 72 beds for treatment for alcohol and illicit drug addiction. The vast majority of those beds are privately paid for, to the tune of $17,000 for a 42 to 46 day residential program. If detoxification is needed, it’s $350 a day for seven to ten days.

Of those 72 beds, four are funded by the Alberta government, and two are funded by the Saskatchewan government. Usually about 25 per cent of their clients overall come from the Lloydminster area, and the vast majority are from Alberta. A small amount of their total clientele comes from coast-to-coast.

They have the capacity to take more people, run-

ning with less than 50 per cent occupancy on average. Waiting times for funded beds used to be two to three weeks now its eight to twelve weeks.

“Our waiting list for funded beds is into February,” she said.

Krueckl noted the first wave of layoffs earlier in the year are starting to see their employment insurance benefits starting to run out. That has led to more calls.

Their corporate clients are still sending in people, she added.

With employment insurance running out, Krueckl said, “Life takes on more stress. You can’t pay the bills. Life can spiral out of control.”

When people are busy, it’s not as noticeable. But they’re not busy. Krueckl said, “We’re nowhere near from this turning around.”

That might have an impact on people’s choice of drugs. She said Fentanyl is now a huge epidemic in Alberta. “It’s cheap, right,” Krueckl said, adding there’s been a corresponding change in crime, with

thefts and break-ins to support drug habits.

The province of Alberta put $10 million into the facility recently. She noted it’s a shame to be underused.

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PIPELINE NEWS November 2015

Welcomes new truck bypass  By Brian Zinchuk Estevan – Estevan Mayor Roy Ludwig is looking forward to the upcoming opening of the new truck bypass that will divert traffic around the Energy City.

The bypass will have a substantial impact on oilfield traffic, from moving drilling rigs around the city to local companies hauling pipe.

The new bypass is expected to open sometime in November.

“We’re very happy,” Ludwig said about the project.

“We feel it’s important. It will allow a lot of heavy traffic to go around the city.”

For many years, trucks passing through the centre of Estevan would be diverted two blocks north, off the main drag of Fourth Street to Sixth Street for three blocks before returning to the main thoroughfare. This internal bypass of the downtown has been hard on the street surface, requiring numerous “shave and pave” resurfacings over the years.

In anticipation of the opening of the new bypass around the entire community, the city resurfaced the eastern half of the downtown bypass. Ludwig noted they city had hoped the truck bypass would have opened prior to the resurfacing downtown, but delays with the truck bypass prevented that.

A bypass around Estevan had been talked about for many years. It was finally announced in the April 2008 provincial budget, the same day a similar bypass for Yorkton was also announced. But while Yorkton’s was completed several years ago, Estevan’s took sevenand-a-half years.

The third of three phases of Yorkton’s bypass, its southwest corner, was never completed, causing trucks

to take a zig-zag route around the community. Landowner resistance there was an issue, and it turned out to be an issue with Estevan’s, too.

Ludwig noted, “Most of the traffic that doesn’t have to stop for food or to drop off goods will go around.”

He noted interchanges will be coming at some point down the road, planned for the eastern, western ends of the bypass as well as the intersection with Highway 47, north of the city. Ludwig acknowledged concerns have been raised about the safety of those intersections.

Traffic signals at those intersections have been discussed many times, but Ludwig explained the Ministry of Highways and Infrastructure would not have it. Ludwig noted the intention is to have traffic flow around the city and not having to stop.

“The whole idea was to have free flow of traffic,” he noted.

“The Ministry feels it will be safe.”

The Estevan truck bypass is the first of several highways projects that will impact transportation in the heart of oil country. The next is the planned twinning of Highway 39 from Bienfait to Estevan. Following that, Highway 39 and Highway 6 from North Portal to Regina is supposed to be twinned, with open houses having been held over the past year discussing the routing.

“We feel the oilfield will utilize (the bypass),” Ludwig said.

As for traffic coming into the city, he hopes there will be sufficient signage so that travellers who might want to stop in Estevan don’t miss the opportunity.

Bert Baxter Transport’s new yard, established northeast of Estevan over the past several years, is just off the new truck bypass. Photo by Brian Zinchuk

A stone’s throw away Estevan – The opening of the new truck bypass around Estevan will have a big impact for local oilfield trucking company Bert Baxter Transport. The company has relocated nearly all of its operations just off the northeast corner of the new bypass.

“They took a chunk of my land,” said Todd Shirley, one of the owners of Bert Baxter.

Four years ago they bought land northeast of Estevan. At that point, the final route for the bypass had not yet been established.

“I know they were talking about it,” he said. “I bought it to get out of the city taxes and get into the RM.” “Everything we do is out there,” Shirley said.

They still have their offices in Estevan at the corner of Kensington Avenue and Fourth Street, and a mechanic’s shop a few blocks away. Headquarters is used for truck storage, meetings and dispatch.

The new yard consolidates operations from what had been seven different locations within Estevan. “It’s all in one place. We can keep it organized and need,” Shirley said. “It’s way easier. I don’t need four forklifts running around. I have two.”

Five new buildings were planned at the new yard, but plans have changed and they chose to move a building from the old headquarters to the new site. Other buildings planned are now on hold.

The new yard is so close to the new bypass, Shirley said, “You can throw a rock at it.”

As a result, he said, “Eighty per cent of my truck traffic will be out of town. It should eliminate a lot of truck traffic in town.”

The exception will be their nightly freight runs, as well as traffic going west towards Torquay.

Shirley is concerned about the lack of signal lights at the three main intersections on the bypass.

“Line up the ambulances now. People will get killed at the intersection.”

But he added bypasses are great if finished properly.

“Everyone’s going to try it to see if it’s faster,” he said.

However, if drivers find they end up being caught by a train, they won’t use it, and traffic will go back to the original highway.

PIPELINE NEWS November 2015

A23

Enform lunch and learn sessions Arnold Betzema of Enform Saskatchewan spoke about integrating young workers into the workplace safely.

Photo by Brian Zinchuk

Estevan – Enform Saskatchewan crisscrossed the province in mid-October, presenting another series of lunch and learn sessions.

The presentations took place in Weyburn on Oct. 13, Estevan Oct. 14, Carlyle Oct, 15, Swift Current Oct. 19, Kindersley Oct. 20 and finally Lloydminster on Oct. 21.

In Estevan, Arnold Betzema touched on “Young Workers, the New Workforce.”

He pointed out that 15 per cent of companies’ workforces are young workers, ages 15 to 24, but 74 per cent of Canadian employers surveyed didn’t have existing safety programs and/or training for younger workers.

According to Saskatchewan’s Workers Compensation Board, approximately 6,000 people under the age of 25 are injured on the job in Saskatchewan each year. Of those, there are approximately 2,750 hands cut, struck or burned every year; 1,00 back injuries, 900 legs sprained, strained or broken; 650 arms cut, strained or sprained, 600 eyes injured by chips and splinters and three workrelated deaths.

“Right now we have more seniors than youth,” Betzema said, adding for the first time in history, we’re now seeing four generations working side-by-side. But he questioned if the experience of older generations

is being passed down to the young.

A “grey ceiling” can limit upward progress of young workers and lead to resentment.

Approximately 15 per cent of workers in their 40s and 50s are paying to support a grown child, Betzema pointed out.

“Freedom 55 is a fallacy, given today’s fluctuating markets. Older workers are in for the long haul.”

He added that 21 per cent of loss time injuries involve young workers.

To deal with this, the WCB will soon be releasing a new guide in conjunction with WorkSafe BC. Supervisors have a direct, legislated duty and responsibility, Betzema said, adding job interview processes should have a health and safety component.

“Some existing workers may be setting a bad example. Give new hires detailed job descriptions, laying out specifics and expectations,” he said.

Other items employers can do is review their probationary guidelines and systems for corrective action.

In addition to young workers, new immigrants who may not have a strong command of English can be a concern, too.

“Yeah, yeah, I understand,” Betzema said may

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not actually be the case.

The current downturn in the oilpatch may be an opportunity to review internally the tools and systems in place for when hiring in place when the business rebounds.

With many workers leaving the oilpatch now due to lack of work, when things do pick up, Betzema said there will be a lot of new workers to the industry.

Additional sessions touched on workplace ergonomics and supervision.

Firesky charity golf tournament donation Firesky Energy Inc. of Estevan held its charity golf tournament on Sept. 17 at the TS&M Woodlawn Golf Club. They raised $12,525 which was then donated to the 2016 Saskatchewan Summer Games. The event will be held next year in Estevan July 24-30. Approximately 110 golfers took part, and there were numerous companies as hole sponsors. Back row, from left (all are from Firesky unless otherwise indicated): Amanda Davidson; Warren Waldegger; Jason Howden; Bernie Bjorndalen, Friends of the Games co-chair; Trevor Vindevoghel. Front row: Kelly McConnell, Friends of the Games co-chair; John Breakey, Tracey Ward, Brenda Noble, Dustin Hockey.

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A24

PIPELINE NEWS November 2015

A RM councillor, former police chief, and landowner: a unique perspective on the Estevan truck bypass Estevan – Del Block has an interesting perspective on the new truck bypass that circumnavigates around the north side of Estevan. As a retired Estevan Police chief, he dealt with traffic in and through the city on a daily basis. As a councillor for the RM of Estevan, he’s been involved with the discussions around the bypass. And finally, the acreage he shares

with his wife, Carol, had its northern edge shaved off it when the route was finally chosen.

First off, Block says he’s been a supporter of the project from the beginning. “There are lots of positives,” he said.

“There could be a lot of commercial businesses along the bypass,” he predicted, everything from implement

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dealerships to hotels, restaurants and fast food.

“The main driver is to get heavy traffic out of the city,” he said. “I expect there will still be a certain amount through the city.”

There have long been issues with oversize trucks running into problems with the underpass on west side of Estevan, near KFC. “That won’t be an issue now,” he said, noting there won’t be obstructions on the new truck bypass.

However, if there is a train causing a delay, for instance at the western end of the bypass, he expects truckers will choose to go through the city at that point.

He noted how some drivers are creatures of habit. When roadwork on the overpass on the east side of Estevan about seven years ago diverted traffic down the gravel roads past their acreage, a lot of drivers chose to keep using that route long after the overpass work was done. “We still have international truckers to this day who found that route and use it,” he said.

The new bypass should take care of that.

The city has diverted heavy traffic

around its downtown core for many years, and that, too has been problematic. He noted the corner near the SARCAN is especially difficult when two semis meet each other going the opposite direction.

“Before I was chief, I pushed for years for trucks to go down Fourth Street, using the centre lane, with no turns, and going only 30 kilometres per hour,” he said.

This is essentially what happens whenever the downtown bypass was closed for roadwork, as was the case for much of October. “I don’t recall of a single accident when trucks were routed down Fourth,” he said.

There was a reluctance from businesses and the city council to do that, however, and the downtown bypass remains to this day.

Sitting on the RM council has opened his eyes to why it has taken so long to complete.

“It doesn’t happen quickly,” he said, noting there have been numerous meetings and budgetary processes.

As for the Blocks’ land, it was expropriated, and it wasn’t the only land expropriated, either. “I’m still not settled,” he said. ► Page A25

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PIPELINE NEWS November 2015

A25

Del Block and his wife, Carol, live along the new Estevan truck bypass. Currently they see a lot of oil traffic pass by on the gravel roads past their acreage. Much of that will end up on this new asphalt. Photo by Brian Zinchuk

◄ Page A24 The initial amount offered per acre was a small fraction of the final result.

That was a factor for the seven-and-a-half year long processes from initial announcement in the April 2008 provincial budget to completion now.

“They came in with a lowball offer. It would have been faster. Two developers got much higher amounts,” Block noted.

He agreed with Todd Shirley of neighbouring Bert Baxter Transport in saying truckers will go through the city if they are delayed by trains at either end of the bypass. The track on the west side, Canadian Pacific’s Soo Line, is one of their mainline connections from Western Canada to the American Midwest.

“We were up to 26 trains a day when I was chief,” he said. There’s only room to stage one semi between Highway 39 and the rail crossing on the west end. If there are more eastbound semis wishing to turn onto the bypass but blocked by a train, they will stack up along the highway’s turning lane.

On the east side of the bypass, that track is a branch line with much less traffic, but also with trains that run much slower and thus will take longer to clear the crossing.

At the bypass/Highway 47 intersection, he was hoping to see traffic lights, but that’s not in the cards. Traffic leaving Estevan northbound on Highway 47 will have its speed reduced to 80 kilometres per hour until it reaches the stop sign at the bypass intersection.

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PIPELINE NEWS November 2015

Going further afield and offering rentals Estevan – Turnbull Excavating of Estevan only has about one quarter of its business in the oilpatch, but it has still felt the down-

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turn over the last year.

As such, the company has done a few things to broaden its horizons.

The first was doing exactly that – broad-

ening their horizons.

“We’re working away from home, further than ever,” said Ed Turnbull, owner, on Oct. 8.

“We’re bidding

200 kilometres away,” he said. Before, that distance has never been over 100 kilometres.

That resulted in landing three rail projects, the third of which was expected to be completed Thanksgiving weekend. They involved earthwork, compaction, aggregate and ballast.

“We built some rail sidings right from scratch,” he said.

“We’ve worked for rail for 15 years, but never did siding jobs before.”

Overall, business has been slower than it was prior to 2008, he noted. Over the years they have been steady right through, but there was a spike in 20112013 when they were very busy.

“Last year started slowing down,” he said.

During that time, there’s been plenty of other companies coming to the region.

“We’re overrun with services,” he said.

“We’re talking about heavy equipment, gravel, earth work. We’re just overrun. Every company has expanded as if there was always going to be a boom. All of a sudden, bang! It’s reality time.”

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our companies. All the new companies moved into this area because of our Bakken oil boom.”

Despite the downturn, Turnbull Excavating has been able to keep its staff. There was a layoff last winter, he noted, when things didn’t look good and they were slow. But they were called back.

As for this winter, he said, “I don’t think it’ll be busy. Most of the stuff is seasonal. We’ll do whatever we need to to keep our employees.”

Rentals With a slow year expected bringing with that, idle equipment, Turnbull started offering rentals last spring.

“We’ve had some dozers, rock trucks, compactors (rented out). There’s no point in having it sit,” Those who are renting this equipment are often the small outfits that have work, but

have light equipment, not heavy equipment.

“Guys with a BobCat, they’re some of my best customers,” he said.

“They take on work, and bigger things come their way, so they need some rental equipment, somebody to haul some gravel for them or do an excavation.

“When I started, all I had was a BobCat, so when I look at those guys, they’re making a living with their skidsteer. I don’t consider them competition.

They’re customers, more than anything for us.

We sell them some aggregate, rent them some stuff, and it works out as a win-win for both,” he said.

The venture has apparently been beneficial, as Turnbull said he was going to add a few items specifically for rental.

“We just got our feet into it,” he said.

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PIPELINE NEWS November 2015

A27

Ed Turnbull’s operation has expanded its geographic area to find additional work. Photo by Brian Zinchuk

Excited about the Estevan bypass: Turnbull The need for a bypass around Estevan has been something Ed Turnbull of Turnbull Excavating has wanted for a long, long time.

So much so, that a few years ago he “voted with his feet,” as it were, and relocated the entire operation from the west side of Estevan to the east side. A prime consideration in the move was reducing the amount of time his trucks would spend going back and forth through Estevan.

The new location is near the eastern end of the new bypass, just

off Shand Road. That provides easy access.

“We’re pretty excited about it,” Turnbull said.

On average, they have more than 100 truck trips a day going through Estevan.

“Once we’re on the bypass, we can get west on Highway 39, saving time and being safer doing it.

“The biggest concern is the intersection at Highway 47,” he said, adding traffic lights would be the answer.

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He personally lives on an acreage just off the northeast corner of the bypass. There’s been plenty of traffic over the years using the backroads past his place to avoid going through Estevan. In wet weather, they’d still go down those roads, despite the damage it caused. The bypass should hopefully put an end to that.

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PIPELINE NEWS November 2015

MS RS

Stampede has kept drilling

Estevan – Southeast Saskatchewan’s newest drilling company, Stampede Drilling, has been fortunate over the past year, often having all three of its rigs at work at the same time.

They’re humble about it, but Stampede

has had one of the highest utilization rates in Saskatchewan over the past year, if you follow rig activity on Pipeline News’ sister publication Rig Locator (riglocator. ca). Stampede was also one of the companies the Canadian Associa-

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“Our utilization has been quite well,” said Jackie White, who, along with Bill Devins, look after the management of Stampede (they really, really don’t like titles).

“It’s been strong.

We’ve run a tight ship,”

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Devins said, “We’ve always been tight.”

White noted the industry has seen a roller coaster in the last year. “We’re prepared for the worst case scenario,” she said.

When it comes to price concessions that have been a fact of life throughout the industry, she noted, “We never took advantage of the high prices.”

For a while this past summer Stampede Rig 1 could be found just outside of Saskatoon, drilling a 30-day well for the Potash Corporation of Saskatchewan.

Devins said that well was helpful for their company at the time, a nice addition to their agenda. “It was a good experience. Our safety cultures meshed really nicely. Our COR (Certificate of Recogni-

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tion) came through at the same time.”

“It brought our three years of safety management into full view,” he added, crediting White, who looks after Stampede’s safety program.

Despite having a strong year, Stampede did see a slowdown in September, when the rig count for the entire province dropped to 17.

“There was a lull there for about twoand-a-half weeks,” Devins said. “We never saw a time when all three rigs shut down.”

White noted during that slowdown, “Everybody was ready for goose hunting season.”

Stampede has been able to keep its staff through this year that has been tough on the industry. “We haven’t lost anybody. If anything, we’ve gained,” Devins said. “We’re booking into the first quarter of 2016 today for all three rigs.”

White added they don’t have a stack of resumés on their desk.

“It’s the same phone calls as two years ago,” she said.

Devins countered, “I would say we had more resumés two years ago.”

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PIPELINE NEWS November 2015

A29

Stampede Drilling has had two, and often all three, of its rigs working for most of 2015. Here Rigs 2 and 3 were working close to each other in the Pinto area this past summer. Photo by Brian Zinchuk

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Traffic lights needed on Estevan bypass, says Stampede Drilling Ask Bill Devins and Jackie White of Stampede Drilling about the new Estevan truck bypass, and you’re likely to get an earful. That’s because in early October they witnessed a woman make a left turn onto Highway 39 at the intersection on the east end of the bypass. She nearly got hit by a semi running without a trailer.

They are both concerned about the possibility of a fatality at the key intersections of the new truck bypass, which is expected to open in November.

“I’m telling you, it’s coming. A poor woman almost got killed,” Devins said, adding there was smoke coming off the tires of that semi.

The Stampede office and shop is not far from the eastern end of the bypass.

They see a lot of traffic coming off Shand Road, from the Shand Power Station and the nearby coal mine at shift change.

“I’m not saying (the bypass) is a bad idea, but they need (traffic signal) lights,” Devins concluded.

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PIPELINE NEWS November 2015

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in the 1980s, worksharing.

It’s a Service Canada program where workers put in reduced hours, but their income is supplemented through Employment Insurance.

Service Canada’s website describes it as “an adjustment program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. The measure provides income support to employees eligible for Employment Insurance benefits who work a temporarily reduced work week while their employer recovers.

“Work-Sharing is a three-party agreement involving employers, employees and Service Canada. Employees on a Work-Sharing agreement must agree to a reduced schedule of work and to share the available work over a specified period of time.”

“It hit everybody.

We’re all in the same boat,” said Todd Shir-

Yard loader operator Wayne Stubel works with Bert Baxter Transport in Estevan. Like many of their employees, he’s on the Service Canada work-sharing program. “I worked in the oilpatch in the early 1980s. It was slow in ’85-’86, but nothing like this,” he said.

Photo by Brian Zinchuk

ley, who heads up the family-owned and operated business.

“We reduced hours,” he said, adding they started on the WorkSharing program five months ago. It took about three weeks to set up this time As a result, they haven’t had to do a lot of layoffs.

“We did a few, but very few,” Shirley said.

Usually they would buy three trucks a year.

Not now.

“We’re doing zero expenditures,” he noted, adding they’ve parked probably 15 to 20 trucks out of a fleet of 86 and

pulled their licence plates.

“The oilpatch is down everywhere, not just here.”

Drilling activity is down by over half since January, and the companies closest to the drill bit are among those seeing the most impact of the downturn.

“We do a lot of pipe. Maybe a quarter of our business is tied to drilling. It’s hit the hardest. In the good times, it was up to 50 per cent tied to drilling.”

Service rig business is also down as hard, he noted.

“The whole indus-

try’s dropped a lot,” Shirley said. “This is one of the worst (downturns) I’ve seen. I think this is harder than ’86.”

Back then, Bert Baxter Transport, one of the oldest companies in the southeast Saskatchewan oilpatch, did just what they are doing now – Work-Sharing.

Asked when he thinks things will turn around, Shirley said, “I can’t even give you a guess. When oil prices are back up, things will pick up. She’s just a waiting game.

“There are no guarantees in the oilpatch,” he concluded.

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PIPELINE NEWS November 2015

A31

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A32

PIPELINE NEWS November 2015

One of the largest oilfield tank trucking companies in the industry, operating continually in Saskatchewan for more than 50 years!

Crude Oil, Emulsion, Produced & Fresh Water Hauling, Condensate, Butane, Propane, NGL Hauling

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306-483-7462

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306-483-8121

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Pressurized Trailers

Justin Boettcher, Sales

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Mike Crawford, Dispatcher

306-485-7970 403-352-8770

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OILFIELD FABRICATION Heavy Truck Body & Paint Custom buil t skid units fo r all your oilfi eld needs.

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Skip (306) 461.5205 » skipper@threestartrucking.ca Marvin (306)483.8937 » marvin.threestar@sasktel.net

306-443-2424 Alida, SK