Pipeline 20180601

PIPELINE NEWS SASKATCHEWAN’S PETROLEUM MONTHLY Canada Post Publication No. 40069240

June 2018

www.pipelinenews.ca

Vol. 11/1

E N I L E P I P NEWS THLY

OLEUM MON

TR EWAN’S PE

ING T A R B E L E C

SASKATCH

S R A E Y 10 HE OIL GT OF SERVIN ECTOR S AND GAS

The Refinery That Wasn’t

This big open field southeast of Stoughton is supposed to be the site of a new 40,000 barrel per day oil refinery, proposed by Quantum Energy, Inc. and its wholly-owned subsidiary, Dominion Energy Processing Group, Inc. Despite their talk in early 2017 of breaking ground by the end of that year, nothing has happened. Through a 15-month investigation, Pipeline News has found they haven’t applied for any permits. They haven’t spoken to the Ministry of Environment in over a year. They haven’t talked to Crescent Point Energy, largest oil producer in Saskatchewan, whose main Viewfield Bakken facility is seen in this picture adjacent to the proposed refinery site, “for a long time.” While they were holding public meetings in southeast Saskatchewan, the company had one employee, and its head office could be rented by the hour. See our extensive coverage throughout this edition, starting on Page A3. Photo by Brian Zinchuk

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A2

PIPELINE NEWS June 2018

AECOM pulls out of Estevan, Virden; staff laid off

By Brian Zinchuk Estevan – In a month when oil crested US$70 per barrel for WTI, AECOM, which was the last in a line of companies which had bought out the assets and operations of what was once Carson Energy Services, has closed its doors in Estevan and in Virden, Man. A sign posted in the door of its Estevan shop on Supreme Street, just off Shand Road, said, “AECOM has ceased all day to day operation out of this location as of May 8, 2018. For all inquiries,

This is the notice that greeted workers in Estevan. Photo by Brian Zinchuk

please call 306-634-5233.”

A call to that number on May 14 got AECOM’s answering service in Regina. An AECOM spokesman from New York who preferred he not be named replied by phone with this statement, “The decision to close any field office is not an easy one, however, we must respond to market conditions. We remain committed to our clients and to providing oil and gas services where we see long-term opportunities.”

In October 2011, Carson Energy Services sold to Flint Energy Services.

It subsequently sold to URS, which was then sold to AECOM in 2014.

At the time of the Flint deal, Pipeline News wrote, “Carson has 17 locations, 13 in Saskatchewan, three in Alberta, and one in Manitoba. There are over 1,300 employees and over 1,800 pieces of equipment. The company’s existing services include midstream pipeline and facilities construction, pipeline integrity services, site prep and civil work, trucking and pickers, environmental, directional drilling, fabrication in the field and in-shop, roustabout and maintenance services, and safety sales and services.”

Whereas Carson Energy had operated out of locations in almost every oil community in southeast Saskatchewan as well as oil communities in western Saskatchewan, AECOM had dramatically reduced its footprint since it

AECOM has closed its doors at this Estevan shop, formerly Supreme Oilfield Construction. Photo by Brian Zinchuk acquired URS. This included closing the Lampman location, formerly the headquarters for Carson Energy. During the years of the downturn, much of their equipment assets were sold off.

As AECOM has withdrawn, a new company, Canadian Plains Energy, made up largely of former Carson employees, has filled the spaces, quite literally, vacated by AECOM. Since firing up in early 2017, Canadian Plains has occupied former Carson shops in Carlyle and Alida, and will soon be opening in Halbrite. It also has loca-

tions in Virden, North Battleford and Lloydminster. Its Regina operation will open June. 1.

AECOM’s website said the company had approximately US$18.2 billion of revenue during the 2017 fiscal year, and that it was “Named one of Fortune magazine’s “World’s Most Admired Companies” for the fourth consecutive year.”

The company is based in Los Angeles and has operations in more than 150 countries. Its 2016 fact sheet said it had 90,000 employees on seven continents.

MATRRIX buys assets of Red Dog Drilling ASSETS OF FOURTH DRILLING FIRM IN SEVEN MONTHS PICKED UP BY MATRRIX

By Brian Zinchuk Estevan – The wave of consolidation sweeping the small independent drillers in southeast Saskatchewan has continued, with the announcement on May 10 that MATRRIX Energy Technologies has purchased the assets of Estevan-based Red Dog Drilling Inc. for $5.7 million.

Since Oct. 30, 2017, MATRRIX has purchased the assets of Vortex Drilling (three rigs), the entirety of Stampede Drilling (three rigs), D2 Drilling (one rig) and now the assets of Red Dog Drilling. All these combined operations are now run as Stampede Drilling Ltd. Red Dog Drilling, 14 years in operation, had four drilling rigs, two telescopic doubles, a jackknife double and a brand new jackknife triple – Rig 5.

Rig 5 was completed just as the oil downturn hit in late 2014. It was the last new rig built for any drilling contractor based in southeast Saskatchewan. It drilled two holes starting in January 2015. Since that time, Red Dog, like most of the small, independent drilling contractors of the same size, was reduced to one rig working through much of the downturn. Rig 4 continued to work, and its employees will have an opportunity to join up with Stampede.

The multi-colored fleet of Stampede is now made up of 11 drilling rigs – nine telescopic doubles, one jackknife double and one jackknife triple.

Pursuant to the agreement, MATRRIX will acquire the purchased assets for a purchase price of $5,700,000, to be paid as the issuance of 1,573,334 common shares of the corporation at a deemed price of $0.45 per common share, valued at $708,000, and $4,992,000 in cash.

The rigs include two heavy telescopic double drilling rigs, Red Dog Rig 3 and 4, which are of a similar design to Stampede’s existing drilling rig fleet. Most of those telescopic doubles (except for Red Dog 3) were built at the now-defunct Do-All Industries in Estevan. These two rigs each have a depth rating of 4,000 meters. Red Dog Rig 5 was rebuilt from certain components of their previous Rig 1, turning it into a jackknife triple with a depth rating of 5,000 meters. Red Dog Rig 2 is a jackknife double with a depth rating of 2,800 meters.

Closing of the acquisition is subject to certain customary conditions, including the approval by the shareholders of Red Dog and receipt of all regulatory approvals, including the approval of the TSX Venture Exchange. The board of directors of Red Dog has unanimously determined that the acquisition is in the best interest of the Red Dog shareholders. Certain Red Dog shareholders, holding approximately 67.3 per cent of the currently outstanding Red Dog shares, have indicated their agreement to vote their Red Dog shares in favour of the acquisition. It is anticipated that the acquisi-

Doghouses for Red Dog Drilling Rigs 3 and 5 are racked near each other just west of Bienfait. Photo by Brian Zinchuk tion will close on or about May 31, 2018.

Lightyear Capital Inc. acted as financial advisor to MATRRIX on the acquisition.

Following the successful closing of the acquisition, in addition to its fleet of drilling rigs, MATRRIX will continue to operate its directional MWD division consisting of 16 directional systems, from its field office located in Leduc, Alta.

MATRRIX did not assume any of

the Red Dog head office facilities and will operate the purchased assets from its existing Stampede Drilling facilities located in Estevan.

Upon completion of the acquisition, including the payment of the $4,992,000 cash and the issuance of 1,573,334 common shares, MATRRIX is expected to have 131,487,024 common shares outstanding and approximately $9,200,000 cash.

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PIPELINE NEWS June 2018

A3

Was there ever going to be a Stoughton refinery?

DO ONE-PERSON COMPANIES BUILD REFINERIES?

By Brian Zinchuk Estevan – In early 2017, two refineries were proposed for Saskatchewan. One, a 30,000 bpd asphalt refinery at Lloydminster was proposed by one of the largest oil companies in the country, and one that already had an asphalt refinery and an upgrader at that community. The second refinery, proposed for Stoughton, was proposed by a company few people had ever heard of, unless you were one of five towns in North Dakota and Montana where that company had also proposed refineries.

In both cases, nothing was built. In the Lloydminster case, it was in large part because Husky Energy was successful in buying the 50,000 bpd refinery at Superior, Wisconsin, for US$435 million. But in the Stoughton case, the story goes much deeper than that. It’s a story Pipeline News has been investigating since February 2017, and it’s one of big promises, but nothing delivered. But more importantly, these were promises made at the

time by a company with one employee, and a head office you could rent by the hour.

This second refinery has been alternately referred to as either a 40,000 bpd or 42,000 bpd facility by its proponent.

The proponent of the proposed Stoughton refinery was Quantum Energy, Inc., of Tempe, Arizona. (at the time, late 2016, early 2017). It said it was setting up a wholly-owned Canadian subsidiary, Dominion Energy Processing Group, Inc., to build the refinery in Saskatchewan. At the time, Stanley F. Wilson was the president and CEO of Quantum Energy, Inc., and Lorne Keith Stemler was the CEO of Dominion Energy Processing Group, Inc. But at the time Stemler was talking to packed rooms in Stoughton, Weyburn and Estevan, Quantum filed its S-1 statement, its registration statement, with the Securities and Exchange Commission (SEC) in the United States.

And that S-1, filed March 6, 2017, had plenty

to tell. As detailed in depth throughout this edition, we reveal that Quantum, in its filing, said it had one singular employee, Stanley F. Wilson, and at the time, he was the sole person allowed to sell its stock, and its largest shareholder. We found that its head office was a virtual office that you could rent by the hour. We did, and we have the receipt. You can too, because there’s an app for it.

These meetings in southeast Saskatchewan, including a contractor meeting in Weyburn which attracted around 300 people, came after Quantum had proposed, but failed to build, similar refineries in a total of five different locations in North Dakota and Montana.

Since that time, no visible work has appeared at the site, immediately adjacent to the Crescent Point Viewfield gas plant.

There is not a survey stake to be found, not even a sign.

Neither Stemler, the man on the ground in southeast Saskatchewan,

As of May 10, there wasn’t so much as a survey stake on the site of the proposed Stoughton refinery, the large open field seen here, adjacent to Crescent Point Energy Corp.’s Viewfield gas plant. Photo by Brian Zinchuk nor Wilson are apparently with the company anymore. An April 12, 2018, press release said, “Effective February 28, 2018, Stanley F. Wilson resigned as a director and officer of Quantum and its subsidiaries. Effective February 24, 2018 Lorne Keith Stemler resigned as a director and officer of Quantum and its subsid-

iaries.”

Wilson had been the largest shareholder at the time of the S-1 filing, and Stemler was the fourthlargest. The share structure was revamped in January 2018.

The current president, Jeff Mallmes of Sicamous, B.C., had been listed in the S-1 as one of Quantum’s largest sharehold-

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ers, when combined with his wife, Janice and his company, The Big Barge Company Inc.. Mallmes, a Sicamous district (municipal) councillor, built his business in British Columbia building docks.

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A4

PIPELINE NEWS June 2018

PIPELINE NEWS

EDITORIAL

Publisher

Rick Sadick - 1.306.634.2654 Editor

Brian Zinchuk - 1.306.461.5599 Advertising Sales:

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To submit a stories or ideas: Pipelines News is always looking for stories or ideas from our readers. To contribute please contact Brian Zinchuk at 306-461-5599.

Subscribing to Pipeline News: Pipeline News is a free distribution newspaper, and is now available online at www.pipelinenews.ca Advertising in Pipeline News: Advertising in Pipeline News is a newer model created to make it as easy as possible for any business or individual. Pipeline News has a group of experienced staff working throughout Saskatchewan, Manitoba and parts of Alberta, so please contact the sales representative for your area to assist you with your advertising needs.

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

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

Conditions of editorial and advertising content: Pipeline News attempts to be accurate, however, no guarantee is given or implied. Pipeline News reserves the right to revise or reject any or all editorial and advertising content as the newspapers’ principles see fit.

Pipeline News will not be responsible for more than one incorrect insertion of an advertisement, and is not responsible for errors in advertisements except for the space occupied by such errors.

Pipeline News will not be responsible for manuscripts, photographs, negatives and other material that may be submitted for possible publication.

All of Pipeline News content is protected by Canadian Copyright laws. Reviews and similar mention of material in this newspaper is granted on the provision that Pipeline News receives credit. Otherwise, any reproduction without permission of the publisher is prohibited. Advertisers purchase space and circulation only.

Rights to the advertisement produced by Pipeline News, including artwork, typography, and photos, etc., remain property of this newspaper. Advertisements or parts thereof may be not reproduced or assigned without the consent of the publisher.

The Glacier group of companies collects personal information from our customers in the normal course of business transactions. We use that information to provide you with our products and services you request. On occasion we may contact you for purposes of research, surveys and other such matters. To provide you with better service we may share your information with our sister companies and also outside, selected third parties who perform work for us as suppliers, agents, service providers and information gatherers.

About that refinery…

When Quantum Energy, Inc. and its wholly-owned subsidiary, Dominion Energy Processing Group, Inc., announced a refinery was coming to Stoughton, we were admittedly slow to catch wind of it. Thus, Pipeline News didn’t attend public meetings in Stoughton. But we did make it to a potential contractors meeting in Weyburn February 15, 2017, and a meeting with Estevan city council and Chamber of Commerce on March 21, 2017.

Between those two meetings, on March 6, 2017, Quantum filed its S-1 Registration Statement with the Securities and Exchange Commission.

That lengthy document made for some very, very interesting reading, and some very late nights looking into Quantum. The obvious question was, is this legit? Are they actually going to build a refinery? Do they have the wherewithal and the funding to do it?

Starting at the very beginning of the S-1 was the company’s address for the its corporate head office.

Entering that into Google Maps, and then using Streetview, one found a very impressive looking building. It had Microsoft, KPMG and MetLife signs all over it. Fancy Schmancy.

But then we found that a whole bunch of other companies listed the exact same address. That’s because that address, 60 East Rio Salado Parkway, Suite 900, Tempe, Arizona, is a virtual office space that you can book, by the day or by the hour, through an app. Consider it an Uber for offices.

You might think the stories in this edition fixate on this one point a little too much. The reason it was significant is that the company was talking a good talk at meetings all throughout southeast Saskatchewan, but couldn’t, or wouldn’t, even have a permanent office. Yet it was proposing a $600 million refinery.

At the very same time, Husky Energy was also proposing an asphalt refinery for Lloydminster. The company already has one there, as well as an upgrader. For many years, Husky was the largest oil producer in Saskatchewan until it was overtaken by Crescent Point, so they have legitimacy. They have an office tower in downtown Calgary that they presumably don’t rent by the hour. And that office tower has all sorts of people working for them.

Quantum’s S-1 said it had one singular employee, who was its chair, CEO, and sole director at the time. He was also the only guy authorized to sell its stock. When we’ve asked about this, various people involved with it have said they can hire all the help they need. But to this date, we’ve not seen a single-person company build a substantial battery, let alone a refinery.

The number of people they said it would take to build this refinery didn’t make sense – 200 at a time.

Having been to the Regina refinery when it had an expansion that was completed in 2012, the workforce was in the thousands. And it cost $2.66 billion.

The Sturgeon Refinery near Edmonton is just finishing up, and started in 2011. That 50,000 bpd facility had a peak construction workforce of 8,000 people, And it cost $9.3 billion as of June 29, 2017, according to JWN Energy.

Did we mention that Quantum had already proposed five, yes, five refineries at various points in Montana and North Dakota, before coming to Stoughton, and not one has been built?

Quantum’s front man, Keith Stemler, who is no longer with them, apparently, also spoke of carbon capture on this facility. We have some experience with that in Estevan. A carbon capture facility added $1 billion for just one generating unit at Boundary Dam Power Station.

Now, perhaps there are other ways carbon capture can be done through the refining process as opposed to postcombustion capture, but no matter what, it’s not likely to be cheap.

There were a lot of other things that didn’t make sense, but since we couldn’t substantiate them, they did not see print.

We put together a lengthy list of points we were concerned about, and sent them to a select few people, all with extensive business experience and much smarter than a lowly writer. All those people said we were onto something, and something wasn’t right.

At the Estevan meeting, Pipeline News put Stemler through the wringer on many of these points. The next day, an Estevan city councillor tore a strip off us for doing so, i.e. asking hard questions. We pointed out to this councillor that he did not ask hard questions, himself.

We waited over a year to see what, if anything has happened? So, what did? Stemler, CEO of Dominion and the front man in this neck of the woods, is gone. The CEO, Stanley F. Wilson, is also gone. The company has shaken up its share structure. The Ministry of Environment told us they have not heard from Quantum or Dominion in over a year. They haven’t applied for one permit, and they need 12 different forms of permits and approvals, according to the Ministry. Crescent Point Energy, without whom any project of this scale would have a very tough time without them on board, has “had no contact with the proponents of the project for a long time now.”

Could the Stoughton refinery still happen? Perhaps.

But maybe we should ask East Fairview, N.D., Baker, Mont., Billings, Mont., Stanley, N.D. or Berthold, N.D., how their Quantum refineries have panned out.

PIPELINE NEWS June 2018

Ten years for Pipeline News! Whoo hoo!

I had grand plans for this month. I’d been thinking about it for a while. This edition marks the 10th year of Pipeline News in its current form, as Saskatchewan’s petroleum monthly newspaper, or as I like to say, the only publication that gives a damn about the Saskatchewan oilpatch.

I was going to do a few top ten lists, looking back at some of the stories and players over the last decade. I did top five lists five years ago.

I actively seek out companies with major anniversaries to write stories on. I think it’s a big deal. If you made 25, 30, 40, 50, or even 60 years, that’s a big deal. Our industry is dumped upon all the time. I think we need to celebrate the victories we have, and the perseverance that made it happen.

So tooting our own horn didn’t seem like a bad idea.

But things kind of overtook that. As you’ll read in this paper, the month got swallowed by a story I’ve been working on since February of 2017, one that has consumed many, many late nights plowing through everything I could find online about this proposed refinery at Stoughton, and the people behind it.

Personally, I think that’s a much better 10th anniversary tribute. Instead of rehashing the past, like a TV clip show, this edition has been some of the hardest-nosed journalism I’ve ever done. Word-wise, it’s almost as much as I wrote about the opening of the Boundary Dam 3 Integrated Carbon Capture and Storage Project. But this was much, much harder.

Some people will like it, some will appreciate it, but some will decry me for questioning something they thought for sure was coming. Maybe I will be blamed should the project be called off.

On a different note, the day this paper gets distributed, I will have the honour of being the banquet speaker at the Redvers Oil Showcase. I tried for months to find someone for them who would be fitting, suggesting various CEOs

A5

OPINION

FROM THE TOP OF THE PILE

By Brian Zinchuk

and the like, but nothing came to pass. So they asked me.

My speech is entitled, “I didn’t see their horses.” I will talk about the kerfuffle over H2S last fall, the hoops our industry jumps through, and how we are perceived. Some people think we’re the devil. Well, we’re not the devil.

In other words, I’m going to take the earthmuffins on. I tend to do a lot of that these days, with my weekly newspaper column, Pipeline News, and in various other forums.

If I’m ambitious enough, I might even video it and put it on YouTube for you to share with all your earthmuffin friends. If it has a bit of an “angry nerd” vibe, you’ve been warned.

now over US$70 per barrel. This edition is the largest we’ve had in a while. There was a time when our page count was in lockstep with the price of oil. If oil was US$96/barrel for WTI, we would coincidentally print a 96 page edition.

We’re not there yet, but here’s hoping.

Thank you for being there with us through these last 10 years. I look forward to the next 10.

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

"In other words, I’m going to take the earthmuffins on."

- Brian Zinchuk Ten years is still a big deal. The last few years have been tough – extremely tough. You’ve felt it, we’ve felt it.

Some are still feeling the brunt of it, and this downturn is not over by any means. There is a huge amount of ground to be made up.

The equity destruction is almost too much to imagine.

The recapitalization crisis I’ve been spouting off about for over a year now will take further hold as time goes on.

Our paper has seen staff reductions to the absolute bone. We’ve felt this downturn just like you have. We wondered if the light at the end of the tunnel was the sun or a train, and how long, for goodness’ sake, this tunnel is going to last?

But, as they say, a rising tide floats all boats, and oil is

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PIPELINE NEWS June 2018

Merger partner address same as Wyoming Mail Forwarding Service ◄ Page A3 stranger to the company.

Andrew J. Kacic had been the CEO several years ago, at the time the company had several proposals in North Dakota and Montana supposedly at play.

In the interim, Quantum’s corporate head office now started listing a location in Chicago. And in keeping with its previous pattern,

that precise address, like the Tempe one, was the exact same suite listed as the office for roughly one-dozen independent law firms.

In recent weeks, on April 12, 2018, Quantum announced via press release it would be merging with Inductance Energy Corporation (IEC). The release stated, “They have entered into a binding letter of intent, pursuant

to which upon satisfaction of certain conditions, IE Arizona, Inc., an IEC affiliated company (“IE Arizona”) a Wyoming corporation, a privately held company, would be merged with Quantum.”

And, like before, this new player, Inductance Energy Corporation, also apparently shares its corporate head office with numerous other companies, since its address

listed with the Wyoming Secretary of State is also that of Wyoming Mail Forwarding Service, a virtual office, whose services can be had for “only $50 per month!” according to the mail forwarding company’s website.

In the meantime, another company has been working on building a similar scaled 27,500 bpd refinery at Belfield, North Dakota called the

Davis refinery. On April, 16, 2018, Meridian Energy Group, Inc, signed a letter of intent with an engineering procurement and construction firm, for its front-end engineering and design. Their project is relatively similar in scale to the one proposed

by Quantum, so it provides a real-time comparison of what a similar project entails in scale and resources. Expect to

see a story on this refinery in our July edition, following the Williston Basin Petroleum Conference, where they will have made a presentation (but after our press time.)

When we checked with Husky, they did not use a virtual office for their corporate headquarters, and they employed more than one person when they made their refinery proposal.

One says ground will be broken this year, the other doesn’t CURRENT PRESIDENT AND SECRETARY OF QUANTUM QUESTIONED

By Brian Zinchuk Estevan – On May 17, Pipeline News spoke by phone to the top two people currently involved with Quantum Energy, Inc., whose wholly-owned subsidiary Dominion Energy Processing Group, Inc., proposed a 40,000 bpd refinery at Stoughton in late 2016.

Jeffrey Mallmes (in some instances, referred to as “Jeff Mallmes”) is listed in their Feb. 28,

2018 annual report at chairman, president, treasurer and director, with 14.91 per cent ownership. Andrew J. Kacic is listed as secretary and director, with 18.66 per cent ownership. Kacic had formerly been CEO of Quantum, back when it was proposing five refineries in North Dakota and Montana. He is also the person now listed as the contact at the end of Quantum press releases.

Mallmes’ company

featured in the company’s March 6, 2017, S-1 filing with the Securities and Exchange Commission, when presentations were being made throughout southeast Saskatchewan.

At that time, he, his company, Sicamous, B.C.based The Big Barge Company Inc., and his wife Janice Mallmes, were listed as shareholders, effective Feb. 23, 2017. Big Barge makes elaborate dock systems on interior British Columbia lakes.

POWDER COATING

He has also been elected as a Sicamous district councillor. His candidate listed in the Oct. 15, 2014 Eagle Valley News, states, “I am Jeff Mallmes, born in Moose Jaw in 1956. I attended SAIT to complete a B-pressure welders and Level 3 welding inspection ticket.

I started a welding business in 1979 and world in oilfields, water filtration and bridge inspection.

“In 1997, I moved to the Okanagan and began building docks. The first commercial marina completed in Sicamous was in 1998. I became a fulltime resident of Sicamous in 2005.”

At the end of 2017,

Mallmes and Kacic came to the fore in the leadership of the company.

“About all I can tell you is that we’re trying to proceed with it and get the environmental studies started and that, but we’re just waiting for funding to come in. That’s about as much as I can tell ya,” Mallmes said by phone from Sicamous.

Asked if any they have made any applications to the province for permits, Mallmes said, “That was done by Keith Stemler a year and a half ago, so we’re going to have to revisit it. The other thing is that our option on the property is about to expire, so I

Jeffrey Mallmes is the current president of Quantum Energy.

He is a Sicamous district councillor, as seen in this picture from the Sicamous.ca website.

Photo from Sicamous.ca, District of Sicamous reached out to them to have a conversation with them as well.”

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PIPELINE NEWS June 2018

A7

“Read between the lines,” Keith Stemler no longer with Quantum, says current president Jeffrey Mallmes ◄ A6 the CEO of Dominion Energy Processing Group, Inc., and the person who signed that company’s incorporation papers with Corporations Canada.

He is still listed as the company’s sole director on Corporations Canada’s website.

Asked if they have taken out a caveat on the property, he said, “No. We don’t own it.”

“Like I said, Keith Stemler was working on that. I’m just familiarizing myself with the file. Keith Stemler is no longer with the company.”

Why is that?

“It wasn’t going fast enough for him,” Mallmes replied. “The funding he was working on never materialized, and he wasn’t sure the funding would ever come in. I’ve been working on completing things for Quantum and the funding for it and I feel pretty confident we’re going to get the funding to do the environmental study, and once the environmental study is done and signed off, then financing is not an issue.”

Asked when was the last time they have spoken with the Ministry of Environment, Mallmes said, “Keith spoke with them in November or December, 2017.”

The Saskatchewan Minister of Environment, Dustin Duncan, told Pipeline News via email on May 16 they had not have any contact with the company in over a year.

When told that, Mallmes said, “Oh? Well, I got an email from Keith saying

he did speak to them. Like I said, I was not involved in that side of it. I’m managing the company overall.

Keith was the fellow that was dealing with it. So I’m not saying we’re starting over. I’m saying I have to get more familiar with the file.”

Asked where they are on the 12 different permits required, he said, “Right now, the only thing that’s been done is the preliminary engineering to figure out what is that we’re going to build. The next step is to start the environmental.”

Regarding a timeline for construction, he said, “I can’t tell you that. That’s entirely based on the environmental. As you well know, the environmental, they talk about a pipeline and a bunch of people show up, and you don’t know if the ministry is going to allow it. I can’t tell you that. That would be up to the environmental firm we hire and the engineering firm.”

When told Stemler had told approximately 300 potential contractors in Weyburn in February 2017 that he intended to break ground by the end of the year, Mallmes replied, “Yeah, well, that’s why Keith’s not with the company anymore. I can’t speak to what Keith said to people, and I won’t speak it. So, I would suggest you contact me again somewhere about the middle of June, and I may have a few more answers for you.”

Mallmes said he took over the company “because I have more money invest-

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“Even if I started tomorrow morning, had $10 million cash in the bank, there’s no way I would be building

by November. That’s a pipe dream.”

– Jeffrey Mallmes, president and chair, Quantum Energy, Inc. ed in this than anybody.”

He noted he has interest in welding and fab shops in Alberta. “I don’t like to speak out of turn.

I like to make sure the ducks are lined up, facts are facts, and things are ready to go. I’m not going to promise anybody an empty promise, like we’re going to be building by November, because we’re not. Those are facts.

“Even if I started tomorrow morning, had $10 million cash in the bank, there’s no way I would be building by November.

That’s a pipe dream.”

With regards to the price tag, which Stemler had said was $600 million, Mallmes distanced himself from that, repeating, “Keith is no longer with the company. So read between the lines. What Keith promised people, what Keith said he could accomplish, the money Keith said he could raise – none of it materialized.

And I don’t like people being involved with me who have conversations about things they think they’re

going to get done, and then they don’t get done.

That doesn’t do anybody any favours. I’m not a false hope fella.

“So when I have what I know to be true, I can talk to you. Right now, the thing to do with the refinery – there is a need for a refinery, a microrefinery, in a local area, for supplying product locally. It’s a good idea. That’s why I invested in the company to start with. And I still believe it’s a good idea. But to do it, you have to have everything situated right to most forward. And it’s not there yet.”

Pipeline News pointed out that at the time Keith Stemler was making these promises, Quantum’s S-1 filing said it had one employee, its head office rent was $230 a month, and the head office was a place you can rent by the hour, because we did do just that. Mallmes replied, “Okay, I’m not telling you something you don’t know.

Those are all facts.”

“The fact is, today, sir, today, since I took over the

Keith Stemler spoke to potential contractors in Weyburn on Feb. 17. Jeffrey Mallmes, current president of Quantum Energy, Inc., said on May 17, “What Keith promised people, what Keith said he could accomplish, the money Keith said he could raise – none of it materialized.” Photo by Brian Zinchuk company, November ’17 …

I’ve put another $200,000 of my own cash into this thing.”

Mallmes said on June 15, he would have more answers.

Andrew J. Kacic Speaking to Kacic just before speaking to Mallmes ended up with some substantially different answers. Note that at the beginning of each phone call, the respondent said we should talk to the other person.

Kacic was at Big Fork, Mont., although he said he spends most of his time at Scottsdale, Ariz.

Asked what the status of the proposed Stoughton refinery, Kacic said, “We’re still moving ahead on it,” but suggested we talk to Mallmes, as he was handling it.

“He’s more in tune with it than I am. I’m handling other matters,” Kacic said. “We’re working on an S-1 filing.”

The old S-1 has been redone, he said. They’ve completed two years of audits and have a tentative merger which has been announced. Kacic said, “That’s the part that I handle.”

Asked the purpose of the purpose of the merger, he responded that it is what they issued in their press release, and as a public company, he couldn’t talk beyond that.

Regarding the proposed refineries in Montana and North Dakota, he said, “If anything, there’s really nothing going on in North Dakota. Our main effort is in Saskatchewan. ► Page A8

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A8

PIPELINE NEWS June 2018

Refineries have difficulty with Bakken oil, says Kacic ◄ Page A7 “After that, we could possibly be able take it to another location, then we would probably look at some of the sites that we had previously in North Dakota. The primary effort and total focus is for Saskatchewan.”

Kacic also acknowledge that Stemler is no longer with them. Asked why it would take until April to announce his departure in late February, Kacic said, “It didn’t seem to be that pressing at the time.”

“I was part of the initial team, along with Keith, that met with the Saskatchewan provincial government. We met with Crescent Point and also Tundra. We had a number of meetings up there in Saskatchewan. ” Asked when was the last time someone from Quantum or Dominion had spoken to the Ministry of Environment, he said, “I wouldn’t know that.”

He noted there’s been dramatic changes in the corporate structure since the initial S-1 filing.

Head office by the hour Regarding their head office being used by at least 25 other companies, he said, “It’s an executive office suite. You rent an office. Why would we

have anything other than that? Our operations we’re discussing are refineries in North Dakota and Saskatchewan. So it’s an executive office suite complex. It was our corporate office at that time.”

When told we rented their head office, by the hour, Kacic responded, “I’m sorry?

“It’s what you have when you need a corporate office, and you’re looking where the permanent office is going to be. Obviously, our first refinery will probably be our operations based in that location. For a corporate basis, we used a virtual office, like many companies do,” he said.

“You find it weird, and I find it prudent. What’s wrong with that?”

Refineries have difficulties with Bakken oil When we pointed out Husky Energy, which was also proposing a refinery at the same time last year, does not rent its head office by the hour, Kacic said, “We’re not Husky. We’re a greenfield company looking to make a state of the art diesel refinery using Bakken oil.”

At this point Kacic spoke about how refineries are having difficulty dealing with Bakken oil.

“The refineries are having a problem handling Bakken oil.

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This wide shot does not include the additional rows at the back of the room, full of potential contractors who, on Feb. 15, 2017, were eager to find work on the proposed refinery. The man standing at the front, under the screen, was Keith Stemler, now-former CEO of Dominion Energy Processing Group, Inc. Photo by Brian Zinchuk “Refineries are up and running, including the ones with Husky, they’re all based on the production they’re going to be running through the refinery.

“And throughout the country, which is international news, there is a problem with the refineries that are built because they cannot handle the light, sweet Bakken crude.”

“So when we were launching our refinery, we were the ones with the state-of-the-art to handle the sweet Bakken crude that really came into fruition in the last five or six years, as far as consistency of production. So we’re

looking to build a refinery just to handle the Bakken crude.

“Of course, you probably know there’s a dramatic fluctuation in oil prices, from $100 down to $27, and the whole capital markets got really shaken and rattled because of that.

“So the technology is what we were keying off to handle Bakken sweet for areas that need diesel, like Saskatchewan. Close to production, close to consumption. The biggest variable you have in oil and gas prices is logistics.

So instead of shipping it from the coast, we would produce it right by the production and sell it in

R.FRENCH TRANSPORT

the areas around there, other provinces. That was the plan that got delayed.

“So until we got a more permanent location, we rented an office,” Kacic said.

“It’s brand new technology. The whole idea of what we’re doing has never been done before.”

Asked what particular technology he was referring to, he said, “Just having the crude oil slate of the Bakken oil, being able to create as much diesel out of it as possible, and to be able to develop the whole barrel, not just get the diesel, naptha and bottoms, but try to get everything a handle and produce a finished product in all three categories.”

“Again, build a crude oil slate around the crude oil slate of the Bakken.”

Production lined up He said he was not familiar, off hand, with Saskatchewan Bakken production. (Bakken production in Saskatchewan had peaked several years

ago.)

“We have plenty of our production already lined up,” he said.

“I used to be an oil and gas producer. If I knew I had an end user, I would probably be drilling more wells.”

He said he can’t disclose anything that’s not public knowledge regarding who that lined up production would be.

When asked to explain why they located their site beside a major Crescent Point facility, but that company isn’t very familiar Quantum, he said, “You probably know that you cannot have a commitment that’s going to become a contingent liability, to lock up either an offtake or production.

You can only go so far down the road – until we break ground, we’re not going to be able to get anything firm until we break ground and get all our permits for our refinery. We’re not ► Page A9

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PIPELINE NEWS June 2018

A9

Kacic first says ground will be broken late this year, then he says early next year ◄ Page A8 there yet.

“Hopefully we’ll be there shortly, or at least this year,” Kacic said.

“That’s our goal.

There’s a lot of work. How much in the breaking ground category, I don’t know, but our goal is for this year. Now, I’m not the engineer. Knowing how the season or the weather is, it’s already May.” “We’re looking forward to breaking ground this year,” he affirmed.

“We still have testing to do. We’re still looking at the property. Tests have to be done on the property location. It depends on how fast we can move.”

In regards to the permits, we asked which permits they’ve acquired.

“I don’t think we have any permits yet. I know Keith was in discussions on quite a few on the staging of the permits, but no permits as of yet.”

Asked if they’ve made any applications yet, he said, “With the applications, you have to submit a set of plans. It’s not just filling out an application.

It’s several million dollars of work and engineering that has to be submitted along, to get your permit.”

They have not applied for any permits as of yet.

When asked why the Ministry of Environment had not heard from Dominion or Quantum in over a year, he replied, “Again, the financial markets and oil prices have fluctuated dramatically in the last couple years, and really, the financial market has just stabilized, moreso this year than last year, where we have a lot of interest in financing this operation, where we didn’t have before, or this project, I should say.”

Again asked how they would break ground this year, despite not having applied for one of 12 required permits, he replied, “Okay, then we’ll break ground the first part of next year. We’ll try to move as quickly as we possibly can with the funding that we’re discussing that was made in the news announcement.”

Pipeline connection?

With respect to

“We’re looking forward to breaking ground this year.”

– Andrew J. Kacic, secretary and director, Quantum Energy, Inc. Tundra Energy Marketing Limited (TEML), the principal oil gathering pipeline system in the region, John Williams, VP of pipeline operations told, Pipeline News on May 10, that they had not heard from the refinery proponents in the past year. “I would have to say no to that. I believe there was a fleeting contact between the guy who did that presentation and one of our engineering staff in the days after the presentation. And that came about because our engineer attended the presentation and handed him his business card. He didn’t follow up again on that, from the refinery.”

When we asked Kacic how they would build a refinery without a pipeline connection, he laughed then said, “As we go through the process, we will have discussions

we will finalize before we do that.”

“Why would I discuss the pipeline in any great detail without knowing where we are on our financing?”

He went on, “It’s been pretty rough. It’s been pretty rough to lock up money to get into this industry. We think we have a lot going for us that we’re going to introduce, that our financing seems to be very attracted to, none of which I can get into any detail with until we make an announcement and we should have some more announcements in the next few weeks, hopefully in the first part of the month.”

Financing Stemler was working on “didn’t materialize,” Kacic said, adding, “We really thought it was real, and

when it came down to it, it didn’t materialize.

“We’re trying our darnedest to get our financing finalized for that location. And if you spoke to someone in the oil industry whose challenged like the example you gave me, we don’t give up. We try to get prudent. Pissing away money on exotic office space is not prudent.

So we’d rather spend it where it counts, to get the interest back into the oil sector, and the Stoughton area. That’s where our focus is.”

“Our revised S-1 will be out by the end of next week, knock on wood,” he said, noting their direction has dramatically changed, and their audited financial statements were posted on OTC Markets.

Refinery targeting light sweet Bakken Regarding the over 100,000 barrels of refining capacity they announced in Montana and North Dakota, before the Stoughton announcement, Kacic said, “We had the

locations and everything was keying up. You should do your homework, Brian, I know. I can tell you do your homework. So we’re kind of keying it off the facility in Dickenson, that was done by MDU and Calumet. You’ve heard of those two companies, right?

“So we were looking at that as our program, because Westcon, who was the contractor on that location, whose a subsidiary of Bilfinger, an international firm, was our partner, when we announced those refineries.

Of course, you did your homework, right Brian?

You know that,” Kacic said.

“The Dickinson refinery, it didn’t work.

We didn’t know that, until everyone found out at the same time that it didn’t work. The market fell apart for naptha, which was a third of it. And the bottoms had no market.

So we didn’t know that design didn’t work until everybody found out it didn’t work.”

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A10

PIPELINE NEWS June 2018

Quantum Energy announced five refineries before Stoughton, none are built

By Brian Zinchuk Estevan – Long before Quantum Energy, Inc. announced a 40,000 bpd oil refinery near Stoughton, Sask., the company made similar announcements at five other locations in Montana and North Dakota, each time announcing a new refinery, then usually a short time later, that they had secured the land.

The company’s own press releases, on marketwired. com (search for “Quantum Energy Inc.”) tell the tale.

On Dec. 5, 2013, the company announced a change in its direction, towards refining. “…it has redirected its oil and gas focus from the West Texas Barnett Shale fields to North Dakota with the opening of an office in Williston, North Dakota in the heart of the Bakken formation. The company has secured the consulting

services of Andrew J. Kacic and Advisory Services, Inc. with offices in Williston to assist in identifying oil and gas opportunities in that region,” said Stan Wilson, the new chairman and president of Quantum.

‘We are impressed with the diesel refinery model being constructed by MDU in Dickinson and believe it can be replicated throughout the Bakken,” Wilson said. “Mr. Kacic has recent experience in funding efforts for refineries and we are in discussions with potential refinery sites to assess feasibility,” Wilson explained.

“In addition to refinery development opportunities, Quantum will continue its oil and gas exploration, drilling, well completion and fuel distribution efforts in reliance on Mr. Kacic’s experience in those areas as well.”

Refinery No. 1,

The site of the proposed Stoughton location would fill this entire field up to the road. It’s immediately adjacent the Crescent Point Viewfield gas plants 1, 2 and 3, the edge of which is on the left side of the image.

Photo by Brian Zinchuk

East Fairview, N.D. In short order, the company started announcing locations for new refineries in Montana and North Dakota. In under four months, it announced its first refinery site purchase agreement, on March 20, 2014. That was an 80 acre site at East Fairview, North Dakota, right on the Montana border, southwest of Williston. In what would become a pattern, the site was near a rail transloading site.

The “Fairview Refinery” was going to be a 20,000 bpd diesel refinery.

“The Fairview Refinery will process 20,000 barrels of Bakken crude oil per day and will operate as a topping plant. It will convert around one third of the crude oil into diesel fuel.

The refinery will produce approximately 7,000 barrels of diesel per day which will reduce the amount of diesel imported into North Dakota by marketing the diesel output in the Bakken region.”

They announced it would generate annual revenues of US$600 million per years, with an EBITDA in excess of US$60 million and employ 100-plus employees. “We anticipate further announcements soon on funding for the expected $250,000,000 investment,” Wilson said in their press release. Six days later, the company announced that Andrew J. Kacic was their new CEO. As of May 17,

Quantum Energy, Inc. has proposed refineries at six locations.

To date, ground has not been broken on one. Map courtesy Google Earth 2018, he was the company’s secretary and director.

They were also going to explore CO2 capture, EOF and stripping NGLs. A week later, on April 1, 2014, (yes, April Fools) Quantum announced it increased its site to 122-plus acres. Three weeks later, they announced Quantum “received a Conditional Commitment Letter from NBM Strategic Capital and its Grey Fox private equity arm for the $250 million dollar projected cost to construct the Fairview Refinery in East Fairview, North Dakota.”

On May 20, 2014, the company announced, “Quantum has engaged Shelley International CPA of Mesa, Arizona as its auditor for its February 28, 2014, year end and has begun the drafting of a Form 10 to be filed upon

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completion of the audit so as to become a fully reporting company with the SEC. Once audited and fully reporting, Quantum plans to immediately apply for trading status with a major stock exchange.”

That is significant, as similar verbiage was used with reference to the proposed Stoughton refinery, three years later.

Just under a week later, when announcing its third refinery, the company announced it had signed a two-year option to purchase 144 acres in Richland County, Montana, near Fairview. “Quantum had a purchase agreement for a site in East Fairview, North Dakota that previously expired due to difficulties in accomplishing the necessary local zoning which Quantum does not anticipate being a problem given the initial reception from Richland County,” their Aug. 27, 2014 press release said.

Refinery No. 2, Baker, Montana Three months after the initial announcement of its first propose refinery, Quantum announced on June 19, 2014. The announcement stated, “Quantum has entered into a fully executed Letter of Intent for the acquisition of 400 acres near the city of Baker in Fallon County, Montana for the development of a 21st Century Energy Center to include a 20,000 barrel per day diesel refinery. The LOI calls for a contribution agreement to be executed no later than July 3, 2014 by which title to the 400 acres is to be exchanged for shares of Quantum common stock.

Quantum also has an existing purchase agreement for a refinery site with Northstar Transloading LLC in East Fairview, N.D.” The press release notes, “Quantum Energy CEO Andrew Kacic, who visited Baker, said he plans to build five such oil refineries, called

"21st century energy centers" by the company...”

Of note, the next day, WTI traded for US$107.26, and then began is decline which lead to the nearly four-year downturn the oil industry has seen since.

On Aug. 14, 2014, Keith Stemler is first mentioned, brought on as part of a five-member advisory board.

On Aug. 28, 2014, the company announced, the “signing of a two year option on 160 acres in Fallon County and a companion three year option on an adjoining 240 acres for a total of 400 acres under contract.”

Two weeks later, Quantum announced a strategic alliance with Bilfinger Westcon, Inc. of Bismarck.

Refinery No. 3 Billings, Montana On Aug. 21, 2014, the company announced it had “made a presentation to the Yellowstone County Commissioners and Big Sky Economic Development Tuesday, August 19, 2014 in Billings, Montana about their proposed five refinery plan to bring a new generation of refineries to North Dakota & Montana including one in Billings.”

In this announcement, the company stated, “the goal is for 100 per cent of the diesel to be used within a 100 miles radius of the facility.”

It also references capturing CO2, and over 100 “good paying, permanent jobs in the refinery.”

By Oct. 14, 2014, the company said its audit was complete, and it was ready to seek fully reporting status. As of March 9, 2018, they still had not received “fully reporting status.” On Oct. 31, 2014, Neil Amondson was named president of Quantum Energy, Inc. The Bakken Oil Business Journal October/ November 2014 edition publishes a story by Alexis ► Page A11

PIPELINE NEWS June 2018

A11

Quantum announced 20,000 bpd and 40,000 bpd refineries in North Dakota and Montana

◄ Page A10 the company apparently on henceforth, and the becoming a fully reporting recently completed for the ing annual EBITDA Bonogofsky entitled, “If other sites are dropped had not entirely given up is projected at approxiregistered SEC company,” Boundary Dam Inteit’s too good to be true, while it announced these from all references. mately US$345,000,000. grated Carbon Project at Wilson said. then it probably is! The six refineries. “Quantum Refinery No. 6, StoughThe capital commitEstevan, which employed “Upon completion of Quantum Energy, Inc. Energy, Inc. a diversified ton, Saskatchewan ment to build the fathe registration and fund- 1,400 people at peak and tale.” energy holding company, The first time cility is estimated at cost C$1.6 billion, of ing, Quantum intends to Refinery No. 4, Stanley, is pleased to announce Stoughton comes up in US$645,000,000. The which roughly $1 billion seek a listing on a major North Dakota that it has begun to diverQuantum Energy, Inc.’s was for the capture plant. estimated output of the exchange and begin the Eight months down sify its refinery developThe first four refineries primary products from the press releases is on Aug. permitting and entitlethe road now, Quantum ment plan through the ac6, 2016. It stated, “Quancrude processing facility Quantum announced ment process on the first announced it had sequisition of opportunistic tum continues its Bakken in barrels per day based were to each include the of our Bakken refineries,” cured a 260-acre site near projects which generate refinery development on a 360 day operating ability to capture carbon Wilson added.

Stanley, North Dakota for projects with ongoing per- revenue for the company. year include 18,400 bpd dioxide. That was not Wilson, in a letter another 20,000 bpd topThe first such projects are mitting efforts in North of gasoline; 13,200 bpd referenced in the Native to OTC Markets Group, ping plant diesel refinery. oil and gas prospects and Dakota and an increased of diesel #2; 5,600 bpd of Sons Refining announceInc., dated June 27, 2017, Like the others, it would properties. QEGY has diesel #1 and 2,800 bpd of emphasis on a 40,000 ment for Berthold. describes himself as “I am incorporate CO2 capture simultaneously acquired bpd proposed project AGO/bottoms.”

On July 29, 2015, an attorney at law duly and NGL stripping. This a company with apin the Stoughton area This is the first referQuantum Native Proadmitted to practice in fourth refinery, too, would the State of Nebraska. I proximately 3,000 acres of Saskatchewan, Canence to a refinery that cessing Partners, LLC, provide 100-plus fulland 89 well bores in the ada. Quantum is in the does not focus on diesel announced the filing of a am general counsel and a time jobs, according to Texas Panhandle along process of forming a Caalone. Five days earlier, a minor source air quality member of the Board of Amondson, in the press with an approximate 5 per nadian subsidiary, Energy barrel of WTI was going construction permit apQuantum Energy, Inc. I release of Nov. 3, 2014. cent working interest in a Processing Group, Inc., for US$48.14. plication with the North am a resident of the State WTI oil on Nov. 7, 2014 heavy oil project in Misto develop the Stoughton An Aug. 26, 2015, Dakota Health Departof Arizona.” was US$78.65/bbl. The processing center and will souri. “These acquisitions press release highlightment, Division of Air On Feb. 20, 2014, company started using the WTI oil is now going for add $3,500,000 in assets be announcing its board ing “Favourable Refining Quality. This announceterm “Energy Centre” to along with $1,900,000 and officers soon.”

Operating Conditions” ment now projects, “The US$50.34/bbl. describe their proposals. of net equity,” said Stan This press release now only refers to the On May 26, 2015, the Berthold refinery annual Refinery No. 5, Berthold, company announced it Wilson, Quantum Chairalso makes reference to Berthold site. The other revenues using June 2015 North Dakota (near man. Both acquisitions didn’t need that law firm, four proposed sites are not the company’s previous prices are projected at Minot) were completed by means roots as a junior oil and and was working with included in the press reapproximately US$1.2 On Nov. 24, 2014, ► Page A12 gas producer, something another to handle its S-1 lease. This pattern carries billion while resultjust three days before filing. It also said it had OPEC agreed to flood increased the acreages of • Access to • Links to world markets with crude, the Fairview, Mont. site, • Direct heavythe BNSF all Class 1 sending oil prices into a from 144.6 acres to 154 haul access • Direct access network, railroads in sharp nosedive, Quanacres. to Western to the BNSF including North America tum Energy announced On July 16, 2015, Canada, up main line West Coast, via interchange a fifth location, although Robert L. Monday joins to 62,500kg Gulf Coast, with BNSF curiously, the press release the Quantum advisory (137,788lbs) and Midwest Railway says it is their fourth Bak- board. For the middle part ken site for an “Energy of 2017, he becomes the Centre.” Their list in the company’s CEO. press release no longer inQuantum announced cludes Billings, Montana, on July 17, 2015 it had the third location initially teamed up with Native announced. Again, this Son Holdings, LLC to will be a 20,000 bpd topform a joint venture for ping plant diesel refinery, the construction and with CO2 capture and operation of a 40,000 NGL stripping capacity. barrel per day refinery in The diesel is intended for Berthold, N.D. The joint “Meeting the much-need- venture will be known Saskatchewan’s Newest International Inland Port ed local diesel markets for as “Quantum Native A multi-commodity logistics center strategically located on the Canada/U.S. border in southeast agriculture and indusProcessing Partners, Saskatchewan servicing energy, industrial and agriculture sectors in Canada and the U.S. try…”

LLC, and will be owned “Quantum has signed by Quantum and NaFACILITIES two year option agreetive Son Refining LLC, a Ceres Northgate Terminal is a 1,300 acre multiments in Baker, Mont., subsidiary of Native Son modal, multi-commodity facility designed Fairview, Mont., Stanley, Holdings LLC.” to handle crude oil, liquefied petroleum N.D. and now Berthold, This is the first referchemicals, chemicals, frac sand, pipe, HD N.D. for Energy Cenence to a refinery with equipment, other dry, liquid and agricultural ter sites and is making double the capacity of the products. progress in firming up initial announcements, relationships with other also on par with the later Ceres Northgate Terminal provides in one Welcome to the Ceres Northgate Terminal, a multi-commodity logistics center strategic alliance partners, Stoughton announcement. location: strategically located refinery design teams, This is alsoon thethe first Canada/U.S. border in southeast Saskatchewan.

• 40,000 ft of rail track which includes two engineering firms, major reference to Canada, with high efficiency 120 car unit train capable diesel off-take sources and the following statement, loop tracks potential funding sources “Quantum and NSR have Northgate Area Map as well as crude supply also been approached STRATEGICALLY LOCATED candidates as a result about a possible JV with a • Single carload and unit train Ceres Terminal is located in southeast of recent meetings in Northgate Canadian TSX company Vancouver shipments servicing industrial Bismarck, N.D.,Saskatchewan Willisto build energy, a 40,000 bpd and • Industrial products transloading Winnipeg Coutts NORTHGATE agriculture sectors in Canada and Manitoba the U.S. ton, N.D. and Oklahoma facility in either and laydown capabilities City.” orTerminal Saskatchewan Ceres Northgate provides:and • High throughput 26,000 ton Three months discussions are • later, Direct accessongoing to the BNSF main line fertilizer warehouse. • Tender truck Superior on Feb. 19, the company place.”including • Access to thetaking BNSF network, scaling services West Coast, Gulf Coast, and announced it was engagWith allMidwest five of these • Truck-to-rail/rail-to-truck • Links 1 railroadsthe in North America ing the legal services of to all Class refineries, company transloading via interchange with BNSF Railway Securities Compliance had announced approxi• Long-term warehousing and storage Chicago • Direct heavy-haul access to Western Canada, Group, Ltd. on February mately 120,000 bpd of space available up to 62,500kg (137,788lbs) 18, 2015. new refining capacity, The press release roughly the same capacFacility: Northgate, SK Ceres Northgate Terminal said, “We are excited to Contact Info: Paul Ferguson, Ceres Northgate Terminal FACILITIES ity the Regina Refinery email: pferguson@ceresglobalag.com Agricultural Unit Train Loop Track reach another milestone Complex.

Office: 1660 S. Highway 100, St. Louis1.Park, MN 55416 Cell phone: (952)320-5394 Tel: (952) 746-6826 Ceres is a 1,200 was acre also of moving forward in Northgate Terminal 2. High Speed Grain Shuttle Elevator Construction

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PIPELINE NEWS June 2018

Site announced, then land deal announced, then not much happens afterwards

◄ Page A11 of a share exchange and contribution agreement.”

Andrew J. Kacic was replaced as CEO by Stanley F. Wilson on July 1, 2016. Kacic would return to the board Nov. 8 2017, and Wilson would resign as an officer then.

On Dec. 1, 2016, Quantum announced the establishment of a wholly-owned Canadian subsidiary, Dominion Energy Processing Group, Inc., “to conduct the development, construction and operation of a 40,000 bpd full slate refinery in Saskatchewan, Canada.”

Keith Stemler was announced as its CEO. In early 2017, Stemler held public meetings in Stoughton, Weyburn and Estevan regarding the proposal.

Merger, Wilson and Stemler leave An April 12, 2018 press release stated that “Effective February 24, 2018, Lorne Keith Stemler resigned as a director

and officer of Quantum and its subsidiaries.”

Similarly, effective Feb. 28, 2018, Stanley F. Wilson had resigned as a director and officer of Quantum and its subsidiaries. Why Wilson’s departure was announced effective Nov. 8, 2017, and then Feb. 24, 2018, is unclear.

On April 17, 2018, Quantum announced a proposed merger with Inductance Energy Corporation, a Wyoming corporation.

“The proposed merger is conditioned upon, among other things, IEC’s successful completion of its due diligence examination of Quantum, the negotiation and execution of a definitive agreement and IEC raising in the aggregate up to $50,000,000.

Provided such conditions are satisfied including IEC’s funding of the Total Capital Investment, Quantum will issue to IEC such number of shares of Quantum com-

mon stock as shall represent 60% of the then issued and outstanding shares of Quantum common stock. Quantum will also, based on valuations as yet to be determined, issue additional shares (after the initial issuance to IEC), to additional investors, as necessary to accommodate the closing of the Total Capital Investment. The combined entity will also provide the necessary funds required to prove out the viability of the development of the refinery currently planned to be developed in Stoughton Saskatchewan, Canada including (a) obtaining environmental and engineering studies to prove the viability of the intended site, (b) if the site is determined to be viable, to acquire the land, (c) obtain required permits and (d) pay other related costs.”

The press release went on, “The transaction is expected to be completed on or before

August 31, 2018, extendable to December 31, 2018.

“Also, upon completion of the merger, William J. Hinz, who is currently a member of the board of directors of Quantum and a member of the board of directors and CEO of IEC, will become interim chief operating officer of Quantum.”

The release stated, “IEC is a development stage company that holds certain exclusive intellectual property licenses for the application of the science and mechanical application of magnetic propulsion. Magnetic propulsion is a technology that uses highly concentrated magnetic energy to move physical objects in a rotary, reciprocating, angular, linear, or vertical direction, purely through the manipulation (use) of a magnetic field (magnetic radiation). IEC has the exclusive license to design and manufacture a

This is the plot plan for the Stoughton refinery, as shown to potential contractors at a meeting in Weyburn on Feb. 15, 2017. North is to the left. The facility on the bottom right corner is Crescent Point Energy’s Viewfield gas plant. Photo by Brian Zinchuk broad range of high quality magnetic propulsion engines, as well as related and support equipment marketed through a worldwide distribution network, under a variety of brand names. IEC’s licensed products are used

principally to produce electrical and mechanical energy.”

As of May 17, 2018, construction has not started on any of the six refineries Quantum Energy, Inc. has announced to date.

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PIPELINE NEWS June 2018

A13

Crescent Point has no insight on refinery project

REFINERY LOCATION IMMEDIATELY ADJACENT TO MAJOR CRESCENT POINT FACILITY

By Brian Zinchuk Stoughton – The location chosen by Quantum Energy, Inc. and its wholly-owned subsidiary, Dominion Energy Processing Group, Inc., for the proposed was immediately adjacent to Crescent Point Energy’s Viewfield gas plant and battery, where the company has significant storage, connections to the TEML pipeline and its own rail loading facility a few kilometres northwest of Stoughton.

However, when Pipeline News contacted Crescent Point, they confirmed on May 18, “We’ve had no contact with the proponents of the project for a long time now. We unfortunately have no insight to provide you on this project,” according to spokesperson Andree Morier.

Additionally, according to Randy Fleck, a long-time land agent with Land Solutions in Lampman, it is common practice to place a caveat on a property when optioning the land for a project.

However, a title search conducted by Pipeline News with ISC on May 10 found that Quantum/ Dominion have placed no such caveats registered upon the two quarters, NE-8-8-8-W2 and SW-8-8-8-W2. There are numerous pipeline easements and other leases held by Crescent Point Energy Corp. and TEML Saskatchewan Pipelines Limited on the southwest quarter and none on the northwest quarter. But none of those easements and leases are with respect to the refinery project.

Its Feb. 28, 2018 annual report, obtained on otcmarkets.com, said in its audited financial statements, “On December 5, 2016, the company executed a farm contract of purchase and sale with a

land owner in Stoughton, Saskatchewan. The purchase price of the property is $500,000 (Canadian) subject to certain terms and conditions including approval of the purchase by the Saskatchewan Farm Land Review Board, the company completing various test for hydrology and land suitability, the proposed refinery project meeting all requirements of various Saskatchewan government laws and bylaws, and full approval by all levels of provincial government and agencies. The purchase contract originally expired on December 15, 2017, however, the contract was amended to extend the closing date to July 10, 2018 for removal of all terms and conditions to the purchase. The company paid $7,822 as a deposit on the property.”

Crescent Point is, by far, the largest producer of oil in the Saskatchewan Bakken, with that Viewfield facility being the key gathering point. The companies total Williston Basin production, which includes the Viewfield Bakken around Stoughton, its Flat Lake play at Torquay, and a small play in North Dakota, is approximately 106,000 boepd, according to its May 2018 corporate presentation.

The company has 63 per cent of all Bakken and Torquay/Three Forks wells in southeast Saskatchewan, according to its May 2017 technical presentation.

This is key, as Andrew Kacic, currently director and secretary of Quantum Energy, Inc., and its CEO when the company was proposing refineries at five different locations in North Dakota and Montana, told Pipeline News on May 17 that they were specifically targeting light, sweet Bakken oil, as other refineries were having difficulty refining it.

The graphic, from Crescent Point’s May 2017 technical presentation, shows the rough location of the proposed Stoughton refinery, as indicated by the star. Graphic courtesy Crescent Point Energy Corp.

The land title for the two quarters optioned for the proposed refinery at Stoughton have no caveats registed against them by the refinery proponents. Photo by Brian Zinchuk

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PIPELINE NEWS June 2018

Ministry of Environment has not heard from Quantum/ Dominion for over a year, says minister

By Brian Zinchuk Estevan – In early 2017, Quantum Energy, Inc., through its Canadian subsidiary, Dominion Energy Processing Group, Inc., said they were working on their permitting for a proposed ref inery in Stoughton. Over a year has passed since that time, and in that year, they have had no contact with the Ministry of Environment for “well over a year,” according to Minister of Environment Dustin Duncan. Duncan was the Minister of Energy and Resources at the time of the initial proposal.

Pipeline News sent a series of questions via email regarding this proposal. Duncan and Energy and Resources Minister Bronwyen Eyre responded by email on May 17.

Pipeline News: In early 2017, there were two proposed refineries for Saskatchewan, one at Lloydminster and one at Stoughton. What sort of government approvals and permits are necessary to build a refinery in this province?

Dustin Duncan: Ministry of Environment: • Environmental Assessment and Decision by Minister of Environment • Approval to Construct, Install, Alter, or Extend Industrial Waste Works • Approval of Decommissioning Plan and Financial Assurance • Environmental Protection Plan under the Industrial Source (Air Quality Chapter) of the Saskatchewan Environmental Code • Approval to Operate Industrial Waste Works Water Security Agency

• •

Aquatic Habitat Protection Permit Permit for Waterworks Intended for Human Consumption • Permit for Sewage Works Ministry of Highways and Infrastructure • Provincial Highway Access Permits Municipal Approvals • Road Use Agreements • Municipal Development Permit • Amendments to Zoning Bylaw (if required) P.N.: Where is Quantum Energy Inc./Dominion Energy Processing Group, Inc. in the process with regards to applying for an environmental permit for the proposed Stoughton refinery? Have they made an application?

Duncan: The Ministry of Environment has not received any applications.

P.N.: Are there any monetary requirements or commitments in the permit process, such as bonds?

Duncan: There is no application fee for environmental assessment review. Should a project proceed to the permitting stage, a decommissioning and reclamation plan and financial assurance from the proponent would be required. The financial assurance would be held by the ministry and used to reclaim the site should the company become insolvent or walk away from the project.

P.N.: Can any work take place before the permit is issued?

Duncan: No work should proceed until the appropriate regulatory approvals have been obtained.

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Dustin Duncan is Minister of the Environment, and previous to that, Minister of Energy and Resources.

Photo by Brian Zinchuk P.N.: What would be the expected timelines to make a permit application, and to get it approved?

Duncan: There is no legislated timeline for completion of the environmental assessment process or permitting processes. Timelines depend on the quality of information submitted by proponents in their applications and their ability to respond to additional information requests during the approvals process.

P.N.: When was the last time the Ministry of Environment or Ministry of Energy and Resources has seen movement on this file from Quantum/Dominion?

Duncan: The Ministry of Environment has not had any contact with the company for well over a year.

P.N.: We understand that access to water may have been an issue. Is that the case, and if so, how so?

Duncan: It is the Ministry of Environment’s understanding that water would be required for the project; however, no application has been received and as such, the Ministry is unaware if a suitable water source has been located.

P.N.: In the 2017 provincial budget, the province announced, “the Oil Processing Investment Incentive encourages processing of our oil resources in the province, with royalty credits on new production.” Have you had any takers on that? Specifically, has Quantum Energy Inc./Dominion Energy Processing Group done anything with regards to applying for this program?

Bronwyn Eyre: The Oil Processing Investment Incentive has not yet been opened for applications.

The government is undertaking stakeholder consultations to ensure that the program is designed to accommodate and promote a wide variety of large-scale value-added investment projects in the oil and gas sector.

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PIPELINE NEWS June 2018

A15

You could rent refinery proponent’s head office by the hour. We did.

By Brian Zinchuk Estevan – So just where are Quantum Energy Inc., and its Canadian subsidiary, Dominion Energy Processing Group, Inc., based?

The S-1 filing with the United States Securities and Exchange Commission (SEC) was filed on EDGAR, their electronic filing system, on March 6, 2017, right

around the time the company was doing numerous meetings in southeast Saskatchewan. The documents are dated Feb. 22, 2017.

The filings can be found here https://www.sec.gov/ cgi-bin/browse-edgar?action=getcompany&CIK=000129 5961&owner=include&count=40&hidefilings=0 The S-1 filing, General form for registration of securities under the Securities Act of 1933, is a critical document in filing for a securities listing.

Quantum Energy, Inc.’s February 2017 S-1 filing lists its head office address as 60 East Rio Salado Parkway, Suite 900 Tempe, Arizona 85281.

A quick search on Google maps and using Google

Streetview shows an impressive steel and glass building in Tempe, Az. The 12-story building is referred to as Hayden Ferry Lake, although some references call it Hayden Ferry Lakeside.

That particular address, Suite 900, was listed as “office space available” on the Downtown Tempe Authority website, as of Jan. 24, 2018. It has 4,000 square feet, divisible, and the contact is listed as Regus Group.

Head office can be rented by the hour, through an app The “Regus Group” portion is key. You see, they have an app for that. ► Page A16

Done right and on time...

The Regus app allows you to rent vitual office space at your leisure. This is the image it presents of 60 East Rio Salado Parkway, Suite 900 Tempe, Arizona, which was the head office of Quantum Energy, Inc. at the time the company was holding meetings throughout southeast Saskatchewan in early 2017. Screenshot of Regus app

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A16

PIPELINE NEWS June 2018

There's an app for getting a head office ◄ Page A15 On the iTunes app store, you can download the Regus app. If you are travelling all over North America, they have numerous listings of office spaces available for rent on short term, temporary basis, even by the hour.

If you download the Regus app, and enter Tempe, Arizona, on it, seven results come up. The first one is Hayden Ferry Lake. It’s address? 60 E Rio Salado Parkway, Suite 900, Tempe, Az. 85281 The signs outside and on the building look impressive, listing Microsoft, MetLife and KPMG as tenants. It also has Regus on the side of the building.

The building overlooks a small reservoir which forms the border between

Tempe and Scottsdale, on the eastern side of the greater Phoenix metropolitan area.

Using the app, you can choose “Book a room.” Room types include meeting room, training room, day office and co-working office. Choosing a day office, for two people, for one hour, a week in advance, comes up as US$26.78.

We have done this, under Brian Zinchuk Publishing, for Mar. 24, 2017, from 9-10 a.m, and have the US$26.78 receipt to prove it. In fact, booking a day office, got us on their radar, despite not having shown up to actually use it. Regus has since sent more than a dozen emails, asking about “your recent visit” following up on if we would like to use them again.

The most recent, as of the time of writing,

was May 10, 2018. They’ve even phoned several times to ask if we would like to use them again.

This is pertinent in that the S-1 filing’s prospectus summary said, “The registrant was incorporated in the State of Nevada on February 4, 2004. Our principal executive offices are located at 60 East Rio Salado Parkway, Suite 900 Tempe, Arizona 85281.”

Head office was rented for $230 per month Further on in the filing, it says, “The Company leases office space at 60 East Rio Salado Parkway, Suite 900, Tempe, Arizona 85281 as its corporate headquarters at a monthly rent of $230.”

A May 5, 2017, email from Greg Waddington, Regus’ area manager – Tempe, said, “Just following up to see if you decided on an office solution yet.

We 6 locations in the east valley with full time private offices starting at less than $300 a month. That includes fully furnished office, unlimited high speed internet, multiline telephones at every desk, mail handling, utilities, janitorial, a free meeting room option and of course 24/7 access. A more cost effective option is our Business World membership which provides you with 5 or 10 office days a month anywhere in our network of 3,000 locations throughout the globe for $189/$299 respectively.”

Quantum’s former head office was a busy place

Here’s the receipt, left for renting the head office of Quantum Energy, Inc. for one hour on March 24, 2017. It cost US$26.78. On the right is the S-1 filing with the Securities and Exchange Commission, showing the exact same address. Photo by Brian Zinchuk

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There’s a lot of other businesses who use Suite 900, 60 E Rio Salado Parkway, Tempe, Az. as their business address. Highlighting that exact address from the S-1 filing and asking Google to search for it found these companies using the exact same address, Suite 900, in their contact information: Isos Technology Hypofusion Gilberti White Berberian PLC Gonzalez Law, LLC Ayres Associates The SEM Express Alt Thirty-Six RX Medical Zigi Gas Jeff J. Komar, Komar & Associates Reztech, LLC Epic Home Entertainment Voxee Hosted VOIP Billing HQ – a member of the Regus

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First out of the gate: Aldon Oils Ltd.

By Brian Zinchuk Weyburn, Lampman – On May 5, there was just one rig working in southeast Saskatchewan – Lasso Drilling Rig 1.

That grey rig was making hole a few kilometres northwest of Lampman for Weyburn-based, privately owned Aldon Oils Ltd. Del Mondor, owner of Aldon, was eager to get back in the field, offsetting two wells drilled in February. That’s because, according to BMO Capital Markets, those two wells were the top producing wells in Saskatchewan for the month of March, producing 545 and 385 bps respectively.

Those two wells were drilled on land Aldon had held for many years.

Another producer drilled a successful well next door, and upon seeing that, Aldon drilled its own immediately adjacent, offsetting the first.

“We’ll be drilling another in three days,” Mondor said on May 11 in his Weyburn office.

Each of these wells have been two-leg horizontals, running northsouth in the Frobisher formation. Being Frobisher, that means they’re conventional reservoirs, not requiring fracking for completion.

Also, they are not as deep as some other formations in the region, and therefore are less expensive to drill.

Mondor said Frobisher wells have bigger early days, but don’t last as long. In comparison, he owns Midale wells which were drilled in 1956 and have been producing ever since.

“They came on like gangbusters,” he said, adding, “We’ve had our share of failures, and surprises. We always have estimates and we’re rarely

right.

“It’s a crap shoot.

That’s why not everyone’s doing it. The old saying about an oil well is, ‘First day of production is the beginning of the end.’”

These new wells are using progressive cavity pumps, something that’s pretty new for Aldon.

While they’ve used one a few years ago, Mondor said, “We thought we’d try it.”

He noted the service rig can more or less install it.

“We’ve bought five in a row, now,” he said.

The wells are, “Flumping,” he explained, flowing and pumping.

While hitting a sweet spot is a good feeling, the better feeling is seeing oil over US$70 per barrel.

For the first time in three years, Mondor said, “We’re drilling for the wallet as opposed to commitments.”

In other words, during the downturn, drilling was primarily targeted at ensuring land was secured before leases expired. Now, he’s drilling with profit in mind.

“I’m nervous about the price, but I’m not smart enough to know where the price is going to go,” Mondor said.

Punching into a calculator, he pointed out that with oil at US$71.01 per barrel and the Canadian dollar at 78.26 cents compared to the American greenback, the price is now over C$90 per barrel.

“Those two numbers, together, mean we can produce and get the profits I need to pull the trigger on some projects we’ve held off on,” Mondor said.

He noted how, when oil prices were depressed to almost a third of what they are now, there

Lasso Drilling Rig 1 was the first rig working in southeast Saskatchewan at the conclusion of spring breakup, according to Rig Locator. The rig was drilling for Aldon Oils, drilling an offset well from two high producers drilled in February. wasn’t much ambition to develop prospects whose best production would be during low-paying times.

“We drilled eight wells in the last 12 months. We just added six more to our program.

We’ll do 10 more wells from this point in 2018.”

In addition to the Lampman area, the other drilling focus is south of Weyburn in the MidaleElswick field. “We did a purchase from a large oil

company,” he said. “We turned some wells on and did some drilling in other areas as well.”

Factoring in tariffs and transportation costs, he said, “To me, there are getting towards good times. I have no idea how long they’ll be here for.”

He noted there is now geopolitical risk incorporated into the price of oil again, and that includes uncertainty from the United States.

“We don’t like uncertainty around here.

We have to be careful and tread lightly,” he said.

That could mean curtailing a drilling program quickly, if necessary.

But to that end, he added, “The bulls are out.”

Royalty company For many years, Mondor maintained two oil companies, Aldon Oils and Brownstone Resources. But he’s taken

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a page from a movement that tools off when Encana, when it spun off PrairieSky Royalty Ltd., a wholly-owned subsidiary which hold the mineral rights to its properties, and more.

Brownstone is now the mineral rights company, and Aldon Oils is the operating company.

Their combined production is at a record, but what that number is, he ► Page A18

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A18

PIPELINE NEWS June 2018

Brownstone Resources now a royalty company ◄ Page A17 holds close to his chest.

“In recent months, we’ve taken all the producing assets from Brownstone and moved them into Aldon,” Mondor said. Brownstone is now a mineral title company and a farmland company. The transition began six months ago.

Brownstone was started during his time working in Calgary in 1996.

He said Brownstone has “sizable holdings” for mineral title. It holds property that not only Aldon

operates, but land other companies are drilling on, too.

Indeed, he said, “Most of my minerals are not Aldonproducing.”

Asked why make Brownstone a mineral rights company, he said, “I’m turning 50 years old. Not that I’m thinking of retiring, but that day will come.”

Mondor said he could sell Aldon one day, and still maintain Brownstone, which is much less management-intensive.

The other aspect of Brownstone is the same sort of royalty thinking, but on the surface, in the form of

rent. So far they’ve acquired 52 quarters of land.

“Some 20 years ago, an old man told me they’re not making anymore farmland, so buy,” Mondor said.

“We are interested in buying more farmland,” he said. “We purchased a couple quarters over the winter.”

Price escalation in farmland is starting to be noticeable, however.

On the mineral rights, he said they are aggressively pursuing it. “You know your backyard better than any other,” he said about the area of highest interest.

Hank’s Maintenance reaches 50 years

By Brian Zinchuk Estevan – This year marks the big 5-0 for Hank’s Maintenance & Service Co. Ltd. of Estevan.

Ted Vicary, operations manager and dispatcher, has been with them for many of those years, starting in 1977.

Robin Holma, general manager, started 3.5 years ago. They spoke to Pipeline News on April 24.

The “Hank” in “Hank’s” comes from original owner Henry “Hank” Fuglerud.

Vicary said, “Hank used to work for Oilwell Supply. I worked for Hank.

Brothers Grant and Conrad Walkom bought the business from Hank around 1980. Grant and his wife, Elaine, bought Conrad’s shares.”

In 2011, the company was purchased by Ironbridge Equity Partners, a Toronto-based private equity firm. That same year, Ironbridge also bought Estevan-based L&C Trucking. Ironbridge has largely allowed the two companies to continue on as normal.

Vicary said that Elaine stayed on

for a few years as office manager. Grant stayed on a few more years. He passed away in 2017.

Vicary said, “1977 was my first attempt. I left briefly for about a year in 1981, for about half a year, then again in 1985.

“It’s been good.”

Holma came over from TS&M Supply, where he did similar work to what he does now, managing and looking after multiplex: disposal and injection pumps. He worked at TS&M for over six year. Prior to that he owned High Energy Performance, but sold his share when he exited the business.

“I’m a journeyman industrial mechanic,” Holma said.

Vicary added that he personally is not a ticketed mechanic, but he worked in the field from 1977 to 1989.

“We were the mechanics. I worked on gas engines, pump units and disposal pumps, sometimes all three in the same day,” he said. ► Page A19

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A19

Hank's now does some work for national defence ◄ Page A18 Much of this was single-cylinder engines running on natural gas, propane, or even gasoline. “They’ll almost run on Varsol,” he said.

Holma said, “The core of the business is pump unit maintenance.”

Vicary added, “Robin’s brought on the disposal side of it, stronger than it’s ever been.”

That has included applications in power production and the potash industry.

Holma said, “We also started a push into the Kindersley area, Fort St. John and Grande Prairie.”

The bulk of their business is pumpjacks. “We can maintain them, from the three-ton trucks, to our machine shop and weld shop,” Vicary said.

Hank’s also overhauls complete pumps, rebuilds pump skids and builds new pumps skids.

They have seven three-ton trucks, all with knucklebooms, and three onetons. The staffing has been consistent at around 30 people. They had been up to 40 people at one time, but have seen the downturn like everyone else.

“We are lucky here. Seventy per cent are senior guys with lots of knowledge, 15- to 30-year guys, ” said Vicary.

Over the years, the company has

observed the consolidation of the southeast Saskatchewan oilfield to a much smaller number of oil companies.

“We used to work for 200 different oil companies,” Vicary said. “That’s all gone.”

He noted that small “Mom and Pop” operations would do their spending when prices were down, which helped during down times. Both of their shop expansions over the years were done during those times.

With the downturn that hit in 2014, Vicary said they did see one round of cuts in rates, which they largely dealt with by finding internal efficiencies.

“For sure, our billed hours dropped,” Holma said. “That’s who we diversified into different areas; power production, potash and refining. National defence was pretty cool.”

In the 10 years Pipeline News has been published in its current form, that was the first time someone mentioned national defence as an area of diversification. Potash, often, but national defence, no.

He explained they had some pumps go west to Victoria and some go east to Halifax.

That opened the door. It took an awful lot of paperwork to get the pro-

Journeyman machinist Willie Forrest has been with Hank’s Maintenance for six years.

Photo by Brian Zinchuk cess going, but now they’re looking for more government work. “Now we do a fair bit of bidding, for all government stuff. We do get odds and ends,” he said.

“It’s all pump related.”

As for their more regular work, they say pumpjack maintenance will

continue to be an ongoing thing. “You’re dealing with moving parts,” Vicary said.

For this year, Holma said he expects it to be similar to 2017. The first quarter of 2018 wasn’t as good as expected.

Their busiest time is now, through the summer.

The oilman’s lawyer, and sometimes the farmer’s, too: Barry Bridges has been at it 45 years

By Brian Zinchuk Estevan – An integral, but perhaps overlooked part of the oilpatch are the lawyers who get the deals done, long before any drilling rig spuds a well. And there are precious few in Saskatchewan who specialize in the field of oil and gas law.

One of the most prominent is Estevan lawyer Barry Bridges.

Bridges has been a lawyer for 45 years, and 44 of those have been spent in Estevan. It didn’t take him long to figure out there was a need for an oil and gas lawyer in the area.

He grew up in Govan, where his grandfather ran a grocery store, followed by his parents. “I broke the tradition and didn’t take over the grocery store,” he

said in his Estevan office on May 3.

Bridges started out by getting an education degree, then went onto law school at the University of Saskatchewan. “I can’t see myself doing this for the rest of my life,” he decided after his teaching internship.

Scouted He graduated from law school in 1973 and was

admitted to the bar in 1974.

He articled in Regina, and then came to Estevan right after that. “It was the opportunity, really. I was in one of the larger firms in Regina, and I didn’t care for that.”

Dennis Ball, a lawyer in with Hill-Klassen-McLellan-Ball essentially scouted Bridges, and invited him to come to Estevan and to join the firm.

“When I came here, that’s one thing I noticed: really there was nobody in southeast Saskatchewan doing oil and gas law, and there was a need for it,” he said. “But that was right at Bill 42 time, and the industry was really in a crisis. There wasn’t a lot going on at that time, which was probably good, because it gave me an opportunity

to learn more about oil and gas law.”

It took until about 1976, the year he was made a partner, before things picked up. “What was going on in the Bill 42 days was the oilfield service companies were hit hard because there was no work for them to do. That meant changes in that regard. Some ► Page A22

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Very few lawyers in Saskatchewan specialize in oil and gas law, do Bridges took it on ◄ Page A19 companies that were able to weather the storm better bought out other companies. One partner might buy out the other, or they might wind up the company. I was involved with that.”

Bill 42 was a seminal event that rocked the Saskatchewan oilpatch to the core in the 1970s. The NDP government at the time dramatically increased royalties, bringing the sector to its knees.

“The point of Bill 42 was to nationalize the oil industry for the province, as opposed to the National Energy Program, which was later. The NDP government of the day increased the royalties you had to pay on each well to the point where you would lose money if you kept them operating. So people started shutting in those wells. To counter that, the government imposed a penalty of $1000 a day if you had the well shut in longer than the prescribed period. So either way, you were in trouble. So you would keep it shut in as long as you could, then you would go and start it up to avoid penalty.”

“The royalties were beyond punitive. The point was, they wanted you to give, or sell at a modest price, your wells to SaskOil,” Bridges said.

“It’s shocking to realize that could happen here in Saskatchewan.

Specializing in oil “In those days I had a very general practice. I did anything that came in the door – divorces, real estate, corporate law, estates.

Now I don’t do that sort of thing.

“You can’t do it all and be good at everything.”

Bridges came to that

firm conclusion in the mid-1980s. “The law, like everything else, has become more complicated in the last 25 years. Because of that, it’s too hard to be an expert on everything,” he noted.

The original firm changed over there years, dissolved in 2001. Bridges & Company is partly a descendant of that firm.

“I went on my own, but worked under McDougall Gauley up until 2015 when we changed and went to the Bridges & Company name,” he said.

In 2015 he was granted the Queen’s Counsel designation and in 2015, and each year since then, he was voted by his peers as one of the “best lawyers” in Canada in the field of oil and gas law.

There are two partners in Bridges & Company – Chad Jesse and Rob Nicolay. Surprisingly, Bridges is not a partner anymore.

“They are the partners. I’ve withdrawn from the partnership in an effort to slow down some. They call me ‘counsel to the firm,’” said the 69-year-old Bridges. “I work less than full-time. It depends on the workflow.

“As long as I enjoy what I’m doing, I want to keep on doing it, but on a reduced basis.”

He’s put in a lot of 16-hour days, evenings and weekends.

There are very few lawyers in Saskatchewan who specialize in oil and gas law in Saskatchewan. The number would likely fit in his boardroom.

“Most of the oil industry is driven out of Calgary, so people tend to use Calgary lawyers a lot,” he said. “When I came here, people had to use Calgary lawyers. There weren’t any (oil and gas lawyers) in

southeast Saskatchewan.”

“I think if there were more lawyers who were knowledgeable in oil and gas, probably more of the work would be done in Saskatchewan,” Bridges said.

Once lawyers go to Calgary, they tend not to come back. “I think that’s part of it. Young people want to go the bit cities and the bright lights.

WE just can’t compete with Calgary or Toronto or Vancouver on those terms.”

“When we recruit lawyers here, we go looking for the people who might have tried that and said that’s all nice, but I’d like to live in a smaller centre where the quality of life is a little better.”

“It’s tough to recruit lawyers to cities the size of Estevan.”

They’re not recruiting right now, but that could change in a hurray with US$100 oil and a pipeline or two, he noted.

Oil and gas law “For the most part, my clients are mid-sized to smaller oil companies,” Bridges said. “Over the years I’ve done work for some of the major oil companies, but must of their stuff is done in Calgary or other centres. I do a lot of work for farmers and other mineral owners as well.”

“We also do a lot of negotiating the petroleum and natural gas lease.

That’s where it starts. If we’re not acting for the oil company, we’re free to act for the mineral rights owner, who is often the farmer. So we negotiate the royalty that he gets, the money that he gets, the wording of the lease.

“It’s called a lease. It’s not really a lease. A lease

is you use something for a while and you give it back.

The oil company doesn’t give the oil back.”

“We do a lot of that, and negotiate the terms of surface leases.”

Royalties Asked for a range of what a typical royalty would be, he said, it depends a bit on the economy.

“When the price of oil is low, the oil companies try to drive the royalties down. For the most part, the royalties would be in the 17 to 20 per cent range. Sixteen, on today’s market, I would regard as low. I would put 17 pretty much as the bottom end of the range, and 18 is going to catch the vast majority,” Bridges said.

Where minerals are highly sought after, i.e. next to some good production, or more than one oil company is bidding on it, 20 per cent or even the low 20s is possible.

Using an example of when oil was $100 per barrel, he said, “The industry has a standard form of lease. Not all oil companies use it, but most do. That standard form of lease typically says that you get your percentage of the current market value at the point of measurement.

They meter how much the well makes every day, and that is your point of measurement.

“The expenses almost all come off after that point of measurement. So what your share of the oil is worth, at the point of measurement, is not the $100 per barrel, because to get it marketable, it has to be treated. The salt water and other impurities have to be taken out of it and it has to be gotten into marketable condition and

Barry Bridges has been a lawyer for 45 years, and 44 of those have been in Estevan. Photo by Brian Zinchuk transported to a pipeline terminal,” Bridges said.

“Transportation becomes a factor. So, the oil company gets to say you get 18 per cent, but you also have to pay 18 per cent of the treating and processing costs to make this emulsion into marketable oil. And you have to pay 18 per cent of the cost of transporting that oil to TEML’s pipeline terminal.”

How much water a particular well makes adds up the costs. There’s typically a lot, and it has to be separated and put into a disposal well.

“The typical approach, by oil companies, is that even if it’s pipelined, they get to charge you a return on their capital costs.”

“Usually what happens, the oil company will pay you your royalty each month. They’ve already deducted what they call your share of the expenses.”

Lifting costs is a very negotiable point, he said.

“When you are going to

enter into a petroleum and natural gas lease with an oil company, that’s one point you should negotiate with them, because usually, they will negotiate to no deductions, so your 18 per cent comes off the top.”

“There’ve been lots of mineral owners in southeast Saskatchewan whose royalties well exceed $1 million per year.”

Negotiating pays off There’s a whole range of attitudes when it comes to mineral rights owners.

Very few people will not want any development on their land. Others have held the rights for a long time, and they’re quite anxious to make a deal. Bridges said they can sometimes give in too easily. The more sophisticated ones will say “no” to get better terms. Maybe a third are in that last category, he said, and they’re almost always successful.

“If I’m acting for the mineral owner, I would be negotiating with the land ► Page A24

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PIPELINE NEWS June 2018

Leases often have room to negotiate ◄ Page A22 agent. If I’m acting for the oil company, the oil company will often ask me to draft the terms they want in the lease, or if the mineral owner asks for a specific clause.”

That type of work is as low as 35 per cent of his work, and at the high end, it can be as much as 90 per cent, mostly for the oil companies. In 2008, they were really busy.

His work also involves oil companies selling land and leases from one to another. He also does work on surface leases, unit agreements, pipeline easements, and contracts between oil companies and service companies, although an awful lot of that last point comes out of Calgary.

Bridges has been around long enough to see the large oil companies pull out of southeast Saskatchewan, the

rise of the junior producers, and then the wave of consolidation now underway with local oil companies. He’s seen serial entrepreneurs keep getting back into the game after selling their wells.

“I’ve been fortunate enough to have clients who have invited me to invest with them,” Bridges said, noting he’s had “skin in the game.” And while he’s been fortunate enough that most of the time it’s been positive, there have been some losers, too.

Bridge’s wife, Bonnie, has been married to him 49 years this June. She has helped in the office from time to time, but has retired from that. The high school sweethearts got married in 1969, and they’ve had four children, all of whom felt law was not for them.

“You have to have a very understanding spouse,” Bridges concluded.

Surface rights issues from an expert

FORMER CHAIR OF BOARD NOW REPRESENTS LANDOWNERS BEFORE IT

By Brian Zinchuk North Battleford – North Battleford lawyer Richard Gibbons spent many years as the head of the Saskatchewan Surface Rights Board of Arbitration. Now he specializes in representing landowners before the board.

Gibbons was appointed to the board in 1995, and left it in November 2009.

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The government had changed, and Gibbons felt they wanted some new faces for the nonpolitical board. “I was on the board for 14 years, so it was probably time for some refreshing.”

“I was okay with that. There was a lot of travel. You go all the way from Estevan to Pierceland,” Gibbons said by phone on May 4.

When he was on the board, he was the board chair and authored most of the decisions. Three board members would take part in a particular hearing. He talked about how one had to understand the technical part of oil and gas, reduce that to a written form that would make sense, be consistent with previous decisions, and be fair to the oil and gas industry as well as the agricultural industry.

The rules are that you cannot appear before the board for one year after you’ve left it. Since that time has passed, Gibbons has been appearing before the board instead of sitting on it. “After that year went by, I had people who remembered me being on the board, and (they) concluded I still might have some interest and expertise in the area, and things went from there. If you look at the decisions of the last five years, you’ll see I was involved in a number of hearings,” he said.

“I have surface rights as specialty. I appear for landowners only. I do not represent petroleum or natural gas corporations. I review oil and gas leases, mines and minerals leases, surface rights agreements and leases, and appear before the Surface Rights Board on applications for surface rights and applications for setting compensation for surface rights.”

About 30 to 40 per cent of his practice is this sort of work. The rest is general litigation, business and corporate work.

Gibbons has clients from south of Kindersley to the Alberta border and north to Pierceland.

Further than that, travel becomes an issue. The oilpatch is slowly creeping towards North Battleford, and is now at Prince, 20 kilometres north of the Battlefords. He knows of

test holes further east and south.

“Heavy oil was stagnated for years until they developed the technique, I think Husky developed it, of pumping sand with the oil. That revolutionized the production of cold oil. Now, Husky, who is the main player in this area, is looking for thermal injection and SAGD-types of arrangements.”

As that sort of work gets closer to North Battleford, he expects services to locate there.

The 65-year-old has no intention of retiring anytime soon, and will continue on as long as his health is good and he enjoys it.

Typical client “When it comes to oil and gas and surface rights, the typical client is a farmer who owns farmland on which there are oil and gas installations, typically oil wells.

Gas wells typically don’t have a very big footprint on his land and don’t raise very many issues, and they aren’t serviced heavily with traffic on and off the site, whereas oil wells are,” Gibbons said.

“So they are coming to me typically one of two ways. One is the oil and gas company wants to drill on their land, and they haven’t done that before, or secondly, they’re looking at the compensation being reviewed. If there’s a new well and a surface lease entered into, and if not, there’s a hearing before the Surface Rights Board, and they want some help before the Surface Rights Board: what evidence to call, what’s relevant, what’s the board interested in, what are the considerations.

What can be done, if anything, to settle before a hearing, and if not, run the hearing and see what the results of that will be.

If there’s a right of entry granted so they can drill a well, they engage me to negotiate surface rights compensation.

“And if we can’t we reach an agreement on compensation, we run a hearing before the board and the board will set compensation.”

Different forms of compensation Asked what a range ► Page A25

PIPELINE NEWS June 2018

A25

Oil companies do not understand farming: Gibbons ◄ Page A24 of a farm owner could expect in northwest Saskatchewan, with a CHOPS (cold heavy oil with sand) installation, Gibbons responded, “That’s a tougher question than you think. The oil and gas companies will typically try to get a number of land owners to sign surface rights rentals. They’re typically done at the low end of the range, because people aren’t informed of what their rights are under the surface rights compensation.

“They then use some of these lower end rental payments to form a ‘pattern of dealing,’ and use that pattern of dealing to force all owners to receive the low end of those rentals. Some of those rentals, are, in my view, extremely poor.”

He used the example of a three-acre site – two acres at the wellhead and one acre for the road.

“They’re typically looking at the value of that farmland to be $1,000 an acre.

Well, current farmland sales around the Battlefords are closer to $3,000 an acre.

“But there’s more to that. That $1,000 an acre is increased by 150 per cent in accordance to what’s called the Blackstock formula, which says no landowner would part with three acres of land going into the middle of his field voluntarily. So this is, in effect, a type

of expropriation, so the value of the land should be increased to reflect the small-taking factor. If the current fair market of the land is $3,000 an acre, then the award should be $4,500 per acre, having the Blackstock formula implemented.

He then referenced the loss of use, which takes into effect the crop on that land. “The typical returns on canola grown will be 50 bushels per acre, at $12 per bushel.

That’s $600,” he said.

“They’re typically offering $300, which is half of what that farmer is going to lose, by having oil and gas on that location.”

Severance “Then you go onto what’s called severance, adverse effect and nuisance,” Gibbons continued. “Severing is the imposition of this oil installation, sometimes in the middle of your field, which severs one part of the field from the other.

Depending on the field pattern you have, there could be sloughs, ravines, or other obstacles, you can have severance of your land with this oil and gas installation.

“The second thing is the adverse effect, which is the impact of putting this on your farming operations. The biggest thing nowadays is there’s so many GPS devices used on farm equipment, it enables the farmer have the tractor guided and directed by GPS

so you have incredibly straight farming lines. The oil site and roadway in the middle of your field destroys the ability to use your GPS. You now have to farm around these obstructions.

“Then you get into the nuisance effect. You’re looking at 100, 120-foot sprayers. When you look at the operation of any farm equipment around a wellsite and roadway, the equivalent of a mushroom with square corners, you have to turn tight to go perpendicular of the direction of travel, to go along the roadway. You’re going to have inside corners going up to the mushroom. You’re going to have outside corners.

“On the inside corners, you’re going to have underspray and overspray, because the outside boom goes faster, the inside boom goes slower. You have the opposite going around the mushroom, around the box. Plus you have headlands, area you can’t spray. So you lose production around the wellsite and the roadway due to underspray and overspray.

“It’s extremely difficult to farm around these obstructions with the size of farm equipment now,” Gibson said.

When there are multiple sites on a quarter, there’s then a cumulative effect, which also needs to be compensated for. “If you have one installation on your quarter section of land, that’s one thing.

But if you have as many as four, or more, farming around these becomes almost impossible, or extremely difficult, with modern farming equipment. When you add to that a naturally occurring slough or ravine, you run into huge issues with farming your land at all.

But there’s no compensation other than for the wellsite and the roadway, and there should be.”

And this is a major frustration for Gibbons.

“I think it needs to be addressed by Surface Rights Board, because they have the ability to make that award. But if you do an examination of the Surface Rights Board’s decisions, I would take the position the board has been inadequately com-

Richard Gibbons is a North Battleford-based lawyer who deals with a lot of surface rights issues. File photo pensating the landowner.”

Lack of understanding “In my view, the oil companies do not understand farming. And if they understand it, they’re determined, on a cost-cutting measure, (they) aren’t interested in over-compensating farmers. They’re interested in undercompensating them,” Gibbons said.

Often wellsites are sculpted into a teardropshaped berm. The oil companies will often make an agreement with the farmer to farm up to the teardrop, which controls the weeds on the wellsite.

But then the oil compa-

nies are asking to then reduce the compensate in relation to the smaller area, such as a now-oneacre wellsite instead of the original two-acres. “But the oil company has every right to go on that land any time they want. So if the farmer goes up to the teardrop shape, but the oil company wants to bring a service rig on there, to service the well, they drive around in the farmer’s field, because that field is still on the surveyed wellsite and roadway,” Gibbons said.

He said oil companies still want to be ► Page A26

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Farmers spray five times a year to control weeds ◄ Page A25 able to use that land as needed, but they don’t want to pay for it because they are not using it all the time. “And that’s fundamentally wrong,” he said.

The second and third years of a three-year lease do not include the value of the farmland. There are payments for loss of use and severance, adverse effect and nuisance. “Typically you’re receiving less than $3,000 in subsequent years, depending on the size of the site,” he said. Battery sites are larger, with five or six acres. A satellite might be three or four acres, and a well might be located in the middle of the field, with a two or three-acre roadway.

Larger sites, which can eventually be developed as pad sites, up to five acres in size, can result in free occupation if that is developed and

the lease compensation is not reviewed until the review window comes up, once every three years on the anniversary date.

Reviews can be requested three months before or after the anniversary date. Those reviews are typically requested by the landowner.

Weed control “The Act requires the petroleum company to control the weeds and prevent them from going to seed. The reality of noxious weeds is they start forming seeds almost immediately after they germinate. So the requirement is they be prevented from germinating into seed. So you need to be there immediately in the spring, and as many applications of herbicide or mechanical eradication as is necessary to prevent them from going to seed,” Gibbons said.

“I have applica-

tions before the Surface Rights Board where they don’t do that. Of course, those weed seeds are now spread along the farmers’ fields, and the cost of chemical herbicides is, of course, dramatic. The farmers are bearing the results of the oil company paying a half-attention to controlling the weeds.”

Depending on the site, he said they should be sprayed as many as five or six times, as much as a farmer does now – a preseeding burndown, one after seeding, one in the middle of the summer, another before harvest and another in the fall.

Work done in the winter, breaking frost with rippers, can lead to issues with the separation of topsoil and various horizons of subsoil as well.

“Winter construction is hard on soil horizons,” he said.

This comes into play on flowline construction,

This area near Marshall, as seen on Google Maps, shows some of the surface rights issues lawyer Richard Gibbons says farmers have to deal with. The multiple leases on each quarter, and their associated roads, cause “severance,” making it difficult for farmers to use very large equipment efficiently. as the landowner is only compensated for the first three years on a diminishing basis each year. Yet after those three years, the landowner can’t build on that land, and there’s often settling. “That’s grossly unfair.”

Government held off

changes Several years ago the Saskatchewan government, under thenPremier Brad Wall, had made moves to make changes to Surface Rights Act. But when the downturn hit, the provincial government

backed off, not wishing to add another burden onto an already beleaguered industry.

Gibbons had submitted a large 20-page brief to amend the act, but he noted the new act has not passed or been proclaimed.

Surface landowners’ rights being slowly eroded LAWYER FOR FARMER SPEAKS

By Brian Zinchuk Swift Current – Long-time Swift Current lawyer Cliff Nimegeers has represented many mineral rights owners, often farmers, over the years, and one singular oil company.

“I work primarily for farmers and owners, but in the case of Eldon

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McIntyre, who is a personal friend of mine and a personal client, I made and exception for his oil company,” “I was born in ’41,” he said. Nimegeers was raised one of 13 children on a large cattle and grain farm in the Weyburn area, where he went to school with Kenney and Dick Cugnet. He graduated from Weyburn High School and continued his education with the University of Saskatchewan. There he achieved his Bachelor of Arts (English/Philosophy) and thereafter his Bachelor of Laws (1966).

He was called to the Bar in 1967.

His practice has included criminal, civil litigation, family law, surface rights and mineral rights, wills and estate planning, all types of farm and ranch and commercial sales. These days, partially due to his age, he focuses on wills and estates, home farm and business transactions and mortgages, and mineral/ surface rights. “Purely solicitor work, now. In the past I did criminal work, I’ve done civil litigation.

I don’t do that anymore,” he said.

Nimegeers said mineral and surface rights might be 25 per cent of his work. ► Page A27

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Nimegeers has dealt with surface rights from the very beginning of the act in the 1960s ◄ Page A26 The Keystone XL pipeline, if built, will pass through southwest Saskatchewan. Nimegeers said it doesn’t impact him too much, but, “Many of my clients in the southwest have their land (and) will be giving easements to TransCanada.

Some of them have done it already, I believe. The Keystone, if it’s approved, will certainly have a significant financial impact on the southwest of Saskatchewan.”

“The Keystone pipeline is certainly of great interest, and of interest to use because we’re anxious to see that the oil companies that operate in this area will get a fair price for their product.

I’m well aware of the problems with disparity in prices because we can’t get our oil and natural gas to market as well as we should.”

He’s also interested in what happens with the Kinder Morgan project as well. “We have a very large oil industry in Swift Current. Anything that’s good for the oil industry will be food for Swift Current and will be good

for my practice.”

He generally represents the farmer when it comes to surface rights.

“There was a time I didn’t represent any oil companies at all, and refused to represent oil companies.

Now, certainly my focus is on landowners’ rights.

When you say farmer, I want to broaden that to ranchers and landowners of all kinds. The landowners’ interests are my primary focus.”

“I have some very broad concerns about the direction the whole surface rights issue is going in,” Nimegeers said. In particular, he has issues with the direction the Saskatchewan Surface Rights Board of Arbitration has taken in recent years.

“Mineral rights, of course, there’s total freedom of negotiation.

If you can’t make a deal, the owner of the mineral rights can walk, so there’s no right to expropriate the mineral rights. In the surface rights area, there’s expropriation rights, and that creates a lot of issues.

“I would almost say it’s a rather remark-

able right that a private company, private oil companies, have the right to expropriate land from landowners, but it’s a necessary right, because the oil company has the oil under the ground and they have to get it out somewhere, and that involves the surface. So there had to be an accommodation, and that accommodation was created in the Surface Rights Act, allowing oil companies in limited circumstances, to expropriate and to require the farmer give up his land for the purpose of allowing the company to take their oil.

“The problem that’s developing, in my view, is the rights being given to the oil industry, to the oil producers, is going beyond what the act contemplated. The act is very restrictive. Take your oil, remove it and do what you have to do to do that.

But any rights beyond that should be negotiated.

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There shouldn’t be expropriation rights because that doesn’t impact their ability to get their oil.”

“What is happening, in my view, is the board is exceeding some of the expropriation powers by giving such things as temporary work spaces and other rights that go beyond what the act contemplated and what it clearly states.”

“I don’t think the oil industry needs those things to effectively operate.”

“Generally, I think farmers’ and landowners’ rights are being eroded.

There’s a reason for that.

Farmers are not being well-represented, because, usually, the issue is whether they get $4,000, $5,000 or $6,000 for a well, the differential isn’t worth spending a lot of time, cost and lawyer’s fees. The oil company, on the other hand, will often have tens or even hundreds of wells in the area, so they are able to

present a strong case with powerful legal representation.”

His history with the board goes back very far indeed. In 1968, he had some input in the Friesen Commission that resulted in the act.

The act is 50 years old this year, he noted, saying, “The act is not a bad act. It needs some updating.

“There is an imbalance. In the early stages, it seems the board was recognizing that imbalance, not putting as much pressure on the land owner or onus on them to prove their losses.

It seems to me the act allows the board to use their expertise to figure out what their losses may be. But the board is very strident, now, in saying if you come to the board, you better be prepared.

You better bring the evidence, and if you don’t have the evidence, too bad for you. You’re not going to get the com-

pensation you’re asking for. So they’re moving away from such things as cumulative effect. They’re suggesting maybe they won’t pay gross loss of use anymore.”

He noted that farming has radically changed.

Summer fallow is no more. The land is continuously cropped with huge inputs, and there are better prices for the product. As a result of that, the gross return may be in excess of $500 per acre on many occasions.

Asked about a typical file, he noted that farmers are using lawyers less and less, because lawyers are expensive and the cost of a lawyer doesn’t justify the differential in the amount they might get.

“That’s particularly problematic if they appear before the board, because often it will be a full day hearing before the board on a differential that may mean a few thousand dollars, particularly when ► Page A28

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Additional compensation should come with additional use ◄ Page A27 the board is demanding the evidence be very carefully presented to them. It requires more care. And then there’s the preparation. You can quite easily see how it might not be economic for a farmer to hire a lawyer to do the work.”

In a typical case, he tries to costeffectively as possible put forward propositions based on board awards, and is focused on the documents to be signed so they are not granting broad rights that are not paid for.

“Many of the leases that I see where the farmer and landowner is not represented, the oil company is paying for apples and they’re taking a fruit basket, in terms of their rights on the land, that they can do anything that is pertinent to

their operations, whereas they only want one well, to drill a well and take production from it.

“If you want more rights, you have to pay more. If you put two wells on the same pad, there should be more compensation. If you put a refinery site, there should be a negotiated deal. If they want treaters and tanks, there should be more compensation. Generally speaking, the industry recognizes that, but the documents do not, in many cases,” Nimegeers said.

He hasn’t appeared before the board in many years. Instead, he prepares the farmers for their hearing, and that way he doesn’t have to spend days on a case, becoming completely cost-ineffective for the farmer. But he reads every award very

carefully and follows the progress of their thinking.

Regarding that one oil company he works with, it’s Jarod Oils, owned by Eldon McIntyre, originally of Hazlet.

“Eldon has been my friend for some 50 years,” Nimegeers said.

He even participated in some of McIntyre’s wells in the late 80s.

Nimegeers was reluctant, at first, to represent an oil company, but he told McIntyre, “If you’ll allow me to give fair compensation, and do state of the art documents, I will.

“Eldon quickly agreed,” Nimegeers said. Since then, he said their compensation for land owners has been better, or different, than other companies, resulting in great relations with landowners. In the

end, it’s been a win-win situation.

Some his motivations behind this work are very personal. He grew up in in the Ralph area in what eventually became the famed Weyburn Unit, one of Saskatchewan’s most prolific oilfields. “My father, back in the 50s, got conned out of his mineral rights in a section. It was a really hurtful situation,” Nimegeers said.

So when he went to law school, he did some special studies into this area of law. When his parents died in 1978 in a car accident, his brother looked after the estate, and he fought for four years to get those mineral rights. He succeeded. There are four or five wells on it now in the Midale and Frobisher formations, and he’s one of 13 children who receive cheques from them.

The theme for the Williston Basin Petroleum Conference in Bismarck, N.D., May 22-24 was Bakken Now. The state of North Dakota is expected to set another oil production record in June, of 1.2 million barrels per day, so moods were running high, in sharp contrast of two years ago. Photo by Brian Zinchuk

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How many workers does it take to build a refinery?

By Brian Zinchuk Estevan – How many workers does it take to build a refinery? According to Dominion Energy Processing Group, Inc, subsidiary of Quantum Energy, Inc., 180 or 200, depending on when we spoke with them. That was the number they told about 300 people who attended a contractors meeting in Weyburn on Feb. 15, 2017.

Back then, Keith Stemler, then-CEO of Dominion, said, “Based on schedule, we have 29 months from the time we receive the permit to the time of first oil.

I feel we can do this – put the kit together, complete civil, all the underground and above ground structure, and achieve first oil in 29 months. To do that, we’re looking at a craft staff of basically 24 hours a day 180 guys for 24 months to get it done.”

That roughly 180 workers will change in makeup as the project progresses through its various stages.

Looking at analogous facilities has shown much, much higher numbers. MDU Resources Group, Inc. completed its Dakota Prairie Refinery at Dickinson, N.D. in 2015, commencing operations in May of that year. A press release from MDU on May 4, 2015, noted, “Construction of the facility began on March 26, 2013 on a 318-acre site that is located about four miles west of Dickinson in southwest North Dakota. More than 800 workers were on site at peak construction.

Total cost of the plant is estimated to be approximately US$425 million to US$435 million, and the facility employs about 80 people.”

In 2016, that refinery, which struggled in the oil downturn, was purchased by Tesoro Refining & Marketing Co. LLC. The Dickinson refinery is pegged at 20,000 bpd., or half the size of Quantum/Dominion’s proposed Stoughton Refinery.

In 2012, the Co-op Refinery Complex in Regina completed its three-year, Section 5 expansion and revamp project. It cost C$2.66 billion. At the time, Scott Banda, CEO for Federated Co-operatives Ltd, told Pipeline News, “We maxed out at 5,000 people on this

When the Regina Co-op Refinery Complex did its Section 5 expansion and revamp, a project of similar scale to the proposed Stoughton refinery, the workforce peaked in the thousands. File photo site at the peak of construction. There were two pieces of our construction: Section V and the revamps. The revamps, we’re still a couple months from finishing. But we will add 45 per cent capacity to our facility. That takes us up to 145,000 barrels a day.”

It should be noted that 5,000 number may have included organic employees and turnaround staff.

In August 2010 Bud Van Iderstine, then the vicepresident in charge of the refinery, said they expected a peak of 1,800 people working on the construction and

revamps. That number may have changed between 2010 and 2012, when the project was completed.

That project, which Pipeline News visited in August 2010, added 30,000 bpd of nameplace capacity, and additional debottlenecking added another 15,000 bpd, bringing the total additional capacity to 45,000 bpd, closely in line with the size of the refinery Quantum/Dominion proposed. At the time of our visit, there were 800 people working on the Section V portion alone.

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New head Quantum office has a lot of tenants

AND THEIR MERGER PARTNER’S HEAD OFFICE IS A MAIL FORWARDING COMPANY

By Brian Zinchuk Estevan – In a similar manner to the address previously listed as the corporate head office of Quantum Energy, in Tempe, Arizona, the address listed on Quantum Energy, Inc.’s web page, as of Mar. 9, was 218 N Jefferson St. Suite 400, Chicago Illinois, 60661, USA. This address is also listed on OTC Markets (otcmarkets.com), where Quantum Energy, Inc. is listed under the symbol QEGY. Searching for that exact address, specifically suite 400, turned up this list of companies, nearly all lawyers, but separate firms using precisely the same address. The first one matches Jerold N. Siegan, Esq., who is listed in the company’s Feb. 28, 2018 annual report as Quantum’s legal counsel. He is listed as shareholder “In consideration for legal services at $0.15 per share.”

Companies that list 218 N Jefferson St. Suite 400, Chicago Illinois, 60661, USA, as their address include: 1. J.N. Siegan & Associates Attorneys & Counselors (Lists just one lawyer, J.N. Siegan, Esq., who is also listed on Quantum’s website as a Transfer Agent.)

2. Law Offices of Curtis S. Burke, P.C. 3. Loizzi Law Offices, LLC 4. Matthew J. Conti Law Offices 5. Law offices of Scott B. Shapiro (shows up under Sherwood Law Group, Suite 401) 6. Connelly & Vogelzang 7. Ellen J. Morris (Chicago attorney) 8. Charles A. Spinuzza, Attorney at Law 9. John L. Malevitis, attorney 10. Art Fiumetto, Attorney 11. Skedditt Ventures, Skeditt Healthcare App,

Skeditt Investment Fund 12. Curtis S Burke Law Office In a press release dated April 17, 2018, Quantum Energy, Inc., announced a pending merger with Inductance Energy Corporation, a Wyoming corporation.

A search on the Wyoming Secretary of State website found that Inductance Energy Corporation’s principal office is 30 N Gould St Ste R, Sheridan, WY 82801.

A search of that exact address follows the same pattern, with numerous businesses using the exact same address. One of those is “Autoimmune Secrets.”

The reason for this becomes plain, as 30 N Gould St Ste R, Sheridan, WY 82801 is the address of Wyoming Mail Forwarding LLC. It can be found at https:// www.wyomingmailforwarding.com/.

Steel Reef Infrastructure Corp. has been growing substantially in southeast Saskatchewan. Representing this company at the Williston Basin Petroleum Conference in Bismarck, ND May 22-24 were, from left, Al Eggum, Don Boll and Dave Mattila.

Photo by Brian Zinchuk

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PIPELINE NEWS June 2018

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Ever heard of Pink Sheets?

By Brian Zinchuk Estevan – Quantum Energy, Inc. is not listed on the Toronto Venture Exchange, nor on the New York Stock Exchange or Nasdaq.

So where is it listed? OTC Pink, also referred to as Pink Sheets. It’s trading symbol is QEGY.PK:OTC, as listed by a June 27, 2017 letter from “Stanley F. Wilson, J.D., President and General Counsel,” to OTC Markets Group, Inc.. Wilson had been CEO until May, 2017.

If you haven’t heard of it, neither had we, nor the accountant or corporate lawyer we asked about it. We did see “pink sheets” referenced in the opening scenes of Wolf of Wall Street, described in the movie as penny stocks sold over the counter.

The FAQ on otcmarkets.com states, “What types of companies are traded on the OTCQX, OTCQB and Pink markets? Companies that trade on our markets span a broad range of sectors, from the ADRs of large cap conglomerates to small and micro-cap growth companies, SEC reporting companies and community banks; and across all major industries, including metal and mining, financial services, oil & gas, utilities, telecommunications, media, pharma & bio tech, and many others. To create clarity in the investment process, we organize these securities into three tiered markets - OTCQX, OTCQB and Pink - based on the quality and quantity of information companies make available. The 10,000 securities on our markets are traded through our SEC-registered Alternative Trading System, OTC Link ATS. As of March 9, 2018, Quantum’s

listing on otcmarkets.com stated, “Warning! This company may not be making material information publicly available.

“Buying or selling this security on the basis of material nonpublic material information is prohibited under Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5 and 10b5-1 thereunder. Violators may be subject to civil and criminal penalties.”

In March, 2018, Quantum’s profile was listed as verified,12/2017, and they were also labeled a "shell company, and either dark or defunct, as the Company is not able or willing to provide disclosure to the public markets." However,

by May 19, 2018, that “dark or defunct” label was no longer there. The warning in the above paragraph was also no longer present.

The company’s annual report, for the year ending Feb. 28, 2018, and posted May 14, 2018, on otcmarkets. com, listed the following as the officers, directors and control persons: ■ Jeffrey Mallmes; chairman, president, treasurer and director; 14.91 percent ownership ■ Andrew J. Kacic; secretary and director; 18.66 per cent ownership ■ William Hinz; director; 0 per cent ownership ■ Stanley F. Wilson; no position; 6.19 per cent ownership ■ Robert Henry; no position; 6.19 per cent ownership.

That annual report included audited financial statements, as signed by certified public accounting firm deCoriaMaichel-Teague of Sokane, Washington. The firm noted they have served as the company’s auditor since 2018.

The outdoor exhibits at the Williston Basin Petroleum Conference in Bismarck, N.D., May 22-24, included a service rig, an airplane, and several trailers. Photo

by Brian Zinchuk

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PIPELINE NEWS June 2018

Top Torque started with one tool

By Brian Zinchuk Estevan – Back in 2011, Josh Biggs had never been to Estevan, but he and his new wife, Kristin, came to the Energy City, bought a house and set up shop.

Pulling a seacan behind their truck, the business, Top Torque Torque Services Ltd. was based on one, singular tool, the Volant CRT, an innovative new way to run casing on top drive rigs.

Seven years later, the shop is no longer a seacan, but a much larger facility that used to be owned by a cementing company. There are now 11 tools instead of one. But the operation is still a two-man show.

“We’re a two-man band,” said Biggs. The other player in that band is tool hand Tanner Frycz. And between the two of them they’ve been able to keep those 11 tools working between around 10 rigs at a time.

Biggs grew up in Peace River, Alta. He started out on the drilling rigs for a few years, then went to work for Volant in Edmonton. “I was there pretty early on.

There were 20 people at the time,” he said. Of those, he

was one of three with rig experience, the others were engineers and other technical people.

“I saw the tool come from prototype to market version,” he said. Coming to southeast Saskatchewan allowed him to not be in competition with Volant’s own operations based in Edmonton.

The Volant CRT (Casing Running Tool) is just that, a tool that allows top drive-equipped drilling rigs to run in casing in a manner that is much more efficient than the old way.

That old way involved using several nubbins in rotation. They would have to be threaded into the collars of pipe on the catwalk.

When the pipe was lifted to the top drive, the nubbin would be engaged by the drive, then would have to be removed on the drill floor and sent down a zip line to the catwalk for use in one of the subsequent joints of casing pipe.

The Volant CRT eliminates the use of nubbins.

When the pipe arm lifts up the joint of casing, Biggs explained, “It screws to the quill off the top drive

and goes inside the casing.

It grips the inside of the casing with five expanding dies.”

The expansion is controlled by the rotation of the top drive, as is its disengagement.

It’s all done via the existing controllers the driller has on the rig, rotating the top drive in and out.

It mimics screwing into drill pipe. Turn to the right until its tight. There’s also a torque read-out for the tool.

Over the years Top Torque went from working out of a seacan to the back of Viking Surplus’ shop to, now, the former Sanjel facility on Mississippian Drive.

Biggs said it was a “silver lining in the recession,” as they were able to buy the shop for about half of its previous value in March 2017. It sits on a 1.5 acre yard.

That’s a big change from when he first moved to Estevan, when real estate was hard to come by, for business or residential.

“We came Aug. 28, and couldn’t find anything to rent,” Biggs said. In a few weeks, they bought a house.

“For that time, we had one rig for Penn West, around Alida. They got rid of Alida and I went to Waskada,” he said.

The number of rigs went from zero to one to five pretty quickly.

Another company started offering the Volant tool in the area in 2013, but the downturn happened, and that competition got out of that line of business.

“We were here first. We’re the only ones left with the Volant. The closest are in Lloydminster,” Bigg said.

This all coincides with a slow transition towards top drives in southeast Saskatchewan by some drillers. “Top drives used to be a Manitoba thing. Most Manitoba rigs were top drives,” Biggs said. By the winter of 2012-2013, they were looking after 11 rigs.

It’s common to put on 600 to 700 kilometres a day in the field.

As evidence of that transition, when things were hopping in 2012, they had 10 top drive rigs. Last year they also had 10 top drive rigs, but on a muchreduced rig count.

The Manitoba work led to working out of a

This is the up close and personal view of a Volant CRT (Casing Running Tool) shop in Carnduff for a year in 2015. But as the Manitoba work subsided, it made more sense to work out of

Estevan. That was the time Frycz joined.

Most of the rigs ► Page A34

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PIPELINE NEWS June 2018

Volant tool greatly simplifies running casing with top drives ◄ Page A32 they work with are super singles, what Biggs calls, “The little rigs that could.”

He noted that since he started doing this, there was a perception those rigs couldn’t handle Stoughton, Roche Percee and Torquay areas, but that has since been proven wrong.

When the rig count in southeast Saskatchewan plumbed the single digits during the lowest times of the downturn, of the rigs that were working, several were top drive super singles.

To contend with the downturn, they did a little bit of hotshotting.

A Volant tool will typically spend about 24 hours on the rig. Top Torque drops it off and picks it up. Initially,

they would remain with the tool, but the rigs that use them are adept with it on their own now.

There are three difference sizes of tool. The 4-1/2 inch base handles 4-1/2 to 5-1/2 inch. The 5-1/2 inch base takes care of 5-1/2, 7, 8-5/8 and 9-5/8 inch.

The 7 inch base takes care of 7, 8-5/8 and 9-5/8 inch. They swap out dies as needed to fit the casing.

Frycz said, “You can circulate through it. It has a packer cup on the bottom of it. It’s a power tong, elevator and circulation swedge all in one.

He added, “We have a torque calibration sub that can be used for calibrating any style of top drive rig. We just got it last year.”

We’ll call you resulted in no calls we could find

By Brian Zinchuk Estevan – When over 300 people attended a contractor’s meeting in Weyburn for Quantum Energy, Inc./Dominion Energy Processing Group, Inc.’s proposed Stoughton refinery, they were told by Keith Stemler, then CEO of Dominion, that he didn’t want to take home their binders on the flight back to British Columbia. Instead, they would be collecting business cards which they would then pass onto their soon-to-be announced engineering, procurement and construction (EPC) firm.

Of those who have attended, not one company Pipeline News has spoken to since then has been contacted.

Ryan Swayze of Swayze Concrete in Weyburn said on May 11, “I have no idea what’s going on.”

He hasn’t had any calls “Not one.”

Justin Wappel of AGI Environtank in Biggar came down for the meeting, looking for tank manufacturing work.

Wappel said on May 14, “No, I haven’t heard anything. I left them cards, digital brochures. It’s been at least six months ► Page A35

Josh Biggs, left, and Tanner Frycz, are the two-man band making up Top Torque Services Ltd. They are standing among different models of the Volant CRT, a tool that simplifies running casing with top drive rigs. Photo by Brian Zinchuk

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We’ll call you resulted in no calls we could find ◄ Page A34 since I sent my last email.

No response.”

Coderre Construction has a number of gravel pits in relatively close proximity to the site. As of May 11, Del Coderre, owner, hadn’t heard anything. “I

Williston Basin Petroleum Conference

With oil over US $70/BBL. WTI, the optimism was high and the trade show booths were busy at The Williston Basin Petroleum Conference in Bismarck, N. D., May 22-24. Photo by Brian Zinchuk.

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left a card,” he said.

Did anyone phone?

“No,” he replied.

Randy Fleck of Land Solutions in Lampman, said on May 10, “They didn’t want anything but a business card. They never called.”

For those who attended the Feb. 15, 2017 contractors meeting in Weyburn, not one person who was present at that meeting that Pipeline News has spoken to has received a call. Photo by Brian Zinchuk

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PIPELINE NEWS June 2018

North Dakota refinery market getting crowded

By Brian Zinchuk Bismarck, N.D. – Before Quantum Energy, Inc. came to Saskatchewan with a refinery proposal at Stoughton, they proposed three refineries in North Dakota and two in Montana.

Lynn Helms is the long-time director of the North Dakota Department of Mineral Resources. He spoke to Pipeline News on May 23 at the Williston Basin Petroleum Conference in Bismarck, N.D., where he was the co-host of the conference.

Asked on May 23 how far Quantum got into the regulatory process for its three proposed refineries in North Dakota, Helms said, “To the best of my knowledge, they never applied for any air or water permits in the state. They acquired land. They did FEED (front end engineering and design) and looked at the potential for the small, Dickinsonsized refineries.

“Several things have changed since then. One of the major factors is the demand for diesel is way down. Companies have converted a lot of their rigs to dual fuel. Trucking is down because of pipeline transportation of the oil

and water, and frac crews are doing dual fuel as well.

It’s made the economics of small refineries much, much more difficult. You saw MDU Resources sell their refinery. They were in partnership with Calumet. They sold to Endeavour, which was Tesoro. They merged with Western Refining and became Endeavour, and they were purchased by Mobil.”

The MDU refinery at Dickinson was built a few years ago and sold shortly after it opened.

“You have to think, if there’s an opportunity to make money in the refining business, Mobil is going to be looking at it really hard.

They’re going to be the U.S.’s number one domestic refiner. And so the economics are going to be much, much tougher than they are some years ago.

Helms continued, “I think some of these folks’ business model was to get in, get a site located, get the land acquired. Get the permitting process in place.

Do the FEED studies, then be able to sell that permit to another company, and so I still wonder if that isn’t the business model we’re looking at. Diversify.

Spread your eggs across the landscape. Some are going to work out. Some aren’t.

But the economics of that market have become much more difficult with the decreased diesel demand and the new pipelines, two large refinery centres, and export capacity.

“That’s another big change. When they were starting all this business, the export ban was on, and that’s gone now,” Helms said.

Asked if proposing six refineries, including three in North Dakota, was a bit of an overreach, Helms responded, “Again, it might be, depending on the size of the company and their capitalization. I think the approach is to have lots of options on the table and to be able to market one of those options that has good economics to a company like Tesoro, Mobil, Endeavour, Davis, something like that.”

As for the last time his department has heard from Quantum, Helms said, “It’s been over a year. It’s somewhere between a year and 18 months.”

“They were serious discussions where they were looking for data on crude

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Lynn Helms is the director of the North Dakota Department of Mineral Resources. oil production projections, pipeline projections, and trying to find areas where a small, niche-sized refinery could make money, where crude oil was being transported out by rail, or there was a lot of demand for diesel, and those kind of things.

“They were serious discussions about what does oil production look like in various counties, what are the transportation options look like, county-by-county.”

Asked if these all looked like short-term horizons, not 40 years, he said, “I think you’d be correct there.”

He had not heard anything at all regarding a Saskatchewan refinery by Quantum.

North Dakota has two refineries currently, the

Mandan and Dickinson refineries, and a third, the proposed Davis Refinery, at Belfield, ND, would be doing a presentation at the conference later that day. (see story in the upcoming July edition of Pipeline News). To that end, Helms said, “Not only have the economics become tougher, there’s some pretty good competition in this area for folks like Quantum.”

That third refinery, Davis, still does not have their air permit from the state. “That’s the one piece that they’re lacking. Based on the information I have, that’s likely and probably not too far in the distant future. They would well ahead of a company like Quantum, who really just acquired land in strategic locations and had done the

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FEED studies.

Asked if companies with one employee and rent their office by the hour build refineries, Helms replied, “Um, typically no.

“Typically they identify strategic locations and do the FEED studies. They spearhead some of the permitting. But more often than not, somebody else comes in and capitalizes it and builds the refinery.”

“You’re going to need a solid team of 10-15 people and several hundred million dollars to push that thing forward from the FEED study, through the permitting to break ground and get any sort of construction going on.”

That’s before they break ground. Helms said, “You better have your capital together.”

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PIPELINE NEWS June 2018

Saskatchewan faces at Williston Basin Petroleum Conference

Dan MacLean, president and CEO of the Petroleum Technology Research Centre in Regina, gave a presentation on May 23 about the last 20 years of the PTRC, and looking forward to the next 20. Photo by Brian Zinchuk

Arden Marsh, petroleum research geologist with the Saskatchewan Geological Survey, did a presentation on the Madison Group. His study included the very southeast corner of Saskatchewan, around the Carnduff area, and extended 19 miles into the adjacent area of North Dakota. His study used oil cut as its main metric. Photo by Brian Zinchuk

Fire Sky Energy CEO Warren Waldegger smiles when the camera finds him. Photo by Brian Zinchuk

Dylan Gillis, left, of Gilliss Casing Services, and Jason Howden of Fire Sky Energy came down to Bismarck to check out the conference. Photo by Brian Zinchuk

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Drilling a Coke well, and using CO2 for enhanced Coke recovery up to 40 per cent

By Brian Zinchuk Bismarck, ND – Liberty Resources president and CEO Mark Pearson likes his Coke. In fact, wherever he’s worked, all around the world, he likes to drink his Coke. And he used that as a very telling example of primary, secondary and tertiary recovery of oil.

The CEO started his presentation to the Williston Basin Petroleum Conference in Bismarck, N.D., on May 23 by drilling a Coke well. In other words, he put a straw through a hole in the lid at the top of a 2-litre bottle of Coke.

Then he connected a series of straws, his flowline, to a large mason jar.

He squeezed the Coke, and it flowed through the taped-together straws to the jar and got about four per cent, a typical recovery factor for primary production of the Bakken.

Then he put a second straw into the lid of the Coke bottle, and he blew.

This was waterflood – secondary recovery. And it got some more Coke. But then he swapped it with a straw with a core blocking it – a very tight formation, as it were. When he blew, not much came out. And this is typical of secondary recovery. “There’s a lot or resource left in the ground,” Pearson said. Even drilling more wells will result in 84 per cent being left in the ground.

But then he noted he actually prefers Diet Coke, i.e. “unconventional Coke.”

So Pearson swapped bottles, and put in his tertiary Coke well. This one had three Menthos candies attached to the straw. They released the CO2, creating an equivalent to a miscible flood, and soon CO2 and Coke was gushing into the mason jar. The net result?

About 40 per cent recovery, or what could be expected with CO2-enhanced oil recovery.

To that end, he said, “That is the opportunity in the Bakken.”

The Bakken, he said, has more oil than the reserves of Saudi Arabia.

“It’s true. The oil in place is greater than the reserves of Saudi Arabia.”

The key is what is technically recoverable. CO2 is most readily used, but it’s an expensive process.

He noted that the Bakken has a high percentage of natural gas liquids.

“Ethan and propane excite us,” Pearson said, adding they have a lower minimum miscibility pressure map than carbon dioxide.

Thus, by re-injecting it into the ground, one could increase production, potentially significantly increasing recovery factors.

They are going to be

doing a test near Tioga, with a huff and puff process. Simulations show a potential increase of 250,000 to 500,000 barrels of oil per well in additional production.

This test, called the Stomping Horse Bakken EOR Project, will use a series of modern, cemented wells with tight fracs. They will be surrounded by perimeter wells for monitoring, and multiple wells will be tested. The instrumentation will allow them to know realtime producYou don’t often see CEOs blowing into Coke bottles at oil conferences, but that’s exactly tion, every day. It will use what Liberty Resources’ CEO and president Mark Pearson did to demonstrate his point jet pumps for artificial lift. on enhanced oil recovery. Photo by Brian Zinchuk There is a surveillance plan bright for the Bakken. I for offsetting wells. think it’s time for some The project is anticienhances Bakken oil recovpated to start July 2018. ery,” Pearson concluded.

“I think the future is

CAREERS

CAREERS

FULL TIME Journeyman Heavy Duty Mechanic Must have the ability to perform skilled tasks in mechanical repair and maintenance of heavy trucks and trailers.

We offer competitive wages and benefit package after 3 months.

Job Description: • Demonstrate ability to solve complex technical problems (troubleshooting) • Ability to perform repairs and jobs from oil changes to engine rebuilds.

• Demonstrates the ability to plan and prioritize work and material requirements and operate independently.

• Expected to play a role in implementing and promoting work place safety and professionalism • To communicate and follow Company Policies, Procedures and Guidelines Candidate Requirements: To apply send resume • Journeyman Heavy Duty Mechanic • Provide valid drivers license and abstract and cover letter: • 1A license would be asset but not essential • Ability to read and understand operating manuals Fax: 306-482-5271 • Email: iohl@sasktel.net Mail: Box 144 • Carnduff, SK • S0C 0S0 • Able to communicate both verbally and in writing

For The Following Position

CREW TRUCK LABOURER Email resumes to

DexterM@dirtybirdoilfield.ca or call (306) 575-6013 www.dirtybirdoilfield.ca

“A Local Company Working For Local Clients”

PERMANENT FULL TIME POSITIONS AVAILABLE

WANTED

Tenaris is a leading global manufacturer and supplier of steel pipe products and related services for the world’s energy industry and other industrial applications Advance your career in this well-respected industry.

HYDROVAC OPERATORS

Tenaris is currently hiring for the following positions in Bienfait, SK: Loader Operator supports logistics and yard operations by operating heavy equipment in a safe and appropriate manner. Heavy equipment may include trucks, front-end loaders and other pieces of equipment, used to transport tubular product and accessories for clients the oil and gas industry.

Lead Loader Operator has same duties as loader operator, but must also provide scheduling assistance and general direction for a crew of Loader Operators.

Swamper This role supports logistics and yard operations by performing tasks such handling, moving, loading and unloading materials by hand or using material handling equipment. Using hand held devices to process stock in a safe and efficient manner according to applicable procedures, complying with defined quality standards.

Employees will be required to work on-call approximately once every month, depending on business needs.

Please note: Tenaris requires all employees to pass a drug and alcohol test as well as fit test, prior to employment.

Tenaris offers competitive salaries, a comprehensive benefits package, including employer paid pension/RSP contributions.

Tenaris is an equal opportunity employer, valuing diversity in employment.

CAREER

NOW HIRING

Please send resumes to resumes@tenaris.com We thank all candidates for their interest, however, only those chosen for an interview will be contacted.

• Offering competitive hourly wages based on experience • Excellent benefit package available • Willing to train • Safety tickets H2S Alive, First Aid and Ground Disturbance required • Operators must possess Class 1 OR Class 3A driver's license • Working with new equipment Email resume to: extremeexcavating@hotmail.com or fax to: 306-483-2082

EAGLE WELL SERVICING IS BUSY WITH FULL TIME STEADY WORK. WE’RE HIRING ENTRY LEVEL, EXPERIENCED SERVICE RIG HANDS & FULL CREWS. LOCAL WORK | HOTEL & SUBSISTENCE WORK REQUIREMENTS: H2S ALIVE FIRST AID

NOW HI R I N G

VALID CLASS 5 LICENSE OR HIGHER ( NON GDL) AIR BREAKES AN ASSET.

1. 877. 346. 9710

w w w. e a g l e ri g s . c o m

A40

PIPELINE NEWS June 2018

May 30 & 31, 2018

OSY will be in Redvers!

Sour Single Well Battery

www.osyrentals.com

Roll The

Sale On Now!

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150 Hp Evinrude E-tec Motor & Trailer

Pontoon (2 tube Performance Package) 115 Hp Evinrude E-tec Motor & Trailer

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