PIPELINE NEWS Saskatchewan’s Petroleum Monthly
November 2016
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Canada Post Publication No. 40069240
Volume 9 Issue 6
Kindersley slogs through
Husky granted extension
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TEML buys EPSI
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Good to Go back from brink
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When it hasn’t been raining, or more recently, snowing, the Kindersley area has been drilling. Plagued with the wettest weather in years, the region has been one of the bright spots for drilling this year when the roads are dry. This super single rig was working a few kilometres north of Kindersley on Sept. 16. Photo by Brian Zinchuk
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PIPELINE NEWS November 2016
Energy and Resources Minister’s perspective Since the July 21 spill occurred on the North Saskatchewan River, seen hear near the Borden Bridge. Approximately 900 kilometres of shoreline have been assessed and over 1,000 hotspots have been cleaned up. Photo by Brian Zinchuk
Husky granted 30 day extension to report on spill ■ By Brian Zinchuk Regina – It’s going to take a little while longer to find out why a Husky Energy pipeline leaked into the North Saskatchewan River on July 21. On Oct. 20 Husky asked for, and was granted, a 30 day extension by the Ministry of the Economy in reporting its findings. Doug MacKnight, assistant deputy minister of the petroleum and natural gas division with the Ministry of the Economy, said on Oct. 21, “Husky has requested and been granted a 30 day extension for the submission of certain technical reports related to the incident under section 21(2) of The Pipeline Regulations, 2000. Their request was granted. “The additional time was needed to complete a metallurgic report on the failed pipeline as well as geotechnical report on lands where the failure occurred. Both of these reports are being prepared for Husky by a third-party engineering firm. Based on these technical reports, Husky will be providing its assessment of the cause of the July 21 incident on or before Monday, Nov. 21, 2016. Husky’s final report will include the background studies supporting its conclusions as to the cause of the failure.” Husky has submitted an additional report on the incident, which was released to the media by the province on Oct. 21. The total ground area of the spill was reported as 41,500 square metres, although MacKnight noted, “We have work to do to understand how Husky actually calculated it. Obviously, we need to true it up
with our own work in the investigation.” All of that area was off-lease. The volume, as earlier reported, was 225 cubic metres, plus or minus 10 per cent. The recovered amount is listed as 210 cubic metres, and the lost amount is 15 cubic metres. There was a total of 4,303 cubic metres of soil recovered, 551 cubic metres of water and 349 tonnes of vegetation. “It’s important to note that Husky’s final report on the incident, which is due in November, is just one part of a broader investigation we’re undertaking with regard to the cause of the failure, MacKnight said. The Ministry of Economy, Ministry of Environment, Water Security Agency and Attorney General’s office are all involved in the investigation and overseeing Husky’s recovery work. Corporate records have been collected and analyzed and Husky officials and staff have been interviewed. Skystone International, a Calgary engineering firm, has been providing advice to the Ministry of the Environment throughout this time. MacKnight said, “Skystone has considerable expertise in major pipeline investigations in Canada and has been providing advice to the investigation group at each stage in the process.” Skystone has also been contracted to do additional research or studies to validate information provided by Husky. “Overall, the investigation is proceeding quite well. There’s still a lot of work ahead of the technical team in terms of analyzing the information collected, documenting the findings, and preparing the
public report,” he added. The ministry is not providing timelines or preliminary findings at this time. Ash Olesen, acting executive director for the environmental protection branch with Ministry of Environment, said, “We have effectively moved from spill response to a remediation and reclamation status. To that end, the response team has demobilized the cleanup sites, including the removal of equipment and personnel.” There will be monitoring over the winter. He added that 93 per cent of the oil spilled has been recovered. More than 900 kilometres of shorelines was assessed, including both sides of the river and islands, from the spill entry point to a little past Prince Albert. More than 1,000 hot spots have been cleaned up as a result of that assessment. “We consider the cleanup and assessment complete for 2016. That activity will resume in spring of 2017. This is all part of the scheduled discontinuation of cleanup efforts as winter approaches,” Olesen said. Pipeline News asked what sort of activity was expected in the springtime, and how whatever remains would be affected by ice and snow in the winter. Olesen said, “We’ll resume the shoreline cleanup and assessment protocols we’ve established with Husky for the 2016 season that will actively resume in 2017. The degree and intensity of that shoreline assessment will be a function of whether there is or isn’t more observable sheen, an potentially the dispersement of any additional oil. That remains to be Page A6 ▲
In an Oct. 7 interview, two weeks prior to Husky’s request for an extension for filing its report on the July 21 spill, Energy and Resources Minister Dustin Duncan said, “We have taken some interim steps. Obviously we’ll have to have a more fulsome response to the findings of our investigation and Husky’s investigation. But as an interim step, what we have done is begun an inspection of any pipeline crossings under bodies of water that are potable water sources. We’ve identified an initial about 40 high priority crossings, and maybe another 90 after that. We had our field staff go out and visually inspect pipelines as they come out of ground and go underground, where they cross a body of water that provides a potable water source. “To date, we haven’t any causes for concern. But we did want to, as an interim step, be able to assure people that especially potable water sources need to be protected. That work is still underway.” The initial priority list included the North and South Saskatchewan Rivers, Souris River, Battle River, Swift Current Creek. Asked about the necessity of pipelines crossing water bodies like rivers, he responded, “If you take the North and South Saskatchewan Rivers, that basically bisects the province from southwest to the northeast. I think people just have to realize, yes, we do have thousands of kilometres of pipeline underground. Some of its oil. Some is natural gas. We’re in Weyburn right now for this interview, there’s not a home in this city that doesn’t have a pipeline to it to provide natural gas. “It does mean we have to be very diligent and vigilant in our responsibilities as a regulator and operators have to fulfill their commitments as well. These types of incidents, we certainly want to avoid them in the future. “Our interim measure has two parts. One is sending field staff to visually inspect pipelines that do go under a body of water that provides for a potable water source. They’re looking to see has there been construction in the area that had an impact on the pipeline? Is there slumping that is visual to the naked eye? “They also have the ability to go back to the regulator. Hopefully there’s nothing on a visual level that they see. They can go back, as the regulator, to look at their compliance measures and see their compliance with CSA guidelines,” Duncan said. While the ministry can ask for smart pigging (internal, robotic inspection) of these lines, he said they are not doing that at this time unless something is flagged during the inspection or compliance follow up.
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PIPELINE NEWS November 2016
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TEML to acquire Enbridge’s Saskatchewan gathering system ■ By Brian Zinchuk
This pipeline and truck terminal at Steelman is part of the assets Tundra Energy & Marketing Limited is purchasing from Enbridge. Photo by Brian Zinchuk
terminals. It does not include the Bakken Expansion Pipeline built from North Dakota to Cromer, Man., in 2013. The system currently transports approximately 175,000 barrels of crude oil per day to Enbridge’s Mainline system at Cromer, Man, where the main terminal of TEML’s Manitoba crude oil gathering system and interconnection with Enbridge’s Bakken Expansion Pipeline is also located. With the exception of small volumes
of oil being shipped out of the region by rail, nearly all crude oil produced in the southeast Saskatchewan is marketed via this pipeline system. The purchase comes on the heels of TEML’s purchases last year of other Enbridge pipelines in southwest Manitoba that used to be part of EPSI. Upon closure, TEML will operate effectively the entire gathering network for both southeast Saskatchewan and southwest Manitoba – essen-
tially all of the Canadian portion of the Williston Basin. Following the closing of this transaction, TEML will handle over 250,000 barrels per day of crude oil production from Saskatchewan, Manitoba and North Dakota. It will also continue to have over 700,000 barrels of crude oil storage capacity and the ability to load unit trains for its customers at Cromer. Hartley T. Richardson, president and chief executive
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Calgary – On Sept. 29, a sale affecting nearly every drop of oil produced in southeast Saskatchewan took place, when Tundra Energy & Marketing Limited (TEML) announced it had purchased the South East Saskatchewan pipeline system from an affiliate of Enbridge Income Fund for $1.075 billion. Closing of the transaction is expected to occur in late 2016 and is subject to various regulatory approvals. The sale comes on the heels of Enbridge’s recently announced merger with Spectra Energy. “In conjunction with the proposed Spectra Energy merger, we announced our intention to divest of approximately $2 billion of non-core assets over the next year to further strengthen Enbridge Inc.’s consolidated balance sheet and provide for additional financing flexibility,” noted Enbridge executive vice president and chief financial officer John Whelen. “The sale of these regional gathering pipelines by (Enbridge Income Fund Holdings Inc.) not only provides an efficient source of financing for the Fund’s organic growth program, but also immediately addresses about one-half of our monetization target while displacing equity that we would otherwise need to raise through the issuance of new capital.” The Southeast Saskatchewan Pipeline System, previously known as Enbridge Pipelines (Saskatchewan) Inc., or EPSI, includes over 1,600 kilometers of crude oil and liquids gathering pipelines, approximately 547 kilometers of trunk line and four truck
officer of James Richardson & Sons, Limited, TEML’s parent company, said in a release, “Throughout JRSL’s 159 year history, our primary focus has been moving Canada’s commodities to North American and global markets in a safe and efficient manner. This transaction will further that tradition, and we look forward to welcoming our new employees to the JR Group of Companies.” Bryan Lankester, president of TEML, spoke to Pipeline News on Oct. 5. Asked what brought on this purchase, he replied, “We’ve been in operation in Cromer, Manitoba, since 2005, building infrastructure like the rail facility plus 700,000 barrels of storage. We’ve been expanding. What brought this on was our business plan to continue expanding in the Williston Basin,” Lankester said. TEML already has an interconnection between the Westspur System and their facility. It was put in place in Page A7
History of Saskatchewan gathering network 1955 – Creation of Producers Pipelines Limited and Westspur Pipe Line Company, and initial construction of the Westspur mainlines and Producers gathering system began. 1971 – Dome purchased Producers Pipelines Limited and Westspur Pipe Line Company. 1985 – Producers Pipelines Inc. and Westspur Pipe Line Company (1985) Inc. purchased liquids pipeline assets back from Dome. Dome retained ownership of the gas pipeline system. 1992 – Producers Pipelines Inc. purchased a Weyburn area gathering system (original construction in 1957) from Norcen and rebranded it Weyburn Pipelines Inc. 1993 – Producers Pipelines Inc. purchased a Virden MB area gathering system (original construction in 1955) from Norcen and rebranded it Virden Pipelines Inc. 1995 – Interprovincial Pipe Line purchased Producers
Pipelines Inc., Westspur Pipe Line Company (1985) Inc., Weyburn Pipeline Inc., and Virden Pipeline Inc. 1998 – Interprovincial Pipe Line rebranded in entirety as Enbridge, with the SE Saskatchewan and Manitoba systems being renamed Enbridge Pipelines (Saskatchewan) Inc., Enbridge Pipelines (Westspur) Inc., Enbridge Pipelines (Weyburn) Inc., and Enbridge Pipelines (Virden) Inc. 2013 – Construction of the Enbridge Bakken Pipe Line Company Inc. 16” pipeline from Steelman to Cromer. 2015 – The majority of assets held by Enbridge Pipelines (Virden) Inc. were sold to Tundra Energy Marketing Ltd. 2016 – Pending sale of Enbridge Pipelines(Saskatchewan) Inc., Enbridge Pipelines (Westspur) Inc., Enbridge Pipelines (Weyburn) Inc., and the remaining Enbridge Pipelines (Virden) Inc. assets to Tundra Energy Marketing Ltd. Courtesy Enbridge
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PIPELINE NEWS November 2016
PIPELINE NEWS
EDITORIAL
Mission Statement: Pipeline News’ mission is to illuminate importance of Saskatchewan oil as an integral part of the province’s sense of community and to show the general public the strength and character of the industry’s people.
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If you produce oil in SE Saskatchewan, this sale affects you The pipelines connecting southeast Saskatchewan and southwest Manitoba’s oil wells to market have changed hands a few times during the years, but it’s been a generation since that last happened. The difference this time is that instead of being amalgamated into a larger company, it’s been spun off and purchased by a smaller company. However, in the end, the marketing options for all involved may be a lot greater than they have been in the past. On Sept. 29, Tundra Energy Marketing Limited (TEML) announced its planned acquisition of Enbridge’s Southeast Saskatchewan Pipeline System, previously known as Enbridge Pipelines (Saskatchewan) Inc., or EPSI. While TEML president Bryan Lankester declined to comment about potential future connections to TransCanada’s proposed Energy East project, we can draw our own conclusions. With TEML’s purchase of the EPSI system, combined with the potential of the Energy East project, oil producers in southeast Saskatchewan and southwest Manitoba would have a full suite of shipping options, as well as storage. If Energy East does go through, and its planned Cromer Lateral pipeline goes ahead, an oil producer in this region would have dramatically more options than they had, say, six years ago. They could use the Enbridge mainline, shipping into the American PADD II market, as has been the case for generations. Or they could choose to ship to Eastern Canada, via the Cromer Lateral and Energy East, thus
allowing for usage in Canadian refineries. Or they could choose to ship to the East Coast of the U.S. via barge or tanker from Saint John, New Brunswick, or even overseas via tanker. Their third option, when the economics present themselves, will be the use of the substantial crudeby-rail facility TEML built near Cromer a few years ago. Capable of loading unit trains, and connected by pipeline to the Cromer complex, any oil shipped into Cromer via the gathering system could potentially be loaded onto rail cars and shipped anywhere in North America. This last option presumably makes crude-by-rail a little easier for any producer already connected by pipe, meaning that, potentially, anyone would be able to ship by rail, not just those with a rail loading facility nearby. It also means if you were a trucking firm whose business gained from the influx of crude-byrail a few years ago, you might not be able to count on it again when the economics for rail shipments improve. While Enbridge now characterized these assets as “non-core,” for TEML, this will be the heart of their business. It dramatically increases the scope and scale of their business as a midstream pipeline operator. Will this sale actually change much for the people on the ground? No. But for producers, with new options for crude-by-rail (when the price supports it,) and possible connection to Energy East (if it is ever built), it could mean a better bottom line, improving the business for all involved.
PIPELINE NEWS November 2016
Five pipelines shut down by vandals who call themselves activists Around dawn on Oct 11, across the northern United States, five pipelines were struck at various remote sites roughly simultaneously. Near-simultaneous strikes has been a hallmark of Al Qaeda, be it the embassy bombings in Africa, 9/11, or bombings in London and Madrid. Except in this case, instead of bombs, the weapons were bolt cutters. In several cases, flowers, not shrapnel, were left behind. Hitting in remote areas, the perpetrators targeted pipeline block valves. The intention, as their hashtags say, was to #ShutItDown. Wearing white plastic hardhats, each with a large red ‘X’ label across the forehead, these protesters tampered with five of the key international pipelines that ship Canadian “tar sands oil,” as the activists called it, to American markets. The lines included Kinder Morgan’s Trans Mountain in Washington, Spectra Energy’s Express line in Montana, TransCanada’s Keystone in North Dakota and Enbridge’s Lines 4 and 67 in Minnesota. The acts of vandalizing these block valves were broadcast live via Facebook. “BREAKING: To avert climate catastrophe, activists are shutting down pipelines bringing Tar Sands Oil into the US, in solidarity with Standing Rock,” their posts said. The reference to Standing Rock is the North Dakota band protesting the construction of the Dakota Access Pipeline south of Bismarck, N.D.
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OPINION FROM THE TOP OF THE PILE
While individuals or pairs went onto the site, others videoed the acts and the subsequent arrests. Police showed up, and cordially arrested the trespassers. These people should have been thrown to the ground, eaten dirt with a knee on the back of their necks when they were arrested. Despite their self-righteousness, these truly militant and criminal acts should be prosecuted to the maximum extent of the law. Interfering with infrastructure vital to national security is not something the American government is liable to take likely. Shutting down pipelines is not a joke. It’s not chaining yourself to a bulldozer. Thankfully, SCADA monitoring system would have monitored any pressure variation and shut in the system before anything serious, like a spill, could happen. Not surprisingly, these protests were videoed and broadcast with cellphones made of petrochemicals. Their high visibility vests were made of petrochemicals. And, in each of the videos I watched, they drove there. “Shutting down” might be too strong of a term. It didn’t looking like they did much cranking on those valves. Nonetheless, at least two of the pipeline companies shut down their lines as a precaution. I’m familiar with most of the major pipeline rightsof-way in Saskatchewan. I usually notice them every time I drive past one, to the point where my kids are probably sick
By Brian Zinchuk
of it. Often I’ve wondered about the security of sites such as block valves like the ones these protestors tampered with. You can bet after this little fiasco, there will be millions spent on video cameras for every site that doesn’t have them already. The real worry is actual terrorism. No amount of security cameras, chains or fences in the world is going to speed up response time to sites in the bald prairie. Thankfully, since pipelines are well buried, any damage would be limited. These vandals, whose group picture on their Facebook page shows them to be white men and women in their 50s and 60s, stated they did this, “in support of the call for International Days of Prayer and Action for Standing Rock. Activists employed manual safety valves, calling on President Obama to use emergency powers to keep the pipelines closed and mobilize for the extraordinary shift away from fossil fuels now required to avert catastrophe.” I surely hope they had time to feed their horses on the way to and from these attacks. Wait, didn’t one talk about where his Jeep was parked? Right – it’s catastrophic, until the Jeep needs to be filled up at Phillips 66. Then it’s just convenient. Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@sasktel.net.
Fighting to get information on birds killed by wind turbines Dear editor: I just read Brian Zinchuk’s excellent article on wind turbines and bird deaths in Alberta and Saskatchewan. Way to go Saskatchewan for actually taking this issue seriously - we’ve never had this happen in Ontario! I’m from southwestern Ontario, but moved to New Brunswick two years ago
when the turbines went up. For six years I fought them, went to tribunal hearings, videotaped the NextEra destroying an active eagle nest, got sued by the same company because I parodied their logo as “NexTerror,” and I organized and attend uncountable protests during that time. If I would have stayed and remained sur-
rounded by turbines, the kids’ school surrounded by turbines, I would have continued, but our health came first and we left the land I was born and raised on. Here’s the thing - I’ve since realized that the wind companies are killing way more birds and bats then the media or researches know - with impunity. The last report on bird/
bat mortality that any wind developer released to the public was in 2012 (TransAlta’s Wofle Island), then all of a sudden the whole industry stopped releasing these reports. I couldn’t find them anywhere. Bird Studies Canada wouldn’t release the documents - they are confidentially working with the wind companies (on a voluntary basis...). I asked
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the wind company for it (NextEra) - they told me they would give me a two page summary in a couple of months. I asked the Ministry of Natural Resources and Forestry - they said I had to file an FOI (Freedom of Information) request. These should be public documents! So I filed a test FOI for three local projects. After many months, and a faked “appeal” by the wind company to delay the release, the documents came. My heart sank and my blood boiled. In six months the two local NextEra projects killed eight red tailed hawks and 14 vultures - in just six months! You can imagine what the raptor population will be in that area when the 20 year lifespan of this project is over. We lived on flat, prairie like farm land, with small woodlots – good raptor habitat, but not now, as there are 200+ wind turbines there. I decided to file FOIs for all the wind projects in Ontario. There are over 110 projects. I had to source out and make a comprehensive list and then present it to the FOI office and the Renewable Energy Coordinator for the MNRF. You know what the MNRF guy said? “I didn’t even know about half of these projects.” Right - this is the guy in charge of wind turbines and wildlife in the province,
and he doesn’t even have a LIST of the wind projects there? I asked them if they are studying the massive cumulative impacts these projects will be having on the bird and bat populations. His answer was no, not unless there is some secret study going on. So nobody is looking into it. Not a soul. It’s all eyes closed to these massive kills. Oh, and they told me it will probably costs me thousands of dollars to retrieve these documents through the FOI. I took a breath and said, “Do it.” I’ll set up a Go Fund Me, or something. These need to be made public. I’ve posted what I have so far on a Google Drive page open to the public. At some point it might be a good idea to do this in Alberta as well. We asked the New Brunswick MNR for these documents and they just emailed them to us, free of charge, in two days. We asked the Nova Scotia government and they mailed us the documents, through an FOI request, for five dollars. But in Ontario “It’ll cost you thousands.” Obviously, it’s for information they don’t want getting out when they put an enormous price tag on it - that’s not open government. Esther Wrightman St. Andrews, New Brunswick www.ontario-windresistance.org
PIPELINE NEWS INVITES OPPOSING VIEW POINTS. EDITORIALS AND LETTERS TO THE EDITOR ARE WELCOME. Email to: brian.zinchuk@sasktel.net
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PIPELINE NEWS November 2016
Remediation work to continue in spring ▲
Page A2 seen. But effectively the same activity we saw this summer/fall will resume in 2017, weather permitting. Pipeline News then asked how much, if anything, they expected to retrieve in the spring, nine months after the initial spill, and with only seven per cent unrecovered? Olensen replied, “The expectation is that if there is anything to be retrieved, we will be actively requiring Husky to do so. It is
everyone’s expectation, and hope, that given 93 per cent recovered, there isn’t much to see. But again, we’ll see.” Sam Ferris with the Water Security Agency noted Prince Albert began using its river water intake on Sept. 19, the week following the all clear was given by the WSA. Additional water sampling has been requested, and no petroleum hydrocarbons have been detected. The city is also using additional powder-activated carbon in
its water treatment process. Melfort began re-using their intake on Codette Reservoir on Sept. 16 and has refilled its reservoir. No hydrocarbons have been detected there, either. North Battleford was still relying on using its groundwater treatment plant (with four additional new wells) and its water supply line from the Town of Battleford. “The construction of a previously
planned pre-filtration system has not yet started, but equipment is being purchased and preliminary plans are in place to have it installed,” Ferris said. Dredging of the river near the surface water intake was delayed and scheduled to begin Oct. 24. The dredging was required due to natural siltation of the river and sand bar formation. This was supposed to happen in July, but the oil spill caused the delay.
New players drilling in almost every region
■ By Brian Zinchuk Estevan – While Saskatchewan’s active drilling rig count remains low, in large part due to wet conditions in the Kindersley area bringing activity to a near standstill, several new companies have appeared on the Rig Locator drilling map. As of Oct. 24, there were 28 rigs shown working on that day. In addition to the usual players of Crescent Point Energy Corp., Surge Energy Inc. and Whitecap Resources Inc., across Saskatchewan lesser-known companies have popped
up with a rig in their employ. In the Lloydminster area, near Onion Lake First Nation, Avalon Oil & Gas Ltd. had one rig. The two other rigs in the area were both drilling near Paradise Hill, one for Canadian Natural Resources Ltd., and the other for Husky Energy. The Kindersley area was nearly devoid of activity, with Crescent Point Energy Corp. and Raging River Exploration Inc. with a rig apiece. Crescent Point’s was just east of Kindersley, and Raging River’s was south of Elrose, in
Drilling activity in the Kindersley area, as seen here on Sept. 16, has been substantially hampered by continued wet weather. This is Savanna Drilling Rig 436. Photo by Brian Zinchuk
the Forgan district. The southwest has picked up steam with five rigs, after having been totally devoid of
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activity. In this case, the standout rig is drilling for Capio Energy Ltd., just west of Gull Lake. Whitecap had one
rig drilling just to the northwest of Gull Lake. Crescent Point has one rig near Shaunavon and another southeast of Eastend, at Eastbrook. Surge Energy also had a rig near Eastbrook. In the southeast, Dawn Energy Inc. , east of Moosomin, and Ventura Resources Inc., drilling near Lampman, are the standout new players. Torc Oil & Gas and Crescent Point were also drilling near Lampman. Keystone Royalty Corp. is another notable name, drilling two kilometres west of Alida.
Northwest of Carnduff, Triland Energy Inc. had one rig, while Spartan Energy Corp had a rig near Alameda. Crescent Point had a rig northeast of Oxbow and northwest of Alameda. In the Oungre area, Crescent Point had three rigs working, two near the border and one near Bromhead. Activity picked up in the Stoughton area, with four Crescent Point rigs working east and southeast of the community. Two more rigs were working on potash, at Colonsay and Esterhazy.
PIPELINE NEWS November 2016
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Minister not concerned with Enbridge sale ■ By Brian Zinchuk Weyburn – Saskatchewan Energy and Resources Minister Dustin Duncan does not have concerns regarding the announced sale of Enbridge’s south Saskatchewan gathering system to Tundra Energy & Marketing Ltd. On Oct. 7, Duncan told Pipeline News in his Weyburn–Big Muddy constituency office, “I don’t think it was a surprise, knowing that Enbridge, moving into the big Spectra merger, was looking at what was core, what was non-core assets to them, and trying to get out of some of their business to do some of the merger. “Our understanding is it really has no impact on companies that are feeding into the distribution
line at this point, and no real impact on employment. I think, overall, it’s a positive for the province to see a company like Tundra furthering their investment in Saskatchewan. “Premier Wall has had conversations with some of the people. I’m in the process of connecting with Tundra. I look forward to furthering that relationship and welcoming them to the province in a bigger way,” Duncan said. Asked if he was concerned about having a smaller corporate entity than Enbridge running that pipeline gathering system, with regards to their fiscal capacity to deal with a major spill, Duncan replied, “No. It isn’t a concern. Obviously we need operators with the wherewithal and the size of company to not only maintain the operations, but
respond to any difficulties in the future. I think, for Tundra, they would have had to do their due diligence with the age of the pipe, the operations of the pipe in the past. As a company, they would have to factor that in. I suspect a company (like) the Richardsons and Tundra, if it wasn’t something they couldn’t take on, they wouldn’t have. They’ve been in business a long time for a reason. They’re good operators and a good organization. “From our standpoint, it doesn’t really raise a flag that it’s transferring from a company the size of Enbridge to Tundra. We’ll work with them, as we do with all of our operators, pipeline and otherwise, and make sure we’re doing our part on the regulatory side, and they’re doing their part as an operator,” Duncan said.
good for the producers down there, is our thought. We’re focused on that area. We put capital into the facilities there. We built the storage tanks. We’ve invested a lot into infrastructure for producers in the Williston Basin. And that’s not going to stop. “For Enbridge, it was a smaller asset. For us, this is our home area. This is where we’re going to put our efforts into building in the future.”
company is a multi-billion dollar company, and there is also a role for insurance. Pipelines don’t change hands that often. Lankester said the fact Enbridge, a good operator, had been operating this pipe for 20 years was one of the reasons they were interested in it. Enbridge Pipelines (Saskatchewan) Inc. has been a strong community supporter over the years. This past summer alone,
Control centre returning to Estevan ▲
Page A3 August 2015. It allowed producers in southeast Saskatchewan to store product in TEML’s tanks, and to be re-shipped into Enbridge. They also have a rail facility, connected by pipeline, located a few kilometres east of their main terminal, on a CN rail line, which producers can make use of. However, the economics for crudeby-rail aren’t there right now. “The Brent to WTI differential has closed back in. It went out to high amounts there and rail filled that gap. Since then, there’s very little crude on rail going anywhere from Canada.” There’s some use of their rail facility, but very little compared to two years ago. At this time, there are no plans to expand their overall Cromer facilities. TransCanada’s Energy East Pipeline proposal includes plans for a terminal at Moosomin and a “Cromer Lateral,” a 71 kilometre pipeline which would originate just northwest of the Enbridge terminal at Cromer. Asked if that proposal was tied into TEML’s plans, Lankester declined to comment. “Producers in southeast Saskatchewan will benefit from this transaction by providing better access to rail loading and storage,” Lankester said. “All producers want access to alternative markets. We provide access to alternative markets in a seamless manner.” TEML is 100 per cent owned by the Richardson family, the same family which owns Tundra Oil & Gas Limited, Richardson International Limited, Richardson Pioneer, as well as other financial and real estate ventures. The parent company is James Richardson & Sons, Ltd., a company that pre-
dates Canada’s birth as a nation, with roots going back to 1857. However, TEML is a distinct company within that ownership. Lankester explained, “We started out as the marketing arm for Tundra Oil & Gas. In 2012, we were spun off as a separate entity with a mandate to grow business. That’s when we started building the storage tanks, rail loading facility and connection to Westspur.” Jobs coming back to Estevan By purchasing these assets from Enbridge, TEML becomes a much larger entity. The acquisition adds another 175 people. While Enbridge characterized the sale as “non-core” assets, this acquisition will very much be the core of TEML going forward. And that’s a key message Lankester wants to get out. They’re offering all existing employees jobs within the company. “Everyone will be retained,” he said. Estevan had a control facility for the EPSI system that was moved to Edmonton two years ago. “It will be repatriated as part of this transition back to Estevan,” Lankester said. “We look at Estevan as being the head office of operations for TEML. We’re dedicated to maintaining that office and its role as of running the pipelines.” John Williams will continue running the operation in Estevan. “I think it’s a good news story for southeast Saskatchewan. We’re repatriating jobs from Edmonton back there. That’s the centre of our Williston Basin operations and it’s going to remain that way.” He added, “This is good for Estevan. It’s
Pipeline safety and possible spills became a significant issue in Saskatchewan this past summer when a 16 inch Husky gathering system line leaked near the North Saskatchewan River, north of Maidstone, and contaminated the river for hundreds of kilometres. Asked about TEML’s fiscal capacity to deal with potential catastrophic failures like this, Lankester noted their parent
they were a lead sponsor of the Saskatchewan Summer Games held in Estevan, for instance, and have supported numerous charitable organizations throughout the year. “That will continue,” Lankester said. “We are dedicated to supporting the Estevan community as Enbridge has done in the past. They’ve provided a lot of support in southeast Saskatchewan, and we intend to continue that tradition.”
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PIPELINE NEWS November 2016
Holland’s Hot Oiling ■ By Brian Zinchuk Kindersley – There’s a good chance most light oil wells in the Kindersley area will need hot oiling at some point, and that’s exactly why Holland’s Hot Oiling has been providing that service for the last 27 years. Since then, the company has added numerous other service lines, including supporting fracking and offering rentals through an associated division. Holland’s Hot Oiling is owned by Pat and Deb Holland. The outfit is very much a family affair. Jaymie Holland is the senior manager. Deb’s sister-in-law, Lisa Johnson, is office manager. Deb’s brother, Brian Johnson, has a hot oiler subcontracted on and acts as field supervisor and shop foreman. Gary Holland, Pat’s brother, has two water trucks subcontracted on. Brad Ginther, Jen Holland’s husband and Jaymie’s brother-in-law, has hot oilers and heating units onboard. The company started in 1989, according to Jaymie. Speaking to Pipeline News on Sept. 16, he said, “Pat had
other oil experience in the chemical industry and sales. He started running a hot oil truck in the early-1980s working for a local company, and eventually bought a couple hot oilers off of the company and started his own business.” As for the function of hot oiling, he explained, “Light oil has wax issues, and that’s when a hot oiler comes into play. (It’s used) to heat the oil in the truck and pump it down the well or flowline, with heat, to break down the wax.” A hot oiler is essentially a pressure truck with a heating unit on it. The heat is provided by burning diesel fuel, typically. A coil inside the burner allows the oil to be heated before it flows down the 1.25 inch high-pressure hose, into the well. Fluid can be drawn from a production tank, through the pump and into the burner, or it can be drawn from the on-body tank. The oil is usually heated to around 90 C. “We try not to get over 100 C,” he said. Temperature and rate of pressure has a lot to do with it.
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They might pump one to two cubic metres per minute. When there are pump issues, they’ll go down the tubing with hot oil to free up the waxed off pump or rods. “Usually, it ends up down the flowline,” he said. The growth of horizontal drilling, which now dominates the industry, means they’re using more fluid for a flush. It used to be around two to four cubic metres, but now those number might run six to 10 cubic metres. As a result, they may need more tank capacity. “Lots of times, we’ll do it with a tank truck,” he said. As for the fluid used, sometimes they’ll use chemical and water, sometimes it’s light oil and chemical. The chemicals are used to break up the paraffins. It usually takes about 1.5 hours to load fluid and pump it down during the summer. In winter, they will pre-heat the fluid on the truck. “Often we can do several wells, six to 10, a day, if everything’s going good,” he said. Some oil companies run a schedule, e.g. monthly flushes, for their
To keep up with the changes in the industry, Holland’s Hot Oiling first added two diesel frac heaters, one year later adding three propane-fired super heater units like this one. Photo by Brian Zinchuk
wells. “We take the calls as we get them,” he said. Asked how the downturn has affected them, he replied, “The last couple years have been trying times, like anyone else.” Holland’s had had about a 20 per cent decrease in its staffing level. Oil companies are shutting in wells more commonly now, with some maintenance, chemical and hot oil programs not as much a priority as before. The company’s direct staff and management numbers around 15, with 50 to 60 subcontractors. They run close to 50 units. “At our peak, we were just shy of 100 people,” he said. There’s a lot of price
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Fracking in the area has been a focal point over the last seven years. Hollands has added water trucks to fill frack tanks with tridems and super-B tankers. Frack heating is another service line they started five or six years ago. Their first frac heaters used diesel fuel, but due to the oil crash and rate cuts, diesel prices made those units uncompetitive. As a result, they bought three propane-fueled burner units. Holland’s has a rentals division, J&H Rentals, which has been around for about 10 years. Jaymie has bought out his parent’s interest in the rental company. They carry office trailers, light towers, gen sets and garbage wagons equipped with portapotties. “Rentals are still going out the door, but rates have been affected. It’s a tougher market now,” Jaymie said.
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PIPELINE NEWS November 2016
Raging River plans for 330 wells in 2017, if the ground will ever dry up ■ By Brian Zinchuk Kindersley – Raging River Exploration Inc. typically has an annual meeting with its operations staff and contractors in Kindersley, each September, letting them know how things are going and what’s to come. On Oct. 19, Raging River’s president and CEO Neil Roszell told Pipeline News, “The key message we were providing to all our staff was one, sincere gratitude for the hard work and efforts they put in to build the company to where it is today, notionally 20,000 barrels a day, from a start of 1,200 barrels a day four-and-half years ago. “Key message two was that Raging River continues to be in this area for the long haul. We have meaningful growth plans as we look forward. We’re not counting on oil prices having to be US$60 or US$70 a barrel WTI to be able to do that. In fact, under what we’re seeing for current prices, calling for low US$50s to US$55 WTI, we would intend on drilling
somewhere in the order of 330 wells in 2017, and continuing on that growth trajectory heading towards 23,000 to 24,000 barrels per day by the time we exit 2017.” That growth trajectory will hopefully motivate the workers, he noted. “They all matter, and we’re going to have a lot of iron moving. We’re going to keep people working for the foreseeable future. Barring challenges like the weather we’ve seen in the last few weeks and over the summer, we’ll continue to grow.” Roszell added, “The entire complement of people working for Raging River really went above and beyond during the summer months, because Kindersley had probably the wettest summer on recorded weather history. The challenges that created to move drilling rigs, service rigs and to move oil to market was beyond challenging.” As of mid-October, Raging River had fired up its second of three rigs. For a while, it was down to one, working in
the somewhat drier Alberta land they have. The reduction in activity from going full out is “100 per cent weather,” according to Roszell. Snow and rain has been the most recent culprits, causing rigs to be racked for much of October. But prior to that, the Kindersley has endured a very wet year, often putting a crimp on activities as rural municipalities shut down roads to heavier loads. Once freeze-up does occur, those three rigs should be working steady until the end of February. “We try to schedule our drilling rigs to be down my March 1,” he said. In recent years, crude-by-rail facilities have popped up in the area, including a substantial facility near Kerrobert and another east of Kindersley, both of which are currently idled. Asked about their usage by Raging River, Roszell replied that back in April 2014, the company had probably 20 per cent of their crude moving by rail. “As prices rolled over, the differential between WTI and Edmonton par
crude tightened up significantly to such a point, there was no economics to move crude-by-rail. In fact, it was more costly to the producer, so we stopped moving and crude-by-rail, along with other producers.” Inter Pipeline expanded their pipeline takeaway capacity in the area as well, allowing local production to join the Enbridge mainline at Kerrobert. Thus, to see Raging River putting oil on the tracks again, he said, “What we would need to see is a couple of things. If Enbridge, for example, had apportionments, which are typically caused by with downstream problems i.e. if the Bakken in southeast Saskatchewan and North Dakota really ramped up production again, and pushed some of the barrels back so we couldn’t get production in the pipeline. That would cause us to use rail again. But that same thesis that could see apportionments again, which we haven’t seen for a couple years, would also drive the spread between WTI and Edmonton Par. That
would have to happen before rail is used,” he said, adding that only a nominal amount of crude oil these days is making its way to rail. Oil doesn’t have to hit US$90 per barrel, but it would have to be in the mid-US$60s. In the Viking, significant producers include Teine Energy, Raging River, Crescent Point Energy Corp., Whitecap Resources Inc. and NAL Resources Ltd. Ish Energy Ltd. also has significant land, but not as much production. Raging River had been the largest Viking formation producer in Saskatchewan until this past summer, when Teine Energy’s $975 million purchase of Penn West Exploration’s Viking and heavy oil Bakken land in the area moved that company to top spot. Raging River has a field office in Kindersley. The company employs approximately 100 people directly, and, when running at full steam (weather permitting), a further 150 contractors such as drillers, pipeliners and hydraulic fracturing, for example.
A9
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A10
PIPELINE NEWS November 2016
They brought their company back from the brink ■ By Brian Zinchuk Kindersley – This oil downturn has had many casualties, but few have survived being been through the
wringer in the manner Norm Neigum and Darla Dorsett have endured over the last three years. The husband and wife team were the
The accident This October marks three years since Norm Neigum ’s accident. “I came back from dying six times. I came from cardiac arrest six times to ‘healthy as a horse,’” he said. The accident came about when he was test driving a new race car in Georgia (he has his own race track just east of Kindersley). The accident resulted in Norm becoming a T-2 paraplegic (second thoracic vertebrae). He spent fourand-a-half months in the hospital in Georgia, then the better part of half a year in hospitals between Saskatoon and Kindersley when they got back. The American health-care costs came out of their own pocket, and those bills were considerable, to say the least. In the middle of all this, the initial purchase of the companies by GPE had been taking place. “We love our community and surrounding area. There’s so many valuable people that have helped us through all this, especially our employees, our long-time employees who rode this out with us,” Norm said. Norm is in a motorized wheelchair. He goes to the gym every day, building his strength. “I don’t know anyone whose physically or mentally tougher than Norm,” his wife, Darla Dorsett, said. Norm continues to mentor several racers, including Darla and Norm’s son, Shayne Neigum. The cars are like dragsters, but on sand, and without a parachute.
owners of Good To Go Trucking and its associated companies, and are the owners again, having snatched the company from bankruptcy. They did all this during one of the worst times of their lives, as Norm had been paralyzed, three years ago, from the chest down in a racing accident in Georgia. Good To Go Trucking handles general oilfield hauling. Good To Go Rentals offers commercial and oilfield equipment rentals. GPE Fluids Management offers KCL (potash) and fluids hauling for fracking. Pipeline News caught up to them in their Kindersley office on Sept. 16. The companies involved include Good To Go Trucking, Good To Go Rentals and GPE Fluids Management. Their yard on the west side of Kindersley covers an entire city block, plus two other yards north of town and a shop east of town. “We had two companies we sold to GPE. I owned Good To Go Trucking,
and Norm and Dean Dorsett owned Good To Go Rentals,” Darla said (Dean is Darla’s brother). “We owned these companies for 22 years before the sale. GPE had possession for two years and down we went. But we are still here and going to celebrate 25 years in business Jan. 9, 2017.” Great Prairie Energy Services Inc. bought the companies on Oct. 31, 2013. GPE was a new publicly traded company formerly called DevCorp. Great Prairie purchased and amalgamated Good To Go Rentals and Good To Go Trucking with an eye to rapid growth. Our story in January 2014, noted, “Good To Go Rentals expects to open new outlets in the future to serve the Swift Current-Shaunavon, Estevan-Weyburn, Kindersley-Kerrobert and Lloydminster areas.” The downturn in oil later that year put a stop to that. The deal to initially sell their companies to GPE was just being finalized when Norm had his accident on Oct. 13, 2013.
not being fully paid out for the initial sale of the company to GPE in 2013. They had to finance the re-purchase of the company they used to own. Darla explained, “They phoned us on Friday. The receiver was here at 4:55 p.m. on Friday. Head office had called us at 2 p.m. to tell us negotiations didn’t go well. I hung up the phone, went outside, and thought, ‘What just happened here?’ She had been anticipating a call that was the total opposite of what actually happened. “I was just in shock,” she said. In their 22 years of running the company, the two of them had only taken three holidays. She said, “Our life was this place. We worked way, way too hard.” “I talked to Norm. We said, ‘Nobody’s getting it. We worked our lifetime, and nobody’s coming in and buying these companies.’ “The receiver came in at 5 o’clock that day, and by midnight, we had a deal where Norm and I would personally take on all responsibility for operations. We were working at the time, and we didn’t want interruptions.” As Norm was a board member, Darla dealt with the receiver and bought the company back. The message to the receiver was, “You shut us down for 24 hours, even five minutes, we’re walking. We’ll restart on our own. Do not stop operations in mid-flight, because of the volatility of the work situation.” The receiver was respectful, the couple said. Darla was the largest unsecured creditor. She had written cheques to keep the company operational during this time. Of the equipment that had been sent to Alberta stations, including dozens of brand new tanks straight from the factory, none of it came back. Page A11 ▲
Downturn hits hard “We fell victim to the declining oil prices,” Norm said. “In November of 2014 Alberta got hit fast and hard. It was another 10 months before we felt it in Kindersley,” Darla said. Late November 2014 saw OPEC decide to open their taps and expand production, resulting in a tremendous slide in oil prices in the coming months. “The receivers walked in Jan. 22, 2016, and their response was we’re no longer in business. At that point, Darla and I had to think very fast and make a five-minute decision,” Norm said. “The reason we had to think fast was that Norm and I thought, to the very end, they were going to restructure,” Darla said. “We had faith in that to the very end. We really believed that until midnight the night before.” “We knew we could turn the Kindersley operation around, our own companies. We decided, within five minutes, we would purchase our companies back,” Norm said. These events took place just as oil was hitting its lowest point in this downturn to that point, with WTI trading at US$26.55 on Jan. 20, 2016, the lowest it had been since November, 2001. “We worked too hard to watch it all slide away,” Norm said. “And we knew we could turn this operation around, and be successful.” Kindersley was stable, Darla noted, but they couldn’t carry the Alberta side of the company through the tough times. Great Prairie Oilfield Services had locations in Drumheller, Valleyview and Rocky Mountain House, in addition to Kindersley. Kindersley’s operations had never changed the company name. The receiver’s coming The couple’s losses were substantial in the entire affair, including
PIPELINE NEWS November 2016
A11
▲
The receiver showed up the week oil hit its lowest point in 15 years Page A10
Finding millions over the weekend The couple would take over operations until they could make a formal offer to buy back the Kindersley divisions. Darla took on 100 per cent responsibility that day for all expenses until that sale agreement was formalized. While there wasn’t a lot of activity at the time, they did have some work, and they didn’t want to jeopardize that. “We needed the work that we had,” she said. She had until Monday, three days later, to make an offer. “This is Friday. Got no lawyer, no banker, but through the weekend I brought all my family in. We worked hard. We got all our personal information together. The bankers at the Luseland Credit Union worked through the night, because I had
to make an offer by Sunday.” She had never dealt with a credit union before, but her daughter’s banker at the Luseland Credit Union went to bat for them. A syndicate of credit unions supported the deal. “I was totally amazed at the efforts of the Luseland Credit Union, that they would take our file over the weekend and work through the night,” she said. “Norm and I had been through two declines in prices before, when we were in control, and we survived them. This one, nobody knew how long it was going to be. But at that point, the point where you’re about to lose everything you’ve worked for, you have to come to the decision. Is it worth the risk? Of course it is,” Darla said. The next six weeks were very stressful. It took several weeks to hash out the deal, then to get it into court to
get approval. Gratitude Operations for the rest of 2016 were hampered by record rainfalls. They had work, but often couldn’t get to it. “Right now, we’re working at moderately lower margins, but we’re grateful for the work we have. Our goal right now is to keep all our families and employees’ families fed, and to pay for our equipment the second time around,” Darla said. “We’re grateful there are oil companies that continue to drill at the current oil prices. We’re just trying to work with the oil companies by absorbing lower margins,” Darla said. “In the end, Norm and I are grateful. We get up every day. We come in. We do the best we can do. We’re grateful to be able to provide the service we do to the oil companies that are here, and we’re very grateful to our employees who stuck by us,” Darla concluded.
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A12
PIPELINE NEWS November 2016
USTOMS ROKERS Licence near Bromhead goes for $5.1 million Regina – Crown land sales picked up in October, effectively doubling the amount brought in for this fiscal year so far. The Oct. 6 Crown petroleum and natural gas rights sale raised $17 million. This was by far the largest revenue among the four public offerings held to date in this fiscal year. At $376 per hectare, Saskatchewan’s average
per-hectare price is the highest among western Canadian public offerings, indicating sustained interest being shown by the industry in the province’s petroleum and natural gas resources. “Nothing has changed in Saskatchewan when it comes to our accessible resource base, our favourable operating environment and our transparent policy
regime,” said Energy and Resources Minister Dustin Duncan. “This results in clear investment opportunities for the industry, and we continue our work to encourage and enable those opportunities in anticipation of future development.” In this public offering, two exploration licences located west of Estevan received bonus bids totalling $6.9
million for 2,832.814 hectares. Millennium Land Ltd. was the successful bidder of these parcels that are prospective for multiple targets including the Midale and Frobisher Beds of the Madison Group, the Bakken Formation and the Three Forks Group/ Torquay Formation. Lloydminster area The total bonus received in the area was
$248,698, an average of $79.60/hectare. This compares to $381,757, an average of $134.76/hectare at the last offering. The top purchaser of acreage in this area was NRG LandSolutions Inc. which spent $172,808 to acquire 11 lease parcels. Top price paid for a single lease in this area was $42,207, paid by NRG LandSolutions lnc. for a 259-hectare parcel situated 25 kilometres east of the Unity South Viking and Sparky Sands Gas Pools, 10 kilometres southwest of Wilkie. The highest dollar per hectare in this area was received from Windfall Resources Ltd. which paid $1,253/hectare for a 16.19 hectare parcel located within the Edam West Mannville Sands Oil Pools, 25 kilometres east of Maidstone. Kindersley area The total bonus received in the area was $3,271,423, an average of $167/hectare. This compares to $363,447, an average of$145/hectare at the last offering. Top purchaser of acreage in this area was
Synergy Land Services Ltd. which spent $1,393,686 to acquire five lease parcels and two exploration licences. Top price paid for a single licence in this area was $874,731, paid by Synergy Land Services Ltd. for a 1,554-hectare parcel situated adjacent to the Forgan Viking Sand Oil Pool, 15 kilometres southeast of Elrose. Top price paid for a single lease in this area was $156,759, paid by Scott Land & Lease Ltd. for a 194.25-hectare parcel situated within the Hoosier Bakken Sand Oil Pool, 30 kilometres northeast of Alsask. The highest dollar per hectare in this area was received from Synergy Land Services Ltd. which paid $879/hectare for a 64.75 hectare parcel located adjacent to the Whiteside Viking Sand Oil Pool, 30 kilometres northeast of Alsask. Swift Current area The total bonus received in the area was $2,463,876, an average of $198/hectare. This compares to $371,693, an Page A14 ▲
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PIPELINE NEWS November 2016
Christo Bezuidenhout owns and operates Velocity Transloading, which unloads frac sand from rail cars at a facility east of Kindersley. Photo by Brian Zinchuk
A13
Velocity Transloading is expanding the road, allowing them to access to up to 22 rail cars at a time. Photo by Brian Zinchuk
Frac sand has been pouring in ■ By Brian Zinchuk
Kindersley – Driving east of Kindersley on Highway 7, it’s hard to miss the substantial crude-by-rail transloading facility on the south side of the highway. The Secure Energy Services facility has been idle for a while now, as depressed oil prices have taken the wind out of crude-by-rail’s sails across Western Canada. But adjacent to the crude transloading site, another operator is making a go of it.
Velocity Transloading Ltd. is a small transloading outfit owned by Christo Bezuidenhout. He has five employees. “Frac sand, that’s all we do, at the moment” he said on Sept. 16. A few years ago he had been working on an oil transloading facility east of Camrose, but that project didn’t go ahead, so he looked for anything else that made sense. Bezuidenhout worked for CN for three years, one year as a conductor, two years
as a manager. “I helped set up four different oil transloading facilities,” he said. Two were at Unity, one at Lloydminster and one near Maidstone. At its peak it was running approximately 100 cars a day. “I was a manager at the rail line and I just happened to be there when the customers were trying to get set up. I, myself, didn’t know lots about their side of things, but I knew the rail side of things. I worked with them handin-hand to set it up, and
through that experience I picked up everything that I have right now.” “We started leasing this in June of this year,” he said of their facility near Kindersley. The company fired up last January. They’re scheduled to load sand from this past July into this
December. Work should fire up again in January. If there’s enough volume, they should go until spring breakup in March. “We can hold a total of 35 sand cars, and access up to 12 cars at a time. We offload about four a day.”
They’re building a road to increase the access to 22 cars at a time. There are two other sand transloading facilities nearby, Bezuidenhout noted, and both are bigger. Most of their frac sand comes from Wisconsin.
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PIPELINE NEWS November 2016
Page A12
average of $223/hectare at the last offering. Top purchaser of acreage in this area was Millennium Land Ltd. who spent $498,045 to acquire five lease parcels. Top price paid for a single licence in this area was $411,965, paid by Elk Run Resources Ltd. for a 3,108-hectare parcel situated partially within the Notukeu
Upper Shaunavon Oil Pool, 20 kilometres north of the town of Shaunavon. Top price paid for a single lease in this area was $161,741, paid by Metropolitan Resources Inc. for a 1,036-hectare parcel situated partially within the Leon Lake Lower Shaunavon Oil Pool, 15 kilometres northeast of Eastend. The highest dollar per hectare in this area was received from
Millennium Land Ltd. which paid $516/hectare for each of three 259-hectare parcels located adjacent to the Rapdan Upper Shaunavon Oil Pool, 30 kilometres southeast of Eastend. Estevan Weyburn area The total bonus received in the area was $11,245,453, an average of$876/hectare. This compares to $8,863,243, an average of $771/hectare at the last offering.
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Top purchaser of acreage in this area was Millennium Land Ltd. who spent $9,298,879 to acquire seven lease parcels and two exploration licences. The top price paid for a single licence was $5,166,059, paid by Millennium Land Ltd. for a 2,007.25 hectare parcel situated adja-
cent to the Bromhead Midale Beds Oil Pool, 35 kilometres west of Estevan. Top price paid for a single lease was $397,565, paid by Millennium Land Ltd. for each of five 259 hectare parcels situated adjacent to the Elswick Midale Beds Oil Pool, 50 kilometres north-
west of Estevan. The highest dollar per hectare in the offering was received from Synergy Land Services Ltd. who paid $3,151/hectare for a 32.38-hectare parcel located within the Steelman Midale and Frobisher Beds Oil Pools, 35 kilometres northeast of Estevan.
Kelro shop in Kindersley Kindersley – Lloydminster-based Kelro Pump & Mechanical Ltd. has established a new location this summer. “August 1st we opened in Kindersley,” said Brent Rohs, sales manager of Kelro, while manning their display at the Lloydminster Heavy Oil Show on Sept. 15. Kelro president Gord Rohs explained, “Due to the downturn in the economy, we were getting pushed on travel time.” The satellite location eliminates approximately 240 kilometres of driving each way between Lloydminster and Kindersley. “It’s an opportunity
Gord Rohs, left, and Brent Rohs of Kelro Pump & Mechanical Ltd., as seen in their booth at the Lloydminster Heavy Oil Show in September. Photo by Brian Zinchuk
to provide service to the local area,” Brent said. “We’re hoping to
have a couple of mechanics and a parts/service manager,” he said. The idea is to offer full parts and service out of Kindersley. “We’ve been discussing it for a year, year-and-a-half, and finally made the move,” Gord said. “By luck, we knew somebody and we subleased. We were fortunate. We got a just about brand-new shop.” As of mid-September, they were looking for a resident millwright, alternatively called an industrial mechanic. The service side of the industry is always relatively busy, Gord added, but new pump packaging is very slow.
PIPELINE NEWS November 2016
A15
Swabbing keeps old wells going: Red Sky Resources ■ By Brian Zinchuk
Jim Olson, left, and his brother Gregg “Butch” Olson own Red Sky Resources Ltd. with their respective wives, Brenda and Dawn. Photo by Brian Zinchuk
top and middle. The cups slide up, allowing the tool to drop through the fluid. Once you are at the bottom of the well or as deep as you want to go, engaging the drawworks tightens the cable. The cups seat on the bottom and pull up the fluid with it – just like a bucket full of
water. A three-inch hose comes off the lubricator off the top. All the fluid goes into the tank on the truck. “It’s pretty much a portable pumpjack on a truck, basically.” “In oil wells, it’s mostly oil,” he said. The process is pretty
quick, as Olson noted they can do one-tothree wells in an hour, depending on the wells. “You back into the well, you stand your pole. You’ve got a fourinch valve on the well. You spin a half-thread in for a hammer union. Our lubricator goes on. You hammer that
in, tight. You open the valve, lift your brake and run ’er down. “The wells are basically dead. There’s little to no gas. We have a depthometer that tells you how deep you are. Most of the stuff we’re swabbing is about 680 to 720 metres down the well. They’re mostly old verticals. “When you’re done, you shut the valve on the well, unhook the lubricator and go to the next well. Most of our tanks are six cubic metres of fluid. You go until you’re full. You go to the battery or field tank to unload.” “It’s just a matter of keeping producing them when there’s nothing to pump anymore. Most of these are a barrel-a-day wells. They’ve reached the end of their life and they’re kind of oozing in there. That’s why they’re not viable for the power for the pumpjack or the operator to check on it.” Page A16 ▲
Kindersley – When an oil well is near the end of its productive life, but not quite there yet, often several more years can be wrung out of it before abandonment. That’s where a process known as swabbing comes into play. For Jim Olson, he’s been doing it since September 1989. Jim Olson owns and operates Red Sky Resources Ltd. with his brother Gregg “Butch” Olson, along with their respective wives Brenda and Dawn. Jim runs the office and goes out in the field from time to time, while Gregg handles a lot of the repair. “That’s basically what started the industry we’re in, swabbing, was a downturn like this one,” Jim Olson said. “They were stripping off these real marginal wells. “A lot of companies were going broke. They
start stripping off wells, selling equipment. They were giving wells away, selling them for a buck. You didn’t have to worry about the abandonment,” he explained. It wasn’t viable to keep paying for operators to maintain those wells. By swabbing them once or twice a week, those wells kept going. “Some of them, you’ll get anywhere from 0.3 of a cubic metre to 2.5 cubic metres off them, depending on the well,” Olson said. “The production swabbing we do is pretty unique to this area,” he said. “We don’t just swab oil wells. We swab water off gas wells.” The process of swabbing is not too far off from the concept of lowering a bucket by rope into a water well then pulling it up. “The tool we run down the hole has swab cups on it – rubber rings,” he said. There are holes through the tool at the
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PIPELINE NEWS November 2016
Keep producing them when there's nothing left to pump ▲
Page A15
they shut it in,” he said. Gas wells need swabbing when the water in the well loads up to a point where the gas won’t flow anymore. While some people might think swabbing is on its way out, Olson countered, “I’ve been hearing that since I started nearly 30 years ago.” Liability ratios for keeping old wells active versus abandoning and cleaning them up is a growing issue for the industry. Olson said, “My take on that is they all have to be abandoned at some point. But for these companies, whether they keep swabbing them or abandoning them … if they’re
The work is usually done on a contract basis, by the hour or by the swab. Their rigs are very similar to flushby units, but smaller. Most of Red Sky’s units are single axel trucks with a small drawworks, pull mast and tank. Sometimes if a well doesn’t flow after a frac, they’ll be called in to swab the water out of the well to get it going. “They’ll go from dead to live really quick,” Olson said. Due to the low price of gas, swabbing gas wells has dropped off substantially. “For gas wells, the last two years have been nonexistent. (Given) the price of gas, if the well loads up,
still profitable as you’re swabbing them, why would you abandon them?” “That’s basically what started our industry. As an alternative to abandoning a well, let’s keep making money. The RMs are collecting taxes off it. The farmers are collecting lease payments. We’re employing people to run equipment to do it. It keeps money in the area. “But there is a point where some stuff just isn’t profitable, where you have to abandon that stuff and plug it.” The Kindersley area has hundreds of old vertical wells that are swabbed. The bulk of their work is between Kindersley and
Kerrobert, but they also work in the Plato area. Red Sky runs seven swabbing rigs and has nine employees. Each rig usually has just one worker, unless they are working on a gas well, then they would have two. The business stays fairly steady all the time, whether the price of oil is high or low. “It’s pretty consistent. Compared to a lot of other sectors in the oilfield, we’ve been fortunate,” Olson said. While things have slowed down and they’ve had to cut rates, they’ve actually just hired another worker, allowing them to reactivate a unit that had been idled for a year.
Hotel boom There are a lot more options for hotel rooms these days in Kinderley. This is the new Suburban Extended Stay. Photo by Brian Zinchuk
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Happy In Jack O’ Lantern Land Little Brynley Rosengren was all smiles in her princess costume and ready for some snacks at the Estevan Art Gallery and Museum’s Halloween Haunt on Saturday. She and over 300 other visitors to the Gallery were greeted with a fine array of pumpkin carvings at the entryway. Photos by Norm Park.
Local man arrested on drug and firearms charges By David Willberg dwillberg@estevanmercury.ca
A 35-year-old man is facing several drug, firearms and weapons charges after he was apprehended on Oct. 20. The Estevan Police Service’s (EPS) Containment and Warrant Entry Team (CWET), assisted by members of the Criminal Investigations Division and the patrol division, executed a search warrant at a residence on Seventh Street in Estevan. The arrest followed an investigation conducted by
the EPS’s Drug and Intelligence Unit. As a result of a search and investigation, EPS members seized six firearms, one pair of brass knuckles, eight containers of Tannerite explosives, approximately 2,000 rounds of ammunition, 220 grams of marijuana, six grams of psilocybin and an undisclosed amount of cash. The marijuana has a street value of approximately $2,200. David Tierney is facing one charge of possession of marijuana for the purpose of trafficking, one
charge of possession of psilocybin, one charge of possession of the proceeds of crime, nine counts of possession of firearms and explosives contrary to a court order, two counts of unsafe storage of firearms, and one count of possession of a prohibited weapon. Police Chief Paul Ladouceur said Tierney was taken into custody without incident. “We had received ongoing information about this resident, and certainly members had initiated an investigation,” said La-
douceur. “This goes handin-hand with the investiga-
juana at some point in the future, the drug is not legal
tions assets that we’ve been doing$51.4m yet, and he said this case Geocan selling for throughout the city, as we “goes beyond weed.”
Page 8
look at the drug subculture in Estevan.” In many cases, Ladouceur said the police might be looking at one particular drug group, and receive information or intelligence from that investigation that leads them to open another investigation. “This wasn’t an overly lengthy investigation,” said Ladouceur. Even though it’s expected the federal government will legalize mari-
“We’re seizing firearms, we’re seizing explosives and we’re seizing large quantities of ammunition,” said Ladouceur. “And this is drug trafficking. Even when marijuana is legalized, when and if, that doesn’t legalize drug trafficking in marijuana. “There’s a big misconception that it’s okay to sell marijuana because it’s going to be legal anyhow. Nowhere in the future do we foresee that it’s going to be
legal to grow, produce and sell marijuana privately.” As for the explosives, Ladouceur noted it is legal to possess Tannerite, but there are strict guidelines on its quantity and its use. Since Tierney was on a court order not to possess firearms, ammunition or explosives, he was charged. Tierney made his first court appearance the following morning. He was back in court on Oct. 24, when he was released with conditions after posting a $2,500 bond. He will be back in court on Nov. 7.
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Page 25
Page 24
Estevan considered for 1solar March 2008, Volume - Issue 1 power By David Willberg dwillberg@estevanmercury.ca
SaskPower is looking to add solar power to its electrical generation fleet, and Estevan is one of three sites they are considering. The Crown corporation held an open house at the Saskatchewan Energy Training Institute on Oct. 20. Representatives from SaskPower were on hand to explain how the solar power station would work and why Estevan was being considered. Tim Schuster, the director of independent power producer development for SaskPower, told the Mer-
cury that they are considering Estevan because they are looking for a location that would keep costs at a reasonable rate. It would also have optimal solar intensity, good interconnection availability, favourable community support and a location that would be environmentally safe. They are also looking at Morse and Rush Lake, both in southwest Saskatchewan, as possible locations. “The interconnection opportunities are good, and there are locations we can look at to satisfy the criteria for the project,” said Schuster.
All three locations have available infrastructure and capacity, and interconnection availability. In Estevan’s case, there is a substation that SaskPower can access for a solar power site, and they wouldn’t have to build much new infrastructure. Southern Saskatchewan is an area that would be a good site for solar power projects, he said. In fact, according to information supplied by SaskPower, it is one of the best locations in the country, along with southern Alberta and southwestern Manitoba. SaskPower’s proposal calls for an initial 10 mega-
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watts to be constructed on about 70 acres of land. Another 10 megawatts would be added at some point in the future. “What we’re going to do is buy a full-quarter section, so there’s lots of room to put that project on that land, and then it can be expanded again in the future if we want to,” said Schuster. It’s expected the plant would employ a few people. The total projected cost for the 10-megawatt solar plant is $25 million to $30 million. There would also be 20 megawatts of solar power through a partnership with
Tom Woodhouse, left, listens as Helene Careau from SaskPower discusses the solar power project planned for the Boundary Dam Power Station.
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Glenn McGregor was among the participants in the threshing demonstration that was part of the Souris Valley Antique Association’s Pioneer Echoes Weekend in Midale on Aug. 6 and 7. This year marked the 50th edition of the event, and hundreds of people witnessed the old-fashioned farming technique. Photo by David Willberg.
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An important date on producers’ calendars is swiftly approaching. The Saskatchewan Crop Insurance Corporation (SCIC) has sent out a reminder to producers that an important date for participation in the AgriStability Program is Sept. 30. This is the initial deadline for producers enrolled in the program to submit their 2015 program
forms. Submitting the forms is part of the annual process for participation in the program and the information provided determines whether the producer qualifies for a benefit payment and builds the farm’s program history. Producers who file by the deadline date can be certain their financial profile
is up to date and their individual reference margin is established and available should something unforeseen happen to their farm. One good way to manage AgriStability information is through AgConnect, they said. This is a secure online application giving producers the ability to review previous AgriStability informa-
tion and submit new information. Information submitted through this process enters SCIC’s system directly, allowing for quicker file processing. Knowledgeable staff are readily available to help producers activate their AgConnect account. They can be contacted at their call centre at 1-866-270-8450
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